April 2010

ECONOMIC SURVEY 2009-10: CURRENT ECONOMY

Current NEWS Covered up to MARCH 01, 2010APRIL 2010, XVIYear, Issue No.4 19

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The Budget 2010-11 has deferred the implementation of Direct TaxCode from 2010 to 2011. The new Direct Tax Code that seeks torevamp and simplify the Direct Tax Law and its administration inthe country through several radical changes. The code, which thegovernment plans to enact and implement Financial Year 2011

onwards with suitable changes if required, envisages meaningful reductionin the tax rates while simultaneously being revenue neutral for thegovernment. It aims to achieve this by increasing the tax base and rationalisingthe myriad tax incentives prevalent under the current law.

The overall changes proposed will be quite beneficial for a number of sectorsand companies, albeit definitively withdrawing tax holidays being currentlyenjoyed by different sectors, something that has been contemplated andproposed often in the past and therefore should not come as a major negativesurprise. The Code seeks to consolidate and amend the law relating to alldirect taxes, that is, income-tax, dividend distribution tax, fringe benefit taxand wealth-tax so as to establish an economically efficient, effective andequitable direct tax system which will facilitate voluntary compliance andhelp increase the tax-GDP ratio. Another objective is to reduce the scope fordisputes and minimize unnecessary litigations significantly and will alsosimplify regulations. It is designed to provide stability in the tax regime as itis based on well accepted principles of taxation and best international practices.It will eventually pave the way for a single unified taxpayer reporting system.It is expected to usher in a new tax regime of transparency and greatercompliance.If passed, it will become the new Income Tax Act, replacing the existing fourdecade old IT Act of 1961. In the foreward to the Tax Code it is explained that

the aim is to eliminate distortions inthe tax structure, introduce moderatelevels of taxation, expand the tax base,improve tax compliance, simplify thelanguage and lower tax litigations.Initial analysis shows that most ofthese objectives are achievable bytweaking of some provisions. Thenew proposals are in the rightdirection. The Code is a completelynew law and not an amendment ofthe existing Income Tax Act. This is a

TAX REFORMS 2010-11

Direct Tax Code 2009

Review and AnalysisBy Siddharth Malik, IRS

Highlights

Key proposals for investors:1. Rates of tax to be uniform2. Tax deduction limit on savingsto be hiked to Rs 3 lakh (Rs 300,000)3. Income tax slabs proposed to bechanged; highest tax rate of 30 percent for individuals to be applicablefor income over Rs 25 lakh (Rs 2.5million)4. Security transaction tax to beabolished5. Effective corporate tax rate at 25per cent6. To scrap long, short-term capitalgains distinction7. Business losses can be carriedforward indefinitely8. No tax deduction on interestpayable on any govt. security9. Base year for calculation of capgains tax moved to April 200010. Wealth tax liability to bedischarged by payment of pre-paidtaxes11. Income from certain transfersnot be treated as capital gainsProposals for businesses:1. Taxation of all non profitorganisations rationalised2. Profits of non-life insurancebusiness to be disclosed annually3. Government may enter overseasagreements for double taxationavoidance4. No tax deduction on interestpayable to banking cos, insurers

Direct Tax Code Implications

CORPORATE TAXATION PERSONAL TAXATION

� Corporate Tax rate to be 25 pc � Maintains tax exemption at Rs. 1.60against 30 pc lakh income a year

� Abolition of Securities Transaction � 10 percent tax imposed on incomeTax of Rs. 1.6-10 lakh

� Re-introduction of long-term capital � 20 percent tax imposed on incomegains tax over Rs. 10 lakh upto Rs. 25 lakh

� No distinction between short and � 30 percent tax imposed on incomelong term capital gain tax beyond Rs. 25 lakh

� Amalgamation and de-mergers to � All perks and allowances will bebe tax neutral added to income for taxation

� Business losses can carried forward � Savings upto Rs. 3 lakh will betill fully adjusted exempted from income for

� MAT will be on gross assets as taxationagainst book profit taxation

� Area-based incentives will be � Withdrawals from PF, PPF etc.replaced with incentives on will be taxedinvestment � Wealth tax limit raised to Rs. 50

� Punishment for defaulters will crore from Rs. 30 lakhbe more severe � Financial securities like shares

brought under wealth tax



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commendable change as one hasalways experienced tinkeringof existing laws.Reduction in effective tax rates forIndividuals is a major gains forindividualsPersonal income tax, almost allsalaried persons will agree, in ourcountry is one of the highest in theworld. More open and honest anemployer is in terms of disclosingremunerations, worse it is for theemployees because taxable incomegoes up. The present system thusrewards dishonesty and non-disclosure of income by way of lowertax. The Tax Code will try to addressthese issues by significantly loweringincome tax and by disallowing all tax-free perks. It proposed exemption ofincome tax on specified savings up toRs 3 lakh a year as against the presentdeduction limit of Rs 1 lakh for alltypes of savings under 80C of the ITAct. The catch, however, is that a fewlong term investments like publicprovident fund, employer’sprovident fund, insurance premiumin pension (annuity) schemes, PostOffice National Savings Scheme etcwill be eligible for tax exemption. Butcontributions to fixed deposits,interest and principal payment onhousing loans, educational expensesof dependents, and a host of otherforms of savings will not qualify aseligible for tax savings. The thrust,clearly, is to induce long term savingsfor future needs.The Tax code proposes a significantincrease in the tax slabs for personalincome tax which, if implemented,will result in a meaningful increasein disposable income, especiallybenefiting Fast Moving ConsumerGoods and other domesticconsumption stories. The proposedincrease in tax slabs is quitesubstantial in view of the country’sper capita income distribution, andshould reduce the impact of theproposed increase in capital gains taxrates.There is increased deduction forsavings up to Rs 3 lakh (Rs 300,000).The code proposes to exempt thegeneral tax payer from payingincome tax if his income is Rs 1,60,000in a year. He would pay just zero taxtill an income of Rs 1,60,000 per year.

From income above Rs 1,60,000 tillRs 10 lakh (Rs 1 million), he will paya tax of 10 per cent. For income aboveRs 10,00,000, but less than Rs 25,00,000(Rs 2.5 million), he will pay tax of Rs84,000 plus 20 per cent of the amountover Rs 10,00,000. For income aboveRs 25,00,000, he will pay Rs 3,84,000plus 30 per cent of the amount bywhich the total income exceeds Rs25,00,000.Currently, the general income taxpayer does not pay tax till Rs 1,60,000of income in a year. However, he pays10 per cent tax on income between Rs1,60,000 and Rs 3 lakh, 20 per centbetween Rs 3 lakh and Rs 5 lakh (Rs500,000) and 30 per cent beyond Rs 5lakh. Thus, for an individual withtaxable income of Rs 10 lakh a yeartax payment will drop from Rs 1.68lakh to Rs 51,000, a net annual savingof Rs 1.17 lakh. The exemption limitfor women and senior citizens willcontinue to be Rs 1.90 lakh and Rs 2.40lakh, respectively.

At the same time, the code proposesto do away with the distinctionbetween long and short-term capitalgains and abolish the SecuritiesTransaction Tax (STT), effectivelytaxing all capital gains at theapplicable marginal tax rate for thetax-payers’ total income.At present, the long-term capitalgains tax is Nil on equity transactionson which STT is paid and 20 per centon all other assets, while the short-term capital gains tax rate is 10 percent on equity transactions on whichSTT is paid and 30 per cent on otherassets.Change in tax slabs for personalincome will boost consumption,owing to rising disposable income inthe hand of consumers triggeringincreased consumption and spendingin the economy. Specifically, thiswould boost the demand forconsumer discretionary items. Thiswould ultimately provide a fillip toindustrial capex and, consequently,

Tax incentives on Savings: Not without painsThe code also proposes to increase the tax deduction limit however, the taxincentives on Interest paid on home loans is proposed to be withdrawn. Ona further negative note, the code also proposes to tax the savings in variousinstruments including PPF, Insurance, etc. at the time of withdrawal, i.e.investments in tax savings instruments will only lead to a postponement oftax liability rather than an outright exemption as applicable at present.Moreover, retirement benefits such as gratuity will be tax-free only ifdeposited in specified retirement benefit schemes. These investments, whenaccrued, were earlier exempted from tax. The Tax Code says that under theExempt-ExemptTax (EET) systemall withdrawalswill attract taxb e c a u s et h e a m o u n twithdrawn will betreated as part ofthe income for thatyear.Though taxingfinancial gains available after retirement will pinch the retired people.However, as a relief to senior citizens, tax exemption limits for them shouldbe raised to Rs 5 lakh per annum instead of Rs 2.40 lakh at present. The prospect of eventual taxation at the time of withdrawal could weigh oninvestment decisions and reduce attractiveness of tax-saving instruments. Ifthe finance minister is for giving major relief to tax payers, he will alsomake sure that there aren’t many avenues to avoid taxes. So, as a rider, theTax Code proposes to add all perquisites enjoyed by a tax payer to incomefor the purpose of tax calculations. In other words, allowances like leavetravel, furnishings, entertainment expenses, conveyance, medical etc, willbe added to income.



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the Capital Goods industry wouldalso benefit, in the form of increasedinflows in the long run.Wealth tax benefitsThe proposed Tax Code has sought tomake major changes in wealth taxcalculations and rates.The threshold limit for wealth taxwill be raised to Rs 50 crore from thepresent Rs 30 lakh and the tax ratewas reduced from 1 per cent to 0.25per cent.But, in a smart move, to expand thescope of taxation the Tax Codeincluded financial assets like shares,corporate bonds, fixed deposits, etcin wealth tax. The valuation of theseassets will be done at cost or at marketprice, whichever is lower. In case ofcapital gains tax too, the Tax Codeproposed some sweeping changes. Ithas done away with the presentsystem of short-term and long-termcapital gain tax, and replaced it witha uniform structure and gains will betaxed at the marginal tax rate asapplicable to the tax payer. Theimplications of these changes areclear: The period of holding has nobearing on the tax payable and biggerinvestors will be taxed at higher ratesthan the smaller ones.Reduction in Corporate Tax;withdrawal of tax incentives onExports; increased rate of MAT: Amixed bag for corporatesReduction in the Corporate Tax ratefrom 33 per cent (including surcharge)to 25 per cent will benefit companiesacross sectors but sectors, especiallyin FMCG and Banking where theeffective tax rates are close to 33 percent for most companies. Moreover,business losses will be allowed to becarried forward indefinitely, unlike8 years at present. The reduction intax rates is intended to becompensated by a withdrawal ofvarious tax incentives available tosectors such as exports, infrastructure,area-based tax holidays, etc. The codedoes provide for some investment-based incentives. In respect of revenueand capital expenditure on scientificresearch and development, deductionto the extent of 150 per cent of theexpenditure will be allowed to allcompanies. Under the newprovisions, tax liability will accrue invarious specified infrastructure

sectors only after 100 per cent of thecapital expenditure is recovered,allowing these companies topostpone the tax liability.As companies under our coveragecome under the full tax bracket, thereduction in corporate tax rate willbring down the overall tax liabilityof these companies and will providea push-up to the bottom line.MAT provisionsThe tax code proposes a radicalchange in the MAT provisions. Underthe new system, MAT will be paid ata specified percentage of Gross assetsof a company (broadly equates tocapital employed- Basis forcomputing Minimum Alternate Tax(MAT) changed from “Book Profits”to “Gross Assets”; Gross Assets toinclude: Value of Gross Fixed Assets+ Capital work-in-progress + BookValue of all other assets -Accumulated Depreciation - Debit

Balance in P&L A/c; MAT to becharged at 2 per cent of Gross Assetsand will be the final tax and will notbe available as tax credit insubsequent years). This shift in MATfrom book profits to gross assets isaimed at encouraging optimalutilisation and increased efficiency ofassets. The specified percentage is 0.25per cent for banking companies and 2per cent for all other companies.Although intended to widen the taxbase by reducing tax evasion, the newMAT proposals will cause hardshipto loss making companies as they willhave to pay tax on assets.

International taxation:The code proposes to treat foreigncompanies as Indian residence if theplace of control or management issituated either wholly or even partlyin India at any time during the year.It is a very interesting proposal - forclose to fifty years, we had a very clearrule which has been unammended tosay that if there is a foreign companywhich is wholly managed andcontrolled from India, it will betreated as a resident Indian company.The significant being that if it is aresident Indian company we haveglobal basis of taxation worldwideincome will be taxed in India.Carrot and stickIf the Tax Code is generous in givingrelief to tax payers, be sure, it willalso make life miserable for thosewho evade tax through fraudulentmeans. As the Tax Code prescribesstiff penalties and prosecution for

non-compliance with the tax laws, itproposes that every tax offense underthe Code will be punishable by bothimprisonment and fine. Apart fromdefaulters, the Tax Code proposes topunish tax consultants who help intax evasion. It gives sweeping powersand blanket protection to Income Taxofficials for initiating courtproceedings on matters relating to taxoffences.Briefly, the salient features of thecode are as under:(a) Single Code for direct taxes: Allthe direct taxes have been broughtunder a single code and compliance



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procedures unified. This willeventually pave the way for a singleunified taxpayer reporting system.(b) Use of simple language: With theexpansion of the economy, thenumber of taxpayers can be expectedto increase significantly. The bulk ofthese taxpayers will be small payingmoderate amounts of tax. Therefore,it is necessary to keep the cost ofcompliance low by facilitatingvoluntary compliance by them.This is sought to be achieved, interalia, by using simple language indrafting so as to convey, with clarity,the intent, scope and amplitude of theprovision of law. Each sub-section isa short sentence intended to conveyonly one point. All directions andmandates, to the extent possible,have been conveyed in active voice.Similarly, the provisos andexplanations have been eliminatedsince they are incomprehensible tonon-experts. The various conditionsembedded in a provision have alsobeen nested. More importantly,keeping in view the fact that a tax lawis essentially a commercial law,extensive use of formulae and tableshas been made.(c) Reducing the scope for litigation:Wherever possible, an attempt hasbeen made to avoid ambiguity in theprovisions that invariably give riseto rival interpretations. The objectiveis that the tax administrator and thetax payer are ad idem on theprovisions of the law and theassessment results in a finality to thetax liability of the tax payer. Tofurther this objective, power has alsobeen delegated to the CentralGovernment/Board to avoidprotracted litigation on proceduralissues.(d) Flexibility: The structure of thestatute has been developed in amanner which is capable ofaccommodating the changes in thestructure of a growing economywithout resorting to frequentamendments. Therefore, to the extentpossible, the essential and generalprinciples have been reflected in thestatute and the matters of detail arecontained in the rules/Schedules.(e) To ensure that the law can bereflected in a Form: For mosttaxpayers, particularly the small and

marginal category, the tax law is whatis reflected in the Form. Therefore,the A-10 structure of the tax law hasbeen designed so that it is capable ofbeing logically reproduced in a Form.(f) Consolidation of provisions: Inorder to enable a better understandingof tax legislation, provisions relatingto definitions, incentives, procedureand rates of taxes have beenconsolidated. Further, the variousprovisions have also been rearrangedto make it consistentwith the generalscheme of the Act.(g) Elimination ofregulatory functions:Traditionally, thetaxing statute has alsobeen used as aregulatory tool.However, withregulatory authoritiesbeing established invarious sectors of theeconomy, theregulatory function ofthe taxing statute hasbeen withdrawn. This hassignificantly contributed to thesimplification exercise.(h) Providing stability: At present, therates of taxes are stipulated in theFinance Act of the relevant year.Therefore, there is a certain degree ofuncertainty and instability in theprevailing rates of taxes. Under thecode, all rates of taxes are proposedto be prescribed in the First to theFourth Schedule to the code itselfthereby obviating the need for anannual Finance Bill. The changes inthe rates, if any, will be done throughappropriate amendments to theSchedule brought before Parliamentin the form of an Amendment Bill.

It was heartening to note that inthe true spirit as stated in the Codethe draft Code was circulated for

discussion and consultations at thenumerous forums. Now that theprocess of consultations is over, theCode will need a redrafting but asreported in the press there could be arelook at the proposals on taxationfor employees, income from houseproperty, proposals of the minimumalternate tax (MAT), capital gain, taxtreaties, taxation for foreign

companies, etc. The direct tax code isnot yet law and the government isreviewing many aspects of it whichis aimed at bringing a new law thatwill further the objective of reform,yet be acceptable to ‘aam aadmi’. Thenew code is expected to simplify thetax procedures and adoptinternational best practices. But itcould be tough on investors becausetheir overall tax burden is likely toincrease. The government has taken

into account the serious problem ofcomplexity of tax legislation in India.Tax administrators, charteredaccountants and tax payers haveraised concerns about the complexstructures of the Income Tax Act. Inparticular the numerous amendmentshave rendered the Actincomprehensible to the average taxpayer. The problem has been furthercompounded by the courts at differentlevels. It is expected that the newDirect Tax code will have bettercompliance and better collection oftaxes as this is a brand new Codewritten from scratch.

As per the promise of annualBudget 2005-06, the FinanceMinister has come out with

an Outcome Budget. This will en-sure good governance. In simplewords, it will provide outcomes forthe expenditure provided for in theBudget for a fiscal. Each departmentand ministry will continue with thepresent practice of tabling a Perfor-mance Budget giving the details ofthe performance in the year goneby. The first official Budget was pre-sented on March 18, 2006.

OUTCOME BUDGET



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OVERALL ECONOMIC SCENARIO

Still miles to go before ..

Finally, the Economic Survey of India 2009-10, prepared by the Fi-nance Ministry, has indicated that the economy is expected to growat 7.2 per cent in 2009-10, with the industrial and the service sectorsgrowing at 8.2 and 8.7 per cent respectively. This recovery is impres-sive for at least three reasons.

Firstly, it has come about despite a decline of 0.2 per cent in agriculturaloutput, which was the consequence of sub-normal monsoons.Secondly, it foreshadows renewed momentum in the manufacturingsector, which had seen continuous decline in the growth rate for almosteight quarters since 2007-08. Indeed, manufacturing growth has morethan doubled from 3.2 per cent in 2008-09 to 8.9 per cent in 2009-10.Thirdly, there has been a recovery in the growth rate of gross fixedcapital formation, which had declined significantly in 2008-09 as per therevised National Accounts Statistics (NAS). While the growth rates ofprivate and Government final consumption expenditure have dipped inprivate consumption demand, there has been a pick-up in the growth ofprivate investment demand.

There has also been a turnaround in merchandise export growth in November2009, which has been sustained in December 2009, after a decline nearly twelvecontinuous months.

Major concerns of 2009: A major concern during the year 2009-10, especially inthe second half, was the emergence of high double-digit food inflation. On ayear-on-year basis, wholesale price index (WPI) headline inflation in Decem-ber 2009 was 7.3 per cent but for food items (primary and manufactured) witha combined weight of 25.4 per cent in the WPI basket, it was 19.8 per cent. Thus,unlike the first half of 2008-09 when global cost-push factors resulted in WPIinflation touching nearly 13 per cent in August 2008, with inflation in primaryand manufactured products just below the overall average and that in the fueland power group at over 17 per cent, the upsurge in prices in the second half of2009-10 has been more concentrated and confined to food items only. As of theweek ending January 30, 2010 the inflation in primary food articles stood at17.9 per cent, and that in fuel, power light and lubricants at 10.4 per cent. Asignificant part of this inflation can be explained by supply-side bottlenecks insome of the essential commodities, precipitated by the delayed and sub-nor-

IMF ProjectionsThe International Monetary Fund’s(IMF) World Economic Outlook up-date of January 26, 2010 suggests thatfollowing a sharp decline of 3.2 percent in 2009, output in the advancedeconomies has begun to expandsince the second half of 2009 and isnow expected to grow by 2.1 per centin 2010. In the case of emerging anddeveloping economies, the modest2.1 per cent output growth in 2009 isexpected to be followed by a rise ofabout 6 per cent in 2010. For theworld as a whole an output declineof 0.8 per cent in 2009 is projected toturn into a growth of 3.9 per cent in2010.

mal southwest monsoons. Since De-cember 2009, there have been signs ofthese high food prices, together withthe gradual hardening of non-admin-istered fuel product prices, gettingtransmitted to other non-food items,thus creating some concerns abouthigher than-anticipated generalizedinflation over the next few months.Overall GDP Growth: While there areno major changes in the overallgrowth rate of GDP at constant 2004-05 prices, except for 2007-08 where ithas been revised upward from 9.0 to9.2 per cent, there are some changesin growth rates at sectoral level andin the level estimates of GDP. Thus,for instance, the contribution of theagriculture sector to the GDP at factorcost in 2004-05 has declined from 17.4per cent in the old series to 15.9 percent in the new series. Similarly, whilethe contribution of registered manu-facturing has declined from 10.9 percent in the old series to 9.9 per cent inthe new series, that of unregisteredmanufacturing has increased from 4.9to 5.4 per cent. There is also an increasein the contribution of real estate, own-ership of dwellings and business ser-vices from 8.2 per cent to 8.9 per cent.



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HighlightsEconomic Survey 2009-101. Economy posted a remarkable recovery expected to grow at 7.2 per cent in2009-10 against 6.7 per cent in 2008-09. Survey hopes the Indian GDP can beexpected to grow around 8.5+/- 0.25 per cent, with a full recovery, breachingthe 9 per cent mark in 2011-12.2. Manufacturing growth more than doubled to 8.9 per cent in 2009-10 from3.2 per cent in 2008-09.3. Survey recognizes food inflation as major con-cern.4. Per capita income increased to 5.3 per cent in 2009-10 from 3.7 per cent in 2008-09.5. Gross Fiscal deficit stands at 6.5 per cent of GDP.6. Liquidity condition remained comfortable dur-ing 2009-10.7. Bank credit grows by 13.9 per cent on year-on-year basis. Non-food bank credit recorded an in-crease of 8.7 per cent on financial year basis till Janu-ary 15, 2010 as per the latest available data.8. Agricultural credit disbursal exceeds target. Atsectoral level, there has been a rebound in the growth rate of investment inthe agricultural sector, which grew at 16.5 per cent and 26.0 per cent in 2007-08 and 2008-09 respectively against 1.4 per cent recorded in 2006-07.9. Investment Deposit Ratio increases to 32.52 per cent.10. Balance of Payment situation improves due to surge in capital flows andrise in foreign exchange reserves, which have been accompanied by rupeeappreciation.11. Net capital flows to India at US$ 29.6 billion in April-September 2009remained higher as compared to US$ 12.0 billion in April-September 2008.12. During fiscal 2009-10, foreign exchange reserves increased by US$ 31.5billion from US$ 252.0 billion in end March 2009 to US$ 283.5 billion in endDecember 2009.13. Recommendations of the Thirteen Finance Commission need to be takenon board in shaping the fiscal policy for 2010-11 and in the medium term.14. Momentum in telecommunication sector continues with monthly addi-tions exceeding 17.6 million connections.15. Share of central government expenditure on social services includingrural development, in total expenditure, plan and non-plan gone up to 19.46per cent in 2009-10 which was only 10.46 per cent in 2003-04.16. The consolidated balance sheets of SCBs expanded by 21.2 per cent as inend-March 2009 as compared to 25.0 per cent in the previous year. Thecapital to risk-weighted assets ratio (CRAR) of SCBs improved to 13.2 percent as in end-March 2009 from 13.0 per cent as in end-March 2008, remain-ing significantly above the stipulated minimum of 9.0 per cent.

In the case of level estimates of GDPat current prices, the difference rangesfrom 3.1 per cent in 2004-05 to 6 percent in 2008-09.While the GDP at factor costs at con-stant 2004-05 prices, is placed at Rs44,53,064 crore, the GDP at marketprices, at constant prices, is estimatedat Rs 47, 67,142 crore. The correspond-ing figures at current prices are Rs57,91,268 crore and Rs 61, 64,178 crorerespectively. It is worthwhile to notehere that the growth rates of GDP atmarket prices, at constant 2004-05prices, in 2008-09 and 2009-10 at 5.1per cent and 6.8 per cent have beenconsiderably lower than the growthrates of GDP at factor cost. This is dueto the significant decline in net indi-rect taxes (i.e. indirect taxes minus sub-sidies) in the said years on account ofthe fiscal stimulus implemented by theGovernment, which included tax re-lief to boost demand and increase inthe expenditure on subsidies.Seven out of eight sectors/sub-sectorsshow a growth rate of 6.5 per cent orhigher. The exception, as anticipated,is agriculture and allied sectors wherethe growth rate is estimated to be mi-nus 0.2 per cent over 2008-09.Gross Domestic Product:GDP is a measure of total flow ofgoods and services produced by theeconomy over a specified time period.It is obtained by valuing output ofgoods and services at market pricesand then the aggregate is formulated.The are three sectors:1. Primary Sector- agriculture, fishery,forest, mining, quaring (total produc-tion is calculated)2. Secondary Sector- industries, manu-facturing, construction, electricity.3. Services Sector - banking, insurance,transportation, communication.In this process the intermediate goodare excluded. Intermediary goods aremainly a kind of raw materials orsomething which is used in the pro-duced in the production of other goodse.g. steel sheets used in making of acar body. It is also called producergoods. GDP is of 2 types:1. Nominal GDP- it measures totaleconomic activity in current price.2. Real GDP- total economic activityin constant price (rise in Nominal GDPdoes not mean rise of Real GDP).Gross National Product:Gross National Product (purified form

of GDP)GNP = GDP + (x - m)

x = profit earned by an In-dian outside India .

m = profit earned by a for-eigner in India.In developed countries GNP >GDP.In developing countries GDP >GNP.Net National Product:NNP = GNP- Depreciation (due tomaintenance and technological obso-lescence).NNP is of two types:1. Factor Cost.

2. Market Price.In India GDP is calculated on the basisof Factor cost of NNP.�Price of the product at the produc-tion basis is known as factor price.�Tax added to that price is known asmarket price.�Market price is always more thanFactor price (factor price is also knownas Factory price)�NNPFC = Market price – Indirecttax + subsidy.Per capita growthWhile the growth in per capita in-



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Thirteenth Finance CommissionInclusive and green growth promoting fiscal federalismAs per Articles 270, 275 and 280 of the Indian Constitution, the FC-XIII sub-mitted its report on December 30, 2009. The FC-XIII’s overall approach wasto foster “inclusive and green growth promoting fiscal federalism”. Observ-ing that as against the level of 75 per cent targeted by the Twelfth FinanceCommission, the combined debt-GDP ratio was 82 per cent in the terminalyear (2009-10), the FC-XIII focused on anchoring the fiscal consolidationprocess in a medium-term debt reduction framework. The FC-XIII proposesreducing the combined debt-GDP ratio to 68per cent by 2014-15 with the Centre’s debt-GDP ratio declining to 45 per cent.Major recommendations:1. Fiscal consolidation through the elimina-tion of revenue deficit as the long-term tar-get for both the Centre and States. For thisthere should be a normative discipline forboth Centre and States; with equal treatmentwhich entailed no automatic priority for anylevel of Government and a focus on equal-ization (and not equity).2. In order to make the GST practicable, FCXIII recommended the sanction of Rs 50,000crore as compensation for revenue losses ofStates on account of the implementation ofthe GST. This amount would shrink to Rs 40,000 crore were the implementation to take place on/after April 1, 2013 andfurther to Rs 30,000 crore were it to take place on/after April 1, 2014.3. The share of States in net proceeds of shareable Central taxes shall be 32per cent every year for the period of the award.4. Revenue accruing to a State is to be protected to the levels that would haveaccrued to it had service tax been a part of the shareable Central taxes, if the88th Amendment to Constitution is notified and followed up by a legisla-tions enabling States to levy service tax. Centre is to review the levy of cessesand surcharges with a view to reducing their share in its gross tax revenue.The indicative ceiling on overall transfers to States on revenue account maybe set at 39.5 per cent of gross revenue receipts of the Centre.5. The Fiscal Responsibility and Budget Management (FRBM) Act needs tospecify the nature of shocks that would require relaxation of the targetsthereunder. States are expected to be able to get back to their fiscal correctionpath by 2011-12 and amend their FRBM Acts to the effect.6. The National Calamity Contingency Fund (NCCF) should be merged withthe National Disaster Response Fund (NDRF) and the Calamity Relief Fund(CRF) with the State Disaster Response Funds (SDRFs) of the respective States.Grants to states:

�A total non-Plan revenue grant of Rs 51,800 crore is recommendedover the award period for eight States. A performance grant of Rs 1500crore is recommended for three special category States that have gradu-ated from a non-Plan revenue deficit situation.�An amount of Rs 19,930 crore has been recommended as grant formaintenance of roads and bridges for four years (2011-12 to 2014-15).�An amount of Rs 24,068 crore has been recommended as grant forelementary education.�An amount of Rs 27,945 crore has been recommended for State-spe-cific needs.�Amounts of Rs 5,000 crore each as forest, renewable energy and wa-ter sector-management grants have been recommended.�A total sum of Rs 3,18,581 crore has been recommended for the awardperiod as grants-in-aid to States.

come, measured in terms of GDP atconstant market prices, has declinedfrom a high of 8.1 per cent in 2007-08to 3.7 per cent in 2008-09 and then re-covered to 5.3 per cent in 2009-10, percapita consumption growth as cap-tured in the private final consumptionexpenditure (PFCE) shows a decliningtrend since 2007-08 with its growth ratein 2009-10 falling to one-third of thatin 2007-08.Aggregate demandThe change in the NAS series from theold base of 1999-2000 to the new baseof 2004-05 has brought about signifi-cant revision in the expenditure esti-mates of the GDP for 2008-09. Whilegrowth of the PFCE in 2008-09 wasrevised upward from 2.9 per cent to6.8 per cent, growth in Governmentfinal consumption expenditure was re-vised downwards from over 20 percent in 2008-09 on the old base to 16.7per cent on the new base. In 2009-10 agrowth of 4.1 per cent is expected inprivate final expenditure and 8.2 percent in Government final expenditure.There is therefore a significant declinein the growth of consumption expen-diture in 2009-10. However, the over-all share of consumption expenditure,both private as well as Governmentin GDP at market prices, at constant2004-05 prices, has declined only mar-ginally from 70.9 per cent in 2008-09to 69.6 per cent in 2009-10.At the same time, the growth rate ofgross fixed capital formation in 2008-09 has also undergone a revision dueto the change in the NAS base year.It was revised downward from 8.2 percent in the earlier base to 4 per cent inthe revised base for 2008-09. It is, how-ever, estimated to grow by 5.2 per centin 2009-10. Moreover, gross capitalformation adjusted shows a negative4 per cent growth in 2008-09 in the newNAS base. This is because of a signifi-cant decline in inventories (change instocks) from Rs 1,08,739 crore in theold base to Rs 59,812 crore in the newbase. The share of gross fixed capitalformation in GDP remains nearly thesame at 32.5 per cent in 2009-10 and32.9 per cent in 2008-09.Agriculture:Total foodgrains production in 2008-09 was estimated at 233.88 milliontonnes as against 230.78 million tonnesin 2007-08 and 217.28 million tonnes



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in 2006-07. In the agricultural season2009-10, the impact of the delayed andsub-normal monsoon is reflected inthe production and acreage data forkharif crops. As per the first advanceestimates, covering only the kharifcrop, production of foodgrains is esti-mated at 98.83 million tonnes in 2009-10, as against the fourth advance esti-mates of 117.70 million tonnes for thekharif crop in 2008-09 and a target of125.15 million tonnes for 2009-10.Overall production of kharif cerealsin 2009-10 has shown a decline of 18.51million tonnes over 2008-09.The total designed storage capacity atfull reservoir level (FRL) of 81 majorreservoirs in the country monitoredby the Central Water Commission is151.77 billion cubic metres (BCM). Atthe end of monsoon 2009, total wateravailability in the reservoirs was 90.48BCM, which is less than the wateravailability of 113.74 BCM at the endof monsoon 2008 and the average of100.95 BCM for the last 10 years.Decline in production:Rice: In the case of rice the decline isabout 15 per cent over the 2008-09 leveland 17 per cent in comparison withthe target for 2009-10.Coarse cereals: In the case of rice thedecline is about 15 per cent over the2008-09 level and 17 per cent in com-parison with the target for 2009-10.The decline in kharif coarse cereals in2009-10 in comparison with 2008-09 isnearly 20 per cent and the shortfallwith respect to the target for kharif2009-10 is nearly 10 million tonnes.Total production of kharif pulses isestimated at 4.42 million tonnes in2009-10, which is 8 per cent lower thanthe production during 2008-09 and 32per cent lower than the targeted pro-duction for 2009-10.Oilseeds: Similarly, total kharif pro-duction of the nine oilseeds in 2009-10is about 15 per cent lower than thekharif production in 2008-09.Sugarcane: Sugarcane production in2009-10 is estimated at 249.48 milliontonnes, which is 9 per cent lower thanthe previous year and 27 per cent lowerthan the targeted production for 2009-10.Cotton: Cotton production in 2009-10is estimated at 236.57 lakh bales (of170 kg each), which is higher than thefourth advance estimates of 231.56 lakh

Gross domestic savings (GDS)The rate of GDS on the new series increased from 32.2 per cent in 2004-05 to36.4 per cent in 2007-08 before declining to 32.5 per cent in 2009-10, as againstthe old series where it rose from 31.7 per cent in 2004-05 to 37.7 per cent in2007-08. From 2005-06 to 2007-08, the GDS rate was overestimated in the NASold series by an average of 1.3 per cent. The fall in the rate of GDS has mainlybeen due to the fallin the rates of sav-ings of the publicsector (from 5.0 percent in 2007-08 to 1.4per cent in 2008-09)and private corpo-rate sector (from 8.7per cent in 2007-08to 8.4 per cent in2008-09). In respectof the householdsector, the rate of saving has remained at the same level of 22.6 per cent in2007-08 and 2008-09.Domestic Savings: The data is prepared by CSO. The domestic savings is theis the assess of current income over the current expenditure. There are threefactors involved in estimating domestic savings:1. Household savings; 2. Private corporate savings; and 3. Public savings.1. Household savings: (i) Total financial savings i.e. currency, shares, prefer-ence shares insurance and claims. (ii) Savings in the forms of physical estate,machinery, car household appliances etc.2. Private corporate savings: (i) Non-Government, non-financial companies.(ii) Private financial institutions. (iii) Corporate institutions.3. Public savings: Government’s income and profit. Gross Domestic Savings= 1+2+3In India most of the savings are done in the Household sector, whereas inwestern countries the Private corporate sector accounts for largest compo-nent of GDS. The household sectors mainly deposits in bank and contractualsavings and investment in shares and debentures is relatively less.

Gross domestic capital formation (GDCF)Gross Domestic Capital Formation refers to investment which domesticsavings and other capital flows. Foreign capital inflows bridges the savings–investment gap. The rate of gross capital formation at current prices rosefrom 32.7 per cent in 2004-05 to 37.7 per cent in 2007-08 before declining to34.9 per cent in 2008-09.At sectoral level, the rate of gross capital formation or simply the invest-ment rate has increased in both the public and private sectors. In the formerit rose continuously from 7.4 per cent in 2004-05 to 9.4 per cent in 2008-09,whereas in the latter, it increased from 23.8 per cent in 2004-05 to 27.6 per centin 2007-08 before falling to 24.9 per cent in 2008-09. Between 2007-08 and2008-09, the investment rate for the private corporate sector declined signifi-cantly from 16.1 per cent to 12.7 per cent, whereas that of the householdsector increased from 11.5 to 12.2 per cent.The sectoral savings-investment gap, reflecting the gap between gross do-mestic savings and gross capital formation of a sector, declined significantlyfor the public sector as its savings increased until 2007-08. However, with asudden drop in its savings rate by nearly 4 percentage points in 2008-09, thisgap shot to a negative 8 per cent. In the case of the private corporate sector,the savingsinvestment gap has been consistently positive and has risen in2008-09 to 6.2 per cent after falling to 3.8 per cent in 2007-08 from 6.1 per centin 2004-05.



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Sectoral InvestmentThe sectoral investment rate is a useful indicator of the direction of newinvestments. While the overall growth of investment in India was in therange of 15 to 16 per cent per an-num during the last few years, itplunged to - 2.4 per cent in 2008-09as a result of the external shock-ledslowdown.AGRICULTURE: At sectoral level,there has been a welcome reboundin the growth rate of investment inthe agricultural sector, which grewat 16.5 per cent and 26.0 per cent in2007-08 and 2008-09 respectively.This is in contrast to the growth rateof 1.4 per cent recorded in 2006-07.INDUSTRY: Growth of investmentin the industrial sector has beenmore than the total investmentgrowth up to 2007-08. However, in2008-09, this was reversed, when in-vestment in the industrial sectordeclined by - 17.6 per cent as compared to a decline of - 2.4 per cent in totalinvestment. Within the industrial sector, the decline was more prominent inmanufacturing and the construction sector. Investment in the unorganizedmanufacturing sector declined by a negative 42 per cent, indicative, perhaps,of the difficulty faced by the sector in accessing credit due to the tight marketconditions in the post financialcrisis phase.SERVICE: Investment in the services sector registered a growth of 20.2 percent in 2006-07, which suddenly declined to - 16.0 per cent in 2007-08 as aresult of a decline in investment in the trade, hotels Sectoral share in grossdomestic capital formation 2008-09.

bales in 2008-09 by 2.2 per cent. How-ever, it is lower than the target set for2009-10 by 9 per cent.Industry:�While the CSO’s advance estimatesplace industrial-sector growth at 8.2per cent, as against 3.9 per cent in 2008-09, the IIP industrial growth is esti-mated at 7.7 per cent for the periodApril-November 2009-10, signifi-cantly up from 0.6 per cent during thesecond half of 2008-09. The manufac-turing sector, in particular, has grownat the rate of 8.9 per cent in 2009-10.�There was strong growth in auto-mobiles, rubber and plastic products,wool and silk textiles, wood products,chemicals and miscellaneous manu-facturing; modest growth in nonme-tallic mineral products; no growth inpaper, leather, food and jute textiles;and a slump in beverages and tobaccoproducts in 2009-10.�Growth in the production of capitalgoods, a proxy for investment, is im-proving, but different components ofthe “capital goods” group reflect amixed picture during the current year.The strength of the recovery so far hasbeen helped by the favourable baseeffect and mild inflation in manufac-turing articles, especially of industrialinputs. The declining trend in the num-ber of mandays lost because of strikesand lockouts witnessed in recent yearshas continued in 2009-10.�Core industries and infrastructureservices, led by the robust growth mo-mentum of telecom services andspread across power, coal and otherinfrastructure like ports, civil aviationand roads, have also shown signs ofrecovery in 2009-10.Infrastructure:Power Sector: During April-December2009, the peak deficit and total energydeficit came down considerably to 12.6per cent and 9.8 per cent respectivelyfrom 13.8 per cent and 10.9 per centduring the corresponding period of theprevious year. Due to the productionin KG Basin the overall PLF also im-proved during April-December 2009.Crude Oil: During 2009-10, the pro-jected production for crude oil is 36.7mmt, which is about 11 per cent higherthan the actual crude oil productionof 33.5 mmt in 2008-09.Roadways: In 2009-10, as against thestipulated target of developing about

a 3,165 km of national highways un-der various phases of the NationalHighway Development Project(NHDP), the achievement up to endNovember 2009 has been about 1,490km. Similarly, as against the 2009-10target of about 9,800 km for awardingprojects under various phases of theNHDP, projects totalling a length ofabout 1,285 km have been awarded upto end November 2009.Telecom sector: From only 54.6 mil-lion telephone subscribers in 2003, thenumber increased to 429.7 million atthe end of March 2009 and further to562 million as of October 31, 2009showing an addition of 96 million sub-scribers during the period from Marchto December 2009.Service sector:As against a growth of 9.8 per cent in2008-09 it grew at 8.7 per cent in 2009-10. While there has been a significantdip in the growth of community so-cial and personal services in 2009-10,the other sub-sectors have either re-

tained their growth momentum or im-proved upon it. A comparison be-tween the old and the new series ofNAS reveals considerable differencein the level estimates of the valueadded of service sub-sectors to GDP atcurrent prices. Thus, for instance, therehas been a decline, ranging fromaround 8 per cent in 2004-05 to 30 percent in 2008-09, in the communicationsub-sector. This has been partly offsetby the increase in the level estimatesof value added in real estate, owner-ship of dwellings, business and legalservices, ranging from 11.6 per cent in2004-05 to nearly 34.4 per cent in 2008-09.Foreign exchange reserve:During fiscal 2009-10, foreign ex-change reserves increased by US$ 31.5billion from US$ 252.0 billion in endMarch 2009 to US$ 283.5 billion in endDecember 2009. Out of the total accre-tion of US$ 31.5 billion, US$ 11.2 bil-lion (35.6 per cent) was on BoP basis(i.e excluding valuation effect), because



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InflationThe implicit deflator for GDP at market prices defined as the ratio of GDP at current prices to GDP at constant prices isthe most comprehensive measure of inflation on annual basis, Unlike the WPI, the GDP deflator also covers prices in theservices sector which now accounts for well over 55 per cent of the GDP. Overall inflation, as measured by the aggregatedeflator for GDPMP, increased from 4.7 per cent in 2005-06 to 5.6 per cent in 2006-07 and then declined to 5.3 per cent in2007-08, before rising again to 7.2 per cent in 2008-09. It has been estimated at 3.6 per cent in 2009-10 as per the advanceestimates.The year-on-year WPI inflation rate has been fairly volatile in 2009-10. It was 1.2 per cent in March 2009 and thendeclined continuously to become negative during June-August 2009, assistedin part by the large statistical base effect from the previous year. It turnedpositive in September 2009 and accelerated to 4.8 per cent in November 2009and further to 7.3 per cent in December 2009. For the fiscal year so far (Marchover December 2009) WPI inflation is estimated at 8 per cent.Causes: The supply-side bottlenecks in some of the essential commodities,precipitated by the delayed and sub-normal south-west monsoons as well asdrought-like conditions in some parts of the country. In the case of sugar, delayin the market release of imported raw sugar may have contributed to theoverall uncertainty and thereby price rise.Private Final Consumption Expenditure: The PFCE measures the average changeover time in the price paid for all consumer purchases. For this reason, thePFCE deflator measures changes in the cost of living, and because it measures the price paid for all consumerpurchases, versus just a basket of goods, it is considered a more accurate measure of inflation than the CPI. PFCE-based inflation is at a lower level than CPI-IW inflation during all the four years (2005-06 to 2008-09).Impact of Inflation

1. Income Effect: Change in demand for a product caused by a change in the price on the spending power ofconsumers. When the price of commodity is declining the purchasing capacity of the real income or constantincreases as result people buy more commodities.2. Substitution Effect: Under this condition the price of commodity tends to increase and as a result of this thecustomer is compelled to shift for substitutes. SE is always negative because consumers always shift spendingfrom the commodity whose price has risen.3. Price Effect: Income Effect+ Substitution Effect. Due to increase is cost of product the real income of thecostumer decreases. As a result of this the customer purchases that commodity whose price is less.Commodities are of three types: 1. Normal Commodities- High income high demand. 2. Inferior Goods –High income low demand or Low income high demand. 3. Complementary substitutes. If there would be risein cost of petrol the demand for petrol cars would come down. Therefore, the effect is indirect.4. Substitute Goods: When the prices of increases the demand for coffee increases or when the prices of coffeeincreases the demand for tea increases. Impact is indirect.5. Giffen Goods (Robert Giffen): This is an exception to the law of demand and supply. A commodity for whichthe demand increases at higher prices and falls at lower prices. He found that as the prices of bread rose , thepoor who always relies on it as their staple diet could simply no longer afford to buy other relatively moreluxurious food items which they had to replace with increased cost/ purchases of bread. Similarly ,becausebread constituted the bulk of their spending when its price falls they enjoyed such large increase in their realincome that they could then afford to substitute bread in their by other platable food. Therefore, the demandfor bread comes down.6. Inflation curves: The curve showing different combination two goods such as apples and pears betweenwhich the consumer is indifferent and which may be regarded as giving him equal satisfaction at the givenincome.

TE

RM

S

of higher inflows under FDI and port-folio investments, while accretion ofUS$ 20.3 billion (64.4 per cent) was onaccount of valuation gain due to weak-ness of the US dollar against majorcurrencies.Balance of payment:There has been improvement in thebalance of payments (BoP) situationduring H1 of 2009-10 over H1 of 2008-09, reflected in higher net capital in-flows and lower trade deficit. Thetrade deficit was lower at US$ 58.2 bil-lion during H1 (April-September) of

2009 as compared to US$ 64.4 billionin April-September 2008 mainly onaccount of decline in oil import.Merchandise exports on a BoP basisposted a decline of 27.0 per cent in H1(April-September 2009) of 2009-10 asagainst a growth of 48.1 per cent inthe corresponding period of the pre-vious year.Import payments declined by 20.6 percent during April-September 2009 asagainst a sharp increase of 51.0 per centin the corresponding period of theprevious year. The decline in imports

is mainly attributed to the base effectand decline in oil prices.The net invisibles surplus (invisiblesreceipts minus invisibles payments)stood lower at US$ 39.6 billion duringApril-September of 2009 as comparedto US$ 48.5 billion during April-Sep-tember 2008. The current account defi-cit increased to US $ 18.6 billion inApril-September 2009, despite a lowertrade deficit, as compared to US $ 15.8billion in April-September 2008,mainly due to the lower net invisiblessurplus.



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Fiscal scenario:The expansion took the form of taxrelief to boost demand and increasedexpenditure on public projects to cre-ate employment and public assets. Thenet result was an increase in fiscal defi-cit from 2.6 per cent in 2007-08 to 5.9per cent of the revised GDP (new se-ries) in 2008-09 (provisional) and 6.5per cent in the budget estimates for2009-10 (as against 6.8 per cent of theGDP on the old series, reported ear-lier). Thus the fiscal stimulusamounted to 3.3 per cent of the GDPin 2008-09 and 3.9 per cent in 2009-10from the level of the fiscal deficit in2007-08. As part of the fiscal stimulus,the Government also enhanced theborrowing limits of the State Govern-ments by relaxing the targets by 100basis points. As a result, the gross fis-cal deficit of the States combined rosefrom 1.4 per cent of the GDP in 2007-08 to 2.6 per cent in 2008-09 (revisedestimates) and was estimated at 3.2 percent of the GDP in 2009-10 (BE).As a proportion of the GDP, the Planexpenditure at 5.3 per cent of the GDPin 2009-10(BE) was the highest in re-cent years. Non-Plan expenditure grewby 19.4 per cent and 14.8 per cent re-spectively in 2008-09 and 2009-10 (BE).Social sector:The share of Central Government ex-penditure on social services includingrural development in total expendi-ture (Plan and non-Plan) increased to19.46 per cent in 2009-10 (BE) fromabout 10.46 per cent in 2003-04. Simi-larly, expenditure on social servicesby General Government (Centre andStates combined) as a proportion oftotal expenditure increased from 19.9per cent in 2004-05 to 23.8 per cent in2009-10 (BE).Further, sector-specific increases in-cluding in education, health and ruraldevelopment were reinforced in theBudget allocations for 2009-10. Underthe NREGA, which is a major ruralemployment initiative, during theyear 2009-10, 4.34 crore householdshave been provided employment sofar. Out of the 182.88 crore person dayscreated under the scheme during thisperiod, 29 per cent and 22 per cent werein favour of Scheduled Caste andScheduled Tribe population respec-tively and 50 per cent in favour ofwomen.

PILLARS OF INDIAN ECONOMY

Money market and monetary

policy

CALL MONEY MARKETThe money market remained by and large orderly during 2009-10, due to theprevailing surplus liquidity conditions. Call rate continued to hover around thereverse repo rate during Q1 of 2009-10 and averaged 3.2 per cent as compared to4.2 per cent during the last quarter of 2008-09. During the second quarter of 2009-10, the call rate averaged 3.25 per cent. Even in the third quarter, the call ratecontinued to hover around the lower bound of the informal LAF corridor. Theaverage call rate was placed at 3.20 per cent during this period. It is a market forovernight to short-term funds and for short-term money and financial assetsthat are close substitute for money. The organised market comprises the RBI andBanks; the Non-Banking Financial Institutions (NBFIs) like, LIC, GIC and itssubsidiaries and UTI, which doesn’t participate directly but indirectly throughthe banks. Besides commercial Banks, the Cooperative Banks also participates. It

is called organized because RBI systematically coordinates it.�There are three main components of Organised Money Market:(a) Inter-bank call Money Market: Funds borrowed by discount houses andbanks; it can be withdrawn without notice, on a daily basis. It is mainly centredin Bombay, Calcutta, and Madras. It deals in one-day loans called call money,which may or may not be renewed the next day. The participants are mostlybanks, therefore, called inter-bank call money market. Between the Banks SBI isa lender of intermediate resort (because of its most liquid position) and RBI aslender of last resort.�The main function of the market is to redistribute the pool of day todaysurplus funds of banks among other banks in temporary deficit of cash.

Different Rates(A) Bank Rate: The Bank rate is the rate at which the RBI should be preparedto buy or rediscount eligible bills of exchange or other commercial papers.But the Bill market in India is not well developed and the RBI makes ad-vances to banks mainly in other forms against government securities and asrefinance.It is a weapon of control of money supply–An in-crease in the Bank Rate by raising the cost of bor-rowed reserves, other things being the same, dis-courages bank borrowings from the Central Bank.The Bank Rate has been kept unchanged at 6.0 per cent.(B) Differential Interest Rates: The scheme was in-troduced in 1972. Under the scheme, the public sec-tor banks give loans at a concessional interest rateof 4 per cent to the weaker sections of the commu-nity.(C) Prime Lending Rates: It a privilege rate at which the banks gives loan tothe prime customers. The risk is relatively less. The rate is to be decided bythe governing body and directors of the bank but the scheduled commercialbanks follow the PLR rate of State Bank of India. This is an interesting ques-tion for many borrowers. The prime rate is a “reference or base rate” thatbanks use to set the price or interest rate on many of their commercial loansand some of their consumer loan products. State Bank of India, the country’slargest lender, cut the rate it charges its best clients to 13 per cent last weekfrom 13.75 per cent, the highest in a decade. ICICI Bank Ltd, the country’slargest private lender, hasn’t reduced its 17.25 per cent charge.



