Author: Explains

  • Discussing Budget 2016-17 | Tax Reforms

    In this section, we will deal with the issue which can guide the future investments for an economy – Tax Reforms.

    budget_tax reforms

    Focus Areas

    Small Enterprises

    • The corporate income tax rate is lowered for relatively small enterprises i.e companies with turnover not exceeding Rs 5 crore to 29% plus surcharge and cess, from the next financial year.
    • Govt. has increased the turnover limit under Presumptive taxation scheme to Rs 2 crores to bring big relief to a large number of assesses in the MSME category.

    Start Ups

    • 100% deduction of profits for 3 out of 5 years for startups set up during April 2016 to March 2019. MAT will apply in such cases
    • Startups will look at India as a favourable destination instead of relocating to more tax friendly regimes such as Singapore
    • New manufacturing companies to be given an option to be taxed at 25% + surcharge and cess, provided they do not claim deductions and other incentives
    • Read about the whole start up stand up policy in our two part explainer, click here and here

    Cess and Surcharge

    • Surcharge is increased on persons having income above Rs 1 crore from 12% to 15% <progessive taxation, taxing superrich>
    • The Krishi Kalyan Cess @ 0.5% will be imposed on all taxable services. The proceeds would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers
    • An Infrastructure cess @ 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs
    • The ‘Clean Energy Cess’ levied on coal, lignite and peat is renamed as ‘Clean Environment Cess’ and simultaneously increased its rate from Rs 200 per tonne to Rs 400 per tonne <click here to know difference b/w tax, cess and surcharge with an awesome infographic>

    Miscellaneous Provisions

    • To implement General Anti Avoidance Rules (GAAR) from 1.4.2017
    • Exemption of service tax on services provided for skill development &
      entrepreneurship
    • Changes in customs and excise duty rates on certain inputs to reduce
      costs and improve competitiveness of domestic industry
    • 13 cesses which are levied by various ministries in which revenue collection is
      less than Rs 50 crore in a year will be abolished

    Opportunities Missed

    • The finance minister could have reduced corporate tax rate by half a percent overall, rather than distorting the structure. Most countries have reduced corporate tax rates to attract inward investments <Lowering the corporate tax rate leads to money being reinvested back into businesses, increasing hiring and creating more output, and therefore spending in the economy>
    • There is no clarity about when the govt will lower the corporate tax rate to the proposed 25% from 30%. The reduction in corporate tax rate and phase out of exemptions must be in tandem to ensure a smooth transition from a high tax regime to a more competitive tax regime
    • The reduction in corporate tax rate should eventually lead to a phasing out of the MAT, as the difference between the basic tax rate and the effective MAT rate is likely to narrow
    • There is no clarity about the future of SEZs, in case tax incentives are phased out. <Already, SEZs have lost popularity since FY12, when a MAT and a Dividend Distribution Tax were implemented to prevent erosion of the tax base. Phasing out tax holidays could reduce investments in SEZs further amid sharply slowing exports>–

    Criticism

    There are several incremental measures, but no intention to undertake deep, structural reforms in tax policy or administration

    • It takes some steps forward on administrative simplification, but then doesn’t go far enough by amending the provision on retrospective taxation
    • There seems some discord between govt. and Income tax department, as Income tax department continues to send notices
    • It does provide some tax relief to SMEs under direct taxes, but doesn’t extend it to cover indirect taxes
    • The tax amnesty scheme clearly gives a signal to tax evaders that there will be ample opportunities to convert their unaccounted, untaxed incomes and assets into “white” incomes and assets, with zero risk of prosecution

    PS: Please click on the green hyperlinked text to read more about the concepts. Revise and revise & feel free to ask pertinent questions.

    Read more about GST Bill: All you need to know about and follow our story on       GST: Most Important Tax Reform since 1947 and Minimum Alternate Tax.


    Published with inputs from Pushpendra | Image: Finmin
  • Important Judgements of the Supreme Court in 2015 | Part 5


    Catch up on the previous links to this series:


    #9. RBI bound to disclosure under RTI

    Reserve Bank of India vs. Jayantilal Mistry

    Summary:

    Coming down heavily on the Reserve Bank of India (RBI) for depriving information under the RTI Act, 2005 in the name of fiduciary relationship between itself and the banks, the Supreme Court has in a landmark decision declared that RBI does not place itself in a fiduciary relationship with the Financial institutions because, the reports of the inspections, statements of the bank, information related to the business obtained by the RBI are not under the pretext of confidence or trust.

    SC observations:

    • RBI is supposed to uphold public interest and not the interest of individual banks. RBI is clearly not in any fiduciary relationship with any bank. RBI has no legal duty to maximize the benefit of any public sector or private sector bank, and thus there is no relationship of ‘trust’ between them.
    • RBI has a statutory duty to uphold the interest of the public at large, the depositors, the country’s economy and the banking sector. Thus, RBI ought to act with transparency and not hide information that might embarrass individual banks.
    • It is duty bound to comply with the provisions of the RTI Act and disclose the information sought by the respondents herein.
    • The exemption contained in Section 8(1)(e) applies to exceptional cases and only with regard to certain pieces of information, for which disclosure is unwarranted or undesirable. If information is available with a regulatory agency not in fiduciary relationship, there is no reason to withhold the disclosure of the same.
    • The RBI and the Banks have sidestepped the General public’s demand to give the requisite information on the pretext of Fiduciary relationship and Economic Interest.
    • This attitude of the RBI will only attract more suspicion and disbelief in them. RBI as a regulatory authority should work to make the Banks accountable to their actions

    Counterview:

    • Information sought for is exempted under Section 8(1)(a), (d) and (e) of the Right to Information Act, 2005
    • As the regulator and supervisor of the banking system, the RBI has discretion in the disclosure of such information in public interest
    • The disclosure of information would prejudicially affect the economic interest of the State
    • Further, if the information sought for is sensitive from the point of adverse market reaction leading to systematic crisis for financial stability

    What is RTI Act Section 8?

    (1) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen,—

    (a) information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence;
    (d) information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information;
    (e) information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information;

    What is a ‘fiduciary relationship’?

    • Where one person places complete confidence in another in regard to a particular transaction or one’s general affairs or business.
    • The relationship is not necessarily formally or legally established as in a declaration of trust, but can be one of moral or personal responsibility, due to the superior knowledge and training of the fiduciary as compared to the one whose affairs the fiduciary is handling

    #10. Acid Attack Victims in disability list

    Parivartan Kendra vs. Union of India

    Summary:

    The Supreme Court has directed all the States and Union Territories to consider the plight of Acid Attack victims and take appropriate steps with regard to inclusion of their names under the disability list. Apex court bench of Justices M.Y. Eqbal and C. Nagappan said that State shall upon itself take full responsibility for the treatment and rehabilitation of the victims of acid attack as per the Guidelines provided in Laxmi vs. Union of India.

    SC observations:

    • The State has failed to check the distribution of acid falling into the wrong hands even after giving many directions by this Court in this regard. Henceforth, a stringent action be taken against those erring persons supplying acid without proper authorization and also the concerned authorities be made responsible for failure to keep a check on the distribution of the acid.
    • Laxmi’s case doesn’t put a bar on the Govt. to award compensation limited to Rs.3 Lakhs. The State has the discretion to provide more compensation to the victim in the case of acid attack.
    • The enhancement of the Compensation will act in two ways
    1. It will help the victim in rehabilitation
    2. It will also make the State to implement the guidelines properly as the State will try to comply with it in its true sprit so that the crime of acid attack can be prevented in future.

    State shall upon itself take full responsibility for the treatment and rehabilitation of the victims of acid attack as per the Guidelines.


    Published with inputs from Swapnil
  • Discussing Budget 2016-17 | Governance and Ease of Doing Business

    In this section, we will deal with the issue which is of critical importance to the growth of every economy – Governance and Ease of Doing Business

    Take a look at overall approach of govt. towards Governance and Ease of Doing Business. Want to read the story of Ease of Doing Business, click here


    Focus Area

    Rationalisation of Personnel

    Govt. has set up a task force to look into the rationalisation of human resources in various ministries. A comprehensive review and rationalisation of autonomous bodies is also under process.

    Procurement

    • A technology driven platform will be established to facilitate procurement of goods and services by various ministries and agencies of the Government
    • This will bring more transparency and efficiency in govt procurement of goods and services

    Amendment to Companies Act

    • Govt. will introduce a bill to amend Companies Act, to remove the difficulties and impediments to ease of doing business
    • It would also improve the enabling environment for start-ups

    Inflation

    Govt has approved creation of buffer stock of pulses through procurement at Minimum Support Price and at market price through Price Stabilisation Fund, in order to deal with the problem of abrupt increase in prices of pulses <Despite recent cooling down of food inflation, sudden spurt in prices of onions, pulses etc is a common feature of Indian agriculture. What are the reasons? Enumerate steps taken by the govt along with suggestions to remedy the problem. Answer in the comments.>

    Want to understand intricacies of inflation, CPI, WPI, PPI etc, click here 

    New Initiatives

    Ek Bharat Shreshtha Bharat

    • It seeks to link States and Districts in an annual programme that connects people through exchanges in areas of language, trade, culture, travel and tourism
    • It will strengthen understanding of each other and create a closer engagement between different States and Districts in a structured manner

    Targeted Subsidies

    Govt. will take several measures to ensure targeted disbursement of govt. subsidies and financial assistance to the actual beneficiaries:

    • Govt. has introduced a bill for Targeted Delivery of Financial and Other Subsidies, Benefits and Services by using the Aadhar framework. A social security platform will be developed using Aadhar to accurately target beneficiaries
    • Govt. will introduce DBT for fertilizers on a pilot basis in a few districts across the country with a view to improving the quality of service delivery to farmers
    • Govt. will take provide automation facilities in 3 lakh Fair Price Shops out of 5.35 lakh Fair Price Shops in the country by March 2017

    Update- Lok Sabha has already passed the Aadhar bill which was introduced as money bill. <Enumerate the salient provisions of Aadhar bill? Does it come into conflict with privacy and thus violative of fundamental right to privacy? Was govt right in introducing it as money bill? What are the implications of bills being introduced as money bill? Answer in the comments>

    Criticism– No big bang reform measures announced

    PS: Please click on the green hyperlinked text to read more about the concepts. Revise and revise & feel free to ask pertinent questions.

    
    
    Published with inputs from Pushpendra | Image: Finmin
  • Discussing Budget 2016-17 | Fiscal Discipline

    In this section, we will deal with the issue which is of critical importance to the growth of every economy – Fiscal Discipline

    budget_fiscal

    Before, you know about fiscal position of the country. For a better understanding, do read our Budget Deficits Explained

    Focus Areas

    Fiscal Position

    Fiscal Deficit: The fiscal deficit in RE 2015-16 and BE 2016-17 have been retained at 3.9% and 3.5% of GDP respectively

    Revenue Deficit: Govt. has improved upon the Revenue Deficit target from 2.8% to 2.5% of GDP in RE 2015-16.

    Seventh Pay Commission

    Govt has constituted a committee to examine the Seventh Pay Commission Report and give its recommendations.

    Follow our story on Seventh Pay Commission here.

    Rationalisation of Central Schemes

    • Govt has rationalised and restructured more than 1500 Central Plan Schemes into about 300 Central Sector and 30 Centrally Sponsored Schemes Answer in the comments.>
    • A sub-group of CMs was formed under NITI Ayog to review the Centrally Sponsored Schemes, which suggested that there should be two basket of schemes – one mandatory for all states and other optional

    New Initiatives

    Expenditure

    The total expenditure in the Budget for 2016-17 has been projected at Rs 19.78 lakh crore, consisting of Rs 5.50 lakh crore under Plan and Rs 14.28 lakh crore under Non-Plan.< Keep in mind, our non-Plan expenditure is higher than Plan expenditure> Answer in the comments.>

    Various committees have questioned the merit in having Plan and Non-Plan classification of govt expenditure. Govt. has decided that the classification will be done away with from fiscal 2017-18 and it will give greater focus to Revenue and Capital classification of govt expenditure.

    Quality of Expenditure: Every new scheme being sanctioned by govt will have a sunset date and outcome review, in order to improve the quality of govt expenditure Answer in the comments.>

    Fiscal Responsibility and Budget Management Act (FRBM Act)

    • Since FRBM involves rule-based budgeting, it has significantly helped both central and state govt
    • However, there are suggestions to move from fixed numbers for fiscal deficit targets to a fiscal deficit range as the target. This would give necessary policy space to the govt to deal with dynamic situations
    • Therefore, Budget proposed a committee to review the implementation of the FRBM Act

    PS: Please click on the green hyperlinked text to read more about the concepts. Revise and revise & feel free to ask pertinent questions.


    Published with inputs from Pushpendra | Image: Finmin
  • The Strategic Importance of Space Law for India

    • There is a growing clamour for a comprehensive, legally binding treaty to commit nations to keep outer space a zone of peace.
    • With outer space becoming the fourth dimension of warfare, India cannot remain a mute spectator to the grim reality of final frontiers emerging as a new theatre of war.
    • For India, a comprehensive space act has become a critical necessity to give a greater level of acceleration to its space activities.

     

    Since the dawn of the space age heralded by the launch of Soviet Sputnik way back in October 1957, there has been a burgeoning growth in the global space activities, underpinning the need for a regulatory mechanism supported by a legal framework to facilitate the smooth, robust growth of the exploration of final frontiers without any negative fall outs for earthlings.

    There is a growing clamour for a comprehensive, legally binding treaty to commit nations to keep outer space a zone of peace. For obvious reasons, USA has expressed its opposition to such a treaty.

    The 1967 UN outer space treaty ratified by all the countries of the world is perhaps the first ever comprehensive legal mechanism aimed at regulating the global space activities. This treaty specifically forbids the use of outer space for testing and deploying weapons of destruction including nuclear devices.

    For it treats outer space as the common heritage of mankind meant for peaceful uses. Even so, countries including USA, former Soviet Union and China have exploited outer space for experimenting with anti- satellite and killer satellite systems.

    However, it is imperative for India to register its entry date so that the cut off date, whenever it comes as part of this proposed treaty, does not work to India’s disadvantage in so far as preparing for the country for space war is concerned.
    Indeed, with outer space becoming the fourth dimension of warfare, India cannot remain a mute spectator to the grim reality of final frontiers emerging as a new theatre of war.

    While legally binding international treaties are vitally essential to regulate the healthy and meaningful growth of space activities without any negative or problematic consequences for earthlings, individual space faring nations too should have their own space acts to regulate their space activities in consonance with dynamics of global space activities.

    For India, which has made a mark as a leading space faring nation in the aftermath of the successful probes to moon and Mars, a comprehensive space act has become a critical necessity to give a greater level of acceleration to its space activities.

    Increased private participation in Indian space activities would allow ISRO to concentrate on cutting edge areas of research and focus on deep space probes.

    And with the Indian Government making vigorous efforts to use space technology to drive a range of developmental and governance activities in the country, the need for a well conceived space act has become all the more pronounced.

    In this context, A.S.Kiran Kumar, Chairman, Indian Space Research Organisation (ISRO) says that a detailed paper on the subject has already been submitted to the Indian Government, following a wide ranging discussions with academicians and legal experts in January 2015.

    He also made it clear that the proposed space act would need to be cleared by the Indian Parliament. According to Kumar, very few countries in the world have their own exclusive legislations pertaining to the use of outer space. But Kumar made the point that a law is necessary for the Government to spell out how it would go about tackling space related issues including untoward incidents.

    Right at the moment, ISRO continues to monopolise Indian space activities with Indian industries, in both the private and public sector, providing supplies and services on a modest scale. As such, the proposed Indian space act will have provisions to boost private participation in the rapidly expanding Indian space activities.

    On the commercial front, the proposed space law would open up the avenues for private players to enter the satellite and launch vehicle business of the country in a big way. Once the space act comes into force, private players will be in position to own and operate satellite systems as well as launch vehicles.

    For promoting Indian space business, now being spearheaded by the Bangalore based Antrix Corporation, the commercial arm of the Indian space programme, ISRO would need to step up its capability for building and delivering launch vehicles and satellites with a vastly enhanced frequency.

    For this strategy to assume a practical shape ISRO should encourage Indian industries to float consortium to build and deliver satellites and launch vehicles in a ready to use condition. Indeed, for this change over, a space act spelling out a dynamic and enhanced role for the Indian industry in the country’s space programme would work as a facilitator.

    The anti satellite test carried out by China in early 2007 heightened the clamour in India for preparing the country for the eventuality of a space war. In a stunning demonstration of its military might, China successfully destroyed its ageing weather watch satellite by using a modified version of a ground based ballistic missile.

    ISRO has already on hand a proposal to rope in private industries and encourage them float consortiums to build and launch four stage Polar Satellite Launch Vehicle(PSLV) described as a Indian space workhorse on a routine basis.
    To this end, it has mooted the idea of setting up a space industrial corridor close to Satish Dhawan Space Centre (SDSC), the Indian space port on the eastern coast of India.

