Friday, December 30, 2011

“Caste strengthening in politics”

    • While there is evidence of the decline of caste in some domains in India, clearly it is strengthening in the political domain
    • It is difficult to talk about caste in clear, simple, lucid terms, primarily because of its diverse manifestations and variations in forms throughout the subcontinent
    • One unique feature of the Indian society is the way loyalty to the community of birth overrides one's loyalty to one's religion.
    • Until the second half of the 19{+t}{+h}century, when serious ethnographic mapping of Indian society was begun by the British, the caste system in India was believed to be based on the division of society into four varnas: Brahmin, Kshatriya, Vaisya, Sudra. There is a difference between this four-fold division and the division of society from currently existing innumerable jathis, or sub castes.
    • Varna represents the conceptual design of Hindu society, and jathis represent the living system. While the Varna system has been there since time immemorial and cannot be changed, it could be made obsolete. “Today varna is obsolete but jathis are not.”
    • Varna provided a whole language for discussion of social order: Rules of inclusion and exclusion in rituals of purity and pollution; rules for spousal selection; and choice of occupation
    • they have been considerably weakened over the years.
    • More inter caste marriages are happening these days, and the law has rendered these ancient rules without legal validity.
    • Today caste is only generally associated with occupatio
    • eople in rural areas are less obsessed with caste than those in the cities
    • education and employment are two domains in which strife and conflict between castes exists.

Wednesday, December 28, 2011

India japan joint statement highlights

    • Japan’s initiative to strengthen international cooperation in the area of disaster risk reduction, including the holding of an international conference in the Tohoku region in 2012 appreciated by india
    • japan to invite approximately six hundred Indian youth under the new “Kizuna (bond) Project” aimed at promoting global understanding of Japan’s revival in response to the Great East Japan Earthquake.
    • Commencement of negotiations on an agreement between India and Japan on Social Security, which will contribute to the promotion of economic activities by private sectors of both countries.
    • Government of Japan would extend loans totaling 134.288 billion yen to two new projects, namely, “Delhi Mass Rapid Transport System Project Phase III” and “West Bengal Forest and Biodiversity Conservation Project”
    • emphasised the importance of an early realisation of the Western Dedicated Freight Corridor (DFC) which runs through the Delhi-Mumbai Industrial Corridor (DMIC) with Japan’s support.
    • stressed the importance of infrastructure development in the areas between Chennai and Bengaluru, where an increasing number of Japanese companies including SMEs have made direct investments to establish their manufacturing base
    • Japan’s technologies and expertise be utilised in the development of India’s high-speed railway system
    • important to upgradation of speed of passenger trains to 160-200 kmph on existing Delhi-Mumbai route of the western leg of the Golden Rail Corridor for India’s economic development
    • decided to enhance the earlier bilateral currency swap arrangement from 3 to 15 billion US dollars.
    • Indian and Japanese enterprises would jointly undertake industrial activities to produce and export rare earths at the earliest.
    • facilitation of trade in high technology between the two countries
    • \expansion of India-Japan collaboration for the development of the Indian Institute of Technology, Hyderabad (IIT-H)
    • Since 2007, approximately 2,300 Indian youth have visited Japan through “Japan-East Asia Network of Exchange for Students and Youth” (JENESYS) programme
    • reaffirmed their support for the East Asia Summit (EAS) as a forum for dialogue on broad strategic, political and economic issues of common interest and concern with the aim of promoting peace, stability and economic prosperity in East Asia
    • xpressed support for the EAS as a Leaders-led forum with ASEAN as the driving forc
    • reiterated their commitment to the promotion of the Comprehensive Economic Partnership in East Asia (CEPEA) as a step towards attaining economic integration in East Asia
    • xpressed their support for ASEAN Connectivity and considered the possibility of having a “Connectivity Master Plan Plus” which would develop further linkages between ASEAN and its partners
    • Joint exercise between the Indian Coast Guard and the Japan Coast Guard to be held in January 2012
    • appreciated the progress made with regard to the establishment of the Nalanda University and reiterated their support to its revival as an icon of Asian renaissance and as an international institute of excellence.
    • pledged to explore opportunities for consultation on their respective assistance projects, including those projects implemented in the neighbouring countries, that advance Afghanistan’s mid- and long-term development and build its civilian capacity
    • Resolved to develop greater cooperation in combating terrorism through sharing information and utilising the India-Japan Joint Working Group on Counter-Terrorism, as well as cooperation in multilateral forums such as the Financial Action Task Force (FATF) and the Global Counter-Terrorism Forum (GCTF)
    • reiterated India's commitment to a unilateral and voluntary moratorium on nuclear explosive testing.
    • reaffirmed their commitment to working together for immediate commencement and an early conclusion of negotiations on a non-discriminatory, multilateral and internationally and effectively verifiable Fissile Material Cut-off Treaty (FMCT) in the Conference on Disarmamen
    • Seoul Nuclear Security Summit in March 2012.
    •  East Asia Low Carbon Growth Partnership Initiative proposed by Prime Minister Noda at the East Asia Summit.
    • Reiterated their commitment to ensure effective implementation of the G-20 Cannes Summit decisions including the Cannes Action Plan, which aims to achieve the Strong, Sustainable and Balanced Growth.
    • shared an expectation that the decisions of the European Council of 9 December 2011 towards stabilisation of the financial markets and strengthening of economic policy coordination and governance would be implemented effectively and in a timely manner through coordinated efforts by the European leaders.
    • reaffirmed their commitment made at G-20 Cannes Summit on anti-protectionism.

Monday, December 26, 2011

FAQ on factoring





Q:Sir, I recently read about The Regulation of Factor Bill (Assignment of Receivables), 2011. It would be helpful if you could explain what factoring is.
A: Sure. Factoring is one of the oldest methods of financing by way of selling the accounts receivable of a firm. There are certain financial institutions called factors which provide this type of financing. The invoice approved by the buyer is sent to the factor. The factor in turn makes the payment to the company (seller).


What does the factor gain?
The invoice payment is done on a discount which usually ranges from 0.35 to 4 per cent of the value of the invoice. Also the entire amount is not paid by the factor. Usually it makes a payment of 75 to 80% keeping the remaining amount as reserve. The reserve amount is paid back when the buyer actually pays the amount. Thus the factor earns commission for factoring.

Does this imply that through factoring, all the sales made by a company are like cash sales? What are the advantages of factoring to the company?
As the factor pays the amount of sales to the company, it is equivalent to having all cash sales. Also the risk of collection of receivable and bad debts may be transferred to the financial institution acting as the factor based on terms agreed upon. Other advantages of going for factoring is that it frees up large amounts of funds locked up as accounts receivables and this can be used to purchase more inventory and fund other short term projects that can accelerate growth. Factoring also relieves a company from the burden of maintaining receivable accounts, conducting credit assessments for customers and handling collection of receivables. The working capital management of the company becomes efficient and hence, reduces the cost which in turn improves the possibility of better profits.

This seems great. So the companies can transfer all its accounts receivables to the factor and be risk free right?
This is not the case always. Companies must take judicious decision when going for factoring mode of financing. If the debtor is credit worthy and has paid all the debts in time, the company will lose money in terms of factoring fees. There must be a trade-off between the present value of the earnings a firm gains from sales and the cost of utilising factoring as a means for financing. For example, businesses which result in slower repayment can be factored so that the company is not affected by cash deficit for other needs.
If factoring is utilised for sundry debtors alone, why financial institutions provide this type of financing?
Factoring can be used in place of bank loans for small and medium enterprises. Though factoring costs are higher than bank rates, small companies which cannot obtain bank loans easily can resort to this mode of financing. Also factoring financial institutions look for the credit worthiness of the buyers and not the companies resorting to factoring. This proves to be an advantage for SMEs. Factoring is utilised by firms which cannot borrow money from other sources.