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�The money market is normallytighter during the busy season (Octo-ber-April) and the slack season (Mayand September).(b) Treasury Bill Market: T-bills issu-ances during the year 2009-10 were dy-namically managed, keeping in viewthe emerging requirements of the Gov-ernment and the market conditions.The T-bills issued for enhancedamounts in 2008-09 which became duefor repayment both in the first and sec-ond quarters of 2009-10 were fullyrolled over. The primary market yieldsfor TBs of different tenors (91 days, 182days and 364 days ) remained by andlarge stable during 2009-10 as com-pared to the pattern observed in 2008-09.TBs are short term (91 days) liabil-ity of the Government. In theory, theyare issued to meet temporary needs forfunds of the Government, arising fromtemporary excess of expenditure overreceipts. RBI on behalf of the CentralGovernment sells all treasury bills.The Government has decided to ensurethat all future issuance of securities byit would be in a paperless mode or in adematerialised form. The cabinet hasintroduced a new bill which wouldenable stripping of government secu-rities. Stripping is the process of sepa-rating the coupon from the principaland then trading them independently.The Treasury Bills are of two types:(1) Ad hoc: means for the particular endor case at hand. It is issued for provid-ing investment outlets to state govern-ments, semi government departmentsand foreign capital banks for their tem-porary surpluses. They are not sold tothe general public and banks and notmarketable. However, their holders,when in need of cash, can get them re-discounted with the RBI, i.e, sell themback to the RBI.(2) Regular or ordinary: It is directlysold to the public or banks, mainlybanks.�Bills are bought and sold on dis-counted basis; i.e, the amount of inter-est due on it is paid in the form of dis-count in the price charged for the Bill.�This price is thus lower than its facevalue by the amount of interest due onthe bill.�The RBI introduced the sale of 91-day treasury bills in January 1993. Inaddition, 364-day bills were also soldby auction, which was started on April

28, 1992 on a fortnightly basis. From1997-98, the system of ad hoc treasurybills was discontinued.Brief Introduction:Treasury bill was first issued in Indiain 1917, and then it continued unabatedtill 1950. A treasury bill is a peculiartype of finance bill or promissory noteput out by the Government of the coun-try. A finance bill, which does not arisefrom any genuine transaction in good,is called Finance bill. Treasury bill isnot self-liquidating. The system of ad-hoc Treasury bill was introduced inIndia in 1937. From 1997 26th March toeffective from 1 April 1997 ad-hoc Trea-sury bill were discontinued and in placeof these WMA was introduced.CASH MANAGEMENT BILLThe introduction of a new short-terminstrument, known as cash manage-ment bill (CMB), was announced inAugust 2009 to meet the temporarycash-flow mismatches of the Govern-ment. CMBs are non-standard, dis-counted instruments issued for matu-rities of less than 91 days. However,issuance of CMBs has not so far beenresorted to during the year.GILT-EDGED MARKETThe gilt-edged market (the best qual-ity) is the market in government secu-rities, i.e., securities of Government ofIndia and State Governments or thesecurities guaranteed (as to both prin-cipal and interest) by the Government,i.e., issued by the local authorities (likecity corporations, municipalities andport trusts, banks and State ElectricityBoards.Two benefits: (a) Highly liquid; (b) therisk level is very lessThe Gilt-edged market can be dividedinto two parts: (1) Treasury Bill mar-ket; and (2) Government bond market.COMMERCIAL BILL MARKETDuring 2009-10, the commercial paper(CP) market also picked up with theeasing of liquidity conditions and thesize of fortnightly issuance increasedsignificantly. The outstanding amountof CP issued by corporates has shownan increasing trend from Rs 44,171 crorein end-March 2009 to Rs1,03,915 croreas in end -November 2009, marginallycoming down to a level of Rs 90,305crore in end-December 2009 . Theweighted average discount rate(WADR) of CP declined from 9.79 percent as in end-March 2009 to 4.71 per

cent as in end-July 2009 and increasedto 5.17 per cent in end-November 2009.Firms engaged in business issue thecommercial Bills. Generally, they areof three-month maturity. They are likepostdated cheques drawn by sellers ofgoods on the buyers of goods for valuereceived. They have a fixed term tomaturity called usance.�The Commercial Bills are of varioustypes: (a) Hundis: there is a differencebetween inland bills and foreign (trade)bills; the trade bills are called Docu-mentary Bills as they carry with thempapers pertaining to genuine tradetransactions. Therefore, they are calledgenuine (trade) bills. Finance bills, onthe other hand, are clean bills. They donot carry any documents of sale ofgoods with them. They are only ‘ac-commodation bills’ drawn and ac-cepted as a device for short-term credit.(b) Demand or sight Bills or Time orusance Bill: Former is payable on de-mand and the latter on fixed time.(c) Drawer’s Bill and Drawee’s Bill: Thesame bill may be of either kind. It alldepends on who presents the bill to abank for discounting: drawer ordrawee. If the former, then the Bill is adrawee’s bill, if the latter then the billis a drawee’s bill.COMMERCIAL PAPERThey are short term usance promissory

QHow Treasury bill affectsthe monetary policy? Whatis implication of Treasurybill?

Ans: The selling of Treasury bill di-rectly to banks affects the workingof the banks. It affects in two ways:(a) It may create inflationary tenden-cies by pumping more and moremoney in the market.(b) But when the bill matures and itis being return back to RBI, the RBIpays cash at the time of the repur-chase of the bill.



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repo operationsThe global financial situation continues to be uncertain and unsettled. Evenas countries directly affected by the turmoil have taken aggressive action tomanage the crisis, confidence and calm is yet to be fully restored in thefinancial markets. Due to financial integration, this uncertainty is transmit-ting also to countries outside the epicenter ofthe crisis.India too is experiencing the indirect impactof the global liquidity constraint as reflectedby some signs of strain in our credit marketsin recent weeks. In order to alleviate the pres-sures and, in particular, to maintain financialstability, the Reserve Bank has decided to re-duce the repo rate under the Liquidity Adjust-ment Facility (LAF) by 100 basis points to 8.0per cent with immediate effect.Repo contract is a contract whereby one con-tractual party transfers financial assets (e.g., securities) in favour of the othercontractual party in exchange for a sum of money.> repo transactions – receipt of deposits and sale of securities with a commit-ment to repurchase these on a specific date.> reverse repo transactions – making deposits and buying securities with acommitment to resell them on a specific date.In other words, when RBI lends money to bankers against approved securi-ties for meeting their day to day requirements or to fill short term gap. Ittakes approved securities as security and lends money. These types of op-erations are generally for overnight operations. The present rate of LAF hasbeen kept unchanged at 8.0 per cent. The reverse repo rate under the LAF hasbeen kept unchanged at 6.0 per cent.

notes with fixed maturity issued mostlyby the leading nationally reputed creditworthy and highly rated large corpo-rations of India in 1989, by RBI and be-came effective from January 1990Guidelines are basically issued by RBI.It is a new instrument in money mar-ket. Commercial papers are also knownas Industrial Paper, if it is a liability offinance companies. It is known as fi-nance paper. Commercial paper is is-sued in domestic as well as interna-tional market. In foreign it is known asEuro commercial paper. They are sup-pose to be the safest and secure and ofhighest quality investment availablefrom the private sector.RBI’s guidelines for commercial pa-pers: 1. The tangible net worth of issu-ing company will not between lessthan 4 crore. 2. The company can issuecommercial papers to the extent of 75per cent of the working capital limit.3. The minimum denomination of thecommercial is Rs. Five lakh and theminimum size of an issue to a singleinvestor is to be Rs. Twenty five lakh.Certificate of DepositsWith the persistence of surplus liquid-ity conditions, the fortnightly averageissuance of certificates of deposit (CD)also remained high during much of2009-10. The amount of outstandingCDs issued by SCBs increased from Rs1,92,867 crore in end-March 2009 to Rs2,43,584 crore as on December 4, 2009.The outstanding amount constituted7.84 per cent (as on December 4, 2009)of aggregate deposits of CD-issuingbanks with significant inter-bank varia-tion. CDs are bank deposits accounts,which are transferable from one party toanother. They are marketable or nego-tiable short-term instruments in bearerforms and are known as negotiable cer-tificates of deposits. They are marketablereceipts in bearer or registered form offunds, deposited in a bank for a specifiedperiod, at a specified rate of interest. CDsare the obligations of the banks just asfinance papers are the obligations of fi-nance companies. The maturity periodof CDs verified between 2 weeks to 5years; but the most common period isbetween 3 months to 1 year. In India CDslaunched in June 1989 on the recommen-dation of Vaghul Working Group. Thesize of CDs market is much bigger thanthat of CP’s market.Discount

Finance House of India(1) It has commenced its operations inApril 1988. (2) It is set up as a special-ized money market institution.(3) It is a subsidiary of RBI; its basicobjective is to stimulate activity in themoney market by providing liquiditythrough the treasury bills and redis-counting the commercial bills.(4) The DFHI is created on the basis ofthe recommendations of Chore Com-mittee and hence with the suggestionof Vaghul Committee it was createdwith a paid up capital of Rs. 200 crore.Securities TradingCorporation of India(1) It was set up in 1994 with the objec-tive of promoting good secondarymarket in dated instruments; (2) Paidup capital Rs. 500 crore, RBI’s share is51 and; other banks are LIC; (3) Itmainly deals with long dated securi-ties while DFHI deals with TreasuryBills; (4) DFHI is mainly a broker whileSTCI is a market maker.Open Market Operations (OMOs)During 2009-10 ( up to January 15,2010), gross market borrowing raised

through dated securities by the Cen-tral Government (excluding issuancesunder the MSS) was Rs 3,93,000 crore(net Rs 3,51,911 crore) as againstRs1,80,000 crore (net Rs 1,35,972 crore)raised during the corresponding pe-riod of the previous year. This alsoincluded floating rate bonds amount-ing to Rs 2,000 crore with a tenor of 11years issued on December 18, 2009.RBI sucks out liquidity from the mar-ket through open market operations(OMOs) by selling of Government se-curities– a strategic policy operationknown as sterilisation of capital in-flows. Government of India issuestreasury bills or dated securities un-der the Market Stabilization Scheme(MSS) in addition to normal borrow-ings requirements to absorb excess li-quidity. These instruments indistin-guishable from the present treasurybills and dated securities issued by theGovernment are eligible for the pur-poses of SLR and repo operations.

BANKING SECTORBank Credit: While the overall credit



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STATUTORY LIQUIDITY RATIO

It works indirectly: – it affects the borrowings of the government from theRBI. Banks are subject to statutory liquidity requirements. Each bank is

required statutorily to maintain a prescribedminimum proportion of its daily total de-mand and time liabilities in the form of des-ignated liquid assets. The liquid assets com-prises:1. Excess Reserves2. Government and approved securities3. Current Account Balances with otherbanksSLR = ER + I + CB LWhere, ER = Excess Reserves; I = Investmentin unencumbered government and ‘other ap-proved’ securities; CB = Current-account balances with other banks, and L =Total demand and time liabilities.The objectives of SLR are: 1. To restrict the expansion of bank credit. 2. Toaugment the investment of the banks in Government securities. 3. To ensuresolvency of banks. A reduction of SLR rates looks eminent to support thecredit growth in India. The SLR is commonly used to contain inflation andfuel growth, by increasing and decreasing it respectively.The maximum and minimum limits for the SLR are 40 per cent and 25 percent respectively. Following the amendment of the Banking regulation Act(1949) in January 2007, the floor rate of 25 per cent for SLR was removed. TheSLR was 24 per cent with effect from 8 November, 2008. Keeping in view thecomfortable liquidity position, the SLR was restored to its earlier level of 25per cent of NDTL with effect from November 7, 2009.

demand of the manufacturing sectorfrom the banking sector slowed downduring the 2009-10, corporates couldaccess non-bank domestic sources offunds and external financing (whichhad almost dried up earlier during thecrisis period) at lower costs. Thus,while bank credit during 2009-10 con-tinued to decelerate, there was a turn-around in financing from non-bankdomestic sources. It is likely that re-vival of growth in bank credit wouldmanifest in the near-term economicrecovery process.As against an increase of 22.3 per centin 2007-08, bank credit increased by17.5 per cent in 2008-09. Non-foodcredit during the same periods was 23.0per cent and 17.8 per cent respectively.During 2009-10, on financial-year ba-sis, growth in bank credit extended byscheduled commercial banks (SCBs)stood at 8.4 per cent (end March 2009to January 15, 2010), as compared to11.9 per cent during thecorresponding period in 2008-09.The benchmark prime lending rates(BPLRs) of PSBs moved from the 12.25-13.50 per cent range in March 2008 to11.50-14.00 per cent in March 2009 and11.00-13.50 per cent in December 2009.The BPLRs of PSBs, private-sectorbanks and foreign banks decreasedfrom their September 2008 levels inMarch 2009 and further declined inDecember 2009. However, the move-ment in the BPLRs does not fully andaccurately reflect the changes in effec-tive lending rates as nearly two-thirdsof banks’ lending takes place at sub-BPLR rates; the share of sub-BPLR lend-ing of all SCBs (excluding export creditand small loans) was nearly 67.0 percent in March 2009, and increased fur-ther to 70.4 per cent in September 2009.PRIORITY SECTORLENDING (PSL):Domestic SCBs, both in the public andprivate sectors are required to meet atarget of 40 per cent of their adjustednet bank credit (ANBC) or creditequivalent amount of off-balance sheetexposures (OBEs), whichever is higher,for lending to the priority sectors.Within this, sub-targets of 18 per centand 10 per cent of ANBC or creditequivalent amount of OBE, whicheveris higher, have been stipulated forlending to agriculture and the weakersections respectively. In respect of for-

eign banks having offices in India, thetarget for lending to the priority sec-tor has been kept at 32 per cent ofANBC or credit equivalent amountof OBE, whichever is higher.Within the overall target of 32 per centto be achieved by foreign banks, ad-vances to the MSE and export sectorsshould not be less than 10 per centand 12 per cent of the ANBC or creditequivalent amount of OBE, whicheveris higher, respectively.(a) Before 1969, commercial banks hadlargely neglected agriculture becausecooperative banks mainly undertookthe agricultural lending.(b) This led to the failure of the agri-cultural planning. Therefore, the ra-tionale of priority sector lending wasone of the causes for nationalizationof the top 14 banks in 1969.(c) In 1980, RBI issued followingguidelines: (1) Priority sector ad-vances should constitute 40 per centof aggregate bank credit; (2) Out ofpriority sector advances, at least 40per cent should be provided for agri-culture; (3) Direct advances to weakersectors in agriculture and allied ac-

tivities in rural areas should form atleast 50 per cent of the of the total di-rect lending to agriculture; (4) Bankcredit to rural artisans, village crafts-men and cottage industries should beat least 12.5 per cent of the total ad-vances to small scale industries and(5) About 12 per cent of bank creditshould go to exporters.Rural InfrastructureDevelopment Fund (RIDF)The annual allocation of funds an-nounced in the Union Budget hasgradually increased from Rs 2,000crore in 1995–96 (RIDF I) to Rs 14,000crore in 2009-10 (RIDF XV). The ag-gregate allocations have reached Rs1,00,000 crore. Further, a separate win-dow has been created under the RIDFwith a corpus of Rs 4,000 crore, withannual replenishment, for partly fund-ing the rural roads and bridges com-ponents of the Bharat NirmanProgramme from 2006–07 to 2008-09.This amount was raised to Rs 4,500crore in 2009-10.RIDF was set up under NABARD in1995-96. Its main function is to im-prove rural roads and bridges, to re-



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CASH RESERVE RATIO

Section 42 of the RBI Act, which stipulates cash reserves of scheduledbanks to be kept with RBI. The cash reserve ratio may now be varied

between 3 per cent and 15 per cent. Section 18 of the Banking Regulation Act,1949 was amended so as to require non-scheduled banks to maintain withthem or in current account with RBI.

1. Money at call at short notice. It is money lent to other banks, stockbro-kers and other financial institutions for a very short period varyingfrom 1 to 14 days.2. Investments can be in(a) Government securities (b) Ap-proved securities(c) Other securities(a) Government securities calledfirst class Bill or Gilt-edged Bill,Treasury Bill, treasury depositcertificates, postal obligationssuch as National Plan Certificates,National Saving Certificates.(b) Other Approved securities are those securities, which are approvedunder Banking Regulation: 1949 Act in government associated bodies,such as electricity boards, housing boards, etc.3. Loans: It can be done in four ways:(a) Cash Credit: on the basis of the withdrawing power of the borroweri.e., which is determined by the assets.(b) Overdrafts: is an advance given by allowing a customer to withdrawhis current account up to an agreed limit.(c) Demand Loan: It has no stated share brokers mostly take maturitysuch loans.(d) Term Loan: it is the loan granted for a specified period on an agreedup conditions. It is further of two types namely long term and shortterm, which is for more than a year and less than a year respectively.On October 6, 2008 the Reserve Bank of India announced a reduction ofthe cash reserve ratio (CRR) for scheduled banks by 50 basis points to 8.5per cent of net demand and time liabilities (NDTL) with effect from thefortnight beginning October 11, 2008.

Accordingly, on a review of the evolving liquidity situation in the contextof global and domestic developments, RBI had reduced the Cash ReserveRatio (CRR) by 150 basis points to 7.50 per cent of NDTL on October 11, 2008and it injected Rs 60,000 crore in the market. In addition, in the Third QuarterReview (January 29, 2010) the RBI announced that the CRR was being raisedfrom 5.0 per cent of NDTL to a level of 5.50 per cent effective the fortnightbeginning February 13,2010 and to 5.75 per cent effective the fortnight be-ginning February 27,2010.

move inter-regional, rural-urban orinter-state disparities, to help the newagricultural policy to realise morethan 4 per cent growth rate, to help insoil conservation, water and bio-di-versity, etc. The RBI has advised SCBsto provide at least 10 per cent of theirnet bank credit or 25 per cent of theirpriority sector advances to weaker sec-tions comprising small and marginalfarmers, landless labourers, tenantfarmers and share croppers, artisans,village and cottage industries whereindividual credit limits do not exceedRs 50,000, beneficiaries of the Govern-ment sponsored schemes such as theSwar-najayanti Gram SwarojgarYojana for rural poverty, SwarnaJayanti Shahari Rozgar Yojana forurban poverty, Scheme of Liberationand Rehabilitation of Scavengers(SLRS) and beneficiaries of the Differ-ential Rate of Interest (DRI) scheme.Agricultural credit:As against the target of Rs 2,80,000crore (provisional) for agriculturalcredit in 2008-09, the banking systemdisbursed credit of Rs 2,92,437 croreto the agricultural sector, thereby ex-ceeding the target by around 4 per cent.Commercial banks and regional ru-ral ranks (RRBs) together extendedcredit to 81.02 lakh new farmers dur-ing 2008-09. In addition to this, coop-erative banks provided loans to 13.88lakh new farmers during the period,thus taking the total number of farm-ers financed by the banking system to94.90 lakh.KISAN CREDITCARD SCHEME (KCC):The KCC scheme has become a widelyaccepted mechanism for delivery ofcredit to farmers. The banking systemhas issued 878.30 lakh KCCs as ofNovember 30, 2009. The scheme nowalso covers borrowers of the long-termcooperative credit structure. The KCChas thus become a single window fora comprehensive credit product.�The KCC was introduced in 1998-99and designed to follow simplifiedprocedures to enable farmers to availthemselves of crop loans as and whenneed be.Therefore, objectives are:(a) To facilitate the flow of timely andadequate short-term credit to the farm-ers;(b) The loans disbursed under KCC

scheme have also been brought un-der the Krishi Bima Yojana under theGeneral Insurance Corporation (GIC).Self-Help Groups (SHGs)Under the SHG-Bank LinkageProgramme, as on March 31, 2009,61,21,147 SHGs held savings bank ac-counts with total savings of Rs 5,545.62crore as against 50,09,794 SHGs withsavings of Rs 3,785.39 crore as onMarch 31, 2008. Thus more than 8.06crore poor households were associatedwith banking agencies under the SHG-Bank Linkage Programme.As on March 31, 2009, commercial

banks had the maximum share of SHGsavings with savings of 35,49,509SHGs (58 per cent) amounting to Rs2,772.99 crore (50 per cent); this wasfollowed by RRBs with savings bankaccounts of 16,28,588 SHGs (26.6 percent) and savings amount of Rs1,989.75crore (35.9 per cent) and cooperativebanks with savings bank accounts of9,43,050 SHGs (15.4per cent) and sav-ings amount of Rs 782.88 crore (14.1per cent).The RBI has been taking a pro-activerole in promoting micro-finance. It setup four Groups in 2002 to look into

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CAPITAL ADEQUACY RATIO (CAR):

With important measures for improving capital adequacy such as (a)application of capital charge for market risk from March 2006, (b) a

sharp increase in risk weighted assets on account of higher credit growth,and (c) increase in risk weights for per-sonal loans, real estate and capital mar-ket exposure, the overall capital to riskweighted assets ratio (CRAR) for allSCBs was 12.3 per cent at end-March2006.Rapid credit expansion by SCBs, ne-cessitated introduction of stiffer pru-dential norms by the RBI for maintain-ing quality of credit. Riskweighted as-sets of SCBs at end-March 2007 in-creased to Rs. 24,12,236 crore from Rs. 17,97,207 crore at end-March 2006.Concomitantly, capital funds of SCBs kept pace with the riskweighted assetsand increased to Rs. 2,96,191 crore at end-March 2007 from the level of Rs.2,21,363 crore at end-March 2006. The capital to risk-weighted assets ratio(CRAR) during 2006-07 remained at 12.3 per cent, unchanged from the previ-ous year. It was substantially higher than the RBI stipulated minimum CRARof 9 per cent.The overall CRAR of all SCBs improved to 13.2 per cent by end-March 2009from 13.0 per cent a year earlier, thus remaining significantly above thestipulated minimum of 9.0 per cent. While the CRAR of as many as 78 bankswas above 10 per cent, that of only one bank was in the range of 9 to 10 per

various aspects of micro-financing.Based on the recommendations madeby these Groups, the RBI announcedthat banks should provide adequateincentives to their branches in mak-ing the procedures for financing theSHGs simple and easy. Based on therecommendations of the Vyas Com-mittee, the RBI, in its annual policystatement for 2004-05, indicated thatmicro-finance institutions would notbe permitted to accept public depos-its, unless they comply with the ex-tant regulatory framework.Micro Finance has been given moreimportance and the target for credit-linking to be enhanced from 2 lakhSelf Help Groups (SHGs) to 2.5 lakhSHGs; Micro Finance DevelopmentFund to be redesignated as the “Mi-cro Finance Development and EquityFund” with an increased corpus of Rs.200 crore; RBI to open a window toenable qualified NGOs to use the Ex-ternal Commercial Borrowing (ECB)window.BASEL IIAll commercial banks in India exclud-ing RRBs and local area banks havebecome Basel II compliant as of March31, 2009.Non-performing assests (NPAs)The gross NPAs to gross advances ra-tio for SCBs remained constant at 2.3per cent during 2008-09 as in 2007-08.However, though the gross NPA togross advances ratio of PSBs declinedfrom 2.2 per cent in March 2008 to 2.0per cent as of March 2009, that of oldprivate banks increased from 2.3 to 2.4per cent and that of foreign banks from1.8 to 4.0 per cent in March 2009 overthe level of March 2008. The net NPAratio (net NPAs as percentage of netadvances) increased marginally from1.0 to 1.1 in the case of SCBs in March2009.Non-Performing Assets (NPAs) areloans that have gone bad, i.e. loanswhere borrower has defaulted onmaking payment of interest or princi-pal and remains overdue for a periodof more than 180 days. In order tomove closer to international conven-tion, NPA is proposed to be reducedfrom 180 days to 90 days with effectfrom March 31, 2004.Banking and science and technology:ICCOMS: During 2008-09, the trans-mission of clearing data—both for

cheque and electronic clearing ser-vices—and collation of inputs fromcurrency chests as part of the Inte-grated Currency Chest Operationsand Management System (ICCOMS)was done using secured websites.CPADS: The prevalent IT system toprocess the accounting requirementsof the State and Central Governmentswas replaced by the Centralised Pub-lic Accounts Department System(CPADS), which is considered morerobust and user friendly.NDSA: To facilitate a smoother andfaster bidding in the Primary DatedSecurities Auctions held by the Re-serve Bank, a new version of the Ne-gotiated Dealing System Auctionmodule, developed and hosted by theClearing Corporation of India, wasdeveloped in 2008-09, leading to itslaunch with effect from May 11, 2009.CBS: One of the major achievementsduring 2008-09 was the increase in thenumber of branches providing CoreBanking Solutions (CBS). The totalnumber of branches of PSBs that haveimplemented CBS increased from35,464 as on March 31, 2008 to 44,304as on March 31, 2009. The number ofbranches providing ‘core banking so-lutions’ (CBS) in recent years is in-

creasing rapidly. Under CBS, a num-ber of services are being providedsuch as ‘anywhere banking’, ‘every-where access’, and quick transfer offunds in an efficient manner and at rea-sonable cost.ATMs: During 2008-09, the total num-ber of automated teller machines(ATMs) installed by banks grew by25.4 per cent.Straight-through-processing (STP):The STP technology framework seeksto provide better efficiency by provid-ing a seamless data flow both withinthe enterprise as well as across themarket, without any manual interven-tion. The STP can even enable the stockmarket with T + 1 system.�The clearing transactions, use ofMagnetic Ink Character Recognition(MICR) technology for cheque clear-ing which currently accounts for 65per cent of the value of cheques pro-cessed in the country, the computer-ization of Government accounts andCurrency Chest transactions, op-erationalization of Delivery versusPayment (DvP) for Government secu-rity transactions.�The coverage of Electronic ClearingService (ECS) has been significantlyexpanded to encourage non-paper



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MONETARY AND CREDIT POLICY

The broad objectives of monetary policy in India has been continued : (i)to maintain a reasonable degree of price stability and (ii) to help accel-

erate the rate of economic growth. Monetary policy has been formulated inthe context of economic planning to accelerate the growth process in thecountry; but economic planning createsinflationary tendencies and then themonetary policy to play the role of acountervailing force. India has some in-herent problems: (a) violent fluctuationsin agricultural production caused byweather conditions; (b) population ex-plosion; (c) external debt, growing fis-cal deficit. In order to overcome thesesituations Chakravarty Committee sug-gested two remedies: (a) Governmentshould aim at raising output levels and;(b) RBI should control the expansion inreserve money and money supply. Themonetary policy of 2004-05 has tried tochange the traditional policy by givingmore incentives to market forces of de-mand and supply rather than price stabilization. The Reserve Bank of India(RBI) mainly emphasised on two aspects: (i) to ensure the provision of ad-equate liquidity to meet credit growth and support investment and exportdemand in the economy while keeping a very close watch on the move-ments in the price level and (ii) to pursue an interest rate environment thatis conducive to maintaining the momentum of growth and macroeconomicand price stability.The RBI constituted an Internal Working Group on Instruments of Steriliza-tion. Based on the recommendations of the Group, a scheme for launchingmarket stabilization bonds was formulated. RBI sucks out liquidity fromthe market through open market operations (OMOs) by selling of Govern-ment securities– a strategic policy operation known as sterilisation of capi-tal inflows. Government of India issues treasury bills or dated securitiesunder the Market Stabilization Scheme (MSS) in addition to normal bor-rowings requirements to absorb excess liquidity. These instruments indis-tinguishable from the present treasury bills and dated securities issued bythe Government are eligible for the purposes of SLR and repo operations.

based funds movement and developthe provision of a centralized facilityfor effecting payments.�The scheme of Electronic FundsTransfer (EFT) operated by the RBI hasbeen significantly augmented and isnow available across 13 major cities.�The Centralized Fund ManagementSystem (CFMS) which would enablebanks to obtain consolidated account-wise and centre-wise position of theirbalances with all 17 offices of the De-posits Accounts Department of RBI.�The critical elements in the devel-opmental strategy are the opening ofnew clearing houses, interconnectionof clearing houses through theINFINET (Indian Financial Network)operational-ized by the Institute ofDevelopment and Research in Bank-ing Technology (IDRBT), Hyderabad;optimizing the deployment of re-sources by banks through Real TimeGross Settlement System (RTGS), Cen-tralized Funds management System(CFM-S), Negotiated Dealing System(NDS) and the Structured FinancingMessaging Solution (SFMS).SENSITIVE SECTORSSCBs' credit to sensitive sectors, whichconsist of capital market, real estatemarket and some selected commodi-ties, was driven mainly by the de-mand of the real estate market.The lending by Scheduled Commer-cial Banks (SCBs) to sensitive sectorscomprises capital market, real estateand commodities. Advances by SCBsto the (i) capital market, (ii) commodi-ties and advances to (iii) real estate.NATIONALISATION OF BANKSThe Government of India (GOI) pro-mulgated an Ordinance called theBanking Companies (Acquisition andTransfer of Undertakings) Ordinance,1969. Under this 14 major Indian bankswhich has deposits of not less than Rs.50 crores were nationalised. They are:(1) The Central Bank of India, (2) Thebank of India, (3) Punjab National Bankof India, (4) The Bank of Baroda, (5)Canara Bank Limited, (6) The Unitedcommercial Bank, (7) Dena Bank, (8)United Bank of India, (9) SyndicateBank Limited, (10) The Union Bank ofIndia, (11) Allahabad Bank, (12) TheIndian bank Limited, (13) The Bank ofMaharashtra Limited, (14) The IndianOverseas bank Limited.In April 1980 six more banks were

nationalized: (1) Andhra Bank, (2) TheCorporation Bank, (3) The New Bankof India, (4) The Punjab and Sind Bank,(5) The Oriental bank of Commerce,and (6) Vijaya Bank.What is SCHEDULED COMMER-CIAL BANKS (SCBs)?(a) It should be in the second scheduleof the RBI Act, 1934(b) The paid up capital should be mini-mum 5 lakhs(c) They will have facilities of Clear-ing House.(d) They must deposit CRR with theRBI(e) They are entitled to get loans atBank RateCLEARING HOUSE: It serves as a

meeting place for the representativesof member banks, at appointed hourson each working day to settle paymentsof cheques and other transfer order oneach other by their customers. The clear-ing houses are run by the RBI at placeswhere it has its offices and by the SBIand its subsidiaries elsewhere. Thereare more than 730 clearing houses inthe country, of which 14 managed bythe RBI and rest by the SBI.Lead Bank Scheme:�The Branch expansion programmeof banks in the post-nationalisationphase was supposed to be interwovenwith the Lead Bank Scheme, adoptedin 1969. The scheme was recom-mended by Gadgil Group.



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Capital and commodity

markets in India

FFFFFinance Market can be defined as the market in which financialassets / instruments are created or transferred. Financial marketsdeal in financial assets and instruments of various kinds such ascurrency, deposits, cheques, bills, and bonds, etc. It has two parts:(1) Money Market: The financial institutions that deal in short-term

Securities and loans, gold and foreign exchange.(2) Capital Market: It provides the resources needed by medium and large-scaleindustries for investment purposes. It deals in long-term sources of funds, i.e.,funds with more than one-year period of maturity. When a corporation first makesstock available for public purchase, it works with an investment-banking firm toarrange an initial public offering (IPO). An investment-banking firm buys thefirst issue of stocks from the company at a negotiated price, and then makes themavailable for sale to their clients and other investors. Corporations that have IPOsare usually young companies in need of large amounts of capital. A corporation

can only have one IPO—the first time it makes stock available to the public. Afterits IPO, a company is said to be public. Public companies that need an infusion ofcapital may choose to issue more stock at a later time. This is called a subsequent,or follow-on, offering.Capital Market:The Stock Market has two markets: (1) Primary Markets; (2) Secondary Markets.Stock exchanges serve important roles in national economies. They encourageinvestment by providing places for buyers and sellers to trade securities, stocks,bonds, and other financial instruments. Companies issue stocks and bonds to ob-tain capital to expand their business. Corporations issue new securities in the pri-mary market (as opposed to the secondary market, where securities are boughtand sold), usually with the help of investment bankers. In the primary market,corporations receive the proceeds of stock sales. Thereafter, they are not involvedin the trading of stocks. Owners of stocks trade them on a stock exchange in thesecondary market.Primary market: The total number of initial public offerings (IPOs) declined to 20in 2009 from 37 in 2008. Public Offerings are classified into Initial Public Offer-ings (IPO), where a company goes public for the first, Rights Issues, where a com-pany sells additional to existing shareholders, and Seasoned Equity Offerings

(SEOs), where a listed company sellsshares to the public.Secondary market: It is that segment ofthe capital market where the outstand-ing securities are traded. Its main func-tion is to provide liquidity to such se-curities. In the secondary market, inves-tors, not companies, earn the profits orbear the losses resulting from theirtrades. Stock exchanges encourage in-vestment by providing this secondarymarket. By allowing investors to sell se-curities, exchanges increase the safetyof investing.There are two parts of secondary mar-kets: (a) Organized Stock sector; and(b) Over-the counter market. The stockmarket in India is regulated by the Cen-tral Government, under SCRA (Securi-ties Contracts Regulation Act, 1956).(1) Stock Exchanges:A Stock Exchange is an organization fororderly buying and selling of ‘listed (ap-proved) existing securities. Approvedsecurities depend on several consider-ations, such as the size of the issue,timely production of the annual ac-counts, etc,. An organized stock ex-change is an auction type market.It operates in three ways:1. Customer-Driven: Auction System.2. Order-Driven: Customers buy andsell orders reach a central point wherethey are matched.3. Quote-Driven: Dealers compete togive customers’ best price- ElectronicTrading.BOLT- Bombay online Trading Sys-tem––Introduced in 19, 1995 January by BSE.BOLT is an attempt to strike a delicatebalance between the computerizedtrading and retaining some of theunique practices at the BSE. It givesquote- driven automated trading facil-ity.(1) Bombay Stock Exchange:(1) It is the apex Stock Exchange in In-dia; established in 1857; at that time themembership fee was Rs.1 and now in1997 it was Rs. 2 crore.(2) It mainly deals with listed share, andhas business with 100 other cities.(3) The BSE takes 1978-79 as the baseyear(4) On 19th January 1995, BSE intro-duced BOLT-Bombay On Line TradingSystem(5) It provides a driven automated trad-ing facility;



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(6) The market capitalization as a per-centage of GDP is one of the indicatorsto measure the growth of capital mar-ket in the economy.(7) The market capitalization in the BSEwas 10,219 crore in Dec. 1984, increasedto 3,23,363 crore in the end of March1992 and 5,05,137 crore at the end ofMarch 1997.(2) National Stock Exchange of India:(1) It was set up in Nov. 1992, and itseffective operations started from June30, 1994;(2) It is fully automated electronicscreen-based trading system;(3) It is sponsored by IDBI and co-spon-sored by LIC, GIC, SHCIL, SBI(4) It has two separate segments:(a) The wholesale debt market segment- which caters to banks, financial insti-tutions and other institutional partici-pants and which deals in PSU Bondunits, treasury bills, government secu-rities, etc.(b) Capital market segment deals in eq-uities, convertible debentures.(5) The NSE introduced trading RAPOwith effect from 23rd June 1995(6) NSE is an order driven and not aquote driven market(7) It deals with two types of share:(a) Listed(b) Permitted(8) It has business in 200 cities with 1000terminals. It was first started in 1870sin USA, National Association of Secu-rities Dealers Automated QuotationsSystem (NASDAQ). Thousands of com-panies do not list their stock on any ex-change. These stocks make up the over-the-counter (OTC) market. The largestof these companies are traded on theNasdaq stock market. Nasdaq standsfor National Association of SecuritiesDealers Automated Quotation system.The member countries of the EuropeanUnion (EU) have an equivalent market,called EASDAQ. Nasdaq is a share-holder in and provides operational ad-vice to EASDAQ. Nasdaq andEASDAQ operate like exchanges, butinstead of having central locations, theirspecialists are located at computer ter-minals all over the United States andEurope. Trades are carried out prima-rily online through computer networks.Companies that list their stock onNasdaq and EASDAQ are generallysmaller than those listed on centralizedexchanges. OTCEI can be defined as an

exchange without a specific tradingring. Its market is spread across thecountry through various counters, sothat nationally and internationally scat-tered buyers can perform their businessmore effectively.�It deals in such securities as are not‘listed’ on an organized stock exchange.These are securities of small companiesand have only a limited market. Theirprices are determined through directnegotiations between stockbrokers andnot through open bidding.

�It is based on automated ringless,trading system and it is promoted byICICI, IDBI, IFCI, LIC,GIC, CAN Bank,UTI�HQ - Bombay and deals with threetypes of shares: (a) Listed; (b) Permit-ted; and (c) Mostly in Unlisted�It follows T+3 settlement system - thefastest in the country. It provides a liq-uid cash market for the retail investors.�Malegam and Dave Committeeswere appointed to see the functioningof the OTCE. The number of companies

NON-BANKING FINANCIALINSTITUTIONS (NBFIS): While banks account for a major share of the In-dian financial system, NBFIs also play an important role in providing a widerange of financial services. While banks have an edge in providing payment-and liquidity-related services, NBFIs tend to offer enhanced equity and risk-based products. The major intermediaries that are included in the NBFI groupare development finance institutions (DFIs), insurance companies, non-bank-ing financial companies (NBFCs), primary dealers (PDs) and capital marketintermediaries such as mutual funds.The NBFIs provide medium- to long-term finance to different sectors of the economy.Financial Institutions (FIs): Based on the major activity undertaken by FIs,they could be classified into three broad categories, namely (i) term-lendinginstitutions whose main activity is direct lending by way of term loans andinvestments (e.g. EXIM Bank); (ii) refinance institutions which mainly extendrefinance to banks as well as NBFIs (e.g. NABARD, the Small Industries De-velopment Bank of India [SIDBI] andNational Housing Bank [NHB]); (iii)investment institutions which deploy their assets largely in marketable secu-rities (e.g. the Life Insurance Corporation of India [LIC]). The ‘umbrella limit’for aggregate borrowings by financial institutions (FIs) (through five speci-fied instruments, namely term depos-its, term money borrowings, certifi-cates of deposits [CDs], commercialpapers [CPs] and inter-corporate de-posits [ICDs]) which was stipulatednot to exceed 100 per cent of their netowned funds (NOFs) at any time, asper their latest audited balance sheets,was also raised to 200 per cent of NOFsfor one year with effect from December 8, 2008 for EXIM Bank and from Janu-ary 15, 2009 for the NHB, subject to review and subject to the asset liabilitymanagement (ALM) guidelines of the Reserve Bank.NON-BANKING FINANCIALCOMPANIES (NBFCS): The NBFCs as a whole account for 9.1 per cent of theassets of the total financial system. The total number of NBFCs registeredwith the Reserve Bank, consisting of deposit-taking NBFCs (NBFCs-D), re-siduary non-banking companies (RNBCs), mutual benefit companies (MBCs),miscellaneous non-banking companies (MNBCs) and Nidhi companies, de-clined from 12,809 in end-June 2008 to 12,740 in end-June 2009.The number of NBFCs-D also declined from 364 in end-June 2008 to 336 inend-June 2009, mainly due to the exit of many NBFCs from deposit-takingactivity. The number of NBFCs with less than the minimum regulatory CRARof 12 per cent declined to 9 in end-March 2009 from 47 in end- March 2008. Inend-March 2009, 198 out of 207 NBFCs had CRAR of 12 per cent or more asagainst 280 out of 327 NBFCs in end-March 2008. The number of NBFCs withCRAR more than 30 alsodeclined to 168 in end- March 2009 from 239 in end-March 2008.



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listed on OTCEI was 101, by the end ofthe March 1997.Other National and Regional StockExchanges of India:(1) BSE; (2) NSE; (3) OTCEI; (4)Ahmedabad; (5) Bangalore; (6)Bhubaneshwar; (7) Calcutta; (8)Coimbatore; (9) Cochin; (10)Hyderabad; (11) Jaipur; (12) Ludhiana;(13) Madhya Pradesh; (14) Chennai; (15)Magadh; (16) Mangalore; (17) Mumbai;(18) Pune; (19) Saurashtra; (20)Vadodara; (21) Lucknow; (22) Kutch;(23) DelhiInternational Stock Exchanges:(1) Dolex, Sensex, Nifty-Fifty (Mumbai-India), (2) Dow Jones (New York), (3)Nikkei (Tokyo), (4) Mid Dax (Frank-furt), (5) Hang Seng (Hong Kong), (6)Simex, Straits Times (Singapore), (7)CAC (Paris), (8) FTSE 100 (London). (9)SBS General (Switzerland), (10) Com-posite Index (South Korea), (11) CBS-All share (Netherlands), (12) IPC(Mexico), (13) Bovespa (Brazil), (14)BEL-20 (Belgium), (15) Xextra DAX(Frankfurt-Germany), (16) HEX General(Finland), (17) KFX (Denmark), (18)Toronto Composite (Canada), (19) ISEQOverall (Ireland).�Largest Stock Exchange is NASAQ.Amongst the National Stock Exchange(NSE) indices, both Nifty and Nifty Jun-ior recorded positive annual equity re-turns (current year-end index dividedby previous year-end index multipliedby 100) of 75.8 per cent and 128.6 percent in 2009 as against negative annualequity returns of 51.8 per cent and 63.5per cent respectively during the calen-dar year 2008.The Jakarta Compositeindex (Indonesia) registered a rise of264.1 per cent to 2,510 at end-Decem-ber 2009, while the BSE Sensex was upby 199.1 per cent to 17,465 in end-De-cember 2009. Nikkei 225, Japan, how-ever remained lower than its end-De-cember 2003 level.Exchange traded interest rate futures(IRFs) contracts on a 10-year notionalcoupon bearing Government of Indiasecurity started trading at the NSE onAugust 31, 2009. Market participantsinclude banks and primary dealers,mutual funds, insurance companies,corporate houses, brokers, FIIs and re-tail participants. IRFs enable banks andprimary dealers to mitigate risk andimprove process efficiency, while mu-tual funds, insurance companies and

corporates can use them to manage riskpertaining to volatility in interest rates.The minimum contract size for an IRFis Rs 2 lakh. The trading volumes in IRFshave, however, remained low. LIC andCentral Bank of India have recentlycome forward to support transactionsin the IRF market by buying securitiesfrom various market participants whowish to liquidate the securities receivedas part of their IRF obligations.Foreign Institutional Investors (FIIs):The overall limit for investments by FIIsand subaccounts is US$ 5 billion forgovernment securities and treasury billsand US$ 15 billion for corporate debt.Investments by FIIs/ sub-accounts indebt-oriented mutual fund units (in-cluding units of money market and liq-uid funds) are considered corporatedebt.Development of electronic spot ex-changes: The Government and FMChave allowed the national commodityexchanges to set up three spot ex-changes in the country, namely theNational Spot Exchange Ltd. (NSEL),NCDEX Spot Exchange Ltd. (NSPOT)and National Agriculture Produce Mar-keting Company of India Ltd.(NAPMC). These spot exchanges havecreated an avenue for direct market

linkage among farmers, processors, ex-porters and end users with a view toreducing the cost of intermediation andenhancing price realization by farmers.They would also provide the most effi-cient spot price inputs to the futures ex-changes. The spot exchanges wouldencompass the entire spectrum of com-modities across the country and wouldbring home the advantages of an elec-tronic spot trading platform to all mar-ket participants in the agricultural andnon-agricultural segments. So far,Maharashtra, Karnataka, Gujarat,Rajasthan, Orissa and Madhya Pradeshhave given licences to the spot ex-changes to undertake electronic spottrading.CCIL and CBLO:In order to check the unfair transactionin the Inter-bank call money market, aninnovation took place at the ClearingCorporation of India (CCIL) throughlaunch of Collateralized Borrowingand Lending Obligation (CBLO). TheCBLO is like a repo, i.e. it be interpretedas borrowing backed by securities ascollateral. Issued at a discount to facevalue, CBLOs always redeem at par,similar to treasury bills or zero couponbonds. The maturities range from 1 dayto 1 year. Further, in order to measure

COMMODITY FUTURES MARKET

The third component of organised trading of standardised products in thecountry is in the commodity futures markets. In recent years, these marketshave drawn upon the success of nationwide electronic trading on the equitymarket, and three new exchanges have come about: National CommodityDerivatives Exchange (NCDEX), Multi Commodity Exchange (MCX) andNational Multi Commodity Exchange (NMCE).�The last component of the Indian securities market is the commodity fu-tures markets. These markets have been experiencing strong growth, throughthe introduction of nationwide electronic trading and market access, as wasdone on the equity market during 1994-1996. The National Commodity De-rivatives Exchange (NCDEX) has emerged as the largest commodity futuresexchange.Commodities traded in thecommodity futures marketduring 2009 included a vari-ety of agricultural commodi-ties, bullion, crude oil, energyand metal products. Severalnew commodities were intro-duced for futures trading in 2009, such as almond, imported thermal coal,carbon credits and platinum. The total value of trades in the commodity fu-tures market rose from Rs 50.34 lakh crore in 2008 to Rs 70.90 lakh croreduring 2009. The MCX, Mumbai, recorded the highest turnover in terms ofvalue of trade during 2009,followed by the National Commodity & Derivatives Exchange Ltd.(NCDEX)and National Multi Commodity Exchange of India Ltd.(NMCE) respectively.



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the liquidity in the market ‘turnoverratio’ (TR) has been introduced. TR isdefined as the latest 12 months turnover(NSE + BSE) divided by market capi-talization. The National SecuritiesClearing Corporation (NS-CC) doesrisk management at NSE. When a clear-ing member on NSE defaults on pay-ment obligations, these are fulfilled byNSCC. It is supervised by SEBI.EVENING TRADINGIt has been introduced with the integra-tion of major commodity markets acrossthe world. Domestic bullion prices areclosely related to the current tradingprices on the New York MercantileExchange (NY-MEX-COMEX) in USAand the London Bullion Market Asso-ciation. Similarly, domestic Palmoleinprices are highly correlated to the priceson the Malaysia Derivatives ExchangeBerhad (MDEX). Further, a Multi Com-modity Exchange (MCX) has started anevening trading facility to carry out thetrade till 11.30 PM. NCDEX, Mumbaihas the equity participation of 19.95 percent each from ICICI Bank, LIC,NABARD, NSE; 12.10 per cent fromCRISIL, and 8.10 per cent from PNB.MCX has been promoted by FinancialTechnologies of India Limited (FTIL),which is a public limited software com-pany.Agricultural commodities, however,accounted for 38 per cent of the totalvolume of trade. Agriculture commod-ity futures staged a remarkable recov-ery after steady decline over the last twoyears, recording a trading value of Rs10.88 lakh crore in 2009, signifyinggrowth of 48 per cent over the previousyear. During the year, a new NationalCommodity Exchange called IndianCommodity Exchange (ICEX) becameoperational. Besides, a scheme ofupgradation of Ahmedabad Commod-ity Exchange to National CommodityExchange status has been approved.NCDEX spot Exchange LtdThe Government has allowed the Na-tional Commodity Exchanges to set upthree spot exchanges in the country,namely the National Spot ExchangeLtd. (NSEL), NCDEX spot ExchangeLtd. (NSPOT) and National AgricultureProduce Marketing Company of IndiaLtd. (NAPMC). During 2009, there wassignificant expansion of spot exchanges’trading facilities in India.Insurance SECTOR

Of the 21 insurance companies thathave set up operations in the life seg-ment post opening up of the sector, 19are in joint venture with foreign part-ners. Since the opening up of the sec-tor, the number of participants has goneup from six insurers (including LIC ofIndia, four public-sector general insur-ers and the General Insurance Corpo-ration as the national reinsurer) in theyear 2000 to 44 insurers operating in thelife, non-life and reinsurance segments(including specialized insurers, namelythe Export Credit Guarantee Corpora-tion [ECGC] and Agricultural InsuranceCompany [AIC]). Two of the generalinsurance companies, namely StarHealth and Alliance Insurance Com-pany and Apollo DKV function asstandalone health insurance companies.Pension SECTORNPS implementation in the CentralGovernment has stabilized with morethan 5.64 lakh employees already cov-ered. The Pension Fund Regulatory &

Development Authority (PFRDA), setup as a regulatory body for the pensionsector, is engaged in consolidating theinitiatives taken so far regarding the fullNPS architecture and expanding thereach of the NPS distribution network.The full NPS architecture comprising aCentral Record keeping Agency (CRA),pension fund managers (PFMs), trusteebank, custodian and NPS Trust hasbeen put in place and is fully opera-tional. The National Securities Deposi-tory Limited (NSDL) has been selectedas the CRA. The PFRDA has also ap-pointed six Pension Fund Managers(PFM) for the unorganized sector,namely UTI Retirement Solutions Lim-ited, SBI Pension Funds Pvt. Ltd., ICICIPrudential Life Insurance CompanyLtd., IDFC Asset Management Com-pany Ltd., Reliance CapitalAsset Management Ltd. and KotakMahindra Asset Management Com-pany Ltd., as pension fund sponsorsunder the NPS.

