India could beat China in remittance game

The amount of money sent by NRIs is likely to be $58 billion in 2011, slightly ahead of China's estimated receipts of $57 billion, says the World Bank. With this, India would beat China in receiving the highest remittances globally for five years in a row, from 2007. Countries such as Mexico and the Philippines were among the other top recipients of remittances from their respective emigrants.

According to RBI data, money sent to India by NRIs increased 13.3 per cent (to $45.6 billion) for the first nine months of 2011, compared with the first nine months of 2010. Inflows expanded 7.9 per cent for a similar period in 2010 over 2009. Remittances in 2010 accounted for 3 per cent of India's GDP.

These remittances, also called personal transfers, do not include NRI deposits in banks here. The transfers are used for consumption by the NRIs' families or invested in options such as property. They contribute to the local economy. The rupee depreciation against major currencies may have driven remittance flows in recent times. When the rupee depreciates, every dollar or Saudi riyal yields more rupees back home.

Remittances from NRIs saw a sharp pick-up in the September quarter over the previous three-month period. As against the 3-4 per cent quarterly growth in remittances in 2010 and first half of 2011, remittances in the September quarter jumped 9.8 per cent over the previous quarter.

High inflation, too, could have triggered NRIs to send more to their families to meet the price rise on their food bill and higher interest on domestic loans.

Russia becomes WTO 153rd member

On 16 December 2011, Russia cleared the final hurdle to become a WTO member. WTO Ministers adopted Russia’s WTO terms of entry at the 8th Ministerial Conference in Geneva. Russia will have to ratify the deal within the next 220 days and would become a fully-fledged WTO member 30 days after it notifies the ratification to the WTO.

The Russian membership deal was agreed by the Working Party of countries negotiating with the applicant on 10 November 2011, and ended 18 years of negotiation. Russia still has to ratify the agreement and will become a member 30 days after it notifies the WTO. Under the agreement, it should ratify within 220 days (about 22 July 2012).
Ministers welcomed the agreement and the forthcoming membership of the last large economy to remain outside the WTO. Several also paid tribute to Switzerland for broking an important deal between Russia and Georgia during the final stages of the negotiations.

Georgia and Russia have signed an historic trade deal which allows Russia to join the World Trade Organization (WTO). The deal, which follows 18 years of negotiations, was brokered by Switzerland. Georgia has repeatedly blocked Russia's WTO entry since the two countries fought a short war in 2008. The deal hinges on international monitoring of trade along the mutual borders of Abkhazia and South Ossetia. The two provinces have broken away from Georgia and are recognised as independent states by Russia.

Russia has finally joined the World Trade Organization (WTO) at a ceremony in Switzerland on Friday, after 18 years negotiating its membership. The Swiss brokered a deal between Russia and Georgia earlier this year that removed the last obstacle to Russia's accession.
Georgia had tried to block Russia's WTO entry since the two countries fought a short war in 2008. Russia was by far the biggest economy yet to join the global trade body. It is also the last member of the Group of 20 major economies to join, after China gained membership in 2001. "This result of long and complex talks is good both for Russia and for our future partners," President Dmitry Medvedev said in a message to a WTO ministerial meeting in Geneva that formally approved Russia's membership.

The White House said US President Barack Obama called Mr Medvedev to congratulate him on Russia's admission.
The 153-member WTO provides a forum for international trade liberalisation agreements, which it polices - deciding when rules have been breached and when retaliatory trade sanctions can be imposed. The removal of trade barriers is likely to stimulate greater and more diversified trade between Russia and the rest of the world. Some estimates suggest Russian membership will help to boost its economy by tens of billions of dollars each year. Russia is Europe's third largest export market, while Russia's own exports have been dominated by oil and gas.
One reason the agreement was finally reached was because of a change of heart in the Russian leadership, according to Mr Tchakarov. "Since the 2008-09 [global financial] crisis there has been a certain recognition at the very high level in Russia that... Russia will have to open up a little bit to foreign investment, because this is the only way for Russia to become a more competitive economy," he said. Ahead of the signing ceremony, Russian officials were talking up the benefit of the deal, which will still need to be ratified by the Russian parliament in the next six months. "This will create the right conditions for the further improvement of our business climate, for an influx of foreign investment and for boosting Russian exports while also retaining the possibility of giving support to our key branches of domestic economy," said Russian foreign ministry spokesman Alexander Lukashevich. "We are achieving a completely new level of integration into the global economic system."
The deal with Georgia that opened the way for Russia to join hinged on the international monitoring of trade along the mutual borders of Abkhazia and South Ossetia. The two provinces have broken away from Georgia and are recognised as independent states by Russia.
However, the agreement may still face a hurdle in the US, where existing legislation left over from the Cold War era blocks favourable trading relations with Russia. But Mr Tchakarov at Renaissance Capital said he believed Congress would agree to eliminate the laws, as past disputes with Russia over agriculture and intellectual property rights have now been fully resolved.

Russia and WTO timeline

• 1993 : Russia applies to join the General Agreements on Tariffs and Trade (Gatt)
• 1995 : The Gatt is institutionalised as the World Trade Organization (WTO)
• 1998 : Russia suffers a major financial crisis
• 2000 : US President Bill Clinton backs Russia's WTO bid in a speech to the Russian parliament
• Vladimir Putin succeeds Boris Yeltsin as Russian president
• 2001 : China joins the WTO after 16 years of talks
• Russian membership talks intensify
• 2002 : The US and EU recognise Russia as a market economy, removing a major hurdle to WTO membership
• 2004 : EU gives formal backing to Russia's application
• 2006 : US formally backs Russian membership
• Georgia threatens to veto after Russia imposes a trade blockade on it
• 2008 : Brief Russian military invasion of Georgia
• President Putin questions the benefits of joining the WTO
• 2010 : EU reaffirms support for Russian membership
• 2011 : Russia reaches an agreement with Georgia in November, opening the way for its accession in December
• 2011 : Russia reaches an agreement with Georgia in November, opening the way for its accession in December

