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Monday, 18 August 2008

From Today's Papers - 18 Aug

Revised pay package will add to government’s tax kitty

New Delhi, August 17
The revised pay scales will not only give additional bonanza to the central government employees, but also add Rs 4,500-5,500 crore to the exchequer this fiscal in the form of personal income tax.

Besides, some money would also come through indirect taxes as some of the increased pay would go into buying products and services, official sources said here. The increased burden on the Centre would be Rs 22,131 crore during 2008-09. While the additional burden on the Union Budget would be Rs 15,717 crore, the Railway Budget would take Rs 6,414 crore burden due to the increased payout.

However, one-fifth to one-fourth of this amount was expected to come back to the government exchequer in the form of personal income tax, depending on the slab that each employee would fall in after the pay hike, the sources said.

This means that Rs 4,426.2-5,532.75 crore would be added to the central kitty. The government has increased the income tax exemption limit from Rs 1.10 lakh to Rs 1.50 lakh, in addition to restructuring the tax slabs in this fiscal budget. The tax exemption limit for women assesses has been hiked from Rs 1.45 lakh to Rs 1.80 lakh, while in case of senior citizens it has been increased from Rs 1.95 lakh to Rs 2.25 lakh.

Though it is yet to be calculated as to how many of the 50 lakh government employees would still enjoy the tax exemption, it is expected that many more will move to taxable income. The sources said the entire clerical staff would move to taxable income.

According to the changed slabs, income between Rs 1.5-3 lakh is taxed at 10 per cent, between Rs 3-5 lakh at 20 per cent, while for Rs 5 lakh and above the rate would be 30 per cent in addition to 3 per cent education cess.

With 20-25 per cent of the increased pay expected to come to the government exchquer and some more money through indirect taxes as portion of it would be spent on buying goods and services, one could easily assume that the net burden on the government may not be as much as it might appear.

Both Union and railway budget have a capacity to bear the burden on account of implementation of revised pay scale for central government employees, finance minister P. Chidambaram had said after the Cabinet approved pay panel’s report with some modifications on August 14.

The finance minister had said budget deficit targets for 2008-09 would be adhered to, even after the implementation of revised pay for central government employees. He had said the revised pay scales were not a new development and its impact on deficit targets was already factored into when the Budget for 2008-09 was prepared and the economic advisory council (EAC) and the RBI gave their estimates.

The pay revision would be implemented from September 1 and arrears would be paid with effect from January 1, 2006, in two tranches - 40 per cent this year and 60 per cent in the next year.

However, the EAC had said recently that when other unbudgeted (pay commission and farm loan waiver) and under budgeted (NREGA) liabilities are also included, total off-budget liabilities of the Centre could exceed 5 per cent of GDP, over and above the budgeted 2.5 per cent. — PTI

India open to trade across LoC: Sources

NDTV Correspondent

Sunday, August 17, 2008 (New Delhi)

Government sources have told NDTV that India is ready to do trade on the Srinagar-Muzaffarabad route, but Pakistan has not yet responded.

Sources also added that the government will deal with the separatists in "an efficacious and effective manner".

This comes even as the coordination committee spearheading protests in Kashmir is meeting in Srinagar. The group includes the separatist Hurriyat leaders, traders and fruit-growers ,who have demanded the opening of the Srinagar-Muzaffrabad trade route to allow trade across the LoC.

First Atlantic drill for navy


New Delhi, Aug. 17: A flotilla of the Indian Navy will participate in war games in the Atlantic Ocean for the first time with the navies of the UK and France, senior naval sources said here today.

This will be the Indian Navy’s farthest deployment for exercises with foreign navies. The exercise will last a fortnight.

But before the Atlantic drill, the Indian Navy is getting ready to host the next edition of the Malabar series of exercises with the US Navy — this time off the west coast of India — “on a more complex scale”, one officer said.

