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regard this new budget, quite Ok,

since there are several facets of


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.
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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
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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.
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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.
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Economy India July-August 2014
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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
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Economy India July-August 2014
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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.
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Economy India July-August 2014
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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.
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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
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Economy India July-August 2014
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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.
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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
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Economy India July-August 2014
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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
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Economy India July-August 2014
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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.
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Economy India July-August 2014
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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."
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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.
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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
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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
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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.
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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.
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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
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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
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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
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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
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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
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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
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