National Solar Mission

In a significant development, the Union Government has recently finalised the draft for the National Solar Mission (NSM). The NSM aims to make India a global leader in solar energy and envisages an installed solar generation capacity of 20,000 MW by 2020, of 1,00,000 MW by 2030 and of 2,00,000 MW by 2050.

Expected Funding
The total expected funding from the Government for the 30-year period will run to Rs. 85,000 crore to Rs. 105,000 crore. The requirement during the11th Five-Year Plan (2007-2012) is estimated to be Rs. 5,000 crore to Rs. 6,000 crore. It will rise to between Rs. 12,000 crore and Rs. 15,000 crore during the 12th Five Year Plan (2012-17).

Implementation will be in three phases. The first phase of solar deployment (2009-2012) will aim to achieve rapid scaling-up to drive down costs. It will spur domestic manufacturing through the consolidation and expansion of on-going projects for urban, rural and off-grid applications. This will involve the promotion of commercial-scale solar utility plants, mandated installation of solar rooftop or on-site photo-voltaic applications in buildings and establishments of government and public sector undertakings. The target is 100 MW installed capacity here.

The Objective of Mission
The NSM will encourage the use of solar applications to meet day-time peaking power requirement that is now met through diesel generation. Further expansion of solar lighting systems through market initiatives including micro-financing, in the rural and urban sectors, is expected to provide access to lighting for three million households by 2012.

In this phase, the NSM will make it mandatory for all functional buildings such as hospitals, hotels, guest houses and nursing homes to install solar water heaters. Residential complexes with a minimum plot area of 500 sq m will also be included.

In the second phase, to be implemented between 2012 and 2017, the NSM will focus on the commercial deployment of solar thermal power plants. This will involve storage options, and the promotion of solar lighting and heating systems on a large scale in market mode. This will be without subsidies but could include micro-financing options.

Achieving Tariff Parity
Between 2017 and 2020, the target is to achieve tariff parity with conventional grid power and achieve an installed capacity of 20 gigawatts (Gw) by 2020. The installation of one million rooftop systems with an average capacity of 3 kilowatts (kW) by the same year is also envisaged. The proposed strategy of the Mission should help achieve significant reduction in the cost of solar power and create a robust infrastructure for it.

Sri Lanka Announces End of Combat Operations

There is no war that is not eventually funneled in the direction of peace, genuine or flawed. It is the quality of the political effort attending on the closure of a war that determines whether the denouement will be satisfactory to all concerned. Going by present indications, Sri Lanka has announced that combat operations against the Liberation Tigers of Tamil Eelam (LTTE) have reached their conclusion and troops have been instructed to stop using heavy caliber guns, combat aircraft and aerial weapons in the war zone, which could cause civilian causalities. The security forces will confine their attempts to rescuing civilians who are held hostage and give foremost priority to saving civilians. The announcement came as there is a growing concern internationally about the plight of civilians still trapped in a 10 sq km area, which the LTTE occupies.

However, the decision does not tantamount to a cessation of hostilities or a ceasefire due to ‘international pressure’ as speculated by some sections of the media.

The security forces will continue the humanitarian operations to rescue the remaining 15,000 -20,000 people held hostage by the LTTE while avoiding the use of heavy caliber weaponry as a strict measure coinciding with its zero civilian casualty policy.

This is indeed a moment of reckoning for the LTTE, which has had a fascist stranglehold over the Tamils in northern Sri Lanka and has been designated a terrorist organisation and proscribed in more than 30 countries.

Ceasefire Offer Rejected
The guns fell silent after the Sri Lankan government first rejected the LTTE offer of “unilateral ceasefire”, saying that the fighting would go on so long as the remaining LTTE men did not surrender. The pressure from India, the UN, the US and the European Union must have played a role in Colombo’s decision besides the fact that its military objective has almost been achieved.

The surrender of two key LTTE leaders shows how fast it could all be unravelling for the terrorist organisation. Taking Tigers prisoner is rare at any given time, and the detention of Daya Master, a former media coordinator, and George, an aide to S.P. Thamilchelvan, the chief of the LTTE’s political wing who was killed in 2007, will be regarded as a key success. But on Wednesday too, there came increased international pressure on Colombo to spare a thought for the thousands of civilians believed to be trapped in the Tigers shrunken territory. The Sri Lankan authorities and the Tigers refuse to heed calls for cessation of firing long enough to enable civilians to escape into the safety of crowded refugee camps. Sri Lanka argues that a ceasefire would give the LTTE a chance to recoup at a time when they are facing the end to a 25-year-long conflict.

Sri Lanka could no longer ignore the massive humanitarian crisis that had been getting worse with every day passing. The military offensive that began in January 2008 resulted in the rebels getting confined to a small no-fire zone after the Tigers’ de facto capital, Killinochchi, was captured early in 2009.

Tamil civilians who are trapped in the war zone and are being used as a human shield by what remains of the LTTE’s bruised and battered leadership. It may not be entirely inconsequential that the Sri Lankan Army has been prompt in pointing out that “conclusion of combat operations” does not mean that it has declared a ceasefire with the LTTE. What it means is that President Mahinda Rajapaksa has instructed the defence forces “to end the use of heavy calibre guns, combat aircraft and aerial weapons which could cause civilian casualties”. That, of course, is a step in the right direction, not least because Rajapaksa cannot disown responsibility for the safety and security of the Tamil civilians.

Agony of the Sri Lankan Tamils
As the LTTE faced one defeat after another during the last three years from the Sri Lankan Armed Forces — initially in the Eastern Province and finally in the Northern Province — the irrational side of the LTTE supreme Velupillai Prabhakaran’s personality erased his rational side. His shocking use of the Tamil civilians in order to delay the final end of the counter-insurgency and counter-terrorism campaign undertaken by the Sri Lankan Armed Forces is driven by this irrational streak in him, which now dominates his personality.

As many as 80,000 people had crossed over to the government-controlled safe zone, taking the total since January to a whopping 1,50,200 civilians. In large part, it is the treatment that the Rajapakse government metes out to these hapless people who are in acute penury that will determine the success or failure of the Sri Lankan government’s professed resolve to absorb the Tamil masses into the country’s mainstream and to prevent the country from slipping into Tamil militancy again.

The prolonged agony of the Sri Lankan Tamils caused by the final bout of Prabhakaran’s irrationality and loss of lucidity in thinking has to be ended. The Sri Lanka Armed Forces, which have shown patience till now and deliberately slowed down their operations, cannot be faulted if they have come to the conclusion that the time has come to liberate the no-fire zone too from the clutches of the LTTE by undertaking limited operations with small arms and ammunition even at the risk of some collateral casualties to the civilians.

India’s Support
India must also step up humanitarian aid considerably to ward off a catastrophe. Even in the context of the emotional bond between Tamils of Sri Lanka and India, a major Indian humanitarian effort would help erase the deep sense of hurt that prevails in a section of Indian Tamils over the Indian government’s “inadequate” response to the situation. That this feeling has been consciously nurtured by some political leaders for electoral gains in undeniable. At the same time, India must push hard for greater devolution of power to the Tamils in Tamil-majority districts as the ultimate solution after the current end-game has been played out.

It would be best for New Delhi to stick to its stand and not succumb to domestic political pressure. The ongoing conflict in Sri Lanka is an internal matter, and therefore, it would be prudent for India or any other country to refrain from interfering. However, this does not mean that our Government should not offer humanitarian help to rehabilitate the Tamil refugees and insist that they get equal rights and opportunities as their Sinhala brethren.

In claiming the LTTE has legitimate goals and its commander, Prabhakaran, is not a terrorist, M Karunanidhi, Chief Minister of Tamil Nadu and DMK leader, has triggered controversies at multiple levels. For a start, he has severely embarrassed the Congress by exonerating the man held guilty of masterminding the assassination of the former Prime Minister Rajiv Gandhi in 1991. That aside, he has exposed the vulnerability of the UPA Government — and perhaps of any Government at the Centre — to sectional and parochial world views of regional parties. It was parties such as the DMK that reduced the UPA’s coalition dharma to a joke, by replacing Ministers at will and running independent fiefdoms in Ministries they controlled. The consequences of imposing regional political agendas on foreign and economic policy are, of course, of another order.

