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1.30 Prashant Bhushan for law to curb black money .................................................................. 22

1.31 Infrastructure finance firms can raise long-term funds..................................................... 22

1.32 SEBI unveils slew of reforms .................................................................................................. 23

1.33 Far-reaching moves ................................................................................................................. 24

1.34 Pressure on profitability to continue..................................................................................... 24

1.35 Extension of export sops comes as sweetener for sugar industry..................................... 24

1.36 RBI fixes timelines for regulatory approvals........................................................................ 25

1.37 Centre to simplify laws for single window clearance........................................................... 25

1.38 Make power distribution reforms a top priority: World Bank........................................... 25

1.39 BRT system will save 27,000 lives in India: World Bank................................................... 26

1.40 U.S. govt panel puts India on piracy watch list.................................................................... 26

1.41 Move to bring more drugs under control draws flak........................................................... 27

1.42 Sweetened package .................................................................................................................. 27

1.43 Many challenges to stability ................................................................................................... 28

1.44 Treat gold deposits as part of CRR/SLR: bankers............................................................... 28

1.45 Price Stabilisation Fund Scheme may be modified............................................................. 29

2 Science and tech + Environment ......................................................................................................... 29

2.1 Vulture conservation in gram sabha agenda........................................................................ 29

2.2 Unmonitored CFL disposal ups environmental hazards.................................................... 30

2.3 Now, a system to extract water from manure ...................................................................... 31

2.4 SpaceX unveils capsule to ferry astronauts.......................................................................... 33

2.5 Now, eagles fall prey to diclofenac......................................................................................... 33

2.6 Melting glaciers, more rain to swell Himalayan rivers....................................................... 34

2.7 Solar plane completes first test flight .................................................................................... 34

2.8 Supernova recreated in lab ..................................................................................................... 34

2.9 Artificial lakes cause alarm in Himachals downstream areas........................................... 34

2.10 Sperm-inspired robots ............................................................................................................. 35

2.11 Google funds technology to bring entire planet online....................................................... 35

2.12 Why is it not possible for mosquitoes to spread AIDS?...................................................... 36

2.13 CONFIRMATION OF HIGGS BOSONS PRESENCE......................................................... 36

2.14 HIMACHAL PARK IS NOW A WORLD HERITAGE SITE................................................ 37

2.15 300 new species found in Greater Mekong .......................................................................... 37

2.16 New edible films to preserve bread longer ........................................................................... 38

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2.17 Kudankulam Unit 1 at full tilt ................................................................................................. 38

2.18 NASA beams video from space via laser ............................................................................... 39

2.19 Standing tall in a concrete jungle........................................................................................... 39

2.20 Genetically modified mosquitoes a quantum leap in tackling malaria....................... 40

2.21 Gravitational waves: a big bungle? ........................................................................................ 40

2.22 E-waste looms large over India .............................................................................................. 41

2.23 COLOUR PERCEPTION ......................................................................................................... 41

2.24 Scientists warn of tourism threat to Antarctica................................................................... 42

2.25 Targeting a chink in TB bacterias armour ........................................................................... 42

2.26 UN alarmed over dumping in Great Barrier Reef................................................................ 42

2.27 Slaughter of whale sharks on the rise.................................................................................... 43

2.28 Pest sprays poisoning world food supplies........................................................................... 43

2.29 Government to roll out National EMF portal....................................................................... 43

2.30 Top companies flout e-waste rules, says study .................................................................... 44

2.31 An eventful year on Mars ........................................................................................................ 44

2.32 Russian Arctic, a new promised land for oil giants............................................................. 45

3 Agriculture .......................................................................................................................................... 46

3.1 PM calls for a tricolour revolution ....................................................................................... 46

4 Disaster ............................................................................................................................................... 46

4.1 A year later, no lessons learnt................................................................................................. 46

4.2 The tasks in Uttarakhand ........................................................................................................ 47

4.3 A tragic conflagration .............................................................................................................. 48

5 Security ............................................................................................................................................... 48

5.1 PROMOTING 'SWADESHI' IN DEFENCE (EDITORIAL )............................................... 48

5.2 CRPF-police distrust hobbles anti-Maoist operations in Chhattisgarh.......................... 49

5.3 Jaitley caught in Defence-Finance crossfire......................................................................... 49

5.4 A need for defence bureaucracy reforms .............................................................................. 50

5.5 The North-eastern challenge .................................................................................................. 50

5.6 BrahMos test-fired from warship........................................................................................... 52

5.7 Counter to the spirit of counter-insurgency......................................................................... 52

5.8 Facing apathy, many in CRPF look for an exit..................................................................... 54

5.9 Taliban flush with cash, warns U.N. report.......................................................................... 54

5.10 A dangerous road in Sri Lanka ............................................................................................... 55

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

1 ECONOMY

1.1 JAITLEY AIMS TO CUT EXPENDITUREThe Finance Ministrys budget team has some broad guiding principles already:

It includes steps to ensure rise in revenues without burdening taxpayers

Greater efficiency in government expenditure to reduce fiscal deficit

Revive the manufacturing sector

The UPA governments interim budget had estimated:

Interest payments on borrowings for its past expenditure will exhaust 43.3 per cent of the tax

collections in 2014-15. Subsidies were estimated at 26 per cent of tax collections.

Interest Payments and Subsidies along with pensions to account for 80 per cent of the Centresnet tax revenues

Leaving barely 20 per cent for governance and development.

Given this legacy, Mr. Jaitley will have topush revenues and control expenditure.

1.2 FINANCE MINISTRY MULLS NODAL AGENCY TO TAKE OVER BAD LOANSThe Finance Ministry is considering a proposal to set up a National Asset ManagementCompany, which may act as a nodal agency, for taking over bad loans of banks and help revive

sick units.The public sector banks can jointly put in capital to form such an entity, which could act as anaggregator of NPAs and clear such assets quickly.

Once set up, the proposed National Asset Management Company can pick up large stressedassets entirely from a consortium instead of the normal practice of a partial takeover.

Stressed assets have been on the rise due to the economic slowdown and the delay ininfrastructure projects. There is also a proposal to finance the acquisition of bad assets. In suchcases, bank finance would be made available to a financially strong buyer to acquire stressed

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assets or a sick company.The Finance Ministry has asked public sector banks to act tough in case of willful defaulters and

has suggested that they go in for a change of management of defaulting companies.

Some facts:

The top 30 NPAs of PSBs account for 40.2% of their gross bad loans.

Bad loans of PSU banks rose by 28.5 per cent to Rs.1.83 lakh crore in last two quarters.

1.3 RBIBI-MONTHLY MONETARY STATEMENT

1.4 NEEDED,MORE DELIBERATIONArtilce talks about parts of FSLRC reports that are drawing major criticism specially from RBI

guv:

Among the most contentious proposals of the FSLRC involve the setting up of twoentities: one, a new super-regulator, the Unified Financial Regulatory Agency (UFRA); andtwo, a Financial Sector Appellate Tribunal to review regulatory decisions. If this proposal isimplemented, the financial sector will have just two regulators, the RBI and the proposed UFRA.In the new set-up, the RBI will have some of its existing functions, such as regulation of

organised financial trading, taken away. The RBI will have a diminished role, confined to beingthe monetary authority and regulator of banks.

In another recommendation, the FSLRC wants a new monetary policy committee which would be dominated by government nominees and not the RBI Governor, to set policyinterest rates.

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1.5

ARVIND MAYARAM PANEL ON RATIONALISING

DEFINITIONS OF FDI AND FII

FPI includes portfolio investors such as foreign institutional investors (FIIs) and qualified

foreign investors (QFIs).

Seeking to simplify norms,a government panel has suggested that :

foreign investment of over 10 per cent in a listed company be treated as FDI ( accepeted by

centre hence applicable now)

investments from NRIs on a non-repatriable basis be deemed as domestic investment.

foreign investment in an unlisted company should be treated as FDI.

The report says any investment by way of equity shares, compulsorily convertible preference

shares/debentures less than 10 per cent should treated as foreign portfolio investment (FPI).

