budget, so it is difficult to address all of them separately, but on the whole, NAMO govt. has saved its face at least at the moment through its General budget . Talking about Railway budget, while canvassing with the media persons, I was very amazed to listen from the present railway minister Sadanand Gauda that we do not take suggestion from the Media people, we take suggestion only from our officers for doing anything. This is the reality of our system. Now I understand why any democratic government can not take astute decision against the corruption of bureaucracy, because they are after all the suggestion maker then why any suggestion maker will go after own self. The one organization, Indian railway, catering the need of almost 125 crore citizens of the country, in fact has reached its ceiling point of its service provider capacity very before. The railways which has total track length of around 60,000 kilometer has just added 12,000 Kilometer in last 65 years, whereas the numbers of rail passengers have increased by manifold, by almost 5 times, in the same manner the tones goods amount, being carried by railways has increased by more than 10 times. The simple point is, we have not expanded Railway as per the demand of the country and the reason is, because it is run and nurtured by one and one government only. If we would have separate Rail infrastructure development department under the ministry of railway, things would have been different and this department might have always worked over raising of funds in order to expand railway infrastructure, whether collecting money from the public, from the investors, from the bankers, from the foreign investors like that. But the railway ministry was left only at the mercy of its political master. Anyway the new general budget, presented by Arun Jaitley provided some relief to almost 3 crore income tax payers of the country. The exemption limit increased by 50 thousand( from 2 lakh to 2.5 lakh), the investment exemption limit increased by 50 thousand( from 1 lakh to 1.5 lakh), the home loan tax exemption increased by 50 Thousand( from 1.5 lakh to 2.0- lakh), the PPF saving limit by 50 thousand( from 1 lakh to 1.5 lakh), all these have given an urgent kind of relief to the tax payers, who were waiting these for a long time under the circumstances, when country was witnessing very high inflation, salary increase etc. I think this is very early to judge, in the long run how this govt. will bring several policies and perspective in order to meet out various challenges, the administrative management, e-governance, new personnel policy; on all these fronts, if this government does something, it will open the new face of government, otherwise in the existing framework of governance, budget would be also proved simply a routine exercise. Empanelled Indias First Complete Magazine on Economic Affairs Editorial Editor In Chief MANOHAR MANOJ Email: manoharmanoj.k@gmail.com Editorial Advisors DR. MADAN BIHARI PRASAD RAMESHWAR GUPTA Bureau Chief ARVIND KUMAR Circulation MANI KANT Art Co-Ordinator AVINASH JHA Email: avns.jha@gmail.com Marketing Assistant Deepak Kushwaha July-August 2014 Volume-8 Number-7 Proprietor, Publisher, Editor, Printer, Manohar Manoj Kumar, Published at 323 B, J&K Pocket, Dilshad Garden,Delhi-110095, Printed at Kumar offset printers, 381-P. P. Ganj, Industrial Area, Delhi 110092 The writers are solely responsible for the articles published in the magazine and have nothing to do with the consent of the Editor. Editorial Office DELHI OFFICE 107. Rishabh IPEX Mall. I.P. Extn Road, Opp. to ICICI Bank, Patparganj, Delhi-92 MUMBAI OFFICE 9, Milan Association, 3rd Row, Golibar, Santacruz(E),Mumbai-55 PATNA OFFICE Sangrila House, Rosebud lane, In front of A.N.College, Patna Address for correspondence Economy India, 303, Himgiri Society., Kaushambi, Ghaziabad- Pin- 201010 Ph. 011-45052769, Mob:- 98110-69966 E-Mail--economyindia@gmail.com website : www.economyindia.co.in NGO Indian Young Journalists Organisation Economy INDIA The Indian Newspaper Society Direct. of Advt. & Visual publicity Member News Analysis Research Investigation I Email: manoharmanoj.k@gmail.com CONTENT June, 2014 60 72 46 Rajartha 06-09 Artha-Desh 10-15 Artha-Pradesh 16-17 Artha-Vishwa 18-19 Public Sector 20 Corporate Sector 21-23 Infrastructure 24-25 Banking Sector 26-27 Human Development 28-29 Agriculture 30-31 Budget India 32-57 Financial Market 58-59 Special Story 60-67 Glamour 72 32 BHARAT PARIVARTAN ABHIYAN A new wave to change the system Presenting a comprehensive, scientific, pragmatic and Ideal vision document for bringing all necessary and required change in the system A total solution to corruption an alternative structural vision to our ethnicity, polity, society, economy, public administration and all key institutions of the country, thus we aim to build India of the next 100 years www.bharatparivartanabhiyan.com email:bharatpravartanabhiyan@gmail.com Ph. 011-45052769 Mob: 9811069966 When NAMO invited several SAARC countries leaders at the time of his oath ceremony, it seemed, this government will construct a new leak of her actions and governance, but now it looks very disappointing to see this new NAMO government, just following the policy path of earlier UPA government. The BJP led new NDA government which roughly exposed the whole policy regime of the last UPA govt. during the election time, is very amazingly still depending on those very policies; rather it is continuing the same governing trend also especially over price rise, economic management, subsidy continuation and price hike of some infrastructure goods & services. We all were expecting the NAMO led new government will start some fundamental and long term change in the governance mode of the country, but it seems this government is even not ready to show some new symptoms in its style of governance. Few days ago, Arun Jaitley delivered a statement that one should be ready to pay the government for the services provided to them; principally it was not a wrong statement. If we do no pay for consumable goods and services considering its cost and inflation, we are playing with the sustainability of a product or its producer. In this context, we all know and it is very much true that there are some government managed goods and services, which are not being appropriately charged, but it is also more than true that there lies a huge amount of mismanagement, inappropriate utilization of resources, existence of rampant corruption, leakages and lack of productivity in the several govt. organizations. In order to this , the new government was very much expected to start a perspective kind of reform followed by some rational price increase, then it would have called justifiable approach on the part of new government. But this government did not show this gesture and immediately hike the railway fare, this hike move not only gave wrong signal to the supporters of this government, in fact, it was proved to be neither a reformist approach nor a politically legitimate approach, particularly in the context of the upcoming assembly elections in states like Hariyana, Maharashtra, Jharkhand and possibly in Delhi. The three factors which are said to be responsible for the defeat of UPA- 2 govt. the price rise, corruption and policy paralysis in the governance, on all these front this government lacks new vision, so they validated the old policies, rather they delivered the same statement in their defense what UPA people were delivering during their regime. For the price rise, UPA was also making hoarders responsible; the NAMO govt. delivered the same statement, so the question is if that is there, why people replaced UPA with NDA. This NDA government must understand this fact that if hoarders are responsible for the price increase, why don't they do this all the time and throughout the year, why they do only off and on. Many times, prices of essential commodities persist on a reasonable level, why hoarders do not do their act on that occasion; after all we have a defect in our policy, which ultimately provides opportunity to the hoarders to hoard and it happens when there become supply constraints or inadequate supply of some commodities in the market seeing their volume of demand, the problem gets start. On the occasion of price increase, generally it is seen government eases imports, restricts export or starts selling items through its authorized outlets or circulating media news in regards to start campaign against hoarders. But the question is, could these kind of measures bring permanent control over the price rise. Obviously reply is in 'no'. So, on behalf of the new government, it is very much expected to initiate those kinds of policies which can stabilize the prices forever and never ever give opportunity to the hoarders to hoard. I think it is possible if govt. does three things, first and foremost govt. must fix the minimum remunerative prices to the producers as well as fix up the reasonable maximum retail prices to all essential 32 agriculture items. I think in showing Replica of the past policies Manohar Manoj NAMO Govt. W Rajartha Economy India July-August 2014 6 Rajartha hen Arun Jaitley took a long pause in the middle of his budget presentation, it seemed very awkward to the many, because it was never seen before, but at the end of it, it seemed this backache of finance minister which compelled FM for taking pause might have proved backbone of the governance of this NAMO government. During its reign of almost one and half month, this government , first time got some round of applause, otherwise the growing price rise with addition of rail fare and diesel-LPG price hike has attracted many opposition to this government. Anyway the new budget provided some relief to the almost 3 crore income tax payers of the country. The exemption limit increased by 50 thousand ( from 2 lakh to 2.5 lakh), the investment exemption limit increased by 50 thousand( from 1 lakh to 1.5 lakh), the home loan tax exemption increased by 50 Thousand( from 1.5 lakh to 2.0- lakh), the PPF saving limit by 50 thousand( from 1 lakh to 1.5 lakh), all these have given an urgent kind of relief to the tax payers, who were waiting these for a long time, when country was witnessing very high inflation, salary increase etc. Second this government has given strong message for keeping the fiscal deficit under the prescribed target. In order to this the present fiscal deficit would be 4.1 percent and for the upcoming years he has even indicated the deficit would be cut down further to 3 percent level, but the problem is how he would be able to increase tax revenue, because he has told this fiscal prudent measure would be not achieved through expenditure cut. So he will have to explore the revenue raising measures. He talks about clearance of all tax disputes which involves around 4 lakh crore and also he has mentioned all bank NPA which involves around 2 lakh crore, if tax reform measures are implemented in strong manner, the volume off revenue could be increased. We all know the fiscal deficit is greatly aggravated by non plan expenditure like subsidies, defense, pension, interest payment etc. I think barring subsidies, nothing can be curtailed in the existing circumstances , in the era when petroleum subsidies are on the lower side, the subsidies on fertilizers and food are on alarming side. Though FM has said that he would bring a new Urea policy in time to come, but no one want to bring down food subsidy. In this circumstances to check fiscal deficit under the prescribe limit would be a herculean task. Many aspirations were tagged with new government and Prime Minister Narendra Modi who had presented many vision agendas before the nation. FM has tried his level best to incorporate all those schemes like AIMS, IIT, IIM, Metro, smart cities, urban development, Ganga cleaning and set up of ghats etc. but very amazingly he has provided only token amount of money for these, in reply to this query Mr. Arun Jaitlye says already 3 months have spend and the full modalities of the concerned scheme will come at least within 1.5 to 2 months, then land would be allotted for this, until then financial year would get end so the real budgeting will be done next year only. Arun Jaitley, new finance minister has no doubt given manufacturing sector, his big focus area, already economic survey tells about setting up of 16 national manufacturing centre in the country. In order to this about a dozen sea port and a dozen cargo airport, 24X7 electric supply, speedy land clearance have been mentioned in the budget. Bringing manufacturing sector at the level of 25 percent of the country's GDP and enabling 10 crore employment generation is a mammoth task. In the budget we saw many fiscal incentives have bee given to some industries, the renewable energy are prime out of them. The power generating companies have got long tax holidays even up till 10 years in the budget. Most significant point is how this government will frame a new guideline over scheme like MNREGA, Food security,, the schemes which have aggravated inflation as well as corruption. These two items take around 2 lakh crore worth of money and gives a huge burden over government kitty. If MNREGA get converted in some rural infrastructure development plan after clubbing it with PMGSY, AJIVAKA, NREP etc, it will give big boost to the rural economy of the country and on the other side if Food security yojana is replaced by a better social security schemes, it would have a more justification. Provisions for agriculture credit, infrastructure development have been mentioned in routine manner. I think this is very early to judge, in the long run this govt. will have to brought many policy and perspective in order to meet out various challenges, the administrative management, e-governance, new personnel policy on all these fronts, if this government does something, it will able open the new face of government, otherwise in the routine framework of governance, budget would be proved simply a routine exercise. New Govt. saved its face through the Budget W Economy India July-August 2014 7 Rajartha t a r t developing railways to the next level and utilizing it as an engine of infrastructure development of the country was one of the NAMO' main dream during the election. So budget was very much expected on those lines, that is why in the rail budget, the government announced the inception of high speed trains along with one bullet train between Ahmadabad to Mumbai. But on the whole this railway budget is telling so many things in a very routine manner, which all railway ministers used to say, like house keeping, RO drinking water, cleanliness etc, increasing the booking of e-tickets, but I think the culture of facilitating railway services in terms of drinking water, lodging, seating, platform spaces etc. is rooted so deep in India and so these are on a very high expectation note from the public side that we forget one most fundamental thing in the railways, that is availing reservation ticket on demand on anytime and for any route, but this is far from the railway's achievability. I think when we go to the bus stand or airport, we do not even get seat to sit, we are just being disposed for our traveling, but from the railway our expectations from the railway is so high and deep rooted in last 150 years from colonial period to independence period. The one organization, Indian railway, catering the need of almost 125 crore citizens of the country has reached its ceiling point of providing services very before. The railway which has total track length of around 50,000 kilometer has just added 12,000 Kilometer in last 65 years, whereas the Rail passenger has increased by manifold, by almost 5 times, in the same manner the tones goods amount, being carried by railways has increased by more than 10 times. The simple point is we have not expanded Railway as per the demand of the country and the reason because; it is run and nurtured by one and one government only. If we would have separate Rail infrastructure development department under the ministry of railway, this department might have always worked over fund raising to expand railway infrastructure, whether collecting money from the public, from the investors, from the bankers, from the foreign investors like that. But the railway ministry was left only at the mercy of its political master. This is the reason when a political master of railway provides train for any route, people tell him he is favoring his constituency. Whereas railway is a commercial enterprise, it must be avail on all those places , where people are ready to afford it, pay it, but in regards to railway our perception is different as if rail service is freebies for the public. This is so because there is scarcity and there is in equilibrium in the demand and supply of railway service. So the topmost agenda for railway is to expand it as per the demand of the public and for this if railway invites private players or foreign players, it should be always allowed. In the present budget FDI has been allowed in railway except the operation side, I think this is very late but accurate move. But unless this government bring a broad policy guidelines for the track expansion of the country, just announcing public private participation in pieces meal approach will not help its causes. I think railway has enough land space to construct one pair extra track on both side of existing track lying all over the country. If we do so country will have extra 1 lakh kilometer extra track which will be sufficient enough to meet out the present and also future needs of the country. Government should outline new rail infrastructure policy like new telecom policy so that substantial investment can be invited for this. I think railway thinkers have done sin firstly by not managing sufficient government funds and secondly by not inviting investors in it through new policy regime. At present railway minister talk about private investment not through a broad policy initiative rat her in pieces which have been announced in the budget. We know the expansion of tracks will require a fully modernized traffic control system, because we already have many incidents of accidents in railway, but in the western world the rail traffic control system is fully digitalized, that can be done in India also. In this budget, railway minister has started so many pilot projects, but he could not start a very crucial project that was to start TT less coaches in Indian railway through biometric ticketing system. All railway ministers including new railway minister Sadanand Gowda keep weeping over fund crunches in the railway organization, but they never talks about the leakages, under productivities, lack of booking counters, the influence of touts and middlemen etc. In this new budget the new railway minister never mentioned the mismanagement and corruption in the railway which enables largest number of complains in the railway and bribery reporting in organization like CVC. I think railway should all out for the corporatization of its all 16 zones, it must be made more revenue consciousness and always avail work for the availing the services as per the demand of passengers. Rail Budget Reformist, but in routine way Economy India July-August 2014 8 S terms of food grains the difference between minimum and maximum price must be 25 to 30 percent and in terms of vegetables and other perishables the difference between minimum and maximum prices must be 50 to 60 percent, which is right now 50-100 percent in terms of food grains and 100-200 percent in terms of vegetables and perishables. Second this government must allow its procurement and distribution agencies like FCI, NAFED and other marketing cooperative organizations to intervene in the open market operation. It means, these agencies would purchase all agro items in the harvesting and plucking season from the producers and farmers and store it in their warehouses and god owns and latter on sell them in the off season period in open market. Third, govt. must ban the future trading of all agriculture commodities with immediate effect. If government starts all these 3 measures, prices will have a stabilizing trend. These set of measure would ensure regular supply chains in the market. If we do not provide cost plus prices to the farmers, the supply chain in longer period will get affected. Food inflation has a more a supply- demand in equilibrium dimension, whereas the problem of general inflation has many more dimension other than demand and supply in equilibrium, which needs to be discussed. General inflation get affected by monetary environment of the country, which is controlled by RBI, it is affected by the fiscal situations of the country, controlled by ministry of finance, it is affected by the tariff policy, controlled by ministry of commerce, it is affected by the external factor, get adjusted and controlled by all above mentioned authorities, it is affected by calamity conditions, controlled through our disaster management system. In this context, for any government, task of controlling inflation is rendered through bunch of policies, having more focus on practicing fiscal disciplines in the governance. We know, the FRBM act, which was brought to control the fiscal deficit within the target limit in the country, was now followed affectively by the UPA government. UPA's continuing dependence over populism to win elections in fact brought havoc to the economy. UPA govt. first brought farm loan waiver schemes in 2008, implemented sixth pay commission , initiated non productive MNREGA schemes followed by food security act, these all schemes have had not only having the inflationary content in their preamble of the scheme, rather it had immense potential of corruption. My latter part of article is going to diagnose that under this ailing economic condition, is this government still ready with policies of UPA Government, means food security , MNREGA and measure to control corruption. I don't think unless the present government rethinks and takes decision over petroleum subsidy, continuation of MNREGA, over pumping food security and starting a new culture in the bureaucracy, it would able to start course correction in dealing with fiscal deficit, corruption and price rise. I think UPA took right decision to discard subsidy over diesel by hiking its rate by 50 paise per liter in every month, now the under recovery has fallen down to merely 3 rupee per liter which was once 17 rupee per liter. But on LPG front UPA took bad and unpopular decision, it should not have created dual pricing system, in stead it should have increase its prices by 200 by limiting maximum cap 12 which was earlier only 6, raised to 9 and then to 12. There must not be difference of more than 200 rupee between the prices of subsidized and market price of LPG cylinder. Govt. initiated the small size LPG cylinder very late, I think 5 kg cylinder at the cost of 300 must be made freely available; it will stop public anger as well as black marketing of LPG. On kerosene front govt. should keep continuing subsidized coupon system for the rural areas otherwise it must have diesel parity price in the urban part of the country. A uniform type of policies for all 4 petro items gasoline, diesel, LPG, kerosene must be accompanied with broad tax reform by bring full white paper over it. Govt. must minimize as much as taxes imposed over these. Providing relief to the consumer through tax in place of subsidy is the best policies for any government. It will stop corruption and mishandling of public money. Talking about MNREGA program, once termed to be a social inclusive program, in fact proved to be inflationary as well created lots of scope for leakages and corruption. If this money being spent over rural infrastructure (physical and social) based on PURA, it would have more meaningful affect over rural economy. I think NAMO govt. must amend this scheme and make it more meaningful . Coming over food security act which is consuming more than 1.5 lakh crore annually, it should be replaced by a nationwide social security and social insurance scheme, which can ensure elderly people having at least pension of 1000 rupee per month. I think present PDS program should be converted in mass lungar program with the help of NGOs and charity organizations. PDS must be stick with calamity condition and for the remote and tribal areas, In regards to tackling corruption from the public life, this NAMO govt. must launch a completely new personnel policy, until unless we have a new office culture, the designing and redesigning of cabinet will not help at all in dealing with public. Unless we overhaul our bureaucracy, nothing will happen especially on the front of corruption. At last this government has done one thing different to the earlier government that is stopping of Nehru and Gandhi nemesis of almost all program, schemes, institutions etc.,that has now shifted to people like Shyama Prasad Mukherji, Deendayal Upadhyay, jayprakash Narayan, Pt. Madan Mohan Malviya and Sardar Patel. Rajartha Economy India July-August 2014 9 Artha-Desh Take decisions, I'll back you: Modi n his first meeting with the secretaries of all the government departments collectively Prime Minister Narendra Modi asked them to take decisions without fear. It was reported that while Modi asked the secretaries to approach him directly to resolve issues and expedite decision-making, he also told them to take decisions and assured his full support. He also "encouraged the officers to take decisions and assured them that he would stand by them," an official statement later said. The PM further asked the bureaucrats to simplify and streamline administrative rules and procedures in order to make them people-friendly, while expressing full faith in their commitment and competence to build a better future for the country. He said that "there may be rules and processes which have become outdated, and instead of serving the process of governance, they are leading to avoidable confusion" and stressed upon the need to "identify and do away with such archaic rules and procedures". During the marathon two-and-a-half hour meeting, Modi "listened extensively" to the top bureaucrats and empathized with their sentiments while noting their anguish in not being able to realize their true potential because of "circumstances". The intent behind the meeting was to give the bureaucracy a greater role in decision-making with thrust on transparency and speedy and effective governance. To ensure that implementation of decisions and programmes are not stuck in 'red-tape', the PM asked secretaries to call him or email him directly for suggestions or intervention required in resolving issues or expediting decisions, sources said. During the meeting, first by a Prime Minister directly with all the secretaries without ministers, Modi made initial remarks and then asked secretaries to raise issues. About 25 secretaries spoke on the sectoral issues under their responsibility. "Discussions focussed more on making governance more effective," a source said. In all, 77 top bureaucrats, including Finance Secretary Arvind Mayaram, Home Secretary Anil Goswami, Defence Secretary Radha Krishna Mathur and Foreign Secretary Sujatha Singh, were called for the meeting. Sources said 16 groups were formed by clubbing related ministries. All finance ministry departments were grouped together, while secretaries of energy-related departments - power, coal, oil, mines and atomic energy were put together. Agriculture and related departments were clubbed under one head, while the infrastructure group comprised of railways, telecom, roads, civil aviation, shipping and posts. The sources said the Prime Minister illustrated what kind of work he expected them to perform. No presentation was made by the secretaries. Cabinet Secretary Ajit Seth made the inital remarks. After that those who spoke included Finance Secretary Arvind Mayaram, Power Secretary P K Sinha, Heavy Industries Secretary Sutanu Behuria and DoPT Secretary S K Sarkar, the sources said. Previously, the secretaries had been asked to prepare a 10-minute presentation for the Prime Minister listing successes and failures of the past regime as well as points of action for the next five years. That process may start tomorrow. Notes of Finance Ministry officials for the meeting included inflation, fiscal consolidation, controlling the current account deficit, clarity on tax administration and disinvestment in non-core sectors like steel and cement. Liberalising the FDI policy in defence, e- commerce retail, railways and construction development and hurdles in land acquisition and cumbersome project clearances topped the agenda of Commerce Secretary Rajeev Kher. Updates on the monsoon and a new insurance scheme to protect farmers from crop failure figured on Agriculture Secretary Ashish Bahuguna's notes, while the consumer affairs department was concerned about rising onion prices. While the Oil Ministry went with a list of pending decisions, including an increase in natural gas prices which was due on April 1, the Power Ministry cited round-the-clock power supply and easing of fuel shortages as its top focus. Divestment of stake in PSUs such as SAIL and opening of closed mines were the focus areas for the steel and mines ministry. I Economy India July-August 2014 10 Artha-Desh India-only funds see biggest foreign outflows since 2008 ndia-only funds saw a net $786 million in outflows in May, the highest since the global financial crisis, reflecting investors' preference for diversified funds rather than funds dedicated to one country, data from Thomson Reuters Lipper showed. Aberdeen Global Indian Equity Fund, the world's biggest India-only fund run by Aberdeen Asset Management PLC, accounted for around 40 per cent of the outflows, or a net $328.8 million, according to the data this week. The waning interest in these funds come even as overall foreign interest in India remains high, especially over the election of Narendra Modi as the prime minister last month. Data has consistently shown fund investors prefer diversified emerging market funds that minimize single-country risk. Foreign investors invested a net of $8.8 billion in Indian shares so far this year, adding to their $20.1 billion in purchases last year. "In the last six months sentiment has turned positive for India because of the elections and expectations of a better government," said Niranjan Risbood, director of Fund Research at Morningstar India said. "But overall, India has faced a lot of macro problems and investors are still reluctant to put their money into India-specific funds, so most of the money coming into India is through diversified funds." The net outflows in May compares with $123.51 million withdrawn from India-only funds in April and is the highest since $814.04 million were redeemed in October 2008. All but one of the top 10 India funds posted outflows last month. Combined assets under management of offshore India- only funds has shrunk from $55 billion in 2009 to $33.9 billion at the end of last year. Aberdeen attributed the selling to some profit-taking after shares hit record highs and the end of the elections on May 16. "We've seen some heavy selling towards the end of the month purely on valuations as the market hit all- time highs," James Thom an investment manager in Aberdeen's Asian equities team said. "Investors are taking the opportunities to take some profit on the election event." Expert panel for re-launch of direct benefit transfer scheme onths after the scheme to pay LPG users cash subsidy was put on hold, an expert committee has recommended its reinstatement after streamlining some processes as it helps prevent pilferages. The Direct Benefit Transfer for LPG (DBTL) scheme was rolled out in 291 districts from 1 June 2013 in six phases to do away with the practice of selling the fuel at below cost rates. About Rs5,400 crore was transferred to more than 2.8 crore LPG consumers across the country. However, the scheme, which provided for cash transfer only to customers having Aadhaar number, was put on hold on 7 March following complaints that many consumers were left out because they either did not have the unique identification number or a bank account. "While preliminary results indicated that the scheme met its primary objective of curbing leakages in the distribution system, the speed at which it was rolled out and inclusion of low Aadhaar districts gave rise to consumer grievances," the panel headed by Prof S.G. Dhande said in its report. The panel headed by the former Director of the Indian Institute of Technology, Kanpur was appointed to review DBTL. "The DBTL scheme was successful in achieving its objectives, viz. reducing diversion, eliminating ghost/ duplicate connections, and improving LPG availability," the report said, adding that the scheme promotes enhanced financial inclusion. The Committee "strongly recommends that the DBTL scheme should be re-instated". Stating that the scheme design was "very robust and scalable" which prevents leakages, it suggested some systemic changes and enhancements to mitigate the hardships reported by the LPG consumers. It recommended a centralised grievance redressal mechanism as consumers, particularly illiterate, face difficulties in obtaining Aadhaar in some places and in getting it seeded in bank accounts and LPG database. Under DBTL, consumers got an advance of Rs435 on joining the scheme. Consumers used this money to buy a LPG cylinder at market price of Rs905 per 14.2-kg bottle in Delhi as against a subsidised rate of Rs411 they were paying previously. The committee felt that this amount should be raised as in some months the subsidy or the difference between the subsidised retail price and the market price was as high as Rs800. It also recommended that the launch of DBTL should be preceded by a three month preparatory period during which there should be extensive communication campaign, enrolment, seeding of Aadhaar in LPG/bank database. I M Economy India July-August 2014 11 Artha-Desh India to grow at 5.5%, low growth for developing nations: World Bank eveloping countries are headed for a year of disappointing growth, the World Bank said in its Global Economic Prospects (GEP) report, which has lowered its forecasts for developing countries to 4.8 percent growth rate this year from the January estimate of 5.3 percent. The World Bank projected India's growth at 5.5 percent in fiscal 2014-15, accelerating to 6.3 percent in 2015-16 and 6.6 percent in 2016-17 as it urged developing countries to double down on domestic reforms. Subdued manufacturing activity and a sharp slowing of investment growth in India led to GDP growth in South Asia as a whole slowing to an estimated 4.7 percent in market price terms in calendar year 2013, the Bank said in a new report Wednesday. The growth in South Asia was 2.6 percentage points below average growth in 2003-12, the World Bank noted in its twice-yearly Global Economic Prospects report that also lowered projections for global economic outlook. In its latest report, the Bank has lowered its forecasts for developing countries, now eying growth at 4.8 percent this year, down from its January estimate of 5.3 percent. Signs point to strengthening in 2015 and 2016 to 5.4 and 5.5 percent, respectively. China is expected to grow by 7.6 percent this year, but this will depend on the success of rebalancing efforts. If a hard landing occurs, the reverberations across Asia would be widely felt, the Bank said. "Growth rates in the developing world remain far too modest to create the kind of jobs we need to improve the lives of the poorest 40 per cent," said World Bank Group President Jim Yong Kim. "Clearly, countries need to move faster and invest more in domestic structural reforms to get broad-based economic growth to levels needed to end extreme poverty in our generation," Kim said. The global economy, it said, is expected to pick up speed as the year progresses and is projected to expand by 2.8 percent this year, strengthening to 3.4 and 3.5 percent in 2015 and 2016, respectively. High-income economies will contribute about half of global growth in 2015 and 2016, compared with less than 40 per cent in 2013, it added. Kaushik Basu, Senior Vice President and Chief Economist at the World Bank . Exports speed up in May, trade talks planned with U.S. ndia's exports increased at the fastest pace in six months in May, in a boost for Prime Minister Narendra Modi's new government as it signalled a loosening of gold import rules and a push to improve trade ties with the United States. Bilateral trade stands at about $100 billion annually but is below potential due to disputes over protectionism and intellectual property rights that have worsened in the past two years. Trade secretary Rajeev Kher said the two countries were planning to start trade talks in July and could hold a ministerial level engagement in October - after an expected summit between Modi and President Barack Obama in Washington. India's exports have risen in recent months due to a pick-up in demand from Europe and the United States and a weaker rupee currency, while strict controls on gold imports have helped prevent a brewing balance of payments crisis last year. The trade deficit stood at $11.23 billion in May, up from $10.09 billion in April, data released by the Ministry of Commerce and Industry showed. While trade gap grew compared with April, the year-on-year trend was more encouraging. Exports in May jumped 12.4 percent from a year earlier to $28 billion, while imports were down 11.41 percent to $11.23 billion helped by a 72 percent drop in overseas gold purchases. India is the world's second-biggest gold buyer and the government is under pressure from the industry to loosen restrictions, including a 10 percent import