Uproar in Lok Sabha over non-procurement of paddy in UP, Bihar Members in the Lok Sabha on Friday expressed serious

concern over non-procurement of paddy in Uttar Pradesh, Bihar and some other States causing serious problems to farmers, with the government saying it would soon convene a meeting of the States concerned to find a solution. The issue raised by Jagdambika Pal (Cong) generated much heat with SP, RJD and BJP members supporting his contention and SP and RJD members even storming the Well seeking an immediate statement from the government. Finance Minister P Chidambaram intervened to say that the government would convene a meeting of the affected States to find ways to resolve the problems. However, this failed to pacify the members who continued to vociferously raise their demands in the Well. Speaker Meira Kumar then adjourned the House till 2 p.m.. Raising the issue during Zero Hour, Mr Pal said the plight of the paddy-growers in Uttar Pradesh was worsening as the procurement agencies were not purchasing their produce. This was forcing farmers to sell to private traders at rates much below the minimum support price (MSP). Mr Pals contention that the procurement agencies were turning farmers away by raising the issue of dampness and moisture in paddy, came in for strong support from SP chief Mulayam Singh Yadav and his RJD counterpart Lalu Prasad. The Congress member also said there was a virtual stoppage of the entire procurement in Uttar Pradesh. Such a situation has never occurred before. Government should find out whether it is being done by the officers. The Centre is responsible for procurement and it should fulfil that responsibility, the SP chief said, alleging there was a conspiracy to blame the states ruled by non-Congress parties. Middlemen were looting the entire rice crop and the farmers, said Mr Lalu Prasad. The RJD chief told the Speaker that similar problems were being faced by farmers even in Bihar, from where she is elected, and urged her to use your authority to direct the government to take immediate steps to rectify this situation. Shahnawaz Hussain (BJP) also tried to raise the issue but could not be heard in the din. Mr Chidambaram said the members had pointed to various deficiencies in the procurement process that not enough was being purchased, paddy was being rejected as they were not meeting the standards, there was not enough storage. Observing that he would convey these concerns to the minister concerned, he said the Centre would soon convene a meeting of the officials of the affected state governments to find a way to resolve the problems. Mr Chidambaram said farmers were growing more paddy and offering more to the central pool. =================================================== Indian Boxing Federation suspended by AIBA In a massive jolt to boxing in India, the International Boxing Association has suspended the IABF alleging possible manipulation in its recent elections but the body has denied the charge, insisting that the process was transparent. The development which has left the Indian Amateur Boxing Federation (IABF) stunned comes within a few days of the International Olympic Committee suspending the Indian Olympic Association.

Further to the International Olympic Committees suspension imposed on the Indian Olympic Association, the International Boxing Association (AIBA) Executive Committee Bureau has decided today December 6 to provisionally suspend the Indian Amateur Boxing Federation (IABF), the AIBA said in a statemen t. This provisional suspension is also due to the fact that AIBA had learned about possible manipulation of the recent IABFs election. AIBA will now investigate this election and especially a potential political link between IOA President, as former Chairman of the IABF, and the IABF election, it added. During the September elections, outgoing President Abhay Singh Chautala, who was elected IOA President despite IOCs suspension, was retained in the body as nominated Chairman of the body. The development now also puts a question mark over Mr Chautalas election as IOA President since he came into the fray as an IABF representative. Interestingly, his brother-in-law and BJP MLA from Rajasthan, Abhishek Matoria was elected as the new IABF President. Stunned by the suspension, Mr Matoria said that the world body had been apprised of the election process in detail. AIBA had specific queries about the election process and we had explained to them that there was no manipulation. Those who got elected were unanimous choices and just because there was unanimity, the AIBA cannot allege manipulation, Mr Matoria told PTI. This is a provisional suspension and I am sure it would be lifted soon after we explain our stand to AIBA. If need be, I will personally go and speak to AIBA officials in Lausanne, Mr Matoria said. Our boxers are not threatened by any repercussions for the time being because the next major AIBA event is quite far and the matter will be resolved by then, he added. The next AIBA event is the Junior World Championships in August next year, followed by the senior World Championships in October. A senior IABF functionary told PTI that there might be a re-election. Lets wait and see. Maybe there would have to be a re -election in a proper manner with AIBA Observer being present, he said. In the September IABF elections, the body had been left in a fix after the Sports Ministry barred it from making constitutional changes that could have facilitated continuation of the incumbent set of office-bearers. Meanwhile, the AIBAs decision came as a bolt from the blue for the boxers, many of whom are in the national camp in Patiala. It is a sad day for Indian boxing and I cant understand how such a development can take place. I dont understand why the matter was not explained to AIBA, Indias first Olympic medallist in the sport, Vijender Singh, said. The Beijing Olympics bronze-medallist was, however, hopeful that the issue would be resolved soon. The next AIBA event is quite far but hopefully we would not sit on it for too long and get the suspension revoked as soon as possible, he said. =================================================

Funding for science and technology likely to go up The Union government has proposed to increase the funding for science and technology from 0.9 per cent of the countrys Gross Domestic Product (GDP) to 2 per cent of the GDP in the 12 five year plan if the private and public industries contribute half of the fund, said K. Kasturirangan, Member (Science) of Planning Commission of India. Speaking at the inauguration of the fifth edition of Bangalore Nano here on Thursday, Mr. Kasturirangan, who is also the former chairman of the Indian Space Research Organisation, said that the Union government was in talks with public and private industries to contribute funds equivalent to one per cent of the GDP. The government is willing to sanction up to one per cent provided there is a matching contribution from the private and public sectors and this can be in terms of research inputs. Chairman of the Science Advisory Council to the Prime Minister C.N.R. Rao is playing a key role in bringing both the public and private industry into an arrangement with the government for this, he said. He said that special importance was being given for the growth of Nano Technology in the 12 Five Year Plan by granting funds to aid research and education. India contributes 3 per cent of scientific output in global research. Our countrys position in global science research has risen to 16th from ninth. We are aiming to reach the sixth position, he said. Prof. Rao, who is also the chairman of Karnatakas Vision Group on Science and Technology and Nanotechnology, said that India needed people who have a passion to do things. What India requires is a bunch of nuts, crazy fellows who are really crazy about doing something... who are really mad. There is a shortage of mad people (people with passion) here. There are too many normal people in Bangalore, he said. Speaking about the developments in the area of Nano Science and Technology, Prof. Rao referred to Nano Nose, a diagnostic tool developed in Israel to detect breast cancer. Pointing out that people with breast cancer breathe out unique molecules that can be detected by Nano Nose, Prof. Rao said that this tool was in the final stages of trial in Israel. Referring to research in nanotechnology in the U.S., Prof. Rao said that scientists there were working on targeting specific cancer cells using nano particles to burn the cells. Earlier, Bangalore Nano National award was presented to G.U. Kulkarni, Professor, Chemistry and Physics of Materials Unit and DST Unit on Nanoscience, Jawaharlal Nehru Centre for Advanced Scientific Research, for his contribution in the field of nanotechnology. I.S.N. Prasad, Principal Secretary, Department of IT, BT and Science and Technology, Sir Richard Friend, Cavendish Professor of Physics, Cavendish Laboratory, Cambridge, U.K., and A.K. Sood from the Departmentof Physics, Indian Instituteof Science, Bangalore, spoke. ========================================================= Whos afraid of moral defeat? SHARE COMMENT (16) PRINT T+ Irrespective of how the Rajya Sabha votes on the resolution against Foreign Direct Investment in multi-brand retail, the United Progressive Alliance government has won where it matters most: in the Lok Sabha. Given that some of the constituents and supporting parties of the UPA were against FDI in multi-brand retail, the government did well to tide over this mini-crisis, defeating the Opposition-sponsored resolution comfortably enough in the end. A loss in the Lok Sabha would have raised questions about the

legitimacy of the government, and of the continuance of the pro-reforms push. However, the walkout by the Samajwadi Party and the Bahujan Samaj Party, both opposed to FDI in multi-brand retail but supportive of the government, ensured the defeat of the resolution moved by the principal opposition, the Bharatiya Janata Party. The fact that the numbers in support of the UPA did not add up to 272 or more, which is the absolute majority in the House, is the only consolation for the BJP, the Left parties and the Trinamool Congress, who were in the forefront of the battle against the government on this issue. But the Congress will have no problem in dealing with this moral defeat that means nothing at all in real terms. The way the vote went is a pointer to emergence of key political fault-lines in the run up to the 2014 general election. Both the SP and the BSP were content to register their opposition on FDI and walk out without actually voting against the government. Obviously, in their calculations, the survival of Prime Minister Manmohan Singh is much more important than the debate over multinational giants, kirana stores and farmers. After all, the government had left it to the States to decide whether or not to allow FDI. Despite the best efforts of the BJP, the resolution was seen by the two Uttar Pradesh-based parties in the context of the survival of a secular government at the Centre. The BJP was hoping to keep the focus on FDI, and away from the communal-secular divide, but for the SP and the BSP, as for the UPA, too much hinged on the FDI vote. Clearly the BJP is finding its communally divisive agenda difficult to live down. No matter what it professes in the immediate context, all its actions are viewed by other secular parties in the larger context of its communal politics. Fear of the BJPs sectarian politics is enough to drive parties such as the SP and the BSP into the arms of the Congress. To the credit of Congress political managers, the FDI vote turned not just on the economy, but on the countrys social-democratic fabric too. While the BJPs past wrongdoings are still helping the Congress, the Congresss present wrongdoings are not coming to the aid of the BJP. ==================================================== Paper glitters more SHARE COMMENT (2) PRINT T+ The surge in the domestic demand for gold has continued unabated even when gold prices are going through the roof and new records are becoming the order of the day. With very little of it mined within the country, India has been a massive importer of the precious metal. The surge in the domestic demand for gold has continued unabated even when gold prices are going through the roof and new records are becoming the order of the day. With very little of it mined within the country, India has been a massive importer of the precious metal. Last year (2011-12), imports aggregated 1067 tonnes at a value of $60 billion, sharply higher than the $40 billion spent on gold imports the previous year. The bulk of the demand within the country comes from households, both for jewellery making and increasingly for investment. In fact, the demand for gold bars and coins has grown tremendously in recent years while the tradition of ornament making has continued to spur gold demand. Of the several reasons attributed to the high demand, a few are prosaic: gold, in a standardised form as bar or coin, is available more freely than ever before, sold even through bank branches. However, it is the realisation that gold as an investment product can consistently beat almost all other normal avenues such as bank deposits and shares both in terms of appreciation and as a hedge against inflation that is behind the phenomenal spurt in demand. The macroeconomic implications of this development are huge and although quite apparent to policymakers for a while, are only now beginning to engage their serious attention. An obvious consequence of the inelastic nature of imports of gold and, of course, energy products has been the burgeoning import bill and consequent widening of the trade imbalance. It is a big challenge to reduce the current account deficit, which was at a record 4.2 per cent of the GDP in March, to more acceptable levels. Moderating gold imports through fiscal or administrative measures is not a viable option for an economy that is integrating fast with the rest of the world. Past experience suggests that illicit channels and hawala trading will emerge in the event of a clampdown. Another deleterious consequence of the preference for physical gold has been the sharp reduction in household financial savings, which are vitally needed for the industrial economy. An interesting idea recently suggested by RBI Deputy Governor Subir Gokarn of popularising paper gold financial savings instruments which are backed by gold is worth pursuing immediately. Long available in centres like Singapore, these products in effect call upon banks to buy and sell gold at market determined prices so that their customers can enjoy all the benefits of

gold investment without the hassles of storing it physically. The craze for physical gold will hopefully come down then. ==================================================== Remembering to forget MEENA MENON In Night and Fog (1955), Alain Resnais powerful testament to Nazi brutality, the camera pans over the chilling remnants of concentration camps rows of curved concrete pillars with barbed wire, empty gas chambers and hospitals, and the barbaric shower rooms where Jews were gassed to death. There is no such detritus of the violence in Mumbai in 1992-93. While there is a clamour for a statue to the late Shiv Sena leader Bal Thackeray, indicted by the Srikrishna Commission for his role in the riots after the Babri Masjid demolition on December 6, 1992, there are no memorials to the over 900 people who were killed and many more who went missing. While justice for survivors has been delayed and denied, some are still fighting for close to 20 years with a system that is unyielding. The riots divided the city, hardening stereotypes, creating more ghettos and putting a question mark forever on Mumbais cosmopolitan veneer. Nearly 20 years after her son was killed, Akhtari Tahir Hasan Wagle gave an account of his death to a senior police officer, the third to investigate the case of her son. She told him the same things that she had repeated a hundred times to journalists and others who cared to listen. My husband was not at home that day. It was January 10, 1993, around 11 a.m. We heard the police entering the narrow lane to the chawl and closed all our doors and windows. They were going into houses and dragging all the men out but they kicked the doors open and I saw my son Shahnawaz being taken away. A PEONS PLIGHT The police ignored her pleas that Shahnawaz, 16, was a student and took him down two floors. My daughter Yasmin was standing at the window when she suddenly shouted and said Shanu is dead, theyve shot him. We both ran down and asked the police what had happened. I asked for my son. Give him back to me, I said. Instead they put him in a van and threatened to beat us if we didnt stay back, laments Ms Wagle. That justice for riot survivors has been too little, and often non-existent is exemplified in the case of Farooq Mapkar, whose case against the police officers who fired inside Hari Masjid is still dragging on with the Central Bureau of Investigation (CBI) submitting a closure report in December 2011. The next date for the hearing is December 20. Dont ask me how much time and money I have spent for the last 20 years on my case, says Mapkar, 45, a peon in a cooperative bank. He fought long and hard with a reluctant State government which even went to the Supreme Court to scotch a CBI investigation in the Hari Masjid firing case where police randomly fired inside the prayer hall on January 10, 1993 killing six in all. Mapkar, who was shot in the back, was in jail for 15 days before getting bail and having the bullet removed. After the Bombay High Court ordered a CBI inquiry in 2008, a First Information Report was registered against then sub-inspector Nikhil Kapse and others who were alleged to have fired in Hari Masjid. CHASING COMPENSATION While the State set up a designated court under the Terrorist and Disruptive Activities (Prevention) Act (TADA) court to try the cases of the serial blasts of March 12, 1993 which resulted in 100 convictions in 2007 the riot victims had nowhere to seek justice. Instead the police closed 1,371 of the 2,267 cases. Of the 1,371, 112 cases were reinvestigated. In eight cases, fresh charge sheets were filed, according to the Maharashtra governments affidavit to the Supreme Court in January 2008. Of the 31 policemen indicted by the Srikrishna Commission, 10 were punished after departmental inquiries, 11 were found not guilty and one died. Cases on the implementation of the commissions report are still pending in the Supreme Court. Victims have had to face the trauma of chasing compensation for missing persons or for a paltry Rs.5,000 for their destroyed homes or workplaces. Women like Hazra Bi cannot hope to get justice for the brutal murder of her husband and son and Mukim Sheikh, whose father was killed in the riots, did not even bother

to testify before the Srikrishna Commission. Mumbais fabric of togetherness was ripped apart like never before in the post-Babri Masjid demolition violence. New ghettoes sprung up inside and even outside the city, like Mumbra and parts of Mira Road in Thane which ironically were dubbed terror hotbeds by the police. Only one Shiv Sena politician, the late Madhukar Sarpotdar, was convicted for hate speech in July 2008 and handed out a years simple imprisonment. Of the eight cases filed in 1993 against Bal Thackeray for his articles in Saamna, four were withdrawn from the Dadar court. Of the remaining in two cases, charge sheets were filed after the stipulated time period and two were closed for lack of evidence, according to information using the Right to Information (RTI) Act. Of the nearly 20 cases in all against Thackeray for hate speech and other sections of the Indian Penal Code, most are closed or the government has not given permission for his arrest. Mumbai chugs along. No one will notice Rashida Kotawala as she sits at her street side stall repairing bags in Vile Parle. Or Sudarshan Bane who ekes out a living as a driver and does odd jobs. Banes parents were burnt to death in Gandhi Chawl in Jogeshwari, and his sister Naina escaped with severe burns. The Gandhi chawl incident was used by the Shiv Sena to wreak revenge for Hindu deaths, sparking off the bloody second phase of the Mumbai riots in January 1993. The Bane family, the face of the riots then, is struggling to survive now. While Mumbai mourns Bal Thackeray, there is a veil over the violence he was accused of perpetrating after the Babri Masjid demolition. meena.menon@thehindu.co.in ========================================================= Prior approval must for CICs to invest in overseas JVs: RBI PTI SHARE COMMENT PRINT T+ The Reserve Bank of India (RBI) on Thursday said core investment companies (CICs) would require prior approval from the RBI for investing in joint ventures/subsidiaries or offices overseas in the financial sector. All CICs investing in joint ventures or subsidiaries or representative offices overseas in the financial sector will require prior approval from the bank, the RBI said in a release. CICs are those companies that invest primarily in group companies in different sectors of the economy.It has, therefore, been decided to issue a separate set of directions to CICs with regard to their overseas investments, the RBI said. The CICs, now exempted from registration and desirous to make overseas investments in financial sectors, would require a certificate of registration from the RBI and would have to comply with all the regulations pertaining to this, the apex bank said. However, exempted CICs do not require to be registered with the RBI for making investments in non-financial sector, it added. ======================================================== Decision on NIB deferred PTI SHARE COMMENT PRINT T+ The Union Cabinet, on Thursday, deferred its decision on setting up the National Investment Board (NIB) as Prime Minister Manmohan Singh wanted more inter-ministerial discussions on the proposal. The proposal to set up a high-level body for according speedy clearance to infrastructure projects entailing investment in excess of Rs. 1,000 crore was initially mooted by Finance Minister P Chidamabram. The Prime Minister wanted more discussion to he held on the issue, said a Cabinet Minister who attended the meeting.

The proposal, according to official sources, may come up for Cabinet approval next week. ================================================ Defence lab develops depth detector for rescue ops In June 2010, a water tanker bound for a factory at Ambalapara, near Palachuvadu, hurtled off a narrow road into an abandoned, water-logged quarry. There was no mechanism to fathom the depth of the water column, filled with hyacinths and thick undergrowth, which delayed rescue efforts considerably. In the crowd that gathered on the rims of the quarry to watch the rescue operation on the second day, were two young scientists of the Naval Physical and Oceanographic Laboratory (NPOL), a Defence Research and Development Organization (DRDO) Lab, located at nearby Thrikkakara. Their director, S. Ananatha Narayanan, had suggested that they go to the site to see what was going on. One of the scientists, Sameer Abdul Azeez, also the convener of the defence labs creativity and innovation cell, came back wondering if he could tweak some defence technology to develop a spin -off product that would aid rescue operations in water bodies. Two years later, the lab has been able to cut out one. Tarangini, as the device is named, is an underwater depth and bottom hardness indicator that gives the user a fair idea of the depth and nature of bottom surface of a water body. Mr. Azeez was working on an airborne (dunking) sonar system project when the Palachuvadu accident took place. Along with colleague Eldho Jacob, he moulded the technology in a scaled down manner, tapping resources from the labs technology incubation cell to fashion the instrument. Tarangini has its industrial prototype developed, tested and calibrated at various water bodies. A market-ready version is under development with Kaynes technology, Mysore. The National Institute of Design, Ahmedabad, was roped in to do the product styling. The lab intends to launch it through the Accelerated Technology Acquisition and Commercialisation programme, a joint initiative of the DRDO and FICCI. For Anantha Narayanan, like the Sanjeevani acoustic life detector earlier developed by the laboratory, Tarangini is a key instrument, which will be of use to rescuers as well as paramilitary forces operating in insurgency-hit jungles. The device will come in handy when they are to cross unfamiliar water bodies, he said. Small wonder, after a presentation on the instrument was made at the National Police Academy in Hyderabad recently, enquiries are pouring in from police about its availability. As the co-architect of the device, Mr. Azeez points to its ease of use, as it can be recharged with a mobile charger. It has ambient and inherent lightning, suitable for round-the-clock use, and a depth ceiling of 100 ft (30 metre) beyond which men cannot go without diving gears, he says. The market version of Tarangini is expected to be launch-ready in a months time. ========================================= BSE selects 14 investment banks for IPO PTI SHARE COMMENT PRINT T+ Premier stock exchange BSE Ltd., on Thursday, moved closer to its initial public offering (IPO) plan by selecting 14 investment banks, including Bank of America-Merrill Lynch, JP Morgan, Barclays and UBS, for a public issue that is slated to hit the markets in the first half of next year, a top official said.

Yes, we have selected 14 investment bankers for our forthcoming IPO slated for the first half of 2013, BSE Chief Executive and Managing Director Ashish Kumar Chauhan told PTI. The other lead managers to the issue include domestic majors Kotak Mahindra Capital, ICICI Securities, Edelweiss Capital, Axis Capital, and IIFL, Mr. Chauhan added. BSE, which had reported a net profit of Rs.178 crore on a revenue of Rs.578 crore last fiscal, will be the second bourse to get listed after Multi Commodity Exchange of India (MCX) made its debut in March. He did not divulge the details of the issue, saying the investment bankers would decide on the pricing and the issue size. BSE was seeking an offering that would value it at about Rs.4,000-5,000 crore, sources close to the development said. BSE has opted for the public issue to give an exit route to existing shareholders, who hold over 41 per cent stake in the exchange. The IPO could fetch Rs.800-1,000 crore, they added. At Rs.5,000 crore, the BSEs valuation would be at a 37 per cent discount to MCXs current market capitalisation of Rs.7,881 crore. Late last month, in an interview to PTI, Mr. Chauhan had said that the oldest Asian bourse had appointed a committee to finalise the bankers. BSE had in October once again retained the No. 1 slot as the worlds largest exch ange in terms of number of companies listed. Markets regulator SEBI notified new rules for ownership and governance of bourse this June, which also included a clause on listing of bourses. ====================================================== Banks advised to increase the pace of NPA recovery Worried over the slowdown of the economy and the rising non-performing assets (NPAs) of public sector banks, the Reserve Bank of India (RBI) has asked banks to put a loan recovery policy in place while the government has asked them to take new initiatives to increase the pace of recovery and management of NPAs. The cause for concern is the fact that the NPAs of public sector banks rose close to one percentage point from 3.17 per cent to 4.01 per cent in six months to September 2012, according to official records of the Finance Ministry. On its part, the RBI has asked banks to have a loan recovery policy, which sets down the manner of recovery of dues, targeted level of reduction (period-wise), norms for permitted sacrifice/waiver, factors to be taken into account before considering waivers, decision levels, reporting to higher authorities and monitoring of write-off/waiver cases. The government has also asked banks to undertake new initiatives, which include appointment of nodal officers for recovery, conducting special drives for recovery of loss assets and putting in place an early warning system. Banks have also been asked to replace the system of post-dated cheques with the electronic clearance system (ECS), e-auctions, sharing of credit information through CIBIL, assigning of loss assets on incentive basis to asset reconstruction companies and giving weightage to recovery of NPAs

