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GLOSSARYGLOSSARY


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Gross Domestic ProductGross Domestic Product

Total money value of all final goods &services manufactured within the

country in one year.

Annual value of goods sold and services

paid for inside a country


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Nominal & Real GDPNominal & Real GDP

Nominal GDP measures the value of all the

goods and services produced and expressed

atcurrent prices.

Real GDP measures the value of all thegoods and services produced expressed at

theprices of some base year


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Different ways of arriving @ GDPDifferent ways of arriving @ GDP

GDP at Constant Prices

GDP at Current Prices

Calculated at constant prices to know

real growth


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Gross National Product

(GNP)

Gross National Product

(GNP)

GNP = GDP + Income accruing to domestic

residents from investments abroad income

earned by foreigners in the country.

Annual value of goods and services in a country

including income from other countries


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National Income

V Sum of total incomes of normal residents of a

country before deduction of direct taxes.

V To calculate total income, add all payments

for

the use of factors of production , like wages,

salaries, profits & net income from abroad.


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Per Capita IncomePer Capita Income

Income per head =

Population

IncomeNational

Average income of one person.


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Inflation

Excess Demand in the economy

High costs

Increase in money supply More money chasing fewer goods

Rise in prices, purchasing power of moneydecreases

High interest rates tend to increase inflation

Zimbabwe classic case of gallopping

inflationcurrency scrapped


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INDICATORS OF ECONOMYINDICATORS OF ECONOMY

Poverty Line

F Consumption expenditure required for getting

2100 calories per person in urban area and2400 calories in rural areas.

F Key parameters

F No. of people BPL

F % of population BPL

(Conti)


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F Orissa highest percentage of BPL population

F Some poverty zones are BIMARU and the KBK

belt in Orissa.

F The BPL percentage in India differs according to

the methodology adopted.


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INDICATORS OF ECONOMY

HDI - HUMAN DEVELOPMENT INDEX

INDICATORS OF ECONOMY

HDI - HUMAN DEVELOPMENT INDEX

Developed by UNDP in 1996.

Measures physical quality of life in a country alongwith 3 key parameters

Life expectancy at birth

No. of years in school

Per capita income HDI 2009 India at 134 (182 countries ranked)

HDI 2009No. 1 is Norway

Niger ranked at 182


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WPIWPI -- WHOLESALE PRICE INDEXWHOLESALE PRICE INDEX

F Measures increase/decrease in industrial,

commercial prices of commodities under3 broad categories.

F Primary articles 98 items

F Fuel, power etc., 19 itemsF Manufactured products 318 items

F Certain weightage to each category ofcommodities


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WPI IIWPI II

V Base year 1993 94

V Used for calculating INFLATION.

V WPI no longer a true indicator of inflation as it maynot reflect ground reality

V The basket of commodities may be outdated

V New series introduced fromApril 1st, 2000V 435 commodities in the new series; as against 447

in the old series.


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CPI CONSUMER PRICE INDEX

Calculates increase/decrease in retail price

Direct bearing on consumers

Different types of CPIs for

agricultural laborers industrial workers

urban non-manual employee


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FOREIGNDIRECT INVESTMENT

(FDI)

FDI supplements domestic investment

The investment made to acquire long term benefits

in enterprises operating outside the economy of

the

investor

The FDI relationship consists of a parententerprise

and a foreign affiliate which together form a

transnational corporation

Mauritius, USA and Japan are the three biggest

(Conti)


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FDI involves bringing scarce capital, technologyand managerial expertise

FDI creates jobs

FDI barred at present in retail trading except singlebrand product retailing

FDI restricted to 26% in print media relating tonews and current affairs

FDI restricted to 26% in insurance and defence


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Foreign Institutional Investor

(FII)

Foreign Institutional Investor

(FII) FII means an entity established or

incorporated outside India which

proposes tomake investment in the financial markets

in

India FII is not stable money

Unlike FDI the focus of FII is on making


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Real & NominalInterest Rates