duty on the metal. Kher said the trade ministry was in favour of "rationalising" the import duty and that there was a clear view that "normalcy" needed to be restored to gold imports. "Export figures have begun to acquire their normal levels, which is encouraging," he told reporters. Kher said he also favoured opening up agricultural exports, where possible, but added the government was ready to intervene if needed to contain onion and milk prices, key drivers of India's volatile food inflation.Although month-on-month increases in the import bill, particularly for oil, has kept the trade deficit high for three months in a row, analysts said the trade gap should be manageable, even with softer restrictions on gold. "With better economic activity especially in the U.S. and Europe, Indian exports are likely to stay on a reasonably better footing this time," said Anubhuti Sahay, an economist with Standard Chartered Bank in Mumbai. D I Economy India July-August 2014 12 Artha-desh Centre asks states to crack down on hoarders, to check inflation he Finance Minister urged that urgent and timely attention be given to all matters related to price rise, and that the departments concerned should take necessary steps without any delay. The Finance Minister also emphasized on the urgency to effectively check constraints in ensuring smooth flow of essential commodities availability in the market through dehoarding, timely inspection, monitoring etc. Finance Minister Arun Jaitley has asked states to crack down on hoarders, and introduced several measures to bring inflation down. Presiding over a high-level meeting that included ministers and secretaries, Jaitley asked the states to delist fruits and vegetables from the Agricultural Produce Market Committee list and allow farmers to sell their produce directly in the open market. Jaitley told media last evening that 22 commodities are under active observation of the government. He also said that the government has decided to release an additional 50 lakh tonnes of rice to states for sale in the open market at above poverty line rate of 8.30 rupees per kilogram and allowed states to directly import pulses and edible oils to meet shortages. The government has imposed a minimum export price (MEP) of 300 dollar per tonne on onions to curb overseas sales and check retail prices. A commerce ministry notification said that export of all onion varieties will be subject to the MEP of 300 dollar per tonne. The MEP, which is the rate below which no exports are allowed, has been re- introduced barely three months after the previous government had abolished it in March. Onion prices have risen to about 25- 30 rupees per kilogram in the national capital from 15-20 rupees per kilogram a fortnight ago. The auction of onions at Nashik in Maharashtra will resume today after a gap of two days after traders called off their strike last evening. Our Correspondent reports that differences over how much wages should be paid to porters led onion traders to go on strike. Revision of FY15 deficit numbers not to have major impact, says Moody ating agency Moody's has said that revision of the fiscal deficit numbers for the FY15 will not have any major impact on India's credit score. However, the agency is keeping a close watch on sustained steps to bring down the deficit as it believes that all high growth forecasts will amount to nothing if these measures are absent. There has been strong debate on the FY15 deficit target of 4.1% announced by former finance minister P Chidambaram under the UPA government. Finance minister Arun Jaitley will announce the new government's deficit targets in his maiden budget in the first week of July. Some economists have said that new NDA government should tolerate a higher deficit and focus on kick starting growth. According to Moody's; Whether the new government's FY 2015 deficit estimate is above or below the previous overnment's estimate of 4.1% of GDP is not the key determinant of India's credit outlook. The agency said that more relevant to the sovereign credit outlook will be whether the budget includes measures that address the government's low revenue base, high current expenditures, and exposure to commodity prices. The agency pointed out that India's budget deficits, are higher than those in most similarly rated countries and increase macro-economic imbalances and thus expose the economy to shocks. In a report titled, "Frequently Asked Questions on India's Fiscal Position and the Forthcoming Budget" the agency outlined the reasons behind India's high fiscal deficits and compared fiscal developments in India and in other similarly rated countries to explains how fiscal policy has affected growth, balance of payments and exchange rate trends. "India's high budget deficits are partly due to a large population and low per capita income levels. Low income levels limit the government's tax revenue base and at the same time drive socio-political pressure to increase government spending on subsidies and economic development. However, Moody's notes that other countries with low per capita incomes have avoided deficits as large as India's. This suggests that fiscal discipline can improve budget outcomes despite structural challenges," said Moody's. The report notes that wide budget deficits have kept India's inflation high and contributed to a widening current account deficit between 2011 and 2013 which heightened exchange rate volatility and resulted in higher domestic interest rates. These trends have exacerbated the slowdown in GDP growth since 2011. "In Moody's view, absent measures to reduce the fiscal deficit, the future high growth rates many forecast T R Economy India July-August 2014 13 Artha-Desh for India may not be realized. The July budget could indicate whether fiscal constraints on India's sovereign credit profile will ease over the coming years," said the report. email id & mobile updated on the website of the IT deptt. valid Email ID and Mobile Number has to be registered/updated on the e-filing website of the Income Tax Department so that direct communication with taxpayer can be possible. The Department will send separate One Time Passwords (OTP) also referred as PIN on the mobile and email provided by the taxpayer. The OTPs have to be entered by the taxpayer after logging into their e-filing account to authenticate the same. The OTPs will remain valid for 24 hours within which the taxpayer has to complete the process. For 'Foreign/ NRI' taxpayers, the OTP validation of the email ID would be sufficient. Validation of email and mobile numbers has been introduced to facilitate taxpayers as in many cases incorrect emails and mobile numbers have been provided and taxpayers did not receive important communication from the Department. Further, it has been observed that in many cases taxpayers are not able to reset their password since the new temporary password from the Department may be sent to their registered email which may be different from the taxpayer's personal email, e.g. email of their intermediary. This is a one-time process to validate the mobile number and email ID. However, whenever the taxpayer changes the Mobile Number or email ID in their Profile, the process will be repeated to ensure that the particulars provided are correct. Further, this validation will ensure that Department can send an OTP for resetting the password used for Login in case the taxpayer has forgotten the password. One mobile number or email ID can be used for a maximum of 10 user accounts as the Primary Contact- Mobile Number and Email ID in e- Filing. This is to ensure that family members and related business concerns (not exceeding 10 separate users) not having personal email or mobile can be covered under a common email or mobile, but in general taxpayers should have their own unique email ID and Mobile registered with the Department. The taxpayer can enter any other person's email or mobile number in addition, as a Secondary Contact (without any restriction on the number of user accounts linked as a Secondary Contact). Using "Profile Settings 'My Profile" the taxpayer can select to include the Secondary Contact to also receive emails, alerts etc. It is advised that the emails and SMS from the Income tax Department may be included in the 'safe list' or 'white list' to prevent the communications from the Department from being blocked or rejected or sent to Spam folder. Taxpayers are also advised not to share their user-id and password of their e-filing account with others to prevent un-authorized access.Taxpayers can reset their password using the 'Forgot Password?' link while logging in to their e-filing account and by providing the necessary details. The Department requests the cooperation of all taxpayers for completing this validation process at the earliest for a smooth and convenient return filing process. CAG to conduct reviews of FRBM act compliance o give a further boost to knowledge sharing and capacity building in various aspects of the Fiscal Responsibility & Budget Management (FRBM) Act, 2003 and Public Debt Management, the Comptroller & Auditor General of India (CAG) signed a Memorandum of Understanding (MoU) with the National Institute of Public Finance & Policy (NIPFP) here today. The institution of CAG of India has been internationally recognized that it can play a significant role in improving public debt management in terms of cost efficiency, sustainability and exposure to risk. The MoU was signed by Shri A.W.K. Langstieh, Director General of Audit (Central Expenditure) and Dr. Rathin Roy, Director, NIPFP in the presence of Shri A.K. Singh, Deputy Comptroller & Auditor General. In his opening remarks at the MoU signed ceremony, Sh. A.K. Singh disclosed that CAG has taken up audit of Public Debt Management in India this year which is first of its kind, comprehensive audit effort. Audit will be conducted in line with international best practices. He said that amendment to the FRBM Act carried out in 2012 has entrusted upon the CAG of India a periodic review of the compliance of the FRBM Act. A T Economy India July-August 2014 14 Artha-desh he Government of India had constituted a Committee for rationalising the definition of FDI and FII as per the announcement of the then Union Finance Minister during the Budget Speech 2013-14 (Para No. 95) which reads as follows: "In order to remove the ambiguity that prevails on what is Foreign Direct Investment (FDI) and what is Foreign Institutional Investment (FII), I propose to follow the international practice and lay down a broad principle that, where an investor has a stake of 10 percent or less in a company, it will be treated as FII and, where an investor has a stake of more than 10 percent, it will be treated as FDI. A committee will be constituted to examine the application of the principle and to work out the details expeditiously." The Committee has now submitted its report which has been accepted by the Government .Report of the Committee is available on the web-site of Ministry of Finance- www.finmin.nic.in. Major features of the report are as follows: The core recommendation of the committee is that it should be the endeavour to simplify the classification of foreign investment and enable basically two classes of foreign investors in the long run viz. Portfolio Investors and FDI Investors, and at best carve outs therein for NRIs, in view of their special status. The committee adopted the conceptual framework that Foreign Direct investment (FDI) is characterised by a lasting interest i.e. existence of a long term rel ati onshi p, s i g n i f i c a n t degree of i n f l u e n c e . N o r m a l l y , ownership of 10 percent or more of the o r d i n a r y shares OR voting power signifies this relationship and it involves both initial and subsequent transactions. On the other hand Portfolio Investment is characterised by the largely anonymous relationship between the issuers and holders, and the degree of trading liquidity in the instruments. Further it covers, but is not limited to securities traded on organized or other financial markets. The Committee has recommended the merger of the FII and Qualified Foreign Investors (QFI) regimes under the new "Foreign Portfolio Investors" (FPI) regime, and this has been notified by SEBI and RBI in their respective regulations. The FPI regime will be subject to the prevailing SEBI (SAST) Regulations to prevent persons acting in concert. There is no change proposed in the monitoring mechanism. However, it has been proposed in addition, that the onus of adherence to the aggregate FPI limit will also be cast on the Investee Company, which can be asked to get the compliance to the foreign investment limit verified by the Statutory Auditor on a half-yearly basis. Foreign investment of 10 percent or more through eligible instruments made in an Indian listed company would be treated as FDI. All existing foreign investments below the threshold limit made under the FDI Route shall however, continue to be treated as FDI. Foreign Investment in an unlisted company irrespective of threshold limit may be treated as FDI. An investor may be allowed to invest below the 10 percent threshold and this can be treated as FDI subject to the condition that the FDI stake is raised to 10 percent or beyond within one year from the date of the first purchase. The obligation to do so will fall on the company. If the stake is not raised to 10% or above, then the investment shall be treated as portfolio investment. In case an existing FDI falls to a level below 10 percent, it can continue to be treated as FDI, without an obligation to restore it to 10% or more. In a particular company, an investor can hold the investments either under the FPI route or under the FDI route, but not both. A relook at the Foreign Venture Capital Investors (FVCI) scheme is called for since these investors are basically in the nature of FDI. Regarding NRI investors, they have a special place in the foreign investment regime since NRI funds flow even through deposits and remittances. Special privileges are also available to NRIs in terms of the Overseas Citizenship Act and the provision to make 'non- repatriable' investments. This position would remain and to reinforce the same, it may be further examined if non- repatriable investment by an NRI can be treated as "domestic" as also an enabling mechanism to enable such investment to come through via a corporate form. Govt. accepts the report of the committee for rationalising the definition of FDI & FII The committee adopted the conceptual framework that Foreign Direct investment (FDI) is characterised by a lasting interest i.e. existence of a long term relationship, significant degree of influence. Normally, ownership of 10 percent or more of the ordinary shares OR voting power signifies this relationship and it involves both initial and subsequent transactions. T Economy India July-August 2014 15 Delhi to get extra gas supply from NTPC inally there is some reprieve for Delhi. The Capital, which a facing a power crisis, will get extra gas supply from the NTPC so that state government- owned generators can produce an additional 400 mw of electricity. The assurance on additional fuel availability to the Delhi's plants was provided by power minister Piyush Goyal after he held an emergency meeting with LT Governor Najeeb Jung on Tuesday to review Delhi's power situation. Delhi's discoms have tied up enough power supply from generating stations in other states to meet their peak e l e c t r i c i t y requirements but due to the destruction of some of its sub-transmission infrastructure in the recent storm, entire power from outside cannot be moved to Delhi. The current power shortfall can be mitigated by utilising the idle capacity of state government's plants. Out of its quota of 3 million standard cubic meter ( mmscmd) gas lying unused with Gail India, state-owned NTPC will divert 0.9 mmscmd of gas to Delhi government's 1,500 mw Bawana power plant, which is currently producing only 290 mw electricity, much below its rated capacity. The plant will be able to run at the higher capacity of 700 mw once it gets additional gas supply. Delhi's current power demand is estimated at 5,800 mw and against that, availability is pegged at 5,300 mw, leaving a gap of 500 mw. Goyal also promised that the Bawana-Rohini power transmission line, which was damaged by the storm in the capital and adjoining states on May 30, will be restored by Tuesday. "Hopefully, we will be able to meet the peak demand of today," he added. All other transmission lines will be repaired in the next 15 days. Delegation of MPs from bihar meets Power Minister delegation of Members of Parliament (MPs) from Bihar led by Shri Sushil Kumar Modi met Shri Piyush Goyal, Minister of State (Incharge) Power, Coal and Renewable Energy here today to discuss issues related to power sector, coal sector, etc with a view to enabling supply of more power to Bihar along with resolution of issues related to assistance under central sector schemes. The major pending projects discussed were, Barh - II, Ultra mega power plant (Banka), Renovation & Modernisation of State Sector Plant, Barauni (210 MW) plant. Coal allocation issues relating to Ultra Mega Power Projects (UMPP) in Bihar (4000 MW) were also discussed. Ministry of coal has agreed to allocate a coal block for Bihar UMPP. It was also indicated that Barh - II Unit 4 (660 MW) of NTPC will be operational commercially by the end of this month (June 2014). The issue of setting up of 1320 MW Buxar Thermal Power Project by SJVNL was also discussed. As per MoU between SJVNL and Bihar 85% of power from the project is to be supplied into the Transmission Grid of Bihar State. Ministry of Coal already allocated Deocha Pachami Coal Block (2102 MT) located in Barauni District of West Bengal for this Project with 6 State Power Utilities. Certificate of possession of private land has been issued by District Land Acquisition Officer, Buxar for total land of 1048.72 acres. Cabinet approval for diversion of total 13.34 acre Government land has also been obtained. Kerala Travel Mart 2014 coming up in September TM 2014 will be held from 18th - 20th Sep'14 at Kochi, Kerala. A new venue has been chosen this time called "Samudrika Convention Centre" located at the cruise terminal, Willingdon Island, Cochin and overlooking the backwaters. This single floor layout, which in itself will be the major highlight, is fully air conditioned, with a business centre, food courts, seminar hall and all the basic amenities. The inaugural function is scheduled for the evening on 17th Sep'14 at Le Meridien, Cochin. A Kerala Village Theme is being planned for this edition of KTM which will give a glimpse of the rural life of Kerala. Adding a plethora of responsible elements, the village life presents a wide range of opportunities for the tour operators to create itineraries based on the Kerala Villages. The Mart will also showcase Kerala, as an ideal spot for Destination weddings as well as MICE. Artha- Pradesh F A K Economy India July-August 2014 16 Artha- Pradesh Cairn India Gets Approval for Raising Oil Output at Rajasthan Block airn India Ltd has received approval from a panel set up by the environment ministry to raise oil output to 300,000 barrels per day from 200,000 at its block in Rajasthan state, according to a notice on the ministry website. The panel, however, set some conditions for the company, including that Cairn India will have to upload the status of environment c o m p l i a n c e , including results of monitored data, on its website and update it periodically. Cairn India has a portfolio of nine blocks, one in Rajasthan which contains multiple assets, two on the west coast and four on the east coast of India, and one each in Sri Lanka and South Africa. Tamil Nadu, Gujarat favourites for starting a business: Survey amil Nadu and Gujarat have emerged as the most preferred destinations for those looking to start a business as these states offer the best incentives and most conducive investment policies, a survey has found. The survey is the first-ever nationwide poll of micro, small and medium industries which was conducted over a nine month period covering 26 states and 3,30,000 MSMEs across the country. "In terms of ease of starting or doing business in a state, Tamil Nadu topped the survey with 9 per cent respondents extremely satisfied with policies, infrastructure, benefits and incentives. Gujarat came in close second with 91.75 per cent of the respondents from the state highlighting tremendous growth," the survey said. Moreover, according to the survey, 58 per cent of the micro, small and medium enterprises (MSMEs) polled were doing far better business than last year in terms of turnover and profitability. Further, 24 per cent of the MSMEs were doing marginally better than last year while 61 per cent respondents polled had employed new staff this year. Besides, 19 per cent reported no change in number of employees from last year while a sizeable 20 per cent actually cut their workforce. The survey was undertaken to understand the issues faced by MSMEs and provide them with probable solutions that could help them to improve their business conditions. It is huge in terms of sample size and predominantly highlights the financial ecosystem, national entrepreneurial ecosystem, state entrepreneurial ecosystem, state of MSME business and other diverse factors concerning MSMEs. The survey was instituted by the India SME Forum and executed by SDRC India. PM flags off train to Vaishno Devi, names it Shreeshakti Express rime Minister Narendra Modi on Friday declared that the Centre wants to win the hearts of people of Jammu and Kashmir through development as he flagged off the train linking Katra--the base camp for Mata Vaishno Devi shrine in Trikuta hills--with the rest of the country. Suggesting that the train be named 'Shree Shakti Express', Modi, who is on his maiden visit to J and K after assuming power, said the state has gone through many "problems and difficulties" and the country wants it to be "prosperous and peaceful". The train connectivity to Katra is part of the ambitious Kashmir rail link project that will connect the Valley with the rest of the country. The last link between Katra and Banihal pass, is expected to be completed by 2018. The 25-km long Udhampur- Katra line, commissioned after prolonged delays, has been built at an estimated cost of Rs.1,132.75 crore. The train will traverse through seven tunnels and over 30 small and large bridges. There will be a small station - Chakrakhwal - between Udhampur and Katra. Trains will be able to reach Katra directly as the 53-km Jammu- Udhampur rail line is already operational. This would enable lakhs of pilgrims headed to the revered Vaishno Devi shrine to travel directly to the base camp at Katra. "I congratulate the crores of devotees of Mata Vaishno Devi, who want to come here for pilgrimage from all across the country," Modi said while dedicating the train to the nation. C P T Economy India July-August 2014 17 Artha- Vishwa Modi to meet Obama in September he flagging India-US ties are set to mend with Prime MinisterNarendra Modi to hold a bilateral meeting with US PresidentBarack Obama in Washington in September, sources said Thursday. Prime Minister Modi, who as Gujarat chief minister was denied a visa by the US in 2005 over the Gujarat riots, has said he is keen to visit Washington, source said. According to sources, Obama is keen to patch up the damage to the India-US ties as fast as possible. His meeting with Modi will be the second in the span of a year with an Indian prime minister. He met Manmohan Singh in September last year during the former prime minister's visit to Washington en route to the UN General Assembly summit. Modi said in interviews before becoming prime minister that individual incidents should not be allowed to cloud bilateral relations - giving an indication of his intent to take forward the ties. Obama is keen to discuss the stalled talks over the civil nuclear liability laws, which have been a major stumbling block in the execution of the India-US nuclear deal. The US is also keen to increase its defence ties with India, a major market. Hero MotoCorp to enter US market next year, Brazil by 2016 ero MotoCorp plans to enter the US market in 2015 with its entry-level bikes and scooters in the 100cc to 125cc range like Splendor and Passion. As part of its aggressive international plans, the Munjals- promoted company will also enter another key two- wheeler market, Brazil, in 2016 while at the same time starting its first fully-owned overseas manufacturing plant in Columbia with a $70- million investment. Pawan Munjal, Hero MotoCorp's MD and CEO, told FE on the sidelines of the Opening Ceremony of the Fifa World Cup 2014 that in the US the company will be distributing its products through Erik Buell Racing (EBR), its technology partner, after initially importing them from India. Hero had purchased a 49.2% stake in EBR, a niche sports bike maker, in 2013 for $25 million, and is likely to take its holding up further. "Our products are already going through homologation in the US, and that takes a long time. There is usually a small window for launch, so while we have showcased our products at a motor fair already, we will formally launch only next year, since we do not want to hit the market in the winter season," he said. Hero has already started work on a $70-million plant in Colombia, its first fully- owned factory overseas that from next year will supply to most of the region till another factory in Brazil comes up at a later date. In Brazil, where it will start sales in 2016, the company is currently talking to potential partners for distribution support. "Initially, we will import our products to Brazil from Columbia. Brazil is different, since it uses ethanol as a fuel, so we are working on substantial modifications to our engines with AVL (another technical partner)," Munjal said. He added: "We aim to launch our products here in 2016, around the Brazil Olympics and will target the huge regional market. Its a tough and a very evolved market with well-established players." Since its split with Japan's Honda Motor in 2012, Delhi-based Hero has been focusing aggressively on overseas markets where operations had been restricted before. In the past year, the company has started exports to around 18 new countries like Peru, Ecuador and Guatemala in South and Central America, besides countries like Kenya and Ivory Coast in Africa. Stiff Competition to Manage Tech Billions hen Microsoft went public in 1986, its chief executive and largest shareholder, Bill Gates, wound up with a broker at Goldman Sachs, the Wall Street firm that had led the company's initial public offering. The San Francisco broker, William Hobi, was so excited to have Gates as a client that he put a vanity license plate on his Porsche for a few years with the letters MSFT, the trading symbol for the company's stock. Times may have changed, but technology billionaires still set the engines racing among Silicon Valley brokers. Social media IPOs, including LinkedIn, Facebook and Twitter, and acquisitions like Facebook's planned $18 billion purchase of WhatsApp have created T H W Economy India July-August 2014 18 more than a dozen billionaires, by one count of Forbes magazine data. Competition to handle their money is intense. "Every day I get a connection request from a wealth manager on LinkedIn," said Michael Cagney, the founder and chief executive of Social Finance, or SoFi, an online student-loan platform in San Francisco that might go public in the next year or two. Cagney sold another financial software company, Finaplex, in 2007 and runs a hedge fund. The wealth management dollars up for grabs were detailed last fall at the trial of Mark Cuban, the Dallas billionaire who was acquitted of civil insider trading charges. The first defense witness, Charles McKinney, a former Goldman broker now at Credit Suisse, testified that Cuban's $695 million account produced annual fees for his firm of about $2.8 million. Many wealth advisers charge up to 1 percent for the first $5 million or $10 million, reducing the fee in stages to 0.5 percent or lower, subject to negotiation, for amounts exceeding $100 million. Clients with simple portfolios of stocks and bonds may pay less than those in more exotic assets, such as hedge funds or private equity. Of course Goldman and its archrival, Morgan Stanley, the longtime leader of tech IPOs, have the biggest share of the market partly because their brokers can forge close ties with technology titans in the IPO process. Goldman's clients have included Meg Whitman, the chief executive of Hewlett-Packard who was chief of eBay when Goldman led its IPO in 1998. Morgan Stanley's roster has included the venture capital investor Brook Byers and Raymond J. Lane, the former executive chairman of HP. But more than two years ago, the charismatic South Africa-born broker Divesh Makan, who had worked at Goldman and Morgan Stanley, took a bite out of their books by starting his own firm, Iconiq Capital, with a pack of Silicon Valley billionaires led by Mark Zuckerberg and Sheryl Sandberg of Facebook and Reid Hoffman of LinkedIn. Iconiq now manages $7.6 billion, up more than 50 percent in the last year. China's 'Apple' Xiaomi to make India debut soon iaomi, often called the 'Apple'of China, has launched its official website in India, paving the way for its entry into the fiercely competitive Indian smartphone market in the next few weeks. "Namaste, Mi Fans! We have officially arrived in India. Join us on this incredible journey at http://www.mi.com/in," said a tweet on the company's official Twitter handle. Founded in 2010 by serial entrepreneur Lei Jun, the Beijing-headquartered firm has become one of China's biggest electronics companies that designs, develops and sells smartphones, mobile apps and other such consumer items. Other Chinese firms selling its handsets in India include Huawei, ZTE, Lenovo, Gionee and Oppo, the latest entrant. According to the company's website, it has already sold over 17 million handsets in China. Its portfolio includes devices like Mi 3, Redmi (Singapore USD 169), Mi Wi-Fi and Mi Box, among others. It launched its products in Singapore in February this year. Earlier this month, the company had also roped in Jabong co-founder Manu Kumar Jain to head its operations in India. The Indian smartphone market is witnessing strong competition between local and international players, all vying to grab a share of the multi-billion dollar market. According to research firm IDC, smartphone sales in the country grew almost three-fold to over 44 million in 2013, buoyed by affordable devices made by local firms such as Micromax and Karbonn. In the first quarter of 2014, 17.59 million smartphones were shipped into India as compared with 6.14 million in the same period of 2013. hina's piecemeal approach to loosening monetary policy this year may be discreet, but the cumulative effect is proving just as powerful as an outright cut in bank reserves. Wary of being criticised for not doing enough to wean the world's second-largest economy off its reliance on easy credit and heavy investment, authorities have ruled out major stimulus even as growth slowed to an 18-month low in the first quarter. Instead, the People's Bank of China (PBOC) has relied on four low-key adjustments that have added a total of 550 billion yuan ($88 billion) into the banking system, a calculation based on a Reuters poll and information from sources shows. That is equivalent to an economy-wide 50 basis point cut in the reserve requirement ratio (RRR), the level of reserves that banks must hold, a splashier move which would also have released 550 billion yuan in one stroke. The four moves -- two reductions in the RRR for selected banks and two big loans to commercial banks - - are designed to direct cash to where its needed in the economy, and thwart speculative investment. Characterising these changes as a "fine-tuning", the central bank has been adamant that overall monetary policy has not changed and remains prudent. "We need to take a holistic view about monetary easing," said Wei Yao, an economist at Societe Generale in Hong Kong. "The approach is called 'fine-tuning' because they did it bit by bit, but the accumulated impact is not small." China's fine-tuning adds up to stimulus by stealth C X Artha- Vishwa Economy India July-August 2014 19 Public-Sector Coal India Limited To Enter Fertilizers & Chemicals Business oal India Limited (CIL) has decided to alter its memorandum of association to get into the business of producing fertilizers and chemicals using coal gas. The amendment will allow CIL to produce, store, distribute, sell, import and export gas and other by- products from coal gasification, and use them to produce ammonium nitrate and fertilizers. The amendment will also allow it to install and operate such plants in India and abroad. The CIL board recently approved the proposal. It has decided to seek shareholders' nod on this issue through a postal ballot. The company said that Rashtriya Chemicals & Fertilisers had signed a memorandum of understanding with GAIL (India) for jointly exploring the potential use of gas produced from the surface coal gas project in the fertilizer industry. GAIL had approached CIL for co- operating in the studies required and the project development for surface coal-gasification in coal-bearing states in India, including the area in and around Talcher in Odisha. There would be two joint ventures - one for coal gasification and gas purification with GAIL and the other for setting up a downstream fertilizer-cum-ammonium nitrate unit. Solar energy in telecom: BSNL, NEDO in talks tate-run telecom firm BSNL and Japan's NEDO started discussions for using solar energy in telecom networks to reduce carbon footprint. "Mr (Iwao) Miyamoto, Chief of NEDO in India had a meeting today ...with Mr Anupam Shrivastava, Director Consumer Mobility BSNL and explained the support of Japan to India. This falls in line with the directives of the Prime Minister to reduce the dependence on energy by substituting the same with solar power," BSNL said in a statement. Both the organisations met in the backdrop of a proposed visit by Prime Minister Narendra Modi to Japan. New Energy and Industrial Technology Development Organization (NEDO) is a semi-governmental Japan based organization that was set up in 1980 to promote the development and introduction of new energy technologies. NEDO has formed alliance in India with TERI to promote use of renewal energy in the country. Government has directed telecom companies to migrate 50 per cent of all rural mobile towers and 20 per cent in urban area to hybrid power, which is mix of renewable energy and grid power, by 2015. By 2020, all telecom companies have been directed to adopt hybrid power for 75 per cent rural towers and 33 per cent of urban towers. BSNL has about 70,000 mobile towers across country. Railways Planning FDI Route for High-Speed Trains: Gowda he Modi government is planning to allow foreign direct investment (FDI) into railways to finance its ambitious plans to modernize the sector. At present, there is a complete ban on any kind of FDI in railways except mass rapid transport systems. Railways minister DV Sadananda Gowda on Thursday said the government is short of resources and some resource mobilization should be taken as a priority. "I want to have discussion with commerce minister Nirmala Seethraman, who has asked me to come up with proposals... I think in 3-4 days we will come to a conclusion," said Mr Gowda. Modernization and revamping of railways is the top infrastructure agenda of the government, which wants to build a Diamond Quadrilateral project of high-speed trains and a network of freight corridors over the next few years. These projects require very large capital investments. According to Press Trust of India, the Commerce and Industry Ministry has started the exercise to relax foreign investment norms in the railways sector by permitting 100 per cent FDI in high-speed train systems and dedicated freight lines. Besides high-speed train systems and dedicated freight lines, there is also a proposal to allow foreign investment in sub-urban corridors and freight lines connecting ports, mines and power installations, sources told PTI. However, existing passenger and freight network operations will not be opened to foreign investors, the sources said. The move to liberalize investment in railways comes after a similar decision was taken to allow 100 per cent FDI in the defence sector. C S T Economy India July-August 2014 20 Corporate-Sector sia's top companies reported a bullish outlook in the second quarter of 2014 compared to the first three months despite worries over the global economy and rising costs, the latest Thomson Reuters Business Sentiment Survey showed. Of the 124 companies who responded to the poll, none reported a negative outlook for the first time in the survey's history. The Thomson Reuters Business Sentiment Index rose significantly to 74 in the second quarter compared to a 64 reading in the first quarter. A reading above 50 indicates an overall positive outlook. India: Sentiment surges (index at 100 vs 65 in Q1). Despite worries over the global economy, rising costs and volatility in exchange rates, Indian companies were the most optimistic with all 10 respondents reporting a positive outlook, a level last seen in the fourth quarter of 2012. Nine companies said new orders and sales increased in the second quarter while employment levels rose for 60 per cent of the respondents. Three companies said delays in payments from customers had declined. A resounding election victory last month for pro-business leader Narendra Modi, with the mandate to steer the economy out of its current slump and create