in the statement of intent on annual goals of public sector banks. ============================================ Where caution is welcome C. R. L. NARASIMHAN SHARE COMMENT (2) PRINT T+ There has been considerable media interest in the apparent differences in the approach of the Finance Minister and the Reserve Bank of India (RBI) over the issue of new bank licences. While the former is reportedly keen on the RBI speeding up its process of issuing new licences, the latter would first like to beef up existing regulation in order to be a more effective regulator when the sector is further opened up. The RBI specifically wants to equip itself with powers to supersede the boards of banks in case the situation so warrants. Differences The so called differences between the Finance Ministry and the RBI are over the timeframe for issuing new bank licences. The larger issue of whether new private banks should be licensed at all has long since been settled. In his 2010 budget speech, the then Finance Minister, Pranab Mukherjee, mentioned the possibility of issuing licences for opening a few new banks to the private sector, to be promoted by non-banking finance companies (NBFCs) and industrial houses. Banks promoted by NBFCs are not new, and the governments decision to allow a few more NBFCs to start banks is in line with existing policy. However, enabling industrial houses to start banks is controversial for a variety of reasons. (1) The reform era that began in the 1990s saw the entry of new private banks. Following the Narasimham Committee recommendations, new private banks, very adequately capitalised and having the latest technology platforms, were allowed in. Ten new banks made their appearance in the mid-1990s while two more Kotak Mahindra and the Yes Bank were given licence in 2002. The question, therefore, is not about private banks per se but over the entry of those promoted by industrial houses. (2) There are both historical and contemporary reasons pointing to the need for a cautionary approach. Almost all the leading public sector banks of today Bank of Baroda, Bank of India and Punjab National Bank were in the private sector. All of them were either promoted by large industrial houses or had significant connections with them. The two-stage bank nationalisation that began in 1969 was preceded by a period of social control. The official justification for both was to check what was then seen to be their common practice of banks being at the beck and call of their promoters, indulging in cross-lending and not having any prudential restraints in their dealings with industrial houses. A second reason given was to reorient the banks towards national objectives. Critics of nationalisation have said that the decision was a cynical one, based more on politics than economics. However, after the two-stage nationalisation the second one was in 1972 for good or bad, Indian banking came to be identified with the public sector. More recently, in the 1990s, Indian banking, especially the segment confined to metropolitan areas, had a taste of world-class banking, with the advent of the new-generation private banks. Many of the features of modern day banking that have enhanced the quality of personal banking and added to the convenience can be traced to this development. However, even though these banks have opened branches in non-metro areas, their focus has been on the metros. This point is of relevance given the policy push being given to financial inclusion. In fact, a main justification for the new bank licensing policy is that they will spread banking far and wide, to areas and customers so far not covered by the financial sector. Whether recent experiences of banks, especially the new private banks, vindicate that approach are a moot point. Although not spelt out, RBIs caution is basically confined to the entry of industrial houses into banking.

The structure of Indian banking so far, industrial houses do not directly own a bank although in many cases they have sizable shareholding in individual banks has a lot in its favour. Through a variety of regulatory rules, the RBI has ensured that no individual group, irrespective of its shareholding, can control a bank. The situation will change radically if large business houses get a direct foothold. For them, banking will not be the core or even the main business. No matter what safeguards are put in place, it will be a herculean task for the government and the RBI to keep a watch over the infringement of rules. Inter-connected shareholding will stress regulators, and is not a desirable outcome of reform. That is why the RBI wants more powers to check possible shenanigans. Stiff rules The RBIs draft rules for licensing new banks are understandably stiff. The capital requirements are pegged at Rs.500 crore. Eligible private sector promoters will be entities and groups with diversified ownership, sound credentials and integrity and having a track record of at least 10 years. Those having even an exposure of 10 per cent to speculative sectors of real estate and broking over the past three years are barred. The RBI wants a corporate sector in which all the financial activities of the promoter group will be ring-fenced from their other activities. This, it hopes, will provide a measure of comfort to the depositors of the new banks. So, in the next few weeks, there might be action on the bank licensing front. Of particular interest will be the entry of business groups. The RBIs task is not easy. No matter how stiff the qualifying standards are, it is impossible to keep a really determined entity from gaming the system. Also, the subjectivity that is impossible to avoid in any guidelines will be the loop hole. narasimhan.crl@thehindu.co.in ========================================== A right, not a favour KALPANA SHARMA SHARE COMMENT (1) PRINT T+ Despite a liberal abortion law, countless poor rural women continue to die because of unsafe practices and doctors who choose to interpret the law differently. The tragic death of the 31-year-old dentist Savita Halappanavar in a hospital in Galway, Ireland, on October 28 has brought the issue of womens right to safe and legal abortion to the forefront yet again. Savita died in her first pregnancy even though she was within reach of a hospital with modern facilities and trained medical personnel. Yet, the doctors chose not to intervene because of their interpretation of the law that makes abortion illegal. There are literally lakhs of Savitas in India who die during pregnancy either because they have no access to modern medical facilities or because doctors choose not to intervene because of the way they interpret the law. And this happens in a country where abortion has been legalised since 1971, under the Medical Termination of Pregnancy (MTP) Act. Yet even here, although it is the right of any woman facing the kind of complications Savita did to go to a government facility and ask for an abortion, there is simply no guarantee that she will get it. Because the ultimate decision is left in the hands of doctors who can choose to interpret even this liberal law in different ways. According to a recent study by the World Health Organisation and the New York-based Guttmacher

Institute, India has the highest number of unsafe abortions in South and Central Asia. Of the 10.5 million abortions in the region, an estimated 6.5 million abortions take place in India (2008). And of these, two thirds are unsafe abortions, that is abortions that expose the woman to infection that could even lead to death. Although official figures cite that only 8 per cent of maternal deaths are caused by unsafe abortions, this is likely to be a gross underestimation as the link between an unsafe abortion and a maternal death is unlikely to be established in cases where health complications occur over a period of time after the abortion. These complications include blood loss, infection and septic shock. Think of a woman in rural India who becomes pregnant but has to seek an abortion for various reasons. She is most likely to be sent to a quack for an abortion. If she then develops complications, chances of her getting to a medical facility in time are low. Even if she makes it to a primary health centre, whether she will get the treatment she needs in time is a question. But in the event of her death, it is highly improbable that the cause will be linked to the earlier episode of an abortion under unsafe conditions. That apart, several studies in the last two decades have brought out several important aspects of womens access to safe abortion facilities in India. For one, a substantial number of rural women are unaware that abortion is legal in India and that they can go to a government facility within 12 to 20 weeks of their pregnancy. Secondly, even if aware, they would not find such facilities as most are clustered in or around urban areas. As a result, most rural women are left with no choice but to turn to private untrained practitioners, thereby risking their lives. Even where women can access government hospitals, they have complained of long waits, humiliation at the hands of doctors and nurses, insistence on approval of husbands even though this is not mandatory, and in the case of married women considerable pressure to undergo sterilisation after the abortion. For unmarried women, the treatment is much worse and usually results in the young woman running away and seeking some other facility. This year, the central government appears to have woken up to this reality in India where, despite the law, women are dying from complications arising out of unsafe or incomplete abortions. It has identified 20,000 model health facilities that will provide abortion services round the clock and has prepared Comprehensive Abortion Care guidelines. This is a baby step in a country as large as India but it is a step forward. The bottom line is that pregnancy is not a life-threatening condition or a disease. Women, who have the exclusive responsibility of childbirth, should not be exposed to risks that result in permanent health complications or even death. At a time when advances in science have increased longevity of the human race, it is unacceptable that millions of women in India continue to die during the course of their pregnancy or during childbirth. Savitas premature death should act as a wake-up call to our government too. There is no point having a liberal law if you cannot extend its reach to the women who need it; if you cannot train your doctors to understand and interpret the law keeping in mind the urgent need of the woman in front of them; if your facilities cannot provide the necessary safe and aseptic conditions that are essential; and if you fail to inform women that access to all this is their right and not a favour that a government doctor bestows on them. sharma.kalpana@yahoo.com ================================================== Taking leave of our senses VIJAY NAGASWAMI When in love, we suspend rational judgement of the person, and this helps ensure that love is sustained through the years and guarantees a lasting relationship. A recent story in The Daily Mail explained how, when in the presence of or shown a picture of someone they were passionately in love with, most people have a fairly characteristic response. An important part of their

brain the frontal lobe that governs their capacity to make rational judgements, seems to shut down. Since its publication the story, though it has not exactly gone viral, has been echoed by a large number of news sources all over the world, both online and in print. The ironical thing is that the research study on which this story is based was first published in September 2000, by Andreas Bartels and Semir Zeki. Obviously, it was not considered hot enough then to be reported, but with the increasing interest on the part of the general public in the findings of scientific research concerning love, sex and relationships, its evidently more saleable now. The leader of this and several other such neurobiological studies, Prof Semir Zeki, is the author of several scholarly books on the visual brain (the most recent being The Splendours and Miseries of The Brain), a Fellow of the Royal Society and the Professor of Neuroaesthetics (a discipline connecting science and art, that he pioneered) at the University College, London. He has done much path-breaking research on the relationship between the human brain on the one hand and beauty, art and love on the other. I understand he is scheduled to speak tomorrow on Neurobiology of Love and Beauty at the 25th Foundation Day Celebrations of the Centre for Cellular and Molecular Biology at Hyderabad, and am sorry that I wont be able to hear him there. But hopefully the Internet will make available the text of this talk soon enough. Lets try to understand what precisely Prof Zekis research threw up. By using the fMRI (functional Magnetic Resonance Imaging) technique, researchers can see which specific part of the brain is activated when we perform certain tasks, by assessing the oxygen flow to its component parts. Zeki and his co-workers studied the fMRI responses of 17 healthy male and female volunteers when they were shown pictures of their romantic partners compared to pictures of their friends. They found a distinctive difference between the way people responded to friends and to romantic partners. While both activated the expected areas in the brain that are associated with positive emotions, certain portions of the brain were significantly deactivated when pictures of the romantic partners were presented. Portions of the prefrontal cortex (which governs judgement and social behaviour) and middle temporal cortex (which regulates negative emotions) were deactivated, as is usually the case when we are happy. But, the more interesting finding was the deactivation of the amygdala which controls fear, sadness and aggression. Friends activated this part of the brain, but lovers deactivated it. Other research has also established that people in love have some chemical changes in their brains as well. There is a surge of a neurotransmitter (chemical messenger in the brain) called Dopamine which gives us a feeling of euphoria. But there's also a depletion of another neurotransmitter called Serotonin, which is why we tend to feel easily anxious, jittery and depressed. There is also a deluge of adrenaline making our heart beat faster, our palms sweaty, and our mouths go dry in the presence of the one we love. So, putting this all together, when in love, we temporarily take leave of our senses. We suspend rational judgement, we are fearless and we think only positive thoughts. We can swing between euphoria, anxiety and depression, within minutes. Its almost like weve consumed a narcotic drug. And heres the rub. Another interesting finding of the study was that the same portions of the brain that get activated by the narcotic drug cocaine are also activated by romantic love. The biological explanation of all of this is that a temporary suspension of their judgement of each other is desirable to increase the likelihood of two human beings to reproduce. But in our country, we seem to be doing rather nicely without this. Which is probably the basis for the derogatory conclusion that love is blind. Or worse, that falling in love is the dumbest thing one can do. However, I suspect that this suspension of judgement is a very useful mechanism to ensure that love can sustain through the years and make for a lasting relationship. For most relationships break because we judge each other too harshly, based on our expectation that our partner should be perfect in order to cater to all our needs throughout our lives. I also suspect that if fMRIs were done on Indian mothers when it comes to their sons or Indian fathers when it comes to their daughters, a fair number of them might well show significantly deactivated prefrontal lobes. As I write this, my wife and I have just completed 25 years of being married to each other, during which period we have kept our prefrontal cortices pretty busy activating and deactivating them on a regular basis to the point that they have pretty much given up now, and remain in a state of irreparable deactivation, thereby increasing the likelihood that were going to remain in a state of mu tual happiness till death do us

part. Love may be blind. It may be dumb. But whatever anyone else says, theres nothing quite like it. www.vijaynagaswami.com =================================================== Triple whammy C. R. L. NARASIMHAN SHARE COMMENT PRINT T+ It is fairly common nowadays to receive unflattering reports on the economy. After all, the slowdown in the economy is all too evident. Periodic reports, both official and unofficial, have recently tended to focus on the negative aspects. However, receiving three sets of worrisome economic data on the same day is something unusual. On November 12, the monthly industrial output data, retail inflation for October as well as the trade figures for that month were released. All of them reveal facets of the slowdown, and the challenges policy-makers face at this juncture. FOREIGN TRADE To take the trade figures first, during October, merchandise trade deficit, the excess of imports over exports, was $21 billion, a record for any individual month. For the April to October 2012 period, cumulative trade deficit has gone up to $110 billion. At this rate, barring any major change in the trends of exports and imports, it could easily touch $200 billion, even higher than the $185 billion last year. India has generally imported more than it exported. Trade deficit on merchandise account is the rule. But apart from its sheer size what makes its present level menacing are the following: Oil and gold imports account for a substantial part of the import bill, and their share has been rising. These are not unusual. Petroleum imports are inelastic, not susceptible to changes in price. Gold imports, which surged ahead of the festival season, might possibly moderate but the long-term solution to reduce its imports is to condition domestic demand for it. Encouraging financial savings in the place of buying gold or the jewellery is one possible solution but for a long time to come, the fascination for physical gold among households will not cease. What matters equally are non-oil imports, which have, over April-October, declined by 82 per cent even while oil imports are up. Imports of capital goods, intermediate products and other items needed for investment in India have declined along with other non-oil imports. This is interpreted to be a sure sign of the slowdown. Indian exports have been affected by the continuing economic woes of the U.S. and the European Union, which remain the two principal markets. Under the current foreign trade policy regime, India has sought to diversify its trade to non-traditional markets and to products, but with world trade itself contracting, such strategies might pay-off only when more normal conditions return. Another interesting feature has been the impact of rupee movements on Indias trade volumes. Normally, a weaker rupee should give a fillip to exports but this time rupee depreciation does not appear to have benefited. Reasons for this are worth examining in detail but one plausible explanation might be that

amidst all the volatility in the dollar-rupee exchange rate, it was not possible to manage a hedging strategy. INFLATION On inflation, there were two reports, both relating to October, the one on retail inflation at the beginning of the week and the other the monthly WPI (wholesale price index) inflation in the course of the week. Retail inflation, based on a new, broad-based consumer index, rose to 9.75 per cent, on the back of a sharp increase in prices of sugar, pulses, vegetable oils and edible oils. While this seemed to vindicate the Reserve Bank of Indias (RBI) stand in not signalling a softer interest rate policy, the news on WPI inflation which came a few days later was more positive for those clamouring for lower interest rates. WPI inflation declined sharply to 7.45 per cent in October from 7.8 per cent in August. Especially noteworthy has been the fact that slow demand-side pressures have caused non-food manufactured inflation (core inflation) to decline to 5.2 per cent from a peak of 5.8 per cent in August. WPI inflation has been the benchmark the RBI has been relying upon, even though it has admitted that it is not the most suitable one. Recently, there have been criticisms that the RBI has not been consistent, relying on core inflation, at times, the WPI inflation on other occasions and now the CPI inflation to justify its interest rate stance. Rating agency Crisil thinks that food prices will go up in the near-term and that would reflect in the WPI numbers. INDUSTRIAL OUTPUT The third set of data released on Monday, the IIP (index of industrial production) figures for September showed a contraction in industrial output of 0.40 per cent. Industrial growth during the first-half of the year (April-September) has been at a mere 0.1 per cent as against 5.1 per cent during the same period last year (2011-12). In August 2012, the IIP was up by 2.5 per cent over last year, the only month in the July-September quarter, in which it was positive. At that time, some official spokespersons claimed that the worst was over for the economy. Clearly, such claims are premature. If anything, the declines in capital goods and consumer durables do not encourage optimism. If anything, the lower IIP might suggest a sharp decline in the GDP (gross domestic product) figures for the second quarter, probably even less than 5 per cent. narasimhan.crl@thehindu.co.in ================================================= Indias great shame HARSH MANDER One of modern Indias great shames is the official failure to eradicate manual scavenging, the most degrading surviving practice of untouchability in the country. Merely because of their birth in particular castes, the practice condemns mostly women and girls, but also men and boys, to clean human excreta in dry latrines with their hands, and carry it to disposal dumps or lakes or rivers. Many men also clean sewers, septic tanks, open drains into which excreta flows, and railway lines. People trapped by their birth in this vocation are shunned and despised. The anonymity of cities otherwise

may free people of the disadvantaged destinies brought on by their caste identity, because their caste is not written on their foreheads. But manual scavengers are branded irrefutably by the loathed work which they perform. Forty-three years after its prohibition in the Constitution, in 1993, a law was passed which outlawed the practice. But it was a feeble and toothless law, weakly and reluctantly applied. It was rescued only by extraordinary and sustained non-violent resistance by organisations of manual scavengers themselves. I have in these columns celebrated their collective actions to demolish dry latrines and proudly burn the baskets in which they carried human excreta. They also moved the Supreme Court of India to compel central and state governments to enforce the law. One demand of some organisations and activists was for a new and improved central law to strengthen its accountability mechanisms, widen the definition of manual scavenging, and above all to shift the focus to human dignity from merely sanitation issues. Their struggles persuaded the central government to introduce a new legislation, which unlike the 1993 law, would be automatically binding on all state governments. Particularly welcome is the acknowledgment in the preamble of the new bill, that it is necessary to correct the historical injustice and indignity suffered by the manual scavengers, and to rehabilitate them to a life of dignity. This stops short of the national apology which people who have suffered untold humiliation over centuries wanted to see in the law. But a clear acknowledgement of the historical injustice suffered by them would be a salve to their wounds. The 1993 law defined a manual scavenger as a person engaged in or employed for manually carrying human excreta. The 2012 bill definition is fittingly more elaborate and inclusive, and includes a person engaged or employed... for manually cleaning, carrying, disposing of, or otherwise handling in any manner, human excreta in an unsanitary latrine or in an open drain or pit into which the human excreta from the insanitary latrine is disposed of, or on a railway track... But the advantages of the expanded definition are completely undone by the proviso that a person who cleans excreta with the help of such devices and using such protective gear, as the Central Government may notify in this behalf, shall not be deemed to be a manual scavenger. No such proviso was there even in the 1993 law. It deliberately introduces a huge escape route: employers may merely issue gloves and protective clothing, which the Central Government notifies as sufficient, and this would be sufficient to allow the demeaning practice to persist. Bring in innovations The 2012 Bill explicitly prohibits construction of dry latrines, and employment of manual scavengers, as also the hazardous cleaning of a sewer or a septic tank. But cleaning railway tracks has not been included, and hazardous cleaning is defined not by employers requiring workers to manually clean sewers or septic tanks, but requiring them to do so without protective gear. Our objection to manual cleaning of sewers and septic tanks is not just of compromising worker safety which is no doubt important but of human indignity, which would continue even if such manual cleaning is done with protective gear. And it is unconscionable to let the railways off the hook. For sewer workers and railway workers, liberation will come by introducing technological changes which will render the occupation humane, dignified and safe, and also ensure that human beings do not have to make any direct contact with excreta. Technologies are available globally which both the Indian Railways and municipalities could invest in, which would obliterate the requirement for human beings to manually handle excreta. The fact is that central, state and local governments do not make these public investments, because human beings are available to perform this work cheaply, propelled by their birth in most disadvantaged castes and lack of other livelihood options. The 2012 bill places a duty of survey on all local authorities, but the past experience is that State Governments are mostly in denial. They usually reject community findings, even when backed by strong

evidence. This can be prevented only if there is a continuous system of joint surveillance, beginning with a joint survey by designated teams of government officials and community members. The 2012 bill fittingly mentions rehabilitation in the title itself. But it does not take us much beyond earlier rehabilitation programmes which were introduced from 1993. The law should explicitly guarantee fully government funded school education for every child of school going age, with scholarships for higher education, and vocational and computer training. Given the past experience of corruption and harassment in loans, and the fact that most manual scavengers are women, many of whom are older and with poor literacy, the scheme should be entirely grant-based. Women should have the option of receiving a monthly pension of Rs 2000, or an enterprise grant of up to Rs 1 lakh, supported by training and counselling facilities. Highly subsidised housing should be ensured in mixed colonies. Public officials have frequently failed in their duties to identify, report and end manual scavenging, demolish dry latrines, and rehabilitate manual scavengers, and on their shoulders rests major culpability for the continuance of the unlawful and unjust social practice. The bill must introduce the offence of dereliction of duty by public officials under this statute, and prescribe deterrent consequences for these failures. This new central law presents the people of this country one more chance to remedy an enormous historical wrong, of enslaving our people to painful lifetimes of humiliation and hopelessness. We should not allow another deliberately weak law to postpone once again our collective obligation to end one of modern Indias greatest shames. ================================================ FDI in banking C. P. CHANDRASEKHAR As the next session of Parliament approaches, the Prime Minister and the Congress Party seem adamant about further advancing their programme of financial liberalisation. Controversial among their favoured reforms is a change in the rules governing foreign investment in Indias banking sector. Opposition to this move was one of the issues motivating a two-day strike by around a million bank employees in August this year. But those advocating liberalisation of governance regulations in the form of equity caps for foreign shareholders and caps on voting rights for both domestic and foreign investors are unwilling to listen. They often even suggest that this is an area in which reform has been almost absent or creeping, and is restricting the ability of private banks to mobilise foreign capital to enhance their capital base. But are they right? The fact of the matter is that governance rules in the banking system have indeed been changed to accommodate the private investor (domestic and foreign) after liberalisation. Besides permitting the entry and consolidation of new private banks, the government (through the Ministry of Commerce) had as far back as March 5, 2004, announced a set of decisions with reference to foreign investment in the banking sector, which relaxed the cap on foreign equity in Indian banks to 20 per cent in the case of public sector banks and 74 per cent in the case of private banks. This was in addition to the permission granted to foreign banks to operate in the country through wholly owned subsidiaries subject to increasingly relaxed rules. Consequent to the Ministry of Commerce announcement, the Reserve Bank of India issued a more detailed and comprehensive set of policy guidelines on ownership of private banks. Recognising that the 5th March 2004 notification by the Union Government had hiked foreign investment limits in private banking to 74 per cent, the guidelines first clarified that this ceiling was applicable to the sum total of foreign investment in private banks from all sources (FDI, Foreign Institutional Investors, Non-Resident Indians).

