Showing posts with label NEWS-VIEWS. Show all posts
Showing posts with label NEWS-VIEWS. Show all posts

Sunday, 4 March 2012

Iran and its Nuclear Programmes – the Controversies and Consequences

Iran is a mountainous, arid, ethnically diverse country of southwestern Asia. Much of Iran consists of a central desert plateau, which is ringed on all sides by lofty mountain ranges that afford access to the interior through high passes. Most of the population lives on the edges of this forbidding, waterless waste. The capital is Tehrān, a sprawling, jumbled metropolis at the southern foot of the Elburz Mountains. Famed for its handsome architecture and verdant gardens, the city fell somewhat into disrepair in the decades following the Iranian Revolution of 1979, though efforts were later mounted to preserve historic buildings and expand the city’s network of parks. As with Tehrān, cities such as Eṣfahān and Shīrāz combine modern buildings with important landmarks from the past and serve as major centres of education, culture, and commerce.
The heart of the storied Persian empire of antiquity, Iran has long played an important role in the region as an imperial power and later—because of its strategic position and abundant natural resources, especially petroleum—as a factor in colonial and superpower rivalries. The country’s roots as a distinctive culture and society date to the Achaemenian period, which began in 550 bc. From that time the region that is now Iran—traditionally known as Persia—has been influenced by waves of indigenous and foreign conquerors and immigrants, including the Hellenistic Seleucids and native Parthians and Sāsānids. Persia’s conquest by the Muslim Arabs in the 7th century ad was to leave the most lasting influence, however, as Iranian culture was all but completely subsumed under that of its conquerors.
An Iranian cultural renaissance in the late 8th century led to a reawakening of Persian literary culture, though the Persian language was now highly Arabized and in Arabic script, and native Persian Islamic dynasties began to appear with the rise of the Sāmānids in the early 9th century. The region fell under the sway of successive waves of Persian, Turkish, and Mongol conquerors until the rise of the Ṣafavids, who introduced Ithnā ʿAsharī Shīʿism as the official creed, in the early 16th century. Over the following centuries, with the state-fostered rise of a Persian-based Shīʿite clergy, a synthesis was formed between Persian culture and Shīʿite Islam that marked each indelibly with the tincture of the other.
With the fall of the Ṣafavids in 1736, rule passed into the hands of several short-lived dynasties leading to the rise of the Qājār line in 1796. Qājār rule was marked by the growing influence of the European powers in Iran’s internal affairs, with its attendant economic and political difficulties, and by the growing power of the Shīʿite clergy in social and political issues.
The country’s difficulties led to the ascension in 1925 of the Pahlavi line, whose ill-planned efforts to modernize Iran led to widespread dissatisfaction and the dynasty’s subsequent overthrow in the revolution of 1979. This revolution brought a regime to power that uniquely combined elements of a parliamentary democracy with an Islamic theocracy run by the country’s clergy. The world’s sole Shīʿite state, Iran found itself almost immediately embroiled in a long-term war with neighbouring Iraq that left it economically and socially drained, and the Islamic republic’s alleged support for international terrorism left the country ostracized from the global community. Reformist elements rose within the government during the last decade of the 20th century, opposed both to the ongoing rule of the clergy and to Iran’s continued political and economic isolation from the international community.
Iran – Country Profile
Official name Jomhūrī-ye Eslāmī-ye Īrān (Islamic Republic of Iran)
Form of government unitary Islamic republic with one legislative house (Islamic Consultative Assembly [290])
Supreme political/religious authority Leader
Head of state and government President
Capital Tehrān
Official language Farsī (Persian)
Official religion Islam
Monetary unit rial (Rls)
Population (2011 est.) 75,276,000
Total area (sq mi) 636,374
Total area (sq km) 1,648,200
Loaded ‘first domestically-made nuclear fuel
20120126_Nuclear_Program
Iran has staged an elaborate ceremony to unveil new developments in its nuclear programme.
Tehran says it has used domestically-made nuclear fuel in a reactor for the first time, and also unveiled more efficient enrichment centrifuges.State television showed President Ahmadinejad inspecting the rods as they were loaded into a reactor.
Western countries fear Iran wants to make nuclear weapons; Tehran says it only wants to produce its own energy. The government unveiled the “new generation” of faster, more efficient uranium enrichment centrifuges at its Natanz facility in the centre of the country.
The head of Iran’s Atomic Energy Organisation, Fereydoon Abbasi Davani, said they were three times more efficient than their existing capacity.
President Ahmadinejad was wearing a white coat at the research reactor in Tehran, and was also shown attending the ceremony to mark what he has called the great achievements in the nuclear sphere. He said that his country would never halt its programme to enrich uranium.
Home-grown industry
In January, 2012 the International Atomic Energy Agency (IAEA) confirmed that Iran had started the production of uranium enriched up to 20% at its Qom plant.
A deal to provide fuel for the reactor from abroad collapsed two years ago – at which point Iran decided to make the fuel itself.
One central point links these developments, says the BBC’s Iran correspondent James Reynolds: Iran is determined to show that it can master nuclear technology on its own, and that international sanctions against its nuclear programme will make no difference.
The US and the European Union have recently imposed new sanctions targeting Iranian oil sales as part of a drive to increase international pressure on Tehran over its nuclear programme.
Talks between Iran and six world powers – the US, UK, France, Germany, Russia and China – on the nuclear programme collapsed a year ago and show little sign of resuming.
Iran’s key nuclear sites
Arak – Heavy water plant
Iran is building a reactor at Arak, where it already has a heavy-water production plant
The existence of a heavy water facility near the town of Arak first emerged with the publication of satellite images by the US-based Institute for Science and International Security in December 2002.
Heavy water is used to moderate the nuclear fission chain reaction either in a certain type of reactor – albeit not the type that Iran is currently building – or produce plutonium for use in a nuclear bomb.
In August 2010, the IAEA visited the IR-40 heavy water reactor site at Arak. It said the facility was still being built but some major equipment had been installed. Iran told the IAEA the operation of the reactor was planned to start by the end of 2013.
The IAEA said that based on satellite imagery, the heavy water production plant appeared to be in operation, but had not had access to it to confirm such reports.
Bushehr – Nuclear power station
The reactor building at Bushehr was built with Russian help
Iran’s nuclear programme began in 1974 with plans to build a nuclear power station at Bushehr with German assistance.
The project was abandoned because of the Islamic revolution five years later, but revived in the 1990s when Tehran signed an agreement with Russia to resume work at the site.
Moscow delayed completion on the project while the UN Security Council debated and then passed resolutions aimed at stopping uranium enrichment in Iran.
In December 2007, Moscow started delivering the canisters of enriched uranium the plant needs.
Earlier in the same month, a US intelligence report said Iran was not currently running a military nuclear programme.
There are two pressurised water reactors at the site.
Satellite images from March 2010 show the first completed reactor building on a site that occupies 2.5 square kilometres (one square mile), about 17 km (11 miles) south of the city of Bushehr.
Iranian state media said the plant was connected to the national grid in September 2010.
When it was inspected by the IAEA in October 2011, the agency noted that the reactor was in operation.
Gachin – Uranium mine
Yellowcake is used in the preparation of fuel for nuclear reactors
In December 2010, Iran said it had delivered its first domestically produced uranium ore concentrate, or yellowcake, to a plant that can make it ready for enrichment.
Iran’s nuclear chief Ali Akbar Salehi said the first batch of yellowcake had been sent from Gachin mine sent to a conversion facility at Isfahan.
Mining operations started at the Gachin in 2004.
Iran was believed to be running low on its stock of yellowcake, originally imported from South Africa in the 1970s.
Isfahan – Uranium conversion plant
Men making hexafluoride gas at the Isfahan uranium conversion facility
Iran is building a plant at a nuclear research facility to convert yellowcake into three forms:
  • Hexafluoride gas – used in gas centrifuges
  • Uranium oxide – used to fuel reactors, albeit not the type Iran is constructing
  • Metal – often used in the cores of nuclear bombs. The IAEA is concerned about the metal’s use, as Iran’s reactors do not require it as fuel.
Natanz – Uranium enrichment plant
Iran is planning new facilities at Natanz
Iran resumed uranium enrichment work at Natanz in July 2004, after a halt during negotiations with leading European powers over its programme.
It announced in September 2007 that it had installed 3,000 centrifuges, the machines that do the enrichment. In 2010, Iran told the IAEA Natanz would be the venue for new enrichment facilities – construction of which would start around March 2011.
This is the facility at the heart of Iran’s dispute with the United Nations Security Council.
The Council is concerned because the technology used for producing fuel for nuclear power can be used to enrich the uranium to a much higher level to produce a nuclear explosion.
Parchin
One area at Parchin has been identified as a suspected nuclear weapons development facility.
The overall complex is one of Iran’s leading munitions centres – for the research, development and production of ammunition, rockets and high explosives. A limited inspection carried out by the IAEA in 2005 found no proof of any nuclear weapons activity at Parchin.
But according to information from an IAEA report in November 2011, it is believed the site has also been used for testing high explosives that could be used in nuclear weapons.
Qom – Uranium enrichment plant
IAEA says work started on Qom site earlier than Iran suggests
In January 2012, Iran said it had begun uranium enrichment at the heavily fortified site of Fordo near the holy city of Qom.
It had revealed the existence of the facility, about 30km (20 miles) north of the city, in September 2009.
Iran initially informed the IAEA that it was constructing the plant to produce uranium enriched up to 5% – commonly used in nuclear power production.
In June 2011, Iran told the IAEA that it was planning to produce uranium enriched up to 20% at Fordo – and would subsequently stop 20% fuel production at Natanz.
In January 2012, the IAEA confirmed Iran had started the production of uranium enriched up to 20%.
Iran says the Highly Enriched Uranium (HEU) is for use as a fuel in research reactors. Uranium – with a concentration of 20% or more – is needed to build nuclear weapons.
The IAEA says environmental samples taken from the site at Fordo in April 2011 did not indicate the presence of enriched uranium.
UN sanctions against Iran
Iran has been subjected to four rounds of United Nations Security Council sanctions in relation to its nuclear programme.
In spite of this, it has continued its uranium enrichment operations and there is growing pressure for sanctions to be tightened further.
The following are the UN resolutions relating to Iran’s nuclear programme.
In March 2006, the issue was discussed at the UN Security Council, which called for a report by the IAEA to establish Iran’s compliance with the terms of the nuclear non-proliferation treaty (NPT).
The treaty allows for the use of nuclear technology for peaceful energy purposes, as long as countries can demonstrate that their programmes are not being used for the development of nuclear weapons.
In July 2006, the Security Council said it was “seriously concerned” that the IAEA was unable to provide assurances about Iran’s undeclared nuclear material. It demanded that Iran “suspend all enrichment-related and reprocessing activities, including research and development”, giving it one month to do so. Failing that, it would face the possibility of economic and diplomatic sanctions.
Iran asserted that its nuclear programme was for civilian use permitted by the NPT. On this basis it said it rejected the validity of the Security Council’s calls. It claimed that while subscribers to the NPT were being punished, those who had not signed up to the agreement were being rewarded by generous nuclear cooperation agreements.
Resolution 1696
The deadline for Iranian compliance with the Security Council’s demands passed without being heeded. In December 2006, the Council unanimously adopted Resolution 1737.
This called on states to block Iran’s import and export of “sensitive nuclear material and equipment” and to freeze the financial assets of those involved in Iran’s nuclear activities.
The Council decided that all countries should prevent the supply or sale of equipment and technology that would aid Iran’s nuclear programme in any way.
Resolution 1737
Arms
With Iran’s nuclear programme ongoing, in March 2007 the Security Council voted to toughen sanctions. It banned all of Iran’s arms exports. It also froze the assets and restricted the travel of people it deemed involved in the nuclear programme.
Resolution 1747
Financial and trade
Further restrictions imposed in March 2008 encouraged scrutiny of the dealings of Iranian banks.
It also called upon countries to inspect cargo planes and ships entering or leaving Iran if there were “reasonable grounds” to believe they were goods prohibited by previous resolutions.
Resolution 1803
In June 2010, the Council approved fresh sanctions against Tehran.
The measures prohibit Iran from buying heavy weapons such as attack helicopters and missiles.
They also toughen rules on financial transactions with Iranian banks and increase the number of Iranian individuals and companies that are targeted with asset freezes and travel bans.
There is also a new framework of cargo inspections to detect and stop Iran’s acquisition of illicit materials.
The sanctions were passed after being watered down during negotiations with Russia and China. There are no crippling economic sanctions and there is no oil embargo.
U.S., EU welcome Iran’s offer to restart nuclear talks
Western nations welcomed 17.12.2012 a letter from Iran offering a resumption of stalled nuclear talks, though they were still determining the Islamic republic’s sincerity.
European Union Foreign Policy chief Catherine Ashton said she was “cautious and optimistic” about the prospect of dialogue between Iran and six world powers — the United States, France, Britain, China, Russia and Germany. “Let me say that it’s good to see that the letter has arrived and that there is the potential possibility that Iran may be ready to start talks,” Ashton said at a news conference with U.S. Secretary of State Hillary Clinton.
Clinton called the letter from Iranian nuclear negotiator Saeed Jalili “an important step.” “This response from the Iranian government is one we’ve been waiting for and, if we do proceed, it will have to be a sustained effort that can produce results,” she said.
Sanctions hit Iran
Russian steel, Ukrainian maize, tea from India, palm oil from Malaysia — myriad products are shipped through the Gulf emirates. Iran wants and needs them all. But in the last few months, the growing web of U.S. and European sanctions has begun to paralyze its ability to import and export key products.
Multiple banking, shipping and trade sources tell that Iran is struggling to import staples and export crude oil as its access to the global financial system is curbed. As a result, inflation is rising and shortages of basic products are growing.

