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Current AffairsFebruary 11

2011

Praveenhttp://indiancurrentaffairs.wordpress.com

2/11/2011

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POLITICS AND THE NATION

SC asks govt to consider special court for 2G trial

The Supreme Court on Thursday asked the attorney general to consult and

make a statement on the possibility of constituting a special court for second-

generation (2G) telecoms licence trial, considering the magnitude of the 2G

spectrum scam and the higher-ups involved in it.

The Central Bureau of Investigation (CBI) is probing alleged irregularities in

telecoms licence and radio airwaves allocations in 2007/08 which a state

auditor said cost the government upto INR 1.76 lakh crore ($39 billion) in

revenue.

The senior counsel K.K. Venugopal, appearing for the CBI was informed: “We

have a large number of persons who consider themselves above the law. The

law must catch them. It should be done with greater expedition. Merely

because they are in the Forbes list of millionaires, it does not make any

difference.”

The Court opined: “This investigation has led to prima facie conclusion about

the culpability of four persons. What about the beneficiaries? They are part of

a larger conspiracy. We want to know about them. You [the CBI] take

instructions and tell us what action you are planning to take.”

DMK linked to spectrum scandal

The police on Thursday linked the Dravida Munnetra Kazhagam (DMK) to a

multi-billion dollar telecoms scam, dealing a fresh blow to a government

already crippled by corruption scandals.

A police lawyer told a court companies linked to a telecoms firm under

investigation for buying mobile licences at unfairly cheap prices had paid 2.14

billion rupees ($47 million) to a TV channel Kaliagnar, run by the DMK, which

helps the ruling coalition maintain its slim majority in parliament.

The main opposition Bharatiya Janata Party, which had brought parliament to

a standstill demanding a probe into India's biggest corruption scandal, has

said Prime Minister Manmohan Singh's reliance on the DMK prevented him

from quickly probing the case.



The latest court documents come a day after the government appeared close

to agreeing to a broad, cross-party investigation in the scandal, paving the

way for parliament to resume as normal on Feb. 28 for a session that will see

discussions on the budget.

Authorities have arrested Raja, a DMK member, and Balwa in connection with

the scandal, in which the government is alleged to have lost as much $39

billion in the award of second-general telecoms licences in 2008.

"There was a transaction of about 2.14 billion rupees from Cineyug

Films to Kalaignar TV in the year 2009," the court documents said.

The document said Kalaignar TV, which is controlled by the DMK, was linked

to Raja and that the money was given to Cineyug by firms controlled by

Balwa and his relatives

I-T officials to join OECD to help government tackle black money

After deciding to deploy revenue service officers at eight overseas Income Tax

units, the government will now depute IRS officers at the top world economic

body OECD to improve global cooperation in tackling money laundering, tax

crimes and bribery.

Finance Minister Pranab Mukherjee earlier this month approved the proposal

for deputing the officials at the Paris-headquartered body as advisors.

Indian tax officials will function in three broad areas of tax

administration and tax crimes -- exchange of tax crime information,

transfer pricing and the global forum for transparency and exchange

of information for tax matters.

According to the Finance Ministry sources, the government wants these

officers to liaise with tax authorities of other countries and subsequently gain

expertise to effectively tackle the issue of blackmoney and stashing of illegal

funds in tax haven nations.

The officers to be sent on deputation to the OECD for a maximum of three

years will work on tax crimes and would support the task force on tax crimes

which works towards improving cooperation between law and enforcement

agencies, tackling money laundering and bribery.

According to the rules of the Organisation for Economic Cooperation and

Development (OECD) -- that are favourable to India's position vis-a-vis



fighting blackmoney -- the body "advocates exchange of information

between tax authorities on request in cases of specific tax enquiries

to better equip tax authorities to tackle tax evasion under Article 26

of its model DTAA."

The world body, established in 1961, also "provides a forum in which

governments can work together to share experiences and seek solutions to

common problems" and considers India to be an "emerging giant" in terms of

economy.

The top economic cooperation body has 34 member nations which

include the US, the UK, France, Germany, Canada, Italy and Switzerland.

India too is vying for a place in the board which could happen soon.

The I-T overseas units will come up in countries like the United States , the

United Kingdom, the Netherlands, Cyprus, Germany, France, Japan and the

United Arab Emirates.

Chaturvedi panel to review Antrix-Devas deal

Government has appointed a high-powered committee to review various

aspects of the controversial deal ISRO''s commercial arm Antrix had struck

with a private company for lease of scarce S-band spectrum.

