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Today's Hot Stories - January 07, 2013

10 Headlines for Today

(1) Toll rises to 4 in Dhule violence, curfew remains
(2) Akbaruddin Owaisi plea to delay police deposition
(3) World’s longest subway system boosts China’s public transport push
(4) Mahindra plans to launch ‘Mojo’ next fiscal
(5) India’s foreign reserves up by near $40 million
(6) Need to align bilateral investment treaty regime with global reality
(7) Warne banned for T20 Big Bash clash with Samuels
(8) India pulls off a dramatic win to avert clean sweep
(9) Tipsarevic solves the Chennai riddle
(10) Cold wave continues to sweep Delhi

5 Stories for Today

(1) SGPC, Akali Dal keep off Akal Takht function
(2) Iran wants all “aliens” out of Afghanistan after 2014
(3) Govt to consider diesel price de-regulation
(4) Lenovo to release giant 27-inch ‘coffee table PC’
(5) Worrying numbers compound problems

(1) SGPC, Akali Dal keep off Akal Takht function

In a departure from previous occasions, the top leadership of the Shiromani Gurdwara Parbandhak Committee and the ruling Akali Dal stayed away from a function on Sunday within the Golden Temple complex in which the Jathedar of the Akal Takht, Giani Gurbachan Singh, honoured the relatives of assassins of the former Prime Minister, Indira Gandhi. At the function organised to mark the 24th anniversary of the hanging of Satwant Singh and Kehar Singh, the Jathedar bestowed “siropa” (robes of religious honour) on their relatives.

(2) Iran wants all “aliens” out of Afghanistan after 2014

As Afghanistan’s President Hamid Karzai prepares for a visit to the United States, Iran has made it plain that it opposes the presence of American troops on Afghan soil after a formal exit in 2014.

Using a convoluted formulation, the visiting head of Iran’s Supreme National Security Council Saeed Jalili said in Kabul that not only should “aliens” leave the country, Afghanistan’s national sovereignty must also always be respected. Mr. Jalili — fresh from his visit to India where Afghanistan’s transition post-2014 was a salient topic for discussion — praised the Afghan people’s “historical background in not accepting aliens”. He added that this was Afghanistan’s “big asset” that imparted a powerful impulse to preserve “national sovereignty”.

The New York Times reported that the Obama administration was considering maintaining a force of 3,000 to 9,000 troops in Afghanistan after 2014. It noted that the U.S. and Afghanistan began talks in November on a possible agreement that would authorise an American troop presence in Afghanistan after 2014.

“Any force that remains is expected to have several missions. It would include Special Operations forces, which would be assigned to carry out raids against Al Qaeda and other terrorist groups that are deemed to threaten American interests,” said the report. The write-up also observed that “troops would also advise and mentor the Afghan Army and police in conjunction with forces from other NATO nations”.

On the contrary, Mr. Jalili signalled a regional approach, free from foreign presence, for providing security and enabling nation-building in Afghanistan.

“He [Mr. Jalili] expressed pleasure with process of formation and consolidation of national government in Afghanistan and expressed Iran’s readiness to transfer its experiences in different fields for more security development, progress and prosperity for Afghan people,” reported the state-run Islamic Republic News Agency (IRNA) following Mr. Jalili’s meeting with Mr. Karzai on Saturday.

Apart from the Iranians, the Russians have also declared their opposition to the presence in Afghanistan of American forces that are not mandated by the United Nations Security Council. In an interview with Afghan website Tolonews, Russian Foreign Minister stated that he found it “strange that while insisting that in 2014 the American troops, NATO troops I assume, would leave Afghanistan, at the same time Washington discusses with Afghanistan very purposefully the establishment of four five military bases for the post 2014 period”. He added: “I don’t think why this should be done this way because if you need the military presence, then you continue the implement the mandate of the Security Council. If you don't want to implement the mandate of the Security Council or you believe that you have implemented the mandate already, but still want to establish and keep the military bases, I don’t think it's logical.”

