GS 3 - June

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in/

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GS 3
Contents
1 Economy ................................................................................................................................................ 4
1.1 Jaitley aims to cut expenditure ................................................................................................ 4
1.2 Finance Ministry mulls nodal agency to take over bad loans .............................................. 4
1.3 RBI bi-monthly monetary statement ...................................................................................... 5
1.4 Needed, more deliberation ....................................................................................................... 5
1.5 ARVIND MAYARAM PANEL ON RATIONALISING DEFINITIONS OF FDI AND FII . 6
1.6 Drugs affordability and patents ............................................................................................... 6
1.7 INDIA SLIPS IN FDI RANKINGS ........................................................................................... 8
1.8 Centre to rope in States to fight inflation ................................................................................ 8
1.9 Adverse growth-inflation setting, major challenge ............................................................... 9
1.10 India Inc looks for conducive tax environment, bold reforms ............................................. 9
1.11 India, U.S. trade officials to start work on policy forum meet ............................................. 9
1.12 Forex reserves drop to $312 billion ....................................................................................... 10
1.13 Tackling Indias economic headwinds ................................................................................... 10
1.14 Boosting markets for new issues ............................................................................................ 12
1.15 Gold prices likely to drop further ........................................................................................... 13
1.16 Putting the spring back into the economy ............................................................................ 13
1.17 Reviving economy is priority: Pranab ................................................................................... 15
1.18 RBI simplifies KYC norms for opening bank account ......................................................... 16
1.19 ICP data validate Tendulkar poverty line ............................................................................. 17
1.20 Bankers pitch for dilution of govt ownership ....................................................................... 17
1.21 Nitin Gadkari opposes plan to impose anti-dumping duty on solar gear ........................ 18
1.22 GST rollout will have to wait for statute amendment ......................................................... 18
1.23 India Inc seeks speedy implementation of GST ................................................................... 19
1.24 Focus on diamond quadrilateral ............................................................................................ 19
1.25 Pilot scheme to allow drawals from semi-closed mobile wallets ....................................... 19
1.26 PE, key funding option for realty sector ................................................................................ 20
1.27 On the road to safety ................................................................................................................ 20
1.28 An intractable problem ............................................................................................................ 21
1.29 Indian money in Swiss banks swells to over Rs.14,000 crore............................................ 22
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1.30 Prashant Bhushan for law to curb black money .................................................................. 22
1.31 Infrastructure finance firms can raise long-term funds ..................................................... 22
1.32 SEBI unveils slew of reforms .................................................................................................. 23
1.33 Far-reaching moves ................................................................................................................. 24
1.34 Pressure on profitability to continue ..................................................................................... 24
1.35 Extension of export sops comes as sweetener for sugar industry ..................................... 24
1.36 RBI fixes timelines for regulatory approvals ........................................................................ 25
1.37 Centre to simplify laws for single window clearance........................................................... 25
1.38 Make power distribution reforms a top priority: World Bank ........................................... 25
1.39 BRT system will save 27,000 lives in India: World Bank ................................................... 26
1.40 U.S. govt panel puts India on piracy watch list .................................................................... 26
1.41 Move to bring more drugs under control draws flak ........................................................... 27
1.42 Sweetened package .................................................................................................................. 27
1.43 Many challenges to stability ................................................................................................... 28
1.44 Treat gold deposits as part of CRR/SLR: bankers ............................................................... 28
1.45 Price Stabilisation Fund Scheme may be modified ............................................................. 29
2 Science and tech + Environment ......................................................................................................... 29
2.1 Vulture conservation in gram sabha agenda ........................................................................ 29
2.2 Unmonitored CFL disposal ups environmental hazards .................................................... 30
2.3 Now, a system to extract water from manure ...................................................................... 31
2.4 SpaceX unveils capsule to ferry astronauts .......................................................................... 33
2.5 Now, eagles fall prey to diclofenac ......................................................................................... 33
2.6 Melting glaciers, more rain to swell Himalayan rivers ....................................................... 34
2.7 Solar plane completes first test flight .................................................................................... 34
2.8 Supernova recreated in lab ..................................................................................................... 34
2.9 Artificial lakes cause alarm in Himachals downstream areas ........................................... 34
2.10 Sperm-inspired robots ............................................................................................................. 35
2.11 Google funds technology to bring entire planet online ....................................................... 35
2.12 Why is it not possible for mosquitoes to spread AIDS? ...................................................... 36
2.13 CONFIRMATION OF HIGGS BOSONS PRESENCE ......................................................... 36
2.14 HIMACHAL PARK IS NOW A WORLD HERITAGE SITE ................................................ 37
2.15 300 new species found in Greater Mekong .......................................................................... 37
2.16 New edible films to preserve bread longer ........................................................................... 38

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2.17 Kudankulam Unit 1 at full tilt ................................................................................................. 38
2.18 NASA beams video from space via laser ............................................................................... 39
2.19 Standing tall in a concrete jungle ........................................................................................... 39
2.20 Genetically modified mosquitoes a quantum leap in tackling malaria ....................... 40
2.21 Gravitational waves: a big bungle? ........................................................................................ 40
2.22 E-waste looms large over India .............................................................................................. 41
2.23 COLOUR PERCEPTION ......................................................................................................... 41
2.24 Scientists warn of tourism threat to Antarctica ................................................................... 42
2.25 Targeting a chink in TB bacterias armour ........................................................................... 42
2.26 UN alarmed over dumping in Great Barrier Reef ................................................................ 42
2.27 Slaughter of whale sharks on the rise .................................................................................... 43
2.28 Pest sprays poisoning world food supplies ........................................................................... 43
2.29 Government to roll out National EMF portal ....................................................................... 43
2.30 Top companies flout e-waste rules, says study .................................................................... 44
2.31 An eventful year on Mars ........................................................................................................ 44
2.32 Russian Arctic, a new promised land for oil giants ............................................................. 45
3 Agriculture .......................................................................................................................................... 46
3.1 PM calls for a tricolour revolution ....................................................................................... 46
4 Disaster ............................................................................................................................................... 46
4.1 A year later, no lessons learnt ................................................................................................. 46
4.2 The tasks in Uttarakhand ........................................................................................................ 47
4.3 A tragic conflagration .............................................................................................................. 48
5 Security ............................................................................................................................................... 48
5.1 PROMOTING 'SWADESHI' IN DEFENCE (EDITORIAL ) ............................................... 48
5.2 CRPF-police distrust hobbles anti-Maoist operations in Chhattisgarh .......................... 49
5.3 Jaitley caught in Defence-Finance crossfire ......................................................................... 49
5.4 A need for defence bureaucracy reforms .............................................................................. 50
5.5 The North-eastern challenge .................................................................................................. 50
5.6 BrahMos test-fired from warship ........................................................................................... 52
5.7 Counter to the spirit of counter-insurgency ......................................................................... 52
5.8 Facing apathy, many in CRPF look for an exit ..................................................................... 54
5.9 Taliban flush with cash, warns U.N. report .......................................................................... 54
5.10 A dangerous road in Sri Lanka ............................................................................................... 55

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5.11 An NSA for hard times ............................................................................................................. 55

1 ECONOMY
1.1 JAITLEY AIMS TO CUT EXPENDITURE
The Finance Ministrys budget team has some broad guiding principles already:
It includes steps to ensure rise in revenues without burdening taxpayers
Greater efficiency in government expenditure to reduce fiscal deficit
Revive the manufacturing sector
The UPA governments interim budget had estimated:
Interest payments on borrowings for its past expenditure will exhaust 43.3 per cent of the tax
collections in 2014-15.
Subsidies were estimated at 26 per cent of tax collections.
Interest Payments and Subsidies along with pensions to account for 80 per cent of the Centres
net tax revenues
Leaving barely 20 per cent for governance and development.
Given this legacy, Mr. Jaitley will have to push revenues and control expenditure.

1.2 FINANCE MINISTRY MULLS NODAL AGENCY TO TAKE OVER BAD LOANS
The Finance Ministry is considering a proposal to set up a National Asset Management
Company, which may act as a nodal agency, for taking over bad loans of banks and help revive
sick units.
The public sector banks can jointly put in capital to form such an entity, which could act as an
aggregator of NPAs and clear such assets quickly.
Once set up, the proposed National Asset Management Company can pick up large stressed
assets entirely from a consortium instead of the normal practice of a partial takeover.
Stressed assets have been on the rise due to the economic slowdown and the delay in
infrastructure projects. There is also a proposal to finance the acquisition of bad assets. In such
cases, bank finance would be made available to a financially strong buyer to acquire stressed

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assets or a sick company.
The Finance Ministry has asked public sector banks to act tough in case of willful defaulters and
has suggested that they go in for a change of management of defaulting companies.

Some facts:
The top 30 NPAs of PSBs account for 40.2% of their gross bad loans.
Bad loans of PSU banks rose by 28.5 per cent to Rs.1.83 lakh crore in last two quarters.
1.3 RBI BI-MONTHLY MONETARY STATEMENT

1.4 NEEDED, MORE DELIBERATION
Artilce talks about parts of FSLRC reports that are drawing major criticism specially from RBI
guv:
Among the most contentious proposals of the FSLRC involve the setting up of two
entities: one, a new super-regulator, the Unified Financial Regulatory Agency (UFRA); and
two, a Financial Sector Appellate Tribunal to review regulatory decisions. If this proposal is
implemented, the financial sector will have just two regulators, the RBI and the proposed UFRA.
In the new set-up, the RBI will have some of its existing functions, such as regulation of
organised financial trading, taken away. The RBI will have a diminished role, confined to being
the monetary authority and regulator of banks.
In another recommendation, the FSLRC wants a new monetary policy committee
which would be dominated by government nominees and not the RBI Governor, to set policy
interest rates.

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1.5 ARVIND MAYARAM PANEL ON RATIONALISING
DEFINITIONS OF FDI AND FII

FPI includes portfolio investors such as foreign institutional investors (FIIs) and qualified
foreign investors (QFIs).
Seeking to simplify norms,a government panel has suggested that :
foreign investment of over 10 per cent in a listed company be treated as FDI ( accepeted by
centre hence applicable now)
investments from NRIs on a non-repatriable basis be deemed as domestic investment.
foreign investment in an unlisted company should be treated as FDI.
The report says any investment by way of equity shares, compulsorily convertible preference
shares/debentures less than 10 per cent should treated as foreign portfolio investment (FPI).
1.6 DRUGS AFFORDABILITY AND PATENTS
One of the urgent tasks before the new government is something that does not figure in
common discourse but is still extremely important for its larger implications for Indo-U.S.
economic ties. Indias patent regime, which protects intellectual property rights (IPRs), has
come under intense scrutiny in the United States. It is the contention of the U.S. Trade
Representative (USTR) that the environment for IPR in India has deteriorated. India has been
placed on the priority watch list of countries, whose IPR regimes will be scrutinised during the
year. The saving grace is India has not been labelled a Priority Foreign Country (PFC) in the
USTRs Special Report released at the end of April. The U.S. Trade Representative is part of the

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executive office of the U.S. President empowered to develop and recommend trade policy to the
U.S. government.
Any penal action against India would have cast doubts on the institutions and processes of
economic diplomacy in the U.S. It would have been thoroughly ill-timed: the report was
released, on schedule, two weeks before a new government took office in India.
If, indeed, the USTR had categorised India as a Priority Foreign Country, it could have led to
imposition of sanctions by the U.S. on Indian trade.
Yet, while there was no downgrade, Indias IP regime would be closely watched.
Pharma lobbies
Indias IPR regime is currently under attack by the U.S. pharma lobbies which have teamed up
with other powerful lobbies to make out a case against India. From Indias point of view, the
objective of the high pressure lobbying by big pharma in the U.S. is to stymie Indias efforts at
providing affordable medicine without in any way compromising on existing treaty agreements.
Flexibilities
Big pharma is obviously piqued by Indias decision to use the flexibilities that are available in
the existing TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement. Since
2005, when patent protection was incorporated into domestic laws, the flexibilities were used
only twice. In March 2012, it issued a compulsory licence to an Indian firm for a cancer drug,
whose patent holder, the German multinational Bayer, had priced it well beyond the reach of a
majority of Indian patients.
Under another provision, countries have the option to deny patent to a drug that involved only
incremental innovation. In April 2013, the Supreme Court upheld the 2006 decision of the
Indian Patent Office denying the Swiss company Novartis patent on a drug precisely on this
ground.
Clearly, it is not just these two instances but the fear that other developing countries would
emulate India that is behind the lobbying. India should be prepared to challenge any unilateral
action by the U.S. before the WTO whose disputes settlement mechanism has a good record of
impartiality.
The way forward is through discussions not confrontation. India needs foreign technologies and
investment. Obviously, it helps alleviate any impression that Indias patent regime is being
diluted. Two points in Indias favour are (one) patent issues are decided after a due process,
never arbitrarily. Two, the very few instances of using flexibilities are indicative of the fact that
India uses those safeguards selectively. Very recently, despite strong recommendations from
the Health Ministry, the government refused to issue a compulsory licence for production of a
copy of Bristol-Myers Squibbs cancer drug Dasatinib in India. The argument is that a case has
not been made out for producing a generic version of that drug in India.
The debate should go on. There is a case for having a permanent mechanism for discussing
patent-related issues, especially concerning the drug industry.