History of Indian Currency

Money as a means of payment consists of coins, paper money and withdrawable bank deposits. Today, credit cards and electronic cash form an important component of the payment system. For a common person though, money simply means currency and coins. This is so because in India, the payment system, especially for retail transactions still revolves around currency and coins. There is very little, however, that the common person knows about currency and coins he handles on a daily basis.
Here is an attempt to answer some of the Frequently Asked Questions on Indian Currency.
Some Basics
What is the Indian currency called?
The Indian currency is called the Indian Rupee (INR) and the coins are called paise. One Rupee consists of 100 paise.
What are the present denominations of bank notes in India?
At present, notes in India are issued in the denomination of Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and Rs.1000. These notes are called bank notes as they are issued by the Reserve Bank of India (Reserve Bank). The printing of notes in the denominations of Re.1 and Rs.2 has been discontinued as these denominations have been coinised. However, such notes issued earlier are still in circulation. The printing of notes in the denomination of Rs.5 had also been discontinued; however, it has been decided to reintroduce these notes so as to meet the gap between the demand and supply of coins in this denomination.
What are the present available denominations of coins in India?
Coins in India are available in denominations of 10 paise, 20 paise, 25 paise, 50 paise, one rupee, two rupees and five rupees. Coins up to 50 paise are called 'small coins' and coins of Rupee one and above are called 'Rupee Coins'.
Can bank notes and coins be issued only in these denominations?
Not necessarily. The Reserve Bank can also issue notes in the denominations of one thousand rupees, five thousand rupees and ten thousand rupees, or any other denomination that the Central Government may specify. There cannot, though, be notes in denominations higher than ten thousand rupees in terms of the current provisions of the Reserve Bank of India Act, 1934. Coins can be issued up to the denomination of Rs.1000.
Currency Management
What is the role of the Reserve Bank in currency management?
The Reserve Bank manages currency in India. The Government, on the advice of the Reserve Bank, decides on the various denominations. The Reserve Bank also co-ordinates with the Government in the designing of bank notes, including the security features. The Reserve Bank estimates the quantity of notes that are likely to be needed denomination-wise and places the indent with the various presses through the Government of India. The notes received from the presses are issued and a reserve stock maintained. Notes received from banks and currency chests are examined. Notes fit for circulation are reissued and the others (soiled and mutilated) are destroyed so as to maintain the quality of notes in circulation. The Reserve Bank derives its role in currency management on the basis of the Reserve Bank of India Act, 1934.
What is the role of Government of India?
The responsibility for coinage vests with Government of India on the basis of the Coinage Act, 1906 as amended from time to time. The designing and minting of coins in various denominations is also attended to by the Government of India.
Who decides on the volume and value of bank notes to be printed and on what basis?
The Reserve Bank decides upon the volume and value of bank notes to be printed. The quantum of bank notes that needs to be printed broadly depends on the annual increase in bank notes required for circulation purposes, replacement of soiled notes and reserve requirements.
Who decides on the quantity of coins to be minted?
The Government of India decides upon the quantity of coins to be minted.
How does the Reserve Bank estimate the demand for bank notes?
The Reserve Bank estimates the demand for bank notes on the basis of the growth rate of the economy, the replacement demand and reserve requirements by using statistical models.
How does the Reserve Bank reach the currency to people?
The Reserve Bank manages the currency operations through its offices located at Ahmedabad, Bangalore, Bhopal, Bhubaneshwar, Belapur(Navi Mumbai), Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Lucknow, Mumbai (Fort), Nagpur, New Delhi, Patna and Thiruvananthapuram. These offices receive fresh notes from the note presses. Similarly, the Reserve Bank offices located at Kolkata, Hyderabad, Mumbai and New Delhi initially receive the coins from the mints. These offices then send them to the other offices of the Reserve Bank. The notes and rupee coins are stocked at the currency chests and small coins at the small coin depots. The bank branches receive the bank notes and coins from the currency chests and small coin depots for further distribution among the public.
What is a currency chest?
To facilitate the distribution of notes and rupee coins, the Reserve Bank has authorised selected branches of banks to establish currency chests. These are actually storehouses where bank notes and rupee coins are stocked on behalf of the Reserve Bank. At present, there are over 4422 currency chests. The currency chest branches are expected to distribute notes and rupee coins to other bank branches in their area of operation.
What is a small coin depot?
Some bank branches are also authorised to establish small coin depots to stock small coins. There are 3784 small coin depots spread throughout the country. The small coin depots also distribute small coins to other bank branches in their area of operation.
What happens when the notes and coins return from circulation?
Notes and coins returned from circulation are deposited at the offices of the Reserve Bank. The Reserve Bank then separates the notes that are fit for reissue and those which are not fit for reissue. The notes which are fit for reissue are sent back in circulation and those which are unfit for reissue are destroyed after processingshredded. The same is the case with coins. The coins withdrawn are sent to the Mints for melting.
From where can the general public obtain bank notes and coins?
Bank notes and coins can be obtained at any of the offices of the Reserve Bank and at all branches of banks maintaining currency chests and small coin depots.
Current Issues
Why are the coins and bank notes in short supply?
This is not entirely correct. It is true that till recently the demand for currency was more than their supply. The primary reason for this is that the Indian society is still predominantly cash-driven. However, at present there are no supply constraints so far as bank notes are concerned. As regards coins, Government of India are taking various steps, including importing rupee coins. The impression of coins being in short supply is also enhanced probably due to people’s preference for notes.
Is there a way to reduce dependence on cash?
Yes, once instruments such as, cheques, credit and debit cards, electronic funds transfer gain popularity, the demand for currency is expected to go down.
Meanwhile, are some steps being taken to increase the supply of bank notes and coins?
Yes, several steps have been taken to augment the supply of bank notes and coins. Some of these are:

• The existing note printing presses and the mints owned by the Government are being modernised.
• Two new currency printing presses with the state-of-the-art technology have been set up under the aegis of the Bharatiya Reserve Bank Note Mudran Ltd., a wholly owned subsidiary of the Reserve Bank.
• To bridge the demand-supply gap, the Government had, as a one-time measure, even imported bank notes.
• The production capacity of the four India Government Mints are being augmented.
• Government of India has also been importing rupee coins to supplement the supply of coins from the four mints. Till date 2 billion rupee coins have been imported.

Why are Re1, Rs.2 and Rs.5 notes not being printed?
Volume-wise, the share of such small denomination notes in the total notes in circulation was as high as 57 per cent but constituted only 7 per cent in terms of value. The average life of these notes was found to be around a year. The cost of printing and servicing these notes was, thus, not commensurate with their life. Printing of these notes was, therefore, discontinued. These denominations were, therefore, coinised. However, it has been decided that notes in the denomination of Rs.5 be re-introduced so as to meet the gap between the demand and supply of coins in this denomination.
Soiled and Mutilated Notes
What are soiled and mutilated notes?
Soiled notes are notes, which have become dirty and limp due to excessive use. Mutilated notes are notes, which are torn, disfigured, burnt, washed, eaten by white ants, etc. A double numbered note cut into two pieces but on which both the numbers are intact is now being treated as soiled note.
Can such notes be exchanged for value?
Yes. Soiled notes can be tendered at all bank branches for and exchange obtained.
How much value would one get in exchange of soiled or mutilated notes?
Full value is payable against soiled notes. Payment of exchange value of mutilated notes is governed by the Reserve Bank of India (Note Refund) Rules, 1975. These Rules have been framed under Section 28 of the Reserve Bank of India Act, 1934. The public can get value for these notes as laid down in the Rules, after adjudication. Currently, provisions exist for paying either full, half or no value as far as notes in the denomination for Rs.10 and above are concerned; as regards Re.1, Rs.2 & Rs.5, a tenderer can get either full or no value depending upon the condition of the note.
What types of notes are not eligible for payment under the Note Refund Rules?
The following notes are not payable under the Note Refund Rules.
A note which is

• less than half the area of the full note
• devoid of the major portion of the number, i.e., the prefix and three digits or four digits of the number in notes up to and inclusive of Rs.5; in respect of notes of Rs.10 and above, where this inadequacy is present at both the numbering panels.
• cancelled by any office of the Reserve Bank or against which the value has already been paid
• found to be forged
• deliberately cut, mutilated or tampered
• carrying extrinsic words or visible representation intended to convey or capable of conveying any message of a political character.