Wednesday, 21 December 2011

Gender inequality problem of India

Close on the heels of the world population crossing the 7 billion-mark, the new Human Development Report of UNDP has revealed a major reason behind India’s growing numbers. While we are worrying about high total fertility rates (TFRs) of 2.6, new data points out that our adolescent fertility rates (AFR) are even more shocking at 86.3.

Adolescent fertility rate—defined as the number of births per 1,000 women aged 15 to 19—is among the highest for India in South Asia. Only Nepal and Afghanistan have higher rates at 103.4 and 118.7.

One of the main drivers of high gender inequality in India, which has the poorest (129th) Gender Inequality Index rank in South Asia (leaving aside Afghanistan which is poorer at 141), high adolescent fertility rate reflects that our child marriage prevention laws have simply not worked and our contraception prevalence rate remains poor at 54%. Even Sri Lanka has a higher contraception prevalence rate at 68%.

On gender equality, India lags far behind China which is ranked a handsome 35 in the world (lower the rank on GII, better the state of gender equality). In China adolescent fertility rate is just 8.4, while TFR is also low at 1.6.

Even on the other two major components that drive gender equality—women’s representation in national Parliament and the participation of age 25 years plus women in economic activities—India is far behind many even in South Asia. Nepal is the best in this category with 33.2% women in Parliament, while China and Pakistan have 21.3% and 21%, respectively—much better than India’s 10.7%.

As far as people who have attained secondary education are concerned, in India the percentage is 26.6 for women as against 50.4 for men—indicating a wide gap, which is also seen in labour force participation, where women make up 32.8% workforce as against 81.1% men.

Saturday, 3 December 2011

Urban Mobility India 2011 to Address Ways to Achieve Sustainable Mobility

India with 1.2 billion; over 31 per cent in cities; three mega cities with 10 million plus population,53 million pus cities and rapid pace of urbanization is poised at a critical threshold. Urban renewal and development has become a policy priority of the Government of India, which is an appropriate response to the challenge and a great potential opportunity. Cities that are livable, clean, green, energy efficient and sustainable need to be built. The most challenging impact of this urban growth and the rising income levels is the mobility crisis. This makes urban transport as the most important urban infrastructure for urbanisation and to ensure that lack of mobility does not become a bottleneck for economic growth, major investments shall have to be done in the field of urban transport in next 20years. The investment needed for urban transport in the 12th five year plan is of the order of Rs. 3,88,000Cr as per the report of the working group on urban transport submitted to planning commission recently.

In a continuing effort to get a better understanding of this critical issue, the Ministry of Urban Development, Government of India, has been organizing Urban Mobility India – a conference-cum-exhibition from 3-5th December of every year, for the last 4 years.

This year, Urban Mobility India (UMI) 2011 is being organized at The Manekshaw Centre (Dhaula Kuan) in Delhi from Dec 3rd to 6th, 2011. This year event is co-hosting 6th Regional Environmentally Sustainable Transport Forum(EST) having representation from about 40 countries with participation from 23 Asian countries. United Nations Centre for Regional Development (UNCRD), World Health Organization (WHO) and Ministry of the Environment Government of Japan are partner organizers.

Chaired by Prof. Saugata Roy, Minister of State (Urban Development) the conference-cum-exhibition will bring together under one roof the technology and service providers in urban transport from India and abroad in various modes such as pedestrians, non-motorized transport, bus operations, BRT, LRT, metro rail, environment and traffic management, congestion management, ropeways, parking and ITS etc., as well as, the policy makers, practitioners and officials.

Key note addresses would be delivered by Dr. E Sreedharan, MD, Delhi Metro and Mr. Robert O’Keefe, Vice President of the Heath Effect Institute (HEI) and Chairman of CAI-Asia. Shri Kamal Nath, Minister for Urban Development, will present Urban Mobility Awards to selected and best urban transport initiatives/projects.

The Conference and expo shall be formally inaugurated on 4th December 2011 by Saugata Roy, Minister of State for Urban Development. The awards would be presented by Minister for Urban Development during valedictory session on 6th December. The technical sessions as well as round tables cover almost entire gamut of issues relating to urban transport from pedestrianisation to metro including PPP, accessibility, intelligent transport System, land use and transport planning, public health and safety, last mile connectivity, mode choices for public transport, people and environment friendly urban transport planning, sustainable mobility and large housing projects, nationally appropriate mitigation actions (NAMA), financing options, fare integration for seamless travel, bike sharing, green freight etc.