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1.7 INDIA SLIPS IN FDI RANKINGS
India drew $28 billion foreign direct investment (FDI) in 2013 against $24 billion in the
previous year, shows a report for 2014 by the United Nations Conference on Trade and
Development. However, its ranking in terms of most-favoured FDI destination slipped by a
notch compared to the one given in the report for 2013.
The World Investment Report, 2014 showed that policy uncertainty on allowing
international supermarket chains kept investors on tenterhooks. Though in terms of
its ranking in drawing FDI inflows improved a notch to 14th in 2013 compared to 2012, its
position in terms of the most-favoured FDI destination took a beating to the fourth in the report
for 2014 against third in the 2013 report.
An Unctad report shows a survey of companies ranking countries in terms of most-favoured
FDI destination for three years. As such, the report for 2014 shows the ranking for 2014-
16 and the one for 2013 shows the ranking for 2013-15.
IT IS MAINLY due to policy uncertainty and slowing down of economy that are taking
a toll on India's most- favoured investment destination ranking
Although India drew slightly more FDI in 2013 than in the previous year, "foreign investment
continues to flow into single-brand retail, no new investment projects have been
recorded in multi-brand retail and, in fact, divestment have taken place", the report
added.
Major multinational corporations that entered India after the first round of liberalisation have
taken steps to get out of the market. For instance, Walmart abandoned its plan to open full-scale
retail outlets in India and dissolved its partnership with Bharti.
The report suggested that a different approach could be considered for foreign
investment in the Indian retail industry, in terms of mode of entry, franchising
and other non-equity forms of multinational participation
1.8 CENTRE TO ROPE IN STATES TO FIGHT INFLATION
To keep a check on inflation in the wake of a weak monsoon, Prime Minister Narendra Modi on
Thursday pushed for proactive coordination between the Centre and States in implementing
contingency plans.
Fast track courts for hoarders.
Contingency plans for 500 districts
Creation of Fodder-grids for long term
Raised MSP of Kharif crops
Hiked Export price of Potato
Called states to implement National food security


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1.9 ADVERSE GROWTH-INFLATION SETTING, MAJOR CHALLENGE

1.10 INDIA INC LOOKS FOR CONDUCIVE TAX ENVIRONMENT, BOLD
REFORMS
In a pre-budget consultative meeting with the Finance Minister, captains of industry listed out a host
of demands, including:
Reviving the investment sentiment
Lowering of tax rates: The government should move away from the aggressive revenue
approach and provide a genuine non-adversarial and conducive tax environment.
Easing of gold import curbs
Clarity on retrospective tax law amendment: Industry pressed for an amendment to the
Income Tax Act, to promulgate the reversal of retrospective amendment and make all taxation
prospective.
Early roll out of the GST and DTC: A simple, transparent and non-adversarial tax regime
bereft of complexities and ambiguities
Renewal energy needed priority attention and the industry had sought FDI exemption in
renewal energy project

1.11 INDIA, U.S. TRADE OFFICIALS TO START WORK ON POLICY FORUM
MEET
The U.S.-India Trade Policy Forum (TPF) is an inter-agency collaboration led by the USTR. It
is the principal trade dialogue between the countries. It has five focus groups:
1. Agriculture

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2. Investment
3. Innovation and Creativity (IPRs)
4. Services
5. Tariff and Non-Tariff Barriers.
Issues:The American pharma sector had alleged that the Indian IPR laws discriminate against U.S.
companies and violate global norms. USFDA has shown concerns over safety of Indian
Pharmaceuticals.
The USTR in its Special 301 report had kept India out of the priority list, but has said that they would
do an out-of-cycle review of Indias IPR regime.
At present, bilateral trade is around $100 billion. The U.S.-India Business Council had said bilateral
trade between the countries could touch $500-billion mark over the next one decade.
1.12 FOREX RESERVES DROP TO $312 BILLION
India's foreign exchange reserves comprise:
1. Foreign currency assets (FCA)
2. Gold
3. Special Drawing Rights (SDRs)
4. Reserve tranche position (RTP) in the International Monetary Fund (IMF).
The level of foreign exchange reserves is largely the outcome of:
The RBI intervention in the foreign exchange market to smoothen exchange rate volatility
Valuation changes due to movement of the US dollar against other major currencies of the
world
Foreign currency assets are maintained in major currencies like the US dollar, euro, pound sterling,
Canadian dollar, Australian dollar and Japanese yen etc. Both the US dollar and the
Euro are intervention currencies, though the reserves are denominated and expressed in the US
dollar only, which is the international numeraire for the purpose
1.13 TACKLING INDIAS ECONOMIC HEADWINDS
Current Indian economy is marred with a high rate of inflation that persists, declining growth,
inadequate employment generation, fiscal deficit, current account deficit (CAD) and corruption.
The problem has been compounded by the capital intensive nature of current
investment which uses less labour and more capital, so that even when output rises,
employment hardly grows. Most are forced to work in the informal sector at low wages which
when coupled with high persisting inflation, causes economic distress and political unrest.
This state of affairs is due to the decline in the rate of investment from its peak of 38 per cent in
2007-08 because of the global economic crisis.
Why Investment has become so important for growth of economy?
Economy rapidly increased in the 2000s leading to the boom of 2003-2008. The rapid increase
in investment was engineered by allowing national income to shift rapidly in favour of the high
savers those who have high property incomes. This was evident from the direct tax data
which showed that corporate tax collections boomed after 1999. This trend has led to a rapid

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increase in inequality in society and a slow rise in mass consumption so that the growth of the
economy has depended more than before on rising investment levels.Hence the crucial
determinant of growth in the economy in the period after 2000 has been investment.
Investment in the economy depends on private investment, both foreign and domestic and on
public investment. There has been a problem with each one of them. Situation worsened as:
1. Exports declined: The green shoots in the United States did not bloom, Eurozone went into a
double dip recession, Japan continued its sluggish growth and the Chinese and the other
BRICS economies slowed down.
2. Imports increased: Imports rose sharply due to the high import bill for petro products and the
increase in the gold import bill
Result of 1+2 = high trade deficit and CAD and a decline in demand in the economy
This has also been accompanied by a reduced inflow of foreign investments so that the value of
the rupee vis--vis the dollar declined sharply in the last few years. This added to the imbalance
on the external front with speculation and a flight of capital aggravating it. The threat by credit
rating agencies to downgrade the country has been looming large which could lead to an
increase in cost of borrowing abroad and a rise in CAD.
Foreign investment has slowed down but it only constitutes around 10 per cent of the total
investment in the economy. The bulk of investment is internal and this has slowed down due to
several factors.
1. One of them has been the unravelling of scams since 2009 and the subsequent
intervention of courts. This hasimpacted the confidence of the business community which
was used to employing crooked means to manage its investments and the markets.
2. Their confidence has also been shattered by widespread public protest against large-scale
acquisition of land needed for major projects. This goes back to the days even before Singur.
Resistance has continued in Jaitapur, Kudankulam, POSCO, Tata Mundra and so on.
In brief, the slowdown in internal investment is a result of the discredited model of
investment in the country which has been based on collusion between businessmen, politicians
and the bureaucracy. Thus, for different reasons, both foreign and domestic private investment
has slowed down.
The last element, public investment has also slowed down because of policy paralysis in the
government and even more importantly due to the sharp cutback in Plan size in each of the
last five years so as to keep the fiscal deficit down; compared to budget estimates, the actual
has been less by Rs.5 lakh crore in these five years. This has led to a slowdown in investment
in infrastructure and an aggravation of shortages.
Now coming to solutions:
1. Foreign Investments: While the rise in the stock markets signals the flow of funds from FII, it
does not mean that foreign direct investment will suddenly increase. Further, there is the danger
of a speculative bubble building up as in the past which could collapse and adversely
impact the investment climate. This could be triggered by the continuing easing of the Fed

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intervention in the U.S. something that is ongoing. Even if foreign investment increases, it
is a small part of the total investment so it cannot be the major stimulus needed.
2. Internal investment: Domestic investment public and private needs to be revived. Large
investment is going to remain hamstrung by environmental and other clearances and difficulties
in acquisition of land unless laws are changed but that would take time. Transparency in
business decisions is needed to revive investment, which also needs time.
So, the only thing that can be done soon is to increase public investment, especially in
rural areas where infrastructure is woefully inadequate.
Schools, dispensaries, roads, telecom, water, small irrigation and so on are needed urgently in
rural India. This has the potential to create lots of jobs unlike the big investments and would be
much less expensive than in urban areas because land is less expensive. Thus, it would benefit
many more people and slow down the expensive and environmentally damaging urbanisation
currently taking place. But this requires efficient governance.
1.14 BOOSTING MARKETS FOR NEW ISSUES
The stratospheric valuations that the share markets currently command should have
automatically led to a revival of the moribund primary markets. This, however, has not
happened for many reasons. There is often a considerable time lag between conceiving a
project and getting it financed through the stock market route. As recent macroeconomic data
show, the levels of savings and investments have been coming down. This, along with
governance failures, have led to a situation where a number of projects, including large
infrastructure projects, get stuck even during the early stages of their execution. The new
government has said it will unclog stalled projects on a priority basis, but it will take time before
their promoters are able to raise resources from the capital market. Moreover, when they are
finally ready for a public issue launch usually at the fag end of financing arrangements
they may not be able to tap the kind of money they require. For instance, there is a paucity of
investors in infrastructure companies. In the developed countries, insurance companies and
pension funds provide a large part of the funds required by infrastructure projects. Raising the
limit for foreign direct investment in insurance will help. At the same time, it is necessary
to educate retail investors of the advantages in buying long-dated instruments which will
provide steady, non-cyclical returns.
In the final analysis, it is the retail investors who provide depth and stability to the capital
market. Unfortunately, this class has not only not received the right regulatory support, but
there are also some provisions that discriminate against them. For instance, some of the
initiatives of the Securities and Exchange Board of India completely bypass retail investors.
Over the years there have been but token attempts to attract small investors, such as by giving
them a small discount on public sector share issues. Recently, SEBI Chairman U.K. Sinha
advocated a rationalisation of public issue norms relating to promoters holding as a means to
increase the supply of shares. The idea is to prescribe a uniform minimum public float of 25
per cent in a share issue irrespective of the size. At present, public sector undertakings and
companies with a post-issue capital of above Rs.4,000 crore, need offer only 10 per cent. The
motives behind the proposal are laudable, but an increase in the quantum of shares by itself
cannot do much to boost retail investments. Considering the requirements of infrastructure

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finance, it is time that debt and quasi-debt instruments such as convertible debentures are
popularised. Those should attract risk-averse investors too.
1.15 GOLD PRICES LIKELY TO DROP FURTHER
Gold prices are likely to drop further in the coming weeks, Bullion experts feel the fall may be
precipitated by a number of factors:

Internationally, signs of a stronger U.S. economy have diminished the golds safe haven
status, and money is being diverted to investments such as equities.
The booming equity market and stronger rupee point to a lower fancy for gold in India.
RBI has eased some controls over import of gold by trading houses.
Gold in the domestic markets has traded at a high premium over international markets ever
since the RBI introduced restrictions on import to combat the high CAD in July, 2013.
The new government might cut the import duty from current 10 per cent levels in the coming
weeks and a cut of 2-3 per cent in duty could lead to another sharp correction in domestic gold
prices.
1.16 PUTTING THE SPRING BACK INTO THE ECONOMY
The economy is in a state of paralysis. The events which led it to this state are as follows:
The reforms era
In the first slew of economic reforms and liberalisation in 1993, the traditional industrial and
services sectors within the economy gained a lot of freedom that they had never enjoyed earlier.
Before 1993, the major constraints these sectors faced were legal and policy constraints like the
industrial licensing policy, tariff and quota restriction on import of raw materials and
intermediate goods, etc. The 1993 reforms removed most of these constraints. This led to the
first growth boom in India, with the average per capita growth rate of the economy going up
from less than two per cent to more than four per cent per year.
Then came the second growth boom in 2004 with per capita growth rates increasing to more
than six per cent per year. This boom happened partly due to some of the traditional sectors
continuing to do well and also because of a new kind of growth momentum from some specific
sectors minerals, construction, real estate and telecom. The momentum in the minerals sector
came from exports, as global demand and the price of minerals were very high during this
period. In the real estate and the telecom sectors, growth resulted directly from increased
middle class incomes due to the first growth boom. The impetus in construction was the result
of conscious policy decisions of the government that wanted to push for big infrastructure
projects.
Interestingly, the growth momentum in all these sectors was based on a close
relationship between the political class and big private investors. The mineral sector,
which was earlier completely under the public sector and catering largely to domestic demand,
was consciously opened up to big private investment and exports. The real estate sector,
previously made up almost entirely of small players, saw a number of large private investments
during this period. In the telecom sector, the nature of the market ensured that only big players

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could participate. Even in the construction sector, some of the big projects like airports needed
huge investment and big businesses.
Paralysis and backlash
Undoubtedly, these sectors needed to be developed for sustained and continuing growth in
India. The problem was thatpolicymakers thought that the set of reforms made in and
after 1993 would be sufficient to regulate this new kind of growth. On hindsight, we
now know that there were very significant regulatory failures in these sectors during the
second growth boom. We also understand that the reforms of the 1990s, which focussed
on removing constraints on activity, were insufficient to provide broad-based,
corruption-free growth in these sectors.Each of these sectors needed a different
governance structure and set of regulations, which were not put in place before the
sectors started growing at a very rapid rate.
We also know that the regulatory failures during the second growth boom led to a very strong
institutional and political backlash since 2010. This backlash manifested itself in several ways.
Since 2010, the media began raising issues of corruption and crony capitalism in
these sectors. Next, civil society got involved and voiced its opinion on the need for
alternative regulatory and anti-corruption institutions like the Lokpal. Finally,
the courts passed orders and rulings that criticised the decisions made by the
government in these sectors. All this led to what is now being called the paralysis.
In fact, the paralysis manifested itself in the activity of two important agents of the economic
growth bureaucrats and private investors.
Once the courts gave adverse rulings on the decisions taken by some bureaucrats, the
bureaucracy as a whole became jittery about taking decisions, sometimes deferring to them to
the extent that projects simply ground to a halt.
Private investors, on the other hand, found out that formal and informal understandings
that they had entered into with the political class were not as secure as they had thought them
to be, especially in the face of court cases and popular political uprisings like the one in Singur.