What if a note is found to be non-payable?
Non-payable notes are retained by the receiving banks and sent to the Reserve Bank where they are destroyed.
Where are soiled/mutilated notes accepted?
All banks are authorised to accept soiled notes across their counters and pay the exchange value. They are expected to offer this service even to non-customers. All public sector bank branches and currency chest branches of private sector banks are authorised to adjudicate and pay value in respect of mutilated notes, in terms of the Reserve Bank of India (Note Refund) Rules, 1975. The RBI has also authorised all commercial bank branches to treat certain notes in ‘two pieces’ as soiled notes and pay exchange value.
Features of Contemporary Bank Notes
What are the general features of bank notes currently in circulation?
Rs.10, Rs.20, Rs.50 and Rs.100 notes issued earlier and which are still in circulation contain the Ashoka Pillar watermark and Ashoka Pillar effigy. The Rs.500 notes issued earlier i.e. since 1987 bear the Ashoka Pillar watermark and the Mahatma Gandhi portrait. The Reserve Bank is now issuing bank notes in Mahatma Gandhi series. This means that the notes contain Mahatma Gandhi watermark as well as Mahatma Gandhi's portrait. The Rs.5 notes re-introduced in August 2001 also bear the Ashoka Pillar watermark and Ashoka Pillar effigy. All these notes issued by the Bank are legal tender.
Why was the change brought about?
The central banks the world over bring in some change in the design of their bank notes. This is primarily to make counterfeiting difficult. India also follows the same policy.
Are there any special features introduced in the notes of Mahatma Gandhi series?
The new Mahatma Gandhi series of notes contain several special features vis-à-vis the notes issued earlier. These are:
i) Security thread: Rs.10, Rs.20 and Rs.50 notes contain a readable but fully embedded security windowed security thread. Rs.100, Rs.500 and Rs.1000 notes contain a readable windowed security thread. This thread is partially exposed and partially embedded. When held against light, this thread can be seen as one continuous line. Other than on Rs.1000 notes, this thread contains the words 'Bharat' in the devnagri script and 'RBI' appearing alternately. The security thread of the Rs.1000 note contains the inscription 'Bharat' in the devnagri script, '1000' and 'RBI'. Notes issued earlier have a plain, non-readable fully embedded security thread.
ii) Latent Image: A vertical band behind on the right side of the Mahatma Gandhi’s portrait, which contains a latent image, showing the denominational value 20, 50, 100, 500 or 1000 as the case may be. The value can be seen only when the note is held on the palm and light allowed to fall on it at 45° ; otherwise this feature appears only as a vertical band.
iii) Microletterings: This feature appears between the vertical band and Mahatma Gandhi portrait. It contains the word ‘RBI’ in Rs.10. Notes of Rs.20 and above also contain the denominational value of the notes. This feature can be seen better under a magnifying glass.
iv) Identification mark: A special intaglio feature has been introduced on the left of the watermark window on all notes except Rs.10/- note. This feature is in different shapes for various denominations (Rs.20-Vertical Rectangle, Rs.50-Square, Rs.100-Triangle, Rs.500-Circle, Rs.1000-Diamond) and helps the visually impaired to identify the denomination.
v) Intaglio Printing: The portrait of Mahatma Gandhi, Reserve Bank seal, guarantee and promise clause, Ashoka Pillar Emblem on the left, RBI Governor's signature are printed in intaglio i.e. in raised prints in Rs.20, Rs.50, Rs.100, Rs.500 and Rs.1000 notes.
vi) Fluorescence: The number panels of the notes are printed in fluorescent ink. The notes also have optical fibres. Both can be seen when the notes are exposed to ultra-violet lamp.
vii) Optically Variable Ink: The numeral 500 & 1000 on the Rs.500 [revised colour scheme of mild yellow, mauve and brown] and Rs.1000 notes are printed in Optically Variable Ink viz., a colour-shifting ink. The colour of these numerals appear green when the notes are held flat but would change to blue when the notes are held at an angle.
Forgeries
How does one differentiate between a genuine note and a forged note?
The notes on which the above features are not available can be suspected as forged notes and examined minutely.
What are the legal provisions relating to printing and circulation of forged notes?
Printing and circulation of forged notes are offences under Sections 489A to 489E of the Indian Penal Code and are punishable in the courts of law by fine or imprisonment or both, depending on the offence.
Remember: An aware public is the best safeguard against forgeries
This is an electronic document. Kindly refer to the printed brochure for the definitive version.

Currency Issues by Republic India

Throughout history, the right to Coinage and Currency and issues of sovereignty have been curiously conjoined, emotionally if not rationally; these issues stimulate debate even today.
The transition of currency management from colonial to independent India was a reasonably smooth affair. Midnight, August 15, 1947 heralded Indian independence from colonial rule. The Republic, however, was established on 26th January, 1950. During the interregnum, the Reserve Bank continued to issue the extant notes.
Government of India brought out the new design Re 1 note in 1949.

Government of India - Rupee One
Symbols for independent India had to be chosen. At the outset it was felt that the King's portrait be replaced by a portrait of Mahatma Gandhi. Designs were prepared to that effect. In the final analysis, the consensus moved to the choice of the Lion Capital at Sarnath in lieu of the Gandhi Portrait. The new design of notes were largely along earlier lines.

Rupees Ten - King's Portrait

Rupees Ten - Ashoka Pillar
In 1953, Hindi was displayed prominently on the new notes. The debate regarding the Hindi plural of Rupaya was settled in favour of Rupiye. High denomination notes (Rs 1,000, Rs. 5,000, Rs. 10,000) were reintroduced in 1954.

Rupees One Thousand - Tanjore Temple

Rupees Five Thousand - Gateway of India

Rupees Ten Thousand - Lion Capital, Ashoka Pillar
The lean period of the early sixties led to considerations of economy and the sizes of notes were reduced in 1967. In 1969 a commemorative design series in honour of the birth centenary celebrations of Mahatma Gandhi was issued depicting a seated Gandhi with the Sevagram Ashram as the backdrop.

Rupees One Hundred - Commemorative Design
Cost benefit considerations prompted the Bank to introduce Rs. 20 denomination notes in 1972 and Rs. 50 in 1975.

Rupees Twenty

Rupees Fifty
High denomination notes were once again demonetised in 1978 for the same reasons as the 1946 demonetisation. The 1980s saw a completely new set of notes issued. The motifs on these notes marked a departure form the earlier motifs. The emphasis lay on symbols of Science & Technology (Aryabhatta on the Rs 2 note), Progress (the Oil Rig on Re 1 and Farm Mechanisation on Rs 5) and a change in orientation to Indian Art forms on the Rs 20 and the Rs 10 notes. (Konark Wheel, Peacock).
Management of Currency had to cope with the rising demands of a growing economy, together with a fall in purchasing power. The Rupee 500 note was introduced in October 1987 with the portrait of Mahatma Gandhi. The water mark continued to be the Lion Capital, Ashoka Pillar.

