World Food Summit

World Food Summit
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I. Introduction:

1. Concept of Food Security:
Can be defined in terms of adequate availability of food in the market, the need for economic access to food and biological absorption of food in the body. Availability is a function of production and access is conditioned by purchasing power. Biological absorption is determined by the availability of safe drinking water, primary health care and environmental hygiene.

2. Current World Food Crisis:
Soaring food prices, aggravated by decreasing production along with spiralling oil prices have plunged the international community in a food security crisis.
The crisis has led to food riots, protest and export restrictions worldwide. Food prices have increased by 40 per cent since 2007 and 83 per cent in the past three years.
Food security is one of the biggest challenges facing the world this century. An estimated 850 million in the world were affected by chronic hunger. Food production needs to increase by 50 per cent by 2030 to meet the rising demand, according to the UN Secretary-General Ban Ki-moon. Investment in agriculture was vital to ensure global food security, according to Mr. Ban.

II. Background:

1. Establishment of the FAO:
On October 16, 1945, the Food and Agricultural Organisation (FAO) of the United Nations was established at Quebec, Canada for the purpose of “contributing towards an expanding world economy and ensuring humanity’s freedom from hunger”.

2. Aims:
•  To raise nutrition levels and living standards.
•  Secure improvements in production and distribution of Food and Agricultural products.
•  To improve the living conditions of the rural population.
•  To eliminate hunger.
•  The FAO sponsors the World Food Programme (WFP).

3. Permanent Headquarters:
Rome

4. Director General:
Jacques Diouf

5. World Food Day:
October 16 is commemorated each year as “World Food Day” to remind the world that “food for all” is yet an unachieved global and national responsibility.

III. World Food Summit (Rome, June 2008):

1. 181 Countries Participated in the Three-day Summit:
A three-day World Food Summit was organised by the UN Food and Agricultural Organisation (FAO) at its headquarters in Rome in June 2008. The Summit was attended by a record 181 countries.

2. Agenda of the Summit - Short term solutions and strategies to deal with the effects of global warming, growing demand for biofuels and a crumbling agriculture sector in the developing countries.

3. $3 Billion Emergency Aid Pledged at the Summit:
UN officials announced around $3 billion of emergency aid to help ease the global food crisis. However, the UN Secretary-General Ban Ki-moon stressed that up to $20 billion a year would be needed to increase food production by 50 per cent by 2030.

4. UN Task Force Action Plan to Tackle the Food Crisis:

Intended to be a Guide for Global and National Actors, both Institutions and Governments:
The Comprehensive Framework for Action (CFA) prepared by a high-level UN Task Force established and chaired by the UN Secretary-General is intended to be a guide for global and national actors, both institutions and Governments, and a catalyst for action that needs to start now, according to a UN Communiqué.
The CFA proposed to boost smallholder food production through urgent injection of key inputs such as seeds and fertilizers, improved rural infrastructure, and better links to the market, as well as expansion of microcredit programmes. The CFA suggested adjustment of trade and taxation policies to minimise export restrictions and import tariffs.
Sensible management of the impact of rising food prices on inflation and macro-economic policy;balance of payments support to net food importers where necessary; and ensuring immediate actions to respond to food price rises are financially sustainable for government, according to the CFA.
Call for establishment or improvement of real-time food security and food market monitoring systems as well as nutritional assessment systems to ensure that early warnings are received and contingency plans are in place.
Over the longer term, production can be increased through establishment of appropriate national policy frameworks , improvement in safety net programmes including food assistance, establishment of longer-term monitoring system to ensure that food crises are anticipated and prevented, development of regional and global mechanisms to improve emergency access to food, improvement of country-level stocks management, and development of better financial risk management.
The CFA emphasised the need for building a greater international consensus on sustainable biofuels, research and development into new technologies, and a reassessment of biofuel subsidies and protective tariffs.
The UN Communiqué pointed out that the UN system agencies were working with at least 40 national Governments to asses, food security, needs, and options for immediate and long-term action. The focus was on vulnerable groups like children and women.




India A Rising Global Power
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I. Introduction:

1. India a Core State in the Emerging Global Order:

India's External Affairs Minister Pranab Mukherjee projected India as a core state in the emerging global order. He emphasised that India's role would be crucial for ensuring and maintaining long-term peace, stable balance of power, economic growth, and security in Asia.

2. Greater Recognition of India's Stabilising Role in the Region:
In the present time, there is a greater recognition of India's stabilising role in the region born out of its restraint, economic dynamism and potential, the history its civilisational engagement and its role as a firewall against destabilising ideas and influences, according to Mr. Mukherjee.

3. Rise of India and China has Resulted in the Resurgence of Asia:
The new wave of globalisation had begun to accelerate the distribution of power in the international system, according to Mr. Mukherjee. The rise of India and China had resulted in more than the resurgence of Asia. The consequences of rapid growth in China and India were being felt in Latin America and Africa, according to the External Affairs Minister.

4. India and China Crucial Elements of an Asian Century:
Referring to the Late Chinese leader Deng Xiaoping's assertion that there could be no Asia-Pacific or Asian Century without India and China forming crucial elements of such an architecture, Mr. Mukherjee stressed that India is one of the important legs of the Asian juggernaut along with China, Japan and Indonesia.

5. Political and Economic Resurgence of Asia Accompanied by the Rise of Powerful Economic Forces:
India's External Affairs Minister pointed out that the political and economic resurgence of Asia had been accompanied by the rise of powerful economic forces unleashed by globalisation and the trend towards regional integration.

6. Only a Pluralistic Security Order Would have the Legitimacy of Dealing with the 21st Century Challenges:
Mr. Mukherjee favoured a pluralistic security order in Asia, based on a cooperative approach to security. Such a polycentric order would be accommodative of the diversity of the region. He also suggested that only such an order, working through a network of cooperative structures, would have the legitimacy of dealing with the challenges of the 21st century.

II. Steps Towards India Becoming a Regional Power by 2020:

The approach towards India becoming a regional power by 2020 can be divided into five broad categories as follows:
1. Flexible Foreign Policy
2. India's Economic Interests
3. Creating a Stable and Cooperative Atmosphere in the Region
4. Enhancing Security Cooperation
5. Working Towards a Multipolar World Order

1.Flexible Foreign Policy:

Changing the Mindset is the Biggest Challenge to India's Foreign Policy:
The External Affairs Minister Pranab Mukherjee said that the biggest challenge to India's foreign policy lay in changing its own mindset. He stressed that the India strategic community must come to terms with India’s increasing weight in the international system. Currently India is not a bystander to the actions of other powers, according to Mr. Mukherjee.

Flexible Tactics Needed to Adapt to Changing World Order:
Prime Minister Manmohan Singh said that India could not be tied down to its past. It needed flexibility of tactics, depending on the changes the world over.

2. India's Economic Interests:
Economic Interests and Energy Security - a New Thrust to the Foreign Policy:
The Prime Minister pointed out that access to markets, sources of energy, investment and advanced technologies posed new challenges to India's external relations. These challenges had led India towards new thrusts in its foreign policy. There were new directions in India's approach towards major economic partners, the Asian neighbourhood and other developing countries.

Most Important Objective of India's Foreign Policy - Constructive Agenda for Economic Development:
Mr. Mukherjee said that the most important objective of India's foreign policy was to set a constructive agenda for economic development. India's objective is to have sustained economic growth in the range of 9 to 10 per cent during the 11th Plan and higher growth level in the 12th Plan. The foreign policy would aim at achieving that objective, according to Mr. Mukherjee

India's Trade with the Countries of the Region has Increased Since the Initiation of the Look East Policy:
Since 1990 when the Look East policy was initiated, India's trade with the countries of the region has grown from $8.1 billion to $67.5 billion and the share of trade with these countries in India's global trade has increased from 19.4 per cent to 28.2 percent, according to Mr. Mukherjee.

India can Gain by Taking Advantage of the Knowledge Explosion in the World:
Dr. Singh pointed out that India has to flourish and survive in a world where there is an explosion of knowledge. There are challenges and opportunities. Therefore it is essential the India's thinking population should be able to analyse these developments objectively.

3. Creating a Stable and Cooperative Atmosphere in the Region:

Foreign Policy Must Help Create an International Environment Conducive to India's Development:
Dr. Singh felt that there could be no disconnect between India's domestic capabilities, national aspirations and external policies. He emphasised that foreign policy must help create an international environment conducive to India's rapid social and economic development.

