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Today's Hot Stories - March 05, 2011

10 Headlines for Today

(1) Arjun Singh passes away
(2) I accept my responsibility in CVC appointment: Manmohan
(3) Nepal’s former Prime Minister Bhattarai dies at 87
(4) GM to launch 6 new cars in India
(5) Centre seeks Rs.79,590 cr more to meet fuel, fertilizer bills
(6) Toyota defers Liva launch
(7) Serbia leads after Rohan Bopanna goes down fighting to Viktor Troicki
(8) West Indies wallops Bangladesh
(9) Kiwis canter to a comprehensive win
(10) ‘Slumdog Millionaire’ actor Rubina loses home in Bandra fire

5 Stories for Today

(1) Major chapter closed in Bofors case, Delhi court discharges Quattrocchi
(2) Rift in PPP over religious forces
(3) Pranab hints at further easing of FDI policy for infra development
(4) Rise of BRIC helped create global commodity boom: IMF
(5) Engineering exports likely to cross $50 b

(1) Major chapter closed in Bofors case, Delhi court discharges Quattrocchi

A major chapter in the 25-year-old Bofors saga was closed on Friday with a Tis Hazari court here discharging Italian businessman Ottavio Quattrocchi from the payoffs case after allowing the CBI to withdraw prosecution against him.Chief Metropolitan Magistrate Vinod Yadav, in his 73-page order, noted that the CBI, despite “spending through the nose for about 21 years, has not been able to put forward legally sustainable evidence with regard to conspiracy in the matter. Further, in the case of Mr. Quattrocchi, as against the alleged kickback of Rs.64 crore he received, the CBI had by 2005 already spent around Rs.250 crore on the investigation, which is sheer wastage of public money.”

Under the circumstances, the application seeking withdrawal of prosecution “appeared to be bona fide and in the larger public interest.”

Mr. Yadav started by reciting famous lines from an old Hindi film song — Woh afsana jisse anjaam tak laana na ho mumkin, usse ek khoobsurat mod dekhar chhodna hi achha — which translates to: “A story that cannot be taken to a logical end; it is better to leave it at a good juncture.”

The grounds stated by the CBI in 2009 for withdrawal of prosecution were: more than 19 years had passed since the first case was registered in 1990; all the other accused had died or proceedings against them had been quashed by the Delhi High Court; attempts to extradite Mr. Quattrocchi from Malaysia and Argentina had failed; and the Delhi High Court in 2004 had knocked out allegations of corruption or conspiracy with public servants.

The application was opposed by advocate Ajay Kumar Aggarwal on the ground that he as a public spirited citizen had “locus standi” to intervene in the case in the “public interest.”

But Additional Solicitor-General P.P. Malhotra said that Mr. Aggarwal had no right to oppose the application. However, the court had allowed him to make arguments as “amicus curiae”, in the larger interest of justice.Mr. Yadav said that his primary task was to decide whether the CBI had sufficient evidence to proceed with the prosecution; whether further heavy expenses would be borne by the state; and whether it was in the interest of public policy.In his order, Mr. Yadav also quoted from the February 4, 2004 High Court judgment, to indicate that the CBI had failed to prove that the money transferred by A.B. Bofors (Swedish arms company) to various agents including Mr. Quattrocchi was meant to be paid as a bribe to public servants in India. He also cited the orders of Malaysian and Argentinean courts, which were unconvinced by the offences made out by the CBI against Mr. Quattrocchi.

(In 1986, a $15-billion contract was signed between the Indian government and A.B. Bofors for supply of over four hundred 155 mm howitzer field guns.)

Mr. Yadav took serious note of Mr. Malhotra's submission that “no other country would allow extradition applications of the Indian government” because of two precedents of two countries, which at the time of considering extradition applications, considered the merits of the case as well.

Besides noting that Mr. Aggarwal had no “locus standi” to oppose the application, Mr. Yadav took a harsh view of his conduct during the proceedings, saying that he was interested in “cheap publicity” through the media and “innumerable court days were wasted” by him.

Talking to journalists later, Mr. Aggarwal said that he had no intention of giving up on the case and would appeal in the High Court.