Rupees Five Hundred
Mahatma Gandhi Series
With the advancement of reprographic techniques, traditional security features were deemed inadequate. It was necessary to introduce new features and a new 'Mahatma Gandhi Series' was introduced in 1996. A changed watermark, windowed security thread, latent image and intaglio features for the visually handicapped are amongst the new features.

Rupees Ten : Size 137 x 63 mm

Rupees Fifty : Size 147 x 73 mm

Rupees One Hundred : Size 157 x 73 mm

Rupees Five Hundred : Size 167 x 73 mm

Rupees One Thousand : Size 177 x 73 mm

Banknotes in Mahatma Gandhi Series - Security Features The Reserve Bank has the sole authority to issue bank notes in India. Reserve Bank, like other central banks the world over, changes the design of banknotes from time to time. The Reserve Bank has introduced banknotes in the Mahatma Gandhi Series since 1996 and has so far issued notes in the denominations of Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and Rs.1000 in this series. These notes contain distinct easily recognizable security features to facilitate the detection of genuine notes vis-à-vis forgeries. Security Features:  Watermark  Security Thread  Latent Image  Microlettering  Intaglio  Identification Mark  Fluorescence  Optically Variable Ink  See through Register

	Security Features on Indian Banknotes

	Watermark : The Mahatma Gandhi Series of banknotes contain the Mahatma Gandhi watermark with a light and shade effect and multi-directional lines in the watermark window.

Security thread : Rs.1000 notes introduced in October 2000 contain a readable, windowed security thread alternately visible on the obverse with the inscriptions ‘Bharat’ (in Hindi), ‘1000’ and ‘RBI’, but totally embedded on the reverse. The Rs.500 and Rs.100 notes have a security thread with similar visible features and inscription ‘Bharat’ (in Hindi), and ‘RBI’. When held against the light, the security thread on Rs.1000, Rs.500 and Rs.100 can be seen as one continuous line. The Rs.5, Rs.10, Rs.20 and Rs.50 notes contain a readable, fully embedded windowed security thread with the inscription ‘Bharat’ (in Hindi), and ‘RBI’. The security thread appears to the left of the Mahatma's portrait. Notes issued prior to the introduction of the Mahatma Gandhi Series have a plain, non-readable fully embedded security thread. Latent Image : On the obverse side of Rs.1000, Rs.500, Rs.100, Rs.50 and Rs.20 notes, a vertical band on the right side of the Mahatma Gandhi’s portrait contains a latent image showing the respective denominational value in numeral. The latent image is visible only when the note is held horizontally at eye level. Microlettering : This feature appears between the vertical band and Mahatma Gandhi portrait. It contains the word ‘RBI’ in Rs.5 and Rs.10. The notes of Rs.20 and above also contain the denominational value of the notes in microletters. This feature can be seen better under a magnifying glass. Intaglio Printing : The portrait of Mahatma Gandhi, the Reserve Bank seal, guarantee and promise clause, Ashoka Pillar Emblem on the left, RBI Governor's signature are printed in intaglio i.e. in raised prints, which  can be felt by touch, in Rs.20, Rs.50, Rs.100, Rs.500 and Rs.1000 notes. Identification mark : A special feature in intaglio has been introduced on the left of the watermark window on all notes except Rs.10/- note. This feature is in different shapes for various denominations (Rs. 20-Vertical Rectangle, Rs.50-Square, Rs.100-Triangle, Rs.500-Circle, Rs.1000-Diamond) and helps the visually impaired to identify the denomination. Fluorescence : Number panels of the notes are printed in fluorescent ink. The notes also have optical fibres. Both can be seen when the notes are exposed to ultra-violet lamp as shown below. Coinage history of Republic India The Decimal Series The move towards decimalisation was afoot for over a century. However, it was in September, 1955 that the Indian Coinage Act was amended for the country to adopt a metric system for coinage. The Act came into force with effect from 1st April, 1957. The rupee remained unchanged in value and nomenclature. It, however, was now divided into 100 'Paisa' instead of 16 Annas or 64 Pice. For public recognition, the new decimal Paisa was termed 'Naya Paisa' till 1st June, 1964 when the term 'Naya' was dropped. Naya Paisa Series 1957-1964   Denomination Metal Weight Shape Size Coin Rupee One Nickel 10 gms Circular 28 mm Fifty Naye Paise Nickel 5 gms Circular 24 mm Twenty Five Naye Paise Nickel 2.5 gms Circular 19 mm Ten Naye Paise Cupro-Nickel 5 gms Eight Scalloped 23 mm (across scallops) Five Naye Paise Cupro-Nickel 4 gms Square 22 mm (across corners) Two Naye Paise Cupro-Nickel 3 gms Eight Scalloped 18 mm (across scallops) One Naya Paisa Bronze 1.5 gms Circular 16 mm With commodity prices rising in the sixties, small denomination coins which were made of bronze, nickel-brass, cupro-nickel, and Aluminium-Bronze were gradually minted in Aluminium. This change commenced with the introduction of the new hexagonal 3 paise coin. A twenty paise coin was introduced in 1968 but did not gain much popularity.  Aluminium Series 1964 onwards Denomination Metal Weight Shape Size Coin One Paisa Aluminium-Magnesium 0.75 gms Square 17 mm (Daigonal) Two Paise Aluminium-Magnesium 1 gm Scalloped 20 mm (across scallops) Three Paise Aluminium-Magnesium 1.25 gms Hexagonal 21 mm (Diagonal) Five Paise Aluminium-Magnesium 1.5 gms Square 22 mm (Diagonal) Ten Paise Aluminium-Magnesium 2.3 gms Scalloped 26 mm (across scallops) Twenty Paise Aluminium-Magnesium 2.2 gms Hexagonal 26 mm (diagonal) 24.5 mm (across flats) Over a period of time, cost benefit considerations led to the gradual discontinuance of 1, 2 and 3 paise coins in the seventies; Stainless steel coinage of 10, 25 and 50 paise, was introduced in 1988 and of one rupee in 1992. The very considerable costs of managing note issues of Re 1, Rs 2, and Rs 5 led to the gradual coinisation of these denominations in the 1990s. Contemporary Coins Denomination Metal Weight Diameter Shape Cupro-Nickel 9.00 gms 23 mm Circular Cupro-Nickel 6.00 gms 26 mm Eleven Sided Ferratic Stainless Steel 4.85 gms 25 mm Circular Ferratic Stainless Steel 3.79 gms 22 mm Circular Ferratic Stainless Steel 2.83 gms 19 mm Circular Ferratic Stainless Steel 2.00 gms 16 mm Circular Minting & Issue The Government of India has the sole right to mint coins. The responsibility for coinage vests with the Government of India in terms of the Coinage Act, 1906 as amended from time to time. The designing and minting of coins in various denominations is also the responsibility of the Government of India. Coins are minted at the four India Government Mints at Mumbai, Alipore(Kolkata), Saifabad(Hyderabad), Cherlapally (Hyderabad) and NOIDA (UP). The coins are issued for circulation only through the Reserve Bank in terms of the RBI Act. Denominations Coins in India are presently being issued in denominations of 10 paise, 20 paise, 25 paise, 50 paise, one rupee, two rupees and five rupees. Coins upto 50 paise are called 'small coins' and coins of Rupee one and above are called 'Rupee Coins'. Coins can be issued up to the denomination of Rs.1000 as per the Coinage Act, 1906. Distribution Coins are received from the Mints and issued into circulation through its Regional Issue offices/sub-offices of the Reserve Bank and a wide network of currency chests and coin depots maintained by banks and Government treasuries spread across the country. The RBI Issue Offices/sub-offices are located at Ahmedabad, Bangalore, Belapur (Navi Mumbai), Bhopal, Bhubaneshwar, Chandigarh, Chennai, Guwahati, Hyderabad, Jammu, Jaipur, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram. These offices issue coins to the public directly through their counters and also send coin remittances to the currency chests and small coin depots. There are 4422 currency chest branches and 3784 small coin depots spread throughout the country. The currency chests and small coin depots distribute coins to the public, customers and other bank branches in their area of operation. The members of the public can approach the RBI offices or the above agencies for requirement of coins. Measures to improve the supply of coins The various Mints in the country have been modernised and upgraded to enhance their production capacities. Government has in the recent past, imported coins to augment the indigenous production. Notes in denomination of Rs.5 have been reintroduced to supplement the supply of coins. New initiatives for distribution Coin Dispensing Machines have been installed at select Regional Offices of the Reserve Bank on pilot basis. Dedicated Single-window counters have been opened in several of the Reserve Bank's offices for issuing coins of different denominations packed in pouches. Mobile counters are being organised by the Reserve Bank in commercial and other important areas of the town where soiled notes can be exchanged for coins.