more jobs, has revived consumer confidence in Asia's third-largest economy. Australia: Significantly better (index at 79 vs 64 in Q1). Business confidence among companies in Australia recovered in the second quarter even as half the participants continued to worry about the global economy. Of the 12 respondents, which included Stockland Corp and Oil Search, seven companies were positive while the rest remained neutral, an improvement over the last quarter where only two of seven companies were positive. Five companies said their new orders increased while the same number said they hired more people. Close to a third of all companies surveyed have increased employment levels in the second quarter. China: Recovery (index at 67 vs 50 in O1). Sentiment in China rebounded as a third of companies polled reported a positive outlook and 50 percent of the participants saw an increase in new orders and sales in the second quarter. Last quarter all eight respondents held a neutral outlook. Nine of the 15 participants said global economic uncertainty was the top risk, a worry shared by more than 50 per cent of 124 companies surveyed in the second quarter. A handful of Chinese firms are concerned about rising costs. The world's second-largest economy is struggling to recover from an economic slowdown, exacerbated by deterioration in the property market, despite government stimulus. This has pulled the sentiment index down from its peak of 95 in the first quarter of 2011. Japan: Slips marginally (index at 56 vs 59 in Q1) Business sentiment in Japan weakened slightly with the global economic environment primarily weighing on corporate outlook. Of the 16 respondents, which included Daiichi Sankyo Co Ltd, Canon Inc, Seven & I Holdings and NTT DoCoMo, 14 were neutral on the outlook and two positive, similar to the previous survey. While risks associated with exchange rate volatility abated in the second quarter, a handful of companies continued to worry about rising costs. Fewer companies reported an increase in new orders and employment levels over the last quarter. South Korea: Significantly lower (index at 50 vs 67 in Q1). Global economic uncertainty weighed on sentiment at South Korean companies with the economy's index falling to 50 in the second quarter from 67, last quarter. All 19 respondents said their outlook was neutral with the majority concerned about the global economy while a handful were worried about rising costs. While half the respondents said new orders and sales increased, only three reported higher employment. In the previous quarter a third of the companies had a positive outlook while the remaining six were neutral. Taiwan: Sentiment rebound (index at 67 vs 50 in Q1). Optimism returned to Taiwan's sentiment index, reversing the decline in the March quarter. Two of the six respondents A Indian Companies Most Optimistic in Asian Business Sentiment Survey Economy India July-August 2014 21 Corporate-Sector turned positive in their outlook compared with none in the last survey. Companies were concerned about the global economy, rising costs and exchange rate volatility. Two respondents lowered employment levels this quarter compared with steady levels last quarter while two companies reported an increase in orders, compared to just one in the previous quarter. South East Asia: mostly stable, Thailand recovers (Thailand at 91; Philippines at 100; Singapore at 67; Malaysia at 67). Sentiment among Southeast Asian businesses was mostly upbeat as Thailand recovered and with the exception of Malaysia, which slipped to 67 from 75 as rising costs and uncertain world economics continued to worry businesses in the region. The business outlook in Thailand turned positive after two quarters of negative sentiment as political turmoil in the country eased. The index rose to 91 from 41 last quarter - the highest level since the first quarter of 2012 - as 12 of 16 companies saw an increase in new orders and sales. Worries over political stability, among other things, remained. The Philippines, along with India, was the most optimistic with all 15 respondents showing a positive outlook which remained unchanged at 100. Two-thirds of the respondents reported higher employment levels while almost all saw an increase in new orders and sales. The sentiment index among companies in Singapore remained unchanged at 67 with two of six respondents showing a positive outlook and the rest remaining neutral. Only three of six companies said new orders and sales increased this quarter compared with eight of nine respondents last quarter. There were no responses from Indonesia, the region's biggest economy. Vodafone facing total tax liability of over Rs 27000 crore K-based telecom major Vodafone is facing tax claims and interest totalling more than Rs 27,000 crore in India, which includes Rs 14,200 crore for acquiring Hutchison's stake in 2007, the company said in its annual report. According to the report, "Vodafone India (VIL) and Vodafone India Services Private Limited (VISPL) are involved in a number of tax cases with total claims exceeding 1 billion pound plus interest, and penalties of up to 300 per cent of the principal.", Reports, PTI. The report said, "Vodafone International Holdings BV (VIHBV) has not received any formal demand for taxation following the Finance Act 2012 but it did receive a letter on January 3, 2013 reminding it of the tax demand raised prior to the Indian Supreme Court's judgement and purporting to update the interest element of that demand in a total amount of Rs 142 billion." Besides, the UK telecom company is facing a tax liability of over 1 billion. These claims are related to transfer pricing, disallowance of income tax holidays and applicability of value-added tax to SIM cards. Apart from the tax cases, Vodafone's local outfit is also facing a number of regulatory cases, the report said. "Litigation remains pending in the Telecommunications Dispute Settlement Appellate Tribunal, High Courts and the Supreme Court in relation to a number of significant regulatory issues including mobile termination rates, spectrum and licence fees, licence extension and 3G intra-circle roaming," Vodafone said. As regards the liability of Rs 14,200 crore towards acquisition of Hutchison Whampoa in 2007, the company faces tax demand following the retrospective tax amendment carried out by the UPA government in 2012. Infosys appoints new boss as co-founder Murthy leaves r Murthy came out of retirement last year to take up the role of chairman, for a period of five years, to help revive the firm's flagging fortunes. But his return was followed by the departure of various senior executives. Mr Sikka, a former SAP executive board member, will be the first non-founder to lead Infosys. He will take charge of the company from 1 August. Growth revival India's software firms have enjoyed robust growth over past few years, but more recently their growth rates have slowed. The economic downturn in key markets such as the US and Europe has hurt demand and dented their growth. For its part, Infosys has also been hurt by growing competition at home and has been losing market share to rivals such as Tata Consultancy Services. Even though the firm reported a jump in revenue and profit for the financial year ending 31 March, there have been concerns about a slowdown in its pace of growth. Those fears have been fanned further by the departure of several senior executives in recent months. However, on Thursday MrSikka said there was scope for the company to tap into new areas of growth. "Computing technology is reshaping every industry across every walk of life," he said. "We, at Infosys, have a unique opportunity to deliver breakthrough solutions that will bring greater value to our clients, employees, investors and other stakeholders." U M Economy India July-August 2014 22 Corporate-Sector U Kotak wins the World Entrepreneur Award day Kotak, the founder, Executive Vice Chairman and Managing Director of Kotak Mahindra Bank was last night named the EY World Entrepreneur Of The Year 2014 at an awards ceremony held in Monaco's Salle des Etoiles. Mr Kotak was picked from among the 60 country finalists vying for the title from 51 countries, each of whom has already been named the EY Entrepreneur Of The Year in their home countries. Rebecca MacDonald, founder and Executive Chair of Just Energy Group, Chair of the World Entrepreneur judging panel said, "It was an incredibly tough decision, but Uday shone through for the way he created a new bank in a challenging and highly regulated environment that has a positive impact in the community. We were impressed with his strong focus on inclusive growth, providing low-cost services to rural customers that have a tangible impact on people's lives." Mr Kotak is the second from India to win the coveted World Entrepreneur Of The Year award and his selection comes 11 years after Mr N R Narayana Murthy of Infosys had won in 2003. " Airtel ties up with Tigo, Zantel for mobile money transfer harti Airtel said it has tied up with African telecom operators Tigo and Zantel for providing customers in Tanzania mobile money transfer service across networks. The service is expected to begin this month, Bharti Airtel said in a statement. With this agreement, customers of the three firms will be able to send money by mobile to each other by either using Airtel Money, Tigo Pesa or EzyPesa. "This is the first agreement in Africa to adopt such interoperability whereby mobile network operators allow their customers to send and receive money across their networks and the e-money goes directly to the respective customer's e-wallet account," Airtel said. "This is a tremendous evolution towards ensuring the mobile commerce inclusion sought by many Tanzanians, especially taking into account Airtel's broad reach across the country," Airtel Tanzania Managing Director Sunil Colaso said. Airtel said in the early years of mobile industry, such agreements were common for both voice calls and SMS text messaging. "Just as we co-operate with our competitors on voice calls and text to help our customers, so we hope to be able to do the same with mobile money and help make Tanzania a global pioneer in digital financial inclusion," Tigo General Manager for Tanzania Diego Gutierrez said. Zantel Managing Director Pratap Ghose also said the company will work with the industry and the regulatory bodies to ensure that they offer 'best in class' service to its customers. Maruti enhances market share in Q1, crosses 42 pct iding on the strategy of focusing on first time buyers and rural markets, country's largest carmaker Maruti Suzuki India (MSI) has increased its market share in passenger vehicle segment in the first quarter of the current fiscal to 42 per cent. In the April- June period, the company sold 2,41,812 units of passenger cars and utility vehicles out of an industry total of 5,73,038 units, garnering 42.19 per cent market share, according to latest SIAM data. During the same period last fiscal, MSI had sold 2,22,645 units of passenger car and utility vehicles out of industry total of 5,58,416 units, securing a market share of 39.87 per cent in the period. In June, the company's market share rose to 45 per cent with 91,226 cars and utility vehicles sold out of a total 2,04,081 passenger vehicles sold during the month. "Some of the strategies such as focus on first time buyers, on exchange, on urban markets, on rural opportunities have started giving us results," said MSI COO (Marketing and Sales) Mayank Pareek. Fair Trade Regulator Slaps Rs. 25.67 Cr Penalty on Adani Gas Fair trade watchdog Competition Commission of India (CCI) has imposed a penalty of more than Rs. 25 crore on Adani Gas for violating competition norms by abusing its dominant market position. Adani Gas is a subsidiary of Adani Enterprises, which is part of diversified Adani Group. CCI's ruling has come on a case related to supply and distribution of natural gas by Adani Gas Ltd in Faridabad. A fine of Rs. 25.67 crore has been imposed on Adani Gas for abusing dominant position, the regulator said in a statement on Monday. The penalty amount translates to four per cent of average of Adani Gas's turnover for the last three financial years. Adani Group did not immediately comment on the matter. Besides directing Adani Gas to cease and desist from unfair practices, the CCI has asked the company to modify the Gas Sales Agreements (GSAs). The case was taken up by CCI following information filed by Faridabad Industries Association and the final order was passed on July 3. U B R Economy India July-August 2014 23 Infrastructure PlanCom, PMEAC wings might be clipped he Narendra Modi government is looking for an adviser in the Planning Commission, even as the deputy chairman is yet to be appointed, perhaps a sign of the current priorities. 'The Commission's role might be truncated to an advisory body alone. The Prime Minister's Economic Advisory Council (PMEAC) might also see its role severely diminished. The department of personnel & training has advertised a vacancy for an adviser's post in the Commisison, a joint secretary rank, on its website. The post is to be filled by August. The deputy chairman has Cabinet minister rank; the other members are in the rank of minister of state (MoS). Rao Inderjit Singh's appointment as MoS (independent charge) for planning comes after quite a while. A minister was earlier appointed to have independent charge of the Commission in 1990, when there was someone of Cabinet rank. A senior official explained, "This means all Parliament questions and files hitherto sent to the Prime Minister in view of him being the chairman of the Commission will be handled by the minister himself, without concerning the PM." The official said he believed the Commission might not be abolished (it was formed by an executive order in 1950) but would remain in the current state of limbo for a few more months, without the deputy chairman and members, to be replaced later with only a few advisers and members. Officials said some talk had already started on appointing only senior sectoral advisers instead of full-time members or otherwise appointing only two or three full-time members, not as powerful as earlier. Earlier, ministers of planning have been deputy chairmen of the Commission as well. Prime Minister Narendra Modi in his earlier role as chief minister of Gujarat had been critical of the functioning of the Commission. Officials also said for allocation of plan funds, a basic function of Commission, the new government might turn to a report of a committee headed by C Rangarajan, former chairman of PMEAC. The committee had proposed abolition of the distinction between Plan and non-Plan expenditure for both Centre and states. It had said the budgetary plan allocation currently decided by the Commission for both Centre and state governments should be given to the finance ministry. On the other hand, the Planning Commission should widen its ambit to include non-Plan expenditure as well but only as an advisory body. Non-Plan spending includes subsidies, salaries and pensions, and devolution of taxes to states as decided by the Finance Commission, beside defence expenditure. PMEAC might also see its role diminished, even as it was an advisory body earlier as well. Rangarajan has already resigned from its chairmanship. The new government has to take a call on its reconstitution, officials said. The Commission in its long history had some illustrious names donning the post of deputy chairman, including former PMs Manmohan Singh and P V Narasimha Rao, incumbent President Pranab Mukherjee and others. In the previous government, the Commission was headed by noted economist Montek Singh Ahluwalia, aided by eight full-time members who represented diverse fields. He was one of the longest serving deputy chairmen, for almost 10 years. Manmohan Singh had in fact said a few months earlier that the Commission should reorient itself and critically analyse whether it was relying on tools developed for another era. "With an increasingly open and liberalised economy, with a greater reliance on market mechanisms, we need to reflect on what needs to be the role of the Planning Commission in this new world," he'd said. Reliance Jio Infocomm Ltd may use 30,000 and 45,000 towers for 4G service Our recent channel checks suggest that RJio has completed about 11,000 base station installations nationwide and is possibly targeting 30,000-45,000 base stations by launch. We expect this target to be met by December 2014 or March 2015," Credit Suisse analysts Sunil Tirumalai and Chunky Shah said in a recent report. RJio's rollout of networks is progressing at 2,500-3,000 base stations a month and the pace is accelerating, T
"This means all Parliament questions and files
hitherto sent to the Prime Minister in view of him being the chairman of the Commission will be handled by the minister himself, without concerning the PM." Economy India July-August 2014 24 Infrastructure according to the report. The rollout is well spread out across the country and will continue after the launch, the analysts said. The company has signed deals with various tower companies through which it has access to about 1,92,500 sites. Credit Suisse estimates that RJio's network at launch will be three times larger than that of all the companies that started operations in 2009-10 and disrupted India's telecom market with their price wars. In a report in May, Credit Suisse said almost 60 per cent of RJio's nationwide fibre project appears to have been completed, making its fibre network quite comparable to those of the top telcos in at least the top cities and circles. Wal-Mart to launch e-commerce marketplace in India in July al-Mart Stores Inc (WMT.N) will launch its business-to-business e-commerce platform in the Indian cities of Lucknow and Hyderabad in the first week of July, its India boss said on Friday. The world's largest retailer has 20 wholesale outlets in India, including in Lucknow and Hyderabad, which will support its e-commerce services, its India Chief Executive Officer Krish Iyer said. It would look at rolling out the service to the remaining 18 outlets as well, Iyer said, but not for another six months at least. "We will not start rolling out to the other 18 stores for the next six months because we will learn from any teething problems and feedback from members," Iyer told Reuters. In April, Wal- Mart said it planned to open 50 more wholesale outlets in India over four to five years and start online operations to sell to small shopkeepers, several months after it decided against opening its own retail stores. The e-commerce service will be available only to its trader members, Iyer said. India restricts global online retailers from selling their products directly to consumers. But sources told Reuters this month India could allow global online retailers such as Amazon.com Inc AMZN.O to sell their own products directly to consumers as early as July, removing restrictions that have held back competition in one of the world's biggest retail markets. Wal-Mart does not have any immediate plans to sell directly to consumers through its e-commerce service, Iyer said. "We will continue to focus only on business-to-business... but that does not mean we will not look at it," he said. Iyer said Wal-Mart's wholesale stores currently cater to consumers within a 20-km radius and the e-commerce business will help the company serve customers from within a 40-km radius of its stores. Wal-Mart has been operating under the wholesale format in India since 2007. The company's desire to enter India with supermarkets has been met with fierce opposition from small shopkeepers and political parties. Maruti sees $1.8 billion savings on Suzuki agreement aruti Suzuki India Ltd, the country's biggest car maker, said it expected a saving of about 105 billion rupees over 15 years by entering into a contract manufacturing agreement with parent Suzuki Motor Corp. In January, Suzuki said it plans to build a wholly-owned car plant in Gujarat that will supply exclusively to Maruti. The plan has met with resistance from some of Maruti's large Indian shareholders. Maruti, pending shareholder approval, plans to enter into a contract manufacturing agreement with Suzuki for 15 years, which can mutually be extended by another 15 years, it said in a presentation, a copy of which it filed to the stock exchanges. Suzuki will invest a total of about 185 billion rupees to build the plant that would eventually have a capacity of 1.5 million cars, Maruti said. Australia Delays Decision on Adani's $15 Billion Coal Project dani Enterprises Ltd faces a new delay on a planned coal mine in Australia, amid worries that a port expansion to accommodate the project could hurt the World Heritage-listed Great Barrier Reef. Australian Environment Minister Greg Hunt has extended his review of Adani's A$16.5 billion ($15.5 billion or Rs. 93,000 crore) Carmichael coal and rail project to August 1, a spokesperson for the minister said. "The date for a decision has been extended to ensure the minister can thoroughly consider the large volume of material associated with this project referral," Hunt's spokesperson said in an email to Reuters. The project in the untapped Galilee Basin, designed to produce 60 million tonnes a year of thermal coal used in power stations, has been attacked by green groups opposed to both new coal mines and the rail lines and ports needed to ship the coal. The port that Adani plans to use, Abbot Point, is facing a legal challenge from green groups fighting an expansion that will dredge up 3 million cubic metres of sand to be dumped near the Great Barrier Reef. The government's move to postpone a decision on the Carmichael project comes just as UNESCO's World Heritage Committee is due to consider a proposal to vote next year on putting the Great Barrier Reef on the "in danger" list. W M A Economy India July-August 2014 25 Banking J&K Bank to sell stake in insurance venture ammu And Kashmir Bank Ltd will raise 5-6 billion rupees ($84-$101 million) by selling its 5 percent equity holding in a life insurance company by the end of this year, its chairman said. The mid-sized state bank will exit from PNB MetLife India Insurance Co Ltd (PNB MetLife) with the stake sale and use the capital to bolster its core banking business, Mushtaq Ahmed said. "We have already given the mandate for this. PNB Metlife has the first right of refusal for this. The exploratory process has already started," he said. The main shareholders in PNB MetLife are state-owned lender Punjab National Bank and US life insurer Metlife Inc. Sebi accuses Factorial of insider trading in L&T Finance shares ecurities and Exchange Board of India (Sebi) on Thursday, 5 June 2014, issued an order restraining Factorial Master Fund, which is domiciled in Cayman Islands and operates as a hedge fund, from dealing in the securities in Indian securities market, including through Offshore Derivative Instruments and/or accessing the Indian securities market, directly or indirectly, in any manner whatsoever till further orders on allegations of insider trading in shares of L&T Finance Holdings. Sebi said on 13 March 2014, abnormal movement was observed in the share price of L&T Finance Holdings (LTFH) and, therefore, Sebi undertook preliminary examination in the matter. Sebi said it observed that on 13 March 2014, i.e. the day on which the shares of LTFH were included in the futures & options (F&O) segment, the price of the March expiry futures contract of LTFH in the F&O segment opened at Rs 87.80, and dropped by more than 10% to close at Rs 75.55 on the same day. In cash segment, the scrip had opened at Rs 86, rose to Rs 88 and then dropped by more than 10% to close at Rs 79.20. Sebi observed that just before 13 March 2014, Factorial was involved as potential investor in the market gauging exercise undertaken by Credit Suisse Securities (India) with regard to Offer for Sale (OFS) of LTFH shares by promoter L&T. Credit Suisse was appointed by L&T as Seller Broker in the OFS. Sebi observed that Factorial built substantial short position in LTFH (84.15% of the market wide open interest) in the futures & options segment on 13 March 2014 at average price of Rs 80.94 ahead of announcement of the OFS of shares of LTFH at a floor price of Rs 70 on the same day in the late evening. Sebi also observed that Factorial had taken such an aggressive short position without any existing exposure in the shares or derivatives of LTFH. Sebi said five different and independent FIIs were used to build the short position in LTHF. Sebi also said nearly the same number of shares were covered in cash segment the next day by subscribing to the OFS at a price of Rs 71.50, locking a profit of approximately Rs 20 crore. Sebi said that Factorial may file its reply, if any, to Sebi on this order within 21 days from the date of receipt of this order, if it so desires, avail an opportunity of personal hearing on a date, place and time fixed in that regard by Securities and Exchange Board of India. RBI eases address proof rules for bank A/c ow, citizens without having permanent address proof can open a bank account by submitting only one document as current proof of address, according to the Reserve Bank of India. Taking note of citizens who are migrant workers and transferred employees who do not possess permanent address documents, the central bank eased the Know Your customer (KYC) documentation rules. In a notification, RBI said, "Henceforth, customers may submit only one documentary proof of address (either current or permanent) while opening a bank account or while undergoing periodic updation. In case the address mentioned as per 'proof of address' undergoes a change, fresh proof of address may be submitted to the branch within a period of six months." T h e RBI further added that in case the proof of address furnished by the customer is not the local address or address where the customer is currently residing, the bank may take a declaration of the local address on which all correspondence will be made by the bank with the customer. "No proof is required to be submitted for such J S N Economy India July-August 2014 26 Banking address for correspondence/local address. This address may be verified by the bank through 'positive confirmation' such as acknowledgment of receipt of (i) letter, cheque books, ATM cards; (ii) telephonic conversation; (iii) visits; etc," it said. In the event of change in this address due to relocation or any other reason, customers may intimate the new address for correspondence to the bank within two weeks of such a change, RBI added. Govt to set health rider for 49% FDI in insurance he Bharatiya Janata Party-led government is set to raise the foreign direct investment (FDI) threshold in insurance to 49 per cent with two riders. All companies will have to providehealth insurance, and voting rights of foreigners will be limited to 26 per cent, the current investment cap. The government is working on a three-pronged strategy to make health care affordable. First, ensuring availability of products by making it mandatory for all companies to provide standalone health insurance. Second, it will encourage people to go for health insurance by offering tax sops in the Budget. The exemption limit for self, spouse and dependent children might be raised from Rs 15,000 a year. The limits for additional deduction of Rs 15,000 (if parents are dependent) and Rs 20,000 (if the individual or one of the parents is a senior citizen), could also go up. Third, the finance ministry will work out a mechanism in consultation with the health ministry to ensure patients are not overcharged by private hospitals. REFORM WITH CAUTION Cap: FDI in insurance may be raised to 49% from 26% Riders: Those wanting to raise FDI beyond 26% will have to offer health insurance; cap on voting rights of foreign firms' nominees on boards capped at 26% Capital: Minimum paid-up capital for health insurance is Rs 50 crore, unlike Rs 100 crore for other insurance segments Piecemeal way: Govt might follow a gradual approach to raising insurance FDI - starting with non-life, health and then life Priority: Health insurance a priority for govt; tax sops might follow in the Budget Regulation: Govt to bring mechanism to ensure private hospitals don't overcharge patients Hopes: FDI inflows of Rs 5,000-6,000 cr expected immediately after insurance FDI cap is raised "While allowing up to 49 per cent FDI, we will ask companies to compulsorily offer health insurance. They are willing to do that. Second, we are contemplating higher tax exemption on health insurance. More products and players should be in the market. Third, there should be some regulation of charges levied by private hospitals," said a ministry official, asking not to be named. The decision to include mandatory health cover in the FDI policy for insurance was taken after Finance Minister Arun Jaitley asked the department of financial services to give it a push because of the rising cost of private health care. Jaitley also wanted control of insurance companies to remain in Indian hands. Accordingly, the 26 per cent cap on voting rights could be imposed. The policy will keep the capital requirement for health insurers at Rs 50 crore, against Rs 100 crore for others. Also, as the government wants to open the sector gradually, it might first allow higher foreign investment in health and general insurance. NABARD Reduces Rates of Refinance ABARD has reduced the rate of interest by 20 basis points (bps) on their long term refinance facility to banks with an objective to promote investments in agriculture. The new rates will be applicable from 6 June 2014. Announcing the new rates, Dr. Harsh Kumar Bhanwala, Chairman, NABARD said that rates of refinance will now be 9.50% for 5 years and above and 9.70% for 3-5 years period, Banks availing more than Rs.500 crore in a single drawl will further be incentivised by 10 bps. To combat food inflation, efficient agricultural technologies get a further incentive of 50 basis points. In addition, NABARD shall further give 50 basis points reduction, for innovative agricultural activities which enhance production & productivity. These activities among others include; production under controlled conditions like poly houses with water saving drip & fertigation facilities, precision farming, post-harvest management, etc. The list includes 12 such innovative farm practices to enhance fruit and vegetable production. This initiative is aimed at combating the food inflation by addressing the supply side constraint. NABARD will also extend the 50 basis points rebate for supporting single purpose under area development schemes, mainly to benefit small and marginal farmers. Dr. Bhanwala said that this initiative will incentivise the Cooperative Banks, RRBs and Commercial Banks in reversing the decelerating trend of investment credit and will aid in enhancing capital formation in agriculture. T N Economy India July-August 2014 27 Human Development India has slowest internet penetration growth in APAC ndia, which accounts for the third largest online user base globally after China and the U.S., has had the lowest internet penetration growth in Asia Pacific (APAC) at 17.4 per cent so far this year, research firm eMarketer said in a report. However, it left behind major emerging markets in APAC like China and Indonesia in terms of growth in online users as of May 2014. Asia-Pacific will boast of over 1.33 billion internet users this year, the largest online population of any region in the world, eMarketer said in the report. "Within the region, internet usage rates span a broad range, from as low as 17.4 per cent of India's population this year, to nearly eight in 10 in South Korea," it added. The research firm said there is a clear split between developed internet economies South Korea, Japan and Australia, which all have at least three-quarters of their total populations online and less developed, but growing, markets like Indonesia and India. South Korea accounted for the highest 78.9 per cent of the internet penetration growth in Asia Pacific followed by Japan (77.3 per cent), Australia (76 per cent), China (48.5 per cent) and Indonesia (33 per cent). "Unsurprisingly, it's these less mature markets that are growing their web populations more quickly, both because of their relatively smaller bases and the basic fact that saturation is far off in these countries," eMarketer said. India led Asia Pacific nations in user growth at 28.9 per cent followed by Indonesia (14.9 per cent), China (6 per cent), Australia (1.7 per cent), Japan (0.8 per cent) and South Korea (0.7 per cent). "Double- digit growth rates in India's Internet population are expected throughout eMarketer's forecast period (2012- '18), while Indonesia will also post increases of 10 per cent or higher through 2016," the firm said. By contrast, it expects online populations of South Korea and Japan to stagnate over the same period. Industry body Internet and Mobile Association of India (IAMAI) expects India's internet user base to touch 243 million by this month, projecting a year-on-year growth of 28 per cent. As per TRAI data, the country's internet subscriber base stood at 238.71 million as on December 31, 2013. Rejuvenation of River Yamuna & Making the Delhi he Minister for Road Transport, Highways and Shipping Shri Nitin Gadkari has emphasized the need for a systematic public awareness clean- Yamuna campaign involving citizens and students. Chairing a meeting for rejuvenation of Yamuna River and to make its stretch in Delhi navigable, the Minister said that a sense of involvement and community participation for the development of river front should be inculcated. Among the issues discussed were: To make sufficient water flow/discharge available in the river throughout the year. The issue of treatment of sewage and industrial waste in Delhi before discharging into the river for augmenting its water level. To undertake development and beautification of the river banks in an ecologically sound and environment sensitive manner. Shri Gadkari asked representatives of the Delhi Government, who attended the meeting, to explore the possibility of constructing navigational barrages in Delhi stretch of Yamuna to augment the flow of the river as suggested by Central Water Commission in one of their earlier Reports. The project also entails augmenting the water capacity by recharging the 4/5 (Four/Five) big lakes which are close to the river and connecting/channelizing their flow into the river. The Delhi Government also has a plan for taking up a pilot project around the "Signature Bridge" presently under construction in the city to improve the water flow in the stretch by dredging and installing an "inflatable rubber weir" to hold back enough water during the lean season to provide 2-3 mtrs. (Two to three mtrs.) depth for navigation purposes throughout the year. I T Economy India July-August 2014 28 Human Development Proposed Deendayal E-Rikshaws Scheme he minister for Road transport, Highways and Shipping Shri Nitin Gadkari has said the Shri Narendra Modi's Government is committed to removing poverty through employment generation and make India an empowered nation. Addressing a rally of electric rikshaw pullers in New Delhi the minister announced some important policy decisions including removing the rickshaws which run with power below .65 watts from the preview of the Motor Vehicles Act. He said the drivers of these rickshaws should be their owners and they should be able to register their vehicles with the Municipal corporation with a fee of Rs.100/- and get an Identity Card. Shri Gadkari said that he has proposed to the Prime Minister and the Finance Minister that the scheme may be called "Deendayal e-Riksha". Loans for these vehicles may be given at an interest rate of 3% per annum. The minister said the objective of the scheme was to remove the practice of man pulling a man and luggage through manual rikshaw. The minister said that four people may be allowed to travel in these rikshaws along with two pieces of luggage of 25 kgs each. Shri Nitin Gadkari said amidst uproar of rikshaw pullers and others who attended the rally that this first decision of the ministry after his takeover is aimed at benefitting two crore rikshaw pullers of the country. E-tailers Growth Ensnared in India's Logistics Jungle nline retailers jostling for a chunk of India's $13 billion or Rs. 76,700 crore e-commerce trade are so desperate to avoid snarled roads and inefficient railways that they fly their packages in the passenger cabin of costly commercial flights. The cargo, however, often gets bumped off. India's largest domestic e-tailer Flipkart as well as bigger global rivals like Amazon and eBay Inc are widening their supplier networks or racing to build multi-million dollar logistics networks to circumvent crumbling infrastructure, keen to attract customers by shrinking delivery times to same-day or even as short as nine hours. (Read: Flipkart Battles Amazon for India E-Shopping Dominance) In the meantime, they remain at the mercy of commercial airlines, which Smriti presents the 'QS University Rankings to PM he Union Human Resource Development Minister, Smt Smriti Zubin Irani presented the first copy of the 'QS University Rankings: BRICS 2014' to Prime Minister Shri Narendra Modi .Speaking on the occasion, Prime Minister Shri Modi identified the need to link research and education to the development needs of the country. He emphasised the need for India to evolve an independent 'India Ranking' metric which can then involve the SAARC nations as the existing systems are skewed towards Western Nations. Earlier, the ICAA delegation called upon the Union HRD minister SmtIrani and delivered a detailed presentation on Global Rankings and discussed steps to help assist Universities in India