The two-member Committee, headed by B K Chaturvedi, Member,

Planning Commission, will review the technical, commercial, procedural and

financial aspects of the Agreement between Antrix and Devas Multimedia Pvt.

Ltd, an official statement today said.

It will also review the adequacy of procedures and approval processes

followed by Antrix, ISRO and Department of Space, and suggest

improvements and changes.

The Committee has been asked to submit its recommendations to Prime

Minister Manmohan Singh, who is incharge of Department of Space within

one month. .

Noted aerospace expert Roddam Narsimha, Member, Space Commission

is the other member of the committee.



Media reports had stated that the Department of Space had allocated 70 MHz

of S-Band spectrum to Devas Multimedia for Rs 1,000 crore. The actual value

of this was estimated to be around Rs 2 lakh crore, the reports claimed.

The Prime Minister''s Office had denied reports, saying no decision has been

taken and hence charges of revenue loss were without any basis.

ISRO chief K Radhakrishnan had admitted that details about contract that

gave Devas rights to 90 per cent usage of transponders on two satellites,

were not shared with the Space Commission or the Union Cabinet.

Efforts on to formulate vocational curriculum framework

The HRD Ministry yesterday held a consultation with media and entertainment

sector as part of its efforts to involve all stakeholders in the formulation of a

vocational curriculum framework.

The meeting came against the backdrop of the Ministry setting up a group of

State Education Ministers to suggest ways for strengthening vocational

education at all levels and develop a broad consensus on the contours of the

proposed National Vocational Education Qualifications Framework.

India’s National Skill Development Policy aims to train 50 crore people

by 2022.

The vocational framework aims at setting up common principles and

guidelines for a nationally recognised qualification system, covering schools,

vocational education institutes and institutes of higher education with

qualifications ranging from secondary to doctorate level, leading to

international recognition of national standards.

ULFA holds meetings for peace talks

The United Liberation Front of Asom (ULFA) has secretly held its general

council meeting - though without its elusive commander-in-chief Paresh

Baruah - to chart out a roadmap for peace talks with the government, top

members of the banned outfit said Wednesday.

'We completed our central executive first and then the resolutions taken there

were adopted at the general council meeting. The details of the two meetings



would be made public at a press conference Saturday,' ULFA chairman

Arabinda Rajkhowa told.

But ULFA sources told the outfit's central executive and general council

meetings were held in the western Nalbari district in the past week - both the

meetings held secretly, away from the media glare.

Rajkhowa apart, all the top eight ULFA leaders are out on bail now with the

government facilitating their release from jail to pave the way for peace talks.

According to a senior ULFA leader, the important decisions taken at the

meetings include holding unconditional peace talks with the government

besides urging New Delhi to help extradite Anup Chetia, the ULFA general

secretary who has been in a Bangladesh jail since 1997.

ULFA's commander in chief Paresh Baruah is believed to be somewhere along

the China-Myanmar border and his stand on the peace talks is still unclear.



WORLD AFFAIRS

Road-map for resumption of Indo-Pak dialogue unveiled

Unveiling the road-map for resumption of a comprehensive dialogue with

Pakistan, India yesterday announced that the Home Secretaries of the two

countries will hold talks on counter-terrorism, including progress on 26/11

trial in Rawalpindi court, ahead of Foreign Minister S M Qureshi's visit here by

July.

In a statement ''Agreed Outcome of India-Pakistan Foreign Secretary-

level talks in Thimphu'', Ministry of External Affairs said Secretary-level

talks on the issues of counter-terrorism (including progress

on Mumbai trial); humanitarian issues; peace and security, including

CBMs; Jammu and Kashmir; promotion of friendly exchanges; Siachen

and economic issues will be held in the next few months.

Discussions on issues such as Wullar barrage or Tulbul navigation project

and Sir Creek will be at the level of Additional Secretaries or Surveyors

General.

List of issues mentioned in the statement are same as in the Composite

Dialogue, that was halted by India after the 2008 Mumbai attacks.

Egypt Unrest: How will the dust settle?

Egyptian President Hosni Mubarak is on the verge of capitulating to protester

demands to give up power but may still seek to hold on in a nominal capacity by

giving presidential powers to his deputy or a joint leadership involving an army

council.

The army made the first move, with an announcement called "Communique No.