1.6

DRUGS AFFORDABILITY AND PATENTSOne of the urgent tasks before the new government is something that does not figure in

common discourse but is still extremely important for its larger implications for Indo-U.S.economic ties. Indias patent regime, which protects intellectual property rights (IPRs), hascome under intense scrutiny in the United States. It is the contention of the U.S. Trade

Representative (USTR) that the environment for IPR in India has deteriorated. India has beenplaced on the priority watch list of countries, whose IPR regimes will be scrutinised during the

year. The saving grace is India has not been labelled a Priority Foreign Country (PFC) in theUSTRs Special Report released at the end of April. The U.S. Trade Representative is part of the

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executive office of the U.S. President empowered to develop and recommend trade policy to the

U.S. government.

Any penal action against India would have cast doubts on the institutions and processes ofeconomic diplomacy in the U.S. It would have been thoroughly ill-timed: the report was

released, on schedule, two weeks before a new government took office in India.

If, indeed, the USTR had categorised India as a Priority Foreign Country, it could have led toimposition of sanctions by the U.S. on Indian trade.

Yet, while there was no downgrade, Indias IP regime would be closely watched.

Pharma lobbies

Indias IPR regime is currently under attack by the U.S. pharma lobbies which have teamed up

with other powerful lobbies to make out a case against India. From Indias point of view, theobjective of the high pressure lobbying by big pharma in the U.S. is to stymie Indias efforts at

providing affordable medicine without in any way compromising on existing treaty agreements.

Flexibilities

Big pharma is obviously piqued by Indias decision to use the flexibilities that are available in

the existing TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement. Since2005, when patent protection was incorporated into domestic laws, the flexibilities were used

only twice. In March 2012, it issued a compulsory licence to an Indian firm for a cancer drug,whose patent holder, the German multinational Bayer, had priced it well beyond the reach of a

majority of Indian patients.

Under another provision, countries have the option to deny patent to a drug that involved only

incremental innovation. In April 2013, the Supreme Court upheld the 2006 decision of theIndian Patent Office denying the Swiss company Novartis patent on a drug precisely on this

ground.

Clearly, it is not just these two instances but the fear that other developing countries wouldemulate India that is behind the lobbying. India should be prepared to challenge any unilateral

action by the U.S. before the WTO whose disputes settlement mechanism has a good record ofimpartiality.

The way forward is through discussions not confrontation. India needs foreign technologies and

investment. Obviously, it helps alleviate any impression that Indias patent regime is beingdiluted. Two points in Indias favour are (one) patent issues are decided after a due process,

never arbitrarily. Two, the very few instances of using flexibilities are indicative of the fact thatIndia uses those safeguards selectively. Very recently, despite strong recommendations from

the Health Ministry, the government refused to issue a compulsory licence for production of acopy of Bristol-Myers Squibbs cancer drug Dasatinib in India. The argument is that a case has

not been made out for producing a generic version of that drug in India.

The debate should go on. There is a case for having a permanent mechanism for discussingpatent-related issues, especially concerning the drug industry.

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1.7 INDIASLIPSINFDIRANKINGSIndia drew $28 billion foreign direct investment (FDI) in 2013 against $24 billion in the

previous year, shows a report for 2014 by the United Nations Conference on Trade and

Development. However, its ranking in terms of most-favoured FDI destination slipped by a

notch compared to the one given in the report for 2013.

The World Investment Report, 2014 showed that policy uncertainty on allowing

international supermarket chains kept investors on tenterhooks. Though in terms of

its ranking in drawing FDI inflows improved a notch to 14th in 2013 compared to 2012, its

position in terms of the most-favoured FDI destination took a beating to the fourth in the report

for 2014 against third in the 2013 report.

An Unctad report shows a survey of companies ranking countries in terms of most-favoured

FDI destination for three years. As such, the report for 2014 shows the ranking for 2014-

16 and the one for 2013 shows the ranking for 2013-15.

IT IS MAINLY due to policy uncertainty and slowing down of economythat are taking

a toll on India's most- favoured investment destination ranking

Although India drew slightly more FDI in 2013 than in the previous year, "foreign investment

continues to flow into single-brand retail, no new investment projects have been

recorded in multi-brand retail and, in fact, divestment have taken place", the report

added.

Major multinational corporations that entered India after the first round of liberalisation have

taken steps to get out of the market. For instance, Walmart abandoned its plan to open full-scale

retail outlets in India and dissolved its partnership with Bharti.

The report suggested that adifferent approach could be considered for foreign

investment in the Indian retail industry, in terms of mode of entry, franchisingand other non-equity forms of multinational participation

1.8 CENTRE TO ROPE IN STATES TO FIGHT INFLATIONTo keep a check on inflation in the wake of a weak monsoon, Prime Minister Narendra Modi on

Thursday pushed for proactive coordination between the Centre and States in implementing

contingency plans. Fast track courts for hoarders.

Contingency plans for 500 districts

Creation of Fodder-grids for long term

Raised MSP of Kharif crops Hiked Export price of Potato

Called states to implement National food security

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1.9

ADVERSE GROWTH-INFLATION SETTING,MAJOR CHALLENGE

1.10INDIA INC LOOKS FOR CONDUCIVE TAX ENVIRONMENT,BOLD

REFORMSIn a pre-budget consultative meeting with the Finance Minister, captains of industry listed out a host

of demands, including:

Reviving the investment sentiment

Lowering of tax rates: The government should move away from the aggressive revenueapproach and provide a genuine non-adversarial and conducive tax environment.

Easing of gold import curbs

Clarity on retrospective tax law amendment: Industry pressed for an amendment to theIncome Tax Act, to promulgate the reversal of retrospective amendment and make all taxationprospective.

Early roll out of the GST and DTC: A simple, transparent and non-adversarial tax regimebereft of complexities and ambiguities

Renewal energy needed priority attention and the industry had sought FDI exemption inrenewal energy project

1.11INDIA,U.S.TRADE OFFICIALS TO START WORK ON POLICY FORUM

MEETTheU.S.-India Trade Policy Forum (TPF)is an inter-agency collaboration led by the USTR. It

is the principal trade dialogue between the countries. It has five focus groups:

1. Agriculture

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2. Investment

3. Innovation and Creativity (IPRs)

4. Services

5. Tariff and Non-Tariff Barriers.

Issues:The American pharma sector had alleged that the Indian IPR laws discriminate against U.S.

companies and violate global norms. USFDA has shown concerns over safety of Indian

Pharmaceuticals.

The USTR in its Special 301 report had kept India out of the priority list, but has said that they would

do an out-of-cycle review of Indias IPR regime.

At present, bilateral trade is around $100 billion. The U.S.-India Business Council had said bilateral

trade between the countries could touch $500-billion mark over the next one decade.

1.12FOREX RESERVES DROP TO $312BILLIONIndia's foreign exchange reserves comprise:

1. Foreign currency assets (FCA)

2. Gold

3. Special Drawing Rights (SDRs)

4. Reserve tranche position (RTP) in the International Monetary Fund (IMF).

The level of foreign exchange reserves is largely the outcome of: The RBI intervention in the foreign exchange market to smoothen exchange rate volatility

Valuation changes due to movement of the US dollar against other major currencies of theworld

Foreign currency assets are maintained in major currencies like the US dollar, euro, pound sterling,

Canadian dollar, Australian dollar and Japanese yen etc. Both the US dollar and the

Euroare intervention currencies, though the reserves are denominated and expressed in the US

dollar only, which is the international numeraire for the purpose

1.13TACKLING INDIAS ECONOMIC HEADWINDSCurrent Indian economy is marred with a high rate of inflation that persists, declining growth,

inadequate employment generation, fiscal deficit, current account deficit (CAD) and corruption.

The problem has been compounded by the capital intensive nature of current

investmentwhich usesless labour and more capital, so that even when output rises,

employment hardly grows. Most are forced to work in the informal sector at low wages which

when coupled with high persisting inflation, causes economic distress and political unrest.

This state of affairs is due to the decline in the rate of investment from its peak of 38 per cent in2007-08 because of the global economic crisis.

Why Investment has become so important for growth of economy?

Economy rapidly increased in the 2000s leading to the boom of 2003-2008. The rapid increase

in investment was engineered by allowing national income to shift rapidly in favour of the high

savers those who have high property incomes. This was evident from the direct tax data

which showed that corporate tax collections boomed after 1999. This trend has led to a rapid

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increase in inequality in society and a slow rise in mass consumption so that the growth of the

economy has depended more than before on rising investment levels.Hence the crucial

determinant of growth in the economy in the period after 2000 has been investment.

