Today's Hot Stories - December 24, 2012 - PT education

Today's Hot Stories - December 24, 2012

10 Headlines for Today

(1) Manmohan-Putin meeting venue shifted
(2) Sri Lankan navy arrests 27 Indian fishermen
(3) Obama nominates Kerry Secretary of State
(4) Aviation services are necessity, not luxury, says Khurshid
(5) SEBI bars Indiabulls Securities official
(6) Asia stocks waver ahead of ‘fiscal cliff’ deadline
(7) Zvonareva withdraws from Australian Open
(8) Sachin quits one-dayers
(9) National shooting championship: Anjali disappointed with poor scoring
(10) ToucHb shines light on anaemia

5 Stories for Today

(1) Manmohan makes fresh appeal for peace
(2) Egypt's draft charter gets 'yes' majority in vote
(3) India, ASEAN finalise FTA in services, investments
(4) Sistema’s ties with India will continue
(5) India’s triumph in rice

(1) Manmohan makes fresh appeal for peace

Issuing a fresh appeal for peace, Prime Minister Manmohan Singh on Monday said government will look into delay in response in the gang-rape case as also all aspects concerning the security of women while asking people to desist from violence.

In a televised address, Dr. Singh said he and his family join in the concern for the 23-year-old victim, who was gangraped and brutally assaulted in a moving bus in south Delhi on December 16 night.

“As a father of three daughters myself, I feel as strongly about this as each one of you. My wife, my family and I are all joined in our concern for the young woman who was the victim of this heinous crime.”

He said the government was constantly monitoring her medical condition.

His statement came as protests, which turned violent on Sunday, continued for the seventh day today.

Emphasising that anger at this crime is “justified”, Dr. Singh said, “but violence will serve no purpose.”

Dr. Singh noted that Home Minister Sushil Kumar Shinde has already spoken about the steps being taken to address issues regarding safety of women in the country.

“We will examine into delay not only the responses to this terrible crime but also all aspects concerning the safety and security of women,” he said.

Dr. Singh broke his silence on the issue on Sunday night when he issued a similar statement saying public anger is “genuine” and “justified“.

Dr. Singh had also expressed sadness over the turn of events that led to clashes between the angry protesters and the police and appealed for peace and calm.

(2) Egypt's draft charter gets 'yes' majority in vote

Egypt’s Islamist-backed constitution received a “yes” majority in a final round of voting on a referendum that saw a low voter turnout, but the deep divisions it has opened up threaten to fuel continued turmoil.

Passage is a victory for Islamist President Mohammed Morsi, but a costly one. The bruising battle over the past month stripped away hope that the long-awaited constitution would bring a national consensus on the path Egypt will take after shedding its autocratic ruler Hosni Mubarak nearly two years ago.

Instead, Mr. Morsi disillusioned many non-Islamists who had once backed him and has become more reliant on his core support in the Muslim Brotherhood and other Islamists. Hard-liners in his camp are determined to implement provisions for stricter rule by Islamic law in the charter, which is likely to further fuel divisions.

Saturday’s voting in 17 of Egypt’s 27 provinces was the second and final round of the referendum. Preliminary results released early Sunday by Mr. Morsi’s Muslim Brotherhood showed that 71.4 percent of those who voted Saturday said “yes” after 95.5 percent of the ballots were counted. Only about eight million of the 25 million Egyptians eligible to vote a turnout of about 30 percent cast their ballots. The Brotherhood has accurately predicted election results in the past by tallying results provided by its representatives at polling centres.

In the first round of voting, about 56 percent said “yes” to the charter. The turnout then was about 32 percent.

The results of the two rounds mean the referendum was approved by about 63 percent.

Mr. Morsi’s liberal and secular opposition now faces the task of trying to organise the significant portion of the population angered by what it sees as attempts by Mr. Morsi and the Brotherhood to gain a lock on political power. The main opposition group, the National Salvation Front, said it would now start rallying for elections for the lawmaking, lower house of parliament, expected early next year.

“We feel more empowered because of the referendum. We proved that at least we are half of society (that) doesn’t approve of all this. We will build on it,” the Front’s spokesman, Khaled Daoud, said. Still, he said, there was “no appetite” at the moment for further street protests.

