ET - RBI s policy on June 30 ( no change in interest rates and decrease in growth forecast to 5.5)

NEW DELHI: Maintaining an extremely hawkish stance, the Reserve Bank of India (RBI) in its first quarter monetary policyreview, not only kept key policy rates unchanged, but also cut the GDP growth forecast for FY14 to 5.5% from 5.7% earlier.

RBI Governor Subbarao cited various risks that are likely to hamper economic growth. Both domestic and global uncertainty were admitted to be a deterrent for economic recovery.

We take a look at the four risks that the central bank has highlighted:

External sector: By far, the biggest risk to the macroeconomic outlook stems from the external sector. "Financial markets around the world went into a flash turmoil on the perception of an earlier than expected tapering of QE by the US Fed. The rupeedepreciated in nominal terms by as much as 5.8 per cent between May 22 (the day of the first 'announcement effect') and July 26, consequent on sudden stop and reversal of capital flows in reaction to the prospective change in the US monetary policy stance," RBI said.

"It is not clear if financial markets have factored in the full impact of the prospective tapering of QE or whether they will react to every future announcement of tapering," it added.

According to RBI, India, with its large CAD and dependence on external flows for financing it, will remain vulnerable to the confidence and sentiment in the global financial markets.

Large CAD: A Current Account Deficit (CAD), well above the sustainable level of 2.5 per cent of GDP for three years in a row, is a formidable structural risk factor, the bank says.

"It has brought the external payments situation under increased stress, reflecting rising external indebtedness and the attendant burden of servicing of external liabilities. Most external vulnerability indicators have deteriorated, eroding the economy's resilience to shocks," it said.

"The recent measures by the Reserve Bank to restore stability to the foreign exchange market should be used as a window of opportunity to put in place policies to bring the CAD down to sustainable levels. Furthermore, the growing vulnerability in the external sector reinforces the importance of credible fiscal consolidation with accent on both quantity and quality of adjustment," it added.

Investment climate: The investment climate remains weak and risk aversion continues to stall investment plans. "The outlook for investment is inhibited by cost and time overruns, high leverage, deteriorating cash flows, erosion of asset quality and muted credit confidence," it says.

Supply-side constraints: An environment of low and stable inflation and well-anchored inflation expectations is necessary to sustain growth in the medium-term. To engender this benign growth-inflation environment, it is critical to ease the supply constraints in theeconomy, particularly in the food and infrastructure sectors.

"Without policy efforts to address the deterioration in productivity and competitiveness, the pressures from wage increases and upward revisions in administered prices could weaken growth even further and exacerbate inflation pressures," it said.

TOI - Foreign investment in Indian aviation and Mayaram committee

NEW DELHI: The fund-starved Indian airline industry — which recently witnessed the grounding of Kingfisher apart from the closure of Paramount and MDLR — could now get life-saving money and management of foreign airlines. The Jet-Etihad deal was being seen as a test case by foreign airlines which are eying stake purchase in SpiceJet and GoAir (IndiGo has so far not shown any interest) and they may now quickly announce their deals in coming days.

Aviation ministry sources say the Foreign Investment Promotion Board's nod for the Jet-Etihad deal may push the home ministry to expedite the security clearance for the proposed airline from the AirAsia-Tata joint venture.

For flyers, this would mean well-funded airlines competing among themselves to woo them. This, in turn, will mean lower fares and more choices.

"Getting clearances in India is a nightmare. The government held up for months the $900-million Jet-Etihad deal, which is the biggest FDI in the aviation sector here. Other potential foreign airline investors coming with much smaller sums of money were sitting on the sidelines and will now start coming in. Expect announcements from SpiceJet and GoAir very soon," said a Delhi-based senior official of a foreign airline.

Just how badly Indian airlines need funds is clear from the fact that their collective debt on March 31, 2013, was Rs 93,000 crore, according to the Centre for Asia Pacific Aviation (CAPA). Their collective loss in FY12-13 was Rs 10,700 crore, with Air India and Kingfisher (which got grounded on October 1, 2012) alone accounting for Rs 9,600 crore. Low-cost carrier IndiGo was the only airline that made a profit.

Industry sources say some foreign airlines want to invest in start-ups like the AirAsia-Tata joint venture. "A couple of more start-ups are possible after the next general election. The remaining term of UPA-II may see SpiceJet and GoAir getting FDI," said sources.