Investment in the economy depends on private investment, both foreign and domestic and on

public investment. There has been a problem with each one of them. Situation worsened as:

1. Exports declined: The green shoots in the United States did not bloom, Eurozone went into a

double dip recession, Japan continued its sluggish growth and the Chinese and the other

BRICS economies slowed down.

2. Imports increased: Imports rose sharply due to the high import bill for petro products and the

increase in the gold import bill

Result of 1+2 = high trade deficit and CAD and a decline in demand in the economy

This has also been accompanied by a reduced inflow of foreign investments so that the value of

the rupee vis--vis the dollar declined sharply in the last few years. This added to the imbalance

on the external front with speculation and a flight of capital aggravating it. The threat by creditrating agencies to downgrade the country has been looming large which could lead to an

increase in cost of borrowing abroad and a rise in CAD.

Foreign investment has slowed down but it only constitutes around 10 per cent of the total

investment in the economy. The bulk of investment is internal and this has slowed down due to

several factors.

1. One of them has been the unravelling of scams since 2009 and the subsequent

intervention of courts. This hasimpacted the confidence of the business communitywhich

was used to employing crooked means to manage its investments and the markets.

2. Their confidence has also been shattered bywidespread public protestagainst large-scaleacquisition of land needed for major projects. This goes back to the days even before Singur.

Resistance has continued in Jaitapur, Kudankulam, POSCO, Tata Mundra and so on.

In brief, the slowdown in internal investment is a result of the discredited model of

investment in the country which has been based on collusion between businessmen, politicians

and the bureaucracy. Thus, for different reasons, both foreign and domestic private investment

has slowed down.

The last element, public investment has also slowed down because ofpolicy paralysisin the

government and even more importantly due to the sharp cutback in Plan sizein each of the

last five years so as to keep the fiscal deficit down; compared to budget estimates, the actual

has been less by Rs.5 lakh crore in these five years. This has led to a slowdown in investmentin infrastructure and an aggravation of shortages.

Now coming to solutions:

1. Foreign Investments: While the rise in the stock markets signals the flow of funds from FII, it

does not mean that foreign direct investment will suddenly increase. Further, there is the danger

of a speculative bubble building up as in the past which could collapse and adversely

impact the investment climate. This could be triggered by the continuing easing of the Fed

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intervention in the U.S. something that is ongoing. Even if foreign investment increases, it

is a small part of the total investment so it cannot be the major stimulus needed.

2. Internal investment: Domestic investment public and private needs to be revived. Large

investment is going to remain hamstrung by environmental and other clearances and difficulties

in acquisition of land unless laws are changed but that would take time. Transparency in

business decisions is needed to revive investment, which also needs time.

So, the only thing that can be done soon is to increase public investment, especially in

rural areas where infrastructure is woefully inadequate.

Schools, dispensaries, roads, telecom, water, small irrigation and so on are needed urgently in

rural India. This has the potential to create lots of jobs unlike the big investments and would be

much less expensive than in urban areas because land is less expensive. Thus, it would benefit

many more people and slow down the expensive and environmentally damaging urbanisation

currently taking place. But this requires efficient governance.

1.14BOOSTING MARKETS FOR NEW ISSUESThe stratospheric valuations that the share markets currently command should have

automatically led to a revival of the moribund primary markets. This, however, has not

happened for many reasons. There is often a considerable time lag between conceiving a

project and getting it financed through the stock market route. As recent macroeconomic data

show, the levels of savings and investments have been coming down.This, along with

governance failures, have led to a situation where a number of projects, including large

infrastructure projects, get stuck even during the early stages of their execution. The new

government has said it will unclog stalled projects on a priority basis, but it will take time before

their promoters are able to raise resources from the capital market. Moreover, when they are

finally ready for a public issue launch usually at the fag end of financing arrangements

they may not be able to tap the kind of money they require. For instance, there is a paucity of

investors in infrastructure companies. In the developed countries, insurance companies and

pension funds provide a large part of the funds required by infrastructure projects. Raising the

limit for foreign direct investment in insurance will help. At the same time, it isnecessary

to educate retail investors of the advantages in buying long-dated instruments which will

provide steady, non-cyclical returns.

In the final analysis,it is the retail investors who provide depth and stability to the capital

market. Unfortunately, this class has not only not received the right regulatory support, but

there are also some provisions that discriminate against them. For instance, some of the

initiatives of the Securities and Exchange Board of India completely bypass retail investors.

Over the years there have been but token attempts to attract small investors, such as by givingthem a small discount on public sector share issues. Recently, SEBI Chairman U.K. Sinha

advocated a rationalisation of public issue norms relating to promoters holding as a means to

increase the supply of shares. The idea is to prescribe a uniform minimum public float of 25

per cent in a share issue irrespective of the size. At present, public sector undertakings and

companies with a post-issue capital of above Rs.4,000 crore, need offer only 10 per cent. The

motives behind the proposal are laudable, but an increase in the quantum of shares by itself

cannot do much to boost retail investments. Considering the requirements of infrastructure

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finance, it is time that debt and quasi-debt instruments such as convertible debentures are

popularised. Those should attract risk-averse investors too.

1.15GOLD PRICES LIKELY TO DROP FURTHERGold prices are likely to drop further in the coming weeks, Bullion experts feel the fall may be

precipitated by a number of factors:

Internationally, signs of a stronger U.S. economy have diminished the golds safe havenstatus, and money is being diverted to investments such as equities.

The booming equity market and stronger rupee point to a lower fancy for gold in India.

RBI has eased some controls over import of gold by trading houses.

Gold in the domestic markets has traded at a high premium over international markets ever

since the RBI introduced restrictions on import to combat the high CAD in July, 2013.

The new government might cut the import duty from current 10 per cent levels in the coming

weeks and a cut of 2-3 per cent in duty could lead to another sharp correction in domestic gold

prices.

1.16PUTTING THE SPRING BACK INTO THE ECONOMYThe economy is in a state of paralysis. The events which led it to this state are as follows:

The reforms era

In the first slew of economic reforms and liberalisation in 1993, the traditional industrial and

services sectors within the economy gained a lot of freedom that they had never enjoyed earlier.Before 1993, the major constraints these sectors faced were legal and policy constraints like the

industrial licensing policy, tariff and quota restriction on import of raw materials andintermediate goods, etc. The 1993 reforms removed most of these constraints. This led to the

first growth boom in India, with the average per capita growth rate of the economy going upfrom less than two per cent to more than four per cent per year.

Then came the second growth boom in 2004 with per capita growth rates increasing to morethan six per cent per year. This boom happened partly due to some of the traditional sectors

continuing to do well and also because of a new kind of growth momentum from some specificsectors minerals, construction, real estate and telecom. The momentum in the minerals sector

came from exports, as global demand and the price of minerals were very high during thisperiod. In the real estate and the telecom sectors, growth resulted directly from increased

middle class incomes due to the first growth boom. The impetus in construction was the resultof conscious policy decisions of the government that wanted to push for big infrastructureprojects.

Interestingly, thegrowth momentum in all these sectors was based on a closerelationship between the political class and big private investors.The mineral sector,

which was earlier completely under the public sector and catering largely to domestic demand,was consciously opened up to big private investment and exports. The real estate sector,

previously made up almost entirely of small players, saw a number of large private investmentsduring this period. In the telecom sector, the nature of the market ensured that only big players

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could participate. Even in the construction sector, some of the big projects like airports needed

huge investment and big businesses.

Paralysis and backlash

Undoubtedly, these sectors needed to be developed for sustained and continuing growth in

India. The problem was thatpolicymakers thought that the set of reforms made in andafter 1993 would be sufficient to regulate this new kind of growth. On hindsight, wenow know that there were verysignificant regulatory failures in these sectors during the

second growth boom. We also understand that the reforms of the 1990s, which focussedon removing constraints on activity, were insufficient to provide broad-based,

corruption-free growth in these sectors.Each of these sectors needed a differentgovernance structure and set of regulations, which were not put in place before the

sectors started growing at a very rapid rate.