Real interest rate = Nominal interest

rate rate of inflation


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CRRMinimum 3% Maximum 20%

SLRMinimum 24% Maximum 40%

Cash Reserve Ratio (CRR) 5%

Statutory Liquidity Ratio (SLR) 25%

BankRate 6%

Repo Rate 4.75%

Reverse Repo Rate 3.25%

Key indicators of banking sector

(Conti)


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BankRate is for a longer period say 6

monthsto one year

Repo and reverse repo rates are for the

shortterm. They are used to either increase

moneysupply or mop up excess liquidity

Repo and reverse repo have now assumedmore importance than BR

PLRis benchmark rate

Conce t of BPLRunder scrutin


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FOREXFOREX

F Exchange control

F Fixed Exchange rates

F Free/Floating exchange rates

F Depreciation/appreciation

F Devaluation

F Indias forex reserves more than $120 billioninvested mostly in low yielding US securities

F Countries like China and India are financingconsumption in the USA

F Chinalargest forex reserves in the world morethan $ 1 trillion


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Purchasing Power Parity (PPP)Purchasing Power Parity (PPP)

An exchange rate between two currencies

such

that the same basket of goods and services

couldbe bought in each country if the cost were

converted at that exchange rate.

It is often used to compare the standards of

living between countries.

Rate of exchange between two countries

determined b com arin res ective internal


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Current A/c ConvertibilityCurrent A/c Convertibility

2 Free flow for purposes other than for capitalpurchases and loans

2 Exports

2

Imports2 Travel

2 Study abroad

2 Medical treatment

2 Employment abroad2 Gifts

2 Consultancy

2 Intl. credit cards


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2 The freedom to convert local financial assets

into foreign financial assets & vice versa at

market determined rates of exchange

2 Indicator of a developed economy2 Gives confidence to investors

2 However, leaves the country at risk

2 Tarapore Committee 19972 Fiscal consolidation low inflation

2 Financial sector reforms

CapitalA/c ConvertibilityCapitalA/c Convertibility


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TAXES DIRECT TAXES

Direct incidence of tax on the person who pays the tax.

liability to pay tax is NOT passed on to someone else.

e.g.

INCOME TAX, CORPORATION TAX, WEALTHTAX, LANDREVENUE, GIFT TAX etc.

V INDIRECT TAXESLevied on goods and services. Traders/producers pay it.

Liability passed on to end customer. e.g. VAT, EXCISE

TAX, CUSTOMSDUTY, SERVICE TAX

New Tax on Goods and Services [TGS] to beimplemented from April 1st 2010

New Tax code proposed to replace Income Tax Act


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SUBSIDIES

Grants to suppliers of goods and services Used to keep consumer prices down (LPG &

Kerosine, PDS to BPL)

To prop up production (farm and fertilizer

subsidies) To boost exports

To lower cost (tax subsidies)

To improve infrastructure

Meet social obligations (subsidy on food,education)

Cross subsidies (petroleum products)

Cross subsidies in Banking through concept of


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SUBSIDIES IN 2008-09

Food subsidy Rs.32,667 cr.

Fertilizer subsidy Rs.30,986cr.

Kerosine & LPG Rs.30,000 cr. Politically and socially sensitive issue.

LPG subsidy aimed at the middle class


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CORE SECTORS

Coal

Cement

Power

Steel

Petroleum

Petroleum refinery products


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DISINVESTMENT

1991-92 to July 2007 Target Rs.96,800 crore

Achievement Rs.51,608 crore

(14 companies privatised)

Issues Loss making units

Social responsibility

Method Public issue, strategic sale

Valuation Creating monopolies (IPCL, VSNL)

Job loss

Loss of govt. control

(Conti)


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Ministry ofDisinvestment formed by NDA

Govt Abolished by UPAGovt

Present policy is to opt for the IPO model of

disinvestment rather than outright sale

Minimum Govt stake in PSUs to be 51%

National Investment Fund created to pool

disinvestment proceeds

Focus on Investment rather than disinvestment

Investment Commission formed.

