Iran to accept oil payments in ₹

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  • Up till now India was making 45% of the payment in Euros (routed through the Turkish Halkbank) and the remaining 55% in INR (through Uco bank)
  • Now we will pay for all our crude purchases from Iran in INR
  • India imports 70% of its crude. Presently Iran accounts about 8% (down from 16%) from this figure
  • Quality of the iranian crude is “sweet crude” and India has set up facilities to refine it
  •  India and 7 other economies are party to a 6 month waiver from the US-led international sanctions on Iranin exchange for their agreeing to reduce purchases of oil from Iran.
  • The waivers, which the State Department calls exceptions mean that financial institutions in the consumer countries do not risk being cut off from the U.S. financial system for the next six months.
  •  The intended purpose of the sanctions is to choke funding to Iran’s nuclear program.
  • Iran has denied the allegations, stressing that as a committed member of the International Atomic Energy Agency and a signatory to the Non-Proliferation Treaty it is entitled to develop nuclear technology for peaceful purposes.
  • Implications for Indian Forex
    • we can save a lot of our valuable forex by paying in Rupee
    • since INR is not a global currency, Iran will have to spend it to buy goods from India, which is good for our exports

Bhutan, PDP and India-Bhutan Relations


  • Full name: Kingdom of Bhutan
  • Population: 750,000 (UN, 2012)
  • Capital and largest city: Thimphu
  • Major language: Dzongkha (official)
  • Major religions: Buddhism (official), Hinduism
  • Monetary unit: 1 ngultrum = 100 chetrum
  • The Druk Gyalpo (Dragon King) is the Head of State
  • Jigme Khesar Namgyal Wangchuk is the 5th Druk Gyalpo
  •  Our PM today congratulated the People’s Democratic Party for winning their second ever parliamentary elections
  • He reaffirmed our support for the “steady steps that Bhutan is taking to further strengthen democratic processes and institutions”
  • Dr. Singh said he has already given instruction to officials for preparing the roadmap for plan assistance to Bhutan and that he look forward to working with Mr. Togbay to further enhance the cooperation between the two countries.
  • The country has been a democracy since 2008, when the king voluntarily relinquished his absolute power.
  • The PDP beat the ruling Druk Phuensum Tshogpa (DPT) party, which has strong links to the king.
  • The PDP had criticised the government for a recent deterioration of ties with India, a key ally.
  • India’s recent massive reduction of oil and gas subsidies for Bhutan has sparked speculation that this may be because of the Himalayan country’s improving relations with China.
  • PDP President Tshering Tobgay is expected to be the new Prime Minister succeeding DPT’s Jigmi Y Thinley, whose meeting with then Chinese Premier Wen Jiabao on the sidelines of an Environment Summit in Brazil last year had raised eyebrows in India.
  • PDP had also built a campaign around exposing what he described as “the DPT’s hollow claims on Gross National Happiness” aimed more at an international audience which, he alleged, did not deliver tangible benefits to people.

India-Bhutan Relations 

  • India–Bhutan relations continue to follow a positive trajectory and over the past few years bilateral relations have evolved into a comprehensive partnership encompassing a wide range of issue areas.
  • Hydro-power tops the list in development cooperation
  • Information and intelligence sharing along with hot pursuit of North East militant groups trying to establish bases in Southern Bhutan

Operation All Clear

During the early 90s, the Indian Separatist groups United Liberation Front of Asom (ULFA), National Democratic Front of Bodoland (NDFB) and Kamtapur Liberation Organization (KLO) had begun to clandestinely set up camps in Bhutan’s dense southern jungles. These camps were used to train cadres, store equipment, and launch attacks on targets in India. The Bhutanese government became aware of their presence in 1996 and from 1997, the issue was regularly discussed in the National Assembly. The Government of India began exerting diplomatic pressure on the Royal Government to remove the militant presence and offered conducting joint military operations against the militants. The Royal Government preferring a peaceful solution, declined the offer and instead initiated dialogue with the militant groups in 1998. By December 2003, negotiations failed to produce any agreement and the Royal Government unable to tolerate their presence any longer issued a 48-hour ultimatum on 13 December. On 15 December the RBA commenced military operations against the militant groups.

A combined RBA and RBG force of 6,000, it’s total strength, attacked an estimated 3,000 militants spread across 30 militant camps. By 27 December 2003, all 30 militant camps had been captured.


Some changes to this blog

I had abandoned this blog a while ago. I had lost my enthusiasm for pursuing current happenings as the date for prelims loomed closed and I only had a couple of months to prepare the traditional syllabus. It was going to be my first attempt so I got a little nervous. Well, here I am now, with the prelims a thing of the past and the mains only four and a half months away. The syllabus has been changed considerably, though it can be assumed that the papers will be heavy on current affairs and associated issues.