    Similarly, ISRO is looking at the possibility of promoting an industrial park in Bangalore where in private industrial consortiums would take up the responsibility of building and delivering the satellites in a ready to use condition.

    For instance, the success of the European space transportation company, Arianespace, is not little due to the active participation of the European industries. Right at the moment, Arianespace accounts for around 60 percent of the global market for launching satellites on commercial terms. The Ariane vehicle deployed by Arianespace has proved to be a reliable and efficient space transportation system.

    ISRO, being a purely civilian set up with a mandate to promote the peaceful uses of outer space, the Indian defence set up will look at the prospect of having an exclusive agency to exploit the military potentials of outer space. In particular, the Indian defence establishment is exploring the possibility of setting up a launch pad dedicated to orbit military satellites.

    Against this backdrop, the Indian military set up will also scrutinise the draft of the Indian space act. Verily, the proposed space act should take care of the needs and concerns of military set up in terms of using outer space to sustain its strategic superiority.

    Indian defence experts have suggested the need for India to go in for both defensive and offensive space war strategy.

    In all probability, the Indian military establishment would press for addressing the issue of space security arising out of the efforts to deploy anti satellite and killer satellite devices.

    Similarly, the need for harnessing the potentials of space technology for military applications could be an important issue for the Indian defence set up. For ISRO, on account of its purely civilian mandate, cannot associate directly with any endeavour involving the space defence programme.

    It is in the fitness of things Indian defence experts have suggested the need for India to go in for both defensive and offensive space war strategy. The defensive aspect involves hardening of satellites against the machinations of the space based and ground based “killer devices” including anti satellite systems.
    Against this backdrop the proposed Indian space act should contain a legal provision to support a well defined space security plan to be unveiled by the Indian defence establishment.

    In particular the, tri service Indian aerospace command , which unfortunately is yet to be approved by the Indian Government , should have under its control a well equipped space and missile force to take care of all aspects of space war.

    “Agni-V can be used to launch mini satellites into a low earth orbit when access to one’s major satellite constellation gets disrupted” observed the then DRDO chief V.K.Saraswat

    Of course, Defence Research and Development Organisation (DRDO) has made it clear that it is capable of engineering “building blocks” of a killer satellite system to help prepare the country for the eventuality of a space war. What’s more, a modified version of the long range Agni-V missile can be used to launch defence satellites into a low earth orbit during emergency.

    Certainly it is well within the Indian capability to develop advanced technological elements to face the threat of a full fledged space war in the future. All that is required is the go ahead from the political dispensation in New Delhi.
    Whether the Narendra Modi led Government would take a bold decision to give a green signal for an Indian space war strategy, one would need to wait and watch.

    This article was first published here.

  • Discussing Budget 2016-17 | Financial Sector Reforms

    In this section, we will deal with the issue which is of critical importance to the growth of every economy – Financial Sector Reforms.

    Take a look at overall approach of govt. towards financial sector reforms:

    • Rs 25,000 crore towards recapitalisation of public sector banks
    • Target of disbursement under MUDRA increased to 1,80,000 crore
    • Banking Board Bureau to be operationalised
    • General Insurance companies will be listed in the stock exchange

    budget _ finance reforms

    Focus Areas

    Monetary Policy Committee

    Govt. will amend RBI Act 1934, to provide statutory basis for a Monetary Policy Framework and a Monetary Policy Committee through the Finance Bill 2016.

    Capital Market

    • RBI will improve greater retail participation in govt securities
    • SEBI will develop new derivative products in the commodity derivatives market

    Revamping Public Sector Banks

    • Govt. to allocate Rs. 25000 crore towards recapitalization of public sector banks
    • The Bank Board Bureau will be operationalized during 2016-17
    • The Debt Recovery Tribunals will be strengthened with focus on improving the existing infrastructure for speedier resolution of stressed assets
    • Efforts are made to address structural issues in various sectors like Power, Coal, Highways, Sugar and Steel, with a focus on reviving stalled projects

    Read more about Indradhanush and PJ Nayak committee on bank reforms and do watch our video explainer on NPAs.

    Pradhan Mantri Mudra Yojana

    Govt. had launched this scheme for the benefit of bottom of the pyramid entrepreneurs. Banks and NBFC-MFIs have sanctioned about Rs. 1 lakh crore to over 2.5 crore borrowers under PMMY. Govt. has increased the target next year to Rs. 1,80,000 crore.

    Read more about Mudra bank and follow our story on Micro-finance.

    New Initiatives

    Bankruptcy code for Financial Sector Insolvency

    Govt. will introduce a comprehensive Code on Resolution of Financial Firms as a Bill, in order to provide a specialised resolution mechanism to deal with bankruptcy situations in banks, insurance companies and financial sector entities

    This code along with the Insolvency and Bankruptcy Code 2015, will provide a comprehensive resolution mechanism for our economy.

    Bill on Illicit Deposit Schemes

    Govt. will bring in a comprehensive central legislation to deal with the menace of illicit deposit taking schemes as poor and the financially illiterate are the worst-victims.

    Amendments in SARFAESI Act, 2002

    Govt. will bring necessary amendments in the SARFAESI Act 2002, tackle the problem of stressed assets in the banking sector. It will enable the sponsor of an Asset Reconstruction Companies to hold up to 100% stake in it and permit non-institutional investors to invest in Securitization Receipts.

    Financial Data Management Centre

    The centre will be set up under the aegis of the Financial Stability Development Council to facilitate integrated data aggregation and analysis in the financial sector.

    What’s Financial Stability Development Council?

    The idea to create such a super regulatory body was first mooted by the Raghuram Rajan Committee in 2008. Finally in 2010, the then Finance Minister of India, Pranab Mukherjee, decided to set up such an autonomous body dealing with macro prudential and financial regularities in the entire financial sector of India.

    Chairperson: The Union Finance Minister of India

    Post Office ATMs

    To provide better access to financial services, especially in rural areas, we will undertake a massive nationwide rollout of ATMs and Micro ATMs in Post Offices over the next three years.

    Read more about Payment Banks’ revolution.

    Listing of General Insurance companies

    The general insurance companies owned by the govt will be listed in the stock exchanges, in order to promote public shareholding in govt-owned companies as a means of ensuring higher levels of transparency and accountability.

    Read more about Reforms in Banking Sector.

    PS: Please click on the green hyperlinked text to read more about the concepts. Revise and revise & feel free to ask pertinent questions.


    Published with inputs from Pushpendra | Image: Finmin
  • Discussing Budget 2016-17 | Infrastructure and Investment

    In this section, we will deal with the sector that holds the potential to transform India – Infrastructure and Investment Sector.

    budget_infra

    Focus Area

    Road Sector

    The process of road construction will be accelerated and govt. has allocated Rs. 55,000 crore in the Budget for roads and highways. Govt. will approve nearly 10,000 kms of National Highways in 2016-17 and nearly 50,000 kms of State highways will also be taken up for up-gradation as National Highways.

    Read more about Developments In Road Sector.

    Port

    Govt has started a series of measures for modernizing the ports and increasing their efficiency. Govt. is planning to develop new greenfield ports both in the eastern and western coasts of the country along with expedition of National Waterways.

    Read more about Sagarmala Project.

    Civil Aviation

    Govt. is drawing an action plan for revival of un-served and under-served airports. There are some 160 airports and air strips which can be revived at an indicative cost of Rs. 50 crore to Rs. 100 crore each. Union govt. will partner with the States to develop some of these airports for regional connectivity.

    Read more about Developments In Civil Aviation Sector.

    Oil and Gas

    Govt is planning to incentivise gas production from deep-water, ultra deep-water and high pressure-high temperature areas, which are presently not exploited on account of higher cost and higher risks.

    Read more about Ministry of Petroleum and Natural Gas: Important Updates.

    Power Sector

    Govt. will diversify the sources of power generation for long term stability. A comprehensive plan will be prepared to augment the investment in nuclear power generation.

    Read more about India’s Nuclear Dilemma at the World’s Stage and Policy Wise: India’s Power Sector and recently launched UDAY scheme.

    Financing

    Govt will permit mobilisation of additional finances by various institutions such as NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority to the extent of Rs. 31,300 crore through raising of bonds during 2016-17.

    New Initiatives

    Abolition of Permit-Raj

    Govt. will bring necessary amendments in the Motor Vehicles Act and open up the road transport sector in the passenger segment. An enabling eco-system will be provided for the States which will have the choice of adopting the new legal framework. Entrepreneurs will be able to operate buses on various routes, subject to certain efficiency and safety norms.