Some prominent disinvestments are BALCOin 2001 and Hindustan Zinc Ltd in 2001-02 and

VSL in 2001

Current polices: Disinvestment to be used sparingly

Global financial trends do not favour disinvestment


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INFRASTRUCTURE

Transport Railways, roads, shipping , civilaviation

Communication Telecom, P & T

Energy Electricity, Oil, coal, non-

conventional

sources

Science & Technology

Banking, finance and insurance Social education, health

India lags behind China in development of

infrastructure (Conti)


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PATENTS

Product patents

Process patents

Patents Act 1970

Generic Drugs $80 bn worth Reverse Engg

Huge opportunity

Compulsory Licensing

India has created a digital data base of traditionalknowledge of healing systems like Yoga,

Ayurveda,Unani and Siddha and registered with European

Patent Office [EPO](Conti)


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Frivolous patents granted in Western countries for

traditional Indian products like neem, turmeric andeven forYoga

Geographical Indication (GI) is a patent associated

with a region Ex: Kalamkari art, Darjeeling Tea, Coorg coffee

latest Tirupati Laddu

Mashelkar committee on patents

The patent regime of WTO can be overlooked in

times of medical emergencies like Swine Flu


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SSISSIManufacturing Services

Micro 25 lakhs 10lakhs

Small 25 lac - 5 crores 10 lac 2cr

Medium 5 10 crores 2 - 5 cr

128.44 lakh units

Turnover Rs.4,97,842 cr

Employs 312.52 lakh people

Exports worth Rs.86,013 cr


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IMPORT RESTRICTION

S

Tariff Barriers

Non-Tariff Barriers


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TARIFF BARRIERS

Customs Duty

Countervailing Duty

Anti-dumping duty

Transit duty

Cess

Additional duties or surcharges


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Non-Tariff Barriers

( Health, Safety regulations

( Quality norms (ISO & EN standards , FDA,CE mark)

( Quarantine laws( Local subsidies

( Channelised imports through governmentalagencies

(eg: sugar imports through STC)( Licencing policy

( Quota restrictions

( Import bans

( Cumbersome Customs rocedures


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Fiscal PolicyThe governments policy of achieving economic

objectives (employment, per capita income)through government earning and spending related to

increase or decrease in taxes.

Government sources of funds : Taxes and duties,government

businesses, borrowing from public,

investments

Government uses of funds : Infrastructure,mining, public welfare,defense, power

generation, research and

developmentFiscal policy intimately linked to the Union Budget


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Monetary PolicyMonetary PolicyMonetary PolicyMonetary Policy

The governments policy of achieving economicThe governments policy of achieving economicobjectivesobjectives (employment, per capita income, balance(employment, per capita income, balance

of trade, economic parity)of trade, economic parity)

by controlling money supply through instrumentby controlling money supply through instrumentlike interest rateslike interest rates

Decrease in supplyDecrease in supply : Deflation or decrease in: Deflation or decrease in

pricespricesIncrease in supplyIncrease in supply : Inflation or increase in prices: Inflation or increase in prices

Monetary policy intimately connected to RBIsMonetary policy intimately connected to RBIs

policiespolicies

The governments policy of achieving economicThe governments policy of achieving economicobjectivesobjectives (employment, per capita income, balance(employment, per capita income, balance

of trade, economic parity)of trade, economic parity)

by controlling money supply through instrumentby controlling money supply through instrumentlike interest rateslike interest rates

Decrease in supplyDecrease in supply : Deflation or decrease in: Deflation or decrease in

pricespricesIncrease in supplyIncrease in supply : Inflation or increase in prices: Inflation or increase in prices