Last year, the Indian Navy hosted Malabar 2007 off the east coast in the Bay of Bengal — though the name of the war games derives from the west coast — with the navies of the US and four other countries, an event that sparked protests from the Left in India.

The composition of the Indian Navy’s flotilla for Malabar 08 or for the Atlantic drill has not yet been finalised. “We will have to take into account the foreign environment to which we are not accustomed,” the senior officer said.

The Indian Navy has the “Konkan” series of exercises with the UK and the “Varuna” series with the French. The invitation to sail to the Atlantic is under a reciprocal arrangement. Scenarios for the drill are still being worked upon but, said the officer, it would test skills in undersea, air and surface operations.

The programme for an expanding series of international naval exercises — mostly with western powers — is being drawn up even as a large Indian Air Force contingent with its frontline Sukhoi 30 Mki aircraft is currently in the US for the Red Flag exercise. The Indian and Russian navies hold a more infrequent exercise called the “Indra” series. An American army team is also in the Indian Army’s Counter Insurgency and Jungle Warfare School, Vairangte, for a joint training camp.

The navy has also sent four warships to the Red Sea and off the African coast for a two-month deployment for “flag showing” and smaller exercises with African and West Asian navies. The INS Talwar, the INS Godavari, the INS Delhi and the INS Aditya will be making port calls in the Red Sea and also participate in a drill with a French flotilla near the Persian Gulf. The INS Delhi and the INS Talwar have visited Egypt and the two others have touched a Syrian port.

Army called in for rescue operations in flood-hit areas of Punjab

Sun, 17 Aug 2008:

Chandigarh, Aug 17 (ANI): Army has been called in for rescue operations in the flood-affected areas along the Sutlej River in Punjab.Nearly 40 villages near Shahkot Lohian in Jallandhar District have submerged due to 150-feet breach in its embankments.

About 400 marooned families have been taken to safeplaces.

The breach is being plugged on war-footing. Due to release of more water from Bhakara Nagal Dam into the river, the bundh around the river was washed away. About 5000 acres of paddy crops have been totally damaged, official sources said.

Besides the help of Army and Police, the cooperation of NGOs and religious organisations have been sought to deal with the situation.

The district administration has assured that very soon the situation would be brought under control and the people relocated to safe places.

Meanwhile, Pakistan authorities are reported to have lodged a strong complaint with their Indian counterparts over the release of flood waters from the Sutlej River, claiming that this has damaged considerable swathes of farmland in West Punjab.

Heavy monsoon rain in Himachal Pradesh has contributed to the rising water level in rivulets and dams. (ANI)

After Georgia, what future for NATO?

Russia's message – 'We're back and we're strong' – creates a new geopolitical dynamic in Eurasia for the Western alliance.

By Gordon Lubold | Staff writer of The Christian Science Monitor

The Russian Army's foray into Georgia this month has had enormous international impact. But the actions of its conventional forces served more to send a message to the West than to pose any significant military challenge much past its borders.

The immediate crisis in Georgia appears to be over for now. But as the West assesses what is clearly a new geopolitical dynamic in Eurasia, there is recognition that while Russia's military may not be as formidable as it once was, NATO and other Western allies must adapt quickly to counter the threat it does pose to its immediate neighbors.

That will undoubtedly lead to a broader debate about the future of NATO, its membership roster, and the resources it will need to create a viable impediment to Russia's military, whatever Moscow's ambitions may be.

But for now, it seems obvious that Russia has used its forces to send a clear message that it won't be ignored.

Once all but indomitable, Russia's military had crumbled by the 1990s, marked by its dilapidated tanks, very low troop morale, and deflated defense spending.

Russia's move into South Ossetia, however, showed its military in a new light. While it may not be a military on the rise, Russia showed for the first time in years that its military could exceed the world's low expectations. Under President Vladimir Putin, ground force training doubled from 2002 to 2003, for example, according to, citing open sources.