Amber Dubey, partner KPMG, said, "The deal will help the Indian civil aviation industry by enhancing capacity, increasing competition and bringing down airfares. We may also see some more deals in the coming months... Because we have so many complex rules and restrictions, precious man-hours of the government agencies are being wasted in checking whether the restrictions are being complied with.... The government should seriously consider the Mayaram Committee's recommendation of completely freeing the airline sector from FDI restrictions. Let there be as many foreign airlines operating in India through their 100% subsidiaries or by buying into Indian carriers. India will only gain."

The Hindu - Delhi incineration vs gassification

While incineration endangers lives, gasification will produce transport fuel that can meet half of India’s consumption needs

Delhi’s Chief Minister Sheila Dikshit has been at her wits’ end on how to dispose of the city’s ever growing mountain of garbage. Rising population and growing affluence have raised the daily outpouring of refuse to more than 8,000 tonnes, while simultaneously pushing up the cost of land to astronomical levels. The result: Delhi has run out of land for landfills, and none of the neighbouring States intends to surrender any to meet its needs.

The obvious answer to Delhi’s problem seems to be to burn the solid waste. Cities all over the world are doing it, so why can’t Delhi follow suit? In 2006, the Delhi Municipal Corporation proposed that a small, mothballed, waste incineration plant at Timarpur, that had been put to work for altogether five days since it was built in the 1980s, be reopened to convert 214,000 tonnes of solid waste a year into 69,000 tonnes by sifting out inorganic matter, and drying and palletising the rest to increase its fuel value. Burning this garbage, it was estimated, would produce six megawatts of power per hour, or 5.5 billion units of electricity a year.

The proposal never took off, but it became the springboard for a private sector grab at Delhi’s garbage — investors figured their income would come from the highly inflated tariff decreed by the Central government for ‘green’ energy and the carbon credits they would earn by reducing greenhouse gas emissions.

Their plans are close to maturing. In her 2013-14 budget speech, Ms Dikshit announced that the city already has one incineration plant at Okhla, burning almost 2,000 tonnes a day, and that two more are being set up to incinerate another 4,300 tonnes a day. What’s more, these plants will generate 50 MW of power every hour of the day. More incineration plants are on their way: since the Okhla plant went on stream, the Union Ministry of Environment and Forests has approved eight more plants in various cities.

There is, however, a catch. Incinerating garbage in Delhi will cost an estimated 200,000 ragpickers their jobs. Throughout the world, moreover, countries are closing incineration plants owing to the hazard they pose to human health. The threats come from particulate emissions that greatly exacerbate lung diseases from bronchitis and asthma to emphysema and lung cancer, and from dioxins and furans in addition to the usual nitrogen and sulphur oxide gases in the flue gas.

THE DIOXIN THREAT

To residents of Indian cities who have become inured to dust, smoke, diesel fumes, as well as lead and nitrous oxide poisoning, this may sound like just one more addition to the long list of risks they face in their daily lives. But dioxins belong to another level of threat altogether. The word is a generic term for more than a hundred long lasting chemicals that are produced by burning municipal and medical waste and by a few industrial processes. Dioxins are insoluble in water and when they settle on land and water bodies, they are absorbed in their entirety by terrestrial and aquatic vegetation. They travel up the food chain into animals and fish that feed on plants and thence into humans. Since living organisms cannot metabolise them, they are found in very high concentrations in meat, fish, milk and eggs. In human beings, a prolonged exposure to dioxins — through a ‘rich diet’ — impairs the functioning of the liver and the immune and reproductive systems, and raises the incidence of cancer. In sum, dioxins shorten our lifespan. Men have no way of expelling them. Women can, but only by passing them to foetuses in their wombs or breast-feeding their babies.

Not surprisingly, the U.S. Environmental Protection Agency, which put together the first comprehensive report on dioxins in 1994, described them as “the most poisonous substances known to man.” In Finland, the government has ordered shut an incineration plant built with the most elaborate safeguards when it found, after two years of its operation, that dioxin levels in the surrounding vegetation had risen by 15 to 25 per cent within a distance of 4 km from the plant.

Whenever environmentalists have pointed these hazards out to the Delhi government, its officials and company representatives have assured them that elaborate safeguards have been incorporated into the design of the plants to ensure that they meet prescribed safety norms. But subsequent tests have falsified this claim. In tests carried out at Okhla last year, particulate emissions exceeded norms on four occasions and stayed within them only on six. A test carried out in May 2013 revealed dioxins and furans emissions from its two chimney stacks to be 2.8 and 12.7 times the prescribed maximum!