So what is the “Regulation of Factor Bill” about?
The bill provides regulations for factoring business by RBI. All financial institutions providing factoring services should get approval from RBI before entering into this business. Also the mechanism of assignment of receivables to the factor and payment of consideration by the factor will be regulated. This will also enable the factors to obtain legal remedy and claim their rights on the invoices factored by them in a more efficient manner.


source:http://www.iims-niveshak.com/

Saturday, December 24, 2011

Friday, December 23, 2011

PIB notes 22nd dec

PM's remarks at the meeting of the Council on Trade and Industry


  • We face the continued possibility of a potentially severe crisis in the Eurozone.
  •  issues of international food price volatility and the increase in oil prices.
  • persistent high inflation for some time now is unacceptable. We have to steer the economy back to the path of fiscal consolidation.
  • with the policy focus on improving agricultural production and productivity, our economy will soon be able to step up the production of food articles, thereby controlling inflation in these products. 
  • This is the broad context in which the RBI has had to use monetary policy in an attempt to bring down inflation
  • In order to curb inflationary pressures some reduction in aggregate demand was essential.
  • sharp depreciation of the rupee is also a matter of concern
  • exchange rate depreciation increases the profitability of exports and our industry should take advantage of this development.
  • almost every major government decision has to be negotiated in the larger democratic arena. This is especially true of sensitive issues like those related to acquisition of land and environmental concerns.
  •  industry and the government will have to work together to find solutions that are fair and equitable even as they promote growth. 
  • our country has remained on the path of liberalization even as we have sought to provide social safety nets for the poor and underprivileged
  •  policies of pro-poor growth, skill development and agricultural rejuvenation will help industry to grow at a faster pace. 
  • The energy sector, the port sector, the transport sector, the supply of gas and coal, all need greater attention. Corruption and better governance also require firm handling


Farmer Associations Support FDI in Retail

FDI in retail will free farmers from the middleman and will get the remunerative price for the produce to the farmer

As supply chain efficiencies are built up, post-harvest losses will be considerably reduced, thereby enabling remunerative prices to farmers

 safeguards pertaining to a minimum of 30% procurement from Indian small industries would provide the necessary scales for these entities to expand capacities in manufacturing thereby creating more employment and also strengthening the manufacturing base of the country

Rural economy will benefit as large-scale investment in the retail sector especially in backend infrastructure will provide substantive gainful employment opportunities in the entire range of activities

Consultative Committee Meeting of the Ministry of Labour & Employment Emphasises Upon Providing Employment to Skilled Work Force on Priority Basis

 employment on priority basis to the work force trained by the various skill development institutes

 a holistic approach to skill development is necessary so that training imparted is according to national standards, of quality excellent and can meet the specific needs of various sectors of economy

 low-skill, low-productivity, low-wage economy is unsustainable in the long run

There is a vicious circle of low education, low skill, low productivity , poor quality jobs and low wages that traps the working poor

skills development is an essential factor for achieving the objective of decent work both by increasing productivity and sustainability of enterprises and improving the working conditions and employability of workers

three main objectives:

(a) Matching supply to current demand for skills;

(b) Holistic approach and effective Policy for Skill Development.; and

(c) Active participation of stake holders, particularly employers.


  • “National Policy on Skill Development”  addresses the need of skill development of a huge population, by providing them with skills that make them employable and help them secure a ‘decent’ job
  • Current capacity of skill development in the country is about 53 lakh per annum
  • policy sets a target of skilling 50 crore people by 2022 to meet the challenges of India
  • Due to demographic advantage, both in terms of numbers and age, the entire world is looking towards India as a great reservoir of skilled manpower.
  • Need  to keep pace with technological changes and provide necessary support for skill development as per the requirement of the industry. 
  • many reforms like re-engineering of National Council for Vocational Training by making it a statutory body; design and development of National Vocation Qualification Frame- work and creating a Labour Market Information System by modernizing all the employment exchanges in the country have been initiated
  • “National Council on Skill Development” under the chairmanship of Prime Minister, and a “National Skill Development Coordination Board” under the chairmanship of Dy. Chairman, Planning Commission, have been constituted
  • National Skill Development Corporation” under the chairmanship of a leading industrialist, has also been set up to support private efforts in skill development
  •  setting up Sector Skills Councils for identification of skill development needs and formulating sectoral skills development plans.
  • State level Skill Development Missions have also been constituted by 26 States and 5 Union Territories
  • the numbers of Government and Private ITIs have almost doubled from 5114 to 9404 in the last 5 years
  •  significant scheme titled ‘Skill Development Initiative’ (SDI) based on the Modular Employable Skills was started in 2007-08 with a total outlay of Rs.550 crores. The scheme offers skill development programmes for early school leavers and existing workers of 14 years of age or above. 
  • concern on the current practice of direct recruitment by the employers byepassing the Employment Exchanges


Lokpal and Lokayuktas Bill 2011 Introduced in Lok Sabha

                Government today introduced in Lok Sabha the  Lokpal and Lokayuktas Bill, aimed at setting up the body of Lokpal at the Centre and  Lokayuktas at the level of the States.  Government also introduced a Bill for amending the Constitution for conferment of Constitutional status on both bodies.  Government also withdrew earlier Lokpal Bill, 2011 as it decided to introduce a new comprehensive Lokpal and Lokayuktas Bill, 2011 Bill after consideration of the suggestions made by the Parliamentary Committee which recommended significant changes in the scope and content of the earlier Bill.

The salient features of the proposed new Bills are as under:-

Focus on improving accountability

Ø       Establishment of new institution in the Constitution called  Lokpal for the Union and Lokayukta for the States.  These autonomous and independent bodies, shall have powers of superintendence and direction for holding a preliminary inquiry, causing an investigation to be made and prosecution of offences in respect of complaints under any law for the prevention of corruption.

Ø       The Bill provides a uniform vigilance and anti corruption road map for the nation, both at Centre and States.

Ø       The Bill institutionalizes separation of investigation from prosecution and thereby removing conflict of interest as well as increasing the scope for professionalism and specialisation.

Structure of the Institution:

Ø       Lokpal will consist of a Chairperson and a maximum of eight Members of which fifty percent shall be judicial Members.

Ø       Fifty per cent of members of Lokpal shall be from amongst SC, ST, OBCs, Minorities and Women.

Ø       There shall be an Inquiry Wing of the Lokpal for conducting the preliminary inquiry and an independent Prosecution Wing.

Ø       Officers of the Lokpal to include the Secretary, Director of Prosecution, Director of Inquiry and other officers.
 Process of selection:
Ø       The selection of Chairperson and Members of Lokpal shall be through a Selection Committee consisting of –
§         Prime Minister;
§         Speaker of Lok Sabha;
§         Leader of Opposition in the Lok Sabha;
§         Chief Justice of India or a sitting Supreme Court Judge nominated by CJI;
§         Eminent jurist to be nominated by the President of India

Ø       A Search Committee to assist Selection Committee in the process of selection.  Fifty per cent of members of Search Committee shall be from amongst SC, ST, OBCs, Minorities and Women.