This uncertainty that crippled both the bureaucracy and private investors led to the collapse of
investment and growth rates.
Bureaucracy and business
So, what should the new government do to bring back growth? The first thing that it needs to do
is to move the economy out of this paralytic state. Clearly, the approach has to attempt to
rejuvenate both the bureaucracy and the private investor.
Bureaucracy: The government needs to ensure that the bureaucracy does not become a
part of any deal-making with the business class which can lead to decisions that are not
in the best interests of the country. This means that there needs to be strong penalties for
any malpractice by bureaucrats. However, if the government adopts an approach that
strongly penalises the bureaucracy for any outcome that is less than satisfactory, then this may
lead to a very risk-averse bureaucracy, which also hampers vibrant decision-making. In effect,
the government needs to put in place a system which can differentiate between the
deliberate malpractice of the bureaucracy and poor decisions that it may
occasionally take even with the best of intentions.

15

The crony-capitalism associated with the second growth boom resulted in all sorts of informal
deals between the political and the business class, which initially raised investor confidence in
this period, but later led to a breakdown in confidence when the deals were challenged by
accountability institutions like the Comptroller and Auditor General of India (CAG), the
Central Bureau of Investigation (CBI) and the courts. Any future relationship between the
political class and the business elite has to be based on formal rather than
informal deals. This will not only help investments become less costly due to a fall in
transaction costs but also assure investors that these deals will not be reneged in
future.
Tackling inflation
The other crucial thing that the government needs to do in order to sustain growth is to control
inflation. Inflation has always been partly demand-driven and partly structural, due to
elements like supply bottlenecks. In India, in the last few years, its the structural part which is
almost always driving inflation, particularly food inflation.
In order to solve this problem, the government has to think out of the box. First, it has to have
a clear idea about which part of the food chain is really responsible for inflation. It
is widely discussed that while farmers are not getting adequate returns from the prices they get,
consumers pay a high price in the retail market. The government needs to put in place a
system which collects data on a real-time basis about various stages of the
agricultural pricing process, right from the farm up to the retail market, so that we can
identify where the problem lies. Once there is an adequate understanding of this phenomenon,
the government can take appropriate measures to minimise it. These measures will have to
involve the enabling of more competition at some level of the wholesale business,
after the produce leaves the farm, but before it reaches the retail market.
1.17 REVIVING ECONOMY IS PRIORITY: PRANAB

Putting the economy back on track is of paramount importance for the government.
Foreign policy
building a peaceful, stable and economically inter-linked neighbourhood and strategic
and cooperative partnership with neighbours, including China.

16

bring renewed vigour in Indias engagement with the United States and to
operationalise the civil nuclear agreement.
Governance
The government was "dedicated to the poor" and the first claim on development
belonged to the poor
Poverty has no religion, hunger has no creed
special measures to spread modern and technical education among minority
communities.
a policy of zero tolerance" towards terrorism, extremism, riots and crime.
By the time the nation completed 75 years of Independence in 2022 every family would
have a proper house with water connection, toilet facilities, and round-the-clock electricity
supply.
(CLICK on the image if not visible)

1.18 RBI SIMPLIFIES KYC NORMS FOR OPENING BANK ACCOUNT
The bank had received representations/references from various quarters, especially migrant workers
and transferred employees, regarding problems faced in submitting a proof of current/permanent
address while opening a bank account. This would promote financial inclusion and
electronic transfer of remittances.

17

1.19 ICP DATA VALIDATE TENDULKAR POVERTY LINE
The recently released International Comparison Program (ICP) data have provided an
independent, international validation of the poverty line fixed by the Suresh Tendulkar committee,
which is being reviewed by the C. Rangarajan committee for a likely revision.
Since the ICPs purchasing power parities (PPPs) estimate pegs $1 at Rs. 15.1 in 2011,
the World Bank poverty line of $2 per capita per day works out to Rs. 30.2 or Rs. 906 per
capita per month. The Tendulkar methodology had estimated the national poverty line for 2011-12 at
Rs. 902 per capita per month.
The Tendulkar poverty line faced sharp criticism after the Planning Commission, using it as the
basis, announced that the number of poor fell from 40.7 crore to 27 crore from 2004-05 to
2011-12. Following the criticism, the UPA government set up Rangarajan Committee to review and
if necessary, revise it. The group is expected to submit its report to Prime Minister Narendra Modi
soon.
Where the Tendulkar Poverty Line fails is in the political and the emotional quotient.
The International Comparison Program (ICP) is a worldwide statistical partnership to collect
comparative price data and compile detailed expenditure values of countries GDP, and to estimate
PPPs of the worlds economies. Using PPPs instead of market exchange rates to convert
currencies makes it possible to compare the output of economies and the welfare of
their inhabitants in real terms (that is, controlling for differences in price levels).
It had ranked Indias GDP behind only that of the U.S. and China. But in terms of per capita GDP,
India was ranked 129th.
1.20 BANKERS PITCH FOR DILUTION OF GOVT OWNERSHIP
Bankers asked the Finance Minister to consider:
Setting up National Asset Management Company to deal with the problem of rising
NPAs.
Recapitalisation of banks as all the public sector banks need capital.
Reducing government stake in PSUs to 51%.
Implementation of recommendations of the Naik committee report.
Revision of the definition of priority sector lending.
Continuation of interest subvention scheme for investment lending in the agriculture
sector.
Interest subsidy for solar power projects.
Long-term instrument to finance infrastructure, and the issue of tax-free bonds for
development of the sector
Changes to Rajiv Gandhi Equity Saving Scheme to encourage a shift from gold and real
estate to the equity market.
Insurance awareness to be made part of corporate social responsibility.
To increase savings, Banks and insurance companies wanted tax benefits for their
products.
Listing of LIC

18

The government should seriously consider listing of LIC. The kind of money the government can
raise by listing LIC is significant. It can fund the needs of public sector banks as well as the fiscal
deficit.
1.21 NITIN GADKARI OPPOSES PLAN TO IMPOSE ANTI-DUMPING DUTY ON
SOLAR GEAR
The government plans to slap anti-dumping duty on solar panels. The Directorate General
of Anti-Dumping and Allied Duties (DGAD) had recommended slapping the restrictive duty on
imported solar panels from the U.S., Malaysia, China and Chinese Taipei to protect
domestic manufacturers.
The Commerce Ministry had suggested restrictive duty in the range of $0.11-0.81 per watt. The
levy would be applicable onsolar modules and cells assembled partially or fully,
originating or exported from the countries mentioned above.
Why Anti Dumping Duty?
The indigenous solar cell industry, which is in nascent state, needs protection and
nurturing. They are unable to compete with the imported panels and are loosing out.
Opposition:
From Domestic solar energy industry as they will have to buy solar modules at a higher
cost. The cost of solar power is already high as compared to coal and other conventional sources.
Since, the capacity generated under national solar mission has domestic sourcing norms, most
of the upcoming projects are being planned under State schemes to bypass this norm.
U.S. has already dragged India to the WTO with respect to domestic sourcing norms for
the national solar mission. India is of the view that its solar mission which aims to have 20,000
MW solar capacity by 2022 is compliant with WTO rules.
The Ministry of New and Renewable Energy (MNRE) has also opposed the
recommendation to slap ADD on imports, saying it is not the right time.

Transport Minister Gadkari suggested that indigenous manufacturers could be compensated
with appropriate subsidy.
1.22 GST ROLLOUT WILL HAVE TO WAIT FOR STATUTE AMENDMENT
An early rollout of the Goods and Services Tax (GST) seems unlikely as the Empowered
Committee of State Finance Ministers will start work on its design and form only after
Parliament passes a Constitutional Amendment for introducing the new tax regime and the
States ratify it.
Work on the Model GST Law for the States will start only after the amendment.
The empowered committee has written to Mr. Jaitley asking for the governments views on the
issues pertaining to the Constitution Amendment Bill.
Issues

19

The committee maintains that alcohol and petroleum, major sources of revenue for
States, should beexcluded from the GST.
The panel is unwilling to give to the Centre powers to notify declared goods
and fix GST rates on themwithout consulting the States.
The States want a mechanism to compensate them for revenue losses due to the
GST, to be made part of the Constitution Amendment Bill.
1.23 INDIA INC SEEKS SPEEDY IMPLEMENTATION OF GST
Various industry bodies, including Society of Indian Automobile Manufacturers (SIAM) and
Manufacturers Association of Information Technology (MAIT), have sought speedy
implementation of Goods and Services Tax (GST) to make the tax system simpler.
Besides, it has suggested measures to address issues affecting the industry such as inverted
duty structure, dual taxation on sale of packaged or canned software etc.
National Association of Software and Service Companies (Nasscom), which represents the over
$118 billion Indian IT-BPO industry, has urged the government to make the regulatory
environment more predictable, legal provision more transparent and remove ambiguity.
It has also recommended the launch of an India Technology Entrepreneurship Mission (ITEM)
to provide a supportive framework to technology start-ups and SMEs (small and medium
enterprises).
1.24 FOCUS ON DIAMOND QUADRILATERAL
Presidents address has outlined a diamond quadrilateral project of high speed trains. Perhaps
modelled on the golden quadrilateral national highways programme, this project could
provide special high-speed corridors to link the four main metros.
High-speed trains could be the answer to the congestion along the highways and slowing road
speeds. But it calls for huge investments and consequently high fares. Other concepts mentioned
in the address relate to agri-rail networks for the quick movement of perishable
commodities, and the expansion of the rail network in the northeast.
1.25 PILOT SCHEME TO ALLOW DRAWALS FROM SEMI-CLOSED MOBILE
WALLETS
The Reserve Bank of India has kicked off a pilot project that will allow a few mobile payment
providers to test cash withdrawal facilities for a small portion of their semi-closed mobile wallet
users.
Mobile wallets are digital products that can be loaded with cash, usually through a
mobile payment provider or telecom operator such as Airtel or Vodafone, and can
be used to purchase goods electronically.
Semi-closed mobile wallets, which were once hailed as weapons of financial inclusion as they do
not require the user to have a bank account, have one noticeable drawback: a user can
add cash but cant draw it out.

20

The Reserve Bank has long-held the view that letting telecom operators to offer cash-out
facilities for their mobile wallet users would allow the companies to bypass the banking
system.
What happens is that the sender and beneficiarys wallet will be seeded with Aadhaar number.
When the money transfer happens, the receiver, who does not have a bank account, can walk to
a mRUPEE outlet and receive the cash after authenticating his identity with the biometric
[fingerprint scanning], Pradeep Kumar Sampath, COO-MMPL, a subsidiary of Tata Telservices
Limited, told this correspondent.
Tata Teleservices mobile wallet payment-based service mRUPEE is one of the eight participants
in the RBI pilot.
1.26 PE, KEY FUNDING OPTION FOR REALTY SECTOR
The cash-strapped real estate sector has been increasingly turning to private equity (PE) and
structured debt to meet its funding needs. Faced with a liquidity crunch, high land acquisition
costs and increasingly tough due diligence by banks owing to its risky nature, real estate players
have been opting for private funding.
In future, more platform deals and equity stake acquisitions are likely to be seen and the entry of
real estate investment trusts (REITs) would provide alternative funding channels.
According to CBRE South Asia, a forward looking legislation on REITs will be a key enabler for
capital markets and shall be the single-most consequential reform witnessed in the sector in
recent times.
1.27 ON THE ROAD TO SAFETY
Another article on Road safety. Roads are unsafe because of
1. shortcomings in road and traffic engineering,
2. old and non-standard codes of traffic control devices,
3. poor driver training and assessment,
4. outdated legislations and
5. a poor enforcement system.
Though the Ministry of Road Transport and Highways is the nodal ministry for road safety
management, the issue is a multipronged and shared responsibility of many ministries Home,
Health and Family Welfare, Urban Development, Law and Justice, Heavy Industries, Human
Resource Development, Environment, Petroleum, Defence, Planning and Finance, among
others.
The number of recorded road deaths in India 1,40,000 annually is the highest in the world.
In addition, an estimated 2.2 million people are seriously injured on roads.
In order to diagnose the problems leading to unsafe roads, the most important is scientific
investigation of road accidents. This is our weakest area today that we are unable to

21

know the causes and consequences of road accidents. Policemen who investigate crashes are
neither professionally trained, nor do they possess the basic tools to collect evidence, and
analyse and reconstruct the events leading to the crash. This is evident from the fact that the
media has to invite a host of persons as experts to present their views on high-profile accidents
rather than depending on probes by the police.
It is crucial to introduce the science of traffic engineering to each and every road authority.
The process of change should be based upon indigenous research and verified practices that are
applicable to the needs of the country. This demands a paradigm shift from the
dependence upon consultancies approach.
The Ministry of Road Transport and Highways should initiate the process of road safety
management by first building the capacity of the department. Ministry should deliberate
on creating the governments own expertise and knowledge base in all areas of
legislation,
transport planning,
traffic engineering,
traffic enforcement,
driver training and education,
post-crash management,
as well as integration of road transport with rail, inland waterways (as has been
announced), maritime shipping and air traffic.

These sub-departments with their expertise would be able support all States and Union
Territories towards building their capacity as well.
1.28 AN INTRACTABLE PROBLEM
Steps taken by government recently to tackle inflation:
1. high minimum export prices on two important staples, onions and potatoes, to discourage
their exports.
2. It has advised State governments to exempt perishables such as fruits and vegetables from the
purview of the state-administered APMC Act. This legislation gives near-monopoly status to
traders and middlemen to procure, stock and trade food produce.
3. The Food Corporation of India has been asked to offload 5 million tonnes of rice from its
overflowing godowns.
Long term strategy should be:
1. reduce the numerous intermediaries between farmers and consumers. It should be
possible for farmers to fetch a higher price without pushing up the price paid by consumers.
Though talked about for a long time, this has been difficult to implement because of political
opposition from lobbies representing middlemen and traders.