progress up the ranks. The growing interest in international rankings is reflected in a sharp increase in the positions of some Indian institutions featuring in the BRICS Ranking published by QS. Twenty Indian educational institutions feature in the latest BRICS ranking and five Indian Institutes of Technology (IITs) win places in the top 20. IIT-Delhi, IIT- Bombay, IIT-Kanpur, IIT-Madras and IIT-Kharagpur have made it to the list. IITs are again by far the most successful representatives of the country's higher education system. The prestigious IIT Kharagpur has a higher proportion of PhDs among its staff than any university in the five countries, while another three Indian institutions feature in the top five on this measure. On overall staffing levels, only Manipal University appears in the top 100 among the universities of the BRICS countries. Other educational institutions from India in the list include University of Mumbai, University of Madras, Banaras Hindu University, Manipal University, Birla Institute of Technology and Science, University of Pune, Indian Institute of Information Technology, Calcutta University, Delhi University, Allahabad, Amity University, Anna University and Punjab University. The Indian Centre for Assessment & Accreditation is a not-for-profit organization formed with a vision 'to help assist the inclusion of at least 5 Indian Universities in the Top 200 of the World University Rankings by 2025'. A new Central University for Himalayan Technology will be set up in Uttarakhand says Human Resource Development Minister Highlights the need for a Rashtriya Aavishkaar Abhiyaan and National Framework for Ranking Universities/Colleges. National e- Library to be established by the end of this year, says Smt Smriti Irani. T T O Twenty educational institutions from India feature in the latest BRICS ranking Economy India July-August 2014 29 rest read on page no.73 Agriculture Agriculture Attaches from Different Countries Meet Agr. Minister delegation of diplomats from Embassies and High Commissions in New Delhi representing respective Ministries of Agriculture called on Agriculture Minister Shri Radha Mohan Singh to know about the plans and policy of the new Government for cooperation in the agriculture and allied sector. Agriculture Minister spelt out the priorities of the new Government which would focus on marginal and small farmers, skill development and new farm jobs etc. Diplomats from these countries expressed their desire to cooperate and further strengthen bilateral relations with India in the field of agriculture and offered their expertise in the field of cold chain development, post harvest management and overall development of Indian agriculture. The diplomats invited Union Agriculture Minister to visit their respective countries for developing stronger relations. Agriculture Minister told diplomats that he is also looking forward for visits of their Agriculture Ministers to India to have purposeful and productive discussions for strengthening cooperation. Secretary, Shri Ashish Bahuguna and senior officers of the Ministry also participated in the discussions. Amul wins World Dairy Innovation Award 2014 ndia's Amul has won the World Dairy Innovation Award-2014 for the best marketing campaign for its "Eat Milk with Every Meal" campaign. The finalists and winners in the World Dairy Innovation Awards 2014 were announced on June 17 at the 8th Global Dairy Congress in Istanbul, Turkey. K. M Jhala, Chief General Manager of Amul, received the award. The entry of the launch of Amul Kool in PET bottle was chosen as a finalist for the best innovation in brand extension. According to the Global Dairy Congress, the judging panel considered almost 160 entries from 30 countries in 17 categories. They mentioned that there were some excellent applications this year so to be considered among the best is a big achievement. Innovation continues to be the key driver in the dairy industry and that was evident in the wide range of new products and packaging ideas, use of new ingredients, great new marketing campaigns, brand extensions and a huge variety of nutrition and environmental projects that interact with consumers and the wider community. All this activity helps to make the dairy sector the most exciting food and beverage category. Since 2007, the World Dairy Innovation Awards have been held at the Global Dairy Congress - designed to celebrate excellence and innovation across every category of the global dairy industry. R.S.Sodhi, Managing Director, GCMMF said that expansion, innovation and brand building are the three pillars of Amul's strategy to achieve the growth. We are glad that our efforts are being recognised at the global level. GCMMF is India's largest food product marketing organisation with annual turnover of Rs. 18,150 crores or USD three billion. ICRA cuts its FY15 growth outlook downwards to 4-6% for Indian Tractor Industry ccording to ICRA's latest update on Indian Tractor Industry, Tractor sales growth is likely to abate in the current fiscal (FY15), as untimely rains in some parts of the country during Feb/Mar have impacted Rabi crop as well as consumer sentiments. ICRA has revised its FY15 growth outlook downwards to 4%-6% and continues to maintain a volume CAGR of (8-9%) for the tractor Industry over the next five years as long term industry drivers remain favourable. According to ICRA research, after seeing a robust performance during the last year, growth in the domestic tractor industry shall also be contingent on the timeliness and adequacy of rainfall during 2014 south- west monsoons; however, current predictions portend a weaker monsoon on account of El A I A Economy India July-August 2014 30 Agriculture Nio weather phenomenon. Expectations of bumper Rabi harvest have however been tempered by unseasonal hail and rainfall during Feb and Mar-14. While a 7% volume correction in Apr-14 was partly on account of high base of Apr-13, wherein sales had expanded by record 31%, continued weakness in May-14 points towards a debilitation of demand drivers. Spatial distribution of rainfall will also be a critical determinant; states in southern and western India are more vulnerable to the effects lower rainfall on account of lower irrigation penetration, as against markets like Punjab, Haryana and Western Uttar Pradesh, where reliance on rain-fed agriculture is lesser. How Weak Monsoon Could Hit Indian Economy rime Minister Narendra Modi's task at hand has got tougher. Now, add weak monsoon to the list of other economic challenges he faces: Worst slowdown in decades, high level of inflation, high interest rates, weak manufacturing growth and poor infrastructure, among others. The Indian Meteorological Department in its second estimate has forecast that the rainfall during the June-September monsoon is likely to be 7 per cent below normal, worse than its April forecast of 5 per cent below normal rainfall. This has got significant implications for an economy that grew 4.7 per cent in the most recent fiscal year, nearly half the rate that is required to provide jobs to millions entering the workforce every year. Agricultural Growth: If rains during the monsoon season are 10-15 per cent below normal, then agricultural growth could be closer to 0 per cent or even negative, says Nomura in a report. Agriculture had been a brighter spot in Indian economy, which grew 4.7 per cent in 2013- 14. During the year, the agriculture sector grew 4.7 per cent compared with 1.4 per cent in the previous fiscal. India's farm sector accounts for 14 per cent of India's nearly $2 trillion economy, with two-thirds of its 1.2 billion population living in rural areas. Food Inflation: Nomura forecasts that the consumer price inflation could inch up by as much as 1 per cent from earlier forecast of 8 per cent by early next year. Retail inflation is currently hovering around 8.5 per cent. Bank of America says if monsoon remains weak, consumer conflation could rise to 8-10 per cent next year. Nomura however adds that food price inflation should be manageable if the government proactively releases food grains to contain cereal price inflation and eases import restrictions to ease inflation in the price of edible oils, pulses and other items. Interest Rate: High food inflation could force the Reserve Bank of India to hold on to high interest rates for a longer time than anticipated. Bank of America says weak monsoon could "push the first RBI rate cut to early 2015, from our base case of December." In its June 3, 2014, monetary policy statement RBI chief Raghuram Rajan cited "sub-normal/delayed monsoon on account of possible El Nino effects" as one of the risks to its forecast of 8 per cent consumer inflation by January 2015. An El Nino phenomenon heats the Pacific and drives rains away from India. Economic Growth: Bank of America in a report says Indian economic growth could see a 0.50-0.75 per cent hit from weak monsoon. India's economy is expected to grow at 5.4 per cent this fiscal, according to Bank of America. Manufacturing Recovery: High food inflation level could delay its recovery. Manufacturing sector contracted 0.7 per cent in 2013-14, compared to a growth of 1.1 per cent in 2012-13. Persistently high inflation and elevated interest rates have crimped consumer demand. Consumer goods output, a proxy for consumer demand, has grown just once in the past 11 months as elevated levels of inflation over the past two years hurt the disposable income of consumers. Compensation package for farmers: Ashok Gulati, chair professor for agriculture at the Indian Council for Research on International Economic Relations, says the farmers are going to lose their income from sub-normal rainfall. Can the government be ready for a compensation package for farmers?" However, given the tight fiscal position of the government, the Modi government would be hard-pressed to announce a generous package for farmers if monsoon fails. The Narendra Modi government has said that it is readying contingency plans for a weak monsoon and also committed to invest in agricultural infrastructure to boost production. Though boosting infrastructure will take time, the government could be helped in its fight against weak monsoon by the comparatively higher levels of water in rivers. "A bit of good news is that rivers are running relatively full. In particular, the Ganga, which waters the rice fields of the north and the east, is flowing at 2.4 times its 10-year average, Bank of America said in a report. Ashok Gulati, the professor at Indian Council for Research on International Economic Relations, had a word of caution for Modi government: watch onion prices closely. "My suggestion to the government would be count your onions. In October, they could create problems." The meteorological department will issue its next forecast in end-July. P The Indian Meteorological Department in its second estimate has forecast that the rainfall during the J une-September monsoon is likely to be 7 per cent below normal, worse than its April forecast of 5 per cent below normal rainfall. This has got significant implications for an economy that grew 4.7 per cent in the most recent fiscal year, Economy India July-August 2014 31 ncreased passenger amenities, more safety measures, timely completion of projects and increased financial discipline are the main highlights of the Railway Budget 2014-15 presented by the Minister of Railways Shri D. V. Sadananda Gowda in Parliament. The Budget seeks course correction in the light of mismanagement, apathy, populism in starting projects and severe fund crunch that have inflicted the railways over the years, the Minister averred. For this, structural reforms will be introduced and resources will be mobilized through PSU surplus, FDI and PPP. The Budget proposes multi-pronged approach to make Railway journey safe and secure and comfortable for passengers. More thrust has been placed on passenger amenities, cleanliness and efficient station management. Now all major stations will have foot-over bridges, escalators, lifts etc. On safety and security, the Budget has proposed introduction of advance technology for rail-flaw detection to check causes of accidents, a significant amount has been kept for road-over and road-under bridges and a pilot project will be launched on automatic door closing in mainline and sub-urban coaches. In order to make women safer while travelling, the Railway will recruit 4000 women constables. Coaches for ladies will be escorted. IT initiatives get a big boost in the Budget. Revamping Railway Reservation System into Next Generation e-Ticketing will be taken up with provision of platform tickets and unreserved tickets also over internet. The Railway has proposed real-time tracking of trains and rolling stocks, mobile based Wakeup Call System for passengers, mobile based destination arrival alert and Wi-fi Services in A-1 and A category stations and in select trains. Indian Railways has also planned paperless offices in 5 years. In order to make Railway management more efficient, Budget has proposed setting up of Railway University for training in both technical and non-technical subjects besides establishing Innovations and Incubation Centre to harness the ideas generated from staff. In a bid to modernise Indian Railway network, Bullet train has been proposed on Mumbai- Ahmadabad sector besides increasing speed of trains to 160-200 kmph in select 9 sectors. The Railway has also planned setting up of Diamond Quadrilateral Network of High Speed Rail connecting major metros and growth centers of the country. Identified stations will be developed to international standards with modern facilities on lines of newly developed airports through PPP mode. Railway has also proposed harnessing solar energy by utilizing roof top spaces of stations, I Rail Budget Rail Budget Seeks Course Correction, Avoids Populism Seeks Course Correction, Avoids Populism Economy India July-August 2014 32 Budget India ailways proposes to introduce 58 new trans which includes five Jansadharan Trains, five Premium Trains, six AC Express Trains, 27 Express Trains, eight Passenger Trains, two MEMU services and five DEMU services this year. Announcing this in Parliament today while presenting the rail budget, the Minister of Railways Shri D. V. Sadananda Gowda also proposed to extend the run of 11 existing trains. Shri Gowda said these services would be meeting the demand surges which manifest themselves on special occasions. He said that special trains would continue to run to meet the holiday and festival rush including services for Melmaruvathur, Velankanni, Jhalawar etc. NEW TRAINS Jansadharan Trains i) Ahmedabad-Darbhanga Jansadharan Exp. via Surat ii) Jaynagar-Mumbai Jan. Exp. ii) Mumbai-Gorakhpur Jan. Exp. iv) Saharasa-Anand Vihar Jan. Exp. via Motihari v) Saharasa-Amritsar Jan. Exp. Premium Trains i) Mumbai Central-New Delhi Premium AC Exp. ii) Shalimar-Chennai Premium AC Exp. iii) Secunderabad- Hazrat Nizamuddin Premium AC Exp. iv) Jaipur-Madurai Premium Exp. v) Kamakhya-Bengaluru Premium Exp. AC ExpressTrains i) Vijayawada New Delhi AP Exp. (Daily) ii) LTT-Lucknow (Weekly) iii) Nagpur-Pune (Weekly) iv) Nagpur-Amritsar (Weekly) v) Naharlagun-NewDelhi (Weekly) vi) Nizamuddin-Pune (Weekly) Express Trains i) Ahmedabad-Patna Exp. (Weekly) via Varanasi ii) Ahmedabad Chennai Exp. (Biweekly) via Vasai Road iii) Bengaluru-Mangalore Exp. (Daily) iv) Bengaluru-Shimoga Exp. (Biweekly) v) Bandra(T)-Jaipur Exp.(Weekly)Via Nagda, Kota vi) Bidar-Mumbai Exp.(Weekly) vii) Chhapra-Lucknow Exp. (Tri weekly) via Ballia, Ghazipur,Varanasi viii) Ferozpur-Chandigarh Exp.(6 days a week) ix) Guwahati-Naharlagun Intercity Exp. (Daily) x) Guwahati-Murkongselek Intercity Exp. (Daily) xi) Gorakhpur-Anand Vihar Exp.(Weekly) xii) Hapa-Bilaspur Exp.(Weekly) via Nagpur xiii) Hazur Saheb Nanded-Bikaner Exp. (Weekly) xiv) Indore-Jammu Tawi Exp. (Weekly) xv) Kamakhya-Katra Exp. (Weekly) via Darbhanga xvi) Kanpur-Jammu Tawi Exp. (Biweekly) xvii) LTT-Azamgarh Exp. (Weekly) xviii) Mumbai-Kazipeth Exp. (Weekly) via Balharshah xix) Mumbai-Palitana Exp.(Weekly) xx) New Delhi Bhatinda Shatabdi Exp. (Biweekly) xxi) New Delhi-Varanasi Exp.(Daily) xxii) Paradeep-Howrah Exp. (Weekly) xxiii) Paradeep-Visakhapatnam Exp. (Weekly) xxiv) Rajkot-Rewa Exp. (Weekly) xxv) Ramnagar-Agra Exp.(Weekly) xxvi) Tatanagar Baiyyappanahali (Bengaluru) Exp. (Weekly) xxvii) Visakhapatnam-Chennai Exp. (Weekly) Passenger Trains i) Bikaner-Rewari Pass.(Daily) ii) Dharwad-Dandeli Pass. (Daily) via Alnavar iii) Gorakhpur-Nautanwa Pass. (Daily) iv) Guwahati-Mendipathar Pass. (Daily) v) Hatia-Rourkela Pass. vi) Byndoor-Kasaragod Pass. (Daily) vii) Rangapara North-Rangiya Pass. (Daily) viii) Yesvantpur-Tumkur Pass.(Daily) MEMU services i) Bengaluru -Ramanagaram 6 days a week (3Pairs) ii) Palwal-Delhi-Aligarh DEMU services i) Bengaluru -Neelmangala (Daily) ii) Chhapra-Manduadih (6days a week) via Ballia iii) Baramula-Banihal (Daily) iv) Sambalpur-Rourkela (6 days a week) v) Yesvantpur Hosur (6 days a week) Extension of run of existing trains i) 22409/22410 Anand Vihar Sasaram Garib Rath Exp. to Gaya ii) 12455/12456 Delhi Sarai Rohilla Sriganganagar Exp. to Bikaner iii) 15231/15232 Gondia Muzaffarpur Exp. to Barauni iv) 12001/12002 New Delhi Bhopal Shatabdi Exp. to Habibganj v) 54602 Ludhiana-Hissar Pass. to Sadulpur vi) 55007/55008 Sonpur- Kaptanganj Pass. to Gorakhpur vii) 55072/55073 Gorakhpur-Thawe Pass. to Siwan viii) 63237/63238Buxar- Mughalsarai MEMU to Varanasi ix) 63208/63211 Jhajha-Patna MEMU to Jasidih x) 64221/64222 Lucknow Hardoi MEMU to Shahjahanpur xi) 68002/68007Howrah-Belda MEMU to Jaleswar 58 New Trains to be Introduced 11 Existing Trains to be Extended Economy India July-August 2014 33 Budget India R Budget India railway buildings and land. To augment resources of Railways, the Budget has proposed schemes to facilitate procurement of parcel vans and rakes by private parties, special milk tanker trains, increased movement of fruits and vegetables in partnership with Warehousing Corporation and setting up Private Freight Terminals on PPP model. The Railway has proposed to bring in more transparency in administration and execution of projects. The status of ongoing projects will be available online, E-procurement will be made compulsory for procurement of higher amount and online registration of demands for wagons will be introduced within next two months. The Budget has passenger centric focus on suburban and metropolitan rail services. 864 additional state-of-the-art EMUs will be introduced in Mumbai in two years. Study to explore possibility of enhancing existing railway network for better connectivity needs of Bangaluru will be taken up. The Railway Budget 2014-15 has proposed 58 new trains besides extending 11 existing trains. Provision has been made for 28 surveys for new lines and doubling or gauge conversion of lines. Higher funds have been proposed for ongoing projects in Northeast and remote areas. Special packaged trains on identified pilgrim circuits, two tourist trains and a special train featuring life and work of Swami Vivekananda has been proposed in the Budget. According to the Budget estimates, the Railways will earn ? 1,64,374 crore through various resources and will spend ? 1,49,176 crore during 2014-15. The operating ratio is expected to be 92.5% which is 1% better than that in 2013-14. Catering Services to be Improved; Food Courts to be Set up at Major Stations The Minister of Railways Shri D. V. Sadananda Gowda has said that in order to improve the quality, hygiene of on-board catering services and to provide variety, the Indian Railways proposes to introduce Pre-cooked (Ready-to-eat) Meals of reputed brands in a phased manner. Presenting the Railway Budget 2014- 15 in Parliament today he said, to bring perceptible improvement in the catering services, he proposes to introduce Quality Assurance Mechanism through Third Party Audit by NABCB certified agencies. He said, in addition to the third party audit, a system of collecting feedback through IVRS mechanism, from the travelling passengers on the quality of food served, will be launched shortly. The Minister said, if the service is not to the standards set, especially in hygiene and the taste, severe action would be initiated against the vendors including cancellation of the contract. The Minister said, Indian Railways also proposes to set up Food Courts at major stations to provide the option of ordering regional cuisine while onboard, through emails, SMS and Smart Phones, etc. A pilot project will be started shortly between New Delhi-Amritsar and New Delhi- Jammu Tawi sections. Measures for Improvement in Safety and Security of Passengers The Minister of Railways Shri D. V. Sadananda Gowda has said that safety of passengers is of paramount importance for Indian Railways. Presenting the Railway Budget 2014- 15 in Parliament today he said, it is estimated that over Rs. 40,000 crore would be needed to be invested in track renewals, elimination of unmanned level crossing and construction of Road-under-bridges and Road-over-bridges. The Minister said, he is making provision of Rs. 1,785 crore for Road-under-bridges and Road-over-bridges in the Budget and requested concerned State Governments to expedite their proposals and pass on their share of the cost. The Minister said, Indian Railways have 30348 Level Crossings, out of which 11563 are unmanned. Each unmanned level crossing is being examined in detail and depending on the site condition, action will be taken to eliminate it by suitable modality. He said, Indian Railways proposes to use modern Vehicle Borne Ultrasonic Flaw Detection System to detect rail and weld fractures. In addition Ultrasonic Broken Rail Detection System (UBRD) will also be tried at two locations as a Economy India July-August 2014 34 Budget India Pilot Project. The Minister said, in order to improve the safety of travelling passengers, he proposes to bring in technology for automatic closing of doors before start of train, both in main line and in sub-urban coaches. A pilot project for limited number of trains will be taken up. He said, in order to strengthen security in trains and at Stations, 17000 RPF constables have been recruited and shall be shortly available for deployment. He said, the Indian Railways also proposes to recruit 4000 women RPF constables. He said, in order to ensure security of ladies travelling alone, special instructions are being issued for their safety in each class of travel. With the induction of women RPF constables, coaches for ladies will be escorted. Additional care will be taken for ladies travelling alone in all classes. The Minister said, RPF escorting teams in trains will be provided mobile phones so that passengers can contact them when in distress. Security helpline will be augmented. He also said that the Railways will explore the possibility of building of boundary walls around stations through PPP route. Resource Mobilisation for Railways The Minister of Railways Shri D. V. Sadananda Gowda outlined the Resource Mobilization for Railways as under :- Leveraging Railway PSU Resources:- Railway PSUs have done very well and are financially sound. It is proposed to launch a scheme to bring in investible surplus funds of Railway PSUs in infrastructure projects of Railways, which can generate attractive returns for PSUs. Private investment in Rail Infrastructure through FDI & Domestic Investment:- Growth of Railway Sector depends heavily on availability of funds for investment in rail infrastructure. Internal revenue sources and government funding are insufficient to meet the requirement. Hence, Ministry of Railways is seeking Cabinet approval to allow FDI in Rail Sector. Public Private Partnership:-There has been a lot of talk about public private partnership for raising resources. Railways being a capital intensive sector have not been successful so far in raising substantial resource through PPP route. Bulk of our future projects will be financed through PPP mode, including the high-speed rail which requires huge investments. Apart from mobilizing resources, there is also a need to strategically manage other aspects of railway planning and administration. Rail Budget Identifies Areas Needing Stratigic Management The Minister of Railways Shri D. V. Sadananda Gowda, while introducing the Railway Budget for 2014-15 in Parliament , said that there is a need to strategically manage various aspects of railway planning and administration. To meet this end, the following initiatives have been proposed:- a. Near Plan Holiday approach; b. Prioritizing and setting timelines for completion of the ongoing projects; c. Devising a mechanism for raising funds for Rail infrastructure; d. Decision Support System for project implementation; e. Strategic partnerships & transparency in procurements; f. Aggressive indigenization of imported products; g. Adopting safety standards matching international practices and setting up of Simulation Center to study causes of accidents. h. Encouraging development of Locomotives, Coaches & Wagon Leasing Market Rail Tourism to be Promoted to Tap the Potential of Domestic Tourism The Minister of Railways Shri D. V. Sadananda Gowda has said that Indian Railways plans to take up Eco- Tourism and Education Tourism in North Eastern States. Presenting the Railway Budget 2014-15 in Parliament today he said, Special Pilgrim Circuits like Devi Circuit, Jyotirling Circuit, Jain Circuit, Christian Circuit, Muslim / Sufi Circuit, Sikh Circuit, Buddhist Circuit, Famous Temple Circuit have been identified. The Minister said, he proposes to introduce specially packaged trains for these circuits. He said, private participation in this area will also be encouraged and some trains for Pilgrims and Tourists are intended to be introduced in short run also. The Minister said, one Tourist Train will run from Gadag to Pandarpur via Bagalkot, Bijapur and Solapur covering the pilgrim and tourist places of Karnataka and Maharashtra. Another such train will start from Rameshwaram covering pilgrim and tourist places like Bengaluru, Chennai, Ayodhya, Varanasi and Haridwar. He said, he also plans to run a special train featuring life and work of Swami Vivekananda to inculcate good moral values and propagate the teachings of Swami Vivekananda. Economy India July-August 2014 35 Budget India Financial Performance of Railways in 2013-14 The Minister of Railways Shri D. V. Sadananda Gowda, while presenting the Railway Budget for 2014-15 in Parliament today, said that the financial position of Railways has undergone a change since presentation of Interim Budget and passing of the 'Vote on Account' in February last. He gave the details as under :- 1. Since presentation of Interim Budget and passing of the 'Vote on Account' in February last, financial position has undergone a change. Railways carried 1050.18 million tonnes. Goods Earnings were short only by Rs. 94 crore. Originating passengers, also, were less by 46 million over Revised target and Passenger earnings were short by Rs. 968 crore over Revised target. 2. Over all, though the Gross Traffic Receipts grew by 12.8% to reach Rs. 1,39,558 crore, it was short of Revised target by Rs. 942 crore. On the other hand, Ordinary Working Expenses stood at Rs. 97,571 crore, which was in excess by Rs. 511 crore. 3. Appropriation to Pension Fund had to be stepped up to match the actual outgo. 4. As a result, instead of ending the year with a surplus of Rs. 7,943 crore, the surplus was actually Rs. 3,783 crore i.e., a shortfall of Rs. 4,160 crore. This is after fulfilling the dividend commitment of Rs. 8,010 crore. 5. The internal resource generation for Plan, in 2013-14, was Rs. 11,710 crore, as against Revised target of Rs. 14,496 crore. This is short by Rs. 2,786 crore. 6 In 2013-14, there was a decline in traffic growth as compared to Revised projections. Expenditure however, shot up and was more than what was estimated. The Operating Ratio deteriorated by 2.7% over Revised target to touch 93.5% by end of 2013-14 fiscal. 7. As far the Plan Expenditure for 2013-14 is concerned, it fell short of Revised target of Rs. 59,359 crore mainly due to non-materialization of PPP targets. Pilot Project for 'Office on Wheels' for Business Travelers The Minister of Railways Shri D. V. Sadananda Gowda has said that in order to add best value to business travelers, the Indian Railways proposes to provide workstations in select trains on payment basis. Presenting the Railway Budget 2014- 15 in Parliament today he said, a pilot project will be launched by this year. He said, Indian Railways is also going for a computer assisted Enterprise Resource Planning Solution, so that synergy is brought in. To begin with, following initiatives will be taken up: i) Moving towards paperless offices in Indian Railways in 5 years; ii) Next Generation Ticket Reservation System; iii) Wi-fi Services in all A1 and A category stations and in select trains; iv) Real-time tracking of trains and rolling stock; v) Mobile based Wakeup Call System for passengers; vi) Mobile based Destination Arrival Alert; vii) Station Navigation Information System; viii) Extension of Dual Display Fare Repeaters at all the Ticket Counters through PPP; ix) Digital reservation charts at Stations (Bengaluru model); x) Extension of Computerized Parcel Management System; xi) Extension of logistics support to various e-commerce Companies by providing designated pick-up centres at identified Stations; xii) Providing education to children of Railway staff at remote locations through Railtel OFC (optical fibre cable) network. Project Management Group to be set up to Overcome Delays in Project Execution Railways will set up Project Management Group at the level of Railway Board to overcome delays in project execution. Presenting the Railway Budget in Parliament the Minister of Railways Shri D. V. Sadananda Gowda said similarly to expedite the projects at the ground level, a project Monitoring & Coordination Group consisting of officials of State Government, Railways and professionals will also be set up. Railways have been suffering heavily because of time and cost overrun due to poor project management. Giving details of the poor state of project completion, the Minister said that in the last 30 years as many as 676 projects were sanctioned worth Rs.1,57,883 crore. Of these, only 317 projects could be completed and 359 projects remain to be completed. Budget Allocation for Cleanliness in Trains and Stations Increased Substantially The Minister of Railways Shri D. V. 54 Percent Jump in Allocation to Provide Connectivity to Hilly States & Northeast Regions Railways have allocated an outlay of Rs.5,116 crore for projects in the North- East. This is 54% jump over allocations in the previous year. Presenting the Railway Budget in Parliament the Minister of Railways Shri Gowda said that there are 23 projects underway in the Northeast, of which 11 are National Projects. The Minister expressed the hope that Dudhnoi- Mendipathar New Line; Lumding-Badarpur-Silchar Gauge Conversion; Harmuti-Murkongselek and Balipara- Bhalukpong sections will soon get commissioned. Indian Railways proposes to outsource cleaning activities at 50 major stations to professional agencies and to set up a separate Housekeeping Wing to have focused attention and exclusive responsibility of maintaining cleanliness and sanitation at stations. Economy India July-August 2014 36 Budget India Sadananda Gowda has announced substantial increase in budget allocation for cleanliness in the current year, which is a 40% increase over the previous year. Presenting the Railway Budget 2014-15, he said, the Indian Railways proposes to outsource cleaning activities at 50 major stations to professional agencies and to set up a separate Housekeeping Wing to have focused attention and exclusive responsibility of maintaining cleanliness and sanitation at stations. He said, a Corpus Fund for upkeep of stations will be set up. The Minister said, use of CCTVs at stations will be extended to monitor cleanliness activities. All-India level complaint/ helpline number will be printed on the back of all PRS tickets. System of periodic third-party inspections will be introduced. Further, Bio-toilets will be increased in sufficient numbers in trains in order to mitigate the problem of direct discharge of human waste on the tracks and platform aprons at stations. The Minister said, Onboard Housekeeping Services, currently operational in 400 trains, has received good feedback from passengers. This will be extended to all the important trains. He said, the Indian Railways also proposes to increase Mechanized Laundries in order to improve quality of the bedrolls provided in AC Coaches. Railways Committed to Meet Social Service Obligations Despite Rising Costs The Minister of Railways Shri D. V. Sadananda Gowda, while presenting the Railway Budget for 2014-15 in Parliament today, said that the Social service obligation of Railways rose from 9.4% of Gross Traffic Receipts in 2000-01 to 16.6% in 2010-11. In 2012- 13, such obligations stood over Rs. 20,000 crore. The total investment, which is the Plan Outlay under budgetary sources, in the same year, was Rs. 35,241 crore. As an amount, the burden of social service obligation is more than half of the size of our Plan Outlay under budgetary sources. An organization spending an amount equivalent to more than half of its Plan Outlay under budgetary sources on social obligations, can hardly have adequate resources for its development works. However, Indian Railways would continue to fulfill its social obligations, the Minister said. Digitization and GIS Mapping of Land Assets of Indian Railways to be done The Minister of Railways Shri D. V. Sadananda Gowda has said that Indian Railways hold vast land assets which need to be digitized and GIS mapped for better management and usage. Presenting the Railway Budget in Parliament today Minister said the resources mobilization using land assets will be explored through private participation in setting up railway related business in railway lands as well as for commercial development. This would hold Railways in protecting the lands as well as leveraging it for raising resources. Water, Shelter & other Passenger Amenities to be Improved The Minister of Railways Shri D. V. Sadananda Gowda has said that in the passenger amenities, Indian Railways envisage to provide foot- over bridges, escalators and lifts at all major stations including through PPP route. Presenting the Railway Budget 2014-15 in Parliament today he said, Indian Railways would make earnest attempt this year to provide sufficient water supply, platform shelters and toilets at the Railway Stations. He said, Indian Railways propose to extend service of Battery- operated Carts to facilitate differently-abled and senior citizens Economy India July-August 2014 37 Budget India to reach any platform comfortably at all major stations. He said, Railways proposes to involve individuals, NGOs, Trusts, Charitable Institutions, Corporates, etc. to provide passenger amenities at stations. Innovations Incubation Centers to be set up to make best use of Ideas and Experience of Staff Railways proposes to set up an Innovations Incubation Center to harness the ideas generated from the staff of Indian Railways and convert them into practical solutions to increase efficiency of the system. Presenting the Railway Budget in Parliament the Minister of Railways Shri D. V. Sadananda Gowda said innovations which result in cost saving as well as revenue generation will be suitably rewarded in the form of incentive. As part of this exercise, it is also proposed to set up summer internships for the undergraduates of engineering and management studies. Students can intern at any of the various units of Railways i.e. Division, PSUs and Production Units. Steps to be taken to Attract more Investment Under PPP Model Railways will interact with Industry and take further steps to attract investment under Public Private Partnership (PPP) through BOT and Annuity route and 8 to 10 capacity augmentation projects on congested routes will be identified for this purpose. Presenting the Railway Budget in Parliament today the Minister of Railways Shri D. V. Sadananda Gowda said Zonal Railways will be suitably empowered to finalize and execute such projects. The Minister said with a large backlog of sanctioned projects, funding continues to be the biggest challenge for Railways. He said while private investment and customer funding for some port connectivity projects and few other Power Sector Projects has started, much more needs to happen if infrastructure creation has to keep pace with the requirement. Shri Gowda said that Indian Railways has taken up port connectivity on priority through PPP mode of funding in tandem with Sagar Mala Project of Port Development. Railways will facilitate connectivity to the new and upcoming ports through private participation. He said, so far in principle approval has been granted for building rail connectivity to the Ports of Jaigarh, Dighi, Rewas, Hazira, Tuna, Dholera and Astranga under Participative Model Policy of Indian Railways, amounting to a total of over Rs. 4,000 crore. Railways to Earn Rs. 1.64 lakh Crore in 2014-15 on Improved Operating Ratio The Minister of Railways Shri D. V. Sadananda Gowda, while presenting the Railway Budget for 2014-15 in Parliament today, gave details of the Budget estimates of Railways for the year 2014-15 as under:- Anticipating a healthier growth of economy, it is hoped to achieve total receipts of Rs. 1,64,374 crore and would peg total expenditure at Rs. 1,49,176 crore. The freight traffic growth of 4.9% amounting to 1,101.25 million tonne, an increment of 51.07 million tonne over 2013-14, based on trends in the first two months it anticipated. Also anticipated is a small growth in Passenger Traffic over 2013-14. Earnings from Freight