INTERNATIONAL AFFAIRS - august
China overtakes Japan as second-largest economy
After three decades of spectacular growth, China has passed Japan in the second quarter of 2010 to become the world’s second-largest economy behind the United States. The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendancy is for real and that the rest of the world will have to reckon with a new economic superpower.
The recognition came on August 16, 2010, when Tokyo said that Japan’s economy was valued at about $1.28 trillion in the second quarter, slightly below China’s $1.33 trillion. Japan’s economy grew 0.4 percent in the quarter, substantially less than forecast. That weakness suggests that China’s economy will race past Japan’s for the full year.
Experts say unseating Japan—and in recent years passing Germany, France and Great Britain—underscores China’s growing clout and bolsters forecasts that China will pass the United States as the world’s biggest economy as early as 2030.
For Japan, whose economy has been stagnating for more than a decade, the figures reflect a decline in economic and political power. Japan has had the world’s second-largest economy for much of the last four decades, according to the World Bank. And during the 1980s, there was even talk about Japan’s economy someday overtaking that of the United States. But, while Japan’s economy is mature and its population quickly aging, China is in the throes of urbanization and is far from developed, meaning it has a much lower standard of living, as well as a lot more room to grow.
China is already a major driver of global growth. The country’s leaders have grown more confident on the international stage and have begun to assert greater influence in Asia, Africa and Latin America, with things like special trade agreements and multi-billion dollar resource deals. Beijing is also beginning to shape global dialogues on a range of issues; for instance, in 2009 it asserted that the dollar must be phased out as the world’s primary reserve currency.
While the United States and the European Union are struggling to grow in the wake of the worst economic crisis in decades, China has continued to climb up the economic league tables by investing heavily in infrastructure and backing a $586 billion stimulus plan.
There are huge challenges ahead, though. Economists say that China’s economy is too heavily dependent on exports and investment and that it needs to encourage greater domestic consumption—something China has struggled to do. The country’s largely state-run banks have recently been criticized for lending far too aggressively in 2009, while shifting some loans off their balance sheet to disguise lending and evade rules meant to curtail lending growth.
China is also locked in a fierce debate over its currency policy, with the United States, European Union and others accusing Beijing of keeping the Chinese currency, the renminbi, artificially low to bolster exports—leading to huge trade surpluses for China but major bilateral trade deficits for the United States and the European Union. China says that its currency is not substantially undervalued and that it is moving ahead with currency reform.
Regardless, China’s rapid growth suggests that it will continue to compete fiercely with the United States and Europe for natural resources but also offer big opportunities for companies eager to tap its market.
US ends combat mission in Iraq
On August 31, 2010, US President Barack Obama announced an end to the US combat mission in Iraq, not with a declaration of victory but rather a sombre admission that the US had paid a “huge price.”
Announcing an end to Operation Iraqi Freedom in a nationally televised speech from the White House, the President said the Iraqi people now have lead responsibility for the security of their country.
But as US troops roll out of Iraq, the country continues to be locked in a political stalemate with disagreement over who will lead it, after elections failed to throw up a clear winner.
Obama urged Iraq’s leaders to “move forward with a sense of urgency to form an inclusive government that is just, representative, and accountable to the Iraqi people.” “And when that government is in place, there should be no doubt: The Iraqi people will have a strong partner in the United States. Our combat mission is ending, but our commitment to Iraq’s future is not,” he added.
Anthony Cordesman of the Center for Strategic and International Studies said while US troops may have withdrawn, the Iraq war is not over, it is not “won,” and any form of stable end state in Iraq is probably impossible before 2020.
A transitional US force will remain in Iraq with a mission of advising and assisting Iraq’s security forces, supporting Iraqi troops in targeted counter-terrorism missions, and protecting US civilians.
Mid-East Summit
US President Barack Obama waded into a new round of Middle East diplomacy September 1, 2010, seeking momentum for revived peace talks clouded by a flare-up of West Bank violence and a deadlock over Jewish settlements.
Obama met Israeli Prime Minister Benjamin Netanyahu as he launched a series of one-on-one meetings with Middle East leaders attending a US-led peace summit that culminated with the first direct Israeli-Palestinian talks in 20 months.