Eurozone crisis: On the brink of chain reaction

Eurozone refers to the Economic and Monetary Union of member states of the European Union. Members of the Eurozone have adopted the Euro as their common currency and sole lender. The monetary policy of the Eurozone is laid out by the European Central Bank (ECB). Fiscal Policy, however, is the domain of individual member countries. The eurozone currently consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. The roots of the ongoing economic crisis in Europe began in early 2009, as a knock-on effect from the 2008 global financial crisis, which had already claimed Iceland as a victim. Iceland was not an institutional issue for the EU, but in 2009 Eastern members of the EU not using the euro began to have balance-of-payments problems. They suffered effective devaluations of their national currencies and sought help from Brussels to resolve their mounting budget deficits. In response, the EU doubled the funds in an existing facility to address balance-of-payments problems. Among the European countries that are affected mainly by the ongoing Eurozone crisis are Portugal, Ireland, Greece and Spain (PIGS countries). Iceland, the country which experienced the largest crisis in 2008 when its entire international banking system collapsed has emerged less affected this time as the government was unable to bail the banks out. In the EU, especially in countries where sovereign debts have increased sharply due to bank bailouts, a crisis of confidence has emerged with the widening of bond yield spreads and risk insurance on credit default swaps between these countries and other EU members, most importantly Germany.

The debt crisis affecting Europe has come to a fore. Called the Sovereign debt crisis, the issue started around the beginning of 2009. By 2010 eurozone members Greece, Ireland and Portugal and some other EU countries outside the area were affected. In simplified terms Eurozone countries in question are faced with the risk of running out of money to pay back the loans that they have taken out in past. As a result the countries are being refused loans for the future. The crisis began from Greece, which amassed a huge pile of debt from years of statistical fraud in its public-accounts sector. In lay terms, debt crisis was triggered by over-borrowing. Countries borrowed beyond their means and then struggled to pay off these debts. This led to a dramatic rise in borrowing costs for these countries, worsening the problems further. What started off two years ago in Greece has now spread to Portugal, Ireland, Spain and Italy. Other European countries are also feeling vulnerable. Those lending money to these countries are charging higher interest rates since they are now seen as risky – and hence prone to default. So we have country after another country in eurozone being dubbed as not good risk, and are therefore charged more for loans via bond issues. This is very much the same as someone who has failed to pay back a past mortgage and would be refused, or charged more for a loan by a bank, in the future. European zone countries face a similar dilemma. The Euro as a common currency of countries with disparate political and fiscal policies has meant the crisis has spread across the Eurozone. If each of these countries would have had a separate currency and monetary policy, the crisis would have been localized instead of having spread across the Eurozone. With slowing GDP growth, large welfare budgets and popular opposition to measures towards curbing entitlements, the situation in Europe is extremely difficult. At present, Germany is the only large Eurozone country with a sound economy, and it cannot be expected to bail out all of Eurozone on its own.

On wrong track: When the EuroZone formed in the late 1990’s, Germany and France were the economic powers and every other country was clearly in an economically subservient position. When the poor countries of Europe wanted to build roads, fund schools, and do various other large-scale projects, they funded these activities by issuing debt in the form of government bonds. Countries that are economic powers are able to borrow this money for pretty cheap. However, countries that are not in excellent financial shape have to pay more to finance their debt by offering investors a higher yield. Economically-weak PIGS countries were paying quite a bit to be able to borrow money. By joining the EuroZone, they were magically allowed to borrow money at very close to German bond yields. So the grand idea when the EuroZone started was that these weak countries like Greece would be able to borrow money at cheap rates in order to economically develop their countries in a responsible manner. This would help them close the gap with stronger countries like Germany and France, and then all of Europe would grow more powerful. It is clearly evident now that this grand idea has failed drastically and the whole Eurozone is facing the worst economic crisis of this century. Well, of course Greece, Portugal, Spain, Italy, and Ireland borrowed money. It’s what they did with the money, and how much they borrowed that became a problem. Instead of using the money to develop strong economic infrastructure in their respective countries, they went on reckless spending sprees. These countries have spent so much money and developed such irresponsible fiscal agendas that they are now having trouble paying back all those loans. To make it worse, investors are now demanding more yields in order to hold the debt of these countries.

Euro was introduced in 1999 and the unified interest rates allowed its members to borrow heavily and recklessly. Bonds issued by southern European nations were taken to be as safe as German ones. The money created a huge boom into the real estate in PIGS countries. The US housing bubble busted in 2008 and this affected real estate business all over Europe. The big EU countries and IMF came to rescue but did not able to stop the spread to other EU countries. If Greece were to default on its 370-billion-euro debts then the European banks that lent to Greece at the height of the borrowing binge would certainly be hit especially the French banks. The budgetary deficit of Greece in the eight months to the end of August has widened to 22 per cent to 18.9 billion euros, more than the target of 18.1 billion euros for the period. Greece has pledged to reduce its general government deficit to about 7.5 per cent of gross domestic product this year from 10.5 per cent in 2010.