About 1000 delegates are expected to participate in this four day event from all over India representing almost all the agencies including traffic police, planners, engineers, policy makers, consultants, industry etc. Post graduate Students and research scholars from various institutions are also participating.

FDI in Multi Brand Retail

The Government has decided to allow Foreign Direct Investment  (FDI) upto 51% in multi brand retail. This means that global retailers can come to India with a local partner and set up stores in the country.  Till now FDI was not allowed in multi brand retail.  However, there were big multi brand retail outlets owned by Indian entities.

 This decision is an enabling policy that will open up new windows of opportunity to modernize the retail sector particularly for agricultural products and the small-scale sector.

The benefits would be for all:
The farmer will get a better price for their produce as middlemen will be removed   and retailers will buy directly from farmers.  Farmers’ losses from wastages specially  in vegetables and fruits will come down.

The small scale sector will find new buyers and cheap and better quality source for their products.

Consumers will get better prices and greater variety from these stores.  The entry of global players will encourage existing traders and retail outlets to upgrade and become more efficient, thereby providing better services to the consumers as also better remuneration to the producers from whom they source their products.

This is also one of the most effective ways to tackle rise in food prices and inflation due to availability of food items on lower prices.

Today India is one of the largest producers of fruits and vegetables in the world. However 30-40% of food and vegetable products go waste due to lack of storage and cold chain facilities. This decision will bring in funds for investment to improve supply chain infrastructure such as cold storage, transportation and procurement along with bringing in investment for growth of the economy.
 
This will bring huge employment opportunities in agro-processing, sorting, marketing and the frontend retail business.  As per some estimates upto 10 million jobs will be created in coming years. 

Government has provided safeguards to protect national interest such as:
· Minimum investment by the global retailer will be $ 100 million and 50% of which will be in backend infrastructure that will control wastage and help local farmers. Backend infrastructure will be in or near villages and will be of immense value for rural economy.
· It has been made mandatory that 30% sourcing will be done from Indian small industry. This will promote local manufacturing, as Indian small industries will feel encouraged to expand capacities in manufacturing thereby creating more employment and also strengthening the manufacturing base of the country.

·These stores can be set up only in cities with the population of more than 10 lakh.   This provision along with the requirement of master/zonal plans will make sure that small retailers are not affected.  Moreover small retailers can benefit from sourcing their products from deep discount wholesale cash-and-carry big retailers.  This will improve quality of their product and reduce their cost.

· In order to ensure supply to ration shops (PDS) government will have the first right to the procurement of agricultural products.  This is important from food security point of view also. 

Some people fear that big retailers will destroy small traders by keeping low prices initially (predatory pricing).  However, Competition Commission of India will not allow this to happen.  As the policy will be implemented in only 53 cities (with population over 10 lakh) which will make it difficult for big retailers to crush competition.  In many developing countries like China, Thailand, Indonesia, Brazil, Argentina, and Singapore, where 100% FDI is allowed, small retailers are successfully co-existing with big retailers.
 
Indian labour will continue to be protected by Indian labour law. It is an enabling policy framework.  States are free to adopt it or leave it. Those states that do not want to have FDI in retail are free not to allow them. This is done to maintain the freedom of states in federal structure. FDI policy does not override the existing laws governing, trade and commerce in the country.  The State Government laws and regulations in this regard would apply as much to the foreign players as to the establishment of any domestic businesses in the retail sector.

Wednesday, 30 November 2011

30% Sourcing under FDI in Multi-brand Retail made Mandatory from Indian MSEs Only

The Union government on 28 November 2011 asserted that 30 per cent sourcing under FDI in multi-brand retail has been made mandatory from Indian MSEs only. The government highlighted that the 30 per cent obligation before the global players is limited to India. The government’s explanation came amidst protests from the opposition and the micro and small enterprises (MSEs).

The government’s assertion however was found to be in total contrast to the note issued earlier which stated that the 30 per cent sourcing by global retailers can be done from anywhere in the world and is not India-specific. The provision for procurement from small units would not violate the WTO obligations.

According to government’s previous stand, the overseas players have to do 30 per cent of their sourcing from MSEs which, however, can be done from anywhere in the world and is not India-specific. The only condition placed was that these MSEs must not have more than $1 million [Rs.5 crore] investment in plant and machinery.

Small enterprises had raised concerns over the clause of 30 per cent sourcing from MSEs anywhere in the world, complaining that it would help the cheap Chinese goods rather than Indians in view of cheaper labour available in China.

Union cabinet on 24 November 2011 approved 51 per cent foreign direct investment (FDI) in multi-brand retail. The Cabinet also decided to raise the cap on foreign investment in single-brand retailing to 100 per cent from 51 per cent.

Reasons to be wary of retail giants

Foreign direct investment (FDI) in retail has been permitted up to 51 per cent, and the FDI limit for single-brand retail has been increased to 100 per cent. The power of the State governments to decide on FDI in retail in their States has also been taken away. In this context, it is important to understand the implications of FDI in food retail for various stakeholders.

FARMERS NOT BENEFITED

The operations of domestic fresh food supermarkets in India haven't made any difference to the producer's share, other than lowering the marketing cost of producers, as supermarkets have collection centres in producing areas, unlike the Agricultural Produce Market Committee (APMC) markets (mandis) which are in distant cities.
But, these supermarkets buy only ‘A' grade produce, that too, on open market (APMC) price-based prices, and only a part of the farmers' output — those who end up going to the APMC mandi to dispose of the remaining/rejected produce. The chains procure from ‘contact' (not contract) farmers without any commitment to buy regularly, as they don't want to share the risk of the growers.
Thus, the involvement of supermarket chains with producers is low and there is no supply-chain efficiency, as many of them have already wound up, for example, in Gujarat. The clamour regarding small landholder benefit in high value crops (read fruits and vegetables) due to supermarket linkage is exaggerated, as these crops account for only 2 per cent of gross cropped area, and the direct linkage is either absent or pretty low. This isn't likely to change even with FDI in retail.
Further, due to the sheer size and buying power of foreign supermarkets, the producer prices may be depressed. There have been a large number of supermarket malpractices across the globe which include: payment and discounts from suppliers for promotions/opening of new stores; rebate from producers as a percentage of their supermarket sales; minus margins whereby suppliers aren't allowed to supply at prices higher than the competitor price; delayed payments; lowering prices at the last minute when supplier has no alternative; changing quantity/quality standards without notice; removing suppliers from their list without good reason; charging high interest on credit, using tough contracts and penalties for failing to supply.It is shocking that no restrictions have been put in place to protect the primary producer or smallholder interest when 86 per cent farmers are small or marginal. The supermarkets are known to prefer large suppliers of farm produce.

JOB LOSSES

The supermarket expansion also leads to employment loss in the value chain. As compared with 18 jobs created by a street vendor, 10 by a traditional retailer and eight by a shop vendor in Vietnam, a supermarket such as Big C needed just four persons for the volume of produce handled.
Metro Cash & Carry employed 1.2 workers per tonne of tomatoes sold in Vietnam, compared with 2.9 persons employed by a traditional wholesale channel for the quantity sold. The spread of supermarkets led to 14 per cent reduction in the share of ‘mom and pop' stores in Thailand within four years of FDI permission. In India, 33-60 per cent of the traditional fruit and vegetable retailers reported 15-30 per cent decline in footfalls, 10-30 per cent decline in sales and 20-30 per cent decline in incomes across cities of Bangalore, Ahmedabad and Chandigarh, the largest impact being in Bangalore, which is one of the most supermarket-penetrated cities in India.

INTERNATIONAL EXPERIENCE

The evidence from Latin American (Mexico, Nicaragua, Argentina), African (Kenya, Madagascar) and Asian countries (Thailand, Vietnam, India) shows that the supermarket prices for fruits and vegetables and some other basic foods were higher than those in traditional markets. Also, lower procurement prices by procuring directly from farmers needn't lead to lower consumer prices in supermarket chains.
Low-income households may face higher food prices because of reasons of distance from supermarkets, and higher prices charged by supermarkets in low-income areas. Supermarkets would lead to concentration of market power, with upstream suppliers facing buyer power in terms of lower prices and consumers (buyers) facing higher prices due to lower competition, besides traditional retailers suffering a decline in their business.

POLICY ISSUES

The biggest fear in India is that there may not be adequate institutions and effective governance mechanisms to monitor the operations of the global retailers.
If the monitoring of wholesale ‘cash n carry' stores so far is any indication, there is no regulation and the norms are flouted openly at the store level by the existing players. They are found to do retail sales in the garb of wholesale as the size of a single purchase (minimum ticket size) is just Rs 500 or Rs 1000, which doesn't seem to be governed by any regulation.
Given the global and the Indian experiences of supermarkets so far, it was important to slow down food supermarket expansion by mechanisms like zoning, business licenses, and trading restrictions. Further, there is a need to limit the buying power of the supermarkets by strengthening the competition laws, like the legal protection given to subcontracting industries in Japan in their relations with large firms.
These provisions are monitored by the Fair Trade Commission. If contract or ‘contact' farming is only another name for subcontracting, then it is only logical to extend such legal provisions with necessary modifications to farming contracts.

