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Insights Daily Current Events: November 27, 2013


November 27, 2013


GoM in a bind over status of Hyderabad

  • The Group of Ministers (GoM) have found it difficult to find a solution to the contentious issue of Hyderabad city’s status as the process of division of Andhra Pradesh gathered momentum ahead of the Union Cabinet meeting on November 28, 2013.

What are the demands of the two regions?

  • Hyderabad remains the bone of contention between the two regions with Seemandhra leaders demanding Union Territory status for the joint capital, for some period of time while Ministers from Telangana say they will have none of it.
  • They want Telangana with ten districts, including Hyderabad, with no strings attached beyond Hyderabad serving as the joint capital for ten years to enable the residuary State of Andhra Pradesh to build its own capital.
  • Telangana leaders do not want the jurisdiction of the capital to extend beyond the GHMC (Greater Hyderabad Municipal Corporation) limits and are not averse to vesting key subjects like law and order with the Centre to create a sense of confidence among the Seemandhra people.
  • Representatives of Seemandhra region said they had no objection to creation of Telangana but they would oppose the States Reorganisation Bill in Parliament if Hyderabad was not made a Union Territory.

Supreme Court gets internal complaints committee

  • Chief Justice of India P. Sathasivam has constituted ‘Gender Sensitisation and Internal Complaints Committee (GSICC)’ in the Supreme Court to receive and decide complaints against sexual harassment. It will be headed by Justice Ms. Ranjana Desai.
  • A complaint has to be inquired into and the report acted upon by the committee within 45 days.
  • If found guilty, an advocate would be barred from entering the court premises for a period that can extend up to a year, and also might face criminal charges depending upon the nature of offence
  • Sixteen years ago, the Supreme Court, in the Visakha judgment, had laid down the definition of sexual harassment, preventive measures and redress mechanisms.
  • Its guidelines mandated the setting up of committees in every organisation and institution.

Visakha judgment:

  • On August 1997, the Supreme Court of India issued a judgment against sexual harassment at the workplace, which has come to be known as the Vishaka judgment.
  • It laid down the definition of sexual harassment, preventive measures and redress mechanisms. It stipulated a mandatory complaint committee on sexual harassment at all workplaces and institutions.
  • This case was the first time that the law recognised sexual harassment as a human rights violation and it did so keeping India’s obligations under international instruments.
  • The most inspiring outcome of ‘Vishaka’ is that, for the first time, the need to alter systemic violence against women at work received judicial recognition by an implied focus on the need to change attitudes. That approach led the court to develop broad-based guidelines, which are
  • applicable at the workplace as well as other institutions. It finds reference not just in the work of women’s groups but also among various sections of society – trade unions, workers, students.
  • The judgment reaffirmed that the law was of ‘‘sufficient amplitude to encompass all the acts of gender equality including prevention of sexual harassment or abuse…’’

(Vishaka is actually the name of an organisation which, along with other organisations, rallied for special measures to deal with sexual harassment inflicted in the course of employment.)


Insurance regulator asked to extend cover to those with HIV

  • The Union Health and Family Welfare Ministry has asked the Insurance Regulatory and Development Authority (IRDA), the national insurance regulator, to remove, from its draft circular, provisions that exclude people living with HIV (PLHIV) from purchasing health insurance products.
  • The IRDA circular asks all insurers to provide life-insurance cover to HIV/AIDS patients. “It is not an either-or-situation for HIV/AIDS patients. They should be able to buy both life and health insurance if their CD4 count (a measure of sickness) is above a particular cut-off. HIV/AIDS should be treated as any other chronic diseases like cancer or diabetes.
  • The technical working group to work out the means of including PLHIV under insurance products had recommended that there should be at least one health insurance product offered by each insurance company where HIV/AIDS is removed from the exclusions. PLHIV shall not be excluded from the group health insurance plans, which are generally offered by insurance companies to employers and must be included in the government-funded mass health insurance schemes targeted at the poor and other vulnerable sections of society.