"Russia desired to have the ability for its Navy and Air Force to operate globally, as evidenced in their joint exercises in the Indian and Pacific oceans in 2003," according to this analysis of the Russian military. In 2006, Russia spent about 2.7 percent of its gross domestic product on defense – comparable to many Western nations though far lower than the roughly 4 percent the US currently spends on defense and the wars in Iraq and Afghanistan.

Yet Russia's ability to do anything more than rough up its weakest neighbors remains in question.

"I don't lose a whole lot of sleep over their conventional capability," says Eugene Rumer, a senior fellow at the Institute for National Strategic Studies at the National Defense University in Washington. Television news footage of Russian military operations seemed to show a "pretty undisciplined force," he says. "The fact that they went in and did what they did speaks that this is no longer the Russian military of the 1990s, but that is a pretty low standard," he says.

Part of the reason the Russian military appeared to exceed expectations is because the Georgian military response was widely seen as poor.

Despite being on a fast-track to NATO membership and the deployment of Georgian troops to Iraq, the Georgian military needs better resources if it is to hold the line against its massive neighbor.

Some would like to see it brought into NATO faster, while others say the recent events call for more circumspection to see if a country such as Georgia is worthy.

Meanwhile, experts such as Mr. Rumer and others believe the US and NATO must strengthen the military capabilities of not only Georgia, but of countries like Estonia and the Ukraine – places where Russia could again flex its resentments toward Western influence.

Poland last week agreed to allow the US to base a missile defense system there over the long objections of Russia, which sees it as a threat to its own security.

Antiair and antiarmor weaponry could go along way to helping those border nations and former republics of the Soviet Union defend themselves, agrees Zbigniew Brzezinski, the hawkish former national security adviser under President Carter who tangled with the Russians often.

"NATO needs to provide these guys weaponry," he says. At the same time as Western allies help NATO build its capacities there, it must push to isolate Russia, says Dr. Brzezinski, now affiliated with the Center for Strategic and International Studies in Washington.

"That will send the Russian political elite a message that they will have to think about it," he says.

NATO, now tied down by the flagging mission in Afghanistan, must have a new discussion about building up its conventional forces, say other analysts as this apparently new, competitive relationship between NATO and Russia reemerges.

"NATO has delayed its own reassessment of strategic concepts," says Ian Lesser, a senior fellow at the German Marshall Fund of the United States, a think tank in Washington.

Meanwhile, in the reaction that followed last week's events, some believe the world could be overinterpreting whatever strategic ambitions the Russians may or may not have beyond Georgia.

The US and its allies must be careful not to overreact. Defense Secretary Robert Gates, for example, who cut his teeth as a US policymaker as a Sovietologist, was careful not to put a "military option" on the table when it came to responding to Russia's move into South Ossetia.

On ABC News's "This Week" Sunday, Mr. Gates dismissed Russia's vows to target Poland with military strikes over the missile defense agreement.

Meanwhile, some analysts believe the world needs more time before it can properly assess what Russia is thinking.

"We are now in a mood to generalize it into something larger and more strategic," says Mr. Lesser, who adds that this poses a risk if the world community overreacts to what may be nothing more than settling an old, regional score. "There is a certain danger that if you get this wrong, that it can indeed become something bigger."

What we are doing in India is about the next quarter century’

Ian Thomas, President, Boeing India

Ashwini Phadnis

If you thought Boeing was a company that just manufactured commercial aircraft, you could not be more off the mark. Apart from producing commercial aircraft, Boeing also makes defence equipment. The company looks at India not just as a market, but as a business opportunity. The President, Boeing India, Dr Ian Thomas, outlined the company’s current position and future plans in a chat with Business Line.

Excerpts from the interview:

How has Boeing’s approach to India changed over the years?

We have been doing business in India for the past 60 years. And I think quite successfully. In Boeing we like to say India joined the jet age on Boeing wings. Air India was the first all-jet Boeing carrier in the world. And that relationship was largely focused on civil aviation till the last couple of years.