Jurisdiction:

Ø       Prime Minister to be brought under the purview of the Lokpal with  subject matter exclusions and specific process for handling complaints against the Prime Minister.  Lokpal can not hold any inquiry against the Prime Minister if allegations relate to:
§         International relations;
§         External and internal security of the country;
§         Public Order;
§         Atomic energy
§         Space.

Any decision of Lokpal to initiate preliminary inquiry or investigation against the Prime Minister shall be taken only by the Full Bench with a majority of 3/4th.  Such proceedings shall be held in camera.
Ø       Lokpal’s jurisdiction to include all categories of public servants including Group ‘A’, ‘B’, ‘C’ & ‘D’ officers and employees of Government.  On complaints referred to CVC by Lokpal, CVC will send its report of PE in respect of Group ‘A’ and ‘B’ officers back to Lokpal for further decision.  With respect to Group ‘C’ and ‘D’ employees, CVC will proceed further in exercise of its own powers under the CVC Act subject to reporting and review by Lokpal.
Ø       All entities receiving donations from foreign source in the context of the Foreign Contribution Regulation Act (FCRA) in excess of Rs. 10 lakhs per year are brought under the jurisdiction of Lokpal.
Ø       Lokpal will not be able to initiate inquiry suo moto.
Other significant features of the Bill
Ø       No prior sanction shall be required for launching prosecution in cases enquired by Lokpal or initiated on the direction and with the approval of Lokpal.
Ø       A high powered Committee chaired by the Prime Minister with leader of the opposition in the Lok Sabha and Chief Justice of India as members,  will recommend selection of the Director, CBI.
Ø       Provisions for confiscation of property acquired by corrupt means, even while prosecution is pending.
Ø       Lokpal to be final appellate authority on all decisions by public  authorities relating to provision of public services and redressal of grievances containing findings of corruption.
Ø       Lokpal to have power of superintendence and direction over any investigation agency including CBI for cases referred to them.
Ø       The Bill lays down clear time lines for :
§         Preliminary enquiry – three months extendable by three months.

§         Investigation – six months extendable by six months.

§         Trial – one year extendable by one year.

Ø       The Bill proposes to enhance punishment under Prevention of Corruption Act :
(a)     Maximum punishment from 7 years to 10 years
(b)     Minimum punishment from 6 months to 2 years
Ø       The Bill proposes to give legal backing to Asset Declaration by public servants.
Ø       The Bill also seeks to make necessary consequential amendments in the Commissions of Inquiry Act, 1952, the Prevention of Corruption Act, 1988, the Code of Criminal Procedure, 1973, the Central Vigilance Commission Act, 2003, and the Delhi Special Police Establishment Act, 1946.


Thursday, December 22, 2011

RBI financial stability report


Black money- sources and solution

PIB notes 21st dec


Condition of Tea Plantation Workers

Under the Plantation Labour Act, 1951, it is mandatory for plantations with tea area of 5 hectares or more and employing 15 or more persons to provide housing, drinking water, sanitation, medical and education facilities, etc. to the tea garden labourers.

provides for safeguards such as limitations by way of maximum hours work in a week, provision of weekly holidays, prohibiting night work for women and children, certification of fitness, annual leave with wages, wages during leave period, sickness and maternity benefits, etc. 

SEZs for Promotion of Exports

The main objectives of the SEZ Act, 2005 are:-
(i)   generation of additional economic activity
(ii)   promotion of exports of goods and services
(iii)  promotion of investment from domestic and foreign sources
(iv)  creation of employment opportunities
(v)               development of infrastructure facilities 

Adverse Effect of Agricultural Produce Marketing Act on Retail Market

a number of State Governments and Union Territories have enacted legislations (APMC) Acts) to provide for regulation of agricultural produce markets. In order to promote, interalia direct marketing/procurement of agricultural produce 

Ministry of Agriculture, in consultation with States/Union Territories, framed a Model APMC Act and circulated the same to States/Union Territories, in 2003, for making necessary amendments in their existing APMC Acts. Nineteen States/Union Territories have made such amendments in their APMC Act for direct marketing.

Development of Indigenous Aero-Engine by DRDO

 Kaveri and Kabini engines

Presently, there is no dedicated Defence Research and Development wing for the Indian Air Force (IAF), All design and development projects for the IAF are undertaken by the DRDO. 

New Inventions by DRDO

DRDO has filed 313 patents and granted 126 patents during the last three years. DRDO has been awarded the prestigious Thomson Reuters India Innovation Award in 2011 in "High-tech Academic and Government" category. 

Consultative Committee of MoHFW meets to Discuss Communicable Diseases’ Burden

 country is vulnerable to emerging and re-emerging diseases because of the existing environmental, socio-economic and demographic situation

 Revised National Tuberculosis Control Programme presently detects about 72% of new sputum cases with treatment success rate of 86%. TB mortality has decreased from over 5 lakh deaths every year at the beginning of the programme to about 2.8 lakh deaths presently

Leprosy has been eliminated as a public health problem in 32 states 

Malaria morbidity has reduced by 16.2%

12th Five Year Plan aims to address several public health challenges, such as: ensuring primary health care to all including urban slum population; strengthening of health care infrastructure as per Indian Public Health Standards; increasing public health workforce; strengthening disease surveillance and response systems; formulation and enforcement of appropriate Public Health Laws and increasing public health allocation & spending.

vital importance in controlling spread of communicable diseases, as causal factors like safe drinking water, sanitation etc. are beyond the mere control of Ministry of Health & Family Welfare only. 

Specialised Wing to Probe Financial Crimes 

constituted a separate cell i.e. Cell for Combating of Funding of Terrorism 

MHA has also constituted a Terror Funding & Fake Currency Cell (TFFC) in the National Investigation Agency(NIA) 

Financial Intelligence Unit-India (FIU-IND) under the Ministry of Finance was set up in 2004 as the central national agency for receiving, processing, analyzing and disseminating information relating to suspect financial transaction.

Raghavan Committee on Ragging

actions taken by the Government for implementing the suggestions made by the Raghavan Committee include:-

-              Starting a Toll-Free Anti-Ragging 
-              Advisories are being issued to Civil and Police authorities of State Governments every year to take stringent measures 

-              A non-Government, Monitoring Agency has been engaged for executing, monitoring and evaluation of Anti-Ragging Helpline. 

-              Media Campaign has been launched to spread awareness on anti-ragging. 

Increasing Unemployment due to Low Production

Government have taken several steps to reduce unemployment

 focus is on productive employment at a faster pace in order to raise the incomes of masses of the rural population

various employment generation programmes, such as Swarana Jayanti Shahari Rozgar Yojana (SJSRY); Prime Minister`s Employment Generation Programme (PMEGP); Swarnajayanti Gram Swarozgar Yojana(SGSY) and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) besides entrepreneurial development programmes run by Ministry of Micro, Small & Medium Enterprises. 
 As per 2001 census, the total number of working children between the age group 5-14 years in the country was 1.26 crore. However, in the Survey conducted by NSSO, in 2004-05 the number of working children were estimated at 90.75 lakh. As per NSSO survey 2009-10, the working children are estimated at 49.84 lakh which shows decline trend. The State-wise information is as per Annexure-I. As per unit level records of NSSO , 2004-05, sector-wise information in percentage terms is as per Annexure-II

child labour

                                Child Labour (Prohibition & Regulation) Act prohibits  employment of children below the age of 14 years in 18 Occupations and 65 Processes  and regulates their working conditions in those occupations/processes where they are not prohibited from working. Any person who employs a child in any occupation or process where employment of  children is prohibited under the Act, is liable for punishment with imprisonment for a term which shall not be less than 3 months but which may extend to one year or with fine ranging from Rs.10,000/- to Rs.20,000/- or with both. The Govt. of India has adopted a multi-pronged strategy for eradication of child labour as follows:

       (i) legal action plan.
       (ii) focus on general development programmes for the benefit of the families of Child Labour; and
     (iii) project-based action in areas of high concentration of Child labour.
      The above measure has yielded the positive results in eradication of child labour.