22

2. minimise wastage of farm produce, especially of perishables such as vegetables and
milk.To do this it is necessary to put in place a robust system of logistics including cold chain
facilities. Reforming the outmoded food management system is a subject that has gained
traction recently.
The phenomenon of overflowing granaries co-existing with high cereal inflation is totally
unacceptable, but continues for want of the political will to reform the system.
1.29 INDIAN MONEY IN SWISS BANKS SWELLS TO OVER RS.14,000 CRORE
Indians money in Swiss banks has risen to over two billion Swiss franc (nearly Rs.14,000 crore),
despite a global clampdown against the famed secrecy wall of the Switzerland banking system.

1.30 PRASHANT BHUSHAN FOR LAW TO CURB BLACK MONEY
A new law, or an amendment to an existing law (such as the Prevention of Money Laundering
Act), requiring all Indian citizens to disclose all their assets and bank accounts in India and
abroad needs to be introduced, senior Supreme Court lawyer Prashant Bhushan has suggested
to Prime Minister Narendra Modi.
1.31 INFRASTRUCTURE FINANCE FIRMS CAN RAISE LONG-TERM FUNDS
The government, on Thursday, allowed infrastructure finance companies to issue
secured debentures with a tenure of up to 30 years, a move that will help in raising long-term
funds for the sector.
Besides, infrastructure debt fund non-banking financial companies (ID-NBFCs) have
been allowed to issue secured debentures for up to 30 years.
Similarly, housing finance companies have been allowed relaxed terms for maintaining
debenture redemption reserve on the lines similar to NBFCs registered with the RBI (Reserve
Bank of India).
A debenture redemption reserve is an account that can only be utilised to redeem
debentures.

23

As per the XII Plan document, India is projected to require investments of
about $1 trillion in infrastructure during 2012-17.
The government also clarified that companies can appoint an independent merchant
banker, registered with the Securities and Exchange Board of India to prepare valuation reports
required before making a preferential allotment of shares.
The firms can also engage an independent chartered accountant with a minimum
experience of 10 years to prepare valuation reports, the statement said.
1.32 SEBI UNVEILS SLEW OF REFORMS
1. all listed public sector undertakings (PSUs) to ensure at least 25 per cent public
shareholding within three years.
Why?
a. to ensure uniformity among listed entities irrespective of their promoters
b. help the government raise close to Rs.60,000 crore
2. decided to share know your client (KYC) information with entities regulated by other
financial sector watchdogs, a move aimed at having common norms across the financial market
3. to revive the primary market, the market regulator has eased norms related to the size of
an initial public offer (IPO) and pricing of preferential shares while allowing anchor
investors to have a greater exposure to the offering.
4. to safeguard investors from manipulative reports and usher in more transparency, the SEBI
board has approved detailed norms for research analysts that include stringent
disclosure requirements.
5. the proposal allowing non-promoter shareholders having over 10 per cent stake to
use the OFS mechanism has been cleared by the SEBI board
6. SEBI has decided to make OFS route available to the top 200 listed firms by market
capitalisation, compared with the top 100 listed companies at present.
7. easier set of regulations for employee stock option schemes that among other things
would classify ESOP Trusts as a separate category of shareholding entities.
Gyaan:
The process of listing for the first time is known as the 'primary market'. The most common way for a
company to come to market is by an 'Offer for Sale'.
1.The company publishes a prospectus describing its business, who its directors are, what its
financial position is, and what profits it thinks it is going to make.
2. The prospectus announces the issue of new shares, sets an offer price for the shares, and invites
subscriptions.
3. Offer prices are often pitched low to make sure the issue is successful.

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1.33 FAR-REACHING MOVES
Given the paucity of regulatory initiatives in the recent past to revive the primary capital market,
the slew of measures announced by SEBI recently would appear to be far-reaching in terms of
their impact.
The insistence on a 25 per cent public float for public sector undertakings, instead of the present
norm of 10 per cent, is an important step that could have multiple benefits:
1. There will be more PSU shares available in the market for all categories of investors.
2. The PSU disinvestment programme will be moved along as many more well-run government
undertakings offload their shares to meet the new SEBI norm, which incidentally also levels the
field with private companies that already follow the 25 per cent norm.

A reservation for retail investors in the Offer for Sale (OFS) route and the provision for a
discount for them are welcome steps, but it should be pointed out that the OFS and the IPP
(Institutional Placement Programme) were created to speed up large divestments of shares,
bypassing the cumbersome procedures of retail investment. Therefore, even if many more
companies can now take the OFS route, the value of this relaxation to small investors is
questionable.
Again, doubling the limit for anchor investors increases confidence-levels in individual issues
and ought to be viewed as another step towards strengthening the primary market mechanism.

SEBI is on the right track, but a genuine primary market revival may not happen in the short
run. Such a revival can only ride on robust economic growth and consequent improved market
sentiment.
1.34 PRESSURE ON PROFITABILITY TO CONTINUE
Aluminium Industry
Indias demand for aluminium has generally remained stable due to its dependence on the power
sector, which has always experienced steady growth in the past. Nearly 40 per cent of domestic
demand for the metal comes from the power sector, which, along with automobiles and
construction, accounts for 75-80 per cent of domestic aluminium consumption. Current
capacity is 1.9 Million Tonnes.
Due to negative growth in Automobile industry and low demand of power cables and
equipment. This is supposed to continue in future.
Lack of raw material linkages including Coal. Captive mines will lead to lower production
costs and optimum capacity utilisation.
1.35 EXTENSION OF EXPORT SOPS COMES AS SWEETENER FOR SUGAR
INDUSTRY
The government announced a slew of measures for millers:
1) Hiked import duty on sugar from 10% to 40%.

25

2) Raised limit for ethanol blending in fuel from 5% to 10%. This would improve demand of
molasses, a significant byproduct in sugar production used to manufacture alcohol.
3) Infusion of liquidity for mill owners by interest free loans and other benefits.
Problems of Sugar industry:
1) Mismatch between prices of cane and sugar due to erroneous pricing policies by State
governments.
2) Shorter crushing season in the northern states
3) Competition from other cash crops such as cotton.
4) Fluctuation in Fructose content of cane due to Monsoon.
5) Hike in Labor prices
1.36 RBI FIXES TIMELINES FOR REGULATORY APPROVALS
Financial Sector Legislative Reforms Commission (FSLRC) had recommended:
1) Timebound disposal of Regulatory Approvals
2) Citizens' Charter
Both have been implemented by RBI
1.37 CENTRE TO SIMPLIFY LAWS FOR SINGLE WINDOW CLEARANCE
This would improve the investment climate and send a clear message to foreign investors
that they could freely invest in India.
there was an impression that India was one of the most over-regulated countries in the
world and one had to obtain20 or odd clearances for a project and this affected investment
climate. He said he had asked the Law Commission to examine whether so many clearances were
needed for approvals.
Government also asked the Law Commission to examine whether govt can have a process
of self-certification from the project proponents that every law had been followed, with a rider
that in the event of violation there will be serious punishment
1.38 MAKE POWER DISTRIBUTION REFORMS A TOP PRIORITY: WORLD
BANK
Power distribution in India needs sweeping reforms if it is to bring back the country to a high
growth trajectory and meet its goal of expanding access to electricity to all by 2019, the Bank report
released on Tuesday said.
Indias annual per capita power sector consumption is at around 800 units, which is among the
lowest levels in the world.The study has identified electricity distribution to the end consumer as the
weak link in the sector.
The report recommends freeing utilities and regulators from external interference, increasing
accountability and enhancing competition in the sector to move it to a higher level of service delivery.
Total accumulated losses in the sector stood at $25 billion in 2011. These losses are concentrated

26

among discoms and bundled utilities State Electricity Boards (SEBs) and the State Power
Departments, the report said.
Revitalising the power sector by improving the performance of distribution utilities, and ensuring
that players in the sector are subjected to financial discipline is the need of the hour.
1.39 BRT SYSTEM WILL SAVE 27,000 LIVES IN INDIA: WORLD BANK
If India built 1,000 kilometres of new, bus rapid transit lanes, over 20 years, that could save more
than 27,000 lives by reducing air pollution and accidents and create more than 128,000 jobs.
India could also reduce greenhouse gas emissions by about 42 million tons
According a report named Climate-Smart Development, $3-4 billion is needed to develop
1,000 km of BRT corridors in about 20 cities across India within 6-12 years.
The report that focuses on five economies Brazil, China, India, Mexico, US and EU shows
the potential economic, health and other gains from scaling up climate-smart policies as well as
projects already in place in developing countries like Brazil, India and Mexico.
The right policy choices can deliver significant benefits to lives, jobs, crops, energy , and GDP
as well as emissions reductions to combat climate change.
The report says recent work by the World Bank in India finds that the combined cost of outdoor
and indoor air pollution is more than $40 billion annually, or more than three per cent of
Indias 2009 GDP.
When other environmental degradation is factored in, including crop, water, pasture,
and forest damage, the total is closer to 5.7 per cent of Indias GDP affecting mostly the
poorest members of society, it added.
The Pimpri-Chinchwad BRT may serve as a model for replication across India.
Policies promoting clean development in transport and energy efficiency will lead to global
growth.We already know that we need to make smart policy choices to combat climate change.
What we didnt know is that these policies make economic sense, as well.
1.40 U.S. GOVT PANEL PUTS INDIA ON PIRACY WATCH LIST
India was named to an International Piracy Watch List by a U.S. government panel that is
looking to highlight countries that are doing little to address high rates of digital piracy. Being
put on this Congressional caucus list may have an impact on the out-of-cycle intellectual
property review that the Office of the U.S Trade Representative will conduct on India later
this year.
The watch list, which also highlights concerns in China, Russia and Switzerland, points out
that India continues to present a seriously flawed environment for the promotion of
copyright and intellectual property.
Among continuing issues in India are extremely high rates of cam-cording piracy, high levels of
unlicensed software use by enterprises, and a lack of effective notice-and-takedown
procedures for online piracy.
A new study recently pointed out that online piracy levels in India remained at 60 per cent,
with nearly $2.9 billion of unlicensed software being installed in 2013.
According to non-profit organisation BSA, India is second only to China (over $8.7 billion) in the
Asia Pacific region in terms of commercial value of unlicensed software sold in 2013.

27

1.41 MOVE TO BRING MORE DRUGS UNDER CONTROL DRAWS FLAK
The Drug Price Control Order (DPCO) 2013 controls the price of 348 medicines deemed
essential under the National List of Essential Medicines (NLEM).
Drugs under NLEM account for Rs.15,000 crore or a fifth of the total Indian market.
Industry wants that the government should first evaluate the impact of the earlier order on availability
and prices and see if the objectives were met. A compensatory mechanism must also be in place to ensure
that companies are not reluctant to invest or hike production.
1.42 SWEETENED PACKAGE
Government announced:
1. to increase the import duty on sugar to 40% from the current 15%
2. to continue with the subsidy of Rs 3,300 per tonne on sugar exports until September
3. go-ahead to 10% ethanol blending in petrol
4. additional interest-free loans of up to Rs 4,400 crore to sugarmills
Government would implement these measures only after sugar mills give it in writing that they would
pay their arrears to farmers, totalling as much as Rs 11,000 crore at present.

Sugar producers in country have two issue:
1. Low prices of sugar : this is due to excessive production of sugar in past years
2. Rising cost of sugarcane procurement : this is due to higher prices mandated by state government
without any linkage with sugar prices

The Rangarajan Committee came up with the ideal solution of revenue-sharing between farmers
and mills, and the ratio suggested by it is very fair to both parties. Yet, only some of the
sugarcane growing States, such as Maharashtra, Gujarat and Andhra Pradesh, have
implemented the recommendation from this year. Major States, such as Uttar Pradesh and
Tamil Nadu, have ignored the Rangarajan formula and continued with the practice of
announcing procurement prices unilaterally.

The move to double ethanol blending with petrol is intended, prima facie, to boost ethanol
demand and increase the income of the mills that produce it from molasses. However, it is
noteworthy that even the current five per cent ethanol blending target has not been
fully met in many parts of the country.

The measures, in fact, show a callous disregard for resource shortages. India is scarce in
land and water, and so biofuel based on field crops such as ethanol for fuel blending is
always going to be a bad idea. And giving incentives for the export of sugar ignores the fact that
it is, in effect, encouraging the export of water, given how water-intensive sugarcane is.

28

1.43 MANY CHALLENGES TO STABILITY
RBI's Financial Stability Report :
1. On the domestic front, the return to political stability has provided impetus to the outlook and the capital
markets reflect the expectations on policy measures to address the adverse growth-inflation dynamics and
saving-investment balance as also efficient implementation of policies and programmes.
2.Indias financial system remains stable, though the banking sector is facing some major challenges,
mainly relating to public sector banks (PSBs).
>> Although there has been some improvement in the asset quality of scheduled commercial banks (SCBs)
since September 2013, the level of gross non-performing advances as percentage of total gross advances
(GNPA ratio) of PSBs was significantly higher as compared to the other bank groups.
>> While the ownership pattern and recapitalisation of PSBs are contingent upon government policy and
the fiscal situation, there is a case for reviewing the governance structures of PSBs, with a greater emphasis
on market discipline.
3. Macro stress tests show that the system level capital to risk-weighted assets ratio (CRAR) of SCBs remains
well above the regulatory minimum even under adverse macroeconomic conditions.
4. The regulation of securities markets in India is in sync with international developments, although mutual
funds and other asset management activities in Indian markets do not carry risks similar to those
experienced in other jurisdictions.
5. The lending activity of insurance companies, though relatively small and within the prescribed exposure
limits applicable for insurance companies, may need to be streamlined and monitored under a prudential
framework comparable to that for banks to eliminate the possibility of regulatory arbitrage.
6. Revised norms for corporate governance as also warehouse and related processes are expected to
strengthen the functioning of the commodity derivatives market.
7. In the context of Indias pension sector, inadequate liability computation in case of several defined benefit
pension schemes can be a potential source of fiscal stress in years to come
1.44 TREAT GOLD DEPOSITS AS PART OF CRR/SLR:
BANKERS

State Bank of India (SBI) and Bank of Baroda feel a portion of the gold deposits held by banks
should be treated as part of the mandatory cash reserve ratio (CRR) or statutory liquidity ratio
(SLR).