With Obama's peace bid facing broad skepticism and the clock ticking toward the September 26, 2010 expiration of an Israeli settlement construction freeze, Israel's defence minister sounded a conciliatory note about the prospects for sharing Jerusalem, an issue at the heart of the decades-old conflict. But big obstacles remain to Obama's quest for a peace deal that eluded so many of his predecessors.
Hamas militants declared war on the talks even before they began, killing four Jewish settlers in the occupied West Bank, vowing more attacks and underscoring the threat hard-liners pose to the fragile peace process.
The summit marked Obama's riskiest plunge into Middle East diplomacy, not least because he wants the two sides to forge a deal within 12 months, a target many analysts call a long shot.
Cricket shamed again
Yet another match-fixing scandal rocked Pakistan cricket on August 29, 2010, engulfing its captain Salman Butt, brilliant pace duo of Mohammad Asif and Mohammad Amir and four other players, leading to the arrest of a bookie in London and questioning of the players by the Scotland Yard after a tabloid sting.
The ‘News of the World’ tabloid alleged that a Pakistani man Mazhar Majeed had paid bribes to the players to bowl no-balls in the series and the Lord’s Test. The video evidence that the tabloid has presented also shows Majeed talking about his links with Indian bookies.
The two Pakistanis who bowled no-balls allegedly on directions from Majeed were Asif and Aamir. Both bowlers delivered three no-balls during the Lord’s Test.
After three decades of spectacular growth, China has passed Japan in the second quarter of 2010 to become the world’s second-largest economy behind the United States. The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendancy is for real and that the rest of the world will have to reckon with a new economic superpower.
The recognition came on August 16, 2010, when Tokyo said that Japan’s economy was valued at about $1.28 trillion in the second quarter, slightly below China’s $1.33 trillion. Japan’s economy grew 0.4 percent in the quarter, substantially less than forecast. That weakness suggests that China’s economy will race past Japan’s for the full year.
Experts say unseating Japan—and in recent years passing Germany, France and Great Britain—underscores China’s growing clout and bolsters forecasts that China will pass the United States as the world’s biggest economy as early as 2030.
For Japan, whose economy has been stagnating for more than a decade, the figures reflect a decline in economic and political power. Japan has had the world’s second-largest economy for much of the last four decades, according to the World Bank. And during the 1980s, there was even talk about Japan’s economy someday overtaking that of the United States. But, while Japan’s economy is mature and its population quickly aging, China is in the throes of urbanization and is far from developed, meaning it has a much lower standard of living, as well as a lot more room to grow.
China is already a major driver of global growth. The country’s leaders have grown more confident on the international stage and have begun to assert greater influence in Asia, Africa and Latin America, with things like special trade agreements and multi-billion dollar resource deals. Beijing is also beginning to shape global dialogues on a range of issues; for instance, in 2009 it asserted that the dollar must be phased out as the world’s primary reserve currency.
While the United States and the European Union are struggling to grow in the wake of the worst economic crisis in decades, China has continued to climb up the economic league tables by investing heavily in infrastructure and backing a $586 billion stimulus plan.
There are huge challenges ahead, though. Economists say that China’s economy is too heavily dependent on exports and investment and that it needs to encourage greater domestic consumption—something China has struggled to do. The country’s largely state-run banks have recently been criticized for lending far too aggressively in 2009, while shifting some loans off their balance sheet to disguise lending and evade rules meant to curtail lending growth.
China is also locked in a fierce debate over its currency policy, with the United States, European Union and others accusing Beijing of keeping the Chinese currency, the renminbi, artificially low to bolster exports—leading to huge trade surpluses for China but major bilateral trade deficits for the United States and the European Union. China says that its currency is not substantially undervalued and that it is moving ahead with currency reform.
Regardless, China’s rapid growth suggests that it will continue to compete fiercely with the United States and Europe for natural resources but also offer big opportunities for companies eager to tap its market.
US ends combat mission in Iraq
On August 31, 2010, US President Barack Obama announced an end to the US combat mission in Iraq, not with a declaration of victory but rather a sombre admission that the US had paid a “huge price.”
Announcing an end to Operation Iraqi Freedom in a nationally televised speech from the White House, the President said the Iraqi people now have lead responsibility for the security of their country.