We also know that the regulatory failures during the second growth boom led to a very strong

institutional and political backlash since 2010. This backlash manifested itself in several ways.Since 2010, themedia began raising issues of corruption and crony capitalism in

these sectors. Next, civil society got involved and voiced its opinion on the need foralternative regulatory and anti-corruption institutions like the Lokpal. Finally,the courts passed orders and rulings that criticised the decisions made by thegovernment in these sectors. All this led to what is now being called the paralysis.

In fact, the paralysis manifested itself in the activity of two important agents of the economic

growth bureaucrats and private investors.

Once the courts gave adverse rulings on the decisions taken by some bureaucrats, thebureaucracy as a whole became jittery about taking decisions, sometimes deferring to them tothe extent that projects simply ground to a halt.

Private investors, on the other hand, found out that formal and informal understandings

that they had entered into with the political class were not as secure as they had thought themto be, especially in the face of court cases and popular political uprisings like the one in Singur.

This uncertainty that crippled both the bureaucracy and private investors led to the collapse ofinvestment and growth rates.

Bureaucracy and business

So, what should the new government do to bring back growth? The first thing that it needs to do

is to move the economy out of this paralytic state. Clearly, the approach has to attempt torejuvenate both the bureaucracy and the private investor.

Bureaucracy: The government needs to ensure that thebureaucracy does not become a

part of any deal-making with the business classwhich can lead to decisions that are notin the best interests of the country. This means that there needs to be strong penalties for

any malpractice by bureaucrats. However, if the government adopts an approach thatstrongly penalises the bureaucracy for any outcome that is less than satisfactory, then this may

lead to a very risk-averse bureaucracy, which also hampers vibrant decision-making. In effect,the governmentneeds to put in place a system which can differentiate between the

deliberate malpractice of the bureaucracy and poor decisions that it mayoccasionally take even with the best of intentions.

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The crony-capitalism associated with the second growth boom resulted in all sorts of informal

deals between the political and the business class, which initially raised investor confidence inthis period, but later led to a breakdown in confidence when the deals were challenged by

accountability institutions like the Comptroller and Auditor General of India (CAG), theCentral Bureau of Investigation (CBI) and the courts.Any future relationship between the

political class and the business elite has to be based on formal rather thaninformal deals. This will not only help investments become less costly due to a fall in

transaction costs but also assure investors that these deals will not be reneged infuture.

Tackling inflation

The other crucial thing that the government needs to do in order to sustain growth is to control

inflation. Inflation has always beenpartly demand-driven and partly structural, due toelements like supply bottlenecks. In India, in the last few years, its the structural part which is

almost always driving inflation, particularly food inflation.

In order to solve this problem, the government has to think out of the box. First, it has to have

a clear idea about which part of the food chain is really responsible for inflation. Itis widely discussed that while farmers are not getting adequate returns from the prices they get,consumers pay a high price in the retail market. The government needs to put in place asystem which collects data on a real-time basis about various stages of the

agricultural pricing process, right from the farm up to the retail market, so that we canidentify where the problem lies. Once there is an adequate understanding of this phenomenon,

the government can take appropriate measures to minimise it. These measures will have toinvolve the enabling of more competition at some level of the wholesale business,

after the produce leaves the farm, but before it reaches the retail market.

1.17REVIVING ECONOMY IS PRIORITY:PRANAB

Putting the economy back on track is of paramount importance for the government. Foreign policy

building a peaceful, stable and economically inter-linked neighbourhood and strategicand cooperative partnership with neighbours, including China.

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bring renewed vigour in Indias engagement with the United States and tooperationalise the civil nuclear agreement.

Governance The government was "dedicated to the poor" and the first claim on development

belonged to the poor

Poverty has no religion, hunger has no creed special measures to spread modern and technical education among minoritycommunities.

a policy of zero tolerance" towards terrorism, extremism, riots and crime.

By the time the nation completed 75 years of Independence in 2022 every family would

have a proper house with water connection, toilet facilities, and round-the-clock electricity

supply.

(CLICK on the image if not visible)

1.18RBISIMPLIFIES KYCNORMS FOR OPENING BANK ACCOUNTThe bank had received representations/references from various quarters, especially migrant workers

and transferred employees, regarding problems faced in submitting a proof of current/permanent

address while opening a bank account. This would promote financial inclusion and

electronic transfer of remittances.

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1.19ICPDATA VALIDATE TENDULKAR POVERTY LINEThe recently released International Comparison Program (ICP) datahave provided an

independent, international validation of the poverty line fixed by the Suresh Tendulkar committee,

which is being reviewed by the C. Rangarajan committee for a likely revision.

Since the ICPs purchasing power parities (PPPs) estimate pegs $1 at Rs. 15.1 in 2011,

theWorld Bank poverty line of $2 per capita per dayworks out to Rs. 30.2 or Rs. 906 per

capita per month. The Tendulkar methodology had estimated the national poverty line for 2011-12 at

Rs. 902 per capita per month.

The Tendulkar poverty line faced sharp criticism after the Planning Commission, using it as the

basis, announced that the number of poor fell from 40.7 crore to 27 crore from 2004-05 to

2011-12. Following the criticism, the UPA government set up Rangarajan Committee to review and

if necessary, revise it. The group is expected to submit its report to Prime Minister Narendra Modi

soon.

Where the Tendulkar Poverty Line fails is in the political and the emotional quotient.

The International Comparison Program (ICP) is a worldwide statistical partnership to collectcomparative price data and compile detailed expenditure values of countries GDP, and to estimate

PPPs of the worlds economies. Using PPPs instead of market exchange rates to convert

currencies makes it possible to compare the output of economies and the welfare of

their inhabitants in real terms(that is, controlling for differences in price levels).

It had ranked Indias GDP behind only that of the U.S. and China. But in terms of per capita GDP,

India was ranked 129th.

1.20 BANKERS PITCH FOR DILUTION OF GOVT OWNERSHIPBankers asked the Finance Minister to consider: Setting up National Asset Management Company to deal with the problem of risingNPAs.

Recapitalisation of banks as all the public sector banks need capital.

Reducing government stake in PSUs to 51%.

Implementation of recommendations of the Naik committee report.

Revision of the definition of priority sector lending.

Continuation of interest subvention scheme for investment lending in the agriculturesector.

Interest subsidy for solar power projects.

Long-term instrument to finance infrastructure, and the issue of tax-free bonds for

development of the sector Changes to Rajiv Gandhi Equity Saving Scheme to encourage a shift from gold and realestate to the equity market.

Insurance awareness to be made part of corporate social responsibility.

To increase savings, Banks and insurance companies wanted tax benefits for theirproducts.

Listing of LIC

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The government should seriously consider listing of LIC. The kind of money the government can

raise by listing LIC is significant. It can fund the needs of public sector banks as well as the fiscal

deficit.

1.21NITIN GADKARI OPPOSES PLAN TO IMPOSE ANTI-DUMPING DUTY ONSOLAR GEAR

The government plans to slap anti-dumping duty on solar panels. The Directorate Generalof Anti-Dumping and Allied Duties (DGAD) had recommended slapping the restrictive duty onimported solar panels from the U.S., Malaysia, China and Chinese Taipeito protect

domestic manufacturers.

The Commerce Ministry had suggested restrictive duty in the range of $0.11-0.81 per watt. Thelevy would be applicable onsolar modules and cells assembled partially or fully,

originating or exportedfrom the countries mentioned above.

Why Anti Dumping Duty?

The indigenous solar cell industry, which is in nascent state, needs protection andnurturing. They are unable to compete with the imported panels and are loosing out.

Opposition:

From Domestic solar energy industryas they will have to buy solar modules at a highercost. The cost of solar power is already high as compared to coal and other conventional sources.

Since, the capacity generated under national solar mission has domestic sourcing norms, mostof the upcoming projects are being planned under State schemes to bypass this norm.

U.S. has already dragged India to the WTOwith respect to domestic sourcing norms for

the national solar mission. India is of the view that its solar mission which aims to have 20,000MW solar capacity by 2022 is compliant with WTO rules.

The Ministry of New and Renewable Energy (MNRE)has also opposed therecommendation to slap ADD on imports, saying it is not the right time.

Transport Minister Gadkari suggested that indigenous manufacturers could be compensated

with appropriate subsidy.