Need of the Hour
The gathering crisis, however, offers an important opportunity to Sri Lanka to demonstrate that it will measure up to its constitutional obligations to the Tamils as full and equal citizens of the country. It could do this by facilitating all possible relief to those Tamils who have escaped from the clutches of the LTTE and taking extraordinary precautions in its impending military offensive to reduce civilian casualties. India has already sent medical missions and large relief supplies to the Tamil population trapped in what could be the catastrophic finale to a gruesome civil war that has lasted nearly three decade.

SC on Modi’s Role in Godhra Riots

The Supreme Court has directed the Special Investigation Team (SIT) that probed the 2002 Godhra train fire and the subsequent riots to investigate a complaint against the Gujarat Chief Minister Narendra Modi, his cabinet colleagues and top police and administration officials that they had aided and abetted the mob violence.

The SIT, headed by former CBI Director RK Raghavan, would submit its report within three months. The Bench issued the order on a petition filed by one Jakia Nasim Ahesan, widow of a riot victim. Senior counsel Prashant Bhushan, appearing for the petitioner, relied on the affidavits of RB Srikumar, who was ADGP of Gujarat at the time of the riots, filed before the Nanavati Commission, which had also gone into the issue.

For seven years the widow of former Congress MP Ehsan Jafri, who was murdered in cold blood along with many others at a prominent housing estate, had sought justice. She had pleaded that under Modi’s instruction the state police had refused to register a FIR in the broad daylight killing of her husband and others. The Gujarat high court did not think she had a case.

Charges of Illegal Instructions

Jakia had approached the then DGP, PK Chakravarty, to register an FIR and on his refusal approached the Gujarat High Court through a writ petition. The High Court, however, dismissed the petition on various grounds, including the petition had relied "heavily" upon the affidavits of Srikumar, the complaints were general in nature and that she could approach the SIT or a magistrate.

Appearing for Gujarat, senior counsel Mukul Rohtagi contended that the SIT had gone into the complaint but Bhushan disputed this, upon which the Bench issued the order.

The petition also alleged that Modi held meetings with his Cabinet colleagues and top-level bureaucrats at which “illegal instructions were issued” to “perform illegal acts”. This was evident from the deposition of then Minister Haren Pandya, since dead, before a Citizens Tribunal constituted and headed by former SC Judges.

Earlier, the Supreme Court had made it clear that it would “intervene” wherever necessary to ensure that fast-track courts (FTCs) conduct a “fair trial” in cases relating to the Gujarat riots. A three-Judge Bench headed by Justice Arijit Pasayat stated that the SIT that was monitoring the probe would also keep a watch on the trial and submit quarterly reports to the apex court.

Turn of Events

In plain terms, this order means that the Chief Minister is not off the hook, whatever his admirers might think of their man. The court’s direction could well enthuse the Bharatiya Janata Party (BJP) and Rashtriya Sewak Sangh (RSS) rank and file to root harder for Modi and rally round the party with gusto in the election season. For exactly the same reason, however, the impact could be the opposite on the party’s key NDA allies, some of which are leading political players in their respective states. The Congress would doubtless be delighted by the turn of events.

The Gujarat Chief Minister is, after all, being projected as the BJP’s prime ministerial candidate. There is no doubt that his abilities as an administrator in his state are noteworthy. Gujarat has among the best development indicators of any Indian State. Nevertheless, Modi’s reputation has been marred by the riots and the role that his administration played during the carnage and after.

In the current electioneering for the Lok Sabha, the Gujarat leader has emerged as his party’s most influential campaigner after Lal Krishna Advani.

Impartiality, important for any inquiry, becomes crucial when it comes to investigating a man as polarising as Modi. The SIT must not just act independently; it must be seen to do so. Giving the Gujarat chief minister a free pass is as unfair as going after him for political reasons — and it does ill-service to those hacked in the horrors of Gujarat. An impartial investigation into Modi’s role in the Gujarat riots will help answer India’s most polarising debate, one way or the other.

However, the ghosts of the past never seem to go away. Congress candidates like Sajjan Kumar and Jagdish Tytler have had to stand aside in Delhi owing to doubts over their role in the horrific 1984 anti-Sikh riots. The Gujarat riots have been bogged down in controversy since they took place. There are many who feel that Godhra was the starting point for what is now seen as among the worst riots in independent India.

World Braces Up for Human Swine Flu

After the US and Mexico, the swine flu epidemic crossed new borders with the first cases confirmed in the Middle East and the Asia-Pacific region, as the number of deaths in Mexico surpassed 150.

Swine flu has spread to seven countries and appears to be jumping borders via airplane flights. In New Zealand, a group of students and teachers were confirmed with the virus after recent trip to Mexico, where the virus is suspected to have infected nearly 2,000 people and caused more than 150 deaths. Another case was confirmed in Israel.

Fifty cases have been confirmed in the United States. Six cases have been confirmed in Canada, two in Spain and two in Scotland.

Swine flu cases were also being probed in Denmark, Sweden, Greece, Czech Republic, Germany, Italy and Ireland, in addition to Spain and Britain. The US, where cases with mild symptoms have been confirmed in California, New York, Texas and Kansas, has declared a medical emergency to deal with the situation.

WHO Warning
The World Health Organization (WHO), which declared the outbreak to be ‘public health emergency of international concern’, stated that it was re-convening the meeting of its emergency committee tomorrow to decide whether to declare it a pandemic.

Six cases of human swine flu linked to the Mexican outbreak had been confirmed in Canada. While two cases came to light in British Columbia province, four were reported in Nova Scotia province. However, the swine flu symptoms in all the six cases were “relatively mild and the patients are recovering.

Urging people to take precautions, the WHO urged that they should wash their hands thoroughly, never cough or sneeze into their hands, always use a hand sanitizer and stay at home if their show symptoms of the flu.

Countries have stepped up surveillance at airports and ports, using thermal cameras and sensors to identify people with fever.

Handling the Menace
Health authorities across Asia tried to reassure nationals, saying they had sufficient stockpiles of anti-flu drugs to handle an outbreak. The European Commission has called an urgent meeting of health ministers.

Fearing another setback for the fragile world economy, markets reacted nervously to the outbreak, which has prompted the WHO to activate its 24-hour “war room” command centre.

Phase 4 Alert
The WHO has raised its pandemic alert for a new strain of swine flu by one level, two steps short of declaring a full pandemic. It stated that the phase 4 alert means there is sustained human-to-human transmission in at least one country. It also warned that at this time containment is not a feasible option'' as the virus has already spread to several other countries.
WHO made the decision to raise the alert level from phase 3 after emergency consultations with flu experts from around the world on April 27, 2009.

China, Taiwan Sign Agreements

The Chinese mainland and Taiwan on April 26, 2009 signed three agreements on opening regular flights, boosting cooperation in finance and cracking down on crime, foretelling the realization of decades-long aspiration of comprehensive, direct and two-way links between the two sides. Chen Yunlin, President of the mainland-based Association for Relations Across the Taiwan Straits (ARATS), and Chiang Pin-kung, chairman of the Taiwan-based Straits Exchange Foundation (SEF), signed these agreements in Nanjing, capital of east China’s Province.

Terms of Agreement

Under the fresh agreements, the two sides will launch regular passenger and cargo flights across the Taiwan Strait, which indicates the normalization of cross-Strait air transport service. Before, direct cross-Strait flight services were only provided on weekends and during four major traditional festivals.

In addition to the current 21 terminals, the mainland will open another six, including Hefei, Harbin, Nanchang, Guiyang, Ningbo and Jinan for direct passenger flights. Taiwan has eight terminals.The number of flights will increase to 270 every week from the current 108, according to the agreement.