But as US troops roll out of Iraq, the country continues to be locked in a political stalemate with disagreement over who will lead it, after elections failed to throw up a clear winner.
Obama urged Iraq’s leaders to “move forward with a sense of urgency to form an inclusive government that is just, representative, and accountable to the Iraqi people.” “And when that government is in place, there should be no doubt: The Iraqi people will have a strong partner in the United States. Our combat mission is ending, but our commitment to Iraq’s future is not,” he added.
Anthony Cordesman of the Center for Strategic and International Studies said while US troops may have withdrawn, the Iraq war is not over, it is not “won,” and any form of stable end state in Iraq is probably impossible before 2020.
A transitional US force will remain in Iraq with a mission of advising and assisting Iraq’s security forces, supporting Iraqi troops in targeted counter-terrorism missions, and protecting US civilians.
Mid-East Summit
US President Barack Obama waded into a new round of Middle East diplomacy September 1, 2010, seeking momentum for revived peace talks clouded by a flare-up of West Bank violence and a deadlock over Jewish settlements.
Obama met Israeli Prime Minister Benjamin Netanyahu as he launched a series of one-on-one meetings with Middle East leaders attending a US-led peace summit that culminated with the first direct Israeli-Palestinian talks in 20 months.
With Obama's peace bid facing broad skepticism and the clock ticking toward the September 26, 2010 expiration of an Israeli settlement construction freeze, Israel's defence minister sounded a conciliatory note about the prospects for sharing Jerusalem, an issue at the heart of the decades-old conflict. But big obstacles remain to Obama's quest for a peace deal that eluded so many of his predecessors.
Hamas militants declared war on the talks even before they began, killing four Jewish settlers in the occupied West Bank, vowing more attacks and underscoring the threat hard-liners pose to the fragile peace process.
The summit marked Obama's riskiest plunge into Middle East diplomacy, not least because he wants the two sides to forge a deal within 12 months, a target many analysts call a long shot.
Cricket shamed again
Yet another match-fixing scandal rocked Pakistan cricket on August 29, 2010, engulfing its captain Salman Butt, brilliant pace duo of Mohammad Asif and Mohammad Amir and four other players, leading to the arrest of a bookie in London and questioning of the players by the Scotland Yard after a tabloid sting.
The ‘News of the World’ tabloid alleged that a Pakistani man Mazhar Majeed had paid bribes to the players to bowl no-balls in the series and the Lord’s Test. The video evidence that the tabloid has presented also shows Majeed talking about his links with Indian bookies.
The two Pakistanis who bowled no-balls allegedly on directions from Majeed were Asif and Aamir. Both bowlers delivered three no-balls during the Lord’s Test.
NATIONAL AFFAIRS - AUGUST
Foreign Contribution Regulation Bill
Organisations of political nature and those involved in religious conversions will henceforth be barred from accepting foreign funds. Also, persons holding political positions like MPs and MLAs can no longer enjoy foreign hospitality and must intimate the government of their visits abroad, personal or official.
After letting private organisations bring in unaccounted foreign remittances for 34 years, the government has brought to the Lok Sabha the Foreign Contribution Regulation Bill, 2010, to regulate the acceptance and utilisation of foreign contribution of hospitality by certain individuals or associations and to prohibit such acceptances for activities detrimental to national interest. The Lower House passed the Bill, which the Rajya Sabha had already cleared.
At the root of the law is the concern that out of 40,173 NGOs (in 1993 there were just 1,500) accepting foreign funding, only 18,796 have submitted their audited accounts. For the rest, the government doesn’t know the source of funding.
So far, Rs 12,000 crore has “officially” come through the foreign route, of which 60 per cent has come from religious organisations, some from countries as small in population as Canada, Mauritius and Luxembourg.
The government’s data shows that in 2005 and 2006, there were over 32,144 organisations taking foreign funds in India. Only 18,000 declared their funding. In 2005-2006, of the Rs 7,000 crore that came from foreign sources, Rs 3,075 crore came for religious organisations. This explains why the new law (which replaces the 1976 legislation) bans foreign funds for conversion purposes.