Separately, the Taliban has issued a statement berating Mr. Karzai for undertaking his journey to Washington “to sign a security pact which would pave the way for the presence of American troops in Afghanistan and through which America would continue its crooked policies in the region”. The Talban warned Washington that if it believes “it can implement its malicious policies and find a secure base for itself by leaving a residual troops presence then we clearly state that these dreams are only dreams which can and will not materialise just as they failed to materialise in the past eleven years”.

During his visit, Mr. Jalili also discussed with Rangeen Dadfar Spanta, Afghanistan’s national security advisor, the expansion of the transit corridor from the Iranian port of Chabahar into Afghanistan — a move that would reduce the landlocked country’s dependence on Pakistani ports for its trade.

(3) Govt to consider diesel price de-regulation

Diesel, kerosene and cooking gas LPG prices may be hiked soon as the government considers Vijay Kelkar Committee recommendations on cutting fiscal deficit.

The Kelkar Committee, which was appointed by Finance Ministry to suggest a roadmap for fiscal consolidation, has suggested immediate hike in fuel prices and complete deregulation of diesel prices by start of 2014-15 fiscal. It also suggested raising kerosene and LPG rates.

“It is still at proposal stage. The (Petroleum) Ministry is only processing that report and we are yet to take a decision,” Oil Minister M Veerappa Moily told reporters here, when asked about deregulation of diesel prices.

The panel had in September recommended “immediate increase in Petroleum prices. This should be continued in the next year in such a way that the prices of diesel are fully deregulated by the start of 2014-15. The prices of kerosene and LPG also should be revised regularly to keep the subsidy levels at affordable levels.”

Price of diesel, which currently costs Rs 47.15 per litre in Delhi, was last revised on September 14 when it was hiked by a steep Rs 5.63 per litre. Kerosene rates have not changed since June 2011 and it currently costs Rs 14.79 per litre in Delhi.

State-owned oil companies currently sell diesel at a loss of Rs 10.16 per litre, kerosene at Rs 32.17 a litre and LPG at Rs 490.50 per 14.2-kg cylinder.

Mr. Moily said the government was also considering raising the cap on supply of subsidised cooking gas (LPG) cylinders to 9 per household in a year from current limit of six.

(4) Lenovo to release giant 27-inch ‘coffee table PC’

Dismayed that family members are spread out over the house, each with a separate PC or tablet? Lenovo has something it believes will get them back together — a PC the size of a coffee table that works like a gigantic tablet and lets four people use it at once.

Lenovo Group Ltd., one of the world’s largest PC makers, is calling the IdeaCentre Horizon Table PC the first “interpersonal computer” as opposed to a “personal computer.”

At first glance, it looks like a regular all-in-one machine in the vein of the iMac- It’s a 27-inch (685.8-millimeter) screen with the innards of a Windows 8 computer built into it, and it can stand up on a table.

But you can pick it up off the table, unhook the power cord and lay it flat for games of “Monopoly.” It is big enough to fit four people around it, and the screen can respond to ten fingers touching it at the same time.

As a tablet, it’s a monstrosity. The screen is the size of eight iPads stitched together, and it weighs 15 pounds (6.8 kilograms). It’s almost as homebound as a flat-panel TV.

The Table PC will include plastic “strikers” for “Air Hockey,” and joysticks that attach to the screen with suction cups for other games, including multiplayer shooter “Raiding Company.”

In a demonstration at the International CES on Sunday, photos and videos could be rotated with fingers. Spreading five fingers at once on the screen cleared the screen of clutter, while squeezing them together brought the photos and videos back.

Lenovo, a Chinese company that owns IBM Corp.’s former PC business, said the Table PC will go on sale this summer starting at $1,699.

Microsoft Corp. pioneered the idea of a table PC with the Surface, a PC with a 30-inch (762-millimeter) touch-sensitive screen released in 2008. It was designed for store displays and other commercial applications. The concept is now called PixelSense, as Microsoft started using the “Surface” name for an unrelated tablet computer last year.

More recently, Sony Corp. released the Tap 20, an all-in-one PC that can also be laid flat. But it’s smaller than the Lenovo model, at 20 inches (508 millimetres) diagonally, and doesn’t have as much table-oriented software as the Table PC.