Monday, 28 November 2011

Climate talks at Durban to decide future of carbon markets

Indian companies looking to earn cash from carbon credits may be in for disappointment as prospects for global carbon trade turn bleak. Prices have hit an all time low ahead of the Durban climate talks starting Monday, where the fate of Kyoto Protocol will be decided.
The first commitment period of Kyoto Protocol, the global legally binding agreement for reducing emissions on which the current carbon market is based, will come to an end in December 2012. Differences between developed and developing countries on the continuance of Kyoto beyond 2012 have made the carbon markets' future uncertain.

Carbon markets weak

“It is a tricky situation,” said Mr Ashutosh Pandey, CEO of carbon advisory business at Emergent Ventures, attributing the slump in carbon credit prices to the poor demand from the recession hit European Union. Prices of carbon credits hit a low €6 last week from about €12-13 in July on high supplies from China and India and weaker demand from the EU.
“I have stopped looking at prices. It is scary and they may fall further,” Mr Pandey said. The price crash has resulted in a big value loss for those Indian firms holding on to carbon credits.
India with 745 projects accounts for 20.63 per cent of the total 3612 clean development mechanism (CDM) projects registered with the UN Framework on Climate Change. Indian companies account for 16 per cent of the 78.10 crore carbon credits issued.
“The carbon markets are almost dead as climate negotiators are unlikely to arrive at a consensus on the Kyoto Protocol replacement at Durban. There is also a talk of concluding a global deal by 2015,” said Mr Anmol Jaggi, Director, Gensol Consultants, a carbon advisory firm.

EU woes

Recent efforts by the UN panel to curtail supplies of carbon credits have not helped lift the market sentiments either. As Europe reels under financial crisis and with no industrial production, the demand for carbon credits remains poor, Mr Jaggi added.
That the European economies are facing difficult times further makes it tougher to continue the Kyoto Protocol unless other developed and developing countries agree to abide by mandatory emission reduction targets.
Earlier many European companies have complained that their global competitiveness was hit by emission reduction targets, which only some developed countries had mandated – US, Australia did not even commit to the current Kyoto Protocol.
However, Mr Pandey feels that the carbon market will continue to exist as the market mechanism has been created. The EU has already stated that it was ready to accept credits generated from CDM projects till end of 2012 in the third phase of EU Emission Trading System which starts from 2013 and goes till 2020. Moreover, the current set up of multilateral trading in carbon credits may go bilateral or the regional way. Japan, which is opposed to extension of Kyoto Protocol, has already expressed its willingness to source credit from India beyond 2012 on a bilateral basis.

Sunday, 20 November 2011

Rise and fall of Lehman Brothers

“Grabbing and greed can go on for just so long, but the breaking point is bound to come sometime.” Opening with this quote of Herbert Lehman is The Last of the Imperious Rich by Peter Chapman
In fact, not one tale, but two, clarifies the intro. “The Lehman Brothers of the early days built and invested and developed the wealth that it had enjoyed. It dealt in solid things, materials that could be seen and touched. You could not fault it as far as risk taking was concerned; its founders crossed half the world under treacherous conditions to get where they were.”

Public Service

Adding that Lehman Brothers was built with consistency and flair, the author notes that its imagination rarely wandered from a calm assessment of the realities and the people it was dealing with. He reminds that Lehman Brothers of this era spent its own money, not that of other people; and that it developed a high reputation for public service and was at the forefront of America's growing prosperity and reputation around the world.
Sadly, from around one of the high points of the US history – the moon landing of 1969 – Lehman Brothers entered its second phase, and one of decline, the book chronicles. “Short-term thinkers seized control. It moved from productive enterprises and businesses of substance and did not much care who it exploited as it developed a talent for fast talk and deceit. Lehman Brothers took excessive risks and betrayed all principles of financial good sense. Fatefully, it moved into bogus products like toxic mortgage bonds.”
A chapter titled ‘Sad in some respects' narrates how the twenty-first-century mortgage salesmen – who worked 84-hour weeks and made six-figure incomes – had far more snazzy products than Henry Lehman's pots and pans. The newer products included ‘Ninja' loans – short for ‘no income, no job, and no assets' loans that went to people with particularly restricted means and little chance of repaying. “The Hispanic community had ‘fecha y firma' loans, so named because to get one they required only a ‘date and signature.' Some loans came with a premium: If someone wanted a mortgage for a house costing three hundred thousand dollars, he might get thirty thousand dollars added to the loan for other spending.”
Among the newer ‘pots and pans' were CDOs, collateralised debt obligations, created out of mortgages bought from many companies and then sliced up to be sold to investors around the world. Banks and pension funds were keen buyers, because the rates of interest on the CDOs were far higher than those of the US Treasury bonds and a lot of other investments, one learns. “Lehman Brothers added a nice percentage fee to each slice sold.”
As the author explains, the assumption was that the CDOs could not fail. He clarifies that though inevitably some people would be unable to repay their mortgages, the probability of many people doing so at the same time was extremely low, and the risk to investors, therefore, would be dissipated. Or, at least that was the expectation, because “the analysts and rocket scientists within the issuing banks devised some high-technology mathematics to prove this. In some cases, their explanations spread to hundreds of pages of formulae.”
The book recounts how, as the business became so good, more and more complex investments were invented, with CDOs of CDOs, or CDO squareds, as they were known, coming into existence. Chapman observes that it was similar to the period building up to the crash of 1929, when investment trusts of investment trusts, and holding companies of holding companies, provided people with new things to put their money into without their having much understanding of where they were putting it.
Sombre account of an unforgettable phase of the world's financial history.

Tuesday, 15 November 2011

European banks and Asia



Banks in Europe are being forced to take a haircut to deal with the region's crisis. This raises concerns about the likely impact that the crisis would have on the financial systems in other regions of the world. What are the implications for Asia?It is now well accepted that one of the consequences of financial globalisation has been the increased presence of global banks in developing countries and an increase in their role as lenders in these countries.
Initially, the still-evolving crisis in Europe was read as being the result of excess public debt and poor public finances. Though this debt was owed to the banks, especially European banks, the latter were seen as protected. Default on debt owed to them would damage the financial system, worsen the real economy crisis, break the Eurozone and end the euro.
Governments that had come together to constitute the Eurozone and adopt a common euro would hardly opt for this scenario stemming from a default by them that could damage bank profitability. Using that argument, the financial community worked overtime to call for action that would save the banks at the expense of the countries of the Eurozone and their populations.
It is now clear, however, that this strategy would not work. Governments seeking to “adjust” through austerity are finding their public finances worsening rather than improving, eroding further their ability to avoid a default on debt commitments. Thus, banks are being required to take a haircut, currently set at 50 per cent of loan value, up from 20 per cent a few months earlier. This could get even higher.

Recapitalisation imperative

Given the damage that this would do to bank profits and balance sheets, a recapitalisation of European banks is imperative, with the current overly conservative estimate placing the funds required for that purpose at €106 billion. In addition, with European regulators set to agree on a revised core (tier one) capital ratio of 9 per cent for their banks, this figure could go up to €275 billion, according to Morgan Stanley.
As of now, banks are required to dig into their global reserves (if any), approach the private markets for debt and equity, as well as take support from governments, through the European Financial Stability Facility (EFSF). But with most European governments unwilling or unable to provide funds, the EFSF's future strength is still uncertain.
Thus, a significant retrenchment of still performing assets by European banks and persisting and possibly worsening real economy crises seem unavoidable as of now.
This has led to much discussion on how a European banking crisis would affect the rest of the world. Our concern here is with the impact on developing countries, especially the developing countries or the “emerging markets” in Asia exposed significantly to global banks.
It is now well accepted that one of the consequences of financial globalisation has been the increased presence of global banks in developing countries and an increase in their role as lenders in these countries. This process has, of course, unfolded to different degrees in different regions of the world.

Foreign claims

Between 1995 and 2005, the share of foreign banks in total bank assets rose from 25 to 58 per cent in Eastern Europe and from 18 to 38 per cent in Latin America, though even by that date the increase in East Asia and Oceania was much less (from 5 to 6 per cent).
With this increase in presence, the share of foreign banks in lending to non-bank residents has been rising. Since the mid-1990s (and by 2009) the share of foreign banks in credit to non-bank residents rose from 30 to 50 per cent in Latin America, to nearly 90 per cent in emerging Europe, but is still at about 20 per cent in emerging Asia.
As of the end of the second quarter of 2011, banks in countries reporting to the Bank of International Settlements (BIS) had foreign claims of $27.3 trillion outstanding.
Though a dominant share ($20.1 trillion) of these accumulated claims was in the developed countries, the developing country share ($5.1 trillion) was by no means meagre (Chart 1).
What is particularly noteworthy is that the international banks involved are predominantly European. Around 70 per cent of the foreign claims of the global banking system is on account of European banks. Greater financial integration in Europe is one obvious reason. Of the $20.1 trillion claims on the developed countries, $12.3 trillion is in European developed countries, as compared with just $5.6 trillion in the US.
But another part of the reason is that European banks faced with increased competition at home are now seeking out developing countries to expand business and sustain profitability.
Close to 20 per cent of the exposure of banks abroad is in developing countries, and this is true of European banks as well (Table 1).
Given the greater role of European banks in total international funding and the importance of a few developing “emerging markets” as recipients of capital, this is of significance.
The concentration of emerging market exposure in banks from one region increases the vulnerability of both these banks and their clients.
But as discussed below, given the asymmetric nature of the relationship between foreign banks and their emerging market clients, this vulnerability is the greater for the latter, especially in the context of the current crisis in Europe.