More importantly, in the interests of diversified ownership the guidelines had declared that no single foreign entity or group could hold more than 10 per cent of equity. There was also a 10 per cent limit set for individual FIIs and an aggregate of 24 per cent for all FIIs, with a provision that this can be raised to 49 per cent with the approval of the Board or General Body. Finally, the 2004 guidelines set a limit of 5 per cent for individual NRI portfolio investors with an aggregate cap for NRIs of 10 per cent, which can be raised to 24 per cent with Board approval. Finally, in keeping with this more cautious policy, the RBI decided to retain the stipulation under the Banking Regulation Act, Section 12 (2), that in the case of private banks the maximum voting rights per shareholder will be 10 per cent of the total voting rights (1 per cent for public banks). The 10 per cent ceiling on equity ownership by a single foreign entity was partly geared to aligning ownership guidelines with the rule on voting rights. The response to this from liberalisation advocates was that the whole exercise was pointless inasmuch as the ceiling on single investor ownership and voting rights would deter foreign investors. The evidence shows that this expectation has turned out to be completely false. As Chart 1 shows, the share of foreign investors in private bank equity exceeds 50 per cent in five banks and stands at between a third and a half in another eight. Moreover, Chart 2 shows that in a number of instances the share of foreign equity has increased between 2005 (when the guidelines had come into force) and 2012. Problems arose only in the case of those entities in which single foreign entities held more than 10 per cent equity. This was, for example, true of the Development Credit Bank (which had the Aga Khan Fund for Economic Development as lead shareholder with around 25 per cent of equity) and the Catholic Syrian Bank (in which Surachan Chawla of the Siam Vidhya group from Thailand had acquired 36 per cent shares in the 1990s and has since been able to reduce the total to only 21 per cent). The problem faced by these entities is that of finding buyers willing to acquire small blocks of equity to ensure adequate dilution of lead stakeholder ownership in a bank being run by a dominant foreign shareholder. As a result they have been under pressure for not complying with the RBIs demand to dilute equity and faced with threats of penal action. The implication of this is clear. The problem with well-performing private banks is not that it is difficult to attract foreign equity investment. The problem is that current rules do not allow entry of those whose intent is to exercise control over a local bank with an adequate share holding and equivalent voting rights. Hence, if the need is to allow foreign equity infusion to meet prudential requirements such as the Basel norms that is still possible. What is not allowed is the entry of single foreign investors seeking to establish or acquire domestic private banks with a controlling stake and voting rights. The case for such regulation of foreign presence had been clearly specified in the past. The RBI has for long strongly advocated diversified ownership of banks. The RBIs Repor t on Trend and Progress of Banking in India, 2003-04 states: Concentrated shareholding in banks controlling substantial amount of public funds poses the risk of concentration of ownership given the moral hazard problem and linkages of owners with businesses. Corporate governance in banks has therefore, become a major issue. Diversified ownership becomes a necessary postulate so as to provide balancing stakes. A more elaborate exposition of the RBIs views on the matter came from Rakesh Mohan, a former De puty Governor of the RBI. In a speech made at a Conference on Ownership and Governance in Private Sector Banking organised by the CII at Mumbai on 9th September 2004 he remarked: The banking system is something that is central to a nations economy; and t hat applies whether the banks are locally-or foreign-owned. The owners or shareholders of the banks have only a minor stake and considering the leveraging capacity of banks (more than ten to one) it puts them in control of very large volume of public funds of which their own stake is miniscule. In a sense, therefore, they act as trustees and as such must be fit and proper for the deployment of funds entrusted to them. The sustained stable and continuing operations depend on the public confidence in individual banks and the banking system. The speed with which a bank under a run can collapse is incomparable with any other organisation. For a developing economy like ours there is also much less tolerance for downside risk among depositors many

of whom place their life savings in the banksHence diversification of ownership is desirable as also ensuring fit and proper status of such owners and directors. It is evident that the RBI, which is the regulator of the banking sector, had a strong case for issuing elaborate guidelines on bank ownership to ensure diversification. Those reasons retain their relevance even today. So there is no case for altering them, especially if the evidence suggests that accessing foreign equity, if needed, to enhance the capital of banks is possible within the current regulatory framework. =========================================== Risk management, a serious business C. R. L. NARASIMHAN SHARE COMMENT PRINT T+ A very erudite speech on the topic "Managing currency and interest rate risks" was delivered by Harun R. Khan, Deputy Governor of the Reserve Bank of India, at a seminar in Bombay recently For banks and their corporate customers, management of currency and interest rate risks has always been a daunting but absolutely vital task. It has become particularly challenging today. The global financial crisis that began in 2007 has vastly exacerbated the market risks. There has been an exponential increase in volatility both in terms of dimension and direction in all classes of financial assets. In the new environment, institutions both financial and non-financial have to reckon with movements of currency and interest rates in ranges hitherto not seen and certainly not anticipated. Almost all the conventional and non-conventional methods of containing risks failed, some, as in the case of U.S. housing market, spectacularly and with disastrous consequences for the entire world. A very erudite speech on the topic Managing currency and interest rate risks was delive red by Harun R. Khan, Deputy Governor of the Reserve Bank of India, at a seminar in Bombay recently. Pointing out how financial market risks affected the real economy, he said that the big increase in volatility had induced uncertainty which, in turn, had a negative impact on the real economy as well. Financial and non-financial companies, unable to anticipate their future, are adopting a more cautious approach to their business planning and employment policies. Heightened volatility, the new normal? It is unlikely that volatility will subside anytime soon. In the post-crisis period, the global economy was initially propelled by the big developing economies which more than offset the lacklustre performance of the advanced economies. However, the global slowdown has now caught with India and China, too. The International Monetary Fund (IMF) is just one of the global institutions to lower its forecast for the world economy during the current year. The slowdown has created uncertainty, which, in turn, had to be countered by some highly unconventional monetary and fiscal policies in the advanced economies. For instance, the extremely loose monetary policy followed by the American Federal Reserve, has the potential to flood the global economy with liquidity. That will have as yet unknown consequences. Global commodity prices could go up, in turn, fuelling imported inflation in countries such as India. On the other hand, India might be able to tap global capital flows to a larger extent than now. However, given the all-pervasive uncertainty, capital inflows will also be volatile. This is already having repercussions on the exchange and money markets in India. Indias growing integration with the rest of the world is another factor. It is no longer possible to sh ield the domestic economy from the vagaries of the global economy. Global risks are now easily transmitted to the Indian economy through a variety of routes trade, finance, commodity prices and confidence channels. The end result is always heightened volatility.

The government and the RBI have taken a number of steps to help banks and corporates deal with the volatility. Most of these aim to increase the supply of dollars to hopefully iron out fluctuations. But this might be a case of being extremely short-sighted. For instance, the measures to encourage short-term external debt flows will cause serious funding mismatches if used for long-gestation projects. They might also lead to a ballooning of debt repayments over the near-term. In that event, interest and exchange rate risks will increase." RBIs genuine concerns Measures to augment supply of foreign exchange are one aspect. But the RBIs current worry is two fold. (1) Many corporates are deliberately or out of ignorance not hedging their foreign currency exposures. According to recent estimates, almost 50 per cent of total outstanding exposures are unhedged. This is an alarming situation. It can not only devastate the concerned companys balance -sheet but can pose major threats to the macro economy. (2) Closely related are the second set of worries which arise from the fact that many companies are exploiting the rules to speculate rather than hedge. For some of these companies, foreign exchange risk management becomes a profit centre, akin to whatever core business they have. In its most basic form, exposures are left unhedged, the objective being to (hopefully) profit from exchange rate movements. Given the current volatility, many of those hopes have come crashing down. Over the past few years, derivative instruments have been used for generating profit rather than to mitigate risks. In nearly all the cases, companies, which gambled on exchange rate, have come to grief. There is obviously a case for educating customers on the dangers of misusing hedging instruments as well as sterner steps. The RBI has recently suggested that banks should monitor the unhedged positions of their lenders and, if need be, penalise them by charging a higher rate. In its recent credit policy review, the RBI has pointed out that large unhedged foreign currency exposures have resulted in accounts becoming non-performing assets (NPAs). They are, therefore, a risk to them as well as the financial system. A stringent monitoring of the exposures is, therefore, called for. Among other measures, banks can consider stipulating a limit on unhedged positions of corporates on the basis of policies approved by respective bank boards. narasimhan.crl@thehindu.co.in ===================================== Power games VIJAY NAGASWAMI SHARE COMMENT PRINT T+ Both nature and nurture create a complex template that determines who will dominate in dyadic relationships. It has become a modern aphorism that all relationships are essentially power struggles. One can readily see how this would apply in the case of political relationships, corporate relationships, institutional relationships and the like. But when it comes to inter-personal relationships, this may appear to be a cynical observation. However, the more one thinks of it, the more likely is one to appreciate that this belief is not entirely devoid of merit. Looking around, one can see that in most dyadic relationships (those involving two people), there is the tacit, often explicit, assumption, that one of the two has a casting vote. Whether between parent and child, man and woman, boss and subordinate, teacher and student, sibling and sibling, friend and friend or service provider and service recipient, most fallouts take place when one doesnt recognise or respe ct the authority of the other, or worse, attempts to reverse the power balance in the equation. The most serene

relationships are those in which the power structure is accepted unquestioningly by both partners in the dyad, and both can therefore be relatively true to their respective selves and each other within the framework of this acceptance. For millennia, in our country certainly, patriarchy has been accepted as an incontrovertible bedrock of cultural existence, except in certain pockets, where matriarchy ruled the roost. While this is slowly changing, whatever else the khap panchayats may want to believe, the fact that in the most intimate of dyadic relationships, one gender had be in control of the other, represents the nucleus of this issue. This phenomenon extends itself to other less intimate relationships as well. Even within the same gender, there still exists a pecking order between the two participants in the equation, determined by the predefined authority that is traditionally vested on the prescribed role each is playing. The one whos less powerful is always expected to play the subordinate role in the relationship. Which is why regardless of strengths or weaknesses, the boss is always right, or the husbands word is law, or the brother is more equal than the sister. In other words, for a relationship to proceed smoothly, everyone has to know their respective places and function within these perimeters. The cycle goes on In more orthodox societies such as the one we live in, social roles are clearly institutionalised, and violations are easily identifiable. But in modern societies, which have broken the barriers of institutionalisation, new parameters to determine who has the power in a dyadic relationship are periodically redefined based largely on the zeitgeist of the culture one is part of. Thus, you have attributes like wealth, attractiveness, education, personality and the like that create a new class of relationship controllers; the richer, more attractive, the better educated and the more extroverted one is, the more the balance of power shift in ones favour. What is ironical is that the attempt to break the shackles of rigid control mechanisms like patriarchy, has resulted not in a state of classlessness, which one would imagine was the primary goal of rebellion, but in the emergence of new and equally rigid classification processes. Tomorrow, new parameters that define power-structures in relationships are bound to emerge. And so the cycle will go on. But why should it happen in the first place. Is it just learned behaviour? Or is it hard-wired into us, part of our DNA? Certainly control or dominance is something we engage in instinctively without being taught. But even if its been drilled into us that by virtue of having c ertain attributes we can be dominant in a relationship, its not uncommon to see men who are controlled by women or a younger sibling taking the one -up position over an older one or children who grew up in an ambience of pacifism turning out to be chauvinistic and intolerant. I would imagine that both nature and nurture together create a fairly complex template in the back of our minds that determine how we will behave in dyadic relationships. But why do we need to have power in relationships? I believe that the closer and more intimate the relationship, the more dependent is one person on the other, whether financially, emotionally, physically or sexually. And when there exists a lack of reciprocity or mutuality, one partner is seen as needing the other more. The more needy one feels the other is, the more likely is one to take the upper hand in the relationship. Some do it gently, some boorishly, and some even unconsciously. But we all do it, however evolved we may think ourselves to be, bolstered by the benevolent dictator argument which rationalises dominance on the basis of good intentions. However, if we are not conscious of the power games we play with each other, or if the balance of power in a close or intimate relationship is permanently tilted in favour of one person over the other, a fallout is waiting to happen. But if we consciously work towards having a reasonably stable power structure in a relationship, then our power games can actually be fun (as games are meant to be), instead of resulting in power outages, as sadly, they so often tend to. www.vijaynagaswami.com ================================================== A step closer to Palestine

The Palestinian bid to become a non-member Observer State at the United Nations has been, as expected, approved by an overwhelming vote of 138 to nine, with 41 abstentions in the General Assembly. The vote implies global recognition of the relevant territory as a sovereign state and is a major step towards a two-state solution for historical Palestine. The new status amounts to less of an achievement than full U.N. membership, which the Security Council declined to consider in September 2011 on the grounds that the members were unable to make a unanimous recommendation, but the Palestinians can now p articipate in General Assembly debates. In sum, this is an important move towards Palestinian statehood, which 132 countries have already recognised. As for particular countries, one former colonial power, France, voted in favour, and the other state with a previous imperial connection to the region, the United Kingdom, abstained, as did Germany. Predictably, Israels biggest supporter, the United States, opposed the resolution, reconfirming its view that a negotiated settlement is the only way to establish a Palestinian state. The U.N. resolution, however, could well be the first of many momentous changes for West Asia. The Palestinian Authority can now seek membership of several U.N. agencies and, above all, can apply to sign the Rome Statute of the International Criminal Court, with the clear implication that Israel may finally be held accountable for crimes committed against the civilian population of Gaza. Secondly, differences have emerged between Washington and major European countries over Israel-Palestine, even if some European officials call criminal charges against Israel a red line. Thirdly, it is consistent with global public opinion; even U.S. opinion polls show majorities for a two-state formula. It also testifies to the increasing confidence of Palestinian representatives, who have said that continued exclusion would strengthen support for Hamas; the representatives, moreover, now know that the regions peoples demand justice for the Palestinians and can no longer be ignored. The vote will be truly meaningful if it marks the start of a new international resolve to ensure the people of Palestine are able to exercise their right to statehood and self-determination, just as the people of Israel have been doing for years. The first order of business has to be to stop the Israeli stranglehold over occupied Palestinian territory, including the monstrous policy of building settlements. As long as the international community gives Tel Aviv a free pass on these issues, peace and security in Israel-Palestine will always remain elusive. ====================================================== Medias Leveson moment Ending months of feverish speculation, Lord Justice Leveson has finally given his verdict on the British press and it does not make comfortable reading either for journalists or politicians. The Financial Times called it a damning indictment of the culture and practices of the newspaper industry. And The Times whose sister paper, the now defunct News of the World, caused the phone hacking scandal that led to the inquiry, credited Lord Leveson with correctly identifying the lapses in moral and professional standards of the press. His 2000-page report longer than Harry Potter, shorter than Proust, denser than Tolstoy, as the Guardian put it lambasts the media for its reckless and outrageous behaviour and accuses it of having wreaked havoc in the lives of innocent people for many decades. Politicians get a sharp rap on the knuckles for developing too close a relationship with the press in a way which has not been in the public interest. Yet, for all the apparent sound and fury, the report is more significant not so much for what it says but for what it does not say. During the hearings, Lord Leveson made some strong observations about the need for a radically new regulatory regime. This sparked speculation that he was likely to recommend a strong dose of statutory regulation. It was widely thought that he might bow to pressure from victims campaign groups such as Hacked Off and go for the nuclear option a press law. In the end, though, he settled for a sensible middle course between the discredited current system of self-regulation and state regulation. He wants the creation of a new regulatory body which would be truly independent of the newspaper industry and the government, but backed by legislation. He stressed that this did not imply state control. The proposed legislation was not meant to establish the new body but only to recognise an independent regulatory regime as the public had no confidence in the industry-controlled Press Complaints Commission. While the Opposition Labour Party and the governments junior coalition partner, the Liberal Democrats, have enthusiastically embraced the proposal, Prime Minister David Cameron believes it has the potential to infringe free speech and the free press, a view not shared by many of his own MPs. Eventually what will count is public opinion and it is overwhelmingly in favour of the Leveson proposal, leaving Mr. Cameron

looking like the odd man out. The report will find resonance in India too, where calls for media regulation are growing louder. Indeed, before it is beset with its own hacking scandal, the Indian media should see what lessons it can draw from the Leveson report. ==================================================== Growing crisis of drug prices Indias drug price control order, which is vital to the availability of affordable essential medicines, has been whittled down to the point of becoming insignificant. While the number of price-controlled medicines has dwindled over the past three decades, from 347 to 74, the pharmaceutical industry has been pursuing super profits. The High Level Expert Group of the Planning Commission on Universal Health Coverage noted in its report that price variation of therapeutically similar drugs based on brand could be as much as 1,000 per cent in the market; low official procurement prices for similar drugs were found to vary by a staggering 100 to 5,000 per cent in relation to market prices. Given these trends, it is unsurprising that 74 per cent of out-of-pocket spending on health by Indians is towards medicines. The distressing reality is that millions go without medications because they cannot afford them and they are not available free from government facilities. Activists have justifiably sought the intervention of the Supreme Court, and the Centre has the responsibility to act quickly. At this stage, it ill-serves the goal to merely expand the National List of Essential Medicines, without arriving at a rational price control formula. Here, the system of cost-based pricing with provision to add post-manufacturing expenses can be built upon, since ingredient and other costs are transparent under declarations made by producers for taxation purposes. Direct control of drug prices is unavoidable in India because the option of indirect control at the time of procurement by public health agencies and insurers is not yet available, as in Europe and the U.S. Citizens in developed countries are insulated from the vagaries of market pricing: they either do not pay at the point of treatment or get a cash reimbursement. But even here, there is the Tamil Nadu model under which the pharmaceutical industry supplies quality drugs at a fraction of the market price. What this proves is that the price of a drug in the market cannot be several hundred per cent more than what is paid by official agencies. In the sample case of anti-hypertensive drug atenolol, in 2008-09 prices, a strip of tablets was procured officially by Tamil Nadu for Rs.1.20, while consumers bought it for Rs. 26.30 from the market leader. Clearly, the case for reform and cost-based pricing cannot be overstated. The Centre must also plug loopholes that help manufacturers evade price controls by producing combinations of essential and other medications. A panel of professionals to examine all medicines consumed in the country must be constituted, to prepare a more exhaustive and relevant list of essential drugs. ================================== Making talks meaningful The Chief Ministers of Tamil Nadu and Karnataka have been quick to respond positively to the Supreme Courts suggestion that they meet and find a political solution to the seemingly intractable Cauvery river water dispute. It ill-behoves anyone to balk at an opportunity for negotiations, regardless of the stage of litigation, especially when the highest court in the land suggests it. Since the need to adjudicate arose because years of negotiations ended in failure, the advice for further talks long after a duly constituted tribunals verdict has been delivered may seem strange. Yet, the executive has to take responsibility for the failure of institutional mechanisms to find a solution. A provision in the Constitution, a law on inter-State water disputes, the verdict of a tribunal formed under the law, and an authority headed by the Prime Minister and involving the Chief Ministers of the basin States all these structural arrangements seem to fail in the face of political intransigence. Past experience shows that the dispute flares up only in years of distress and goes dormant whenever natures bounty renders the upper riparians opinion on the timing and quantum of release of Cauvery water irrelevant. As they sit down for talks on Thursday the first time since 1997 that Chief Ministers from the two States find themselves at the negotiating table it is not the political will to find an amicable solution in the interests of their farmers which brings them there; rather, they will be there at the courts bidding, perhaps each seeing in it an opportunity to expose how intransigent the other side is. If they wish to defy this realistic, if not cynical, assessment, they would do well to understand that this time

