4th BRICS Summit: Playing Crucial Role at World Level

The BRICS (Brazil, Russia, India, China and South Africa) is a grouping of the world’s emerging economies, representing five continents. The BRICS countries together account for 40 per cent of global GDP ($18.49 trillion). Intra-BRICS trade is worth $212 billion, and is growing at 28 per cent a year. It has set itself a trade target of $500 billion by 2015.
The importance of BRICs in the world economy has increased manifold since the acronym was first coined approximately seven years ago. Few could have imagined then how the US economy would collapse and bring down with it much of the rest of the world. It is worth revisiting the original formulations on the significance of these four major countries that were made by representatives of a major US investment bank
Some member countries in the organization are among the fast emerging economies in the world. At the same time, the world has come to realize that to bring an end to the unipolar world and to maintain the power balance, the importance of Russia cannot be ignored. Countries such as China and Brazil not only want to maintain close relations with the United States, but with Russia as well.
However, the aim of the BRICS is to enhance cooperation among member countries and working together at the international forums. Clearly, it is an opportunity for India to improve and strengthen its relations with China and strive to get their disputes resolved.
The fourth BRICS Summit was held in New Delhi on March 28-29. The summit’s theme was “BRICS partnership for Global Stability, Security and Prosperity.” The participants included Presidents Hu Jintao of China, Dmitry Medvedev of Russia, Jacob Zuma of South Africa and Brazil’s Dilma Rouseff. Prime Minister Manmohan Singh hosted the summit, and also held a series of bilateral sessions with his guests, including China’s Hu Jintao.
The summit held against the backdrop of continued profound and complex changes in the international situation, uncertain prospects in world economic recovery and the steadily rising status and role of emerging markets and developing countries in international affairs. It was yet another important event in the ongoing BRICS cooperation. India has worked effectively in preparing for the summit. China tried to work with other BRICS members to push for positive outcomes. On the summit’s eve, the five nations resolved to resist protectionist tendencies worldwide.
The leaders of five emerging economic powerhouses affirmed not just their growing economic clout but also their impact on the global political order.
Delhi Declaration
At the end of the summit, BRICS leaders issued a Delhi Declaration. The Declaration hinted at backing an alternative candidate for the World Bank president's post which has always been appropriated by an American and exhorted the Bank and the International Monetary Fund (IMF) to quickly realign their priorities and approach to the needs of the developing world. This is an agenda the five countries intend pursuing at the coming G20 meeting in Mexico as well.
The leaders also weighed the consequences of setting up a “BRICS Bank” and opted for a more contemplative approach by asking their Finance Ministers to examine its feasibility and report back at the next summit in Russia. They agreed that the bank should in no way emerge as a competitor to the World Bank and the IMF but provide funds for projects that do not find favor with these institutions.
In line with their professed commitment to multilateralism in economic and political problem solving, the leaders agreed to invest more in the United Nations Conference on Trade and Development (UNCTAD) which played a major role in catering to the interests of developing countries in the run-up to the setting up of the World Trade Organization (WTO).
Seeking to reinforce their growing economic heft with diplomatic clout, the BRICS grouping pitched for a bigger say in global governance institutions, including the United Nations and the IMF, and told the West that dialogue was the only way to resolve the Iranian nuclear issue and the Syria crisis.
The leaders of BRISC’s formulation on Iran came close to condemning the West's pressure tactics to make other countries obey their latest restrictions on trade ties, especially in the energy sphere. Saying that a conflict would have disastrous consequences, it wanted the two antagonists to resolve suspicions over Iran's nuclear program through talks on multilateral fora.
On Afghanistan, BRICS exhorted the international community to stay the course on the development front for 10 years after the West withdraws most of its combat troops by 2014-end and, on Russia's insistence, made a mention of checking narcotic trafficking.
In a fresh assertion, BRICS asked the West to implement the 2010 governance and quota reform before the 2012 IMF/World Bank annual meeting, as well as the comprehensive review of the quota formula to better reflect economic weights. They asked for enhancing the voice and representation of emerging market and developing countries by January 2013, followed by the completion of the next general quota review by January 2014.
In a signature step, the BRICS decided to create their first institution in the form of a BRICS-led South South Development Bank that will mobilise "resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries." The leaders directed their finance ministers "to examine the feasibility and viability of such an initiative, set up a joint working group for further study, and report back by the next summit."
The development banks of the five countries signed two pacts, including a master agreement on extending credit facility in local currency and BRICS multilateral letter of credit confirmation facility agreement, which could help scale up bilateral trade from $230 billion to $500 billion.
India’s Major Points
Addressing the summit, Prime Minister Manmohan Singh also said that the grouping has agreed to examine in "greater detail" a proposal to set up a South-South Development bank, funded and managed by BRICS and other developing countries.
Singh also urged member countries to speak in one voice on key issues such as the United Nations Security Council (UNSC) reforms. He suggested that BRICS countries should speak in one voice on issues such as reforms of the international body.
On UNSC reforms, Singh suggested that BRICS countries should speak in one voice on issues such as reforms of the international body.
He also said in their restricted session, the grouping also discussed the ongoing turmoil in West Asia and agreed to work together for a peaceful resolution of the crisis.
Touching upon the issue of terrorism, Singh said the countries should enhance cooperation against terrorism and other developing threats such as piracy, particularly emanating from Somalia.
UN Millennium Development Goals
BRICS nations are the defender and promoter of the interests of developing countries. In their cooperation, BRICS countries have committed to promoting South-South cooperation and North-South dialogue, endeavored to implement the UN Millennium Development Goals, worked for early realization of the goals set out in the mandate for the Doha development round negotiations, strived to secure a greater say for developing countries in global economic governance and fought all forms of protectionism.
Cooperation among BRICS countries is made necessary by the ongoing economic globalization and democratization in international relations. It is consistent with the trend of the times characterized by peace, development and cooperation, and fully conducive to building a harmonious world of durable peace and common prosperity.
Role of China
An impression is sought to be created that with its massive monetary reserves and political clout, China may exert undue influence in this bank. This is unlikely. Such a bank will not require too much paid-up capital (relative to the average size of respective sovereign reserves) if intelligent financial engineering can help sequester foreign reserves. This would mean that the smallest BRICS economy, South Africa, could easily commit an amount similar to that of China in the capital structure. Such doubts could be further allayed with the institution of a rotating Presidency of, say, a two-year term that could initially be restricted to the BRICS countries alone.
India-India Strategic Ties
The China-India strategic and cooperative partnership has made all-round progress in recent years. A sustained, sound and steady growth of relations between China and India, the two large developing countries sharing borders with each other, will serve not only the well-being of the two peoples but also peace, stability and prosperity in Asia and the world as a whole.
The Delhi Summit will be remembered forever for one major achievement, at least. Its expected decision to set up a BRICS bank on the lines of the World Bank may change the course of economic activity in the member-countries. The setting up of this new financial institution by the bloc that has brought together half of the world’s population may speed up infrastructure development programs in the BRICS countries and serve as a second line of financial defense in times of economic crisis as is being faced by Europe today.