Wednesday, December 21, 2011

Good governance reforms


The critical challenge to keep India's growth story intact is providing good governance.There may be several challenges to acceleration of growth and identification of these areas and drawing up plans to address them is relatively an easy part.But what is infinitely more difficult is the translation of those policies into action,where the criticality of good governance steps in.It is the quality of governance that separates success and failure in economic development.
Besides other evils,corruption and its proliferation are byproducts of no governance and bad governance.Our governance record in poverty alleviation programmes,development of tribal and backward areas,public distribution system,has been disastrous,which has led to various internal disturbances,public agony and mistrust in the system.With 17% of the worlds population,India accounts for less than 2% of global GDP and 1% of world trade.Hence,we currently stand at the threshold of a unique opportunity regarding governance and public management reform.
the following are key areas in governance:
Governance by the government
Corporate governance
Electoral reforms
Compliance in democracy

GOVERNANCE BY THE GOVERNMENT

We have a reasonably vibrant democracy and a civil society,which enables the procedural aspects of democratic governance to be largely sustainable.However,the substantiative aspect is mostly elusive,with public institutions being inaccessible to a large section of the populace.
Despite a promising institutional context,Indias structures of governance have remained ineffectual in fulfilling the basic needs of her citizens.The biggest danger for the country comes when the governance by the government shows signs of crumbling.
 following are key issues:
·         Administrative reforms to ensure that a transparent structure is in place for good governance
·         Decentralization of power with accountability
·         Cutting down the various strata of approval process in our present bureaucratic set up
·         Optimizing the flowchart of file movement for fast decision making and minimizing corruption
·         An effective Lokpal
·         Proper use of technology to expedite decision making and to reach the last mile with the benefits of governance by the government.

CORPORATE GOVERNANCE

A firm commitment and adoption of ethical practices by an organization across its entire value chain and in all of its dealings with its wide range of stakeholders is what good corporate governance is all about.This can be achieved by readily embracing certain checks and balances.In light of the recent events in India,which have put the spotlight on corporate governance practices of Indian companies
There is a need for any regulatory changes
corporate governance has been reduced to well draft reports on paper
the time has arrived to vet companies on corporate ethics rather than corporate governance

ELECTORAL REFORMS

The central problem of democracy is how we manage our elections in our present political system.
Over the years,the way democracy has been maligned due to the manner it has been practised by several practitioners and political parties.Corruption of unthinkable proportions has crept in into political parties and elections.The issues of imminent importance include:
·         Transparent financial accounts of political parties
·         Transparent funding of elections
·         Political funding only in white and the information should be made public by the receiver and the donor
·         Election spending limit to be increased to rational levels to encourage political parties to disclose
·         Flexible limit of election spending depending on the constituency
·         Right to reject and right to recall need a thorough debate before arriving at a final conclusion.



COMPLIANCE IN OUR DEMOCRACY
IS IT TRUST-BASED OR ENFORCED ?

A functional democracy requires that the law of the land be complied with.On the other hand,the laws need to be such that they are compliable by the majority of the citizens.Trust is a valuable social asset that forms the basis of democracy.It is true that while taxes are the price we pay for civilization - civilization cannot sustain itself without trust.
Way ahead
Any law which is not followed by the majority should be scrapped,to be replaced by a rational compliable law
Non-compliable laws are more profound when the state does not trust its citizens and likes to have these laws as pretext to nail whom it wants to
It only builds distrust among the citizens and the government
The tax system needs to be more trust based for better compliance
The need is to create an encompassing environment where every one pays tax voluntarily
Strive towards voluntary compliance and our laws should encourage it more since voluntary compliance emanates from a trust based taxation regime
The system should guarantee each tax payer certain basic rights and respect,which are internationally recognized
Trust your citizen,and if he betrays your trust,punishment should be certain and exemplary.

Tuesday, December 20, 2011

PIB notes 20th dec


Vice President’s Address at Fourth Prof. Hiren Mukherjee Memorial Annual Parliamentary Lecture

Vice President of India Shri M. Hamid Ansari has said that it is evident from the overwhelming support given by the international community in July this year to General Assembly Resolution 65/309 advocating the pursuit of happiness as an essential ingredient of a holistic approach to sustainable development.

Developmental Projects in North Eastern Region

Ministry of Development of North Eastern Region sanctions the developmental projects in North Eastern Region under Non-Lapsable Central Pool of Resources (NLCPR) scheme, Special Bodo Territorial Council (BTC) Package and also through North Eastern Council.

No Shortage of Quality Seeds

Government is already implementing a Central Sector Scheme titled “Development and Strengthening of Infrastructure Facilities for Production and Distribution of Quality Seeds”

separate component “Establishment and Maintenance of Seed Bank” for meeting the requirement of seeds during natural calamities
seed Banks maintain seed stock of foundation and certified seeds of short and medium duration varieties which are locally suited to the area

Balanced and Integrated Nutrient Management to Sustain Fertility of Soil

latest estimates of nutrient deficiencies in the country are: Nitrogen - 90%, Phosphorus - 80%, Potassium - 50%, Sulphur - 41%,
 scientists have recommended soil test based balanced and integrated nutrient management (INM) through conjunctive use of both inorganic and. organic sources of plant nutrients
National Project on Management of Soil Health & Fertility has been launched during 2008-09 to promote soil test based judicious use of chemical fertilizers for improving soil health and its productivity

Rural Godown Scheme

Ministry of Agriculture is implementing the Rural Godown Scheme

scheme is demand driven and back-ended subsidy is made available for construction of godowns to all categories of farmers, agricultural graduates, cooperatives, individual companies and corporations and women farmers.

Increasing Production of Fruits and Vegetables

Prices of fruits and vegetables, which are mostly perishable commodities, by and large depend on market forces, prevailing weather conditions, cost of storage, transportation and rising demand due to increasing income and urbanization.

To enhance the production and productivity of horticultural crops including fruits and vegetables, Department of Agriculture & Cooperation is implementing Horticulture Mission for North East and Himalayan States (HMNEH) and National Horticulture Mission (NHM) in remaining States and Union Territories.

assistance is provided under these Missions for setting up of cold storages, terminal markets, wholesale markets and rural primary market

Department of Agriculture and Cooperation has launched a new programme on Vegetable Initiative for Urban Cluster (VIUC), during 2011-12, under the aegis of the Rashtriya Krishi Vikas Yojana (RKVY). The Scheme is being implemented in one city each of 29 States having a population of one million or capital city.