1", saying the army's higher council was meeting in continuous session, a move that

showed the army had taken charge of the situation and Mubarak's fate was in its

hands.

The two obvious options are:



* Mubarak hands over powers to Suleiman, while staying nominally president. But

this may not appease the protesters who want Mubarak and his allies out. The army

may also be wary, because they do not want to confront angry demonstrators.

* Mubarak could hand powers to Suleiman and also empower the higher military

council to oversee the transition. This could also come up against those

demonstrators chanting: "Civilian, civilian, we don't want it military."

But the army is seen by many as a neutral force, so many Egyptians might support

this.

In any of these two cases, one analyst said Mubarak would almost certainly have to

announce martial law to bypass constitutional procedures and move straight to

setting a new constitution and calling for elections.

The Muslim Brotherhood, seen as Egypt's biggest organised opposition group, has

said it is concerned by developments because it "looks like a military coup". Other

protesters may object to a move that hands power from one military ruler to

another.

But the military is unlikely to accept an alternative route that puts them on the

sidelines and ends their almost six decades of control of Egypt since King Farouk was

toppled by Gamal Abdel Nasser and the "Free Officers" in 1952.

Korean talks collapse

Military talks between the two Koreas have collapsed, a unification ministry

official in Seoul said on Wednesday, dealing a setback to efforts to restart

international aid-for-disarmament talks.

Tensions have eased on the divided peninsula since the start of the year, with

both sides calling for dialogue, raising hopes the neighbours could rebuild

relations shattered over the past two years by a series of deadly attacks and

failed nuclear talks.

Colonels from the two Koreas, still technically at war since their 1950-53 civil

conflict ended in a truce, not a treaty, talked for two days but failed to get

past the first hurdle of the preliminary meeting -- setting the agenda for

senior discussions.



"The talks have collapsed; they haven't even agreed on a date for their next

meeting," the official told, referring to the first meeting since the North's

attack on the southern island of Yeonpyeong in November, which killed four

people and raised the threat of possible all-out war.

The South's Defence Ministry said in a statement that the North's

representatives had "unilaterally walked out of the meeting room."

In Washington, Pentagon spokesman called news of the walkout unfortunate

and said the United States had actively encouraged dialogue between the two

Koreas as a way to reduce tensions on the peninsula.



Featured Article

Regime change in Egypt – The consequences

A very good article (“Israel Fears Regime Change in Egypt”) by Gil Yaron for Spiegel

Israel is watching developments in Egypt with concern. The government is standing

by autocratic Egyptian President Hosni Mubarak, out of fear that the Islamist Muslim

Brotherhood could take power and start supplying arms to Hamas.

Israel is usually a country where politicians have an opinion on any topic, and

vociferously so. But in recent days, Israel's leadership has been unusually silent on a

certain question. No one, it seems, is willing to make an official comment on

the ongoing unrest in Egypt, where protesters have been holding anti-government

rallies. It's not because Israel does not care about the riots ravaging its southern

neighbor -- on the contrary, Israeli news channels, normally prone to parochialism,

have been closely following recent events in the Arab world, from Tunisia to

Lebanon.

Radio, television and newspapers constantly report the courage of the demonstrators

in the streets of Cairo, not only relishing the historic spectacle, but openly expressing

sympathy with Egypt's struggle for democracy.

But the Israeli government is keeping quiet. "We are closely monitoring the events,

but we do not interfere in the internal affairs of a neighboring state," was the curt

answer from the Israeli Foreign Ministry to requests for comments.

Uneasy Peace

Egypt was the first Arab state to sign a peace treaty with Israel, in 1979, but the

relationship between the neighboring countries remains delicate. Good relations are

limited to government circles. The regime in Cairo attempts to curtail the

establishment of closer links between the countries' civil societies. The professional

associations of doctors, engineers or lawyers, for example, require their members to

declare that they will not contribute to normalizing relations with Israel.

Even 30 years after the peace agreement, annual trade between the neighboring

countries only amounts to a value of $150 million (€110 million). (For comparison,

Israel's trade with the European Union was worth around €20 billion in 2009.)

http://www.spiegel.de/international/world/0,1518,742186,00.html



A recent incident involving the vice governor of the Sinai Peninsula reveals how

many Egyptians think about Israel. After a shark attack off the coast, the official said

that it could not be ruled out that the deadly fish had been released by Israeli

intelligence to harm Egypt's tourism industry. After the bloody attack on a church in

Alexandria on Jan. 1, a spokesman for Egypt's Muslim Brotherhood speculated that

Israel could be responsible for the attack, with the intention of sowing discord

between Christians and Muslims.