So I have decided to bring this blog back from abandon. My plan is to update on a roughly daily basis, with the following topics and recategorization:

  • Post independence consolidation and reorganization
  • Salient Features of Indian Society; Diversity of India
  • Role of women and women’s organization…
  • Social Empowerment, Communalism, Regionalism…
  • Topics from history of the world
  • Aspects of the freedom struggle
  • Land Reforms
  • Investment Models
  • Energy security
  • Securty issues- conventional and non-conventional

and other things I would consider blogging about.


Parliamentary panel rejected Bill on health education standards

  • Setback to the Union Health & Family Welfare Ministry a Parliamentary committee rejected a Bill which sought to provide a mechanism to regulate standards of medical education in the country citing “serious apprehensions” raised by various stakeholders, including State governments.
  • In its report, the Parliamentary Standing Committee on Health that considered the National Commission for Human Resources for Health (NCHRH) Bill, 2011, has recommended that the Ministry may withdraw this Bill and bring forward a fresh Bill after sufficiently addressing all the views, suggestions and the concerns expressed.
  • Committee has recommended keeping medical education and health research under the purview of the NCHRH Bill
  • In view of the apprehensions expressed by the various stakeholders – particularly the stand of the State governments that the legislation does not give representation to States – the Committee in its meeting on August 17, felt that the Bill in the present form cannot be recommended. “The Committee, therefore, decided not to go in for clause-by-clause consideration of the Bill and to recommend to the government to consider all shades of opinion and all the suggestions and bring forward a revised, comprehensive Bill before the Parliament,” the Committee said.
  • Agreeing with the viewpoint of the States that the composition of the Commission gives no representation to them, the Committee said several stakeholders have raised “serious apprehensions” on various provisions of the Bill and effectiveness of various bodies that are proposed to be established under the Bill.
  • Health is a state subject
  • The Bill was introduced in the Rajya Sabha on last year and referred to the Standing Committee on Health and Family Welfare shortly afterwards.
  • The NCHRH Bill, 2011, and the Higher Education and Research Bill, 2011, had been tabled in Parliament after a long protracted debate over the jurisdiction of medical education.
  • The Human Resource Development piloted NCHER wanted medical education under it while the Health Ministry wanted a separate regulatory body.
  • Ultimately, it was decided that there would be some linkage between the two regulatory bodies but the two Bills would be tabled separately.




Advantages of lowering import barriers and FDI

  • From the self-sufficiency objective of the pre-reform era, we have moved on to the phase of increasing liberalisation.
  • Falling import barriers have produced prosperity because this encourages specialisation in areas where India is competitive, and discourages wasteful investment in uncompetitive areas.
  • The self-sufficiency philosophy ignored the high cost of trying to produce everything-it deliberately shifted India’s energies from high-productivity areas to low-productivity ones.
  • Second, some inputs will always be imported, and high import duties converted India into a high-cost production centre, hitting consumers as well as the competitiveness of Indian producers.
  • High import duties on equipment ensured a permanently high-cost structure that made goods uncompetitive even when labour was dirt cheap.
  • Liberalisation in 1991 drastically reduced tariff and non-tariff barriers to imports. This enabled Indian companies to combine the best of imported inputs with the best of indigenous inputs.
  • Crux of the FDI argument: Foreign retail chains will devise ways for their suppliers to combine cheap imported inputs with domestic ones to produce world-class goods. And competing with them will enable Indian retailers to do something similar.


India’s infrastructure problems

  • Without infrastructure, an economy cannot grow
  • Industry and services cannot expand without highways, electricity, ports and airports, rail links and pipelines.
  • The 12th Plan projects infrastructure investment of a trillion dollars.
  • India is a global leader in public-private partnerships in infrastructure. The private sector financed 36% of infrastructure in the 11th Plan (2007-12), and is expected to finance fully 50% in the 12th Plan.
  • Problems for private players:  Infrastructure requires heavy loans, often twice as much as equity. Such loans have a fixed repayment schedule. If a project is completed on time, revenue from the project will finance the repayments. But if there are delays of months or years, the project is squeezed badly.
  • Other problems for the private players include fuel supply problems, changes in environmental regulations, land acquisition etc.

I will elaborate further on initiatives to address the delicate issues in a later post.