Area under Cultivation of Bt. Cotton

Bt. cotton is the only crop approved for commercial cultivation in nine states by Genetic Engineering Appraisal Committee

findings of laboratory and field studies conducted and also commissioned by Central Institute for Cotton Research (CICR), Nagpur showed that Bt. cotton was toxic to bollworms but did not have any direct effect on any of the non- targeted beneficial insects and was also non-toxic to, birds, fish, cow, goat and soil micro-organisms.

 biggest gain from the technology was in the form of reduced insecticide usage from 46% in 2001 to less than 26% after 2006 and 21% during the last two years 2009 and 2010

 Bt. cotton hybrids has helped in production increase from 156 lakh bales (170 kg lint per bale) in 2001 to an estimated 356 lakh bales in 2011. Bt. cotton was introduced in 2002

more than 90% of the area in all the cotton growing states in India is now under Bt. cotton

Annapurna Scheme

Under Annapurna Scheme food grains are provided through State Governments/ Union Territory (UT) Administrations to indigent senior citizens of 65 years of age or above who are not getting old age pension under the National Old Age Pension Scheme(NOAPS).
Food grains are provided @10 kg per person per month free of cost to the beneficiaries.

Durban conference

 India played a key role in establishing the second commitment period under the Kyoto protocol with effect from January 1, 2013, immediately after the expiry of the first commitment period.

it was also decided to begin a process for developing legal arrangements for enhancing actions of all parties under the Convention. India ensured that the new arrangements, which have to be decided by 2015 and implemented from 2020 are established under the Convention

India highlighted the issues of equity and Common But Differentiated Responsibilities (CBDR) in the climate change negotiations. With support of India, the Green Climate Fund was also established in Durban.

Human-induced Global Warming

there exists highly persuasive evidence to show that the radiative forcing component due to the decrease in primary cosmic ray intensity during the last 150 years is 1.1 Watt per square meters, which is about 60% of that due to Carbon dioxide increase.
future prediction of global warming presented by Intergovernmental Panel on Climate Change requires relook in view of the effect due to long term changes in the galactic cosmic ray intensity

Decline in Minor Forest Produce

Ministry of Panchayati Raj constituted a Committee under the Chairmanship of Dr. T. Haque to look into various aspects of management of Minor Forest Produce (MFP).

Extension of Credit Facilities to Farmers and Small Industries 

 51.4 per cent farmer households in the country do not access credit, either from institutional or non-institutional sources

a target of 40 per cent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent amount of Off-Balance Sheet Exposures (OBE), whichever is higher, as on March 31 of the previous year, has been mandated for lending to the priority sector by domestic scheduled commercial banks, both in the public and private sector, Within this, a sub-target of 18 per cent of ANBC or Credit Equivalent amount of OBE, whichever is higher, as on March 31 of the previous year, has been mandated for lending to agriculture sector.

Interest Subvention Scheme is being implemented by the Government of India since 2006-07 to make short-term crop loans up to Rs. 3 lakh for a period of one year available to farmers at the interest rate of 7 percent per annum. The Government of India has since 2009-10 been providing additional interest subvention to prompt payees farmers, i.e., those who repay their loan in time. The additional subvention was 1% in 2009-10 and 2% in 2010-11. This is being increased to 3% in 2011-12.

 Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS), 2008 has de-clogged the lines of credit that were clogged due to the debt burden on the farmers

 banks have identified approximately 73,000 villages with population of more than 2000 to provide banking facilities by March, 2012.45,000 such villages have been covered upto October, 2011.

Cap on Lending Rates to MFIs

bank loans extended on or after 1st April, 2011 to MFIs have been given the status of priority sector advances subject to fulfillment of certain conditions like 85% of total assets of MFIs being in the nature of qualifying assets, aggregate amount of loan extended for income generating activity not less than 75% of the total loans given by MFIs and compliance to pricing guidelines

margin cap at 12% and interest cap on individual loans at 26% per annum for all MFIs, no penalty for delayed payment and no security deposit/margin to be taken.

Private Investment in Food Processing Industries

 multipronged strategy to provide grants-in-aid as well as fiscal incentives for inviting private sector investment in food processing sector
Government has taken several steps like tax reduction, waiver/reduction of excise duty, reduction of custom duty on specific food items with a view to encourage the growth of food processing industries and make them more competitive.
scheme of the Ministry are project oriented and demand driven

Financial Assistance for Creation of Post Harvest Processing Infrastrucutre

Ministry of Food Processing Industries (MFPI) through its various schemes for financial assistance and other promotional measures, facilitates creation of post harvest processing infrastructure including processing facilities aimed at reducing wastages, enhancing value addition and increasing shelf life in the country.

Under the Scheme for Cold Chain, Value Addition and Preservation Infrastructure financial assistance in the form of grant-in-aid @ 50% of the total cost of plant and machinery and technical civil works in general areas, and @ 75% of the total cost of plant and machinery and technical civil works is provided by the Ministry in difficult areas subject to a maximum of Rs.10.00 crore

Swift Punishment for Violence Against Women 

centre has advised states to adopt appropriate measures for swift and salutary punishment to the persons found guilty of violence against women, improve the quality of investigations, minimize delays in investigations of crime against women, set up ‘Crime against Women Cells’ in districts, advised to undertake gender sensitization of the police personnel, special women courts and initiate steps for security of women working in night shifts at call centres.
As per Seventh Schedule, ‘Police’ and ‘Public Order’ are State subjects under the Constitution, and as such the primary responsibility of prevention, detection, registration, investigation and prosecution of crimes, including crimes against SC/ST, Women and Children, lies with the State Governments and Union Territory Administrations.

State Human Rights Commissions Constituted by 20 States 


8 States have not constituted the State Human Rights Commissions. These are Arunachal Pradesh, Goa, Haryana, Meghalaya, Mizoram, Nagaland, Tripura and Uttarakhand.
responsibility to ensure adequate manpower and infrastructure for each SHRC lies primarily with the respective State Governmen

sixth economic census

census would involve collection of data from entrepreneurial units in the country. Data on major industrial activity of the unit, number of workers, ownership details, major source of finance, and gender, religion as well as social group of the owner for proprietary units among others would be collected for micro level planning and policy formulations.

 last economic census was conducted in the year 2005.

database would enable policy makers and analysts to assess the impact of the economic liberalization process on entrepreneurial activities, especially in the unorganized sector

Regulatory Body for Anti Doping

National Anti Doping Agency (NADA) has already been set up by Government of India
It deals with all matters relating to doping in sports including dissemination of information, educating the sportspersons, coaches and support personnel on the ill-effects of doping


campaign clean India

aimed to undertake both sensitization and action at field level on bringing our tourism destinations and their surroundings to an acceptable level of cleanliness and hygiene.

campaign will be part of Government’s strategy of the 12th five year plan for improving the quality of services and environs in and around tourist destinations across India.














Monday, December 19, 2011

Year End Review-Ministry of Labour & Employment






Following are the salient features of the initiatives taken by the Unnion Ministry of Labour & Employment during the year 2011:

1.            The Rashtriya Swasthya Bima Yojana (RSBY)
RSBY is a flagship programme of the Government that provides health insurance to unorganized workers to avail smart card based cashless hospitalization facilities upto Rs.30,000/-.  In view of the success of the scheme, RSBY has now been extended to the additional categories of workers, viz.
 Building and other construction workers registered with the welfare boards; 
Street vendors; 
Licensed railway porters and vendors; 
MGNREGA workers who have worked for more than 15 days during the preceding year; 
Domestic workers; 
Beedi Workers.  
2.            Employees State Insurance Corporation (ESIC)
The ESIC administers the Employees’ State Insurance Act, 1948 for providing health care and cash benefit payments in case of sickness, maternity and employment injury. 
 The eligibility conditions for availing the unemployment allowance under Rajiv Gandhi ShramikKalyanYojana relaxed from 5 years to 3 years. The duration of benefit enhanced from 6 months to 12 months. A skill upgradation  scheme introduced for the unemployed insured persons who undergo Vocational Training in Centres run by Government to upgrade their skills. ESIC institutions are being upgraded under Employees’ State Insurance Corporation’s IT Project Panchdeep and all ESI institutions are being networked under this Project.