Government measures to containinflation, particularly food inflation(a) Monetary Measures: The RBI made a minor modification in the statutory liquidityratio (SLR) and restored it to 25 per cent of net demand and time liabilities (NDTL) witheffect from the fortnight beginning November 7, 2009. In the Third Quarter Review ofthe RBI’s monetary policy on January 29, 2010, the CRR of scheduled banks was raisedby 75 basis points from 5.0 per cent to 5.75 per cent of their NDTL in two stages; the firststage of increase of 50 basis points will be effective the fortnight beginning February 13,2010, followed by the next stage of increase of 25 basispoints effective the fortnight beginning February 27,2010 .(b) Fiscal Measures: (i) Reducing import duties to zero-–for rice, wheat, pulses, edible oils (crude) and sugar;and for maize (under TRQ of 5 lakh tonnes per an-num, beyond which 15per cent duty will apply); Re-moving levy obligation in respect of all imported rawsugar and white/ refined sugar.(c) Administrative Measures: (i) 2 million tonnes ofwheat and1 million tonnes of rice have been allocatedto States for distribution to retail consumers over andabove normal public distribution system (PDS) allo-cation for the period October 2009 to March 2010. (ii) One million tonnes of wheat hasbeen allocated for release by the FCI in the open market through OMSS for the periodOctober 2009 to March 2010. (iii) The National Agricultural co-operative MarketingFederation (NAFED) has been allocated 37,400 metric tonnes of wheat and 15,500 met-ric tonnes of rice for distribution through its outlets at the same rate at which allocationsare made to State governments under OMSS (D). (iv) Distribution of imported pulsesthrough PDS at a subsidy of Rs.10 per kg to State Governments. (v) Permitted sugarfactories to sell processed raw sugar in the domestic market and fulfill export obliga-tion on tonne to tonne basis. (vi) Proportion of sugar production requisitioned as levysugar has been increased from 10 to 20 per cent for 2009-10 sugar season to ensureadequate levy sugar supplies under PDS. (vii) Minimum Support Prices (MSPs) havebeen systematically increased, leading to increased acreage, production, productivityand central procurement. For the marketing season of 2008-09, the MSP of wheat wasincreased to Rs. 1,080. For different grades of paddy, for kharif marketing season 2009-10, the MSP has been increased to Rs.950-980 per quintal and a bonus of Rs 50 perquintal for all varieties.



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Public finance and fiscal

consolidation

DISTINCTION BETWEEN PLAN AND NON-PLAN

It is argued that the distinction between plan and non-plan expenditure isillogical and even dysfunctional. The distinction has led to ever increasing

tendency to start new schemes/projects to the utter neglect of maintenance ofexisting capacity and service levels. The distinction also often leads to themisperception that non-plan expenditure is inherently wasteful and shouldbe avoided. This dichotomy has resulted in fragmented view of resource allo-cation to various sectors. The problem is assuming greater significance withhigher priority to social sectors where salary constitutes an important elementof the programme. The embargo imposed on recruitment for non-plan postshave caused serious problems of service delivery in health and education sec-tors. A need has been felt to draw protocols that will specify the agency forspecific function and provide arrangements for coordinated activity.DISTINCTION BETWEEN REVENUE AND CAPITAL EXPENDITURE

The distinction between revenue and capital expenditure has acquiredsignificance, and needs a relook, consequent to the emergent situation in

the post-FRBM period. The FRBM Act stipulates that revenue deficit shouldbe eliminated by the end of 2008-09. More than three-fourths of plan expendi-ture is now revenue expenditure. Strict adherence to the FRBM stipulation has

There are three major concern for the government: the non-planned expendi-ture; interest payment and subsidies. In a two-way classification of expenditureas Plan and non-Plan, the front loading of Plan expenditure is evident from thelevels of growth of 34.3 per cent and 18.0 per cent in 2008-09 and 2009-10 (BE)respectively. Plan expenditure at 5.3 per cent of the GDP in 2009-10(BE) was thehighest in recent years. Non-Plan expenditure grew by 19.4 per cent and 14.8per cent respectively in 2008-09 and 2009-10 (BE). In the four-way classificationof expenditure, growth in 2008-09 and 2009-10 (BE) respectively was 32.2 per

cent and 11.2 per cent in non-Plan revenue expenditure; -3.3 per cent (after ad-justment) and 55.3 per cent in non-Plan capital expenditure; 35.5 per cent and18.4 per cent in Plan revenue expenditure; and 27.8 per cent and 16.1 per cent inPlan capital expenditure.Interest payments: As a proportion of revenue receipts declined from a level of52.1 per cent in 1998-99 to a level of 31.6 per cent in 2007-08. They were at the 35per cent level in 2008-09 (provisional) and were budgeted at 36.7 per cent in2009-10 (BE). The rise in the levels of gross market borrowings in 2008-09 and2009-10 (BE) has resulted in a reversal of the trend towards fall in average costof borrowings.Subsidies: As a proportion of GDP, major budgetary subsidies rose from 1.6per cent in 2003-04 to 2.2 per cent in 2008-09 (provisional) and were budgetedat 1.7 per cent in 2009-10 (BE). Besides, the above below-the-line issuance of oiland fertilizer bonds was of the order of 1.7 per cent of GDP in 2008-09. TheBudget for 2009-10, recognizing the importance of institutional reforms, an-nounced the intention to move towards a nutrient-based subsidy regime in re-spect of fertilizers and ultimately towards direct cash transfers and the settingup of an expert to advise on a viable and sustainable system of pricing for petro-leum products. Work on operationalization of the former is being attempted bythe Department of Fertilizers and the Report of the latter containing the recom-mendations on petroleum subsidies has been submitted on February 3, 2010.Government debt: As a result, with the revised GDP series (2004-05) releasedby the CSO, the ratio of outstanding liabilities to the GDP after falling from a

level of 61.6 per cent in 2004-05 to 56.3per cent in 2008-09(RE), has risen mar-ginally to 56.7 per cent in 2009-10(BE).Internal debt, mainly market borrow-ings, continued to be the main compo-nent of outstanding liabilities.Value added tax: VAT has been suc-cessfully introduced by all the States.

The introduction of VAT by States re-sulted in good growth in State’s owntax revenue in the last few years. Dur-ing 2008-09, growth in tax revenue in33 VAT States/UTs was 14.4 percentin the revenue from VAT items. Un-der the specific scheme evolved for thepurposes to facilitate introduction ofVAT, the Central Government com-pensated the revenue losses at the rateof 100 percent of revenue loss during2005-06, 75 percent during 2006-07 and50 percent during 2007-08. An amountof Rs 2,558 crore has already been re-leased to States till December 31, 2009in the financial year 2009-10, so far. Atotal amount of Rs.17,364 crore hasbeen released to the states so far underthis scheme.Advantages of VAT:1. VAT is multi stage tax levied on allstages of production distribution of acommodity.2. Under VAT each input is taxed onlyis taxed only once. Since an input istaxed only ones VAT avoids cascadingeffect which is the chief advantage ofthe traditional system of excise andsales taxation.3. Since the cumulative effect of inputtaxation is absent under VAT, the cost



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THE FISCAL RESPONSIBILITY

AND BUDGET MANAGEMENT RULES, 2004

�Reduction of revenue deficit by an amount equivalent of 0.5 per cent or moreof the GDP at the end of each financial year, beginning with 2004-05.�Reduction of fiscal deficit by an amount equivalent of 0.3 per cent or more ofthe GDP at the end of each financial year, beginning with 2004-05.�No assumption of additional liabilities (including external debt at current ex-change rate) in excess of 9 per cent of GDP for the financial year 2004-05 andprogressive reduction of thislimit by at least one percentagepoint of GDP in each subse-quent year.�No guarantees in excess of0.5 per cent of GDP in any fi-nancial year, beginning with2004-05.�Specifies four fiscal indica-tors to be projected in the me-dium term fiscal policy state-ment. These are revenue deficit as a percentage of GDP, fiscal deficit as a per-centage of GDP, tax revenue as percentage of GDP and total outstanding liabili-ties as percentage of GDP.�For greater transparency in the budgetary process, rules mandate the CentralGovernment to disclose changes, if any, in accounting standards, policies andpractices that have a bearing on the fiscal indicators.The Government is also mandated to submit statements of receivables and, guar-antees and a statement of assets, at the time of presenting the annual financialstatement, latest by Budget 2006-07.The rules prescribe the form for the quarterly review of the trends of receipts andexpenditures. The rules mandate the Central Government to take appropriatecorrective action in case of revenue and fiscal deficits exceeding 45 per cent ofthe budget estimates, or total non-debt receipts falling short of 4 per cent of thebudget estimates at the end of first half of the financial year.

of production increased by the amountof tax itself, thus by preventing unnec-essary cost elevation, VAT promotescompetitiveness of domestic indus-tries in the world market and therebygenerates favorable.4. Since the credit is being granted thenew entrepreneurs and small indus-tries will have advantage because theirinvestment becomes less.5. VAT in its ideal and comprehensiveform also has the advantage of beingnatural as between different industries,techniques of production and businessorganization.GST: In the Budget for 2007-08, an an-nouncement was made to the effectthat GST would be introduced fromApril 1, 2010, and that the EmpoweredCommittee of State Finance Ministerswould work with the Central Govern-ment to prepare a road map for intro-duction of GST.First Discussion Paperon GST in India1. The GST is to have two components-Central GST and State GST—withseparate rates, reflecting revenue con-siderations and acceptability. This dualGST model would be implementedthrough multiple statutes (one for theCGST and an SGST statute for everyState).2. The Central GST and the State GSTwould apply to all transactions ofgoods and services (with some speci-fied exceptions).3. The Central GST and State GST areto be paid to the accounts of the Cen-tre and the States separately.4. Cross-utilization of input tax credit(ITC) between the Central GST and theState GST not to be allowed except inthe case of inter-State supply of goodsand services under the Inter-StateGoods and Service Tax (IGST) model.5. Uniform State GST threshold ofgross annual turnover of Rs10 lakhboth for goods and services for all theStates and Union Territories to be beadopted with adequate compensationfor States (particularly northeasternregion States and special categoryStates) where lower threshold had pre-vailed in the VAT regime.6. Each taxpayer to be allotted a PAN-linked taxpayer identification numberwith a total of 13/15 digits.GST Rate StructureA two-rate structure –a lower rate fornecessary items and goods of basic

importance and a standard rate forgoods in general—proposed with aspecial rate for precious metals and alist of exempted items. Exports wouldbe zero-rated. The GST will be leviedon imports with necessary Constitu-tional Amendments. of deficit budgeting with the cheapmoney policy.CAPITAL GAIN TAXIt was imposed in 1947. But the tax waswithdrawn in 1950. A tax on capitalgain was re-introduced in 1956. Herecapital gain was meant a financial gainresulting from the sale of a capital as-set at a higher price than what it waspaid for it. Under Section 45 of the In-come Tax Act 1961, profits or gainsarising from transfer of capital assetsaffected in the previous year, arechargeable under the head ‘CapitalGains’.ESTATE DUTYIt was introduced in 1953. It is alsoknown as death duty. The estate dutywas levied on total property passing

on the death of a person. The duty wasimposed and collected by the CentralGovernment but the proceeds werepassed on to the States. The rate oftaxation ranged from 4 per cent to 40per cent of the value of the estate leftbehind. It was an extremely progres-sive tax. But the tax collection was verypoor and the Government collectedmerely Rs 15 crore from this source.This prompted the Government towithdraw the tax with effect fromApril 1, 1985.WEALTH TAXIt was introduced in May 1957 on thebasis of the recommendation of Nicho-las Kaldore. The Wealth tax has beenlevied on the excess of net wealth overexemption of individuals, joint Hindufamilies and companies. But in thecomputation of the tax: (1) balances ofprovident funds, (2) life insurance, and(3) certain properties such as agricul-tural land has been exempted. TheGovernment has also exempted pro-ductive assets such as shares, bonds,



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bank deposits , etc. This decision hasbeen taken on the basis of the ChelliahCommittee recommendations. Wealthbelow 2-5 lakh is exempted. Initially,the rate of taxation was 15 per cent andit was a progressive tax. In 1992-93 theceiling was raised to 15 lakh and therate of tax is 1 per cent.

EXPENDITURE TAXIt was introduced in 1957. It was oneof the many ‘progressive’ taxes intro-duced by T T Krishnamachari. Themain rationale was to encouragepeople to save and invest. It will con-trol wasteful expenditure speciallyluxury expenditure. But the tax wasabolished in 1962. It was reintroducedin 1964 but again abolished in 1966.As on November 1987, the Govern-ment again imposed an ExpenditureTax Act, 1987. The Expenditure Actprovides for levy of a tax on the expen-diture on Hotels accommodationcharging more than Rs 400 per day perindividual. The rate of expenditure taxwas increased from 10 per cent to 20per cent for the assessment year 1989-90. The expenditure tax has beenphased out.

GIFT TAXIt was introduced in April 1958. It wasimposed on donor. In 1990-91 budgetimposed the gift tax on donee and noton the donor. As a complement to thestate duty wealth tax and expendituretax, it was yielding only 10 crore peryear. That is why it was abolished in1998-99. Now it will be clubbed withincome in the hands of their beneficia-ries. Reintroduced in the Budget 2004-05. According to the proposal giftsfrom unrelated persons, above thethreshold limit of Rs 25,000 would nowbe taxed as income.

INTEREST TAXIt was introduced in 1974. Provided forthe levy and a special tax on the grossamount of interest allowing on thebanks on the loans and advances givenby them in India. The tax was abol-ished in 1985 but later reintroduced itas an anti-inflationary measure. In2000-2001, the interest tax of 2 per centpaid by bank and financial institutionwas abolished.

CUSTOM TAXThe levy and the rate of customs duty

in India are governed by the CustomsAct 1962 and the Customs Tariff Act1975. Some times the custom duty isalso called Effective Rate of Protections(ERP). Custom duty performs follow-ing functions:

1. To provide protection to do-mestic industries against foreigncompetition.2. They regulate foreign trade ofa country especially imports.3. It works a s an instrument toraise productivity.4. To raise the sufficient rev-enues.

The Union Government levies dutieson both imports and exports. Importduties are generally levied on ad valo-rem basis, i.e, tax amount is scheduledaccording to the value of the item be-ing taxed. It originated in England. Asper Chelliah committee recommenda-tion the custom duty should be re-duced and categorized on the basis ofmerits of the commodities. The peakcustom rate for non-agricultural prod-ucts is proposed to be from 15 per centto 12.5 per cent. Now only a short dis-

tance away from East Asian rates.ADDITIONAL TAX– Additional taxis that which is imposed on the ba-sis of the continuity in relation tothe original one.AUXILIARY TAX - It is imposed irre-spective of the original consider-ation.COUNTERVAILING TAX – An ad-ditional import duty imposed on acommodity to offset a reduction of itsprice as a result of an export subsidyin the country of origin.

MINIMUM ALTERNATE TAX(MAT)MAT was introduced as a measure tobring zero-tax paying companieswithin the tax bracket. MAT was im-posed in 1996-97. Under MAT, if tax-able income of a company, after avail-ing of all eligible deductions, comes toless than 30 per cent of its book profit,its total income is deemed to be 30 percent of the book-profit and taxed ac-cordingly. In 1997-98 export profit wasexempted from MAT. With effect fromApril 1, 2000 MAT has been imposed

Trends of deficitsFiscal Deficit: It is the excess of total expenditure over the sum of revenuereceipts and non-debt creating capital receipts. In other words it is equal toborrowing.B u d g e t a r yDeficit: Al-though, it is thesmallest of thethree types defi-cit, but it is themost danger-ous. Thoughthis deficit is of-ficially just thenet R.B.I creditto the CentralGovernment, inactual practice itis like printingnotes to financeG o v e r n m e n to v e r s -pending.Smallestof all deficits isRevenue deficit(but it is mostpotent one).Revenue Deficit: It is the excess of revenue expenditure over the revenuereceipts.Primary Deficit: It is excess of fiscal deficit over the interest payments. Itrepresents the interest liabilities of an economy.

Central Government: Trends of various deficits

Year Revenue Fiscal Primary Revenuedeficit deficit deficit as

per centof fiscal

dificit

(As per cent of GDP)

FRBMA

2003-04 3.6 4.5 0.0 79.7

2004-05 2.4 3.9 0.0 62.3

2005-06 2.5 4.0 0.4 63.0

2006-07 1.9 3.3 -0.2 56.3

2007-08 1.1 2.6 -0.9 41.4

2008-09 (Prov.)* 4.4 5.9 2.5 74.8

2009-10 (BE) 4.6 6.5 2.8 70.5

Source: Economic Survey 2009-10



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at a flat rate of 7.5 per cent on bookprofit. The Budget 2006-07 has in-creased the rate to 10 per cent, whichis still only one-third of the normal rate.Book Profit is basically computed un-der the Companies Act and it is netprofit in the profit and loss accountwithout allowing for any deductionsor adjustments.The decision to impose MAT was op-posed by the arguments like: (a) MATwould generate higher dividendpayouts and reduced investment rates;(b) zero-tax paying companies wouldpay by way of excise and custom du-ties. But definitely, the MAT would re-duce the tax evasion and would

broaden the tax base and encouragethe social equity and justice.Two important tax are being discussedas an alternative to MAT to prevent thecorporates from showing high profits.ALTERNATIVETAX ON GROSS ASSETS (ATGA)Under this proposed scheme of taxa-tion, the base would consist of grossassets without any deduction of debts,exemption for the financial sector.TAX ON PROFIT BEFOREDEPRECIATION, INTEREST ANDTAX (PBDIT)It is also known a ‘optimum alterna-tive MAT’. It is more simplified andunder this scheme the companies willhave to optimise the utilization of theirinputs so that PBDIT is adequate tomeet the claims of tax, interest and de-preciation.INCOME TAXNet direct tax collections during firstseven months of the present fiscal (upto October 2008) stood at Rs.166,905crore, up from Rs.128,864 crore, regis-

tering a growth of 29.52 percent.Growth in Corporate Taxes was 33.49percent (Rs.105,174 crore as againstRs.78,785 crore), while Personal In-come Tax (including FBT, STT andBCTT) grew at 23.14 percent (Rs.61,433crore as against Rs.49,890 crore). Themomentum of growth in direct taxescould be maintained, despite presentglobal financial crises / recession andits resultant impact on the Indianeconomy, mainly on account of a shiftin the tax collection strategy of the Cen-tral Board of Direct Taxes (CBDT) to-wards improving the tax deduction atsource (TDS) mechanism and encour-aging better tax compliance, reflected

in growth of 35.78percent in TDS and52.76 percent inself-assessment tax.Growth in Corpo-rate TDS was 48.2percent at Rs36,004crore as againstRs.24,293 crore inthe same periodlast year. Despitesubstantial tax re-lief allowed to indi-vidual taxpayers inthe Union Budget2008, growth of PITTDS was 26 percentat Rs.38,868 crore

as against Rs.30,845 crore in the sameperiod last year.Growth in corporate TDS above 48percent, growth in Fringe Benefit Tax(FBT) above 47 percent and growth individend distribution tax above 48 per-cent indicate continued strength of theIndian economy. Growth in SecuritiesTransaction Tax (STT), however, atminus 1.60 percent was reflective ofhumungous erosion in values of stockmarkets transactions.Despite lower advance tax paymentsby certain sectors such as real estate,infrastructure, cement, automobile,power, textile and downstream oilcompanies, advance taxes recordedpositive growth in mining, mineral,metal, engineering, Indian banking,telecom, IT, pharma, and consumergoods sectors. IT was introduced in1860 in India by Sir James Wilson tomeet the financial difficulties caused bythe mutiny of 1857. But the tax wasabolished in 1865. The tax was reintro-duced in 1869. In 1886 exempted agri-

cultural-income (due to land revenue).In 1918 it granted exemption to contri-bution provident fund. In 1922 a sepa-rate department created for IT (pre-ciously it was combined with revenue).In 1924-25 a committee was set up un-der Charles Tod Hunter.In 1939 step system was replaced byslab system. Step Rate- All persons ina particular income bracket bear thesame effective rate on every rupee oftheir income. This is proportional. SlabRate- Tax on each slab of income is cal-culated separately. Then calculatedtechnically. It is progressive in nature.REGRESSIVE TAXES: A tax whichtakes a decreasing proportion of in-come as income rises. In other words,the tax is regressive if the tax rate di-minishes as the base increase.PROPORTIONAL TAXES: A taxwhich is levied at the same rate at allincome levels. The tax liability in-creases in the same proportion as theincrease in income. Hence it is inter-mediate between a progressive tax anda regressive tax.PROGRESSIVE TAXES: A tax whichtakes an increasing proportion of in-come as income rises. In other words,with increasing income, the tax liabil-ity not only increases in absolute terms,but also as a proportion to the income.In 1947 an IT commission was set upunder Srinivas Vardhan. In 1961 IT Actwas imposed, which gave followingexemptions:(i) Agricultural Income(ii) Receipts by a member from Hinduundivided family.(iii) Shares of a profit from a firm.(iv) Tax credit certificate (like NSC,NSS, Insurance etc.)�The basic exemption limit for per-sonal income tax increased: in generalto Rs.1 lakh; for women to Rs.1.35 lakh;and for senior citizens to Rs.1.85 lakh.�The personal income tax rates modi-fied: to 10 per cent for income betweenRs.1 lakh to Rs.1.5 lakh; 20 per cent forincome between Rs.1.5 lakh to Rs.2.5lakh; 30 per cent for income aboveRs.2.5 lakh.�Surcharge at 2.5 per cent applicablein the case of individuals, HUFs, asso-ciation of persons and body of indi-viduals on taxable income above Rs.10lakh.�Standard deduction withdrawn. Allprevailing sectoral caps/rebate underSection 88,88B and 88C removed.

Service tax revenueYear No. of Tax rate in Revenue Growth in

services per cent (Rs crore) per cent

2003-04 60 8 7891 91.4

2004-05 75 10 14200 80.0

2005-06 84 10 23055 62.4

2006-07 99 12 37598 63.1

2007-08 106 12 51301 36.4

2008-09 110 10 * 60702 18.3

2009-10(P) 114 10 36785 -6.5 #

Source: Economic Survey 2009-10.* Reduced to 10 per cent with effect from February 24, 2009.# Over corresponding period April-December, 2008.(P) Revenue collection for 2009-10 (April-December 2009).



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�Investment in financial instrumentshitherto eligible for rebate under sec-tion 88 eligible for deduction from in-come under new section 80C with anoverall cap of Rs.1 lakh. Sectoral capson house loan repayment, tuition fees,contribution to provident fund pay-ment, etc. removed.�Deduction provided in respect ofinterest on certain securities etc. underSection SOL withdrawn.�One-in-six criteria for filing income

tax returns modified. Cellular phonesremoved from the list and expenditureexceeding Rs.50,000 on electricity con-sumption in any previous year in-cluded.TAX DEDUCTIONAT SOURCE (TDS)It is an advance tax (also called with-holding tax). It is sec-208 of IT Act of1961. Under this the person is requiredto pay in advance and it is adjustedagainst tax liabilities after the year as-sessment. As per sec-208, any transac-tion over Rs 5000 related to the follow-ing is subjected TDS:1. Fees for professional or technical ser-vices.2. Deduction of tax from the salary.SURCHARGE TAXSurcharge is tax on tax. It was intro-duce in 1951 and continued uninter-rupted up to 1985. In 1987-88 it wasincreased to 8 per cent for the purposeof unemployment. In 1990 was in-creased to 12 per cent. In 1994-95 sur-charge remained 12 per cent but thelimit became 1 lakh. In 1995-96 it wasabolished from assessment. Surcharge

was levied in 1999-2000 at the rate of10 per cent. In 2000-01 it was increasedto 15 per cent on income more than 1lakh and 1,50,000. In 2001-02 it waswithdrawn again in 2002 it was im-posed 5 per cent. In 2003-04, the sur-charge was abolished.EDUCATION CESSIt was introduced in 2004. It is expectedto yield Rs 4000-5000 crore and the cesswill be ear-marked for educationthrough Mid-Day Meal Scheme. It will

be imposed on the income tax, corpo-ration tax, excise tax and services tax.TRANSACTION TAXThe transaction tax is intended to plugthe loopholes for evasion of long-termcapital gain tax and offset the loss aris-ing out of the abolition of the long-termcapital gain tax. It is levied on everytransaction in securities listed in the ex-change. It is levied as a percentage ofthe total value of the transaction–andcan be levied on either the buyers orsellers or both for every trade.SHORT-TERMCAPITAL GAINS TAXNew Transaction Tax is meant to be inpartial replacement of the direct Tax(Long Term Capital Gain Tax).New taxes to continue:(1) Banking Cash Transaction Tax(BCTT) was introduced with the objec-tive of preventing generation and laun-dering of black money and has per-formed effectively during the previousyear. Banking Cash Transaction Tax(BCTT) at 0.1 per cent introduced onwithdrawal of cash from bank on asingle day of Rs.25,000 or more by in-

dividuals or HUF and Rs.1 lakh by per-sons other than individuals and HUF.Banks to report all deposits which areexempt from tax deduction at sourceon interest. Cash withdrawals fromsavings account and purchase of de-mand draft for cash exempt fromBCTT. BCTT is applicable forencashment of term deposits if cashreceived during a single day exceedsthe limit.(2) Fringe Benefits Tax (FBT). A newfringe benefits tax introduced on thevalue of benefits provided by the em-ployer for the collective enjoyment ofthe employees. The tax at 30 per centon the value of such fringe benefits ispayable by the employer. The taxwould, inter alia, include benefits likeentertainment, conveyance, tour andtravel, use of hotel, boarding and lodg-ing facilities, and gifts.VALUE ADDED TAX (VAT)It is regarded as the fastest growing taxin the world. The road map for theimplementation by the states of a full-fledged VAT system requires that theCentral Sales Tax (CST) phase-out be-gin by 2007-08. As a part of states’ com-pensation package for the phasing outCST, states are given the right to levy-VAT on imports.Advantages of VAT:1. VAT is multi stage tax levied on allstages of production distribution of acommodity.2. Under VAT each input is taxed onlyis taxed only once. Since an input istaxed only ones VAT avoids cascadingeffect which is the chief advantage ofthe traditional system of excise andsales taxation.3. Since the cumulative effect of inputtaxation is absent under VAT, the costof production increased by the amountof tax itself, thus by preventing unnec-essary cost elevation, VAT promotescompetitiveness of domestic indus-tries in the world market and therebygenerates favorable.4. Since the credit is being granted thenew entrepreneurs and small indus-tries will have advantage because theirinvestment becomes less.5. VAT in its ideal and comprehensiveform also has the advantage of beingnatural as between different industries,techniques of production and businessorganization.VALUE ADDED TAX AT STATEIntroduction of State level VAT is the

Sources of tax revenue

2004-05 2005-06 2006-07 2007-08 2008-09 2008-09 2009-10(BE) (Prov.) @ (BE)

(Rs. crore)

Tax revenue as a proportion of gross domestic product* (in per cent)

Direct Taxes (a) 4.1 4.3 5.1 6.0 6.9 6.1 6.0

Personal Income Tax 1.5 1.5 1.8 2.1 2.6 2.2 1.8

Corporate Tax 2.6 2.7 3.4 3.9 4.3 3.8 4.2

Indirect Taxes (b) 5.3 5.4 5.6 5.6 6.1 4.8 4.4

Customs 1.8 1.8 2.0 2.1 2.2 1.8 1.6

Excise 3.1 3.0 2.7 2.5 2.6 2.0 1.7

Service Tax 0.4 0.6 0.9 1.0 1.2 1.1 1.1

Gross Tax Revenue # 9.4 9.9 11.1 12.0 13.0 10.9 10.4

Source: Economic Survey 2009-10@ Provisional and unaudited as reported by Controller General of Accounts, Department of Expenditure,Ministry of Finance.# includes taxes referred to in (a) & (b) and taxes of Union Territories and “other” taxes.* Refers to GDP at current market prices.Notes: 1. Direct taxes also include taxes pertaining to expenditure, interest, wealth, gift and estate duty.2. The ratios to GDP at current market prices are based on the CSO’s National Accounts 2004-05 series.



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most significant tax reform measure atState level. The State level VAT beingimplemented presently has replacedthe erstwhile sales tax system of theStates. Under Entry 54 of List II (StateList) in the Seventh Schedule to theConstitution of India, “tax on sale orpurchase of goods within a State” is aState subject. The decision to imple-ment State level VAT was taken in themeeting of the Empowered Commit-tee (EC) of State Finance Ministers heldon June 18, 2004, where a broad con-sensus was arrived at amongst theStates to introduce VAT from April 1,2005. Accordingly, VAT has been in-

troduced by all States/UTs by now.Uttar Pradesh is the latest State whichhas introduced VAT on January 1,2008.Since sales tax/VAT is a State subject,the Central Government is playing therole of a facilitator for successful imple-mentation of VAT. A compensationformula has also been finalized in con-sultation with the States, for providingcompensation to them, during 2005-06,2006-07 and 2007-08, for any loss onaccount of introduction of VAT andcompensation is being released accord-ing to this formula. Technical and fi-nancial support has also been providedto the States for VAT computerization,publicity and awareness and other re-lated aspects.The Empowered Committee, throughits deliberations over the years, final-ized a design of VAT to be adopted bythe States, which seeks to retain certainessential features commonly acrossStates while, at the same time, provid-ing a measure of flexibility to the Statesto enable them to meet their local re-quirements.Salient features of the VAT design1. The rates of VAT on various com-modities shall be uniform for all theStates/UTs. There are two basic ratesof 4 per cent and 12.5 per cent, besides

an exempt category and a special rateof 1 per cent for a few selected items.The items of basic necessities andgoods of local importance (up to 10items) have been put in the 0 per centor the exempted schedule. Gold, silverand precious stones have been put inthe 1 per cent schedule. The 4 per centrate applies to other essential items andindustrial inputs. The 12.5 per cent rateis residual rate of VAT applicable tocommodities not covered by otherschedules. There is also a category with20 per cent floor rate of tax, but thecommodities listed in this schedule willnot be VATable. This category covers

items like motor spirit (petrol, dieseland aviation turbine fuel), liquor, etc.2. There is provision for eliminating themultiplicity of taxes. In fact, severalState taxes on purchase or sale of goods(excluding entry Tax in lieu of octroi)have been subsumed in VAT or madeVATable.3. Provision has been made for allow-ing “Input Tax Credit (ITC)”. How-ever, since the VAT being imple-mented is intra-State VAT only anddoes not cover inter-State sale transac-tions, the ITC will not be available oninter-State purchases. Exports will bezero-rated, and at the same time, creditwill be given for all taxes on inputs/purchases, related to such exports.4. There are provisions to make thesystem more business-friendly. Theseinclude provision for self-assessmentby the dealers, provision of a thresh-old limit for registration of dealers interms of annual turnover of Rs. 5 lakh,and provision for composition of taxliability up to annual turnover limit ofRs. 50 lakh.5. States have been allowed to continuewith the existing industrial incentives,without breaking the VAT chain. How-ever, no fresh sales tax/VAT-basedincentives are permitted.PRESUMPTIVE TAX

It relates to the use of appropriate in-dicators of income, wealth, etc., insteadof the actual records of these tax bases.In the case of income tax, a presump-tive tax is imposed on the basis of anestimated taxable income. It is exog-enously determined. The base for pre-sumptive income tax is fixed and doesnot depend on the behaviour of indi-vidual entrepreneurs. In essence, a pre-sumptive income tax works like a lumpsum tax.SECURITIESTRANSACTION TAX (STT)It is a tax being levied on all transac-tions done on the stock exchange atrates prescribed by the Central Gov-ernment from time to time. The Gov-ernment of India notified the SecurityTransaction Tax rules in 2004, whichcame into effect from October 1 of thesame year.CORPORATION TAXIt was introduced in 1960-61 and it islevied on the income earned by thejoint stock companies or corporatebodies. Before 1959-60, the super taxon companies was known as corpora-tion tax. Until 1960-61, corporationswere taxed in partial sense. A corpo-ration was required to pay income taxon behalf of the its shareholders ondividends paid to them. In return, eachshareholder got a credit. But after 1960-61, the corporations are treated as aseparate entity and shareholders are nolonger allowed any credit against theirindividual tax liabilities. The ChelliahCommittee had recommended that thecorporation tax rate should be broughtdown to 40 per cent.EXCISE TAXIt is tax on goods produced or manu-factured within a country. It is leviedon two basis: 1. Ad valorem: In this casethe duty is imposed on the basis ofvalue of the product. 2. Specific: Thisis calculated on the basis of quantityof the product.�It is governed by Indian Fiscal com-mission laws of 1921-22. Central ex-cises and Salt Act of 1944 also deter-mines it. Excise duties on commoditiesother than alcoholic liquors and nar-cotics are levied by the Central Gov-ernment.�In 1986 modified value added sys-tem was adopted, it is based on VAT,it was adopted in Britain in 1973 as analternative of Sales Tax. In VAT the cal-culation of tax is calculated at every

KKKKKeeeeey indicay indicay indicay indicay indicatortortortortorsssss

Data categories and components Units 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Fiscal Indicators (Centre)

Gross Fiscal Deficit1 % of GDP 3.9 4.0 3.3 2.6 5.92 6.53

Revenue Deficit1 % of GDP 2.4 2.5 1.9 1.1 4.42 4.63

Primary Deficit1 % of GDP 0.0 0.4 -0.2 -0.9 2.52 2.83

Population Million 1089 1106 1122 1138 1154 1170

1 fiscal indicators are as per revised GDP at current market prices based on National Accounts 2004-05 series.2 fiscal indicators for 2008-09 are based on the provisional actuals for 2008-09.3 fiscal deficit, revenue deficit and primary deficit were envisaged at 6.8, 4.8 and 3.0 per cent of GDP respectively at the timeof presentation of the 2009-10 Budget.



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stage of production till the final pro-duction.Manufactured VAT (MANVAT) wasdone on the basis of recommendationof L.K.Jha committee. But soon it waschanged in 1986, in the form ofMODVAT mainly because of the fol-lowing reasons: (i) Taxation inputs:such as raw materials, components andother intermediated has a number oflimitations. It is very often distorts theproduction structure, results in cascad-ing; of taxes and does not allow cor-rect assessments of tax incidents; AND(ii) Classification problem will beeroded.MODIFIED VALUE ADDED TAX(MODVAT)� It was introduced in 1986. The

MODVAT scheme provides for instantand complete reimbursement of exciseduties paid on competent and raw ma-terials when used in the manufactureof final product. Articles which are notbeing used as inputs during manufac-turing process are not eligible for creditunder the new scheme. The credit un-der MODVAT is available to a manu-facturer on the final product only if thefinal product is dutiable. Credit is al-lowed only after the evidence of pay-ment of duty is received by the Excisedepartment.

Ways and MeansAdvance (WMA)

As per the agreement, the Central gov-ernment would meet temporary mis-matches between receipts and expen-diture through WMA provided by RBI.�RBI and the government would mu-tually determine the size and cost ofWMA.The present system of Ways andMeans Advances (WMA) extended bythe Reserve Bank of India (RBI) to theState Governments is based on theprinciples contained in the recommen-dations of the Informal Advisory Com-mittee (IAC) under the Chairmanship

of B.P.R. Vithal.�Fiscal Situation 2006-07 were revisedin consultation with the Government.As per the revised arrangement, theWMA limits would be fixed on a quar-terly basis instead of the existing half-yearly basis.�Accordingly, the WMA limits for2006-07 was placed at Rs.20,000 croreand Rs.10,000 crore for the first and sec-ond quarters, respectively, andRs.6,000 crore each for the third andfourth quarters of the year.

�The Reserve Bank would retain theflexibility to revise the limitsinconsultation with the Governmenttaking into consideration thetransitionalissues and prevailing cir-cumstances. Furthermore, the interestrates on WMA and overdraft havebeen linked to the repo rate as againstthe Bank Rate hitherto, followingemergence of the repo rate as the short-term reference rate.�Accordingly, the interest rate onWMA will be at the repo rate and thaton overdraft will be at repo rate plustwo percentage points. Consideringthe impact of recession, the ReserveBank of India has raised the limit onhow much the government can borrowfrom the central bank as ways & meansadvance to Rs 20,000 crore up to De-cember 2008, instead of Rs 6,000 crore.In other words, The ways & meansadvance is additional support to keepthe government’s cash flows intact.The government borrows through thisfacility for 90 days at the repo rate, cur-rently at 7.5 per cent. The advantageof the ways & means advances routeis that it does not impact market liquid-ity conditions. The limit was raised toRs 20,000 crore for the first half of theyear, in 2006-07. For the second quar-ter, the limit until now was Rs 6,000crore.REVENUE BUDGETIt has two parts: (i) Revenue receiptsand (ii) Revenue expenditure.Revenue Receipts.All those receipts of the governmentwhich are non-redeemable may betermed as Revenue Receipts. These re-ceipts are divided under two heads: (a)Tax-Revenue and (b) Non-Tax Rev-enue.Tax revenue comprises of proceeds oftaxes and duties levied by the “Union”.Non-Tax Revenue is basically classi-fied into three heads:Interest receipts. These are the larg-est source of income. These receiptsaccrue to four sources: (a) Loans tostate Governments and Union Territo-ries; (b) Indian Railways; (c) Depart-ment of Telecommunications; (d) Co-operatives and Government Servants.Dividends and Profits. These accrueto four sources:(a) Profits from RBI and NationalizedBanks. (b) LIC, GIC, NBFIs. (c) IDBI;(d) Public Sector Units (PSU)

Demand side growth of GDP, growth contribution and relativeshare at 2004-05 market prices (per cent)

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

GDP at Market Prices 9.3 9.4 9.6 5.1 6.8

Consumption (Private) 9.0 8.2 9.8 6.8 4.1

Consumption (Govt) 8.3 3.8 9.7 16.7 8.2

Gross Capital Formation 14.7 14.5 16.9 -4.0 na

Gross Fixed Capital Formation 15.3 14.3 15.2 4.0 5.2

Change in Stocks 24.8 35.0 15.1 -61.2 4.7

Exports 25.9 21.8 5.2 19.3 -15.8

Imports 32.5 22.0 10.0 23.0 -17.2

Contribution to Growth

Consumption (Private) 57.3 51.3 59.7 78.2 36.0

Consumption (Govt) 9.8 4.4 10.4 33.6 13.9

Gross Capital Formation 51.4 52.6 62.7 -29.6 na

Gross Fixed Capital Formation 47.3 46.1 50.1 25.8 25.5

Net Exports -18.6 -8.0 -15.0 -36.2 20.4

Relative Share

Consumption (Private) 59.2 59.1 58.4 58.5 59.5 58.0

Consumption (Govt) 11.0 10.9 10.3 10.3 11.5 11.6

Gross Capital Formation 32.7 34.2 35.8 38.2 34.9 na

Gross Fixed Capital Formation 28.8 30.3 31.7 33.3 32.9 32.5

Source: Economic SurveyNote: Does not add to 100 because only major items are included in the table. Figures for2009-10 are based on advance estimates.



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�Other Non-Tax revenue. Thiscomes from five sources:(a) Fiscal Services:(i) Circulation of coins.(ii) Difference between the face valueof coins and their manufacturing cost.(iii) Mints and penalties realizedagainst economic offences.(b) Other General Services:(i) Examination fees of the UPSC.(ii) Sales of forms, passport and ga-zettes.(iii) Police supply to the states (CRPF,ITBP, CISF and BSF and sometimesRAF).(c) Social Services:(i) Advertisement of Door-darshan andAIR.(ii) Entry fees at the museum.(iii) Public Health Centres (PHC).(d) Economic Services: (i) Animal husbandry.

(ii) Dairy and Fisheries.(iii) Forest and Tourism.(e) Grants-in-aid from foreign coun-tries.Revenue Expenditure.This can be divided under two heads:(a) Planned Expenditure.(b) Non-Planned ExpenditurePlanned Expenditure comprises:�Central plans. These include agricul-ture, rural development, irrigation,flood control, energy, industry, min-eral, transport, communications, sci-ence and technology, environmentand social services and others.�Central Assistance for plans ofstates and Union Territories.Non-planned Expenditure comprises:�Interest payments:�Defence revenue expenditure.�Subsidies.

�Postal deficits. �Police and pension.�General Services (like tax collection).�Social Services (education, healthand broadcasting).�Grants to states and union territories.Grants to foreign countries.CAPITAL BUDGETCapital Budget comprises: (i) CapitalReceipts; and(ii) Capital Expenditures;Capital Receipts.These include receipts accruing from:(a) Market Loans. (b) Special Depos-its. These deposits are due to ProvidentFund, Superannuation and surplusfunds of LIC and GIC. (c) External As-sistance. (d) Recovery of Loans andAdvances. Under the Five Year Plans,the centre has been giving liberal loansto states and UT governments andother parties. (e) Small Savings. Theseaccrue to Post Office Accounts, Recur-

ring Deposit (RD),Time Deposit (TD),National SavingCertificate (NSC),National SavingScheme (NSS),Indira Vikas Patra(IVP). (f) ProvidentFunds. (g) OtherReceipts.

Capital Expendi-ture.This also can be di-vided under twoheads: (a) PlannedExpenditure.(b) Non-Planned

Expenditure.Planned Expenditure comprises of:Central Plans.�Central Assistance for plans ofstates and Union Territories.Non-planned Expenditure comprises:�General Services: These include ex-penditure on defence and civil services.�Social Community Services: Theseinclude expenditure on schools, tech-nical institutions, scientific research or-ganizations, and hospitals.�Economic Services: These includeagriculture, allied services, industry,minerals, petroleum, and chemical fer-tilizers.�Loans and Advances: Loans and ad-vances are given to the state govern-ments, UTs, foreign governments(Nepal and Bhutan) and central gov-ernment employees.

BUDGETARY PROCESSThe entire process proceeds in varioussteps: (a) Preparation starts in Septem-ber by Finance Ministry.(b) Planning Commission scrutinizesthe estimates.(c) Estimates of Revenue are preparedby the Department of Revenue, Minis-try of Finance.(d) The expenditure budget gives thetotal plan provisions.(e) The details of plan outlay at boththe centre and state level are containedin the document titled Annual Plan,prepared separately by the PlanningCommission.(f) A detailed survey of the working ofPSUs is given in a document titled Pub-lic Enterprise Survey, brought out bythe Ministry of Industry.Constitutional Provisions.Article 112, 113, 265 and Rule 104. Notax should be levied or collected exceptby authority of Parliament and that thePresident shall, in respect of every fi-nancial year, cause to be laid beforeboth Houses, the annual financial state-ment.Article 113. Demands for grants: (a) Nodemand for a grant shall be made ex-cept on the recommendation of thePresident; (b) Only the government canpresent a demand for grant and not theprivate members; (3) Demands forgrants indicate separately the votedand charged items of expenditure.Cut Motion: It is a device to initiatediscussion on demands for grants.These motions are meant to reduceamounts of demands for grants. It canbe classified into 3 categories: (a) Dis-approval of policy Cut. The amountof demand to be reduced to Re.1.; (b)Economy Cut. A specific amount ofsum is reduced; (c) Token Cut. Theamount of demand is reduced by Rs.100 only.Principle of Guillotine: The demandsare directly put to vote without anydiscussion or scrutiny.Appropriation Bill: As per Article 114,it is a bill incorporating all the demandsfor grants voted by the Lok Sabha,along with the expenditure charged onCFI.�It is introduced in the Lok Sabha.�It has to be passed before 31st March.It has two parts:(a) Charged items. Though normally,the government cannot spend anymoney without the vote of the Parlia-

Per capita income and consumption at 2004-05 prices

Income Consumption

Rs (%) Rs (%)Growth Growth

2004-05 29,745 17,620

2005-06 32,012 7.6 18,909 7.3

2006-07 34,533 7.9 20,168 6.7

2007-08 37,328 8.1 21,841 8.3

2008-09 38,695 3.7 23,012 5.4

2009-10 40,745 5.3 23,626 2.7Source: Economic SurveyNote : Income is taken as GDP at market prices, Consumption is PFCE.



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ment, certain items of expenditurehave been allowed to be incurred with-out the Parliament’s vote. These itemsare undisputed ones and includePresident’s salary, Contingency fundsand the others. They are kind of tradi-tional items.(b) Voted items. These are subject tovote by the Parliament. Any expendi-ture that involves withdrawal from theConsolidated Fund of India needs anAppropriation Bill to be passed. There-fore, an appropriation bill is a part ofevery budget.Vote on Account: 4 Article 116 em-powers the Lok Sabha to make anygrant in advance for a part of any fi-nancial year pending the completionof the Budgetary Process.�A vote on account would be neces-sary to cover government’s expendi-ture for the period between the bud-get being presented and its beingpassed.�A vote on account only pertains tothe expenditure side.�It is very different from the annualbudget. The annual budget not onlymentions the expenditure but alsospells out how money is to be raised.INTERIM BUDGET:�An interim budget is a statement ofaccounts that does not incorporatechanges in the taxation rates from theprevailing rates at the time of budgetbeing presented.�Usually a caretaker governmentpresents such budgets. In 1991, theChandra Shekhar government pre-sented such a budget.�The rationale behind such a budgetis that the government cannot bringmajor changes without proper man-date which may or may not be accept-able to the new government.�But there is no legal bar on a care-taker government presenting a full-fledged budget.�In India, there is no strict distinctionbetween a caretaker government anda normal government. The constitutiondoes not mention the word caretaker.VOTE OF CREDIT�It is meant to make grants for meet-ing unexpected demand upon the re-sources of the state.�The service demanding grants is ofindefinite character, hence, the detaileddemand cannot be stated as is ordi-narily given in an annual financialstatement.

Exceptional Grant:It is meant to make those grants, whichdo not form a part of the current ser-vice of any financial year.Supplementary demands/grants:�As per Article 115, it is demanded ifthe amount authorized by any lawmade in accordance with the provi-sions of Article 114, to be expended fora particular service for the current fi-nancial year, is found to be insufficientfor the purpose of that year. Thesupplementary demands for grants arepresented to be passed by the Housebefore the end of the financial year.Additional or Excess Grants:As per Article 115, the demands for ex-cess grants are made after the expen-diture has actually been incurred andafter the financial year to which it re-lates has ended.�The excess shallbe brought to thenotice of CAG andexamined by Pub-lic Accounts Com-mittee.BUDGET EX-ECUTION(a) The RevenueDepartment, ofthe Ministry of Fi-nance, executesthe Budget.(b) It has two divi-sions: (i) CentralBoard of Direct Taxes (CBDT);(ii) Central Board of Excise and Cus-toms (CBEC);(c) Integrated Financial Administrationwas introduced on Oct 1, 1976.(d) An organization named ControllerGeneral of Accounts (CGA) was set upto administer matters pertaining to thedepartmentalization of accounts of theUnion Government.Consolidated Fund of India(Article 266)�All revenues received by the govern-ment, loans raised by it and also its re-ceipts from recoveries of loans grantedby it are accounted in the CFI.�No amount can be withdrawn fromthe CFI without the approval and au-thorization of the Parliament.Contingency Fund ofIndia (Article 267)�It is an imprest (around Rs. 50 crore)placed at the disposal of the Presidentto incur the urgent unforeseen expen-diture.

�The approval from the Parliamenthas to be taken and withdrawal of anequivalent amount from the CFI is sub-sequently done.Public Account.�The Provident Fund, small savingcollections, etc., received by the gov-ernment are kept under the Public Ac-count.�The money under Public Accountdoes not belong to government and hasto be paid back sometime or the otherto the persons and authorities who de-posited them.�Parliamentary authorization for pay-ments on the public account is not re-quired.�For operational purposes, it is di-vided into two broad accounts:(a) Revenue Account.(i) 66 per cent of the total account.

(ii) All the receipts of CFI (except bor-rowing) are kept in revenue account,i.e., tax and non-tax revenues.(iii) The revenue received from thevarious taxes is the effect of tax pro-posals raised in the finance bill.(iv) Within the Revenue Account, thenon-tax receipts include profits anddividends on investments, fees and in-terest receipts.(v) The interest receipt is mainlycharged on the non-plan loans ad-vanced to the states and UTs.(vi) The dividends and profits includesurplus/profits of RBI, share in prof-its from nationalized banks, NBFIs,and PSUs. As a whole, non-tax revenuereceipts constitute 20 per cent of the to-tal receipts in revenue account.(b) Capital Account.(i) Around 34-36 per cent of the totalaccount.(ii) This includes the amount beingraised from market loans, long and me-dium term loans, short-term borrow-

Ranks of 109 nations, by PPP-corrected GDP percapitaRank 1975 1984 1994 2004

58 Paraguay Dominican Rep. Dominican Rep. China

75 Grenadines Honduras Zimbabwe India

77 Ghana Sri Lanka China Georgia

80 Mauritania Solomon Islands India PapuaNew Guinea

89 Solomon India Georgia BangladeshIslands

90 India Rwanda Senegal SolomonIslands

96 Bangladesh China Congo,Dem.Rep. Burkina Faso

108 China Nigeria Rwanda Malawi



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ings, external loans, recoveries of loansand advances given for the state plans,NSC, NSS, KVP, IVP, PPF.(iii) The main contribution to CapitalAccount receipts is due to the internalborrowings which constitute 43 percent of the total capital receipts.TYPES OF BILLSMoney Bill�It is defined in Article 110.�It includes: (a) The imposition, abo-lition, remission, alteration or regula-tion of any tax; and (b) The regulationof the borrowing of the money or thegiving of any guarantee by the Gov-ernment of India.(c) The custody of CFI/ ContingencyFund of India, the payment of moneyinto or the withdrawal of money fromany such fund.(d) The appropriation of the money outof CFI.(e) The declaring of any expenditure

charged on the CFI or the increasingamount of such expenditure.(f) The receipt of money on account ofthe CFI or the Public Account of Indiaor the custody or issue of such moneyor the audit of the accounts of theUnion or of a state.�It shall not be introduced in the RajyaSabha.�Joint-Sitting is not applicable (Article108).�President’s prior assent is needed.�Speaker’s certificate must.�When it is passed by the Lok Sabha,it goes to Rajya Sabha, which then hasthree options - accept it, reject all ormake recommendations within thestipulated period of 14 days from thedate of receipt of such bill by it.�It would have following impact:(a) If accepted, the bill shall be deemedto be passed.(b) If Lok Sabha accepts the recommen-

dations of Rajya Sabha, the bill shallbe deemed to be passed.(c) If Lok Sabha doesn’t accept the rec-ommendations of the Rajya Sabha, thebill shall be deemed to be passed.(d) If it is passed by the Lok Sabha andis not returned by the Rajya Sabhawithin the given period, the bill shallbe deemed to be passed.Finance Bill�It is a bill related to revenue or rev-enue expenditure. Its two types are:(a) 1st Class Finance Bill. This bill notonly contains any of the matters speci-fied in Article 110 but also others, e.g.a bill which contains a taxation clausebut doesn’t deal solely with taxation.[Article (1)](b) 2nd Class Finance Bill. Any ordi-nary bill, which contains provisions in-volving expenditure from the CFI, is afinancial bill of 2nd Class. There is noreference of Article 110.