1.22 GSTROLLOUT WILL HAVE TO WAIT FOR STATUTE AMENDMENTAn early rollout of the Goods and Services Tax (GST) seems unlikely as the Empowered

Committee of State Finance Ministerswill start work on its design and form only afterParliament passes a Constitutional Amendment for introducing the new tax regime and the

States ratify it.

Work on the Model GST Law for the States will start only after the amendment.

The empowered committee has written to Mr. Jaitley asking for the governments views on theissues pertaining to the Constitution Amendment Bill.

Issues

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The committee maintains that alcohol and petroleum, major sources of revenue for

States, should beexcluded from the GST.

The panel is unwilling to give to the Centre powers to notify declared goods

and fix GST rates on themwithout consulting the States.

The States want a mechanism to compensate themfor revenue losses due to the

GST, to be made part of the Constitution Amendment Bill.

1.23 INDIA INC SEEKS SPEEDY IMPLEMENTATION OF GSTVarious industry bodies, including Society of Indian Automobile Manufacturers (SIAM) and

Manufacturers Association of Information Technology (MAIT), have sought speedy

implementation of Goods and Services Tax (GST) to make the tax system simpler.

Besides, it has suggested measures to address issues affecting the industry such asinverted

duty structure, dual taxation on sale of packaged or canned software etc.

National Association of Software and Service Companies (Nasscom), which represents the over

$118 billion Indian IT-BPO industry, has urged the government to make the regulatoryenvironment more predictable, legal provision more transparent and remove ambiguity.

It has also recommended the launch of an India Technology Entrepreneurship Mission (ITEM)

to provide a supportive framework to technology start-ups and SMEs (small and mediumenterprises).

1.24 FOCUS ON DIAMOND QUADRILATERALPresidents address has outlined a diamond quadrilateral project of high speed trains. Perhaps

modelled on the golden quadrilateral national highways programme, this project could

provide special high-speed corridors to link the four main metros.

High-speed trains could be the answer to the congestion along the highways and slowing road

speeds. But it calls for huge investments and consequently high fares. Other concepts mentioned

in the address relate to agri-rail networks for the quick movement of perishable

commodities, and the expansion of the rail network in the northeast.

1.25PILOT SCHEME TO ALLOW DRAWALS FROM SEMI-CLOSED MOBILE

WALLETSThe Reserve Bank of India has kicked off a pilot project that will allow a few mobile payment

providers to test cash withdrawal facilities for a small portion of their semi-closed mobile wallet

users.

Mobile wallets are digital products that can be loaded with cash, usually through a

mobile payment provider or telecom operator such as Airtel or Vodafone, and can

be used to purchase goods electronically.

Semi-closed mobile wallets, which were once hailed as weapons of financial inclusion as they donot require the user to have a bank account, have one noticeable drawback: a user can

add cash but cant draw it out.

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The Reserve Bank has long-held the view that letting telecom operators to offer cash-out

facilities for their mobile wallet users would allow the companies tobypass the bankingsystem.

What happens is that the sender and beneficiarys wallet will be seeded with Aadhaar number.

When the money transfer happens, the receiver, who does not have a bank account, can walk to

a mRUPEE outlet and receive the cash after authenticating his identity with the biometric[fingerprint scanning], Pradeep Kumar Sampath, COO-MMPL, a subsidiary of Tata TelservicesLimited, told this correspondent.

Tata Teleservices mobile wallet payment-based service mRUPEE is one of the eight participants

in the RBI pilot.

1.26 PE,KEY FUNDING OPTION FOR REALTY SECTORThe cash-strapped real estate sector has been increasingly turning to private equity (PE) and

structured debt to meet its funding needs. Faced with a liquidity crunch, high land acquisition

costs and increasingly tough due diligence by banks owing to its risky nature, real estate players

have been opting for private funding.

In future, more platform deals and equity stake acquisitions are likely to be seen and the entry ofreal estate investment trusts (REITs) would provide alternative funding channels.

According to CBRE South Asia, a forward looking legislation on REITs will be a key enabler for

capital markets and shall be the single-most consequential reform witnessed in the sector inrecent times.

1.27ON THE ROAD TO SAFETYAnother article on Road safety. Roads are unsafe because of

1. shortcomings in road and traffic engineering,

2. old and non-standard codes of traffic control devices,

3. poor driver training and assessment,

4. outdated legislations and

5. a poor enforcement system.

Though the Ministry of Road Transport and Highways is the nodal ministry for road safety

management, the issue is a multipronged and shared responsibility of many ministries Home,

Health and Family Welfare, Urban Development, Law and Justice, Heavy Industries, Human

Resource Development, Environment, Petroleum, Defence, Planning and Finance, among

others.

The number of recorded road deaths in India 1,40,000 annually is the highest in the world.

In addition, an estimated 2.2 million people are seriously injured on roads.

In order to diagnose the problems leading to unsafe roads, the most important is scientific

investigation of road accidents. This is our weakest area today that we are unable to

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know the causes and consequences of road accidents. Policemen who investigate crashes are

neither professionally trained, nor do they possess the basic tools to collect evidence, and

analyse and reconstruct the events leading to the crash. This is evident from the fact that the

media has to invite a host of persons as experts to present their views on high-profile accidents

rather than depending on probes by the police.

It is crucial to introduce the science of traffic engineering to each and every road authority.

The process of change should be based upon indigenous research and verified practices that are

applicable to the needs of the country. This demands a paradigm shift from thedependence upon consultancies approach.

The Ministry of Road Transport and Highways should initiate the process of road safetymanagement by first building the capacity of the department.Ministry should deliberate

on creating the governments own expertise and knowledge basein all areas of

legislation,

transport planning,

traffic engineering, traffic enforcement,

driver training and education,

post-crash management,

as well as integration of road transport with rail, inland waterways (as has beenannounced), maritime shipping and air traffic.

These sub-departments with their expertise would be able support all States and UnionTerritories towards building their capacity as well.

1.28AN INTRACTABLE PROBLEMSteps taken by government recently to tackle inflation:

1. high minimum export prices on two important staples, onions and potatoes, to discourage

their exports.

2. It has advised State governments to exempt perishables such as fruits and vegetables from the

purview of the state-administered APMC Act. This legislation gives near-monopoly status to

traders and middlemen to procure, stock and trade food produce.

3. The Food Corporation of India has been asked to offload 5 million tonnes of rice from its

overflowing godowns.

Long term strategy should be:

1. reduce the numerous intermediariesbetween farmers and consumers. It should be

possible for farmers to fetch a higher price without pushing up the price paid by consumers.

Though talked about for a long time, this has been difficult to implement because of political

opposition from lobbies representing middlemen and traders.

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2. minimise wastage of farm produce,especially of perishables such as vegetables and

milk.To do this it is necessary to put in place a robust system of logistics including cold chain

facilities. Reforming the outmoded food management system is a subject that has gained

traction recently.

The phenomenon of overflowing granaries co-existing with high cereal inflation is totally

unacceptable, but continues for want of the political will to reform the system.

1.29 INDIAN MONEY IN SWISS BANKS SWELLS TO OVER RS.14,000CROREIndians money in Swiss banks has risen to over two billion Swiss franc (nearly Rs.14,000 crore),

despite a global clampdown against the famed secrecy wall of the Switzerland banking system.

1.30 PRASHANT BHUSHAN FOR LAW TO CURB BLACK MONEYA new law, or an amendment to an existing law (such as the Prevention of Money Laundering

Act), requiring all Indian citizens to disclose all their assets and bank accounts in India andabroad needs to be introduced, senior Supreme Court lawyer Prashant Bhushan has suggested

to Prime Minister Narendra Modi.

1.31INFRASTRUCTURE FINANCE FIRMS CAN RAISE LONG-TERM FUNDS The government, on Thursday, allowed infrastructure finance companies to issuesecured debentures with a tenure of up to 30 years, a move that will help in raising long-term

funds for the sector. Besides, infrastructure debt fund non-banking financial companies (ID-NBFCs) have

been allowed to issue secured debentures for up to 30 years.

Similarly, housing finance companies have been allowed relaxed terms for maintainingdebenture redemption reserve on the lines similar to NBFCs registered with the RBI (ReserveBank of India).

A debenture redemption reserve is an account that can only be utilised to redeemdebentures.

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As per the XII Plan document, India is projected to require investments ofabout $1 trillion in infrastructure during 2012-17.

