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Current Events 28 March 2016



28 MARCH 2016

Syrian forces retake Palmyra, throw out IS

Syrian government forces backed by heavy Russian air support drove Islamic State out of Palmyra, inflicting what the army called a “mortal blow” to militants who seized the city last year and dynamited its ancient temples. The loss of Palmyra represents one of the biggest setbacks for the ultra-hard-line Islamist group since it declared a caliphate in 2014 across  large parts of Syria and Iraq.

large parts of Syria and Iraq.

The Army general command said that its forces took over the city with support from Russian and Syrian air strikes, opening up the huge expanse of desert leading east to the Islamic State strongholds of Raqqa and Deir al-Zor. Palmyra would become “a launchpad to expand military operations” against the group in those two provinces, it said, promising to “tighten the noose on the terrorist group and cut supply routes ... ahead of their complete recapture”.

“This achievement represents a mortal blow to the terrorist organisation and lays the foundation for a great collapse in the morale of its mercenaries and the beginning of its defeat,” the Army command statement said.

Syria’s antiquities chief said other ancient landmarks were still standing and pledged to restore the damaged monuments.


A day before confidence vote, President’s Rule imposed in Uttarakhand

President’s Rule was imposed on Uttarakhand , a day before the Harish Rawat government was to face a test of strength in the Assembly, which has been placed under suspended animation.

Union Finance Minister Arun Jaitley told journalists that the Cabinet took the decision. “Given the political crisis in Uttarakhand, it was decided to impose President’s Rule on the State” he said.

However, the Congress questioned the move, with its spokesperson Manish Tewari citing the Bommai case judgment of 1994, which states that the legitimacy of a government has to be established in the Assembly.

Top sources in the government confirmed that Mr. Jaitley had gone to meet President Pranab Mukherjee to communicate the Cabinet’s decision and address questions that he might have had.

“Governor K.K. Paul’s report on the constitutional breakdown was discussed in the aftermath of the sting video that showed CM Rawat allegedly involved in horse-trading,” a senior Minister.

It was a ‘non-constitutional’ government, says Jaitley

Union Finance Minister Arun Jaitley said the actions of the Uttarakhand government — starting with the way the Finance Bill was deemed passed despite at least nine Congress MLAs openly rebelling against the government in the Assembly — showed the government was “non-constitutional”.

It is perhaps the first and only example in independent India that a failed Bill was passed in the Assembly without a proper vote. The government that was in power after March 18 was non-constitutional,” he told the media.

But Congress spokesperson Manish Tewari said, “A floor test is the lone constitutionally ordained method of testing the strength of a government. In case, the floor test is not possible, it is obligatory on the part of the Governor to give written reasons for not holding it.”

Sources in the Congress said the Union government had moved precipitately as the Rawat government managed to win over Independents and members of the neutral parties and the deadline set by Speaker Govind Kunjwal for the rebels to respond to the show-cause notice was about to expire.

“With nine MLAs disqualified, the Rawat government would have won the floor test anyway,” said a senior leader.

Signs of nervousness were visible in Congress headquarters, when Prime Minister Narendra Modi called an emergency Cabinet meet on the Uttarakhand crisis, hinting at the likelihood of President’s Rule.

Appeal to Pranab fails

Mr. Modi’s Cabinet did not reveal its cards and senior Congress leader Ambika Soni urged President Pranab Mukherjee to “find out everything and look at the greater impact of such actions [President’s Rule]” on the democratic tradition of India.

Since Ms. Soni’s appeal failed to stop President Mukherjee from dismissing the government, the party’s senior leadership unleashed a barrage of criticism on the BJP government, with some describing President’s Rule as a “murder of democracy” and others accusing the BJP of pursuing its “Congress-free India” agenda.

In his report to the President, Governor K.K. Paul said that despite opposition, the Appropriation Bill was passed in the Assembly in controversial circumstances. It charged there was breakdown of law and order and the sting operation where the Uttarakhand CM is purportedly seen offering money to rebel MLAs was found to be genuine by the Central Forensic Science Laboratory, Chandigarh.

65 killed in Lahore park suicide blast

At least 65 people were killed and more than 200 injured when an apparent suicide bomb ripped through the parking lot of a crowded park in Lahore where Christians were celebrating Easter Sunday, officials said.

Dozens of ambulances were seen racing to the Gulshan-i-Iqbal park, situated near the centre of the city of around eight million, with many women and children among the dead and wounded. Top Lahore administration official Muhammad Usman said the death toll had touched 65. “The rescue operation is continuing,” he told AFP. More than 50 children were among the injured.

The Army was called in, he said, and soldiers were at the scene helping with rescue operations and security.

Meanwhile, Prime Minister Narendra Modi called up his Pakistani counterpart Nawaz Sharif and offered his “deep condolences” to the victims. — AFP & PTI

What’s Base Erosion and Profit Shifting?

The idea is simple. Firms make profits in one jurisdiction, and shift them across borders by exploiting gaps and mismatches in tax rules, to take advantage of lower tax rates and, thus, not paying taxes to in the country where the profit is made.                                                                                                                                                                                             

There have been concerns across the globe about companies making profits in a particular country but not paying taxes to the local government. The Organization for Economic Cooperation and Development (OECD) states that BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises. It also states that estimates since 2013 conservatively indicate annual losses of anywhere from 4 to10 per cent of global corporate income tax revenues, or $100-$240 billion annually.

The OECD, under the authority of the Group of 20 countries, has considered ways to revise tax treaties, tighten rules, and to share more government tax information under the BEPS project, and has issued action plans last year. One of the areas discussed was on addressing tax challenges in the digital economy.

The term sprang into the public consciousness last month, because the 2016 Union Budget announced an ‘equalisation levy’ of 6 per cent on payments exceeding over Rs 1 lakh to online ad services from non-resident entities. Prominent among the companies affected would be new economy multinationals with Indian subsidiaries, like Facebook and Google.

India is the first country to impose such a levy, post the OECD action plan. A tax panel has recommended expanding the ambit of this levy to cover a wide gamut of transactions including online marketing, cloud computing, website designing, hosting and maintenance, platforms for sale of goods and services, and online use of or download of software and applications.

India must serve local demand to win WTO solar dispute’

India can achieve greater success in its solar dispute with the US at the World Trade Organisation, according to Vanderbilt University Law School Professor Timothy Meyer. India needs to focus on its arguments or future measures on developing a manufacturing capacity that serves a domestic demand not adequately served by international markets, he said.

Last month, the WTO dispute settlement panel ruled that India’s requirement that companies selling solar power to the government should only use domestically-made components discriminated against American manufacturers.

Interestingly, a December 2015 paper by Mr Meyer showed that local content requirements for renewable energy are quite common at the state and local level in the US. There are 44 such programmes in 23 states in the US, according to the paper.

“The Indian government has already raised the question of whether a few such programmes are consistent with trade rules before a WTO committee, but they have not yet initiated a formal dispute with the United States,” Mr Meyer told

“Given the breadth of local content requirements within the United States, I would not be surprised if India (or China, which has raised similar concerns) eventually brings a claim against the United States based on these programmes,” he said.

Last week, Piyush Goyal, Minister of State (independent charge) for Power, Coal and New & Renewable Energy, said the government is examining options to file a case against the US in the World Trade Organisation based on programmes run by American state governments, which give protection to domestic manufacturers.

However, he said the fact that the US has similar programmes will not help India in an appeal in this case. “This case is only about the consistency of the local content requirements in the Nehru Solar Mission programme, rather than the legality of the US conduct. I suspect that on appeal the WTO’s Appellate Body will confirm the panel’s basic findings.”

The dispute comes at a time when India is betting big on renewable energy. The government has an ambitious plan of achieving 100 gigawatt of solar capacity by 2022.

Mr Meyer said that prevalence of local content requirements in renewable energy indicates that government officials in both India and the US face political pressure to link economic development objectives with environmental objectives.

India has argued that solar manufacturing capacity is in short supply relative to the demand for solar panels in India, and hence it is claiming exception under the General Agreement on Tariffs and Trade for measures “essential to the acquisition or distribution of products in general or local short supply”.

“India’s defence before the WTO panel was quite creative in this regard. The panel ruled correctly, I think, that this argument is too broad,” said Mr Meyer. “If the mere fact that a country does not produce a product was enough to justify discriminatory measures like local content requirements, the exception could be used to broadly reverse the trade concessions WTO members have made to each other.”

The WTO panel had ruled that the exception only applies when supply, both domestic and international, exceeds demand.



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