Mutual Assistance

Under the agreement on financial cooperation, the two sides agreed to boost mainland investment in the island and facilitate financial institutions to set up branches on each other's side. The mainland and Taiwan will continue to discuss issues concerning market access of financial institutions on the either side.

According to the agreement on mutual assistance in criminal matters, the two sides will collaborate in civil and criminal fields and take measures to jointly crack down on crimes, with a special focus on major crimes involving kidnapping, weapons, drugs and human trafficking, and cross-Strait organized crimes.

Economic cases of fraud, money laundering, forging or falsifying currencies, and securities, would also be targeted.

The two sides agreed to exchange crime-related information and help each other investigate cases and collect evidence. Each side is also responsible for helping the other to identify witnesses, seize and repatriate criminals and suspects.

By January 2007, the Chinese mainland and Taiwan had returned to the other side 38,936 criminals, criminal suspects and people guilty of illegal entry since 1990, when the Kinmen Agreement was signed between Red Cross organizations across the Taiwan Strait.

Financial Supervision

China and Taiwan reach an agreement on promoting financial organizations from the mainland and Taiwan to set up branches in each other's side and continue to negotiate on the admittance of financial organizations and related businesses.The two sides also agreed to jointly set up a system for financial supervision and management.

In addition, they agreed to gradually set up a currency clearing system. Commercial banks are allowed to offer cash exchange services. The two sides will also cooperate in developing cash anti-counterfeit technology. The ARATS and the SEF planned to hold the fourth round of talks in Taipei in the later half of 2009.

New US Norms For H-1B Visa

As the recession in the West deepens, protectionism is on the rise. A bill has been introduced in the US Senate which, if it becomes law, would place severe restrictions on American employers engaging the services of foreign workers on H-1B non-immigrant visas. The bill has made India’s computer software development and business process outsourcing industry rather jittery.

Given that the skilled professionals from India are the one who account for the maximum number of H-1B and L1 visas, Indian professionals followed by those from China are likely to be hit the most if the legislation introduced by Senators Chuck Grassley and Dick Durbin is passed by the Congress and then signed into law by the President.

The bill, introduced, requires all employers who want to hire an H-1B guest worker to first make a good faith attempt to recruit a qualified American worker. Employers would be prohibited from using H-1B visa holders to displace qualified American workers.

The bill will put a stop to the outsourcing of American jobs and discrimination against American workers. The H-1B visa programme should complement the US workforce, not replace it. The bill prohibits the practice of “H-1B only” ads and prevents employers from hiring additional H-1B and L-1 guest workers if over 50 per cent of their employees are H-1B and L-1 visa holders. It gives power to the department of labour to investigate, audit and penalise abuse of H-1B and L1 visa employers.

Restrictions on Companies

The US controversial restriction on companies from hiring skilled foreign workers with non-immigrant H-1B visas will continue for only two years. As part of a stimulus package passed last month for revival of the economy, President Barack Obama signed a new law, named “Employ American Workers Act”, which makes it difficult for companies having received government bailout funds to hire H-1B foreign workers.

However, the US Citizenship and Immigration Services (USCIS), in a circular issued with its invitation of H1-B applications for the next fiscal, has now made it clear that the EAWA requirements are not permanent and would “sunset two years from the date of enactment.” EAWA, which prevents a company from displacing US workers when hiring H1B specialty occupation workers if the company received stimulus funds, took effect on February 17, 2009 and it applies to any “hire” taking place before February 17, 2011.

US Immigration & Nationality Act

Many Indians who are adept at information technology have perceived the US as a land of milk and honey. But even they are no longer rushing to catch the first flight to a country where free enterprise capitalism was supposed to offer unlimited economic opportunities to the talented and the enterprising. The evidence is in the form of a sharp fall in the number of applicants for H-1B visas in 2009.

H-1B visa holders can be "temporarily" hired — usually for three years, extendable for another three years — by US employers provided they are in "specialty occupations". The US Immigration & Nationality Act specifies a "speciality occupation" as one that requires theoretical and practical application of a body of highly specialised knowledge in a field of human endeavour, including, but not limited to, architecture, engineering, mathematics, physical sciences, social sciences, biotechnology, medicine and health, education, law, accounting, business, theology and the arts, and requiring the attainment of a bachelor’s degree or its equivalent as a minimum qualification.

The bill defines “hire” as an employer permitting a new employee to commence a period of employment; that is, the introduction of a new employee to the employer’s US workforce. Further, the bill proposes that employers be prohibited from hiring H-1B visa holders unless at least half its total employee strength comprises US citizens. "Our bill will put a stop to the outsourcing of American jobs and discrimination against American workers", says Dick Durbin, a Senator belonging to the Democratic Party from Illinois, who is also the Assistant Senate Majority Leader and one of the two sponsors of the bill.

Drop in Applicants

This year, there has been a sudden drop in the number of people applying for H-1B visas even as those opposed to outsourcing of American jobs have become increasingly aggressive. Notable among them is Lou Dobbs, conservative television anchor of CNN. For years now, he has frequently highlighted and condemned "offshoring" of jobs. He has persisted in his campaign despite being accused of inciting xenophobia, besides mixing reportage with personal opinion and facts with advocacy. He has been described as a "raving protectionist", a "ratings hound" and as a person with an "intellectual midlife crisis".

Uproar in Indian IT Space

The new law has created an uproar in Indian IT space, as professionals from the country form the majority of people going to the US on H1-B visa to work in IT-related functions at banking and financial services firms. The financial services firms are the main recipients of the stimulus packages in the US and would be therefore subjected to various restrictions in hiring H1-B visa holders.

An H-1B non-immigrant is a foreign national who comes to the United States temporarily to work in a specialty occupation. A specialty occupation position is one that generally requires a bachelor’s or higher degree and specialised knowledge. The US businesses use the H1B program to employ foreign workers in specialty occupations that require theoretical or technical expertise in specialised fields, such as scientists, engineers, or computer programmers.

Under EAWA, any company that has received covered funding and seeks to hire H1B workers is considered to be an “H-1B dependent employer” and such employers would now required to make additional attestations to the US Department of Labour, while filing a Labor Condition Application (LCA).

The most-commonly voiced criticisms of the H-1B policy over the years has been that it replaces American workers, depresses salaries and is a form of subsidy to corporate bodies. It is claimed that the objectives of the policy are subverted by companies engaging foreign workers through contractors and by designating them as consultants. Some critics in the US have gone to the extent of describing H1-B visa holders as "indentured servants" or "slaves" because of their dependence on their employers.

Naxal Menace

Not a single passes without the Naxalite violence at one place or the other. The Naxalites are striking at will in Jharkhand, Bihar, Orissa, Chhattisgarh and Andhra Pradesh. They bomb important installations and kill security personnel and innocent people alike. Over 2,281 civilians and 821 security personnel have been killed due to Maoist violence between 2004 and 2008 along with much destruction of public property. The police forces, in their present condition, can hardly be expected to take on the Maoists.

The audacity with which they hijacked a passenger train in Jharkhand in broad daylight and took 700 passengers hostage speaks volumes about their strength. Luckily, all of them were released unharmed after a six-hour siege, but only after the Naxalites bombed a railway station, torched some oil tankers and caused panic. The threat has become more serious because a chunk of the police force has been deployed on election duty. It seems targeting infrastructural facilities is a part of their strategy.

Landmine Blast in Bihar
Five policemen have been killed when Maoists triggered a landmine blast on a vehicle carrying a police patrolling party in Bihar's Muzaffarpur District. Five policemen died on the spot while the vehicle driver was reported as seriously injured.When the security personnel were returning from duty an Improvised Explosive Device blast took place near a bridge. The blast killed everybody except the driver who got seriously injured.

In the past few weeks, several police personnel and other officials were also fatally attacked across four States--Chhattisgarh, Bihar, Jharkhand and Orissa--termed as the 'Red Belt' due to the presence of ultra Maoist-Leninists.