Monetary policy intimately connected to RBIsMonetary policy intimately connected to RBIs

policiespolicies


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Hyper Inflation

Stagflation

Deflation

Reflation

Highest inflation in world is in Zimbabwe Currency made worthless due to inflation


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Appreciation of the RupeeAppreciation of the Rupee

Indication of economy doing well

Importers & borrowers in forex are happy

Domestic consumers are happy

Interest on government borrowings comedown

Companies with forex loans will gain

Debt of the government decreases Lowers inflation rate

Exporters are hit

Margins erode

Producers have to cut costs


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Agriculture

V Contributes about 22% to GDP

V 60% of area sown dependent on rainfall

V 65 to 70% of population dependent on

agriculture

V 230.67 mt foodgrain production in 2007 08

V National Food Security Mission launched to

enhance production of rice wheat and pulses

V India second highest producer of fruits and

vegetables in world

V Largest producer of milk in the world(Conti)


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V

India is home of spices-largest producer,consumer

and exporter of spices

V India largest producer of cashewnuts and

basmati rice

V National Horticultural Mission 2005

V National Project forOrganic Farming 2004

V India has largest livestock population in world

V National Fisheries Development Board set up

in Hyderabad


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Energy

Coal main source of energy [67%] Installed power capacity is 149,391.91MW as of

31st May, 2009.

ElectricityAct 2003 - SERCs formed

Coal based Ultra Mega PowerProjects [UMPP] of4000 MW each

National Solar Mission to be launched on November

14th 2009

Nuclear energy to be key for Indias quest for energy

security. Hence 123 pact.

Nuclear energy at present contributes 3 to 4% to total

energy pie


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Miscellaneous

India a services sector led economy defies

conventional logic

Conventional model is transition from

manufacturing to services

India is services sector led but still

predominantly

rural Manufacturing and infrastructure are top

priorities

of the Government

(Conti)


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Disinvestment of sick

PSUs and profitmaking

PSUs is needed to generate huge funds for

infrastructure, specially social infrastructure

Second generation economic reforms neededin

power, agriculture, legal sector and financial

sector Massive transfer of population away from

unproductive agriculture to other sectors like

services and manufacturing


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Polity -Polity -

F UPA -- in May 2009. Congress 206 seats

F TMC second largest component ofUPA

F Verdict 2009 is the defeat of the Third andFourth Front primarily rather than of the

NDA

F

Highest tally contributed toNDA byKarnataka

F Left Front humbled in West Bengal

F Agatha Sangma-youngest Union Cabinet(Conti)


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F Shashi Tharoor is MOSExternal affairs

F Meira Kumar first woman to be the Lok

SabhaSpeaker

F LKAdvani and Arun Jaitley leaders of

opposition in LokSabha and Rajya SabhaF Oldest Cabinet MinisterSM Krishna age

77 years


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Polity --Polity --

Ramesh Pokhariyal new Chief Minister of

Uttarakhand

K. Rosaiah new Chief Minister ofAndhra Pradesh

Sikkim creates history-all MLAs belong to theruling party

AshokGehlot new Chief Minister ofRajasthan

Navin Chawla is the new chiefElection

Commissioner

Mohan Bhagwat new RSS Chief

Congress retains power in Maharashtra, Haryana

and Arunachal Pradesh in October 2009.


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8,3000 sq. km of India claimed by China8,3000 sq. km of India claimed by China

China objects to ADBs loan to Arunachal PradeshChina objects to ADBs loan to Arunachal Pradesh Arunachal regarded by China as Southern TibetArunachal regarded by China as Southern Tibet

China objects to Dalai Lamas and Manmohan SinghsChina objects to Dalai Lamas and Manmohan Singhsvisits to Tawangvisits to Tawang

India bans Chinese mobiles, dairy products and toysIndia bans Chinese mobiles, dairy products and toys

China says AgniChina says Agni -- V can target most of ChinaV can target most of China