2nd Nuclear Security Summit: Tightening Nuke Weapons Design and Programs

The two-day second Nuclear Security Summit concluded in Seoul (South Korea) on March 27. The first was held in Washington DC in April 2010 after US President Barack Obama mooted the idea in a speech in Prague in 2009. President Obama, who singled out nuclear terrorism as the most serious threat to international security in his speech, was in Seoul. Leading the Indian participation in the summit was Prime Minister Manmohan Singh.
The gathering of 58 world leaders saw discussing the various issues surrounding nuclear security. The 9/11 attacks in 2001 appear to have spurred countries across the globe to discuss measures that are needed in the event of nuclear materials and facilities actually falling into the hands of non-state actors. Nuclear security is hence seen as a step to combat the threat of nuclear terrorism.
Joint Communique
Seeking strong national measures and global cooperation against nuclear terrorism, world leaders have underlined the central role of International Atomic Energy Agency (IAEA) in strengthening the atomic security framework and insisted that the rights of States to peaceful use of nuclear energy will not be hampered.
The leaders said: “We stress the fundamental responsibility of States, consistent with their respective national and international obligations, to maintain effective security of all nuclear materials, which includes nuclear materials used in nuclear weapons and nuclear facilities under their control.”
The communique, adopted by 53 world leaders and five multilateral organizations, also highlighted the fundamental responsibility of the States to prevent non-state actors from acquiring such materials and from obtaining information or technology required to use them for malicious purposes.
In the backdrop of the 2011 Fukushima disaster, the idea of nuclear safety came to the fore at Seoul, with India underlining the need for synergy between nuclear safety and nuclear security. The Seoul communiqué too touches on this aspect. After all, the release of dangerous radioactive materials in sufficient quantities from a legitimate nuclear power plant is no less dangerous than a terrorist stealing and unleashing a dirty bomb.
At a more practical and feasible level, at the Seoul summit, India pushed the expansion of its bilateral ties with South Korea to include the purchase of civilian reactors and military hardware from it, in addition to engaging in space cooperation under which this country would launch South Korean satellites. Maritime security was discussed too between Singh and President Lee Myung-Bak, in addition to stepped up Korean investment in Indian infrastructure.
India’s Stake
Addressing the summit, Prime Minister Manmohan Singh said that India had made a strong pitch for membership of four exclusive nuclear clubs contending that it would help strengthen its export control systems and maintain highest international standards of its nuclear program.
He added that India had never been a source of proliferation of sensitive technologies and the country was determined to further strengthen its export control systems to keep them
At the summit, the prime minister said on par with the highest international standards. He underlined that India had already adhered to the guidelines of the Nuclear Suppliers Group (NBG) and the Missile Technology Control Regime (MTCR).
Singh said: "As a like–minded country with the ability and willingness to promote global non-proliferation objectives, we believe that the next logical step is India's membership of the four export control regimes."
India is keen for membership of the NSG, MTCR, Wassenaar Arrangement and the Australia Group. At the same time, Singh said an agreed multilateral framework involving all states possessing nuclear weapons was necessary to attain the goal of a nuclear weapons free world.
"This should include measures to reduce nuclear dangers by reducing the salience of nuclear weapons in security doctrines and by increasing universal restraints on the first use of nuclear weapons," he said.
The prime minister also announced a contribution of one million dollars to the IAEA’s Nuclear Security Fund for the years 2012-13.
India has also made some progress, albeit slowly, on its commitment to set up a Global Centre for Nuclear Energy Partnership. It announced that the centre will have a 200 acre campus in Bahadurgarh, Haryana and comprise four different schools covering nuclear security, nuclear energy systems, and radiation safety.
On India's nuclear program, the prime minister said comprehensive reviews of nuclear safety measures have been undertaken at nuclear facilities.
Concern for Pakistan’s Arsenal
President Obama has voiced concern over safety of Pakistan’s nuclear arsenal, saying the world cannot allow non-state actors and terrorists to get their hands on the nuclear weapons and end up destroying cities.
“We can’t afford to have non-state actors and terrorists to get their hands on nuclear weapons that would end up destroying our cities or harming our citizens,” Obama told reporters alongside Pakistani Prime Minister Yousuf Raza Gilani before the two leaders held private talks on the sidelines of the summit.
The West is concerned over the safety of Pakistan’s nuclear weapons as it remains vulnerable because the atomic facilities are located in areas where “Taliban and Al-Qaeda are more than capable of launching terrorist attacks”.
In their first meeting since the killing of Osama Bin Laden in a covert US raid on Pakistani soil in May 2011, the two leaders tried to rescue a troubled anti-terror alliance which has been full of mistrust and recriminations in recent times.
North Korea and Iran Warned
The US President has warned North Korea and Iran that their options are few and their friends fewer as those nations refuse to back down from actions the world sees as menacing.
Seoul warned that it might shoot down parts of a North Korean rocket if they violate South Korean territory, as worries about what Washington calls a long-range missile test overshadowed an international nuclear security summit.
Nuclear Terrorism
The leaders at the summit reached a consensus that nuclear terrorism is among the top global security challenges and that strong nuclear material security measures are the most effective way to prevent it. This may not seem like much, but getting 47 nations to agree on any nuclear issue, however innocuous, is not always easy.
In addition, 29 of the countries present made voluntary commitments to enhance nuclear security. Country-specific steps — colloquially termed “house gifts” — were taken ahead of the summit. Thus, Chile removed all its Highly Enriched Uranium (HEU) — 18 kg — in March 2010, while the Philippines joined the Global Initiative to Combat Nuclear Terrorism. Several countries, including India, announced that they would create new “centres of excellence” to promote nuclear security technologies.
The outcome Seoul summit, as much as the first one hosted by US President Barack Obama in Washington in 2010, are traceable at the level of theology to President Obama’s Prague speech of 2009. And therein lies the weakness of the enterprise. In that address, the US President had highlighted the dangers of nuclear weapons and nuclear materials falling into the wrong hands, and envisioned a world free of the atom bomb. But until such time as that happens, Obama was quite clear in his vision that the United States would stand ready with its own nuclear weapons to take care of any potential adversary.

Growing Corruption in Defense: Army Chief in New Controversy

Indian Army Chief General VK Singh has blown the lid off defense corruption in India by suggesting in an interview to The Hindu. The General Singh had claimed in media interviews that a lobbyist, who had "just" retired, offered him a bribe of Rs 14 crore for clearing a file relating to purchase of a tranche of 600 "sub-standard" vehicles of a particular make and he had immediately informed Defense Minister A K Antony about the same.
In his explanation through the media he has said that by not addressing the main issue of his date of birth, the Supreme Court has created more confusion. It is clear he did not accept the court verdict in the spirit it was delivered. Instead, after the verdict he has dragged in former Army Chief General JJ Singh, calling him the main architect of the date of birth controversy.
Undoubtedly, the Army chief has committed a few improprieties — not taking up his age issue as upfront as he did when he became the Chief of Army Staff (COAS); making a patently erroneous distinction between his personal case and the office of the COAS; filing a statutory complaint against the government and setting an unhealthy trend among the rank-and-file of questioning lawful authority; and, on rejection of his statutory complaint, taking the government to court. To cap it all, he did not put in is papers even after he lost his case in court.
The Czech-origin Tatra multi-wheeled vehicles, manufactured by a public sector unit under license, were being supplied to the Army for the past 25 years. If the quality of the vehicle was indeed unsatisfactory, why did the Army never complain in writing? What is more, it is said that only one vendor has supplied the vehicle to the Army since 1986 and enjoyed a virtual monopoly. Why was then a bribe needed to be paid to General Singh? While General Singh’s insinuation that at least some of his predecessors might have been bribed to keep quiet about the quality of the vehicle has stirred the hornet’s nest, the retired officer named by the Army chief has denied the allegation and any interest in the vehicle, claiming that he has been engaged in only real estate and mining since his retirement.
Defense Ministry’s Response
The defense minister has corroborated the Army chief’s allegation of a Rs 14-crore bribe offered to him by Lieutenant General (retired) Tejinder Singh, but blamed Gen VK Singh of “inaction” in the matter.
Making a statement in the Rajya Sabha (upper house of the Parliament), Antony mentioned Lieutenant General (retired) Tejinder Singh by name and said he had asked the General to act, but he did not want to pursue the matter for unknown reasons. This, and the assertion that he himself could not act as there was no written complaint from the chief were the explanations that the Bharatiya Janata Party (BJP) refused to buy.
Cases Against Army Chief and Others
Lt Gen (retd) Tejinder Singh has filed a criminal defamation case against General Singh and others in a Delhi court, rejecting allegations that he had offered Rs 14 crore as bribe to the General to strike a defense deal.
Tejinder Singh asked the court to summon and initiate proceedings against General Singh for making the "libelous" statement in media.
In his complaint, the retired Lt General has also named Vice Chief of Army staff SK Singh, Lt Gen B S Thakur (D G MI), Major General S L Narshiman (Additional Director General of Public Information and Lt Col Hitten Sawhney accusing them of misusing their official position, power and authority to level false charges against him.
Alarming Questions
The important aspect of this present controversy is that people fail to understand why did not General Singh, who enjoys a just reputation for integrity — exactly like defense minister— not have his dubious interlocutor arrested on the spot? Asked about this in a television interview, General Singh said he was too shocked as the vile suggestion was made by an officer just recently retired and was couched in indirect terms. General Singh said he went up to the defense minister right away and informed him of the distasteful episode.
What action did Antony choose to take apart from “holding his head” and instructing the chief not to let shady characters into our defense trade. Knowing our Parliament, it will probably get fixated on this issue (it must certainly investigate it though), and not pay attention to the wider (and pressing) question of corruption in defense purchases that could have the effect of selling our soldiers down the river in a military crisis.
Earlier in March 2012, the Defense Ministry banned six foreign and two Indian companies for 10 years for allegedly being involved in the payment of hefty sums to the director-general of the ordnance board to secure the contract for setting up factories to produce specialized materials for artillery shells. The firms included the Israeli government company that manages much of that country’s defense exports to India, and Israel is now India’s second largest defense exporter.
General Singh has used the bribery revelations to illustrate that he is being targeted by the establishment for ferreting out the corrupt within the system which had corroded the internal health of the Army. In graphic detail he has explained how corruption has burrowed into the innards of the Army. He has claimed that a retired unnamed officer offered him Rs 14 crore as bribe if he would clear a file. He asked him to leave and reported the matter to the defense minister.
However, the question lies: when the General B K Singh had informed the defense minister; why Antony kept mum in all these months, he should have ordered enquiry into the matter! Moreover, why the Army chief himself not lodged FIR against the person, who had offered bribe in his chamber; who prevented him how the general also kept mum? Only after the age controversy of General Singh, and the judgment going against him and now he is on verge of retirement, Singh is making public all these things? General Singh should have lodged FIR against the responsible person, who came to him personally to offer bribe! Undoubtedly, the Army chief is of impeccable character but his Defense Minister Antony is also known for honest and integrity.
Wrong Timing of Charges
Moreover, why did General Singh choose to go public with the bribery charge now and not earlier? The question is pertinent because as early as March 6, 2012, the Army put out a press release accusing a retired lieutenant. General of offering a bribe on behalf of a company that supplies trucks. Inexplicably, while the press release did not fight shy of naming the person who allegedly offered the bribe, it was silent on who he tried to induce.
General Singh should have started his crusade against bribe-givers more robustly much earlier and not at the fag end of a flagging career. It is true that he pushed the Adarsh Housing Society scandal and the Sukna land scam. But the timing of the latest revelations in The Hindu and The Economic Times is suspect. The immediate fallout from his interview and allegations is a Central Bureau of Investigation (CBI) inquiry in which the Army chief, the unnamed General, the defense minister and officials of the Ministry will be quizzed. The Defense acquisition procedure in which the Army is worst hit will slow down even further, with more defense companies being blacklisted. Even more worrying will be the worsening state of civil-military relations, especially between the Army Headquarters and the Defense Ministry.
Positive Aspect
An officer of impeccable integrity, General Singh's attempts to crack down on corruption in the Army, particularly the Sukna land and Adarsh Housing Society scams, shows he has what it takes to be a tough reform-oriented leader. Which is what makes the seemingly casual handling of an alleged attempt to bribe him somewhat puzzling. If the defense minister did not take his complaint seriously, the Army chief could have pursued the matter in a variety of ways.
Whatever the reason for this reluctance, it is clear that the controversy over his age — a matter strictly between himself and the defense establishment — has caused collateral damage in other areas and spawned unrelated disputes that have the potential of causing divisions in the Army, particularly in the top echelons, and in the Defense Ministry between uniformed men and political leaders.
Assessment
It is abhorrent on the part of General Singh in making sweeping statements and accusations in public to sensationalize the issue rather than making appropriate moves to get the bribe inducer booked and tried with valid proof. It is high time that he stops sullying the image of the army with his politician like demeanor and brings disrepute to the exalted post he holds until he remits office.
It is really surprising why General Singh who is known for his firm stand against corruption kept mum on following up with this issue and what prompted him to open the can of worms at this point of time? He could have got this monkey off his back as soon as this issue surfaced and why waited for over an year and that too when it is time for retirement?
No investigation would change the systems which have been fine-tuned to corruption. Only a grass roots education of citizens of evils of corruption would help reduce corruption. Hope this takes place. We do not need heroes like Anna to address corruption; we need awareness programs to make a common man aware of evils of corruption. Hope we can initiate these awareness without involvement of political parties.