Indeed, the Muslim Brotherhood is one of the main reasons why official

Israel seems to support Mubarak so keenly. It is considered the most popular

political movement in Egypt, and its position regarding the peace treaty with Israel is

clear: They want it revoked immediately. "Democracy is something beautiful,"

said Eli Shaked, who was Israel's ambassador to Cairo from 2003 to 2005, in an

interview with SPIEGEL ONLINE. "Nevertheless, it is very much in the interests of

Israel, the United States and Europe that Mubarak remains in power."

For Israel, more is at stake than the current so-called "cold" peace with Egypt and a

few tens of millions of dollars in trade. "Never before have Israel's strategic interests

been so closely aligned with those of the Sunni states as today," says Shaked,

referring to Arab countries whose populations are mainly Sunni Muslim, such as

Egypt, Saudi Arabia and the United Arab Emirates.

The recent publication of the US diplomatic cables by WikiLeaks showed what he

means: Much of the Arab world, and especially Mubarak, sees Shiite Iran and its

allies, such as Hamas in the Gaza Strip and Hezbollah in Lebanon, as an

existential threat, just as Israel does.

Potential Serious Danger

"If regime change occurs in Egypt, the Muslim Brotherhood would take the

helm, and that would have incalculable consequences for the region," says

Shaked. The Israeli government has noted with concern the fact that, even after 30

years of peace, Egypt's army is still equipped and trained mainly with a possible war

against Israel in mind.

A cancellation of the peace treaty would open up a new front with the 11th largest

army in the world, which is equipped with modern American weapons. But what

Israel fears more than a -- somewhat unlikely -- armed conflict with Egypt is an



alliance between an Islamist regime in Cairo and Hamas, which considers itself an

offshoot of the Muslim Brotherhood.

Today the Egyptian army tries to stop -- albeit hesitantly -- weapons smuggling from

Sinai to Gaza, the main supply route for Hamas. An Egyptian regime that opened the

border with Gaza for arms deliveries would pose a serious danger to Israel.

Shaked considers the West's demands for more openness and democracy in Egypt to

be a fatal mistake. "It is an illusion to believe that the dictator Mubarak could be

replaced by a democracy," he says. "Egypt is still not capable of democracy," he

adds, pointing out that the illiteracy rate is over 20 percent, to give just one

example.

The Muslim Brotherhood is the only real alternative, he opines, which would

have devastating consequences for the West. "They will not change their

anti-Western attitude when they come to power. That has not happened

(with Islamist movements) anywhere: neither in Sudan, Iran nor

Afghanistan."

Ultimately the choice is between a pro- or an anti-Western dictatorship, says

Shaked. "It is in our interest that someone from Mubarak's inner circle takes over his

legacy, at any cost." In the process, it is not possible to rule out massive bloodshed

in the short term, he says. "It would not be the first time that riots in Egypt were

brutally crushed."



BUSINESS/FINANCE/ECONOMICS

Cabinet nod to Rs 1,100 crore fund infusion in RRBs

The government yesterday approved capital infusion of Rs 1,100 crore for

Regional Rural Banks for improving their capital adequacy ratio.

The Share of Central Government that is Rs 1,100 crore will be released as

per provisions made by the Department of Expenditure in 2010-11 and 2011-

12, told Information and Broadcasting Minister Ambika Soni.

The issued capital of RRBs is subscribed by Central Government, State

Government and sponsor banks in the proportion of 50 per cent, 15 per cent

and 35 per cent, respectively.

RRBs are jointly owned by Government of India, the State Government

concerned and the Sponsor banks.

The fund infusion in RRBs will improve their Capital to Risk Weighted Assets

Ratio CRAR) and enable the banks to enhance their lending towards farm

sector.

Besides, the Cabinet approved additional amount of Rs 700 crore as

contingency fund to meet the requirement of the weak RRBs, particularly

those in the North Eastern and Eastern Region. The necessary provision will

be made in the Budget as and when the need arises.

A capacity building fund with a corpus of Rs 100 crore is also to be set up by

the Central Government with National Bank for Agriculture and Rural

Development (NABARD) for training and capacity building of the RRB staff

in the institution of NABARD and other reputed institutions.

Finance Minister Pranab Mukherjee after review of RRBs in 2009,

constituted a committee under the Chairmanship of RBI Deputy

Governor K C Chakrabarty.