Capital outflow

In the current context, the vulnerability of the developing countries, as demonstrated by the experience during the 2008-09 crisis, comes especially from one source.
Having to cover losses at home, recapitalise themselves and improve the risk profile of their lending, European banks are likely to look to transferring profits and retrenching assets in their global operations.
Emerging markets are bound to be affected by such moves. Among emerging markets, those in the Asia-Pacific, normally presented as relatively “decoupled” from the developed West, are just as vulnerable. As much as $1.8 trillion of the $5.1 trillion of global banking foreign claims located in developing countries are in the Asia-Pacific.
The disconcerting feature of these claims is that they seem to have been driven to a substantial degree by short-term supply side developments in the developed countries.
As Chart 2 shows, foreign claims on the Asia-Pacific developing countries rose by $547 billion during the period 2000-2006, when there occurred a supply side driven surge in capital flows across the globe.
Even during the crisis period stretching from 2007 to the middle of 2009, foreign bank claims in the region increased by $290 billion. And when the post-crisis liquidity infusion made available cheap capital in large quantities to the banking system, the Asia-Pacific developing countries were the locations for an expansion of foreign bank claims to the tune of $596 billion in just two years.
A capital surge of this kind, that provided additional grounds for the “decoupling” perspective, makes the region even more vulnerable to a capital outflow or a mere cutback in lending by foreign entities.
Given what we noted earlier, this vulnerability is greater because of the importance of European banks in the region. The share of European banks in these claims in the developing Asia-Pacific rose from 53 to 58 per cent between 2000 and 2006, and has since fallen to 52.6 per cent (Chart 3).
Part of the reason for that decline is the fact that the liquidity infusion into the banking system has been far more in the US than in Europe in the aftermath of the crisis.
But it is also a reflection of the fact that European banks have been turning more cautious and possibly retrenching assets when they mature to transfer funds to their parent entities.
That being said, how important are these foreign bank claims to the Asia-Pacific developing countries? It is indeed true that in many of them the annual flows of capital that those claims represent are small when compared to the aggregate annual flow of debt, equity and other claims.
However, as accumulated claims, these do constitute a significant amount relative to GDP in most Asian emerging markets, excluding China (Table 3).
At 15-20 per cent in India and Thailand and as much as 30-50 per cent in Korea and Malaysia, these accumulated claims are a source for concern. Any sudden retrenchment can create liquidity as well as foreign exchange difficulties.

Collateral damage

This vulnerability needs to be assessed in the context of the collateral damage that a banking crisis in Europe can result in.
It would worsen the recession in Europe, which is an important destination for exports from Asia. The recession in Europe would, in turn, precipitate the double dip that can damage Asia's foreign exchange earnings and growth even more.
And finally, the European banking crisis could trigger a global crisis, not just in banking but in the financial sector generally, given the multiple institutions and instruments through which financial markets are interlinked today.
If that occurs, what matters is the aggregate exposure of the Asia-Pacific to global capital: and that is indeed substantial. Asia too needs to look to protecting itself in the near future.

Australia mulls uranium exports to India


The Australian government looks set to overturn its ban on selling uranium to India after Prime Minister Julia Gillard changed sides on November 15 and came out in support of lifting an embargo that has strained relations with the world’s biggest democracy.
Since taking office in 2007, the Labour government has tied uranium exports to India signing the 1970 Nuclear Non-Proliferation Treaty. India refuses to do so because that would entail getting rid of its nuclear arsenal.
Ms. Gillard is now pushing for Labour to endorse the policy of former Prime Minister John Howard and allow exports without the need for India to sign the treaty.
“We must, of course, expect of India the same standards we do of all countries for uranium export - strict adherence to International Atomic Energy Agency arrangements and strong bilateral and transparency measures which will provide assurances our uranium will be used only for peaceful purposes,” Ms. Gillard wrote in a column for The Sydney Morning Herald.
The uranium export ban is an impediment to closer ties and also holds up India’s programme to shift to nuclear power and away from its reliance on burning coal to generate electricity.
Australia has 40 per cent of the world’s easily recoverable uranium, the feedstock for nuclear power plants, but currently meets only 20 per cent of world demand.
Ms. Gillard will campaign for a change at a Labour conference next month where delegates set policy that the parliamentary party must follow.
The Greens, whose votes keep Ms. Gillard in power after a dead-heat election in August 2010, are opposed to lifting the ban.
“This is a country that has intermediate-range missiles,” Greens leader Bob Brown told national broadcaster ABC. “It’s developing a plethora of nuclear submarines with nuclear weapons.” Left-wing members of Ms. Gillard’s cabinet are also against the move but the prime minister’s change of heart could be compelling in reversing party policy.
Lavina Lee, a researcher at Sydney’s Macquarie University, describes the no—sales policy as nonsensical from any standpoint.
“It serves no real purpose in non-proliferation, is counter-productive in combating climate change and it stands in the way of Australia’s strategic relationship with India and should be reversed,” she told the Sydney Institute private think tank in a briefing last year.
Indian Prime Minister Manmohan Singh was a notable absentee at the Commonwealth heads of government meeting that Australia hosted in Perth earlier this month.
His absence - no Indian Prime Minister has visited Australia in 25 years - was linked by some analysts to annoyance at the uranium sales ban.
Ms. Lee pointed out that India has a better non-proliferation record than China, a buyer of Australian uranium, and should not be classed alongside nuclear-leaky North Korea and Pakistan.
“The sale of uranium shouldn’t be viewed as a reward for signing the (treaty) but as reward for being responsible,” she said.
North Korea withdrew from the treaty, and India, Pakistan and Israel have never signed.
When Mr. Howard was prime minister he supported India getting a waiver from the Nuclear Suppliers Group that endorsed it as a nuclear-capable state. The waiver enables India to purchase uranium from suppliers other than Australia.
Canada, which also had a longstanding proscription on uranium sales to India, reversed that decision in 2009.
Australia, which has no nuclear power plants, exports around 10,000 tons of uranium a year, around a quarter of which goes to Japan.
Uranium miners, who together shipped product worth 1 billion Australian dollars (1.3 billion U.S. dollars) last year, say annual receipts could grow to 17 billion Australian dollars by 2030 if world demand holds up.

Friday, 11 November 2011

The ways of rating agencies

Rating agencies are known to move in sync, almost to the point of exhibiting herd behaviour. So, it is a little unusual to see the global top two – Moody's and Standard & Poor's (S&P) – taking diametrically opposite positions on the country's banking system, that too within a space of two days.  Moody's downgraded its outlook for India's banks from ‘stable' to ‘negative', citing slowing economic momentum, high inflation and rising interest rates that could “adversely affect (their) asset quality, capitalisation and profitability”. The very next day saw S&P revise upwards its rating of the Indian banking industry by a notch, while drawing attention to its “high level of stable, core customer deposits, which limit dependence on external borrowings” and also the Government's commitment to provide “timely financial support”.
What does one make of these two divergent rating actions? The Government will, of course, feel vindicated by S&P's upgrade, which may even be claimed as ‘righting' a ‘wrong' committed by its rival. This is more so, given that Moody's had, earlier last month, also downgraded the financial strength rating of State Bank of India (SBI). Such righteous indignation, however, misses the real point. The banking system is only a mirror and barometer of the functioning of the larger economy, which includes the way in which it is being managed. There can be no two views today that growth in the economy has weakened, even while inflation remains stubbornly high. What is equally indisputable is that the second tenure of the ruling United Progressive Alliance has been marked by policy paralysis, and so-called governance deficit that has, in turn, dented investor confidence. If the ‘real' economy isn't doing all that great, is it not bound to reflect in the financial system as well? After all, what does the increasing trend of delinquent loans to the power sector represent – other than the fact that stalled tariff and distribution reforms have bankrupted state electricity boards, just as the indecision on coal linkages and land acquisition have held up projects?
One way to look at the actions of rating agencies is to laugh at them. There is some justification for that: It, indeed, beats reason how Italy and Spain — or, till four months back, even Portugal — enjoy better ranking on these agencies' scale than India. But then, like it or not, the markets place great store on their opinion about the creditworthiness of a particularly country or company. And these opinions sometimes serve to bring the necessary ‘market' pressure on recalcitrant governments. Take the example of SBI itself, where Moody's downgrade was based on the hazy picture with regard to capital infusion in the country's largest bank to enable it to meet regulatory requirements. This single rating action would probably be more effective in forcing a vacillating Government into doing something about it, than SBI's own Oliver Twist-like pleas and supplications.