In the face of such facts, the Delhi government has merely reaffirmed its determination to go ahead with setting up the incineration plants. This has led to the usual accusations of corruption and crony capitalism, but in this case the cause probably lies in two preconceptions that are deeply imbedded in the public mindset. First, that garbage is simply a nuisance and has no economic value whatever; second, since the physical sorting of household refuse is not feasible in India, incineration is the only way out.

Both assumptions reflect the casual ignorance of decision-makers. There is a third way of disposing garbage that not only eliminates all pollutants, but turns garbage into gold. This is to gasify garbage. Gasification is an incomplete combustion of organic matter that replaces a large part of the carbon dioxide we get from combustion with carbon monoxide and hydrogen. These two gases are, and have been for a hundred years, the basic building blocks of the world’s petrochemicals industry. They are also ideal for driving gas turbines to generate power. From India’s perspective, their best feature is the ease with which they can be synthesised into any transport fuel one desires, and into Di Methyl Ether, a condensate gas that is a superior diesel substitute and a complete substitute for Liquefied Petroleum Gas (LPG).

Gasification also eliminates the threat from dioxins. When gasification is carried out with oxygen, it produces only seven per cent of the flue gas obtained from combustion. The reaction takes place, moreover, at such high temperatures —1000 to 3,000 degrees Celsius — that dioxins and furans get broken down into their basic elements, losing their toxicity. The release of dioxins from a 24 tonne-per-day plasma gasification plant that has been running for more than a decade in Yoshii, Japan, has been found to be less than one per cent of that released by corresponding incineration plants. Consequently, city and municipal corporations around the world have begun to switch to gasification. According to the U.S.-based Recovered Energy Inc., a turnkey engineering company specialising in renewable energy projects, there are 200 Municipal Solid Waste (MSW) gasification plants under construction or in operation globally, of which half use the revolutionary new technology called plasma gasification.

ISOLATED VENTURES

Ironically, India already has employed plasma gasification technology — for the past four years, two 68 tonnes-a-day commercial plants employing this technology have been disposing of medical and other hazardous wastes in Pune and Nagpur. Since Indian states do not share information, however, these have remained isolated ventures.

At present, most MSW gasification plants abroad produce electricity. But this is giving way to the production of transport fuels. British Airways is partnering Solena, a U.S.-based biofuels company, to set up a plant that will gasify 1,300 tonnes a day of London’s solid waste to produce 16 million gallons of Aviation Turbine Fuel and 9 million gallons of naphtha in addition to generating up to 40 MW of power. This plant is expected to meet two per cent of British Airways’ global demand for jet fuel. Solena has won contracts for similar plants with Qantas, Lufthansa and SAS. Lufthansa’s plant will have a modification that New Delhi will do well to take note of: instead of naphtha, it intends to produce 9 million tonnes of diesel fuel.

India stands therefore at a crossroads. In 10 years from now, 600 million Indians will be living in cities with more than a million inhabitants who generate at least 600,000 tonnes of garbage a day. Incinerating this garbage will endanger the lives of future generations. Alternatively, this is sufficient to produce more than 35 million tonnes of transport fuel a year and meet half of India’s current consumption of the same. The saving in foreign exchange will lift the threat of a foreign exchange crisis forever. It will also free domestic prices from the yoke of international oil prices forever. And it will do all this without requiring a rupee of subsidies.

The Hindu - Why to bet on FDIs

The government’s decision to liberalise the foreign direct investment regime stems directly from its concerns about the deteriorating external account but its impact both in the short and medium term will depend on how the new policy is implemented. At about $85 billion, or 4.5 per cent of GDP, India is running one of the highest current account deficits in the world. With the rupee coming under relentless pressure, not least from speculators and portfolio investment outflows, the government appears to have made a strategic decision to push for stable capital flows in the form of FDI, which stay committed to the host country in times good and bad. At present, our dependence on temporary capital inflows is high — some $25 billion worth of FII money is needed to plug the current account gap. By any yardstick, this is an uncomfortable position to be in. In theory, FDI helps stabilise the external situation in two ways. First, because of its longer investment horizon, and second, because it could help reduce the country’s dependence on imported manufactures. The government’s new policy on FDI in defence, telecom and other sectors will make a difference if it leads to the infusion of critical technology and the augmentation of our productive capacity. For example, the Cabinet Committee on Security can now clear defence FDI proposals beyond 26 per cent; it is essential that this authority be used to reduce India’s dependence on future defence imports in critical technology areas rather than displacing existing capabilities.

The same is true for telecoms and other high-end electronics, where our import dependence is still high. One reason why India’s trade deficit has widened over the years is because of telecom and other technology product imports. Using foreign capital to create a larger domestic manufacturing base is a laudable objective but to achieve this, India must learn how to invite investment and technology on its own terms. Unlike China, we have failed to do this in the past. The West, as also Japan, are increasingly aging societies and should not be allowed to dictate terms to large consuming markets in the same way they did 20 years ago. India must fully leverage this aspect when dealing with the U.S., EU, Japan and even China, which see India as a big market. Preference must also be given to greenfield FDI projects rather than mergers and acquisitions, which unfortunately account for a large percentage of cross-border investment flows. Nor should any corners be cut as far as the process of acquiring land and environmental clearances are concerned. Large projects cannot get off the ground if local communities are sidelined.

The Hindu - UN welcomes Myanmar's bnning of Border Security Force

The United Nations on Tuesday welcomed Myanmar’s decision to abolish the border security force blamed for many of the atrocities committed against Muslims in the Rakhine State last year.

Myanmar President Thein Sein, who is currently on an official visit to Britain and France, announced the abolition of the Nasaka force in a statement posted on his website on July 14.

The Nasaka were accused of human rights violations in suppressing the sectarian clashes in the Rakhine State last year that left at least 167 people dead, mostly Rohingya Muslims, and up to 140,000 displaced.

The force was accused in a report by the UN special rapporteur on human rights in Myanmar, TomOjea Quintana, of extrajudicial killings, arbitrary arrest and detention, and torture in detention.

“The abolition of Nasaka should not mean that the credible allegations of widespread and systematic human rights violations committed by its members are not properly investigated and the perpetrators held to account,” Mr. Qintana said in a statement issued from Geneva, while welcoming the force’s abolition.

“Furthermore, whatever force takes the place of Nasaka, it is vital that the issue of impunity is addressed,” he added.

Since coming to power in March, 2011, Thein Sein has pushed through significant political and economic reforms that have brought Myanmar back into the international fold after decades of isolation among Western democracies.

However, the dramatic re-entry onto the world stage has been tarnished by a rise in sectarian violence, first directed against the Rohingya Muslim communities in the Rakhine and this year against Muslim communities in central and northern Myanmar.

Myanmar is a predominantly Buddhist country, where Muslims are estimated to number about 5 per cent of the population.

The Hindu - CBI's quest for autonomy

The Central Bureau of Investigation wants complete functional and financial autonomy for its proper functioning.

In its reply to the Centre’s proposal on conferring autonomy, the CBI on Tuesday told the Supreme Court that it was agreeable to Director and officers being appointed by a Committee comprising the Prime Minister, the Leader of the Opposition in the Lok Sabha and the Chief Justice of India or a budge nominated by him. But the views of the outgoing CBI Director should be considered, the agency said.

The Centre had, in its affidavit, explained the steps it proposed to take to insulate the CBI from government interference in its investigations as well by amending the Delhi Special Police Establishment Act. The Centre’s affidavit came on the petitions filed by advocate Manohar Lal Sharma and others in the coal allotment scam case. On the Centre’s move to fix a two-year tenure for the CBI Director, the agency said it should be three years. It agreed with the proposal that investigation of offences alleged to have been committed under all statutes except the Prevention of Corruption Act “shall vest with the Central government.” Investigation of corruption cases would done be under the supervision of the Central Vigilance Commission (CVC).

The CBI’s affidaviti said functional autonomy was “largely predicated on the Director’s administrative and financial powers. In the present arrangement, the administrative, disciplinary and financial powers of the Director are limited and this impinges on his ability to ensure expeditious and complete investigation and high ethical standards among his subordinates. As such, it is necessary that the CBI Director should be vested with ex-officio powers of the Secretary of Government of India reporting directly to the Minister without having to go through the Department of Personnel and Training.”

Financial and administrative powers were essential for the efficient functioning of the CBI and for insulating it from the Ministry in its day-to-day functioning, the affidavit said. “A Director who is dependent on Ministry for routine administrative and financial approvals is not best placed to take independent and objective decisions in crunch situations. The CBI Director who is free to take routine administrative and financial decisions within the prescribed rules is undeniably necessary for the CBI to remain insulated to discharge its core function without fear or favour.”

On grant of sanction for prosecution, the affidavit said a committee headed by the CVC and with the Cabinet Secretary and the CBI Director as members e “should decide on matters pertaining to sanction. Views of the department concerned can be formally sought to assist in decision-making. CBI agrees with the three-month time limit for taking decision.”

The CBI opposed the setting up of an Accountability Commission, to entertain and inquire into allegations of misbehaviour, incapacity, impropriety or irregularity on the part of an officer or employee of the agency either on a complaint or on a reference from the Centre. “Creation of an outside Accountability Commission will have the tendency of compromising discipline within the organisation as disciplinary power will vest outside, albeit indirectly. This will create an anomalous situation wherein the superior authorities, i.e. Accountability Commission, will enquire into the complaint and junior authorities who have disciplinary powers will decide on the enquiry report. Besides, such provision will disturb the chain of command within the organisation.”

The CBI wanted greater autonomy in appointing lawyers of its own choice. The provision requiring Law Ministry approval should be dropped, it said.

At present if there was disagreement between the Director and the Directorate of Prosecution, the matter would be referred to the Attorney-General for his opinion. Only in appeal and revision cases (excluding investigation matters) where the Director disagreed with the advice of the Director (Prosecution) should the matter be referred to the AG, the CBI affidavit said. “Thereafter the decision of the Director keeping in view the opinion of the AG shall be final.”

The case comes up for hearing on Wednesday.

ET - Govt relaxes FDI rules in various sectors to revive growth

 Govt relaxed foreign direct investment (FDI) rules on Tuesday in a broad swathe of industries including telecoms, single brand retail and oil and gas in a bid to lure capital inflows, prop up a sliding currency and rev up growth.

In a meeting of senior cabinet ministers, Prime Minister Manmohan Singh cleared plans to allow 100 percent FDI in telecoms, Commerce and Industry Minister Anand Sharma told reporters.

The move will allow companies such as Vodafone Group Plc , Telenor ASA and Sistema to operate in the country without requiring an Indian partner. Foreign investors are currently allowed to hold a maximum 74 percent in local phone carriers.

Sharma added that the government will have to approve any FDI proposal beyond 26 percent in the defence production sector, on condition it involves state-of-the-art technology.

India's weakest economic growth in a decade and a record high deficit in the current account, the broadest measure of a country's international trade, have made the rupee the worst-performing emerging Asian currency so far this year.

It hit an all-time low of 61.21 per dollar last week and is down nearly 10 percent against the dollar since May.

To stabilise the currency, RBI on Monday night raised short-term borrowing costs, restricted funds available to banks and said it would sell Rs 120 billion ($2.03 billion) in bonds, effectively draining cash from the market.

In telecom, 100 per cent FDI is now permissible, a move that's expected to bring in at least 10 billion dollars.

For the key sector of insurance, the FDI cap has been increased from 26% to 49%.  

In the contentious multi-brand retail sector, the cap remains at 51 per cent as decided in September, a move that prompted the exit of Mamata Banerjee and her Trinamool Congress from the ruling UPA, forcing the government into a minority.  A new hike of upto 74 per cent had been suggested by a committee headed by Economic Affairs Secretary Arvind Mayaram.

 
In sectors like petroleum and single-brand retails, an initiative for faster clearances means that for upto 49% FDI, projects will no longer have to first be cleared by the Foreign Investment Proposal Board or FIPB.

In defence, the cap remains at 26 per cent, though the government says it may allow higher FDI for cases that will help India acquire "state-of-the-art technology."   The Cabinet Committee on Security or CCS  will have to approve all such proposals.

India's weakest economic growth in a decade and a record high deficit in the current account, the broadest measure of a country's international trade, have made the rupee the worst-performing emerging Asian currency so far this year.

It hit an all-time low of 61.21 per dollar last week and is down nearly 10 per cent against the dollar since May.

To stabilise the currency, the Reserve Bank of India or RBI  has raised short-term borrowing costs, restricted funds available to banks and said it would sell Rs. 12,000 crore in bonds, effectively draining cash from the market.

NDTV - 10 steps by RBI to decrease depreciation

The Reserve Bank of India announced several steps to stop the slide in the Indian rupee on Monday, which hit a record low of 61.21 last week. The falling rupee not only poses big challenges to the economy, it's also likely to become a political issue for the government seeking to win a third straight mandate early next year.