Coping with external sector

Balance of payment

Developing countries are likely to grow by 2.1 per cent in 2009and 6.0 per cent in 2010, led by India and China, which remainedthe most resilient to the crisis.As per the latest BoPdata for fiscal2009-10, exports and imports showed substantial decline during April-September (H1) of 2009-10 vis-à-vis the correspond-

ing period in 2008-09. There has been improvement in the BoP scenario duringH1 of 2009-10 over H1 of 2008-09, reflected in higher net capital inflows andlower trade deficit. However, the invisible surplus declined and current accountdeficit widened vis-a-vis the corresponding period last year. The private trans-fer receipts, which had marginally declined during the second half of 2008-09,increased by 4.3 per cent in the first half of 2009-10. A notable feature in the lastquarter of 2008-09, however, was significant narrowing down of the trade defi-cit on account of a larger decline in imports relative to exports, which alongwith the sustained invisibles surplus led to a significant reduction in the currentaccount deficit (CAD).However, for fiscal 2008-09, despite the higher invisibles surplus of US$ 89.9billion (7.4 per cent of GDP), the CAD increased to US$ 28.7 billion (2.4 per centof GDP), mainly on account of the widening trade deficit, as compared to US$15.7 billion (1.3 per cent of GDP) in 2007-08.The CAD, despite lower trade defi-cits, increased to US$ 18.6 billion in H1 (April-September) of 2009-10 from US$15.8 billion in April-September 2008 mainly due to a lower net invisibles sur-plus.There was massive decline in net capital flows from US$ 106.6 billion in 2007-08(8.8 per cent of GDP) to US$ 7.2 billion (0.6 per cent of GDP) in 2008-09. Thedecline was mainly due to net outflows under portfolio investment includingforeign institutional investments (FIIs), American depository receipts (ADRs)/global depository receipts (GDRs) (US$ 14.0 billion), banking capital includingNRI deposits (US$ 3.2

billion) and short-term trade credit(US$ 1.9 billion).However, notwithstanding these ad-verse developments, the resilience ofFDI inflows (US$ 17.5 billion in 2008-09) reflected the growing perceptionof India as one of the favourite long-term invest-ment destina-tions.Foreign Ex-change Re-serveIndia’s for-eign exchangereserves com-prise foreigncurrency as-sets (FCA),gold, speciald r a w i n grights (SDRs)and reservetranche posi-tion (RTP) inthe Interna-tional Mon-etary Fund(IMF). For-eign currencyassets aremaintained inmajor curren-cies like theUS dollar,euro, pound



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Balance of Payments

The Balance of Payment is divided into two main parts: (a) Current Account and (b)Capital Account.I. Current Account: It shows all flows that directly affect the national-income accounts.The current account consists of two major items, namely, (a) merchandise exports andimports or visibles; and invisibles exports and imports. It includes:(a) Exports and Imports of merchandise;(b) Exports and Imports of services, e.g., transportation, insurance, travel, etc.;(c) Inflows and outflows of investment income;(d) Grants, remittances, and other transfers.In terms of calculations, current account consists of

1. Merchandise: (i) Private and (ii) Government.2. Non-monetary Gold Movement:3. Invisibles: (i) Travel; (ii) Transportation; (iii) Insurance; (iv) Investment income;(v) Government, not included elsewhere; (vi) Miscellaneous; (vii) Transfer pay-ments (a) Official; and (b) Private.

II. Capital Account: It shows all flows that directly affect the national balance sheet.Capital account in India is classified into three main sectors:

(a) Private Capital- it is further divided into: (i) long term private capital, whichcovers foreign investment (both direct or portfolio), long term loans, foreign cur-rency deposits and an estimated portion of the unclassified receipts allocated tothe capital account.(ii) Short term private capital, which comprises of loans of an original maturityof one year or less constituting the relevant dividing line.(b) Banking Capital- it covers movements in the external financial assets andliabilities of commercial and cooperative banks authorized to deal in foreign ex-change.(c) Official Capital Transaction- it covers RBIs holding of financial currency as-sets and monetary gold. It includes: (i) Loans; (ii) Amortisation; and (iii) Miscella-neous.

Rs 45.99 per US dollar, Rs 64.98 pereuro and Rs 46.22 per 100 yen, indicat-ing depreciation by 12.5 per cent, 12.2per cent and 23.5 per cent respectivelyover the annual average exchange rateduring 2007-08. However, annual av-erage exchange rate of the rupee perpound sterling of 78.29 in 2008-09 in-dicated appreciation by 3.2 per centover 2007-08.The nominal effective exchange rate(NEER) and real effective exchangerate (REER) indices are used as indica-tors of external competitiveness of thecountry over a period of time. NEERis the weighted average of bilateralnominal exchange rates of the homecurrency in terms of foreign currencies.REER is defined as a weighted aver-age of nominal exchange rates adjustedfor home and foreign country relativeprice differentials. REER capturesmovements in cross-currency ex-change rates as well as inflation differ-entials between India and its majortrading partners. The RBI has been con-structing six currency (US dollar, eurofor eurozone, pound sterling, Japaneseyen, Chinese renminbi and Hong Kongdollar) and 36 currency indices ofNEER and REER.What is Exchange Rate?It is of two types:(i) Fixed exchange rate.; and (ii) Flex-ible Exchange rate system.Fixed Exchange Rate-Countries following the FER (alsoknown as stable exchange rate andpegged Exchange rate) system agreesto keep their currencies at fixed or atpegged and to exchange their valueonly fairly at frequent intervals, whenthe economic situation forces them todo so. Gold standards are the rate un-der this exchange rate system. Uses: 1.It is necessary for orderly developmentand growth of foreign trade.2. It is necessary to attract foreign capi-tal invested, as foreigners will not beinterested to invest in a country withunstable currency.3. Unstable ER may encourage theflight of capital.4. A stable ERS eliminates speculationin the foreign exchange market.Flexible Exchange Rate System-Under the flexible exchange rate sys-tem , ERS are freely determined in anopen market. Primarily by privatedealing by authorized dealers and like

sterling, Australian dollar and Japa-nese yen. Foreign exchange reservesare denominated and expressed in theUS dollar only.A general allocation of SDRs for anamount equivalent to US$ 250 billionand a special SDR allocation pursuantof the fourth amendment of the IMF’sArticles of Agreement, amounting toUS$ 33 billion, was made by the IMFto member countries on August 28,2009 and September 9, 2009 respec-tively. India received SDR 3,082 mil-lion (equivalent to US$ 4,821 million)under general allocation and SDR 214.6million (equivalent to US$ 340 million)under special allocation from the IMF.These SDR allocations have resulted inan increase of US$ 5.2 billion in India’sforeign exchange reserves. The thirdmajor development was the purc haseof gold from the IMF by the RBI.Country-wise details of foreign ex-

change reserves reveal that India is thefourth largest foreign exchange re-serves holder in the world, afterChina, Japan and Russia.Gold PurchaseRBI purchase of gold from the IMF TheExecutive Board of the IMF, on Sep-

tember 18, 2009 announced its decisionto sell 403.3 metric tonnes of goldas a central element of its New IncomeModel and in order to increase its re-sources for lending to low-incomecountries. The IMF also decided thatthe initial offer of the sale would bedirectly to official holders, includingcentral banks. Consequent of this, theRBIconcluded the purchase of 200 met-ric tonnes of gold from the IMF, underthe IMF’s limited gold salesprogramme, at the cost of US$ 6.7 bil-lion, in November 2009, as part of itsforeign exchange reserves manage-ment operation. With this purchase,gold holdings in the country’s foreignexchange reserves have increased from357.7 tonnes to 557.7 tonnes, which isabout 6 per cent of the reserves. Post–purchase, India has become the 10thlargest official gold-holding country inthe world.

Foreign exchange:In fiscal 2008-09, the rupee depreciatedagainst major international currencies,except the pound sterling, due to de-celeration in capital flows and widenedtrade deficit. The annual average ex-change rate of the rupee in 2008-09 was



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Housing Price IndexThe share of the construction sector in the GDP at constant prices (2004-05)has increased from 7.7 per cent in 2004-05 to 8.0 per cent in 2008-09 (quickestimates). Similarly, the shareof real estate, ownership ofdwelling and business services(in the financial sector) in over-all GDP has increased from 8.9per cent in 2004-05 to 9.2 percent in 2008-09 (quick esti-mates). Both these sectors havegrown at an average of 9.7 percent (construction) and 9.6 percent (real estate, ownership ofdwelling and business services)during 2004-05 to 2008-09.The National Housing Bank(NHB) RESIDEX in India waslaunched in 2007. Initially 2001was taken as the base year forthe NHB RESIDEX and pricemovements during the period 2001-05 were captured for five cities (Banga-lore, Bhopal, Delhi, Kolkata and Mumbai). Subsequently, based on data fromthe housing finance companies (HFCs) and National Council of Applied Eco-nomic Research (NCAER) the NHB RESIDEX was updated for twoyears, 2006 and 2007. The NHB RESIDEX has now been expanded to fifteencities, namely Bangalore, Bhopal, Delhi, Kolkata, Mumbai, Ahmedabad,Faridabad, Chennai, Kochi, Hyderabad, Jaipur, Patna, Lucknow, Pune andSurat and updated up to December 2008 with 2007 as the new base year.

other common market prices vary fromday to day. The flexible ERS dependsupon the day to day import and exportof a country.Merits:1. Those countries with higher growthrate and efficiency will prevail overthose not having such performances(greater the efficiency greater thedominance).2. It gives new country to come for-ward and to reassert its position. Thetendency of monopoly diminishes.3. Instead of conflict competition pre-vails.Demerits:1. Investors become speculative.2. Inflationary tendencies rise off highsometimes.3. Difficult for the poor countries toprevail under this system.In between Fixed and Flexible there aremany Exchange Rate Systems.(i) Target Zone- The fluctuation is per-mitted 2 to 3 per cent of the fixed rate.In this system gold is backed by papercurrency. This is also known as WiderBand System (WBS).(ii) Managed Floating- When the gov-ernment intervenes in the exchangemarkets to affect its exchange rate. Itis also called pegged exchange rate.In general, currency values are allowedto fluctuate with market demand andsupply, but wide fluctuations are pre-vented by central bank interventions.It is also called “Dirty Floating”.(iii) Crawling Peg: The par value is au-tomatically revised; the central bank in-tervenes whenever the exchange rateapproaches the support point and re-vises the par value itself.(iv) Mixed Exchange System- This isalso called Dual Exchange Rate (exist-ing in India) i.e. current account isclean float and on capital account isdirty float. The current account is de-termined by market and the capitalaccount is fixed by RBI.(v) Clean / Pure / Free float: The ex-change rate is totally determined by themarket demand supply and there isno intervention of government in anysituation.There are two basis of exchange:1. Single currency peg: Single Cur-rency Peg: The currency pegged to asingle major currency usually the Re-serve Currency the Dollar.2. Composite currency peg�There are five basis of transactions:

1. Arbitrage: Arbitrage is the simulta-neous buying and selling of foreigncurrency with the intention of makingprofits from the difference between theexchange rate prevailing at the sametime in the different markets.2. SWAP Operations: CommercialBanks who conduct forward exchangebusiness may resort swap operationsto adjust their fund position. The swapmeans sale of spot currency for the for-ward purchase of the same currencyor purchase of a spot for the forwardsale of the same currency.3. SPOT Exchange: Immediate deliv-ery takes place in this case although ittakes in two days time. But the rate issame. Therefore it is also called SpotRate.4. Forward Exchange: Exchange isdone on spot and delivery takes placelater on like deferred.5. Spot and Forward: Both the featureare prevalent in this system.1. CIF : Cost Insurance and Freight : Itis always greater than FOB.2. FOB – Freight on Board.

External debt:India’s external debt stock stood at US

$ 224.59 billion (Rs 1,142,618 crore) inend-March 2009, that is fractionallyhigher than its previous year’s level ofUS$ 224.41 billion (Rs 897,314 crore).During the first half of 2009-10, totalexternal debt increased by US$ 18.2billion (8.1 per cent) to US$ 242.8 bil-lion (Rs 1,166,217 crore). Long-termdebt posted an increase of US$ 19.2 bil-lion (10.6 per cent) to stand at US$ 200.4billion, while shortterm debt fell byUS$ 985 million (-2.3 per cent) to standat US$ 42.4 billion. The share of long-term debt was higher at 82.5 per centin end-September 2009 as against 80.7per cent in end-March 2009.Concomitantly, the share of short-termdebt declined to 17.5 per cent in end-September 2009 from 19.3 per cent inend-March 2009.US dollar-denominated debt ac-counted for 51.4 per cent of total exter-nal debt in end-September 2009, fol-lowed by Indian rupee (16.6 per cent),Japanese yen (13.6 per cent), SDR (12.0per cent), Euro (3.9 per cent) andpound sterling (2.1 per cent) denomi-nated debt.The debt sustainability indicator, thatis ratio of foreign exchange reserves to



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total external debt showed an improve-ment from 112.1 per cent in end-March 2009 to 115.4 per cent in end-June 2009 and further to 115.8 per centin end-September 2009.The ratio of short-term external debtto foreign exchange reserves, whichhad increased from 14.8 per cent inend-March 2008 to 17.2 per cent in end-March 2009, was also lower at 15.1 percent in end- September 2009.Top Twenty debtors in the world:1. Argentina; 2. Brazil; 3. Chile; 4.China; 5. Colombia; 6. Croatia; 7. In-dia; 8. Indonesia; 9. Kazakhstan; 10.Malaysia; 11. Mexico; 12. Philippines;13. Poland; 14. Romania; 15. RussianFederation; 16. South Africa; 17. Thai-land; 18. Turkey; 19. Ukraine; 20. Ven-ezuela.A cross-country comparison of exter-nal debt of 20 most indebted develop-ing countries, based on the data givenin World Bank’s publication titled Glo-bal Development Finance, 2009showed that India was the fifth mostindebted country in 2007 in terms ofstock of external debt. The ratio ofIndia’s external debt stock to gross na-tional income (GNI) as of 2007 at 18.9per cent was the sixth lowest withChina having the lowest ratio at 11.6per cent. The element of concession-ality in India’s external debt portfoliowas the second highest after that ofIndonesia.In terms of the cover of external debtprovided by foreign exchange re-serves, India’s position was the fifthhighest at 125.2 per cent after China,Malaysia, Thailand and the RussianFederation. A comparison of the shareof short-term debt in total external debtacross countries reveals that India’sposition was the eighth lowest withMexico having the lowest ratio.

World Trade:The World Trade organization (WTO)in March 2009 forecast a 9 per cent de-cline in global trade for 2009, the larg-est in over 60 years. As per the WorldBank, the dollar value of world tradeplummeted 31 per cent between Au-gust 2008 and its low point in March2009. Examination of the month-wiseexports and imports for the world, In-dia and some major trading partnersof India from 2008 onwards indicatesa recovery in trade with export growthbecoming positive in November 2009

over November 2008 in the EU(11.4 percent), Hong Kong (1.3per cent), India(18.2 per cent), Japan (1.5 per cent) andSingapore (13.3 per cent) and remain-ing marginally negative in the USA (-2.5 per cent) and China (-1.2 per cent).Pick up in import growth rates was ledby China (26.7 per cent), followed byHong Kong (6.5 per cent), the EU (5.2per cent) and Singapore (4.4 per cent).Import growth also became less nega-tive in the case of the US (-3.8 per cent),India (-2.6 per cent) and Japan (- 9.9per cent).In 1990, the shares in world exports ofChina and Indiawere 1.8 per centand 0.5 per cent re-spectively and in2008, their respec-tive shares stood at8.9 percent and 1.1percent.Direction ofTrade:The major devel-opment in the di-rection of India’strade is that USAwhich was in thefirst position in2007-08 hasbeen relegated tothe third positionin 2008-09, withUAE becomingIndia’s largesttrading partner,followed by China.However, in the first half of 2009-10,with oil prices moderating, China hasgained a slight edge over the UAE tobecome India’s major trading partner.India’s top 15 trading partners:1. UAE; 2. China; 3. USA; 4. SaudiArabia; 5. Germany; 6. Singapore; 7.Iran; 8. Hong Kong; 9. Korea RP; 10.UK; 11. Australia; 12. Switzerland; 13.Japan; 14. Malaysia; 15. Nigeria.India had bilateral trade surplus withfive countries, namely the UAE, USA,Singapore, the UK and Hong Kong in2008-09 and the first half of 2009-10.India’s trade deficit with the USA andSingapore in 2007-08, turned into tradesurplus thereafter. The export importratio fell in 2008-09 in the case of HongKong, though it recovered in the firsthalf of 2009-10. The fall in export-im-port ratio from 0.8 in 2004-05 to thepresent 0.3 in the case of China needs

special attention. Among the countriesnot in the top 15, Brazil is an interest-ing case. India’s export-import ratiowhich had stabilized at above 2 till2008-09 indicating a high trade surplusfor India has suddenly turned into atrade deficit at 0.64 in the first half of2009-10.The UAE has displaced the USA as thetopmost destination of India’s exportsin 2008-09 and 2009-10 (April-Septem-ber) with an export share of 13.1 percent and 14.4 per cent respectively.India’s exports to all the top three ex-port destinations—the UAE followed

by the USA and China—registerednegative growth of (-) 28.7, (-) 25.3 and(-) 21.9 per cent respectively. Region-wise, over half of India’s exports (55per cent) in the first half of 2009-10were to Asia (including ASEAN), upfrom around 40 per cent in 2001-02.During 2009-10 (April-September), ex-ports to Asia (including ASEAN) de-clined by 27.6 per cent and to Europeby 30.9 per cent. India’s merchandiseexports to South Asian countriesdeclined by 30.4 per cent.In 2009-10 (April-September), Asia andASEAN continued to be the majorsource of India’s imports accountingfor 61.3 per cent of the total. Country-wise, China remained the largestsource with a share of 12 per cent inIndia’s total imports followed by theUSA (5.95 per cent), UAE (5.93 percent) and Saudi Arabia (5.5 per cent).

Foreign exchange reserves of some major countries

Sl. Country Foreign exchangeNo. reserves during 2009

(US$ billion)

1 China (December 2009) 2399.2

2 Japan (December 2009) 1049.4

3 Russia (December 2009) 439.0

4 India (December 2009) 283.5

5 Korea (December 2009) 270.0

6 China P R Hong Kong 256.3(November 2009)

7 Brazil (December 2009) 238.5

8 Germany (November 2009) 189.5

9 Singapore (November 2009) 188.910 Italy (November 2009) 140.1

11 France (November 2009) 139.1

Source: Economic Survey 2009-10



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The Special Economic Zones (SEZs) Policy supported by the SEZ Act 2005and SEZ Rules 2006 intends to make SEZs an engine for economic growthsupported by quality infrastructure, complemented by an attractive fiscal pack-age, both at the Central and State levels and with the single-window clear-ance mechanism. In a short span of about three years since the SEZs Act andRules were notified in February 2006, formal approvals have been granted forsetting up of 571 SEZs out of which 346 have been notified. A total of 105SEZs are exporting at present. Out of these 65 are information technology(IT)/information technology enabled services (ITES), 15 multi-product and 25 othersector-specific SEZs. The total number of units in these SEZs is 2761.The SEZs in China are estimated to account for around 12 per cent of thatcountry’s economy. Shenzhen, is the largest SEZ in China and it accounts forone-seventh of Chinese exports.The main objective of SEZ is to provide an internationally competitive andhassle free environment for export production. The SEZs imply a qualitativetransformation of the traditional export processing zones. The unit operatingin these zones are to be deemed as outside the country’s custom territory andwill have full flexibility of operation. They can import capital goods and rawmaterials duty free. The only pre-condition is this that the units in the zoneswould have to be a net foreign exchange earner.Agricultural Export ZonesAEZ are set up to promote agricul-tural export and to reorganize ourexport efforts. On the basis of spe-cific profit on specific geographi-cal areas. The incentives includes:1) Financial Assistance 2) Tax Con-cessions 3) No export registration4) Free government consultation 5)Transport assistance is proposed tobe made available for export of fresh and processed foods, vegetablesand dairy products. 6) The scheme is already under operations and threeagricultural Economic Zones have come up. Eg. : Pineapple in Jalpaiguri,Darjeeling and West Bengal. Lichee in Udhamsingh Nagar, Nainital inUttaranchal and Gherkins in Bangalore Karnataka.

Special Economic ZonesSpecial Economic ZonesSpecial Economic ZonesSpecial Economic ZonesSpecial Economic Zones

As a result of global recession, India’simport growth from 14 of the top 15trading partners was negative, Indone-sia being the exception.World trade in services:The US$ 3.78 trillion world export ofcommercial services was dominated bythe developed countries in 2008, withthe exception of India and China whichwere also among the top 10 exporters.Import growth in commercial servicesin the US was particularly low at 8 percent, while its deceleration in EU by 9percentage points was particularlysharp. While India ranks 27th in worldmerchandise exports in 2008 comparedto China at 2ndposition , in commer-cial services exports it ranks9th compared to China at 5th rank.The three broad categories of commer-cial services, namely transport, traveland other commercial services wit-nessed a decline in export growth in2008 compared to a high growth in2007.In commercial services imports, Indiamoved from 15th position in 2004 to13th position in 2005, and remained in13th position in 2008, with a 2.4 percent share. The United States, the Eu-ropean Union-15 and Japan are themajor importers of services in theworld. Among top exporters/import-ers of services (with EU-27 taken as asingle unit) India ranked among thefirst five countries in the export of com-puter and information services, com-mercial services, communication ser-vices including telecommunicationsservices and other business servicesand in the import of computer and in-formation services, financial servicesand transport services.India’s services exportsIndia, which is moving towardsservicesdominated GDP growth witha 9 per cent CAGR for services whichis higher than the 5.8 per cent for non-services during 2000-01 to 2006-07, isalso moving towards a services-domi-nated export growth with a CAGR of28.7 per cent for services during 2000-01 to 2006-07 which is higher than the19 per cent for merchandise exportsduring the corresponding period.India’s services importsImports of commercial services havebecome important in recent yearsreaching US$ 52.0 billion in 2008-09though growth had decelerated to 1.1per cent due to global recession.

Five new AEZsProduct Specified areaVegetable and Fruits: PuneVegetables: PunjabPotatoes: AgraMeat: AligarhMangoes: In and around Lucknow


Current NEWS Covered up to MARCH 01, 2010

APRIL 2010, XVIYear, Issue No.4 54

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Agriculture and allied services

and food management

The agriculture sector (including allied activities) in India accountedfor 15.7 per cent of the GDP (at constant 2004-05 prices), in 2008-09,compared to 18.9 per cent in 2004-05, and contributed approximately10.2 per cent of total exports during 2008-09. Notwithstanding thefact that the share of this sector in the GDP has been declining over

the years, its role remains critical as it provides employment to around 52 percent of the workforce. The GCF in agriculture and allied sectors as a proportionof total GDP stood at 2.66 per cent in 2004-05 and improved to 3.34 per cent in2008-09. Similarly, the GCF in agriculture & allied sectors relative to GDP in this

sector has also shown an improvement from 14.07 per cent in 2004-05 to 21.31per cent in 2008-09.Production: Total foodgrains production in 2008-09 was estimated at 233.88million tonnes as against 230.78 million tonnes in 2007-08. However, the pro-duction of major commercial crops (oilseeds, sugarcane, cotton, jute and mesta)declined in 2008-09 compared to 2007-08 levels.Fertilizers: Chemical fertilizers have played a significant role in the develop-ment of the agricultural sector. The per hectare consumption of fertilizers innutrients terms increased from 105.5 kg in 2005-06 to 128.6 kg in 2008-09.Irrigation: The total irrigation potential in the country has increased from 81.1million ha in 1991-92 to 102.77 million ha by March 2007. Government launchedthe Accelerated Irrigation Benefit Programme (AIBP) during 1996-97 for accel-

erating implementation of ongoing ir-rigation/multi-purpose projects onwhich substantial progress has beenmade and which were beyond the re-source capability of the State Govern-ments or at advanced stages of con-struction and could yield irrigationbenefits in the next four agriculturalseasons. AIBP guidelines were furthermodified in December 2006 to provideenhanced assistance at 90 per cent ofthe project cost as grant to special cat-egory States, Drought Prone AreaProgramme (DPAP) States/tribal ar-eas/flood-prone areas and Koraput-Balangir-Kalahandi (KBK) districts ofOrissa. Under the AIBP, Rs 34,783.7823crore of Central Loan Assistance(CLA)/grant has been released up toMarch 31, 2009. An additional irriga-tion potential of 54.858 lakh ha hasbeen created under the AIBP up toMarch 2009. As on March 31, 2009, 268projects have beencovered under the AIBP and 109 com-pleted.Price Support Scheme (PSS): The De-partment of Agriculture & Coopera-tion is implementing the Price SupportScheme (PSS) for procurement of oil-seeds and pulses through the NationalAgricultural Cooperative MarketingFederation of India Limited (NAFED),which is the Central nodal agency, atthe MSP declared by the Government.NAFED is also the Central agency forprocurement of cotton under the PSSin addition to the Cotton Corporationof India (CCI). NAFED undertakesprocurement of oilseeds, pulses andcotton under the PSS as and whenprices fall below the MSP. Procurementunder the PSS is continued till pricesstabilize at or above the MSP.During 2009-10 (up to January 4, 2010)NAFED has procured 64,802 metrictonnes of various oilseeds costing Rs278.07 crore under the PSS.Market Intervention Scheme (MIS):The Department of Agriculture & Co-operation implements the MIS on therequest of State/Union Territory (UT)Governments for procurement of ag-ricultural and horticultural commodi-ties that are generally perishable innature and not covered under the PSS.The MIS is implemented in order toprotect the growers of these commodi-ties from having to make distress sales.In the event of a bumper crop and glutin the market, prices tend to fall beloweconomic levels/cost of production.

Agriculture sector: Key indicators at constant prices (2004-05) in per cent

Item 2007-08 2008-09

1 Growth in GDP in Agriculture & Allied Sectors 4.7 1.6

Agriculture 5.0 1.1

Forestry and Logging 2.2 2.9

Fishing 6.0 6.3

2 Share in GDP - Agriculture and Allied Sectors 16.4 15.7

Agriculture 13.9 13.2


Fishing 0.8 0.8

3 Share of Agriculture & Allied Sectors in total GCF 7.01 9.05

Agriculture 6.43 8.39


Fishing 0.51 0.58

4 Share of Agricultural Imports in TotalImports at Current Prices 2.95 2.74

Share of Agricultural Exports in Total Exportsat Current Prices 12.05 10.23

5 Employment in the agriculture Sector asShare of Total Employment in 2004-05as per CDS 52.1

Source : Economic Survey 2009-10Notes : GCF—gross capital formation; CDS—current daily status.




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Procurement under the MIS is made byNAFED as the Central agency and byState-designated agencies.During 2009-10, the rates of most of thehorticultural crops ruled to the benefitof growers. Thus only a couple of pro-posals were received, one from theGovernment of Karnataka for procure-ment of arecanut and another from theGovernment of Mizoram for procure-ment of passion fruit.Agricultural production:Rubber: India is the fourth largest pro-ducer of natural rubber (NR) with an8.9 per cent share in world productionin 2008.Coffee: In India, coffee is cultivated inan area of around 3.94 lakh ha. Thepost-monsoon crop estimate for the2009-10 season is estimated at 2.90 lakhtonnes comprising 0.95 lakh tonnes ofArabica and 1.95 lakh tonnes of Ro-busta. The current year’s production isabout 10.6 per cent more than the pre-vious year’s.Livestock and fisheries: The livestockand fisheries sector contributed over4.07 per cent of the total GDP during2008-09 and about 26.84 per cent valueof output from total agriculture andallied activities.India ranks first in world milk produc-tion, its production having increasedfrom 17 million tonnes in 1950-51 to108.5 million tonnes by 2008-09.Poultry continues to play an importantrole in providing livelihood supportand food security, especially to the ru-ral population. India produces morethan 55.6 billion eggs per year, with percapita availability of 47 eggs per an-num.Feed and fodder: Adequate availabil-ity of feed and fodder for livestock isvery vital for increasing milk produc-tion and sustaining the ongoing geneticimprovement programme. It is esti-mated that there is green fodder short-age of about 34 per cent in the coun-try.Agricultural insurance: The NationalAgricultural Insurance Scheme(NAIS) is being implemented since rabi1999-2000, as part of the strategy forrisk management in agriculture. Thescheme is being implemented by 25States and two Union Territories. Dur-ing the period from rabi 1999-2000 torabi 2008-09, 1,347 lakh farmers overan area of 2,109 lakh ha have been cov-ered, insuring a sum of Rs 1,48,250crore.

Agricultural schemes in operation:Macro Management of Agriculture Scheme (MMA): It was formulated in 2000-01,by bringing together under one umbrella 27 Centrally sponsored schemes relatingto cooperatives, crop production programmes, watershed developmentprogrammes, horticulture, fertilizer, mechanization and seeds. The Scheme has beenrevised during 2008-09 to improve its efficacy in supplementing/complementingthe efforts of the States towards enhancement of agricultural production and pro-ductivity.National Food Security Mission (NFSM): With a view to enhancing the produc-tion of rice, wheat and pulses by 10 million tonnes, 8 million tonnes and 2 milliontonnes respectively by the end of the Eleventh Plan, the Centrally sponsored NFSMhas been launched from the rabi 2007-08 season. The three major components ofthe Mission are NFSM-rice, NFSM-wheat and NFSM-pulses. The NFSM is pres-ently being implemented in 312 identified districts of 17 States of the country.Rashtriya Krishi Vikas Yojana (RKVY): The RKVY, a flagship scheme of the Gov-ernment in the agriculture and allied sectors was launched in August 2007 to reori-ent current agricultural development strategies to meet theneeds of farmers and rejuvenate the agricultural sector so asto achieve 4 per cent annual growth during the Eleventh FiveYear Plan. The scheme has an envisaged outlay of Rs 25,000crore for the Plan period in the form of Additional CentralAssistance (ACA). Up to 83 per cent and 85.95 per cent of theallocations for 2007-08 and 2008-09 respectively have beenutilized by the end of November 2009.Integrated Scheme of Oilseeds, Pulses, Oil palm and Maize(ISOPOM): The Ministry of Agriculture has restructured oil-seeds, pulses, oil palm and maize development programmesinto one Centrally Sponsored Integrated Scheme of Oilseeds,Pulses, Oil Palm and Maize which is being implemented in 14 major States foroilseeds and pulses, 15 States for maize and 8 States for oil palm. About 75-80 percent area of pulses is already in the NFSM-Pulses districts under 14 States. The OilPalm Development Programme under ISOPOM is being implemented in the Statesof Andhra Pradesh, Karnataka, Tamil Nadu, Gujarat, Goa, Orissa, Kerala, Tripura,Assam and Mizoram.National Rainfed Area Authority (NRAA): The Government of India has also con-stituted the NRAA to give focused attention to the problem of rainfed areas of thecountry.Drought Management: During the year 2009-10, drought/scarcity/drought-likesituation has been declared in 334 districts by 14 State Governments. The Stateshave ready availability of funds under the Calamity Relief Fund (CRF) for takingimmediate necessary measures in the wake of natural calamities including drought.For natural calamities of severe nature, the State Governments can seek additionalassistance from the National Calamity Contingency Fund (NCCF), by submitting adetailed Memorandum with relevant details. Several steps were taken to mitigatethe hardship being faced by the States due to the drought situation.National Horticulture Mission (NHM): For the holistic development of the horti-culture sector, a Centrally sponsored scheme called the National Horticulture Mis-sion (NHM) was launched in 2005-06. Under the Technology Mission for IntegratedDevelopment of Horticulture in the North Eastern Region during 2008-09, an addi-tional area of 1,48,071 lakh ha has been brought under different horticultural crops.Aproposal for implementation of a pilot project for Replanting and Rejuvenation ofCoconut Gardens in Thiruvananthapuram, Kollam and Thrissur districts of Keralaand the Union Territory of Andaman & Nicobar Islands has been approved.Micro Irrigation: A Centrally sponsored scheme on micro irrigation (MI) waslaunched in January 2006 for promoting water-use efficiency by adopting drip andsprinkler irrigation.National Bamboo Mission (NBM): The NBM is a Centrally sponsored scheme with100 per cent Central assistance. The scheme commenced in 2006-07 and aims atholistic development of the bamboo sector in India. The Mission intends to estab-lish 195 bamboo bazaars and 10 retail outlets (showrooms) in different metropoli-tan cities by the end of 2010-11, to promote marketing of bamboo and its products.




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Industrial deIndustrial deIndustrial deIndustrial deIndustrial devvvvvelopmentelopmentelopmentelopmentelopment

The pilot Weather Based Crop Insur-ance Scheme (WBCIS) is being imple-mented in 13 States to provide insur-ance protection to farmers against ad-verse weather incidences which aredeemed to adversely impact crop pro-duction.The Coconut Palm In-surance Scheme(CPIS) has beenlaunched on pilot ba-sis during 2009-10 inselected areas ofAndhra Pradesh, Goa,Karnataka, Kerala,Maharashtra, Orissa and Tamil Nadu.The pilot scheme will continue during2010-11.Decentralized Procurement Scheme(DCP): A number of states have optedfor implementation of the (DCP) intro-duced in 1997, under which foodgrainsare procured and distributed by theState Governments themselves. Underthis scheme, the designated States pro-cure, store and issue foodgrains underthe TPDS and welfare schemes of theGovernment of India.Allocation under the Targeted PDSAllocations of foodgrains for BPL andAAY categories are made at the rate of35 kg per family per month for all ac-cepted 6.52 crore families in the coun-try. The total BPL and AAY allocationsmade during 2009-10 were 276.77 lakhtonnes comprising 181.05 lakh tonnesof rice and 95.72 lakh tonnes of wheat.Allocations under the APL categoryare made depending upon the avail-ability of stocks of foodgrains in theCentral Pool and past offtake. Pres-ently, these allocations range between10 kg and 35 kg per family per monthin different States/UTs. During 2009-10, 197.17 lakh tonnes of foodgrainshas been allocated to States/UTs un-der the APL category as against 112lakh tonnes during 2008-09.Open Market Sale SchemeIn order to check inflationary trends inthe foodeconomy, the Governmenttook a decision in August 2008 to re-lease wheat into the open market un-der the Open Market Sales Scheme(Domestic). These releases have beenmade through (a) allocation to State/UT Governments for distribution toretail consumers; and (b) sale to bulkconsumers by the FCI through opentenders. The release of wheat under theOMSS has helped stabilize wholesaleprices of wheat.

The major industrial groups like automobiles, rubber and plastic products, wool and silk textiles, wood products, chemicals and miscellaneous manufacturing staged a strong recovery during April-November 2009, while machinery and textile products reinforced theirgrowth. Led by cement, non-metallic mineral products also staged

a recovery, albeit a modest one. After posting a growth of around 14 per centannually in the eight-year period ending 2008-09, beverages and tobacco prod-ucts experienced a slump in the current year. Product groups like paper, leather,food and jute textiles did not evince any visible recovery. Cotton textiles andmetal products have also been experiencing lacklustre growth since 2007-08.Overall, the picture is a mixed one in the analysis of major industrial groups.The Technology Upgradation Fund Scheme (TUFS) and Scheme for IntegratedTextile Parks (SITP) are two flagship schemes of the Ministry of Textiles. TUFS,implemented with a view to facilitating modernization and upgradation of thetextile industry by providing credit at reduced rates, has been fine-tuned to in-duce investmentsin targeted seg-ments.Pharmaceuticals:The country nowranks third interms of volume ofproduction (10 percent of globalshare) and 14th byvalue. The Indianpharma industry’sgrowth has beenfuelled by exportswhich registered agrowth of 25 percent in 2008-09.The top five desti-nations of Indianpharmaceuticalproducts are the USA, Germany, Russia, the UK and China. The domestic pharmasector has also expanded in recent years. There are five pharmaceutical Centralpublicsector/joint-sector undertakings under the Department of Pharmaceuticals which manu-facture critical bulk drugs/ formulations. These are Indian Drugs & Pharma-ceuticals Limited, Hindustan Antibiotics Limited, Bengal Chemicals & Pharma-ceuticals Limited, Rajasthan Drugs and Pharmaceuticals Ltd and KarnatakaAntibiotics & Pharmaceuticals Ltd. In pursuit of excellence in pharmaceuticaleducation and research, six new National Institutes of Pharmaceutical Educa-tion & Research (NIPERs) have been set up, in addition to the existing one atMohali.Steel: India ranked as the fifth largest producer of crude steel in the world dur-ing January -November 2009 (World Steel Association). Domestic crude steelproduction grew at a compounded annual rate of 7.1 per cent during 2004-05 to2008-09.Information Technology: During 2008, electronics hardware production in In-dia constituted around 1.5 per cent of global electronics production. The pro-duction of electronics hardware in the country stood at Rs 94,690 crore in 2008-09, registering a growth of 12.1 per cent, compared to a growth of 27.8 per centin 2007-08; the decline is attributable to the global economic slowdown.

Growth in the IIP and its major components

(per cent)

Period Mining Manufacturing Electricity IIP

2006-07 5.4 12.5 7.2 11.6

Q1 2007-08 2.7 11.1 8.3 10.3

Q2 2007-08 7.4 8.9 7.1 8.7

Q3 2007-08 5.5 8.9 4.6 8.3

Q4 2007-08 5.2 7.3 5.5 7.0

Q1 2008-09 4.0 5.8 2.0 5.3

Q2 2008-09 3.8 4.9 3.2 4.7

Q3 2008-09 2.0 0.5 2.9 0.8

Q4 2008-09 0.9 0.3 3.0 0.5

Q1 2009-10 6.8 3.4 6.0 3.8

Q2 2009-10 9.0 9.3 7.5 9.1

Oct-Nov. 09 9.5 11.9 4.0 11.0

Source : Economic Survey 2009-10




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Twenty States/Union Territories havecompleted the institutional frameworkfor State-level strategic decision mak-ing including setting up of State e-Gov-ernance Mission Teams (SeMT) anddeployed SeMT personnel. Under theinitial phase of the National Knowl-edge Network (with scalable multi-gi-gabit capabilities to connect 1,000nodes covering all universities, re-search institutions, libraries, laborato-ries, hospitals and agricultural institu-tions across the country), a core back-bone consisting of 15 Points of Pres-ence (PoPs) has been established with2.5 Gbp capacity.Application-oriented projects for spe-cific users/industries with technologydemonstration and technology trans-fers are mostly carried out by R&D so-cieties of the Department of Informa-tion Technology like the Centre for De-velopment of Advanced Computing(CDAC) and Society for Applied Mi-crowave Electronic Engineering andResearch (SAMEER) with active col-laboration from academics. C-DACcommissioned a high performancecomputing system called PARAM“Yuva”. The “PARAM Sheersh”Supercomputing Facility at the NorthEastern Hill University (NEHU),Shillong conducts scientific and engi-neering research in strategic areas inthe North-East region. The IndianComputer Emergency ResponseTeam (CERT-In) has been designatedas the nodal agency for coordinatingmatters related to cyber security andemergencyresponse. CERT-In has published a cri-sis management plan for counteringcyber attacks and cyber terrorism.Micro, small and medium enterprises(MSMEs): MSMEs contribute about 8per cent of the GDP of the country,about 45 per cent of manufactured out-put and about 40 per cent of exports.This, coupled with a high labour tocapital ratio, high growth and high dis-persion makes them crucial for achiev-ing the objective of inclusive growth.As per the Quick Results of the 4th AllIndia Censusof MSMEs (2006-07), there were 26million MSMEs in the country, whichprovided employment to about 60 mil-lion persons. Of the total, 28 per centwere in the manufacturing sector and72 per cent in the service sector. This is

the first Census after the enactment ofthe MSMED Act 2006 and includes, forthe first time, medium enterprises.Skill development has been accordedhigh priority in line with the overalltarget set by the Prime Minister’s Na-tional Council on Skill Development.The agencies under the Ministry ofMSME will conduct skill developmentprogrammes for about 3.62 lakh train-ees during 2009-10.Under the Credit Linked Capital Sub-sidy Scheme (CLCSS), which aims atfacilitating technology upgradation ofthe MSE sector, 1,403 MSEs have beenassisted and subsidy amounting to Rs81.53 crore has been sanctioned dur-ing April-November 2009.Central Public-sector Enterprises(CPSEs): There were altogether 246CPSEs under the administrative con-trol of various ministries/departmentsas on March 31, 2009. The cumulativeinvestment (paid-up capital plus long-term loans) inall the CPSEs together stood at Rs5,28,951 crore as in end-March 2009.The largest share in this investmentbelonged to the service sector (46.1 percent) followed by electricity (26.2 percent), manufacturing (18.1 per cent)and mining (8.8 per cent). A great dealof investment in CPSEs is being madethrough internal resources ratherthan through investment fromoutside. Of the total, 158 CPSEsmade net profit and 54 net lossin 2008-09.The Government has been del-egatingenhanced financial and opera-tional powers to the Navratna,Miniratna and other profit-mak-ing CPSEs. There are 18Navratna enterprises. Six moreCPSEs, namely the Airport Au-thority of India Limited, Ennore PortLtd, Tehri Hydro Development Corpo-ration, Security Printing and MintingCorporation Ltd, Satluj Jal VidutNigam Ltd and Indian Railway Cater-ing and Tourism Corporation Ltd.were granted Miniratna status duringthe year, raising the total number ofMiniratna CPSEs to 62.Industrial sickness: The Board for Re-construction of Public Sector Enter-prises (BRPSE), established to advisethe Government, inter alia, on revival/restructuring of sick and loss-making

CPSEs, made recommendations on 58cases until December 31, 2009. TheGovernment has approved proposalsfor the revival of 37 CPSEs and closureof two. The total assistance approvedin this regard up to March 31,2009 was Rs 15,275 crore, which com-prised Rs 2,935 crore as cash assistanceand Rs 12,340 crore as non-cash assis-tance.A National Green Tribunal has beenproposed for expeditious disposal ofcases relating to environmental protec-tion and conservation of forests andother natural resources including en-forcement of any legal right relating toenvironment and giving relief andcompensation for damages.FDIFDI inflows to India, which remainedrobust in 2008-09 despite the slump inglobal financial flows, have also con-tinued to flow smoothly during thecurrent year so far. During April-No-vember 2009-10, total FDI equity in-flows stood at Rs 93,354 crore (US$19,379 million) as against Rs 85,700crore (US$ 19,791 million) during thecorresponding period in 2008-09, sig-nifying a growth of 9 per cent in rupeeterms and a decline of 2 per cent in USdollar terms; the divergent patterns ingrowth rates being attributable to ex-

change rate changes during the period.During 2008-09, total FDI equity in-flows stood at Rs1,22,919 crore (US$27,309 million) as against Rs 98,664crore (US$ 24,579 million) during 2007-08, signifying a growth of 25 per centin rupee terms and 11 per cent in USdollar terms.The sectoral shares of FDI inflows havefluctuated significantly in recent years.Sectors like agricultural services, seatransport and electrical equipmenthave shown a quantum jump in FDIinflows during 2009-10.




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Energy, Infrastructure

and CommunicationsPower generation: Electricity generation by power utilities during 2009-10 hasbeen targeted to go up by 9.1 per cent to 789.5 billion KWh. The growth of powergeneration during April–December 2009 was about 6.0 per cent (Table 10.3) ascompared to about 2.7 per cent during April-December 2008. Decline in hydro-electric power generation was mainly due to poor monsoons. Coalbasedgeneration of power constituted around 80 per cent of thermal generation andaround 66 per cent of the total generation of power. The power sector is a majorconsumer of coal using 74 per cent of the coal production. The Eleventh FiveYear Plan envisaged a capacity addition of 78,700 MW, of which 19.9 per centwas hydel, 75.8 per cent thermal and the rest nuclear. The target for 2007-08, thefirst year of the Eleventh Plan, was initially fixed at 16,335 MW and subsequentlyreduced to 12,039 MW. Against this revised target, a capacity addition of 9,263MW was achieved during the year. A capacity addition target of 11,061 MWcomprising 9,304 MW thermal, 1,097 MW hydro and 660 MW nuclear was origi-

nally planned for 2008-09. On account of revision in the definition of commis-sioning of thermal projects, the capacity addition target for the year 2008-09was revised as 7,530 MW, against which a capacity of 3,454 MW was added upto March 31, 2009.Ultra Mega Power Projects (UMPPs): Nine UMPPs of 4,000 MW each have origi-nally been identified for development under the international competitive bid-ding route. Four UMPPs, namely Sasan in MP, Mundra in Gujarat,Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand have already beenawarded. One unit of 660 MW of the Sasan UMPP and two units of 800 MWeach of the Mundra UMPP are expected to be commissioned in the EleventhFive Year Plan. In respect of the UMPP at Sarguja district in Chhattisgarh, allthe pre-Request for Qualification (RfQ) activities have been completed. For theUMPPin Sundergarh district, Orissa, most of the prerequisites for issuing the RfQ arealready in place, except issuance of Section 4 Notification. With respect to theUMPP in Tamil Nadu, the site has been finalized at Cheyyur, along with thecaptive port which is under finalization. For the second UMPP in AndhraPradesh, the site at Nayunipalli, Prakasam District has been finalized by CEA/PFC in consultation with State Government.Mega Power Policy: Guidelines under the Mega Power Policy, introduced in1995, were modified in 1998 and 2002 and further amended in April 2006 toencourage power development in Jammu & Kashmir and the northeastern re-gion. In the wake of the important statutory and policy- level changes, some of

the provisions of the present MegaPower Policy were revisited, bringingthem in line with the National Electric-ity Policy 2005 and Tariff Policy 2006.Forty-six hydro projects with an aggre-gate capacity of 13,675 MW are underconstruction in the country. The twopower exchanges, namely the IndianEnergy Exchange Ltd. (IEX), NewDelhi, and the Power Exchange IndiaLtd. (PXIL), Mumbai, have been inoperation from June 27, 2008 and Oc-tober 22, 2008 respectively. The focusof the Restructured AcceleratedPower Development ReformsProgramme (RAPDRP) is on actual,demonstrable performance in terms ofreduction in aggregate technical andcommercial (AT&C) losses.Under the Rajiv Gandhi GrameenVidyutikaran Yojana (RGGVY),69,963 villages have been electrifiedand connections have been released to88.8 lakh BPL households up to Janu-ary 15, 2010.Rajiv Gandhi Gramin LPG VitrakYojana (RGGLVY): The Ministry of Pe-troleum & Natural Gas has formulateda vision for the year 2015 ‘CustomersSatisfaction & Beyond’ wherein it istargeted to cover 75 per cent of thepopulation with LPG by that year. TheLPG customer base is targeted to in-crease from10.6 crore as on April 1, 2009 to 16.0crore by the year 2015.COAL: More than 92 per cent of thecoal production in India is of non-cok-ing coal. Raw coal production duringApril-November 2009 was 325.87 mil-lion tonnes as against 289.69 milliontonnes in the same period of the previ-ous year, registering a growth of 12.5per cent.RAILWAYS: Adarsh Stations: IndianRailways has decided that 17 more rail-way stations would be added to theexisting list of 358 Adarsh Stations.Railways will develop Adarsh Stationswith basic facilities such as drinkingwater, adequate toilets, catering ser-vices, waiting rooms and dormitoriesespecially for lady passengers andbetter signage. The work has started atvarious stations.Real-time train running information topassengers is proposed to be providedthrough Online Coach Indication Dis-play Boards and Train Arrival/Depar-ture Display Boards. The trial of one

Power Generation by Utilities (Billion KWh)

Category 2007-08 2008-09 April-December Growth

2008-09 2009-10 (per cent)

Power Generation* 704.5 723.8 540.0 572.5 6.0

i) Hydroelectric 123.4 113.0 92.4 85.4 (-) 7.4

ii) Thermal 559.0 590.0 430.7 468.5 8.8

iii) Nuclear 16.8 14.8 11.3 13.4 18.6

iv) Bhutan Import 5.3 5.9 5.6 5.1 (-) 8.3

Source : Economic Survey 2009-10* Excludes generation from captive and non-conventional power plants and thermal power plantsbelow 20 MW units and hydro power plants below 2 MW.




