CIVIL SERVICES INTERVIEW SPECIAL CURRENT AFFAIRS

KRISHNA SNUBS BEIJING OVER SOUTH CHINA SEA

A day after a Chinese official said India would pay a heavy price for exploring oil in the disputed South China Sea; External Affairs Minister SM Krishna said its waters were the “property of the world” and did not come under the jurisdiction of any nation.
China has lost political round on the issue at the ASEAN Summit in Cambodia.

SOUTH CHINA SEA:

South China Sea includes an area from Singapore and Malacca straits to strait of Taiwan of around 3,500,000 sq km.
One-third of the world’s ships transit through its waters.
It is believed to hold huge oil & gas reserves.

TERRITORIAL DISPUTE:

In 2009 China claimed entire South China Sea in a submission to UN Commission on the limits of the Continental shelf.
China considers it core national interest’, similar to Taiwan, Tibet & Xingjian. US rejects claims.
India signed an agreement with Vietnam last October to expand and promote oil exploration in the South China Sea.
ONGC Videsh is engaged in oil exploration in the South China Sea.
China has been repeatedly objecting to oil exploration by India and other activity in the South China Sea region where it has territorial disputes with ASEAN countries like Vietnam.

TAX INCENTIVES ON EXPORTS TO IRAN

The Union government will offer tax incentives to exporters for sales in rupees to Iran, in the latest effort by New Delhi to bolster exports in return for oil from the Islamic Republic squeezed by Western sanctions
Following US and European Union sanctions against Tehran over its nuclear programme, New Delhi is under pressure to cut oil imports from its second-biggest supplier, which provides about 12 percent of its oil needs.
To skirt the sanctions, India has decided to buy oil through a mechanism that lets refiners deposit rupees, which are not freely traded on global markets, for about 45 percent of Iranian crude purchases in an account at UCO Bank.

India and Iran plan to increase their annual bilateral trade by more than 60 percent to $25 billion by 2015. Indian exports to Iran currently total about $2.7 billion a year, with oil imports making up most of the difference.

BY-ELECTIONS IN MYANMAR

Nobel Laureate Aung San Suu Kyi’s National League for Democracy (NLD) has posted a landslide victory in the by-elections for 45 parliamentary seats in this South Asian nation, which has been ruled by the military junta for nearly 22 years.
Unofficial estimates claim that 44 of the 45 constituencies where voters exercised their right of franchise after 12 years (the earlier poll was held in 2010) have returned NLD candidates.
Suu Kyi, the icon for democracy, has won nearly 99 per cent of the votes cast in her rural constituency.

IMPLICATIONS OF THIS VICTORY:

In real terms, the by-elections for the 45 vacant seats in a 664-member House cannot tilt the balance of power in favour of the pro-democracy forces.
The new government, a civilian set-up in name only, will continue to be controlled by the army and the party it has created, the Union Solidarity and Development Party.
Yet the entry of Suu Kyi and other NLD candidates into Myanmar’s parliament sends across the message what the people in general want. The NLD victory is a giant leap towards democracy in Myanmar.
The world community needs to have a fresh look at the UN sanctions imposed on Myanmar, which have made life miserable for the people in this poverty-stricken country.

FERTILITY RATE DROPS BY 19% IN 10 YEARS

India's total fertility rate (TFR has fallen by19% over the past decade.
The latest Sample Registration System 2010 data finalized by the Registrar General of India says India's TFR, which had remained stagnant in 2008 and 2009 at 2.6, finally has dropped by 0.1 points in 2010.

HIGHLIGHTS:

India's TFR now stands at 2.5 as against a TFR of 3.2 in 2000.
Kerala is the only state which has recorded an increase in TFR - from 1.7 in 2009 to 1.8 in 2010.
Among bigger states, the percentage decline in TFR during this period the last decade varied from as high as 28% in Punjab to 5.6%in Kerala.

WHAT IS TOTAL FERTILITY RATE?

TFR – is the average number of children expected to be born per woman during her reproductive years.

WHAT IS POPULATION STABALISATION?

Population stabilization is when the size of the population remains unchanged. It is also called the stage of zero population growth.

INDIA’S TARGET TO REACH POPULATION STABALISATION:

According to the National Population Policy 2000, India should have reached there placement-level fertility rate of 2.1 by 2010, and ought to attain population stabilization at 145 crore by 2045.
However, India now expects to reach the population stabilization TFR of 2.1 at 165 crore by2060.

P-NOTES OUT OF TAX NET

Setting at rest the uncertainty about overseas investments, finance minister Pranab Mukhrjee has said those investing in stock markets through participatory notes (P-notes) will not have to pay tax in India, an assurance that pushed up the markets.

What are Participatory Notes?

Participatory notes (P-Notes) are derivative instruments issued by FIIs on Indian shares, but at a location outside of India.
The investors, who buy P-Notes, deposit their funds in the US or European operations of the FII, which also operates in India. The FII then uses its proprietary account to buy stocks in India.
Other types of P-Notes include equity-linked notes, capped return note, participatory return notes and investment notes.

Why do investors use P-Notes?

While one reason for using P-Notes is to keep the investor's name anonymous, some investors have used the instrument to save on transaction costs also. Such investors look for derivative solution to gain exposure in individual, or a basket of, stocks in the relevant market.
Sometimes, investors enter the Indian markets in a small way using P-Notes, and when their positions become larger, they find it advantageous to shift over to a full-fledged FII structure.

What is the problem with the instrument?

It is difficult to establish the beneficial ownership or the identity of the ultimate investor, and hence cannot be taxed. It is feared that FIIs, which have to comply with know-your customer norms, know the identity of the investor to whom P-Notes are issued.
Tax officials also fear that P-Notes are increasingly becoming a favourite among a host of Indian money launderers, who use the instrument to first take funds out of the country through the hawala route, and then get it back using P-Notes.