3.            Employees Provident Fund Organization (EPFO)
The EPFO administers the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 to provide social security and timely monetary assistance to industrial employees and their families when they are in distress. 


4.Expansion of Training Infrastructure:
ITIs are growing with an average rate of 10% every year during last five years. 

The  Central Government, with the help of State Governments, has launched two major Schemes for upgradation of all the existing Government Industrial Training Institutes in the country.  
100 ITIs have been upgraded into Centres of Excellence through domestic funding at a cost of Rs 160 crore and other 400 ITIs are being upgraded under the Vocational Training Improvement Project assisted by World Bank at a cost of about Rs 1581 crore.

Skill Development Initiative (SDI) Scheme: The scheme is based on Modular Employable Skills (MES) framework to provide vocational training for early school leavers and existing workers, especially in the unorganized sector to improve their employability. 
A new scheme on ‘Enhancing Skill Development in North-East States and Sikkim’ has been approved 
A scheme on ‘Skill Development in 34 districts affected by Left Wing Extremism (LWE)’ with an outlay of Rs.232.95 crore for setting up of ITIs and SDCs has been approved and the concerned State Governments have been asked to submit their proposals. 
A scheme titled ‘Kaushal Vikas Yojana’ for setting up of 1500 ITIs and 5000 SDCs in Public Private Partnership in unserviced blocks has also been prepared and is under process of approval  
5.            Child Labour and the National Child Labour Project (NCLP)
In pursuance of Government commitment to eliminate child labour in hazardous areas, the National Child Labour Project (NCLP) Scheme has been extended to cover 271 districts (which includes 21 districts under INDUS Project).The project provides for withdrawal of child labour from work and admitting them into special schools where they are provided with bridging education, vocational training, mid-day meal, stipend, health care facilities etc. A

6.            Occupational Safety and Health
Steps have been taken to re-organize and strengthen the Director General of Mines Safety (DGMS) with creation of three posts of Deputy Director General of Mines Safety, two new zones at Bangaluru and Udaipur and six new regions at Raigarh, Gwalior, Varanasi, AhmedabadSurat and Bangaluru. The Government declared the National Policy on Safety, Health and Environment at work place on 20th February, 2009 and circulated to all Central Government Ministries/ Departments and State Governments.





National Floor Level Minimum Wage:     In order to have a uniform wage structure and to reduce the disparity in minimum wages across the country, the National Floor Level Minimum Wage (NFLMW) has been revised from time to time primarily taking into account the increase in the Consumer Price Index for Industrial Workers. The NFLMW which was fixed at Rs.80/- on 01.09.2007 was revised to Rs.100/- on 01.11.2009 and Rs.115/- on 01.04.2011. The National Floor Level Minimum Wage applies to all employments including agriculture. 
. Since the NFLMW is a non-statutory measure, the State Governments have been requested to fix/revise minimum wages in such a way that in none of the scheduled employments the minimum wage is less than NFLMW.
Wage Boards:  The Majithia Wage Boards for Newspaper Employees submitted their report on 31st December, 2010. The recommendations of the Wage Board for revision of salaries of journalists and non-journalists in newspaper establishments and news agencies as accepted by the Government have been notified on 11.11.2011.

PIB notes 19th dec


Working of SFIO 
 SFIO was established for investigations falling with the following characteristics:
(i)        of complex nature with inter -departmental  and multi-disciplinary ramifications;

(ii)      involving substantial public interest to be judged by size, either in terms of monetary misappropriation or in terms of  persons affected, and;

(iii)    with the possibility that investigation  will lead to or contribute towards a clear improvement in systems,  laws or procedures.

Veppa Kamesam Committee constituted by the Ministry of Corporate  Affairs in February, 2006 to consider measures to strengthen SFIO and streamline its functioning has recommended inter-alia statutory, administrative and organisational changes for making SFIO more effective in containing corporate frauds.

Ministry of Corporate Affairs has introduced the Companies Bill, 2011 in the ongoing session of the Parliament incorporating the suggestions of the expert committee to strengthen investigation process and the machinery

 it has been decided to set up regional offices at Mumbai, New Delhi, Hyderabad, Chennai, Kolkata and Ahmedabad to increase the reach of the office



rohtang tunnel- under construction

The advantages of this tunnel are as under :

(i) Round the year connectivity to Lahul & Spiti Valley.

(ii) The distance between Manali and Lahul-Spiti Valley will be reduced by 46 Km.

Indigenous Defence Production

‘Make’ procedure was incorporated in the Defence Procurement Procedure (DPP) in 2006 to encourage indigenous developmen

With a view to achieve greater self-reliance in Defence Production, Government has announced a Defence Production Policy in January, 2011.



Development of Habitat for Tigers

setting up a conservation breeding centre for white tigers at Govindgarh in Rewa (Madhya Pradesh)

Environmental Performance Index

Environmental Performance Index(EPI), 2010 has been produced by a team of experts from the Yale centre for Environmental Law and Policy, Yale University, in Columbia

EPI ranks 163 countries

indicators provide a gauge at a national government scale indicating how close countries are with regard to established environmental policy goals

India’s EPI rank is 123 with EPI score of 48.3

relatively lower rank of India appears to be due to its huge population which exerts immense pressure on the environment

 income is a major determinant of environmental success.

 Government have formulated sector-specific action plans to combat with the pollution problems. The important steps taken, inter alia, include;

(i) Formulation of regulation /statutes to address sectors-specific problems.

(ii) Setting up of regulatory/ statutory bodies for enforcement of environmental laws

(iii) Setting up of monitoring network for assessment of water and ambient air quality as well as for noise.

(iv) Action plans implemented to treat municipal waste (sewage and solid) under the various centrally sponsored schemes

(v) Creating infrastructure for industrial pollution control incorporating cleaner production processes, setting up of common waste management facilities .

Norms for Environmental Clearances

While granting environmental clearance to these projects, based on the appraisal done by the Expert Appraisal Committee (EAC), necessary safeguard measures are stipulated for their implementation during the project cycle.

Green Credit Scheme

Under the scheme, all non-EU flights entering EU territory will be required to buy emission allowances based on their share of GHG emissions.

India considers the step as a unilateral measure and in violation of the Chicago Convention and the provisions of United Nations Framework Convention on Climate Change

measure is also against the spirit of bilateral air services agreement entered into by India with some of the EU countries.

Setting up of Bustard Sanctuaries

There is one ‘Great Indian Bustard Sanctuary’ notified under Wild Life (Protection) act, 1972, which is situated in Ahmednagar and Solapur districts of Maharashtra.

Workforce in Organised/Unorganised Sector

About 433 million (about 94%) of the total workforce is engaged in unorganized sector and 26 million on organized sector

organized sector is already covered through social security legislations like the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the Employees State Insurance Act, 1948. The Government has also enacted Unorganised Workers’ Social Security Act to create a framework for providing social security to unorganized workers.