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of the pilot projects, Satellite Imagingfor Rail Navigation (SIMRAN) usingreal-time train tracking through GPSand mobile (GSM) technologies hasbeen successfully carried out by the Re-search Design and StandardsOrganisation (RDSO), Lucknow, incoordination with IIT/Kanpur.National Highways DevelopmentProject (NHDP): About 27 per cent ofthe total length of national highwaysis single-lane/intermediate lane, about54 per cent is two-lane standard andthe balance 19 per cent is four-lanestandard or more. In 2009-10, asagainst the stipulated target of devel-oping about 3,165 km length of NHsunder various phases of the NHDP, theachievement up to November 2009 hasbeen about 1,490 km. Against the tar-get of awarding projects for a totallength of about 9,800 km under vari-ous phases of the NHDP during 2009-10, projects have been awarded for atotal length of about 1,285 km up toNovember 2009.Prime Minister’s Grameen SadakYojana (PMGSY): The Eleventh FiveYear Plan has projected an investmentrequirement of Rs 41,347 crore (at 2006-07 prices) for rural roads. During thefirst three years of the Eleventh FiveYear Plan, the flow of expenditure un-der the PMGSY seems to be on coursefor meeting the Plan target.Greenfield Airports in the North-east-ern region: The AAI plans to constructof greenfield airports in the north-east-ern region with budgetary support.Construction work has already com-menced at Pekyong Airport in Sikkimat a cost of Rs 309.46 crore and is likelyto be completed by January 2012. Ap-proval is being obtained for construc-tion of greenfield airports at Cheitu(Nagaland) and Itanagar (ArunachalPradesh).Development of 35 Non-metro Air-ports: The AAI has taken up the de-velopment of 35 non-metro airports atan estimated cost of Rs 4,662 crore. Ofthem, 9 have been completed andput in operation. The other projects arein progress and likely to be completedby 2010-11. The Committee of Infra-structure has identified 24 of the35 non-metro airports for city-side de-velopment through PPP. It has beendecided that in the first instance city-side development of 10 selected air-

ports, namely Ahmedabad, Kolkata,Jaipur, Lucknow, Amritsar, Indore,Vishakapatnam, Hyderabad, Guwah-ati and Bhubaneswar, should be un-dertaken. It has been proposed to carveout the surplus land available with theAAI on the city side of the selected air-ports and lease out the same throughopen tenders.Pawan Hans Helicopters Ltd. proposesto construct a heliport in New Delhi toprovide connectivity to tourists and thebusiness community, especially duringthe Commonwealth Games 2010, andfor emergency/disaster management.Possession has been taken of the landallotted by the Delhi Development au-thority (DDA) at Rohini and M/sRITES Ltd has been engaged for prepa-ration of a feasibility study.Ports: India has 12 major ports and 200non-major ones. Of the non-majorports, about 66 are handling traffic. Thetotal traffic carried by both the majorand non-major ports during 2007-08was estimated at around 723 milliontonnes. The 12 major ports carry aboutthree-fourths of the total traffic, withVisakhapatnam as the top traffic han-dler in each of the last seven years.Posts: Collection of Rural Price IndexData: The Ministry of Statistics andProgramme Implementation(MoSPI) has entrusted the collec-tion of statistics for ascertainingthe Rural Price Index to 1,183post offices across the countrywith effect from October 2009.The data so collected would beelectronically transmitted toMoSPI.Indian Post has imple-mented certain recommenda-tions of the R.S. NatarajaMurthy Committee on the ser-vice conditions of Gramin Dak Sewaks(GDS), which include enhancement ofemoluments of all categories of GDSand enhancement of certain allow-ances.Urban infrastructure: As per the 2001Census, about 27.8 per cent of thepopulation lives in urban areas.Jawaharlal Nehru Urban Renewal Mis-sion (JNNURM): The JNNURM waslaunched in December 2005. In orderto provide reforms-linked Central as-sistance to State Governments for thedevelopment of urban infrastructure,a Mission Mode approach wasadopted in 63 selected cities, which

include cities with 4 million plus popu-lation (7), cities with 1 million plus butless than 4 million population (28 cit-ies) and other selected cities like Statecapitals and cities of religious/historicand tourist importance(28). During 2009, two more cities, thatis Tirupati and Porbandar were in-cluded as Mission Cities, taking thetotal number to 65.The Peer Experience and ReflectiveLearning (PEARL) programme waslaunched to foster knowledge sharingthrough networking among the Mis-sion cities.The Urban Infrastructure Develop-ment Scheme for Small and MediumTowns (UIDSSMT) is a sub-compo-nent of the JNNURM for developmentof infrastructural facilities in all townsand cities (other than the Mission cit-ies). The UIDSSMT subsumed the erst-while Integrated Development ofSmall and Medium Towns (IDMT) andAccelerated Urban Water SupplyProgramme (AUWSP) schemes. Forobtaining assistance under theUIDSSMT, States and urban local bod-ies (ULBs) need to sign a memoran-dum, committing to reforms.A new pilot scheme for infrastructuredevelopment (water supply, solid

waste management and sewerage) in"satellite towns" around sevenmegacities (which exclude those townsand cities that have taken up projectsunder the UIDSSMT) has beenlaunched. The selection of the cities/towns has been done in consultationwith State Governments, subject totheir commitment to implement re-forms. These are Vikarabad (AndhraPradesh), Vasai Virar (Maharashtra),Sri Perumbudur (Tamil Nadu), NewTown (West Bengal), Hoskote(Karnataka), Sanand(Gujarat) Sonepat(Haryana) and Pilkhua (UttarPradesh).




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Social sector

Poverty and flagship programmesAs per the United Nations Development Programme (UNDP) Human Devel-opment Report 2009 (HDR 2009), the Human Development Index (HDI) for In-dia in 2007 was 0.612 on the basis of which India is ranked 134 out of 182 coun-tries of the world placing it at the same rank as in 2006. According to the Report,life expectancy at birth in India was 63.4 years in 2007 as against 80.5 years inNorway, 81.4 years in Australia, 74.0 years in Srilanka and 72.9 years in China.Adult literacy rate (aged 15 and above) in 1999-2007 was 66.0 per cent in Indiaas against near 100 per cent in many of the developed nations, 93.3 per cent inChina and 92.0 per cent in Indonesia. Combined gross enrolment ratio in educa-tion in 2007 was 61 per cent in India as against 99.3 per cent in Canada, 98.6 percent in Norway, 78.0 per cent in Thailand and 76.4 per cent in Egypt.In terms of the Gender Development Index (GDI), with an index value of 0.594,India ranks 114 out of 155 countries.

Gini Index: The lower (higher) the number, the more equal (unequal) isthe distribution. At 36.8, India’s Gini index was more favourable thanthat of comparable countries like Brazil(55), Turkey (43.2), Thailand(42.5),China(41.5), Indonesia(39.4), Vietnam(37.8) and even the USA (40.8),Singapore(42.5), Hong Kong(43.4) and Portugal(38.5), which are other-wise ranked very high in human development. At 8.6, the ratio of therichest 10 per cent of population to the poorest 10 per cent was also lowerthan in these countries.Gini coefficient: It is a measure of income distribution in an economy. Itis a precise way of measuring the position of the Lorenz curve. The Ginicoefficient is found out by measuring the ratio of the area between theLorenz curve and the 45 degree line. For a society with perfect incomeequality, the Lorenz curve coincides with the 45 degree line and henceGini Coefficient is 0. For a perfectly inequal society, the Gini Coefficient is1.Lorenz Curve: Inter-State inequality in India as reflected in the Lorenzratio ( which like Gini Index is used as a measure of relative inequality)has been estimated by the NSSO based on household consumer expendi-ture for 2004-05. For rural India, the Lorenz ratio for total consumptionexpenditure was 0.30 while for urban India, it was 0.37 indicating, as ex-pected, higher relative inequality in urban areas. Lower inequality wasseen in rural areas of Assam (0.197), Meghalaya(0.155) and Manipur(0.158)than in Kerala(0.341), Haryana(0.323), Tamil Nadu(0.315) andMaharashtra(0.310). Similiarly, lower inequality was seen in the urbanareas of Arunachal Pradesh(0.243), Jammu & Kashmir(0.244),Meghalaya(0.258) and Manipur(0.175) than in Chattisgarh(0.439),Goa(0.405), Kerala(0.400), and Madhya Pradesh(0.397).Lorenz Curve- It is the measure for inequality and relative poverty showsthe relationship between percentage of income receivers and percentageof income. The increase in number of firm would increase number of em-ployment. It shows that the increase percentage of the total income doesnot mean an increase in percentage of receiver.Poverty Gap Index (PGI) – It is defined by the mean distance betweenBPL expressed as proportion of that line a (where the mean is formedover the entire population counting the non-poor as having zero PG). ThePG thus measured the transfer that would bring the income of every poorperson exactly up to the poverty line, thereby elimination the poverty.

Trends of expenditure on reforms: Expenditure on social services as a propor-tion of total expenditure increased from 19.9 per cent in 2004-05 to 21.6 per centin 2006-07 and further to 23.8 per cent in 2009-10 (BE). Expenditure on educa-

tion as a proportion of total expendi-ture has increased from 9.7 per cent in2004-05 to 10.6 per cent in 2009-10 (BE).The share of health in total expendi-ture has also increased from 4.3 percent in 2004-05 to 4.8 per cent in 2009-10 (BE).Poverty: The Uniform Recall Period(URP) consumption distribution dataof the NSS 61st Round yields a pov-erty ratio of 28.3 per cent in rural ar-eas, 25.7 per cent in urban areas and27.5 per cent for the country as a wholein 2004-05. The corresponding povertyratios from the Mixed Recall Period(MRP) consumption distribution dataare 21.8 per cent, 21.7 per cent and 21.8per cent respectively.The committee constituted by the Min-istry of Rural Development for sug-

gesting a methodology for estimationof BPL households in rural areas ob-served that the national poverty lineat Rs 356 per capita per month in ruralareas and Rs 539 per capita per monthin urban areas at 2004-05 prices per-mitted both rural and urban people toconsume about 1,820 k calories asagainst the desired norm of 2,400/2,100 k calories. Hence, a large num-ber of the rural poor got left out of theBPL status benefits as in order to con-sume the desired norm of 2,400/2,100k calories, the cut-off line for determin-ing BPL status should have beenaround Rs 700 in rural areas and Rs1,000 in urban. The committee, there-forerecommended that the percentage ofpeople entitled to BPL status should berevised upwards to at least 50 per centthough the calorie norm of 2,400 wouldrequire this to be 80 per cent.

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Tendulkar Committee on poverty lines1. Poverty estimates to continue to be based on private household consumerexpenditure of Indian households collected by the National Sample SurveyOrganization (NSSO).2. Need to move away from anchoring the poverty lines to a calorie intake norm.3. Since for canvassing household expenditure on a recall basis, the NSSOhas decided to shift to an MRP-based estimates for all its consumption surveysin future, there is need to adopt the MRP-based estimates of consumptionexpendi-ture as the basis for future poverty lines as against the previouspractice of using URP estimates. This changecaptures the household consumption expenditure of poor households onlow- frequency items of purchase more satisfactorily.4. MRP equivalent of the urban poverty line basket (PLB) corresponding to25.7 per cent urban headcount ratio as the new reference PLB to be providedto rural as well as urban population in all the states after suitable adjustments.5. The proposed reference PLB takes into account all items of consumption(except transport and conveyance) for construction of price indices. Separateallowance for private expenditure on transport and conveyance has beenmade in the recommended poverty lines.6. The proposed price indices are based on the household-level unit values(approximated price data) obtained from the 61st round (July 2004 to June2005) of the NSS on household consumer expenditure for food, fuel and light,clothing and footwear at the most detailed level of disaggregation and hencemuch closer to the actual prices paid by consumers in rural and urban areas.Price indices for health and education were also obtained from unit-leveldata from related National Sample Surveys. The proposed price indices(Fisher Ideal indices in technical terms) incorporate both the observed all-India and state-level consumption patterns in the weighting structure of theprice indices. For rent and conveyance, the actual expenditure share for theseitems was used to adjust the poverty line for each state.7. The new poverty lines seek to enable the rural as well as urban populationin all the States to afford the recommended all-India urban PLB after takingdue account of within-State rural-urban and inter-State differentials (ruraland urban) incorporating observed consumer behaviour both at the all-Indiaand State levels.

8. The all-India rural headcount ratio and all-India combined headcount ratiousing the recommended procedure is 41.8 per cent and 37.2 per cent incomparison with official estimates of 28.3 per cent and 27.5 per centrespectively. Poverty at all-India level in 1993-94 was 50.1 per cent in ruralareas, 31.8 per cent in urban areas and 45.3 per cent in the country as a wholeas compared to the 1993-94 official estimates of 37.2 per cent rural, 32.6 percent urban and 36.0 per cent combined. Thus, even though the suggestednew methodology gives a higher estimate of rural and combined ruralurbanheadcount ratio at the all-India level for 2004-05, the extent of povertyreduction in comparable percentage point decline between 1993-94 and 2004-05 is not very different from that inferred using the old methodology.

Employment: As noted in EconomicSurveys of previous years based onNSSO data, employment on a currentdaily status (CDS) basis during 1999-2000 to 2004-05 had accelerated signifi-cantly as compared to the growth wit-nessed during 1993-94 to 1999-2000.During 1999-2000 to 2004-05, about 47million work opportunities were cre-ated compared to only 24 million in theperiod between 1993-94 and 1999-2000.Employment Growth accelerated from1.25 per cent per annum to 2.62 per centper annum. However, since the labourforce grew at a faster rate of 2.84 percent than the work force, unemploy-ment rate also rose. The incidence ofunemployment on CDS basis increasedfrom 7.31 per cent in 1999-2000 to 8.28per cent in 2004-05.Employment in establishments cov-ered by the Employment Market Infor-mation System of the Ministry ofLabour grew at 1.20 per cent per an-num during 1983-94 but decelerated to-0.03 per cent per annum during 1994-2007. However, the latter decline wasmainly due to a decrease in employ-ment in public-sector establishmentsfrom 1.53 per cent in the earlier periodto -0.57 per cent in the later period,whereas the private sector showed ac-celeration in the pace of growth inemployment from 0.44 per cent to 1.30per cent per annum.Rural Sanitation: Total SanitationCampaign (TSC): The annual budget-ary support for the TSC was increasedfrom Rs 202 crore in 2003-04 to Rs 1,200crore in 2009-10. With the scaling upof the TSC, combined with higher re-source allocation, programme imple-mentation has improved substantially.Since 1999, over 6.01 crore toilets havebeen provided to rural householdsunder the TSC. A significant achieve-ment has also been the construction of9.37 lakh school toilets and 2.95 lakhAnganwadi toilets. The number ofhouseholds being provided with toi-lets annually has increased from only6.21 lakh in 2002-03 to 115 lakh in 2008-09. In 2009-10 (up to December 22,2009), more than 62 lakh toilets wereprovided to rural households. The cu-mulative coverage till now is 61 percent as against only 21.9 per cent ruralhouseholds having access to latrines asper Census 2001 data.The TSC follows a community-led and




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Major Anti Poverty,

employment generation and basic services programmesPradhanmantri Gram Sadak Yojana (PMGSY):1. The PMGSY was launched on December 25, 2000 as a 100 per cent Centrally Sponsored Scheme with the primaryobjective of providing all- weather connectivity to the eligible unconnected habitations in the rural areas.2. The programme is funded mainly from the accruals of diesel cess in the Central Road Fund. In addition, support of themultilateral funding agencies and the domestic financial institutions is beingobtained to meet the financial requirementsof the programme.Indira Awaas Yojana (IAY):1. This scheme aims at providing dwelling units, free of cost, to the poor families of the Scheduled Castes,ScheduledTribes, freed bonded labourers and also the non-SC/ST persons below the poverty line in rural areas.2. The scheme is funded on a cost sharing basis of 75:25 between the Centre and the States.Swarnjayanti Gram Swarozgar Yojana (SGSY): 1. The Swarnjayanti Gram Swarozgar Yojana (SGSY) was launched inApril 1999 after restructuring the Integrated Rural Development Programme (IRDP) and allied programmes. It is theonly Self Employment Programme currently being implemented for the rural poor.2. The objective of the SGSY is to bring the assisted swarozgaris above the poverty line by providing them incomegenerating assets through bank credit and Government subsidy. The scheme is being implemented on a cost-sharingbasis between the Centre and States of 75:25 for non-northeastern states and 90:10 for north-eastern states.3. Up to December 2009, 36.78 lakh selfhelp groups (SHGs) had been formed and 132.81 lakh swarozgaris have beenassisted with a total investment of Rs 30,896.08 crore.Sampoorna Grameen Rozgar Yojana (SGRY)1. The Sampoorna Grameen Rozgar Yojana (SGRY) was launchedon September 25, 2001. The objective of the programme is to pro-vide additional wage employment in the rural areas as also foodsecurity, alongside creation of durable community, social and eco-nomic infrastructure in the rural areas.Swarna Jayanti Shahari Rozgar Yojana (SJSRY)1. In December 1997, the Urban Self-Employment Programme(USEP) and the Urban Wage Employment Programme (UWEP),which are the two special components of the Swarna JayantiShahari Rozgar Yojana, were substituted for various programmesoperated earlier for urban poverty alleviation.2. Budget allocation for the SJSRY scheme for 2009-10 is Rs 515.00crore of which Rs 363.12 crore had been utilized till December 31,2009. During 2009-10, as reported by States/UTs, 28,613 urbanpoor have been assisted to set up individual enterprises, 13,453 urban poor women have been assisted in setting upgroup enterprises, 27,463 urban poor women have been assisted through a revolving fund for thrift and credit activitiesand 85,185 urban poor have been imparted skill training.National Rural Employment Guarantee Scheme (NREGS),1. was launched in February 2006 in 200 most backward districts in the first phase and was expanded to 330 districtsduring 2007-08. The coverage was extended to all rural districts of the country in 2008-09. At present, 619 districts arecovered under the NREGS. During the year 2008-09, more than 4.51 crore households were provided employment underthe scheme. During the year 2009-10, 4.34 crore households have been provided employment under the scheme. Out ofthe 182.88 crore person days created under the scheme during this period, 29 per cent and 22 per cent were in favour ofSC and ST population respectively and 50 per cent in favour of women.Bharat Nirman: It was launched in 2005-06 for building infrastructure and basic amenities in rural areas, has sixcomponents,namely rural housing, irrigation potential, drinking water, rural roads, electrification and rural telephony. Itis an important initiative for reducing the gap between rural and urban areas and improving the quality of life of peoplein rural areas. The allocation in 2009-10 for Bharat Nirman was stepped up by 45 per cent over 2008-09(BE). Up toDecember 2009, a total length of about 2,50,554 km of roads has been completed under the PMGSY with a cumulativeexpenditure of Rs 59,800 crore. To enable rural schools to provide safe and clean drinking water for children, theJalmaniprogramme was launched on November 14, 2008 and Rs 100 crore was provided to the States in 2008-09.

peoplecentred approach. The compo-nents of the TSC include start-up ac-tivities, Individual household latrines,community sanitary complexes, schoolsanitation and hygiene education andAnganwadi toilets. To encouragePanchayati Raj institutions (PRIs) to

take up sanitation promotion, there isthe Nirmal Gram Puraskar (NGP) in-centive scheme under which an awardis given to those PRIs that attain a 100per cent open defecation-free environ-ment. The NGP has been acclaimedinternationally as a unique

tool of social engineering and commu-nity mobilization.Skill DevelopmentIn the Eleventh Five Year Plan, a com-prehensive skill developmentprogramme with wide coveragethroughout the country has been initi-




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Major Public Health ProgrammesNational Rural Health Mission (NRHM): The NRHM waslaunched in 2005 to provide accessible, affordable and ac-countable quality health services to rural areas with em-phasis on poor persons and remote areas. It is beingoperationalized throughout the country, with special focuson 18 states, which include eight Empowered Action GroupStates (Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh,Uttar Pradesh, Uttarakhand, Orissa and Rajasthan), the eightnorth-eastern States, Himachal Pradesh and Jammu & Kash-mir. the Mission, in a sector-wide approach addressing sani-tation and hygiene, nutrition and safe drinking water asbasic determinants of good health seeks greater convergenceamong the related social-sector departments, i.e. AYUSH,Women and Child Development, Sanitation, ElementaryEducation, Panchayati Raj and Rural Development. Theexpected outcomes of the Mission include reduction of IMRto below 30 per1,000 live births, MMR to below 100per1,00,000 live births and TFR to 2.1 by 2012.Janani Suraksha Yojana ( JSY): This 100 per cent centrallysponsored scheme was launched with a focus on demandpromotion for institutional deliveries in States and regionswhere these are low. It targeted lowering of the MMR byensuring that deliveries were conducted by skilled birthattendants.Pradhan Mantri Swasthya Suraksha Yojana (PMSSY):The PMSSY has two components in its first phase: (i) Set-ting up of six All-India Institute of Medical Science(AIIMS)-like institutions—Under the first phase of thePMSSY, the Government has decided to set up sixAIIMSlike institutions, one each in the States of Bihar(Patna), Chhattisgarh (Raipur), Madhya Pradesh (Bhopal),Orissa (Bhuban-eshwar), Rajasthan (Jodhpur) andUttranchal (Rishikesh). These States were identified on thebasis of their socio-economic vulnerabilities. (ii)Upgradation of 13 existing Government medical colleges/institutions in ten States. In most of the colleges, most ofthe work is expected to be completed this year, while inthe rest, it would be completed in 2010-11.Universal Immunization Programme.1. The coverage of the programme, first launched in theurban areas in 1985, was progressively extended to coverthe entire country by 1990.2. Between 1988 and 2006, there has been a decline of 83per cent in diphtheria, 83 per cent in pertussis, 59 per centin measles, 94 per cent in neonatal tetanus and 97 per centin poliomyelitis.3. Hepatitis-B vaccination programme which was startedin 2002 in 33 districts and 15 cities as a pilot has been ex-panded to all districts of good performing States. Vacci-nation against Japanese encephalitis was started in 2006.Pulse Polio Immunization Programme1. An outbreak of polio has been witnessed in 2006 withthe spread of polio virus.2. The initiatives include use of Monovalent Oral Polio Vac-cine (mOPV1 & mOPV3) in the high risk districts and Statesto enhance immunity against P1 and P3 virus,vaccinatingthe children in transit and covering children of migratorypopulation from Uttar Pradesh and Bihar.

National Vector Borne Disease Control Programme1. The National Vector Borne Disease Control Programme(NVBDCP) is being implemented for prevention and con-trol of vector borne diseases like malaria, filariasis, kala-azar, Japanese encephalitis (JE), dengue and chikungunya.2. To achieve NHP-2002 goal for Elimination of LymphaticFilariasis by 2015, the Government. of India initiated An-nual Mass Drug Administration (MDA) with single doseof Diethylcarbamazine citrate tablets to all individuals liv-ing at risk of filariasis excluding pregnant women, chil-dren below 2 years of age and seriously ill persons.3. Kala-azar is endemic in 4 States of the country, namelyBihar, West Bengal, Jharkhand and Uttar Pradesh. TheNational Health Policy (2002) envisages kala-azar elimi-nation by 2010.Acute Encephalitis Syndrome (AES)/Japanese encepha-litis (JE) has been reported frequently from 12 States/ UTs.Revised National Tuberculosis Control Programme(RNTCP): It is using Di-rectly Observed Treat-ment Shortcourse(DOTS) is being imple-mented with the objec-tive of curing at least 85per cent of the new spu-tum positive patientsinitiated on treatment,and detecting at least 70per cent of such cases.Padiatric Patient Wise Drug Boxes have been introducedin the programme from January 2007.National AIDS Control ProgrammeThe NACP-III is being implemented for the period 2007-12 with an investment of Rs 11,585 crore.. Major achieve-ments during 2009-10 include scaling up of targeted in-terventions for high-risk groups to 1,281,counselling andHIV testing 91.9 lakh persons including 38.8 lakh preg-nant women and providing anti-retroviral treatment toaround 2.88 lakh patients as of November 2009. New strat-egies initiated during the year include setting up of theDistrict AIDS Prevention and Control Unit (DAPCU),scheme of link workers in rural areas of category A and Bdistricts, collaboration with the NRHM and other NationalHealth Programmes, preferred private provider schemefor management of sexually transmitted infections amonghigh risk groups and setting up of link anti-retroviral (linkART) centres to facilitate ARV drug dispensing. NationalAIDS Control Organisation has tried to increase access toservices and communicate effectively for behavior change.Integrated Disease Surveillance Project (IDSP)1. It was launched in November 2004. It is a decentral-ized, State-based surveillance Program in the country.2. In Phase-I, 9 States, in Phase-II, 14 States and in Phase-III, 12 States are included. Major components of IDSP areintegration and decentralization of surveillance activities,strengthening of public health laboratories, human re-source development and use of information technologyfor collection, collation, compilation, analysis and dissemi-nation of data.




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ated by the Government. The Coordi-nated Action Plan for Skill Develop-ment has a target of 500 million skilledpersons by the year 2022. In this regard,a three-tier institutional structure con-sisting of (i) the Prime Minister’s Na-tional Council on SkillDevelopment, (ii) the National SkillDevelopment Coordination Board(NSDCB) and (iii) the National SkillDevelopment Corporation(NSDC), hasalready been set up to take forward theskill development mission. TheNSDCB has addressed to five coreareas of skill development, namely (i)curriculum revision on a continuousbasis, (ii) vocational education, (iii)apprenticeship training, (iv) accredita-tion and certification system and (v)skillgap mapping.Unique Identification Authority ofIndia (UIDAI): On June 25, 2009 theCabinet approved the creation of theposition of Chairperson, Unique Iden-tification Authority of India (UIDAI).On July 30, 2009 the Prime Minister hasalso constituted a council under hischairmanship to advice the UIDAIand ensure coordination between theministries, stakeholders and partners.Women andChild DevelopmentTwo schemes are being implementedfor the development of adolescentgirls, namely the Kishori Shakti Yojana(KSY) and the Nutrition Programmefor Adolescent Girls (NPAG). The KSYis an intervention for adolescent girlsand aims at addressing the self-devel-opment and nutrition and health sta-tus needs, literacy and numerical skillsand vocational skills of adolescent girlsin the age group 11-18 years. Thescheme is currently operational in6,118 ICDS projects. The NPAG is be-ing implemented in 51 identified dis-tricts acrossthe country to provide 6 kg of freefoodgrains per beneficiary per monthto undernourished adolescent girls (11-19 years) irrespective of financial sta-tus of their families. Both the schemesare currently being implementedthrough the ICDS infrastructure. Theywill now be subsumed within a newscheme for adolescent girls, namely theRajiv Gandhi Schemefor Empowerment of Adolescent Girlsalso named SABLA. The new Scheme

aims at empowering adolescent girlsalong with an improvement in theirnutritional and health status and up-grading of various skills like home, lifeand vocational skills (for girls aged 16and above).Kishori Shakti Yojana (KSY) and Nu-trition Programme for AdolescentGirls (NPAG)1. KSY aims at addressing the needs ofself- development, nutrition and healthstatus, literacy and numerical skills,and vocational skills of adolescent girlsin the age group of 11-18 years.2. It provides free foodgrain @ 6 kg perbeneficiary per month to undernour-ished adolescent girls (11-19 years) ir-respective of financial status of thefamily to which they belong.3. Both the schemes are being imple-mented through the infrastructure ofIntegrated Child Development Ser-vices Scheme (ICDS).4. A Comprehensive Scheme for Pre-vention of Trafficking and Rescue, Re-habilitation andRe-integrationof Victims ofTrafficking andC o m m e r c i a lSexual Exploita-tion-"Ujjawala"-has beenlaunched re-cently. Thescheme has fivec o m p o n e n t s -p r e v e n t i o n ,rescue,rehabilitation, re-integrationand repatriation.National Commission for Protectionof Child Rights (NCPCR)1. The National Commission for Pro-tection of Child Rights (NCPCR) wasset up on March 5, 2007, for effectiveimplementation of child rights in thecountry.2. Initiated in 1975, ICDS is one of thelargest child intervention programmesin the world with a holistic package ofsix basic services for children up to 6years of age, and for pregnant andnursing mothers.3. These services are health check up,immunization, referral services,supplementary feeding, preschooleducation, and health and nutritioneducation through one platform, i.e.Anganwadi Centre (AWC).Rajiv Gandhi National Creche

Scheme1. The scheme of Rajiv Gandhi Na-tional Creche Scheme for Children ofWorking Mothers provides its servicesto the children of age group 0-6 yearswhich includes supplementary nutri-tion, emergency medicines and contin-gencies. 2. Up to March 31, 2009, 31,718creches with approximately 7,92,950beneficiaries had been sanctioned tothe implementing agencies.Juvenile Justice (Care and Protectionof Children) Act, 20001. It is the primary law relating to ju-veniles in conflict with law as well aschildren in need of care and protection.2. This Act provides for proper care,protection and treatment for juveniles,by adopting a child friendly approachinthe adjudication and disposition ofmatters in the best interest of childrenand for their ultimate rehabilitationthrough various institutions estab-lished under the Act.3. The Juvenile Justice (Care and Pro-tection of Children) Amendment Act,2006 came into effect from August 23,2006 and has made the law more childfriendly.4. Under the scheme "A Programme forJuvenile Justice," 50 per cent expendi-ture requirements of States/UTsare being provided for establishmentand maintenance of various homesunder the Juvenile Justice (Care andProtection of Children) Act, 2000.Shishu Greh Scheme1. The Central Adoption ResourceAgency (CARA), an autonomous or-ganization of Ministry of Women andChild Development is functioning withthe goal to promote domestic adoptionand regulate inter-country adoption asprovided under the Guidelines of Gov-ernment of India.2. CARA is also implementing theShishu Greh Scheme for providing in-stitutional care to children up to the ageof 6 years and their rehabilitationthrough in country adoption.Dhanalaxmi scheme: A conditionalcash transfer scheme, Dhanlakshmi,for the girl child was launched as a pi-lot project in March 2008. The schemeprovides for cash transfers to the fam-ily of a girl child on fulfilling certainspecific conditionalities relating tobirth and registration, immunizationand enrolment and retention in schools




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up to Class VIII. The scheme is beingimplemented in 11 blocks across sevenStates. An amount of Rs 5.95 crore wasreleased during 2008-09, which is ex-pected to benefit 79,555 girl childrenin identified blocks of Andhra Pradesh,Chattisgarh, Orissa, Jharkhand andPunjab.The Support to Training and Employ-ment Programme for Women (STEP)seeks to provide updated skills andnew knowledge to poor women in 10traditional sectors for enhancing theirproductivity and income generation.During the year 2008-09, 31,865women have benefited from thescheme. Up to December 31, 2009 11new projectshave been sanctioned and 12,866 ben-eficiaries covered under STEP in 2009-10. As of December 31, 2009, 318Swadhar homesand 237 helplinesare functioningacross the countryunder theSwadhar Schemewhich aims toprovide the pri-mary needs ofshelter, food,clothing and careto margina-lizedwomen/ girls who are without anysocial and economic support.EducationThe 86th Constitutional AmendmentAct 2002 led to insertion of Article 21-A in Part III of the Constitution thatmade free and compulsory educationfor all children between 6 and 14 yearsof age, a fundamental right. The Rightof Children to Free and CompulsoryEducation Act 2009 to provide for freeand compulsory education for all chil-dren of the age 6 to 14 years, was pub-lished in the Gazette of India on Au-gust 27, 2009.Sarva Shiksha Abhiyan (SSA)1. The Sarva Shiksha Abhiyan (SSA) isbeing implemented in partnershipwith States to address the needs of chil-dren in age group of 6-14 years.2. The achievements of the SSA till Sep-tember end 2009 are opening of2,88,155 new schools, construction of2,40,888 school buildings, constructionof 10,26,831 additional classrooms,1,84,652 drinking water facilities, con-struction of 2,86,862 toilets, supply of

free textbooks to 9.05 crore children,appointment of 10.11 lakh teachers andin-service training for 21.79 lakh teach-ers.Rashtriya Madhyamik ShikshaAbhiyan (RMSA): A new centrallysponsored scheme, the RMSA, to en-hance access to secondary educationand improve its quality was launchedin March 2009. The objectives of thescheme are to achieve an enrolmentratio of 75 per cent for Classes IX-Xwithin five years by providing a sec-ondary school within reasonable dis-tance of every habitation, to improvequality of education imparted at sec-ondary level through making all sec-ondary schools conform to prescribednorms, to remove gender, socio-eco-nomic and disability barriers, univer-sal access to secondary level educationby 2017, i.e. by the end of 12th FiveYear Plan and universal retention by2020. The Central Government shallbear 75 per cent and the State Govern-ments 25 per cent of the projectexpenditure during the Eleventh FiveYear Plan. The funding pattern will be90:10 for the northeastern States.National Programme for Education ofGirls at Elementary Education(NPEGEL)1. The programme is aimed at enhanc-ing girls’ education by providing ad-ditional support for development of a“model girl child friendly school” inevery cluster with more intense com-munity mobilization and supervisionof girls enrolment in schools.2. Under NPEGEL, 35,252 modelschools have been opened in additionto supporting 25,537 Early ChildhoodCare and Education (ECCE) centres.Besides, 24,387 additional classroomshave been constructed, and 1.85 lakhteachers have been given training ongender sensitization.Kasturba Gandhi Balika Vidyalaya(KGBV)1. The Kasturba Gandhi BalikaVidyalaya (KGBV) scheme waslaunched in July 2004 for setting upresidential schools at upper primarylevel for girls belonging predominantlyto the SC, ST, OBC and minority com-munities. There are 2573 KGBVs re-ported to have been sanctioned in theStates and 1.96 lakh girlsbelonging to the SC,ST,OBC & minor-ity communities enrolled in them.

National programme of mid-daymeals in schoolsUnder this programme, the Govern-ment has revised the food norm forupper primary children by increasingthe quantity of pulses from 25 to 30 g,vegetables from 65 to 75 g and decreas-ing the quantity of oil and fat from 10to 7.5 g. Upward revision of the cook-ing cost (excluding labour and admin-istrative charges) for primary to Rs 2.50and for upper primary to Rs 3.75 hasalso been made. The cooking cost nowincludes the cost of pulses, vegetables,oil and fats, salt and condiments andfuel. A separate provision for paymentof an honorarium to a cook-cum-helper @ Rs 1000 per month has beenmade. Transportation assistance for 11Special Category States—Assam, Arunachal Pradesh, Himachal

Pradesh, Jammu & Kashmir, Manipur,Meghalaya, Nagaland, Sikkim,Uttarakhand and Tripura—has beenrevised to the rate prevalent under thePublic Distribution System (PDS) inthese States in place of the existing as-sistance at a flat rate of Rs 125 per quin-tal. The new rates are effective fromDecember 1, 2009. Besides the cost ofconstruction of kitchen-cum-store hasbeen revised. The cooking cost, hono-rarium and cost of construction ofkitchen-cum-store will be shared be-tween the Centre and the north-east-ern States on a 90:10 basis and otherStates / UTs on a 75:25 basis.New Central Universities:




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Establishment of New Central Univer-sities : The Central Universities Ordi-nance 2009 was promulgated by thePresident on January 15, 2009 for theconversion of three State Universitiesin Madhya Pradesh, Chhattis-garh andUttarakhand into Central Universitiesand establishment of a new CentralUniversity each in twelve States. TheOrdinance was subsequently replacedby the Central Universities Act 2009.While the three States Universitiesstood converted immediately on pro-mulgation of the Ordinance, 11 newCentral Universities have also been setup in Bihar, Gujarat, Haryana,Himachal Pradesh, Jharkhand,Karnataka, Kerala, Orissa, Punjab,Rajasthan and Tamil Nadu, which didnot have a Central University.National Institute of Technology(NITs): The Government of India de-cided to set up 10 new NITs during theEleventh Five Year Plan in the States/UTs which do not at present haveNITs. Accordingly, the Governmenthas approved setting up of 10 newNITs in Meghalaya, Manipur,Mizoram, Nagaland, Sikkim,Arunachal Pradesh, Goa (also cateringto the needs of Daman & Diu, Dadra& Nagar Haveli and Lakshadweep),Puducherry (also catering to the needsof A&N Islands), Delhi (also cateringto the needs of Chandigarh) andUttarkhand.One Regional Centre ofthe Indira Gandhi National Tribal Uni-versity (IGNTU) Amarkantak has beenstarted in Manipur.RRRRRecent measurecent measurecent measurecent measurecent measures fes fes fes fes fororororor

social prsocial prsocial prsocial prsocial protectionotectionotectionotectionotectionAam Admi Bima Yojana (AABY): Un-der this scheme launched on October2, 2007, insurance will be providedagainst natural as well as accidentaldeath and partial/permanent disabil-ity to the head of the family of rurallandless households in the country. Upto September 30, 2009, the Scheme hadcovered 81.99 lakh lives.Rashtriya Swasthya Bima Yojana(RSBY): The RSBY was launched onOctober 1, 2007 for BPL families (a unitof not more than five) in the unorga-nized sector. The total sum insured isRs 30,000 per family per annum. Thepremium is shared on a 75:25 basis bythe Centre and the State Government.In case of north-eastern States and

Jammu & Kashmir, the premium isshared in a 90:10 ratio. The beneficiaryis entitled to cashless transactionsthrough a smart card. The RSBY be-came operational from April 1, 2008.Till January 12, 2010, 26 States/UnionTerritories have initiated the process ofimplementing the scheme.The Unorganized Workers’ Social Se-curity Act 2008: The Act has the objec-tive of providing social security to un-organized workers. The Unorgani-sedWorkers’ Social Security Rules 2009have also been framed. The Act hascome into force w.e.f. May 16, 2009. Itprovides for constitution of a NationalSocial Security Board and State SocialSecurity Boards which willrecommend social security schemes forthese workers.

Bilateral social security agreements:Bilateral social security agreementshave been signed with Belgium,France, Germany, Switzerland, Lux-emburg and Netherlands to protectthe interests of expatriate workersand companies on a reciprocal basis.Negotiations for similar agreementswith other countries like Czech Re-public, Norway, Hungary, Denmark,Canada and Republic of Korea havebeen completed. Negotiations are inprogress with several other countries.These agreements help workers byproviding exemption from social se-curity contribution in case of posting,totalisation of contribution periodsand exportability of pension in caseof relocation to the home country orany third country.

Revised norms forKASTURBA GANDHI BALIKA VIDYALAYASCHEME (KGBV)The Government has given its approval for revision inthe criteria under the Kasturba Gandhi Balika Vidyalaya(KGBV) Scheme as per the following: (a) For Rural areas– blocks where the female literacy rate is below 30 percent would qualify as educationally backward blocks forthe purpose of this scheme. (b) For Urban areas – Out ofthe 338 town/cities identified by the Ministry of Minor-ity Affairs having concentration of minority population,94 towns/cities having female literacy rate below the na-tional average of 53.76 per cent (as per 2001 Census) wouldqualify for the purpose of the scheme.Impact: The revision would ensure access to education tothe most deprived section if girls through provision of additional residentialschools for girls at upper primary level in blocks having very low femaleliteracy rate (below 30 per cent) and urban areas with female literacy belownational average (53.67 per cent) as per 2001 Census.SMART CARD FOR EMPOWERMENTA Planning Commission Working Group, in the context of the Eleventh FiveYear Plan, has examined the design and potential use of the Multi-Applica-tion Smart Cards (MASCs) System which facilitates simplification of proce-dures and enhances the efficiency of Government schemes. Usefulness ofthe MASCs for various Central Government schemes like, PDS, Indira AwasYojana and National Rural Employment Guarantee Scheme (NREGS), hasbeen recognized. These studies could form the basis for the introduction of aSmart Card system and a web-enabled information system, on an experi-mental basis. The smart cards system will be based on unique ID, sharing ofID, multi-application and access control.The entire system will consist offront, middle and back end. The electronic card will be the front end of theIntegrated Smart Card System. The front end is the point of delivery of thesystem where the smart cards will be read and used. The middle office willbe responsible for charging and updating the card periodically (month, quar-ter, annual) depending on the type of information and the requirement andtransfer information from the front end to the back end and vice versa. Theback end set-up will contain the computerised records, guidelines, accountsand management information systems. The complete system would requirecomplete digitization of the records.


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INTERNATIONAL ORGANISATIONS-PART TWO 2010

E

ECONOMIC COMMUNITYOF WEST AFRICAN STATES:�Headquarters: Abuja, Nigeria: It isthe biggest regional economic bloc inAfrica. It covers an area of 5. 27 mil-lion square km, one-sixth of Africa'stotal territory and embraces a popu-lation of 225 million, one-third of theregion's total.�Largest cities: Lagos, Abidjan, Dakar�Member states: 15�Official languages: French, English,

Portuguese�The current President of the Com-mission is James Victor Gbeho ofGhana since 18 February 2010. Thecurrent chairmen is GoodluckJonathan of Nigeria since 18 February2010.�Formation of ECOWAS - Enforced Treaty of Lagos. - May 28 1975�The main objective is to achieve“collective self-sufficiency” for themember states by means of economicand monetary union creating a singlelarge trading bloc. Member states ofECOWAS are: (1) Benin, (2) BurkinaFaso, (3) Cape Verde, (4) Côte d’Ivoire,(5) The Gambia, (6) Ghana, (7) Guinea,(8) Guinea Bissau, (9) Liberia, (10)Mali, (11) Niger, (13) Nigeria, (14)Senegal, (15) Sierra Leone, and (16)Togo. In 2002, Mauritania left the or-ganization. Guinea was suspended af-ter 2008 coup d'état and Niger wassuspended after 2009 auto-coup.Therefore, currently, there are 13members only.�The West African Economic andMonetary Union (or UEMOA from itsname in French, Union économiqueet monétaire ouest-africaine) is an or-ganization of eight states of West Af-rica established to promote economicintegration among countries that share

a common currency, the CFA franc.UEMOA was created by a Treatysigned at Dakar, Senegal, on January10, 1994 by the Heads of State andGovernment of Benin, Burkina Faso,Côte d’Ivoire, Mali, Niger, Senegal,and Togo. On May 2, 1997, Guinea-Bissau became its eighth member state.�The 36th summit was held at Abuja,Nigeria on 23rd June, 2009.The 37thsummit was held at Abuja, Nigeria on16th February 2010. The Summit hasdeliberated on the political situation

in Niger and inGuinea andelected a newchairman for thes u b - r e g i o n a leconomic group-ing formed tospearhead WestAfrica's eco-nomic integra-tion.E C O N O M I CC O O P E R A -TIONORGANIZA-TION (ECO):

�Established in 1985 by Iran, Paki-stan and Turkey. In 1992, the ECO ex-panded to include seven new mem-bers, namely Afghanistan, Azerbaijan,Kazakhstan, Kyrgyzstan, Tajikistan,Turkmenistan and Uzbekistan.The Headquarter is situated in Tehran.and Secretary General KhurshidAnwar.�It is an intergovernmental interna-tional organization involving tenAsian nations.�It provides a platform to discussways to improve development andpromote trade, and investment oppor-tunities.�The common objective is to estab-lish a single market for goods and ser-vices, much like the European Union.�Last Meeting: Tehran conducted the10th Summit of the Economic Coop-eration Organization (ECO) on 11thMarch , 2009 and discussed plans for agas pipeline linking the two countrieswith India.The 11th eco summit islikely to be held in Pakistan in 2010-2011.ECOSOC:ECOSOC:ECOSOC:ECOSOC:ECOSOC:�The Council’s 54 member Govern-ments are elected by the General As-sembly for overlapping three-yearterms. Seats on the Council are allot-ted based on geographical represen-

tation with fourteen al-located to African States,eleven to Asian States,six to Eastern EuropeanStates, ten to LatinAmerican and Carib-bean States, and thirteen to WesternEuropean and other States.�The Charter established the Eco-nomic and Social Council as the prin-cipal organ to coordinate the eco-nomic, social, and related work of the14 UN specialized agencies, 10 func-tional commissions and five regionalcommissions.�The Council serves as the central fo-rum for discussing international eco-nomic and social issues, and for for-mulating policy recommendations ad-dressed to Member States and theUnited Nations system.� It is responsible for promotinghigher standards of living, full em-ployment, and economic and socialprogress; identifying solutions to in-ternational economic, social andhealth problems; facilitating interna-tional cultural and educational coop-eration; and encouraging universalrespect for human rights and funda-mental freedoms.�It has the power to make or initiatestudies and reports on these issues.�It also has the power to assist in thepreparations and organisation of ma-jor international conferences in theeconomic and social and related fieldsand to facilitate a coordinated follow-up to these conferences. With its broadmandate the Council’s purview ex-tends to over 70 per cent of the humanand financial resources of the entireUN system.�During the 2008 High-level Seg-ment, the Council organized its firstbiennial Development CooperationForum (DCF) and second Annual Min-isterial Review (AMR). The AMR fo-cused on the theme, “Implementingthe internationally agreed goals andcommitments in regard to sustainabledevelopment”, which resulted in theadoption of a Ministerial Declaration.The President of ECOSOC, Mr. LéoMérorès, described the 2008 Substan-tive Session as "historic" as it imple-mented the new functions of the Coun-cil in their entirety.The president of ECOSOC 2010 isAmbassadorHamidonAli ofMalaysia.ECOSOC held its 2009 sub-stantive session in Geneva from 6-9


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SOME MORE AGENCIES

(1)The UN Fund for Population Ac-tivities (UNFPA):-�This Fund aims are to build up capac-ity to respond to needs in population andfamily planning; to promote awarenessof population problems in both devel-oped and developing countries and pos-sible strategies to deal with them; to as-sist developing countries at their requestin dealing with population problem.(2)UNEP (United Nation EnvironmentProgramme):-�Established in 1972, it works to en-courage sustainable developmentthrough sound environmental practices.�HQ: Nairobi(3) UNHCR (United Nation High Com-missioner for Refugees):-�It was established by the UN GeneralAssembly with effect from 1 Jan, 1951,originally for 3 years. Since 1954, its man-date has been renewed for successive five-year period. �For its work on behalf ofrefuges around the world, UNHCR wasawarded the Nobel Peace Prize in 1955and again in 1981.�H.Q: Geneva(4) High Commission for HumanRights:-�Established in 1993 it has 53 mem-bers.(5)UNIDO (United Nation IndustrialDevelopment Organisation):-It provides developing and undevelopedcountries with advice on all aspects ofindustrial policy. It was converted into aSPECIAL ISED AGENCY of UN in 1985.HQ’s: Vienna(6) WTO (World Trade Organisation)�It is a permanent international tradebody, which replaced General Agreementon Tariffs and Trade in Jan 1995. GATTwas negotiated in 1947�HQ’s: Geneva(7) WIPO�World Intellectual PropertyOrganisation: The Convention establish-ing WIPO was signed at Stockholm in1967 by 51 countries and came into forcein April, 1970. In December, 1974 WIPObecome a specialised agency of the U.N.HQ’s: Geneva(8)International Fund for AgriculturalDevelopment (IFAD):-�The establishment of IFDA was one ofthe major actions proposed by the 1974World Food Conference.�The agreement for IFAD came intoforce on 30 November, 1977 followingattainment of initial pledges of $1,000m. and the agency began its operationsthe following months.HQ’s: Rome Italy

July with a focus on current global andnational trends and their impact onsocial development in regard of glo-bal public health. held its 2009 subsn inEURASIANEURASIANEURASIANEURASIANEURASIANECONOMIC COMMUNITYECONOMIC COMMUNITYECONOMIC COMMUNITYECONOMIC COMMUNITYECONOMIC COMMUNITY:::::�Headquarters: Moscow�Secretary General:Tair Mansurov�Formation: - Signed- 10 October 2000- Effective - 31 May2001�Member states:Belarus (2001), Kazakhstan (2001),Kyrgyzstan (2001), Russia (2001),Tajikistan (2001), Uzbekistan (tempo-rarily suspended in 2008)�Observers: Armenia (2003),Moldova (2002), Ukraine (2002)Aim:� Full-scale customs union and com-mon market.�Harmonisation of customs tariffs.�Development of common guide-lines on border security.�Establishment of the general rulesof trade in goods and in services andof their access to the domestic mar-kets.�The introduction of thestandardised currency exchange regu-lation and of currency control.�Development and the implementa-tion of the joint programmes of socialand economic development.�Creation of equal conditions forproduction and entrepreneurial activ-ity.�The formation of the common mar-ket for transport services and unitedtransport system.�The formation of general energymarket.�Equal rights for citizens of partici-pating states to obtain medical aid.�Equal rights for citizens of partici-pating states to enter into higher edu-cation.�The Customs Union officiallylaunched on January 1, a common cus-toms space is to be established be-tween Russia and Belarus as of themiddle of 2010 - a move that will befollowed suit by Kazakhstan in sum-mer of 2011. The three's common eco-nomic space will enable them to stickto a single customs tariff plus mutu-ally beneficial tax and trade principlesEUROPEAN FREETRADEASSOCIATION (EFTA):�Established on May 3, 1960

�It is an alternative for Europeanstates that were not allowed or did notwish to join the European Commu-nity.�Its aim to Provide liberalisation oftrade among the Member States.�The EFTA Convention was signedon January 4, 1960 in Stockholm byseven states.The European Free Trade Association(EFTA) was established on 3 May 1960as a trade bloc-alternative for Euro-pean states who were either unableto, or chose not to, join the then-Euro-pean Economic Community (EEC)(now the European Union (EU)).The EFTA Convention was signed on4 January 1960 in Stockholm by sevenstates. Today only Iceland, Norway,Switzerland, and Liechtenstein remainmembers of EFTA (of which only Nor-way and Switzerland are foundingmembers). The Stockholm Conven-tion was subsequently replaced by theVaduz Convention.The founding members of EFTA wereAustria, Denmark, Norway, Portugal,Sweden, Switzerland and the UnitedKingdom. During the 1960s thesecountries were often referred to as theOuter Seven, as opposed to the InnerSix of the then-European EconomicCommunity.Finland became an associate memberin 1961 (becoming a full member in1986), and Iceland joined in 1970. TheUnited Kingdom and Denmark joinedthe European Communities in 1973(together with Ireland), and henceceased to be EFTA members. Portugalalso left EFTA for the European Com-munity in 1986. Liechtenstein joinedin 1991 (previously its interests inEFTA had been represented by Swit-zerland). Finally, Austria, Sweden andFinland joined the European Union in1995 and hence ceased to be EFTAmembers.General Secretary: Kåre BrynEUROPEANPATENT ORGANISATION:�It is a public international organisa-tion set up by the European PatentConvention (EPC).�Headquarters: Munich, Germany�President: – Alain Pompidou (1 July2004 - 30 June 2007), French– Alison Brimelow (1 July 2007 - 30June 2010), British�Official languages: English, Frenchand German.�EPO provides a single patent grantprocedure, but not yet a single patent


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LATIN AMERICAN RESERVEFUND (LARF)

Latin American Reserve Fund(LARF) with headquarters in Bogoto(Colombia) is a regional financialinstitution having an independentjuridical personality. It was estab-lished in March 1991 as the successorto the Andean Reserve Fund (ARF).Members of LARF are Bolivia, Co-lombia, Costa Rica, Ecuador, Peruand Venezuela. Its functions are toassist in correcting payments imbal-ances through loans with terms ofup to four years and guarantees ex-tended to members, to coordinatetheir monetary, exchange, and finan-cial policies and to promote the lib-eralization of trade and payments inthe Andean subregion.OBJECTIVES�To provide support for membercountries´ balance of payments bygranting credits or guaranteeingthird-party loans;�To contribute to the harmoniza-tion of member countries exchange,monetary and financial policies; and�To improve the conditions of in-ternational reserve investmentsmade by member countries’.

on the point of view of enforcement.EUROPEAN SPACE AGENCY:�Established in 1975�Member states: 18�Director General: Jean-JacquesDordain�Headquartered: Paris�Official Language: English, Frenchand German�It is an inter-governmental organi-zation dedicated to the exploration ofspace.�The highlights of the year 2010 willbe:- The launch of Node-3 and Cupola,and of CryoSat, two ESA astronauts tothe International Space Station,secondAutomated Transfer Vehicle and of thefirst Galileo system satellites, the firstlift-off of Soyuz from Kourou and themaiden flight of Vega.A simulated 520-day 'trip to Mars' willbe starting in May.EAST CARIBBEANCURRENCY UNIONThe East Caribbean Currency Union(ECCU) is a monetary union com-posed of eight small-island econo-mies, six of which are independentstates (Antigua and Barbuda,Dominica, Grenada, Saint Kitts andNevis, Saint Lucia and Saint Vincentand the Grenadines), while the re-maining two are British overseas ter-ritories (Anguilla and Montserrat). Allthese economies, together with theBritish Virgin Islands, constitute theOrganization of Eastern CaribbeanStates (OECS). In June 2006, the OECSjoined the CARICOM Single Market(CSM).East Caribbean dollarThe East Caribbean dollar (sign: $;code: XCD) is the currency of eight ofthe nine members of the Organisationof Eastern Caribbean States. It has ex-isted since 1965 and is normally ab-breviated with the dollar sign $ or,alternatively, EC$ to distinguish itfrom other dollar-denominated cur-rencies. The EC$ is subdivided into 100cents. It has been pegged to the UnitedStates dollar at US$1 = EC$2.7 since1976.Six of the states using the EC$ are in-dependent states: Antigua andBarbuda, Dominica, Grenada, SaintKitts and Nevis, Saint Lucia, and SaintVincent and the Grenadines. The othertwo are British overseas territories:Anguilla and Montserrat.

F

FOOD AND AGRICULTURE

ORGANIZATION (FAO):�The Food and Agriculture Organi-zation (FAO) of the United Nationswas founded in 1945 and the head-quarter is at Rome.�FAO has 191 members states alongwith the European Union and theFaroe Islands, which are associatemembers

�Directors general-Jacques Diouf(Senegal),January 1994 - current�Deputy Directors general-James G.Butler (US), 2008 - current. anuary - c�Serving both developed and devel-oping countries, FAO acts as a neutralforum where all nations meet asequals to negotiate agreements anddebate policy.�FAO’s activities comprise four mainareas: (i) Putting information withinreach. (ii) Sharing policy expertise.(iii) Providing a meeting place for na-tions. (iv) Bringing knowledge to thefield.FRANCOPHONIE:�Official language: French: TheFrancophonie could be compared to aFrench version of the Commonwealthof Nations.�Established: 1970�Member states: 56: Mauritania'smembership was suspended on Au-gust 26, 2008, pending democratic elec-tions, after a military coup.�Headquarters: Paris, France�Secretariat (Secretaries-general):Abdou Diouf (Senegal) : 1 Jan 2003 -present�It is an international organisationof French-speaking countries.Summits of the Francophonie (oftenreferred by the English media as the"Francophone Summit")are held everytwo years, at which time the leadersof the member states have an oppor-tunity to meet and develop strategiesand goals for the organization.Summits:1. Palace of Versailles, Paris, France

(17-19 February 1986); 2. Quebec City,Quebec (Canada) (2-4 September 1987)3. Dakar, Senegal (24-26 May 1989); 4.Chaillot, Paris, France (19-21 Novem-ber 1991); 5. Port Louis,Mauritius (16-18 October 1993); 6. Cotonou, Benin(2-4 December 1995); 7. Hanoi, Viet-nam (14-17 November 1997); 8.Moncton, New Brunswick (Canada) (3-5 September 1999); Beirut, Lebanon(18-20 October 2002); 9. Ouagadougou,Burkina Faso (26-27 November 2004)10. Bucharest, Romania (28-29 Septem-ber 2006); 11. Quebec City, Quebec(Canada) (17-19 October 2008) (part ofthe 400th anniversary celebration ofthe founding of Quebec).Next summit: Montreux, (22-24 Octo-ber 2010)

G

GREENPEACE

�In 1971, motivated by their visionof a green and peaceful world, a smallteam of activists set sail fromVancouver, Canada, in an old fishingboat. These activists, the founders ofGreenpeace, believed a few individu-als could make a difference.�Their mission was to “bear witness”to US underground nuclear testing at


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Amchitka, a tiny island off the WestCoast of Alaska, which is one of theworld’s most earthquake-prone re-gions. Amchitka was the last refugefor 3000 endangered sea otters, andhome to bald eagles, peregrine falconsand other wildlife.�Even though their old boat, thePhyllis Cormack, was intercepted be-fore it got to Amchitka, the journeysparked a flurry of public interest. TheUS still detonated the bomb, but thevoice of reason had been heard.Nuclear testing on Amchitka ended

that same year, and the island was laterdeclared a bird sanctuary.�Today, Greenpeace is an interna-tional organisation that prioritisesglobal environmental campaigns.Based in Amsterdam, the Netherlands,Greenpeace has 2.8 million support-ers worldwide, and national as wellas regional offices in 41 countries.�Greenpeace exists because the earthand all life on it deserves a clean andsafe environment – now and in the fu-ture. Since its earliest days, Greenpeacehas been linked to the seas and itsships are incredibly valuable, not onlyin actions to save the whales and pro-tect the marine environment, but forall campaign work.�Actions often speak louder thanwords and non-violent direct actionis at the heart of Greenpeace cam-paigns, which have also grown to in-clude lobbying and research over thepast years.GUAMGUAMGUAMGUAMGUAMORORORORORGANIZAGANIZAGANIZAGANIZAGANIZATION FORTION FORTION FORTION FORTION FORDEMOCRACY AND ECONOMICDEMOCRACY AND ECONOMICDEMOCRACY AND ECONOMICDEMOCRACY AND ECONOMICDEMOCRACY AND ECONOMICDEVELOPMENTDEVELOPMENTDEVELOPMENTDEVELOPMENTDEVELOPMENT�On October 10, 1997, the Presidentsof Azerbaijan, Georgia, Moldova andUkraine met in Strasbourg duringsummit of the Council of Europe andstated their mutual interest in devel-oping bilateral and regional coopera-tion, European and regional security,political and economic contacts.�Secretary General-Valery

Chechelashvili�The Headquarters of GUAM wereopened on February 26, 2009 in Kiev,Ukraine.�The group was created as a way ofcountering the influence of Russia inthe area, and it has received backingand encouragement from the UnitedStates.�In 1999, the organisation was re-named GUUAM due to the member-ship of Uzbekistan and renames asGUAM due to the withdrawl ofUzbekistan.�In May 22 to May 23, 2006 Ukraineand Azerbaijan announced plans tofurther increase the GUUAM memberrelations by renaming the organiza-tion GUAM Organization for Democ-racy and Economic�Development and establishing itsheadquarters in the Ukrainian capital.�Azerbaijani president Ilham Aliyevwill be elected as the first secretarygeneral of the organization.�On June 19, 2007, presidents of

Lithuania, Poland and Romania joinedthe leaders of GUAM member statesat the GUAM summit in Baku,Azerbaijan.GRGRGRGRGROUP OF NOUP OF NOUP OF NOUP OF NOUP OF NAAAAATIONS:TIONS:TIONS:TIONS:TIONS:G-3:G-3:G-3:G-3:G-3:�It is a free trade agreement betweenColombia, Mexico, and Venezuela.�It came into effect on January 1, 1995.�G3 committed the countries to thephased implementation of a trilateralfree trade area over 10 years.�The Agreement provides for the re-moval of tariff and nontariff barriers(Tariff Elimination Program or TEP),uniform customs procedures, and co-operation accords in various non-trade

areas. It aims to eliminate trade barri-ers within 10 years (12 years for ve-hicles), though there are important ex-ceptions in the agricultural sector. In-cluded in the trade provisions are stat-utes on property rights and services.G-4:G-4:G-4:G-4:G-4:�G-4 was an alliance among India,Germany, Japan and Brazil for the pur-pose of supporting each other’s bid forpermanent seats on the United Na-tions Security Council.�The G-4 nations are regularlyelected to two-year terms on the Secu-rity Council by their respectivegroups.India has been elected to the councilsix times in total, its last term was1991-92.�The G4 nations are regularly electedto two-year terms on the SecurityCouncil by their respective groups: inthe 24-year period from 1987 to 2010,Japan was elected for five terms, Bra-zil for four terms, Germany for threeterms and India for one term.

G-5:G-5:G-5:G-5:G-5:The Leaders of Brazil, China, India,Mexico and South Africa, gathered inSapporo, Japan, on 8 July 2008, haveresolved to issue this Political Decla-ration: Mankind is at a critical histori-cal crossroad. The potential of global-ization and innovation to raise livingstandards is unprecedented, but so aresocial and sustainable developmentchallenges around the world.G-7:G-7:G-7:G-7:G-7:�Seven industrialized nations of theworld, formed in 1976.�Group of seven leading industrialcountries; Canada, France, Germany,Italy, Japan, UK, US.The G7 is the meet-


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ing of the finance ministers from agroup of seven industrialized nations.�It is not to be confused with the G8,which is the annual meeting of theheads of government of the aforemen-tioned nations, plus Russia.�The latest G7 summit was held onFebruary 2010 in Canada.G8G8G8G8G8G-7+1: The Groups brings togethereight major industrial economies ofthe world to consultation and policycoordination at the highest level.�Its members are: Canada, France,Germany, Italy, Japan, the UK, and theUS.�The Group was named G-8 in 1997,Denver Summit with the inclusion ofRussia as a full-fledged member.G8: A Religious Call for Strong Ac-tion, A Spotlight on AfricaHokkaido Toyako, Japan, 2008In 2008, Hokkaido Toyako, Japan, hashosted heads of state of some of theworld’s most developed nations, theGroup of 8, in their 34th annual sum-mit.The G8 summit is one of the only glo-bal summits in which leaders of thenations debate freely amongst them-selves. With much less administrativestructure surrounding the G8 thanother multi-lateral organizations orframeworks, it theoretically allows forfreer dialogue and a more direct fol-low-up on the decisions made regard-ing key international issues.L’Aquila 2009The 35th G8 summit, the meeting fo-rum of the world’s economic power-houses was held in the Italian city ofL’Aquila from 8th July to 10th July 2009.The choice of the venue had its ownsignificance. L’Aquila was chosen “asa mark of solidarity with the peopleof Abruzzo, so badly hit by the earth-quake on 6th April 2009, and with ev-eryone else in the world who is suf-fering as a result of a natural disas-ter.” 36th G8 summit is to be held inJune 25–27, 2010, host country isCanada, host leader is Stephen HarperHuntsville, and location is Ontario.37th G8 summit is to be held in 2011in France in TBD.G-10:G-10:G-10:G-10:G-10:�The Group of Ten signed theSmithsonian Agreement in December1971, replacing the world’s fixed ex-change rate regime with a floating ex-change rate regime.�It comprises countries that contrib-

ute to the General Agreements to Bor-row (GAB).�It aims at discussing problems re-lating to the functioning and structureof the International Monetary Fund.�The Group provides “multilateralsurveillance” over loan recipients in-cludes Iceland, Israel, Japan, Korea,Liechenstein, Mauritius, Norway,Switzerland, Taiwan.The Group of Ten or G10 refers to thegroup of countries that have agreedto participate in the General Arrange-ments to Borrow (GAB). The GAB wasestablished in 1962, when the govern-ments of eight International MonetaryFund (IMF) members—Belgium,Canada, France, Italy, Japan, the Neth-erlands, the United Kingdom, and theUnited States—and the central banksof two others, Germany and Sweden,agreed to make resources available tothe IMF for drawings by participants,and, under certain circumstances, fordrawings by nonparticipants. TheGAB was strengthened in 1964 by theassociation of Switzerland, then a non-member of the Fund, but the name ofthe G10 remained the same (G7 + Bel-gium, Netherlands, Sweden, Switzer-land). The following international or-ganizations are official observers of

the activities of the G10: The Bank forInternational Settlements (BIS), Euro-pean Commission, IMF, and OECD.Luxembourg is also an associate mem-ber.G-15:( GRG-15:( GRG-15:( GRG-15:( GRG-15:( GROUP OF 15 NOUP OF 15 NOUP OF 15 NOUP OF 15 NOUP OF 15 NAAAAATIONS)TIONS)TIONS)TIONS)TIONS)�It was established in 1989 during theninth NAM Summit in Belgrade as anAction Group.�Group of 15 developing countriesacting as the main political organ forthe Non-Aligned Movement.�The summit-level Group brings to-gether developing nations from across

the world�The G15 is comprised 18 countries:Algeria, Argentina, Brazil, Chile,Egypt, India, Indonesia, Jamaica,Kenya, Nigeria, Malaysia, Mexico,Peru, Senegal, Sri Lanka,Venezuela,Iran and Zimbabwe.�The G15 focuses on cooperationamong developing countries in theareas of investment, trade, and tech-nology. The membership of the G15has expanded to 18 countries, but thename has remained unchanged.G-15:G-15:G-15:G-15:G-15:The G15 is an informal group ofnations composed by the 15 leadingeconomies of the world in 2006: USA,China, India, Japan, Germany, UK,Brazil, France, Russia, Italy, Spain,South Korea, Mexico, Canada andIndonesia.�These countries together wereexpected to comprise 73,3 per cent ofthe world Gross Domestic Product(GDP) by Purchasing Power Parity(PPP) in 2008. The real figure wereactually 70,2 per cent according to theCIA World Factbook.a and Indonesia.G-20:G-20:G-20:G-20:G-20:The Pittsburgh Summit Declaration1. The summit was dedicated to meetthe critical transition from crisis torecovery to turn the page on an era ofirresponsibility and to adopt a set ofpolicies, regulations and reforms tomeet the needs of the 21st century glo-bal economy.2. The summit reviewed the on-goingeconomic depression after its Londonsummit.3. The summit designated the G-20 tobe the premier forum for our interna-tional economic cooperation. G-20 es-tablished the Financial Stability Board(FSB) to include major emergingeconomies and welcome its efforts tocoordinate and monitor progress instrengthening financial regulation.Background:The G-20 was formed in 1999. The in-augural meeting took place on Decem-ber 15–16, 1999 in Berlin. The G-20 wasformed as a new forum for coopera-tion and consultation on matters per-taining to the international financialsystem. The membership of the G-20comprises the finance ministers andcentral bank governors of 19 countries:Argentina, Australia, Brazil, Canada,China, France, Germany, India, Indo-nesia, Italy, Japan, Mexico, Russia,Saudi Arabia, South Africa, South Ko-


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rea, Turkey, United Kingdom, UnitedStates of America. The EuropeanUnion, who is represented by the ro-tating Council presidency and the Eu-ropean Central Bank, is the 20th mem-ber of the G-20. Unlike internationalorganisations such as the Organisationfor Economic Co-operation and De-velopment (OECD), IMF or WorldBank, the G-20 (like the G-7) has nopermanent staff of its own. The G-20represents about 90 percent of theworld's gross national product, 80 per-cent of the worlds' trade and two-thirds of its population.G-24:G-24:G-24:G-24:G-24:�The Intergovernmental Group ofTwenty-Four on International Mon-etary Affairs and Development (G-24)was established in 1971. Its main ob-jective is to concert the position of de-veloping countries on monetary anddevelopment finance issues. It consistsof the following countries from eachof the three regions:Member countries are as follows:Region I (Africa): Algeria, Côted'Ivoire, Egypt, Ethiopia, Gabon,Ghana, Nigeria, South Africa and theDemocratic Republic of Congo. Re-gion II (Latin America and the Carib-bean): Argentina, Brazil, Colombia,Guatemala, Mexico, Peru, Trinidad andTobago and Venezuela. Region III(Asia and developing countries of Eu-rope): India, Iran, Lebanon, Pakistan,

Philippines, Sri Lanka and Syrian ArabRepublic. Chairman: H.E. Mr. AdibMayalehCentral Bank - Syria�Its main objective is to harmonisethe positions of the developing coun-tries on monetary and development

finance issues.�China has been a “special invitee”since the Gabon meetings of 1981.G-33:G-33:G-33:G-33:G-33: Developed Countries Developed Countries Developed Countries Developed Countries Developed CountriesThe Group of 33 was an internationalgrouping that existed briefly in 1999,comprising the thirty-three leadingnational economies of the world.It superseded the Group of 22 in early1999, and was itself superseded by thepresent Group of 20 later that year. Anumber of G33 meetings on the inter-national financial system were heldat the behest of the finance ministersand central bank governors of the G7.The first meeting was held in Bonn,Germany in 1999.G-33:G-33:G-33:G-33:G-33: Developing Countries Developing Countries Developing Countries Developing Countries Developing Countries�The G33 is the name for a group ofdeveloping countries that coordinateon trade and economic issues.�G-33 Countries: Antigua andBarbuda, Barbados, Belize, Benin,Botswana, China, Cote d’Ivoire,Congo, Cuba, Dominican Republic,Grenada, Guyana, Haiti, Honduras,India, Indonesia, Jamaica, Kenya, Ko-rea, Madagascar, Mauritius, Mongolia,Mozambique, Nicaragua, Nigeria, Pa-kistan, Panama, The Philippines, Peru,Saint Kitts, Saint Lucia, Saint Vincentand the Grenadines, Senegal, SriLanka, Suriname, Tanzania, Trinidadand Tobago, Turkey, Uganda, Venezu-ela, Zambia, and Zimbabwe�51 per cent of world population.�63 per cent of all Farmers.�20 per cent of world agriculturalproduction.�26 per cent of total agricultural ex-ports.�17 per cent of world’s imports of ag-ricultural products.�G-33 stressed that more meaning-ful and operational Special and Dif-ferential Treatment for developingcountries should be an integral partof all elements of the negotiations.G-77:G-77:G-77:G-77:G-77:�The Group is the largest coalitionin the Third World Nations.�It has 133 nations across the world.�The Group of 77 (G-77) was estab-lished on 15 June 1964 by seventy-seven developing countries signato-ries of the “Joint Declaration of theSeventy-Seven Countries” issued atthe end of the first session of theUnited Nations Conference on Tradeand Development (UNCTAD) inGeneva. Beginning with the first “Min-isterial Meeting of the Group of 77 in

Algiers (Algeria) on 10 – 25 October1967, which adopted the Charter ofAlgiers”, a permanent institutionalstructure gradually developed whichled to the creation of Chapters of theGroup of 77 with Liaison offices inGeneva (UNCTAD), Nairobi (UNEP),Paris (UNESCO), Rome (FAO/IFAD),Vienna (UNIDO), and the Group of 24(G-24) in Washington, D.C. (IMF andWorld Bank). Although the membersof the G-77 have increased to 130 coun-tries, the original name was retainedbecause of its historic significance.�The Group aims to provide the de-veloping world the means to articu-late and promote its collective eco-nomic interests.G-90:G-90:G-90:G-90:G-90:�Most of the G90 countries (AfricanUnion, LDCs and African Caribbeanand Pacific, ACP) have defensive in-terests. Except at WTO ministerials(Doha and again in Cancun), thesecountries have functioned as separategroupings – the African Group, LDCsand ACP – in the WTO. The most vo-

cal amongst them has been Kenya inthe African Group, Uganda or Tanza-nia on behalf of LDCs and sometimesthe Caribbean countries – Guyana orJamaica. Politically however, many inthis group are vulnerable to US andEU pressures since most have somekind of preferential trading arrange-ment with the US (eg. the AfricaGrowth and Opportunity Act, AGOA)or EU (eg. Cotonou) and are depen-dent on these powers for aid and loans.However, they have strength in num-bers, and this allowed them to beatdown the US and EC in Cancun.�The least developed countries(LDCs) joined other countries fromAfrica, the Caribbean and the Pacificduring the Cancun conference to formthe G90.GIRMITIA COUNTRIESGIRMITIA COUNTRIESGIRMITIA COUNTRIESGIRMITIA COUNTRIESGIRMITIA COUNTRIESThose Countries where bonded Indian


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HELCOMThe Helsinki Commission - Baltic Ma-rine Environment Protection Com-mission, also known as HELCOM,aims to call for international coordi-nation to protect the marine environ-ment of the Baltic Sea. The Conven-tion on the Protection of the MarineEnvironment of the Baltic Sea Areawas first signed in 1974 by the coastalstates of the Baltic Sea. In 1992, a newConvention was signed by all the coun-tries bordering the Baltic Sea and bythe European Economic Community.HELCOM is the governing body ofthe Convention. The present contract-ing parties to HELCOM are Denmark,Estonia, European Community, Fin-land, Germany, Latvia, Lithuania, Po-land, Russia and Sweden.�This commission works for protect-ing the marine environment of theBaltic Sea from all sources of pollu-tion through intergovernmental co-operation between Denmark, Estonia,the European Community, Finland,Germany, Latvia, Lithuania, Poland,Russia and Sweden. HELCOM is thegoverning body of the Convention onthe Protection of the Marine Environmentof the Baltic Sea Area - more usuallyknown as the Helsinki Convention.HELCOM’s main goal is to protect themarine environment of the Baltic Seafrom all sources of pollution, and torestore and safeguard its ecologicalbalance.�The 1974 Convention: It was for thefirst time that all the sources of pollu-tion around an entire sea were madesubject to a single convention, signedin 1974 by the then seven Baltic coastalstates. The Convention entered intoforce on 3 May 1980.�The 1992 Convention: In the light ofpolitical changes and developments ininternational environmental andmaritime law, a new Convention wassigned in 1992 by all the states bor-dering on the Baltic Sea, and the Euro-pean Community. It came into forceon 17 January 2000. The Conventioncovers the whole of the Baltic Sea area,including inland waters as well as thewater of the sea itself and the sea-bed.Measures are also taken in the whole

catchment area of the Baltic Sea to re-duce land-based pollution.

I

IBERO-AMERICANSUMMIT�The Ibero-American Summit is ayearly meeting, organized by theIberoamerican Community of Na-tions, of the heads of government andstate of the Spanish-, Portuguese-speaking nations of Europe and theAmericas.�The first summit, held in 1991 inGuadalajara, Mexico, was attended bythe governments of Argentina, Bo-livia, Brazil, Chile, Colombia, CostaRica, Cuba, the Dominican Republic,Ecuador, El Salvador, Guatemala,Honduras, Mexico, Nicaragua,Panama, Paraguay, Peru, Portugal,Spain, Uruguay and Venezuela. An-dorra joined in 2004. EquatorialGuinea and the Philippines entered in2009 as "associate members".�The 19th Ibero-American summitwas held in Estoril, Portugal on No-vember 30–December 1, 2009 .The 20th Ibero-American summit isgoing to be held in Mar de Plata, Ar-gentina on November 11–November12, 2010 .INDEPENDENT SOUTHASIAN COMMISSION ONPOVERTY ALLEVIATION(ISACPA):�In November, 1992, the IndependentSouth Asian Commission on PovertyAlleviation (ISACPA) constituted asan initiative of the Colombo SAARCSummit of 1991.�SAARC Development Goals for theperiod 2007-2012 in the areas of pov-erty alleviation, education, health andenvironment brought out by ISACPAsuggesting strategies to attain thegoals would be a menu for launchingand monitoring programmes to makeSouth Asia free from the clutches ofhunger and poverty.INDIAN OCEANCOMMISSION�It was started in January 1984 underthe General Victoria Agreement.�Official Language: French�It is an intergovernmental organi-zation.Objectives:�Diplomatic cooperation;�Economic and commercial coopera-tion;

�Cooperation in the field of agricul-ture, maritime fishing, and the con-servation of re-sources and ecosys-tems;�Cooperation incultural, scientific,technical, educa-tional and judicialfields.The Indian OceanCommission (COI), known as theCommission de l'Océan Indien inFrench, is an intergovernmental or-ganization that joins Comoros, Mada-gascar, Mauritius, France (for Réunionand Mayotte), and the Seychelles to-gether to encourage cooperation. Itwas started in January 1984 under theGeneral Victoria Agreement.INDIAN OCEAN RIMASSOCIATION FORREGIONALCOOPERATION (IOR-ARC):�The Association brings together theIndian Ocean countries from the threecontinents of Asia, Africa and Austra-lia to step up regional cooperation andinter-continental trade.�It came into existence in 1997 in PortLouis.�The rationale for its formation layin the growing importance of eco-nomic issues and the trend towardsregional economic cooperation and�First established in Mauritius onMarch 1995. Founding member states(March, 1995): Australia; India; Kenya;Mauritius; Oman; Singapore; SouthAfrica. In September 1996: Indonesia;Malaysia; Madagascar; Mozambique;Sri Lanka; Tanzania; and Yemen.March 1999: (Council of MinistersMeeting in Maputo, Mozambique):Bangladesh; Iran; Seychelles (with-drew as a member on 1 July 2003);Thailand; and United Arab Emirates.Dialogue Partners: China; Egypt;France; Japan; and United Kingdom.The Indian Ocean is the world’s thirdlargest Ocean. It carries half of theworld’s container ships, one third ofthe bulk cargo traffic, two-thirds of theworld’s oil shipments. It is a lifelineof international trade and economy.The region is woven together by traderoutes and commands control of themajor sea-lanes.Objectives:1. To promote sustainable growth andbalanced development of the regionand Member States

labourers were introduced by the Brit-ish to work in sugarcane fields:Surinam, Guyana, Trinidad,Mauritius and Fiji.


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2. To focus on those areas of economiccooperation which provide maximumopportunities for development, sharedinterest and mutual benefits3. To promote liberalisation, removeimpediments and lower barriers to-wards a freer and enhanced flow ofgoods, services, investment, and tech-nology within the Indian Ocean rim.INTERGOVERNMENTALAUTHORITY ONDEVELOPMENT:�Membership: 7 member states�Headquarters: Djibouti�Executive Secretary: MahboubMaalim of Kenya (since 14 June 2008).Formation: �Recurring and severedroughts and other natural disastersbetween 1974 and 1984 caused wide-spread famine, ecological degradationand economic hardship in the Horn ofAfrica region.�The six countries of the region tookaction through the United Nations toestablish an intergovernmental bodyfor development and drought controlin their region.�At a January 1986 assembly of headsof state and government, an agree-ment was signed which officiallylaunched the Intergovernmental Au-thority on Drought and Development(IGADD).�The third ministerial Troika meet-ing between the IntergovernmentalAuthority on Development (IGAD)and the European Union (EU) washeld in Brussels on 31 March 2009 un-der the Co–Chairs of His ExcellencyDr Tekeda Alemu, State Minister ofForeign Affairs of the Federal Demo-cratic Republic of Ethiopia, Chairper-son of the IGAD Council of Ministers,and Jan Kohout, Deputy Minister ofForeign Affairs of the Czech Republicrepresenting the President of theCouncil of the EU.INTER-GOVERNMENTALMARITIME CONSULTATIVEORGANIZATION (IMO):�In 1948 an international conferencein Geneva adopted a convention for-mally establishing IMO (the originalname was the Inter-GovernmentalMaritime Consultative Organization,or IMCO, but the name was changedin 1982 to IMO).�The headquarter is at London.�SecretaryGeneral- Efthimios E.Mitropoulos(18 June 2003-Till date)�The IMO Convention entered intoforce in 1958 and the new Organiza-

tion met for the first time the follow-ing year.�The purposes of the Organization,as summarized by Article 1(a) of theConvention, are “to provide machin-ery for cooperation among Govern-ments in the field of governmentalregulation and practices relating totechnical matters of all kinds affect-ing shipping engaged in internationaltrade; to encourage and facilitate thegeneral adoption of the highest prac-ticable standards in matters concern-ing maritime safety, efficiency of navi-gation and prevention and control ofmarine pollution from ships”�ResolutionsResolution MSC.255(84) (adopted on16 May 2008) adopts the Code of theInternational Standards and Recom-mended Practices for a Safety Investi-gation into a Marine Casualty or Ma-rine Incident ( Casualty InvestigationCode).INTERGOVERNMENTAL PANELON CLIMATE CHANGE (IPCC):�Recognizing the problem of poten-tial global climate change, the WorldMeteorological Organization (WMO)and the United Nations EnvironmentProgramme (UNEP) established theIntergovernmental Panel on ClimateChange (IPCC) in 1988. It is open toall members of the UN and WMO.�The First IPCC Assessment Reportwas completed in 1990. The Reportplayed an important role in establish-ing the Intergovernmental Negotiat-ing Com-mittee for aUN Frame-work Con-vention onC l i m a t eChange bythe UNGeneral As-sembly.�The UNFramework Convention on ClimateChange (UNFCCC) was adopted in1992 and entered into force in 1994. Itprovides the overall policy frame-work for addressing the climatechange issue.�The IPCC has decided to continueto prepare comprehensive assessmentreports and agreed to complete itsFourth Assessment Report in 2007.IPCC FOURTHASSESSMENT REPORT 2007The Nobel Peace Prize winning Inter-

governmental Panel on ClimateChange (IPCC) came out with the lastof its four parts of the Fourth Assess-ment Report on 17th November 2007in Valencia, Spain. A Synthesis report,based on the assessment carried outby the three working Groups of theIPCC, has provided an integratedview of climate change as the final partof the Panel's Fourth Assessment Re-port.INTERNATIONAL ATOMICENERGY AGENCY (IAEA):�The International Atomic EnergyAgency (IAEA) is the world’s centerof cooperation in the nuclear field.�It was set up as the world’s “Atomsfor Peace” organization in 1957 withinthe United Nations family. The Agencyworks with its Member States andmultiple partners worldwide to pro-mote safe, secure and peaceful nucleartechnologies.�The IAEA Secretariat is headquar-tered at the Vienna International Cen-tre in Vienna, Austria.�Director General- Yukiya Amano�Board of GovernorsThe current Board members are: Af-ghanistan, Argentina, Australia,Azerbaijan, Brazil, Burkina Faso,Cameroon, Canada, China, Cuba, Den-mark, Egypt, France, Germany, India,Japan, Kenya, South Korea, Malaysia,Mongolia, Netherlands, NewZealand, Pakistan, Peru, Romania,Russian Federation, South Africa,Spain, Switzerland, Turkey, Ukraine,United Kingdom, Uruguay, and Ven-ezuela (IAEA Board of Governors2009–2010).�Operational liaison and regional of-fices are located in Geneva, Switzer-land; New York, USA; Toronto,Canada; and Tokyo, Japan.�The Agency is led by Director Gen-eral Mohamed ElBara-dei and sixDeputy Directors General who headthe major departments.�Three main pillars - or areas ofwork:(a) Safety and Security; (b) Science andTechnology; and (c) Safeguards andVerification.�The Preparatory Commission forthe Comprehensive Nuclear-Test-BanTreaty Organization (CTBTO Prepara-tory Commission) is an internationalorganization established by the StatesSignatories to the Treaty on 19 No-vember 1996. It carries out the neces-sary preparations for the effective


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implementation of the Treaty, andprepares for the first session of theConference of the States Parties to theTreaty.INTERNATIONAL CENTRE FORSETTLEMENT OFINVESTMENTDISPUTES (ICSID):�The creation of the InternationalCentre for Settlement of InvestmentDisputes (ICSID) in 1966 was in partintended to relieve the President andthe staff of the burden of becominginvolved in such disputes.�ICSID is an autonomous interna-tional organization. However, it hasclose links with the World Bank.�Pursuant to the Convention, ICSIDprovides facilities for the conciliationand arbitration of disputes betweenmember countries and investors whoqualify as nationals of other membercountries.�ICSID has to date entered in sucharrangements with the PermanentCourt of Arbitration at The Hague, theRegional Arbitration Centres of theAsian-African Legal ConsultativeCommittee at Cairo and KualaLumpur, the Australian Centre for In-ternational Commercial Arbitration atMelbourne, the Australian Commer-cial Disputes Centre at Sydney, theSingapore International ArbitrationCentre and the GCC Commercial Ar-bitration Centre at Bahrain.�These arrangements have provedtheir usefulness in many ICSID casesand have helped to promote coopera-tion between ICSID and these institu-tions in several other respects.INTERNATIONAL CIVILAVIATION ORGANISATION(ICAO):� (ICAO) was established in 1947 andthe headquarter is at Montreal.�Secretaries General- Raymond Ben-jamin (France) (2009-present)�Council President- Roberto KobehGonzalez (Mexico) (2006-Present)�One of ICAO’s chief activities is stan-dardization, the establishment of In-ternational Standards, RecommendedPractices and Procedures covering thetechnical fields of aviation: licensingof personnel, rules of the air, aeronau-tical meteorology, aeronautical charts,units of measurement, operation ofaircraft, nationality and registrationmarks, airworthiness, aeronauticaltelecommunications, air traffic ser-vices, search and rescue, aircraft acci-

dent investigation, aerodromes, aero-nautical information services, aircraftnoise and engine missions, securityand the safe.�ICAO is currently against the inclu-sion of aviation in the European UnionEmissions Trading Scheme (EU ETS).However, the EU is pressing aheadwith its plans to include aviation from2011.INTERNATIONAL CRIMINALPOLICE ORGANISATION(INTERPOL):�The Organisation facilitates the co-operation of criminal police forces ofover 175 countries for preventing andsuppressing crime.�Its headquarters is in Lyons, France.�It came into effect in 1956.�Secretary general-Ronald Noble ofUnited States since 2000�President- Khoo Boon Hui ofSingapore since Oct 2008�It was given observer status in theUN General Assembly in 1996.�Its objectives are: to ensure and pro-mote the widest possible mutual as-sistance between all criminal policeauthorities; to establish and developall institutions likely to contribute ef-fectively to the prevention of ordinarylaw crime.INTERNATIONALFINANCECORPORATION (IFC):�The International Finance Corpora-tion (IFC) promotes sustainable pri-vate sector investment in developingcountries as a way to reduce povertyand improve people’s lives.�Established in 1956, IFC is the larg-est multilateral source of loan and eq-uity financing for private sector

projects in the developing world.�IFC is a member of the World BankGroup and is headquartered in Wash-ington, DC.�It shares the primary objective ofall World Bank Group institutions: toimprove the quality of the lives ofpeople in its developing membercountries.�It promotes sustainable private sec-tor development primarily by: Fi-

nancing private sector projects locatedin the developing world.�Helping private companies in thedeveloping world mobilize financingin international financial markets.Providing advice and technical assis-tance to businesses and governments.�Ownership and Management IFChas 178 member countries, which col-lectively determine its policies andapprove investments.INTERNATIONAL FUNDFOR AGRICULTURALDEVELOPMENT (IFAD):�International Fund for AgriculturalDevelopment (IFAD) was establishedin 1977 with its headquarter at Rome�One of the major outcomes of the1974 World Food Conference.�President- Kanayo F. Nwanze from2009.�Major goal is to empower poor ru-ral women and men in developingcountries to achieve higher incomesand improved food security�Membership in IFAD is open to anyState that is a member of the UnitedNations or its specialized agencies orthe International Atomic EnergyAgency. The Governing Council isIFAD’s highest decision-making au-thority, with the 165 Member Stateseach represented by a governor andalternate governor. The Councilmeets annually. The Executive Board,responsible for overseeing the generaloperations of IFAD and approvingloans and grants, is composed of 18members and 18 alternate members.The President, who serves for a four-year term (renewable once), is IFAD’schief executive officer and chair of theExecutive Board.�The strategic policy of IFAD is de-tailed in Strategic Framework forIFAD 2007-2010: Enabling the RuralPoor to Overcome Poverty.INTERNATIONALTHERMONUCLEARENERGY INITIATIVEEurope, the US, China, India, Japan,South Korea and Russia have signedan agreement to go for $12.8 billion,10-year project to be built at Cadarachein Southern France. France, which op-erates 58 nuclear reactors, got the op-portunity to host the project. Frenchcompanies including Areva SA, arethe world’s biggest maker of nuclearreactors. The idea was first proposedby Ronald Reagan and MikhailGorbachev in 1985.


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According to ITER organisation, thefirst commercial power from fusionreactors should be available around2045. A Japanese engineer-turned am-bassador, Kaname Ikeda, has been ap-pointed to head the project.Fusion power has been regarded asmuch safer and cleaner than the en-ergy produced by the fission reactor.The fusion power has very low car-bon emissions. Unlike existing fissionreactors, which release energy bysplitting atoms apart, ITER wouldgenerate energy by combining atoms.ITER is a multi-billion dollar interna-tional project that seeks to make useof fusion energy for electricity pro-duction a reality. It is totally meantfor peaceful purposes.It is based around a hydrogen plasma

torus operating at over 100 million de-gree C, and will produce 500 MW offusion power.Work on the ITER de-sign is being done at two Joint Worksites at Naka (near Tokyo, Japan) andin Garching (near Munich, Germany).The main ITER facility will be built inCadarache, France, and all ITER part-ners will participate in its construc-tion, research and development. Thedirect construction costs for ITERwould be $ 2,755 Million. EU will con-tribute 45 per cent and other six part-ners will contribute 9 per cent each.The project is technically ready to startconstruction and the first plasma op-eration is expected in 2016.Pursuant to the nuclear understand-ing of July 18, 2005, the USA supportedIndia’s membership of the Interna-tional Thermonuclear Energy Initia-tive (in ITER).ITER has seven partners. (1) India wasinvited on December 6, 2005 to jointhe initiative as a full partner by the(2) USA, and its other ITER partners -(3) the European Union, (4) Russia, (5)Japan, (6) South Korea, and (7) China -at the ITER negotiations meeting inJeju, South Korea. They are workingunder the auspices of the IAEA. India

will join the international team thatwill work on this project.IBSAThe first meeting of the India-Brazil-South Africa (IBSA) Trilateral Com-mission of the foreign ministers of In-dia, Brazil and South Africa took Placein March 2004 in New Delhi.TheTrilateral Commission was theoutcome of the IBSA Dialogue Forumwhich was formed during the visit ofthe India Foreign Minister to Brazil inJune 2003.Brasilia Declaration :The Foreign Ministers of Brazil, CelsoAmorim, of South Africa, NkosazanaDlamini Zuma, and of India, YashwantSinha, met in Brasilia on June 6, 2003,following ongoing consultations andafter the respective Heads of Stateand/or Government of their countriesheld conversations during the G-8meeting, in Evian.The Prime Minister of India,Manmohan Singh, the President ofBrazil, Luiz Inácio Lula da Silva, andthe President of South Africa, ThaboMbeki (thereafter referred as “the lead-ers”) met in Tshwane, South Africa,on 17 October 2007, for the 2nd Sum-mit of the India-Brazil-South Africa(IBSA) Dialogue Forum.India, Brazil and South Africa commit-ted themselves to jointly pursue re-forms in the United Nations and apoor-friendly conclusion to the DohaRound of trade talks. The three coun-tries are at the centre of G-20 whichhas emerged as a formidable allianceof developing countries and is en-gaged in tough bargains with the de-veloped countries for achieving "bal-anced" outcome. IBSA welcomed theadoption of 45 recommendations ofconcrete actions regarding the “Devel-opment Agenda” by this year’s WIPOGeneral Assembly, as well as the es-tablishment of the WIPO PermanentCommittee on Development and In-tellectual Property.5th IBSAMinisterial SummitIBSA ministerial commission meetingwas held at Somerset West in CapeTown. The IBSA was formed by India,Brazil and South Africa in 2003. Interms of trade, combined value at theend of last year had reached over $10billion. It simply means that the threecountries could feasibly see their tar-get of $15 billion in turnover fromcombined trade by 2010 being ex-

ceeded. Trade between Brazil, Indiaand South Africa also came intosharper focus, the three governmentswelcomed moves by their trade min-isters towards harmonising progressmade in preferential trade agreementsbetween the South African CustomsUnion (SACU) and Mercosur, the LatinAmerican trading bloc.IBSA is a unique initiative in South-South economic cooperation.New Delhi Summit Declaration Oc-tober 2008: The Prime Minister of In-dia, H.E. Dr Manmohan Singh, thePresident of Brazil, H.E. Mr. LuizInácio Lula da Silva, and the Presidentof South Africa, H.E. Mr. KgalemaPetrus Motlanthe (thereafter referredas “the leaders”) met in New Delhi,India, on 15 October 2008, for the 3rdSummit of the India-Brazil-South Af-rica (IBSA) Dialogue Forum.Third IBSA Summit: The IBSA has settarget of US$ 15 billion by 2010 andthis target seems to be within the reach.In the recently concluded Third Sum-mit of the IBSA Dialogue Forum atNew Delhi has kept a new target fortrade. Now the target for trilateraltrade has been set US$ 25 billion by2015. The fourth summit is to be heldin Brazil in early October, 2009”.They reiterated that South-South Co-operation cannot replace commit-ments by developed countries but isonly a complement to North-SouthCooperation. In this context, they wel-comed the convening of the High-level Conference on South-South Co-operation to be held in 2009.INTERNATIONAL LABOURORGANIZATION (ILO):�The International Labour Organiza-tion (ILO) is the UN specialized agencywhich seeks the promotion of socialjustice and internationally recognizedhuman and labour rights. It wasfounded in 1919 and is the only sur-viving major creation of the Treaty ofVersailles which brought the Leagueof Nations into being and it becamethe first specialized agency of the UNin 1946.Membership- Thereare 182 members ofthe ILOExecutive- Mr. KariTapiolathe Governing Body is the executiveof the International Labour Office. Itmeets three times a year, in March,June and November. It takes decisions


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on ILO policy, decides the agenda ofthe International Labour Conference,adopts the draft programme and bud-get of the organisation for submissionto the conference, and elects the direc-tor-general.�The ILO formulates internationallabour standards in the form of Con-ventions and Recommendations set-ting minimum standards of basiclabour rights: freedom of association,the right to organize, collective bar-gaining, abolition of forced labour,equality of opportunity and treat-ment, and other standards regulatingconditions across the entire spectrumof work related issues.INTERNATIONALMONETARY FUND:�Headquarters: Washington, D.C.�Membership: 185 member states�Establishment: December 1945�Managing Director- DominiqueStrauss-Kahn of France from Novem-ber 1, 2007 – present�It is an international organizationthat oversees the global financial sys-tem by observing exchange rates andbalance of payments�Aim: To foster global monetary co-operation, secure financial stability,facilitate international trade, promotehigh employment and sustainable eco-nomic growth, and reduce poverty.�The Group of Twenty (G-20) indus-trialized and emerging market econo-mies has reaffirmed the IMF’s centralrole in the international financial sys-tem, agreeing to triple the Fund’s lend-ing capacity to $750 billion and en-abling it to inject extra liquidity intothe world economy, according toManaging Director DominiqueStrauss-Kahn.INTERNATIONAL REDCROSS AND RED CRESCENTMOVEMENT: �It was established by Geneva Con-vention of 1864. The name and em-blem of the movement are derivedfrom the reversal of the Swiss nationalflag, to honor the country in whichRed Cross was found.�Presidents of the Federation-Tadateru Konoé of Japan(2009-present)�The Red Cross, a strictly neutral andimpartial worldwide organizationdedicated to humanitarian interests ingeneral and to alleviating human suf-fering in particular, is composed ofthree basic elements.�The self-governing National Red

Cross Societies, including the RedCrescent (in Muslim countries) and theRed Lion and Sun (in Iran), operate onthe national level through their vol-unteer members, although they alsoparticipate in international work. To-day numbering 114, these societies allhave Junior Red Cross Societies aswell.�The League of Red Cross Societies,a coordinating world federation of

these societies, was established in 1919as the result of proposals made byHenry P. Davison (1867-1922) of theAmerican Red Cross. The Leaguemaintains contacts between the soci-eties; acts as a clearinghouse for infor-mation; coordinates international di-saster operations.�The International Committee of theRed Cross [ICRC], an independentgroup of Swiss citizens chosen by co-optation (limited to twenty-five innumber), acts during war or conflictwhenever intervention by a neutralbody is necessary, such action consti-tuting its special field of activity.INTERNATIONALORGANIZATION FORSTANDARDIZATION (ISO):�Founded on 23rd February, 1947.�Headquarter- Geneva, SwitzerlandThe ISO is actually not purely an NGO,since its membership is by nation, andeach nation is represented by what theISO Council determines to be the‘most broadly representative’ stan-dardization body of a nation.�Its members are not, as is the case inthe United Nations system, delega-tions of national governments. It is anetwork of the national standards in-stitutes of 153 countries, on the basisof one member per country, with aCentral Secretariat in Geneva, Swit-zerland, that coordinates the system.Nevertheless, ISO occupies a specialposition between the public and pri-vate sectors. This is because, on theone hand, many of its member insti-tutes are part of the governmentalstructure of their countries, or are

mandated by their government. Onthe other hand, other members havetheir roots uniquely in the private sec-tor, having been set up by nationalpartnerships of industry associations.Therefore, ISO is able to act as a bridg-ing organization in which a consen-sus can be reached on solutions thatmeet both the requirements of busi-ness and the broader needs of society,such as the needs of stakeholder groupslike consumers and users.�ISO (International Organization forStandardization) is the world’s larg-est developer of standards. AlthoughISO’s principal activity is the devel-opment of technical standards, ISOstandards also have important eco-nomic and social repercussions. ISOstandards make a positive difference,not just to engineers and manufactur-ers for whom they solve basic prob-lems in production and distribution,but to society as a whole.INTERNATIONALOLYMPIC COMMITTEE(IOC):�It is a non-governmental interna-tional organisation which came intoexistence in 1984.�Its headquarters is in Lausanne,Switzerland.�President- Count Jacques Roggefrom 2001 - 2013 of Belgium.�The IOC aims at ensuring the regu-lar holding of the Olympic Games andfostering Olypism and Olympic move-ment.�It is a permanent organisation thatelects its own members.Olympic Movement seeks to contrib-ute to building a peaceful and betterworld by educating youth throughsport practised without discrimina-tion of any kind.�In 2010, the International OlympicCommittee was nominated for thePublic Eye Awards.INTERNATIONALRESEARCH AND TRAINING IN-STITUTE FOR THEADVANCEMENT OF WOMEN(INSTRAW):�International Research and TrainingInstitute for the Advancement ofWomen (INSTRAW) is the only UnitedNations entity mandated at the inter-national level to promote and under-take research and trainingprogrammes to contribute to the ad-vancement of women and genderequality worldwide.


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�By stimulating and assisting the ef-forts of inter-governmental, govern-mental and non-governmental orga-nizations, INSTRAW plays a criticalrole in advancing the global agendaof gender equality, development andpeace.�Started operations in 1979 - since1983 its main offices are located inSanto Domingo, Dominican Republic.Head: Carmen Moreno.�UN-INSTRAW is governed by anExecutive Board composed of tenMember States. These Member Statesare elected by the Economic and So-cial Council (ECOSOC) of the UnitedNations for a three-year term.�In 2007 the United Nations Eco-nomic and Social Council (ECOSOC)reaffirmed its commitment to elimi-nating gender inequalities by request-ing the Institute to strengthen its re-search and training activities in accor-dance with its mandates and its Stra-tegic Framework 2008-2011, whichstrengthens the Institute’s commit-ment to act as a catalyst for action ongender - promoting applied research,facilitating information-sharing, andsupporting capacity-building.INTERNATIONALTELECOMMUNICATIONSSATELLITE ORGANISATION(INTELSAT):�It promotes and coordinates the op-erations of the telecommunication sat-ellite system.�Its headquarters-Administrative headquarters is inWashington DC and Corporate head-quarters in Bermuda

�It came into effect in 1973.�The objective is to carry forward ona definitive basis the design , devel-opment, construction, operation andmaintenance of the space segment ofthe commercial telecommunicationssatellite system.INTERNATIONALTELECOMMUNICATIONSUNION (ITU):�With headquarter at Geneva and 89member-countries; it was establishedas the International Telegraph Unionin Paris in 1865;�The ITU is headed by a Secretary-General, who is elected to a four-yearterm by the member states at the pleni-potentiary conference.�The present Secretary-General ofITU is Dr.Hamadoun Touré of Mali�Became associated with the UN asits specialised agency in 1947.The purposes of ITU are:�To maintain and extend interna-tional cooperation between all itsMember States for the improvementand rational use of telecommunica-tions of all kinds.�To promote and enhance participa-tion of entities and organizations inthe activities of the Union, and to fos-ter fruitful cooperation and partner-ship between them and Member Statesfor the fulfilment of the overall objec-tives embodied in the purposes of theUnion�To promote and offer technical as-sistance to developing countries in thefield of telecommunications, and alsoto promote the mobilization of thematerial, human and financial re-sources needed to improve access totelecommunications services in suchcountries�To promote the development oftechnical facilities and their most effi-cient operation, with a view to im-proving the efficiency of telecommu-nication services, increasing their use-fulness and making them, so far as pos-sible, generally available to the pub-lic�To promote the extension of the ben-efits of new telecommunication tech-nologies to all the world’s inhabitants�To promote the use of telecommu-nication services with the objective offacilitating peaceful relations�To harmonize the actions of Mem-ber States and promote fruitful andconstructive cooperation and partner-ship between Member States and Sec-

tor Members in the attainment ofthose ends�To promote, at the internationallevel, the adoption of a broader ap-proach to the issues of telecommuni-cations in the global informationeconomy and society, by cooperatingwith other world and regional inter-governmental organizations andthose non-governmental organiza-tions concerned with telecommunica-tions.INTERNATIONALTRADE CENTRE (ITC):�The International Trade Centre(ITC) is the technical cooperationagency of the United Nations Confer-ence on Trade and Development(UNCTAD) and the World Trade Or-ganization (WTO) for operational, en-terprise-oriented aspects of trade de-velopment.�ITC supports developing and tran-sition economies, and particularlytheir business sector, in their effortsto realize their full potential for de-veloping exports and improving im-port operations.ITC works in six areas:�Product and market development�Development of trade support ser-vices�Trade information�Human resource development�International purchasing and sup-ply management�Needs assessment, programme de-sign for trade promotion�ITC’s technical assistance concen-trates on the three issues for which itbelieves the need for national capac-ity-building is most critical: helpingbusinesses understand WTO rules;strengthening enterprise competitive-ness; and developing new trade pro-motion strategies.INTERPOL�Formation: 1923�Headquarters: Lyon, France�Membership: 186 member states�Official languages: Arabic, English,French and Spanish�Secretary General: Ronald K. Noble�President: Khoo Boon Hui ofSingapore, since Oct 2008�It was formed to assist internationalcriminal police cooperation.�Interpol is the world’s fourth larg-est international organization, afterFIBA.�It was given observer status in theUN General Assembly in 1996.


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�Its objectives are: to ensure and pro-mote the widest possible mutual as-sistance between all criminal policeauthorities; to establish and developall institutions likely to contribute ef-fectively to the prevention of ordinarylaw crime.INDO-EU SUMMIT10th EU-India summit,was held inNewDelhi on 6th November 2009.�The FIRST SUMMIT between theEU and India was held in Lisbon, Por-tugal on 28th June 2000. The EU andIndia shall build a new strategic part-nership founded on shared values andaspirations characterised by enhancedand multi-faceted co-operation.�The SECOND SUMMIT betweenIndia and the EU was held in NewDelhi, India on 23rd November, 2001.�The THIRD SUMMIT-EU BusinessSummit, Plenary Session 3

Copenhagen, 9th October, 2002.�The FOURTH SUMMIT betweenIndia and the EU was held in NewDelhi, India on November 29, 2003.Successful conclusion of an Indo-EUCustoms Cooperation Agreement,India's imminent participation in thedevelopment phase of Galileo Projectand the launching of negotiations foran Indo-EU Maritime Agreement.�The FIFTH SUMMIT between theEU and India was held in The Hague,The Netherlands, on 8 November2004. It was a landmark Summit for itendorsed the EU’s proposal to upgradeits relationship with India to a ‘Strate-gic Partnership’. The EU, which hadstrategic partnerships with only five

other countries (USA, Canada, Russia,Japan and China), and now India.�The SIXTH SUMMIT-EU BusinessSummit was on September 7, 2005,New Delhi.�The SEVENTH SUMMIT-EU Sum-mit held in Helsinki, Finland hasstrengthened India and EU relations.Since the first EU-India Summit heldin 2000 in Lisbon, trade between bothpartners has increased from euro 25.6billion to around euro 40 billion in2005.�The EIGHTH-SUMMIT-EU washeld in New Delhi on 30th November2007. A Memorandum of Understand-ing (MoU) on the Country StrategyPaper for India for 2007-2010 wassigned between India and EU. TheMoU, with a total budget of Euro 260million will support India’s efforts toachieve the Millennium Development

Goals (MDG) and to implement theIndia – EU Joint Action Plan.EU-IndiaMarseille SummitThe NINTH EUROPEAN UNION -India Summit was held in Marseilleon 29 September 2008. The EU side wasrepresented by President NicolasSarkozy, in his capacity as Presidentof the European Council; by JoséManuel Barroso, President of the Eu-ropean Commission; by Dr JavierSolana, High Representative for theEU's Common Foreign and SecurityPolicy; by Bernard Kouchner, FrenchForeign Minister; by Mme Anne MarieIdrac, French Secretary of State for ex-ternal trade and by Peter Mandelson,

European Commissioner for Trade.The Republic of India was representedby Prime Minister Dr ManmohanSingh; Kamal Nath, Minister for Com-merce and Industry; and M. K.Narayanan, National Security Ad-viser.Major Outcome:1. The need for strategic partnershipwas reiterated. The India-EU Partner-ship has been firmly based on sharedvalues of democracy and humanrights, fundamental freedoms (includ-ing religious), pluralism, rule of lawand multilateralism.2. The Summit expressed their seriousconcern over the Iranian nuclear issueand called on Iran to take steps to re-establish confidence in the nature ofits nuclear programme, as required bythe IAEA Board of Governors.3. India and EU stressed the need tostrengthen efforts towards nationalreconciliation and reaffirmed the needfor an inclusive dialogue, includingwith Daw Aung San Suu Kyi and theMyanmar ethnic groups, to progresstowards democracy.4. The EU and India agreed to workactively towards a swift finalisationof a Comprehensive Convention onInternational Terrorism at the UN. Atthe bilateral level, the two sides ex-pressed commitment to continuingtheir cooperation on counter-terror-ism and early formalisation of coop-eration between Europol and Indianagencies.5. On global issues, the summit dis-cussed on global economic recession,growing regional disparities, food se-curity, and climate change and energy.Bilateral Issues:1. The joint cooperation in the frame-work of the International Thermo-nuclear Experimental Reactor (ITER)Agreement remains a priority thatwill be further enhanced through theconclusion of a bilateral agreement be-tween Euratom and India in the fieldof fusion energy research, for whichnegotiations are being finalised.2. New channels have been estab-lished, such as the annual security dia-logue. New formats for dialogue havealso been created through Indianmembership of ASEM and EU ob-server status at SAARC.3. In the last five years, trade has morethan doubled, and bilateral investmenthas increased ten-fold. The partieslaunched negotiations for a bilateral


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trade and investment agreement in2007.4. Co-operation on information andcommunications technologies contin-ues to be strengthened, as indicatedby the connection of the European highspeed research network GEANT2 withits Indian counterpart ERNET, allow-ing European and Indian researchersto develop joint projects.

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JUNIOR- 8It is a joint initiative of UNICEF andthe Morgan Stanley Foundation,which is supported by the G8 Presi-dency. The conference serves as an in-ternational forum for the exchange ofideas. Children and young peoplefrom the G8 countries and the devel-oping countries are to be given directaccess to the most powerful leaders inthe world. It also gets young peopleinterested in politics.

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KOREAN SUMMITKOREAN SUMMITKOREAN SUMMITKOREAN SUMMITKOREAN SUMMITIn a historic future-setting accord,President Roh Moo-hyun of the Re-public of Korea (RoK) and ChairmanKim Jong-il of the National DefenceCommission of the DemocraticPeople’s Republic of Korea (DPRK)“agreed to resolve the issue of unifi-cation on their own initiative” and inaccordance with “the spirit of by-the-Korean people themselves.”

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LALALALALATIN UNIONTIN UNIONTIN UNIONTIN UNIONTIN UNION�Official languages: Spanish, French,Italian, Portuguese, and Romanian�GeneralSecretary:Mr.AmbasciatoreBernardino Osio�Established: 15 May 1954�Member states: The Latin Union isan international organization of na-tions that use a Romance language. Itsaim is to protect, project, and promotethe common heritage and unifyingidentities of the Latin, and Latin-in-fluenced, world. It was created in 1954in Madrid, Spain, and it has existed asa functional institution since 1983.Since that time its member states haverisen from 12 to 37, and its member-ship now includes countries in Europe,Africa, the Americas and the Asia-Pa-

cific region�Headquarters: Paris, France�Its aim is to protect, project, and pro-mote the common heritage and uni-fying identities of the Latin, and Latin-influenced, world.

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MEDICINE SANS FRONTIERE�Médecins Sans Frontières was cre-ated in 1971 by a small group of Frenchdoctors.�President- Dr. Christophe Fournier.�It is a global charity organisationthat works to promote the welfare ofthe war ridden people.�It is a secular humanitarian-aid non-governmental organization bestknown for its projects in war-torn re-gions and developing countries fac-ing endemic disease.�Recently, it pulled out its activitiesfrom Afghanistan because of violence.MEKONG-GANGACOOPERATION�The grouping brings together sixnations of the Rivers Ganga andMekong region for economic coopera-tion.�Its members are: Cambodia, India,Laos, Myanmar, Thailand and Viet-nam.�The group was formally launchedin 2000.�The MGC aims at developing closerrelations and better understandingamong the member countries to en-hance friendship and solidarity.Second MGC Ministerial MeetingAt the Second MGC Ministerial Meet-ing held in Hanoi on July 28, 2001, themember countries adopted the HanoiProgramme of Action affirming theircommitment to cooperate in four ar-eas of cooperation. The “HanoiProgramme of Action” has 6 yearstimeframe from 2001 to 2007 and theprogress of its implementation shallbe reviewed every two years.Third MGC Ministerial MeetingAt the Third MGC Ministerial Meet-ing held in Phnom Penh on June 202003, the member countries adoptedthe Phnom Penh Road Map as a planto accelerate the implementation of allMGC projects and activities.Fourth MGC Ministerial MeetingFourth MGC Ministerial Meeting washeld January 12, 2007 at Sebu. In thismeeting Thailand has handed over thechairmanship of MGC to India.

The Fifth Ministerial Meeting of theMekong-Ganga Cooperation was heldin Manila, Philippines, on 1 August2007.The Meeting agreed that the SixthMeeting on MGC was convened in(Kolkata, India) in 2008 under thechairmanship of India.MERCOSUR�Formation: 26 March 1991 (Treatyof Asunción)�Administrative centre: Montevideo�Largest city: São Paulo�Member states: Argentina, Brazil,Paraguay, Uruguay and Venezuela�Associate states: Bolivia, Chile, Co-lombia, Ecuador and Peru�Observer states: Mexico�Official languages: Portuguese,Spanish and Guaraní

�Presidency: Carlos Chacho Álvarez�Mercosur giving the capability tocombine resources to balance the ac-tivities of other global economic pow-ers, maybe especially the United Statesand the European Union. The organi-zation could also potentially pre-emptthe Free Trade Area of the Americas(FTAA).�Last Summit: 19-20 January, 2007;Rio de Janeiro, East of Brazil.MADRID PROTOCOLTRADEMARK PROTECTIONThis system is important for trade-mark protection for the global goingcompanies and Indian companiesneeds to have these protection in or-der to survive in the internationalmarket.The Madrid System is basically ad-ministered by the International Bureauof World Intellectual Property


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Organisation (WIPO), Geneva. TheMadrid Protocol permits the filing,registration and maintenance of trade-mark rights in more than one juris-diction on a global basis.The Madrid System comprises twotreaties:(1) The Madrid Agreement concern-ing the International Registration ofMarks, which was concluded in 1891and came into force in 1892, and (2)the Protocol relating to the MadridAgreement, which came into opera-tion on April 1, 1996.At present, 67 countries are the con-tracting parties to the Madrid Proto-col including China, Japan and the UK.US became a party to it on November2, 2003 and the European Communityjoined it on October 1, 2004.MARSHALL PLAN IIA proposal to green reconstruct pack-age to help developing countries likeIndia and China- to recast pollution-generating and unsustainable devel-opment models and transform themto become clean and sustainable.MIGA�Founded in 1988, as a member ofthe World Bank Group,it is headquar-tered in Washington, DC. MIGA'sshareholders are its 175 member coun-tries. MIGA’s mission is to promote foreigndirect investment (FDI) into develop-ing countries to help support eco-nomic growth, reduce poverty, andimprove people’s lives.�MIGA’s operational strategy playsto our foremost strength in the mar-ketplace—attracting investors andprivate insurers into difficult operat-ing environments.�MIGA gives private investors theconfidence and comfort they need tomake sustainable investments in de-veloping countries.�MIGA specializes in facilitating in-vestments in high-risk, low-incomecountries—such as in Africa and con-flict-affected areas—which account for42 percent of our portfolio.�By partnering with the World Bankand others, MIGA is able to leveragefinance for guarantee trust funds inthese difficult or frontier markets.�The agency also focuses on support-ing complex infrastructure projectsand promoting investments betweendeveloping countries.�MIGA’s technical assistance servicesalso play an integral role in catalyzing

foreign direct investment by helpingdeveloping countries define andimplement strategies to promote in-vestment.�MIGA develops and deploys toolsand technologies to support thespread of information on investmentopportunities. Thousands of users takeadvantage of our suite of online in-vestment information services, whichcomplement country-based capacity-building work. The agency uses its le-gal services to further smooth possibleimpediments to investment.

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NNNNNAAAAATTTTTO:O:O:O:O:�Formation: 4 April 1949�Type: Military alliance�Headquarters: Brussels, Belgium�Membership: 28 member states�Official languages: English, French�Secretary General: Anders FoghRasmussen of Denmark (1 August2009–present )�Deputy Secretary General- ClaudioBisogniero of Italy (2007–present).�It is a military alliance.

�Last Summit:2009 Strasbourg-Kehlsummit from April 3 to April 4, 2009hosted by Strasbourg, France andKehl Germany marks the 60th anni-versary of NATO. 2010/2011 Lisbonsummit will be held at the End of 2010/Beginning of 2011 Lisbon, Portugal .RIGA SUMMITA number of decisions were taken dur-ing the RIGA Summit at Latvia:NATO endorsed the ComprehensivePolitical Guidance (CPG). CPG is amajor policy document that sets outthe priorities for all Alliance capabil-ity isshttp://en.wikipedia.org/wiki/Category:NATO_summitsues, plan-ning disciplines and intelligence forthe next 10 to 15 years.

NALANDAMENTOR GROUPThe fifth Nalanda Mentor Group(NMG) held in Bodh Gaya on 19 and20 February, 2009. One can recollectthat the first summit was held in July2007 in Singapore; the second was heldin December 2007 in Tokyo; the thirdsummit was held in May 2008 in NewYork, and the fourth summit at Au-gust 2008 in New Delhi. The MentorGroup for the revival of Nalanda, hasbeen headed by Nobel LaureateAmartya Sen and comprises the For-eign Minister of Singapore, GeorgeYeo, Harvard historian Sugata Bose,academic and writer Lord MeghnadDesai and scholars and experts fromJapan and China. The Mentor Groupagreed that Nalanda University shouldbe an international university enjoy-ing academic autonomy. It would bea secular academic institution. TheUniversity, according to the blueprintfinalized by the Mentor Group, willhave schools in Buddhist studies, phi-losophy and comparative religions,historical studies, international rela-tions and peace studies, business man-agement and development studies,languages and literature, and ecologyand environmental studies.NON-ALIGNED MOVEMENTIt was founded in April 1955; as of2007, it has 118 members. The purposeof the organization as stated in the Ha-vana Declaration of 1979 is to ensure"the national independence, sover-eignty, territorial integrity and secu-rity of non-aligned countries" in their"struggle against imperialism, colo-nialism, neo-colonialism, racism, andall forms of foreign aggression, occu-pation, domination, interference orhegemony as well as against greatpower and bloc politics.Secretary-General: Raul Castro.Member states and representativesAfghanistan, Algeria, Angola, Antig-ua and Barbuda, Bahamas, Bahrain,Bangladesh, Barbados, Belarus,Belize, Benin, Bhutan, Bolivia,Botswana, Burma (Myanmar), Brunei,Burkina Faso, Burundi, Cambodia,Cameroon, Cape Verde, Central Afri-can Republic, Chad, Chile, Colombia,Comoros, Congo, Côte d'Ivoire, Cuba Democratic Republic of the Congo,Djibouti, Dominica, Dominican Re-public, Ecuador, Egypt, EquatorialGuinea, Eritrea, Ethiopia, Fiji, Gabon, Gambia, Ghana, Grenada, Guatemala,


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Guinea, Guinea-Bissau, Guyana, Haiti,Honduras, Indonesia, India, Iran, Iraq,Jamaica, Jordan, Kenya, Kuwait, Laos,Lebanon, Lesotho, Liberia, Libya,Madagascar, Malawi, Malaysia,Maldives, Mali, Mauritania,Mauritius, Mongolia, Morocco,Mozambique, Namibia, Nepal, Nica-ragua, Niger, Nigeria, North Korea,Oman, Pakistan, Palestine, Panama,Papua New Guinea, Peru, Philippines,Qatar, Rwanda, Saint Lucia, Saint Kittsand Nevis, Saint Vincent and theGrenadines, São Tomé and Príncipe,Saudi Arabia, Senegal, Seychelles, Si-erra Leone, Singapore, Somalia, SouthAfrica, Sri Lanka, Sudan, Suriname,Swaziland, Syria, Tanzania, Thailand,Timor-Leste, Togo, Trinidad and To-bago, Tunisia, Turkmenistan, Uganda,United Arab Emirates, Uzbekistan,Vanuatu, Venezuela, Vietnam,Yemen, Zambia, Zimbabwe.Observers: The following nationshave observer status: Armenia,Azerbaijan, Bosnia and Herzegovina,Brazil, Costa Rica, Croatia, El Salva-dor, Kazakhstan, Kyrgyzstan, Mexico,Montenegro, Paraguay, People's Re-public of China, Serbia, Ukraine andUruguay.15th SummitThe 15th Summit of Non-AlignedMovement ended without any sub-stantive note. During the Summit, theparticipants elected the Egyptian presi-dent, Mohamed Hosni Moubarak, asthe chairman of the Non-AlignedMovement (NAM) for a three yearsterm. Egyptian President HosniMubarak noted the Non-AlignedMovement is" alive and well". Themovement now has 118 memberstates, with 15 observer states, repre-senting two-thirds of the members ofthe United Nations and half of theworld's population. It has struggledto find a role since the 1989 fall of theBerlin Wall and the Soviet Union's col-lapse. The 118 are composed of 53 statesin Africa, 38 in Asia, 1 in Europe and26 in Latin America and the Carib-bean.A meeting between Indian Prime Min-ister Manmohan Singh and Pakistanipremier Yusuf Raza Gilani on the side-lines could become a focus and set thestage for dialogue between the rivals.Sudanese President Omar Hassan al-Bashir is at the summit despite an In-ternational Criminal Court (ICC) in-dictment calling for his arrest on

charges he masterminded rightsabuses in Darfur. In a draft statement,NAM voiced "deep concern" about theICC's move to indict Bashir. The NAMcountries have demonstrated againtheir determination to play a biggerrole in the world arena.NORTH AMERICANFREE TRADE AGREEMENT(NAFTA):�Formation: 1 January 1994�Type: Free trade area�Headquarters: none�Secretariats at Mexico City, Wash-ington, D.C. and Ottawa

�General Secretary: Abdallah Salemel-Badri Libya 1 Jan 2007 - PRESENT�It is the trade bloc in North Americacreated by the North American FreeTrade Agreement (NAFTA).�Its objective is to eliminate mosttariffs and other trade barriers onproducts and services passing betweenthe US, Canada and Mexico.

O

OXFAM�During the Second World War, anational Famine Relief Committeewas set up in England in May 1942.They raised funds for war refugees anddisplaced people across Europe. TheOxford Committee for Famine Reliefmet for the first time in October 1942.�In 1949 the Committee’s objectiveswere again broadened to ‘the relief ofsuffering in any part of the world.’ TheCommittee gradually became knownby its abbreviated telegraph address,Oxfam. This name was formallyadopted in 1965.�The 1960s brought great changes.The organisation worked to present adifferent picture of poor people in theThird World: one in which they wereportrayed as human beings with dig-nity, not as passive victims.�Oxfam’s overseas operationschanged too. The major focus of work,

managed by a growing network ofOxfam Field Directors, became sup-port for self-help schemes wherebycommunities improved their ownwater supplies, farming practices, andhealth provision.�As Oxfam continued to expand itswork through the 1970s, many newideas and theories were put forwardabout development and poverty, in-cluding the decision to employ localpeople to run and work on projects.The same principles of community in-volvement and control are still behindOxfam’s work today.�Oxfam’s Public Affairs Unit (PAU)was set up to provide research intoand analysis of the causes of poverty.By the mid-1980s the PAU was lobby-ing on a range of issues including pes-ticides, food aid, and Third Worlddebt.�With the escalating number of con-flicts following the collapse of the So-viet Union and the Eastern bloc, Oxfambegan emergency and rehabilitationwork in this region during the 1990s.�Oxfam’s largest ever response to ahumanitarian disaster was in the GreatLakes region of Central Africa in themid-1990s. The work on the groundwas matched by international lobby-ing and campaigning aimed at the UN,the Organisation of African Unity, andpowerful governments, in an effort tobuild a lasting peace.OFFICE OF THE UNITEDNATIONS HIGHCOMMISSIONER FORHUMAN RIGHTS (OHCHR):�Office of The United Nations HighCommissioner for Human Rights(OHCHR) works to keep that visionto the forefront through constant en-couragement of the international com-munity and its member States to up-hold universally agreed human rightsstandards.�It is the role of OHCHR to alert Gov-ernments and the world communityto the daily reality that these standardsare too often ignored or unfulfilled,and to be a voice for the victims ofhuman rights violations everywhere.�The post of High Commissionerwas created in 1993. The Office of theHigh Commissioner for HumanRights (OHCHR) is based at the PalaisWilson in Geneva, Switzerland, withan office at United Nations Headquar-ters in New York.OFFICIAL DEVELOPMENT


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ASSISTANCE (ODA):�The poor countries cannot afford tohave loans on the commercial terms(like External Commercial Borrow-ings) Therefore, the Official Develop-ment Assistance (ODA) or Aid is mustfor them.�ODA refers to grants and soft loansfrom official sources to promote so-cial welfare and economic develop-ment. There are two channels of ODA: (a) between governments or govern-ment agencies (bilateral flows), and(b) through multi-lateral institutionslike the World Bank and Regional De-velopment Banks like the Asian De-velopment Banks (multilateral flows).ORGANISATION FORECONOMIC CO-OPERATIONAND DEVELOPMENT (OECD):�Originated in 1948.�Secretary General-José ÁngelGurría of Mexico(2006)�It is an international organisationof those developed countries that ac-cept the principles of representativedemocracy and a free marketeconomy.�The organization provides a settingwhere governments can comparepolicy experiences, seek answers tocommon problems, identify goodpractice and co-ordinate domestic andinternational policies.�Headquarters: Château de la Muettein Paris.ORORORORORGANISAGANISAGANISAGANISAGANISATION FOR TION FOR TION FOR TION FOR TION FOR THETHETHETHETHE

PROHIBITION OF CHEMICALPROHIBITION OF CHEMICALPROHIBITION OF CHEMICALPROHIBITION OF CHEMICALPROHIBITION OF CHEMICALWEAPONS (OPCW):WEAPONS (OPCW):WEAPONS (OPCW):WEAPONS (OPCW):WEAPONS (OPCW):�The Organisation for the Prohibi-tion of Chemical Weapons (OPCW) isthe international organisation that wasestablished in 1997 by the countriesthat have joined the Chemical Weap-ons Convention (CWC) to make surethat the Convention works effectivelyand achieves its purpose.Under the terms of the Convention,the OPCW undertakes many activitiesall over the world, including:�Working to convince those coun-tries in the world that have not yetdone so to join the Convention;checking and confirming the destruc-tion of existing chemical weapons;�Monitoring certain activities in thechemical industry to reduce the riskof commercial chemicals being mis-used for weapons purposes;�Providing assistance and protectionto member countries if they are at-tacked or threatened with attack by

chemical weapons, including by ter-rorists; and�Promoting international coopera-tion for the peaceful uses of chemis-try.�The OPCW plays an important rolein limiting the methods of war by get-ting rid of one of the most horribleweapons and working towards thecomplete elimination of an entire cat-egory of weapons of mass destruction.�The OPCW is an independent inter-national organisation, working in theinterests of its Member States. TheOPCW cooperates with the UnitedNations and, like the United Nations,the six official languages of the OPCWare Arabic, Chinese, English, French,Russian, and Spanish.ORGANISATION OF EASTERNCARIBBEAN STATES:�The Organisation of Eastern Carib-bean States (OECS), created in 1981.�Membership- There are 7 membercountries -Antigua and BarbudaDominica, Grenada, Montserrat,Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines.�Associate Members- Anguilla and British Virgin Islands�Director General - Dr. Len Ishmael� It is an inter-governmentalorganisation dedicated to economicharmonisation and integration, pro-tection of human and legal rights, andthe encouragement of good gover-nance between countries and depen-dencies in the Eastern Caribbean.�The main organ of the OECS, theSecretariat, is based in the capital cityof Castries, Saint Lucia.ORGANISATION OFPETROLEUM EXPORTINGCOUNTRIES (OPEC):�It was established in 1960 and itsheadquarters is in Vienna.�The Organization of the PetroleumExporting Countries (OPEC) is a per-manent intergovernmental organiza-tion, created at the Baghdad Confer-ence on September 10–14, 1960, by Iran,Iraq, Kuwait, Saudi Arabia and Ven-ezuela. The five Founding Memberswere later joined by nine other Mem-bers: Qatar (1961); Indonesia (1962) --suspended its membership from Janu-ary 2009; Socialist Peoples LibyanArab Jamahiriya (1962); United ArabEmirates (1967); Algeria (1969); Nige-ria (1971); Ecuador (1973) -- suspendedits membership from December 1992-October 2007; Angola (2007); and

Gabon (1975–1994).�OPEC had its headquarters inGeneva, Switzerland, in the first fiveyears of its existence. This was movedto Vienna, Austria, on September 1,1965.� It brings together most of theworld’s oil exporting countries to co-ordinate their petroleum policies andprovide them with technical and eco-nomic aid.�OPEC possess over three-quartersof the total oil reserves.�It is in the form of a cartel.�Recently, the organisation has de-cided to increase the production ofcrude oil to lower the soaring oilprices in the global markets.�OPEC was founded to unify and co-ordinate members’ petroleum poli-cies.�Member countries hold about two-thirds of the world’s oil reserves.THIRD OPECSUMMIT AT RIYADHThis was the Third Summit of Headsof State and Government of OPECMember Countries held at Riyadh,Kingdom of Saudi Arabia, 17–18 No-vember 2007. The First and SecondSummits were held in Algiers andCaracas in 1975 and 2000, respectively.It was during the First Summit inAlgiers that the OPEC Fund for Inter-national Development was establishedto provide development assistance todeveloping countries. The Third OPECSummit was concluded under thechairmanship of Custodian of the TwoHoly Mosques King Abdullah bin


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Abdulaziz.The Organization of the PetroleumExporting Countries (OPEC) is a per-manent, intergovernmental Organiza-tion, created at the Baghdad Confer-ence on September 10–14, 1960, by Iran,Iraq, Kuwait, Saudi Arabia and Ven-ezuela. The five Founding Memberswere later joined by nine other Mem-bers: Qatar (1961); Indonesia (1962);Socialist Peoples Libyan ArabJamahiriya (1962); United Arab Emir-ates (1967); Algeria (1969); Nigeria(1971); Ecuador (1973–1992); Gabon(1975–1994) and Angola (2007). OPEChad its headquarters in Geneva, Swit-zerland, in the first five years of itsexistence. This was moved to Vienna,Austria, on September 1, 1965.ORGANISATION OF THEISLAMIC CONFERENCE (OIC):� It was formally established inJeddah, Saudi Arabia in 1971.�Its headquarters in is Jeddah.�It promotes cooperation on all is-sues among the Islamic countries.�The organisation seeks to promotesolidarity among member-states in theeconomic, social, cultural, scientificand other vital fields.Islamic SummitConferences- The 11th OIC summitwas held on March 13–14, 2008 inDakar, Senegal.The 12thOIC Summitwill be conducted in 2011 in Cairo,Egypt.The Organization of the Islamic Con-ference (OIC) is the second largest in-ter-governmental organization afterthe United Nations which has mem-bership of 57 states spread over fourcontinents.The present Charter of the Organiza-tion was adopted by the Eleventh Is-

lamic Summit held in Dakar on 13-14March 2008 which laid down the ob-jectives and principles of the organi-zation and fundamental purposes tostrengthen the solidarity and coopera-tion among the Member States.Aims:�To promote solidarity among all Is-lamic member states;

�To consolidate cooperation amongmember states in economic, social,cultural, scientific, and other fields ofactivity;�To endeavor to eliminate racial seg-regation and discrimination and tooppose colonialism in all its forms;and,�To support all Muslim people intheir struggle to safeguard their dig-nity, independence and nationalrights, bridging gaps between differ-ent culture of the world etc.Prof.Dr. Ekmeleddin Ihsanoglu (Tur-key): is the Secretary General.

The 11th OIC Summit Conference atDakar in Senegal is the first to be heldsince the 3rd Extraordinary Sessionwas held in Makkah Al Mukarramahin the Kingdom of Saudi Arabia from5 to 6 Dhul Qa’ada.Professor Ekmeleddin Ihsanoglu ofTurkey is the first by-vote-elected Sec-retary General of the Organization ofthe Islamic Conference (OIC). Eversince he took the office as the ninthSecretary General in January 2005, hehas taken serious steps to make the 57member states organization as an ef-fective organization.

ORGANIZATION FORSECURITY ANDCO-OPERATION IN EUROPE:�Member States: 56�Created during the cold war era asan East-West forum.�It serves as a forum for political dia-logue and its stated aim is to securestability in the region, based on demo-cratic practices and governance.

ORGANIZATION OFAMERICAN STATES:Headquarters: Washington, D.C.�Membership: 35 member states�Official languages: English, French,Spanish, Portuguese�Secretary General: José MiguelInsulza (26 May 2005 - present)�Formation: - Signed - Charter ofthe OAS 30 April 1948 - In effect - 1 December 195139th OASAt the 39th OAS general assembly inthe Honduran city of San Pedro Sula,the 34 members had unanimouslyvoted in favor of revoking Cuba's ex-clusion from the group. Founded in1948 as a regional political organiza-tion, the OAS had the United States asits leader and a major financial sup-porter in the early days, and memberstates had to conform to U.S. valuesand standards of democracy.One can remember that the US hadplayed an instrumental role in Cuba'ssuspension from the hemisphericbody in 1962 as Fidel Castro's gov-ernment veered into the Soviet blocat a moment of intense global tension.Why Cuba retained membership ofOAS?1. But in recent years, with the ColdWar fading and left-of-centre govern-ments spreading in the Americas,Cuba's isolation has melted away.2. In course of time, every country inthe hemisphere except for the UnitedStates has re-established relations withCuba and the US embargo of Cuba isdeeply unpopular throughout the re-gion.3. Latin American countries also be-came increasingly wary of U.S. inter-ference in their internal affairs as theyimproved relations with Cuba. Withthe resumption of diplomatic rela-tions with El Salvador, Cuba has nowrestored formal ties with all LatinAmerican countries.4. The new regime in USA did notplace any major hurdle in this path.The US has already lifted restrictionson money transfers and travels to theisland by Americans with familymembers there and is resuming long-stalled immigration and postal servicetalks. Washington and Havana havealso agreed to resume regular talkson migration issues.ORGANIZATION OF ARABPETROLEUM EXPORTINGCOUNTRIES (OAPEC):


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�Established byan agreementamongst Arabcountries whichrely on the exportof petroleum, theOrganization ofArab PetroleumExporting Countries (OAPEC) is a re-gional inter-governmental organiza-tion concerned with the developmentof the petroleum industry by foster-ing cooperation among its members.�In 1968, Kuwait, Libya and SaudiArabia signed in Beirut an agreementestablishing OAPEC. The three found-ing members agreed that the Organi-zation would be located in the State ofKuwait. By 1982 the membership ofthe Organization has risen to elevenArab oil exporting countries: Algeria(1970), Bahrain (1970), Egypt (1973),Iraq (1972), Kuwait (1968), Libya(1968), Qatar (1970), Saudi Arabia(1968), Syria (1972), Tunisia (1982) andUnited Arab Emirates (1970). In 1986,Tunisia submitted a request for with-drawal.ORGANIZATION OF CENTRALASIAN COOPERATION (OCAC):�It is an international organization,composed of Kazakhstan, Kyrgyzstan,Tajikistan, Uzbekistan and Russia.�The current member nations, minusRussia and Tajikistan, plusTurkmenistan, formed the OCAC in1991 as Central Asian Common-wealth. Its objective is to enchance “thedevelopment of the economic integra-tion in the region, the perfection ofthe forms and mechanisms of expan-sion of the political, social, scientific-technical, cultural and educational re-lations.ORGANIZATION OF THE BLACKSEA ECONOMIC COOPERATION(OBSEC):�On 25 June 1992, the Heads of Stateand Government of eleven countriessigned in Istanbul the Summit �Dec-laration and the Bosporus Statementgiving birth to the Black Sea EconomicCooperation (BSEC).�With the entry into force of its Char-ter on 1 May 1999, BSEC acquired in-ternational legal identity and wastransformed into a full-fledged re-gional economic organization: Orga-nization of the Black Sea Economic Co-operation.�With the accession of Serbia andMontenegro in April 2004, the

Organization’s Member States in-creased to twelve.�The BSEC Headquarters - the Per-manent International Secretariat of theOrganization of the Black Sea Eco-nomic Cooperation (BSEC PERMIS) -was established in March 1994 inIstanbul.

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PACIFIC ISLANDS FORUM�Founded in 1971 as South Pacific Fo-rum and in 2000 name was changed.�Headquarters: Suva, Fiji�Member states: Australia, the CookIslands, the Federated States ofMicronesia, Fiji, Kiribati, the MarshallIslands, Nauru, New Zealand, Niue,Palau, Papua New Guinea, Samoa, theSolomon Islands, Tonga, Tuvalu, andVanuatu.�Associate members territories: NewCaledonia and French Polynesia.

�Aims: to enhance cooperation be-tween the independent countries ofthe Pacific Ocean.In August 2008, the Forum threatenedto suspend Fiji if the latter did not com-mit to holding a general election byMarch 2009.Secretary General of the Pacific IslandsForum: Tuiloma Neroni Slade (Sa-moa).The Pacific Island Countries TradeAgreement (PICTA) aims to establisha free-trade area between fourteen ofthe Pacific Islands Forum countries. Asof November 2006, it had been signedby twelve countries (not signed byMarshall Islands or Palau per PICTAstatus report): Cook Islands, Fiji,Kiribati, Micronesia, Nauru, Niue,Papua New Guinea, Samoa, Solomon

Islands, Tonga, Tuvalu, Vanuatu.The Melanesian Spearhead Group(MSG) Preferential Trade Agreementis a trade treaty governing the fourmelanesian states of Vanuatu, PapuaNew Guinea, the Solomon Islands andrecently, Fiji. The MSG Trade Agree-ment signed in 1993 is a sub-regionaltrade treaty established to foster andaccelerate economic developmentthrough trade relations.PARIS DONOR'SCONFERENCEIn an effort to shore up the cash-strapped Palestinian Authority, a ma-jor international donor's conferencewas held in Paris, France in the middleof December, 2007. 68 states and orga-nizations came together and pledgedat least $ 7 billion to the Palestinians.The aid is earmarked for creating a vi-able Palestinian state living side-by-side with Israel. The urgent need for

aid had been clearlyvoiced by the Presi-dent of the Palestin-ian Authority,Mahmoud Abbas.PAN-AFRICAN E-NETWORKIt is a brainchild ofPresident A P J AbdulKalam. The currenttotal project cost isabout US$ 105 mil-lion, which will be atotal grant from theGovernment of India.The Ministry of Ex-ternal Affairs, NewDelhi is responsiblefor the project, whilethe TCIL is the

implementing agency.India, in a joint initiative with the Af-rican Union, has launched the Pan-Af-rican e-network project, which willsupport tele-education, telemedicine,e-commerce, e-governance,infotainment, resource-mapping andmeteorological services and VVIPconnectivity. Pan African e-NetworkProject of 53 nations of African Unionwill be connected by a satellite/fiberoptical network.Ethiopia is the firstbeneficiary of the project in Africa.Mauritius is one of three or four coun-tries short-listed for the setting up ofthe "Continental Hub Earth Station".The Pan-African e-Network Projectwas inaugurated on 26th Feb 2009 atNew Delhi.


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Regional Centres of SAARC

�There are five regional centres man-aged each by representatives of mem-ber states, SAARC Secretary Generaland Ministry of External Affairs of thehost government.1. SAARC Agricultural InformationCenter (SAIC) – Dhaka2. SAARC Tuberculosis Centre (STC)– Kathmandu3. SAARC Documentation Centre(SDC) – New Delhi4. SAARC Meteorological ResearchCentre (SMRC) – Dhaka5. SAARC Human Resources Devel-opment Centre (SHRDC) – IslamabadREGIONAL

TRADE AGREEMENT (RTA)

�RTAs are effective means to liberal-ize trade among a group of countriesand are used as an instrument to gainmarket access amongst the signatorycountries. More than two-thirds of theworld trade is amongst RTA bloc.�Basically, RTA implies a higher de-gree of liberalization within the re-gion as compared to the rest of theworld.�The surge in RTAs has continued un-abated since the early 1990s. Some 421RTAs have been notified to the GATT/WTO up to December 2008. Of these,324 RTAs were notified under ArticleXXIV of the GATT 1947 or GATT 1994;29 under the Enabling Clause; and 68under Article V of the GATS. At thatsame date, 230 agreements were inforce.RIO GROUP

�It arose in 1986 as an alternativebody to the Organization of Ameri-can States�The Rio Group is an internationalorganization of Latin American states.�The Rio Group does not have a sec-retariat or permanent body, and in-stead relies on yearly summits ofheads of states.XXII summit 2009 was held atManagua Nicaragua; and the XXIII2010 will held in Cancun Mexico.The Rio Group (Spanish: Grupo deRío, Portuguese: Grupo do Rio) is aninternational organization of LatinAmerican and some Caribbean states.It was created on 18 December 1986 inthe Brazilian city of Rio de Janeiro bymeans of the Declaration of Rio deJaneiro, signed by Argentina, Brazil,Colombia, Mexico, Panama, Peru,

Uruguay and Venezuela (the membersof the Contadora Group and theContadora Support Group).Contadora Support Group: Meeting inPanama City, the Contadora Groupand the Foreign Ministers of CostaRica, El Salvador, Guatemala, Hondu-ras and Nicaragua adopted specificmeasures designed to fulfil commit-ments made earlier in the year in aneffort to restore harmony and stabil-ity in Central america. It was thetwelfth meeting of the ContadoraGroup and the fifth held jointly withthe Central American Foreign Minis-ters.

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SAARC PREFERENTIAL TRAD-

ING ARRANGEMENT (SAPTA)

�In December 1991, the Sixth Sum-mit held in Colombo approved the es-tablishment of an Inter-Governmen-tal Group (IGG) to formulate an agree-ment to establish a SAARC Preferen-tial Arrangement (SAPTA) by 1997.Given the consensus within SAARC,the Agree-ment onSAPTA wassigned on11 April1993 and en-tered intoforce on 7D e c e m b e r1995 well inadvance of the date stipulated by theColombo Summit. The Agreementreflected the desire of the MemberStates to promote and sustain mutualtrade and economic cooperationwithin the SAARC region through theexchange of concessions. So far, fourrounds of trade negotiations wereconcluded under SAPTA coveringover 5500 commodities.The basic principles underlyingSAPTA are:�Overall reciprocity and mutualityof advantages so as to benefit equita-bly all Contracting States, taking intoaccount their respective level of eco-nomic and industrial development,the pattern of their external trade, andtrade and tariff policies and systems;�Negotiation of tariff reform step bystep, improved and extended in suc-cessive stages through periodic re-views;Recognition of the special needs of the

Least Developed Contracting Statesand agreement on concrete preferen-tial measures in their favour; and�Inclusion of all products, manufac-tures and commodities in their raw,semi-processed and processed forms.SAARC Secretariat

�The SAARC Secretariat was estab-lished in Kathmandu on 16 January1987. Its role is to coordinate and moni-tor the implementation of SAARC ac-tivities, service the meetings of theAssociation and serve as the channelof communication between SAARCand other international organisations.The Secretariat has also been increas-ingly utilised as the venue for SAARCmeetings.�The Secretariat is headed by the Sec-retary General, who is appointed bythe Council of Ministers from Mem-ber Countries in alphabetical orderfor a three-year term. Q.A.M.A. Rahimfrom Bangladesh is the current Secre-tary General. The previous Secretar-ies General was from Bangladesh, In-dia, Maldives, Nepal, Pakistan and SriLanka. The next Secretary General isto be from Bhutan.�The Secretary General is assisted byseven Directors on deputation fromMember States.Regional Centres of SAARC�There are five regional centres man-aged each by representatives of mem-ber states, SAARC Secretary Generaland Ministry of External Affairs of thehost government.1. SAARC Agricultural InformationCenter (SAIC) – Dhaka2. SAARC Tuberculosis Centre (STC)– Kathmandu3. SAARC Documentation Centre(SDC) – New Delhi4. SAARC Meteorological ResearchCentre (SMRC) – Dhaka5. SAARC Human Resources Devel-opment Centre (SHRDC) – IslamabadSouth Asian Development Fund(SADF), set up under the overall um-brella of South Asian Association forRegional Co-operation (SAARC),started functioning with its first meet-ing in June 1996. The members of theFund are Bangladesh, Bhutan, India,Maldives, Nepal, Pakistan and SriLanka.15th SAARC Summit at ColomboSAARC groups eight countries ofSouth Asia, namely Afghanistan,Bangladesh, Bhutan, India, the


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Maldives, Nepal, Pakistan and SriLanka with a population of about 1.5billion.Representatives from the People’s Re-public of China, the Islamic Republicof Iran, Japan, the Republic of Korea,Mauritius, the United States ofAmerica and the European Union alsoparticipated in the summit as observ-ers. SAARC has also welcomed Aus-tralia and Myanmar to be associatedas Observers to SAARC. The 15thSAARC summit was conducted withthe theme called “SAARC: Partnershipfor our people.” Food security, terror-ism, energy, environment and otherissues were discussed at the meeting,aimed at promoting regional eco-nomic and political cooperation. Thehighlights of the 15th SAARC Sum-mit was the signing of four signifi-cant regional agreements which in-cluded the proposed Agreement onMutual Legal Assistance in CriminalMatters with the significant inclusionof a regional framework for coopera-tion in tackling terrorism, and the es-tablishment of a SAARC Develop-ment Fund to provide financial assis-tance for economic, social and infra-structure development projects in theregion.The SAARC was established when itscharter was formally adopted on Dec.8, 1985 by the heads of state or gov-ernment of Bangladesh, Bhutan, India,the Maldives, Nepal, Pakistan and SriLanka. Afghanistan joined the SAARCat the 14th summit in New Delhi inApril 2007. 16th SAARC summit to beheld in Bhutan. Bhutan is hosting 16thSAARC Summit at its capital Thimpufrom April 28-29, 2010.SHANGRI-LA

DIALOGUE 2008

The annual Asian Security Summit,also known as the Shangri-La Dia-logue, was conducted as defence min-isters and senior officials from 27 coun-tries heavily focused on internationalcooperation in disaster relief. Thecountries represented since 2001 are:Australia, Bangladesh, Brunei, Cam-bodia, Canada, China, France, Ger-many, India, Indonesia, Japan, Laos,Malaysia, Mongolia, Myanmar, NewZealand, Pakistan, Philippines, Repub-lic of Korea, Russia, Singapore, SriLanka, Thailand, Timor Leste, UK, US,Vietnam. The IISS will convene the 5thRegional Security Summit: The

Manama Dialogue 12-14 December2008. Organised annually, the IISSManama Dialogue provides a forumfor the national security establish-ments of the participating states toexchange views on regional securitychallenges. It is a unique forum in thatit is made up of governmental delega-tions from over 20 countries, includ-ing not only the states of the region

and the immediate neighbourhood,but also the outside powers with se-curity interests in the Gulf.The Manama Dialogue provides op-portunities for government leaders todeliver vitally important public state-ments about the evolving policy ap-proaches to regional security. Cru-cially, it also facilitates private bilat-eral and multilateral meetings be-tween participating states in order toadvance immediate policy goals. TheIISS Manama Dialogue is the primarysecurity forum for the Gulf. Convenedannually, it brings together all ele-ments of the national security estab-lishments from the countries in theregion – Bahrain, Egypt, Iran, Iraq, Jor-dan, Kuwait, Oman, Qatar, SaudiArabia, the UAE and Yemen – withthe key external powers – Australia,China, France, Germany, India, Japan,Pakistan, Russia, Singapore, Turkey,the United Kingdom and the UnitedStates.The Manama Dialogue provides a fo-rum where the most senior authori-ties responsible for defence, foreignpolicy and security issues from the

participating states can exchangeviews on the security challenges of theregion. Since 2004 IISS has hosted fourimportant summit.SHANGHAI

COOPERATION

ORGANISATION (SCO)

�Formation: 14 June 2001�Membership: 6 member states, 4 ob-server states�Headquarters: Secretariat- Beijing,PRC�RATS- Tashkent, Uzbekistan�Working languages: Chinese, Rus-sian�Secretary General: Bolat Nurgaliyev� It comprises (1) China, (2)Kazakhstan, (3) Kyrgyzstan, (4) Rus-sia, (5) Tajikistan and (6) Uzbekistan.Mongolia, Iran, Pakistan and Indiawere granted SCO observer status.�SCO basically aims to bolster re-gional cooperation and serve as acounterweight tothe United States.It has been saidthat SCO mainlytries to curtail USaccess in this en-ergy-rich re-gions. The SCO isdifferent from the North AtlanticTreaty Organization (NATO), SCO hasbeen not conferred as yet a mutualdefence pact. It is only expected to holdjoint military exercises.History�SCO was originally called theShanghai Five. It was formed in 1996largely to demilitarize the border be-tween China and the former SovietUnion.�In 2001, the organization addedUzbekistan and renamed itself theSCO.�Mongolia was conferred observerstatus in 2004.�In 2005, Iran, Pakistan, and India be-came observers.Yekaterinburg, Russia 2009SCO 2009 was held in Yekaterinburg,Russia along with the BRIC Summitat near about the same time. Securityissues and the global economic crisistopped the agenda this time. The fo-cus was essentially on developing co-ordination measures to stabilize theeconomies of the individual memberswhile at the same time maintaininggrowth in the region. China for its partpledged $ 10 billion in loans to the


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SCO countries to help them come outof their economic doldrums. Apartfrom this there were agreements onanti- terrorism which has affected thisvolatile region as well as on informa-tion security cooperation. The SCOmembers came out jointly with a com-prehensive document known as theYekaterinburg Declaration.The 8th session of the Shanghai Co-operation OrganizationPrime Ministers took place in Beijing.The 10-member countries and observ-ers of the Shanghai CooperationOrganisation, the Central Asian re-gional security grouping, emphasisedto work together on combating terrorand improving financial co-operationamong Asian nations to combat thefinancial crisis.SOUTH AMERICAN

COMMUNITY OF

NATIONS (SA (SA (SA (SA (SACN):CN):CN):CN):CN):

�Administrative centre: Brasília�Largest city: São Paulo�Member states: Argentina, Bolivia,Brazil, Chile, Colombia, Ecuador,Guyana, Paraguay, Peru, Suriname,Uruguay and Venezuela�Official languages: Portuguese,Spanish, Dutch, English�Presidency-Secretary: Amb. JorgeD’Escragnolle Taunay Filho, BrazilSOUTH ASIAN DEVELOPMENT

FUND (SADF):(SADF):(SADF):(SADF):(SADF):

�The South Asian DevelopmentFund (SADF) - to mobilise the globalsurpluses for development of SouthAsia. The basic objective of SADF wasto provide finances for industrial de-velopment, poverty alleviation, andprotection of environment, balance ofpayments support, and promotion ofeconomic projects in the region. SADFwas established in 1996 with themerger of the SAARC Fund for Re-gional Projects (SFRP) and the SAARCRegional Fund (SRF).�SADF has three Windows for (i) iden-tification and development of projects;(ii) institutional and human resourcesdevelopment projects; and (iii) socialand infrastructural developmentprojects. Its current core capital basestands at US $ 5.8 million.�The Association brings togetherseven countries of South Asia for re-gional cooperation.�Its headquarters is in Kathmandu.�It was established in 1985.�SAARC has been created “to pro-

mote the welfare of the peoples ofSouth Asia and improve their qualityof life; to accelerate economic growth,social progress and cultural develop-ment in the region; to promote andstrengthen collective self-reliance.SOUTH PACIFIC FORUM:SOUTH PACIFIC FORUM:SOUTH PACIFIC FORUM:SOUTH PACIFIC FORUM:SOUTH PACIFIC FORUM:

�It’s headquarters at Suva.The Pacific Islands Forum was for-merly known as the South Pacific Fo-rum until a name change in October2000 to better reflect the geographiclocation of its members in the northand south Pacific.�The South Pacific Forum beganwith a meeting in Wellington, NewZealand in 1971 when its seven found-ing members Australia, the Cook Is-lands, Fiji, Nauru, New Zealand,Tonga and Westen Samoa - met forthe first time.Currently, there are 16 members: Aus-tralia, Cook Islands, Federated Statesof Micronesia, Fiji, Kiribati, Nauru,New Zealand, Niue, Palau, PapuaNew Guinea, Republic of Marshall Is-lands, Samoa, Solomon Islands, Tonga,Tuvalu, Vanuatu.The Treaty of Rarotonga, 1985:The South Pacific Nuclear Free ZoneTreaty (SPNFZ), also known as theTreaty of Rarotonga is the manifesta-tion of the South Pacific Forum's per-sistent stand against nuclear testingand the dumping of radioactive wasteat sea within the region.The current Secretary General of theForum Secretariat is Tuiloma NeroniSlade of Samoa. Mr Slade was electedto the position for three years on 20August 2008.SOUTHEAST ASIA TREATY

ORGANIZATION (SEATO):�It was signed in 1954, with thefounding members Australia, France,the United Kingdom, New Zealand,Pakistan, the Philippines, Thailand,and the United States. France ceasedactive participation in SEATO in 1967;Pakistan officially withdrew in 1972.By mutual consent, the alliance dis-

banded on June 30, 1977.Currently, Australia, Bangladesh,France, New Zealand, Pakistan, Phil-ippines, Thailand, United KingdomUnited States. Dialogue Partners:South Korea and South Vietnam.SEATO was created as part of theTruman Doctrine of creating anti-com-munist bilateral and collective defensetreaties. These treaties and agreementswere intended to create alliances thatwould contain communist power.SOUTHERN AFRICAN

DEVELOPMENT

COMMUNITY (SADCC):(SADCC):(SADCC):(SADCC):(SADCC):

�Headquarters: New SADC head-quarters building under constructionin Gaborone, Botswana.�Membership: SADC has 15 memberstates, namely: Angola, Botswana,Lesotho, Malawi, Mozambique,Swaziland, Tanzania, Zambia, Zim-babwe, Namibia - since 31 March 1990(since independence), South Africa -since 30 August 1994, Mauritius - since28 August 1995, Democratic Republicof the Congo - since 8 September 1997,Seychelles had also previously been amember of SADC from 8 September1997 until 1 July 2004 than joined againin 2008. Madagascar has been sus-pended.�Working languages: English,French and Portuguese�Formation - As SADCC- April 1,1980- SADCC was transformed into SADCon 17 August 1992, with the adoptionby the founding members of SADCCand newly independent Namibia ofthe Windhoek declaration and treatyestablishing SADC.In 2008, the SADC agreed to establisha free trade zone with the East AfricanCommunity (EAC) and the CommonMarket of Eastern and Southern Af-rica (COMESA) including all membersof each of the organizations.�Chairperson: Levy Mwanawasa(c2007); he died in Aug 08 andKgalema Motlanthe (2008-present)Secretaries-General: Thomas Salomao(2005 - present).�In pursuit of this agenda, SADC hasadopted milestones to facilitate theattainment of the SADC Free TradeArea (FTA) by 2008, the CustomsUnion (CU) by 2010, the CommonMarket (CM) by 2015, MonetaryUnion (MU) by 2016 and the SingleCurrency by 2018. The SADC Free


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Trade Area (FTA) was launched onAugust 17, 2008 at Sandton, South Af-rica during the 28th Summit of SADCHeads of State and Government. The29th summit was held on 8th Septem-ber 2009 Kinshasa.STARTIt was an event that the whole worldwas waiting for. A meeting betweenthe Presidents of the USA and Russia.It was not only the first time that USPresident Barak Obama and RussianPresident Dmitry Medvedev weremeeting each other since they took upthe Presidencies of their respectivecountries but also the first US- RussiaSummit in 7 years.Arguably the highlight of the meet-ing was the signing of an agreementbetween the two countries to reducethe nuclear weapons stockpile of eachby one- third of what is available atpresent. Thus, in numerical terms thenuclear warheads of USA and Russiawill come down to 1500. This newagreement will replace the previousSTART 1 (Strategic Arms ReductionTreaty) which was a treaty signed be-tween the USA and the erstwhile So-viet Union aimed at reduction andlimitation of strategic offensive arms.According to that treaty either coun-try was to maintain no more than 6000nuclear warheads and 1600 Inter- Con-tinental Ballistic Missiles (ICBM), sub-marine- launched ballistic missilesand bombers. Subsequent treaties en-sured that each country would be al-lowed a maximum of 2200 warheads

and 1600 launchvehicles. The newagreement willreduce this num-ber even further.According to theframework agree-ment “withinseven years afterthis treaty comesinto force, and infuture, the limitsfor strategic deliv-ery system shouldbe within therange of 500 to1000 units and forwarheads linkedto them within therange of 1500 to1675 units”. In or-der to dispel con-

cerns regarding implementation of thetreaty, the White House in its state-ment said that there are “effective veri-fication measures” included in it.START I and IISTART (for Strategic Arms ReductionTreaty) is a treaty between the UnitedStates of America and the Union ofSoviet Socialist Republics (USSR) onthe Reduction and Limitation of Stra-tegic Offensive Arms. The treaty wassigned on 31st July 1991. The treatybarred its signatories from deployingmore than 6,000 nuclear warheadsatop a total of 1,600 ICBMs, subma-rine-launched ballistic missiles, andbombers. The treaty was implementedin 2001 and in this process 80 per centof all strategic nuclear weapons werescrapped. Proposed by United States’President Ronald Reagan, it was re-named START I after negotiations be-gan on the second START treaty, whichbecame START II. The START-II Treatywas signed on January 3, 1993 by Presi-dent George Bush and President BorisYeltsin.START II, when implemented, willeliminate heavy intercontinental bal-listic missiles (ICBMS) and all othermultiple-warhead (MIRVed) ICBMS.It will also reduce the total number ofstrategic nuclear weapons deployedby both countries, by two-thirds be-low pre-START levels.