Rational behind the extension:

  • There are approximately 21 lakh people living with HIV in the country who are denied health and life insurance for other diseases if they test HIV-positive.
  • The insurance products of both group and individual type should also be available for widows and children and they should be able to purchase it without getting excluded. Since widows and children are more vulnerable, special efforts should be made so that they are not excluded.


Geneva success impacts Saudi-Iran ties

  • The success of nuclear talks in Geneva have triggered the first signs of a possible de-escalation of tensions between Iran and Saudi Arabia, whose regional rivalry has acquired a sharp sectarian edge in recent years.
  • The recently concluded Geneva agreement has created an opportunity to improve regional security this could be an initial step toward reaching a comprehensive solution to Iran’s nuclear programme.
  • It was also hoped that the agreement would lead to the removal of weapons of mass destruction, especially nuclear weapons, from West Asia (indirect reference to Israel and the Gulf region, which includes Iran). The cautious welcome accorded to the Geneva deal marks a significant shift, at least on paper, from previous positions adopted by the representatives of Saudi, who had expressed deep reservations, if not hostility, to a possible thaw in ties between Iran and the West.
  • According to some analysts rivalry between Iran and Saudi Arabia escalated following Iran’s growing influence in Iraq and Lebanon, the two countries with a majority Shia population, as well as Syria, where the majority is Sunni, but the leadership is Alawi, a Shia offshoot.
  • Saudi Arabia and Qatar have openly supported the armed opposition against the government of President Bashar Al-Assad that is heavily backed by Iran.
  • There was also a proposal from the Iranian side to establish a formal structure, functioning under the United Nations system that would bring together eight littoral countries of the Gulf region working on a common and expanding agenda. Since the challenges and opportunities that the Gulf countries face are enormous. They range from environmental degradation to sectarian tension, from extremism and terrorism to arms control and disarmament, and from tourism and economic and cultural cooperation to confidence-building and security-enhancing measures.
  • Beyond the political, the turn out of Geneva accord, which includes the partial lifting of sanctions, has begun to spark some commercial activity in Iran. The agreement would provide international and regional financial institutions more freedom to consider more finance for projects and trade in Iran.

Nepali Congress all set to form government

  • In the recently held elections, the Nepali Congress (NC) emerged as a front-runner in the second Constituent Assembly election with the Communist Party of Nepal (Unified Marxist-Leninist) gaining a close second position.
  • Together, the two parties that had formed partnership on most issues for the new constitution in the last assembly moved closer to attaining a two-thirds majority in the Constituent Assembly election.

UCPN (Maoist) puts a precondition for joining the Constituent Assembly

  • The Nepali Congress (NC) and the CPN (UML) expressed surprise over the precondition that the UCPN (Maoist) has set for joining the Constituent Assembly.
  • The UCPN (Maoist) said they wanted an amendment to the Interim Constitution of 2007 so as to reinstate the politics of consensus.
  • It also demanded an investigation to the “irregularities” in the election. Once the election results trend started surfacing, the Maoists began to distance itself from the counting process. Its allegation that ballot boxes were changed during transportation and that the counting be reviewed were rejected by the Election Commission. National and international election observers have termed the election free and fair.
  • The two leading parties said they would consider the Maoist proposal in practice but would not amend the Constitution.

Iran, Pakistan to fast track gas pipeline

  • Iran and Pakistan have decided to fast track discussions on the long-delayed gas pipeline project to formulate a road map and a more realistic time schedule for the implementation of the project.
  • The original deadline was December 2014 but Pakistan has been unable to start construction on its share of the pipeline owing to lack of funds. It had asked for $2 billion from Iran for the project earlier.
  • It was agreed that comprehensive technical commercial proposals on the gas pipeline would be discussed in Iran. This would be followed by ministerial level discussions.
  • Both sides emphasised the need to put greater focus on bilateral economic relations. It was also agreed to hold the next round of Joint Ministerial Commission in Iran (in 2014).