Monday, 7 November 2011

Kalam suggests 10-point action plan on KNPP


A day after giving a thumbs up to the Kudankulam Nuclear Power Project, former President A.P.J. Abdul Kalam has suggested to the Centre a 10-point action plan for development of the area including creation of 10,000 jobs, four-lane highway and a world-class hospital.
Vouching for the project’s safety, Mr. Kalam, who visited the site on Sunday, said people should not have “even a nano-sized doubt” over the safety of the project, as it met all the four safety aspects — nuclear criticality, radiation, thermal hydraulic and structural integrity safety.
Construction of a four-lane highway connecting Kudankulam and villages 30 km around it with Madurai, Tirunelveli and Kanyakumari, a world-class hospital with over 500 beds, mobile medical facilities to locals and creation of 10,000 jobs to people in the radius of 30 to 60 km and bank loans to youth with up to 25 per cent subsidy, have been suggested by him.
In his study report submitted to the state government, Mr. Kalam also suggested creating infrastructure facilities like construction of green houses, multi-storeyed housing complex, and playgrounds.
He said fishermen in the area should be provided with motorboats, small jetties and fish cold storage facilities.
Mr. Kalam, who prepared the report along with his advisor V. Ponraj, said efforts should be made to provide locals one million litre of drinking water through desalination process and water should be brought from Pechiparai reservoir in Kanyakumari district for agriculture and drinking water needs.
The report also suggested setting up of five CBSE and state government syllabus schools with hostel facilities, connecting all villages through broadband Internet, setting up of Disaster Protection and Management Centre and guiding selected youth to get permanent employment.
Mr. Kalam, a strong advocate of nuclear energy, said, “At the same time, efforts should be made to remove people’s fears by providing relevant information and with their full co-operation, the plant should start functioning as scheduled to enable Tamil Nadu to get 1000 MW power.”
Mr. Kalam’s report noted that government had formulated very stringent regulations on setting up nuclear reactors and Kudankulam can withstand even if Tsunami and an earthquake struck the plant together.
The site for setting up the reactor was selected after taking into account enough safety aspects and as per Atomic Energy Regulatory Board Code of Practice on Safety in Nuclear Power Plants. Hence, there was “no need for any doubts on the safety aspects” and Environmental Impact Assessment, it said.
Mr. Kalam further said that the 1.5 km radius around the plant was an exclusive sterilised zone and the site came within the project and there was no question of any displacement of habitants.
Contending that Tamil Nadu was free from seismic disturbances during the last 1000 years, he said the towers of Meenakshi Temple at Madurai and Big Temple at Thanjavur had not been affected by any earthquake.
Citing the historic Grand Anicut built by Chola emperor Karikalan in the first century AD, Mr. Kalam said if the king had thought that the dam would burst and destroy humanity, the dam would not have come up and so the present apprehensions on KNPP were unnecessary and unwarranted.
“We are all caught too much with the disease of fear and danger. History is not made by cowards. Sheer crowd cannot bring about changes. Only those who think everything is possible can create history and bring about changes,” he said in an apparent attack on the protestors.
He said there was no strength in the argument that even advanced countries like Germany had given up their nuclear power plants. Germany’s decision to close down their plants was based on the fact that its uranium deposits would exhaust by 2022. Besides, it had achieved “power independence” even without atomic power.
“Nuclear power is a God’s boon to human race and to make the best or the worst of it, totally lies in our hands,” he said, strongly batting for nuclear energy.

Saturday, 5 November 2011

Eurozone and the Euro Debt. Crisis

Eurozone is the economic and monetary union of  member countries of Europe who have adopted Euro as their common currency.Till date it consists of 17 members.Other members can join it and some of them are in the process and will infact join once they fulfill the conditions.
Ten countries (Bulgaria, the Czech Republic, Denmark, Hungary, Latvia, Lithuania, Poland, Romania, Sweden, and the United Kingdom) are EU members not of Eurozone i.e they don’t use Euro as their currency. Before joining the eurozone, a state must spend two years in the European Exchange Rate Mechanism (ERM II). As of 2011, the National Central Banks (NCBs) of Latvia, Lithuania, and Denmark have participated in ERM II; most remaining currencies are expected to follow soon.
The euro is also used in countries outside the EU. Three states—Monaco, San Marino, and Vatican City have signed formal agreements with the EU to use the euro and mint their own coins but they are not considered part of the eurozone by the ECB(European Central Bank) and do not have a seat in the ECB or Euro Group.
The monetary policy of all countries in the eurozone is managed by the European Central Bank (ECB) and the Eurosystem which comprises the ECB and the central banks of the EU states who have joined the euro zone. Countries outside the eurozone are not represented in these institutions. Whereas all EU member states are part of the European System of Central Banks (ESCB). Non EU member states have no say in all three institutions, even those with monetary agreements such as Monaco. The ECB is entitled to authorise the design and printing of euro banknotes and the volume of euro coins minted, and its president is currently Jean-Claude Trichet.
The eurozone is represented politically by its finance ministers, known collectively as the Euro Group, and is presided over by a president, currently Jean-Claude Juncker.
To read in detail about Eurozone,Please Click here.
What is Eurozone Debt. Crisis ?
When the EuroZone formed in the late 90’s, Germany and France were the economic powers and every other country was clearly in a subservient position, economically speaking.
When countries want to build roads, fund schools, and do various other large scale projects, they fund this activity by issuing debt in the form of government bonds. Countries that are economic powers are able to borrow this money for pretty cheap. However, countries that are not in excellent financial shape have to pay more to finance their debt by offering investors a higher yield. Is it more expensive to borrow Rs. 20000 for 1% interest or 2% interest. Of course, 2%.
Economically-weak countries such as Greece, Portugal, Italy, Ireland, and Spain were paying quite a bit to be able to borrow money. By joining the EuroZone, they were magically allowed to borrow money at very close to German bond yields. This means that because Neeraj is in friendship with Gaurav, even though Neeraj is financially irresponsible, he is able to borrow money cheaply and easily because he is friend of Gaurav.You get the picture.
So the grand idea when the EuroZone started was that these weak countries like Greece would be able to borrow money at cheap rates in order to economically develop their countries in a responsible manner. This would help them close the gap with stronger countries like Germany and France, and then all of Europe would grow more powerful. But, oh how the idealistic plans of man often fail in reality.
What went wrong you ask? Well, of course Greece, Portugal, Spain, Italy, and Ireland borrowed money. It’s what they did with the money, and how much they borrowed that became a problem. Instead of using the money to develop strong economic infrastructure in their respective countries, they went on reckless spending sprees. Imagine a college fresher with a new credit card and a mall 2 minutes from campus.Fresher rather than using it for his growth goes on reckless spending spree in the mall.
And so here we are 10 years later. These countries have spent so much money and developed such irresponsible fiscal agendas that they are now having trouble paying back all those loans. To make it worse, investors are now demanding more yield in order to hold the debt of these countries. That is making it even harder for the PIIGS (Portugal, Italy, Ireland, Greece, Spain) to pay back the money they owe.
Why is George Panpandreou and Greece in news?
Greece is considered to be the major defaulter but other countries are also expected to be defaulter.George Panpandreou is the Prime Minister of Greece.
Why is Angela Merkel in news? What is her role?
Angela Merkel is the chancellor of Germany,the strongest economical power in Eurozone countries.She can help bailing out the defaulter countries by lending them money.Being the head of the strongest power in Eurozone,she also has a greater say in the affairs.
Has a solution been reached? what is the current status?
There have been hectic efforts over last few weeks involving a meeting between Greece Prime Minister George Panpandreou,German Chancellor Angela Merkel and French president Nicolas Sarkozy and another meeting between US Treasury Secretary Timothy Geithner(Crisis also believed to have an impact on USA) and European Union finance ministers.
Still no credible action plan has evolved to tackle the euro debt crisis.Despite considerable pressure from other countries, leading European economic powers have so far failed to reach an agreement on a specific bailout plan that would stave off a default by one or more eurozone countries.
What are/could be the consequences of the crisis?
  • Germany’s importance has been augmented by the crisis.
  • A weakening Europe could allow Russia and possibly China to expand their influence.
  • Greece could see an increase in political extremism.
  • Greek unrest will not necessarily be replicated in other fiscally challenged countries.
  • The Greek crisis has ramifications for South-East European security.
  • Future currency unions could be put off by the eurozone crisis.
  • Europe’s overall global influence will wane.
  • It could lead to the possible demise of the Euro and the break-up of the Eurozone.

Monday, 31 October 2011

India's focus on centralised sewage system faulty

Even as 54 per cent of India’s total population does not have access to clean and safe toilets (according to a UNICEF finding for 2008), experts have criticised the government for its ‘centralised approach’ towards sewage treatment, a critical aspect of maintaining sanitation.
“It is a matter of shame. India accounts for 58 per cent of those who practice open defecation across the world,” Union Minister of Drinking Water and Sanitation Jairam Ramesh had recently said in a public function while talking about the findings for 2008 by the United Nations Children’s Fund (UNICEF).
But experts have cautioned that building sanitation capacity without coupling it with decentralised treatment of sewage generated from it, will lead to an increase in many social and health problems. 
3000 years needed
“Even if we put a halt to the development of the cities at this very point in time, it will take us 3000 years to put sewer lines and cover the entire country with centralised sewage treatment plants at this rate. At present, only 269 towns of the more than 7000 towns and cities in India have sewage treatment plant according to government’s own data,” Mr Pathak said, citing the Central Pollution Control Board data.
He said that he has arrived at the conclusion after analysing the rate at, which the government has constructed sewer lines in the country since the first sewer system was laid down in 1870 in Kolkata.
The Central Pollution Control Board, in its 2005 report ‘Status of sewage treatment in India’ has stated that if the issue of sewage treatment is not treated urgently, it will fast “magnify to an unmanageable level”.
The report, one of the most recent ones available, has stated that the position of sewage treatment is “dismal” in the country. Though human waste is not the only component of sewage, it forms an important component in spreading pollution to the water bodies.
Terming the substantial emphasis on centralised sewer system as faulty and impractical, Dr. Pathak said, “It is impossible to cover all the towns and cities in India with this kind of centralised sewage system. First of all, the cost of construction, for laying down sewer lines and building treatment plants is prohibitive. Such plants need enormous quantity of water for flushing. Even the cost of maintenance is very high.”
“The decentralised method of sewage treatment will not only help provide safe sanitation to millions of deprived Indians, it will also solve a very big pollution concern and provide dignity to many, apart from generating energy,” he said.
Lauded as a sanitation innovator and social reformer, Dr. Pathak has received many awards including the Stockholm Water Prize in 2009 for the “development of cost-effective and culturally appropriate toilets and related treatment systems…”
His invention Sulabh Sanitation System was recognised by the UN-Habitat as ‘Global Urban Best Practice’. The UN-Habitat has awarded him with the ‘Scroll of Honour’. The UNEP (United Nations’ Environment Programme) also awarded him with the ‘Global 500 Roll of Honour’ a few years ago.
The Sulabh Sanitation system has been built in 1.2 million homes in India till now and in 8000 public places.
“Sulabh has trained people from 15 African countries. We have also started our work in Cambodia, Laos and such other countries. I have not patented the technology so that it can be freely used anywhere in the world,” Dr. Pathak said.
“The most important part is that the waste gets disposed in-situ. Further, energy can be generated from that waste. Thus the community or a small group of families can benefit from it. Most importantly, the government will not have to bother about making arrangements for carrying and treating it,” he said.

Thursday, 27 October 2011

sushil kumar wins Rs. 5 crore jackpot on Kaun Banega Crorepati 5


KBC 5 has  got its first contestant to win ‘Kaun Banega Crorepati 5′. Sushil kumar from Bihar who is a computer operator and a tutor has won the jackpot amount of Rs 5 crore. Sushil Kumar earns Rs 6000 per month .the episode will be telecated on 2 November.Five months back, he got married.
 Sushil made wise moves while answering the questions. His deftness and presence of mind saw him cross all the hurdles until he got stuck at the thirteenth question, which was about the colonial power that withdrew its involvement from the Nicobar Island in 1968.
Sushil was doubtful about the answer so he made use of two of his lifelines – Phone a Friend and Double Dip – and came up with the answer that won him the dream amount. As a youngster, Sushil wanted to take the civil services exams. He wanted to come to Delhi and prepare for the exams. However, he could not do so as he was unable to afford the expensive coaching classes in the Capital. Now, after having won the bounty, Sushil plans to enroll himself at a prominent coaching institute in Delhi and start preparing for his dream job.

Monday, 24 October 2011

World Polio Day to be observed on October 24 2011


Only one polio case has been detected so far this year in the country making it the longest polio-free period ever since eradication efforts were launched. The only case of polio reported this year has been from Howrah district in West Bengal on 13th January 2011 as compared to 39 cases in the country in the same period of 2010. For the first time no case of polio has been reported from UP (since April 2010) and also from Bihar (since September 2010). No case of type 3 polio has come up for over a year.  Closest ever to eradicating polio, the Ministry of Health and Family Welfare, Government of India has decided to treat any fresh case of polio as a “public health emergency” in order to achieve polio eradication from India at the earliest. An Emergency Preparedness and Response Plan has been drawn up to intensify measures to build the immunity of children in all high risk areas and also to conduct intensive  immunization campaigns rapidly in response to any polio cases if they occurred.

In context of World Polio Day, the Union Minister of Health and Family Welfare, Shri Ghulam Nabi Azad noted that while the progress this year is remarkable, the risk still persists. “We are close to our goal but are not taking any chances. Efforts will be further intensified in the country to stop any residual poliovirus circulation and also to prevent any polio cases following an international importation,” he observed. Shri Azad also noted that the remarkable progress follows introduction of bivalent Oral Polio vaccine besides persistent efforts over the last few years in the highest risk areas and in reaching the most vulnerable populations such as the newborns, the migrants and the mobile populations.
To mitigate the risk of polio importation from Pakistan which is experiencing a spurt in cases and has re-infected China, polio immunization has begun at the Wagah border and Attari train station in Punjab since September and Munabo in Barmer district of Rajasthan since this month. All children crossing over into India by road and train are being administered polio vaccine. An alert has been sounded in the states bordering China to step up polio surveillance.  Continuous polio vaccination is also being carried out at 81 transit points along the Indo-Nepal border in Uttar Pradesh and Bihar since April this year, the Minister said.
A series of new initiatives have been taken this year.
Ministry of Health and Family Welfare has put in place an Emergency Preparedness and Response Plan (EPRP). All states in India are preparing their EPRP. As a part of this plan, Rapid Response Team have already been constituted and (i) high-risk districts (ii) blocks (iii) villages are being identified to roll out measures to scale up routine immunization; address polio associated risk factors such as hygiene, hand washing and diarrohea management with the use of zinc and ORS. The plans are also identifying and putting resources in place to roll out of rapid and intense emergency response to any polio case.
A new communication campaign personalizing the message for polio immunization from ‘Har bachcha har bar’ (every child every time) to ‘mera bachcha har bar’ (my child every time) has been rolled out. The new campaign encourages all parents to take action to protect their children against polio. These measures are in addition to the intense efforts already being made in the polio endemic states of UP and Bihar to ensure that the children living the highest risk areas and specially the youngest children, the newborns, are rapidly protected. A 107 Block Plan that addresses actions to improve actions to improve polio coverage and routine immunization in 107 high risk blocks of UP and Bihar in addition to tackling risk factors such as reducing incidence of diarrhea, improving sanitation and water quality is being implemented. 
Special strategies are being implemented to protect children on the move – those of migrants, nomads, construction sites and brick kiln workers and the families returning to their homes in the endemic states on important festivals such as Holi, Diwali and Chatt. Mobile and transit vaccination teams immunize children at railway stations, inside running trains, at bus stands, market areas, brick kilns, construction sites etc. Around 5 million children are immunized by transit and mobile teams during every round in UP, Bihar and Mumbai alone. Polio immunization is also carried out at religious congregations such as the ongoing ArdhKumbh in Bihar, the annual ShravaniMela, Urs in Ajmer and elsewhere in UP and Bihar. 

India’s progress and efforts have been lauded by both national and international experts and bodies. The India Expert Advisory Group on Polio Eradication, which reviewed the programme in July mentioned that India is on track to eradicate polio. The International Monitoring Board (IMB) of the Global Polio Eradication Initiative in its October report has said that India is on track to interrupt transmission in 2011. Lauding India’s efforts, the IMB said India had pushed barriers after barriers to reach a very favorable position. India stands alone as the country that has demonstrably made consistent progress over a prolonged period of time.

It is pertinent to note that in 1985, there were estimated 2 lakh polio cases in the country in the wake of which polio vaccine was universalized and integrated in the Universal Immunization Programme for administration across the country. In 1995, when Pulse Polio Programme was launched, there were still an estimated 50,000 polio cases in the country. However 2010 was the turning point when only 42 polio cases were reported. Every year two National Immunisation Days (NIDs) are carried out in January and February.  During each NID nearly 17.2 crore children are immunized. Nearly 23 lakh vaccinators under the direction of 155,000 supervisors visit 20 crore houses to administer oral polio vaccine to children under the age of 5 years. The polio campaigns during the rest of the year cover polio endemic states and other areas at risk of importation of poliovirus. 

Friday, 21 October 2011

The ‘Arab Spring’ and beyond

The Arab Spring is a misnomer used by the media to describe the uprising that the self-immolation of Mohammad Bouazizi unleashed in Tunisia on December 18, 2010 in protest against police corruption and ill-treatment — a spark that ignited into wildfire and spread to Algeria, Jordan, Egypt, Yemen and to other countries. In January, Tunisian President Zine El Abidine Ben Ali fled to Saudi Arabia, the fountainhead of Islamic fundamentalism.
But it was in Egypt that the computer-literate working class youth and their supporters among middle-class college students, created a veritable revolution, fanned by the whirlwind of many human rights activists, labour, trade unionists, students, professors, lawyers, and especially unemployed youth. A Facebook page set up to promote the demonstrations, attracted tens of thousands of followers. The government mobilised the riot police and resorted to infiltration to break the uprising, but the demonstrations by students and labour activists continued in Tahrir Square, until President Hosni Mubarak was forced to resign on February 11, 2011, after 18 days of massive protests, ending his 30-year presidency.
The euphoria that chants such as “the people and the Army are united” that had reverberated around Egypt’s squares created, was rudely snuffed out within a week by the Egyptian military Generals, who grabbed power from President Hosni Mubarak. They did not identify themselves as partners in the revolution, but claimed to be the sole bearer of its legitimacy. The haste with which they discarded the façade of secularism that Mubarak’s authoritarian regime was using against the Muslim Brotherhood, resulted in the largest demonstration on Friday, July 29, by thousands of Islamists since the uprising, calling for the imposition of strict Shariah law. Many demonstrators carried Saudi Arabian flags and placards that said: ‘Bin Laden is in Tahrir.’ As recently as 2009, the Brotherhood had called for a ban on women or Christians serving as Egypt’s President.
Tahrir Square, once the scene of wild celebrations, turned into a battlefield as the Army moved in to disperse the activists, beating them with clubs and electric rods, and even firing live ammunition. Hundreds have since been thrown in jail and 12,000 civilians have been tried in military tribunals — a number that is far more than was treated thus during Mubarak’s 30-year dictatorship. Widespread torture by beatings, electrocution, and even sexual assault by military personnel, has been reported. The police, in connivance with the authorities, have shot and killed Coptic Christians who protested against Islamists that had set fire to their churches. The Egyptian Coptic Patriarch, Chenouda III, was awarded the 2000 UNESCO Madanjeet Singh Prize for the Promotion of Tolerance and Non-Violence for encouraging interfaith dialogue.
The Islamic retrogression is a far cry from the colourful secular flowers that had blossomed during the Arab Spring with the establishment of the Baath Party in 1946. “Baath,” which means "resurrection" or "renaissance," was a movement that was founded in Damascus by two Syrian intellectuals: Michel Aflaq, a Greek Orthodox Christian (1910-1989), and Salah al-Bitar, a Sunni Muslim (1912-1980). In the early 1930s, Alfaq and Bitar had gone to study at the Sorbonne University in Paris and worked together to formulate a doctrine that combined aspects of Arab nationalism and socialism committed to Arab unity and the freedom of the Arab world from the clutches of Western colonialism.
On their return to Syria in the early 1940s, they became school teachers, and together with a significant number of Christian Arabs as founding members, they promoted Baathist ideology within a nationalist and secular political framework that rejected the faith-based orientation. These ideas of protecting the minority status of non-Muslims, found favour with the progressive leaders of the Non-Aligned Movement such as Nasser in Egypt, Nehru in India, Tito in Yugoslavia and Sukarno in Indonesia, since the secular ideology helped them to stabilise the ethnic and communal conflicts in their newly independent countries. They also supported the Baathist concept of socialism that differed from classical Marxism.
These were among the reasons for Baathism having grown rapidly, establishing a number of branches in different Arab countries. Baathism went on to form governments in Syria and Iraq, as well as in Egypt briefly when Syria merged with Egypt in 1958, to become the United Arab Republic. There could not have been better interlocutors than Aflaq, representing the Greek civilisation, and Bitar, personifying the Phoenician culture. They conceived their respective religions as a mere appendix attached to the Greek and Phoenician classical antiquity that spread across the Mediterranean region from 1550 BC to 300 BC.
This region, known as the ‘Fertile Crescent,’ comprising ancient Egypt, Syria, Lebanon, Palestine and Mesopotamia, was home to the earliest urban communities in the world, spanning some 5000 years of history. It was in ancient Iraq that the first literate societies developed in the late 4th millennium BC. They developed the first cities and complex state bureaucracies, using a highly sophisticated writing system. Their scholars compiled historical, juridical, economical, mathematical, astronomical, lexical, grammatical and epistolary treatises. They invented the first two-wheeled wooden carts and built roads, earlier than 3000 BC. It was this cradle of civilisation that the illegal Anglo-American invasion destroyed. The invaders installed bin Laden’s jihadists to promote their Islamic agenda.
Taha Hussein (1889-1973) was the senior mentor of Aflaq and Bitar. He was one of the most influential 20th century Egyptian writers and intellectuals, known as the pioneer of the Arab Renaissance and the modernist movement in the Arab world. An admirer of Mustafa Kemal Ataturk, he was a nationalist, and his vision of Egyptian secular culture was embedded in what he called “Pharaonism.” He believed that “Egypt could only progress without reclaiming its ancient pre-Islamic roots.” He opposed Saudi Arabia’s Stone-Age Islamic culture of the desert that was alien to the rich Arab cultures of the Fertile Crescent.
Taha Hussein was prosecuted for his views and lived in exile for several years. It was not until the 1950s that he was rehabilitated, on the eve of Egypt becoming a republic, and appointed Minister of Knowledge (now the Ministry of Education). This gave him the opportunity to initiate a number of educational reforms, such as free education for children. Like Maulana Abul Kalam Azad, the first Education Minister of independent India, Taha Hussein left no stone unturned to make education secular. He transformed many of the Koranic schools into secular primary schools and secularised not only the Al-Azhar but also a number of scientific universities that he established. He upgraded several high schools to colleges, such as the Graduate School of Medicine, Agriculture and others.
Since the United States’ alliance with bin Laden’s Mujahideen destroyed the secular Democratic Republic of Afghanistan in 1989, and dismantled the secular Baath administrations in Iraq for the benefit of al-Qaeda jihadists, the abortion of the 2011 Arab Spring has given the Anglo-Americans another wonderful opportunity to install Islamists in the Arab world. These ferocious vultures are now hovering over Syria, the last bastion of Baathism, under the pretext of democracy, to tear apart the amity between its Muslim and Christian communities. But so far they have found no ruse to directly attack Syria, as President Bashar al-Assad could not be accused of “possessing weapons of mass destruction capable of destroying Western civilisations within 45 minutes.” So the Arab Spring has become the Trojan horse to supply arms and ammunition to the dissidents and escalate the conflict into an emergency to isolate Syria by imposing United Nations sanctions.
The computer-literate students and working class youths and their supporters among the middle class who had initiated the protests, are naturally baffled, as I was when India was partitioned by the British colonialists. The impact of the divide-and-rule policy was even more devastating on the subcontinent’s Sufi Islam as Pakistan’s military dictators uprooted it to cut the Gordian knot with Mother India’s secular and pluralist culture. The political scenario in the Arab countries seems to be heading towards one similar to the struggle now being waged in Pakistan between Muslim fanatics and the more moderate sections of society,
As with the Muslim Brotherhood in Egypt, the Ennahda Party of the Islamist Rachid Ghannouchi is expected to win the elections in Tunisia next month and choose an Assembly to draft a new Constitution. His biographer Azzam Tamimi wrote: “The real struggle of the future will be about who is capable of fulfilling the desires of a devout Muslim. It’s going to be about who is Islamist and who is more Islamist, rather than about the secularists and the Islamists.” During a re¬cent debate with a secular critic, Ghannouchi asked: “If the Islamic spectrum goes from bin Laden to Recep Tayyip Erdogan, which of them is Islam?” And he argued: “Why are we put in the same place as a model that is far from our thought, like the Taliban or the Saudi model, while there are other successful Islamic models that are close to us, like the Turkish, the Malaysian and the Indonesian models — models that combine Islam and mo¬dernity?”
Ghannouchi seems unaware of Prime Minister Erdogan’s antecedents. As Mayor of Istanbul in 1995, he declared that “the New Year’s Day is a Christian holiday and not a legitimate cause for celebration by Muslims,” and that “shaking hands with the opposite sex is prohibited by Islam.” In 1997, he identified Turkish society as having “two fundamentally different camps — the secularists who follow Kemal Atatürk’s reforms, and the Muslims who unite Islam with Shariah laws.” The secular lullaby he is singing to put his people to sleep and join the European Union, is symbolised by the Islamic hijab with which President Gul’s wife wraps her head.
Regarding Indonesia and Malaysia, Ghannouchi would have known better had he married an Indonesian Muslim — as I did in 1963 — and witnessed how the indigenous syncretistic cultures derived from the secular Buddhism and multicultural Hinduism are being systematically destroyed by the innumerable Wahabi mosques and fundamentalist madrasas that the Saudi petrodollars have built in these countries.
The omens are ominous as thousands of Islamists in Tunis have protested against the screening of a film they condemn as “un-Islamic and blasphemous.” And in Cairo, a student attending a Salafist protest meeting asked: “If democracy means majority, then why do they want to impose on us the views of the minorities — the liber¬als and the secularists — when we Islamists are the major¬ity? Salafis are the extremists that espouse violent jihad against civilians as a legitimate expression of Islam.”
The Arab Springers seem well on their way towards subscribing to the Sunni majoritarian culture and becoming another “epicentre of terrorism” like Pakistan, where even the moderate civilians are throwing rose petals on the assassin of Punjab Governor Salman Taseer, who was assassinated for defending a Christian woman condemned to die for insulting Islam. The judge of the Anti-Terrorism Court who sentenced Mumtaz Qadri to death has gone into hiding after lawyers attacked his courtroom, and a spate of protests and death threats. Banner-carrying mobs in Lahore, Rawalpindi and other cities are “saluting Qadiri’s glory,” and some fundamentalist organisations have announced huge rewards for anyone who would kill the judge.
“Pakistan once had a violent, rabidly religious lunatic fringe. This fringe has morphed into a majority. The liberals are now the fringe. We are now a nation of butchers and primitive savages. Europe’s Dark Ages have descended upon us,” said Professor Pervez Hoodbhoy, at the Quaid-e-Azam University in Islamabad.