The new constitution would come into effect once official results are announced, expected in several days. When they are, Mr. Morsi is expected to call for the election of parliament’s lawmaking, lower chamber no more than two months later.

In a sign of disarray in Morsi’s administration, his vice president and possibly the central bank governor resigned during Saturday’s voting. Vice President Mahmoud Mekki’s resignation had been expected since his post is eliminated under the new constitution. But its hasty submission even before the charter has been sealed and his own resignation statement suggested it was linked to Mr. Morsi’s policies.

“I have realized a while ago that the nature of politics don’t suit my professional background as a judge,” his resignation letter, read on state TV, said. Mr. Mekki said he had first submitted his resignation last month but events forced him to stay on.

The status of Central Bank Governor Farouq el—Oqdah was murkier. State TV first reported his resignation, then soon after reported the Cabinet denied he has stepped down in a possible sign of confusion. El—Oqdah, in his post since 2003, has reportedly been seeking to step down but the administration was trying to convince him to stay on.

The confusion over el-Oqdah’s status comes at a time when the government is eager to show some stability in the economy as the Egyptian pound has been sliding and a much—needed $4.8 billion loan from the IMF has been postponed.

Over the past month, seven of Mr. Morsi’s 17 top advisers and the one Christian among his top four aides resigned. Like Mekki, they said they had never been consulted in advance on any of the president’s moves, including his Nov. 22 decrees, since rescinded, that granted himself near absolute powers.

Those decrees sparked large street protests by hundreds of thousands around the country, bringing counter—rallies by Islamists. The turmoil was further fueled with a Constituent Assembly almost entirely made up of Islamists finalized the constitution draft in the dead of night amid a boycott by liberals and Christians. Rallies turned violent. Brotherhood offices were attacked, and Islamists attacked an opposition sit—in outside the presidential palace in Cairo leading to clashes that left 10 dead.

The turmoil opened up a vein of bitterness that the polarizing constitution will do little to close. Mr. Morsi opponents accused him of seeking to create a new Mubarak—style autocracy. The Brotherhood accused his rivals of being former Mubarak officials trying to topple an elected president and return to power. Islamists branded opponents “infidels” and vowed they will never accept anything but “God’s law” in Egypt.

Both rounds of voting saw claims by the opposition and rights groups of voting violations. On Saturday, they said violations ranged from polling stations opening late to Islamists seeking to influence voters to say “yes.” The official MENA news agency said at least two judges have been removed for coercing voters to cast “yes” ballots.

The opposition’s talk of now taking the contest to the parliamentary elections represented a shift in the conflict an implicit gamble that the opposition can try to compete under rules that the Islamists have set. The Brotherhood’s electoral machine has been one of its strongest tools since Mubarak’s fall, while liberal and secular parties have been divided and failed to create a grassroots network.

In the first post—Mubarak parliamentary elections last winter, the Brotherhood and ultraconservative Salafis won more than 70 percent of seats in the lower chamber, which was later dissolved by a court order. The opposition is now betting it can do better with the anger over Mr. Morsi’s performance so far.

The schism in a country that has for decades seen its institutions function behind a facade of stability was on display in Saturday’s lines of voters.

In the village of Ikhsas in the Giza countryside south of Cairo, an elderly man who voted “no” screamed in the polling station that the charter is “a Brotherhood constitution.”

“We want a constitution in the interest of Egypt. We want a constitution that serves everyone, not just the Brotherhood. They can’t keep fooling the people,” Ali Hassan, a 68—year—old wearing traditional robes, said.

But others were drawn by the hope that a constitution would finally bring some stability after nearly two years of tumultuous transitional politics. There appeared to be a broad economic split, with many of the middle and upper classes rejecting the charter and the poor voting “yes” though the division was not always clear—cut.

In Ikhsas, Hassan Kamel, a 49—year—old day worker, said “We the poor will pay the price” of a no vote.

In the industrial working class district of Shubra El—Kheima just north of Cairo, women argued while waiting in line over the draft charter.

Samira Saad, a 55 year old housewife, said she wanted her five boys to find jobs.

“We want to get on with things and we want things to be better,” she said.

Nahed Nessim, a Christian, questioned the integrity of the process. “There is a lot of corruption. My vote won’t count.” She was taken to task by Muslim women wearing the niqab, which blankets the entire body and leaves only the eyes visible and is worn by ultraconservative women.

“We have a president who fears God and memorizes His words. Why are we not giving him a chance until he stands on his feet?” said one of the women, Faiza Mehana, 48.

The promise of stability even drew one Christian woman in Fayoum, southwest of Cairo, to vote “yes” a break with most Christians nationwide who oppose the draft. Hanaa Zaki said she wanted an end to Egypt’s deepening economic woes.

“I have a son who didn’t get paid for the past six months. We have been in this crisis for so long and we are fed up,” said Zaki, waiting in line along with bearded Muslim men and Muslim women wearing headscarves in Fayoum, a province that is home to both a large Christian community and a strong Islamist movement.

The scene In Giza’s upscale Mohandiseen neighborhood was starkly different.

A group of 12 women speaking to each other in a mix of French, Arabic and English said they were all voting “no.”

“It’s not about Christian versus Muslim, it is Muslim Brotherhood versus everyone else,” said one of them, Shahira Sadeq, a Christian physician.

Kamla el—Tantawi, 65, said she was voting “against what I’m seeing” and she gestured at a woman nearby wearing the niqab.

“I lose sleep thinking about my grandchildren and their future. They never saw the beautiful Egypt we did,” she said, harkening back to a time decades ago when few women even wore headscarves covering their hair, much less the black niqab.

Many voters were under no illusions the turmoil would end.

“I don’t trust the Brotherhood anymore and I don’t trust the opposition either. We are forgotten, the most miserable and the first to suffer,” said Azouz Ayesh, sitting with his neighbors as their cattle grazed in a nearby field in the Fayoum countryside. (3) Gulf Oil completes Houghton acquisition

(3) India, ASEAN finalise FTA in services, investments

A valuable milestone in our relationship, says Manmohan Singh

India and the Association of Southeast Asian Nations (ASEAN) on Thursday finalised the much-awaited free trade agreement (FTA) in services and investments. This move is likely to boost trade to $100 billion by 2015.

“It gives me great pleasure to see that our commemorative summit on Thursday coincides with the conclusion of negotiations for the FTA in services and investments. This represents a valuable milestone in our relationship. I am confident it will boost our economic ties in much the same way the FTA in goods has done,’’ Prime Minister Manmohan Singh said here while addressing the summit on the inaugural day.

After operationalising FTA in goods last year, both sides were engaged in widening the base of the pact by including services and investments.

At present, trade between India and ASEAN stands at $80 billion. Dr. Singh said that following the implementation of FTA in goods, trade grew by 41 per cent in 2011-12. “Two-way flows in investments have also grown rapidly to reach $43 billion over the past decade. As ASEAN investments into India have multiplied, ASEAN countries too have emerged as major destinations for Indian companies. From energy resources to farm products, from materials to machinery, and from electronics to information technology, Indian and ASEAN companies are forging new partnerships of trade and investment,’’ he remarked.

Commerce and Industry Minister Anand Sharma said it was a matter of great satisfaction that India and ASEAN had been able to conclude the services and investments agreement.

Regional fillip

“We have been able to reach an agreement well ahead of the commemorative summit as had been directed by our leaders during the ASEAN summit in Cambodia recently. This will pave the way for larger economic integration in the region and give a fillip to regional economic partnership in the South Asia Region,” he added.

Besides FTA with ASEAN, India is negotiating similar market opening pacts with members of the grouping. India has already implemented FTA with Singapore and Malaysia and is negotiating with Indonesia and Thailand in this regard. The FTA would also pave the way for discussions on a regional comprehensive economic partnership (RCEP) that ASEAN plans to seal with its six key trade partners, which include India.

India had been demanding that ASEAN open up its service sector further, including steps to cover independent professional services and contractual service suppliers at all levels. It is learnt that after a tough round of negotiations on Wednesday, India agreed to drop its request for independent professional services and as a trade-off, ASEAN dropped its request for prudential measures in financial services. The final legal documents on services and investment pact is likely to be given a further shape by February, 2013, and the signing could take place in August next year during a consultation between ASEAN economic ministers and Mr. Sharma in Brunei Darussalam.

ASEAN and six partners — Australia, China, India, Japan, South Korea and New Zealand — will start first-round talks on the RCEP next year, which are expected to form the world’s economic bloc in 2015.

(4) Sistema’s ties with India will continue

Cancellation of licence by court is a setback to our business in India, says Yevtushenkov

In spite of the setback in the telecom sector, Russian business conglomerate Sistema’s Chairman Vladimir Yevtushenkov told that the company’s relationship with India will continue.

As Indian diplomats prepare to tell Russian President Vladimir Putin on Monday that it won’t be possible to resolve Sistema’s telecom problems quickly, they are also working on two agreements with a Sistema sister company in the area of satellite navigation.

Sistema has already signed an MoU with ONGC Videsh. Though Sistema has offered an opportunity in Bashkortostan in partnership with another subsidiary Bashneft, ONGC is keener on Sakhalin-III and Trebs and Titov oilfields in the Timan Pechora region.

As Mr. Yevtushenkov put it, “We have refused offers from some companies in the Arabian peninsula and China which wanted to buy some of the stake. We want to start negotiating but they aren’t prepared to sign any agreement.”

Simultaneously, the Sistema chief felt the Supreme Court order cancelling all telecom licences (which negated his company’s investments as well) has proved to be a setback to the company’s business in India.

“The cancellation of Sistema Shyam TeleServices Ltd’s licences will definitely have a bearing on how Russian companies look at India as an investment destination,” he cautioned, adding that he continues to view India as a strategic market, and is hopeful that all pending issues will be resolved soon.

“We don’t exclude partnering with Indian companies in various sectors, including hydrocarbons, but it should be strongly linked to the investment climate,” he noted.

Giving his side of the story, Mr. Yevtushenkov pointed out that Sistema came to India on the invitation of the Indian government and complied with all legal and regulatory requirements before entering the market. “Sistema has always maintained that the company has done no wrong. It believes that the Supreme Court, in its order dated February 2, 2012, didn’t consider several relevant submissions made by Sistema Shyam TeleServices, which were specific and unique to its case.

“We believe that we are being unfairly penalised for acting in good faith and in reliance on the appropriateness of the procedures established by India’s telecommunications authorities,” he said.

To protect the interests of its shareholders, including the Russian government, which holds 17.14 per cent stake in the company, Sistema Shyam TeleServices has already filed a curative petition before the Supreme Court. “We are hopeful that the highest court of the land in India will look into the merits of the case and give Sistema Shyam TeleServices justice,” said the Sistema chief.

The company has already invoked its right under the Bilateral Investment Treaty (BIT) between India and Russia — the right to go for international arbitration and seek damages from the Indian government.

“As the January 18 deadline is fast approaching, we are hopeful that the Indian government will move quickly to resolve all pending issues on or before December 24,” he said.

(5) India’s triumph in rice

India has emerged the world’s largest rice exporter, displacing Thailand from its leadership position, with rice exports in marketing year 2011/12 (October-September) placed at a record 10.4 million tonnes. This rise to the top follows the Indian government’s decision in February 2011 to lift a four-year ban on exports of non-basmati varieties of rice paving the way for a rise in exports. That rise, however, was favoured by a decision in the same year of the Thai government, under Prime Minister Yingluck Shinawatra, to improve the lot of its farmers by introducing a Rice Pledging Scheme under which it procured stocks at an enhanced price of 15,000 baht (US$420) per ton - a 60 percent increase over 2010. This obviously raised the domestic price of Thai rice. If India had not entered the market, the Thai government’s decision to buy rice at prices exceeding the world price would have temporarily reduced its sales to the world market. By increasing stocks with the Thai government and reducing global tradable supplies quite significantly, this would have pushed up global rice prices and allowed Thailand to return to the export market. But India’s entry and increased exports from Vietnam at the prevailing price prevented that rise, resulting in a fall in Thai exports and the loss of its position as the world’s leading rice exporter. Thailand’s “loss” was India’s gain, as Indian non-basmati rice turned internationally competitive.

India’s exports proved price competitive despite the fact that the government had raised the minimum support price quite significantly. Higher support prices had in fact resulted in an increase in stocks with the government. But this did not affect open market availability adversely, because of a record production104.32 million tonnes of rice in 2011 due to a good monsoon. Procurement during the 2011-12 marketing year touched a record 35 million tonnes. Moreover, despite an indifferent Southeast monsoon during 2012, procurement in the marketing season starting October 2012 has also been high, with procurement as on December 12, 2012 placed at 13.4 million tonnes, raising expectations that the government’s target of 40 million tonnes of rice procurement during 2012-13 would be realised. The net result is that stocks of rice with the central pool are substantial. As on December 1, 2012 stocks exceeded 30 million tonnes—far higher than the buffer stock and strategic requirement of 13.8 million tonnes on January 1 of the marketing year. Adequate supply meant that all export surpluses during marketing year 2011-12 were mobilised from the open market, rather than from surplus stocks released by government agencies. Yet, the export surge has not thus far resulted in any surge in domestic rice prices, given the favourable demand supply balance.

The fact that export surpluses are being mobilised from the open market by the private trade implies that export prices being received by India are higher than domestic procurement and open market prices. Exporters can access supplies in the open market only by offering prices higher than the procurement price. And they would not offer these prices and choose to export if the export price was not higher than the domestic open market price.

These features of the rice economy have given rise the argument that the Indian government’s decision to lift the four-year ban on non-basmati rice exports was a wise move that is delivering foreign exchange, raising farm incomes as well as limiting the excess accumulation of stocks with the government. However, there are reasons why this argument is both inappropriate and premature. Inappropriate because it does not take into account the fact that India’s rise to global dominance in the rice trade is explained by the decision of its leading competitor to offer better terms to its farmers who in the past have had to directly and indirectly bear the cost of Thailand’s export competitiveness in two senses. First, low prices of agricultural commodities, especially of rice, helped Thailand become a successful exporter of agricultural commodities like rice. Second, low food prices and domestic terms of trade that were kept favourable for manufactures vis-a-vis agricultural commodities were an important factor explaining Thailand’s low non-agricultural real wage, which was an important contributor to its manufacturing export success. Low agricultural prices and incomes resulted in the huge migration of the rural population to the Greater Bangkok area.

Prime Minister Yingluck Shinawatra claims that she is only correcting this historical injustice by offering farmers a better deal. In doing so she is carrying forward her brother Thaksin’s legacy of providing some state support for a long-neglected rural sector. In a sharply divided society, this effort to offer some benefits of growth to the rural poor has been under attack by a section of the urban elite that has resisted even a marginal redistribution of income in favour of the rural poor. It is in this light that the arguments that Indian farmers have been protected by the government through its support price policy and that exports occur despite this remunerative price being offered have to be judged. The export price clearly is not good enough. A price that is good for the Thai farmer should be good for the Indian farmer. If the Thai government’s offer of a remunerative price for its farmers is what makes India competitive, then it is because the farmer is being deprived of that price that India has been successful. Moreover, a rising support price in itself is no guarantee that the farmer in India is doing well. What matters is the net revenue the farmer obtains. And there are many who argue that rising costs have reduced the viability of crop production.

In fact, domestic market prices in India remain subdued for two reasons. First, limited purchasing power with much of the population keeps demand low despite the high level of hunger and malnutrition in India. Second, large stocks with the government provide the assurance that if prices rise stocks with the government would be released to hold the price level.

But these stocks exist because the government has yet to deliver on its promise of implementing an adequate food security programme that guarantees a minimum amount of access to grains at affordable prices for the needy. In fact, when provisions offered in even the diluted Food Security Act that was drafted by the National Advisory Council were further pruned by the government the justification given was that there was just not enough grain in the country to support the former programme. So, if Yingluck Shinawatra is sacrificing exports in order to improve the lot of Thai farmers, India’s rice export success partly occurs at the expense of its poor and needy who are still to be delivered the promised food security.

But the celebration of even this success is premature. It is likely that as stocks accumulate within Thailand because the country is not competitive in global markets anymore, the Thai government appears to be considering bearing a part of the costs of the Pledging Scheme and selling grain at the best price it can get in global markets. That would raise Thai exports and reduce global prices. In fact, the US Department of Agriculture projects that Thai exports would rise from 6.5 million tonnes in 2012 to 8000 tonnes in 2013. The corollary is that India’s exports would fall from 10 million to 6.5 million. The arguments celebrating India’s rice export success may then prove to be premature, besides being inappropriate.