29

1.45 PRICE STABILISATION FUND SCHEME MAY BE
MODIFIED
The Union Commerce Ministry is trying to modify the Price Stabilisation Fund Scheme so as to
lower the price threshold at which the fund gets activated. The Rs.500-crore Fund, which lapsed
in 2013, is being re-launched, according to a Union Commerce Ministry official.
Tea Board Chairman Siddharth said that the commodity fund was established in 2003 to help
industries engaged in producing four commodities - tea, coffee, tobacco and natural rubber.
The idea behind setting up the fund was to help the trade stay in business by extending them
support if there is a drop in their commodity prices the idea was to establish India as a reliable
supplier in the international markets.
As per current rules, prices of certain commodities have to drop 20 per cent in international
markets for the fund to kick in.
This was considered stringent, and the Commerce Ministry has never had to operate the fund.
Now a move is afoot to revive the fund and lower the threshold to 10 per cent.

2 SCIENCE AND TECH + ENVIRONMENT
2.1 VULTURE CONSERVATION IN GRAM SABHA AGENDA
To sensitise cattle owners in rural areas to the need for refraining from using diclofenac, a
banned drug for veterinary use, the Coimbatore district administration has included vulture
conservation in the agenda for the gram sabha meetings scheduled for June 1.
A study done by the Bombay Natural History Society (BNHS) from 1992 to 2007 showed that
the population of vultures declined by 96-99 per cent. The study also showed that
cattle/livestock subjected to treatment with two versions of the non-steroidal anti-inflammatory
drug among rural folks remained in the carcasses. When vultures consumed the carcasses,
process of their death begins owing to drug-induced kidney failure.
After repeated representations, Drug Controller General of the Government of India on May 11,
2006 banned diclofenac for veterinary use.
Further to save the vulture from becoming extinct, Action Plan for Vulture Conservation
in India and Regional Declaration on Conservation of South Asias Critically
Endangered Vulture species was prepared by the Ministry of Environment and Forest with
technical inputs from Saving Asias Vulture from Extinction (SAVE). The ban has helped
a bit as vultures are reappearing in The Nilgiris and Sathyamangalam forests.
While farmers are not aware of the ban, the clandestine sale of the same by drug stores
continues. Now, the gram sabha meeting will sensitise the farmers, livestock owners to the
issue and save the vulture from going extinct. This is aimed at bringing an end to the demand for
diclofenac for veterinary use so that the supply stops, Mr. Bharathidasan notes.

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2.2 UNMONITORED CFL DISPOSAL UPS ENVIRONMENTAL HAZARDS
A large number of consumers have switched to using Compact Fluorescent Lamps (CFLs) to
save electricity but in the absence of any monitoring system and with most of the disposal chain
being in the informal sector, there is an increased risk of the hazardous mercury from CFLs
escaping into the environment, a study on CFL use and disposal has claimed.
Gyaan:
Mercury exists in various forms:
elemental (or metallic) and
inorganic (to which people may be exposed through their occupation);
Organic (e.g., methylmercury, to which people may be exposed through their diet).

These forms of mercury differ in their degree of toxicity and in their effects on the nervous, digestive
and immune systems, and on lungs, kidneys, skin and eyes.

Mercury occurs naturally in the earth's crust. It is released into the environment from volcanic
activity, weathering of rocks and as a result of human activity. Human activity is the main cause of
mercury releases, particularly coal-fired power stations, residential coal burning for heating and
cooking, industrial processes, waste incinerators and as a result of mining for mercury, gold and
other metals.
Once in the environment, mercury can be transformed by bacteria into
methylmercury. Methylmercury then bioaccumulates(bioaccumulation occurs when an
organism contains higher concentrations of the substance than do the surroundings) in fish and
shellfish. Methylmercury also biomagnifies. For example, large predatory fish are more likely to
have high levels of mercury as a result of eating many smaller fish that have acquired mercury
through ingestion of plankton.
People may be exposed to mercury in any of its forms under different circumstances. However,
exposure mainly occurs through consumption of fish and shellfish contaminated with
methylmercury and through worker inhalation of elemental mercury vapours during industrial
processes. Cooking does not eliminate mercury.
Factors that determine whether health effects occur and their severity include:
the type of mercury concerned;
the dose;
the age or developmental stage of the person exposed (the foetus is most susceptible);
the duration of exposure;
the route of exposure (inhalation, ingestion or dermal contact).

Generally, two groups are more sensitive to the effects of mercury. Fetuses are most susceptible to
developmental effects due to mercury. Methylmercury exposure in the womb can result from a

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mother's consumption of fish and shellfish. It can adversely affect a baby's growing brain and
nervous system. The primary health effect of methylmercury is impaired neurological development.
Therefore, cognitive thinking, memory, attention, language, and fine motor and visual spatial skills
may be affected in children who were exposed to methylmercury as foetuses.
The second group is people who are regularly exposed (chronic exposure) to high levels of mercury
(such as populations that rely on subsistence fishing or people who are occupationally exposed).
A significant example of mercury exposure affecting public health occurred in Minamata, Japan,
between 1932 and 1968, where a factory producing acetic acid discharged waste liquid into
Minamata Bay. The discharge included high concentrations of methylmercury. The bay was rich in
fish and shellfish, providing the main livelihood for local residents and fishermen from other areas.
For many years, no one realised that the fish were contaminated with mercury, and that it was
causing a strange disease in the local community and in other districts. At least 50 000 people were
affected to some extent and more than 2000 cases of Minamata disease were certified. Minamata
disease peaked in the 1950s, with severe cases suffering brain damage, paralysis, incoherent speech
and delirium.
Health effects of mercury exposure
Elemental and methylmercury are toxic to the central and peripheral nervous systems.
The inhalation of mercury vapour can produce harmful effects on the nervous, digestive and immune
systems, lungs and kidneys, and may be fatal. The inorganic salts of mercury are corrosive to
the skin, eyes and gastrointestinal tract, and may induce kidney toxicity if ingested.
Neurological and behavioural disorders may be observed after inhalation, ingestion or dermal
exposure of different mercury compounds. Symptoms include tremors, insomnia, memory loss,
neuromuscular effects, headaches and cognitive and motor dysfunction. Mild, subclinical signs of
central nervous system toxicity can be seen in workers exposed to an elemental mercury level in the
air of 20 g/m3 or more for several years. Kidney effects have been reported, ranging from increased
protein in the urine to kidney failure.
2.3 NOW, A SYSTEM TO EXTRACT WATER FROM MANURE
A technology for extracting drinkable water from manure is on its way to commercial
application this year, a U.S. university said on Thursday.
The technology is particularly useful for animal operations in dry regions where water is at a
premium, according to Michigan State University.
The McLanahan Nutrient Separation System is an add-on to an anaerobic digester, which
extracts energy and chemicals from manure. The system adds ultrafiltration, air stripping and a
reverse osmosis system to produce water thats clean enough for cattle to drink.
Gyaan :
Anaerobic Digestion

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Anaerobic digestion is a biological process that produces a gas principally composed of
methane (CH4) and carbon dioxide (CO2) otherwise known as biogas. These gases are
produced from organic wastes such as livestock manure, food processing waste, etc.
Anaerobic processes could either occur naturally or in a controlled environment such as a biogas
plant. Organic waste such as livestock manure and various types of bacteria are put in an airtight
container called digester so the process could occur.
The process of anaerobic digestion consists of three steps:
1. The first step is the decomposition (hydrolysis) of plant or animal matter. This step
breaks down the organic material to usable-sized molecules such as sugar.
2. The second step is the conversion of decomposed matter to organic acids.
3. Finally, the acids are converted to methane gas.

Process temperature affects the rate of digestion and should be maintained in the mesophillic range
(95 to 105 degrees Fahrenheit) with an optimum of 100 degrees F. It is possible to operate in the
thermophillic range (135 to 145 degrees F), but the digestion process is subject to upset if not closely
monitored.
Ultrafiltration
Ultrafiltration (UF) is a variety of membrane filtration in which forces like pressure or
concentration gradients leads to a separation through a semipermeable membrane. Suspended
solids and solutes of high molecular weight are retained in the so-called retentate, while water and
low molecular weight solutes pass through the membrane in the permeate. This separation process is
used in industry and research for purifying and concentrating macromolecular (103 - 106 Da)
solutions, especially protein solutions. Ultrafiltration is not fundamentally different from
microfiltration, nanofiltration or membrane gas separation, except in terms of the size of the
molecules it retains - it is defined by the Molecular Weight Cut Off (MWCO) of the
membrane used.
Air Stripping
Air stripping is the transferring of volatile components of a liquid into an air stream. It is
a chemical engineering technology used for the purification of groundwaters and
wastewaters containing volatile compounds.
Volatile compounds have relatively high vapor pressure and low aqueous solubility characterized by
the compounds dimensionless Henry's law coefficient, which is the ratio of the concentration in air
that is in equilibrium with its concentration in water. Pollutants with relatively high Henrys Law
coefficients can be economically stripped from water. These include BTEX compounds (benzene,
toluene, ethylbenzene, and xylene found in gasoline, and solvents including trichloroethylene and
tetrachloroethylene. Ammonia can also be stripped from wastewaters (often requiring pH
adjustment prior to stripping). Since Henrys law coefficient increases with temperature, stripping is
easier at warmer temperatures.

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2.4 SPACEX UNVEILS CAPSULE TO FERRY ASTRONAUTS
A sleek, white gumdrop-shaped space capsule that aims to carry up to seven astronauts to the
International Space Station and return to land anywhere on Earth was unveiled Thursday by
SpaceX.
The Dragon V2, short for version two, is the first attempt by a private company to restore
Americans ability to send people to the orbiting space station in the wake of the space shuttle
program's retirement in 2011.
2.5 NOW, EAGLES FALL PREY TO DICLOFENAC
After pushing vultures to the verge of extinction in the country, the veterinary painkiller and
anti-inflammatory drug, Diclofenac, is turning out to be a serious threat to eagles as well.
A research paper published in Bird Conservation International , a Cambridge University
journal, says other raptor species such as hawks, kites and harriers that feed on carcasses of
animals, will possibly fall prey to the drug too.
Gyaan:
Bird of Prey
Birds of prey, also known as raptors, hunt and feed on other animals.
Taken literally, the term "bird of prey" has a wide meaning that includes many birds that hunt and
feed on animals and also birds that eat very small insects. In ornithology, the definition for "bird of
prey" has a narrower meaning:
birds that have very good eyesight for finding food,
strong feet for holding food, and
a strong curved beak for tearing flesh.
Birds of prey are divided into two main groups, the diurnal (day flying) birds of prey and
the nocturnal (night flying) birds of prey, better known as the owls.


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2.6 MELTING GLACIERS, MORE RAIN TO SWELL HIMALAYAN RIVERS

2.7 SOLAR PLANE COMPLETES FIRST TEST FLIGHT
The sun-powered airplane Solar Impulse 2 successfully completed its first flight in
Switzerland, one year before its first solar-powered circumnavigation of the earth.

The project does not aim to replace normal passenger planes with solar-powered ones, but to
prove that mankind could use much less energy with existing technologies.
2.8 SUPERNOVA RECREATED IN LAB
Scientists have used laser beams 60,000 billion times more powerful than a laser pointer to
recreate scaled supernova explosions in the laboratory to investigate one of the most energetic
events in the universe.

Supernova explosions are triggered when the fuel within a star reignites or its core
collapses. They launch shock waves that sweep through a few light years of space.

The Cassiopeia A supernova explosion was first spotted about 300 years ago in the Cassiopeia
constellation 11,000 light years away, its light having taken that long to reach us.
2.9 ARTIFICIAL LAKES CAUSE ALARM IN HIMACHALS DOWNSTREAM
AREAS

The Lahaul-Spiti local administration on Tuesday sounded a high-alert to residents of the areas
downstream from the two big artificial lakes in the mountains of the tribal districts Billing
Nallah. Frequent landslides due to untimely snowfall have resulted in a blockade in the rivulet at
Billing, about 400 km from the capital town.


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While similar landslides had occurred in 1993 and 2001, the river discharge had soon become
normalised and there was no loss to life and property, but the sudden formation of a huge
waterbody could not be taken lightly at any time, he added. The snow is expected to melt in the
coming days, burst the lake and lead to water discharge downhill

These lakes are also called Debris Dams, Landslide dams.

2.10 SPERM-INSPIRED ROBOTS
Scientists, including one of Indian origin, have developed sperm-inspired robots controlled by
oscillating weak magnetic fields.

This may be useful for drug delivery, IVF and other applications at the microscopic level.

The 322 micron-long robots consist solely of a head coated in a thick cobalt-nickel layer and an
uncoated tail.
Mechanism:
When the robot is subjected to an oscillating field of less than five millitesla it experiences a
magnetic torque on its head, which causes its flagellum to oscillate and propel it forward. The
researchers are then able to steer the robot by directing the magnetic field lines towards a
reference point.
2.11 GOOGLE FUNDS TECHNOLOGY TO BRING ENTIRE PLANET ONLINE
Google is planning to launch 180 satellites to provide web access to nearly 4.8 billion people
(two-thirds of the worlds population) who are not yet online.
The small yet high-capacity satellites will orbit the earth at lower altitudes than traditional
satellites.

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Project Loon, a separate project by Google, is designing high-altitude balloons to provide
broadband service to remote parts of the world.
2.12 WHY IS IT NOT POSSIBLE FOR MOSQUITOES TO SPREAD AIDS?
HIV does not survive outside the body for very long, and it does not replicate in insects.
Mosquitoes transmit malaria and other infections when they inject saliva into the victim.
Unlike a syringe, the mosquito delivers salivary fluid through one passage and draws blood up
another. As a result, the food canal is not flushed out like a used needle, and blood flow is always
unidirectional.
2.13 CONFIRMATION OF HIGGS BOSONS PRESENCE
Researchers at CERN have found the first evidence for the direct decay of the Higgs boson into
fermions a strong indication that the particle discovered in 2012 is the Higgs boson.