India Faces the Challenge of Creating a Stable and Cooperative Atmosphere in the Region:
The Prime Minister pointed out that India faces a turbulent neighbourhood and it was a foremost challenge to create a stable and cooperative atmosphere in the region that will allow India to concentrate on tackling the problems at home and in the region.

Need for Deeper Understanding of the Factors Contributing to the Rise and Fall of Nations:
The Prime Minister opined that the current turbulence in the Islamic world required deeper analysis. This also applied to the rise of China as a major global power. India can learn from China's economic development. Dr. Singh also stressed that the diplomats must have a deep understanding of the factors which contribute to the rise and fall of nations and civilisations.

India and China Engaged in a Constructive Dialogue:
Mr. Mukherjee told the Summit that India and China were currently engaged in a constructive dialogue. Both countries have recognised that there is enough space for developing together, growing together, not at the expense of each other but independent of each other.

4. Enhancing Security Cooperation:
Enhancing Security Cooperation Critical to Building Lasting Economic Ties:
The External Affairs Minister said that an environment of security, predictability and peace was essential for people to prosper, business to flourish and development to take place. Thus, enhancing cooperation in the field of security was critical to India's larger efforts aimed at building lasting economic ties, according to Mr. Mukherjee.

Working Purposefully and in Cooperation with Other Nations to Combat the Threat of Terrorism:
Mr. Mukherjee pointed out that the principal threat to peace and stability in the world flowed less from wars between nations and more from the threat of transnational terrorism. He emphasised on the overarching importance of working purposefully and in cooperation to combat the menace of terrorism.

India Playing Its Part to Meet the World Wide Security Deficit:
It was pointed out that India is playing its part to meet the current phenomenon of a worldwide "security deficit". India was enhancing its defence preparedness through several means including a nuclear doctrine of minimum deterrence. However, India's current defence expenditure is at a modest 2.5 per cent of its GDP and was not eroding developmental priorities, according to the Defence Minister.

India Willing to Assist Maritime Security Along the Straits of Malacca:
Mr. Mukherjee offered to help safeguard the strategic Malacca Strait and backed an East-Asian security initiative to enforce compulsory pilotage of the channel against pirates and maritime terror. He stressed that India was willing to assist in the project and share its expertise in maritime security with nations of the region.

Indo-US Strategic Partnership an Aspect of India's Defence Diplomacy:
India's current strategic partnership with the US, as exemplified by the 2005 framework agreement on defence cooperation, was part of India's defence diplomacy.

ASEAN and India have a Convergence in Security Perspectives:
Southeast Asia was the starting point of India's "Look East" policy, according to Mr. Mukherjee. India and the ASEAN nations have a convergence in security perspectives, a common interest in peace and stability in the region and in the maintenance of security of sea lanes and communication.

Major Security Threats in Asia Could be Resolved Through Cooperation Between India, China and Pakistan:
Defence experts at the Summit pointed out that issues like Afghanistan, Iraq and Iran continue to dominate the security and defence agenda. The other security threats include terrorism and proliferation of Weapons of Mass Destruction (WMD). It is felt that the solutions to these security issues could be based on a positive interaction between India, China and Pakistan, especially with regard to terrorism and proliferation.

5. Working Towards a Multipolar World Order:

Constructing a Genuinely Multi-polar World Order:
Today the world is in a state of flux with the core achievements of the UN being undermined by unipolarism. In such a situation, India’s foreign policy faces the challenge of engaging the US, the world’s sole superpower, while, at the same time, acting in concert with other nations and other powers to build an international system that is genuinely multi-polar, according to analysts.

Need to Inject Political Content into India’s Strategic Partnerships with Big Powers:
Despite the gains made in recent years, India’s relations with the US, Russia, China, Japan and Europe were all below potential, according to Mr. Mukherjee. The Government would endeavour to inject real political content into the strategic partnerships that India has with all major powers

Impact of the Global Economic Crisis on India

Impact of the Global Economic Crisis on India
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I. Impact of the Global Economic Crisis on India:

1. Indian Stock Markets Crashed:
In October 2008, Indian Stock markets crashed along with the global stock markets on fears of US financial crisis. The Bombay Stock Exchange (BSE) Sensex lost over 2,000 points in the second week of October 2008. The value of Indian stocks listed on the US bourses sharply reduced causing losses of billions of dollars.

2. GDP Growth Expected to Moderate between 7% to 8%:
In the wake of the global financial crisis, a report released by the Finance Ministry in November 2008 identifies sectors of the Indian economy that are likely to be adversely impacted in varying intensities while segregating those that may not be affected at all and others which may have a positive impact. India’s Gross Domestic Product (GDP) growth is expected to moderate, yet look fairly robust. A GDP growth between 7 per cent and 8 per cent would still be one of the best under these circumstances, according to the report.

3. Positive Impact of the Global Economic Crisis due to Meltdown in Global Commodity Prices Especially Decline in Crude Oil Prices:
The report noted that owing to the meltdown in global commodity prices especially the decline in crude oil prices, the positive impact may get reflected through Moderation in inflation Improving the corporate profitability through input cost reduction and increasing their internal accruals. The sharp reduction in crude oil prices have moderated the prices of products which use crude oil and its derivatives as inputs such as fertilizers, chemicals and others. Community and Services - Relating to Defence and Social Sector Services would witness a positive impact. The Growth was also likely to improve on account of the Positive Impact of the Sixth Pay Commission and other wage increases.

4. Sectors of Indian Economy Experiencing a Moderate Impact of the Global Financial Crisis:
The Finance Ministry report pointed out that many sectors of the Indian economy would experience a moderate .

5.impact of the global financial crisis coupled with domestic factors:
Manufacturing, exports, construction, transport, insurance and banking, business services and real estate. Sectors of the Indian Economy Experiencing Neutral Impact - Agriculture, Electricity, Communication, Trade and Recreation.

6. Sectors of the Indian Economy Experiencing Negative Impact of the Global Financial Crisis:
Lower inflow of portfolio capital despite India being ranked the second most preferred destination in the latest World Investment Report.

7. Impact of the Global Economic Crisis on India Stronger than Expected:
The Reserve Bank of India (RBI) Governor D. Subbarao, said that the impact of the global financial crisis on India was stronger than expected. He pointed out that though India is not directly impacted, the country has not weathered the indirect knock-on effect of the global economic crisis. As the global economic crisis was turning out to be deeper and longer than expected, the impact on India was also turning out to be stronger.

8. Loss of Jobs:
The global economic crisis resulted in the loss of thousands of jobs in India. Recruitment was very low and temporary contract workers were the worst sufferers.

9. India has Several Strengths that can help Mitigate the Adverse Effects of the Global Economic Crisis:
The Centre’s Mid-Year Review 2008-09 presented to the Parliament in December 2008 pointed out that compared to other emerging economies, India has several strengths that can help mitigate the adverse effects of the global financial crisis: Having run a tight monetary policy during the first half of 2008-09, there is considerable scope for monetary policy easing over the next 6-12 months to offset the global increase in demand for money that is being transmitted to India. A pro-active monetary policy may be necessary if the global economic depression continued to adversely affect manufacturing India has relatively high share of services in GDP that tend to be less affected by cyclical downturns Five years of nearly four per cent growth in the Agricultural sector High domestic savings rate of 36 per cent which led to nine per cent growth in past years. India retained its position as a preferred destination for Foreign Direct Investment (FDI).

10. India can Turn the Global Financial Crisis into in an Opportunity to Review and Revisit Pending Reforms:
The then Finance Minister P. Chidambaram pointed out that India can turn the global financial crisis into an opportunity to review and revisit pending reforms. Introduction of reforms particularly in the financial sector would make the economy more competitive and economic regulatory and oversight system more efficient, quick and responsive to global developments. Aggressive easing of interest rates and fast-tracking of pending reforms was needed to mitigate the adverse impact of the global economic crisis on the Indian economy, according to the Mid-Year Review 2008-09 presented by the Centre to the Parliament in December 2008.

II. Steps Taken by the Government to Tackle the Impact of the Global Financial Crisis on the Indian Economy:

1. Monetary Policy:
The tool of macroeconomics policy which involves the regulation of money supply, credit and interest rates in order to control the level of spending in the economy. Focus on measures to increase liquidity in the banking system. Reduce interest rates Ease regulatory management.