State of Families in India After 65 Years of Independence: Is Country Shining?

The Federal Home Ministry has recently released the final figures of the first phase of Census 2011 known as Houselisting and Housing Census in New Delhi. The latest Census has thrown up figures that would shock country planners. Despite significant improvement in living standards over the last census of 2001, the 2011 figures show a picture that is far from respectable for a country aiming to be on the global high-table of decision making.
According to the present Census, these and many other contrasting facts of life have come out in Census 2011. The data casts new light on a country in the throes of a complex transition, where millions have access to state-of-the-art technologies and consumer goods — but a larger number lacks access to the most rudimentary facilities.
The data states that India is now overwhelmingly made up of nuclear families — a dramatic change from just a generation ago, where joint families were the norm. Seventy per cent of the households consist of only one couple. Indian families are overwhelmingly likely — 86.6 per cent of them — to live in their own houses, but 37.1 per cent live in a single room.
Bold Paradox
Sample this: In nuclear India capable of routinely sending satellites into space, 31 per cent - 10 crore - out of 33 crore households across the country use kerosene for lighting homes. Approximately 7 per cent of the urban houses (presumably slums) use kerosene while 43 per cent rural homes use the fuel, indicating that they either do not have power supply or cannot afford it. This figure is an improvement over 2001 when 42 per cent households used kerosene for lighting purposes.
If you thought that almost everybody in India was rushing to buy a car, just sample this: Only 5 per cent - some 1.65 crore -- families in the country own a personal four wheeler. Only 9.7 per cent - some 1 crore -- of the 11 crore urban families have a four wheeler.
Rapid Economic Growth
Despite India’s rapid economic growth, nearly 15 per cent families live in houses that have roofs made of grass, thatch, bamboo, wood, mud etc. Ten years ago, the figure was 21. 9 per cent.
The Census says only 32 per cent households use tap water for drinking from a treated (filtration plant) source. Only 47 per cent families have source of water (tap, well, etc) within the houses, while 18 per cent fetch drinking water from a source located more than 500 meters (villages) and 100 meters (urban) from their homes. In urban areas, 70 pc homes have tapped water supply, while just 30 pc enjoy the facility in the rural areas.
The data shows 61 per cent families across the country have kitchen for cooking. Approximately 79 per cent urban homes have it, while the figure is 53 per cent in villages. Surprisingly, 67 per cent of families use firewood, crop residue, cow dung and coal as fuel to cook. Only 29 per cent homes across the country have access to LPG, electricity or bio-gas as fuel for cooking purposes. In the urban areas, 65 per cent of homes have access to LPG while 20. 1 per cent use firewood and 7. 5 per cent kerosene for cooking.
Cellphone Versus Toilets
It noted that 49.8 per cent Indian households defecate in the open but, in sharp contrast, 63.2 per cent households own a telephone connection, 53.2 per cent of them a cell phone. The data also shows that computers with Internet facilities have penetrated just 3.1 per cent of the population.
The data on toilets has reflected the recent concerns raised by Federal Rural Development Minister Jairam Ramesh, whose remark that women demand cell phones but not toilets had created a controversy. Open defecation continues to be a big concern for the country as almost half the population (49.8 per cent) do it. Cultural and traditional reasons and lack of education were the prime reasons for this unhygienic practice.
The figures show that 3.2 per cent people use public toilets. Jharkhand tops the list with 77 per cent households without toilet facilities, followed by 76.6 per cent in Orissa and 75.8 per cent in Bihar.
Need of the Hour
People without latrines especially women as told Prime Ministyer Manmohan Singh in a statement is a shame for the country. This Census proves that issue is serious and demands attention of the federal and provincial levels.
The government should take note of the issue and ensure functioning of sewage treatment plants in local urban bodies to protect the masses from cancer like ailments in India. Pedestrians and cyclists are most vulnerable to accidents their movement on the roads is at mercy of the fast moving vehicle owners as there no cycle tracks on the roads.
After 65 years of independence, it is a national shame that around 50 per cent of the population ease themselves in the open, and a large majority of the rest have access to latrines with no running water or use public toilets which seldom are useable. As far as the government is concerned, it is a regret that it could not fetch to the citizens the basics like toilets, water and hygiene and for the citizens it's a matter of rejoice that they have earned enough penny to make technology touch the ground in the face of cell phones and televisions. With corrupt politicians and industrialists will India ever be able to solve its toilet problem which is getting worse with each passing day. In other words, profit-seeking companies can do a much better job than the government, the way it is working, in providing services in the country.

Monetary and Credit Policy: Repo and Reverse Repo Rates Unchanged

The Reserve Bank of India (RBI) has recently released its mid-quarterly review. It has clearly spelt out that monetary policy actions will be in terms of rate cuts going forward, given the moderating growth momentum and higher downside risks to growth.
The RBI kept repo and reverse repo rates unchanged at 8.5 per cent and 7.5 per cent, respectively, to fight rising inflation in Asia's third largest economy. The central bank left Cash Reserve Ratio (CRR–(money that banks must keep with the RBI) unchanged at 4.75 per cent. Recently, the RBI slashed CRR, the portion of deposits banks are required to keep with the central bank, by 0.75 percentage points, a step that was meant to infuse Rs 48,000 crore into the economy.
Earlier on March 9, the central bank cut CRR by a hefty 75 basis points, or three-fourths of one per cent, from 5.5 per cent to 4.75 per cent effective the fortnight beginning March 10.
The markets and the corporate sector were expecting the CRR cut on March 15 when the RBI is scheduled to announce its mid-quarter review. But the central bank said on Friday it feared a liquidity crunch due to the advance tax (to be paid before March 15) outflows; and this would have increased the already tight position of banks due to the usual frontloading of cash balances with the RBI.This CRR cut will inject around Rs. 48,000 crores of primary liquidity into the banking system. Earlier in January, the cut in CRR of half a per cent injected Rs. 31,500 crores into the banking system. The CRR cut was welcomed by banks and the corporate sector.
On January 24, RBI had cut CRR by 0.5 percentage points to 5.5 per cent, releasing Rs 32,000 crore into the system. Since then, the fund crunch has only worsened.
The strain on the system rose to high of Rs 1.02 lakh crore. And going forward it will only increase as by March 15 companies will have to make advance tax payments which will drive out Rs 60,000 crore from the system.
Another Rs 12,000 crore is likely to go out of banks due to the Oil and Natural Gas Corporation (ONGC) auction last week, and a similar amount will be drained out on account of excise duty payment by companies.
Rate of Inflation
Inflation rose to 6.95 per cent in February which is much above the Reserve Bank’s comfort level of 5-6 per cent. RBIs own forecasts of inflation is that it will go down to 7 per cent levels in March 2012 from November 2010 levels of 9.11 per cent. RBI has indicated that non food manufacturing inflation is still a worry as it has gone up from 7.6 per cent in October 2011 to 7.9 per cent in November 2011. However, it has reiterated that despite the rise in non food manufacturing index, headline inflation momentum is slowing down.
The market will now have to work out its own math on inflation. Inflation can surprise on the downside as much as it has surprised on the upside. It is going to be a difficult call on where inflation is headed in 2012, but considering the fact that prices are already at elevated levels with inflation as measured by the Wholesale Price Index (WPI) averaging over 9 per cent for the past two calendar years, inflation has the ability to come off sharply especially if global growth slows down dramatically.
GDP Growth
There are now serious concerns on the slowdown in the Indian economy as the Gross Domestic Product (GDP) growth figures for the September-December 2011 quarter came in a paltry 6.1 per cent, the lowest since the Lehman crisis that shook the global economy in 2009.
The economy has given mixed signals in the past few months with some green shoots being seen on inflation, foreign institutional investor inflows, stock markets, the rupee and policy action picking up.
However, the figures come as a dampener as they are well below estimates. It is clear the lag effect of problems seen last year of low investor confidence resulting in low investment, high inflation and high interest rates and policy inaction are playing out. The surprise is that GDP growth is now at the level seen during the Lehman crisis when the world economy was in a reset mode though the situation has improved since.
GDP growth decelerated to a low of 6.1 per cent in the third quarter of fiscal 2012, raising fresh concerns about the growth slowdown. Industrial sector continues to be the main laggard and grew at an anemic rate of 2.6 per cent due to falling domestic demand and faltering global recovery.
The magnitude of moderation has been a bit of surprise because advance estimates released earlier had pegged financial year 2012-13 growth at 6.9 per cent.
According to FICCI, it would be ironical if GDP growth in 2011-2012 goes below 6.8 per cent, would be lower than in the crisis that was achieved in 2008-09 — the year of the post Lehman crisis.
Foreign Trade
Indian imports continued to outpace exports in February as demand remained weak in major exports markets like the United States and Europe, nudging the government to revise up the full-year trade deficit projections.
A widening trade deficit will likely worsen India's current account deficit and further weaken the rupee. Merchandise exports grew an annual 4.3% to $24.6 billion in February, while imports grew 20.6 percent to $39.8 billion.
The trade deficit widened to $15.2 billion during the month, from $14.8 billion in January.