Here's what the RBI has done and how experts' view these moves:

1. The RBI has increased the Marginal Standing Facility (rate at which banks borrow from the RBI using their statutory liquidity ratio securities as collateral) rate. So far, banks (bearish on the rupee) borrowed from call money markets and bought dollars in the forward markets expecting the dollar to rise. Since, borrowing short term money will now be costlier, banks will most likely cut their forward positions and reduce speculative trading. This will reduce pressure on the rupee.
2. The RBI has capped the amount banks can borrow from overnight markets to Rs. 75,000 crore. The RBI will also conduct Open Market Sales of bonds of Rs.12,000 crore on Thursday. These measures are aimed to suck liquidity from the system. Bond prices will fall and yields will rise. Higher yields will attract foreign investment back into the debt market at a time when FIIs have sold billions of dollars ever since the U.S. Fed signalled a tapering of the quantitative easing.
3. The new steps were announced after RBI's earlier steps to sell dollars in forex markets through state-run banks failed to halt the slide in the currency. Moves taken to curb speculative trading last week helped the rupee snap a nine-week losing streak, but the currency slipped below the psychological 60 mark again on Monday, necessitating more steps.
4. The Indian rupee jumped over 1 per cent to 59.13 in early trades on RBI measures. Sonal Varma of Nomura said the measures are "a classic textbook response". These steps will tighten domestic liquidity, raise short-term interest rates, increase the relative interest rate differential and possibly stem debt outflows, Ms Varma wrote in a note.
5. As expected, bond yields jumped sharply, with yields on 7.16% 2012 bond edging above the 8 per cent mark.
6. But stock markets fell, with the Sensex plunging 385 points in early trades fearing there will be no rate cut later this month. Finance Minister P Chidambaram tried to calm markets. He said RBI measures were aimed to quell speculation and volatility in forex markets. "These measures should not be read as a prelude to a policy rate changes," he added.
7. Analysts said the probability of a rate hike, if today's measures are not successful in stemming rupee depreciation, has gone up. Nomura said there is a risk that today's measures could backfire. "India's growth is already very weak and tighter domestic liquidity will worsen the financial conditions for corporates and banks, hurting asset quality and the growth outlook," the investment bank said.
8. There are fears that current moves may succeed in stemming debt outflows (helping the rupee), but growth-sensitive equity flows will be at risk. So, stock markets will fall further, with banking stocks at the highest risk. Barclays said if the higher rates were to persist and impact GDP growth then that would impact the entire banking system negatively. The Bank Nifty slumped over 4.5 per cent lower, underperforming the the broader Nifty.
9. This move will impact the banks and NBFCs in two ways. One, directly through net interest margins (which will fall) and two, indirectly through the impact on GDP growth, Barclays said. Yes Bank traded with over 8 per cent cut, while IndusInd Bank shares shed 7 per cent.
10. These measures are unlikely to send the rupee in a permanent upward trajectory. The government needs to address fundamental problems such as high current account deficit, analysts said. Prime Minister Manmohan Singh will discuss a proposal to increase Foreign Direct Investment (FDI) cap in sectors like telecom, retail and defence later today. Liberalizing FDI rules will help attract foreign investment into the country, which is badly needed at a time when the rupee is the worst performing currency in Asia.

ET - Wastes to be used for construction of roads in rural areas

The Rural development ministry has asked state governments to start using waste material and locally produced fibres to build rural roads-a cost-cutting measure that is seen giving a fillip to the local economy.

The plan, to be implemented under the government's Pradhan Mantri Gram Sadak Yojana scheme to improve connectivity of villages, is expected to result in savings of 5%-30%, according to a senior official. Construction of rural road costs anything between Rs 25 lakh and Rs 80 lakh per km. While jute and coir will be used for strengthening roads in the northeast, waste materials like steel slag, sludge and slurry will be used in industrially developed states like Maharashtra and Karnataka.

"Traditional materials like stone aggregate and sand will not be available for long," the official told ET, adding, "To begin with, we have asked states to ensure that at least 10% of their rural roads should be made out of waste material or locally produced fibres like jute and coir."

According to the official, experiments have shown that roads made of such material are successful in rural areas as they have low traffic volume.

Over the last few years, 55-60 roads aggregating about 500 km in length have been built in Karnataka, Maharashtra and Gujarat using waste materials. Similar roads are expected to come up in Kerala and Mizoram this year. Although a third-party performance report of these roads is awaited, the rural development ministry has gone ahead and notified its guidelines for laying such roads.

In the 12th Five-year Plan, the Centre has earmarked about Rs 1,20,000 crore for building of rural roads. According to latest data, about 1.67 lakh unconnected habitations are eligible for coverage under the Gram Sadak Yojana, which involves construction of about 3.71 lakh km of roads.

NYT - North, South Korea talks on reopening kaesong complex

EOUL, South Korea — A third round of talks on Monday between North and South Korea failed to produce an agreement on reopening the jointly operated Kaesong industrial park in the North, a symbol of inter-Korean economic cooperation that has been shuttered for more than three months.