CAG Report
The latest report of the Comptroller and Auditor-General (CAG) is a severe indictment of the State Governments of those States affected by Maoist violence for not doing enough to modernise the State Police forces despite funds being available. This goes to show that the Maoist threat is not being taken seriously.

In its review of police modernisation in 16 States where there have been several Maoist attacks since 2008, the CAG has found that the State Police forces have been handicapped in their battles with Maoist terrorists. This is largely due to the grave lapses in the proper utilisation of funds, weaponry, communications and training. For instance, Andhra Pradesh, according the review for the period 2002-2007, utilised only 13 to 38 per cent of the funds meant for police modernisation. This means that many of the police stations in the sensitive areas of the State did not even have proper transportation vehicles, and the police personnel had to make do with outdated weapons. States such as Orissa, Madhya Pradesh and Jharkhand have been similarly culpable with funds not having been properly utilised.

The CAG report has also not ruled out the misappropriation of funds on the part of some of these State administrations. Thus, it appears that it is not just the Centre that has allowed the Maoists to flourish by following a soft policy towards them, but it is also the State Governments that have been complacent and have not taken appropriate steps to tackle the problem. The result has been that today a large area in central India, stretching from the eastern districts of Maharashtra all the way to Jharkhand, has been infested by the Maoists. And the security forces have not been able to defeat them despite their best efforts.


In view of the increasing Naxalite attacks, the Centre and the States need to rethink their strategies. The Centre and the state governments must demonstrate the necessary political will and play a leadership role in finding a lasting solution to the crisis. As the roots of the crisis lay in growing socio-economic inequalities and the lack of basic infrastructure and services, the Centre and the States would do well to address these issues also.

Elections in South Africa

For the first time since 1994, many South Africans went into the election not as the proud Rainbow Nation that former President Nelson Mandela ushered in. Instead, many feel as though they are in a cliched movie about yet another postcolonial African state that has lost its way. Some 17 million people out of a little over 23 million registered voters cast a ballot, representing a turnout of 77 percent in the 2009 general elections.

Decisive Victory for ANC
South Africa's long-dominant African National Congress (ANC) won overwhelmingly in parliamentary elections, but did not retain the two-thirds majority it won with ease in the last elections. The victory puts party leader Jacob Zuma in line for the presidency, but without the seats in the 400-member Parliament to enact major budgetary plans or legislation unchallenged.
The ANC has lived up to expectations and carried South Africans with it to what looks like a decisive victory. It may even get two-thirds of the votes — that is more than what was expected. And yet, it was not supposed to be so easy after all.

The ANC took 65.9 percent of the nearly 18 million votes cast on April 22, 2009. A split in the ANC and questions about Zuma's fitness to govern after sex and corruption scandals were the main contributing factors. But the ANC was allotted 264 seats, three short of the two-thirds, based on the vote count. The main Democratic Alliance got 67; the ANC breakaway party, known as COPE, got 30; and the Inkatha Freedom Party 18. Nine other parties shared the remaining seats.

Special Significance
The present South African election was special; the most important since Mandela overthrew apartheid in 1994 and ushered in more representative democracy. One reason for that was the birth of what could have been the first major black-led challenge to the ANC, and the consequent maturing of South African democracy. Secondly, the man who took over as the President long before the polls, Zuma, is an unknown executive entity despite his controversial personal and political past. That is, regardless of hopes and fears, it is not certain exactly which way he’ll take the country. Thirdly, South Africa is a beacon and yardstick for the continent.

In the past three months, the ruling ANC has finalised legislation disbanding the country’s most successful crime-fighting unit, the Scorpions. This is the same unit that investigated Zuma, president of the ANC and the man who will be installed as the country’s president, for corruption, tax evasion, fraud and racketeering.

But 15 years since the anti-apartheid revolution succeeded, the ANC is reeling under its historic burden. It is still the instinctive political home for the overwhelming majority of South Africa’s blacks. But switching to a governing role from a revolutionary one calls not just for adjustment but for the remaking of a party. So while the ANC has delivered to many of the poor, it still fails the rest. It is plagued by allegations of corruption and nepotism, so much so that Archbishop Desmond Tutu vowed not to vote ANC this time.

Challenges Ahead
How Africa’s most robust economy handles the recession, how it fights institutional and political corruption, its high crime rate and poverty, how it deals with an increasingly visible ethnic divide, will colour the decisions of other African Governments.

Zuma has said his Government will work to unite the nation. Zuma said:"Working together we will make it a government for all South Africans.

The new administration will make greater effort to eradicate poverty and build on the success of the past 15 years. The Government will improve service delivery by employing competent people in the relevant posts.

State of Food Insecurity in Rural India

It is an irony of fate that in spite of food grain supplies, in respect of wheat and rice, from domestic production far exceeding the demand over the last more than two decades, India has been witnessing the unmanageably bulging stocks and shortages alternately. All this is due to the irrational export and import policy being followed by the policy makers. At present, this is a major developmental challenge in India. We cannot feel proud of our achievements in different areas until this basic need of each individual is met.

This is what exactly the recently released report, State of Food Insecurity in Rural India states. Released jointly by the UN World Food Programme and MS Swaminathan Research Foundation, the report states that India tops the global hunger chart with 230 million undernourished people who comprise more than a quarter of the world’s undernourished population. It is not merely about food availability, but access to food.

Undernourished People
The new report states that an emerging superpower, India paradoxically tops the global hunger chart with 230 million undernourished people comprising more than 27 per cent of the world’s undernourished population. Indicating that food insecurity is a reality in India the report reveals that while every third adult (aged 15 to 49 years) has a low BMI at less than 18.5, as many as 43 per cent children aged below five are underweight.

The country fares no better vis-à-vis its emerging peers on the food security front as the vast majority of the world’s undernourished people — 907 million — live in developing countries. Of these, 65 per cent live in seven countries: India, China, the Democratic Republic of Congo, Bangladesh, Indonesia, Pakistan and Ethiopia. On a comparative note, some countries in South-East Asia, like Thailand and Vietnam, have made good progress towards achieving the World Food Security target; others in South Asia and Central Asia have suffered setbacks in hunger reduction.But the progress made in these countries has been neutralised by their large populations. Rising global food prices are also to be blamed for such dismal figures. Although food prices have begun to fall around the world, according to the Food and Agriculture Organisation (FAO), in developing countries like India they are not falling so rapidly — or at all. There is an apparent contradiction in India’s description as ‘self-sufficient starved state’, but it cannot be faulted. Deflationary macroeconomic policies, decreasing access to institutional credit, which is becoming prohibitively expensive, and reduction in public investment are the problems facing India. This grim scenario is characterised by a stark reality: There is availability of food, but little or no access to it.

Looking at the market scenario, the contradiction is likely to intensify. During 2008-09, foodgrain harvest is estimated to be a record 228 million tonnes. But mere physical availability of food does not translate into accessibility. A household’s access to adequate food depends on its purchasing power, including the implicit value of its own produce, if any, which further depends on sustainable on-farm or off-farm livelihoods. But even if a livelihood ensures access to food, it does not promise nutrition security. That is why States like Kerala and Tamil Nadu, with much lower levels of per head food — and hence calorie — intake, perform much better in terms of nutritional indicators than States like Bihar or Orissa with higher levels of food intake. Notably, the two States have high literacy rates, the report points out. It is not just food that determines the people’s nutrition security. The other factors like safe drinking water, sanitation and hygiene play important roles in effective biological utilisation of food.

Sanitation and HygieneThe report reveals that a plausible indicator of the abysmal state of sanitation and hygiene is that 78.08 per cent of households have no access to toilet facilities. In nine States more than 80 per cent of the households do not have access to toilets. The national percentage of households without access to safe drinking water stands at 26.8 per cent. Children who are malnourished tend to come from families with least access to potable water, sanitation and healthcare services. Although the National Rural Employment Guarantee Scheme (NREGS) has been able to mitigate the looming crisis, the report does not mince words while discussing its inadequacies.

Public Distribution System

According to the report, the targeted Public Distribution System (PDS) has made matters worse for States that were performing quite well under universal PDS, leading to the exclusion of the ‘eligible poor’ or so-called Above Poverty Line households and decline in off-take of foodgrain from PDS. Using the Indian Council of Medical Research recommended norm, the requirement per person per month will be 11 kg. But the present TPDS restricts the allotment of foodgrain to 10 kg per faimly.

Besides non-accessibility to food, illiteracy and other factors, including lack of social expenditure, have also led to stagnation in the agriculture sector. In such a scenario where malnutrition accounts for nearly 50 per cent of child deaths, more than 1.5 million children are at risk of becoming malnourished because of rising global food prices. Until and unless the right to food becomes a fundamental right and the Constitution is suitably amended, the hungry will have to survive on empty promises. The World Bank’s estimates show that higher food prices have increased the number of undernourished people by as many as 100 million from its pre-spike level of 850 million. Developing countries like India must take it as an opportunity to understand the economics of small-farming and develop agrarian crisis-affected areas into special agriculture zones. The system of universal PDS has to be revived and linked to the ‘capacity to pay’ rather than ‘economic cost’ in the rural areas to reverse the nutritional figures. Meanwhile, the implementation of various welfare schemes should be decentralised through local bodies like panchayats.

Given the economic and physical constraints in transportation and storage of foodgrains across the country, basic food grains should be supplied even to the so-called Above the Poverty Line (APL) families. This will also prove remunerative for PDS dealers as they will lift more quantities of food. The NREGS should be extended to cover every adult, as opposed to some households, and for as many days as required. Considered from the point of view of the food and nutritional needs of its population, India has never been surplus in food grains in the real sense. These surpluses are spurious in nature because a large majority of the people of the country do not have enough purchasing power to access these stocks. It is a situation of only supply exceeding the demand.

Surplus Export of Foodgrains
The country, on several occasions, exported surplus foodgrains at very low prices, incurring huge losses. Just after such exports, there have been crying shortages and foodgrains imported at exorbitant prices. For instance, in 2001, the country had huge foodgrains stocks of around 58 million tonnes. What it lacked was proper storage leading to an unacceptable level of spoilage and wastage. Some lots deteriorated so much that they were not fit for even animal consumption. As a consequence, quite a few of the consignments were rejected by the importing countries.

From the year 2001 to September 2005, the country exported 35 million tonnes of foodgrainss, of which 23 million tonnes was rice and 12 million tonnes wheat. Even in nine months of the year 2005 up to September, India exported over five-million tonnes of rice and 0.72 million tonnes of wheat. A very large portion of these exports was made at below the Below the Poverty Line (BPL) prices. After just about two months, the foodgrains managers of the country started crying shortage.

Now the policy has come full circle. With estimated more than six million tonnes of wheat that would be in stock on April 1, when new rabi food grains start pouring into the domestic market, it is expected that by the end of marketing season of wheat the country will have food grain stocks between 32 to 34 million tonnes. It is said that the Government of India has engaged private consultants on how to mange these stocks. These consultants have recommended exports with export subsidy. It is a foregone conclusion that such consultants would recommend exporter-friendly export policy.

Storage and Management
The system of grain handling in India is such that storage, spoilage, thefts, leakages and exports at loss are costing the nation a fortune and on the other hand large sections of the financially-disadvantaged population cannot have access to two square meals a day to fill their bellies.

The country needs to invest substantially, yet rationally on safe storage and scientific management of food stocks. It makes no sense to keep spending on production, if storage and management is handled indifferently as is being done today. Not to speak of storage in the open that is resorted to at the time of post-harvest marketing season in the surplus producing areas, even plinth storage is not proper storage for food grains.

India needs to create silo-storage capacity of at least 20 million tons, wherein aeration, temperature and humidity are controlled at optimum levels. Although such silos can keep the grains in good condition for five years, yet three years recycling of the grains should be planned so that the stocks are renewed continuously and the grains remain healthy and fit for human consumption These silos should be built mainly in the surplus producing areas from where the consignments can be dispatched to the consuming areas/states as per need. At least three silos should be built at one place to cater to the requirement of the three-year cycle.

There is tremendous scope of reduction in undifferentiated across-the-board input and consumer subsidies. Even if these subsidies are halved, the savings will be enough to create the required capacity of scientific storage in less than five years.

Problem of Populist Politics
Competitive populist politics has spoiled the agriculture credit culture of the country through undifferentiated loan waivers. Unfortunately, the BJP is further promising a complete waiver of farm loans if the party forms a government. This callous approach amounts to playing with the taxpayers’ money.

It will be much more productive, economically justified and socially as well as politically acceptable if the amounts involved in such waivers are used for building modern storage capacity for food grains and related infrastructure in the country. Yet, such economic trade offs and socially justifiable investment of scarce capital resources can be considered only by the mature statesmen, not by the myopic politicians.

After all, a hungry nation cannot become a superpower. No purpose is served if people remain hungry in a food sufficient country. Will policy-makers wake up to this fact?

Nutritional Status for India's Women and Children

The World Bank has recently stated in its report, The World Bank in India, that India's higher economic growth has not translated into a superior nutritional status for the country's women and children, as the country houses the highest number of underweight children globally. The prevalence of underweight children in India is among the highest in the world," the bank said in its publication, the report stated.

Despite experiencing unprecedented economic growth during the last decade, South Asia, including India, has the highest rates of malnutrition and the largest numbers of undernourished in the world, the World Bank report revealed.

WHO Estimates

Citing estimates by the World Health Organisation (WHO), the report revealed that about 49 per cent of the world's underweight children, 34 per cent of the world's stunted children and 46 per cent of the world's wasted children, live in India. The prevalence of malnutrition varies across States, demographic and socio-economic groups, with scheduled tribes and scheduled castes ranking highest among all.

According to the report, Madhya Pradesh, Bihar and Jharkhand have the highest malnutrition rates. It further stated that adding that even in urban areas, a third of the children are underweight. Over the past decade, progress in reducing malnutrition in India has been limited; in fact anaemia has increased, it revealed.

The Major Causes

While poverty is often the underlying cause of malnutrition in children, the superior economic growth experienced by South Asian countries compared to those in Sub-Saharan Africa, has not translated into superior nutritional status for the South Asian child.

The report stated that the income inequality could help explain what average economic growth figures may conceal, yet inequality is not significantly worse in South Asia than in Africa. Besides, low birth in children, undernourishment and anaemia in Indian women and poor household hygiene are some of the issues that need to be dealt with, the World Bank report concluded.

World Economic Outlook Report 2009

With the global economy reeling under recession, the International Monetary Fund (IMF) in its World Economic Outlook Report 2009, released on April 22, 2009 stated that world production was projected to decline by 1.3 per cent in 2009, indicating that the slump is the deepest since the Second World War. However, it is expected to recover only gradually in 2010, growing by 1.9 per cent, the IMF report revealed.

The IMF report projected a negative growth rate for the global economy and for all the advanced economies – United States, Japan, Germany, Britain, France, Italy, Spain and Canada.

The world economy is set for a minus 1.3 per cent growth this year, before rising modestly (1.9 per cent) in 2010. The US also faces the prospect of a minus 2.8 per cent growth this year and zero growth in 2010.

Unprecedented Decline

The IMF stated that advanced economies experienced an unprecedented 7.5 per cent decline in real GDP during the fourth quarter of 2008, and the output is estimated to have fall during the first quarter of 2009.
In contrast to the negative growth of the advanced nations, emerging and developing economies as a group are still projected to eke out a modest 1.6 per cent growth in 2009, rising to four per cent in 2010.

It is not only the US which has experienced a sharp downfall, but also other economies of the world too have had the same fate, including the western Europe and advanced Asia, it said. Emerging economies, too, are suffering badly and contracted four per cent in the fourth quarter in the aggregate.

While there have been some encouraging signs of improvement since the G-20 Summit in London early this month, the report said confidence in financial markets is still low, weighing against the prospects of an early economic recovery.

The April 2009 Global Financial Stability Report (GFSR) estimates write-downs on US-originated assets by all financial institutions over 2007-10 will be $2.7 trillion, up from the estimate of $2.2 trillion in January 2009. This is largely a result of the worsening prospects for economic growth.

Asian Economies

While the US economy may have suffered particularly from intensified financial strains and the continued fall in the housing sector, western Europe and advanced Asia have been hit hard by the collapse in trade as well as rising financial problems of their own and housing corrections in some national markets, the report stated.

Activity in East Asian economies with heavy reliance on manufacturing exports has fallen sharply, although the downturns in China and India have been somewhat muted given the lower shares of their export sectors in domestic production and more resilient domestic demand, it noted.

Although conditions should improve moderately in 2010, the IMF expects the availability of external financing to emerging and developing economies to remain highly curtailed.


Global Exposures
Total expected write-downs on global exposures are estimated at about $4 trillion, of which two-thirds will fall on banks and the remainder on insurance companies, pension funds, hedge funds, and other intermediaries, the report stated.

An important side effect of the financial crisis, the report stated, has been a flight to safety and return of home bias, which have had an impact on the world's major currencies. Since September 2008, the US dollar, euro, and yen have all strengthened in real effective terms.

As the report projections assume that financial market stabilisation will take longer than previously envisaged, even with strong efforts by policymakers, the IMF stated that financial strains in mature markets are projected to remain heavy until well into 2010.

India’s Growth

The IMF has further lowered India’s growth prospects for 2009 to a mere 4.5 per cent – down from the 6.3 per cent it had forecast last October and 5.1 per cent in January 2009.

The projected decline is a lot more precipitous when compared with the growth level recorded in the last two years – 9.3 per cent in 2007 and 7.3 per cent in 2008. During 2010, the IMF expects India to recover a bit, recording 5.6 per cent growth.

Massive Financial Crisis
The global economy is in a severe recession inflicted by a massive financial crisis and an acute loss of confidence, the IMF report stated. Wide-ranging and often unorthodox policy responses have made some progress in stabilizing financial markets but have not yet restored confidence nor arrested negative feedback between weakening activity and intense financial strains.

The report made it clear that the projection of a gradual recovery next year will depend on authorities acting decisively to restore financial stability, and fiscal and monetary policies in the world’s major economies providing sustained strong support for aggregate demand.

Emerging markets, which were relatively sheltered earlier from the financial strains because of their limited exposure to the US sub-prime market, have been hit hard by recent events. New securities issues came to a virtual stop, bank-related flows were curtailed, bond spreads soared, equity prices dropped, and exchange markets came under heavy pressure.

President’s Visit to Spain

India and Spain share mutual healthy relations. The diplomatic ties between New Delhi and Madrid were established way back in 1956 with the opening of the Spanish Embassy in India. In 1958, the concurrent accreditation of our High Commissioner to London as Ambassador to Spain was established, followed by opening of a Mission in Madrid, which was headed by a Chargé d'Affaires. The first resident Ambassador was appointed in 1965.

In October 1997, Crown Prince Felipe visited India to inaugurate Expotenia, the Spanish industrial fair.

In February 2001, Crown Prince paid a visit to New Delhi as a Guest of Honour at India Engineering Trade Fair, held in New Delhi, in which Spain was a partner country. The then Deputy Prime Minister and Minister for the Economy Rodrigo Rato accompanied him.

Visits at the Head of Government level include the visit of Spanish Prime Minister Felipe Gonzalez in 1993. From the Indian side, the then Prime Minister Rajiv Gandhi visited Madrid in 1988, followed by Narasimha Rao’s visit in 1992 and PM.

The Prime Minister of Spain Jose Luis Rodriguez Zapatero was on an official visit to New Delhi in July 2006.

In April 2009, President Pratibha Patil visited Spain to strengthen the mutual cooperation between the two countries.

Bilateral Relations
During her visit, President Patil held wide-ranging talks with the Spanish Prime Minister Zapatero. They decided to take their bilateral relationship to a higher level and agreed to fight terrorism in “all its forms and manifestations” and favoured the adoption of a global strategy against the menace at an early date.

President Patil and Zapatero also decided to have direct air links between them to strengthen tourism, economic, political and people-to-people relations.

Terrorism was a leitmotif and Zapatero was quoted as told the Indian President: “Terrorism is a scourge which the 20th century has left [us], a legacy which has to be destroyed.”

To work out the nitty-gritty, the Civil Aviation Authorities of the two countries will renegotiate the existing bilateral Air Services Agreement within three months. The two countries feel that a direct air link between them has acquired urgency in view of Spain opening up its Consulate-General in Mumbai next year which will include a Trade Office as well as a Tourism Office.

Political Dialogue
India and Spain decided to institutionalise the process of political dialogue between them at various levels and intensify their consultations and cooperation in international organisations and other multilateral for a.
The two leaders called upon the member states of the UN to make further concerted efforts to conclude the comprehensive Convention on International Terrorism.In defence sector, they agreed to explore the possibility of joint research and development.

The two leaders expressed their firm support for the work of the United Nations as a fundamental framework for multilateralism and agreed on the urgent need for a comprehensive reform of the United Nations.

Trade Agreement
Giving a major boost to their trade ties, India and Spain inked three key agreements in the fields of tourism, agriculture and renewable energy, paving the way for Spanish technology transfer and investments. India is keen to acquire renewable energy technology, especially in the wind and solar energy sectors, from Spain, which is considered the world leader in the fields. The world’s biggest photovoltaic solar cell-based plant is located in Spain.

Leading Indian wind power company Sulzon is already present in Spain and is seeking the Spanish assistance in the field.

In the tourism sector, Spain, which is the world’s number two destination after France for visitors, India will be seeking assistance of the European country in improving its tourism infrastructure. In the field of agriculture, India is keen to get food processing technology from Spain to utilise the surplus food items produced by it.

The bilateral trade between the two countries was growing, crossing $ 4.5 billion.

Spanish enterprises are known for executing large-scale infrastructure projects. The President invited them to make use of the opportunities India presents, in particular through small and medium enterprises.

Spain’s Foreign Direct Investment (FDI) globally was worth over €100 billion. Of this, India accounts for only €320 million, while India’s investment in Spain was almost twice that.

New Monetary and Credit Policy (2009-10)

The Reserve Bank of India (RBI) in its Annual Monetary and Credit Policy for 2009-10, released on April 21, 2009, slashed the Repo and Reverse Repo Rate by 25 basis points each. This could result in home and auto loans becoming cheaper. The RBI reduced the Repo Rate to 4.75 per cent and Reverse Repo to 3.25 per cent with immediate effect, while retaining other key rates like the cash reserve ratio, the percentage of deposits that banks keep with the central bank.

Banks have the apprehension that reducing deposit rate could shift deposits to post office saving instruments, which for some banks are not valid, while for some it is, the policy stated. In the wake of RBI policy cut, bankers have hinted that there could be reduction in lending as well as deposit rates.It is a signal to bankers to cut rates. Interest rate has already come down and it should soften further.

Since mid-September 2008, the RBI has cut the Repo Rate by 400 basis points and the Reverse Repo Rate by 250 basis points. The Cash Reserve Ratio (CRR) was also reduced by 400 basis points.

Support to Stabilize Economy
The RBI noted that its efforts under the monetary policy in 2009-10 would be to ensure a policy regime that enables credit expansion at viable rates while preserving credit quality so as to support the return of the economy to a high growth path.

The apex bank noted that India too has suffered the impact of the global financial crisis to degree far higher than expected. The extent of impact has caused dismay, mainly on two grounds: first, because our financial sector remains healthy, has had no direct exposure to tainted assets and its off-balance sheet activities have been limited; and second, because India’s merchandise exports, at less than 15 per cent of the GDP, are relatively modest, the RBI stated.

The RBI noted that the immediate challenges before it included supporting the drivers of aggregate demand to enable the economy to return to its high growth path, boosting the flow of credit to all productive sectors of the economy, ensuring an orderly withdrawal of the large liquidity injected in the system since September 2008 by the RBI to support the economy's productive requirements; and the continued challenge of preserving the stability of our financial system drawing from the lesson of the global crisis.

Foreign Banks Policy
The RBI in its policy stated that it would not hurry with the proposal to liberalise operation of foreign banks in the country in the wake of the global financial meltdown. The existing policy would continue, RBI stated.

Growth Rate
The RBI policy also forecast the Gross Domestic Product (GDP) growth at six per cent for the financial year 2009-10, while the rate of inflation was seen at four per cent by March-end. The regulator also projected credit growth and deposit growth at 20 per cent and 18 per cent, respectively.

Deposit and Lending Rates
Following several cuts in key policy rates by RBI, all public sector banks, most private sector banks and some foreign banks have reduced their deposit and lending rates. The reduction in the range of term deposit rates between October 2008 and April 18, 2009 has been 125-250 basis points by public sector banks, 75-200 basis points by private sector banks and 100-200 basis points by five major foreign banks. The reduction in the range of BPLRs was 125-225 basis points by public sector banks, followed by 100-125 basis points by private sector banks and 100 basis points by five major foreign banks.

However, these reductions in lending rates have not spurred lending activities. In fact, during 2008-09, the growth in non-food bank credit (year-on-year basis) decelerated from a peak of 29.4 per cent in October 2008 to 17.5 per cent by March 2009.Substantially lower credit expansion by private and foreign banks also muted the overall flow of bank credit during the year, the policy stated. Given the wide dispersion of credit growth noticed across bank groups during 2008-09, banks with strong deposit base should endeavour to expand credit beyond 20 per cent.

Benefits for Interest on SB Accounts In another move that could boost small savings in the country, the RBI has proposed that the payment of interest on saving bank accounts by scheduled commercial banks be calculated on daily basis.

At present, interest on saving bank accounts is calculated on the minimum balances held in the accounts during the period from the 10th day to the last day of each calendar month.It is proposed that payment of interest on saving bank accounts by scheduled commercial banks would be calculated on a daily basis with effect from April 1, 2010, RBI stated in the annual policy statement 2008-09. This would mean depositors would earn interest on all the 30 days on a daily basis.Several banks have suggested that interest rate on savings bank accounts may be either calculated on minimum balances in deposit accounts during the period from first to last day of each calendar month or on a daily basis.

Opening ATMs without Approval

After allowing customers of free usage across all ATMs, the RBI has now allowed banks to set up offsite ATMs without prior approval. It is proposed to allow scheduled commercial banks to set up offsite ATMs without prior approval subject to reporting, the credit policy stated. These moves could help customer make more use of ATM services.Earlier, the RBI allowed customers to withdraw cash from any ATM without any charge irrespective of the fact whether they hold ATM of that bank. Banks will not levy any fee on cash withdrawals using ATM and debit cards issued by their counterparts.

The RBI also proposed to constitute a group to review the framework of branch authorization policy with a view to providing greater flexibility, enhanced penetration and competitive efficiency consistent with financial stability.

Assessment
The RBI’s approach has been to watch and wait and nudge banks towards reducing their rates rather than aggressively cutting rates. If in response to this policy move, banks do move and cut rates, the RBI should cut rates further in the coming weeks. It should also cut the CRR, which is a tax on the banking system and needs to be removed, especially at a time when bank balance sheets are going to be under stress.

In fact, the reduction in the short-term lending rate by the RBI in as many months is accompanied by widespread pessimism that it is not percolating to the end user. The repo rate, at which the central bank lends overnight money to banks, at 4.75 per cent is now half of what it was in October 2008. The increased liquidity is being used by risk-averse banks to lend mainly to their most credit-worthy borrower: the government. Since October 2008 growth in bank lending to companies and individuals has slowed from 15 per cent to three per cent in March 2009.

The expansionary fiscal policy is likely to result in a GDP growth rate of six per cent in the year to March 2010. The first officially articulated projection, in the RBI’s annual policy statement, is justifiably cautious. It should come as some comfort that Mint Road has not had to look for options beyond interest rates at this stage of the game.

Fifth Summit of Americans

The three-day Fifth Summit of the Americas-- Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela-- concluded in Port of Spain on April 20, 2009 with hemispheric leaders failing to adopt the "Declaration of Port of Spain" that would have provided a blueprint for the future socio-economic development of the Americas.

The Declaration
The declaration itself did not have the approval of all 34 countries. Some countries had reservations about some elements of it and that is understandable because it is very difficult with 34 countries meeting and negotiating positions. Prior to the summit, the member countries of the Alternative Bolivarian for the People's of Our Americas (ALBA), which also includes Nicaragua and Bolivia had vowed not to sign the "Declaration of Port of Spain" in solidarity with Cuba that has not been invited to this nor previous summits.The Declaration of Port of Spain was an attempt to define a renewed hemispheric cooperation agenda for sustainable development in the Americas and addresses the main themes of the summit "Human Prosperity, Energy Security and Environmental Sustainability".

The Declaration of Port of Spain therefore does not fully reflect that because of the time it was negotiated. The negotiations for the declaration had ended before the G-20 Summit in London had taken place.Allocation of SourcesThe deliberation took that into account and came to additional conclusion that we were concerned about the allocation of resources to development institutions, particularly the Inter-American Development Bank (IADB).The leaders at the summit expressed the view that we thought that the western hemisphere countries should not be disadvantaged as a consequence of an improper allocation of finances to the IADB and that the time was most appropriate and opportune to recapitalise the IADB.They adopted the document at the retreat, which meant there was not unanimity, but there was consensus on the matter.

The Caribbean Community (CARICOM) leaders in the discussions served as a tremendous voice of reason and of openness at those times when dialogue did get heated without steering us away from those disagreements.

Optimism Over Relations With US
The South American Presidents were pleased about the new era that appears to be opening in relations with the US and with President Barack Obama's promises that they will be treated as equals, promises that he reiterated during his first Summit of the Americas.

In addition to handshakes and smiles, the conversations with Obama proceeded in an atmosphere of such respect and cordiality that there is now talk of this summit marking a turning point in relations with the US. During this first meeting with the bloc that consists of one of the chief issues was the need for the US to normalise its relations with Cuba, a position that is gaining strength with the Obama administration.

The South American Presidents agreed on the necessity for including Cuba in these summits and President Obama said that this proposal will be studied.

But aside from advances made on the issue of US relations with Cuba and the reinclusion of Cuba in the inter-American system, the region's Presidents are convinced that the difficulties that marked relations (with the United States) during the era of George W. Bush have been put behind them.

India Launches Spy Satellite

Indian Space Research Organisation (ISRO), the country’s space agency workhorse, PSLV-C12 [Polar Satellite Launch Vehicle] rocket soared majestically into a clear sky from the spaceport in Sriharikota on April 20, 2009. It placed its first Radar Imaging Satellite (RISAT 2) and micro-educational satellite ANUSAT into orbit about 19 minutes later in a textbook launch.

The present launch is the 15th flight of PSLV, which has so far launched 30 satellites-- 14 for India and 16 for foreign countries -- since 1993.PSLV had also launched the Chandrayaan-1 spacecraft on October 22, 2008.

Anti-Infiltration Satellite
The 300-kg RISAT-2 will primarily keep an eye on the country's borders round-the-clock and help in anti-infiltration and anti-terrorist operations.The year 2009 has started off well. The final moments of the launch were more thrilling than a cricket match as we hit a few boundaries and bowled some googlies. The performance of the PSLV-C12 launch vehicle was "precise and on the dot". Again, the country has set a record. As in the past, it declared the launch date, time and it made it happen.

National Asset
The satellite would be a good asset to national resources and it is going to serve the country well. RISAT2 has all-weather capabilities to take images of Earth and would also be beneficial in mapping and managing natural disasters, such as floods and landslides.The 40 kg micro satellite ANUSAT, the co-passenger of RISAT 2, has been built by Anna University, to demonstrate the technologies related to message store and forward operations.ANUSAT, the first built by an Indian University, is a 'store-and-forward' communication satellite that will help transfer confidential academic material and also monitor drought and wasteland, urban planning and other studies.

Use of SAR

RISAT2 has a lifespan of three years and ANUSAT, one year. Different from previous remote sensing satellites, RISAT2 uses Synthetic Aperture Radar (SAR), equipped with many antennas, to receive signals which are processed into high-resolution pictures.The SAR, developed by Israel Aerospace Industries, equips RISAT with defence capabilities. The SAR payload can take images during day, night and in all weather conditions, including under cloud cover, a capability that Indian satellites do not have.

Foreign Aid for Pakistan

Pakistan has secured more than $5 billion in fresh aid over two years at a donors conference, held rently after President Asif Ali Zardari vowed to step up the fight against militants. The amount exceeded Pakistan’s hoped-for $4 billion and comes at a time when the international community is worried an economic meltdown in the country could fan popular support for Al-Qaeda and other militant groups. Commitments to existing aid programmes totalling $15 billion were reaffirmed.

Foreign investors are eager to see Islamabad proceed with tough economic reforms seen as vital to restore growth. Pakistan is already being propped up by a $7.6 billion loan from the International Monetary Fund (IMF) over two years.

Pakistan was told that the aid was aimed at equipping, training and building infrastructure directly related to counter-insurgency operations” and “not to support any person or group that conducts violence, sabotage or other activities meant to instil fear or terror in India. The reality, however, has been different. Pakistan is indeed on test. Its failure to respect the donors’ mandate must not go unpunished.

Aid Under US Plan for South Asia
Nuclear-armed Pakistan is central to the US President Barack Obama’s plan for South Asia. That plan includes trying to stabilise Afghanistan where Taliban militants, many operating from lawless enclaves in northwest Pakistan, have thrown the effort into doubt. Pakistan President assured Islamabad’s allies that Pakistan would do its utmost to deliver on economic reforms and fighting militants.

With the support of the IMF, the World Bank, and other development partners, Pakistan is now returning to a path that should allow for economic growth and poverty reduction. While it has been imperative to focus on the short term, in terms of regaining macroeconomic stability, the World Bank would not also want to undermine the importance of staying focused on the longer- and medium-term priorities.

Pakistan has a wish-list of projects worth $30 billion that it wants to see implemented over the next 10 years, including hydro-electric dams, roads and projects aimed at improving security in its violence-plagued northwest on the Afghan border.

The US said it would provide $1 billion in aid over two years, subject to approval from Congress, matching a pledge from Japan.

Efforts to Counter Terrorism
The underlying message that the donors — the US, Japan, the European Union and Saudi Arabia — have sent out is that they are one with Pakistan in its efforts to maintain stability, which is essential for preventing the spread of terrorism.

The idea is to ensure that Pakistan does not lack funds for launching development-related projects, particularly in its terrorist-infested tribal areas, as terrorist outfits like Al-Qaida and the Taliban have been exploiting poverty to expand their bases. The hope is that terrorist outfits may find it difficult to get fresh recruits to their destructive cause in an atmosphere of increased economic activity.

The Other View
The trouble is that there is no proper mechanism to ensure that the funds being made available to Pakistan by the international community in the name of fighting terror will be used only for the intended purposes. Pakistan has a history of diverting financial assistance to strengthen its military vis-à-vis India. This can happen again in the absence of a foolproof system for channeling these funds into infrastructure and other such development project.

Deepening Water Crisis in India

Water is one of the most precious elements for human life on the earth. It is critical for satisfying the basic human needs, health, food production, energy and maintenance of regional and global ecosystems. Over 70 per cent of the human body is made up of water. A human being may survive without food for several days but water deprivation can kill a person within a short time. The 21st century has to deal with water quality and management in solving the issues of food or health or sanitation, environment or cities or energy production.

The Crisis
It is estimated that about 120 crore people spread across 40 nations do not have access to safe water; 240 crore lack adequate sanitation services. Over the next 20 years, the world’s population will increase from the present 6.4 billion to an estimated 7.2 billion whereas the average supply of water per person is expected to fall by one-third. The hardest hit will be the poorest.

The principal causes of the water crisis are population growth, climate change, over­use or misuse and pollution of the available water resources. Irrigation accounts for two-thirds of global use of fresh water. Farmers use water less efficiently and withdraw more water to compensate for water losses. In developing nations 60 per cent water is wasted or used inefficiently. Most of the water reservoirs are suffering reduction in storage capacity as a result of sedimentation caused by deforestation; on an average of one per cent of the water storing capacity of the reservoirs is being lost annually.

Situation in India
As far as India is concerned, the country is divided into 24 river basins. Annual mean flow in the river basin is reckoned as water resources of the basin. Central Water Commission has estimated the total water resource of the country at 1953 km3. The water resource of Ganga-Brahmaputra-Meghna is estimated at 1200 km3 which is 60 per cent of the total water resource while the basin occupies 33 per cent of the geographical area.

Safer water is essential for the sustenance of life. It is needed in the household for drinking, cooking and cleaning besides bovine and horticultural needs. Almost 100 per cent of coverage in both water supply and sanitation is yet to be achieved. Progress to extent of 90 per cent urban water supply and 50 per cent for urban sanitation is reported to have been achieved. The coverage, however, varies widely both in Class I and II cities. The variation in the per capita water supply ranges from nine to 584 Ipcd in urban areas and five to 70 Ipcd in rural areas. The Ninth Five-Year Plan strategy to have 100 per cent coverage in sustainable water supply ensuring adequacy in terms of minimum per capita norms is yet to be translated in true sense of term.

Widespread dissatisfaction among consumers in States like Maharashtra, Delhi, Rajasthan and Madhya Pradesh is the result of improperly managed water supply systems, where people are forced to resort to alternate means or supplementary sources for collec­tion of water through private tube wells or tanker supplies at considerable costs. It is so because 17 to 44 per cent of total flow in distribution system is lost due to leakages in the mains, communication and service pipes and leaking valves. To arrest the fall of ground water table, measures of artificial recharge and rain water harvesting have to be encouraged.

Water requirement for industries in India although insignificant, when compared to the demand for other uses like agriculture creates problems by creation of point loads on available resources. Water use in industries is mostly of non-consumptive in nature and with suitable treatment can be recycled and reused by process industries for their requirements of processing, cooling, boiler feed and other miscellaneous purposes. Cost effective strategies have been demonstrated and should be adopted by industries.

National Water Policy
The Union Government had launched a National Water Policy way back in 1987. This was further revised in 2002. It provides guidelines for the optimum use of water in India, treating river basin as units for planning for development and manage­ment. The policy gives first priority to drinking and domestic needs, followed by irrigation and then industry and so on. As the policy, is only a statement of intentions, the states are not exactly following the guidelines unless there is an Act by the Parliament. Under the norms of the policy, each State is supposed to have a State Water Policy. However, few States have adopted their policies to meet the present water crisis.

Inter-State River Conflict
There are two Acts to resolve the Inter-State conflicts. The first is the Inter-State Water Dispute Act of 1956 and the other is the River Board’s Act that came into force in 1957. As far as the first Act is resorted to in dispute by establishing tribunals among States, the latter has not been used at all so far. Even the awards made by the Tribunals under the first Act are running into rough weather with a few States not honouring the decisions.

River Linking Projects
The Government has conceived a massive river linking scheme connecting all the major rivers in India based upon the studies carried out by various agencies during the last two decades. This is considered to be panacea for all the problems of water crisis faced by people of the country during the drought period. International experience on such massive interlinking is being done at present, has not been very favourable. In this connection, the much delayed and yet to be completed Sardar Sarovar Project is also an eye-opener.