Joachim Gauck Becomes German President

Seventy-two-year-old activist pastor Joachim Gauck became German president by an overwhelming majority on March 18, marking the first time a candidate from the former communist east will serve as head of state. It was the third presidential election in three years for Germany after the abrupt resignations of Gauck's two predecessors.
Gauck secured 991 votes out of 1,232 from a special assembly of MPs and other dignitaries. Seventy-three-year-old renowned Nazi hunter Beate Klarsfeld nominated as a protest candidate by a far-Left Party, attracted 126 votes while a candidate for the extreme right drew three.
Leader of Peaceful Revolution
Gauck is a former pastor who opposed East Germany’s then—communist regime and became head of a federal agency overseeing the files of the Communists’ ubiquitous domestic intelligence service after Germany’s reunification. Gauck helped drive the peaceful revolution that brought down communist East Germany and later fought to ensure that the public would be granted access to the vast stash of files left behind by the despised Stasi secret police after reunification in 1990. He oversaw the archive for the next decade.
Hard-Won Freedom
Chancellor Angela Merkel, who also grew up under communism, hailed Gauck's victory as a sign of how Germany had transformed in the approximately 23 years since the Berlin Wall fell.
Merkel gave her backing to the plain-spoken Lutheran pastor in February after then President Christian Wulff stepped down amid a flurry of corruption allegations dating from his time as a state premier. Wulff served only 20 months of his five-year term in office.
He had replaced Horst Koehler, a former head of the International Monetary Fund (IMF) who bowed out after an uproar over comments he made appearing to justify using the military to serve Germany's economic interests.
Expectations are outsized for the new president, who has won a reputation across the country as an inspiring public speaker.
As a staunch Protestant like Merkel, he is keen to remind Germans that their hard-won freedoms carry weighty responsibilities with them -- a lifelong theme he has said he will take to the presidential palace.
Gauck himself warned scandal-weary Germans against seeing him as a redeemer, telling reporters the night he was nominated that they should not expect "Superman." He stressed again Sunday that he would "surely not be able to fill all expectations."
People’s Expectations
Expectations are outsized for Gauck, who has won a reputation across the country as an inspiring public speaker, albeit with a notorious touch of vanity. But as a staunch Protestant like Merkel, he is also keen to remind Germans that their hard-won freedoms carry weighty responsibilities with them -- a lifelong theme he has said he will take to the presidential palace.

Union Budget 2012-13: Neither Reformist Nor Populist

Finance Minister Pranab Mukherjee presented the Union Budget for 2012-13 in the Lok Sabha (lower house of the Parliament) on March 16. The Budget proposed a total plan outlay for agriculture has been increased by 18 per cent from Rs 17,123 crore in 2011-12 to Rs 20,208 crore in 2012-13. This will support the new initiatives announced in the budget besides backing the existing programs which have resulted into record food grain production this year. There is a total non-plan outlay of Rs 4,011 crore in the budget estimates for 2012-13.
The finance minister also announced an increase in the allocation for Rashtriya Krishi Vikas Yojana (RKVY) from Rs. 7860 crore in 2011-12 to Rs. 9217 crore in 2012-13. Expressing satisfaction at the success of bringing Green Revolution to Eastern India by way of increasing the production and productivity of paddy, the Finance Minister proposed to increase the allocation for this scheme from Rs. 400 crore in 2011-12 to Rs. 1000 crore in 2012-13.
Defense
The Union Budget has announced a justifiable 17.6 per cent hike in its defense spending to allocate an additional Rs 28,992 crore for 2012-13, over the ongoing year’s Rs 1,64,415 crore defense budget. India will spend Rs 1,93,407 crore, nearly $38.6 billion, on defense which is about 11 per cent of the entire country’s budgetary outlay for the next financial year staring April 1.
Around Rs 79,579 crore, it was Rs 69, 199 crore in 2011-12, have been earmarked for capital expenses like for new acquisitions of weapons, warplanes, warships, equipment, naval dockyards and special classified projects. In 2011-12, India had affected a hike of 11.59 per cent in its defense spending.
The finance minister said this allocation was based on the present needs projected by the Defense Ministry and further needs for security would also be met. India’ budgetary hike comes just weeks after China announced a $106 billion military budget, taking its military spending into the triple digit figures for the first time.
In other words, India would be spending some 40 per cent of what China spends on its Defense. The core US defense budget, not including its war funding, has been projected $525 billion for the same period. Pakistan has a defense outlay of $5.75 billion for 2011-12, a raise of 12 per cent.
The present hike, when seen from the revised budget allocation for this year, works out to be a 13.15 per cent. Interestingly, the share of India’s defense spending out of its Gross Domestic Product (GDP) has gone up slightly. It now stands at 1.90 per cent of the GDP, up from 1.84 per cent for the ongoing fiscal.
Agriculture
The finance minister Pranab gas announced a Rs 1,00,000 crore increase in the agriculture credit target, boosting it to Rs 5,75,000 for the next fiscal, and raised the outlay for farm sector by more than Rs 3,000 crore - proposals that farmers’ representatives called “encouraging” and economists “lacking in new initiatives”.
Emphasising that agriculture was a priority for the government, Mukherjee increased the total plan outlay for the sector by 18 per cent, up from Rs 17, 123 crore in 2011-12 to Rs 20,208 crore in 2012-13.
As per leading agriculture scientist MS Swaminathan, the increase in the target for agricultural credit to Rs 5,75,000 crore is the only new initiative in Budget. The finance minister has essentially tried to consolidate the gains made as a result of the initiatives he had launched during the previous two budgets.
Education
With a range of flagship projects moving in parallel in the school education sector, Pranab Mukherjee has announced nearly a 22 per cent hike for the Sarva Shiksha Abhiyan and a 29 per cent increase for the Rashtriya Madhyamik Shiksha Abhiyan (RMSA).
The finance minister has earmarked a total of `61,427 crores for the education sector in budget 2012-13, a hike of about 18 per cent in the budgetary allocation over last year, with `15,458 crores earmarked for higher education and `45,969 for school education.
Health
The Union Budget has proposed to increase the outlay of the government’s flagship scheme — National Rural Health Mission (NRHM) and projected to launch the National Urban Health Mission (NUHM) to target the urban poor. It proposes to increase the allocation to NRHM from `18,115 crores in 2011-12 to `20,822 crore in 2012-13.
The finance minister also proposed to extend concessional basic customs duty of five per cent with full exemption from excise duty/CVD to six life-saving drugs/vaccines. The drugs and the vaccines exempted from excise duty are: Raltegravir Potassium for treatment of HIV-I infection, rotavirus vaccine, Pneumococcal Polysaccharide vaccine for the treatment of patients with thallassemia, malignancy, Posaconazole Oral Suspension for the treatment of life threatening invasive fungal infections, Temsirolimus Concentrate for Infusion for Injection for treatment of advanced renal cell carcinoma and Natalizumab the treatment of relapsing forms of Multiple Sclerosis.
For 2012-2013 an allocation of `30, 477 crores has been made as against the budget estimate of `24315 crores in 2011-2012. This amounts to a jump of over 25 per cent. In a major thrust towards ensuring adequate nutrition women and children, the government has proposed to reduce basic customs duty on soya protein concentrate and isolated soya protein to 10 per cent from the present 30 per cent and 15 per cent respectively.
Subsidy
The government has made it clear in the Budget presented that it is not possible to grant more subsidies and keep consumers cushioned from price rises.
The finance minister has set a target to restrict subsidies under 2 per cent of GDP in 2012-13 and bring it down further to 1.75 per cent of GDP over the next three years. This may be achieved through direct transfer of fuel and fertilizer subsidies to the beneficiaries and an increase in retail prices of petroleum products. This means the subsidy bill would be capped at `2.04 lakh crores, considering India’s GDP of `102 lakh crores. The government has absorbed the duty reduction in petroleum products with annual revenue loss of `49,000 crores. For 2011-12, the total subsidy bill has been pegged at `2.16 lakh crores. The Budget estimate for subsidies stands at `1.9 lakh crores for 2012-13.
External Commercial Borrowings
Finance Minister Pranab Mukherjee permitted the sectors to take External Commercial Borrowings (ECB) route to help themselves.
The Budget proposed to allow external commercial borrowings to part finance rupee debt of existing power projects. Reliance Power, Tata Power, Torrent Power, Adani Power, GVK Power are the major companies which would get benefit from this move.
As regards airlines, Kingfisher, Jet Airways and SpiceJet got a major relief after the Government allowed the airline companies to raise capital through external borrowings worth $1 billion for a year.
Kingfisher Airlines, which has a debt of around Rs 600 crore, reported a net loss of Rs 469 crore for the July-September quarter of the current fiscal, while Jet Airways posted a net loss of Rs 101.22 crore (Rs 1.01 billion) for the third quarter of 2011-12, will benefit the most from the move.
As regards the real estate and road sector, the Budget has taken into account the crying need to focus on affordable housing sector by allowing ECB for low cost housing, road as well as construction. Experts say as withholding tax on ECBs for affordable housing has been reduced from 20 per cent to 5 per cent for 3 years this will help ease the liquidity in the sector.
Tax Relief
In a relief to individual taxpayers and salaried class, the finance minister raised the exemption limit on personal income-tax by `20,000 to `2,00,000 in the Union Budget. The exemption limit will be the same for men and women, unlike in the past. The threshold limit for senior citizens remains unchanged, at `2,50,000. The change will mean savings of `2,000 in tax for male taxpayers and savings of `1,000 for women.
The finance minister also tinkered with tax slabs; the top 30 per cent income-tax rate will be applicable from incomes of `10 lakhs and above, against `8 lakhs now. This will give a straight and flat tax relief to the extent of `20,000 for anyone who has income over `10 lakhs. Incomes between `2,00,001 and `5,00,000 will be taxed at 10 per cent; and those between `5,00,000 and `10,00,000 at 20 per cent.According to the finance minister, increasing the exemption limit is a move toward implementing the Direct Taxes Code (DTC). The standing committee of Parliament that scrutinised the DTC Bill had suggested raising the tax exemption limit to `3 lakhs. Tax rates for senior citizens (60 and above) and “very senior” citizens (80 and above) remain unchanged. The qualifying age for senior citizens has been set at 60 now.
Revenue Collection
The finance minister has been timid in revenue collection resources, which will raise just `41,440 crores net. It is clear that he has tried to act cautiously, and not been as proactive as expected, possibly due to global economic weaknesses, as well as domestic constraints. The revenue collection is nowhere close to what was needed, given the huge fiscal deficit the government must grapple with. He widened the service tax net, but said himself that the funds he will get is far less than what this sector, accounting for almost 59 per cent of GDP, could be tapped for.
Fiscal Deficit
There is skepticism about the finance minister’s claim of reducing the fiscal deficit to 5.1 per cent of the GDP in the coming year. This year the budgetary target of 4.6 per cent of the GDP has been overshot by one percentage point due to economic slowdown, higher oil prices and a hefty subsidy bill. There is no guarantee that things would change this year. There is another negative signal for foreign investors. The government has indicated that the British firm Vodafone’s case may be reopened as the definitions of “property” and “transfer” have been changed retrospectively. The Supreme Court had ruled in favor of Vodafone in a tax dispute over a cross-border deal. Such actions hit investor confidence.
Highlights
* Tax burden for individuals to come down: Income tax exemption limit raised from Rs. 1,80,000 to Rs. 2,00,000; 10 per cent tax for 2-5 lakh income; 20 per cent for 5-10 lakh and 30 per cent beyond Rs. 10 lakh; Savings bank account interest up to Rs. 10,000 exempted from tax.
* Many services and goods to cost more: No change in corporate tax rate, but standard rate of excise duty, as also service tax rates, raised from 10 per cent to 12 per cent; No change in peak customs duty of 10 per cent on non-agri goods.
* Large cars, imported bicycles, cigarettes, bidis and some imported jewellery to cost more; branded silver jewellery may get cheaper.
* Boost for capital markets: Securities Transaction Tax on cash delivery reduced by 25 per cent to 0.1 per cent; A new Rajiv Gandhi Equity Saving Scheme to allow income tax deduction to retail investors in stocks.
* Economy expected to gain ground: GDP growth rate pegged at 7.6 per cent in 2012-13; Subsidy Expenditure to be checked and higher tax revenues targeted; Rs. 30,000 crore to be raised from disinvestment.
* Capital boost to financial and infrastructure sectors: Rs. 15,888 crore to be provided for capitalisation of public sector banks and financial institutions; Infrastructure investment of Rs. 50 lakh crore in 12th period, with half from private sector; Tax free bonds of Rs. 60,000 crore to be allowed for financial infrastructure projects.
* Fight against black money: White paper on black money in current session of Parliament; Introduction of compulsory reporting requirement for assets held abroad; tax collection at source on high-value cash purchase of bullion, jewellery, immovable property and trading in coal, lignite and iron ore.
* Greater scrutiny of closely-held companies for funds; Taxation of unexplained money, credits, investments, expenses at highest rate of 30 per cent irrespective of income slab.
* Tax reforms: Direct Taxes Code (DTC) at earliest; GST network to be operational by August 2012; Central Excise and Service Tax being harmonized. A General Anti-Avoidance Rule (GAAR) to be introduced to counter aggressive tax avoidance.
* Attracting foreign funds: Efforts on to allow FDI in multi-brand retail and permitting foreign airlines invest in domestic players; External borrowings to the extent of USD one billion for aviation companies; Qualified Foreign Investors to get access to corporate bond market.
* Tax relief for stressed sectors: Sectors like agriculture, infrastructure, mining, railways, roads, civil aviation, manufacturing, health and nutrition, and environment to get duty relief; Turnover limit for compulsory tax audit for SMEs raised from Rs 60 lakh to Rs 1 crore.
* Farming for growth: Target for agricultural credit raised to Rs 5,75,000 crore; Interest subvention for short-term crop loans to farmers at 7 per cent interest continues; additional 3 per cent for prompt paying farmers.
Financial Highlights of Budget 2012-12:
* Direct proposals to give in net revenue loss of Rs. 4,500 crore and net gain of Rs. 45,940 crore from indirect taxes, resulting into a net gain of Rs. 41,440 crore.
* Fiscal deficit targeted at 5.1 per cent of GDP in 2012-13, down from 5.9 per cent in 2011-12; Central Government debt at 45.5 per cent of GDP.
* Total expenditure budgeted at Rs. 14,90,925 crore; plan expenditure at Rs. 5,21,025 crore, 18 per cent higher than 2011-12 budget; non-plan expenditure at Rs. 9,69,900 crore.
* Gross Tax Receipts estimated at Rs. 10,77,612 crore, 15.6 per cent higher than original budget estimates and 19.5 per cent over the revised estimates for 2011-12.
* Net tax to the Centre in 2012-13 estimated at Rs. 7,71,071 crore; Non-Tax Revenue Receipts estimated at Rs. 1,64,614 crore and Non-debt Capital Receipts at Rs. 41,650 crore.
* Total expenditure for 2012-13 budgeted at Rs. 14,90,925 crore, including Rs. 5,21,025 crore of Plan Expenditure and Rs. 9,69,900 crore as Non-Plan Expenditure. * Defence services get Rs. 1,93,407 crore; any further requirement to be met.