Decreasing the CRR:
The Credit Reserve Ratio (CRR) is one of the tools of the monetary policy. When the CRR (the amount of money banks need to keep with the RBI) is decreased, there is more money in the banks to lend, which increases the liquidity.

2. Fiscal Policy:
An instrument of demand management which seeks to influence the level of economic activity in an economy through the control of taxation and Government expenditure. Primarily refers to the Government’s spending patterns. When inflation is falling the Government can increase expenditure, thereby increase demand. Fiscal Deficit Allowed to Expand beyond the Originally Targeted Level: In recognition of the need for a fiscal stimulus the Government had consciously allowed the fiscal deficit to expand beyond the originally targeted level. The fiscal deficit would be over 6 per cent in 2008-09 more than 3 percentage points of the GDP above what was originally targeted.

3. Monetary Measures Taken by the RBI:
The RBI cut the CRR from 9 per cent to 5 per cent. The repo rate (When RBI conducts a repo it lends to banks by purchasing securities and selling them back at a predetermined price) was reduced from 9 per cent to 5.5 per cent. The reverse repo rate (When RBI does a reverse repo it borrows from banks by selling them securities and buying them back at a future date) was reduced from 6 per cent to 4 per cent. These measures taken by the RBI released Rs.3,20,000 crore for the banking system to lend to the industry. The monetary measures undertaken by the RBI have made consumer loans cheaper. This would inevitably create demand. The industry including automobiles, white goods and consumer electronics would recover faster. With the Central Government mandated reduction in interest rates for affordable housing, the real estate sector has also been positively impacted.

4. Centre’s First Fiscal Stimulus Package to Shore up Various Sectors of the Economy from the Global Economic Meltdown (December 07, 2008):
The stimulus package aimed to revive crucial sectors affected by slowdown such as housing, exports, automobile, textiles and small and medium enterprises (SMEs) through additional funding. Across-the-board 4 per cent cut in Cenvat (Value Added Tax) to bring down the prices of most manufactured goods including cars, cement, textiles and other products. Additional Rs.20,000 crore earmarked for infrastructure, industry and export sectors for the current fiscal. Permitted India Infrastructure Finance Company Ltd. to raise Rs. 10,000 crore through tax-free bonds by March 2009 as part of the exercise to support the Rs.1,00,000 crore highways development programme.

5. Centre’s Second Stimulus Package (January 02, 2009):
The second stimulus package aimed at reversing the economic slowdown through higher public spending, providing additional liquidity for onward lending at lower interest rates, boosting sagging sale of commercial vehicles and making easier credit availability for the export sector, housing and small industries. India Infrastructure Finance Company would access Rs.30,000 crore to fund infrastructure projects. States to be allowed to borrow Rs.30,000 crore from market to finance their expenditure. Package allows Public Sector Banks (PSBs) to be recapitalised by Rs.20,0000 crore. Government asked the PSB’s to increase their credit targets for the fiscal to ensure optimal disbursal of funds at least cost.

6. Third Stimulus Package (February 24, 2009):
A reduction of 2 percentage points in the rates of excise duty and service tax, were announced by the Centre on February 24, 2009. The excise duty was reduced from 10 to 8 per cent while the service tax was reduced from 12 to 10 per cent. The Government was keen on restoring business confidence in the services sector. The Government’s objective was that the dispersal between the CENVAT rate and the service tax rate be reduced with a view to moving towards the Uniform Goods and Service Tax, according to the External Affairs Minister Pranab Mukherjee who was holding charge of Finance.

7. Significance of the Fiscal Stimulus Packages:
The fiscal stimulus packages focus on spurring growth in a grim scenario of a crumbling financial system and recession in the West in order to minimise the slowdown impact. The Government’s fiscal stimulus packages to deal with the economic slowdown were far more than just spending packages, according to the Deputy Chairman of the Planning Commission Montek Singh Ahluwalia. The Government allayed fears that the stimulus packages were inadequate by pointing out that the packages would contribute to the widening of the fiscal deficit in 2008-09. Including the Central and State deficits, the fiscal deficit is expected to rise to 10 per cent of the GDP, according to Mr. Ahluwalia. Stimulus packages focused on infrastructure to bring the economy out of the current situation, according to Mr. Ahluwalia. Both public-private partnerships and government investment would be encouraged. The public expenditure in the packages was focussed on irrigation, housing for the poor, rural roads and urban infrastructure. Packages Provide Relief to All Sectors and Boost the Growth of the Economy: The Indian industry welcomed the stimulus packages describing them as a set of positive measures aimed at providing relief to all sectors and help give boost to the growth of the economy. By combining monetary and fiscal measures, the packages sought to address a number of concerns and restoring business confidence, according to the industry. The reduction in rates of excise duty and service tax were much needed fiscal measures which would go a long way in stimulating demand, according to the CII.

III. Conclusion:
1. RBI’s Views on the Current Economic Situation:
The global financial situation described as the worst since the Great depression, continues to be uncertain and unsettled. Some impact of the global financial crisis on India was felt through the credit, equity and the foreign exchange markets. The global financial crisis had reinforced the importance of putting special emphasis on preserving financial stability. The adverse global developments had led to moderate growth in the industrial and services sectors in the first-half of 2008-09. Later the impact on liquidity and credit was also felt. The financial sector in India is sound and healthy. Indian banks do not have financial exposure to the US sub-prime assets. The fundamentals of Indian economy continue to be strong.

2. India’s Financial Sector Mostly Insulated from the Risks of International Markets due to a Strong Regulatory Framework:
Economists point out that India’s financial sector has mostly been insulated from the risks of international markets due to a strong regulatory framework. Although India has a largely free market-based banking system, it has ensured that its regulatory checks and balances prevent any undue exposure to global risk and the financial sector is prepared to cushion adverse situations.

3. The Current Global Financial Crisis Calls for Governments to Focus on Employment Creation:
Analysts point out that the current global financial crisis can be used by Governments around the world to reshape policies, and put in place structures to help in increasing the pace of recovery. The adverse impact of the crisis has been on employment with millions likely to lose their jobs. India’s focus on urban and rural infrastructure projects linked to employment creation is commendable, according to analysts. Governments around the globe need to focus on employment creation to minimise the adverse impact of the current global financial crisis.

Turning ‘Swachh Bharat’ into a Mass Movement

Turning ‘Swachh Bharat’ into a Mass Movement
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Over 2.5 billion people mostly in rural areas across the world do not have proper sanitation facilities and over one billion people defecate in the open due to lack of proper toilet facilities.
 The situation is no better in our country where more than half of the population defecates in the open.

It is well known that countries where open defecation is most widely practiced are the same countries with the highest numbers of under-five child deaths, high levels of under-nutrition and poverty, and large wealth disparities.

Realizing that the large scale population was exposed to various kinds of diseases due to lack of sanitation facilities the government of India has advancing the earlier target of making India free from open defecation by 2022 to 2019 by launching a massive Swachh Bharat Mission. 2019 coincides with the 150th Jayanti Birth Anniversary year of Mahatama Gandhi who considered sanitation more important than even Independence.

An Action plan has been drawn up to make India Open Defecation Free (ODF) by 2019, to keep villages clean through construction of individual, cluster and community toilets and through solid and liquid waste management with active participation of village Gram Panchayats (GPs). It also aims at enabling water tap make connection to households on demand by 2019.

The Action plan is centered on the major issues:
1. Strengthening delivery mechanism by creating necessary infrastructure
2. Launching a massive awareness programme involving all stake holders to make the Swachh Bharat Mission into a mass movement.
National Reachout Campaign
What is really of prime importance is changing the mindset of the people who are habituated to defecate in the open, even those who have toilets. To bring in behavioral change is the biggest challenge before the government. A National Reachout Campaign has been unleashed towards this end.

The measures include:
 A continuous door to door contact with every rural household in the country on the lines of the Pulse Polio campaign so that the people can be made aware of the importance of using a toilet and the consequences of not doing so.

Launching of a National and State Level Media campaign making use of audio visual, mobile telephony and local outreach programmes to communicate the message.

Involving social, local, sports or movie icons in sanitation. Already cricket icon Sachin Tendulkar and many movie stars have joined the campaign.

Community mobilization is an important step to turn the campaign into a mass movement. It is not just the involvement of ASHA workers, self help groups and other NGOS which is already being done but also using school children as a medium to influence families.