The government also clarified that companies can appoint an independent merchantbanker, registered with the Securities and Exchange Board of India to prepare valuation reportsrequired before making a preferential allotment of shares.

The firms can also engage an independent chartered accountant with a minimumexperience of 10 years to prepare valuation reports, the statement said.

1.32 SEBIUNVEILS SLEW OF REFORMS1. all listed public sector undertakings (PSUs) to ensureat least 25 per cent public

shareholding within three years.

Why?

a. to ensure uniformity among listed entities irrespective of their promoters

b. help the government raise close to Rs.60,000 crore

2. decided toshare know your client (KYC) informationwith entities regulated by otherfinancial sector watchdogs, a move aimed at having common norms across the financial market

3. to revive the primary market, the market regulator has eased norms related to the size ofan initial public offer (IPO) and pricing of preferential shares while allowing anchor

investors to have a greater exposure to the offering.

4. to safeguard investors from manipulative reports and usher in more transparency, the SEBI

board has approved detailed norms for research analyststhat include stringentdisclosure requirements.

5. the proposal allowing non-promoter shareholders having over 10 per cent stake to

use the OFS mechanism has been cleared by the SEBI board6. SEBI has decided to make OFS route available to the top 200 listed firms by marketcapitalisation, compared with the top 100 listed companies at present.

7. easier set of regulations for employee stock option schemesthat among other thingswould classify ESOP Trusts as a separate category of shareholding entities.

Gyaan:

The process of listing for the first time is known as the 'primary market'. The most common way for a

company to come to market is by an 'Offer for Sale'.

1.The company publishes a prospectus describing its business, who its directors are, what its

financial position is, and what profits it thinks it is going to make.

2. The prospectus announces the issue of new shares, sets an offer price for the shares, and invites

subscriptions.

3. Offer prices are often pitched low to make sure the issue is successful.

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1.33 FAR-REACHING MOVESGiven the paucity of regulatory initiatives in the recent past to revive the primary capital market,

the slew of measures announced by SEBI recently would appear to be far-reaching in terms of

their impact.

The insistence on a 25 per cent public float for public sector undertakings, instead of the present

norm of 10 per cent, is an important step that could have multiple benefits:1. There will be more PSU shares available in the market for all categories of investors.

2. The PSU disinvestment programme will be moved along as many more well-run government

undertakings offload their shares to meet the new SEBI norm, which incidentally also levels the

field with private companies that already follow the 25 per cent norm.

A reservation for retail investors in the Offer for Sale (OFS) route and the provision for a

discount for them are welcome steps, but it should be pointed out that the OFS and the IPP

(Institutional Placement Programme) were created to speed up large divestments of shares,

bypassing the cumbersome procedures of retail investment. Therefore, even if many more

companies can now take the OFS route, the value of this relaxation to small investors is

questionable.Again, doubling the limit for anchor investors increases confidence-levels in individual issues

and ought to be viewed as another step towards strengthening the primary market mechanism.

SEBI is on the right track, but a genuine primary market revival may not happen in the short

run. Such a revival can only ride on robust economic growth and consequent improved market

sentiment.

1.34 PRESSURE ON PROFITABILITY TO CONTINUEAluminium Industry

Indias demand for aluminium has generally remained stable due to its dependence on the power

sector, which has always experienced steady growth in the past. Nearly 40 per cent of domestic

demand for the metal comes from the power sector, which, along with automobiles and

construction, accounts for 75-80 per cent of domestic aluminium consumption. Current

capacity is 1.9 Million Tonnes.

Due to negative growth in Automobile industry and low demand of power cables and

equipment. This is supposed to continue in future.

Lack of raw material linkages including Coal.Captive mines will lead to lower production

costs and optimum capacity utilisation.

1.35EXTENSION OF EXPORT SOPS COMES AS SWEETENER FOR SUGARINDUSTRY

The government announced a slew of measures for millers:

1) Hiked import duty on sugar from 10% to 40%.

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2) Raised limit for ethanol blending in fuel from 5% to 10%. This would improve demand of

molasses, a significant byproduct in sugar production used to manufacture alcohol.

3) Infusion of liquidity for mill owners by interest free loans and other benefits.

Problems of Sugar industry:

1) Mismatch between prices of cane and sugar due to erroneous pricing policies by State

governments.

2) Shorter crushing season in the northern states

3) Competition from other cash crops such as cotton.

4) Fluctuation in Fructose content of cane due to Monsoon.

5) Hike in Labor prices

1.36 RBIFIXES TIMELINES FOR REGULATORY APPROVALSFinancial Sector Legislative Reforms Commission (FSLRC) had recommended:

1) Timebound disposal of Regulatory Approvals

2) Citizens' Charter

Both have been implemented by RBI

1.37CENTRE TO SIMPLIFY LAWS FOR SINGLE WINDOW CLEARANCE This would improve the investment climate and send a clear message to foreign investorsthat they could freely invest in India.

there was an impression that India was one of the most over-regulated countriesin theworld and one had to obtain20 or odd clearances for a project and this affected investmentclimate. He said he had asked the Law Commission to examine whether so many clearances wereneeded for approvals.

Government also asked the Law Commission to examine whether govt can have a processof self-certificationfrom the project proponents that every law had been followed, with a riderthat in the event of violation there will be serious punishment

1.38 MAKE POWER DISTRIBUTION REFORMS A TOP PRIORITY:WORLDBANK

Power distribution in India needs sweeping reforms if it is to bring back the country to a high

growth trajectory and meet its goal of expanding access to electricity to all by 2019, the Bank reportreleased on Tuesday said.

Indias annual per capita power sector consumption is at around 800 units, which is among the

lowest levels in the world.The study has identified electricity distribution to the end consumer as the

weak link in the sector.

The report recommends freeing utilities and regulators from external interference, increasing

accountability and enhancing competition in the sector to move it to a higher level of service delivery.

Total accumulated losses in the sector stood at $25 billion in 2011. These losses are concentrated

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among discoms and bundled utilities State Electricity Boards (SEBs) and the State Power

Departments, the report said.

Revitalising the power sector by improving the performance of distribution utilities, and ensuring

that players in the sector are subjected to financial discipline is the need of the hour.

1.39 BRTSYSTEM WILL SAVE 27,000LIVES IN INDIA:WORLD BANKIf India built 1,000 kilometres of new, bus rapid transit lanes, over 20 years, that could save more

than 27,000 lives by reducing air pollution and accidentsand create more than 128,000 jobs.

India could also reduce greenhouse gas emissions by about 42 million tons

According a report named Climate-Smart Development, $3-4 billion is needed to develop

1,000 km of BRT corridors in about 20 cities across India within 6-12 years.

The report that focuses on five economies Brazil, China, India, Mexico, US and EU shows

the potential economic, health and other gains from scaling up climate-smart policies as well as

projects already in place in developing countries like Brazil, India and Mexico.

The right policy choices can deliver significant benefits to lives, jobs, crops, energy , and GDP

as well as emissions reductions to combat climate change.

The report says recent work by the World Bank in India finds that the combined cost of outdoorand indoor air pollution is more than $40 billion annually, or more than three per cent of

Indias 2009 GDP.

When other environmental degradation is factored in, including crop, water, pasture,

and forest damage, the total is closer to 5.7 per cent of Indias GDP affecting mostly the

poorest members of society, it added.

ThePimpri-Chinchwad BRT may serve as a model for replication across India.

Policies promoting clean development in transport and energy efficiency will lead to global

growth.We already know that we need to make smart policy choices to combat climate change.

What we didnt know is that these policies make economic sense, as well.

1.40U.S.GOVT PANEL PUTS INDIA ON PIRACY WATCH LISTIndia was named to an International Piracy Watch Listby a U.S. government panel that is

looking to highlight countries that are doing little to address high rates of digital piracy. Being

put on this Congressional caucus list may have an impact on the out-of-cycle intellectual

property review that the Office of the U.S Trade Representativewill conduct on India later

this year.

The watch list, which also highlights concerns in China, Russia and Switzerland, points out

that India continues to present a seriously flawed environment for the promotion of

copyright and intellectual property.

Among continuing issues in India are extremely high rates of cam-cording piracy, high levels ofunlicensed software use by enterprises, and a lack of effective notice-and-takedown

procedures for online piracy.