Perspectives of enabling small businesses through better Public Service Delivery

  • Recent push for reforms concentrate on increasing the equity share foreigners can hold in sectors like retail and airlines.
  • Foreign investment is hardly 2% of GDP. This is a small fraction of the total investment rate of around 35% of GDP.
  • Libertarian economists are of the opinion that the major push should focus on investment by Indians which faces administrative and institutional roadblocks.
  • The 2012 Doing Business report of the IFC/World Bank ranks India at just 132nd out of 183 countries in ease of doing business.
  • The Economic Freedom Index 2012 of the Heritage Institute ranks India at 123rd position.
  • Misgovernance is not just about corruption. It is also about the delivery of every government service, including education, health and welfare payments. Above all, it includes the police and judiciary, who are supposed to deliver security and justice.
  • Judicial redress: besides being a moral and human issue it is also a huge economic issue. According to the Doing Business 2012 report, India ranks low in enforcement of contract.
  • The edifice of market economics is built on the assumption that contracts will be honoured. Thus, efficient judicial redress is needed to give an enabling environment for small and medium businesses to thrive.
  • India has come close to getting its credit rating downgraded to junk status because of its stubbornly high fiscal deficit. This deficit, say the rating agencies, is due mainly to high, unwarranted and unsustainable subsidies for oil and fertilisers.
  • Some argue that the  fiscal deficit is mainly a governance deficit. If only the quality of governance improves, then tax evasion will drop and the government will get a tsunami of tax revenue.


Opinion: Fast growth can be inclusive as well

Note: “Faster, sustainable and more inclusive growth” has become an important buzzword in recent times. It is also the theme for the 12th FYP. Some argue that faster growth that we witnessed was driven by certain sectors of the economy, while the poverty gap only increased. While this does hold some merit, there are alternative opinions by some economists, such as the one presented here:

  • Record poverty reduction has occurred simultaneously with record GDP growth. This shows dramatically how fast growth is the best antidote for poverty.
  • Fast growth provides a revenue bonanza for anti-poverty programmes.
  • More important, it creates new economic opportunities that absorb the reserve army of labour.
  • This creates labour shortages, pushing up real wages. This has happened dramatically in recent years.
  • There is a widespread illusion that fast growth just happens and then the government should redistribute the bonanza.
  • No, 8% growth is rare globally because it cannot be achieved just by the fast growth of a few regions or businesses.
  • It can be achieved only when the productivity of a large chunk of the population goes up.
  • Inclusion is not something that comes later. Rather, only when the bulk of states and people are prospering will fast growth happen. That’s the big India story.
  • Let nobody think that fast growth occurred just in advanced states, and was then redistributed by the government to backward states.
  • (2009 to 2012) the National GDP growth averaged 7.7%. The fastest states were Uttarakhand and Bihar (12.5%). Next came Gujarat (10.3%), Madhya Pradesh (9.9%), Goa (9.8%) Maharashtra (9.7%), Haryana (9.6%) and Jharkhand (9.2%).
  • High growth rates in pooe states were drawn on the new opportunities and improved infrastructure created by two decades of economic reform.
  • Fast growth did not trickle down to the backward states. Rather, accelerated growth in backward states trickled up to create fast national growth.
  • Record poverty reduction has occurred simultaneously with record GDP growth. This shows dramatically how fast growth is the best antidote for poverty. .

 (extractedfrom Swaminomics)

Institutional activism in India: SC, EC, CAG

  • Some see it as a revolt by India’s institutions against a corrupt and decadent political class
  • Institutions like EC, SC and CAG have responded to this deficiency by crossing traditional jurisdictional borders– i.e activism.
  • On becoming chief election commissioner in 1990, TN Seshan decided to crack down on election malpractices.
  • He would not allow elections to go forward till fair conditions were established. He decreed that the Election Commission would determine the deployment of security forces to ensure honest polling, not state governments. He staggered elections in a state over several days, to allow concentrated security forces to move from one section of the state after another, combating booth capturing.
  • Seshan wanted voter ID cards to check impersonation. Many chief ministers opposed this as too expensive and time-consuming. Seshan responded by threatening not to hold elections in two states unless ID cards were issued. His ploy was struck down by the Supreme Court as an unwarranted excess. Nevertheless, Seshan ended his term as a public hero. Indian elections have once again become fair, and ID cards have become the norm.
  • The Supreme Court has long revolted against state callousness. In 1979, Justice PN Bhagwati pioneered public interest litigation, empowering any citizen to move the Supreme Court-on the principle of fundamental rights – to ensure justice and fairness on virtually any issue for the common man. The activist court has passed orders to protect the civil rights of tribals, bonded labourers and prisoners; to check environmental damage and to ensure that the state avoids sundry arbitrary favours.
  • The court’s most famous activist interventions have been in the Jain hawala scam and the 2G scam.
  • However, its activism has led to excesses.
  • Former solicitor general Andhyarujina points out that the court has ordered the interlinking of rivers, banned the pasting of black film on automobile windows, and banned tourism in core areas of tiger reserves.
  • “All these managerial exercises by the court are hung on the dubious jurisdictional peg of enforcing fundamental rights under Article 32 of the Constitution. In reality, no fundamental rights of individuals or any legal issues are at all involved in such cases. The court is only moved for better governance and administration, which does not involve the exercise of any proper judicial function.”
  • CAG: From conventional audoits, it has started making calculations of how much revenue the government might have lost by failing to auction natural resources, first in the 2G case (estimated loss Rs 1.76 lakh crore) and now in coal mine allocations (estimated loss Rs 1.08 lakh crore).
  • However,economist Surjit Bhalla has, poked huge holes in the CAG’s estimates. The CAG has failed to do elementary things like discount the value of future profits, allow for variations in future prices, or allow for tax payments.
  • Despite excesses, an activist CAG represents a net gain for democracy. Along with the Supreme Court, the CAG has ensured that most natural resources will be auctioned in future. That is a huge gain in fairness.