Proposal for Helping SMEs

Ministry of MSME has launched a scheme “Promotion of Information and Communication Technology (ICT) in MSME sector” as part of National Manufacturing Competitiveness Programme (NMCP).

provides financial assistance to encourage MSMEs towards adopting ICT tools and applications in their business processes

Khadi Research Centre in Gujarat

 Research and Development Centre at Ahmedabad in Gujarat proposed

steps taken by the Ministry to promote the export of khadi and village industries (KVI) products through KVIC include: (i) providing incentives to KVI institutions on direct export of KVI items, (ii) providing support through KVIC, which is having the status of deemed Export Promotion Council (EPC) and (iii) participation in international trade fairs.

requested the Ministry of Rural Development to consider including khadi and coir spinning activities in the list of permissible activities under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

Credit Guarantee Fund Scheme For MSMEs

Ministry of MSME launched Credit Guarantee Fund Scheme for Micro and Small Enterprises on 30th August 2000 to ensure better flow of credit to micro and small enterprises by minimizing the risk perception of financial institutions and banks. It is operated by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

The Scheme provides a maximum guarantee cover up to 85 percent of the credit.




Proposal for Helping SMEs

Ministry of MSME has launched a scheme “Promotion of Information and Communication Technology (ICT) in MSME sector” as part of National Manufacturing Competitiveness Programme (NMCP).

provides financial assistance to encourage MSMEs towards adopting ICT tools and applications in their business processes

Khadi Research Centre in Gujarat

 Research and Development Centre at Ahmedabad in Gujarat proposed

steps taken by the Ministry to promote the export of khadi and village industries (KVI) products through KVIC include: (i) providing incentives to KVI institutions on direct export of KVI items, (ii) providing support through KVIC, which is having the status of deemed Export Promotion Council (EPC) and (iii) participation in international trade fairs.

requested the Ministry of Rural Development to consider including khadi and coir spinning activities in the list of permissible activities under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

Credit Guarantee Fund Scheme For MSMEs

Ministry of MSME launched Credit Guarantee Fund Scheme for Micro and Small Enterprises on 30th August 2000 to ensure better flow of credit to micro and small enterprises by minimizing the risk perception of financial institutions and banks. It is operated by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

The Scheme provides a maximum guarantee cover up to 85 percent of the credit.

Development of Alternative Fuel Energy

. Grants upto 100 per cent of project cost to educational and research institutions and upto 50 per cent to industries is provided for undertaking research, development and demonstration projects.

 a target of 20% blending of biofuels in diesel and petrol by the year 2017 has been indicated in the National policy on Biofuels

mandatory target of 5% blending of ethanol with petrol and recommendatory target of 5% blending of bio-diesel with diesel is in force since October 2009.


Vision Document for Power Generation

a Strategic Plan for accelerated development of renewable energy sources for various applications including power generation, covering the period up to 2022.

Plan covers grid-interactive power generation from the main renewable energy sources - solar, wind, biomass and small hydro power,  besides off-grid/ decentralised renewable energy applications/ programmes such as biogas, remote village electrification, biomass gasifiers, solar photovoltaic/ thermal systems, micro-hydel, waste-to-energy, et

laid down specific goals and targets for the six years period 2011-17 and long-term Aspirational Goals for the ten years period up to 2022

50,000 MW  new capacity would be added  during the XII and XIII plan periods leading to total renewable power generation capacity of about 73,000 MW by 2022

 20,000 MW from solar power under the National Solar Mission and the remaining   30,000 MW from other renewable energy sources mainly wind, small hydro and biomass power.

following incentives are given to encourage renewable energy
Fiscal and financial incentives
Generation Based Incentives Scheme introduced for Wind power and Solar Power
minimum percentage for purchase of electricity  from renewable energy sources
Preferential tariff



NTPC’s Hydro Power Project in Arunachal Pradesh

CEA has identified 58356 MW hydro capacity (above 25 MW) in North Eastern (NE) Region of the Country which constitutes about 40% of the total identified hydro capacity in the country.

Presently, only about 1.98% of the identified potential (above 25 MW) has been developed in N.E. region, while another 7.96% is under various stages of development.

Raising of Funds for Development of Roads

proposed in the Union Budget for the year 2011-12 to allow National Highway Authority of India (NHAI) to raise Rs.10,000 crores through issue of Tax-free Bonds.

Developing Inland Waterways

five waterways have so far been declared as National Waterways (NWs):

1. Ganga –Bhagirathi- Hooghly river system (Allahabad-Haldia-1620 km)-NW-1, declared in 1986.

2. River Brahmaputra (Dhubri – Sadiya -891 Km) –NW-2 declared in 1988.

3. West Coast Canal (Kottapuram – Kollam) along with Udyogmandal and Champakara Canals– (205 km) – NW-3 declared in 1993.

4. Kakinada-Puducherry canals along with Godavari and Krishna rivers (1078 km)-NW-4 declared in 2008.

5. East Coast Canal integrated with Brahmani river and Mahanadi delta rivers (588 km) – NW-5 declared in 2008.

out of the above mentioned five NWs, basic inland water transport related infrastructure has been provided on NW-1, 2 and 3

Planning Commission has now advised to develop commercially viable stretches of NW-4 and 5 under Public Private Partnership (PPP) mode with Viability Gap Funding (VGF)

Law for Welfare of Senior Citizens

Government has enacted the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 in December 2007 which defines "senior Citizen" as any person being a citizen of India, who has attained the age of sixty years or above.

makes maintenance of parents/ senior citizens by children/ relatives obligatory and enforceable through tribunals

provides for establishment of old age homes for indigent senior citizens

23 States and all Union Territories have brought the Act into force.

Saturday, December 17, 2011

quotes for essays on polity topics


         ·         It is the scared responsibility of every citizen, judge and lawyer to the country, that the luster of judicial   portals is not diminished, its pious reputation not tarnished and that judiciary as the bulwark of freedom grows from strength to strength
         ·         Obstruction, opposition and cooperation are all legitimate parliamentary previleges- Arun Jaitley
         ·         Constitution of india provides ample scope to accommodate any legitimate demand through dialogue, civil discourse and peaceful negotiations-Manmohan singh
         ·         Democracy means the need to explain, the need to justify, the need to convince,
the need to get people on board, the need to compromise.-Jairam ramesh
         ·         Parliament is aorta of authority through which the sustaining blood of government flows.
         ·         Parliament is an assembly of humans. It must have human virtues, vices and failures
  •  Courts are transforming from being arbitrators of disputes into insititutions of governance

        ·      Constitution is an organic document that operates not in isolation, but in tune with live realities of people
        

Saturday, November 26, 2011

background on FDI retail


source:pib.nic.in
EXISTING POLICY
Ø  FDI in Multi Brand Retail Trading (MBRT) is prohibited.
Ø  Foreign direct investment (FDI),  up to 51%, in the Single Brand Retail Trading (SBRT) sector, is permitted, under the Government/FIPB route, subject to the following conditions:
(a)    Products to be sold should be of a ‘Single Brand’ only.
(b)    Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
(c)    Single Brand’ product-retailing would cover only products which are branded during manufacturing.
(d)    The foreign investor should be the owner of the brand