Involving school children as messengers of change on ‘WASH’ – water, sanitation and hygiene and including inputs in the school curriculum till Class X. Holding of rallies, walk/run for sanitation, seminars, painting competitions & other activities in Schools to disseminate the sanitation message are being organized in a big way – facebook page of ‘Swachh Bharat Mission’ and Ministry of Drinking Water and Sanitation provide a glimpse of all these activities.

Getting doctors, teachers, local political and religious leaders involved in the sanitation communication, is also part of this mission approach.

In fact, it involves using every tool available to spread the message of sanitation including using fitting vehicles with publicity material on sanitation and drinking water supply; showing short films on sanitation as well as best practices.

The vehicles like trucks could also carry models of twin pit latrines; rural sanitary pans with p-traps and models for water supply schemes.

Also making use of the popular folk media like puppet shows, nukkad nataks to create awareness.

Involvement of various organizations in the mass communication plan like the UNICEF, WSP, WATERAID, WHO, ADB, Rotary India, Sulabh and the vast network of non-governmental workers as well as corporate sectors. The assistance of some of these institutions has successfully been utilized in the Pulse polio campaign.

Another important step proposed in the action plan is setting up of at least one Model Community Sanitary Complex (CSC) to begin with, in each of the 6000 Blocks in the country as an IEC tool.

Strengthening delivery mechanism
While the mass media can create awareness and bring changes in attitude, what is significant is the creation of necessary infra structure for construction of toilets in the villages and laying of pipe lines for supply of water in a time bound manner, this involves the provision of material and adequate funding.

The Action plan proposes the use of revolving funds in construction linked-installments to provide advance to poor households who cannot afford initial construction cost or to gram panchayats in construction linked installments to be finally recouped against incentives released on completion of the toilets.

Increased Finance Commission transfers for this purpose may be considered to ensure maintenance of school, anganwadis and community sanitation complexes, which is very poor due to paucity of O&M funds.

Linkage of funds released to GPs under all programmes, could be linked with coverage and usage of toilets in the GP, to use it as a leverage to ensure Swachh Bharat by 2019.

Steps proposed for supply of material for construction include:
1. Ensuring availability of sanitary hardware suitable for rural areas in adequate quantity and in reasonable prices. Availability of Deeper angle rural pans with water seal p-traps which consume lesser water shall be ensured.
2. Creation of rural sanitary marts/ production centres in every block of the country.
3. Completing the supply of material like cement, pan bricks etc through provision of exchangeable coupons, with labour contribution by beneficiaries.
4. Training of Masons in the construction of sanitary toilets across the country to be taken up in a focused manner. For this leading NGOs could be roped in sanitation, ITIs/ polytechnics that could create an Army of trained Masons specializing in sanitation construction.
5. Involvement of corporate sector to assist in covering the GPs in their catchment areas for sanitation especially community sanitary complexes, either directly or through CSR funding. The corporate may also look after O&M for a couple of years.
6. To ensure the interest of the district, sub-district and block level Government officers beginning from District Magistrates in sanitation, the achievements of their areas under sanitation may be included in their APRs (Annual Performance Reports).
Equal right over sanitation
It was in 2013 that the UN officially recognized November 19 as World Toilet Day to make sanitation for all, a global development priority to promote public awareness of the need for adequate toilets in order to improve health of people and save lives. Describing the practice of open-air defecation as “extremely harmful” to public health, the UN says that the lives of more than 200,000 children could be saved with the provision of proper toilets facilities.

The 2014 campaign of World Toilet Day is centered on the theme of “Dignity and Equality” because women and girls bear the greatest burden of lack of toilet access throughout all life stages; Lack of toilets in schools leads to increase in dropout rates amongst girls and open defecation by girls exposes them to sexual harassment, assault and violence.

So in order to save millions of lives, to provide dignity to girls and women the need is to ensure that men and women have equal right over sanitation and water facilities.

A momentum in the Swatchh Bharat Mission has already been created across the country, the need is to sustain it, ensure that the campaign becomes a movement of the masses, translated into action and a Swatchh Bharat becomes a reality by 2019 as a tribute the Father of the Nation Mahatama Gandhi.

Source: PIB

Integrated Power Development Scheme

Integrated Power Development Scheme - Ensuring 24x7 Quality Power in Urban Areas
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Power crisis in India is always a burning issue. With the demand for power growing manifold day by day, the need for round the clock availability of power has become more and more relevant.
 With the launch of the Integrated Power Development Scheme (IPDS), power outages will be a thing of past. Moving towards Prime Minister Shri Narendra Modi-led government's objective to provide 24x7 power supply, the Union Cabinet has recently approved multiple schemes to improve transmission and distribution networks across the length and breadth of the country. The Integrated Power Development Scheme (IPDS) is one of the flagship schemes of the Ministry of Power and will be at the core attempt to ensure 24x7 power for all.

Integrated Power Development Scheme (IPDS)
The IPDS announced in the Union Budget 2014-15 envisages strengthening of
• Sub-transmission network
• Metering
• IT application
• Customer Care Services
• Provisioning of solar panels
• Completion of the ongoing works of Restructured Accelerated Power Development
• Completion of the Reforms Programme (RAPDRP)
The scheme will help in reduction of AT&C losses; establishment of IT enabled energy accounting / auditing system, improvement in billed energy based on metered consumption and improvement in collection efficiency. The estimated cost of the present scheme with the components of strengthening of sub-transmission and distribution networks, including metering of consumers in the urban areas is Rs. 32,612 crore, which includes the requirement of budgetary support from Government of India of Rs. 25,354 crore over the entire implementation period. The component of IT enablement of distribution sector and strengthening of distribution network approved by Cabinet Committee on Economic Affairs (CCEA) in June, 2013 in the form of RAPDRP for 12th and 13th Plans will get subsumed in this scheme and CCEA-approved scheme outlay of Rs.44, 011 crore including a budgetary support of Rs. 22,727 crore will be carried over to the new scheme of IPDS.

Eligible Utilities:
All Discoms including private Discoms and State Power Departments will be eligible for financial assistance under this scheme. Discoms will prioritize strengthening of urban infrastructure work considering specific network requirement and will formulate Detailed Project Reports for the projects for coverage under this scheme. Projects under this Scheme will be completed within a period of 24 months from date of issue of Letter of Awards. Power Finance Corporation is the nodal agency for operationalisation of this scheme.

Funding Pattern:
Grant portion of the Scheme is 60% for other than special category States (up to 75% on achievement of prescribed milestones) and 85 % for Special category States (up to 90% on achievement of prescribed milestones). The milestones for the additional grant are: timely completion of the scheme, reduction in AT&C losses as per trajectory and upfront release of subsidy by State government. All North Eastern States including Sikkim, Jammu & Kashmir, Himachal Pradesh and Uttarakhand are included in special category States.

Tripartite/Bipartite agreement:
Suitable Tripartite agreement will be executed between Power Finance Corporation as the nodal agency of the Ministry of Power, the State Government and the Discom to ensure implementation of the scheme in accordance with the guidelines prescribed under the scheme. Bipartite agreement will be executed in case of State Power departments.

Model Benchmark:
A model benchmark for power systems in urban areas which sets standards in items like digital/ prepaid metering ,underground cabling of 11KV and LT lines, limits for AT&C losses etc will be prepared by Central Electricity Authority within 5th January 2015.

Source: PIB

Smart City –The New Address of Urban India

Smart City –The New Address of Urban India
________________________________________
Today, ‘smart cities’ is one of the most discussed topics.
 In bilateral cooperation with different advanced countries, this is one of the topics that is appearing prominently. In the election manifesto and after assuming the public office, the BJP has shown policy consistency and much-needed commitment to redesign the Indian urban space.

500 Cities in 20 Years
Every minute, about 30 Indians are migrating to cities from rural areas. By 2050, India’s urban population will reach the mark of 70 crore. To attend their needs, there is a need to develop 500 cities. By 2050, 70% of the world population will be living in urban areas and metro cities bear most of the burden.

Despite increased urbanisation in India, the modes and means of managing the cities and urbanisation processes haven’t changed. Thanks to the governmental apathy, our basic amenities in our towns and cities have been in shambles and citizens are put up with sub-humane urban infrastructure. At such a juncture the smart cities initiative assumes paramount importance. Let us take a look at the new urbanisation initiative by the Indian government and its potential to change the future of our cities. The NDA government has decided to develop 100 cities into smart cities by 2020 and overall 500 cities in the near future. The need for development of such cities is has been an overdue.