At that time, Jim McNerney who had just become our chairman, encouraged us to take a good look at India and to begin to adapt and evolve our strategy presence and approach. Historically, we had approached India as a sales opportunity for commercial aircraft. But Mr McNerney wanted us to move beyond the sales and business unit approach.

The market fundamentals in India have changed in the last couple of years because the relationship between India and the US has changed and will continue to change. It is an expansive relation and includes economic and commercial dimensions, agriculture, education, people-to-people exchanges and a political military dimension that increasingly looks at defence cooperation and would like to include defence trade and of course the civil nuclear deal.

In the last two or two-and-a-half years, we sought to get into the defence business here and have been encouraged to do so by the Government, our customers in the Ministry of Defence and certainly by the US Government. I think that everyone rightly believes that defence trade is one component of the overall strategic partnership between the two countries.

So we have moved from looking at India simply as a commercial aeroplane opportunity and more recently as a defence opportunity, to what we call the Boeing enterprise opportunity, which is taking an approach to India which incorporates everything that we do — commercial aeroplanes, integrated defence systems and a host of activities across, between and around those which really focus on productivity and on tapping into the tools, technology and talent that is resident here. That can make us more competitive here so that we can sell more planes and more defence products and services and also make us a better global company.

Why this change to an enterprise approach?

We believe that we are moving beyond a simple resource exchange with India. It is no longer a question of ‘you send us money and we give you an aeroplane or helicopter’. We are relentlessly focused on returning value to our shareholders and customers on a quarterly basis.

What we are doing in India is also about the next quarter century. We are laying a foundation and executing an integrated enterprise strategy to make us successful for the long term even as we capture the near-term gains that we must in order to fill that quarter century.

The point is to find a competitive advantage by acting as a single enterprise and pursuing one common strategy which in India is focused on two things –growth which is about selling commercial aeroplanes and defence products and services and productivity which is about for example using an offset obligation and looking at it to create partnerships.

How much of this is being driven by the fact that some of the biggest contracts, such as Air India or the Ministry of Defence, require a 30 per cent offset?

On the Air India sale and on defence sales we have offset obligations ranging between 30 and 50 per cent depending on the contract. In both cases, and all cases, offset is not simply an obligation; it is an opportunity. It helps us create long-term effective, viable, successful, and mutually beneficial partnerships with Indian industry whether it is with PSUs such as HAL or BEL, or private sector entities.

Are you looking to have offset obligations in private sector deals as well?

Not generally or exclusively; in my experience, offset is a requirement of Governments. But the point I would make is that offset is just a catalyst to help us accelerate what we are going to do anyway. We would be here in many respects regardless of offset because we believe that the value proposition that is inherent with partnering with Indian industry — the tools, technology and the talent — is so compelling that we are moving on shore.

I think over time you will see a proliferation of commercial arrangements some of which will be only Boeing, some will for example be the Boeing-Tata joint venture. Some will be sub-contracts to say HAL, some will be research and development relationships with IITs, and some will include third, fourth and fifth parties. I think we see embryonic relationships of all these categories now and they will just begin to proliferate.

How much of your yearly global sourcing comes from India?

Sourcing from India is just getting started. It will depend on the country’s capability to be competitive but we see potential here for enhanced opportunity, for both Boeing and Indian companies.

Indian manufacturing, particularly in aerospace, is in its infancy. There is a strong automotive foundation which is not aerospace but is a great jumping off point.

When you look at modelling and simulation, software analysis, material process and the like, the core competencies here do not really exist. However, if you look at things that fly, whether in civil or defence, they are increasingly network-enabled and India’s core competence of being able to identify, manage and move data around and turn it into actual knowledge is what it does best and has been doing in banking, finance, insurance and, increasingly, in medicine. It has moved from IT to knowledge processing.

But it is in things that fly that you need that capability. I think the country is incredibly well positioned from the IT, engineering and other sectors to move into the global aerospace economy.

Do you see a position where India can be involved with Boeing for developing an aircraft for civil or defence purposes?