Sovereign states and large debts: First, investors start worrying that the debt may not be sustainable, concerns rise over the ability of the state to pay back capital and interests by generating budget surpluses in the future (that is, fiscal revenues in excess of expenditures). In this case, investors require higher interest rates to subscribe new public debt as a compensation for the risk of insolvency. This in turn increases the risk of insolvency as it worsens public sector balance sheets. At some point, there may no longer be an interest rate able to compensate investors for the risk of insolvency; then they just stop subscribing the public debt. This is a situation of fiscal crisis and has only two possible outcomes:

• (a) Government default followed by a renegotiation of the debt.
• (b) Monetization of the debt, which is effectively bought by the central bank. This represents an injection of money in the economy and thus generates inflation and exchange-rate depreciation.

Euro depreciating: In the last few days we have witnessed the sudden depreciation of the Euro. A possible answer is that as the financial crisis spreads to other large Eurozone countries, the risk of monetization of the public debt becomes more concrete. Even if Greece has been bailed out by other countries in the Eurozone, this would not be feasible for the much larger public debts of other debt ridden European nations. In the scenario of a widespread crisis, the possibility that the ECB will monetize the debt of weak Eurozone countries exists, and fear of the implied inflation can explain the depreciation of the euro. However, a massive monetization is an unlikely scenario, as it would eventually undermine price stability in the Eurozone and imply a substantial transfer of resources from strong to weak Eurozone countries.

Measures to curb crisis:

• (a) The 27 member states of the European Union have created the EFSF (European Financial Stabilization Mechanism), a legal instrument to preserve financial stability in Europe by providing financial assistance to Eurozone states in difficulty. The facility is jointly and severally guaranteed by the Eurozone countries’ governments.
• (b) The steps taken by ECB to reduce volatility in the financial market and improving liquidity include: (i) it began open market operations buying government and private debt securities. (ii) It announced two 3-months and one 6-month full allotment of Long Term Refinancing Operations (LTRO’s). (iii) It reactivated the dollar swap lines with Federal Reserve support.
• (c) The Euro Plus Pact: The Euro Plus Pact was adopted in March 2011 under which the countries of the EU make concrete commitments to a list of political reforms intended to improve the fiscal strength and competitiveness of each country. The Euro-Plus Pact has four broad strategic goals along with more specific strategies for addressing these goals. The four goals are: (i) Fostering competitiveness. (ii) Fostering employment. (iii) Contributing to the sustainability of public finances. (iv) Reinforcing financial stability.
• (d) Eurozone leaders agreed to extend the maturity of current bailout loans to Greece to 7.5 years, doubling the repayment deadline. They also agreed to lower the interest on their bilateral loans to Greece by 100 bps.
• (e) Euro zone leaders have agreed that the EFSF will be able to buy troubled countries’ bonds on the primary market — that is, when they are auctioned by the sovereign. The purchases will be possible only for countries which have agreed on an emergency aid programme with the euro zone, such as Greece or Ireland. Greece's parliament has passed a law to expand the powers of the European Financial Stability Facility (EFSF), which renders the euro zone's bailout fund more flexible. The EFSF increases the rescue fund's effective lending capacity to 440 billion euros ($603 billion) and allows it to lend euro zone governments money to recapitalise their banks. The fund is also empowered to provide precautionary loans to countries under attack in the markets and to buy sovereign bonds. Further, German Chancellor Angela Merkel has suggested that parts of a planned new 109-billion-euro ($148.6 billion) rescue for the debt-laden country could be reopened, depending on the outcome of the troika's audit.
• (f) Greek Prime Minister George Papandreou's Socialist Pasok party has won the parliamentary backing by 155 to 142 for a property tax to meet deficit-reduction targets required to avoid default. But the implementation of the measures is the biggest challenge for the government as the trade unions and parts of the civil service will protest against this decision. The property levy, to be collected via electricity bills, will provide an annual yield of 1.1 per cent of GDP. It will generate as much as 1.8 billion euros.
  The Government has announced an additional 20 per cent wage cut, on top of 15 per cent for the civil service and 25 per cent in the wider public sector. Pensions are being reduced 4 per cent on average, in addition to previous cuts of 10 per cent. A lowering of the tax-free threshold to 5,000 euros will mean higher taxes for all Greeks.

Possible solutions to the crisis:

• (a) Creation of Common European bond: If a common Euro bond is created it will allow the weaker countries to share Germany’s credit rating and hence they will be able to borrow at lower rates. However, for this, Germany would have to guarantee other countries’ debt which is highly unlikely.
• (b) ECB buys bonds of weak countries: One of the solutions to cope up with the meltdown is that ECB buys bonds of the heavily indebted Eurozone members. The ECB has earlier bought Greek, Irish and Portuguese bonds and is now buying Italian and Spanish bonds. But this is not a bottomless pit and purchases would have to stop at some point.
• (c) IMF should come to rescue Eurozone: International Monetary Fund should organize a global rescue package worth trillions of euros. Europe’s debtor nations could borrow at low rates with long maturities. Once a debt pressure is relieved, Europe could follow more pro-growth economic policies.
• (d) Developed nations can write off the debts: A solution to the ongoing eruozone crisis can be achieved if the developed nations negotiate and write down on their debts or defaults on them. Superficially, this seems a solution. But it would create other problems. Defaults would inflict huge losses on banks, insurance companies and will lead to collapse of many European banks and finally the global economy will fall into Great Recession II.
  Thus we can analyze the fact that there are no easy solutions to the crisis confronting Eurozone. However, the urgency for solid steps to confront the issue is also increasing day by day.

European crisis and the American economy: Both, the USA and the Eurozone are witnessing the economic crisis almost at the same time. The 2008 global financial crisis was triggered due to failure of the American economic system and in 2011 the world is witnessing the failure of European economic policies. The fear about the failed Eurozone economy has raised concerns about rising government deficits and debts across the globe. This has worsened the situation and has created alarms in world financial markets and expectations of recession in developed countries including the United States. Let us analyze briefly the impact of European crisis on American economy:

• (a) Impacts on US Banks: The U.S.’ gross direct exposure to European banks through loans and bonds amounts to $678 billion. This does not include less direct exposure through financial derivatives, loan guarantees and other financial connections such as credit default swaps. While a collapse of a European bank as major as Societe Generale or BNP Paribas will not have much impact on the U.S. economy, a financial contagion in Europe will, however, have a palpable impact on the U.S. and the global financial system through the loss of confidence in banks.
• (b) Euro devaluation: The European sovereign debt crisis will trigger a devaluation of the euro against the U.S. dollar, which would impact U.S. exports. Europe is the largest export market for the United States. Depreciation in the euro will make American exports to Europe more expensive, which would significantly weaken the only remaining engine of growth for U.S. economic recovery after the U.S. government ended its stimulus package.
• (c) Threat to Euro viability: The weakening of the euro versus other global currencies and spread of contagion from small European countries, such as Greece and Portugal, to the larger countries, such as Germany and France, may threaten the viability of the euro, potentially paralyzing global credit markets in a way similar to what happened after the collapse of Lehman Brothers in the United States.
• (d) Loss of wealth: The European crisis has affected U.S. capital markets other than the banking sector. It has unraveled stocks and increased fears of a new crash in the stock market. The crisis has also jolted hopes of a strong recovery in the United States. There could be a global loss of wealth, one way or the other, and the loss could be huge. Thus we can say that if the US economy is again hit by recession, this time it will definitely come from Europe and whenever it happens it may be called Great Recession II.