Growth of the Idea
The idea of smart city came into being as part of the search for solutions to the increasing problems of urban dwellers. By making optimal use of resources, smart cities propel growth. This will in turn result in healthy competition and sustainable development. The idea first came into prominence during global financial slowdown, which stated in 2008. In this year, the IBM Corporation has started IBM Smarter Cities Initiative to focus on creating tech-savvy smart cities. Since 2009, several countries including South Korea, United Arab Emirates and China made huge investments in research and development of smart cities.

Need for Smart Cities
Urban areas record faster growth than rural ones in any country. The migration of rural and semi-urban population to the big cities in search of better opportunities accelerates this growth and this has been the world-wide phenomenon. According to 2011 Census, about 42.6 % and 45.2% of population of Gujarat and Maharashtra are urban dwellers, respectively.

In south India, the undivided Andhra Pradesh state has more than 35% of its population living in urban areas. The urban population of Tamil Nadu and Kerala are 48.5% and 47.7% and in Karnataka it is 38.6% and this trend is growing. Unplanned urbanisation as such rapid speed is nothing but a fountainhead of problems. Concentration of development in big cities also created regional economic disparities.

The cities have witnessed huge demographic growth after independence due to rural migration. During 1971-81, the population of Bangalore has grown at 75.6% growth rate. Asansol, the second largest city in West Bengal has recorded a huge 108.7% population growth rate during 1981-1991. In the same period, Faridabad of Haryana, Guwahati of Assom, Thane of Maharashtra, Visakhapatnam of Andhra Pradesh and Bhubaneswar of Odisha have respectively recorded the population growth of 85.5 %, 188.3%, 105.9%, 75 %, 87.7%. Between 1991 and 2001, Surat (Gujarat) and Nasik (Maharashtra) had 85.1% and 58.9% population growth rates. Between 2001 and 2011, the country’s prominent metros Delhi and Mumbai have received huge numbers of migrant population from different parts of the country. Stagnation of rural economy and recurrent agrarian crises have compelled the migration from rural areas to big cities in search of opportunities.

The EU Strategies
Between 1991 and 2011, about 7 million farmers have left agriculture. The continuous migration has exposed the long-pending problems in development and management of urban infrastructure. At this juncture, the NDA government which assumed public office in May 2014 brought the concept of smart cities to the fore. As part of this project, it has decided to develop 100 cities into smart cities. Several developed countries are now ready to extend their cooperation in this rejuvenation process. Reportedly, Indian government is now studying the urban growth strategies of European Union. .

Definition of Smart City
According to Frost & Sullivan, a growth consulting firm, smart cities must have eight fundamental features -
1. Smart Governance
2. Smart Energy
3. Smart Building
4. Smart Mobility
5. Smart Infrastructure
6. Smart Technology
7. Smart Healthcare
8. Smart Citizen
According to Smart Cities Council, any city which interweaves digital technology with all its important activities and transactions is called smart city.

IEEE Smart Cities, the smart city is a process of bringing together the technology, government and the society with the objective to develop of smart economy, smart mobility, smart environment, smart people, smart living, and smart governance.

According to Business Directory, economic growth is the key for improvement of economy and standards of life. Any city that has achieved it can be called a smart city.

In India, the government proposed to develop 100 smart cities in 2014-15 budget. To initiate the project, the Union Finance Minister Arun Jaitely earmarked Rs. 7,060 crore. According to the government, the following 100 cities will be modernised and developed into smart cities –

Sl. No. State Cities
1. Maharashtra 1. Pune
2. Mumbai
3. Nagpur
4. Nashik
5. Aurangabad
6. Bhivandi
2. West Bengal 1. Calcutta
2. Durgapur
3. Haldia
4. Habra
5. Jangipur
3. Gujarat 1. Ahmedabad
2. Surat
3. Vadodara
4. Rajkot
5. Bhavnagar
6. Junagadh
7. Gandhi Nagar
4. Madhya Pradesh 1. Indore
2. Gwalior
3. Burhanpur
4. Jabalpur
5. Tamil Nadu 1. Chennai
2. Coimbatore
3. Madurai
4. Tiruchirappalli
5. Salem
6. Tirunelveli
6. Karnataka 1. Bangalore
2. Gulbarga
3. Bidar
4. Bijapur
5. Badami
6. Pattadakal
7. Mahakuta
7. Kerala 1. Thiruvananthapuram
2. Kollam
3. Kottayam
4. Tiruvalla
5. Ernakulam
6. Cochin
7. Thrissur
8. Telangana 1. Hyderabad
2. Warangal
3. Karimnagar
4. Nizamabad
5. Nalgonda
9. Andhra Pradesh 1. Guntur
2. Vijayawada
3. Kurnool
4. Chittoor
10. Uttar Pradesh 1. Kanpur
2. Allahabad
3. Lucknow
4. Jhansi
5. Faizabad
6. Varanasi
11. Rajasthan 1. Jaipur
2. Ajmer
3. Bharatpur
4. Bikaner
5. Jodhapur
6. Kota
7. Udaipur
12. Punjab 1. Ludhiana
2. Amritsir
3. Jalandhar
4. Patiala
13. Bihar 1. Muzaffarapur
2. Patna
3. Gaya
4. Bhagalpur
5. Bihar Sharif
14. Haryana 1. Faridabad
2. Gurgaon
3. Panipat
4. Ambala
15. Assam 1. Guwahati
2. Tinsukia
3. Obalguri
4. Tangla
5. Goalpara
16. Odisha 1. Bhubaneswar
2. Cuttack
3. Rourkela
4. Sambalpur
5. Balasore
17. Himachal Pradesh 1. Shimla
18. Uttarakhand 1. Dehradoon
2. Haridwar
19. Jharkhand 1. Jamshedpur
2. Dhanbad
3. Ranchi
4. Roorkee
20. Sikkim 1. Gangtok
2. Pelling
3. Yuksam
21. Manipur 1. Bishnupur
2. Chandel


In these cities, special investment areas or special economic zones will be developed and government wants to attract foreign investment by providing tax incentives.

Commendable Goal
Indian government wants to develop the 100 smart cities by 2020. This goal is clubbed with the sustainability goals of World Bank. Experts feel that smart cities can further the growth of fast-growing Indian economy. And the road for this development is modernisation of existing cities and converting them into business hubs.

For quite a long time, Indian urbanisation has been perceived as a by-product of failed regional planning. Urban areas become viable only when they generate income that exceeds the expenditure over them. So far, this fundamental aspect has missed in thought of urban development. The new effort of the government has this important ingredient.

Benefits of Smart Cities
The smart cities must emerge as the cities with best of the class infrastructure, sustainable real estate, information management and markets. By implementing smart technologies, following benefits can be reaped -
1. Efficient Public Transport System
2. Sewage Water Recycling
3. Water Management Systems
4. Green Spaces
5. Well-developed Physical and Social Infrastructure
6. Employment through Special Economic Zones
7. Uninterrupted supply of goods and services
8. Improvement in life standards of the people
9. Effective Management of Natural Resources
10. Citizens’ Participation in the Governance
11. Conservation and Management of Environment
12. Smart Urban Governance
13. Sustainable Development
14. Global Networking
15. Creative Industries
16. Availability of modern communications network
17. E-Urban Governance
18. Industrialisation
19. Modernisation of Security System
Cooperation of US and Singapore
Global pension funds of Japan, Singapore and the USA are keen on participating in the development of 100 Indian smart cities. It is estimated that only Greater Noida alone will attract investments worth Rs. 30,000 crore. According to an estimate, if Kochi becomes a smart city, Kerala will emerge as an IT hub and about 1 lakh jobs will be created. This will develop other sectors such as media and real estate. Overall, development of Kochi will elevate growth rate of Kerala.

The US is keen to extend its expertise in the areas of railways systems, manufacturing of railway equipment, airports, traffic control systems, repair and maintenance of aircrafts, modernisation of security systems, integrated traffic management systems, urban safety systems and port development. Cooperation in smart cities development will take Indo-US cooperation to the next level.

Singapore government is also evincing interest to take part in development of smart cities. Besides, Singapore also wants to have lion share in development of capital city of newly-carved Andhra Pradesh state. After holding the talks, the Union Urban Development Minister Venkaiah Naidu and Singapore Prime Minister Lee Hsien Loong have decided to form a committee to oversee the cooperation in urban development. This committee will look into the topics – development of smart cities, infrastructural development in 500 cities and towns, urban housing development, development of the cities of historical and heritage importance. The Indian government has requested the Singapore government to also assist in the areas of urban e-governance and solid waste management, which play an important role in delivery of civic services.