This was to analyse the financials of the RRBs and suggest measures

including re-capitalisation to bring the CRAR of RRBs to at least 9 per cent in

a sustainable manner by 2012.

The Committee, which submitted its report in May, 2010, had

recommended RRBs to have CRAR of at least 7 per cent as on March

31, 2011 and at least 9 per cent by the end of March 2012.



Recapitalisation requirement is of the order of Rs 2,200 crore for 40 of the 82

RRBs. This amount is to be released in two installments in 2010-11 and 2011-

12, the panel had recommended.

The remaining 42 RRBs will not require any capital and will be able to

maintain CRAR of at least 9 per cent as on March 31, 2012, it had suggested.

Food inflation eases, but price pressures remain

India's food inflation eased in end January on moderating prices of fruits and

vegetables but annual headline inflation in January is still expected to remain

high.

India's food price index rose 13.07 percent and the fuel price index

climbed 11.61 percent in the year to Jan. 29, government data on Thursday

showed.

Headline inflation in December was 8.43 percent stoked by high food

inflation which reached a one year high in end December last year and

analysts say that figure could shoot higher in January.

In the prior week, annual food and fuel inflation stood at 17.05 percent and

11.61 percent.

The primary articles price index was up 16.24 percent in the latest week,

compared with an annual rise of 18.44 percent a week earlier.

The Indian central bank, the Reserve Bank of India (RBI), has raised seven

times since March last year but that has had limited effect on moderating

inflation.

In its January 25 policy review, the RBI had upwardly revised its end March

inflation projection of 5.5 percent to 7 percent. Despite monetary and

administrative measures, high inflation has become entrenched in the

economy, a realisation which has prompted top policy makers to prepare

ground for people to live with high inflation.

India is expected to grow at 8.6 percent this fiscal year that ends in

March 2011, provisional estimates by the government released this week

showed.

‘Eurofighter’ sees strong demand in Asian Markets



European consortium Eurofighter expects the global combat aircraft export

market to reach 800 units in 20 years, and it expects to deliver 250 of those

planes, a senior executive said on Thursday.

Eurofighter, a four-nation consortium of EADS, representing Germany

and Spain, Britain's BAE Systems and Italy's Finmeccanica, is in the

race for an $11 billion Indian contract for 126 fighter jets, one of the

largest export orders in the history of defence.

It is competing with Saab's JAS-39 Gripen, Boeing's F/A-18 Super

Hornet, Dassault's Rafale, Lockheed's F-16 and Russia's MiG-35 to win

the fighter contract.

"India and other nations in Asia are important markets for combat aircraft,"

Enzo Casolini, chief executive of Eurofighter said.

Middle East crisis impact on India

India should be prepared for the implications of prolonged crisis in the Middle

East, which would push up oil prices, Reserve Bank of India (RBI) governor,

Duvvuri Subbarao said on Thursday.

Unrest in Egypt has sparked fears of supply shortages and pushed up crude

oil prices.

In India, higher crude prices can either be passed through to consumers,

further fanning stubbornly high inflation, or can be absorbed by the

government, adding to its subsidy bill and straining its fiscal postion.

"Given the situation in the Middle East, we are hoping it is settled. But should

that be prolonged there will be implications on oil prices so we have to be

prepared for this," said RBI Governor Subbarao said.

RBI counting on the government to tighten fiscal policy said that "We are

hoping and expecting that the central government will come up with a

credible fiscal consolidation plan for the medium term and for immediate

2011-12," Subbarao said.

"From the perspective of the RBI, fiscal consolidation is also important

because monetary policy is most effective when there is fiscal

consolidation," he added.

The government loosened fiscal policy by slashing taxes and

increasing spending in the aftermath of the global financial crisis in

2008.



Since then, it has unveiled a roadmap for fiscal consolidation and has

budgeted for the fiscal deficit to be contained within 5.5 percent of

GDP for the year that ends in March 2011.

RBI has also raised key interest rates seven times over the past year, aimed

at setting interest rates in order to rein in inflation without hurting growth.

'Swabhimaan', a new financial inclusion campaign launched

Finance Minister, Pranab Mukerjee informed that banking services will be

rolled out in 20,000 villages this fiscal, as a part of government’s financial

inclusion drive.

"For the year 2010-11, we have set a target of rollout in 20,000 villages. I am

confident that this target will be achieved," Mukherjee said at the launch of

'Swabhimaan', the financial inclusion campaign of the government.