    Impact: It will lead to more efficient public transport facilities, greater public convenience, new investments, creation of new jobs, growth of start-up entrepreneurs and other multiplier effects.

    Reviving the Public Private Partnership

    Govt. will take various measures to revive the PPP sector:

    • It will introduce Public Utility (Resolution of Disputes) Bill to streamline institutional arrangements for resolution of disputes in infrastructure related construction contracts, PPP and public utility contracts
    • Guidelines for renegotiation of PPP Concession Agreements will be issued without compromising transparency
    • A new credit rating system for infrastructure projects will be developed, instead of relying upon a standard perception of risk which often result in mispriced loans

    Read more about recently released Kelkar Committee Report.

    Reforms in FDI policy

    100% FDI will be allowed through FIPB route in marketing of food products produced and manufactured in India, as lot of fruits and vegetables either do not fetch the right prices or fail to reach the markets. This move will benefit farmers, give impetus to food processing industry and create vast employment opportunities.

    Govt. has also proposed changes in the areas of insurance and pension, Asset Reconstruction Companies, Stock Exchanges, etc

    Public Sector Enterprises

    Govt. has approved a new policy for management of its investment in PSUs, including disinvestment and strategic sale. Govt. will leverage the assets of CPSEs for generation of resources for investment in new projects. The NITI Aayog will identify the CPSEs for strategic sale.

    The Department of Disinvestment is being re-named as the Department of Investment and Public Asset Management (DIPAM).

    Challenge

    There is a need for consolidation, starting from approval to implementation, apart from an institutional mechanism for fair pricing and competition in infrastructure policy.

    Criticism

    There are no big reforms or major policy turnarounds in this regard.

    PS: Please click on the green hyperlinked text to read more about the concepts. Revise and revise & feel free to ask pertinent questions.


    Published with inputs from Pushpendra | Image: Finmin
  • Important Judgements of Supreme Court in 2015 | Part 4


    Catch up on the previous links to this series:

    #7. States cannot unilaterally grant remission

    Union of India vs. Sriharan

    Summary:

    In a setback to seven life convicts in the Rajiv Gandhi assassination case which includes four Sri Lankans, will remain in Vellore Central Prison in Tamil Nadu, as a five judge Constitution bench of the Supreme Court ruled that the Tamil Nadu government headed by J Jayalalithaa could not have unilaterally granted them remission.

    Observations:

    • Since the case was probed and prosecuted by CBI, a central agency, the decision should not have been taken without the “concurrence” of the Central government
    • Life sentence in such cases should mean life in jail till death
    • ‘REMISSION CAN BE CANCELLED’: SC upheld the 2008 Swamy Shraddananda judgment- Courts can ignore remission right of prisoner in heinous crimes like mass murder and terrorism by awarding sentences ranging from 20 to 40 years unless it is not rarest of rare offences meritting death sentence.
    • Interpreting Section 435 (2) of the CrPC: the word ‘consultation’ means ‘concurrence’. This means that TN Govt should have got the prior consent of the Centre before issuing its February 19 order to remit the sentences.

    Politics of remission:

    Read more here: reviving the politics of remission

    Recently polls have been announced in Tamil Nadu.
    There is every possibility that remission action can be used as a trump card to gain votes.
    So, need we not check this as it goes against Model Code of Conduct- influencing votes by populist policies?

    What does Election Commission of India has to say on it?
    Q- Would action be taken if any reference was made on the Tamil Nadu government’s decision to remit the life sentence of the Rajiv Gandhi assassination case convicts?
    Ans- As and when the reference comes, the Commission will take an appropriate view to ensure that our voters are not influenced.

    #8. Minimum Edu Qualification rule for Panchayat elections upheld

    Rajbala vs. State of Haryana

    Summary:

    Two Judge Bench of the Supreme Court of India upheld the validity of Haryana Panchayati Raj (Amendment) Act, 2015 (Act 8 of 2015), which introduced the minimum educational qualification for candidates to contest the panchayat elections. The Bench consisting of Justice Chelameswar and A.M.Sapre held that both the rights namely “Right to Vote” and “Right to Contest” are not fundamental Rights but only constitutional rights of the citizen.

    Observations:

    • Prescription of an educational qualification is not irrelevant for better administration of the PANCHAYATS
    • The classification cannot be said either unreasonable or without a reasonable nexus with the object sought to be achieved
    • Every person who is entitled to vote is not automatically entitled to contest for every office under the Constitution
    • Constitution itself imposes limitations on the right to contest depending upon the office
    • It also authorises the prescription of further disqualifications/qualification with respect to the right to contest

    Trivia:

    Supreme Court also upheld the clauses of the Act which disqualify persons who are in arrears of amounts to cooperative bodies and the electricity bills and also if a person has no functional toilet at his place of residence.


    Published with inputs from Swapnil
  • Important Judgemets of Supreme Court in 2015 | Part 3


    Catch up on the previous links to this series:

    #5. Unwed mother can become sole guardian of a child

    ABC vs. State (NCT of Delhi)

    Summary:

    In a landmark judgment, a Supreme Court bench headed by Justice Vikramajit Sen held that an unwed mother in India can apply to become the sole guardian of a child, without giving notice to the father of the child and without disclosing his identity.

    The Court also directed that if a single parent/unwed mother applies for the issuance of a Birth Certificate for a child born from her womb, the Authorities concerned may only require her to furnish an affidavit to this effect, and must thereupon issue the Birth Certificate, unless there is a Court direction to the contrary.

    Background:

    • The child was born in 2010, and the woman petitioner raised him without any assistance from or involvement of his putative father
    • She desired to make her son her nominee in all her savings and other insurance policies
    • But was informed that she must either declare the name of the father or get a guardianship/adoption certificate from the Court
    • She then filed an application under Section 7 of the Guardians and Wards Act, 1890 (the Act) before the Guardian Court for declaring her the sole guardian of her son
    • Section 11 of the Act requires a notice to be sent to the parents of the child before a guardian is appointed
    • However, both the Courts (the guardian court and Delhi High court) held that she needed to disclose the father’s name to get his consent while filing a guardianship petition
    • Then she filed a petition in SC against ruling of the trial court and the Delhi High Court

    SC observations:

    • The predominant thought in these jurisdictions, as is in India, is to bestow guardianship and related rights to the mother of a child born outside of wedlock
    • The mother need not disclose the identity of the father and include him as a party to the guardianship petition in certain cases
    • The ruling relied on the best interest of the child, which requires that the procedural requirement should be done away with

    #6. Section 364A IPC awarding death penalty not unconstitutional

    Vikram Singh vs. Union of India

    Summary:

    The Supreme Court of India dismissed an appeal by a death row convict, and held that Section 364A awarding death penalty as a possible punishment, for kidnapping any person threatening to cause death in order to compel Government or any other person, to pay ransom, is not unconstitutional.

    Three Judge Bench of Justices T.S. Thakur, R.K. Agrawal and Adarsh Kumar Goel examined the background of the Section 364A and held that it was enacted for the safety and security of the citizens and the unity, sovereignty and integrity of the country.

    About Section 364A:

    • Introduced: 1993
    • Awards: death penalty or life imprisonment
    • For: kidnapping or abducting any person and threatening to cause death or hurt to such person
    • Protects: the Government, any foreign State or international inter-governmental organisation or any other person

    Observations:

    • Private persons are also covered:
      Section 364A is wide enough to cover even cases where the demand for ransom is made not as a part of any terrorist act but also for monetary gain from a private individual.
    • 364A deals with ordinary crimes too:
      The counsel for petitioner had argued- since the Kidnapping/abduction of a person for ransom is already covered by other provisions of IPC hence Section 364A was added only to deal with terrorist related ransom situations and not ordinary crimes.
      However, the SC held that ingredients of 364A are unique, and cannot be found in other provisions of IPC even in the provisions dealing with extortion.
    • Rule of Ejusdem generis does not apply:
      The meaning of the term ‘person’ can not be restricted to the ‘government’ or ‘foreign State’ or ‘international inter-governmental organisations’ only.
    • Section 364A not disproportionate:
      Citing various Indian and foreign decisions, the court laid down the principles governing proportionality of punishments
      ○ Punishments must be proportionate to the nature and gravity of the offences for which the same are prescribed
      ○ Prescribing punishments is the function of the legislature and not the Courts’.
      ○ The legislature is presumed to be supremely wise and aware of the needs of the people and the measures to meet those needs
      ○ Courts show deference to the legislative will and wisdom and are slow in upsetting the enacted provisions dealing with the quantum of punishment prescribed for different offences
      ○ Courts, however, have the jurisdiction to interfere when the punishment prescribed is so outrageously disproportionate or so inhuman or brutal which cannot be accepted by any standard of decency
      ○ Absence of objective standards for determining the legality of the prescribed sentence makes the job of the Court reviewing the punishment difficult
      ○ Courts cannot interfere with the prescribed punishment only because the punishment is “perceived to be” excessive

    What is Ejusdem Generis?

    • A Latin term which means “of the same kind
    • It is used to interpret loosely written statutes
    • Where a law lists specific classes of persons or things and then refers to them in general then the general statements only apply to the same kind of persons or things specifically listed

     

    Published with inputs from Swapnil
  • Discussing Budget 2016-17 | Skills and Job Creation

    In this section, we will deal with the sector which seeks to empower the youth – Skills and Job Creation.

    Take a look at basic statistics, which will give you a larger picture about govt.’s approach towards Education, Skills and Job Creation, where the emphasis is to make India a knowledge based and productive society:

    • 1500 Multi-skill training institutes to be set up
    • Objective to skill 1 crore youth in the next 3 years under the PM Kaushal Vikas Yojna
    • National Skill Development Mission has imparted training to 76 lakh youth

     

    Focus Areas

    #1. Skill India Mission

    The National Skill Development Mission has created an elaborate skilling eco-system and imparted training to 76 lakh youth. Govt. will set up 1500 multi-Skill training institutes across the country, to capitalise our demographic advantage.

    Govt. will further scale up Pradhan Mantri Kaushal Vikas Yojna to skill one crore youth over the next 3 years.

    Benefits: The emphasis on skill development will resonate with India’s youth seeking to improve their employability quotient.

    Career Portal

    Govt. had launched National Career Service in July, 2015, where 35 million jobs seekers have registered. Govt. will make 100 Model Career Centres operational by the end of 2016-17. It will also inter-link State Employment Exchanges with the National Career Service platform.

    New Initiative

    Certification

    Govt. will set up a National Board for Skill Development Certification in partnership with the industry and academia.

    Benefits: This will help formally skilled youth to be recognised for employment purposes in public & private sector.

    Massive Open Online Courses

    Entrepreneurship education and training will be provided in 2200 colleges, 300 schools, 500 govt ITIs and 50 vocational training centres through Massive Open Online Courses. Govt. will make efforts to connect aspiring entrepreneurs, particularly those from remote parts of the country, to mentors and credit markets.

    Job Creation

    Govt of India will pay the Employee Pension Scheme contribution of 8.33% for all new employees drawing a salary of up to Rs.15,000 a month and enrolling in EPFO, for the first 3 years of their employment.

    Govt. will amend Income Tax Act in order to broaden the scope of employment generation incentives.

    Benefits: This will incentivize the employers to recruit unemployed persons and that too in the formal sector. It could also lead to migration of informal sector workers to the formal sector. Of the 470 million plus workforce in India, less than 10% are in the formal sector.

    Retail Sector

    In order to simplify the regulations for the retail sector, which is the largest service sector employer in the country, Govt will circulate a model Model Shops and Establishments Bill, which can be adopted by the State Govts on voluntary basis. The model bill seeks to allow small and medium shops to remain open all 7 days a week on voluntary basis. This will help in creation of new jobs in retail sector.

    Challenge

    • In India, only about 2.2% of workforce had received formal vocational training. Even those who had received any form of vocational training, the majority had either acquired a hereditary skill or learned on the job
    • Without access to affordable and appropriate skills training, young people, particularly those leaving rural areas and small towns for big cities, will be stuck in low-wage, insecure jobs that will leave them in want or poverty
    • Job creation has not kept pace with India’s demographic momentum, and in the coming days, it will pose a problem for a skilled workforce

    Learn about Deen Dayal Upadhyaya Grameen Kaushalya Yojana and Agency involved in Skill IndiaFollow our story on Skill India too.

    PS: Please click on the green hyperlinked text to read more about the concepts. Revise and revise & feel free to ask pertinent questions.


    Published with inputs from Pushpendra | Image: Finmin
  • Discussing Budget 2016-17 | Education

    In this section, we will deal with the sector which will determine how well we use our demographic dividend – Education Sector.

    Take a look at basic statistics, which will give you a larger picture about govt.’s approach towards Education, Skills and Job Creation, where the emphasis is to make India a knowledge based and productive society:

    • Allocation for education sector – Rs 68,968 cr
    • Higher Education Financing Agency to be set-up with initial capital base of Rs 1000 Crores
    • Digital Depository to be set-up for certificates, mark sheets, etc
    • Initiative to make world-class teaching and research institutions

    budget_edu

    Focus Areas

    #1. School Education 

    Govt. will allocate increasing share for quality improvement under Sarva Shiksha Abhiyan. 62 new Navodaya Vidyalayas will be opened in the remaining uncovered districts over the next two years

    #2. Higher Education

    Govt. will ensure an enabling regulatory architecture to empower 10 public and 10 private institutions to emerge as world-class Teaching and Research Institutions. This will enhance affordable access to high quality education for ordinary Indians.

    Benefits: Govt. seeks to stress on the importance of teaching along with recognising the role of private sector in the education sector – not all world-class institutions that emerge from India need to be publicly funded.

    Read more about The State Of Affairs In Higher Education

    New Initiative

    Finance

    Govt. will setup a Higher Education Financing Agency with an initial capital base of Rs. 1,000 crores. It will be a not-for-profit organisation that will leverage funds from the market and supplement them with donations and CSR funds. These funds will be used to finance improvement in infrastructure in the top institutions.

    According to ministry of corporate affairs, education and skill development attracted 23% of the CSR spending for FY15.

    Benefits: Since Banks are finding it difficult to manage the NPAs from the education loans, a dedicated agency would give the much needed thrust.

    Digital Depository

    Govt. will establish a Digital Depository for School Leaving Certificates, College Degrees, Academic Awards and Mark sheets, on the pattern of a Securities Depository. This will help validate authenticity, safe storage and easy retrieval of these documents.

    Read more about Digital India Initiatives

    Criticism

    • There is little to offer in terms of any concrete steps to improve the quality of elementary education
    • Teachers training does not figure in this year’s budget
    • The whole purpose of CSR is defeated if the govt lays down the agenda on what the priority areas for companies should be. It also shifts the accountability for CSR from the company to the govt
    • It seems that the Rs.1000 crore fund will be mostly used for redressal of the problems of students seeking educational loan. Also, the current outstanding educational loans are around Rs.50,000 crore, how a fund of Rs.1,000 crore will resolve the massive requirements of educational loans

    Future

    There is group of secretaries proposal to phase out Sarva Shiksha Abhiyan as it currently exists and replace it with an outcome-based financing program that links 20% of the education budget to performance on outcomes

    Read more about Ministry of Human Resource Development : Important Updates

    PS: Please click on the green hyperlinked text to read more about the concepts. Revise and revise & feel free to ask pertinent questions.


    Published with inputs from Pushpendra | Image: Finmin
  • 2016-17 के बजट पर चर्चा: सामाजिक क्षेत्र

    सामाजिक क्षेत्र: समाज के कमजोर वर्गों के विकास के मायने में सामाजिक क्षेत्र अहम हो जाता है।

    आइये सबसे पहले बुनियादी आंकड़ों पर एक नजर डालते हैं क्योंकि आकंड़े इस बात का आईना होते हैं कि सरकार ने किस तरह से बड़ी आबादी के व्यापक हितों को योजनाओं के तहत साधा है।

    • शिक्षा और स्वास्थ्य देखभाल सहित सामाजिक क्षेत्र के लिए 1,51,581 करोड़ रुपये का आबंटन।
    • भारत की जनसंख्या के एक तिहाई हिस्से को नई स्वास्थ्य बीमा योजना से जोड़ा गया।
    • 3000 मेडिकल स्टोर्स को प्रधानमंत्री जन औषधि योजना के तहत खोले जाने का ऐलान।
    • सभी बीपीएल परिवारों को रसोई गैस कनेक्शन दिया जाना।
    • देशभर के जिला अस्पतालों में डायलिसिस सेवाएं प्रदान करने के लिए नेशनल डायलिसिस सर्विस शुरू करने की घोषणा।

      social

    मुख्य बिंदु

    #1. जेनेरिक दवाएं

    सरकार ने प्रधानमंत्री जन औषधि योजना के तहत वर्ष 2016-17 के दौरान  3,000 नए दवा स्टोर खोल उनके माध्यम से जेनेरिक दवाओं की आपूर्ति करना सुनिश्चित किया है। यानी लोगों को सस्ती कीमतों पर अच्छी दवाएं उपलब्ध होंगी। फार्मा सेक्टर का विकास इसी से जुड़ा पहलू है।

    #2. अनुसूचित जाति, अनुसूचित जनजाति और महिलाएं

    सरकार ने अनुसूचित जाति और अनुसूचित जनजाति और महिलाओं को उद्यमी बनाने की दिशा में कदम बढ़ाया है। सरकार ने इस वर्ग को सक्षम बनाने के लिए स्टैंडअप इंडिया योजना की पहल की है। इस योजना के चलते इस वर्ग के 2.5 लाख लोगों को सीधा फायदा पहुंचेगा साथ ही इन दोनों वर्ग के उद्यमियों को सहायता उपलब्ध कराने के लिए राष्ट्रीय अनुसूचित जाति/ जनजाति केंद्र स्थापित किया जाएगा। इस योजना से प्रत्‍येक श्रेणी के एक उद्यमी के लिए प्रति बैंक शाखा कम से कम ऐसी दो परियोजनाओं को मदद मिलेगी। इस योजना से कम से कम 2.5 लाख उद्यमियों को लाभ मिलेगा।

    #2. उद्यमियता- एससी/एसटी और महिलाएं

    सरकार का उद्योग संघों और सूक्ष्‍म, लघु और मध्‍यम उद्यम मंत्रालय की भागीदारी में राष्‍ट्रीय अनुसूचित जाति/जनजाति केन्‍द्र की स्थापना करने का प्रस्‍ताव है। यह केन्‍द्र अनुसूचित जाति/जनजाति के उद्यमियों को केन्‍द्र सरकार की खरीदारी नीति 2012 के अधीन अपनी जिम्‍मेदारी पूरी करने के लिए वैश्विक सर्वश्रेष्‍ठ कार्य विधि अपनाने और स्‍टैंड अप इंडिया पहल का लाभ उठाने के लिए पेशेवर मदद उपलब्‍ध कराएगा।

    नए कदम

    स्वास्थ्य बीमा देश में गरीबी की रेखा से नीचे जीवन यापन करने वाले लोग हर साल कई खतरनाक बीमारियों और आकस्मिक हादसों मे मारे हैं।  एक नई स्वास्थ्य सुरक्षा योजना में परिवार प्रति 1 लाख रुपए के लिए स्वास्थ्य कवर प्रदान किया गया है। वरिष्ठ नागरिकों को 30,000 रुपये तक एक अतिरिक्त टॉप-अप पैकेज उपलब्ध कराया जाएगा।  

    स्वास्थ्य देखभाल

    इस समय देश मेें कई सुदूरवर्ती इलाकों के लोग स्वास्थ केंद्रों पर पहुंचने से पहले ही दम तोड़ देते हैं। उनका डायलिसेस ही नहीं हो पाता है। गुर्दे खराब होने की स्थिति में  रोगियों को नियमित जांच की जरूरत होती है। सरकार ने इस संबंध में पीपीपी मोड के माध्यम से राष्ट्रीय स्वास्थ्य मिशन के तहत एक ‘राष्ट्रीय डायलिसिस सेवा कार्यक्रम’ का शुभारंभ किया है।

    रसोई गैस

    बीपीएल परिवारों को सरकार सब्सिडी देकर गैस कनेक्शन मुहैया कराएगी।  इस घोषणा से 2016-17 में लगभग 1.5 करोड़ बीपीएल परिवारों को फायदा होगा। सरकार देश में रसोई गैस को पूरे देश में सर्व सुलभ कराने की हिमायती है। इससे काफी हद तक उन गरीब महिलाओं और बीपीएल परिवारों के लोगों को फायदा होगा जिनके परंपरागत चूल्हों खाने बनाने से सेहत पर खराब असर पड़ता है।

    आलोचना

    • स्वास्थ्य नीति के लिए सरकार की समग्र सोच क्या है इस पर बजट में कोई रोशनी नहीं डाली गई है। हालांकि इसमें बीमा सेक्टर पर काफी बढ़चढ़कर बातें कही गई हैं लेकिन उसकी अपनी सीमाएं हैं।  इसे सरकार की स्वास्थ्य नीति की ताकत नहीं कहा जा सकता।
    • नई बीमा योजना, नाम बदलकर महज राष्ट्रीय स्वास्थ्य बीमा योजना का रूपांतरण लगता है।

     

  • Discussing Budget 2016-17 | Rural Sector

    In this section, we will deal with the sector which is very important for a country like India, where more than two-third of the population resides in villages – Rural Sector.

    Take a look at basic statistics, which will give you a larger picture about govt.’s approach towards rural sector, where emphasis is on rural employment and infrastructure:

    • Total allocation for rural sector is 87,700 cr
    • Rs. 2.87 lakh cr grant-in-aid to Gram Panchayats and Municipalities
    • Rs. 38,500 crore has been allocated for MGNREGS in 2016-17
    • 100% village electrification by May 2018
    • 300 Rurban Clusters will be developed under the Shyama Prasad Mukherjee Rurban Mission
    • Digital Literacy mission to cover additonal 6 cr households

    rural_budget

    Focus Areas

    #1. Decentralization

    As per 14th Finance Commission recommendations, the budget has allocated a sum of Rs. 2.87 lakh cr grant-in-aid to Gram Panchayats and Municipalities, which is higher by 228% as compared to the previous 5-year period.

    Each Gram Panchayat will receive an average assistance of Rs 80 lakh, where as each Urban Local Body will get Rs. 21 cr.

    #2. Mitigating Rural Distress

    • Every block in the distress areas will be set up as an intensive Block under the Deen Dayal Antyodaya Mission
    • Formation of Self Help Groups will be speeded up to promote multiple livelihoods
    • Cluster Facilitation Teams will be set up under MGNREGS to ensure water conservation and natural resource management
    • Priority to these districts under Pradhan Mantri Krishi Sinchaii Yojna

    #3. Infrastructure Creation

    Govt will develop 300 Rurban clusters under the Shyama Prasad Mukherjee Rurban Mission.

    These Clusters will incubate growth centres in rural areas by providing infrastructure amenities and market access for the farmers. They will also expand employment opportunities for the youth.

    #4. Electrification

    Govt is targeting to achieve 100% village electrification by 1st May, 2018. The budget has allocated Rs. 8,500 crore for Deendayal Upadhayaya Gram Jyoti Yojna and Integrated Power Development Schemes.

    #5. Modernization of Land Records

    Govt. has revamped National Land Record Modernisation Programme, to build an integrated land information management system, which is critical for dispute free titles.

    #6. Sanitation

    Govt. will reward villages that have become free from open defecation, under Swachh Bharat Mission

    New Initiatives

    Promotion to Digital Literacy

    About 12 crore households out of the total 16.8 crore rural households, do not have computers and are unlikely to have digitally literate persons. In this regard, there are already 2 schemes, which are approved to promote digital literacy:

    • National Digital Literacy Mission
    • Digital Saksharta Abhiyan

    Govt. will launch a new Digital Literacy Mission Scheme for rural India to cover around 6 crore additional households within the next 3 years. This will help India to derive greater benefit from our demographic advantage.

    Improving Governance of PRI’s

    Govt. will make efforts to develop governance capabilities of Panchayat Raj Institutions so that they can deliver on the Sustainable Development Goals. In this regard, govt. has proposed to launch a new restructured scheme, called Rashtriya Gram Swaraj Abhiyan.

    PS: Please click on the green hyperlinked text to read more about the concepts. Revise and revise & feel free to ask pertinent questions.


     

    Published with inputs from Pushpendra | Image: Finmin
  • Discussing Budget 2016-17 | Agriculture and Farmer’s Welfare

    Amidst global and domestic headwinds, Finance Minister presented a growth and development-oriented Budget that seeks to transform india for the benefit of farmers and the vulnerable. We will take a look at the budget in terms of various sectors.

    In this section, we will deal with the sector which received a lot of attention in this budget – Agriculture and Farmer’s Welfare

    Take a look at basic statistics, which will not be useful for memorizing, but certainly will help you in analyzing the shifting focus of govt. towards agriculture.

    • Total allocation for Agriculture and Farmers’ welfare is 35,984 crore
    • 28.5 lakh heactares of land will be brought under irrigation
    • 5 lakh acres to be brought under organic farming over a 3-year period
    • Rs 6,000 crore for recharging of ground water recharging
    • Dedicated irrigation fund in NABARD of Rs.20.000 crore

    budget_farmers


     

    Focus Areas

    #1. Food Security to Income Security

    Govt. is targeting to double the farmers’ income in 5 years. Govt. will re-orient its efforts both in farm and non-farm sectors. The access to markets becomes critical in this respect, so govt. will implement a Unified Agriculture Marketing Scheme which envisages a common e-market platform that will be deployed in selected 585 regulated wholesale markets.

    #2. Irrigation

    Irrigation is a critical input for increasing agriculture production and productivity. Out of 141 million hectares of net cultivated area in the country, only 46% is covered with irrigation. A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about `20,000 crore.

    The ‘Pradhan Mantri Krishi Sinchai Yojana has been strengthened and will be implemented in mission mode. 28.5 lakh hectares will be brought under irrigation under this scheme. Govt. is taking efforts to fast track 89 irrigation projects languishing under AIBP, which will help to irrigate 80.6 lakh hectares.

    Under the sustainable management of ground water resources, at least 5 lakh farm ponds and dug wells in rain fed areas will be created and 10 lakh compost pits for production of organic manure will be taken up by making productive use of the allocations under MGNREGA.

    #3. Conserve Soil Health and Fertility

    There is a National Project on Soil Health and Fertility and govt. is implementing Soil Health Card Scheme. It enables farmers to get information about nutrient level of the soil and can make judicious use of fertilizers. The target is to cover all 14 crore farm holdings by March 2017.

    #4. Credit Availability

    Govt. is making special efforts to ensure adequate and timely flow of credit to farm sector. The target for agricultural credit in 2016-17 will be at an all-time high of Rs. 9 lakh crore, as against the target of Rs. 8.5 lakh crore in 2015-16.

    Govt. has made the provision of Rs. 15,000 crore towards interest subvention, in order to reduce the burden of loan repayment on farmers

    #5. Food Processing Industry

    100% FDI will be allowed through FIPB route in marketing of food products produced and manufactured in India. It will benefit farmers as fruits and vegetables will fetch right prices and also reduce their wastage. It will also give impetus to food processing industry and create vast employment opportunities.

    New Initiatives

    Finances

    A  Krishi Kalyan Cess will be imposed at 0.5% on all taxable services, proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. To know more about basics of cess – Read more.

    Broadening MSP

    Govt. will make efforts to ensure that the benefit of MSP reaches farmers in all parts of the country. Govt. will encourage remaining states to take up decentralized procurement. An online procurement system will be undertaken through the Food Corporation of India. Govt has also made effective arrangements  for pulses procurement.

    Dairy Development

    Govt. will bring four new projects to make dairying more remunerative to the farmers:

    • Pashudhan Sanjivani – An animal wellness programme and provision of Animal Health Cards (‘Nakul Swasthya Patra’)
    • An advanced breeding technology
    • Creation of ‘E-Pashudhan Haat’ – An e-market portal for connecting breeders and farmers
    • A National Genomic Centre for indigenous breeds

    Agriculture Insurance

    In order to protect the farmer from the adverse consequences of nature, govt. has recently announced PM Fasal Bima Yojna, which will have nominal premium and highest ever compensation in case of crop loss.


    PS: Please click on the green hyperlinked text to read more about the concepts. Revise and revise & feel free to ask pertinent questions.

    Published with inputs from Pushpendra | Image: Finmin
  • Vikas ka Budget | Key points from the Ministry of Finance – 2016

    It is true that the Budget could be difficult to understand. Sarkar just made it easier for you to know how your tax-money is being spent. Try evaluating whether your Government is doing enough.

    This time, we were pleasantly surprised to find the lengths to which the Ministry of Finance has gone to make it easier for everyone to understand the Budget.

    What’s in it for me!

    #1. How does it helps a farmer, Khem Lal Khushwaha?


     

    #2. How does it helps a daily wage labourer, Mohan Patel?


     

    #3. How does it helps a student, Shushmita?


     

    There are a few more character sketches and a lot more variations across sectors/ benefits at the Finmin website. Do check out the Vikas ka budget – click here.

    If you have any questions (however basic), feel free to drop them here.

    Source: Finmin.nic.in
  • 9 important takeaways from Union Budget 2016

    The budget focuses its efforts on what needs fixing – the rural distress, the jobs problem, the banking crisis, and infrastructure deficit.


     

    As you prepare for your IAS examination in 2016, keep these recurring themes in mind! Even government is waking up to take them seriously.

    First, the budget sticks to the fiscal deficit roadmap and promises to bring down the deficit to 3.5 percent in 2016-17. Read more on this, click here.

    Second, the corporate sector has been let down, with the promised reduction in corporate taxes restricted to small and new companies. To know all about taxes and ease of doing business, click here.

    Third, the most exciting idea is the introduction of a tax amnesty scheme for domestic black money or undeclared incomes. Black money holders have to pay 45 percent tax – a penalty about 10 percent more than normal – to get immunity from questioning and penal action.

    Read all about black money and the economics around it, click here.

    Fourth, the big numbers are in infrastructure investment. Between railways and roads, both national highways and rural roads, the total investment in 2016-17 will be a massive Rs 2,18,000 crore – this should be a stimulant for jobs and investment. We have been following up developments in this sector for the year round. Click here.

    Fifth, the organised sector is being incentivised to take on more employees with the centre offering to pay the 8.33 percent pension contributions of new employees for three years.

    Sixth, the budget lowers the axe on rich promoters, who have benefited from the fact that dividend tax is paid by companies. They thus got a benefit not intended for the rich. Not any more. Promoters and big shareholders will now face 10 percent additional tax when dividend payments exceed Rs 10 lakh.

    Seventh, the bottom end of the middle class gets some relief. Taxpayers in the sub-Rs 5 lakh income bracket will get a tax rebate of around Rs 3,000. Two crore taxpayers will benefit.

    Eight, there is a strong financial sector angle in the budget. Jaitley has proposed a strong exit policy which will involve legislating the Indian Financial Code, the Bankruptcy Code and quicker disposal of debt recovery cases in debt tribunals.

    Follow up the developments of 2015-16, click here.

    Ninth, the big pitch was to the rural and farm sector. The FM promised Rs 2.87 lakh crore of fiscal transfers to villages, and all villages will be electrified by 2018. This government obviously believes in doing things in mission mode. After Jan Dhan, now it is time for full electrification and taking cooking gas to all rural households.

    Source: SwarajyaMag | Image: India.com
  • Economic Survey: 6 Important suggestions which Sarkar must take

    Subjects:

    “I am the chief economic adviser, not the chief political decider,” chief economic advisor Arvind Subramaniam said in response to a question about whether the suggestions in the Economic Survey 2015-16 will find space in the budget.

    But, you are an aspirant, aren’t you? And in a rare case that the interview panel grills you on your analysis on the Economic Survey, here’s what can save your ass!

    #1. Do something urgently on subsidies

    The survey lists seven items – kerosene, electricity, LPG, railways, petrol, diesel, aviation turbine fuel and gold – on which the implicit subsidy to the rich amounts to RS 10 lakh crore! “. . . rectifying some egregious anomalies may be good not only from a fiscal and welfare perspective, but also from a political economy welfare perspective, lending credibility to other market-oriented reforms,” the Survey says.

    #2. Work seriously on ending tax exemptions

    • No profession should escape the tax net
    • Clear reference to agricultural income, which is not taxed at all
    • While the government is working on ending tax exemptions for the corporate sector, what about the agriculture sector!

    #3. Don’t raise exemption thresholds

    • The Survey junks the theory put out by Thomas Piketty that India under-taxes and under-spends
    • Bring more people under tax net. Let the threshold stay where it is!

    #4. Spread the JAM (Jan Dhan Yojana, Aadhar and Mobile transactions) trilogy to new areas

    • How to go about it? What about its efficacy? The Survey suggests doing this based on two criteria – the extent of leakages and the extent of central government control
    • Subsidies with higher leakages have larger returns after introduction of JAM
    • It will be easier to roll out JAM in areas where the central government is the main provider of the subsidy

    #5. Focus on easier exits

    Not just about corporate exits! The Survey expands the paradigms of exits

    • Allow easier entry to encourage competition; address legal lacuna through laws (which is being done with the new bankruptcy law)
    • In the case of agriculture, exit from the current cereal-centric, regionally concentrated, input-intensive policies to pulses-oriented, regionally-broad based, more-for-less inputs system

    #6. Undertake serious reform of the fertiliser sector

    The Survey suggests a cap on the number of subsidised bag each farming household can purchase and insistence on biometric authentication at the point of sale (POS)


     

    Source: Swarajyamag

    PS: This was just a trailer. Original series on Economic Survey with back2basics reference coming soon.

  • Railway Budget 2016-17: Reorganize, Restructure & Rejuvenate

    Subjects:

    Suresh Prabhu has set out an ambitious medium-term goal to reset the country’s oldest institution, including its governance, and restore its key place in the Indian economy. Railway is facing twin challenges of finances and ability to be a growth driver for the economy

    Few Glimpses of Railway Budget 2016-17

    • The minister fixed the revenue target for next fiscal at Rs.1.84 trillion, marginally above the budget estimate of 2015-16, though it failed to achieve its target for this year by a big margin
    • Railways will have to bear the burden of an additional payout of Rs.28,000 crore as part of the 7th Pay Commission recommendations
    • The railways will end up with operating ratio of 90 for 2015-16. For 2016-17, it expects the operating ratio to further worsen to 92 
    • No changes in passenger fares and freight rates

    Finances

    Railwaythe

    There is shortfall in traffic receipts worsened by low freight demand from core sector. The Railway minister outlined the medium-term plan of investing Rs.8.5 trillion by 2019-20. The investment plan for 2016-17 is Rs 1,21,000 crore –

    • Transfer from the Union budget – Rs.45,000 crore
    • Internal resources – Rs.12,700 crore
    • Partnerships with state governments – Rs.18,000 crore
    • Life Insurance Corporation of India – Rs.23,000 crore
    • Indian Railway Finance Corporation – Rs.21,700 crore

    Do you know about Sundry earnings of Railways?

    Sundry Earnings: All earnings on add-on services (which are not free of cost), including WiFi, concierge service, advertising, etc. Simply put, Railway puts all its non-tariff earning as Sundry Earnings in its account books. 

    These earnings stood at an estimated Rs. 6229 crore this year.

    Budget Proposal

    • The target of non-tariff earnings for next year has been scaled up by 53% to Rs. 9590 crore
    • Advertising is a major source of non-tariff revenues. So, Railways will install around 20,000 screen across its ecosystem to display ads
    • The Railways will also monetise its data bank on passengers so that frequent travellers get value-added, targeted services
    • Railways to monetise land on tracks by leasing out for horticulture and tea plantation
    • Holding company to be explored for monetising assets of Railway companies

    Freight

    Challenge: The freight business provides two-thirds of Indian railways’ revenues, but it is struggling with capacity constraints and slow industrial demand. Also, our freight rates are among the highest in the world, which make our products uncompetitive.

    Budget Proposal: To expand the list of commodities it services—increasing it to 40 from nine at present by including automobiles, packaged consumer goods, cotton, fruits and vegetables.

    Dedicated Freight Corridors: It is proposed to take up the following freight corridors:

    • North-South connecting Delhi to Chennai,
    • East-West connecting Kharagpur to Mumbai
    • East Coast connecting Kharagpur to Vijayawada

    Impact: They can radically slash transit time for goods. Also, shifting of freight traffic from existing tracks to the new corridors would release capacities, helping increase speed of passenger trains.

    Criticism: The high freight rates have diverted railway traffic to roads. In fact, discounting for the fuel component in freight charges, the rates should have been reduced this year.

    New Trains

    The budget announced 4 new types of trains:

    • Antyodaya Express: A long-distance, fully unreserved, superfast train service, for the common man, to be operated on dense routes
    • Humsafar: It will be a fully air-conditioned train for the budget passengers
    • Tejas: It will showcase the future of train travel. It will travel at 130 km an hour and offer on-board WiFi services
    • Uday: It will be an overnight double decker service for the busiest routes in the country with 40% more carrying capacity

    Better Governance

    Challenges: Departmental orientation, absence of cross-functional collaboration and lack of business focus

    Budget Proposal: To reorganize the Railway Board along business lines and suitably empower Chairman, Railway Board to lead the organization effectively

    Vulnerable Sections : Old People/ Disabled/ Women/ Porters

    • A “Saarthi seva” will be introduced to help the old and disabled at stations. Railways to increase lower berth quota for senior citizens by 50%.
    • Disabled enabled toilet in 11 Class-A stations this year
    • 33% reservation to women in reserved quota in Railways
    • Porters to be called ‘Sahayaks’ now. They will be trained in soft skills

    Sanitation

    • 17000 bio toilets and additional toilets at 475 stations will be provided before the close of this year
    • World’s first Bio-Vacuum toilet was developed by IR and is being used in Dibrugarh Rajdhani Express
    • For those queasy about train travel because of dirty toilets and coaches, the minister has “clean-my-coach” on demand through SMS

    Improving Railway Stations

    • 400 stations to be re-developed through PPP
    • Beautification of stations at pilgrimage centres: Ajmer, Amritsar, Gaya, Mathura, Nanded, Nashik, Puri, Tirupati, Varanasi, Nagapattinam and others

    Technology

    • 400 railway stations to be equipped with wifi, 100 this year.
    • To reduce the waiting period for passengers, the railways will introduce bar-coded tickets at select stations.
    • Scanners and access control on a pilot basis on major stations.

    Railway Budget: Few Shortfalls

    • There is a shortfall in the number of engines required to run even our existing fleet of freight and passenger vehicles. With increased capacity, we will need many more locomotives. The budget does not indicate a comprehensive strategy for these issues
    • Most tracks and rolling stock are already fit for speeds above 100 kmph for passenger services and above 75 kmph for goods services. However, average speeds of passenger services are around 40-50 kmph and those of freight 20-25 kmph. This is because we don’t have the capacity to run them at optimum speed. Increasing capacity by doubling/ quadrupling lines would in itself improve speeds. Budget does not have much to offer to overcome this lacunae

    Want to read more?

    Published with inputs from Pushpendra
  • Understanding the refugee crisis and lessons for India

    Know about some basic terminologies used in this context

    Refugee: A refugee is someone who has been forced to leave their country in order to escape war, persecution or natural disaster.

    Asylum: It is a protection granted by a state to someone who has left their home country as a political refugee.

    Migrant: A person who choose to leave their home state, principally in search of a better life. It is a voluntary choice and not a involuntary act. They do not enjoy any protection under international law.

    Special Status of Refugees

    They enjoy certain special protections under the law:

    • Safety from being deported to the country where they face persecution
    • Protection of basic human rights without radical or religious discrimination or of national origin
    • Access to fair and efficient asylum procedures
    • Provision of administrative assistance

    Know the Refugees: Statistics & Countries

    According to International Organisation for Migration, 3.5 lakh migrants and refugees have tried to cross the Mediterranean sea into Europe. Almost 2500 died in Mediterranean sea during first half of 2015.

    Refugees are mostly from West Asia comprising of war-torn countries like Syria, Iraq and Libya. West Asia was used by the political powers in Europe and US to serve their political interest in the name of supporting pro-democratic forces, ending in promoting radical groups and thus destabilizing it.

    The unending civil conflict in Afghanistan and decline in socio-economic conditions in Pakistan has further fueled the crisis.

    Why refugees are migrating to Europe?

    First of all, Europe is economically prosperous, socially secure and presence of better immigration laws makes it a perfect destination for refugees.

    But, it is not alone the brighter side of Europe, but the adverse condition in the home country, which are outside the control of common people, leading to mass migration.

    Refugee vs. Migrant debate in Europe

    This comes in the backdrop of UN forecast that about 3000 people per day will try to reach Europe in the next few months, which has worried European policy makers. The European powers had increased patrolling around the Mediterranean sea and security in the border areas.

    • Europe is portraying the refugees as economic migrants i.e. those who are in search of better life
    • They consider the influx of people as a threat to standard of living and social structure of Europe
    • The main reason for such portrayal is that migrants do not enjoy any protection and privileges under international law, while refugees do

     

    Lessons for India: Need for a coherent domestic asylum policy

    India is neither a signatory to the 1951 UN Refugee Convention nor it has a domestic asylum framework/National Asylum law. Interestingly, none of South Asian countries are signatories to the refugee convention.

    Reason: There is a fear that if govt. does any of the above, it might lead to influx of refugees. Already, it is finding difficulty in tackling illegal migration from Bangladesh.

    However, India has repeatedly stated its commitment to protect refugees. The country has also signed a number of international conventions that have a bearing on its obligation to refugees. Some of legal rights are available to refugees as well. For instance, RTE applies to all children in India, including refugees. Refugees can take the benefit of govt. health services, justice system, etc.

    Future

    Germany has shown some solidarity with the refugees by granting asylum to 8 lakh people. However, France and Britain have shown signs of reluctance and resorted to tightening of asylum rules. The failure to reach a consensus on the refugees, will lead to the guilty of not being able to live up to European values.


     

    Published with inputs from Pushpendra