Traffic are estimated at Rs. 1,05,770 crore and from Passenger Traffic Rs. 44,645 crore. Periodic revision in passenger fare and freight rates, will be linked to revisions in fuel prices in order to insulate the Railway revenues from fuel cost escalation. Out of total expenditure, the ordinary working expenses have been proposed at Rs. 1,12,649 crore, which is Rs. 15,078 crore higher than 2013-14. This has been necessitated by fuel price hike and increase in staff costs. Pension outgo in 2013-14 had grown by about 16%. Keeping the same trend, provision for pension is kept at Rs. 28,850 crore. Operating ratio in 2014- 15 is pegged at 92.5% which is 1 % better than that in 2013-14. Railway Reservation System to be Revamped The Minister of Railways Shri D. V. Sadananda Gowda has said that Railway Reservation System will be revamped into Next Generation e- Ticketing System. Ticket booking through mobile phones and through Post Offices will be popularized. he said, the Indian Railways will improve the system capabilities in e- ticketing to support 7200 tickets per minute as against 2000 tickets per minute and allow 1,20,000 simultaneous users at any point in time. The Minister said, facility of Coin Operated Automatic Ticket Vending Machines will be experimented. He said, efforts will also be made to provide facility of buying Platform Tickets and unreserved tickets over internet. Parking-cum-Platform Combo Tickets will be launched to facilitate the passengers and to save their time. He said that online booking facility of Railway Retiring Room will be extended to all the stations during the course of the year. Presenting the Economy India July-August 2014 38 Budget India Railway Budget 2014-15 in Parliament today he said, the Indian Railways is expanding the scope of online booking for people to book a Train, book a Coach, book a Berth and book a Seat in Chair Car. Budget Comes in the Face of Huge Fund Requirement, Incomplete Projects Railways need to Balance Commercial and Welfare Objectives The Minister of Railways Shri D. V. Sadananda Gowda, while presenting the Railway Budget for 2014-15 in Parliament today, said that the Indian Railways practically carries anything and everything and it never says no to 'a thing' if it fits in the wagons. Most importantly, it is the backbone of supply chain of the defence establishment and plays a very crucial role in security of the nation. While it carries 23 million passengers a day, there are still large number of people who have not set a foot on a train yet. It carries over one- billion tonnes of freight a year, connecting ports and mines to industrial clusters, but still there are vast tracts of hinterland waiting for rail connectivity. Though freight business has grown steadily over the years, Indian Railways carry only 31% of the total freight carried in the country by all modes. These are the challenges we have to face. An organization of this magnitude vested with varied responsibilities, is expected to earn like a commercial enterprise but serve like a welfare organization. These two objectives are like two rails of the railway track, which though travel together but never meet. So far, Indian Railways have managed to do tight-rope walking by balancing these twin conflicting objectives. It implies that we spend 94 paise out of every rupee earned, leaving 6 paise only as surplus. This surplus, apart from being meager, is continuously on decline due to non- revision of fare. The surplus, after paying obligatory dividend and lease charges, was Rs.11,754 crore in 2007- 08 and is estimated to be Rs. 602 crore in the current financial year. This meager surplus so generated is required to finance the Plan Outlay for safety, capacity expansion, infrastructure, improving passenger services and amenities. Funds to the tune of about Rs. 5 lakh crore i.e. around Rs. 50,000 crore per year for next 10 years, are required for ongoing projects alone. This leaves a huge gap between what is available as surplus and what is needed. While prudent efforts should have been made to address this gap, the tariff policy adopted lacked rational approach. Passenger fares were kept lower than costs, thus causing loss in the passenger train operations. This loss kept on increasing from 10 paise per passenger kilometer in 2000-01 to 23 paise in 2012-13, as the passenger fares were kept low always. There has been focus on sanctioning projects rather than completing them. In the last 30 years, as many as 676 projects were sanctioned worth Rs. 1,57,883 crore. Of these, only 317 projects could be completed and 359 projects remain to be completed which will now require as much as Rs. 1,82,000 crore. In the last 10 years, 99 New Line projects worth Rs. 60,000 crore were sanctioned out of which only one project is complete till date. In fact, there are 4 projects that are as old as 30 years, but are still not complete for one reason or another. The more projects we add, the thinner we spread our resources and longer it takes to complete them. If this trend is allowed to continue, many more thousands of crore will get spent yielding hardly any returns, the Minister said. Bullet Trains and Diamond Quadrilateral Network of High Speed Rail The Minister of Railways Shri D. V. Sadananda Gowda has said that Indian Railways is on its way to fulfill the long cherished dream to run a Bullet Train. Presenting the Railway Budget 2014-15 in Parliament today, he said, the Railways proposes bullet trains by starting off with an already identified Mumbai-Ahmedabad sector, where a number of studies have been done. The Minster said, under the leadership of Shri Narendra Modiji, the Railways is embarking on an ambitious plan to have a Diamond Quadrilateral Network of High Speed Rail, connecting major Metros and growth centers of the country. A provision of Rs.100 crore has been made in the Budget for high Speed project to RVNL/HSRC (High Speed Rail Corridor) for taking further steps. He said, while bullet trains would require completely new infrastructure, higher speed for existing trains will be achieved by upgrading the present network. The Minister said, hence, an effort will be made to increase the speed of trains to 160-200 kmph in select sectors so as to significantly reduce travel time between major cities. The Minister said, the identified sectors are: i) Delhi-Agra ii) Delhi-Chandigarh iii) Delhi-Kanpur iv) Nagpur-Bilaspur v) Mysore-Bengaluru-Chennai vi) Mumbai-Goa vii) Mumbai-Ahmedabad viii) Chennai-Hyderabad and ix) Nagpur-Secunderabad. Economy India July-August 2014 39 Budget India India's BoP Position Improves Dramatically he Economic Survey 2013-14, presented today in the Lok Sabha by the Union Finance Minister Shri Arun Jaitley, has noted that India's Balance of Payments (BoP) position improved dramatically in 2013-14, particularly in the last three quarters. This owed in large part to measures taken by the Government and the Reserve Bank of India (RBI) and in some part, to the overall macroeconomic slowdown that fed into the external sector. Current account deficit (CAD) declined sharply from a record high of US $ 88.2 billion (4.7 per cent of gross domestic product GDP) in 2012-13 to US $ 32.4 billion (1.7 per cent of GDP) in 2013-14. After staying at perilously unsustainable levels of well over 4.0 per cent of GDP in 2011- 12 and 2012-13, the improvement in BoP position is a welcome relief and there is need to sustain the position going forward, the Survey noted. Annual Average Exchange Rate Goes UP The Economic Survey 2013-14, presented today in the Lok Sabha by the Union Finance Minister Shri Arun Jaitley, has noted that the annual average exchange rate of the rupee went up from Rs. 47.92 per US dollar in 2011-12 to Rs. 54.41 per US dollar in 2012-13 and further to Rs 60.50 per US dollar in 2013-14. The large depreciation of the rupee during the course of the year, notwithstanding sizeable accretion to reserves in 2013-14, could partly be attributed to frictional forces and partly to the role of expectations in the forex market. The rupee has stabilized recently, reflecting an overall sense of confidence in the forex market as in other markets. India has the 2nd Fastest Growing Services Sector India has the second fastest growing services sector with its Compound Annual Growth Rate at 9.0 per cent, just below China's 10.9 per cent, during 2001 to 2012. Also, India ranked 12th in terms of services Gross Domestic Product (GDP) in 2012 among the world's top 15 countries in terms of GDP. While services share in World GDP was 65.9 per cent and in employment was only 44 per cent in 2012, in India, they were 56.9 per cent and 28.1 per cent respectively. GDP Services constitute a 57 per cent share in GDP at factor cost (at current prices) in 2013-14, an increase of 6 percentage points over 2000- 01. Despite deceleration, services GDP growth at 6.8 per cent was above the 4.7 per cent overall GDP in 2013-14. The growth rate of the combined category of trade, hotels, restaurants, transport, storage, and communications decelerated to 3.0 per cent while financing, insurance, real estate, and business services grew robustly at 12.9 per cent. FDI In 2013-14, FDI inflows to the services sector (top five sectors including construction) declined sharply by 37.6 per cent to US$ 6.4 billion compared to an overall growth in FDI inflows at 6.1 per cent resulting in the share of the top five services in total FDI falling to nearly one-sixth. Exports India's increase in share in world services exports from 0.6 per cent in 1990 to 3.3 per cent in 2013 was faster than in merchandise exports. Exports of software services, T Economy India July-August 2014 40 Budget India accounting for 46 per cent of India's total services exports, decelerated to 5.4 per cent in 2013-14, travel, accounting for a nearly 12 per cent share, witnessed negative growth of 0.4 per cent. India's Foreign Exchange Reserves Increase The Economic Survey 2013-14, presented today in the Lok Sabha by the Union Finance Minister Shri Arun Jaitley, has noted that India's foreign exchange reserves increased from US $ 292.0 billion at end March 2013 to US $ 304.2 billion at end march 2014. The Survey underlined that India continues to be one of the countries that have sizeable foreign exchange reserves particularly considering that some of the other major reserve holders are nations with large current account surpluses. Intervention in the foreign exchange markets by the RBI so as to manage the exchange rate of the rupee and guard against volatility without targeting a specific rate is behind the accumulation of reserves generally. In the specific context of developments in 2013-14, the intervention was to provide a measure of comfort against the elevated levels of vulnerability indicators which are expressed as proportions of reserves. External Debt Remains within Manageable Limits The Economic Survey 2013-14, presented today in the Lok Sabha by the Union Finance Minister Shri Arun Jaitley, has noted that India's external debt has remained within manageable limits due to the external debt management policy, with prudential restrictions on debt varieties of capital inflows given the large interest differential. India's external debt stock at end of March 2013 stood at US $ 404.9 billion (Rs. 2,200,410 crore), recording an increase of US$ 44.1 billion (12.2 per cent) over the previous year's level of US $ 360.8 billion (Rs. 1,844,167 crore). External debt both at end March 2013 and end March 2012 is higher than reported earlier in various publications owing to the inclusion of securitized borrowings of banks as reported by the RBI in its external debt statistics. Component- wise, long-term debt increased by 9.1 per cent to US $ 308.2 billion at end March, 2013 from US $ 282.6 billion at end March 2012, while short-term debt refers to such debt in terms of original maturity unless otherwise stated, increased by 23.7 per cent to US $ 96.7 billion from US $ 78.2 billion at end March 2012, reflecting elevated levels of imports. India had a large trade deficit in the 1st quarter The Economic Survey 2013-14, presented today in the Lok Sabha by the Union Finance Minister Shri Arun Jaitley, has noted that as India had a large trade deficit in the first quarter, negative market perceptions led to sharper outflows in the foreign institutional investors (FIIs) investment debt segment, leading to 13.0 per cent depreciation of the rupee between May 2013 and August 2013. The government swiftly moved to correct the situation through restrictions on non-essential imports like gold, custom duty hike in gold and silver to a peak of 10 per cent, and measures to augment capital flows through quasi-sovereign bonds and liberalization of external commercial borrowings. The RBI also put in place a special swap window for foreign currency non-resident deposit (banks) [(FCNR (B)] and banks' overseas borrowings through which US$ 34 billion was mobilized. The one-off flows arrested the negative market sentiments on the rupee and, in tandem with improvements in the BoP position, led to a sharp correction in the exchange rate and a net accretion to reserves in 2013-14. Sustaining Improvement in BoP Position - A Challenge The Economic Survey 2013-14, presented today in the Lok Sabha by the Union Finance Minister Shri Arun Jaitley, has noted that sustaining the improvement in the BoP position in the medium term is a challenge. Given the uncertain global environment and the frequent bouts of flight of capital on aversion to all kinds of risks, there is need to put in place a mechanism for closely monitoring developments and assessing vulnerabilities so as to take measures to cope with the situation. The Survey observed that the improvement in the BoP position during the latter half of 2013-14 was indeed swift and owed to exceptional measures like restrictions on non- essential imports and limited period incentives for certain varieties of capital flows and the impact of overall economic slowdown on imports. Sustaining the robust outcome in the medium term is a challenge as some of the restrictions need to be gradually withdrawn and there is a need to adjust not merely to the asset purchase taper by the US Fed but also to the eventual exit from the accommodative monetary policy stance by the advanced economies. Economy India July-August 2014 41 Budget India Long-term Borrowings Account for 78.2 per cent of Total External Debt The Economic Survey 2013-14, presented today in the Lok Sabha by the Union Finance Minister Shri Arun Jaitley, has noted that the maturity profile of India's external debt indicates dominance of long-term borrowings. The long-term external debt accounted for 78.2 per cent of total external debt at end-December 2013 vis--vis 76.1 per cent at end- March 2013. The long-term debt at end - December 2013 increased by US $ 25.1 billion (8.1 per cent) over the level at end-March 2013 while short-term debt declined by US $ 4.0 billion (4.1 per cent), reflecting a fall in the levels of imports. Fiscal Deficit Contained at 4.5% of the GDP Proactive policy action helped government prevent the fiscal slide and remain in fiscal consolidation mode in 2013-14. According to the Economic Survey 2013-14 released here today, the fiscal outcome of the central government in 2013-14 was in line with the targets set as per the Medium Term fiscal policy statements and was achieved despite the macro- economic challenges of growth slowdown, elevated levels of global crude oil prices, and slow growth of investment. The fiscal deficit for 2013-14 has been contained at Rs 508149 crore (provisional) which is 4.5% of the GDP. The corresponding figure for 2012-13 was 4.9%. The primary deficit would be 1.2% of the GDP in 2013-14 while the revenue deficit is 3.2%. The revenue receipts in 2013-14 would be Rs 1015279 crore, 8.9% of the GDP. The gross tax revenue in 2013-14 are provisionally estimated to be Rs 1133832 crore which is 10% of the GDP. The gross tax revenue has shown a decrease of 0.2% in terms of GDP over the previous year. The shortfall is mainly due to the poor performance of indirect taxes. The total indirect tax collection for 2013-14 has been Rs 496231 crore, while it was Rs 473792 crore in 2012-13. The decline in expected revenue from indirect taxes was mainly on account of general economic slowdown, reduction in duty rates (both customs and excise), lower volume of imports of dutiable goods, and various exemptions. The direct tax collection for 2013-14 has been Rs 633473 crore. The percentage of direct tax revenues as part of GDP is 5.6% while indirect tax revenues constitute 4.4% of the GDP. The non-tax revenue during the year 2013-14 has gone up to Rs 199233 crore, showing a significant increase of about 45% compared to the previous year, chiefly on account of dividends and profits and interest receipts. Non-debt capital receipts which include recoveries of loans, disinvestment receipts and miscellaneous receipts decreased to Rs 36644 crore in RE 2013-14. The disinvestment programme has had limited success due to subdued market conditions and yielded Rs 27555 crore. The total expenditure of the central government was Rs 1563485 crore which constituted 13.1% of the GDP. The major subsidies went up to Rs 247596 crore, 2.2% of the GDP. The interest payments were Rs 377502 crore, 3.3% of GDP. With the shortfall in tax revenues and disinvestment receipts, and higher than budgeted subsidies, interest, and pension payments, the fiscal consolidation was mainly achieved through a reduction in grants for creation of capital assets and capital expenditure. To achieve the debt policy of maintaining stable, sustainable, prudent and market oriented active debt management, the government conducted buyback and switching of securities which resulted in reduction in market Economy India July-August 2014 42 Budget India borrowings by Rs 15000 crore for 2013-14 to Rs 468902 crore. To broaden the investor base and develop a competitive market, the government introduced inflation indexed bonds. A positive change in the debt profile of the country has been the reduction of total outstanding liabilities of the central and state government, as a proportion of GDP which now stands at 49.4%. India's central government liabilities-GDP ratio declined from 63.5 per cent in 2002-03 to 49.8 per cent in 2013-14 (RE), because the high nominal GDP growth offset both the new borrowing as well as the nominal interest payments, creditors have demanded. Economic Survey says that despite the global and domestic challenges, the economy achieved its targeted fiscal consolidation in 2013- 14 but this was done by cutting expenditure (majorly plan /capital expenditure) which is unsustainable for an economy. It says that addressing the risk of food, fertilizer and petroleum subsidies is critical. Another challenge lies in improving tax buoyancy, and overall shortfall in non-debt receipts could be contained with greater efforts at mobilisation and reforms. Fiscal consolidation remains imperative for the economy, both in the current context and the years to come with the emphasis on maintaining the quality of adjustment. It is better to achieve fiscal consolidation partly through a higher tax- GDP ratio than merely through reduction in the expenditure to GDP ratio, in view of the large unmet development needs. Three major milestones of the year 2013-14 The passage of the PFRDA Act, the shift of commodity futures trading into the Ministry of Finance, and the presentation of the FSLRC report, were the three major milestones of the year 2013-14. In the banking sector gross NPAs of banks registered a sharp increase. Overall NPAs of the banking sector increased from 2.36 per cent of total credit advanced in March 2011 to 4.40 per cent of total credit advanced in December 2013. The RBI has indentified five sectors -- infrastructure, iron and steel, textiles, aviation and mining as the stressed sectors. The New Pension System (NPS), now National Pension System, represents a major reform of Indian pension arrangements, and lays the foundation for a sustainable solution to ageing in India by shifting to an individual account, defined- contribution system. Till 7 May 2014 a total of 67.11 lakh members have been enrolled under the NPS with a corpus of ` Rs. 51,147 crore. The Swavalamban Scheme for workers in the unorganized sector launched in 2010, has now been extended to five years for the beneficiaries enrolled in 2010-11, 2011-12, and 2012-13 and thus the benefits of co-contribution under the Scheme would be available till 2016- 17. The FSLRC in its Report submitted on 24 March 2011 has given wide-ranging recommendations, broadly in the nature of governance enhancing principles for enhanced consumer protection, greater transparency in the functioning of financial sector regulators in terms of their reporting system, greater clarity on their interface with the regulated entities and greater transparency in the regulation making process by means of mandatory public consultations, incorporation of cost benefit analysis etc. WPI Inflation Shows Sign of Receding fell to 5.98% during 2013-14 Economic Survey 2013-14 states that in comparison with previous years, inflation showed signs of receding with average wholesale price index (WPI) inflation falling to a three-year low of 5.98 per cent during 2013-14, compared to 7 and 9% over the previous two years. Consumer price inflation, though higher than the WPI, has also exhibited signs of moderation with CPI (new-series) inflation declining from 10.21 per cent during FY 2013-14 to about 9.49 per cent in 2013-14. Food inflation, however, remained stubbornly high during FY 2013-14, reaching a peak of 11.95% in third quarter. High inflation, particularly Economy India July-August 2014 43 Budget India food inflation, was the result of structural as well as seasonal factors. Contribution of the commodity sub- groups, 'fruits and vegetables', as well as 'egg, meat and fish' to the food inflation has been very high. Inflation in Non Food Manufactured Product (WPI core) has remained benign throughout the year, with average inflation moderated to four year low of 2.9 per cent in 2013-14, which indicates that underlying pressures of broad-based inflation have somewhat eased. IMF has projected that most global commodity prices are expected to remain flat during 2014-15, which augurs well for inflation in emerging market and developing countries including India. The WPI inflation is expected to moderate by the end of 2014. However, there are risks to the outlook for inflation from a possible sub-normal monsoon during 2014-15 as predicted by the IMD on account of El-Nino effect, possible step up in the pass-through of international crude oil prices, and exchange rate volatility. The course of gradual monetary easing that had started alongside some moderation of inflationary pressures at the beginning of the financial year 2013- 14 was disrupted in May 2013, following indications of possible tapering of the US Fed's quantitative easing programme. The RBI with a view to restoring stability to the foreign exchange market, hiked short term interest rate in July and compressed domestic money market liquidity. Following the ebbing of volatility in the foreign exchange market, RBI initiated normalisation of the exceptional measures in a calibrated manner since its mid- quarter review (MQR) of September 20, 2013. The interest rate corridor was realigned to normal monetary policy operations with the MSF rate being reduced in three steps to 8.75 per cent between September 20, 2013 and October 29, 2013. RBI in its Third Quarter Review of Monetary Policy on January 28, 2014, hiked the repo rate by 25 bps to 8 per cent on account of upside risks to inflation, to anchor inflation expectations and to contain second round effects. The move was intended to set the economy securely on the disinflationary path. Liquidity conditions remained tight during the first half (H1) of 2013-14, mainly reflecting policy intent to stabilise the exchange market pressure. The elevated central government cash balances with RBI (particularly in Q2 and Q4 of 2013-14), quarterly advance tax outflows, and festival- induced increase in currency in circulation also contributed towards the tight liquidity phases in 2013-14. In order to prevent excessively worsening of liquidity conditions, which would have impacted financing conditions, RBI undertook measures to inject liquidity through OMO purchase auctions, overnight repo, MSF and variable rate term repos. Survey asks to move towards a Low and Stable Inflation Regime through Fiscal Consolidation GDP at constant prices is expected to grow in the range of 5.4 - 5.9 per cent in 2014-15. There are downside risks to the economy arising from a poor monsoon, the external environment and the poor investment climate.GDP growth slowed to below 5 per cent for two consecutive years, i.e. 2012- 13 and 2013-14. The combination of domestic structural constraints, inflationary pressures, particularly food inflation and uncertainty in the global economy, has affected growth and posed challenges for macroeconomic stability. The growth slowdown was broad based, affecting in particular the industrial sector. Aided by favourable monsoons, the agricultural and allied sector grew at 4.7 per cent in 2013-14. In 2013-14 industry grew at 0.4 per cent. The key reasons for poor performance have been contraction in mining activities and deceleration in manufacturing output. Manufacturing and mining sector GDP declined by 0.7 per cent and 1.4 per cent respectively in 2013- 14. The underlying cause of the poor performance of these two sectors has been considerable deceleration in investment, particularly by the private corporate sectorduring 2011- 12 and 2012-13. In infrastructure delays in regulatory approvals, problems in land acquisition & rehabilitation, environmental clearances and time overruns in the implementation of projects are matters of concern. Consumer price inflation declined from 10.21 per cent during FY 2013-14 to about 9.49 per cent in 2013-14. However, food inflation remained stubbornly high during FY 2013-14. Contribution of the commodity sub-groups, 'fruits and vegetables', as well as 'egg, meat and fish' to the food inflation has been Economy India July-August 2014 44 Budget India very high. India's balance-of- payments position improved in 2013-14 with current account deficit (CAD) at US $ 32.4 billion (1.7 per cent of GDP) as against US$ 88.2 billion (4.7 per cent of GDP) in 2012- 13. India's exports at US$ 312.6 billion grew by a positive 4.1 per cent compared to the previous year's negative growth of 1.8 percent. Import growth decelerated from 0.3 per cent in 2012-13 to a negative (-) 8.3 per cent in 2013-14, owing to fall in non-oil imports by 12.8 per cent primarily due to restrictions on gold imports. POL imports grew marginally by 0.7 per cent.Services grew at 6.8 per cent in 2013-14. The growth rate of the combined category of trade, hotels, and restaurants and transport, storage, and communications decelerated to 3.0 per cent while financing, insurance, real estate, and business services grew robustly at 12.9 per cent. Challenges to the external environment remain as the global environment remains uncertain. In 2013-14, public finances faced serious challenges. With a shortfall in tax revenues and disinvestment receipts and higher than budgeted subsidies, interest and pension payments, fiscal consolidation was mainly achieved through a reduction in grants for creation of capital assets and capital expenditure. An important factors in the increase in the Centre's fiscal deficit after 2008-09 has been the sharp increase in subsidies from 1.42 per cent of GDP in 2007-08 to 2.56 per cent of GDP in 2012-13. For 2013- 14 (RE) the subsidy bill is 2.26 per cent of GDP. In the financial sector, leverage by infrastructure firms and deteriorating asset quality of the banking sector emerged as a major concerns. Gross NPAs of banks increased from 2.36 per cent of total credit advanced in March 2011 to 4.40 per cent of total credit advanced in December 2013 with infrastructure, iron and steel, textiles, aviation and mining emerging as the stressed sectors.Reforming the financial sector would involve reducing financial repression through which the state usurps a large share of household financial savings, financial sector regulatory reform and changing the laws and regulations governing the flow of foreign capital into India. The passage of the PFRDA Act, the shift of commodity futures trading into the Ministry of Financeand the first steps towards adoption of improved consumer protection and better regulatory practices proposed by the Financial Sector Legislative Reforms Commission were the milestones in financial sector reform in 2013-14. The Survey identifies the need to address long run problemsto improve the investment climate. It emphasizes the need for creating a framework for low and stable inflation, setting public finances on a sustainable path by tax and expenditure reform, and creating the legal and institutional framework for a well-functioning market economy. It calls for legislative and administrative reform for building state capacity to allow businesses to operate in a stable environment and improve the ease of doing business. The Survey calls for putting public finances on the sustainable path through fiscal correction, a new Fiscal Responsibility and Budget Management (FRBM) Act with teeth, better accounting practices, greater transparency and improved budgetary management. It argues that improvements on both tax and expenditure are needed to obtain high quality fiscal adjustment. It calls for a tax regime that is simple, predictable and stable consisting of a single-rate goods and services tax (GST), fewer exemptions in direct taxes, and a transformation of tax administration. Government expenditure reform should involve three elements: shifting subsidy programmes away from price subsidies to income support, a change in the focus of government spending towards provision of public goods, and a focus on outcomes through an improvement in systems of accountability. For example, a focus on health and education outcomes, rather than inputs and expenditure must be a priority. The Survey recommends that the government needs to move towards a low and stable inflation regime through fiscal consolidation, establishing a monetary policy framework, and creating a competitive national market for food. Initiation of reforms on these fronts should reduce inflation uncertainty and restore a stable business environment. Further lower inflationary expectations should increase domestic household financial saving and make resources available for investment. The Survey calls for reforming the food market. Restrictions on farmers to buy, sell and store their produce to customers across the country and the world imposed by Indian laws enacted in the 1950s and 60s have not been removed, even though restrictions on industry were removed long ago. Restoring economic freedom of farmers and allowing them to be part of a competitive national market is essential for controlling food inflation. Economy India July-August 2014 45 Budget India Govt. to spend 50,000 crore rupees for development of urban areas he Union Finance Minister Shri Arun Jaitley while presenting his maiden Budget, in the Lok Sabha today announced that his Government has a major focus of providing good infrastructure, including public transport, solid waste disposal, sewerage treatment and drinking water in the urban areas. The Budgetary provision for the Pooled Municipal Debt Obligation Facility has been enhanced from Rs 5000 crores to Rs 50,000 crores with extension of the facility by five years to March 31, 2019. Shri Jaitley informed the House that this facility was set up in 2006 with participation of several banks to promote and finance infrastructure projects in Urban Areas on shared risk basis. Shri Jaitley said that for urban renewal of cities and towns, four f u n d a m e n t a l activities are necessary like provision of safe drinking water and sewerage management, use of recycled water for growing organic fruits and vegetables, solid waste management and digital connectivity. The Finance Minister said it is the vision of this Government that at least five hundred (500) such habitations must be provided support, while harnessing private capital and expertise through PPPs, to renew their infrastructure and services in the next ten years. Government will encourage development of metro rail systems, including light rail systems, in the PPP mode, supported by the Central Government. Shri Jaitley stressed that for two million plus cities, planning of metro projects must begin now and in the current fiscal, a sum of Rs. 100 crore has been allocated for Metro Projects in Lucknow and Ahmedabad. HOUSING FOR ALL BY 2022 Government is committed to endeavour to have housing for all by 2022 by extending additional tax incentive on home loans to encourage people, especially the young, to own houses. It has proposed to set up a Mission on Low Cost Affordable Housing to be anchored in the National Housing Bank. The Finance Minister Shri Arun Jaitley informed the Lok Sabha while presenting the General Budget 2014-15 that a sum of Rs 4,000 crore has been earmarked for National Housing Bank with a view to increase the flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment. He added that Government has already outlined some other incentives such as easier flow of FDI in this sector and is willing to examine other positive suggestions. He also informed the inclusion of slum development in the list of Corporate Social Responsibility (CSR) activities to encourage the private sector to contribute more towards this activity. Shri Jaitley informed that the Rural Housing Scheme has benefited a large percentage of rural population General Budget 2014-15 T Economy India July-August 2014 46 Budget India Madam Speaker, I rise to present the Budget for the year 2014-15. I. STATE OF THE ECONOMY 2. The people of India have decisively voted for a change. The verdict represents the exasperation of the people with the status-quo. India unhesitatingly desires to grow. Those living below the poverty line are anxious to free themselves from the curse of poverty. Those who have got an opportunity to emerge from the difficult challenges have become aspirational. They now want to be a part of the neo middle class. Their next generation has the hunger to use the opportunity that society provides for them. Slow decision making has resulted in a loss of opportunity. Two years of sub five per cent growth in the Indian economy has resulted in a challenging situation. We look forward to lower levels of inflation as compared to the days of double digit rates of food inflation in the last two years. The country is in no mood to suffer unemployment, inadequate basic amenities, lack of infrastructure and apathetic governance. 3. The slowdown in India broadly reflects the trend in many economies. In contrast to the aftermath of the crisis of 2008- 09 when restoration of growth in advanced economies was the primary concern, the continuing slowdown being presently witnessed in many emerging economies has posed a threat to a sustained global recovery. Fortunately, there are green shoots of recovery being seen in the global economy. As per IMF, the world economy is projected to grow at 3.6 percent in 2014 vis--vis 3.0 per cent in 2013, with the Euro area expected to register a positive growth after the contraction witnessed in 2012 and 2013. However, the performance of the US economy with attendant implication for the unconventional monetary policy stance and global financial conditions is pivotal to the fate of global recovery in the coming years. These are the head winds against which the Indian economy would have to maneuver its way to attain high growth trajectory. 