Implications of Eurozone crisis for Indian Economy: Any deceleration in software exports due to the Euro zone debt crisis and the poor economic conditions in the US will affect India's GDP growth. In 2009-10, the US alone accounted for 61 per cent of India's total software exports. European countries (including the UK) followed with as much as 26.5 per cent. If these two regions are the first to be hit by the recession, it is unlikely that software export revenue would remain unscathed. Moreover, over the period 2004-05 to 2009-10, services accounted for 66 per cent of the increment in India's GDP. Revenues from software services amounted to 9.4 per cent of this (excluding public administration and defence). According to balance of payment data, gross revenue from exports of software services amounted to as much as 24 per cent of the gross revenue from merchandise exports. But by and large, India is not going to be affected directly due to PIGS crisis as in 2010, Portugal and Greece had a share of about 1.3 per cent each in India's exports to the EU and Ireland had about 0.7 per cent. Italy and Spain had 11.5 per cent and 6.8 per cent respectively.

Let us now examine some potential scenarios:(a) Impact on foreign trade: First of all, the EU (excluding UK) accounts for roughly 30 per cent of the country’s merchandise foreign trade (export and import). A slowdown in Europe would naturally have a negative impact on our foreign trade and lead to loss of revenue as well as jobs in export-oriented industries. The impact of a slowdown would be much more severe in the service sector (particularly BPO and software) where trade is in India’s favour.(b) Impact on domestic economy: If the European meltdown spreads and leads to a global slowdown, this will definitely worsen India’s trade with other countries and thus hit our domestic economy directly as well as indirectly. The income of exporters will reduce drastically, unemployment will rise, etc. thus our domestic demands will fall drastically and our growth rate will have to comprise. (c) Bearish stock market: More importantly the impact of the crisis would be felt in the financial market. The first signs of this may already be visible, with the Indian markets declining by nearly 4 per cent in last week September, 2011. (d) Fall in commodity prices: In addition to decline in security markets, one can expect to see a rise in gold prices and fall in commodity prices (due to lower demand), and depreciation in currency (due to flight of capital). (e) Currency depreciation: If the Eurozone crisis hangs on for a longer time it will result in deprecation of Indian Rupees due to fligh to capital from the market. (f) Foreign remittances will suffer: Slowdown could impact the flow of remittances and NRI deposits in India. In the wake of a crisis, remittances from abroad could slow down and a significant number of expatriates might even lose jobs and move back to India, thus straining the local economy.

The impact of Eurozone meltdown will be felt seriously by emerging economies like India. In addition to the possibilities outlined above, the Indian economy could be affected in numerous other ways, as it is practically impossible to identify all the interlink-ages between India and the global economy in this day and age of increasing integration. But there is another side of the story which can also become possible. The slowdown in Europe and the USA could benefit the emerging economies due to fall in commodity prices and flow of capital from those countries to countries such as India. In order to reap fruits from the crisis the developing nations need to fasten their economic growth and change the overall climate of crisis of governance.

DTAAs : to curb black money

Basically DTAAs are those pacts that seek to eliminate double taxation of income or gains arising in one country and paid to residents or companies of another. In other words, the treaty is devised to ensure that the same income is not taxed twice. In a bid to curb the growing menace of black money, the Government of India has written, under revised tax treaties, some countries to freeze the assets of Indians that have not been declared in India and repatriate the money. It is important to note that India has renegotiated Double Taxation Avoidance Agreements (DTAAs) with 29 out of the 79 countries with which it has such agreements, including the US, Mozambique, Tanzania, Ethiopia, Colombia and Norway. Further, India has also involved into the process of revising DTAAs with Switzerland and Mauritius as well.

The government was amending DTAAs by inserting a clause on information regarding banking sector and also entering into tax information exchange agreements (TIEAs) with several countries, including tax havens. DTAAs have been amended (clause on banking sector has been inserted) with 40 nations and TIEA has been sealed with tax havens like Isle of Man, Bermuda and Bahamas. In absence of a clause on banking sector in DTAAs, the contracting countries were not sharing information in this regard.

The revised pacts include an article on 'Assistance in Collection of Taxes' which allows the two sides to help each other collect taxes due under their respective domestic laws. In some DTAAs, India is including "conservancy" measures, too. The measures include seizure or freezing of assets before the final judgment to ensure they are available whenever the dues are to be collected.

Abuse of DTAAs and round-tripping:

1. DTAAs are misused when many of the countries with whom we have avoidance agreements do not tax their residents in the manner we do. For example, Mauritius has exempted taxation on capital gains but India imposes. It is important to note that through Mauritius 41.9 per cent of all FDI since 1991 and bulk of the FIIs flows into India. India loses more than $600 million every year in revenues on account of the DTAA with Mauritius, as per some available estimates. India and Mauritius entered into the DTAA way back in 1982 as part of a strategic relationship in response to the US setting up military base in Diego Garcia in the Indian Ocean.
2. The money going out of India, however, is coming back to India for investments, in what is known as "round-tripping". It has been suspected that round-tripping or routing of Indians' illicit money back into the country through the Mauritius route. But in India still we don't have sound estimates regarding round-tripping exist and for this the network of DTAAs and TIEAs to be strengthened to check such practices. And in this regard, the Government has concluded discussions for 11 TIEAs and 13 new DTAAs along with revision of provisions of 10 existing DTAAs during 2010-11. He said foreign tax division of CBDT had been strengthened and a dedicated cell for exchange of information was being set up to work on this agenda.
3. It has been suspected that a significant surge in venture capital funds coming from Mauritius in sectors like telecom and real estate, which have been subject matter of close scrutiny for money laundering cases. A total of 154 foreign venture capital investors are registered with SEBI and are permitted to invest in Indian companies and as many as 149 of these entities are based out of Mauritius, three from Singapore and two in Cyprus.
4. It has been believed that due to growing popular demand to make public of those having money in bank accounts in locations like Switzerland has also led to a large number of entities shifting their illicit wealth to Mauritius with an aim to ultimately route the funds to India.

Proposed measures:

1. The Direct Taxes Code (DTC) Bill introduced in Parliament and likely to be implemented from April 1, 2012, has proposed to override provisions of DTAAs with regard to certain overseas transactions. Basically, DTC has overriding powers in three areas: General anti-avoidance rules (GAAR), controlled financial operations and branch profit tax. At present, there is no provision in the Income-Tax Act to tax overseas or cross border transactions.
2. The newly-approved Directorate of Criminal Investigation (DCI) would collect information about persons and transactions connected with criminal activities and initiate prosecution proceedings against them. The DCI will perform functions in respect to criminal matters having any financial implication punishable as an offense under any direct tax law.
3. India has also entered into information exchange agreement with countries such as Switzerland and tax havens such as Bahamas and British Virgin Islands to allow it to receive relevant data on tax evasion in specific cases and to enable the agencies to take the required action.