A new study recently pointed out that online piracy levels in India remained at 60 per cent,

with nearly $2.9 billion of unlicensed software being installed in 2013.

According to non-profit organisation BSA, India is second only to China (over $8.7 billion) in the

Asia Pacific region in terms of commercial value of unlicensed software sold in 2013.

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1.41MOVE TO BRING MORE DRUGS UNDER CONTROL DRAWS FLAKThe Drug Price Control Order (DPCO) 2013 controls the price of 348 medicines deemed

essential under the National List of Essential Medicines (NLEM).

Drugs under NLEM account for Rs.15,000 crore or a fifth of the total Indian market.

Industry wants that the government should first evaluate the impact of the earlier order on availabilityand prices and see if the objectives were met. A compensatory mechanism must also be in place to ensure

that companies are not reluctant to invest or hike production.

1.42 SWEETENED PACKAGEGovernment announced:

1. to increase the import duty on sugar to 40% from the current 15%

2. to continue with the subsidy of Rs 3,300 per tonne on sugar exports until September

3. go-ahead to 10% ethanol blending in petrol

4.additional interest-free loans of up to Rs 4,400 crore to sugarmills

Government would implement these measures only after sugar millsgive it in writing that they would

pay their arrears to farmers, totalling as much as Rs 11,000 crore at present.

Sugar producers in country have two issue:

1. Low prices of sugar : this is due to excessive production of sugar in past years

2. Rising cost of sugarcane procurement : this is due to higher prices mandated by state government

without any linkage with sugar prices

The Rangarajan Committee came up with the ideal solution of revenue-sharing between farmersand mills, and the ratio suggested by it is very fair to both parties. Yet, only some of the

sugarcane growing States, such as Maharashtra, Gujarat and Andhra Pradesh, haveimplemented the recommendation from this year. Major States, such as Uttar Pradesh and

Tamil Nadu, have ignored the Rangarajan formula and continued with the practice ofannouncing procurement prices unilaterally.

The move to double ethanol blending with petrol is intended, prima facie, to boost ethanol

demand and increase the income of the mills that produce it from molasses. However, it isnoteworthy that even the current five per cent ethanol blending target has not been

fully metin many parts of the country.

The measures, in fact, show acallous disregard for resource shortages. India is scarce inland and water, and so biofuel based on field crops such as ethanol for fuel blending is

always going to be a bad idea. And giving incentives for the export of sugar ignores the fact thatit is, in effect, encouraging the export of water, given how water-intensive sugarcane is.

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1.43 MANY CHALLENGES TO STABILITYRBI's Financial Stability Report :

1. On the domestic front, the return to political stability has provided impetus to the outlook and the capital

markets reflect the expectations on policy measures to address the adverse growth-inflation dynamics and

saving-investment balance as also efficient implementation of policies and programmes.

2.Indias financial system remains stable, though the banking sector is facing some major challenges,

mainly relating to public sector banks (PSBs).

>> Although there has been some improvement in the asset quality of scheduled commercial banks (SCBs)

since September 2013, the level of gross non-performing advances as percentage of total gross advances

(GNPA ratio) of PSBs was significantly higher as compared to the other bank groups.

>> While the ownership pattern and recapitalisation of PSBs are contingent upon government policy and

the fiscal situation, there is a case for reviewing the governance structures of PSBs, with a greater emphasis

on market discipline.

3. Macro stress tests show that the system level capital to risk-weighted assets ratio (CRAR) of SCBs remainswell above the regulatory minimum even under adverse macroeconomic conditions.

4. The regulation of securities markets in India is in sync with international developments, although mutual

funds and other asset management activities in Indian markets do not carry risks similar to those

experienced in other jurisdictions.

5. The lending activity of insurance companies, though relatively small and within the prescribed exposure

limits applicable for insurance companies, may need to be streamlined and monitored under a prudential

framework comparable to that for banks to eliminate the possibility of regulatory arbitrage.

6. Revised norms for corporate governance as also warehouse and related processes are expected to

strengthen the functioning of the commodity derivatives market.

7. In the context of Indias pension sector, inadequate liability computation in case of several defined benefit

pension schemes can be a potential source of fiscal stress in years to come

1.44TREAT GOLD DEPOSITS AS PART OF CRR/SLR:BANKERS

State Bank of India (SBI) and Bank of Baroda feel a portion of the gold deposits held by banks

should be treated as part of the mandatory cash reserve ratio (CRR) or statutory liquidity ratio

(SLR).

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1.45PRICE STABILISATION FUND SCHEME MAY BEMODIFIED

The Union Commerce Ministry is trying to modify the Price Stabilisation Fund Scheme so as to

lower the price threshold at which the fund gets activated. The Rs.500-crore Fund, which lapsed

in 2013, is being re-launched, according to a Union Commerce Ministry official.

Tea Board Chairman Siddharth said that the commodity fund was established in 2003 to help

industries engaged in producing four commodities - tea, coffee, tobacco and natural rubber.The idea behind setting up the fund was to help the trade stay in business by extending them

support if there is a drop in their commodity prices the idea was to establish India as a reliablesupplier in the international markets.

As per current rules, prices of certain commodities have to drop 20 per cent in international

markets for the fund to kick in.

This was considered stringent, and the Commerce Ministry has never had to operate the fund.

Now a move is afoot to revive the fund and lower the threshold to 10 per cent.

2

S

CIENCE AND TECH

+

E

NVIRONMENT

2.1VULTURE CONSERVATION IN GRAM SABHA AGENDATo sensitise cattle owners in rural areas to the need for refraining from using diclofenac, a

banned drug for veterinary use, the Coimbatore district administration has included vulture

conservation in the agenda for the gram sabha meetings scheduled for June 1.

A study done by the Bombay Natural History Society (BNHS) from 1992 to 2007 showed thatthe population of vultures declined by 96-99 per cent. The study also showed that

cattle/livestock subjected to treatment with two versions of the non-steroidal anti-inflammatorydrug among rural folks remained in the carcasses. When vultures consumed the carcasses,process of their death begins owing to drug-induced kidney failure.

After repeated representations, Drug Controller General of the Government of India on May 11,

2006 banned diclofenac for veterinary use.

Further to save the vulture from becoming extinct,Action Plan for Vulture Conservation

in Indiaand Regional Declaration on Conservation of South Asias CriticallyEndangered Vulture specieswas prepared by the Ministry of Environment and Forest with

technical inputs from Saving Asias Vulture from Extinction (SAVE). The ban has helpeda bit as vultures are reappearing in The Nilgiris and Sathyamangalam forests.

While farmers are not aware of the ban, theclandestine sale of the same by drug stores

continues. Now, the gram sabha meeting will sensitise the farmers, livestock owners to theissue and save the vulture from going extinct. This is aimed at bringing an end to the demand for

diclofenac for veterinary use so that the supply stops, Mr. Bharathidasan notes.

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2.2 UNMONITORED CFLDISPOSAL UPS ENVIRONMENTAL HAZARDSA large number of consumers have switched to using Compact Fluorescent Lamps (CFLs) to

save electricity but in the absence of any monitoring system and with most of the disposal chain

being in the informal sector, there is an increased risk of the hazardous mercury from CFLs

escaping into the environment, a study on CFL use and disposal has claimed.

Gyaan:

Mercury exists in various forms:

elemental (or metallic) and

inorganic (to which people may be exposed through their occupation);

Organic (e.g., methylmercury, to which people may be exposed through their diet).

These forms of mercury differ in their degree of toxicity and in their effects on the nervous, digestive

and immune systems, and on lungs, kidneys, skin and eyes.

Mercury occurs naturally in the earth's crust. It is released into the environment from volcanic

activity, weathering of rocks and as a result of human activity. Human activity is the main cause of

mercury releases, particularly coal-fired power stations, residential coal burning for heating and

cooking, industrial processes, waste incinerators and as a result of mining for mercury, gold and

other metals.

Once in the environment, mercury can be transformed by bacteria into

methylmercury. Methylmercury thenbioaccumulates(bioaccumulation occurs when an

organism contains higher concentrations of the substance than do the surroundings) in fish and

shellfish. Methylmercury alsobiomagnifies. For example, large predatory fish are more likely to

have high levels of mercury as a result of eating many smaller fish that have acquired mercury

through ingestion of plankton.