Economic Survey 2011-12: Inflation Pegged at 6.5 Per Cent, Maintained GDP Growth at 6.9 Per Cent

Finance Minister Pranab Mukherjee presented the Economy Survey 2011-12– a report card of the Indian economic scenario for current fiscal– in the Lok Sabha (lower house of the Parliament) on March 15.
Inflation Rate
The Survey pegged inflation at 6.5-7 percent by end of March and projected a further moderation in the next fiscal. Inflation in the current fiscal has largely been driven by high food prices. It had slipped to a low of 6.6 percent in January, but rebounded to almost 7 percent in February. The survey, however, said that fiscal consolidation was the only way to keep inflation down.
The survey said that monetary measures by the Reserve Bank of India (RBI) and its impact on curbing inflation needed to be studied further to improve efficiency of such actions in the future. Incidentally, the RBI in its mid-quarter review of the monetary policy left key rates unchanged, citing upside risks to inflation.
Growth Rate
The Economic Survey has maintained Gross Domestic Product (GDP) growth at 6.9 per cent. The growth in the financial year 2012-13 growth is expected to come in at 7.6 per cent and the financial year 2013-14 growth is pegged at 8.6 per cent.
Indian along with Indonesia showed strong growth despite a global economic slowdown in the final quarter of 2011, according to the International Monetary Fund (IMF).
IMF in its latest provisional report has said the GDP growth of G20 – a grouping of leading economies of the world – slowed to 0.7 per cent in the October-December quarter, compared with 0.9 per cent in the third quarter.
In the United States, GDP growth increased to 0.7 per cent in the fourth quarter, compared with 0.5 per cent in third quarter.
The IMF stated that in India and Indonesia growth increased strongly, but slowed in China to 2 per cent, compared with 2. 3 per cent in the third quarter.
In Japan, economic growth decreased to (-)0.2 per cent, following the strong rebound (+1. 7 per cent) in third quarter.
The Survey states that GDP fell by (-)0.3 per cent in both the European Union and the euro area in the fourth quarter of 2011, the first fall since the second quarter of 2009.
Fiscal Deficit
The Survey states that the fiscal outcome in 2011-12 is likely to be affected by the macroeconomic setting which indicates sharp slowdown in industry and rising costs affecting profits. In the first nine months of the current fiscal, gross tax revenue has grown by 12.2 per cent as against the budget estimate target of 17.3 per cent, it said.
On the other hand, as against a target of 4.9 per cent for the whole year, growth in total expenditure in the first nine months of 2011-12 was 13.9 per cent, which comprised 15.4 per cent growth in non-Plan expenditure and 10.8 per cent growth in Plan expenditure, the survey added.
Per Capita Income
According to the Survey, the per capita income of India stood at $ 1,527 in 2011. The Survey says that this is perhaps the most visible challenge. Nevertheless, India has a diverse set of factors, domestic as well as external that could drive growth well into the future.
The Survey further says that between 1980 and 2010, India achieved a growth of 6.2 per cent, while the world as a whole registered a growth rate of 3.3 per cent. As a result, India’s share in global GDP more than doubled from 2.5 per cent in 1980 to 5.5 per cent in 2010.
Consequently, India’s rank in per capita GDP showed an improvement from 117 in 1990 to 101 in 2000 and further to 94 in 2009. China, however, improved its rank from 127 to 74 during the same period.
Highlights
* India's economic growth estimated at 6.9 per cent in the current fiscal; growth momentum to pick up in next two fiscals to 7.6 per cent 2012-13 and 8.6 per cent in 2013-14.
* RBI expected to lower policy interest rates, as inflationary pressures expected to ease in coming months; A low interest rate regime to encourage investment activity and push forward economic growth.
* Steps required for deepening of domestic financial markets, especially corporate bond market and attracting longer-term inflows from abroad; Efforts at attracting dedicated infrastructure funds have begun.
* The growth rate of investment in the economy is estimated to have declined significantly; borrowing costs up due to a sharp increase in interest rates.
* High borrowing costs and increase in other costs affecting profitability and internal accruals.
* Slowdown in Indian economy largely due to global factors, as also because of domestic factors like tightening of monetary policy, high inflation and slower investment and industrial activities.
* Inflation high, but showing clear signs of slowdown by the year-end; Whole-sale food inflation down to 1.6 per cent in January 2012 from 20.2 per cent in February 2010.
* India remains one of the fastest growing economies of the world; Country's sovereign credit rating rose by a substantial 2.98 per cent 2007-12
* Farm sector growth pegged at 2.5 percent for 2011-12.
* Services sector to grow at 9.4 percent.
* Services sector share in GDP to go up to 59 percent in the fiscal ending March 31.
* Industrial growth pegged at 4-5 percent, expected to improve as economic recovery resumes.
* Inflation on Wholesale Price Index (WPI) was high but showed clear slow down by the year-end. This is likely to spur investment activities leading to positive impact on growth.
* WPI food inflation dropped from 20.2 percent in February 2010 to 1.6 percent in January 2012.
* Calibrated steps initiated to rein-in inflation on top priority.
* India remains among the fastest growing economies of the world.
* Fiscal consolidation on track - savings and capital formation expected to rise.
* Exports grew by 40.5 percent in the first half of this fiscal and imports grew by 30.4 percent.
* Foreign trade performance to remain a key driver of growth.
* Forex reserves enhanced - covering nearly the entire external debt stock.
* Central spending on social services goes up to 18.5 percent this fiscal from 13.4 percent in 2006-07.

Rail Budget 2012-13: Hike in All Classes Fares

Railway Minister Dinesh Trivedi presented his maiden Railway Budget for 2012-13 in the Parliament on March 14. The annual plan outlay for Indian Railways for 2012-13 has been pegged at Rs 60,100 crore which provides Rs. 6,872 crore for new railway lines and significant funds for passengers safety, security and amenities. Of the total budget, Rs 24,000 crore will be in the form of gross budgetary support, Rs 2000 crore from railway safety fund (RSF) and Rs 18050 crore would be through internal accruals.
The railway minister has focused on five important fields, which are: safety; consolidation; decongestion and capacity augmentation; modernization; and to bring down the operating ratio from 95 per cent to 84.9 per cent in 2012-13.
Passengers Charged
The increase would be 2 paise per km for suburban trains; 3 paise per km for mail trains. Express train fare was up by 5 paise per km, 10aise p per km for a/c chaircar, 10 paise per km for a/c 3-tier, 15 paise per km for a/c 2-tier and 30 paise per km for a/c 1st class. Platform tickets would now cost Rs 5.
According to the railway minister, the attempt was to round off fares to eliminate the need for change.
According to the minister, Indian Railways will invest Rs.7.35 lakh crore during the 12th Five Year Plan (2012-17), against Rs.1.92 lakh crore in the current one. By then, it will double its contribution to India's gross domestic product to 2 percent.
The minister said the outlay of Rs.60,100 crore proposed for 2012-13 will be the highest ever and added that the network will require Rs.14 lakh crore over the next 10 years for modernization.
Coming to specific proposals, the railway minister said 85 new line projects would be taken up during the next fiscal year at a cost of Rs.6,870 crore, even as feasibility surveys would be conducted for another 114 lines.
Trivedi said an attempt will also be made to increase train speeds to 160 km per hour from around 90-100 km per hour. With that, he said, a journey from New Delhi to Kolkata will be brought down to 14 hours from 17 hours.
Budget At A Glance
* Passenger fares to be hiked by 2 paise per km for suburban and ordinary second class travel; 3 paise per km for mail/ express second class; 5 paise per km for sleeper class; 10 paise per km for AC chair car/AC 3-tier and First Class; 15 paise per km for AC 2-tier and 30 paise per km for AC 1-tier.
* Minimum fare and platform tickets to cost Rs 5.
* Seventy-five mew Express trains to be introduced, along with 21 new passenger services, nine DEMU services and 8 MEMU services trains.
* Route of 39 trains to be extended and frequency of 23 trains to be increased.
* Railways to hire more than one lakh employees in 2012-13; 80,000 persons hired last year.
* Indian Railways Stations Development Corp to be set up to re-develop stations and maintain them like airports.
* To set up an independent Railway Safety Authority as a statutory body.
* The open discharge toilets on trains to be replaced with green (bio) toilets.
* All unmanned level crossings to be abolished in next five years; To target zero deaths due to rail accidents.

India, Italy Differences Over Killings of Fishermen

India and Italy have failed to resolve their differences over who should probe the killings of two Indian fishermen by Italian marines off the Kerala coast on February 15. The two countries, however, pledged not to allow the incident to cast a shadow on bilateral relations. External Affairs Minister SM Krishna held wide-ranging talks here this afternoon with visiting Italian Foreign Minister Giulio Maria Terzi di Sant’ Agata. However, the February 15 incident in which the two Indian fishermen were killed is understood to have dominated the talks.
The two ministers were quite forthright in restating the positions of their respective countries. Italy is insisting that the incident should be tried according to international laws since it took place in international waters. India, however, maintains that since the incident involved an Indian vessel and those killed were Indian nationals, the two Italians would be tried under Indian laws.
Ajesh Binki (25) and Jalastein (45) were part of an 11-member team that set sail on February 15 night. The guards on board the merchant vessel Enrica Lexie fired at them suspecting the group to be pirates. The Indian fishermen were unarmed and posed no threat to such a big merchant vessel, sources said. There has been no incident of piracy off India's west cost in the last eight months.
One of the fishermen killed is from Tamil Nadu, where fishing boats have often come under attack from the Sri Lankan Navy for crossing the International Maritime Boundary Line. On the eve of 26/11, sailors from Gujarat were killed on the high seas by terrorists.
No Rules of Engagement
Somali pirates have been active off Lakshadweep, close to the Indian mainland. It is, therefore, not unrealistic for a foreign merchant vessel to be extra careful in these parts. India too has been attacked by pirates and patrols these areas, and indeed has a good track record in dealing with this recently emerged threat to international shipping. However, for Indian fishing boats operating around our coastline, no rules of engagement have yet been evolved. It is undeniable that the Italians should have exerted greater care before firing fatal shots against what they mistook to be a pirate vessel.
Somali pirates do range over long distances but are certainly not likely to operate bang off the south-western coast of India. Nine of the other 11 fishermen in the boat were sleeping, and no matter what the Italian ship's crew claim to have seen through their binoculars, the boat posed no visible threat.
Krishna said: “We met in the backdrop of an unfortunate incident involving the death of two Indian fishermen and the subsequent detention of two Italian navy personnel. There is strong public opinion on both sides. The Italian minister had agreed that their two countries ‘need to clear the air’ so that their people were reassured of their will and commitment to strengthen the bilateral partnership.”
Norms and Law
India, however, made it clear that the two Italian marines would face the Indian law since the incident involved Indian nationals and an Indian vessel.
However, the processes through which a country protects its citizens are governed under established norms and the law. If these are taken recourse to with an open mind, well-intentioned negotiations can being relief to victims’ families in the normal course. Regrettably, in the case of the two unarmed Indian fishermen, mistaken for pirates and killed by two Italian Navy guards of a private merchant vessel of that country off the Kerala coast recently, common sense appears to have given way to meaningless nationalist posturing on both sides.
The ties between the two countries were mature and based on strong foundations. The Italian minister, who was here on a visit planned much before the February 15 incident, regretted the deaths but underlined that there were differences between the two countries over the jurisdiction issue. He said: “I have explained frankly the position of our government on the legal aspect. International laws should try the Italian men. There is difference of opinion on this and it has not been resolved.”
The Italian minister also went to Kerala to meet the families of the two fishermen. He also met Chief Minister Oommen Chandy.
Demand of Situation
India is part of the global effort to patrol the piracy-affected sea lanes of the Indian Ocean, but not enough seems to have been done to prevent tragic mix-ups of the kind that cost the lives of two innocent people.
India and Italy need to immediately take professional help to determine whether the tragedy occurred in Indian waters, and then swiftly ascertain jurisdiction through purposeful conversation, without hype. Rome has rushed its deputy foreign minister to New Delhi, and Italy’s foreign minister is also due to arrive soon. We need to de-escalate, look for an early practical solution, and get the case off the diplomatic crisis category.

Assembly Elections 2012: SP Storms Back to Power in Uttar Pradesh, SAD-BJP Creates History in Punjab, Congress Scores Hat Trick in Manipur