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The two sides will meet in Kaesong again on Wednesday, said Kim Ki-woong, the chief South Korean negotiator.

The factory park, near the North Korean border, was idled in early April, when North Korea withdrew all of its 53,000 workers, blaming tensions it said were caused by American-South Korean military drills. The South later pulled out all of its workers, most of them factory managers.

Both sides agree that whether they can strike a deal on reopening the factory park will have far-reaching implications for broader relations between the Koreas, which soured this year as the two sides exchanged threats of attack and counterattack. In the two earlier rounds of talks this month, they differed widely on conditions for resuming operations, a gap they failed to narrow on Monday.

South Korea demands that the North take responsibility for the damage caused by the shuttering of the industrial zone and that it take steps to ensure that nothing similar happens again. The North bristles at those demands, blaming the South Korean government for the closing of the complex and accusing it of abusing inter-Korean dialogue to escalate tensions.

Since Wednesday, the North, which wants the complex to reopen soon, has allowed South Korean factory managers to return to Kaesong to check on the plants’ long-idled equipment and retrieve hundreds of tons of finished goods and other materials.

The South’s conservative government appears determined to use the talks to set new rules in inter-Korean relations. President Park Geun-hye has said that if the South appeased the North by ignoring its provocative behavior, the "vicious cycle" would only continue.

Mr. Kim, the chief South Korean delegate, said his government wanted to turn Kaesong into an “internationalized” factory park. By inviting foreign investors, South Korean policy makers said, they hoped to help North Korea become more responsible for honoring “international standards” in business. But the North rejected the idea as a plot to spread outside influence in the country, where the totalitarian government strives to keep its people isolated from the rest of the world.

Last week, North Korea proposed talks on reuniting families who have been separated for decades by the division of the Korean Peninsula, but it later withdrew the offer, after the South rejected a separate offer from the North to discuss resuming South Korean tours to a North Korean mountain. Both sides agreed to focus on the Kaesong issue.

The Kaesong complex, pairing South Korean manufacturing skills and capital with low-cost North Korean labor, was the last of a handful of cross-border projects that were begun during an earlier period of rapprochement. It began operations in late 2004; its production rose to $470 million last year.

The Hindu - Science

Highlighting science news you may have missed, and telling you why it matters in about a minute.

Nerves control prostate cancer

What it is: Nerves have been found to play a critical role in the development and spread of prostate tumours.

It is quite common for nerves to be found around tumours, but their role in cancers was previously undefined. Scientists tested their function by injecting human prostate cancer cells into mice and disabling different parts of the mice’s nervous systems to observe what the effect was on the cancer cells.

They found that the sympathetic nervous system (SNS gives us our “fight or flight” response) helps initiate the cancer process, whereas the parasympathetic nervous system (PNS controls activity when our body is at rest) contributes to the spread of cancer from its origin site (or metastasis).

Lending further credibility to this observation was the fact that patients with more aggressive tumours had greater nerve density. Though this was proved only for prostate cancers, the researchers suspect that this could be common of other cancer types as well.

Why it matters: Using this knowledge it could be possible to design a test to predict the aggressiveness of cancers. Moreover, it raises the possibility that drugs targeting the PNS and SNS could be developed to treat prostate cancer.

See the invisible with terahertz vision

What it is: Scientists from Caltech have created a small silicon chip that can emit and receive signals in the terahertz frequency.

Terahertz frequency signals are not often used to communicate between smartphones because it is very difficult to generate as well as receive. Historically, the devices that can do this have been bulky and expensive.

On July 8, electrical engineers from the California Institute of Technology, or Caltech, announced that they were able to create a terahertz transmitter/receiver using a silicon chip the size of a one-rupee coin.

The size is important because it is the first time such a device has any scope in the future to be handheld. Terahertz signals can easily go through skin, paper, fabrics, etc., but not through denser materials like bone or metal, so they bounce off – making them excellent metal-detectors that can also double up as a detector for contraband goods.

Since the transmitter/receiver is the size of a small silicon chip, this Superman-like “X-ray vision” technology can be operated out of a smartphone. Because smartphones come with a variety of programmable hardware, the scope of the silicon chips can be expanded.

Why it matters: From inside a smartphone, a socially and economically viable plethora of applications are possible – including non-invasive cancer screening, ultrafast data transmission, better motion-sensing, and gesture-recognition.

HTTP 2.0 will be a binary protocol

What it is: The next generation of the principal system of digital rules (or protocols) that define the way communications work over the World Wide Web, HTTP 2.0, will include multiplexing.