T

TSHWANE IBSA DECLARATION

The Prime Minister of India,Manmohan Singh, the President ofBrazil, Luiz Inácio Lula da Silva, andthe President of South Africa, ThaboMbeki (thereafter referred as “the lead-ers”) met in Tshwane, South Africa,on 17 October 2007, for the 2nd Sum-mit of the India-Brazil-South Africa(IBSA) Dialogue Forum.THE ADVISORY CENTRE ON

WTO LAW (ACWL):�It is an international organisationestablished in 2001�The Centre is based in Geneva, has37 Members: 10 developed countryMembers, and 27 Members entitled tothe services of the ACWL�Aim: To provide legal advice onWTO law, support in WTO disputesettlement proceedings and trainingin WTO law to least developed coun-tries, developing countries and cus-toms territories, and countries witheconomies in transition.THE CARIFTA:

�In 1972, Commonwealth Caribbeanleaders decided to transform the Car-ibbean Free Trade Association(CARIFTA) into a Common Marketand establish the Caribbean Commu-nity, of which the Common Marketwould be an integral part. CARICOMwas established by the Treaty ofChaguaramas which came into effecton August 1, 1973. The first four sig-natories were Barbados, Jamaica,Guyana and Trinidad and Tobago.THE SAARC FOOD SECURITY

RESERVE BOARD (SFSRB):

�Agreement on Establishing theSAARC Food Security Reserve wassigned during the Third SAARC Sum-mit (Kathmandu, 1987). The SAARCFood Security Reserve Board (SFSRB)comprising representatives fromMember Countries meets once a year.THE WEST AFRICAN

CUSTOMS AND

ECONOMIC UNION (UDEAC): (UDEAC): (UDEAC): (UDEAC): (UDEAC):

�The West African Customs and Eco-nomic Union (UDEAC) was estab-lished in 1966, has led to the fixing ofnew rates of duty applicable to goodsexchanged between Senegal and theIvory Coast. Corresponding to theConseil de l’Entente and the UDEAO inthe west is the Central African Cus-toms and Economic Union, which in-cludes the five states of Cameroon,Chad, Gabon, Central African Repub-lic, and the Congo (Brazzaville).


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TRANSPORT CORRIDOR

EUROPE-CAUCASUS-ASIA

�It is an international organisationof economic cooperation.�Permanent Secretariat based inBaku, Azerbaijan.�Established in 1998, upon signingof Multilateral Agreement on Inter-national Transport.�Its first elected Secretary Generalwas a representative of Georgia , am-bassador Zviad Kvatchantiradze.�Currently Permanent Secretariat islead by Rustan Jenalinov fromKazakhstan.TEAM - 9

The rationale behind the initiative isthat India would share its develop-ment and technology experience withBurkino, Faso, Chad, Cote d’ I’vore,Equatorial guinea, Ghana, GuineaBissaue, Mali, Congo and Senegal,with government facilitating interac-tion between the private and institu-tional sector. Under this programme,we are cooperating in informationtechnology, education, health care,small and medium scale industry, in-frastructure, energy, textiles, trans-port, tourism and most notably agri-culture. Under the techno-economicapproach to Africa-India movement(TEAM-9), India has extended a creditline of $500 million to eight West Af-rican nations. Indian investment inCote d’Ivoire will rise to $1 billionover 2006-11, mainly in the miningand hydrocarbon sectors.

U

Umbrella Group

The ten-nation Umbrella Group coun-tries pledged to act on climate change.The Umbrella Group, which consistsof Canada, Iceland, Japan, Kazakhstan,New Zealand, Norway, Russia,Ukraine, the United States and Aus-tralia.Umbrella Group believed that the in-crease in global average temperatureabove pre-industrialized levels oughtnot exceed two degrees Celsius andthe group sought a global outcomethat put the world on a path to a 50percent reduction in CO2 emissionsby 2050.But the Umbrella Group did not givethe details of the reduction targets.One can recall that the UmbrellaGroup has long been criticized for itsreluctance to reduce carbon emissions,

though they have much higher capa-bilities compared with many othercountries.Union of South American Nations(Unasur): Members are: Bolivia, Co-lombia, Ecuador, Peru and associatemembers are Chile, Argentina, Bra-zil, Paraguay and Uruguay andobservors are Mexico and Panama.TheUNASUR Constitutive Treaty wassigned on May 23, 2008, at the ThirdSummit of Heads of State, held inBrasília, Brazil, but not as of yet rati-fied by the required ninth nation.U.N. SUMMIT

�Place: New York (U.S)�Duration: Sept 14-16, 2005�Participant: 170 countriesOutstanding:�The UN members agreed on a col-lective responsibility to protect civil-ian population against genocide, warcrimes, ethnic cleasing and crimesagainst humanity.�Nuclear Plants should be verifiedby the IAEA, India, Pakistan, and Is-rael are not agreeable.

�Uranium and Plutonium enrich-ment should be restrained even forpeaceful purposes. Main objectors areIran, Brazil, Algeria, Germany, Indiaand Pakistan.�On the Security Council Expansiontwo models are proposed, both withnon-veto powers for new members.�Model-A was for six new Perma-nent Members- two each from Asia andAfrica, one each from Europe and theAmericas-and three new non-perma-nent members. The G-4 (Japan, India,Brazil Germany) and S. Africa seem tofavour this model while the ‘CoffeeClub’ of 40 mid size countries includ-ing Italy, Pakistan, Mexico, Argentian,S Korea and Spain oppose this model.The U.S. and China too are not in

favour of it.�Model B was for 8 ‘Semi-perma-nent’ members with renewable termof four years and one new non-per-manent member. The G-4 opposes it,while all the countries opposed toModel A are in favour of it.UN CAPITUN CAPITUN CAPITUN CAPITUN CAPITAL DEVELAL DEVELAL DEVELAL DEVELAL DEVELOPMENTOPMENTOPMENTOPMENTOPMENT

FUND (UNCDF):FUND (UNCDF):FUND (UNCDF):FUND (UNCDF):FUND (UNCDF):

�UN Capital Development Fund wasestablished in 1966 and became fullyoperational in 1974. Headquartered inNew York City, the UNCDF, is a semi-autonomous unit of the United Na-tions Development Programme, pro-vides grants and loans to the least-de-veloped members of the UN forprojects in areas such as agricultureand agro-industry. UNCDF currentlyinvests in 38 LDCs with a totalprogramme portfolio amounting toapproximately US$200 million.UNCDF is a member of the UNDPGroup and provides capacity buildingand investment support to the LeastDeveloped Countries (LDCs) withinthe areas of Microfinance and LocalDevelopment.�Executive Secretary: DavidMorrison.UN MAIN BODY

Security Council

Until 1965, the Council has 11 mem-bers and now the Council has 15 mem-bers— five permanent members and10 elected by the General Assemblyfor two-year terms. Every year fivenew countries are elected to theseseats, which rotate on a geographicalbasis: five from Asia, Africa and theMiddle-East; two from Western Coun-tries; two from Latin America; and onefrom Eastern Europe.The Council is composed of five per-manent members — China, France,Russian Federation, the United King-dom and the United States — and tennon-permament members (with yearof term's end): Austria (2010) Japan(2010) Turkey (2010); Bosnia andHerzegovina (2011); Lebanon (2011)Uganda (2010); Brazil (2011) Mexico(2010); Gabon (2011) Nigeria (2011).The General Assembly elected Bosniaand Herzegovina, Brazil, Gabon, Leba-non and Nigeria to serve as non-per-manent members of the Security Coun-cil for two-year terms starting on 1January 2010. The newly elected coun-tries will replace Burkina Faso, CostaRica, Croatia, Libyan Arab Jamahiriya


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and Viet Nam.UN Security Council Chamber in NewYork, also known as the NorwegianRoom.UNEP

�UNEP, established in 1972, is thevoice for the environment within theUnited Nations system. UNEP acts asa catalyst, advocate, educator and fa-cilitator to promote the wise use andsustainable development of the glo-bal environment. To accomplish this,UNEP works with a wide range of part-ners, including United Nations enti-ties, international organizations, na-tional governments, non-governmen-tal organizations, the private sectorand civil society.UNEP work encompasses:(a) Assessing global, regional and na-tional environmental conditions andtrends(b) Developing international and na-tional environmental instruments(c) Strengthening institutions for thewise management of the environment(d) Facilitating the transfer of knowl-edge and technology for sustainabledevelopment(e) Encouraging new partnerships andmind-sets within civil society and theprivate sector.�To ensure its global effectivenessUNEP supports six regional offices,plus a growing network of centres ofexcellence such as the Global ResourceInformation Database (GRID) centresand the UNEP World ConservationMonitoring Centre (UNEP-WCMC).UNEP also has major offices in Genevaand Paris, where its Division of Tech-nology, Industry and Economics issituated.�UNEP also hosts several environ-mental convention secretariats includ-ing the Ozone Secretariat and theMontreal Protocol’s Multilateral Fund,CITES (the Convention on Interna-tional Trade in Endangered Species ofWild Fauna and Flora), the Conven-tion on Biological Diversity, the Con-vention on Migratory Species, and agrowing family of chemicals-relatedagreements, including the Basel Con-vention on the Transboundary Move-ment of Hazardous Wastes and therecently negotiated Stockholm Con-vention on Persistent Organic Pollut-ants (POPs).Achim Steiner is the UNEP ExecutiveDirector.

UN-HABITAT

It was established in 1978 and has itsheadquarters at the UN office inNairobi, Kenya.It is the United Nations agency for hu-man settlements.It runs two major worldwide cam-paigns – the Global Campaign on Ur-ban Governance, and the Global Cam-paign for Secure Tenure. Throughthese campaigns and by other means,

the agency focuses on a range of is-sues and special projects which it helpsimplement.�TURKISH Prime Minister, Mr.Recep Tayyip Erdogan is winner of theinaugural Rafik Hariri-UN-HABITAT.Mrs. Anna Tibaijukais the is the Ex-ecutive Director.UNICRI

�United Nations Inter-regionalCrime and Justice Research Institute(UNICRI) acts with its partners in theinternational community to:�advance understanding of crime-re-lated problems�foster just and efficient criminal jus-tice systems�support the respect of internationalinstruments and other standards�facilitate international law enforce-ment cooperation and judicial assis-tance.�UNICRI supports other interna-

tional organizations, national and lo-cal governments, non-governmentalorganizations, academic and educa-tional institutions and the communi-ties at the large.�As part of the United Nations Orga-nization, UNICRI sets its activities inaccordance with the priorities indi-cated by the United Nations Commis-sion on Crime Prevention and Crimi-nal Justice. The Institute maintains

close working relations with UN bod-ies and agencies, particularly with theUnited Nations Office on Drugs andCrime (UNODC).Secretary-General Ban Ki-moon hasappointed Mr. Sandro Calvani fromItaly as Director of the United NationsInterregional Crime and Justice Re-search Institute (UNICRI).UNIDO

�The United Nations Industrial De-velopment Organization (UNIDO)helps developing countries and coun-tries with economies in transition intheir fight against marginalization intoday’s globalized world. It mobilizesknowledge, skills, information andtechnology to promote productiveemployment, a competitive economyand a sound environment.�Dr. Kandeh K. Yumkella is the Di-rector-General of UNIDO.�UNIDO was set up in 1966 and be-


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came a specialized agency of theUnited Nations in 1985.�As part of the United Nations com-mon system, UNIDO has responsibil-ity for promoting industrializationthroughout the developing world.�As of 11 December 2008, 173 Statesare Members of UNIDO.�Its headquarters are in Vienna, andit is represented in 35 developingcountries.UNITAR

�United Nations Institute for Train-ing and Research (UNIT-AR) was es-tablished in 1965.�It is an autonomous body within theUnited Nations with the purpose ofenhancing the effectiveness of the Or-ganization through appropriate train-ing and research.�UNITAR is governed by a Board ofTrustees and is headed by an Execu-tive Director.UNITAR's headquarters are based inGeneva, Switzerland. It has two re-gional offices in New York, U.S.A andin Hiroshima, Japan.UNITED NATIONS

�Formation: 24 October 1945�Type: International organization�Headquarters: International terri-tory on Manhattan Island, New YorkCity�Membership: 192 member states�Official languages: Arabic, Chinese,English, French, Russian, Spanish�Secretary-General: Ban Ki-moon�Aim: facilitate co-operation in in-ternational law, international security,economic development, socialprogress and human rights issues.Current UN peacekeeping operations:16Budget for 2008-2009: USD 4.171 bil-lion (peacekeeping operations not in-cluded)Official languages: Arabic, Chinese,English, French, Russian, Spanish.Information about the UN in otherlanguagesUN Observances - The first day ap-proved by the UN General Assemblywas United Nations Day, 24 October(by resolution 168 (II) of 31 October1947).UNITED NATIONS CONFER-

ENCE ON TRADE AND

DEVELOPMENT (UNCTAD)

�The United Nations Conference onTrade and Development (UNCTAD)was established in 1964. It was meant

for the integrated treatment of tradeand development and related issuesin the areas of investment, finance,technology, enterprise developmentand sustainable development. Thereare 193 members.Main Functions:�It functions as a forum for intergov-ernmental deliberations, supported bydiscussions with experts and ex-changes of experience, aimed at con-sensus building.�It undertakes research, policy analy-sis and data collection for the debatesof government representatives andexperts.�It provides technical assistance tai-lored to the specific requirements ofdeveloping countries, with special at-tention to the needs of the least devel-oped countries and of economies intransition. When appropriate,UNCTAD cooperates with other or-ganizations and donor countries in thedelivery of technical assistance.�The Secretary-General of UNCTADis Dr. Supachai Panitchpakdi (Thai-land), who took office on 1 September2005.UNITED NATIONS DEVELOP-

MENT PROGRAMME (UNDP):

�United Nations DevelopmentProgramme (UNDP) is the UN’s glo-bal development network, an organi-zation advocating for change and con-necting countries to knowledge, ex-perience and resources to help peoplebuild a better life.�There are as many as 166 countries,working with UNDP for their own so-lutions to global and national devel-opment challenges.(1) UNDP helps developing countriesattract and use aid effectively. It en-courages the protection of humanrights and the empowerment ofwomen.(2) The annual Human DevelopmentReport, commissioned by UNDP, fo-cuses the global debate on key devel-opment issues, providing new mea-surement tools, innovative analysisand often controversial policy propos-als.Helen Clark became the Administra-tor of the United Nations Develop-ment Programme on 17 April 2009, andis the first woman to lead the organi-zation.The present country programme docu-ment for India (2008-2012) was formu-

lated in partnership with the Depart-ment of Economic Affairs of the Min-istry of Finance, building on theUnited Nations Development Assis-tance Framework (UNDAF) 2008-2012.UNITED NATIONS

ECONOMIC AND SOCIAL

COMMISSION FOR ASIA AND

THE PACIFIC (UNESCAP):

�The regional arm of the United Na-tions Secretariat for the Asian and Pa-cific region is the United Nations Eco-nomic and Social Commission forAsia and the Pacific (UNESCAP). It islocated in Bangkok, Thailand.Noeleen Heyzer (Singapore) is theninth Executive Secretary of the Eco-nomic and Social Commission forAsia and the Pacific (ESCAP). Ap-pointed by the United Nations Secre-tary-General in August 2007.The functions of UNESCAP have beendefined by the Secretary- General asfollows:(a) Promoting economic and social de-velopment through regional and sub-regional cooperation and integration;(b) Serving as the main economic andsocial development forum within theUnited Nations system for theUNESCAP region;(c) Formulating and promoting devel-opment assistance activities andprojects commensurate with the needs

and priorities of the region while act-ing as an executing agency for relevantoperational projects;(d) Providing substantive and secre-tariat services and documentation forthe Commission and its subsidiarybodies;(e) Carrying out studies, research andother activities within the terms ofreference of the Commission;(f) Providing advisory services to gov-ernments at their request;(g) Developing and executingprogrammes of technical cooperation;


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(h) Coordinating UNESCAP activitieswith those of the major departments/offices of the United Nations at Head-quarters and specialized agencies andintergovernmental organizations.�Sustainable Agricultural Develop-ment in Asia was the focus of a two-day meeting organized by UNESCAPregional institution Centre for Alle-viation of Poverty through SecondaryCrops’ Development in Asia and thePacific in Bogor, Indonesia.With a membership of 62 Govern-ments, 58 of which are in the region,and a geographical scope that stretchesfrom Turkey in the west to the Pacificisland nation of Kiribati in the east,and from the Russian Federation inthe north to New Zealand in the south,ESCAP is the most comprehensive ofthe United Nations five regional com-missions.UNITED NATIONS

ECONOMIC COMMISSION

FOR EUROPE:

�Established in 1947�Member states: 56�Secretariat Headquarters: Geneva,Switzerland�It is one of five regional commis-sions under the administrative direc-tion of United Nations headquarters.�Aim: to encourage economic coop-eration among its member States.UNITED NATIONS

EDUCATION, SCIENTIFIC AND

CULTURAL

ORGANISATION (UNESCO):

�United Nations Education, Scientificand Cultural Organisation (UNESCO)fosters values by multiplying and re-inforcing educational, scientific andcultural relations, pursuing twoclosely linked objectives: develop-ment which, beyond the simple de-mands of material progress, must alsorespond to a full range of human aspi-rations without jeopardizing the heri-tage of future generations; and estab-lishment of a Culture of Peace, basedon education for responsible citizen-ship and full participation in demo-cratic processes.�The headquarter is at Paris andfounded in 1946.Through its strategies and activities,UNESCO is actively pursuing the Mil-lennium Development Goals, espe-cially those aiming to:(a) halve the proportion of people liv-ing in extreme poverty in developing

countries by 2015;(b) achieve universal primary educa-tion in all countries by 2015;(c) eliminate gender disparity in pri-mary and secondary education by2005; and(d) to reverse current trends in the lossof environmental resources by 2015.UNITED NATIONS

HIGH COMMISSIONER

FOR REFUGEES (UNHCR):

�High Commissioners: AntónioGuterres, 2005 - present (Portugal).�The Office of the United NationsHigh Commissioner for Refugees wasestablished on December 14, 1950 bythe United Nations General Assembly.

�The agency is mandated to lead andco-ordinate international action toprotect refugees and resolve refugeeproblems worldwide.�Its primary purpose is to safeguardthe rights and well-being of refugees.�It strives to ensure that everyone canexercise the right to seek asylum andfind safe refuge in another State, withthe option to return home voluntar-ily, integrate locally or to resettle in athird country.�High Commissioners: AntónioGuterres, 2005 - present (term to ex-pire in 2009) (Portugal).UNITED NATIONS

OFFICE ON DRUGS

AND CRIME (UNDOC):

�The United Nations Office on Drugsand Crime (UNODC) is a globalleader in the fight against illicit drugsand international crime. Establishedin 1997, UNODC has approximately500 staff members worldwide.�Its headquarters are in Vienna andit has 21 field offices as well as a liai-son offices in New York.�UNODC relies on voluntary contri-butions, mainly from governments,for 90 per cent of its budget.The three pillars of the UNODC workprogramme are:�Research and analytical work to in-crease knowledge and understandingof drugs and crime issues and expandthe evidence-base for policy and op-erational decisions;�Normative work to assist States inthe ratification and implementation ofthe international treaties, the devel-opment of domestic legislation ondrugs, crime and terrorism, and theprovision of secretariat and substan-tive services to the treaty-based andgoverning bodies; and�Field-based technical cooperationprojects to enhance the capacity ofMember States to counteract illicitdrugs, crime and terrorism.UNITED NATIONS

POPULATION

FUND (UNFPA):

�United Nations Population Fund(UNFPA) is an international develop-ment agency that promotes the rightof every woman, man and child to en-joy a life of health and equal opportu-nity.�UNFPA supports countries in usingpopulation data for policies andprogrammes to reduce poverty and toensure that every pregnancy is wanted,every birth is safe, every young per-son is free of HIV/AIDS, and everygirl and woman is treated with dig-nity and respect.�UNFPA seeks to improve the livesand expand the choices of individualsand couples. Over time, the reproduc-tive choices they make, multipliedacross communities and countries, al-ter population structures and trends.�UNFPA helps governments, at theirrequest, to formulate policies andstrategies to reduce poverty and sup-port sustainable development.�The Fund also assists countries to


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collect and analyse population datathat can help them understand popu-lation trends. And it encourages gov-ernments to take into account theneeds of future generations, as well asthose alive today.�The close links between develop-ment and reproductive health and gen-der equality, the other main areas ofUNFPA’s work, were affirmed at the1994 International Conference onPopulation and Development (ICPD)in Cairo. UNFPA is guided in its workby the Programme of Action adoptedthere. At the conference, 179 countriesagreed that meeting needs for educa-tion and health, including reproduc-tive health, is a prerequisite for sus-tainable development over the longerterm. They also agreed on a roadmapfor progress with the following goals:�Universal access to reproductivehealth services by 2015�Universal primary education andclosing the gender gap in educationby 2015�Reducing maternal mortality by 75per cent by 2015�Reducing infant mortality�Increasing life expectancy�Reducing HIV infection rates�Reaching the goals of theProgramme of Action is also essentialfor achieving theMillennium Devel-opment Goals.UNITED NATIONS

PROGRAMME ON HIV/AIDS

�With its headquarters in Geneva, theUNAIDS Secretariat works on theground in more than 80 countries.�The Joint United NationsProgramme on HIV/AIDS (UNAIDS),is the main advocate for accelerated,comprehensive and coordinated glo-bal action on the epidemic.Five major components make up therole of UNAIDS:�Leadership and advocacy for effec-tive action on the epidemic�Strategic information and technicalsupport to guide efforts against AIDSworldwide�Tracking, monitoring and evalua-tion of the epidemic and of responsesto it�Civil society engagement and thedevelopment of strategic partnerships�Mobilization of resources to sup-port an effective response.UNAIDS Executive Director is MichelSidibé.

UNITED NATIONS

RESEARCH INSTITUTE

FOR SOCIAL DEVELOPMENT

(UNRISD):(UNRISD):(UNRISD):(UNRISD):(UNRISD):

�UNRISD was created in 1963 as partof the first United Nations Develop-ment Decade. Since then, the Institutehas sought to promote a holistic andmultidisciplinary approach to socialdevelopment by focusing on decision-making processes, often conflictingsocial forces, and the question of whowins and who loses as economiesgrow or contract and societies change.�UNRISD is an autonomous UNagency engaging in multidisciplinaryresearch on the social dimensions ofcontemporary problems affecting de-velopment. Through its research,UNRISD stimulates dialogue and con-tributes to policy debates on key is-sues of social development within andoutside the United Nations system.For more than 47 years, UNRISD hasengaged exclusively in research on so-cial development and remains theonly United Nations organization thatdoes so.�UNRISD is an unusually open spacefor research and dialogue.UN Secretary-General, Ban Ki-moon,has appointed Dr. Sarah Cook as thenew Director of UNRISD. Dr. Cook

has taken up her post on 1 November2009, replacing Thandika Mkandawirewho left UNRISD on 30 April 2009.UNOPS:

�The United Nations Office forProject Services (UNOPS), a ten yearsyoung and self-financing entity of theUnited Nations system, has more thana decade of experience in providingoperational management servicesworldwide to help the clients achieveresult. With its headquarters inCopenhagen, Denmark, a network offive regional offices and a further 20operations and project centres, UNOPSoversees activities in more than 60countries.�It was established on 1 January 1995.It is self-financed. Jan Mattsson hasbeen Executive Director of UNOPSsince June 2006, having enjoyed a dis-tinguished career with the United Na-tions over the previous 23years.Siddharth Chatterjee is the Di-rector of the Europe and Middle EastRegional Office (EMO).UNU:

United Nations University (UNU) hasfour key roles:�An international community ofscholars.�A bridge between the United Na-tions and the international academic

UNIVERSAL POSTAL UNION

�Formation: October 9, 1874�Headquarters: Berne, Swit-zerland�Membership: United Nations�Official languages: French(official + working language),English (working language)�Secretary General: EdouardDayan�It coordinates postal policiesbetween member nations. It has191 members.The Council ofAdministration (CA) consists of41 member countries andmeets in principle each year atUPU Headquarters in Bern.�The postal services is the largest physical distribution network in theworld.�It is the second oldest international organisation after the InternationalTelecommunications Union. World Post Day is celebrated each year on 9October, the anniversary of the establishment of the Universal Postal Unionin 1874 in the Swiss Capital, Bern. It was declared World Post Day by theUPU Congress held in Tokyo, Japan in 1969.�The Pan African Postal Union (PAPU) has successfully wrapped up its 30thanniversary celebrations, attracting a record number of postal-sector minis-ters and top policy-makers from international and regional organizations.


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community.�A think-tank for the United Nationssystem.�A builder of capacities, particularlyin developing countries.Since the beginning of its academicactivities in September 1975, the UNUniversity has grown and maturedinto a decentralized, global networkcomprising UNU Centre in Tokyo, aworldwide network of institutes lo-cated in 13 UN Member Nation hostcountries (as of 2008), and liaison of-fices at United Nations Headquarters(New York) and UNESCO Headquar-ters (Paris).Prof. Dr. Konrad Osterwalder is theRector; Prof. Govindan Parayil is theVice-Rector.US-INDIA CEO FORUM

The US-India CEO Forum Infrastruc-ture Investment Conference, whichtook place at the fag end of October2007, and which was attended by topofficials and corporate honchos fromboth India and USA, provided a plat-form for the free flow of ideas on waysand means to strengthen economicties between the two countries.UNFCCC:UNFCCC:UNFCCC:UNFCCC:UNFCCC:

The United Nations FrameworkConvention on Climate ChangeThe UNFCCC was opened forsignature on May 9, 1992, after anIntergovernmental NegotiatingCommittee produced the text of theFramework Convention as a reportfollowing its meeting in New Yorkfrom 30 April to 9 May 1992. It enteredinto force on March 21, 1994. As ofDecember 2009, UNFCCC had 192parties.The Parties to the UNFCCC typicallyconvene annually in a Conference ofthe Parties (COP), and twice a year inmeetings of the subsidiary bodies –the Subsidiary Body forImplementation (SBI) and theSubsidiary Body for Scientific andTechnological Advice (SBSTA).The SecretariatThe Conference of the Parties (COP),

Subsidiary Bodies and Bureau areserviced by the secretariat, also knownas the Climate Change Secretariat,whose mandate is laid out in generalterms in Article 8 of the Convention.The UNFCCC is also the name of theUnited Nations Secretariat chargedwith supporting the operation of theConvention, with offices in HausCarstanjen, Bonn, Germany. Since 2006the head of the secretariat has beenYvo de Boer. The Secretariat,augmented through the parallel effortsof the Intergovernmental Panel onClimate Change (IPCC), aims to gainconsensus through meetings and thediscussion of various strategies.The function was to mainly coordinatewith the secretariats of other relevantinternational bodies, notably theGlobal Environment Facility (GEF)and its implementing agencies(UNDP, UNEP and the World Bank),the Intergovernmental Panel onClimate Change (IPCC), and otherrelevant conventions.One of its first taskswas to establishnational greenhousegas inventories ofgreenhouse gas(GHG) emissions andremovals, whichwere used to createthe 1990 benchmarklevels for accession ofAnnex I countries tothe Kyoto Protocoland for thecommitment of thosecountries to GHGreductions. Updatedinventories must be regularlysubmitted by Annex I countries.The parties to the convention havemet annually from 1995 inConferences of the Parties (COP) toassess progress in dealing with climatechange. In 1997, the Kyoto Protocolwas concluded and established legallybinding obligations for developedcountries to reduce their greenhousegas emissions.1995 - COP 1, The Berlin Mandate1996 - COP 2, Geneva, Switzerland1997 - COP 3, The Kyoto Protocol onClimate Change1998 - COP 4, Buenos Aires1999 - COP 5, Bonn, Germany2000 - COP 6, The Hague, Netherlands2001 - COP 6, Bonn, Germany

2001 - COP 7, Marrakech, Morocco2002 - COP 8, New Delhi, India2003 - COP 9, Milan, Italy2004 - COP 10, Buenos Aires, Argentina2005 - COP 11/MOP 1, Montreal,Canada2006 - COP 12/MOP 2, Nairobi, Kenya2007 - COP 13/MOP 3, Bali, Indonesia2008 - COP 14/MOP 4, Poznañ, Poland;2009 - COP 15/MOP 5, Copenhagen,Denmark; 2010 - COP 16/MOP 6,Mexico; 2011 - COP 17/MOP 7, SouthAfrica; 2012 - COP 18/MOP 8, Atpresent, there are two countriesbidding to host: Qatar and SouthKorea.BALI ROADMAP(1) A preamble notes the "urgency" ofscientific evidence that warming of theclimate system is unequivocal and thatdelay in reducing emissions increasesthe risk that the impacts of climatechange will worsen.(2) The Roadmap sets the frameworkfor negotiations for a long-termagreement on emissions cuts, includ-

ing the United States, the only indus-trial power to remain outside the UN'sKyoto Protocol.(3) The negotiations are to wrap up inCopenhagen at the end of 2009, to giveparties time to ratify the treaty so thatit takes effect at the end of 2012, fol-lowing on from current commitmentsunder Kyoto. Four meetings are sched-uled in 2008: in March/April, June,August/September and finally in De-cember, in Poznan, Poland.(4) The Roadmap does not specify anyclear emissions goal, nor does it sug-gest which countries should makeemissions cuts or how deep these cutsshould be. But in a footnote in the pre-amble, it refers to scenarios by theUN's Nobel-winning scientists, the In-


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tergovernmental Panel on ClimateChange (IPCC), which include a goalof halving global emissions by 2050,compared with the level for 2000.POZNAN SUMMIT 2008The international political response toclimate change began with the adop-tion of the UNFCCC in 1992. The UNFramework Convention on ClimateChange (UNFCCC) sets out a frame-work for action aimed at stabilizingatmospheric concentrations of green-house gases to avoid “dangerous an-thropogenic interference” with the cli-mate system. The UNFCCC enteredinto force on 21 March 1994, and nowhas 192 parties.

W

WHO

�The World Health Organization(WHO) is the United Nations special-ized agency for health. It was estab-lished on 7 April 1948 and the head-quarter is at Geneva. At present, it has193 members.�WHO’s objective, as set out in itsConstitution, is the attainment by allpeoples of the highest possible levelof health. Health is defined in WHO’sConstitution as a state of completephysical, mental and social well-be-ing and not merely the absence of dis-ease or infirmity. WHO is governedby 193 Member States through theWorld Health Assembly. The HealthAssembly is composed of representa-tives from WHO’s Member States.�The main tasks of the World HealthAssembly are to approve the WHOprogramme and the budget for the fol-lowing biennium and to decide majorpolicy questions.�Dr Margaret Chan is the Director-General of WHO, appointed by theWorld Health Assembly on 9 Novem-ber 2006.WIPO:

�The World Intellectual Property Or-ganization (WIPO) is an internationalorganization dedicated to promotingthe use and protection of works of thehuman spirit.�These works-intellectual property-are expanding the bounds of scienceand technology and enriching theworld of the arts. Through its work,WIPO plays an important role in en-hancing the quality and enjoyment oflife, as well as creating real wealth for

nations.�With headquarters in Geneva, Swit-zerland, WIPO is one of the 16 special-ized agencies of the United Nationssystem of organizations.�The Organization counts 184 na-tions as member states.Francis Gurry was appointed Direc-tor General of the World IntellectualProperty Organization (WIPO) andSecretary-General of the InternationalUnion for the Protection of New Vari-eties of Plants (UPOV) on October 1,2008.WMO

�WMO has a membership of 189Member States and Territories(on 4December 2009). Established in 1950,WMO became the specialized agencyof the United Nations in 1951 for me-teorology (weather and climate), op-erational hydrology and related geo-physical sciences.�It originated from the InternationalMeteorological Organization (IMO),which was founded in 1873 and theheadquarter is at Geneva.�WMO is playing a leading role ininternational efforts to monitor andprotect the environment through itsProgrammes, such as the WorldWeather Watch Programme, WorldClimate Programme, the AtmosphericResearch and EnvironmentProgramme, and the Hydrology andWater Resources Programme. The vi-sion of the WMO for the Sixth Long-term Plan (2004-2011) is to provideworld leadership in expertise and in-ternational cooperation in weather,climate, hydrology and water re-sources, and related environmentalissues, and thereby to contribute to the

safety and well being of peoplethroughout the world and to the eco-nomic benefit of all nations.�Ali Mohammad Noorian waselected First Vice-President of theWorld Meteorological Organizationby Fourteenth World MeteorologicalCongress in 2003.WORLD BANK GROUP

�Formation: 27 December 1945�Operational: 25 June 1946�Headquarters: Washington, D.C.�The President of the World Bank,Robert B. Zoellick, chairs meetings ofthe Boards of Directors and is respon-sible for overall management of theBank. By tradition, the Bank presidentis a U.S. national and is nominated bythe United States, the Bank's largestshareholder.�World Bank is part of the UnitedNations system, but its governancestructure is different.�The World Bank works to bridgethis divide and turn rich country re-sources into poor country growth.�The “World Bank” is the name thathas come to be used for the Interna-tional Bank for Reconstruction and De-velopment (IBRD) and the Interna-tional Development Association(IDA). Together these organizationsprovide low-interest loans, interest-free credit, and grants to developingcountries.�The World Bank’s headquarter issituated at Washington DC. Currently,it has 186 members.Total member countries in each insti-tution1. The International Bank for Recon-struction and Development (IBRD) has186 members.


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2. The International Development As-sociation (IDA) has 169 members.3. The International Finance Corpora-tion (IFC) has 182 members.4. The Multilateral Investment Guar-antee Agency (MIGA) has 175 mem-bers.5. The International Centre for Settle-ment of Investment Disputes (ICSID)has 144 members.IDA: The International DevelopmentAsso- ciation (IDA) is the part of theWorld Bank that helps the world’spoorest countries. Established in 1960,IDA aims to reduce poverty by pro-viding interest-free credits and grantsfor programs that boost economicgrowth, reduce inequalities and im-prove people’s living conditions.IDA complements the World Bank’sother lending arm–the InternationalBank for Reconstruction and Develop-ment (IBRD)–which serves middle-in-come countries with capital invest-ment and advisory services.IDA lends money (known as credits)on concessional terms. This means thatIDA credits have no interest chargeand repayments are stretched over 35to 40 years, including a 10-year graceperiod. IDA also provides grants tocountries at risk of debt distress.Since its inception, IDA credits andgrants have totaled US$207 billion,averaging US$14 billion a year in re-cent years and directing the largestshare, about 50 percent, to Africa.IDA'sArticles of Agreement became effec-tive in 1960. The first IDA loans, knownas credits, were approved in 1961 toChile, Honduras, India and Sudan. OnJanuary 5, 2009 - Independent filmveteran Michael Lumpkin has beenchosen by the Board of Directors ofthe International Documentary Asso-ciation to lead the organization as itsnew Executive Director.IFC: Lars H. Thunell, a Swedish na-tional, is Executive Vice President andCEO of IFC (International FinanceCorporation), a member of the WorldBank Group.The creation of IFC in 1956represented the first step by the glo-bal community to foster private sec-tor investment in developing nations.IFC fosters sustainable economicgrowth in developing countries by fi-nancing private sector investment,mobilizing capital in the internationalfinancial markets, and providing ad-visory services to businesses and gov-

ernments.IFC helps companies and financial in-stitutions in emerging markets createjobs, generate tax revenues, improvecorporate governance and environ-mental performance, and contributeto their local communities. The goalis to improve lives, especially for thepeople who most need the benefits ofgrowth.MIGA: As a member of the WorldBank Group, MIGA's mission is to pro-mote foreign direct investment (FDI)into developing countries to help sup-port economic growth, reduce pov-erty, and improve people's lives.Iraq became the 174th signatory coun-try of the Multilateral InvestmentGuarantee Agency (MIGA), a memberof the World Bank Group.Mexico isthe 175th member.Izumi Kobayashi is the MIGA’s Execu-tive Vice President.Kevin Lu, Director and Chief Finan-cial Officer of the Multilateral Invest-ment Guarantee Agency (MIGA), hasbeen named a "Young Global Leader"for 2010 by the World Economic Fo-rum.ICSID: ICSID is an autonomous in-ternational institution establishedunder the Convention on the Settle-ment of Investment Disputes betweenStates and Nationals of Other Stateswith over one hundred and fortymember States. The Convention setsforth ICSID's mandate, organizationand core functions. The primary pur-pose of ICSID is to provide facilitiesfor conciliation and arbitration of in-ternational investment disputes.There are currently 155 signatoryStates to the ICSID Convention. Ofthese, 144 States have also depositedtheir instruments of ratification, accep-tance or approval of the Conventionand have become ICSID ContractingStates.Prof. Carlos Hinrichsen, Chile is theICSID President and currentlyConvenor of the Senate.

WORLD

TRADE ORGANIZATION

�Formation: 1 January 1995�Headquarters: Geneva, SwitzerlandThe 153-member World TradeOrganisation has been joined by VietNam ( 11 January 2007), Tonga ( 27July 2007), Ukraine (16 May 2008) andCape Verde (23 July 2008).

Observer has been given to followingmembers: Afghanistan, Algeria, An-dorra, Azerbaijan, Bahamas, Belarus,Bhutan, Bosnia and Herzegovina,Cape Verde, Comoros, EquatorialGuinea, Ethiopia, Holy See (Vatican)Iran, Iraq, Kazakhstan, Lao People'sDemocratic Republic, Lebanese Re-public, Liberia, Republic of Libya,Montenegro, Russian Federation, Sa-moa, Sao Tomé and Principe, Serbia,

Seychelles, Sudan, Tajikistan,Uzbekistan, Vanuatu, and Yemen.�Official languages: English, French,Spanish�Director-General: Pascal Lamy�It is an international organizationdesigned to supervise and liberalizeinternational trade.Ministerial summits:1. Singapore 9–13 Dec. 19962. Geneva 18 & 20 May 19983. Seattle 30 Nov.–3 Dec. 19994. Doha 9–14 Nov. 20015. Cancún 10–14 Sept. 20036. The Sixth WTO Ministerial Confer-ence was held in Hong Kong, China,13–18 December 2005. In general, min-isterial conferences are the WTO’shighest decision-making body, meet-ing at least once every two years andproviding political direction for theorganization.7. The 7th summit was held at Genevafrom 30November 2009 to 3 Decem-ber 2009.

WORLDWIDE FUND

FOR NATURE (WWF):

�Headquarters: Gland, SwitzerlandIt was formed and registered as a char-ity in 11 September, 1961.�It aims at preserving genetic spe-cies and ecosystem diversity and toensure that renewable natural re-sources is sustainable.


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�It is the world’s largest and mostexperienced independent conserva-tion organisation.With almost 5 million supporters dis-tributed throughout 5 continents,WWF has offices in over 90 countriesand can safely claim to have played amajor role in the evolution of the in-ternational conservation movement.Since 1985, WWF has invested overUS$1 billion in more than 12,000projects.Yolanda Kakabadse is Chair of theAdvisory Board of Fundacion FuturoLatinoamericano, a regional NGOdedicated to conflict management inLatin America.James P Leape is theinternational director.

WORLD

ECONOMIC FORUM (WEF)

The World Economic Forum is an in-dependent inter-national organizationcommitted to improving the state ofthe world by engaging leaders in part-nerships to shape global, regional andindustry agendas.1979: The WEF became the first non-governmental institution to initiate apartnership with China's economicdevelopment commissions.1988: Andreas Papandreou and TurgutOzal, the Prime Ministers of Greeceand Turkey respectively, launched apeace initiative. They set up a crisis'hot-line' and vowed to avoid war.Incorporated as a foundation in 1971,and based in Geneva, Switzerland, theWorld Economic Forum is impartialand not-for-profit; it is tied to no po-litical, partisan or national interests.The World Economic Forum is underthe supervision of the Swiss FederalGovernment.The Forum’s competitiveness reportsrange from global coverage, such asThe Global Competitiveness Report,to regional and topical coverage, suchas the Africa Competitiveness Report,The Lisbon Review and the Global In-formation Technology Report.TheWorld Economic Forum has an-nounced the names of 197 outstand-ing leaders from 72 countries and anarray of sectors who are to join theForum’s Young Global Leaders in2010.Executive Chairman: Klaus Schwab isthe founder and Executive Chairmanof the World Economic Forum.Davos Summit 2009

The WEF Meet in Davos, Switzerlandwas held in the back drop of the cur-rent global economic crisis. The fiveprimary objectives and the key devel-opments in these directions that theparticipants at the five day meetworked on are.1. Supporting governments and gov-ernance institutions, particularly theG20; 2. Ensuring that global challengesare examined in a holistic way; 3. Be-ginning a process to develop recom-mendationson how thes t r u c t u r eand strate-gies of inter-national co-o p e r a t i o ncan be up-dated.4. Improv-ing the ethi-cal basis forbusiness as aconstructivesocial actor.5. Restoringconfidence in the future. Japanese PMAso to offer Asian countries more thanUS$ 17 billion of aid over three yearsto fight the global financial crisis.

WORLD SOCIAL

FORUM (WSF):�It is an annual meeting held bymembers of the anti-globalizationmovement to coordinate world cam-paigns, share and refine organizingstrategies, and inform each otherabout movements from around theworld and their issues.It tends to meet in January when its“great capitalist rival”, the World Eco-nomic Forum is meeting in Davos,Switzerland. The WSF has promptedthe organising of many regional so-cial forums, including the EuropeanSocial Forum, the Asian Social Forum,the Mediterranean Social Forum, andmany local and national social forum.�The first WSF was held from 25 Janu-ary to 30 January 2001 in Porto Alegre,Brazil, organized by many groups in-volved in the alternative globaliza-tion movement. The WSF was spon-sored, in part, by the Porto Alegretown government, led by BrazilianWorker’s Party. The second WSF wasalso held in Porto Alegre from 31 Janu-ary to 5 February 2002.

The third WSF was again held in PortoAlegre, in January 2003. Among thespeakers was the famed American au-thor Noam Chomsky.�The fourth WSF was held inMumbai, India, from 16 January to 21January 2004.The fifth WSF for 2005 was held inPorto Alegre, Brazil between 26 Janu-ary and 31 January.The sixth WSF was “polycentric” heldin January 2006 in Caracas (Venezu-

ela) and Bamako (Mali), and in March2006, in Karachi, Pakistan. The seventhWSF took place in Nairobi, Kenya inJanuary 2007. The eighth WSF in 2008was not organized at a particular place,but globally, which means by thou-sands of autonomous local organiza-tions, on or around January 26. Theyare also known as the Global Call forAction.The ninth WSF took place in the Bra-zilian city of Belém, located in theAmazon rainforest, between January27 and February 1, 2009.During 2010 (it's tenth anniversaryyear), the World Social Forum will nothave a single global centralised event.There was indeed an event in PortoAlegre in January.ANZUS

The Australia, New Zealand, UnitedStates Security Treaty (ANZUS orANZUS Treaty) is the military alliancewhich binds Australia and NewZealand and, separately, Australia andthe United States to cooperate on de-fense matters in the Pacific Ocean area.On February 4, 2008, U.S. Trade Rep-resentative Susan Schwab announcedthat the United States will join nego-tiations with four Asia–Pacific coun-tries: Brunei, Chile, New Zealand andSingapore to be known as the "P-4".

April 2010

Documents

tax base

tax compliance

tax rates

rates of tax

tax holidays

tax structure

direct tax law

income tax slabs