Policies hold the key
The idea of developing cities with advanced infrastructure is highly commendable. However, these facilities must be of on par with world class. For this, there is need for policy flexibility and conducive tax systems which can attract foreign investment. To reach this goal, governments must work in selfless and non-partisan manner.

GST – Dawn of a New Era in Indirect Taxation

GST – Dawn of a New Era in Indirect Taxation
________________________________________
With its sincere efforts to introduce single Goods and Services Tax (GST) across the country the BJP-lead NDA government has opened a new chapter in taxation history of the country.
 The government is all set to usher in the Goods and Services Tax, which will abolish all the myriad taxes that are being levied on goods and services by the Central and State governments such as octroi, central sales tax, state sales tax, entry tax, stamp duty, telecom licence fees, turnover tax, tax on consumption or sale of electricity and taxes on transportation. If everything goes as per the plan, the GST will come into effect from April 1, 2016. Such introduction of GST will remove these multiple layers of taxation that is holding back the economic growth of the country.

What is GST?
GST is a comprehensive value added tax levied on the manufacture, sale and consumption of goods and services at a national level. Through a tax credit mechanism, this tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain.

The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, all the tax paid by the goods manufacturers and service providers will be borne by the end consumer as he is the last person in the supply chain.

According to experts, the GST will not only make the tax system simpler, but also help in increased compliance, improve tax revenues and boost India's economic development by breaking tax barriers between States and integrating India through a uniform tax rate, which is the case in most of the developed countries.

Legislative History of GST
In 2000, Vajpayee Government initiated discussion on GST by setting up an empowered committee. The committee was headed by Asim Dasgupta, the then Finance Minister of West Bengal. It was given the task of designing the GST model and overseeing the IT back-end preparedness for its rollout. In the 2007-08 budget speech, the erstwhile Union Finance Minister P. Chidambaram announced that the GST would be introduced from April 1, 2010 and that the Empowered Committee of State Finance Ministers would work with the Central Government to prepare a road map for introduction of the new tax regime.

As a follow up, the Empowered Committee of State Finance Ministers decided to set up a Joint Working Group on May 10, 2007, with the Adviser to the Union Finance Minister and the Member-Secretary of Empowered Committee as co-convenors and the concerned Joint Secretaries of the Department of Revenue of Union Finance Ministry and all Finance Secretaries of the states as its members. The Joint Working Group, after intensive internal discussions as well as interaction with experts and representatives of Chambers of Commerce and Industry, submitted its report to the Empowered Committee on November 19, 2007.

This report was then discussed in detail in the meeting of Empowered Committee on November 28, 2007. On the basis of this discussion and the written observations of the states, certain modifications were made, and a final version of the views of Empowered Committee at that stage was prepared and was sent to the Government of India on April 30, 2008. The comments of the Government of India were received on December 12, 2008 and were duly considered by the Empowered Committee on December 16, 2008.

Despite initial efforts, the UPA government could not push the new tax regime. The BJP has not only made GST a key point in its election manifesto, but also taken it seriously once it came into power. The central government is working towards full-fledged implementation of GST from April 1, 2016 onwards.

As part of this effort, the government has given its consent for a constitutional amendment on December 17, 2014 and introduced 122nd constitutional amendment bill in Lok Sabha. This bill requires 2/3 majority in both houses of the parliament and also assent of more than half of the state legislative assemblies.

Such constitution amendment is required as – the states shall be given legal power to collect GST once it is introduced. Any transfer of power from the centre to state requires a constitutional amendment.

Salient Features of GST
Following are some of the important features of the GST:
• The alcoholic liquors have been kept out of GST purview and petroleum products were included.
• Those products fall in the range of GST only from the date notified by the GST Council.
• About 2/3 GST Council members come from the states and any decision of council can be enforced only after it secures the assent of 75% of the members.
• If states think that they are losing the revenues due to GST implementation, they are empowered to impose 1% more tax than the accepted GST for the first two years.
• If states incur revenue losses due to introduction of GST, the centre will compensate 100% loss for first three years, 75% of the loss on the fourth yeas and 50% of the loss in the fifth year.
• Though petroleum products are part of the GST regime, there will be no tax levied on them and states can continue to levy their value-added tax. In the beginning, the centre will collect excise tax for some years.
• All the state and central taxes will be levied through a single tax. As a result several taxes will be abolished and the practice levying taxes on taxes – tax cascading - will also be abandoned.
Disputes about GST
Since the conception of idea, the GST has attracted a lot of disputes. The UPA government has introduced GST Bill in Lok Sabha in 2011, but lapsed. The NDA has come up a new bill. At this stage, the state governments have objected placing the petroleum products under the GST scope.

The centre has initiated talks with several state governments and finally withdrew its decision on petroleum products. The centre as well added Entry Tax in the new tax policy. These two measures have considerably bridged the gap between the policy stands of the states and the centre and cleared the major disputes, which have so far pulled down the uniform tax regime.

Importance of GST
The existing Value Added Tax regimes of states and centres are flawed. For example, the Central VAT or CENVAT which is levied by the central government hasn’t included the central taxes such as additional customs tax and surcharge. It hasn’t factored in the Value Added Chain of commercial distribution, which is below the manufacturing level. As a result, revenues of central government have come down drastically.

At state level, the luxury and entertainment taxes that are to be levied on the goods and services that are part of VAT are being collected separately. Besides that, the state VAT and CENVAT both are being levied on the value of goods and services. The GST has come into picture when the central government wanted to avoid this multiple taxation.

Model of GST
• While all the countries have single GST models, India has opted for Dual GST model, which empowers both the centre and states to collect the GST. Accordingly, the GST has been divided into two types – the Central GST, levied by the central government and the State GST, levied by the state governments and Union Territories. The state and central GST would be decided based on two factors – revenue and acceptability.
• The state and central GSTs are applicable to all the transactions of goods and services. This classification is used to divide the goods and services into the state and centre lists. While making the lists, the international GST methods and the traits of service sector of India are taken into consideration.
• Collection methods of both GSTs are the same. The collected revenue would be deposited in respective accounts.
• Since both the GSTs are treated separately, the tax that is being paid on the basis of central GST gets input tax credit. These rules are equally applicable to state GST too.
• The cross utilisation of input tax between the state and central GSTs is not allowed.
• Every tax payer would be issued PAN-based Tax Payer Identification Number. It has 13 digits and there are two additional numbers to recognise the state GST and one additional number recognise the central GST.
Technology of GST
Making full of technology has been one of the important ideas of GST framework. The government is working on a special IT platform for smooth implementation of the proposed Goods and Services Tax (GST). The IT special purpose vehicle (SPV) christened as GST N (Network) will be owned by three stakeholders—the centre, the states and the technology partner NSDL.

Benefits of GST
World over, GST has been implemented in over 150 countries. Almost all the developed countries have this advanced tax regime. Following are some of the important benefits the GST ushers in for Indian economy:

Simpler Tax Structure: As multiple taxes on a product or service are abolished and a simplified tax regime comes into place, the tax structure is expected to be much simpler and easier to understand. Paperwork will be easier and there will be a reduction in accounting complexities for businesses. A simple taxation regime can make the manufacturing sector more competitive and save both money and time. According to some estimates, the implementation of GST would push up GDP by 1%-2%. According to National Council for Applied Economic Research, implementation of GST would improve the GDP by 2% -2.5 %.

Increased Tax Revenues: A simpler tax structure can bring about greater compliance, thus increasing the number of tax payers. According to an estimation, the tax-rate under the proposed GST would come down, but the number of assesses would increase by 5-6 times. As a result, tax collection would go up despite the reduction in the tax rates. When the GST was introduced in New Zealand in 1986, it yielded revenues that were 45 per cent higher than anticipated, in large part due to improved compliance. In Canada, introduction of GST resulted in an increase in potential GDP by 24 per cent, consisting of 12.4 per cent increase in national income.

Competitive Pricing: GST will eliminate all other forms of indirect taxing. This will effectively mean that the tax paid by the final consumer will come down in most cases. According to Vijay Kelkar, President of 13th Finance Commission, GST will redistribute the tax burden between the manufacturing and service sectors and this leads to quantitative change tax regime. It will benefit not only the three sectors of the economy, but also ordinary consumers as prices would come down.