This is an enormous breakthrough which let know that particles like electrons get their mass by
coupling to the Higgs field, which is really exciting,

In July 2012 researchers from the ATLAS and Compact Muon Solenoid (CMS) experiments at
the European Organisation for Nuclear Research (CERN), said they had observed a new particle
in the mass region of 125 to 126 gigaelectronvolts (GeV).

To determine whether the particles could decay into fermions, the researchers fired protons at
each other in a 6-metre-diameter solenoid and used specialised detectors to determine which
particles were produced in the resulting collisions.

GYAAN

HIGGS BOSON= The Higgs boson (or Higgs particle) is a particle that gives mass to other
particles. Bosons are particlesresponsible for all physical forces except gravity. Other
bosons are the photon, the W and Z bosons, and the gluon. It is very difficult to detect the Higgs
boson with the equipment and technology we have now. These particles are believed to exist for
less than a septillionth of a second. Because the Higgs boson has so much mass (compared to
other particles), it takes a lot of energy to create one.

The Large Hadron Collider at CERN is the equipment scientists used to find it

Higgs bosons obey the conservation of energy law, which states that no energy is created
or destroyed, but instead it is transferred

IMPORTANCE

The Higgs boson is the last missing piece of our current understanding of the most fundamental
nature of the universe,Essentially because it proves that our understanding of the basic
workings of the universe is correct. If the Higgs boson didnt exist, the Standard Model would be
proved incorrect. Its importance led to the God Particle nickname


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STANDARD MODEL OF PARTICLE PHYSICS= The model explains the way 17 subatomic
particles are bound together to create atoms and then matter by three the four fundamental
forces of nature: the strong nuclear force, the weak nuclear force and
electromagnetism. It excludes the fourth force: gravity.

The particles fit into two categories: bosons, which transmit forces, and fermions, which
make up matter.
2.14 HIMACHAL PARK IS NOW A WORLD HERITAGE SITE
The Great Himalayan National Park (GHNP) in Kullu district of Himachal Pradesh was
accorded the Unesco World Heritage Site status on Monday.

The Unesco World Heritage Site Committee at Doha in Qatar granted the status to the park
under the criteria of exceptional natural beauty and conservation of biological
diversity.

The GHNP has now come in the league of Indian World Heritage Sites (WHS) such as the Taj
Mahal, Ellora, Kaziranga National Park, Keoladeo National Park, Manas National Park,
Nandadevi Biosphere Reserve and the Sunderbans.

This would help in boosting ecotourism in the hill State

The GHNP was declared a National Park under the Wildlife (Protection Act), 1972, by the
Himachal Pradesh government in 1999. A total of 832 plant species, representing 128 families
and 427 genera, which cover 26 per cent of the total flora of Himachal Pradesh, have been
recorded in the GHNP.

It supports self-sustaining populations of near-threatened, vulnerable and endangered species
like leopard, Himalayan Black Bear, Royles Vole, Himalayan tahr, Himalayan serow, Himalayan
goral, Himalayan musk deer, western tragopan and cheer pheasant.

The endangered snow leopard and the critically endangered Red-headed vulture are
also present.

the park has been inscribed under category 10 of the World Heritage Convention

GYAAN = Ecotourism is a form of tourism involving visiting fragile, pristine, and relatively
undisturbed natural areas

Its purpose may be to educate the traveler, to provide funds for ecological conservation, to
directly benefit the economic development and political empowerment of local communities, or
to foster respect for different cultures
2.15 300 NEW SPECIES FOUND IN GREATER MEKONG
Some facts:


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1. A series of high-flying creatures, including giant flying frogs and squirrels
and a parachute gecko, are among the hundreds of exotic new species recently
discovered in the greater Mekong region in south-east Asia.
2. A new eyeless spider and a fish that mates head-to-head are also
highlighted in a report from World Wildlife Fund on the extraordinary biodiversity in the
forests surrounding the Mekong river, which runs through Cambodia, Laos, Myanmar,
Thailand, Vietnam and China, and is also home to about 325 million people.
High extinction rates:

1. Human activities such as the destruction of habitats, hunting and the
pollution of land and water have driven extinction rates to 1000 times faster than
the natural rate.
2. Among the 21 new amphibian species discovered is Helens flying frog,
discovered less than 62 miles from Ho Chi Minh City in Vietnam. The huge green frog
managed to evade biologists until recently by using its large, webbed hands and feet to
glide between treetops and only coming down to breed in rain pools. It was found in a
patch of forest surrounded by farmland, highlighting the urgent need for conservation.
3. Also discovered in Vietnam was a tiny new fish with a very complex anatomy
which includes having its sex organs just behind its mouth. As a result, it mates head-to-
head.
2.16 NEW EDIBLE FILMS TO PRESERVE BREAD LONGER
New edible films containing oils from clove and oregano can preserve bread longer than
commercial additives. The search for new ways to keep packaged food from spoiling has
led some scientists to essential oils, which can keep bacteria and mould at bay.

Essential oils have boomed in popularity as more people seek out alternatives to replace
their synthetic cleaning products, anti-mosquito sprays and medicines. Now scientists
are tapping them as candidates to preserve food in a more consumer-friendly way.

Bread is a common staple around the world and is often kept fresh with calcium
propionate. Though naturally occurring, some research suggesting negative side effects
have tarnished its popularity.

Essential Oils:
Essential oils are natural aromatic compounds found in the seeds, bark, stems, roots,
flowers, and other parts of plants. An oil is "essential" in the sense that it carries
a distinctive scent, or essence, of the plant. Essential oils do not form a distinctive
category for any medical, pharmacological, or culinary purpose and they are not
essential for health.
2.17 KUDANKULAM UNIT 1 AT FULL TILT
The first unit at the Kudankulam Nuclear Power Project (KKNPP) reached its full power generation
capacity of 1,000 MWe at 1.20 p.m. on Saturday

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The 21st nuclear power reactor in the country has become the single-largest power
generating unit in the country.
The KKNPP consists of two Russian LW reactors, each with a capacity of 1,000 MWe, using enriched
uranium as fuel, and light water as coolant and moderator. Russia has agreed to supply enriched
uranium fuel for both the reactors for their life time.
The second unit is expected to reach criticality by the end of this year.
Gyaan:
What is Criticality in a Nuclear Power Plant?
Criticality means that a reactor is controlling a sustained fission chain reaction where each fission
event releases a sufficient number of neutrons to maintain an ongoing series of reactions.
In the balanced state of criticality, fuel rods inside a nuclear reactor are producing and losing a
constant number of neutrons, and the nuclear energy system is stable.
At start-up, the reactor is briefly put into a state that produces more neutrons than are lost. This
condition is called supercritical state, which allows the neutron population to increase and more
power to be produced. When the desired power production is reached, adjustments are made to
place the reactor into critical state that sustains neutron balance and power production. At times,
such as for maintenance shutdown or refuelling, reactors are placed in a subcritical state so that
neutron and power production decrease.
2.18 NASA BEAMS VIDEO FROM SPACE VIA LASER
NASA on Friday said it had successfully beamed a high-definition video from the International Space
Station to Earth using a new laser communications instrument, a technology demonstration
that could help fundamentally change the communication process in future deep-space missions.
The transmission of the 175-megabit video titled Hello, World took only 3.5 seconds, which
corresponds to a data transmission rate of 50 megabits per second and would have taken more than
10 minutes using traditional downlink methods.
NASA said the technology demonstration Optical Payload for Lasercomm Science
(OPALS) which focussed laser energy reached data rates between 10 and 1,000 times higher than
current space communications, which rely on radio waves.
Because the space station orbits Earth at 17,500 miles per hour, transmitting data from the space
station to Earth requires extremely precise targeting, the agency said in a statement. The process
can be equated to a person aiming a laser pointer at the end of a human hair 30 feet away and
keeping it there while walking.
2.19 STANDING TALL IN A CONCRETE JUNGLE
Article talks about the issue of falling of trees in the name of beautification of urban areas. Case
considered here is of Delhi where on May 30 a thunderstorm occurred causing wide spread
damage which could have been less severe if the trees would not have been fell or their roots
concretised.

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Understanding the issue:
In several parts of the city, trees have been concretised up to the roots, in a frantic bid to grab
land for parking or as a way to justify expensive urbanisation budgets.
With concretisation and built-up areas, water is not being allowed to seep into the earth. It
follows that the roots of such trees (classified as trees outside forests by the Forest Survey of
India) have been found to be starved of water. A study of trees in Delhis (rather quiet) NDMC
area found that the trees there are stressed by water scarcity and noise pollution. Areas with
more concretisation and noise would have trees in a much worse condition.
In 2007, the Delhi High Court : concretisation around trees on pavements in urban areas was
unnecessary and excessive, and ordered the removal of tiles around trees in Delhis sidewalks.
When the order was not followed, last year, the National Green Tribunal issued notices to
municipal authorities to abide by the High Court order. Tragically, municipal agencies have
hacked away at both the concrete and the intertwined tree roots with such carelessness that
trees are falling now because of these exercises.
Solutions:
1. better pavements that would help sequester high water tables and feed the needs of a large
tree. Pavement tiles with perforations and intermittent mud patches have been laid for this
reason in places like the stunningly green Delhi University and should be replicated in other
localities and campuses. These pavements allow water to seep into the earth rather than
evaporate; they also nurture small patches of urban biodiversity.
2. A sensitive (not hacking or slashing) removal of concrete around the base of trees is needed
across our cities, and horticulturalists need to attend to the needs of grown trees, not just
growing saplings.
2.20 GENETICALLY MODIFIED MOSQUITOES A QUANTUM LEAP IN
TACKLING MALARIA
Malaria kills more than 1 million people each year most of whom are African children.
The new technique by a team at Imperial College London involves injecting mosquitoes with a
gene that causes the vast majority of their offspring to be male, leading to an eventual dramatic
decline in population within six generations as females disappear.
Males dont bite humans [and transmit malaria]
2.21 GRAVITATIONAL WAVES: A BIG BUNGLE?
An announcement made earlier this year prior to publication, which was purported to be the
cosmology worlds finding of the year, may well prove to be flawed, as viewed by two
independent analyses.
This was the discovery of gravitational waves by a Harvard University group led by John Kovac,
seen as an evidence for thetheory of cosmic inflation (which is the concept that the cosmos
ballooned in size during the first few instants after the big bang).

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The Harvard group, working at BICEP2 (Background Imaging of Cosmic Extragalactic
Polarisation) telescope, had reported that they had observed a twist in the polarisation of
ancient light that goes back to the time of the big bang. This twist was seen as the evidence
for gravitational waves (ripples in the fabric of space-time generated in the early universe,
close to the big bang) which were predicted by Einstein.
On the other hand, the study led by David Spergel argues that this effect of twisting the
polarisation of the light could be produced by dust which is present both within the Milky Way
and outside it. Their contention is that ultrafine dust can absorb starlight and re-emit it as
infrared or radio waves and because of their uneven shape, could end up twisting the light.
The other study, points out another point of debate. In small spatial scales, gravitational
lensing, a process by which light curves around massive objects in space, can have the same
effect of twisting the polarisation of light.
2.22 E-WASTE LOOMS LARGE OVER INDIA
In just over a decade, India will have on its hands a whopping 130 million obsolete desktop
computers and 900 million laptops to dispose of, a new research paper estimates.
Besides the sheer volume of non-biodegradable material this entails, e-waste involves distinctly
hazardous substances such ascadmium, mercury, lead, arsenic and a blend of
plastics that are difficult to remove from the environment.
A yawning gap exists already between the ewaste generated in India and its capacity to deal with
it.
They propose that a recycling capacity for 1030 million obsolete PCs be planned by 2025.
2.23 COLOUR PERCEPTION
Why does the perceived colour of a tree-covered mountain change from green to
indigo to violet as the distance of the observer from the mountain successively
increases?
Sunlight consists of all visible wavelengths from violet to red. Earths atmosphere consists of gas
molecules (78 per cent Nitrogen, 21 per cent Oxygen, 1 per cent Argon and traces of water
vapour, hydrogen etc.) dust particles, smoke, water droplets etc.
The size of the gas molecules is very small (1000 times approximately) when
compared to the wavelength of the visible light and hence the scattering of sunlight
by these gas molecules is wavelength dependent. So,short wavelength radiations
like violet and blue are scattered more (Rayleigh scattering).
When an observer sees a mountain under sunlight, he not only sees the light coming from the
mountain (trees and plants) but also the sunlight scattered by the gas molecules of atmosphere
(more correctly, troposphere) present between him and the mountain.
When he looks close to mountain, light from the mountain is more than the light scattered from
the atmosphere. Hence, it appears green. However, when he looks at the same mountain at
larger distances, length of the atmosphere is increased and also the intensity of light coming
from the mountain is reduced.