Significant amounts (to the tune of Rs 7,229 crore) have also come in for education, with no monitoring. In the run-up to the new FCR Bill 2010, the government banned 41 outfits from taking foreign remittances; sealed accounts of 11 and asked 45 to take permission first.
With the new law, the government has also capped administrative expenses at 50 per cent of all inflows to NGOs (India has about 20 lakh).
Nuclear Liability Bill
On August 25, 2001, the UPA government successfully shepherded the Civil Liability for Nuclear Damage Bill, 2010, through the Lok Sabha, with active support from the BJP and strategic absence of some fence-sitters such as the Samajwadi Party.
Quashing opposition from the Left Bloc and other critics, Prime Minister Manmohan Singh denied that the Bill was railroaded through the House to serve US interests. “This Bill is a completion of a journey to end the nuclear apartheid, which the world had imposed on India in the year 1974,” he said.”
The government managed to bring the BJP on board in return for accepting amendments to the controversial Clause 17(b) and dropping the word “intent”. The new formulation of 17(b), now states that suppliers would be liable where “the accident has resulted as a consequence of an act of a supplier or his employees, done to cause nuclear damage, and such act includes supply of equipment or material with patent or latent defects or sub-standard services”.
While his government achieved what appeared even a few months ago to be an impossible task—getting the Lok Sabha to pass the Bill— Manmohan Singh announced that the government would give safety issues top priority. “Concern about nuclear safety is one, which I fully share. I assure (you) we will do everything to strengthen the Nuclear Regulatory Board to ensure that safety concerns receive the attention that they must, if we are to use nuclear power as a major source for generating and meeting India’s need for energy,” he said.
The key points of the Bill are:
—Controversial Clause 17(b) amended by dropping the word ‘intent’.
—Compensation cap to be paid by the operator at Rs 1500 crore provided in the Bill is not the ‘limit’.
—Compensation will be decided by the Claims Commissioner and the operator will have to pay.
—Government assumes full liability for even a plant not operated by it.
—The Bill is necessary for full implementation of civil nuclear deal signed with the USA in 2006.
Bill to provide women equal guardianship rights
A Bill paving way for the women to get equal rights in guardianship and adoption of children has been passed by the Rajya Sabha.
The Personal Laws Amendment Bill seeks to amend the Guardians and Wards Act, 1890 and the Hindu Adoptions and Maintenance Act, 1956. It also seeks to allow the mother, along with the father, to be appointed as a guardian, making the process gender-neutral.
Besides, it aims at removing hurdles in the way of a married woman to adopt. She can give a son or daughter for adoption.
For adoption and guardianship, under the existing Act, only the father is considered to be the natural guardian of the child in a Hindu family and only unmarried, divorced women and widows are allowed to adopt a child. Women separated from their husbands and engaged in lengthy divorce battles cannot adopt a child.
Annual Supplement to Foreign Trade Policy 2009-14
The government has extended sops worth Rs 1,052 crore to exporters, particularly for the labour-intensive textile, handicrafts and leather sectors, to help them see through the fragile economic recovery globally. The revenue implication of these measures would be Rs 1,052 crore. The government also made it clear that the popular Duty Entitlement Pass Book (DEPB) scheme, which has been in vogue for over a decade, is being extended for the last time.
Experts said drawing the curtains on the DEPB scheme was inevitable as it was considered incompatible with the global trade rules under WTO.
A number of additional products from sectors like engineering, leather, textiles and jute have also been added to the existing two per cent interest subvention scheme. Handloom, handicrafts, carpet and the SMEs have been getting this facility, which will now be available till March 31, 2011.
The government also extended the zero-duty Export Promotion Capital Goods (EPCG) scheme by one year to March 31, 2012. The scheme, which was announced in August 2009, was to expire on March 31, 2011. Steps to reduce transaction cost of exports too were announced in the policy.
India-Japan Strategic Dialogue
On August 21, 2010, visiting Japanese Foreign Minister Katsuya Okada held the fourth round of strategic dialogue with External Affairs Minister S.M. Krishna. The two sides discussed the nuclear pact, comprehensive economic partnership agreement (CEPA), other bilateral and international issues, including UN reforms and the situation in Afghanistan and Pakistan.