The latest working copy of HTTP 2.0 is out, released by members of the Internet Engineering Task Force, and it is already causing waves. Unlike previous versions of the HTTP protocol, this version will be a binary format, which was put in mainly to reduce the huge delay in web surfing.

Binary protocols are protocols that were designed to have the advantage of terseness, which usually translates into speed of transmission, but they are also expected to be read by a machine rather than a human being.

This is controversial because, while binary formats are very useful in saving space and conserving bandwidth, they also make life very painful during the debugging process as binary protocols aren't meant to be read by humans!

However, the charter emphasizes that the protocol will be optional. While the document released is an alternative, it will not obsolete previous versions of the HTTP protocol. In practice, however, this may not work as one protocol will soon have to be adopted over the other.

Why it matters: It is expected that HTTP 2.0 will substantially and measurably improve thesluggishness that some internet users feel while browsing. It will also improve the way browsers interact when they connect to servers on the World Wide Web, especially regarding congestion control. That’s faster internet for everybody!

Superstrong fiber gets help from carbon nanotubes

What it is: The strength of certain polymeric fibers can be increased by adding controlled quantities of carbon nanotubes.

Of the various ways carbon atoms can bond with each other to create different materials, graphene and carbon nanotubes are garnering great attention from a variety of industries for their unique properties. While graphene is a one-atom-thick layer of carbon atoms, nanotubes are akin to a graphene sheet being rolled up to form a straight, slender cylinder.

Now, a researcher from Northeastern University, Massachusetts, has exploited another strange property of carbon nanotubes to create superstrong fibers. A famous example of such a fiber is Kevlar, which is used in bulletproof vests. These fibers are continuous chains of certain molecules, like ethylene, whose bonds are so strong as to prevent tearing.

The researcher, Marilyn Minus, has however found that adding small quantities of carbon nanotubes to ethylene chains and carefully heating the mixture results in something strange: the chains ‘skate’ along the carbon nanotubes’, as if they were guiding rails, and align themselves parallel to each other.

This alignment makes the chains much stronger. At the moment, Ms. Minus is testing this method with other fibers, such as polyacrilonitrile (PAN).

Why it matters: Such fibers are no longer confined to making bulletproof vests. They are also used as parts of aircraft wings, etc. So, making a stronger version could eliminate the need for heavier metals, and make future aircraft lighter and more fuel-efficient.

Data storage that could outlast the human race

What it is: Researchers have found a way to record and retrieve data onto a single disk of quartz glass that can withstand temperatures of up to 1000 C and should keep the data readable for up to a million years.

As we create increasingly more data, the problem has always been about storing it in readable, retrievable forms. Digital data from floppy drives just fifteen years ago are now quite unreadable, not to mention the damage it will sustain over long periods of time.

Scientists have now used nanostructured glass to experimentally demonstrate the recording and retrieval process of ‘five dimensional’ digital data by femtosecond laser writing.

Dubbed affectionately as the ‘Superman’ memory crystal, as the glass memory has been compared to the ‘memory crystals’ used in the Superman films, the data is finally recorded via self-assembled nanostructures created in fused quartz.

Why five dimensional though? This is because the information encoding is realized in five different dimensions: the size and orientation in addition to the three dimensional position of the nanostructures.

All that it remains is a method of being able to read the information—this is usually done by a combination of an optical microscope and a polarizer—as the self-assembled nanostructures change the way light travels through glass.

Why it matters: This new technique appears to have the tremendous potential for low-cost, long-term, high-volume archiving of enormous databanks. Previous contenders such as CDs/DVDs/hard drives have not worked out so far.

Sharks whip their tails to stun prey

What it is: A species of shark was shown to have evolved a complex predatory mechanism involving their tails.

Thresher sharks can grow up to 20 feet long and about 50 per cent of that is its tail length. No proof existed so far of what exactly the function of these sharks’ tails was, though biologists have toyed with the possibility that it may be used to enhance prey capture like those of dolphins and killer whales.

A group of scientists dived into the waters off the coast of the Philippines to study precisely this, and found out that thresher sharks slap their prey to death.

To elaborate, the sharks swim towards schools of sardines, waving its tail madly (up to speeds of 80 mph!). In this process they not only break up the school, but also strike several of the fish dead and instantly consume them.

This behaviour indicates that sharks are much more intelligent predators than thought.

Why it matters: Sharks are endangered species, whose existence is further threatened by decreasing population of their prey – in this case, sardines. If this tail lashing is indeed the chief hunting tactic used by thresher fish, then fisheries that reduce the population of schooling fish like sardines could soon pose a problem for them.