China reveals a plan on its semiChina reveals a plan on its semi--official website to balkaniseofficial website to balkaniseIndia into 15 to 20 pieces by using Pakistan, Bangladesh andIndia into 15 to 20 pieces by using Pakistan, Bangladesh andtaking the assistance of various terrorist organizations liketaking the assistance of various terrorist organizations like

ULFA etcULFA etc The two fastest growing economies in the world are ChinaThe two fastest growing economies in the world are China

and Indiaand India

India is the worlds largest democracy and China is theIndia is the worlds largest democracy and China is theworlds largest freeworlds largest free--market and politically regimentedmarket and politically regimented

countrcountr

8,3000 sq. km of India claimed by China8,3000 sq. km of India claimed by China

China objects to ADBs loan to Arunachal PradeshChina objects to ADBs loan to Arunachal Pradesh Arunachal regarded by China as Southern TibetArunachal regarded by China as Southern Tibet

China objects to Dalai Lamas and Manmohan SinghsChina objects to Dalai Lamas and Manmohan Singhsvisits to Tawangvisits to Tawang

India bans Chinese mobiles, dairy products and toysIndia bans Chinese mobiles, dairy products and toys

China says AgniChina says Agni -- V can target most of ChinaV can target most of China

China reveals a plan on its semiChina reveals a plan on its semi--official website to balkaniseofficial website to balkaniseIndia into 15 to 20 pieces by using Pakistan, Bangladesh andIndia into 15 to 20 pieces by using Pakistan, Bangladesh andtaking the assistance of various terrorist organizations liketaking the assistance of various terrorist organizations like

ULFA etcULFA etc The two fastest growing economies in the world are ChinaThe two fastest growing economies in the world are China

and Indiaand India

India is the worlds largest democracy and China is theIndia is the worlds largest democracy and China is theworlds largest freeworlds largest free--market and politically regimentedmarket and politically regimented

countrcountr

INDIAINDIA CHINA TIESCHINA TIESINDIAINDIA CHINA TIESCHINA TIES


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JASWANT SINGHJASWANT SINGH

Author of Jinnah India Partition Independence

FormerDefence and External Affairs Minister in

NDAGovt

Expelled from BJP for sympathetic portrayal ofJinnah and criticism ofSardarPatel Gandhiji and

Jawaharlal Nehru.

He is chairman ofPublic Accounts Committee

[PAC] in LokSabha. Involved in controversy during NDAGovt for

escorting terrorists to Kandahar


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AWARDS

Deep Joshi awarded Magsaysay award forsocial service

Alice Munro wins 2009 Man BookerInternational Prize

President BarackObama is surprise choicefor

2009Nobel Peace Prize

Hilary Mantel wins 2009 Man BookerPrize

Herta Muller 2009Nobel Prize forLiterature ElinorOstrom and Oliver Williamson, Nobel

Prize Economics

Venkatraman Ramakrishnan wins Nobel Prize

for Chemistry

iiii


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Business related awards [ETBusiness related awards [ET

Awards]Awards]

Business related awards [ETBusiness related awards [ET

Awards]Awards] Business Leader ofYearBusiness Leader ofYear--Anand MahindraAnand Mahindra

Global IndianGlobal Indian--Ram CharanRam Charan

Businesswoman ofYearBusinesswoman ofYear--Vinita BaliVinita Bali

Corporate Excellence, Company of the YearCorporate Excellence, Company of the Year--Hero HondaHero Honda

Entrepreneur of the YearEntrepreneur of the Year--GV Krishna ReddyGV Krishna Reddy

Corporate Citizen of the YearCorporate Citizen of the Year--TERI,TERI, Reformer of the YearReformer of the Year--Nitish KumarNitish Kumar

Life Time Achievement awardLife Time Achievement award--Keshub MahindraKeshub Mahindra

Business Leader ofYearBusiness Leader ofYear--Anand MahindraAnand Mahindra

Global IndianGlobal Indian--Ram CharanRam Charan

Businesswoman ofYearBusinesswoman ofYear--Vinita BaliVinita Bali

Corporate Excellence, Company of the YearCorporate Excellence, Company of the Year--Hero HondaHero Honda

Entrepreneur of the YearEntrepreneur of the Year--GV Krishna ReddyGV Krishna Reddy

Corporate Citizen of the YearCorporate Citizen of the Year--TERI,TERI, Reformer of the YearReformer of the Year--Nitish KumarNitish Kumar

Life Time Achievement awardLife Time Achievement award--Keshub MahindraKeshub Mahindra


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SPORTSSPORTSSPORTSSPORTS

Rio De Janiero 2016

OlympicsRio De Janiero 2016

Olympics2010 FIFA World Cup venue is South Africa2010 FIFA World Cup venue is South Africa

2010 Commonwealth Games venue Delhi2010 Commonwealth Games venue Delhi

2010 World Cup Hockey venue Delhi2010 World Cup Hockey venue Delhi

2011 World Cup Cricket; India, Sri Lanka and2011 World Cup Cricket; India, Sri Lanka andBangladeshBangladesh

2009 Castrol Award Player of the Year, Gautam2009 Castrol Award Player of the Year, Gautam

GambhirGambhir

ICC Test Cricketer ofYear 2009 is GautamICC Test Cricketer ofYear 2009 is Gautam

GambhirGambhir

ICC, ODI player ofYear 2009 is MSDhoniICC, ODI player ofYear 2009 is MSDhoni

Union Minister forSports, MSGillUnion Minister forSports, MSGill

Rio De Janiero 2016

OlympicsRio De Janiero 2016

Olympics2010 FIFA World Cup venue is South Africa2010 FIFA World Cup venue is South Africa

2010 Commonwealth Games venue Delhi2010 Commonwealth Games venue Delhi

2010 World Cup Hockey venue Delhi2010 World Cup Hockey venue Delhi

2011 World Cup Cricket; India, Sri Lanka and2011 World Cup Cricket; India, Sri Lanka andBangladeshBangladesh

2009 Castrol Award Player of the Year, Gautam2009 Castrol Award Player of the Year, Gautam

GambhirGambhir

ICC Test Cricketer ofYear 2009 is GautamICC Test Cricketer ofYear 2009 is Gautam

GambhirGambhir

ICC, ODI player ofYear 2009 is MSDhoniICC, ODI player ofYear 2009 is MSDhoni

Union Minister forSports, MSGillUnion Minister forSports, MSGill


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MISCELLANEOUSMISCELLANEOUS

Mamta Banerjee coins slogan of Ma Maati

Manush

Pranab Mukherjee and P. Chaidambaram unveil

proposal for a new Tax Code Nandan Nilekani appointed chief of the Unique

Identification Authority

C. Ranagarajan is reappointed chairman ofPMsEconomic Advisory Council

BarackObama is youngest American president to

win Nobel Peace Prize(Conti)


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FormerPresident Pervez Musharraf indicted formurder of Baluch nationalist leaderNawab AkbarBugti

Centenary of eminent Defence Scientist, SuriBhagwantam, observed

Angela Merkel most powerful woman in the world,according to Forbes

Jean Dreze, Belgian economist is ETs PolicyChangeAgent ofYear

Nandita Das is chairperson of the Childrens FilmSociety of India

Lee Kun Hee former head ofSamsung given five

year suspended jail sentence and a fine of $110


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MISCELLANEOUS --

Fortis acquires Wockhardt Hospitals

Telecom rural penetration only 13% in India Swiss luxury goods giant Mont Blanc adopts

Mahatma Gandhi as brand ambassador for its

Rs.14 lakh pen

Swati Piramal is new president ofAssocham

Current capacity of nuclear power in India is

4000 MW

Lunar CraterObservation and Sensing Satellite[LCROSS] ofNASA crashlands on moon to

search

for water

dh d b fi hi f i i b

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