People may be exposed to mercury in any of its forms under different circumstances. However,

exposure mainly occurs through consumption of fish and shellfish contaminated with

methylmercury and through worker inhalation of elemental mercury vapours during industrial

processes. Cooking does not eliminate mercury.

Factors that determine whether health effects occur and their severity include:

the type of mercury concerned;

the dose;

the age or developmental stage of the person exposed (the foetus is most susceptible);

the duration of exposure;

the route of exposure (inhalation, ingestion or dermal contact).

Generally, two groups are more sensitive to the effects of mercury. Fetusesare most susceptible to

developmental effects due to mercury. Methylmercury exposure in the womb can result from a

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mother's consumption of fish and shellfish. It can adversely affect a baby's growing brain and

nervous system. The primary health effect of methylmercury is impaired neurological development.

Therefore, cognitive thinking, memory, attention, language, and fine motor and visual spatial skills

may be affected in children who were exposed to methylmercury as foetuses.

The second group is people who are regularly exposed (chronic exposure) to high levels of mercury

(such as populations that rely on subsistence fishing or people who are occupationally exposed).

A significant example of mercury exposure affecting public health occurred in Minamata, Japan,

between 1932 and 1968, where a factory producing acetic acid discharged waste liquid into

Minamata Bay. The discharge included high concentrations of methylmercury. The bay was rich in

fish and shellfish, providing the main livelihood for local residents and fishermen from other areas.

For many years, no one realised that the fish were contaminated with mercury, and that it was

causing a strange disease in the local community and in other districts. At least 50 000 people were

affected to some extent and more than 2000 cases of Minamata disease were certified. Minamata

disease peaked in the 1950s, with severe cases suffering brain damage, paralysis, incoherent speech

and delirium.

Health effects of mercury exposure

Elemental and methylmercury are toxic to the central and peripheral nervous systems.

The inhalation of mercury vapour can produce harmful effects on the nervous, digestive and immune

systems, lungs and kidneys, and may be fatal. The inorganic salts of mercury are corrosive to

the skin, eyes and gastrointestinal tract, and may induce kidney toxicity if ingested.

Neurological and behavioural disorders may be observed after inhalation, ingestion or dermal

exposure of different mercury compounds. Symptoms include tremors, insomnia, memory loss,

neuromuscular effects, headaches and cognitive and motor dysfunction. Mild, subclinical signs of

central nervous system toxicity can be seen in workers exposed to an elemental mercury level in theair of 20 g/m3 or more for several years. Kidney effects have been reported, ranging from increased

protein in the urine to kidney failure.

2.3 NOW,A SYSTEM TO EXTRACT WATER FROM MANUREA technology for extracting drinkable water from manure is on its way to commercialapplication this year, a U.S. university said on Thursday.

The technology is particularly useful for animal operations in dry regions where water is at apremium, according to Michigan State University.

The McLanahan Nutrient Separation System is an add-on to an anaerobic digester, which

extracts energy and chemicals from manure. The system adds ultrafiltration, air stripping and areverse osmosis system to produce water thats clean enough for cattle to drink.

Gyaan :

Anaerobic Digestion

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Anaerobic digestion is a biological process that produces a gas principally composed of

methane(CH4) and carbon dioxide (CO2) otherwise known as biogas. These gases are

produced from organic wastes such as livestock manure, food processing waste, etc.

Anaerobic processes could either occur naturally or in a controlled environment such as a biogas

plant. Organic waste such as livestock manure and various types of bacteria are put in an airtight

container called digester so the process could occur.

The process of anaerobic digestion consists of three steps:

1. The first step is the decomposition (hydrolysis) of plant or animal matter. This step

breaks down the organic material to usable-sized molecules such as sugar.

2. The second step is the conversion of decomposed matter to organic acids.

3. Finally, the acids are converted to methane gas.

Process temperature affects the rate of digestion and should be maintained in the mesophillic range

(95 to 105 degrees Fahrenheit) with an optimum of 100 degrees F. It is possible to operate in the

thermophillic range (135 to 145 degrees F), but the digestion process is subject to upset if not closely

monitored.

Ultrafiltration

Ultrafiltration (UF) is a variety of membrane filtration in which forces like pressure or

concentrationgradients leads to a separation through a semipermeable membrane. Suspended

solids and solutes of high molecular weight are retained in the so-called retentate, while water and

low molecular weight solutes pass through the membrane in the permeate. This separation process is

used in industry and research for purifying and concentrating macromolecular (103 - 106 Da)

solutions, especially protein solutions. Ultrafiltration is not fundamentally different from

microfiltration, nanofiltration or membrane gas separation, except in terms of the size of themolecules it retains - it is defined by the Molecular Weight Cut Off (MWCO) of the

membrane used.

Air Stripping

Air stripping is the transferring of volatile components of a liquid into an air stream. It is

a chemical engineering technology used for the purification of groundwaters and

wastewaters containing volatile compounds.

Volatile compounds have relatively high vapor pressure and low aqueous solubility characterized by

the compounds dimensionless Henry's law coefficient, which is the ratio of the concentration in air

that is in equilibrium with its concentration in water. Pollutants with relatively high Henrys Lawcoefficients can be economically stripped from water. These include BTEX compounds (benzene,

toluene, ethylbenzene, and xylene found in gasoline, and solvents including trichloroethylene and

tetrachloroethylene. Ammonia can also be stripped from wastewaters (often requiring pH

adjustment prior to stripping). Since Henrys law coefficient increases with temperature, stripping is

easier at warmer temperatures.

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2.4 SPACEXUNVEILS CAPSULE TO FERRY ASTRONAUTSA sleek, white gumdrop-shaped space capsule that aims to carry up to seven astronauts to the

International Space Station and return to land anywhere on Earth was unveiled Thursday bySpaceX.

The Dragon V2, short for version two, is the first attempt by a private company to restore

Americans ability to send people to the orbiting space station in the wake of the space shuttleprogram's retirement in 2011.

2.5 NOW,EAGLES FALL PREY TO DICLOFENACAfter pushing vultures to the verge of extinction in the country, the veterinary painkiller andanti-inflammatory drug, Diclofenac, is turning out to be a serious threat to eagles as well.

A research paper published inBird Conservation International, a Cambridge University

journal, says other raptor species such as hawks, kites and harriers that feed on carcasses ofanimals, will possibly fall prey to the drug too.

Gyaan:

Bird of Prey

Birds of prey, also known as raptors, hunt and feed on other animals.

Taken literally, the term "bird of prey" has a wide meaning that includes many birds that hunt and

feed on animals and also birds that eat very small insects. In ornithology, the definition for "bird of

prey" has a narrower meaning:

birds that have very good eyesight for finding food,

strong feet for holding food, and

a strong curved beak for tearing flesh.

Birds of prey are divided into two main groups, the diurnal (day flying) birds of prey and

the nocturnal (night flying) birds of prey, better known as the owls.

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2.6

MELTING GLACIERS,MORE RAIN TO SWELL HIMALAYAN RIVERS

2.7

SOLAR PLANE COMPLETES FIRST TEST FLIGHTThe sun-powered airplaneSolar Impulse 2successfully completed its first flight in

Switzerland, one year before its first solar-powered circumnavigation of the earth.

The project does not aim to replace normal passenger planes with solar-powered ones, but to

prove that mankind could use much less energy with existing technologies.

2.8

SUPERNOVA RECREATED IN LABScientists have used laser beams 60,000 billion times more powerful than a laser pointer to

recreate scaled supernova explosions in the laboratory to investigate one of the most energetic

events in the universe.

Supernova explosions are triggeredwhen the fuel within a star reignites or its core

collapses. They launch shock waves that sweep through a few light years of space.

The Cassiopeia Asupernova explosion was first spotted about 300 years ago in the Cassiopeia

constellation 11,000 light years away, its light having taken that long to reach us.

2.9

ARTIFICIAL LAKES CAUSE ALARM IN HIMACHALS DOWNSTREAMAREAS

The Lahaul-Spiti local administration on Tuesday sounded a high-alert to residents of the areas

downstream from the two big artificial lakes in the mountains of the tribal districts Billing

Nallah. Frequent landslides due to untimely snowfall have resulted in a blockade in the rivulet at

Billing, about 400 km from the capital town.

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