At the moment we have no plans for co-development. But having said that, I would add that we all want to walk before we run. We are going to partner here when and where we see value. And we see significant value. I will not put it completely off the table for the long term.

If Boeing is going to say that India has the opportunity to join the global aerospace and defence industry and be a global power in the 21st century it will require partnering for co-development — if not for the whole aeroplane, then certainly for significant systems and components. The three key areas that we are focused on here in R&D are modelling and stimulation, analysis and software, and manufacturing processes and materials. These are areas where the country excels.

Do you see a situation where Boeing ties up with a GE or some other company and then ties up with an Indian firm?

Sure, these kinds of relationships are not simply bilateral between Boeing and a partner. We have phenomenal relationships with GE, Goodriche, Rolls Royce and a host of others. In this global industry we need partners as much as they need us. It is a sheer destiny and we are trying to bring that approach into India.

Is there any exclusivity in what Indian industry is doing for Boeing?

The exclusivity has to do with the Tatas. In January this year we announced a major deal with Tata as a subcontractor. We have not announced the value but we have transferred technology to Tata that exists nowhere else in the world for the manufacture of titanium floor beams for the Boeing 787.

After aeroplane 100 all the floor beams will be made by Tata. We have sold 900 aeroplanes to date and will probably sell many thousands of this aeroplane, for which all the floor beams will be made by Tata. This is an exclusive deal of significant magnitude. The floor beams will start moving in 2010.

What is the contract worth?

I cannot give you the quantum of the contract though I can tell you that the facility that the Tatas are building in Nagpur is of a significant size. Titanium floor beams are a significant weight reduction over aluminium ones, so the economics of doing this is quite compelling.

Any equity infusion by Boeing in the project?

In the joint venture with Tata there is an equity infusion. Because it is aerospace we have foreign direct investment limits of 26 per cent holding. The floor beam contract is a sub-contract, so we are not funding that, as it were.

Besides, from a manufacturing perspective we have a pretty robust set of partnerships in aerospace and defence. The deal with HAL, which we announced in December, is a 10-year, billion-dollar deal for both commercial and defence, focusing on aerospace components. Although we are doing some commercial work there, the thrust will on defence.

After top cop’s dog, Lt-Gen’s pet disappears

By Amitabh Shankar in New Delhi

THERE’S AN uneasy silence at Lt- Gen. Bhupinder Singh’s home after two- year- old Puchkin, a Chihuahua, has gone missing on the evening of August 15 . The family fears that the Chihuahua — one of their six pet pooches — was stolen from Nehru Park at Chanakyapuri in New Delhi where it was taken for a routine walk on that evening.

The police are working overtime to trace the Lt- Gen’s dog, which costs anywhere around Rs 40,000 in the market.

The disappearance and theft of expensive pedigree dogs is not an uncommon occurrence in the Capital.

A couple of weeks ago, Delhi Police commissioner Y. S. Dadwal’s German Dachshund named Toto went missing from his house in Chanakyapuri.

Toto was eventually retrieved from the Hazrat Nizamuddin in South Delhi.

A senior police officer confirmed that they had received a complaint about the missing Chihuahua.

“ There’s a general look- out notice for the dog. The owners have pasted posters at several places and have declared a suitable reward to anyone who finds the dog,” he said.

Lt- Gen. Singh’s daughter Sonal Singh Wadhwa said: “ That evening, all the dogs were taken for a walk by our hired hands.

Somehow, the pack scrambled and each of them went in different directions. Later, it transpired that Puchkin has disappeared.” “ Our security guard had seen two men carrying a small dog.

He said the dog looked scared and uncomfortable in their lap,” Sonal added.

Sonal, who works for an AIDS NGO, said Puchkin was shy and comfortable only when in the company his brothers — Lama, a Beagle, Buddy, a Labrador, Elza, a Dachshund and Amigo and Big Boss, two Yorkshire terriers.

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