Under the campaign, the government has targeted to cover at least

73,000 new habitations with a population of 2,000 and above and

open at least 5 crore new account by March, 2012.

gAccording to CSO estimates, the agriculture sector is poised to grow at 5.4

per cent in the current fiscal, compared to 0.4 per cent a year ago. The credit

is due to phenomenal growth in bank credit to the agriculture sector. It is

expected to cross the target of Rs 3,75,000 crore set for the year

Presently, there are only about 38 per cent of bank branches are in

rural areas, providing coverage to 40 per cent of the country's

population.

Besides, 51.4 per cent of farmer households in the country are

financially excluded from both formal and informal sources of credit.

Overall, 73 per cent of farmer households have no access to formal

sources of credit.

Portability of health insurance policies from 1 July: IRDA

Another welcome development after MNP!

Medical claim policy holders, who are not satisfied with the services of their

existing insurance providers, will now be able to switch to another firm easily



without any change in the premium outgo, the insurance regulator IRDA has

said.

After examining various issues and hearing representations by consumer

associations and policyholders, Insurance Regulatory and Development

Authority (IRDA) on Thursday said the portability of health insurance

policies would come into effect from July 1.

The portability facility will allow policy holders to switch over to another

insurance company with the same conditions.

The new facility will also help those policy holders who stick to one insurer

throughout life for fear of losing the cover for Pre Existing Diseases (PED).

In general, health insurance policies have specific exclusions for PED for a

specified period of cover during the initial year, and policy holders do not get

this cover in the event of changing insurance firm. It was considered

"detrimental to competition".

Currently, IRDA allows portability of motor insurance policies.

The main features of portability are:

1. The credit from the period elapsed excluding PED shall be carried forward to

the new insurer.

2. The accepting insurer shall provide cover, atleast upto the sum assured in

the previous insurance policy.

3. The request for porting the policy shall be completed as per the timelines

prescribed in the IRDA (Protection of Policyholders’ Interests) Regulations

and guidelines.

Cairn opposes change in royalty clause

Cairn India will not accept a change in royalty payment terms of its main

producing asset as that could hurt its value, and in turn jeopardise Vedanta

Resources' $10 billion acquisition bid.

Asked if Cairn thought its value would be hit if India's government made

royalty costs recoverable, Chief Executive Rahul Dhir said it would be

unacceptable.



UK-based explored Cairn Energy agreed in August to sell 40-51 percent in

Cairn India to Vedanta but the deal has been delayed over royalty issues with

the Indian government and its partner in the big Rajasthan block, Oil and and

Natural Gas Corp.

State-owned ONGC, which has a 30 percent stake in Cairn-operated

Rajasthan fields and pays royalty on the entire output, said it would not block

the planned deal but wanted the royalty issue to be resolved at the earliest.

ONGC says the block is not viable for it on the current royalty terms which

amounts to a payment of about 140 billion rupees ($3.08 billion) over the life

of the field. It wants Vedanta to pay a share or account for royalty payments

in the overall exploration costs.

Oil Minister S. Jaipal Reddy said on Tuesday that ONGC's concerns over the

royalties must be addressed for the deal, keenly awaited by shareholders and

seen as a barometer of India's investment climate, to go through.

India and Japan to ink free trade pact on Feb 16

India will sign a comprehensive market opening trade pact with Japan on

February 16 that would enable both the countries to reduce or eliminate

duties on most of the goods and services.

The country would also ink the free trade pact with Malaysia in the same

week.

India has already concluded the negotiations for Comprehensive

Economic Partnership Agreement (CEPA) with Japan and

Comprehensive Economic Cooperation Agreement (CECA) with

Malaysia.

The agreements are aimed at reducing or eliminating tariffs on over

90 per cent of the goods India trades with Japan and Malaysia.

Besides, opening market for merchandise, the pacts also aim at liberalising

trade in services, an area of particular interest to India.

According to sources, under the India-Japan CEPA, both the sides would

relax barriers on trade in goods, investment, services and movement

of professionals, besides enhanced cooperation on protection of

intellectual property.



The agreement would boost the two-way commerce which stood at about

USD 11 billion in 2009-10.

The pact with Malaysia (a member of ASEAN), will be in addition to

the FTA India has with the 10-nation Southeast Asian nations.