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As a result, light scattered by the gas molecules present in the atmosphere is more than the light
from the mountain. So, it appears blue at long distances. Generally, blue colour appears
predominantly over violet as it is more sensitive to human eyes.
One may ask what happens to the scattering of sunlight by dust, smoke particles present in
atmosphere. The size of these particles is comparable or larger than the wavelength of the visible
light. Scattering of sunlight by these particles has negligible wavelength dependence (i.e. all
colours are scattered uniformly and hence appears white). However, this white light intensity is
very small compared to blue light scattered by the gas molecules.
2.24 SCIENTISTS WARN OF TOURISM THREAT TO ANTARCTICA
Antarctic scientists warned on Wednesday that a surge in tourists visiting the frozen continent
was threatening its fragile environment and called for better protection.
Most of Antarctica is covered in ice, with less than one per cent permanently ice-free. Only 1.5
per cent of the ice-free area belongs to Antarctic Specially Protected Areas under the Antarctic
Treaty System, yet ice-free land is where the majority of biodiversity occurs.
2.25 TARGETING A CHINK IN TB BACTERIAS ARMOUR
A novel approach adopted by a team of researchers based in Bangalore has opened a window of
opportunities to design new antimicrobials that could potentially be used to kill the
tuberculosis-causing bacteria.
The team has targeted a class of proteins called HU, which is a histone-like protein that binds to
DNA and compacts it. (The DNA is a long thread and has to be compacted and condensed into a
ball-like structure.) By binding and compacting the DNA, the HU protein is able to regulate the
DNA expression.
Considering the predominant role played by the gene encoding for HU protein, knocking the
gene would in effect kill the TB causing bacterium Mycobacterium tuberculosis .
2.26 UN ALARMED OVER DUMPING IN GREAT BARRIER REEF
The UN has expressed alarm at Australias proposal to dump 3m cubic metres of dredged
material into the Great Barrier Reef world heritage site, saying the development could place the
site on UNESCOs list of shame.
The Australian and Queensland governments have granted approval for dumping as part of the
expansion of the Abbot Point coal port, which lies on the fringes of the reef.
Conservation groups have said the dumping could irreparably damage the coral. The reef
survives on a delicate symbiosis between its plants and animals. Corals provide the skeleton on
which the entire ecosystem is built. These interactions are already significantly threatened by
the runoff of agricultural chemicals and destruction of increasingly fragile corals by cyclones. In
three decades the coral cover on the reef has fallen by 50 per cent.
Gyaan:

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The List of World Heritage in Danger is designed to inform the international community of
conditions which threaten the very characteristics for which a property was inscribed on the World
Heritage List, and to encourage corrective action.
No sites from India are listed in it.
2.27 SLAUGHTER OF WHALE SHARKS ON THE RISE
The whale shark is the biggest fish (largest living non-mammalian vertebrate) in the world. Blue
whale is a mammal.
It is protected as Schedule-I species on a par with tiger under the Indian Wildlife (Protection)
Act, 1972. IUCN statusvulnerable.
It is a target fishery in many parts of the world but not in the Godavari Region. It gets tangled into
the nets accidentally. The fishermen are sure that they will any way lose their nets in the event of the
mammoth caught in them. That is why they are resorting to kill it. Most of them are unaware of the
provisions put in place by the government for protecting sharks.
In Gujarat fishermen are rewarded with a cash prize of Rs. 25,000 if they release the giant fish from
the net whenever caught in the net.
2.28 PEST SPRAYS POISONING WORLD FOOD SUPPLIES
The worlds most widely used insecticides have contaminated the environment across the planet
so pervasively that global food production is at risk, according to a comprehensive scientific
assessment of the chemicals impacts.
The new assessment analysed the risks associated with neonicotinoids, a class of insecticides on
which farmers spend $2.6bn (1.53bn) a year. Neonicotinoids are applied routinely rather than
in response to pest attacks but the scientists highlight the striking lack of evidence that this
leads to increased crop yields.
The chemicals imperilled food supplies by harming bees and other pollinators, which fertilise
about three-quarters of the worlds crops, and the organisms that create the healthy soils which
the worlds food requires in order to grow.
2.29 GOVERNMENT TO ROLL OUT NATIONAL EMF PORTAL
Keen to address the concerns arising out of fears over electromagnetic frequency (EMF) exposure
due to installation of base stations receivers (mobile phone towers), the government has decided to
launch a National EMF portal, which will provide all the relevant data in this regard
along with the location of BTS within a certain locality.
An EMF portal aims at providing the reader with information about EMF and its effects on humans,
backed by scientific studies. A similar platform is already available in Europe.
It is now being feared that shortage of towers may hinder Indias overall progress. Mobile phone
service providers have been facing problems regarding locating their towers, atop of which the
receivers are perched. There is increased hesitancy on getting leases for the towers or renewing them.

44

2.30 TOP COMPANIES FLOUT E-WASTE RULES, SAYS STUDY

Reputed electronic and electrical equipment companies in the country are doing little to safeguard
the environment against the irresponsible dumping of e-waste. Under the E-waste (Management and
Handling) Rules, 2011 the two most important stakeholders are producers and the regulatory
agencies. The report noted that:
Most companies, including leading mobile phone companies have not set up any The take-
back mechanism, which is a system to collect e-waste from the consumers. Those that have such
systems have less than 100 collection points across the nation.
Most top companies have a global policy on waste management and demonstrate responsible
behaviour by setting up efficient systems in most parts of the world. In India, however, the same
companies follow a totally different yardstick, which leaves much to be desired
the findings that revealed negligence on part of the State Pollution Control Boards (SPCBs)
on most of the tasks assigned to them by the e-waste rules. No action has also been initiated against
any of the defaulting companies by the regulatory agency.
The volume of e-waste is growing at an alarming rate. Current estimate shows that 2.7 million tonnes
of e-waste are generated annually in India. The apprehension arising is not of volume alone, but also
of the nature of toxicity associated. E-waste contains a variety of toxic chemicals, metals
and materials such as mercury, lead and brominated flame retardants, known to cause
major health and environmental damage.

2.31 AN EVENTFUL YEAR ON MARS
On June 24, the National Aeronautics and Space Administrations Mars rover, Curiosity, which
soft-landed on the floor of the Gale Crater on a never-before-used contraption called sky crane,
successfully completed one Martian year 687 Earth days.

45

Its primary objective providing much sought after information on whether past
environmental conditions there were favourable for microbial life. The most important
parameter that can prove that such a condition existed, is the presence of liquid water at some
point in the planets history.
Some of the work done in this direction:
detection of well-rounded pebbles in the rock layers on a dry river bed. Sharp-edged
stones can become well-rounded only when transported over a long distance and above a
particular speed by surface running water.
deposition of alternate layers of pebbles aligned at a particular angle is strongly
suggestive of a paleoriver.
The presence of clay minerals inside a drilled rock suggests that water was present for
extended periods of time.
The detection of mineral orthoclase, abundantly seen in Earths crust but never before
detected on Mars, in the Windjana sandstone sample is yet another surprise find.
Despite the presence of liquid water, the lack of atmospheric methane greatly reduces the possibility
of any extant or extinct microbial life on Mars.

The biggest question now is whether Curiosity can reconfirm on the ground the latest find of
glacial, periglacial and fluvial (including glacio-fluvial) activity within the Gale Crater some
3,500 million years ago. The potential evidence of paleoglaciers was gathered by cameras on
board NASAs Mars Reconnaissance Orbiter and the European Space Agencys Mars Express.
2.32 RUSSIAN ARCTIC, A NEW PROMISED LAND FOR OIL GIANTS
The Arctic is one of the worlds largest remaining regions of undiscovered conventional oil and
natural gas resources.
More than 20 per cent of the worlds hydrocarbon reserves yet to be discovered are situated in
the Arctic, according to a 2008 report by government agency the U.S. Geological Survey (USGS).
Arctic is not unfamiliar territory for the oil industry large fields have been explored and
exploited for decade.
To unlock the full potential of the Arctic and also to make Arctic projects commercially viable
and globally competitive, we need new technology and innovative business models.
Global warming has in recent times caused the Arctic ice cap to melt and open new navigation
routes leading to previously inaccessible raw materials.
Non-governmental organisations such as Greenpeace claim that Arctic oil and gas exploration
not only harms a fragile ecosystem home to endangered species such as polar bears and
cetaceans but also accelerates climate change.


46

3 AGRICULTURE
3.1 PM CALLS FOR A TRICOLOUR REVOLUTION

Mr. Modi fleshed out his campaign theme of what he calls a tricolour revolution, referring to a second
green revolution focusing on growing protein-rich pulses, of a white revolution focusing on the care of
cattle and livestock, a saffron energy revolution looking at solar energy, and a blue revolution on clean
water, and the welfare of fishermen. Blue is the colour of the Ashok Chakra.
4 DISASTER
4.1 A YEAR LATER, NO LESSONS LEARNT
Article talks about the conditions at Uttrakhand one year after the tragedy that occurred at
Kedarnath.
locals continue to remain the governments second priority. Rehabilitation of villagers is
still incomplete. Locals continue to make trips to their tehsildars, patwaris, sub-divisional
magistrates, and district magistrates for pending compensation issues, to appeal for the
construction of safety walls and for the rebuilding of roads and bridges.
blocked roads have been opened, some have been black-topped, some reconstructed.
Broken bridges have been replaced with makeshift ones. Roads have been reconstructed, but by
boring deeper into the mountains, already subject to constant erosion by the river flowing beside
them.
A biometric registration system has been introduced this year to keep track of the
pilgrims, and the State Disaster Response Force has been deployed on the yatra routes.
However, the meteorological equipment has not been upgraded since last year. Talks of
establishing an early warning system began only recently.
What is perhaps lacking in Uttarakhand is an effective disaster management system. A
combined effort needs to take place between the State Disaster Management department,
the State Disaster Management Authority, the meteorological department, and other
departments. If every agency continues to work towards disaster management in isolation, the
death toll will only increase.

47

Last year on August 13, the Supreme Court issued an order in which it directed the Union
Ministry of Environment and Forests (MoEF) to constitute an expert body to assess whether
the existing and ongoing/under-construction hydroelectric power projects have contributed to
the environmental degradation and, if so, to what extent. It also directed the MoEF and the
State government to not grant any further environmental clearance or forest clearance for any
hydroelectric power project in the State of Uttarakhand, until further orders.
The expert body, in its Chopra Committee Report, elucidated the adverse role played by the
projects in worsening the disaster.
A Himalayan policy drafted by Shekhar Pathak, a historian from Uttarakhand, and Hemant
Dhyani of Ganga Ahvaan, a movement for the conservation of the Ganga and the Himalayas,
states that after witnessing calamities in the Uttarakhand region for almost four decades, it was
clear that all these calamities failed in fully sensitising the system, administrators, and policy
makers.
The draft of the policy, which is a part of the Chopra Committee Report submitted to the
Supreme Court, suggests
establishing micro hydel projects, solar projects,
stopping illegal mining,
strengthening Van Panchayats, and
demarcating cultural eco-sensitive zones for the conservation of biodiversity, among
other recommendations.
4.2 THE TASKS IN UTTARAKHAND
Dams, barrages and tunnels had impacted the course of rivers. Scores of them are in place in
Uttarakhand alone. Some of them come with dams, but a majority are run-of-the-river projects
requiring tunnelling through mountains. Debris from some of the displaced structures caused
havoc downstream. However, it is equally true that the devastation would have been even more
widespread had the Tehri reservoir failed to contain a significant volume of the deluge. So, the
critical issue may not be dams per se, but overall hydel management.
Another lesson that remains to be learnt relates to the role of deforestation in making the
region vulnerable to landslips and erosion. The absence of vegetation in the higher reaches aids
landslips.

The task of reconstruction is nowhere near completion. Post-disaster, the State government set
up a Rehabilitation and Reconstruction Authority to look into planning and development of the
region. But in a holistic sense, precious little has been done to address the larger issues.

What needs to be done?
A full-fledged Ministry as part of the Union government needs to be created to chart out
and implement in tandem with the State government an action plan to set priorities for the

48

region and preserve its ecology, while striking the right balance between its development needs
and the vulnerability factors.
A suitable mechanism, bringing together scientific expertise, dispassionate efficiency
and administrative acumen, should be put in place to ensure proper and transparent utilisation
under diligent oversight of the aid package that was made available.
4.3 A TRAGIC CONFLAGRATION
Issue: fire in a leaking natural gas pipeline in East Godavari district of Andhra Pradesh

Importance of the issue:
1. Gas is a clean fossil fuel and it will be a part of our energy mix in future. Its main drawback is
its transportation through pipelines which are set to increase in future. So safety framework
around these pipelines is a must.
2. If safety concerns are not taken care of then these can again hamper the infrastructure growth
plans of our nation.

What can be done?
1. statutory safety regulator for the oil and gas sector
2. comprehensive, ongoing system of checks and oversight along routes operated by all the
players in the field
3. round-the-clock monitoring employing advanced technology in quick-response mode.

5 SECURITY
5.1 PROMOTING 'SWADESHI' IN DEFENCE (EDITORIAL )
Editor says that the policy framework for going swadeshi already exists. Ironically, it was
created by the defence ministry under A K Antony, which then lacked the political courage to
implement its own policies. The Defence Procurement Procedure of 2013 explicitly states that
indigenous development and manufacture is the default option.
There is a Defence Production Policy to encourage manufacture. More policy initiatives are
needed - especially in reducing duties and tariffs for the domestic industry that,
incredibly, pays higher taxes for building weaponry in India than foreign vendors pay for
importing it fully built.
The domestic industry must be protected against variation in foreign exchange rates;
export of defence equipment must be not just permitted, but actively encouraged;

49

and foreign direct investment in defence must be automatically allowed up to 49
per cent.
GYAAN = Salient Features of Defence Procurement Procedure- 2013
The first major change that has been brought in relates to the introduction of the preferred
categorization in the following order; Buy (Indian), Buy & Make (Indian), Make
(Indian), Buy & Make, Buy(Global). While seeking the approval for Accord of Necessity
(AoN) in a particular category, say, Buy (Global), it will now be necessary to give justification for
not considering the other higher preference categories. This is expected to give a stronger
impetus to indigenization.
Besides this, the requirement of the prescribed indigenous content, e.g. 30% in the Buy
(Indian) category is to be achieved on the overall cost basis, the basic equipment must
also have minimum 30% indigenous content at all stages including the one offered
at the trial stage
5.2 CRPF-POLICE DISTRUST HOBBLES ANTI-MAOIST OPERATIONS IN
CHHATTISGARH
Distrust between the CRPF and the Chhattisgarh Police may be coming in the way of anti-Maoist
operations in the State. Force faces problems at various levels from sharing of intelligence to
execution of operations.
Problems:
Sharing of intelligence inputs
Distrust: CRPF troops believes that in some rare instances their movements were
leaked from the police stations.
Lack of co-operation: Both CRPF and State police are reluctant on joint operations. One
accuses the other of non co-operation.
CRPF has superiority complex as they are better trained and well equipped.
5.3 JAITLEY CAUGHT IN DEFENCE-FINANCE CROSSFIRE
Whats the issue?
The three service chiefs want govt to increase the defence budget to close to 2%of the GDP.
The bureaucrats at the Finance Ministry say that the money simply cannot be found for the
increase without politically controversial subsidy cuts.
Current Budget allocation
Interim budget for 2013-14 presented by the outgoing government envisaged an outlay of 1.74 per
cent of the anticipated GDP for defence, a historical low. The service chiefs are concerned that this
will choke modernisation plans that defence experts believe are necessary given growing Chinese
military power, the sources said.