FDI in SBRT was first permitted vide Press Note 3 (2006), dated 10.2.2006.
RATIONALE FOR LIBERALIZATION
Leveraging foreign investment in supply chain infrastructure
Ø  Lack of investment in the logistics of retail chain creating inefficiencies in the food supply chain.
Ø  Though India is the second largest producer of fruits and vegetables (about 200 million MT), it has a very limited integrated cold-chain infrastructure, with only 5386 stand-alone cold storages, having a total capacity of 23.6 million MT, 80% of this  is used only for potatoes.
Ø  Lack of adequate storage facilities cause heavy losses to farmers in terms of wastage in quality and quantity of produce in general, and of fruits and vegetables in particular.  Post-harvest losses of farm produce, especially of fruits, vegetables and other perishables, have been estimated to be over Rs. 1 trillion per annum, 57 per cent of which is due to avoidable wastage and the rest due to avoidable costs of storage and commissions.
Ø  As per some industry estimates, 35-40% of fruits and vegetables and nearly 10% of food grains in India are wasted. Though FDI is permitted in cold-chain to the extent of 100%, through the automatic route.  In the absence of FDI in front-end retail, investment flows into this sector have been insignificant.
Ø  The consequences of inadequate infrastructure are:
  • Indian farmer realizes only 1/3rd of the total price paid by the final consumer as against 2/3rd with higher degree of retail.  A World Bank Study of 2007 demonstrates that the average price a farmer receives for horticulture produce is barely 12 to 15% of what is paid at the retail outlet.
  • An 11th Plan working group has estimated a total investment of Rs. 64,312 crores in agricultural infrastructure.  A storage capacity gap of 35 million tonnes has been assessed, requiring an estimated investment of Rs. 7,687 crores during the 11th Plan.
Bringing supply chain efficiencies
Ø  Foreign retail majors have gained decades of experience, technologies and management practices which will ensure supply chain efficiencies.
Medium-term impact on regulating food inflation
Ø  The opening up of Multi Brand Retail will also have a salutary impact on food inflation as it would contribute to savings to the food which perishes on account of inadequate infrastructure.
Securing remunerative prices for the farmers
Ø  In the present dispensation, there is a complex chain of procurement involving several middlemen.  FDI in retail will create the enabling environment and it is expected that progressive States will undertake gradual reform of APMC Act which will ensure direct procurement, at least of horticultural produce from farmers to enable them secure remunerative price.   
Employment opportunities
Ø  Huge investments in the retail sector will see gainful employment opportunities in agro-processing, sorting, marketing, logistic management and the front-end retail business.
Ø  Industry estimates suggest employment of one person per 350-400 sq.ft of retail space, about 1.5 million jobs will be created in the front-end alone in the next 5 years.  Assuming that 10% extra people are required for the back-end, the direct employment generated by the organized retail sector in India over the coming 5 years will be close to 1.7 million jobs.  Indirect employment generated on the supply chain to feed this retail business will add millions of jobs.       


MULTI-BRAND RETAIL FDI POLICY IN OTHER COUNTRIES

S.No.
Country
FDI Limits
Benefits
Remarks
1.
China
100%
·   First permitted in 1992 with foreign ownership restricted to 49%, progressively lifted and now no restrictions.
·   Over 600 hypermarkets opened between 1996 and 2001
·   The number of small outlets (equivalent to ‘kiranas’) increased from 1.9 million to over 2.5 million
·   Employment in the retail and wholesale sectors increased from 28 million people to 54 million people from 1992 to 2001.
Impressive growth in retail and wholesale trade.
2.
Thailand
100%
·   Referred to a country where FDI had an adverse effect on the local retailers.
·   Has a limited capital requirement for retail and wholesale outlets.
Growth in agro processing industry.
3.
Russia
100%
·   Supermarket revolution took place in 2000s.
·   Heavy growth registered.

4.
Indonesia
100
·   Modern retail took off in 1990s.
·   No limit on number of outlets
·   Matahari is leading chain.

5.
Brazil, Argentina, Singapore & Chile allow 100% FDI in retail sector while Malaysia permits FDI to a certain limit.

Cabinet decision
To permit FDI in MBRT in all products, in a calibrated manner, subject to the following conditions:

ü  FDI in Multi Brand Retail Trade (MBRT) may be permitted up to 51%, with Government approval;
ü  Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, may be unbranded. 
ü  Minimum amount to be brought in, as FDI, by the foreign investor, would be US $ 100 million.
ü  At least 50% of total FDI brought in shall be invested in `backend infrastructure`, where ‘back-end infrastructure’ will include capital expenditure on all activities, excluding that on front-end units; for instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc.  Expenditure on land cost and rentals, if any, will not be counted for purposes of backend infrastructure.
ü  At least 30% of the procurement of manufactured/ processed products shall be sourced from `small industries` which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a `small industry` for this purpose.
ü  Self-certification by the company, to ensure compliance of the condition as above, which could be cross-checked as and when required. Accordingly, the investors to maintain accounts, duly certified by statutory auditors.
ü  Retail sales locations may be set up only in cities with a population of more than 10 lakh as per 2011 Census only 53 cities qualify for FDI in multi-brand retail out of nearly 8000 towns and cities and may also cover an area of 10 kms around the municipal/urban agglomeration limits of such cities; retail locations will be restricted to conforming areas as per the Master/Zonal Plans of the concerned cities and provision will be made for requisite facilities such as transport connectivity and parking.
ü  The FDI in multi-brand retail is being opened in 53 cities only with population of 1 million and for the rest of the country, current policy regime will apply.  In the current regime, 100% FDI is allowed upto wholesale cash and carry point from which franchise/small retailers are able to source quality products for sale to the public at large.

ü  Government will have the first right to procurement of agricultural products;
To permit 100% FDI in single brand retail trading, subject to the following conditions:
ü  FDI in single brand retail trading may be permitted up to 100% with Government approval;
ü  Products to be sold should be of a ‘Single Brand’ only.
ü  Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
ü  ‘Single Brand’ product-retailing would cover only products which are branded during manufacturing.
ü  The foreign investor should be the owner of the brand.
ü  In respect of proposals involving FDI beyond 51%, 30% sourcing would mandatorily have to be done from SMEs/ village and cottage industries artisans and craftsmen. `Small industries` would be defined as industries which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a `small industry` for this purpose. The compliance of this condition will be ensured through self-certification by the company, which could be subsequently checked, by statutory auditors, from the duly certified accounts, which the investors will be required to maintain.
Condition of 30% sourcing from small scale sector
ü  30% sourcing is to be done from micro and small enterprises which can be done from anywhere in the world and is not India specific. However, in this case, it has been stipulated that 30% sourcing will be done from micro and small enterprises having plant and capital machinery worth US 1 million.
ü  This condition will ensure that our SME sector, including artisans, craftsman, handicraft and cottage industry benefits, especially in sectors like textiles, gems and jewellery, leather and jute.

This condition is applicable both for Multi-brand retail in all cases and for single brand retail in cases where foreign equity exceeds 51%.
apprehensions

Rationale for enhancing FDI ceiling to 100% in single brand retail trading.

In the last 5 years, under the current regime of 51% FDI in single brand retail, foreign direct investment of only US$ 44.45 million have been received, constituting barely 0.03% of total FDI inflows.  Globally, single brand retail follow a business model of 100% ownership and global majors have been reluctant to establish their presence in a restrictive policy environment.  The current cap of 51% confers a right to pass all ordinary resolutions, while enhancing cap to 100% will confer full ownership and control.