(2) Rift in PPP over religious forces

Assassinated federal Minister for Minority Affairs Shahbaz Bhatti was buried at his native village in Faislabad district on Friday amid reports of growing differences within the ruling Pakistan People's Party (PPP) about its “soft” policy towards the “religious” right-wing forces.

The PPP, along with the entire political class of Pakistan, had gone into retreat mode on the blasphemy issue after the assassination of Punjab Governor Salman Taseer in January. Besides fearing that other parties would make political capital out of the issue, the PPP leadership was also mindful of further violence if amendments were made in the law as per its own election manifesto.

However, with the assassination of the federal Minister this past Wednesday, questions are being asked about the benefits of this defensive strategy which has not only disappointed and disenchanted PPP's support base but also failed to bear fruit in terms of stopping the killings. According to local media reports, two federal Ministers even threatened to resign over the failure of the government to contain the extremism.

While there was no official word on what transpired in the Cabinet meeting where these resignations were supposed to have been offered, an indication of the fireworks was evident in the intervention made by Interior Minister Rehman Malik in the National Assembly during a discussion on the assassination. Evidently under fire but insisting that there was no security lapse, he said that if there was any evidence of failure on the part of even the police, then he would resign.Mr. Malik said that he himself was top-most on the hit list of terrorists, followed by PPP legislators Sherry Rehman and Fauzia Wahab. Death threats have been issued to Ms. Rehman for drafting a bill to amend the blasphemy law to prevent its misuse. Ever since Taseer's assassination, Ms. Rehman has stayed away from public glare as the threat perception increased. Prime Minister Syed Yusuf Raza Gilani sought to assure the Christian community that the assassins of the Minister would be brought to book. He made these remarks at the funeral service for Bhatti at Our Lady Fatima Church in Islamabad. A number of diplomatic personnel turned up for the service after which the Minister's body was flown to his native village Khushpur, where huge crowds followed the mortal remains to its final resting place.

(3) Pranab hints at further easing of FDI policy for infra development

Development of quality infrastructure being the key to sustaining the country's economic growth momentum at pre-global crisis levels in the medium-term, Finance Minister Pranab Mukherjee on Friday hinted at further liberalisation of foreign direct investment (FDI) policy to catalyse larger capital inflows so as to meet the $1 trillion funding needs over the next five years.

In his address at a meeting of the International Institute of Finance (IIF) here, Mr. Mukherjee sought to provide a broad glimpse of the government's economic agenda and the various measures proposed in the budget for 2011-12, aimed at attracting private and foreign funds for core sector development.

“Sustainability of the growth momentum in the medium-term depends critically in the quality and pace of infrastructure development. Our resource requirement for infrastructure over the next Five Year Plan, that is, 2012-17, has been estimated at $1 trillion. Even though, the domestic saving rates are high and have recovered since the global crises, we need significant inflows of capital to finance our infrastructure needs… Discussions are also underway to liberalise the FDI policy,” he said.

Stressing on the need for further fine-tuning of the PPP (public private partnership) model for infrastructure development, Mr. Mukherjee pointed out that while the government's approach has been to attract and leverage private investment in this sector to meet the growing requirements of the economy, “it is our intention to come up with a comprehensive policy that can be used by the Centre and State governments in improving the resource flows to the sector.” Towards this end, Mr. Mukherjee noted that some steps have already been proposed in the budget. “…while allocating a major share of public resources, about 48.5 per cent of gross budgetary support to the Central Plan, for the development of infrastructure, FII investment limits in corporate bonds have been liberalised and ‘special vehicles' in the form of notified infrastructure debt funds with certain tax concessions have been announced to improve the flow of resources to this sector [Infrastructure],” he said.

Alongside, a larger FDI inflow would also go a long way in bridging the current account deficit (CAD). Of late, FDI inflows have been on a slowdown which is evident from the April-December data for the current fiscal, which shows a 23 per cent decline to $16 billion from $20.8 billion in the same period last year. As a consequence, the country's CAD has gone up from 2.9 per cent of the GDP (gross domestic product) in 2009-10 and is projected at 3.5 per cent of the GDP this fiscal. Mr. Mukherjee also pointed out that while the stimulus provided to industry had worked well and the overall growth in 2010-11 was expected at 8.6 per cent, there were certain areas of ‘concern'. “This growth... vindicates the expansionary fiscal and monetary policy stance adopted during and after the economic slowdown in the sector half of 2008. The economy is, thus, back to its pre-crisis growth momentum,” he said.