DTAA
India signed with Tanzania and Ethiopia

With the intention of making a further leap in its relations with Africa, India recently signed double taxation avoidance agreement with Tanzania and Ethiopia. Double tax avoidance agreement is the deal between two countries by which the tax payer need to pay income tax to one country of which it dues, and by showing the certificates of income tax paid, the second country cannot ask to repay the income tax. Some transactions are like this in which one works part time to different country or work in home country to the foreign country. In such cases the Double taxation avoidance agreement works. Major terms of reference of both the Agreements: The agreement for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income, signed by India with two of Africa’s major economies consists of following major references. The DTAA provides that business profits will be taxable in the source state if the activities of an enterprise constitute a permanent establishment in the source state. Profits of a construction, assembly or installation projects will be taxed in the state of source if the project continues in that state for more than 270 days (183 days with Ethiopia). Profits derived by an enterprise from the operation of ships or aircrafts in international traffic shall be taxable in the country of residence of the enterprise. Dividends, interest and royalties income will be taxed both in the country of residence and in the country of source. However, the maximum rate of tax to be charged in the country of source will not exceed a two-tier 5% or 10% in the case of dividends and 10% in the case of interest and royalties. Capital gains from the scale of shares will be taxable in the country of source. The Agreement further incorporates provisions for effective exchange of information and assistance in collection of taxes between tax authorities of the two countries in line with internationally accepted standards including exchange of banking information and incorporates anti-abuse provisions to ensure that the benefits of the Agreement are availed of by the genuine residents of the two countries. The Agreement will provide tax stability to the residents of all the nations and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between India and its African partners. With the latest agreement with Ethiopia and Tanzania, India has now formed DTAAs with 43 countries.

India and Singapore
Signed protocol to amend DTAA
Indian Government has signed a protocol, amending Double Taxation Avoidance Agreement (DTAA) with the Government of Singapore for effective exchange of information in tax matters. It has to be mentioned that both India and Singapore have adopted internationally agreed standard for exchange of information in tax matters and it is likely to ensure greater transparency and governance. The agreed standard for exchange of information in tax matters includes the principles incorporated in the new paragraphs 4 and 5 of OECD Model Article on 'Exchange of Information' and requires exchange of information on request in all tax matters for the administration and enforcement of domestic tax law without regard to a domestic tax interest requirement or bank secrecy for tax purposes.

Jayalalithaa launches Rs 750-cr health insurance scheme

A new health insurance scheme for providing free medical and surgical treatment to 1.34 crore families in Tamil Nadu was January 11 launched by the Chief Minister, Ms J. Jayalalithaa, at an annual outlay of Rs 750 crore.

Under the “Chief Minister's Comprehensive Health Insurance Scheme”, replacing the previous DMK regime's insurance cover, a family would get a health insurance cover up to Rs 1 lakh a year for four years, an official release said.

In the case of certain diseases, the insurance cover could go up to Rs 1.50 lakh. The scheme, to be implemented by public sector United India Insurance Company, would be applicable to every member of a family whose annual family income is less than Rs 72,000.

Ms Jayalalithaa handed over ID cards for the scheme to seven beneficiaries and approval letters for treatment to seven others on the occasion.

After coming to power in May, Ms Jayalalithaa had scrapped the “Chief Minister Kalaingar's Insurance Scheme” named after the DMK President, Mr M. Karunanidhi, as part of reversing DMK regime's pet projects.

Observing that the DMK Government's scheme did not benefit everyone, the release said under the earlier initiative a family was given only Rs 1 lakh total cover for a block of four years.

Furthermore, the insurance amount of Rs 1 lakh in the earlier scheme was not sufficient for treatment of life-saving and major surgeries and no provision was made for post-operative treatment, forcing the poor to borrow money for their medical treatment, the release said.

India’s forest cover falling: Study

India's forest cover has declined by 367 sq km between 2007 and 2009. While the figure may not seem alarming, it runs counter to the impression that afforestation and conservation programmes are yielding results.

The largest dip in forest cover was in the northeast which lost 550 sq km. This loss was very partially made up elsewhere, even as there was an overall negative growth in green cover. There was better news from states like Punjab, Jharkhand, Tamil Nadu and Rajasthan where social forestry projects seem to have worked to some extent.

The 2011 report of the Dehradun-based Forest Survey of India accessed by TOI has been submitted to the ministry of environment and forests (MoEF) and is to be released soon.

The news for Delhiites is not encouraging. There has been no change in the forest cover although Delhi government has been repeatedly claiming that forest areas are increasing. With civic agencies pointing to unchecked encroachments in the Ridge, the FSI report is not a surprise.

Maximum reduction in forest cover has been reported from insurgency-hit Manipur, totaling 190 sq km. Nagaland comes next with at least 146 sq km forest being lost between 2006 and 2008. The trend is equally worrying in Mizoram, Arunachal Pradesh and Meghalaya.

The last FSI report in 2009 showed forest cover in the northeast had increased from 1,69,825 sq km in 2005 to 1,70,423 sq km in 2007 -- an annual increase of 299 sq km over two years.

Citing reasons behind the sharp fall in forest cover, a retired conservator of forests said some forest areas in the region were inhabited by tribals and locals practised Jhum cultivation by clearing out huge swathes of forest areas. There was also the threat of organized wood smugglers and mafia.

But there have been some positive indicators elsewhere. Forest cover has increased by 100 sq km during these two years in Punjab, sources in the FSI said. "This is primarily because the government is pushing agro forestry activities. If satellite imagery establishes at least 10% area in an hectare is under forest, we designate it as forest cover," said an official associated with preparation of FSI reports.

Sources said that while Haryana and Himachal Pradesh reported slight increase in forest cover - 14 and 11 sq km respectively. "We expect the forest cover will be more in Haryana in the next report which will be out in 2013 considering the positive impact of Supreme Court ban on mining in Aravallis," said an official posted at FSI.

European crisis more dangerous than 2008 financial crisis: George Soros

Europe's debt crisis is more dangerous than the 2008 global financial crisis, billionaire investor George Soros said.

"We now have a crisis, which in my opinion is even more serious than the crash of 2008," Soros said on Monday at a business event in the southern Indian city of Bangalore .

"You had the institutions that were necessary to control the situation (in 2008), a functioning central bank, the Federal Reserve system, and a functioning

T reasury," he said. "In the case of the e uro, you have a European Central Bank but you don't have an European treasury. That institution is missing , " he said.

Soros, who made investment history by earning $1 billion with a bet against the British pound two decades ago, said last week that a collapse of the euro and break-up of the European Union would have catastrophic consequences for the global financial system.

He was speaking as French President Nicolas Sarkozy and German Chancellor Angela Merkel prepared to meet to discuss ways to boost growth and improve fiscal coordination in the euro zone.