50

Procurements already account for 90 per cent of the defence capital expenditure in the interim
Budget which accounts for just 40 per cent of the overall defence budget, the rest going on
expenditure such as salaries and pensions.
What the Government can do?
Mr. Jaitley said that government will follow a balanced approach.
India can neither afford an arms race with China but we cant ignore military developments in our
neighbourhood. Restructuring subsidies and Monetising the assets owned by 67 insolvent PSUs are
possible options to fund defence procurement.
5.4 A NEED FOR DEFENCE BUREAUCRACY REFORMS
The Naresh Chandra committee on defence reforms recommended that:
civil service bureaucrats be obliged to serve terms at the military service headquarters
before being assigned to the Defence Ministry in New Delhi.
A course in the College of Defence Management in Secunderabad be made mandatory
for civilian bureaucrats involved in defence administration.
amendments to anti-corruption laws to protect officials making good-faith defence
procurement decisions against prosecution.
The armed forces should assign officers to the headquarters of each other to encourage
the development of the joint services culture integral to modern warfare.

No decision was made on the committees recommendations.
The current system is disastrous as there are bureaucrats who dont know the difference between a
frigate and a destroyer making critical procurement decisions.
NOTE: Refer to:
Naresh Chandra Committee Recommendations
Salient Features of Defence Procurement Procedure- 2013
5.5 THE NORTH-EASTERN CHALLENGE
The recent attacks and killings in Assam, Manipur and Meghalaya by armed non-State groups
represent a challenge and test for the Narendra Modi government and the need to understand
the frustrating complexities of the North-eastern region.
Things are not being made easy after strident demands by the newly elected Bharatiya Janata
Party MPs from Assam to rid the State of Bangladeshis, a phrase that many from the minority
community say is aimed at targeting them, irrespective of nationality, and one that can swiftly
turn into a security nightmare not just for governments in Delhi and Dispur, but also for
ordinary people caught up in a storm. For a moment, the Bangladeshi issue has moved away
from the headlines because of other events that have captured public attention.
Some of the complexities are:

51

While the principal militant factions have been sitting at the negotiating table with New Delhi or
in designated camps for years, be it the Nagas, Assamese, Karbis, Bodos and Garos, they are
being sharply challenged by smaller, more violent, breakaway factions. Armed with
new weapons which are easily available in the illegal small arms markets in the region,
combined with new technology and better connectivity, these groups are demonstrating the
seamless manner in which they can move across State borders.
There is another process that the Modi government will be aware of that of manufactured
consent. In a region like the North-east, where few groups actually constitute a
numerical majority the State has been involved in unending and fatiguing efforts to deal with
a cycle of demands, counter-demands, agitations and resolutions. This has dominated the
political discourse in the region. Thus, almost every State experiencing conflict is witness to a
non-violent process by a group demanding greater powers such as for a community or group
of communities, putting forth an overall set of political demands such as greater autonomy or a
separate State. Yet, this runs almost in parallel with violent movements for, ironically, either
similar demands or, going a step further, for independence.
In almost every movement, outsiders have been targeted whether it is those from another
State, of a different linguistic or ethnic group or the so-called Bangladeshis. Yet, today, in
almost every State, major armed organisations which have thrown challenges to Delhi over the
past six decades have abandoned the gun and are either negotiating with the Centre or engaging
in ceasefire.
Yet, agreements and semi-agreements have been the pattern in the region. These have a history
of spawning breakaway groups which claim to be anti-talks, yet want to be at the table with the
big boys; they hit hard at easy targets, showing the difficulties that police and other forces face
in moving through difficult terrain. The smaller groups too want a share of the funds flowing
into the region and the power that goes with it.
Political will is critical to dealing with this. Small States like Meghalaya have been adversely hit
by the disinclination of both government and Opposition leaders in taking a tough
line on the boys in the Garo Hills. Earlier Chief Ministers had demonstrated political courage,
authorising crackdowns that forced Khasi and Garo groups to the negotiating table. It is also not
a mere coincidence that the armed groups concentrate on the coal-rich areas of the Garo Hills
where extraction is highly profitable and where prominent political figures are said to have
business interests.
Thus, a pattern has emerged over the past decades New Delhi, to use a BJP catchphrase, has
always tried to appease the largest group agitating or fighting for a cause or one which is
prepared to talk. It has not tried to resolve the core issue or issues which involve a
broader and deeper dialogue with other groups, and with non-government and
civil society figures, scholars and organisations. Without that kind of work, through
mediators and counsellors, no agreement can work or last.
The Centre should not be diverted by recent events and instead concentrate on speeding up
the prolonged Naga negotiations (now on for nearly 18 years). Other negotiations also need
to be pursued with vigour and vision.
The Modi government must send a clear and unambiguous message to its members and
followers that they cannot take law into their hands over the issue of Bangladeshis. This could

52

spread fear, tension, mistrust and worse in Assam. Due process must be followed
otherwise there is acute danger of violence, tragedy and abuse of human rights just because of a
persons religion.
The media must play a sober role in this because definitions of Bangladeshis are often
blurred and arbitrary. We need to abide by the recent judgment in the Meghalaya High Court
which, while stating the obvious, defined a Bangladeshi as someone who came to India after the
creation of Bangladesh in 1971. Many tend to look at much earlier cut off dates in their search
for illegal migrants.
New Delhi needs to inform all State governments in the region whichever the party that the
murder of innocents, of whichever ethnicity, religion or language group, and the abuse of rights
by armed groups (or security forces) and local thugs is unacceptable. Such violations need to be
met with a cabrated robust response aimed at showing results in a specific time frame.
5.6 BRAHMOS TEST-FIRED FROM WARSHIP
The supersonic anti-ship cruise missile BrahMos was test-fired for the first time from a warship built
in India, the yet-to-be-commissioned destroyer INS Kolkata, off the coast of Karwar in Karnataka
on Monday.
While the Indo-Russian missile, with a 290-km range, is already in service on the Russia-built
Rajput-class destroyers andTalwar-class frigates of the Navy, it was the first time that the missile
demonstrated its capability from an indigenous warship.
INS Kolkata is the largest indigenous warship and the lead vessel of the class of three ships
being constructed under the NavysProject 15-A.
The vessel, and the ships of its class, will be fitted with 16 BrahMos missiles each.
5.7 COUNTER TO THE SPIRIT OF COUNTER-INSURGENCY
The article talks about the issue of AFSPA and in turn of the larger issue of ailments of India's
counter-insurgency program.
AFSPA (Armed Forces (Special Powers) Act, 1958)
1. It confers special powers upon the armed forces in the states of Arunachal Pradesh, Assam,
Manipur, Meghalaya, Mizoram, Tripura and Nagaland.
2. Extended to J&K in 1990
3. Provisions in the disturbed area;

o AF can use force, even to the causing of death, against any person acting in the contravention
of the law, against any assembly of five or more persons, or possession of deadly weapons
o Arrest without warrant only on the basis of suspicion
o Enter any premises and conduct search

4. Gives the armed forces immunity for their actions. Proceedings against personnels under this
act can be made only after the permission of the central government.
5. Central and state governments have the power to declare an area as disturbed. Their decision

53

cannot be challenged in the court of law.
6. Irom Sharmila has been fasting for last 10 years for the repeal of AFSPA from Manipur.
7. Justice Jeevan Reddy Committee had recommended the repeal of AFSPA from the North-East

Retired military officers : repeal the law as it is of no use
Active military personnel : are against repealing
Some arguments against the repealing:
1. Without the AFSPA, the Army will not be able to stage counter insurgency operations.
2. Some argue that AFSPA free enclaves will be magnets for insurgents
Why the law should be repealed
1. Human rights issue
2. To improve and refocus Indias internal security regime
3. AFSPA is inconsistent with the structure and spirit of our democracy and brings
down Indias image at the global high table at a time when it is looking to be a permanent
member of the U.N. Security Council.
4. It also encourages lazy, inefficient soldiering in counter-insurgency situations
and actually proves to be counterproductive because it makes the security forces look like
occupation armies and not people-friendly, which is what is required in counter-
insurgency.
5. Primary focus of a counter-insurgency operation should be WHAM (winning
hearts and minds), and not liquidation or elimination. AFSPA lets troops get away with
murder and its frequent use encourages a culture of impunity which is counterproductive
to WHAM; it actually increases the disconnect between the forces and the local
population.
6. With AFSPA around, military or paramilitary units do not feel the need for
restraint or fire control. That leads to a sharp drop in professionalism and actually
dehumanises and corrupts the Army and paramilitary forces.
7. AFSPA provides for lazy, non-professional soldiering, characterised by an
absolute lack of focus and a conspicuous lack of a consistent doctrine of counter-
insurgency. Operational action is rarely linked to clearly defined objectives more kills
rather than more surrenders from guerrilla ranks are likely to fetch better decorations
and rewards, encouraging gung-ho commanders who can never gain the confidence of
the people in areas of operation.

The reason for the failure of Indian military units to effectively root out insurgent groups in
Kashmir or the Northeast stems from its failure to evolve an appropriate doctrine for counter-
insurgency even after fighting insurgents for 60 years. This not only reveals the learning
failures of an unimaginative military leadership but actually ends up alienating populations. It
is time the new government realises the dangers of unleashing a force with a redeeming
conventional war bias on its own people.

54

How can counter isnurgency operations be improved in India:
1. Repeal of AFSPA should be seen as the first step in an effort to create a smarter and more
effective counter-insurgency capability that draws more on
information technology,
psychological operations,
political persuasion and
conflict resolution

3. The government will have to evolve a counter-insurgency doctrine which will not only
seek to keep the Army out of the internal security matrix to the extent possible and
deploy other specifically trained and highly skilled forces that observe the principle of
minimum force, but also not insist on an AFSPA-type legislation as a prerequisite for
their deployment and demonstrate a respect for human rights and accountability in
keeping with the letter and spirit of the Constitution.
5.8 FACING APATHY, MANY IN CRPF LOOK FOR AN EXIT
Getting deployed in anti-Maoist operations in central and eastern India is something that every
paramilitary soldier, especially the jawan, dreads. The terrain is extremely inhospitable
and the threat of a Maoist ambush looms large most of the time.
Inside villages, it is impossible to distinguish between an innocent Adivasi and a Maoist
guerrilla. There is hardly any workable intelligence that comes their way. Coordination
with the State police forces is a nightmare, with both sides accusing each other of high-
handedness.
During the day, they are deputed through the Maoist-affected areas where there is no enemy in
sight. But it may be lurking close by, waiting for an opportunity to strike. Once they return to
their barracks, there are hardly any facilities to enable them to take proper rest. As a
result, a soldier turns into powder keg.
One problem is that an officer who is directly recruited in the CRPF (or other
paramilitary forces) through direct recruitment does not make it to the top.
The higher posts are reserved for officers from the Indian Police.
The direct-entry officers in the CRPF and other paramilitary forces are now fighting a legal
battle. They want the government to recognise them as organised cadre.
5.9 TALIBAN FLUSH WITH CASH, WARNS U.N. REPORT
Even as the United States prepares to withdraw most of its combat troops from Afghanistan, a
new United Nations report has warned that the Taliban insurgency is flush with funds, and
added that the past year has been a bumper year for Taliban revenues, boosted by :
1. booming narcotics income,
2. revenue from corruption and extortion, and

55

3. increasingly drawing on revenue from the illegal exploitation of natural resources

5.10 A DANGEROUS ROAD IN SRI LANKA
Article talks about Anti-Muslim violence taking place in Sri lanka. Nothing much important but
mentioning the following from Current Affairs point of view:
Bodu Bala Sena : recently formed extremist Buddhist organisation in Sri Lanka
5.11 AN NSA FOR HARD TIMES
The author tries to define the outlook of the new NSA Ajit Doval. His thoughts are not much important
for Civils but each point can be a separate question for Mains.
1) Indias Internal vulnerabilities are much higher than its external vulnerabilities. He therefore sees the
most dangerous foreign threats as being those that target Indias domestic weaknesses.
He argues for a strong and properly staffed police force (minimum of 200 policemen per lakh
population)
He consider infiltration of Bangladeshis the biggest internal security problem. Bangladesh supports
the demographic invasion of India.
2) Disdain for front organisations supporting the cause of anti-national forces, masquerading as human
right groups. Mr. Doval also argued that a millennia-old Indian national identity was under threat. He
bemoaned the tendency to emphasise Indian diversity, rather than unity. Most remarkably of all, he
claimed that the core of national security was not physical security but cultural identity. This suggests a
crucial and controversial cultural dimension to internal security.
3) To add muscle to Indian intelligence to carry out covert action. He argues for covert action
for disrupting terrorist logistics and communications, rather than just leaders. Indian intelligence had

56

become fixated on foreign terrorists rather than those within India, and argued that the States district
and local level intelligence units had to step up. Argues for a stronger NCTC.
4) Afghanistans stability as western forces draw down. He argues for a substantial and rapid growth
of Indias role in building up Afghan security forces.
5) Distrust of United States. He is convinced that:
In Afghanistan, US will outsource its counter-terrorism operations to Pakistan
Indo-US Civil Nuclear Cooperation will stunt India's emergence as a genuine Nuclear Weapon state and
reduce strategic deterrence.
Navy must adopt proactive role: Jaitley

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