they are armed with much more than good intentions to move forward: the final award of the Cauvery Tribunal, delivered in 2007, is available for guidance and refuge. In the upcoming round of talks, the two Chief Ministers would serve the farmers cause well if they do not stop with finding a way out of the current years water shortage. Here is an opportunity to move beyond the particular requirements of this season as irony would have it, the two States even disagree on what constitutes a season and hammer out a lasting political solution to a dispute that persists five years after a final award which has the force and effect of a Supreme Court decree. They could accept broadly the terms of the award which apportions the water estimated to be available in the Cauvery basin among the four riparian States and look for ways to implement it. Only a meaningful agreement on operationalising the final award during normal years and sharing distress pro rata in years of shortage is the way out. ==================================================== Morsy decrees trouble Egyptian President Mohamed Morsys November 22 decree awarding himself vast new powers has both stirred up a political hornets nest and demonstrated the uncertainty and difficulty of the transition to consolidated democracy of one of the most important countries in the Arab world. The decree, which critics say is akin to former dictator Hosni Mubaraks laws and may even go beyond any of them, gives Mr. Morsy the power to enact any law he wants, and in effect removes the current prosecutor general, so that no authority can now revoke any presidential decision; the President also gets the power to appoint a new prosecutor general for a four-year term. The edict, claimed by Mr. Morsy to be a way of cleans ing public institutions, will remain in force until a new parliament is elected but that cannot be done until a new constitution is drafted and Mr. Morsy has also extended the timeline for that process. The President issued the decree of his own accord, without consultation, in a move that has been likened to the Free Officers coup in 1954 and amounts to a sidelining of the judiciary. It is a contemporary version of a Henry VIII clause. Substantial sections of the Egyptian public have, understandably, been horrified by the Morsy edict, and have taken to the iconic Tahrir Square; some of the initial protests, including those in Alexandria, turned violent as members of the Muslim Brotherhood, parent body to Mr. Morsys Freedom and Justice Party, confronted them, and at the time of writing four people have died. The judiciary, for its part, has gone on strike, and most courts are closed. The President says he means the new powers to apply only to sovereignty-related issues, but that is at best vague; the judiciary, for its part, is widely distrusted for its role during the 30-year-long Mubarak regime, and the Presidents announcement of a special judicial group to reopen the trials of former members of the dictatorship may not go far enough. Mass demonstrations are planned, but for the present most of the public apparently do not wish open confrontation to go too far. The Muslim Brotherhood has abandoned plans for counter-demonstrations, and there are grounds for some optimism. Mr. Morsys dismissal of the senior military has reduced the armys influence. Secondly, the decree has united the democratic opposition, including liberals, leftists, and other groups, in a new National Salvation Front. The key point is that Mr. Morsys decree is simply not a subst itute for genuine democratic reform of major public institutions. That is where the real work lies. ==================================================== The plot thickens Not for nothing has Ram Jethmalani earned the sobriquet Battering Ram. The veteran lawyer and Bharatiya Janata Party member loves a good fight, a behavioural trait that has caused him often to clash with his party leadership. So at one level his suspension from the BJP followed by a show-cause notice is just a replay of history. Yet this time round there appears to be a conspiratorial backstory to Mr. Jethmalanis rebellion which has clearly unsettled party president Nitin Gadkari and his backers, among them the ideological high priests at Jhandewalan. The senior Jethmalani straddles both sides of the ideological divide. If in his heyday he defended terror convicts with some lan, more recently he upset the legion of Hindutva warriors with his outbursts against Lord Ram. As against this, Mr. Jethmalanis current passion is Narendra Modi, whom he appears determined to install as Indias Prime Minister, doing whatever it takes to achieve his objective from lobbying the Rashtriya Swayamsevak Sangh to leading a campaign to oust

Mr. Gadkari. It is this open plotting against the incumbent BJP chief with all its attendant consequences that has resulted in the party acting against Mr. Jethmalani. It is apparent enough that the BJP has read deeper meanings into Mr. Jethmalanis quarrels with the party leadership on the appointment of Ranjit Sinha as the new CBI chief. Mr. Jethmalani not only questioned the BJPs flawed opposition to Mr. Sinhas appointment, he made sure he was joined by other dissenting voices from within the party. It cannot have been a coincidence that the same set of rebels also back Mr. Modi for Prime Minister and want Mr. Gadkari despatched as a first step towards this larger goal. In other words, laffaire Jethmalani is not so much about an individuals misdemeanours as it is symptomatic of the turf battles raging within the BJP. A victory in Gujarat for Mr. Modi especially if it is handsome can only deepen the fissures, with the Chief Ministers backers certain to pitch him as a superhero waiting to deliver India to the saffron fold. Yet the Gujarat Chief Minister evokes deep fears, both within the BJP and among its potential allies. The BJP knows that the organisation will turn into a one-man show under Mr. Modi leading to the virtual eclipse of those with higher ambitions. The RSS, which nurtured Mr. Modi, abhors the cult of personality which it sees as damaging to ideology. The BJP has so far had little luck with expanding its alliance of parties. With Mr. Modi in command, potential allies will have further cause to keep their distance from the BJP. ========================================================== Daddy, can I have a bank? After interest rates, the licensing of new commercial banks has become the latest issue on which the Central government and the Reserve Bank of India cant seem to see eye to eye. According to reports, Finance Minister P. Chidambaram has asked the RBI to expedite the process of issuing new commercial bank licences by first finalising existing draft guidelines, as a prelude to receiving new applications. The RBI, on its part, does not want to move forward unless it is legally empowered to regulate the new entities more comprehensively than is possible now. That would include powers to supersede the boards of directors of recalcitrant banks if the need arises. Existing regulations, in the RBIs view, are not sufficient to check possible violations by banks promoted by those for whom banking may not be the core or even the main business. A specific concern has been the need to ensure that promoter groups are kept at arms length from the new banks. The failure by big business houses to adhere to this basic principle with regard to banks in which they were major shareholders was one of the principal reasons behind Indira Gandhis bank nationalisation drive in 1969. Since then, the door has been shut for them. Even with the onset of liberalisation, while new private banks have come into being, none of them has had any connection with industrial houses. In his 2010 budget speech, Pranab Mukherjee, who was Finance Minister at the time, announced that industrial houses, among others, would be allowed to start private banks. His proposal, predictably, caused a raging, if inconclusive debate, over the desirability of the move. The RBI circulated a discussion paper in August 2010 detailing the pros and cons and released draft guidelines a year later based on the feedback received. The minimum capital requirement is pegged at Rs 500 crore. To be eligible, promoters must have diversified ownership, sound credentials and integrity and a successful track record of at least 10 years. These and other criteria are meant to raise entry barriers. However, there are two sets of objections to letting industrial houses in even after the regulatory lacunae are plugged. The first arises out of a genuine apprehension that large industrial houses, already entrenched in several spheres of the financial sector, might, after getting a bank licence, indulge in regulatory arbitrage and even attempt regulatory capture. There is, besides, no reason to fundamentally alter the ownership structure of Indian banking by letting big business groups in. With the right policy measures and incentives, existing banks will be able to better achieve objectives such as financial inclusion. ==================================================== No time to die Suicides, and mental distress and illness that often lead to them, have been a bane across different

population segments in India. While every life thus lost is a cause for concern, the sense of untimely tragedy is compounded when bright young students resort to the extreme step. Today, educational institutions are increasingly marked by competitive pressures and financial and other demands that put a burden which some students are just not able to bear. The decision of the Ministry of Human Resource Development to deploy a Task Force to look into cases of suicide in Central-funded higher technical institutions was well-founded in the context of 12 such incidents over 2010- 2011. The panel has now made its recommendations, essentially on predictable lines. These include a dedicated system of counselling involving faculty members, students, parents and mental health professionals to cater to the needs of students; a visible entity for the service with parity in the institutions organis ational structure, and a proactive and enabling environment for students with psychological needs. The panel has rightly sought better awareness and sensitivity towards issues of social justice including gender, class and caste. However, this exercise needs to be scaled up to cover the entire spectrum of educational institutions in the country in order to address the underlying issues in a more meaningful and egalitarian manner. According to data for 2011, the number of suicidal deaths country-wide among students was 7,696. In 2010 the total was 7,379. The figures have consistently risen over recent years. According to one study published by Lancet, suicides have become the second leading cause of death among young adults in India, after road accidents for men and maternity-related complications for women. That study also indicated that in India, suicides have become more common among educated and young adults in contrast to patterns observed in many developed societies. We need to pause and reflect: what is happening to our young people? An all-out effort should be launched to reach out to youths in distress, enabling close cooperation and collaboration between counselling services and the health services. As a part of this exercise, India should find ways to address its shortage of mental health professionals. Counselling processes should assist students who have social, academic, linguistic, financial, physical and other difficulties. More preventive and promotional mental wellness activities, as also sensitisation and awareness programmes, need to be put in place. ===================================== Minimum proof, maximum sentence The cavalier approach of the police, especially in Delhi, to terror investigations has long hampered the countrys fight against terrorism. In many cases, the real culprits remain at large even as responsibility is wrongly fixed on persons who are either innocent or only peripherally connected to a particular incident. The terrible consequences of this unprofessionalism were revealed on Thursday when the Delhi High Court ordered the acquittal of two men wrongly sentenced to death in the 1996 Lajpat Nagar market blasts case. The Court was unsparing of the prosecution which, it said, had gone beyond lapses and inefficiencies t o produce evidence whose nature and truthfulness were in serious doubt. The message is inescapable: under pressure to show results, the police often fudge evidence, not bothering that this sleight of hand can rob an accused of the most precious gift ever his life. In this case, the wrong done to Mirza Nissar Hussein and Mohammed Ali Bhatt was so enormous that when the higher court set it right, the two men found themselves dramatically transported from their condemned world of despair and death to full life and liberty. In their judgment, Judges S. Ravindra Bhatt and G.P. Mittal made it a point to rebut the oft-used excuse in terror cases: that the nature of terrorism makes it difficult for the prosecution to meet the impossible standards of proof demanded by the courts: In matters of liberty, the weakness of the state surely cant be an excuse for lowering time-tested standards, especially in serious crimes where the accused stand to forfeit their life... Indeed, with the court unequivocally reitera ting a fundamental principle of justice-delivery, the time has truly come to reassess a state of affairs where manufactured evidence passes for investigation and acquittals are blamed on legal technicalities or on the unreliability of witnesses, more so in terror cases. In another judgment of great import delivered in October this year, the Supreme Court overturned 11 convictions under the Terrorism and Disruptive Activities (Prevention) Act (TADA), rejecting the prosecutions plea that it had committed only a technical error in overlooking a key safeguard of TADA. The courts answer to this was that in the land of Gandhi, the means were necessarily inseparable from the ends. Rather than going after innocents and building cases on evidentiary quicksand as it appears they have been doing in many cases investigative agencies prosecuting terrorist crimes must learn to rely on

improved technical and forensic evidence. At the end of the day, that is the only way to prevent the escape of real terrorists. ===================================== Sealing the cracks The finalisation of a new protocol to curb illicit trade in tobacco products under the World Health Organisations Framework Convention on Tobacco Control (WHO FCTC) promises to address a major systemic weakness. Although the state-parties to the Convention have been working to stop disease and death resulting from tobacco use for seven years, their efforts are stymied by a well-oiled system of unlawful trade in cigarettes and other tobacco products. It is wholly welcome, therefore, that more than 140 members of the FCTC have agreed on the Protocol to Eliminate Illicit Trade in Tobacco Products. The new pact seeks to clearly define illegal trade, and counteract it using licensing, information sharing and legal cooperation among countries. Illicit trade is defined as any practice or conduct prohibited by law and which relates to production, shipment, receipt, possession, distribution, sale or purchase including any practice or conduct intended to facilitate such activity. In the past, smuggling of well-known cigarette brands dominated illegal activity. Recent trends show undeclared manufacture by big tobacco companies for illegal sale in countries with weak law enforcement, and production of new cigarette brands in Free Economic Zones. These cheap illicit whites are sold in distant markets violating local laws. Africa is an attractive market for such cigarettes. Estimates of sales in 84 countries made in recent years indicate that more than a tenth of the consumption appears to be illicit a staggering annual volume of more than 650 billion cigarette sticks. These are cracks in the campaign that a new protocol could seal effectively. FCTC members have since 2008, identified the features of a new agreement that would include licensing of all business segments, introduction of tracking and tracing systems, control of Free Economic Zones that benefit from concessions, and tracing of payments. As a party to the Convention, India should quickly ratify the protocol when it opens for signature in January. But more importantly, it should address the challenge at home, of shifting a large number of farmers away from tobacco cultivation to remunerative alternatives. That is going to be extremely difficult, unless the task is viewed as a mission. The lobbyist argument is that India is the second largest exporter of unmanufactured tobacco, worth about a billion dollars a year. Yet, it is also true that the national health burden linked to tobacco use is nearly 42 per cent cancer deaths in men and 18 per cent in women, besides high cancer incidence and morbidity. As an important member, India must support the new protocol and effective implementation of the Convention. ======================================== Welcome move on clinical trials The recent announcement by the British Medical Journal (BMJ) that starting January it will publish the results of human clinical trials only when there is a commitment [by the sponsors] to make the relevant anonymised patient-level data available on request is commendable. The immediate provocation could be its on-going three-year-long battle with Roche to make the pharmaceutical company share the complete trial data of Tamiflu the antiviral drug used for fighting influenza. According to the BMJ, about 60 per cent of data from Phase III trials have never been published. The journals bold decision will go a long way in stripping the drug industrys shroud of secrecy around clinical trial data, and preventing it from withholdin g and distorting drug safety and effectiveness data. The BMJ decision comes close on the heels of GlaxoSmithKlines announcement last month to make available to scientists the raw data of all trials carried out since 2007, of both approved and abandoned drugs. Next year will also see the European Medicines Agency providing access to clinical trial data submitted to it. If journals vie with each other to publish the results of large-scale trials, they have a moral responsibility to ensure that the scientific community and medical practitioners are not misled, and patients lives are not endangered. History is replete with many high-profile cases where patients have suffered gravely as a result of incomplete and incorrect reporting of drug safety and effectiveness. The last few years have witnessed several measures aimed at bringing more transparency in the way trials are conducted and eliminating the cherry picking of data, the bane of trial results reporting. The International Committee of Medical Journal Editors took the first step when they made registration of all clinical trials post July 2005 a

pre-requisite for publication of trial results in medical journals. Next, an American law made the submission of basic results of all U.S. clinical trials (except Phase I) mandatory with effect from September 2007. The noose is now tightening and drug companies know they cannot always claim that commercial interests override public health concerns. ====================================== Unfriend the thought police There can be only one response to the patently illegal action of Maharashtra police in arresting two young women for exercising their constitutional right to free speech and expression on Facebook: the officers and personnel involved must be made an example of. They should face the full force of the law, leading to the maximum penalty for wrongful arrest, illegal restraint and confinement. Only then will the message go out that trampling on constitutional freedoms will invite severe consequences. Their illegal act was made worse by the craven manner in which the police kowtowed to a violent lumpen group in Palgarh, Thane, which found the Facebook comment by one of the women on the Mumbai shutdown following Bal Thackerays death, and its endorsement by her friend, objectionable. What stands out in this episode, and similar ones earlier, is the readiness of the police to make arbitrary arrests and cloak their censorial actions using a combination of Indian Penal Code sections that have no place in a free country, and the infamous Section 66A of the Information Technology Act which deals with offensive messages. It mattered little to them when using Section 505(2) of the IPC on promotion of hatred, ill-will or enmity, that their case grossly fails the test of mens rea, or intent. After all, what can be illegal about expressing an opinion about so public an event as the complete shutdown of the countrys financial capital? The rise of community websites as networks of hope for the average citizen is obviously discomfiting many in authority. The capacity of the medium to name, shame and embarrass far exceeds the ability of the high and mighty to control it. Their response has been to use the police to settle scores with some, and thus send out the message to the majority. Brazen misuse of the power to arrest continues, because there is no significant penal outcome. There are clear Supreme Court guidelines on making an arrest, which have been blatantly violated in the case of the Facebook women and many other s before them. As the court pointed out in Joginder Kumar vs State Of U.P., an arrest cannot be made simply because it is legal; the police officer must be able to justify the act. The Palgarh police stand naked in the eyes of law on this count. They have no justification for what they did and are prima facie contemnors. As a nation, India must worry about the rapidly shrinking space for freedom of speech and expression, and act resolutely now. Section 66A of the IT Act which nullifies constitutional free speech guarantees must go. Equally, Maharashtra must be compelled to restrain the Shiv Senas proclivity for violence towards people with a counter view. ================================== Dances with Myanmar In the span of less than a week, Myanmar has provided India with a couple of foreign policy reality checks. All these years, New Delhi justified its engagement with the junta as not just dictated by its own strategic and security concerns, but as one that prodded the military towards political reforms. Even if there is some truth to this, it was clearly, if gently, rebuffed by Aung San Suu Kyi herself, on her visit to India last week. On a journey that was both personal and political, the chairperson of Myanmars National League for Democracy was categorical that it was no thanks to the worlds largest democracy where she spent several formative years that she now walked free after nearly two decades of imprisonment. In another subtle rebuke, she said she wanted to focus on rebuilding what were once strong ties between the people of Myanmar and India that would stand the two countries in better stead than governmental relations. As someone likely to lead Myanmar sooner than later, Ms Suu Kyis remarks cannot be shrugged off lightly. Fortunately, her streak of pragmatism has enabled her to take a generous view of Indias policy as something that happens all the time in international relations, as she told this newspaper in an interview. Indeed, it is this pragmatism that has enabled her own co-operation with her military oppressors on the reforms process. The other instructive event was Barack Obamas visit to Myanmar on Monday. The six -hour stopover, sandwiched between stops in Thailand and Cambodia, had two apparent intentions: to underscore

Myanmars importance in the pivot to Asia, Obama IIs new strategic focus; and, to claim success for the U.S. policy on Myanmar, first of punishing economic sanctions against the junta and since 2010, a calibrated engagement with it. While Ms Suu Kyi has been profuse in her gratitude to the U.S. for standing by her, the importance the regime attached to the visit was evident in President Thein Seins decision to go out of his way, literally, to receive Mr. Obama in Yangon rather than in the new capital Nay Pyi Taw. The gesture would have been noted in Beijing, which has massive clout in Myanmar but remains untrusted. He also released another batch of political prisoners ahead of the visit. For his part, the U.S. President signalled the increasing accommodation for the regime by using the junta-given name Myanmar instead of Burma, and expressed more confidence in the reforms process than Ms Suu Kyi. But he made an emotion-filled visit to meet her at her lakeside home that was once her prison. If Prime Minister Manmohan Singhs decision to make her meet him at a Yangon hotel during his visit in May 2012 seemed like a bad idea then, it seems worse now. ================================= New version of Internet addresses available in India The Internet addresses under the present version IPv4 (Internet Protocol version 4), are limited and service providers often assign single IP address to many users, making it difficult to identify the end user. The number of IPv6 addresses available is enormous. ISPs (Internet Service Providers) can allocate an IP address to their users. People can be easily identified if they are using IPv6, APNIC Director (Services and Operations) Sanjaya said at the roadshow for new version IPv6 here today. APNIC, which is one of the five authorised bodies for issuing Internet addresses, has recognised Indian Registry for Internet Names and Numbers (IRINN) for issuing IP addresses in India. We are issuing IPv6 addresses at up to 60 per cent less than prevailing rates in the ongoing soft l aunch period. This is to test compatibility of hardware and softwares that has to be in place. In next couple of months we will launch industrial grade of IPv6, National Internet Exchange of India (NIXI) Chief Executive Govind said. IRINN has been set-up under the state-run NIXI. On new version IPv6, Internet Service Providers Association of India President Rajesh Charia said that the new addresses will be multiple times cheaper for companies than IPv4 addresses. IRINN is issuing initial set-of IPv6 addresses in price range starting at Rs 21,999 compared to prevalent rate of around Rs 66,000 in Asia Pacific region. On addressing security issues with the help of IPv6, Charia said, Government will have to ensure that the new equipment and devices that are produced or imported in the country are at least IPv6 enabled. At present, there is no import restriction on devices and equipment that do not comply with IPv6 standards. =================================== Arming the law against gun trade GARIMELLA SUBRAMANIAM An overwhelming majority of 157 countries, including the United States and China, have voted to finalise next March a global treaty to regulate the billion-dollar trade in conventional weapons. Significantly, not a single country opposed the resolution to combat the proliferation of illicit arms in the United Nations General Assemblys First Committee and Russia was the lone major exporting power to abstain from the vote. The development reflects an emerging consensus that despite the legitimate requirements of defence cooperation among countries, weapons transfers ought to be subject to greater multilateral supervision in view of their devastating consequences for human lives and livelihood.

NEEDLESS CONTROVERSY Under the proposed global convention, governments are expected to agree to cease transfers of arms and ammunition where there are risks that countries are likely to deploy them for human rights abuses and violations of international humanitarian law. This is Amnesty Internationals Golden Rule, requiring all states to carry out a rigorous risk assessment of unauthorised use and potential rights violations. Predictably, attempts to incorporate basic principles of the rule of law was resisted both by the big arms exporting countries such as the U.S., China, and Russia, as well as autocratic regimes in Africa and Asia. However, any attempt to harmonise a global law on the trade in lethal weapons with broad human rights principles is unexceptionable. Such moves are in fact consistent with the spirit underlying established procedures that democratic states have in place to not extradite terror suspects to countries where torture is routinely applied during trials. The other controversy in the negotiations relates to the nature and scope of arms that should be subject to controls. Civil society campaigns have strongly advocated coverage of the entire range of conventional weapons, including small arms and light weapons (SALW) and related ammunition under the treaty. Their claim that a much larger proportion of casualties in modern-day armed conflict are caused by SALW is too compelling to be overlooked. Although the Obama administration reversed the earlier U.S. position on the treaty, Washington, with Moscow and Tehran, is not expected to strive hard for a strong law. One of the sticky points has been the inclusion of ammunition. CROSS-SECTORAL SUPPORT The first-ever comprehensive treaty for control of the commerce in conventional arms enjoys broad support in view of the ethical, socio-economic and public health ramifications of armed conflict. Some 2,000 parliamentarians from over 114 countries have backed proposals to cover transfers of all conventional arms, including ammunition and equipment. Significantly, they have also committed to advocate early and effective ratification of such a treaty by their respective governments. A World Health Organisation report on violence way back in 2002 singled out the need for a global response to arms trade as among the top priorities. Now, the International Physicians for the Prevention of Nuclear War has underscored the importance of a robust treaty on arms trade for the protection of life and the promotion of health. Also significant is the call issued last year by a group of global investors who manage or own assets worth $1.2 trillion. Signatories to the United Nations-backed Principles for Responsible Investment, the group has underscored the need for greater transparency in international arms transfers as social, governance and environmental issues have implications for investment portfolios. HARD REALITIES Yet none of the stakeholders who engaged in deliberations for nearly a decade would seriously count on major weapons exporting countries to cease arming Africas warlords or Latin Americas drug mafia in a hurry. The ink had barely dried on the document signed in New York when Britains Prime Minister David Cameron was busy negotiating weapons export deals with the United Arab Emirates, Oman and Saudi Arabia. Ironically, the United Kingdom is one of the earliest champions of talks on the arms treaty. Western powers seldom miss an opportunity to express support for the momentous democratic churning witnessed in the Middle East. But the material support they extend to autocracies and warlords in Asia and Africa tells a different story. It is no secret that Mr. Camerons bid for the sale of Eurofighter Typhoons acquired urgency after the failed merger of BAE Systems, the U.K.s largest defence contractor, with the Franco-German giant, EADS (European Aeronautic Defence and Space Company). More broadly, clandestine arms supplies that sustain notorious dictatorships and defend domestic jobs are not consistent with the declared policy of promotion of democracy and raising human rights violations abroad. Even less in the context of the severe fallout of the current global economic slowdown.