(5) Worrying numbers compound problems

At the beginning of the New Year, there has been a succession of bad news concerning the external sector. The Reserve Bank of India (RBI) released its quarterly report on balance of payments (BoP) covering the period July-September 2012, the second quarter of the current fiscal year. The report showed the current account deficit (CAD) spinning out of control to reach a record 5.4 per cent of gross domestic product (GDP). This is sharply higher than the 4.2 per cent recorded during the same period last year. In absolute terms, the CAD worsened to $22.3 billion in the second quarter from $16.4 billion in the preceding quarter (April-June 2012) and $18.9 billion a year ago.
External debt

On the same day, the finance ministry released a report on India’s external debt as on September-end. India’s external debt stood at $365.3 billion, up by $20 billion over the level of March 2012. These figures by themselves do not mean anything but the finance ministry’s explanation for the jump is telling. According to the report, the rise in external debt is largely due to higher non-resident Indian (NRI) deposits, short-term debt and commercial borrowings. Long-term debt, at $280.8 billion at end-March, was up by 5.1 per cent over end-March. Short-term debt, accounting for 23 per cent of the total external debt, increased by 8.1 per cent to $84.5 billion.
Limitations of policy-makers

The two data releases are significant in that they show the limitations of policy-makers in arresting the deterioration in two key external account indicators.

Take the current account deficit first. The expectation among policy-makers has been that it could be contained within “reasonable” limits of between 3.5 per cent and 4 per cent of GDP by March 31, 2013. That now looks very difficult to achieve, if not impossible.

Merchandise trade deficit, the excess of imports over exports, widened to $48.3 billion during the second quarter of the current fiscal year, up from $44.5 billion a year ago. Exports recorded a decline of 12.2 per cent and imports by 4.8 per cent. During the corresponding period last year, exports and imports had increased, making this year’s decline all the more pronounced.

Exports have declined month after month this year, the reason being that the principal markets for India’s exports, the developed countries, have not yet recovered from the recession. There is not much that the Government of India can do to reverse the decline beyond export promotion measures targeted at specific sectors. Recent foreign trade policies have sought to diversify foreign trade away from traditional markets and products. This is a strategy worth pursuing even if it is going to pay dividends only in the long haul.

Imports have decreased but not at the level of decline in exports. The two significant contributories to imports are petroleum and gold. During 2011-12, gold imports were of the order of $56 billion. The Finance Minister has hinted at raising the tariff on imported gold in the Union Budget. The difficulty with tariff barriers and physical controls is that either the higher cost might be absorbed given the inelastic demand, or the trade might be driven underground. The government will, however, have to persist with a wide range of measures to lower the demand, and, hence, imports of physical gold. Attempts at developing and popularising gold-linked deposit schemes, through mutual funds and banks, ought to be encouraged.
Portfolio flows

For the overall balance of payments, the implications of the trade and current account deficits are clear. The dependence on portfolio and other capital flows through foreign institutional investors (FII) continues. Recent months have seen a bounty of such flows into the stock markets, boosting their valuation. Exactly a year ago, the situation was very different as the FII pulled out and the indices tumbled.

Adding to the problem, certain other categories that would help in reducing the trade deficit have been coming in at a slower pace. For instance, net receipts under private transfers and other earnings from “invisibles” such as software exports have grown at a more modest pace than a year ago.

There are reasons to worry over India’s external debt, too, though for very different reasons. Whereas factors behind the CAD are mostly beyond the control of the government, it is wrong policies that have accentuated the problems connected with external debt. As the finance ministry has pointed out, the rise in external debt is largely due to higher NRI deposits, short-term debt and commercial borrowings. Recent government policies have sought to encourage these, driven by reasons of expediency. For instance, the government has sought to tap the global markets awash with liquidity through external commercial borrowings. NRIs have been given special concessions.

These policies represent a U-turn. Not long ago, the government sought to discourage the flow of funds from these sources. The rates on NRI deposits were pegged lower, and by prescribing stiff caps on borrowings through ECBs, the government ensured fewer borrowings. The accumulation of short-term loans might pose a threat to external account stability, if “bunched up “repayments” become due.




           
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