Abe Doctrine: Shifts in Japan’s Foreign Policy

  • SE Asia is becoming a theatre of great-power rivalry.
  • As China’s economic weight and political influence grows in southeast Asia, there is anxious search for a stable balance of power in the region.
  • At the end of last year, Obama became the first American president to travel to Myanmar and Cambodia.
  • Last month, India and the Association of Southeast Asian Nations (ASEAN) elevated their ties to a strategic partnership.
  • Japan’s Shinzo Abe is heading to southeast Asia this week on his first trip abroad after he was sworn in as prime minister last month.
  • Various members of cabinet and other high ranking Japanese officials have been making visits to the region


  • Previews of the main speech, to be made in Jakarta, have suggested the premier will announce the “Abe Doctrine” that will spell out new initiatives to deepen Japan’s economic, political and security ties with southeast Asia.
  • Abe’s emphasis is likely to be on developing strategic economic relations with the region amidst China’s emergence as the largest trading partner for most nations in southeast Asia.
  • As deteriorating relations with Beijing threaten the future of Japan’s massive trade and investment ties to China, Japan has another reason to look at southeast Asia as a major alternative destination for Japanese overseas investment.
  • Like Japan, some ASEAN members, especially the Philippines and Vietnam, are locked in escalating maritime disputes with China.
  • Abe would want to translate the shared concerns on China’s assertiveness into concrete political cooperation between Tokyo and the ASEAN as a collective, and bilaterally with key individual members.


  • Security cooperation (with countries other than the US) is no longer a taboo in Japan’s foreign policy.
  • Tokyo announced plans last year to offer 10 coast guard vessels to Manila, which has been desperately seeking foreign support to cope with the Chinese navy’s manoeuvres in the waters adjacent to the Philippines.
  • The incipient maritime security cooperation between Tokyo and Manila has drawn sharp comment from Beijing.
  • In a stinging editorial, the China Daily said: “The Philippines, which suffered Japanese atrocities during World War II, has surprisingly supported the revival of militarism in Japan, which has the tacit backing of the United States.”
  • Until recently, Japan, a major donor of development assistance, was very careful in avoiding military ties with its Asian neighbours.
  • Shedding some of that inhibition in recent years, Tokyo has signed declarations on security cooperation with India and Australia.
  • Japan has provided limited military aid recently to East Timor and Cambodia.
  • It is also reported to be in talks with Vietnam to train its submarine crews.
  • Abe’s southern sojourn this week could reveal how far he is willing to advance Japan’s new military diplomacy.


  • There has been a shift in the traditional foreign policy of the two nations
  • India, which has traditionally been seen as the leader of the non-alignment, and Japan, traditionally  acknowledged to pursue an economic-oriented  

    foreign policy, have engaged in security cooperation measures.

  • This development- the establishment of a Strategic and Global Partnership that is driven by converging long-term political, economic and strategic interests, aspirations and concerns
  • Both countries recognize their common commitment to democracy, open society, human rights and the rule of law;
  • India and Japan share common interest in the safety of sea lines of communications
  • Japan Maritime Self Defence Force’s replenishment activities in the Indian Ocean, constitute an important part in the international community’s effort to eradicate terrorism
  • Both countries acknowledge a common commitment in pursuing disarmament and non-proliferation as partners seeking a peaceful nuclear-weapon free world and working together against proliferation
  • Both countries also have a common commitment to a comprehensive reform of the United Nations, including the expansion of the United Nations Security Council in both the permanent and non-permanent categories
  • In 2008 Prime Ministers Aso and Singh had issued a Joint Declaration on Security Cooperation
  • The landmark document was only the second instance of such bilateral cooperation entered into by Tokyo, aside from its security arrangement with the US.
  • Topics of discussion included safety of sea lines of communication, anti-piracy cooperation as well as drawing up a timeline of joint exercises to be conducted by the two countries’ navies.
  • Japan-India Joint Declaration, unlike its Japan-Australia counterpart, lacks a trilateral reference point to the US force presence in the region. This assumes added significance given the fading away of the ‘Quadrilateral Initiative’ – the putative maritime axis of democratic powers (Australia-India-Japan-US) which presumably sought to situate their exclusive forum as a subsidiary body within the ASEAN Regional Forum (ARF) framework, and selectively expand membership thereafter.