The agreement with Malaysia is expected to come into effect from July and

would give a boost to the USD 8 billion bilateral trade in 2009-10.

India, BV Islands ink TIEA

India has entered into a pact with the British Virgin Islands for

exchange of information to check tax evasion and money laundering.

This is the third Tax Information Exchange Agreement (TIEA) -- as it

is known in the parlance of the Organisation for Economic Cooperation and

Development ( OECD )) -- signed by India.

Earlier, India signed a TIEA with Bermuda on October 7, 2010. More

recently, it inked one with the Isle of Man last week.

Under the agreement, there is a specific provision for providing banking and

ownership information and the requesting state has to provide some

minimum details about the information requested.

"Information must be foreseeably relevant to the administration and

enforcement of the domestic laws of the contracting parties concerning taxes

and tax matters covered by the agreement," the statement added.

However, information is to be treated as secret and can be disclosed to only

specified person or authorities, which are tax authorities or the authorities

concerned with the determination of a tax appeal.

The agreement also allows for exchange of past information in criminal tax

matters.

New Rail committee to examine a viable PPP

Railways have formed another high-level committee on PPP projects, which

would review the recommendations of a previous committee set up to rework

the PPP model.



The high-level committee comprising five senior railway officials would

examine threadbare the report of the six-member committee that was

submitted on February 7.

The committee has been given five days to submit its report. "The report is

expected to be submitted by coming Monday," the sources said.

Railways had on January 22 constituted a six-member committee to

formulate a policy document on suitable bidding process and to go through

the guidelines laid down in the general financial rules and PPP related

instructions of the Finance Ministry and Planning Commission.

The status of the proposed world class stations, the locomotive manufacturing

units and several big ticket projects are expected to become clearer once the

suggestion of the committee is approved.

These projects have created a lot of interest among international bidders,

with the Kanchrapara project in West Bengal attracting the maximum of eight

players, including American giant GE.

Several other western companies like EMD, Bombardier are also in the fray

for Madhepura and Marhora locomotive projects in Bihar.

Railways have maintained that till now, no PPP project of this magnitude has

been undertaken in the world.

Spectrum scam: It’s Unitech now after Swan

After the arrest of Swan Telecom promoter Shahid Balwa, the focus of the CBI

is now on another real-estate house - Unitech - who earned a quick profit

of nearly 267 per cent by off-loading 60 per cent of shares after

getting spectrum in 2007-08.

Sources said that officials of the Unitech would be questioned soon again after

the CBI was through with the interrogation of Shahid Balwa, promoted of

Swan Telecom and Managing Director of DB group, a real estate house.

The charges against Unitech, according to the CBI's FIR, was that it

offlaoded 60 per cent of its shares to Telenor, a Norway-based

telecom company and earned a profit of 267 per cent even before the

roll out.



M/s Unitech was alloted UAS licences for 22 cricles for Rs 1658 crore.

It offloaded its 60 per cent of shares in the licences to Telenor of

Norway for Rs 6100 crore even before the roll-out.

Some of the officials of the Unitech have already been questioned by the CBI

and the Enforcement Directorate and since now some more evidence had

surfaced, there would be a fresh round of questioning, the CBI sources said.

The estimated loss to the governemnt by grant of licences to these two

companies (Swan and Unitech) alone comes to Rs 7,105 crore. On pro-rata

basis, the estimated loss for all the 122 circles is more than Rs 22,000 crore.

Swan was alloted UAS licences for 13 circles for Rs 1537 crore and it sold 45

per cent of shares before roll-out to UAE-based Etislat for Rs 4200 crore, the

FIR said.

States to get Rs. 7,029 crore to offset CST losses

The Centre has agreed to pay Rs. 7,029 crore as compensation to states for

the losses they suffered in 2010-11 due to a reduction in the central sales tax

rate, a move seen as an attempt to break the impasse over the proposed

goods and services tax.

CST, a tax on sale of goods from one state to another, was reduced from 4 %

to 3% in 2007-08 and further to 2% in 2008-09.

The goods and services tax (GST), which will replace central excise

duty and services tax and state taxes, including value-added tax,

entry tax and purchase tax, has fallen prey to political differences between

BJP-ruled states and the Centre.

The government had planned to roll out GST from this fiscal year, but

postponed its implementation by a year. The Constitution has to be amended

to allow Centre and states to levy GST simultaneously.

At present, the Centre can tax goods at the factory gate and services while

states can only tax goods at the retail level. States can't levy tax on services.


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