4. As Finance Minister I am duty bound to usher in a policy regime that will result in the desired macro-economic outcome of higher growth, lower inflation, sustained level of external sector balance and a prudent policy stance. The Budget is the most comprehensive action plan in this regard. In the first Budget of this NDA government that I am presenting before the august House, my aim is to lay down a broad policy indicator of the direction in which we wish to take this country. The steps that I will announce in this Budget are only the beginning of a journey towards a sustained growth of 7-8 per cent or above within the next 3- 4 years along with macro-economic stabilization that includes lower levels of inflation, lesser fiscal deficit and a manageable current account deficit. Therefore, it would not be wise to expect everything that can be done or must be Budget Speech who have availed credit through Rural Housing Fund (RHF). In the light of the above, enhanced allocations to the tune of Rs. 8,000 crore has been made for National Housing Bank (NHB) for the year 2014-15 to expand and support Rural Housing in the country. Free drug & diagnosis services to achieve the goal health for all The Central Government has decided to set up fifteen Model Rural Health Research Centres in the States for better health care facilities in rural India. The Health Centres will take up research on local health issues concerning rural population. Presenting his Maiden Budget in Parliament, the Union Finance Minister Shri Arun Jaitley said that to move towards Health for All, two key initiatives like the Free Drug Service and Free Diagnosis Service would be taken up on priority. The Finance Minister said that in order to achieve universal access to early quality diagnosis and treatment to TB patients, two National Institutes of Ageing will be set up at AIIMS, New Delhi and Madras Medical College, Chennai. A national level research and referral Institute for higher dental studies would be set up in one of the existing Dental institutions. Shri Jaitley informed the House with great satisfaction that all the six new AIIMS at Jodhpur, Bhopal, Patna, Rishikesh, Bhubaneswar and Raipur, which are part of Pradhan Mantrai Swasthya Suraksha Yojana, have become functional. A plan to set up four more AIIMS like institutions at Andhra Pradesh, West Bengal, Vidarbha in Maharashtra and Poorvanchal in UP is under consideration. He announced a sum of Rs 500 crores for this purpose. He said at present 58 Government Medical Colleges have been approved and proposed to add 12 more such colleges. In addition, dental facilities would also be provided in all the hospitals, he added. Shri Jaitley said that for the first time, the Central Government will provide assistance to strengthen the States Drug Regulatory and Food Regulatory Systems by creating new drug testing laboratories and strengthening the 31 existing State laboratories. FIVE NEW IITs AND FIVE NEW IIMs WILL BE SET UP The Government has announced to set-up five more IITs in the Jammu & Kashmir, Chattisgrah, Goa, Andhra Pradesh and Kerala. Similarly, five new IIMs will be set-up in the States of Himachal Pradesh, Punjab, Bihar, Odisha and Maharashtra. For this, a sum of Rs. 500 crore has been allocated in the Budget. Presenting his Maiden Budget in Parliament here today, the Union Finance Minister Shri Arun Jaitley said that the country needs a large number of Centres of higher learning which are world class and accordingly declare to set-up Jai Prakash Narayan National Centre for Excellence in humanities in Madhya Pradesh. Shri Jaitley announced Pandit Madan Mohan Malviya New Teachers Training Programme to infuse new training tools Economy India July-August 2014 47 Budget India and motivate teachers with an initial corpus of Rs.500 crore. He said that for Sarva Shiksha Abhiyan a provision of Rs. 28, 635 crore has been made while for Rashtriya Madhyamik Shiksha Abhiyan Rs. 4,966 crores have been allocated. The Government will also strive to provide toilets and drinking water in all the girls school in first phase, the Minister added. To take advantage of the reach of the IT, the Finance Minister allocated a sum of Rs. 100 crore for setting up virtual classrooms as Communication Linked Interface for Cultivating Knowledge (CLICK) and online courses. Digital India prog. to launched Centre has proposed to launch a pan India Programme called Digital India to further bridge the divide between digital haves and have-nots. This would ensure Broad band connectivity at village level, improved access to services through IT enabled platforms, greater transparency in Government processes and increased indigenous production of IT hardware and software for exports and improved domestic availability. Presenting his Maiden Budget in Parliament here today, the Union Finance Minister Shri Arun Jaitley said that special focus would be given on supporting software product startups. The Finance Minister said that the Government has also proposed to set-up A National Rural Internet and Technology Mission for services in villages and schools, training in IT skills and E-Kranti for government service delivery and governance scheme with an initial corpus of Rs. 500 crore. A programme for promoting Good Governance will also be launched and a sum of Rs.100 crore will be set aside for this, the Minister added. Shri Jaitley informed that so far around 400 permissions for setting up of a Community Radio Stations have been issued and to encourage further growth in this sector, a new plan scheme has been launched with sum of Rs.100 crore to support 600 new and existing Community Radio Stations. The Finance Minister Shri Jaitley informed that Film & Television Institute, Pune and Satyajit Ray Film & Television Institute, Kolkata will be accorded status of Institutes of national importance and a National Centre for Excellence in Animation, Gaming and Special effects will be set up. Beti bachao, beti padhao yojana launched Government has introduced a new scheme called Beti Bachao, Beti Padhao, which will help in generating awareness and improving the efficiency of delivery of welfare services meant for women with an initial corpus of Rs 100 crore. The Union Finance Minister Shri Arun Jaitley announced in his maiden Budget Speech that government would focus on campaigns to sensitize people of this country towards the concerns of the girl child and women. He said that the process of sensitization must begin early and therefore the school curriculum must have a separate chapter on gender mainstreaming. Sharing the concerns of the members on Womens safety, the Finance Minister informed the House that Ministry of Road Transport and Highways will spend Rs. 50 crore on pilot testing a scheme for Safety of Women on Public Road Transport. Similarly, Ministry of Home Affairs will spend Rs. 150 crore on a scheme to increase the safety of women in large cities. The Finance Minister also proposed to set up Crisis Management Centres in all the districts of NCT of Delhi this year in all government and private hospitals. The funding will be provided from the Nirbhaya Fund, the Minister added. Govt. reiterates its commitment to the welfare of SCs & STs The Central Government has said that it is committed to the welfare of SCs and STs and this year an amount of Rs 50,548 crore is proposed under the SC Plan and Rs 32, 387 crore under TSP. The Union Finance Minister Shri Arun Jaitley while presenting his maiden Budget, in the Lok Sabha today said that to provide credit enhancement facility for young start up entrepreneurs from Scheduled Castes, who aspire to be part of the neo- middle class, a sum of Rs 200 crore will Economy India July-August 2014 48 Budget India done to be in the first Budget presented within forty five days of the formation of this Government. 5. While higher growth is a sine qua non, we cannot be oblivious of the fact that there is a large population of this country which is below the poverty line. It is the poor who suffer the most. We have to ensure that our anti-poverty programs are well targeted. The growing aspirations of the people will be reflected in the development strategy followed by the Government led by the Prime Minister Shri Narendra Modi and its mandate of Sab ka Saath Sab ka Vikas. Allow me to assure this House that we have taken up the challenge in the right earnest. We shall leave no stone unturned in creating a vibrant and strong India. 6. The prevailing economic situation presents a great challenge. It calls for a conscious choice to be made by all of us. Should we allow this drift to carry on and watch helplessly? Should we allow our future to suffer because of our indecisiveness? Should we be victims of mere populism or wasteful expenditure? To me, the response and the remedy are both clear. The task before me today is very challenging because we need to revive growth, particularly in manufacturing and infrastructure to raise adequate resources for our developmental needs. On the other hand, the task is simple if we accept the principle that we cannot spend beyond our means. We need to introduce fiscal prudence that will lead to fiscal consolidation and discipline. Fiscal prudence to me is of paramount importance because of considerations of inter-generational equity. We cannot leave behind a legacy of debt for our future generations. We cannot go on spending today which would be financed by taxation at a future date. There is an urgent need to generate more resources to fuel the economy. For this, the tax to GDP ratio must be improved and non-tax revenues increased. We must remember that the decline in fiscal deficit from 5.7 per cent of GDP in 2011-12 to 4.8 per cent in 2012-13 and 4.5 per cent in 2013-14 was mainly achieved by reduction in expenditure rather than by way of realization of higher revenue. Although, the external sector witnessed a turn- around with the year ending with a Current Account Deficit of 1.7 per cent of the GDP against 4.7 per cent in 2012-13, this was mainly achieved through restriction on non- essential imports and slowdown in overall aggregate demand. Going forward, we must continue to be watchful of the CAD. 7. My predecessor has set up a very difficult task of reducing fiscal deficit to 4.1 per cent of the GDP in the current year. Considering that we had two years of low GDP growth, an almost static industrial growth, a moderate increase in indirect taxes, a large subsidy burden and not so encouraging tax buoyancy, the target of 4.1 per cent fiscal deficit is indeed daunting. Difficult, as it may appear, I have decided to accept this target as a challenge. One fails only when one stops trying. My Road map for fiscal consolidation is a fiscal deficit be opertionalised through a scheme by IFCI. For the welfare of the tribals Van Bandhu Kalyan yojana is being launched with an initial allocation of Rs 100 crore. Shri Jaitley has announced a sum of Rs 100 crores for modernization of Madarsas. Shri Jaitley said that NDA Government during its last term in office had introduced the Varishtha Pension Bima Yojana (VPBY) as a pension scheme for senior citizens. Under the scheme a total no. of 3.16 lakh annuitants are being benefitted and the corpus amounts to Rs 6,095 crore. The Finance Minister proposed to revive the scheme for a limited period from 15 August , 2014 to 14, August, 2015 for the benefit of citizens aged 60 years and above. He also proposed to set-up a committee to examine and recommend the use of unclaimed amounts with PPF, Post Office, saving schemes etc for the benefit of senior citizens. Shri Jaitley said that the Government is fully committed to the social security and welfare of employees serving in the organized sector. It is notifying minimum pension of Rs 1,000 per month to all subscriber members of EP Scheme and has made an initial provision of Rs 250 crore in the current financial year to meet the expenditure. Further, increase in mandatory wage ceiling of subscription to EPS from Rs 6,500 to Rs 15,000 has been made and a provision of Rs 250 crore has been provided in the current budget. For the convenience of the subscribers, EPFO will launch the Uniform Account Number Service for contributing members to facilitate portability of Provident Fund accounts. The Finance Minister said that the Government will make all out efforts to create a more inclusive society for Persons with Disabilities to enable them to enjoy equal opportunity to lead an empowered life with dignity. He also proposed to establish National level institutes for Universal Inclusive Design and Mental Health Rehabilitation and also a Centre for Disability Sports. Higher budgetary allocations have been made for rural road & water sectors The Central Government has reaffirmed its commitment to a better and more energetic Pradhan Mantri Gram Sadak Yojana as it had a massive impact in improvement of access for Rural population. Initiated during the NDA-I under the stewardship of then Prime Minister Atal Behari Vajpayee, Economy India July-August 2014 49 Budget India the scheme has been provided a sum of Rs. 14, 389 crore in the General Budget 2014-15. While renewing its commitment to providing wage and self-employment opportunity in rural areas, the Union Finance Minister Shri Arun Jaitley said that the wage employment would be provided under MGNREGA through works that are more productive, asset creating and substantially linked to agriculture and allied activities. Ajeevika, the National Rural Livelihood Mission (NRLM), aims to eliminate rural poverty through sustainable livelihood options. Under this Mission, Women SHGs are provided bank loans at 4% on prompt repayment in 150 districts and at 7 % in all other districts. The Finance Minister said that Government has decided to extend the provision of bank loan for women SHGs at 4% in another 100 districts. Shri Jaitley also proposed to set-up a Start Up Village Entrepreneurship Programme for encouraging rural youth to take up local entrepreneurship programs with an initial sum of Rs 100 crore. Shri Jaitley said to give an added impetus to watershed development in the country, a new programme called Neeranchal will be launched with an initial outlay of Rs 2,142 crore in the current financial year. For providing safe drinking water, Rs 3600 crore has been earmarked under National Rural Drinking Water Programme in approximately 20,000 habitations affected with arsenic, fluoride, heavy/toxic elements, pesticides/ fertilizers through community water purification plants in next 3 years, the Finance Minister added. Enactment of Indian financial code necessary: The Finance Minister Shri Arun Jaitley in his maiden Budget Speech advised financial sector regulators to take early steps for a vibrant, deep and liquid market. Shri Jaitley also proposed to extend a liberalized facility of 5 pecent withholding tax to all bonds issued by Indian corporate abroad, extending validity up to 30/06/2017. Commenting on Financial Sector Shri Jaitley said there are some important recommendations for the sector i.e., enactment of the Indian Financial Code which is considered necessary for better governance and accountability. The Finance Minister Shri Jaitley in his budget address also announced much more liberal and ambitious Bharat Depository Receipt (BhDR) scheme. He also allowed international settlement of Indian debt securities and completely revamped the Indian Depository Receipt (IDR) scheme. Shri Jaitley said that the Indian capital market have been a source of risk capital for growing India and suggested introduction of uniform KYC norms with inter-usability of the KYC records across the entire financial sector. The Finance Minister also announced introduction of one single operating demat account to access and transact all financial assets through one account. Shri Jaitley also announced introduction of Warehouse Development and Regulatory Authority to improve post-harvest lending to farmers. Shri Jaitley also proposed the adoption of new Indian Accounting Standards by the Indian companies from the financial year 2015-16. Welfare of girl child on upmost priority: The Finance Minister Shri Arun Jaitley in his maiden Budget Speech has said that the Government attaches utmost importance to the welfare of Girl Child. He also announced to introduce a special small savings instrument to cater to the requirements of educating and marriage of the Girl Child. A National Savings Certificate with insurance cover will also be launched to provide additional benefits for the small saver. The Finance Minister also announced in his budget speech about re-introduction of Kishan Vikas Patra (KVP) and enhancement of ceiling in PPF Scheme from Rs.1 lakh to Rs.1.5 lakh per annum. Pending insurance laws (amendment) bill to be tabled: The Finance Minister Shri Arun Jaitley in his maiden Budget Speech announced that the pending Insurance Laws (Amendment) Bill will immediately be brought for consideration of the Parliament. The Finance Minister said benefits of insurance in India have not reached to a large section of the people as insurance penetration and density are very low. The Finance Minister Shri Jaitley assured that the Government would work addressing this situation Economy India July-August 2014 50 Budget India in multi-pronged manner with support of all stake holders concerned. Finance Minister also announced that as a part of the legislative initiatives under the financial sector reforms, it is proposed to bridge the regulatory gap under the Prize Chits and Money Circulation Scheme (Banking) Act, 1978. This will facilitate effective regulation of companies and entities which have duped a large number of poor and vulnerable people in the country, the Minister added. 2 agricultural & 2 horticulture universities to be established Government will establish two agriculture research institutions of excellence in Assam and Jharkhand with a initial sum of Rs 100 crore in the current financial year. The Finance Minister Shri Arun Jaitley made this announcement while presenting his maiden budget in Lok Sabha today. The Minister said that farming as an activity contributes nearly 1/6th to our National GDP and a major portion of our population is dependent on it for livelihood. It has risen to the challenge of making India largely self-sufficient in providing food for a growing population. The Finance Minister said that to make farming competitive and profitable, there is an urgent need to step up investment, both public and private, in agro-technology development and creation and modernization of existing agri-business infrastructure. Indian Agricultural Research Institute, Pusa has been at the forefront of research in this area. The Finance Minister in addition set aside an amount of Rs 100 crore for setting up an Agri-Tech Infrastructure Fund. The Minister also proposed to establish Agriculture Universities in Andhra Pradesh and Rajasthan and Horticulture Universities in Telangana and Haryana. An initial sum of Rs 200 crores has been allocated for this purpose. KISAN TV to be launched for farmers The Union Finance Minister, Shri Arun Jaitley while presenting his maiden budget announced Kisan TV, dedicated to the interests of the agriculture and allied sector will be launched in the current financial year. This will disseminate real time information to the farmers of 3.6 per cent for 2015-16 and 3 per cent for 2016-17. I am conscious of the fact that Iraq crisis is leaving an impact on oil prices and the situation in the middle-east continues to be volatile. Monsoon this year appears more unpredictable. While inflation has remained at elevated levels relative to what is perceived as acceptable, there has been a gradual moderation in WPI recently, from a high of 7.35% in 2012-13 and 5.98% in 2013-14. But we are still not out of the woods. We also must address fully the problem of black money which is curse of our economy. Faced with these adversities we have no option but to undertake some bold steps in order to enhance economic activity and spur growth in the economy. These steps are only the beginning of our effort to revive the growth spirit of the Indian Economy. They are directional. Expenditure Management Commission 8. My Government is committed to the principle of Minimum Government Maximum Governance. To achieve this goal, time has come to review the allocative and operational efficiencies of Government expenditure to achieve maximum output. The Government will constitute an Expenditure Management Commission, which will look into various aspects of expenditure reforms to be undertaken by the Government. The Commission will give its interim report within this financial year. I also propose to overhaul the subsidy regime, including food and petroleum subsidies, and make it more targeted while providing full protection to the marginalized, poor and SC/STs. A new urea policy would also be formulated. GST 9. The debate whether to introduce a Goods and Services Tax (GST) must now come to an end. We have discussed the issue for the past many years. Some States have been apprehensive about surrendering their taxation jurisdiction; others want to be adequately compensated. I have discussed the matter with the States both individually and collectively. I do hope we are able to find a solution in the course of this year and approve the legislative scheme which enables the introduction of GST. This will streamline the tax administration, avoid harassment of the business and result in higher revenue collection both for the Centre and the States. I assure all States that government will be more than fair in dealing with them. Tax Administration 10. The sovereign right of the Government to undertake retrospective legislation is unquestionable. However, this power has to be exercised with extreme caution and judiciousness keeping in mind the impact of each such measure on the economy and the overall investment climate. This Government will not ordinarily bring about any change retrospectively which creates a fresh liability. Honble Economy India July-August 2014 51 Budget India regarding new farming techniques, water conservation, organic and farming etc. The Finance Minister for this purpose allocated a sum of Rs 100 crore in the General Budget 2014-15. Soil health card scheme for every farmer The Union Finance Minister Shri Arun Jaitley while presenting his maiden budget said, deteriorating soil health has been a cause of concern and leads to sub optimal utilization of farming resources. He said that Government will initiate a scheme to provide to every farmer a soil health card in a mission mode. The Finance Minister proposed to set aside a sum of Rs 100 core for this purpose. An additional Rs 56 crores have been allocated to set up 100 mobile soil testing laboratories across the county. There have also been growing concerns about the imbalance in the utilization of different types of fertilizers resulting in deterioration of the soil. NATIONAL ADAPTATION FUND TO BE ESTABLISHED FOR CLIMATE CHANGE The Union Finance Minister Shri Arun Jaitley while presenting his maiden budget announces to establish a National Adaptation Fund for climate change. As an initial sum, an amount of Rs 100 crore will be transferred to the Fund. Climate changes is a reality which all of us have to face together, says the Finance Minister. Agriculture as an activity is most prone to the vagaries of climate change he added. The Finance Minister also announced a sum of Rs 500 crore for establishing a Price Stabilization Fund to mitigate price volatility in the agriculture produce which create uncertainties and hardship for the farmers. The Finance Minister said that the farmers and consumers interest will be served by increasing competition and integrating markets across the country. To accelerate setting-up of a National Market, the Central Government will work closely with the State Governments to re-orient their respective APMC Acts., to provide for establishment of private market yards/private markets. The State Governments will also be encouraged to develop Farmers Markets in town areas to enable the farmers to sell their produce directly. Technology driven 2nd green revolution with focus on "Protien Revotution" The Union Finance Minister, Shri Arun Jaitley while presenting his maiden budget said that the Government is committed to sustain a growth of 4% in agriculture. He said that for this government will bring technology driven second Green Revolution with focus on higher productivity and include gProtein revolution h as an area of major focus. The Finance Minister said that as a very large number of landless farmers are unable to provide land title as guarantee, institutional finance is denied to them and they become vulnerable to money lenders f usurious lending. The Finance Minister has proposed to provide finance to 5 lakh joint farming groups of gBhoomi Heen Kisan h through NABARD in the current financial year. Shri Jaitely also proposed to set aside a sum of Rs 50 crores for the development of indigenous cattle breeds and an equal amount for starting a blue revolution in inland fisheries. Measures to increase investment and credit flow into agriculture sector The Finance Minister Shri Arun Jaitley while presenting his maiden Budget in Lok Sabha here today said that bank are providing strong credit support to the agriculture sector. A target of Rs 8 lakh crore has been set for agriculture credit during 2014-15 which he is confident that the banks will surpass in the current financial year. Under the Interest Subvention Scheme for short them crop loans, the banks are extending loans to farmers at a concessional rate of 7%. The farmers get a further incentive of 3% for timely repayment. He hope to continue the Scheme in 2014-15, the Finance Minister added. The Finance Minister said that NABARD operated the Rural Infrastructure Development Fund (RIDF) out of the priority sector lending shortfall of the banks, which helps in creation of infrastructure in agriculture and rural sectors across the country. The Finance Minister proposed to raise the corpus of RIDF by an additional Rs 5,000 crores from the target given in the Interim Budget to Rs 25,000 crores in the current financial year. The Finance Minister said that increasing warehousing capacity for increasing the shelf life of agriculture produces and thereby the earning capacity of the farmers is of utmost importance. Keeping in the view the urgent need for availability of scientific warehousing infrastructure in the country, the Finance Minister proposed an allocation of Rs 5,000 Economy India July-August 2014 52 Budget India crore for the fund for the year 2014-15 the Finance Minister added. The share of long term investment credit in agriculture is going down as compared to short term crop loan. This is severely hampering the asset creation in agriculture and allied activities. In order to give a boost to long term investment credit in agriculture, the Finance Minister proposed to set up gLong Term Rural Credit Fund h in NABARD for the purpose of providing refinance support to Cooperative Banks and Regional Rural Banks with an initial corpus of Rs 5,000 crore. The Short Term Cooperative Rural Credit (STCRC), Refinance Fund was announced in Union Budget 2008-09 with initial corpus of Rs 5,000 crore. In order to ensure increased and uninterrupted credit flow to farmers and to avoid high cost market borrowings by NABARD, the Finance Minister proposed to allocate an amount of Rs 50,000 crore for STCRC Fund during 2014-15. The issue of profitability of small holding based agriculture has assumed importance in view of increasing proportion of small and marginal farmers in the country. The Finance Minister proposed to supplement NABARD fs Producers f Organization Development Fund for Producer fs development and upliftment called ePRODUCE f with a sum of Rs 200 crore which will be utilized for building 2,000 producers organizations across the country over the next two years. Reforms in the food sector will be taken up on priority The Finance Minister Shri Arun Jaitley while presenting his maiden Budget in Lok Sabha today said that the Government is committed to reforms in the food sector. Restructuring FCI, reducing transportation and distribution losses and efficacy of PDS would be taken up on priority the Finance Minister added. Shri Jaitley said that the Government is also committed to provide wheat and rice at reasonable prices to the weaker sections of the society. Even if due to inadequate rainfall, there is a marginal decline in agriculture production, stocks in the Central pool are adequate to meet any exigency he added. The Finance Members are aware that consequent upon certain retrospective amendments to the Income Tax Act 1961 undertaken through the Finance Act 2012, a few cases have come up in various courts and other legal fora. These cases are at different stages of pendency and will naturally reach their logical conclusion. At this juncture I would like to convey to this August House and also the investors community at large that we are committed to provide a stable and predictable taxation regime that would be investor friendly and spur growth. Keeping this in mind, we have decided that henceforth, all fresh cases arising out of the retrospective amendments of 2012 in respect of indirect transfers and coming to the notice of the Assessing Officers will be scrutinized by a High Level Committee to be constituted by the CBDT before any action is initiated in such cases. I hope the investor community both within India and abroad would repose confidence on our stated position and participate in the Indian growth story with renewed vigour. Advance Ruling and Other Tax Related Measures 11. Tax demand of more than ` 4 lakh crore is under dispute and litigation before various Courts and Appellate authorities. This is one of the serious concerns of all taxpayers in this country. In order to reduce litigation in direct taxes, I propose to make certain legislative and administrative changes. 12. Currently, an advance ruling can be obtained about the tax liability of a non-resident from the Authority for Advance Rulings. This facility is not available to resident taxpayers except Public Sector Undertakings. I propose to enable resident taxpayers to obtain an advance ruling in respect of their income tax liability above a defined threshold. I also propose to strengthen the Authority for Advance Rulings by constituting additional benches. I further propose to enlarge the scope of the Income-tax Settlement Commission so that taxpayers may approach the Commission for settlement of disputes. This would continue to be once in a lifetime opportunity for any taxpayer. 13. As an administrative measure, I propose to set up a High Level Committee to interact with trade and industry on a regular basis and ascertain areas where clarity in tax laws is required. Based on the recommendations of the Committee, the Central Board of Direct Taxes and the Central Board of Excise and Customs shall issue appropriate clarifications, wherever considered necessary, on the tax issues within a period of two months. 14. Transfer Pricing is a major area of litigation for both resident and nonresident taxpayers. I have proposed certain changes in the Transfer Pricing regulations, which I would spell out in Part-B of my speech. 15. I hope these measures would go a long way in improving the confidence of taxpayers in the tax system and would provide certainty and clarity in tax laws. FDI 16. The policy of the NDA Government is to promote Foreign Economy India July-August 2014 53 Budget India Minister said that the Government shall, when required, undertake open market sales to keep prices under control. FM sets up an integrated Ganga conservation mission eNAMAMI GANGE The Finance Minister, Shri Arun Jaitley has proposed to set up an Integrated Ganga Conservation Mission called (Namami Gange). The Finance Minister, Shri Jaitley, in his maiden Budget Speech in the Parliament here today said that an amount of Rs. 2037 crore has been set aside for the Mission in the current Budget. Shri Jaitley said that the Mission is being launched because a substantial amount of money has been spent in the conservation and improvement of the river Ganga but the efforts have not yielded desired results because of the lack of concerted effort by all the stakeholders. To harness the enthusiasm of the NRI Community to contribute towards the conservation of the river Ganga, an NRI Fund for Ganga will be set up which will finance special projects, the Finance Minister added. The Finance Minister has also set aside a sum of Rs. 100 crore for Ghat development and beautification of river front at Kedarnath, Haridwar, Kanpur, Varanasi, Allahabad, Patna and Delhi in the current financial year since Riverfronts and Ghats are not only places of rich historical heritage but many of these are also sacred. The Budget also contains the first ever effort to link the rivers across the country. The Finance Minister has set aside a sum of Rs. 100 crore in the current Budget to expedite the preparation of Detailed Project Reports as a serious move in this direction. Rs. 500 crore set aside to create five tourist circuits The General Budget 2014-15 proposes to create 5 tourist circuits around specific themes for which a sum of Rs. 500 crore has been set aside in the current financial year. In his maiden Budget Speech in the Parliament here today, the Finance Minister Shri Arun Jaitley said that India fs rich cultural, historical, religious and natural heritage provides a huge potential for the development of tourism and job creation as an industry. Sarnath-Gaya- Varanasi Buddhist circuit would also be developed with world class tourist amenities to attract tourists from all over the world, he added. The Finance Minister also announced the launching of National Heritage city Development and Augmentation Yojana (HRIDAY) for conserving and preserving the heritage characters of these cities. The programme will be launched in the cities such as Mathura, Amritsar, Gaya, Kanchipuram, Vellankani, and Ajmer with a provision of Rs. 200 crore in the current Budget. The project will work through a partnership of Government, Academic Institutions and local community combining affordable technologies. A National Mission on Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD) with an outlay of Rs. 100 crore is also proposed to be launched in this financial year. The Finance Minister has set aside a sum of Rs. 100 crore for the preservation of archeological sites. Highlighting the importance of Goa emerging as a m a j o r i n t e r n a t i o n a l convention centre, the Finance Minister said that there is a need to develop world class convention facilities in the state. Government of India will fully support this initiative to develop the facilities in PPP mode through the VGF scheme, the Minister added. Rs. 200 crore to develop world class sport stadium in J&K The Finance Minister, Shri Arun Jaitley has provided a sum of Rs. 200 crore in General Budget 2014 ]15 for upgrading the indoor and outdoor sports stadiums to international standards in Jammu and in Kashmir valley. In his maiden Budget Speech in Parliament here today, Shri Jaitley said that Jammu and Kashmir has a lot of sporting talent which is not finding expression due to inadequate sports facilities. The Finance Minister also proposed to set ]up a sports university in Manipur with a provision of Rs. 100 crore in the current financial year. He also set aside a sum of Rs. 100 crore for the training of sports women and men for the upcoming Asian and Commonwealth Games. Highlighting the importance of sports in personality development, Shri Jaitley said that Government will set ]up national level Sports Academies for major games in different parts of the country to mainstream sports. The Finance Minister, Shri Jaitley said that to help the youth find right jobs, employment exchanges will be transformed into career centers which will extend counseling facilities to the youth for selecting the jobs best suited to their ability and aptitude. He has set aside a sum of Rs. 100 crore in the current financial year for this purpose. Shri Jaitley also launched gA Young Economy India July-August 2014 54 Budget India Leadership Programme h with an initial allocation of Rs. 100 crore in the current Budget. Allocation raised to rs 3,000 crore for modernization of state police forces The Union government has raised the allocation for modernization of state police forces from Rs 1,847 crore in the BE of 2013-14 to Rs 3,000 crore in the current financial year. While presenting the General Budget in Lok Sabha today, the Finance Minister Shri Arun Jaitley said that scheme for modernization for State police forces would be reviewed. He said gI am also allocating adequate funds for carrying out small but much needed developmental activities as Additional Central Assistance for Left Wing Extremist Affected districts. The Finance Minister also an announced allocation of a sum of Rs 2,250 crore to strengthen and modernize border infrastructure. Shri Jaitley said in addition, a sum of Rs 990 crore has been allocated for the socio economic development of the villages along the borders. He said a sum of Rs 150 crore has also been ear-marked for the construction of Marine Police Station, Jetties and purchase of boats etc. Defence allocation raised to rs 2,29,000 crore Allocation for defence in this year fs General Budget has been raised to Rs 2,29,000 crore. Presenting the Union Budget in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley also proposed a further sum of Rs 1,000 crore to address the pension disparities while implementing the policy of gone rank one pension h for soldiers. Emphasizing on the modernization of the armed forces to enable them to play their role effectively in the defence of country fs strategic interests, the Finance Minister also proposed to increase the capital outlay for defence modernization by Rs 5,000 crore over the amount provided for in the interim Budget. This includes a sum of Rs 1,000 crore for accelerating the development of the Railways system in the border areas. He said urgent steps would also be taken to stream line the procurement process to make it speedy and more efficient. Direct Investment (FDI) selectively in sectors where it helps the larger interest of the Indian Economy. FDI in several sectors is an additionality of resource which helps in promoting domestic manufacture and job creation. India today needs a boost for job creation. Our manufacturing sector in particular needs a push for job creation. 17. India today is the largest buyer of Defence equipment in the world. Our domestic manufacturing capacities are still at a nascent stage. We are buying substantial part of our Defence requirements directly from foreign players. Companies controlled by foreign governments and foreign private sector are supplying our Defence requirements to us at a considerable outflow of foreign exchange. Currently we permit 26 per cent FDI in Defence manufacturing. The composite cap of foreign exchange is being raised to 49 per cent with full Indian management and control through the FIPB route. 18. The Insurance sector is investment starved. Several segments of the Insurance sector need an expansion. The composite cap in the Insurance sector is proposed to be increased up to 49 per cent from the current level of 26 per cent, with full Indian management and control, through the FIPB route. 