Boost to exports: When the cost of production falls in the domestic market, Indian goods and services will be more price-competitive in foreign markets. This can bode well for exporters, who compete with manufacturers abroad facing a lower cost structure. An estimate by National Council for Applied Economic Research, implantation of GST will boost annual exports by 10% -14%.

Fiscal Consolidation: The current state of the Indian economy demands fiscal consolidation and reduction in fiscal deficit. A recent report by CRISIL states that GST is the country’s best bet to achieve fiscal consolidation. As there is not much scope to reduce Government expenditure, increasing tax revenues is the best alternative to improve the fiscal health.

The tax rates of GSTs haven’t been finalised. However, irrespective of the tax rate, it is logical and apparent from examples of other countries that GST is a critical tax reform needed for any country.

Doubts over Implementation
Though the differences between the states and the centre have come down drastically after ongoing talks, which have resumed at the initiative of new government, still there are issues to be solved.
• Still some of the states are objecting bringing petroleum products and entry tax into the scope of GST.
• They are also demanding the exemption of real estate transactions and stamp duty from the scope of GST.
• The new Finance Minister hasn’t taken the recommendations of Empowered Committed of the State finance ministers into consideration. This may result in a new dispute.
It is yet to be seen how much time and effort are required to implement the GST from April 1, 2016.




Opinions on GST
GST is the biggest indirect tax reform after the independence. This tax regime would promote single market across the country. It improves the state finances and strengthens the country’s economy.
Arun Jaitley, the Union Finance Minister

Introduction of GST is a key fiscal reform. It will help India to grow as an economic super power.
Sachin Menon, KPMG CEO.

Price stabilisation will possible as there would no cascading of tax. This will improve the GDP of the country.
Saktikant Das, Revenue Secretary

Bringing the petroleum products and entry tax under the scope of GST is an encouraging development. It will certainly boost the investors’ confidence and will help attract more investments.
Prasanth Deshpande, Deloitte

GST will deprive the state governments of their revenue sources. The loss must be compensated in full.
Mamata Benerjee, Chief Minister, West Bengal.

Capitalism

Capitalism
Capitalism is a particular way of organizing the economic activities of a society. It can be defined in two dimension:
1) Nature of its class relation

Controlled and owned
                    Producer of means production

2) Central Mechanism of the economic Coordination
It is a provide free market
It is a mode of production in which capital in its various forms is the principal means of production
Characteristics of Capitalism:
• Production for market rather own use
• The separation of the producer from his means of production
• The concentration of the means of production in the hands of one class, the bourgeoisie
• Labour power is too commodity, it is sold or brought and mode of exchange is money in form of the wage
• Limited barter system
• Capitalist is controller of everything such as means of production process, choose of technique, quality of output and input, working condition, deciding wage, the arrangement for selling and buying of the output.
• Capitalism- increase competition-forced to capitalist to adopt new technique and improved machinery-reduce cost of production and accumulation of wealth in one hand
• Technical progress is most essential feature of the capitalism
• Capitalism- The division of labour-specialization of the task of productivity- unprecedented growth of output and productivity- development and growth
• Incentive of profit-main driving force
• With increasing desire for profit, the demand for labour was rising tremendously with the result that the merchant capitalists were hiring more and more workers.
• The final product as well as the entire profit was appropriated by the capitalist.



Capital:
Capital is an asset which can generate an income flow for its owner.
It could be Merchandise, sum of money any other money carrying interest
Capitalist Society:
The production of capital predominates, and dominates every other sort of production

Feudal Framework
Work was generally done in the homes of the producers and not under the factory shades of modern industries
Not full-scale machines, but simple tools were used for manufacturing. And many a times these factors of production were owned by the workers themselves.
factors of production were limited, manufacturing was also on a much smaller scale as compared to goods produced in factories
One man, i.e., the merchant entrepreneur, controlled the whole process from start to finish

Transition from feudalism to Capitalism
Exchange relation or external trade demolished the feudal mode of production
Inner contradiction like exploitation of the peasants by nobles
Unproductive use of the economic surplus like expenditure on war and labour were responsible for breakdown of the feudalism
Demographic Factors
Commerce and capital accumulated to be crucial link between risk of capitalism and decline of feudalism.

Mercantilism
In the 17th century, Europe was under the influence of a set of economic ideas and practice known as Mercantilism.
State controlled economy policy with aim to regulating trade and commerce as well as its factories and manufacturer with the primary purpose of ultimately to concentrate and wield political power by building fleets, equipping army etc.
Characteristics:
 The state policy should be formulated in such manner that the state should get maximum share of trade
 Precious metals (Gold and Silver) Desirable form of the national wealth, if nation did not possess it, the chief way to get them was trade.
 In order to accumulate precious metals, the government should ensure favorable balance of trade (Export> Import)
 To preserve and increase this balance, higher tariff should be imposed on the manufactured good, low tariff should be imposed on cheap raw material and bounties should be given on export.
 The state should take all possible efforts to promote export such as state run workshop, regulating guild etc.
 Colonies could prove to be useful for export market of manufacturing good and as source of supply of raw materials and if possible precious metals. If necessary, war must be waged against economic rivalry for acquisition and protection of the colonies.
Negative Impact of Capitalism in our Society

1) Human Suffering
Exploitation
Negative social externalities of technologies


Profit maximizing competition


While capitalism is an engine of growth, it is also inherent generate poverty, deprivation and marginalization.
Recommendation:
Capitalist economy-Material growth in one hand. So we need creation of the some sort of counter capitalism institution capable of neutralizing the destructive impact of capitalism
2) Inequality
Material Inequality and flourishing
Inequalities in access to interesting and challenging work
Destructive competition


3) Curtailment of Individual freedom and autonomy
The relations of domination within capitalist workplaces constitute pervasive restrictions on individual autonomy and self-direction.  At the core of the institution of private property is the power of owners to decide how their property is to be used.
4) violates liberal egalitarian principles of social justice





                                                                                         Violate the principle of equal opportunity for all

5) Inefficient in crucial respects
Public goods:



Under pricing for natural resources:



Negative Externalities:




6) Environmentally destructive
Capitalist firms face competitive pressures to reduce costs, and externalizing those costs on the environment is a good strategy of doing this. This pressure cannot be countered by the market itself; it requires some form of non-capitalist intervention either by the state or by organized social forces
Natural resources are systematically underpriced in the market since their value to people in the future is not registered in the dynamics of supply and demand in the present
7) Capitalist commodification threatens important values
Commodification of the certain things are seen by most people as monstrous violation of moral value of Human being
For instances:




8) Corrode community
Community is a social unit within which people are concerned for the well-being of other people and feel solidarity and obligations towards others.
Capitalism, as a system of organizing economic activity, has an intensely contradictory relation to community as a way of organizing social cooperation.
9) Capitalism limit democracy
Exclusion of democratic bodies from control over the allocation of investments
The inability of democratic bodies to control the movement of capital undermines the ability of democracy to set collective priorities over even those activities which capitalist firms themselves do not directly organize
Positive impact of Capitalism
1) Economic effects:
Increase production
Increase export
Become prominent industrial power in the world
Growth of urbanization
Capital formation


2) Social Effect:
The renaissance strengthened the middle class values; but the middle class could not exhibit its power in the society for long time. The industrial revolution unfolded the power of the middle class
3) Political Effect:
Various laws were enacted in order to protect the interest of both worker and manufacturer. E.g. Factory act-decided working hour minimum wage and other things
by Dipak Patel