The Election Commission has declared results of the 2012 Assembly elections to five States. The Congress has come a cropper despite the party’s high decibel campaign in Uttar Pradesh, which was led by Congress General Secretary Rahul Gandhi and a galaxy of senior leaders, while in Goa the party has failed to reach, leave alone cross, the double-digit mark in the 40-member House, with the Bharatiya Janata Party (BJP) sweeping the elections.
In fact, the most disastrous performance of the Congress has been in Punjab where the party had taken its victory for granted, fed by glowing feedback about its prospects from a host of sources, not excluding sections of the media.
In Uttar Pradesh it is Akhilesh Singh Yadav, the 39-year-old heir apparent of Samajwadi Party (SP) chief Mulayam Singh Yadav, in Goa it is Manohar Parrikar and in Punjab it is Sukhbir Singh. More important, voters have given their preferred parties a clear majority.
The SP’s landslide victory in Uttar Pradesh was a reflection that the electorate had turned the tables on the Bahujan Samaj Party for non-performance just the way the latter had mauled the SP in the 2007 assembly elections. The fact that both the national parties—the BJP and the Congress—failed to make an impression in Uttar Pradesh was a reflection of the desire of people at large to throw out autocratic Mayawati for which they felt the SP was her most credible adversary. The spectacular victory of the Shiromani Akali Dal (SAD)-BJP combine in Punjab where the anti-incumbency factor did not work in favour of the Congress was the result of sustained hard work in wooing the electorate. In Goa, the BJP’s impressive win was a reaction to the corrupt rule of the Congress, while in Manipur, the Congress sway was never in doubt.
Uttar Pradesh
The SP — with its campaign led by Mulayam Singh Yadav’s son Akhilesh Yadav — swept Mayawati’s Bahujan Samaj Party (BSP) out of power in Uttar Pradesh and left the Congress reeling.
The SP, romped home after winning 224 of the 403 Assembly seats.The SP juggernaut reduced Uttar Pradesh Chief Minister Mayawati from 206 seats in the outgoing House to just 79. The BJP’s tally came down from 51 seats to 47; while the Congress, which had 22 MLAs earlier, managed to add only six more to its kitty. Its alliance partner, Ajit Singh’s Rashtriya Lok Dal, won nine seats.
Akhilesh Yadav is clearly the man of the moment at the SP headquarters. The graduation from ‘bhaiyaji’ to ‘adhyakshji’ (state president) and now the possibility of ‘mukhya mantriji’ has been a long struggle for the three-time Kannauj MP. This was a battle he fiercely fought both on the streets and inside the family quarters, emerging the winner on both fronts.
In fact, the Congress not merely lost Punjab, but was also routed by the BJP in Goa. In the hill state of Uttarakhand, a clear majority eluded both the Congress and the BJP. Pre-poll surveys had indicated a clear victory for the Congress. The only consolation for the beleaguered Congress was its victory in Manipur, where it managed to retain power.
The Congress’ defeat was all the more severe as it could manage to win only two of the 10 Assembly segments which comprise the twin Lok Sabha constituencies of Rae Bareli and Amethi, the party’s pocket boroughs since the days of Indira Gandhi. Law Minister Salman Khurshid’s wife Louise was trounced in Farrukhabad, in third place after an Independent candidate and the BJP.
BSP supremo Mayawati was perhaps the first to suspect a huge anti-incumbency factor working against her government. She thus went to great lengths in an attempt to salvage her party with a massive ‘clean-up exercise’ involving throwing out of 23 ministers and dozens of legislators and replacing more than 100 sitting MLAs weeks before the Assembly elections.
That the SP surpassed the BJP's1991 tally of 221 seats achieved during the Ram wave speaks for itself. The BSP, which was uniquely placed with a committed core vote, has only itself to blame for squandering away a rare opportunity. Mayawati restored law and order and instituted several positive measures, especially towards the uplift of the Dalit community. But her achievements faded when measured against the corruption of the administration and her own perceived arrogance. In the end, the statues she built for herself became a metaphor for the regime's obsessive self-interest.
The belated damage control to distance her party from the corruption of its leaders did not cut ice with the state’s voters. The magic which she had woven in 2007 with so-called social engineering clearly remained an empty slogan this time.
Of the 403 seats, Mayawati had this time given tickets for 88 (21.83 per cent) to the Dalits, 113 (28 per cent) to OBCs, 85 (21.09 per cent) to Muslims and 77 (19.10 per cent) to Brahmins, 33 (8.18 per cent) to Rajputs and the remaining to those from communities like the Kayasths, Vaishyas and even Punjabis.
Among the many surprises that this election threw up was the Congress being wiped out from the party's so-called fiefdom of Rae Bareli and Amethi where the Gandhi-Nehru family had put its personal prestige at stake. The most embarrassing result was in Congress President Sonia Gandhi's parliamentary constituency of Rae Bareli where the party did not win even one of the five Assembly seats. In Amethi, the constituency of Rahul Gandhi, the party managed to salvage two seats of Jagdishpur and Tiloi while conceding to the SP the remaining three seats of Amethi, Gauriganj and Salon.
Punjab
The SAD-BJP alliance made history by overcoming anti-incumbency to retain power for the second consecutive term, thus creating history in the Punjab electoral politics. By winning 56 seats on its own and with its alliance partner BJP winning 12 seats, this will be the first time in Punjab’s history that a ruling party has been voted back to power.
By wrestling 68 of the 117 Assembly sets, the Akali BJP combine has got a formidable lead over its main rival, Congress, which has won 46 seats. While three independents have won at the hustings, the Third Front under the banner of “Sanjha Morcha” has failed to get any seat.
The People’s Party of Punjab (PPP) which was part of the third front failed to open its account and its president Manpreet Singh Badal lost both Gidderbaha and Maur seats. In fact he was third on both these two seats. The SAD-BJP alliance won the contest, but several of its heavyweights fell. This includes Vidhan Sabha Speaker Nirmal Singh Kahlon and ministers, Hira Singh Gabria, Sucha Singh Langha, Tikshan Sud, Ranjit Singh Brahampura, Satpal Gosain. Arunesh Kumar, Sewa Singh Sekhwan, Upinderjit Kaur, besides others.
It was only a one per cent swing in votes that gave the SAD - BJP alliance a gain of 22 seats. The SAD-BJP alliance polled 42 per cent votes with the Congress getting 41 per cent of the vote share. The PPP got six per cent votes that damaged the Congress more than it could harm the Akali Dal. Independents and others according to initial reports secured 11 percent votes that upset many poll calculations.
Manipur
The Congress stormed back to power in Manipur for the third consecutive time with a clear majority, helped by a fragmented opposition. Manipur came as the only solace for the Congress which clinched 36 of 52 seats in the 60-member house and was leading in five of the remaining eight seats.
Chief Minister O Ibobi Singh won from Thoubal and his wife O Landhoni Devi from Khangabok.
The Trinamool Congress, part of an 11-party Peoples Democratic Alliance which came into being very recently, sprang a surprise winning seven of the 48 seats it contested. It had a sole member in the outgoing House.
Other partners of the alliance together with the Trinamool Congress were able to secure only 16 seats. The Manipur State Congress party won four, the Naga Peoples Front three and NCP and LJP won a seat each.
The BJP which contested 19 seats drew a blank. The CPI, which was a former coalition partner of the Congress in the erstwhile Secular Democratic Front failed to win a single seat.
Uttarakhand
The Congress has been set to emerge as the single largest party in Uttarakhand, enjoying an edge against ruling the BJP in a nail-biting finish for half-way mark in the elections to the 70-member Assembly.
Out of the 60 results declared so far, Congress won 27 seats and was ahead in five others while the BJP bagged 28 constituencies and led in three.
The biggest setback for the BJP was the defeat of Chief Minister B.C. Khanduri who was defeated by S.S. Negi of the Congress from Kotdwar seat by 4,632 votes.
The BSP won three seats and three independents emerged successful, thus positioning themselves as possible kingmakers. The Uttarakhand Kranti Dal-Panwar (UKD-P) won one seat.
Goa
The Congress suffered its worst-ever defeat in the Goa Assembly elections. The BJP, riding the anti-incumbency wave against the Congress-Nationalist Congress Party's (NCP) “corruption, misgovernance,” won a clear majority with 21 seats in the 40-member House. The BJP's ally, the Maharashtrawadi Gomantak Party (MGP), won 3 seats. Two Independents supported by the BJP also won.
So severe was the mauling for the ruling coalition that as many as eight of the 11 Ministers, including both NCP Ministers, were defeated. While the Congress won just 9 out of 33 seats it contested, the NCP failed to get even one of the seven it contested. Five independents, two of them Congress rebels, and two MLAs of the Goa Vikas Party (GVP), a regional outfit, also won capitalising on the anti-Congress mood.
The five independents who won are Vijay Sardesai in Fatorda, Naresh Sawal (Bicholim), both Congressmen denied tickets; Benjamin Silva (Velim) and Avertano Furtado (Navelim), both supported by the BJP, and Rohan Khavtye from Porvorim.
So decisive was the mandate for the BJP-MGP combine, following a very high turnout of nearly 83 per cent, that except for Micky Pacheco, former Tourism Minister (Nuvem), and Caetano R. Silva (Benaulim), who won on the GVP ticket, no other regional outfit or new entrants like the Trinamool Congress or independents fielded by village groups could make any adverse impact.
The BJP — which hitherto got only Hindu votes, while the nearly 27 per cent Catholic population looked at it with suspicion and traditionally rallied behind the Congress-NCP alliance — for the first time found a massive mandate from across the communities.
Other Perspective

Undoubtedly, the 2012 Assembly elections have been free and fair, and the Election Commission deserves all the kudos. But when money, caste and religion come into play and make a mockery of polls, can they be called free and fair?
The poll results for the state Assemblies of Uttar Pradesh, Uttarakhand, Punjab, Goa and Manipur cannot hold much cheer for the Congress, which heads United Progressive Alliance (UPA) government at the Centre. Barring the state in the Northeast, where the party retained its government with a thumping victory, in the other states its performance has been well below par.
The UPA government had come under considerable pressure on a variety of counts for the past one in particular — the high prices of goods of everyday consumption, the breaking of corruption scandals which fed the anti-Congress Anna Hazare campaign whose reverberations were felt throughout the country, and the political oneupmanship of UPA partners, particularly the Trinamul Congress, which stopped the government from pushing a policy quotient that might have brought credit to the government and the Congress as a party. For the Congress, the negative implications of these developments have not been politically neutralised through face-saving poll results at the state level in elections taking place approximately half way through the second term of the UPA.
Demand of the Situation
All eyes will now be on the Manmohan Singh government at the Center which has run half its term. The UPA has indeed been in a state of siege with a surfeit of corruption scandals sullying its image. If the Congress-led combine was looking for redemption from this round of assembly elections, the results are a major disappointment. The fact that the SP does not need Congress support in the State would render its support to the UPA uncertain. In the event of Mamata Banerjee’s Trinamool Congress pulling the rug from under UPA’s feet, the federal government could face a crisis of survival if the SP support is not forthcoming.
The common people have been unsparing in their verdict on several outgoing ministers, refusing to elect them. Several Congress heavyweights, including the outgoing Deputy Leader of the Congress Legislature Party, have also been rejected. Personal nominees of former chief minister Narayan Dutt Tiwari, who is said to have arm twisted the party into fielding them, have lost and so have the young faces from the Youth Congress, foisted ostensibly at the insistence of Rahul Gandhi.
However, that is not how the people will perceive the performance of the Congress whose campaign was led from the front by Rahul Gandhi. Bagging 28 seats for the party after addressing 218 election rallies in 48 days is not something that he can flaunt as electoral success.
It can be said that the present Assembly election results as stunning would be an understatement given that incredible stories have emerged in at least three of the five States that went to the polls over the past six weeks. In other words, the verdict is a devastating blow to the Congress.
Results At A Glance
Uttar Pradesh: (403) SP 225, BSP 79, BJP 47, Congress 28, RLD 9, Others 15
Punjab: (seats 117) SAD 56, BJP 12, Congress: 46, Others 3
Manipur: (60) Congress 42, AITC 7, NPF 4, MSCP 5, LJSP 1
Uttarakhand: (70) Congress 32, BJP 31, BSP 3, Others 4
Goa: (40) BJP 21, Congress 9, MGP 3, Others 7

China Announces Defense Budget: Beijing Sets 7.5 Per Cent GDP Target

China has announced it will increase defense spending by 11.2 per cent in 2012, for the first time taking its annual military expenditure beyond $100 billion as it puts in place plans to modernize its Army against the backdrop of an uncertain regional environment.
The planned defense budget was announced in Beijing on Sunday as 670.274 billion yuan ($106.39 billion), an increase of 67.604 billion yuan over the expenditure in 2011 and an 11.2 per cent year-on-year rise.
The present hike will bring official outlays on the People's Liberation Army (PLA) to 670.3 billion yuan ($110 billion) for 2012, after a 12.7 per cent increase in 2011 and a near-unbroken string of double-digit rises across two decades.
The rise in military spending was in keeping with the growth in the Gross Domestic Product (GDP) and fiscal expenditure. The spending as a share of GDP was only 1.28 per cent, lower than many countries including the United States and the United Kingdom. “where it exceeds 2 per cent.”
Double-Digit Percentage Rise
It, however, remains unclear how China's neighbors will perceive the double-digit percentage rise, with several countries, from Japan to those involved in disputes over the South China Sea, having expressed concerns in recent months over the rise in military spending.
The defense budget grew by 12.7 per cent last year to $91 billion, though spending grew by a lower than expected 7.5 per cent in 2010, the first time in two decades that the increase was a single-digit figure on account of the global financial crisis.
China's spending in 2012 will exceed what India spent last year by three times — India's defense expenditure was reported at $36 billion in the 2011-12 budget.
In addition, the specified military spending, which many western analysts say is far higher than the official version, China in 2011 spent over $100 billion on internal security. The hike in China's defense budget, which is now almost triple of the Indian defense spending, may impact New Delhi's military expenditure.
India had allocated $ 36.04 billion for defense in 2011, which represented an 11.59 per cent growth over the 2010 budget.
US President Barack Obama has sought to reassure Asian allies that the United States will stay a key player in the area, and the Pentagon has said it will "rebalance toward the Asia-Pacific region".
Obama's proposed budget for the fiscal year of 2013 calls for a Pentagon base budget of $525.4 billion, about $5.1 billion less than approved for 2012.
Beijing has sought to balance long-standing wariness about US intentions with steady relations with Washington, especially as both governments focus on domestic politics this year, when Obama faces a re-election fight and China's ruling Communist Party undergoes a leadership handover.
But the US "pivot" has fanned unease in China, with some PLA officers calling it an effort to fence in their country and frustrate Beijing's territorial claims.
GDP Growth
China has set its growth target for 2012 at a lower-than-expected 7.5 per cent, in an indication that its focus during a crucial transition year would be on maintaining stability and achieving more balanced growth.
The 7.5 per cent target is the first in eight years that has fallen below 8 per cent, long seen by Chinese officials as the minimum level of growth needed to maintain internal stability. The Chinese economy does, usually, exceed the annual targets set by the government, and is expected to surpass the 8 per cent figure this year as well. The economy grew by 9.2 per cent in 2011, down from 10.4 per cent in 2010.
Assessment
Asian neighbors, however, have been nervous about Beijing's expanding military, and this latest double-digit rise could reinforce disquiet in Japan, India, Southeast Asia and self-ruled Taiwan, which China considers part of its territory. Japan and China have locked horns over islands each claims in the East China Sea; Vietnam, the Philippines and other nations have challenged Beijing over claims to swathes of the South China Sea that could be rich in oil and gas.
It was understood that China has been constructing an aircraft carrier, although the timing of its deployment is not known. It was believed that China was also developing stealth fighters, all these programs made people wonder what the assumption behind such military modernization was about.
The growth trajectory of China's military modernization, as evident from the country's latest defense budget, has attracted much attention across the Asia Pacific region. This followed the expression of concern, in some regional circles, over some of China's recent “military manoeuvres.”

Russian Presidential Election: Putin Wins Third Term

Russians voted on March 4 in presidential polls set to return strongman Vladimir Putin to the Kremlin for an unprecedented third term, as he faced public wrath over allegations of rigging in December’s parliamentary elections which was won by his United Russia party, even as Opposition leaders and Russian observers say they are seeing widespread violations in the elections.
Voters turned out at 90,000 polling stations across Russia spread over 21 hours for the marathon electoral process, that is being monitored through election observers and over 100,000 webcams.
Prime Minister Vladimir Putin has won Russia's presidential election. The present vote saw Putin, hoping to become president for a third time after swapping role as prime minister with his close aide Dmitry Medvedev.
Reports of Large-Scale Violations
The Central Election Commission said, the 59-year-old ex-KGB spy Putin has got 62 per cent of the 85 per cent votes counted. Exit polls conducted by two leading pollsters gave Putin 58-59 per cent. Putin needed to win more than 50 per cent to avoid a runoff.
Communist leader Gennady Zyuganov came second with over 17 per cent of the votes. The other three candidates polled less than 10 per cent each.
The election was marred by reports of large-scale violations. Opposition activists and observers have reported thousands of violations that involved multiple voting, known here as “carousels” — voting without proper documents and non-admission of monitors to polling stations.
Other Candidates
Putin's main challenger was considered to be Communist Gennady Zyuganov, who was running for a fourth time. The other candidates were ultra-nationalist Vladimir Zhirinovsky, tycoon Mikhail Prokhorov, who was standing as an independent, and former Upper House speaker Sergey Mironov, from the centre-left A Just Russia party.
Putin was Russia's president from 2000 to 2008, but was barred by the constitution from standing for a third consecutive term. He faces four challengers, three of whom he has defeated in previous elections.

Interlinking of Rivers: Supreme Court Forms Panel, Controversies Continue

The Supreme Court has directed the federal government to implement the ambitious interlinking of rivers project in a time-bound manner and appointed a high-powered committee for its planning and implementation.
The river interlinking project was the brainchild of the National Democratic Alliance (NDA) government, which was elected to office in 1998 and was reelected in 1999. In October, 2002, then Prime Minister Atal Bihari Vajpayee had formed a task force to get the project going against the backdrop of the acute drought that year.
A federal-appointed task force had in a report recommended division of the project into two-- the Peninsular component and the Himalayan component.
The Peninsular component-- involving the rivers in southern India-- envisaged developing a 'Southern Water Grid' with 16 linkages. This component included diversion of the surplus waters of the Mahanadi and Godavari to the Pennar, Krishna, Vaigai and Cauvery.
The task force had also mooted the diversion of the west-flowing rivers of Kerala and Karnataka to the east, the interlinking of small rivers that flow along the west coast, south of Tapi and north of Mumbai and interlinking of the southern tributaries of the river Yamuna.
The Himalayan component envisaged building storage reservoirs on the Ganga and the Brahmaputra and their main tributaries both in India and Nepal in order to conserve the waters during the monsoon for irrigation and generation of hydro-power, besides checking floods. The fate of the ambitious Rs 5,00,000 crore project proposing linkages between major rivers by the year 2016 has remained a virtual non-starter and the detailed project report is in cold storage.
Initial Work
At the initial stages, the project “may not involve those states which have sufficient water and are not substantially involved in any interlinking of river program and the projects can be completed without their effective participation.
The apex court made it clear that the Committee “shall be responsible for carrying out the interlinking program. Its decisions shall take precedence over all administrative bodies.”
The committee will be headed by the water resources minister and comprise the ministry secretary, the secretary, environment and forest ministry, the Central Water Commission chief, the water development authority secretary, the water and irrigation minister from each concurring state for a particular project, with their principal secretary, and the chief secretary (or his nominee) of the states involved.
Strict Monitoring
The apex court, which discontinued monitoring as it involved questions on “federalism” better left to be decided by the Union and states, said the panel’s other members would be from among social activists nominated by the water resources and environment and forest ministries.Senior advocate Ranjit Kumar, assisting the court in the case since 2002, when it took suo motu notice of a Public Interest Litigation (PIL), will also be in the panel as he is well versed with the issue.A three-member bench comprising Chief Justice S.H. Kapadia and Justices A.K. Patnaik and Swatanter Kumar ordered: “The committee shall meet at least once in two months, and shall maintain records of its discussions and minutes. It will be entitled to constitute subcommittees as it may deem necessary ... on such terms and conditions as it may deem proper.”The panel was directed to submit biannual reports directly to the Cabinet Secretariat, to be placed before the Cabinet for prompt decisions. The Supreme Court stated: “The Cabinet shall take all final and appropriate decisions... as expeditiously as possible and preferably within 30 days from the date the matter is first placed before its consideration.” All reports submitted to the court so far will also be placed before the committee after it is in place.
Major River Rift

* Krishna-Godavari dispute: Involves Maharashtra, Karnataka, Andhra Pradesh, Madhya Pradesh and Odisha
* Cauvery row: Relates to re-sharing of waters between Karnataka and Tamil Nadu
* Ravi-Beas dispute: Involves Punjab and Haryana; started with the reorganization of Punjab in 1966
* Sutlej Yamuna Link canal was to link both Sutlej and Yamuna through a 214-km long canal
* Haryana completed construction of its portion of the canal. Construction stopped on Punjab side since militancy days
* Punjab Government in 2004 passed Termination of Agreements Act that ended all earlier water sharing agreements with neighboring states