19. To encourage development of Smart Cities, which will also provide habitation for the neo-middle class, requirement of the built up area and capital conditions for FDI is being reduced from 50,000 square metres to 20,000 square metres and from USD 10 million to USD 5 million respectively with a three year post completion lock in. 20. To further encourage this, projects which commit at least 30 per cent of the total project cost for low cost affordable housing will be exempted from minimum built up area and capitalisation requirements, with the condition of three year lock-in. 21. FDI in the manufacturing sector is today on the automatic route. The manufacturing units will be allowed to sell its products through retail including E-commerce platforms without any additional approval. Bank Capitalization 22. Financial stability is the foundation of a rapid recovery. Our banking system needs to be further strengthened. To be in line with Basel-III norms there is a requirement to infuse ` 2,40,000 crore as equity by 2018 in our banks. To meet this huge capital requirement we need to raise additional resources to fulfill this obligation. While preserving the public ownership, the capital of these banks will be raised by increasing the shareholding of the people in a phased manner through the sale of shares largely through retail to common citizens of this country. Thus, while the government will continue to have majority shareholding, the citizens of India will also get direct shareholding in these banks, which currently they hold indirectly. We will also examine the proposal to give greater autonomy to the banks while making Economy India July-August 2014 55 Budget India More funds for war & national police memorial Announcing the setting-up of a war memorial at Princes Park, New Delhi, the Union Finance Minister Shri Arun Jaitley said that it will be supplemented by a war museum. Making this announcement while presenting his first General Budget in Lok Sabha here today, the Minister allocated a sum of Rs 100 crore for this purpose. Shri Jaitley said that country is deeply indebted to the officers and the jawans of the armed forces for having made huge sacrifices to defend its honour. In doing so, a very large number of them gave up their lives. He said gIt is a privilege for the nation to erect a befitting memorial in their memory h. The Finance Minister Shri Jaitley also announced the construction of a befitting National Police Memorial and proposed to allocate a sum of Rs 50 crore for this purpose. He said the nation is equally indebted to the officers and the jawans of the police forces, including the central armed police forces, who are constantly engaging with the enemy within and in the process sacrificing their lives in the line of duty. All households to be provided with banking services A Financial Inclusion Mission will be launched from Independence Day this year as a time bound programme to provide all households in the country with banking services. This was announced by the Finance Minister Shri Arun Jaitley while presenting the General Budget 2014- 15 in Lok Sabha here today. Shri Jaitley said that this step would particularly focus to empower the weaker sections of the society, including women, small and marginal farmers and labourers. He said two bank accounts in each household are proposed to be opened. The Finance Minister said long term financing for infrastructure has been a major constraint in encouraging larger private sector participation. He said on the assets side, banks will be encouraged to extend long term loans to infrastructure sector with flexible structuring to absorb potential adverse contingencies, sometimes known as the 5/25 structure. Shri Jaitley said on liability side, banks will be permitted to raise long term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and Priority Sector Lending. The Union Finance Minister said that after making suitable changes to current framework, a structure will be put in place for continuous authorization of universal banks in the private sector in the current financial year. He said RBI will create a framework for licensing small banks and other differentiated banks. Shri Jaitley said differentiated banks serving niche interests, local area banks and payment banks etc. are contemplated to meet credit and remittance needs of small businesses, unorganized sector, low income households, farmers and migrant workforce among others. Expressing concerns over the rising Non Performing Assets (NPA) of Public Sector Banks (PSBs) the Union Finance Minister announced setting-up of six new Debt Recovery Tribunals at Chandigarh, Bangaluru, Ernakulum, Dehradun, Silliguri and Hyderabad. Rs 100 crore allocated for technology development fund An initial sum of Rs 1,00 crore has been allocated to set up a technology development fund to provide necessary resources to public and private sector companies, including SMEs, as well as academic and scientific institutions to support research and development of Defence systems that enhance cutting-edge technology capability in the country. Making this announcement while presenting the General Budget in Lok Sabha today, the Union Finance Minister said that in the year 2011, a separate fund was announced for this purpose but beyond the announcement, no action was taken. Target of fiscal deficit of 4.1 % for 2014-15 The Finance Minister Shri Arun Jaitley has kept a target of limiting fiscal deficit to 4.1 per cent for the current fiscal and to reduce it further to 3.6 per cent and 3 per cent for 2015-16 and Economy India July-August 2014 56 Budget India 2016-17 respectively. Announcing this in his maiden Budget Speech today in the Lok Sabha, the Finance Minister Shri Jaitley said that considering the two years of low GDP growth, static industrial growth, large subsidy burden and not so encouraging tax buoyancy, these targets are daunting. The Finance Minister said that Iraq crisis is leaving an impact on oil prices. Monsoon appears unpredictable and the problem of black money must also be addressed fully. Faced with these adversities, the Government would undertake some bold steps in order to enhance economic activity and spurt growth in the economy, the Finance Minister added. Govt. to constitute an expenditure management commision: The Government will constitute an Expenditure Management Commission (EMC). Announcing this in his maiden Budget speech in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that EMC will look into various aspects of expenditure reforms to be undertaken by the Government. Shri Jaitley said the Government is committed to the principle of eMinimum Government Maximum Governance f. To achieve this goal, time has come to review the allocated and operational efficiencies of government expenditure to achieve maximum output. The Expenditure Management Commission will give its interim report within this financial year. The Finance Minister said he proposed to overhaul the subsidy regime, including food and petroleum subsidies, and make it more targeted while providing full protection to the marginalized, poor and SCs/STs. A new urea policy would also be formulated. (By Economy India Bureau with additional input from Meenakshi Bhattacharya.) them accountable. PSU Capital Expenditure 23. To give a thrust to investment in the economy, PSUs will also play their part constructively. I am assured that the PSUs will invest through capital investment a total sum of ` 2,47,941 crores in the current financial year to create a virtuous investment cycle. Smart Cities 24. As the fruits of development reach an increasingly large number of people, the pace of migration from the rural areas to the cities is increasing. A neo middle class is emerging which has the aspiration of better living standards. Unless, new cities are developed to accommodate the burgeoning number of people, the existing cities would soon become unlivable. The Prime Minister has a vision of developing one hundred Smart Cities, as satellite towns of larger cities and by modernizing the existing mid-sized cities. To provide the necessary focus to this critical activity, I have provided a sum of `7,060 crore in the current fiscal. e-Visa 25. Tourism is one of the larger job creators globally. Many economies world over are supported by tourism. In order to give a major boost to tourism in India, the facility of Electronic Travel Authorization (e-Visa) would be introduced in a phased manner at nine airports in India where necessary infrastructure would be put in place within the next six months. The countries to which the Electronic Travel authorisation facility would be extended would be identified in a phased manner. This would further facilitate the visa on arrival facility. REITs & InvITs 26. Real Estate Investment Trusts (REITS) have been successfully used as instruments for pooling of investment in several countries. I intend to provide necessary incentives for REITS which will have pass through for the purpose of taxation. As an innovation, a modified REITS type structure for infrastructure projects is also being announced as Infrastructure Investment Trusts (InvITs), which would have a similar tax efficient pass through status, for PPP and other infrastructure projects. These structures would reduce the pressure on the banking system while also making available fresh equity. I am confident these two instruments would attract long term finance from foreign and domestic sources including the NRIs. Kissan Vikas Patra 27. Kissan Vikas Patra (KVP) was a very popular instrument among small savers. I plan to reintroduce the instrument to encourage people, who may have banked and unbanked savings to invest in this instrument. Skill India 28. A national multi-skill programme called Skill India is proposed to be launched. It would skill the youth with an emphasis on employability and entrepreneur skills. It will also provide training and support for traditional professions. Economy India July-August 2014 57 Financial- Market ormulaic solutions to intricate problems can be very handy, often resolving a serious tangle with a few variables carefully crafted into an equation. Such cute solutions to complex problems can also raise a storm if the experts start to quibble over the choice of factors and hurl charges of bias and compromised integrity. The oil and gas industry has seen some of that ferment after Dr C. Rangarajan an influential advisor to former prime minister Manmohan Singh slapped together a formula to resolve the battle over gas pricing in the country. The UPA government put its stamp of approval on the so- called Rangarajan formula last year and rushed to implement it from April1, before being stopped in its tracks by the Election Commission ahead of the general elections. In the previous fortnight, we wrote a piece on the subject titled Words and Meanings: Double Trouble appearing in our widely-read, free-access column Petro Intelligence. The response was overwhelming but one comment caught our eye. It is standard practice for the Government of India to carefully select the chairman of important fact-finding committees to protect its interests thus B.K. Chaturvedi for Devas-Antrix, V.K. Shunglu for CWG, P.C. Chacko for 2G JPC. Selection of Kelkar for gas/RIL issues was consistent, wrote a former cabinet secretary. Dr C. Rangarajans name was missing from the list. That made us wonder: did the former bureaucrat really endorse the Rangarajan Committee Report which had recommended a pricing formula that could raise the price of domestic natural gas from the present level of $ 4.2/mmbtC. Rangarajanu to $ 8/mmbtu, we asked. Certainly not, it falls in the same category, he replied. We have been trying to determine out why the Modi government has shied away from implementing the Rangarajan formula since the Prime Minister is allegedly close to the industrial house that is a significant producer of domestic gas. This allegation was repeatedly made by the Aam Admi Party leader Arvind Kejriwal during the election campaign. Sources in the BJP say the party was never enamoured by the Rangarajan formula. During the election campaign, the party had made clear that if elected to power, it would not implement the formula without changes. But the party preferred to play down the controversy for strategic reasons. The fact that the BJP would not implement the formula should have been known to domestic players like RIL which has opted to take the matter to arbitration. Dr C. Rangarjan is an official economist but has never been known to possess an expertise in energy matters. In India, expertise in a relevant area has never been considered important when selecting a person who will head an important committee. The basic qualification is how pliant the worthy is and is he prepared to overcome his qualms over a controversial solution. On the domestic gas production front, the state-owned ONGC is the largest player. But the public sector enVijay L Kelkarterprise does not have the clout to influence the government on appointments of a chairman and its members to a committee. For the same reason, Oil India also cannot be considered influential. Who then could have foisted Rangarajan on the Committee? We do not want to speculate about this as it serves no useful purpose at this stage. It is more important now to consider what precisely is wrong with the Rangarajan formula. There is an accusation that the formula was handed over to the committee by some outside force. We do not subscribe to this view. So, we decided to interact with experts to Warped Formula: Tilting The Scales Sources in the BJP say the party was never enamoured by the Rangarajan formula. During the election campaign, the party had made clear that if elected to power, it would not implement the formula without changes. But the party preferred to play down the controversy for strategic reasons. The fact that the BJP would not implement the formula should have been known to domestic players like RIL which has opted to take the matter to arbitration. F By Shudhakaran M Economy India July-August 2014 58 Financial- Market understand the formula and communicate to the readers their views so that they could judge the issue on its merits. Let us first acknowledge the fact that India does not have too many experts who understand the arcane subject of gas pricing. But there are some who do and they rank among the best in the world. It is difficult to hunt them down and, having done so, persuade them to talk since they recoil at the thought of publicity. These experts will, therefore, remain anonymous but their views need to be aired since it brings a certain gravitas to the debB.K. Chaturvediate. Natural gas (dry or one that includes small amounts of natural gas liquids) is not a tradable commodity because it cannot be transported easily like other solid or liquid hydrocarbons. Since it cannot be transported easily, natural gas markets are not fungible and there is no international price of natural gas. Gas prices can vary by a factor of 10 times or more in different markets worldwide. Natural gas can only be transported through high pressure capital intensive pipelines or by even more capital-intensive liquefaction and transportation in specially designed vessels that carry the liquefied gas at a temperature of about minus 1700C. Both options for trading gas are expensive. The FOB prices of LNG in countries rich in natural gas can easily be 2 to 10 times the average well-head producer price of natural gas in that country. At the broad conceptual level, the Rangarajan Committee wants us to accept that the prices prevailing at international gas hubs and the adjusted net-back prices of LNG imports, as calculated under its methodology, are a measure of the market-driven prices obtained by gas producers worldwide. But is Rangarajan right? Or, is he taking the whole country for a ride for the benefit of a few? One of the controversial aspects of the Rangarajan pricing formula is the linkage to the Japan LNG price. The defenders of the formula have gone on record stating that Japan LNG does not significantly impact the overall price determined by the formula. To start with, we decided to focus on this aspect exclusively for this column in our June 25 issue. This does not mean that we consider the linkage to Japan LNG as the most crucial element in the pricing formula. There are far deeper issues which will be taken up in the subsequent column. According to experts, about 30 per cent of the world gas production is sold outside the borders of the region where it is produced and less than a third of this 30 per cent is sold as LNG. Japanese imports accounted for P.C. Chackor 36.2 per cent of all LNG trade in 2012 and 11.5 per cent of all gas traded across borders. Japanese imports account for 3.5 per cent of all gas produced in the world. But in the Rangarajan formula, the impact of the high-priced Japanese imports is way above the weightage it should have got considering that Japan accounts for 3.5 per cent of all gas produced and sold in the world. The reason for this is the fact that the formula doesnt take into account all the gas consumed in the world. In fact, it leaves out a large chunk of cheap natural gas consumed in Russia, the Middle East, Latin America, Mexico, Africa, Malaysia, Indonesia and Canada. By excluding this large and cheap gas consumption (accounting for almost half of the global consumption), the Japan LNG price punches above its weight in Rangarajans formula. Experts now turn to a far more dangerous aspect of the Rangarajan formula. They say it not only excludes a major part of cheap gas consumed around the world but it also chooses to include the high- priced gas in Europe via the NBP index. NBP prices are weighted by LNG to the extent of 30 per cent. Further, they include the very high pipeline transportation charges of Russian gas sold in Western Europe. And finally, they include the geopolitical premiums that Russia has been arbitrarily imposing on select countries since its breakup. The result of all this is that in 2012, the NBP price was almost four times the Henry Hub price. Further, the impact of including the NBP price in the formula is greater than the inclusion of the Japanese LNG price as Western Europe, excluding Russia, consumes about five times the gas consumed by Japan. So, in essence, the Rangarajan formula is weighted by high-priced gas to the extent of over 50 per cent. And the impact of the Japanese LNG price in the Rangarajan formula impact is at least twice its 3.5 per cent share of global output because it leaves out almost half of the world's cheap gas consumption in the regions and countries listed above. It is standard practice for the Government of India to carefully select the chairman of important fact-finding committees to protect its interests thus B.K. Chaturvedi for Devas-Antrix, V.K. Shunglu for CWG, P.C. Chacko for 2G JPC. Selection of Kelkar for gas/RIL issues was consistent, Economy India July-August 2014 59 s one year has completed of the devastating flash-flood, the ensuing trail of death and misery in Kedarnath on June 16-17 last, local people in Kedar valley are paying homage to the unfortunate souls who got washed away on the fateful day. On June 3 last, a group of Kedarnath temple priests offered 1001oblations to the holy fire and conducted prayers through chanting Sanskrit couplets at Bhairavnath temple in Kedar dham for salvation of all those departed on the occasion of first anniversary. Again President of Kedarnath Purohit Sabha Shri Shankar Prasad Bagwadi announced holding of mass prayers and one thousand and one oblations to the holy fire for the universal welfare. Similar prayers are also bring offered amid elaborate rituals and recital of Linga Purana at Kal Bhairav temple Nirvale at Rudraprayag for 12 days. The memories of last year's massive cloud-burst and ensuing trail of macabre deaths is so heavy on the psyche of local people here that a spate of such mournful prayers are being conducted in each temple in the entire Kedar valley. During the entire year, the state government failed miserably on various counts. One year after the macabre dance of death, all the corpses are yet to be removed and their last rites to be performed, and a vast mountainous regions leading to Kedarnath shrine are yet to get back their network of roads, treks, bridges, system of drinking water, electricity and other essential facilities. As for reconstruction of facilities and rehabilitation of the displaced people, restoring their lives to normalcy and safeguarding the holy shrine from the vagaries of river Mandakini, no work worth the name has been done by the state government during the past year. Most of the things remain as these were on the fateful day of the cloud- burst which gives rise to the local people's anger. According to sources in the Uttarakhand Police Headquarters in Dehradun, the total number of FIRs filed in this connection were 3, 429, and the figure of the dead and missing stands at 10,162. In Uttarakhand, total FIRs lodged were 1993, and by all other states 1436, (West Bengal 21, Jharkhand 19, Orissa 8, Himachal Pradesh 3, Punjab 13, Andhra Pradesh 21, Karnataka 3, Tamilnadu 1, J&K 3, Assam 1, Delhi 82, Maharashtra 71, Chattisgarh 8, Gujarat 54, Haryana 44, Bihar 38, Rajasthan 240, MP 206 and UP 600). Total number of cremations conducted by the Uttarakhand Special Story Kedarnath Kedarnath shrine revisited shrine revisited CM Harish Rawat awaits another disaster to happen By Arvind Kumar A The total number of FIRs filed in this connection were 3, 429, and the figure of the dead and missing stands at 10,162. In Uttarakhand, total FIRs lodged were 1993, and by all other states 1436, (West Bengal 21, Jharkhand 19, Orissa 8, Himachal Pradesh 3, Punjab 13, Andhra Pradesh 21, Karnataka 3, Tamilnadu 1, J&K 3, Assam 1, Delhi 82, Maharashtra 71, Chattisgarh 8, Gujarat 54, Haryana 44, Bihar 38, Rajasthan 240, MP 206 and UP 600). Total number of cremations conducted by the Uttarakhand administration is 647, out of which only 71 corpses were identified, the rest others remained unidentified. Most other corpses were never cremated either, on which vultures, kites and other wild animals feasted. Economy India July-August 2014 60 Special Story Remains of 18 more disaster victims recovered in Kedar valley few days prior to the first disaster anniversary on June 17, skeletal remains of 18 unfortunate disaster victims were found in dense forest in Jangalchatti area in the Kedar valley, which flies in the face of state government which has constantly been claiming that all the bodies have been removed last year, and were 'honourably cremated.' A gang of Nepalis who work as coolies, shepherd and wool-gatherers routinely go to the dense forest to collect firewood, and they discovered the bodies. The police reached the spot and they were aghast to find no less than 18 remains of the disaster victims. They found 15 highly putrefied bodies, and three dismembered bodies from a thicket. All the dead appeared to be Punjabis. Swantra Kumar, a senior police officer in district Rudraprayag said, "Last year, one Sandeep Kumar from Ludhiana filed a complaint with Jangalchatti police that his 10-year-old son has got lost in the dense forest in Jangalchatti area on June 16 last, but then nothing could be found." Besides the bodies, the police have also recovered tattered clothes, footwear, utensils, a child's footwear and clothes etc. The police said DNA samples of the dead have been preserved to match them with their next kins. On the occasion of first anniversary, this chance discovery has come as a major embarrassment for the State Government which has been claiming falsely that all the dead have been cremated honourably. Later, the CM Harish Rawat constituted a special task force headed by IG Police Sanjay Gunjiyal to conduct intensive combing operations in the dense forests in search of more bodies. The news is causing concern among the pilgrims going to Chardham in Uttarakhand - Badrinath, Kedarnath, Gangotri and Yamunotri -- whose number has started dwindling further. A Economy India July-August 2014 61 Special Story administration is 647, out of which only 71 corpses were identified, the rest others remained unidentified. Most other corpses were never cremated either, on which vultures, kites and other wild animals feasted. However, the figure provided by the police is far from complete. President Sri Kedarnath Tirath Purohit Sabha Shri Shankar Prasad Bagwari asserted that pilgrims in far greater number have died in the disaster, besides the Indian pilgrims, more than one thousand Nepali devotees from Kathmandu's Pashupatinath temple were present in the Holy Shrine on the fateful day, who got no mention in the police report. Another Kedarnath priest Pravin Chandra Tiwari claimed that more bodies are still lying trapped under the debris of collapsed buildings in Kedarpuri which still await to be removed and cremated. This claim was again reaffirmed by other priests like Srinivas Posti, Aditya Shukla, Shankar Prasad Bagwadi and Keshav Tiwari etc. A prominent BJP leader in Dehradun Sanjiv Verma asserted the total number of the dead in Kedarnath Dham exceeds 50,000 or even more. In the flash-flood, 14 cops and one home guard on duty at the holy shrine, 16 staff of Shri Badrinath & Kedarnath Temples Committee and a staff of Uttarakhand PWD were also washed away, later their bodies could not be found. As the Holy Shrine falls in district Rudraprayag, no less than 652 local persons went missing who were later declared dead, 12 persons from Uttarkashi, two from district Udhamsingh Nagar, 40 from district Tehri, two persons from district Pithoragarh, 13 from district Pauri, three from district Nainital, six from Hardwar, 19 from Dehradun, 59 from Chamoli, two from Bagheswar and two from Almora were missing who were later declared dead by Rudraprayag Chief Medical Officer acting on reports sent by the District Magistrate Rudraprayag. Recently, a private news channel showed pictures of rotten corpses and skeletons lying in Kedarnath, and a local newspaper dated June 6 last published a news item about the discovery of a rotten body in Jangalchatti in Joshimath block along with the purse belonging to the deceased containing his voter ID-card, a wad of currency notes etc. Later, the deceased was identified as Jitendra, 30 years old, son of Late Madan Singh, resident of village Sartoli, who had disappeared in the surging flood water last year from between Ghangharia and Govind Ghat near Hemkund Saheb. Jitendra used to run an eatery here. His family members identified his body along with his clothes, mobile phone, besides other personal articles. The police handed over the body to the relatives after conducting postmortem on the corpse in Chamoli district hospital. Though the government claims that the road leading to Kedarnath has been completed up to Linchauli, 22 kms short of Kedarnath Shrine; it is a bumpy ride all the way from Rudraprayag to Linchauli, a stretch of 176 kms. From Linchauli to Gaurikund, it is a difficult jeep ride, and from Gaurikund to the Holy Shrine, it is an arduous and steep trek on foot. This trek is the most difficult and steep part of Chardham yatra. However, before undertaking of pilgrimage, a medical check up has been made mandatory for blood- pressure and asthma report card, besides the biometric registration, a necessity for identification in case of pilgrim's eventual death. The centres of biometric registrations and medical check-up have been set up at Narsen (Roorkie), Hardwar, Rishikesh, Dobata, Chinyalisond, Guptakashi, Kedarnath Dham, Pakhi, and Govind Ghat being run jointly by Garhwal Mandal Vikas Nigam and Uttarakhand Tourism Development Board. Vehicles weave precariously through several stretches of what remains of the original tarred roads, some roads are treacherously cracked threatening to cave in the roaring Mandakini under the As for the government's preparedness for the pilgrimage, they have made no efforts to provide security to the holy temple of Lord Kedarnath through diverting the flow of river Mandakini which has whimsically turned towards the Holy Shrine in June last under impact of flash-flood to merge ahead with another tributary named as river Swargdwari. In May and June in 2014, whenever there occurred a heavy rainfall, Mandakini had inundated the Kedarnath temple which had created a wild panic among the temple priests and devotees who had stated fleeing in a maddened frenzy from the holy shrine. Economy India July-August 2014 62 Special Story ravin Chadra Tiwari son of late Shiv Prasad Girijashankar Tiwari is one of the prominent priests in Kedarnath Dham of Gujarat region, who is also the manager of a dharmashala Jai Jalaram House or Gujarat Niwas. He is extremely angry with the Congress government in the state and the local administration. He said soon after the cloud-burst and flash-flood on the fateful day, he cooked khichari in his Gujarati Niwas for the surviving pilgrims in Kedarnath Dham, and served it to all of them, irrespective of the state they belonged to. The entire area had become macabre theatre of dance of death, and was covered with stretching corpses all around. The scene was ghastly. So, he along with more than one hundred persons left the place post haste for his residence in Guptakashi. But despite being a local person, he forgot the jungle trail leading to his destination, and had to suffer inside dense forests for three days in a row. In this absence, however, someone broke open paddocks on his Gujarat Niwas in Kedarnath Dham, and committed theft of a large amount of cash from a king- size box. He suspects the local cops have committed the theft, because they also stole a large number of quilts and mattresses from his dharmshala in which they draped the corpses to cremate. His dharamshala has a capacity of accommodating 210 persons at a time, that is why Pravin Chandra Tiwari had acquired more than 250 quilts and an equivalent number of mattresses, of which only a few are remaining today. He said on May 1, when he went to his dharmshala at Kedarnath, prior to the opening of the holy shrine's portals, he found a number of government officials residing in it in a regal fashion, and he was shocked. When he enquired as to who broke open the paddocks from his building, the officials showed no inclination of explaining anything to him. Paddocks from his building were removed as soon as various government agencies descended upon the area in the aftermath of ghastly deluge in late June 2013. In the beginning, the Nation Disaster Relief Force (NDRF) occupied this dharmshala, followed by a Public Works Department (PWD) team. In last, a camp hospital was housed in his dharmshala to serve the team of government officials, workers, masons, mule drivers and labourers who have been on work all during the snowy winter season. Angry with the recalcitrant government officials, Shri Tiwari got hold of the Sub- Divisional Magistrate (SDM) Ukhimath, distt. Rudraprayag, who was also a great expert at bargaining; ultimately, the SDM agreed to pay Shri Tiwari a rent @ Rs.4800 per day for occupying his dharmshala since July 1 to October 1, 2013. Soon thereafter, the SDM got transferred to Kumaon region of Uttarakhand, and Shri Tewari never got the rent for his dharmshala. The SDM's new incumbent informed Shri Tiwari that the file pertaining to the payment of rent for Dharmshala has been called by chief minister Harish Rawat to his office in Dehradun, because all Gujaratis in Kedarnath Dham are creating mischief! To add insult to injury, Shri Tiwari alleged that the Garhwal Mandal Vikas Nigam (GMVN) officials have taken away from his dharmshala in his absence without his permission all utensils large and small, and all four large-size kerosene stoves and all eatable items in order to run their own kitchen in Kedarnath Dham. On May 1, when Shri Tiwari went to Kedarnath, he headed directly to his dharmshala, but he was stopped by some friendly government officials in midway. They persistently took him to a pilgrims' kitchen, adjacent to the helipad, where all the Kedarnath pilgrims are being served tea, snacks, mineral water bottles and food for free by the state government owned GMVN. Showering love on him, the officials served steaming hot food to Shri Tiwari also. But, Shri Tiwari was surprised and shocked to see the plate, tumbler, bowl and spoon in which the food was served belonged to his dharmshala. All utensils bore names of his dharmshala. Then, he inspected their kitchen, all large cauldrons, ovens, pressure cookers and other cooking utensils belonged to his dharmshala. Then, he started protesting against the atrocious theft with the government officials present there. The officials, however, tried to placate him laughing. They promised to pay for all his cooking wares in cash, or return them to him as soon as possible. However, Shri Tiwari said, they never kept their promise till the day. Moreover, they never paid him for the quilts, and mattresses stolen from his dharmshala for purpose of cremating the dead. -Arvind Kumar P Gujaratis being discriminated against by Congress in Uttarakhand? Economy India July-August 2014 63 Special Story resident of Kedar Ghati Vishthapan va Punarvasa Sangharsh Samiti Shri Ajendra Ajay expressed fears that in the absence of government succour to the Kedarnath valley's homeless, unemployed and other downtrodden, they may fall in the satanic trap laid down by various Christian missionaries' NGOs which have descended upon the afflicted region last year. These NGOs are mainly funded by the western countries, like US, Canada, France, Britain, Italy, Finland, Switzerland, Netherlands, New Zealand, European Union and Germany etc. In June 2013, no sooner than the cloudburst disaster happened in Kedarnath, more than two dozen such NGOs being run by the Christian missionaries descended upon Uttarakhand, and started their vicious campaign of proselytisation. Shri Ajay apprehended that many families afflicted by poverty may fall prey to these missionaries working under the garb of NGOs who are out to destabilize the Indian demography. Among the NGOs currently active in Kedarnath disaster victims with the help of state government and administration, include- Appropriate Tech-India, Catholic, Christian Aid, Christian Aux, EFICOR, Emmunuel, Ganga Action Parivar, GAP, Help a Child of India, Indo-Global, Jai Nanda Devi, Karuna Social, LWSIT, AGAPE, Believers' Church, Doon-Bible College, EHA, Kindershifswerk, Rupantaran, Disha, Youth-with-a-Mission, SEEDS-Relief-Info, Sustainable Environment and Pragya etc. These NGOs are taking away young children to Christian hostels, schools and colleges in far-flung destinations in the country in name of providing education, and medical relief. In other cities, away from Uttarakhand, in a clandestine operation, they plan to marry away these Hindu boys and girls to the Christian children from other states, mainly tribal communities. Sources reveal the Congress Government in the state headed by Harish Rawat never opposes the Christian missionaries because it hurts religious sentiments of Congress president Sonia Gandhi and vice president Rahul Gandhi. In spite of all pretensions, this family is a devout Catholic, and an ardent votary of Vatican's Pope Francis. That is why the state government since the time of Vijay Bahuguna as the chief minister has been extending a helping hand to all these Satanic forces. Revered Hindu saints like Baba Hathyogi, spokesman of Akhil Bharatiya Akhara Parishad in Haridwar, Swami Dayanand Saraswati in Rishikesh took strong exceptions to the Christian missionaries' nefarious activities. Baba Hathyogi said, "Now, we have a government in the centre headed by BJP's Narendra Modi. The PM and the rest of Sangh Parivar should look into the matter. They should also come to the rescue of the homeless, unemployed and other downtrodden in Uttarakhand from these satanic forces of proselytisation by deceit." Swami Dayanand who has written a booklet 'Conversion is Violence' expressed his horrors on what Christian missionaries are perpetrating on innocent Hindus of Kedar valley. A few other saints in Hardwar and Rishikesh demanded stopping of the FCRA facilities being provided to all the NGOs involved in conversion by deceit. P Christian missionaries fan out in Uttarakhand Economy India July-August 2014 64 Special Story he State Disaster Mitigation and Management Centre (DMMC) has come into being soon after the flash-flood in Kedarnath in June 2013 in which experts drawn from various disciplines were included. The DMMC's main emphasis is on adopting proactive pre-disaster measures, rather than the post- disaster management. The DMMC is expected to function as think-tank for the ministry/department concerned, which would look into and incorporate prevention of disasters, preparedness for post- disaster management and its mitigation in all aspects. As part of the pre-disaster management, roadside boards have come up all along the routes of rivers like Ganges, Mandakini, Bhagirathi and Alaknanda to warn tourists and religious pilgrims to keep away from these water bodies as their water level is prone to rise suddenly from one to five feet, without giving them a chance to escape. However, it is another matter that nobody is paying attention to these boards. At present the DMMC is working as an autonomous institute under the aegis of Department of Disaster Management, Govt. of Uttarakhand, which is located in the Uttarakhand Secretariat. As a pre- disaster management measure, the National Disaster Mitigation and Management Centre, New Delhi, and the DMMC have restrained the state Tourism Ministry and Tourism Department from luring people from gathering at such geologically sensitive and dangerous places like Badrinath, Kedarnath, Yamunotri, Gangotri and Gaumukh, as a very first step. In addition to offering an extensive range of training programs, gearing-up to providing advanced information about the likely disaster through the latest technologies available, maintaining a network of experienced experts working in the field and institutions of excellence, the DMMC would also provide consultancy services to all levels of government agencies and the non-government organizations. The DMMC has also undertook the responsibility of training communities and community- based organizations to create awareness about disaster policy, prevention mechanisms, preparedness, and response plans. As part of their proactive pre-disaster management, the DMMC is taking steps to broadcast disaster alerts in form of SMSs on mobile phones in the entire state, as well as on mobiles of religious pilgrims and tourists on visit to these shrines from other states of India. To make the idea a success, the state government is roping the support of various mobile companies like Idea, Airtel, BSNL, MTNL, Uninor and others, who have agreed to the government proposal. The DMMC, with aide of Doppler radar, would create SMS alerts for mobile phones about sudden changes in weather, likely disasters, flash-floods, cloud-bursts, heavy rainfalls, snowfall, hail-storms, other storms, road accidents, breach of roads and bridges etc. in the Himalayan regions. They expect to implement this plan prior to the onset of monsoon this year. In order to strengthen their weather warning system, the central government has allowed the state government to acquire Doppler radar and other latest technologies to install in Dehradun. For the post-disaster management, the state government has organized the State Disaster Rescue Force (SDRF), in which experts from the mountaineering institutes, police and other arms forces have been roped in. T DMMC to broadcast weather alerts through SMSs Economy India July-August 2014 65 Special Story speeding vehicle's weight. Edges of many roads have been nibbled at by the bending river and the roads' bases have been rendered hollow, where a pahari driver swirls his bus in high speed unmindful of the lurking danger. It is a heavenly miracle that motorists are not getting killed these days. As soon as one starts journey from Rudraprayag, one finds half of an iron bridge hanging in the air, while the rest of it has fallen in the river. A momentary lapse by the speeding driver can plunge him deep into the valley thousands of feet below. At many places, the mountain roads without tar are built of dust and pebbles, as the original tarred roads have been breached away in the last year's flood in the valley, and somewhere these uneven roads go up and down by several metres passing on the mountain spur like a coiled snake. On this so-called narrow road, only one vehicle can pass at a time. There motorists flash headlights to warn those coming from opposite direction to make them aware of the risky ride lying ahead. Sometime, heavy bulldozers working on roads cause traffic jams on both sides. Besides the state's PWD, Indian Military's arm Border Road Organisation (BRO) is also responsible for maintenance of these roads leading to Badrinath and Kedarnath, but for past many months the state government has been enmeshed in a skirmish with the BRO for handing over its rights to the PWD. It is anybody's guess why the quality of the roads built and maintained by the PWD is low, while those built and maintained by the BRO are far better. For past many months, the BRO has been starved of funds, which always takes up difficult assignments. An official told the Organiser, "We've lost three or four crucial months when the dry season could have helped the construction works." A source in the BRO said ahead of pilgrimage season, the state government allocated them Rs. 43 crore only with a dictate to hurry up the road constructions." As for the government's preparedness for the pilgrimage, they have made no efforts to provide security to the holy temple of Lord Kedarnath through diverting the flow of river Mandakini which has whimsically turned towards the Holy Shrine in June last under impact of flash-flood to merge ahead with another tributary named as river Swargdwari. In May and June in 2014, whenever there occurred a heavy rainfall, Mandakini had inundated the Kedarnath temple which had created a wild panic among the temple priests and devotees who had stated fleeing in a maddened frenzy from the holy shrine. On May 30 last, when Chief Minister Harish Rawat came here to inspect preparedness for the pilgrimage, the local priests raised vociferously the issue of threat posed by Mandakini to the Holy Shrine, then Rawat disclosed that the work of bending the river to its original course has been entrusted with the Nehru Institute of Mountaineering (NIM) only a few days ago. He said an attempt would be made to divert the surging river prior to the onset of monsoon. They have started up the work of breaking and removing large and heavy boulders from temple's vicinity, for the purpose they have brought a portable stone- crusher from Delhi to Sonprayag. Rawat described an elaborate plan of building a heavy outer protection wall to block the passage of Chorabari glacier, and Economy India July-August 2014 66 Special Story digging a water channel around the holy shrine, for the purpose the NIM has engaged for than 150 labours. The CM has also planned to build an inner protection wall around the temple also. But the rainy season has already arrived, Kedarnath dham is witnessing heavy downpours daily, and the elaborate plan described by Harish Rawat has no chance of being completed in such a short time. That is why there is an overwhelming fear if the holy temple would survive the onslaught of the oncoming rainy season, thanks to the gross ineptitude shown by Harish Rawat. The entire community of priests and sadhus is agitated over the issue. However, most the measures of river channelisation in Kedarnath Dham have already failed in rivers Mandakini, Bhagirathi, Pindari and Alaknanda. On rehabilitation of the displaced disaster victims also, the consecutive governments headed by ex-CM Vijay Bahuguna and current CM Harish Rawat have failed miserably. The miserable situation created in June last year prevails even today. President of Kedarghati Vishthapan va purnarvas Sangharsha Samiti Shri Ajendra Ajay said the state government has been playing hide and seek game with the displaced persons, instead of helping them sincerely. As a result, many displaced victims have made shanties at the road-sides, in villages and forests. Shri Ajendra Ajay said when the national high way from Rudraprayag to Gauri Kund could not be repaired completely, the other link roads, treks and bridges leading to small villages are in worse position causing life-threatening situations before the villagers. Not even single displaced family has been rehabilitated by the state government during the past year. Initially, the government paid a sum of Rs.2 lakh to each affected family, Rs. 1 lakh paid by the state government and Rs. 1 lakh by the central government. But the then CM Vijay Bahuguna later promised to provide them with the pre-fabricated huts at the rate of Rs.5 to Rs 7 lakh. The move was opposed by the affected persons, as the proposed hut's durability was in doubt. Then, a package of Rs. 5 lakh was granted to them with the aid of World Bank in four instalments. After negotiations by the Samiti, the government assented to pay the package of Rs, 5 lakh in three instalments. Later, the state government laid down a pre- condition before the displaced persons for paying the package amount that they should show papers of at least 1000 sq. ft. land in their possession prior to the release of the WB grant to them. However, 854 displaced families have no possession of the land, thus due to this pre-condition, not even single family has been rehabilitated. Again, the state government has stopped paying house rent which was earlier granted to facilitate the displaced persons. Earlier, they said the house rent at the rate of Rs. 3000 per month would be paid for two years or till they build their own house, which ever was earlier. But later on, they stopped paying even the house rent. The government has announced that Rs.1 lakh would be paid for the fully damaged houses, and Rs.50, 000 to partially damaged houses. However, no compensation was fixed for the damage of agricultural land and loss to the standing crops. There were no fixed measures for rehabilitation of the displaced persons without political discrimination, said Shri Ajendra Ajay. Economy India July-August 2014 67 1 . (A)Ethnic Vision and reform plan 1-To work for undivided India a) To work for the reunification of India, Pak and Bangladesh, to start this process first we should form a India-Pak-Bangladesh confederation and latter on try to galvanize the process of reunion in the next 50 years or so b) To effectively ensure the principle of secularism in the country. As of now no political party or a demo- cratically elected government follows the true principle of secularism in the country. They all directly or indirect- ly motivate different religion's sentiments and try to appease them and use them a vote bank c) We think that State must only adhere to the cul- tural characteristics of different religions. We are of the view that let the cultural fabric and cultural characteris- tics of all religions of India get composed. We think that there must be no partialities or preference to any religion and in order to that there would be only one civic law for all citizens of the countries. Ideally there should be no minoritism and no majoritism but there must be great amount of scope for humanism and human rights. d) We are strongly of the view that for the sake of national unity and integrity of country it is necessary to ban all kind of identity politics in the coun- try. We strongly want to dis- courage all political activi- ties based on caste, commu- nity, region, language, cul- ture, ecology and legacy. In order to taming down these elements we want to deter castism especially in Hindu religion and want to pro- mote humanism and secu- larism irrespective of any identity. We want to deal all religious communalism in same yard stick, whether it is Hindu communalism, Islamic Communalism, Sikh com- munalism and Christian communalism. e) We think that secularism is the most scientific principle of governance and statehood. We think princi- ple of secularism checks government from doing partial- ity to any religious activities as well as true spirit of gov- ernance. We would not like to promote religious identity of anyone rather we would like to see a person's national identity only. f) Apart from banning all kind of identity politics in the country, in order to protect unity and integrity of the country, we also want a full and final federal restruc- turing of the country, based on the basis of convenience of federal governance. In the line of U.S. federalism we want to form 35 or 40 state in full and final manner. g) We urgently need various constitutional reme- dies in order to ban identity politics. We want to strictly implement tri language formula all over the country. h) We are in favor of making third tire of democra- cy more purposeful. Before this we want to inject proper balancing treatment between all three tires of democra- cy. i) In order to fulfill the objective of democratic decentralization of the country. We also want to ban dynasty politics in the country. Our foremost objective is to ban all kind of identity politics as well as populist economy. j) We want multi party competitive politics based on good governance only. So we want to adopt welfare economy rather than populist economy. Through consti- tutional remedies we not only want to ban all kind of iden- tity politics but also all populist kind of announcement of and on elections. Our fundamental guidelines of politics would be centered on good gover- nance, greater social justice, greater social welfare and greater amount of secular- ism. k) We want to put greater social justice and true secularism in the preamble of our constitu- tion. As of now social justice in India is reflected only in policy of reservation in the jobs and elections, but we think good governance is the key to the objective of greater social justice. l) We want to ensure the running of all legislative bodies viz. central parliament, state legislative bodies and local bodies of three tire of democracy in a compul- sory manner, at least 100 days in a year in order to ensure its importance and its democratic relevance. We want no disruption allowed in legislative house or parliamentary bodies by any parties. We want to ensure it through con- stitutional remedies. BHARAT PARIVARTAN ABHIYAAN BHARAT PARIVARTAN ABHIYAAN Ethnic Vision and reform plan Political Vision and reform plan Economic Vision and reform plan (B) Religious Reform (a) we want To invite all converted Hindu to return back to Hinduism or sanatana dharna and also to ensure cultural freedom to the all existing religions in India. we want Hindu must scrap their caste identity (B) we want Muslims should modernize themselves in terms of their life style and should alienate politics, economy and society free from the effect of religion, they must give priority to their development rather than spec- ifying their identity. this is the reason in india political parities go for item like Haz subsidy, granting urdu sec- ond official language, establishing wakf board, granting holidays, helping Madarsa rather than establishing all infrastructure meant to them. 2. Political Vision and reform plan J) We want to completely eliminate politics of class- friends and class-enemy, which is practically operational in all political parties. It is ruining our society, as well our national integrity. So we want to create a new political environment where there would be no scope of any kind of social division. It has only basis of good governance oriented competitive politics. We want com- petitive politics based on good governance, greater social justice and quality leadership. K) We think that recently various judgments given by the courts like banning caste rallies, ban- ning communal appeals, discouraging muscle influ- ence in politics, banning populist announcement and also bringing political parties under RTI scanner these all have opened a road map for strong politi- cal reform in the country. L) We need a comprehensive political reform. It is need of hour to redefine, restructure the operation of political parties in the country. We want to demolish the headman, high command culture of political parties. We want to redefine the functions and role of office bearers and workers in various political parties. M) We want to make politics as a career just like any other public life career. Under this we want to make political administrative education and training compul- sorily to the all political activist. In today's political envi- ronment what we usually see candidates are indulged in preparing data of their voters on the basis of caste, creed, region and religion. We want political workers to act as a reporter, communicator and act as a pool between party and government officials. N) We think all political parties will have a clear cut guideline for the selection of candidates. Either there should be a public referendum or better qualification cri- teria on public service. We want quality criteria for all the election aspirants. O) We think that there should be free media facility to all political parties so that political donation can be stopped in the country. We want to prohibit all election expenses. P) I think election commission should play a more pro active role in monitoring and confiscating the ideals of political parties of the country. Q) We want to nurture all political parties of the country, based on good governance, greater social justice, pure secularism and who discard all kind of identity pol- itics and populist economy. R) We want to make political parties fully transpar- ent in their activities and want to bring theme under RTI. S) We want every political parties have a policy research cell on all important aspects of gov- ernance. All workers have proper livelihood so that they can't take the route of graft. T) We want to give more teeth to the CAG, parliament enquiry com- mittees, election commis- sion. Especially we want CAG must have penalizing right to the guilty. U) We want to give Executive power to the MPs in the District administration and MLAs in the block admin- istration. We want to provide pay, salary and perk to the third tier of our democratic representative in line of first and second tier of democracy. By divesting more execu- tive power to bottom representatives of all three tier democracy, we will have more democratic accountability in the local governance V) We want a clear cut guideline for the appoint- ment of all key post of the government and constitution- al institutions, so that there become no scope of any political favor and nepotism... BHARAT PARIVARTAN ABHIYAAN BHARAT PARIVARTAN ABHIYAAN Administrative Vision & reform plan Social Vision and reform plan Institutional Vision & reform plan Arth- Vividha A r A r t h a - t h a - V V i v i d h a i v i d h a A r A r t h a - t h a - V V i v i d h a
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A r A r t h a t h a A r A r t h a t h a Akash Missile Flight Tested Successfully kash, missile was successfully test fired, in very low altitude near boundary mission from the Integrated Test Range, Balasore, Odisha. This flight trial was last among the validation trials being carried out by Army on the first off production models of Akash supersonic missile. The supersonic missile intercepted the very small unmanned fast moving Banshee aerial vehicle at 30 m altitude above sea level proving the system capability against subsonic cruise missile. The sophisticated multi-function radar with built in features tracked the low flying target continuously throughout its course. Special algorithms / techniques developed by DRDO for overcoming the multiple target reflections coming from the sea worked perfectly in the mission. With this flight trial, Indian Army accomplishes all the validation trials on the first off production models and the system is being delivered for induction. Shri Avinash Chander, Scientific Advisor to Defence Minister, Secretary Department of Defence R&D and Director General, DRDO congratulated the teams from DRDO, Production agencies and Army for successful demonstration of intercepting the target in a low altitude near boundary mission and said, "While indigenous development, production and induction of Akash is making very significant contribution to India's self-reliance in air defence technologies, Akash also has great export potential". The trials were supervised by Shri G Chandramouli, Project Director Akash and were witnessed by Director General Army Air Defence and other senior officials of Army and Ministry of Defence. Indian CEOs Spend More Time in Addressing Regulatory Issues tating that Indian CEOs spend more time in addressing regulatory issues than their global peers, Tata Steel India managing director T V Narendran, however, defended regulators, saying industry has invited this scrutiny to some extent. "CEOs in India spend far more time addressing regulatory issues than CEOs in other countries do. To be fair to the regulators, the industry has invited this scrutiny to an extent," Mr Narendran has said in an interview to Tata Review, an inhouse magazine. "There is a need for the industry to look at responsible growth and be good corporate citizens," he added. Mr Narendran, however, also pitched for simplification of regulations to support to attract investors (in steel sector) and tight enough to ensure communities are not exploited. Stating that in the next two years, the demand for steel in India is expected to grow to about 180-200 million tonnes (MT), capacity of an additional 100 MT has to be built, for which we need to spend approximately $100 billion. "Very few countries in the world have both the raw material and the market. India has both. But if we don't leverage this opportunity to translate the richness below the ground to opportunities above the ground, then we will be missing out," he said. Narendran said Tata Steel intends to add 1 MT capacity of every year in India and plans to raise the capacity in South East Asia by 2 MT to 6 MT. Tata Steel has recently increased annual capacity of its Jamshedpur plant in India to 10 MT. The first phase of the Kalinganagar plant in Odisha with 3 mtpa capacity would go on stream in the last quarter of the year. "In South East Asia, we will continue to go downstream, setting up facilities in Indonesia, Malaysia and Hong Kong. We are currently at 4 MT of sales in this region and I would like to take that to 5 to 6 MT," he said. As countries such as Vietnam, the Philippines and Myanmar are still at an early stage of steel consumption, Narendran said, "We have huge opportunities to tap. The key is in going about it in an integrated fashion." A S Economy India July-August 2014 70 Arth- Vividha A r A r t h a - t h a - V V i v i d h a i v i d h a A r A r t h a - t h a - V V i v i d h a
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A r A r t h a t h a A r A r t h a t h a tate Bank of India chairperson Arundhati Bhattacharya and ICICI Bank managing director Chanda Kochhar are among the five women from India who featured in Forbes' 100 most powerful women in the world, a list topped by German Chancellor Angela Merkel. Ms Bhattacharya is ranked 36th on the list, while Ms Kochhar is placed at the 43rd spot. Biocon founder Kiran Mazumdar-Shaw is ranked 92nd. PepsiCo's India-born chief, Indra Nooyi, is 13th on the list while Cisco's chief technology and strategy officer, Padmasree Warrior, is ranked 71st on Forbes' "definitive annual guide to the extraordinary icons and leaders, groundbreakers and ceiling crashers who command the world stage". Ms Merkel, who retained her No. 1 spot this year, has made it to the list 10 times out of the past 11 and 9 times at the No. 1 position. She is followed by Federal Reserve Chair Janet Yellen, philanthropist Melinda Gates (3), former US Secretary of State Hillary Clinton (6), General Motors' first woman CEO Mary Barra (7), First Lady Michelle Obama (8) and Facebook COO Sheryl Sandberg (9). Forbes said as the head of India's largest lender with about $380 billion (Rs. 22,80,000 crore at 1 dollar = 60 rupees) in assets, Ms Bhattacharya holds "one of the most powerful positions" on the Asian subcontinent."Not only is she the first woman appointed to the position, but she is also the youngest at age 57," it said. Ms Bhattacharya has served almost every function within the company, including foreign exchange, treasury, retail operations, human resources and investment banking. "When the Indian economy showed signs of slowing, she voiced strong support for major reforms across agriculture, industry and the financial sector," the magazine said.She's been an ally to women at SBI, introducing a two-year sabbatical policy for women employees for child or elder care and serving on a team to create blueprints for the first all-women bank, it added. Ms Kochhar, 52, oversees almost $125 billion (Rs. 7,50,000 crore) in assets as managing director and chief executive of ICICI Bank. "She has been credited with leading a remarkable transformation at the firm, which experienced major setbacks after the 2008 financial crisis," Forbes said. Her focus on "mobile banking" in rural areas to reach more clients has been praised as a model for low-cost expansion in a country with a burgeoning middle class. Ms Kochhar has been an outspoken proponent of clearer banking laws from the government led by new Prime Minister Narendra Modi. S Economy India July-August 2014 71 SBI's Bhattacharya, ICICI's Kochhar Among Forbes' Most Powerful Women E-tailers Growth... frequently remove their parcels to make room for passengers, highlighting one of the challenges to expanding in an e-commerce market that consultants say is growing at a compound rate of 34 per cent a year, and which saw online retail sales of $1.6 billion or Rs. 9,440 crore last year. "It is unfortunate, but offloading does happen and we have to make sure our delivery promises take that into consideration," Rahul Chari, vice-president, supply chain technologies at Flipkart, told Reuters. Up to 90 per cent of goods ordered online in India are moved by air, which pushes up delivery costs by around half, according to several online retailers and logistics companies. Road and rail transport networks remain woefully underdeveloped and entangled in graft and bureaucracy. With a population exceeding 1.1 billion, a burgeoning middle class and better Internet access, India's e-commerce potential is huge. Online retail sales are expected to surge to $76 billion or Rs. 4,48,400 crore by 2021, according to consultants Forrester, and the segment is growing at a much slower pace than other emerging markets, including China. E-commerce is poised to get a boost as early as next month, when the government is expected to allow online retailers to sell directly to consumers. Logistics, however, remains the biggest barrier to growth and transport troubles are just the tip of the iceberg. Most e-tailers use sometime unreliable third-party delivery firms, more than half of sales are paid for with cash-on- delivery, return rates are high and orders made to fake addresses are all too common. Contd. from page 29 June 2014 trade deficit is largely along expected lines xport growth is expected to be moderate in the coming months, reflecting external demand conditions, a waning of the favourable base effect and relative stability in the nominal exchange rate. In particular, the unfavourable monsoon conditions suggest agricultural exports would be muted in FY15. With a larger number of entities now eligible to import gold, imports of the precious metal rose in June 2014 as compared to the previous month and imparted firmness to non-oil imports. Going ahead, any improvement in investment or consumption activity is likely to boost non-oil non-gold imports. Based on the Q1FY15 merchandise trade deficit and April-May services trade surplus, the current account deficit for the just- concluded quarter is likely to print at a relatively limited USD 5-7 billion, albeit somewhat higher than the level recorded in the last two quarters Budget carriers extend air fare cuts ahead of lean season udget carriers have announced yet another round of fare war, as they look to stimulate demand during the lean season. Carriers like IndiGo, SpiceJet and GoAir have announced a drop in fares, across their networks for travel between August 18 September 30, which is generally a slow season for air travel. The offer is valid for bookings between July 15-17. IndiGo, the biggest carrier by the number of passengers carried, is offering fares starting from Rs 1,699 (all inclusive), while SpiceJet the second largest budget carrier is offering fares starting from Rs 1,999, inclusive of taxes for travel anywhere in India. "Sharat Dhall, president, Yatra.com online travel agency said, the 3-day sale at Rs 1,999 on flights across sectors is aimed at boosting travel during the lean period between the long weekends of August 15- 18 and October 25. This is an excellent offer for someone who wants to take a quick break before the high fares of the festive season kick in." Rajesh Magow, co-founder & CEO-India, MakeMyTrip, an online travel agency, said, "With popular destinations such as Goa, Guwahati, Port Blair, Dharamshala, Udaipur, Thiruvananthapuram and Kochi being served under these promotions, we expect travellers to make use of this limited-period offer. Travellers can receive discounts ranging from 50-80% depending on the sector," said. Drop in airfares has become a routine, with airlines looking to grab additional seats, as competition is expected to intensify with the expansion of of AirAsia India the newest budget carrier in the country. AirAsia India is claiming to go pan India by the end of this year. Novartis, Google working on smart contact lenses ovartis has tied up with Google and announced that its eye care division Alcon will be licensing the search giant's much-anticipated "smart lens" technology for all ocular medical uses. Novartis has signed the deal with Google [x], a team behind the Smart Contact Lenses that Google has been developing for quite some time. Alcon, the company's eye-care subsidiary, will develop and commercialize Google's "smart lens" technology, which was revealed earlier this year. "We are looking forward to working with Google to bring together their advanced technology and our extensive knowledge of biology to meet unmet medical needs," said Novartis CEO Joseph Jimenez. "This is a key step for us to go beyond the confines of traditional disease management, starting with the eye." He further said: "This isn't going to happen overnight because it's a breakthrough technology. It's not months, we're probably talking about years. We would hope to be able to commercialise within about five years." "Our dream is to use the latest technology in the miniaturization of electronics to help improve the quality of life for millions of people," said Sergey Brin, Co-Founder, Google. "We are very excited to work with Novartis to make this dream come true." Under the agreement, Google[x] and Alcon will collaborate to develop a "smart lens" that could totally change how humans react and respond to health worries. One of the applications of the contact lens is to help diabetics keep a closer eye on Consumer E B N Economy India July-August 2014 72 Consumer Economy India July-August 2014 73 insulin levels. The lenses have been designed to measure tear fluid in the eye and connects wirelessly with a mobile device. They could also end up helping the visually-impaired see again. Novartis says non-invasive sensors, microchips and other miniaturized electronics which are embedded within contact lenses have the potential to address ocular conditions. Novartis further says, "For people living with presbyopia who can no longer read without glasses, the "smart lens" has the potential to provide accommodative vision correction to help restore the eye's natural autofocus on near objects in the form of an accommodative contact lens or intraocular lens as part of the refractive cataract treatment." Apple, IBM in Deal to Create Apps, Sell Phones nemies during the early personal-computer wars, Apple Inc and International Business Machines Corp. said they will cooperate in the mobile era, striking an agreement to create simple-to-use business apps and sell iPhones and iPads to Big Blue's corporate customers. The deal underscores Apple's push to expand the reach of the iPhone and iPad into the business world-beyond their traditional base among consumers. IBM, meanwhile, is hoping Apple's simplicity and popularity will help stem eight consecutive quarters of year-over-year revenue declines, as it moves more of its business software onto the mobile devices used by employees. Apple Chief Executive Tim Cook and IBM CEO Virginia Rometty declined to comment on financial terms. A partnership between the two companies would have been unthinkable 30 years ago when Apple famously attacked IBM in an iconic commercial titled "1984," painting IBM as a big-brother-like figure protecting the status quo while Apple's Macintosh provided a pathway to freedom. But both companies have evolved since those days. While Apple still produces Mac computers, its main products are mobile devices. IBM sold its personal- computer business to Lenovo Group in 2005, repositioning the company as a software and computer- services provider. "In '84, we were competitors. In 2014, I don't think you can find two more complementary companies," said Mr. Cook, who worked at IBM for more than a decade before joining Apple, in a joint interview with Ms. Rometty. "This is a really landmark deal." The two companies said they hope to use the expertise of IBM's consultants and relationships with corporate customers to create business apps that offer the simplicity-a hallmark of Apple products-of today's consumer apps. The apps will draw on IBM computing services such as security, device management and big- data analytics. Under the agreement, IBM's employees will provide on-site support and service of Apple products inside companies, similar to the AppleCare service that Apple sells to consumers. IBM said it planned to make more than 100,000 employees available to the Apple initiative. It is a rare partnership for Apple, which historically has avoided such alliances. "This is just the beginning," said Ms. Rometty, citing a statistic that most smartphones inside companies are used only for email and calendar. She said the companies hope to create new, serious business applications. The companies said Apple and IBM engineers are together developing more than 100 new apps for various industries. The first batch of apps is expected to be available in the fall when Apple releases the next version of its mobile software, iOS 8. Historically, Apple has made little effort to sell to businesses. Under Mr. Cook, Apple has started to find success in selling to corporate tech managers. While Apple has made progress in selling to the enterprise, IBM has much deeper ties in that world. "Apple is not an enterprise company, but that's not their DNA. It is IBM's DNA and IBM has had those relationships forever," said Gartner analyst Van Baker. "It's an unlikely combination but a very strong one if they can pull it off." One challenge for Apple is that not many technology companies have succeeded as both an enterprise and a consumer brand. But as more employees bring their own technology to work, they expect the same ease of use in the office as at home. According to Forrester Research, global business and governments spent about $11 billion on iPads in 2013-or about one-third of Apple's total tablet sales. By 2015, Forrester estimates that figure will grow to $13 billion, outpacing the overall rate of spending growth for computers and tablet computers. Forrester principal analyst Frank Gillett said the tandem of Apple and IBM could spurGoogle Inc. GOOGL -0.20% -whose Android operating system is a rival to Apple's iOS software-to seek partners in the corporate segment to create a "credible alternative." Google didn't respond to a request for comment. Apple's stock rose 1.6% in after-hours trading following the announcement. IBM shares were up 2% after hours . E Glamour ce Indian shuttler Saina Nehwal produced a dominating performance to lift her second title of the season, winning the $750,000 Star Australian Super Series after beating Spain's Carolina Marin in the summit clash. The sixth seeded Indian, who had won the India Open Grand Prix Gold earlier this year, prevailed 21-18, 21-11 in a 43-minute c o n t e s t which left her richer by $56,000. The 24-year-old Saina, who enjoyed a 1-0 head-to-head record against Marin going into Sunday's match, logged the first point and displayed some deft net play against her rival, stroking in some delectably timed volleys to take a 5-2 lead in the opening game. But the 21-year-old Marin was not the one to give up easily and showed just why she is considered one of the most feisty players on the circuit. She narrowed the gap to 6-8 but seemed distinctly out of her comfort zone every time Saina dragged her towards the net. Also, Marin didn't help her cause by committing a service error to gift an easy point to Saina, who went into the interval leading 11-7 after an intriguing rally which ended with the Spaniard smashing the shuttle wide. Marin raised her game and the decibel levels after the break but Saina was quick to counter- attack and returned her rival's attempted smashes with quiet intensity. In between, Marin played some fine strokes but they never came consistently enough as Saina made it 17-12. Marin's dogged determination was there to be seen in every point she played for but that alone was never going to be enough to upstage a composed Saina. Saina Nehwal wins Australian Open Super Series title ollywoods latest release Ek Villain is going great at the box office ever since its release last Friday and has collected above RS 50 crore within three days of its release. And the three-day box office collections indicate that movie buffs are loving Ek Villain. In doing so, the Mohit Suri film will break the Box Office records set by Akshay Kumars Holiday and Sajid Khans Humshakals. The film starring Sidharth Malhotra, Shraddha Kapoor and Riteish Deshmukh had minted above Rs 16 crore on the opening day itself. The film opened to great reviews and fantabulous response with multiplexes going housefull.This is also director Mohit Suris hattrick after the success of Murder 2' (2011) and Aashiqui 2' (2013). Tanuj Garg, CEO Balaji Motion Pictures, said: Not only is this opening the biggest for the studio, but for the industry too in light of the screen count. We scored big despite no advantage of a bank holiday weekend. He predicts that with compelling content, strong word of mouth and exemplary marketing, the Riteish Deshmukh, Sidharth Malhotra and Shraddha Kapoor starrer is poised to sustain and enjoy a glorious run at the box office. Revenues from the overseas markets and non- theatre streams are additional.Distributor Anil Thadani said: The film has found universal acceptance. It is one of those rare films that worked as well in a remote single screen as it did in an up-market multiplex. It is a blockbuster and game-changer in the real sense of the words. Hats off to Balaji and Mohit Suri! The films success means a lot to director Mohit Suri as this is his first film outside his home banner Vishesh Films and he is delighted that it has opened to such a path- breaking response. The stupendous figures are testimony to the power of conviction, content and passion, he added. Ek Villain is also Ritesih Deshmukhs second consecutive hit in two weeks after the unexpected success of H u ms h a k a l s , which was panned by critics and audience alike. Ek Villain takes box office by storm, earns Rs. 50.70 crore in 3 days A B Economy India July-August 2014 72