No tax on foreign banks converting to WoS

  • The RBI has clarified that conversion of existing foreign bank branches into wholly-owned subsidiaries(WoS) in India will not attract capital gains tax or stamp duty.
  • This clarification comes in the wake of RBI receiving several queries from foreign banks on capital gains tax and incidence of stamp duty on conversion of existing foreign bank branches into wholly-owned subsidiaries.
  • Earlier RBI had said that foreign banks with complex structures and which did not provide adequate disclosures would have to operate in India only through wholly-owned subsidiaries (WoS) in order to regulate and avoid 2008-type crisis.
  • While allowing foreign banks to list their subsidiaries in the local stock exchanges, the RBI had prescribed that the minimum paid-up equity capital or net worth for a WoS would be Rs. 500 crore.
  • However, it gave the foreign banks operating in India before August 2010 the option to continue their operations in branch model.
  • There were 43 foreign banks in India with a network of 333 branches as of March 2013. At present, foreign banks have presence in India only through branches.

Reserve Bank to recognise SRO

  • The RBI has decided to accord recognition to industry association of Non-banking financial companies (NBFCs) that are engaged in microfinance (NBFC-MFIs), to function as a Self Regulatory Organisation (SRO), which is having at least one-third of the NBFC-MFIs registered as its members, at the time of recognition.
  • This would help industry associations ‘assuming greater responsibility in ensuring compliance by the NBFCs that are engaged in micro-finance (NBFC-MFIs), to the regulations’.

What is a Non-Banking Financial Company (NBFC)?

  • Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.
  • A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non-banking financial company (Residuary non-banking company).

What is difference between banks & NBFCs?

  • NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few differences as given below:
  1. NBFC cannot accept demand deposits;
  2. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;
  3. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

Courtesy – RBI website (

Restore investor trust, EU tells India

  • The European Union (EU) has urged India to regain the confidence of foreign investors as many companies from the EU are keen to invest in India despite various problems.
  • The biggest concern among EU investors was the uncertainty under which they operated in India. The uncertainty over the tax regime, licensing, the delay in the dispute resolution taken by the courts all act as a deterrent for investment.
  • However, the trade relationship between India and EU was on the rise – in 2012 bilateral trade was estimated to be little less than 100 million euros, slightly less than 2011. But this year there were signs of improvement.

Biocon gets DCGI nod for breast cancer drug

  • Biotechnology major Biocon has received market authorisation from the Drug Controller General of India (DCGI) for its biosimilar trastuzumab product. The drug, which is being developed jointly with Mylan, is used for the treatment of Her 2+ metastatic breast cancer.
  • The approval for biosimilar trastuzumab in India is an extremely important milestone for Biocon, as it is the first biosimilar version of Herceptin to be brought to the market (Trastuzumab is equivalent of Herceptin, a registered brand of drug major Roche.)
  • This is a major milestone as it is the world’s first biosimilar trastuzumab to be accorded regulatory approval.
  • The overall global opportunity for biosimilars is estimated to be $22 billion by 2020.


New Exploration Licensing Policy (NELP)

  • New Exploration Licensing Policy (NELP) was conceptualised by the Government of India, during 1997-98 to provide an equal platform to both Public and Private sector companies in exploration and production of hydrocarbons with Directorate General of Hydrocarbons (DGH) as a nodal agency for its implementation. It was introduced to boost the production of oil and natural gas and providing level playing field for both public and private players.

Courtesy – Wikipedia

Production Sharing Contract (PSC)

  • An agreement between Contractor and Government whereby Contractor bears all exploration risks, production and development costs in return for its stipulated share of production resulting from this effort. These costs are recoverable in case of commercial discovery.

Following activities are being carried out in PSC:

  1. Review of work Programme and budget of all exploration blocks and fields under PSC’s.
  2. Facilitating of statutory and other clearances.
  3. Management Committee Meetings.
  4. Assignment of Participating Interest.
  5. Extension of phases, relinquishment of acreages, assignment, appointment of auditor, approval of auditing account and other PSC related issues as and when arise.