Changes in Industrial Policy and its effect on growth

              Changes in Industrial Policy and its effect on growth.
Introduction
Policies are framed to achieve an end. Indian industrial polices framed to obtain faster economic growth through rapid industrialization and making economy self reliant as an end. Industrial sector of the country was in doldrums at the time of independence as it was not promoted but neglected during the two centuries of British Raj. Their exploitative policies framed to serve the interests of their motherland were the major cause of lack of industrialization in India. India was the supplier of raw material and consumer of the British goods. The desire of Indians to industrialize can be viewed from the perspective of the formation of Bombay Plan which was the first effort by prominent industrialists of the country to shape the industrial policy of the country through emphasis on heavy industries.
The beginning
Building on the Bombay plan, first concrete step towards industrialization was taken in for of Industrial policy Resolution 1948. It laid broad contours for the strategy of industrialization. The basic thrust was to lay the foundation of Mixed Economy whereby both the public as well as private sector would plan an important role in Industrial development. But in order to ensure the development according to the plan and PanditNehrus inclination towards Fabian Socialism government imposed heavy regulations on private sector in the form of licensing. Hence giving a larger role to public sector. Industrial(Development and Regulation) Act 1951 provided necessary teeth to the government to impose such restrictions. This paved the way for Industrial Policy Resolution 1956 which introduced the Patent licensing and in true terms was the first comprehensive statement on the strategy for industrial development in India.
Industrial Policy Resolution 1956 was shaped by Mahalanobis model of growth which emphasized on role of heavy industries for long term higher growth path. The resolutions widened the scope of public sector with the basic objective of accelerating economic growth and boost the process of industrialization. Policy also aimed at decreasing regional disparities through development of low industrial base and by giving impetus to small scale industries and cottage industries as they had a huge potential to provide mass employment. The policy stuck in line with the prevalent beliefs of the times i.e attaining self sufficiency. But the policy faced many implementation failures and as a result achieved exactly reverse of what it intended i.e regional disparities and concentration of economic power. Hence Monopolies Inquiry commission(MIC) was setup in 1964 to review various aspects pertaining to concentration of economic power and operation of industrial licensing under Industrial (Development and Regulation) Act 1951. The report while emphasizing that planned economy contributed to growth of industry blamed the licensing system which enabled the big business houses to obtain disproportionately large share of licenses which had led to pre-emptive and foreclosure of capacity. Subsequently, Dutt committee or Industrial licensing inquiry committee 1956 advised that big industrial houses must be given licenses only for setting up industries in core and heavy investment sectors.
Further in order to control the concentration of economic power Monopolistic and restrictive Trade Practices Act (MRTP) was introduced. Large industries were designated as MRTP companies and were eligible to participate in industries that were not reserved for government or small scale industries. Industrial licensing policy as well as Industrial policy 1973 both emphasized on the need for controlling the concentration of wealth and gave importance to small and medium scale industries. Continuing the favoritism to small scale industries the Industrial policy 1977 went a step ahead by introducing District industrial centers to provide support to SSI. It also introduces the new category called TINY SECTOR and considerably expanded the reserve list of small scale industries. But due to exogenic shocks (wars) as well as internal disturbances (emergency) and implementation problems the policy failed to have a significant effect. The soaring economic situation led to formulation of Industrial Policy1980 which sowed the seeds of liberalization.
The Industrial Policy1980 laid emphasis on promotion of competition in the domestic market, technical up gradation and modernization of industries along with the focus on optimum utilization of installed capacity for ensuring higher productivity, higher employment levels, removal of regional disparities etc. Policy measures were announced to revive the efficiency of PSU’s along with provisions of automatic expansion. The PSU’s were freed from a number of restrictions and was provided with greater autonomy. Major steps were taken by deregulating all industries except fot those specified in the negative list. The ‘limited liberalization’ initiated in 1980’s reached its summit with a landmark policy change in 1991.
Industrial policy 1991 slated a paradigm shift in the evaluation of industrial policy and development. Increase in Fiscal deficit and monetized deficit along with the global financial crises (Gulf war, oil crises0 played a major hand in beginning of the new chapter in the history of industrial policy and economic growth. The objective of the policy ‘was to maintain sustained growth in productivity, enhance gainful employment and achieve optimal utilization of human resources , to attain international competitiveness and transform India into a major player in global arena’. Clearly focus of the policy was to unshackle the industry from bureaucratic control. Important reforms brought about by the policy were:-
• Abolition of industrial licensing for most industries barring few which were important because of strategic and security concerns and social environmental issues.
• Significant role accorded to FDI. 51% FDI allowed in heavy industries and technologically important industries.
• Automatic approval to technological agreements for promotion of technology and hiring foreign technology expertise.
• Restructuring of PSU’s to increase productivity, prevent over staffing, technology up gradation and to increase rate of return.
• Disinvestment of PSU’s to increase resources and increase private participation.
• The policy realized that governmental intervention in investment decision of large companies through MRTP act has proved to be deterring for industrial growth. Hence thrust of the policy was more on controlling unfair and restrictive trade practices. Provisions restricting mergers, amalgamations and takeovers were replaced.

Since then the LPG reforms initiated in 1991 has been considerably expanded. Some of the measures are mentioned below.
• Competition commission of India was established in 2003 so as to prevent practices having adverse impact on competition in markets.
• A new North East Industrial Policy was introduced in 1997 for mitigating regional imbalances due to economic growth.
• Focus on disinvestment of PSU’s shifted from sale of minority stake to strategic stakes.
• Focus on PP with government playing a facilitative role rather than regulatory role.
• FDI limits increased in almost all the sectors including defense and telecommunications.
• Add all the new things that will happen till exam, :D

Conclusion

It is evident from the evolution of industrial policy that the governmental role in development has been extensive. The path to be pursued towards industrial development has evolved over time. In initial stages the government adopted an inward looking development policy which forced the Indian industry to have low and inferior technology and suffocated the growth of private sector. It prevented the domestic industries from rigorous competition and therefore resulted in low efficiency and limited its ability to expand employment opportunities. The focus on self reliance and lack of investment in R&D acted as barriers to technological development and hence led to the production of inferior quality of goods. The belief that foreign goods are superior to Indian goods is still prevalent today.

Having said that, the condition of the country after two centuries of exploitation and a traumatic separation must be kept in mind before evaluating the progress and approach of the successive industrial policy. Lack of entrepreneurial skills, low literacy levels, unskilled labour, absence of technology etc were significant features of Indian economy pre independence. In light of this, the plans and policies played an important role by cementing a solid base for the present industrial policies. As DrManmohan Singh puts it ‘on a long term view of Indian economic development over the last four decades, was far from being disastrous. The mediocrity of the outcome was mostly due to the extraordinary and far reaching economic shocks sustained by the economy during the decade of 1965-75’.

Inderjit Singh

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE :
-VINAY KUMAR THAMMI
 DEFINITION: it’s a system by which corporations are direscted and controlled.
 The system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of the many stakeholders in a company - these include its shareholders, management, customers, suppliers, financiers, government and the community.
 
THE ROLE OF CORPORATES IN INDIA:
1. Economic growth and development.
2. Government services and schemes implemnted via the publivate partnership(PPP) mode and hence has a mjor hand in the shaping of india’s future
3. Role in improvement of social indicators like education, health, water, basic services.
4. Role in imports and exports and fortifying the ties with our major trading partners
5. Role of corporates in disaster risk managemnet and post disater relief managemnet.
6. Corporate social responsibility to remove the inequalities and develop those areas not being concentrated by the government.
7. With the uhering in of LPG, corporates have  undeniable role in trade and commerce and basic service provider
8. With the governmnet moving away from its role in service providing by the way of disinvestments , corporates have a greater role to play.
9. Bridges the gender justice and encourages the merit and skill development.
10. Dividents of demography can be fructified with active intervention of corporates.
11. Helps in inclusive growth and financial inclusion, this being reflected in PC emphasizing its role in 12th five year plan.
12. Helps the economies in coping up with  the financial crisis

 The governance structure specifies the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and specifies the rules and procedures for making decisions in corporate affairs.
 PRINCIPLES OF CORPORATE GOVERNANCE: The Cadbury Report (UK, 1992), the Principles of Corporate Governance (OECD, 1998 and 2004), the Sarbanes-Oxley Act of 2002 (US, 2002) has speicified following principles;
• Rights and equitable treatment of shareholders
• Interests of other stakeholders
• Role and responsibilities of the board
• Integrity and ethical behavior
• Disclosure and transparency
 NEED FOR CORPORATE GOVERNANCE:
• The presence of an active group of independent directors on the board contributes a great deal towards ensuring confidence in the market.
• Corporate governance is known to be one of the criteria that foreign institutional investors are increasingly depending on when deciding on which companies to invest in.
• It is also known to have a positive influence on the share price of the company.
• Having a clean image on the corporate governance front could also make it easier for companies to source capital at more reasonable costs.
• It matters for both the clients (in the form of Improving access to capital, Improving performance) and the corporate (for value addition, Reducing investment risk, Avoiding reputational risk, Developing capital markets )
• Dynamic changing structure of ownership

 

• Importance of social responsibility
• Proliferation and ubiquitous corporate scams in corroboration with state and nonstate entities.
• