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Today's Hot Stories - January 30, 2013

10 Headlines for Today

(1) Leprosy continues to haunt India, social stigma remains
(2) Ex-CAG official R.P. Singh’s charges false, says JPC
(3) John Kerry to head US State Department
(4) SBM to raise funds via private placement
(5) GMR synchronises Kamalanga Thermal plant
(6) SpiceJet launches flights to Guangzhou in South China
(7) Djokovic retains No.1 spot; Nadal out of top four
(8) Chinese swimmer Li Zhesi banned 2 years for doping
(9) T20: India maintains No. 3 spot in ICC rankings
(10) Shah Rukh Khan is safe in Mumbai, say Police

5 Stories for Today

(1) Shiv Sena snubs Modi, backs Sushma
(2) Locked in U.N. files, 15 years of bloodletting at LoC
(3) More elbow room for banks to cut rates
(4) Boeing 787’s probe shifts to the maker of the monitoring system
(5) RBI reiterates demand for strong and effective supply side response

(1) Shiv Sena snubs Modi, backs Sushma

Opposition to Gujarat Chief Minister Narendra Modi as the Bharatiya Janata Party’s prime ministerial choice received a tonic on Tuesday with the Shiv Sena endorsing its support for Leader of the Opposition in the Lok Sabha Sushma Swaraj in the race.

“We feel Sushma Swaraj is a suitable candidate for the PM’s post,” Sena MP and party spokesman Sanjay Raut, told reporters here.

According to Mr. Raut, deceased Sena patriarch Bal Thackeray had also backed Ms. Swaraj as the BJP’s Prime Ministerial candidate.

The Sena’s support for Ms. Swaraj comes a day after senior BJP leader Yashwant Sinha vociferously backed Mr. Modi’s candidacy, causing consternation within the Nitish Kumar-led Janata Dal (United).

According to Mr. Sinha, the BJP would ‘hugely gain’ by projecting Mr. Modi as Prime Minister.

The Sena had recently castigated the Gujarat Chief Minister for permitting the Pakistan cricket team to play at Rajkot.

An editorial in the party mouthpiece Saamana had said that while the Gujarat government turned away a 22-member Pakistani delegation that had come for the ‘Vibrant Gujarat’ summit, it allowed the cricket team to play.

“The Gujarat government should have turned the Pakistan team away … Maharashtra and Gujarat must join forces to battle against Pakistan,” said Sena president Uddhav Thackeray in the editorial.

(2) Locked in U.N. files, 15 years of bloodletting at LoC

Complaints by Pakistan of executions, beheadings in secret cross-border raids by Indian forces

In classified protests to a United Nations watchdog that have never been disclosed till now, Pakistan has accused Indian soldiers of involvement in the torture and decapitation of at least 12 Pakistani soldiers in cross-Line of Control raids since 1998, as well as the massacre of 29 civilians.

The allegations, laid out in confidential Pakistani complaints to the United Nations Military Observer Group in India and Pakistan (UNMOGIP), suggest that Indian and Pakistani troops stationed on the Line of Control remain locked in a pattern of murderous violence, despite the ceasefire both armies entered into in November 2003. Earlier this month, bilateral relations were severely damaged after a series of LoC skirmishes, which culminated in the beheading and mutilation of two Indian soldiers Lance-Naik Hemraj Singh and Lance-Naik Sudhakar Singh.

The Ministry of Defence did not respond to an e-mail from The Hindu, seeking comment on the alleged decapitation of Pakistani civilians and troops reported to UNMOGIP. However, a military spokesperson said the issue had “not been raised by Pakistan in communications between the two Directors-General of Military Operations.”

The Ministry of External Affairs also said the UNMOGIP complaints had not been raised in diplomatic exchanges between the two countries.

“Ever since 9/11,” a senior Pakistan army officer told The Hindu, “we have sought to downplay these incidents, aware that a public backlash [could] push us into a situation we cannot afford on the LoC, given that much of our army is now committed to our western borders. Each of these incidents has been protested by us on both military and UNMOGIP channels.”

UNMOGIP, set up after the India-Pakistan war of 1947-1948 to monitor ceasefire violations, does not conduct criminal investigations, or assign responsibility for incidents. The reports of its ceasefire monitors are sent to the organisation’s headquarters in New York, and forwarded to the Ministry of Defence in New Delhi.

Ever since 1972, India has responded to UNMOGIP queries with a standard-form letter, saying it believes the organisation has lost its relevance following the demarcation of the LoC. Earlier this month, India argued in the United Nations that the organisation ought to be wound-up.

Massacre for massacre

The most savage cross-LoC violence Indian forces are alleged to have participated in was the killing of 22 civilians at the village of Bandala, in the Chhamb sector, on the night of November 26-27, 1998. The bodies of two civilians, according to Pakistan’s complaint to UNMOGIP, were decapitated; the eyes of several others were allegedly gouged out by the attackers. The Pakistani military claimed to have recovered an Indian-made watch from the scene of the carnage, along with a hand-written note which asked, “How does your own blood feel”?

First reported by The Hindu’s sister publication Frontline in its June 19, 1998 issue, the Bandala massacre is alleged to have been carried out by irregulars backed by Indian special forces in retaliation for the massacre of 29 Hindu villagers at Prankote, in Jammu and Kashmir, by the Lashkar-e-Taiba. The LeT attackers slit the throats of their victims, who included women and children.

No Indian investigation of the Bandala killings has ever been carried out. However, an officer serving in the Northern Command at the time said the massacre was “intended to signal that communal massacres by jihadists, who were after all trained and equipped by Pakistan’s military, were a red line that could not be crossed with impunity.”

The Lashkar, however, continued to target Hindu villagers in the Jammu region; 10 were killed at Deesa and Surankote just days later, on May 6, 1998. In 2001, 108 people were gunned down in 11 communal massacres, and 83 people were killed in five incidents in 2002 — a grim toll that only died out after the 2003 ceasefire.

Brutal retaliation

Even though the large-scale killings of civilians did not take place again, Pakistan continued to report cross-border attacks, involving mutilations, to UNMOGIP.

Six months after the Kargil war, on the night of January 21-22, 2000, seven Pakistani soldiers were alleged to have been captured in a raid on a post in the Nadala enclave, across the Neelam River. The seven soldiers, wounded in fire, were allegedly tied up and dragged across a ravine running across the LoC. The bodies were returned, according to Pakistan’s complaint, bearing signs of brutal torture.

“Pakistan chose to underplay the Nadala incident,” a senior Pakistani military officer involved with its Military Operations Directorate told The Hindu, “as General Pervez Musharraf had only recently staged his coup, and did not want a public outcry that would spark a crisis with India.”

Indian military sources told The Hindu that the raid, conducted by a special forces unit, was intended to avenge the killing of Captain Saurabh Kalia, and five soldiers — sepoys Bhanwar Lal Bagaria, Arjun Ram, Bhika Ram, Moola Ram and Naresh Singh — of the 4 Jat Regiment. The patrol had been captured on May 15, 1999, in the Kaksar sector of Kargil. Post mortem revealed that the men’s bodies had been burned with cigarette-ends and their genitals mutilated.

Less detail is available on the retaliatory cycles involved in incidents that have taken place since the ceasefire went into place along the LoC in 2003 — but Pakistan’s complaints to UNMOGIP suggest that there has been steady, but largely unreported, cross-border violence involving beheadings and mutilations.

Indian troops, Pakistan alleged, killed a JCO, or junior commissioned officer, and three soldiers in a raid on a post in the Baroh sector, near Bhimber Gali in Poonch, on September 18, 2003. The raiders, it told UNMOGIP, decapitated one soldier and carried his head off as a trophy.

Near-identical incidents have taken place on at least two occasions since 2008, when hostilities on the LoC began to escalate again. Indian troops, Pakistan’s complaints record, beheaded a soldier and carried his head across on June 19, 2008, in the Bhattal sector in Poonch. Four Pakistani soldiers, UNMOGIP was told, died in the raid.

The killings came soon after a June 5, 2008 attack on the Kranti border observation post near Salhotri village in Poonch, which claimed the life of 2-8 Gurkha Regiment soldier Jawashwar Chhame.

Finally, on August 30, 2011, Pakistan complained that three soldiers, including a JCO, were beheaded in an Indian raid on a post in the Sharda sector, across the Neelam river valley in Kel. The Hindu had first reported the incident based on testimony from Indian military sources, who said two Pakistani soldiers had been beheaded following the decapitation of two Indian soldiers near Karnah. The raid on the Indian forward position, a highly placed military source said, was carried out by Pakistani special forces, who used rafts to penetrate India’s defences along the LoC.

Fragile ceasefire

Part of the reason why the November 2003 ceasefire failed to end such savagery, government sources in both India and Pakistan told The Hindu, is the absence of an agreed mechanism to regulate conflicts along the LoC. Though both sides have occasional brigade-level flag meetings, and local post commanders exchange communications, disputes are rarely reported to higher authorities until tensions reach boiling point. Foreign offices in both countries, diplomats admitted, are almost never briefed on crises brewing on the LoC.

In October last year, highly placed military sources said, Pakistan’s Director-General of Military Operations complained about Indian construction work around Charunda, in Uri. His Indian counterpart, Lieutenant-General Vinod Bhatia, however, responded that India’s works were purely intended to prevent illegal border crossings. The unresolved dispute led to exchanges of fire, which eventually escalated into shelling and the killings of soldiers on both sides.

The November 2003 ceasefire, Indian diplomatic sources say, was based on an unwritten “agreement,” which in essence stipulated that neither side would reinforce its fortifications along the LoC — a measure first agreed to after the 1971 war. In 2006, the two sides exchanged drafts for a formal agreement. Since then, the sources said, negotiations have stalled over differing ideas on what kind of construction is permissible. “In essence,” a senior government official said, “we accept that there should be no new construction, but want to be allowed to expand counter-infiltration measures and expand existing infrastructure.”

India insists that it needs to expand counter-infiltration infrastructure because of escalating operations by jihadist groups across the LoC. Pakistan argues that India’s own figures show a sharp decline in operations by jihadists in Jammu and Kashmir. Last year, according to the Indian government, 72 terrorists, 24 civilians and 15 security personnel, including police, were killed in terrorist violence in the State — lower, in total, than the 521 murders recorded in Delhi alone. In 2011, the figures were, respectively, 100, 40 and 33; in 2010, 232, 164 and 69.

“You can’t say that you need more border defences to fight off jihadists when you yourself say there is less and less jihadist violence,” a Pakistani military official said. “The only reason there are less jihadists,” an Indian military officer responded, “is because we’ve enhanced our defences.”

Indian and Pakistani diplomats last met on December 27 to discuss the draft agreement, but could make no headway.

(3) More elbow room for banks to cut rates

CRR reduction to inject Rs.18,000 crore liquidity into the banking system

As widely expected, the Reserve Bank of India (RBI) reduced the indicative policy rate (repo rate) by 25 basis points from 8 per cent to 7.75 per cent. This is likely to help banks reduce their lending rates.

Repo rate is the rate at which banks borrow funds from the central bank.

The central bank also cut the Cash Reserve Ratio (CRR), the portion of the deposits that the banks are required to maintain with the RBI, by 25 basis points from 4.25 per cent to 4 per cent, pumping in a liquidity of Rs.18,000 crore into the system from February 9.

The policy rate cut together with the CRR cut is expected to give more elbow room for banks to lend money at lower rates. This is likely to benefit retail borrowers immediately more than industrial sectors, where growth is subdued.

However, the rate cut does not mean that the RBI is comfortable with the macro-economic indicators which would allow it to cut rates.

“There is some space, but limited….. we use it with lot of judgement,” said D. Subbarao, Governor, RBI, on reducing the rates, while addressing a press conference to announce the third quarter review of the monetary policy.

This is the second policy rate cut in this financial year. The RBI front-loaded the cut with a reduction of 50 basis points from its peak of 8.50 per cent to 8 per cent in April 2012. Since then, ballooning inflation prevented the RBI from cutting rates. Meanwhile, slowing growth made RBI’s job much more difficult.

The RBI Governor said that this cut would “provide an appropriate interest rate environment to support growth as inflation risks moderate.” Dr. Subbarao also expected that investment would be encouraged, “thereby supporting growth”.

“With headline inflation likely to have peaked and non-food manufactured products inflation declining steadily over the last few months, there is an increasing likelihood that going into 2013-14, inflation will remain range-bound around the current levels,’’ the RBI said. The apex bank revised downwards the wholesale price inflation for the March-end 2013 from 7.5 per cent to 6.8 per cent.

“While the series of recent policy initiatives by the government has boosted market sentiment, it will take some time to reverse the investment slowdown and reinvigorate growth,” said Dr. Subbarao adding, “We have revised downwards our projection of GDP growth for the current year from 5.8 per cent to 5.5 per cent.”

"While the rate cut signals a monetary policy stance that is more supportive of growth, the CRR cut complements the same by seeking to address liquidity conditions and will facilitate transmission of the monetary policy stance into lending rates,” said Chanda Kochhar, Managing Director and CEO, ICICI Bank. She hoped that these measures would contribute to a recovery.

“The widening current account deficit (CAD) to historically high levels, especially in the context of a large fiscal deficit and slowing growth, exposes the economy to the twin deficit risk…..Large scale deficits will accentuate the CAD risk, further crowd out private investment and stunt growth impulses,’’ RBI warned.

“What economy needs most of all and most urgently is new investment. This will step up currently flagging aggregate demand and also ease the supply constraints so that existing capacity is fully utilised and new capacity is built up,” Dr. Subbarao added.

(4) Boeing 787’s probe shifts to the maker of the monitoring system

The joint US-Japanese team, which is investigating into the Boeing Dreamliner’s battery problems, has shifted from the battery-maker to the manufacturer of a monitoring system.

Japan Transport Ministry official Shigeru Takano on Monday said that the probe into battery-maker GS Yuasa was over for now as no evidence was found relating to the source of the problems.

Ministry officials said as part of the ongoing investigation they will be inspecting Kanto Aircraft Instrument Co. that makes a system that monitors voltage, charging and temperature of the lithium-ion batteries.

All 50 of the Boeing 787s in use around the world have been grounded after one of the jets operated by All Nippon Airways made an emergency landing in Japan earlier this month due to overheating of the main battery.

Earlier in January, a battery of ANA’s 787 Dreamliner caught fire while parked at Boston’s Logan International Airport.

Share appreciates

GS Yuasa shares jumped after news of shifting of the probe to the system maker, gaining nearly 5 per cent in Tokyo trading. The scrip had plunged 12 per cent after the battery problems surfaced in Japan.

Ministry officials stopped short of saying that Kanto’s monitoring system was under any special scrutiny, saying it was part of an ongoing investigation.

“We are looking into affiliated parts makers,” Takano said.

Kyoto-based GS Yuasa declined to comment, noting that the investigation was still underway.

The Boeing 787 is the first jet to make wide use of lithium-ion batteries, the kind usually found in laptops and other gadgets. They are prone to overheating and require additional systems to avoid fires.

Investigators have been looking at the remnants of the ANA flight’s charred battery, but it is unclear whether the battery or a related part was behind its overheating.

Deliveries of the Dreamliner were three years behind schedule because of manufacturing delays. Much of the aircraft is made by outside manufacturers, many of them major Japanese companies who make about 35 per cent of the plane.

(5) RBI reiterates demand for strong and effective supply side response

Asks banks to be discerning in their loan decisions and ensure adequate credit flow to productive sectors of the economy

Even as the Reserve Bank of India (RBI) addressed the rising growth concerns by reducing the key rates, it yet again reiterated its often-articulated demand for a “strong and effective supply side response” to bridge the gaps in the infrastructure area, and correct structural imbalances in the economy, especially in key food articles.

Asserting that a “credible and comprehensive” fiscal adjustment by the government was critical in this regard, the apex bank reinforced its call for structural reforms. The approval process had to be hastened, and the governance improved to inspire trust among investors.

“The RBI, on its part, will have to calibrate monetary policy to the evolving growth-inflation dynamics, and the management of the twin-deficit risks,” D. Subbarao, Governor of the Reserve Bank, said while releasing the Third Quarter Review of Monetary Policy 2012-13. In this context, the Governor made it clear that the economy needed new investment ‘most urgently’.

The Governor also listed a number of major risks to the management of the economy. He was particularly worried that the widening current account deficit (CAD), read in tandem with the huge fiscal deficit, could expose the economy to “twin deficit risks”. While financing CAD with risky flows could push the economy into further vulnerable zone, the fiscal deficit could crowd out private investment and “stunt growth impulses,” the RBI felt. The apex bank said the global risks remained ‘elevated’. These had the potential to spill over to the Indian economy, it warned. It underscored the urgency in removing supply constraints, and clearing the negative investment climate.

The RBI admitted that the “risk aversion in the banking system stemming from concerns relating to growing non-performing assets is constraining credit flow”. It, however, asked banks to be discerning in their loan decisions and ensure adequate credit flow to productive sectors of the economy.




           
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