However, the focus was clearly on the nuke deal, the discussions on which the two countries propose to conclude as quickly as possible without setting any time-line.
Addressing a joint press conference with Krishna after the three-hour talks between the two sides, Okada candidly admitted that initiating negotiations with India on the nuclear pact was the toughest decision he had taken during his stewardship of the Japanese Foreign Ministry, given the fact that India was not a signatory to the NPT. He also acknowledged that the proposal for a nuclear agreement with India was facing sharp criticism back home, since Japan is the only country to have experienced a nuclear attack.
He also told the Indian side that the philosophy of nuclear disarmament and non-proliferation must be incorporated in the proposed accord on nuclear cooperation.
Asked if Japan had advised India against detonating another nuclear device, Okada said: “I don’t think we can suggest to India to refrain from conducting a test…but if such a thing were to happen, we shall have no option but to suspend our cooperation with India (in the field).”
The two countries will continue and enhance consultations within the G-4 process for reforms of the UN, including the Security Council. They also welcomed the inclusion of the US and Russia in the East Asia Summit (EAS).
National Innovation Council
Prime Minister Manmohan Singh has approved the setting up of a National Innovation Council to prepare a road map for the 'Decade of Innovation 2011-2020'. Sam Pitroda, adviser to the Prime Minister on public information infrastructure and innovations, will head the National Innovation Council.
The Council has been given the mandate to evolve an Indian model of innovation focussing on inclusive growth and creating an appropriate eco-system conducive to fostering inclusive innovation.
It will delineate appropriate policy initiatives within the government required to spur innovation. It will also promote the setting up of sectoral innovation councils and state innovation councils.
While encouraging all important sectors of the economy to innovate, the NIC will take special efforts to facilitate innovation by micro, small and medium enterprises.
Innovation in public services delivery and encouraging multi-disciplinary and globally competitive approaches for innovations would be focused on by the council.
“A Journey” is a memoir written by former British Prime Minister Tony Blair.
The N.C. Saxena Committee was set up by the Ministry of Environment and Forests. It details the manner in which laws were flagrantly flouted to facilitate the Vedanta Alumina Ltd project in Orissa. The project is aggressively opposed by the local tribal groups.
India remained the largest recipient of World Bank loans in 2009-10. The World Bank, through its lending arms IBRD and IDA, committed $9.3 billion in financial assistance to India in 2009-10, more than the aid committed by the US and European Union. Next in line were South Africa ($3.8 billion), Brazil ($3.7 billion) and Turkey ($3.0 billion).
The Indian Parliament has hiked the salary of Members of Parliament to Rs 50,000 per month. Two key allowances (constituency and office expenses) have also been increased to Rs 45,000 each.
Airtel has bagged the title sponsorship rights for the India cricket team’s home games for two-and-half years, at a cost of Rs 3.33 crore per match.
Rajiv Gandhi Akshay Urja Diwas is observed on August 24.
The 2010 Academic Ranking of World Universities has ranked Harvard University as the top University of the world for the eighth year in the annual ranking. Harvard is followed by University of Cambridge, Yale University, University College London (UCL), Imperial College London, University of Oxford, University of Chicago, Princeton University, Massachusetts Institute of Technology (MIT) and California Institute of Technology (CALTECH).
“Oh yaaron, India ne bula liya”, composed by A.R. Rahman, is the theme song of Commonwealth Games, 2010. It has been directed by Shyam Benegal and produced by Bharat Bala.
With his Independence Day speech on August 15, 2010—the seventh—Manmohan Singh edged past Atal Behari Vajpayee to become the Prime Minister of India who has addressed the nation on Independence Day the third-highest number of times. Jawaharlal Nehru addressed the nation 17 times and Mrs Indira Gandhi 16 times.
On September 1, 2010, South-East Asia’s first Sports Injury Centre was opened on the campus of Safdarjung Hospital, New Delhi, in partnership between the government and six private players.
An elephant, named Stumpy, is the official mascot of the 2010 Cricket World Cup.
UNESCO has granted the World Heritage status to Jantar Mantar in Jaipur which is a celebrated astronomical observatory built in 18th century. This is India’s 28th and Rajasthan’s second site (after Keoladev National Park) to be given the World Heritage status.