The areas of concern, he said, were the rising commodity prices coupled with the volatility in capital flows. Adding to this uncertain environment has been the political unrest in the Middle East and North Africa (MENA) region which has pushed global crude prices to $116 a barrel, the highest since 2008. “The major emerging market economies are experiencing robust growth, though volatility in capital inflows and inflation, including from the hardening of global commodity prices, is a source of worry,” he said.

(4) Rise of BRIC helped create global commodity boom: IMF

The rapid economic growth of the BRIC — Brazil, Russia, India and China — has helped create the global commodity boom and strengthened its trade ties with low income countries (LIC), International Monetary Fund has said. The value of LIC-BRIC trade has grown six-fold over the past decade, a policy paper of IMF, dated January 12 but made public on Friday, stated.

As bilateral trade has expanded, financial flows from BRIC to LICs — both in the form of foreign direct investment and development financing — have also increased rapidly.

During the same period, LIC economies have grown at an annual average rate of 4.7 per cent, it said. While improved macro-economic management has been critical to this strong economic performance, the more favorable external environment — the emergence of BRIC was an important contributing factor, IMF noted.

The IMF policy paper states the bilateral trade, which grew exponentially over the past decade, is the “backbone of LIC-BRIC relations.” “These expanding trade flows have had a significant positive impact on LICs’ overall trade performance,” it added. Economic expansion in BRIC nations and the strong economic complementariness between the two groups of countries have underpinned the rapid growth and high intensity of bilateral trade, the paper said.

“Many LICs in general have a strong comparative advantage in commodities while most BRICs are competitive producers of manufactured goods.” BRIC demand for commodities resulted in a significant improvement in LICs’ terms of trade. There is potential to further increase LIC-BRIC trade by lowering tariff and non-tariff barriers on both sides, reducing tariff escalation, extending preferential access for LIC exports, and making rules of origin more liberal in the existing preference schemes, IMF said.

The paper stated starting from a low base, BRIC’s FDI inflows to LICs have grown rapidly. Initial investment, mostly by state-owned companies, has often been destined for natural resource industries. Over time, however, investment appears to be spreading to agriculture, manufacturing and service industries. Many ‘non resource-rich’ countries have also attracted significant investment. Moreover, private companies, particularly small and medium-sized ones from BRICs, have become active investors, with the potential to form industrial clusters in some LICs as seen in East Asia, it said. A key challenge for LIC policymakers is to ensure BRIC FDI inflows, as well as FDI from other sources, continue to boost local firms’ links with the global economy and help enhance domestic resource mobilisation, the paper stated. “Thus continued improvement in the investment climate is important, as are policies to encourage joint ventures and local employment,” it added.

(5) Engineering exports likely to cross $50 b

Riding on the back of strong demand in the Western, African and Middle East markets and the diversification of exports to new emerging markets, India's engineering exports are likely to cross the $50 billion-mark by the end of this fiscal.“India is a major exporter of light and heavy engineering goods and has a well-developed and diversified industrial machinery and capital base,” Commerce and Industry Ministry Joint Secretary Sumanta Chaudhuri said.Engineering exports grew by 61 per cent to $38.80 billion during the April-December period this fiscal from $24.08 billion in the same period in the previous year.

“Exports of engineering goods from India are likely to be over $50 billion in the current fiscal,” Mr. Chaudhuri said. Out of total engineering exports, valued at $32.5 billion in 2009-10, the U.S. and the EU accounted for about 65 per cent of shipments. The strategy paper of the Commerce Ministry has projected that the country's engineering exports will touch $108 billion by 2013-14.

In the engineering segment, India mainly exports industrial machinery, electric machinery and equipment, auto and auto components and ships, boats and floating structures.

Trade fairs

To further boost the sector's exports, the government is organising trade fairs and business meetings.The Engineering Export Promotion Council (EEPC) and the Commerce Ministry have jointly organised a buyer-seller meet at the India Trade Promotion Organisation here. Over 40 delegates from the U.S., Canada, ASEAN and South Asian countries are participating in the meet.

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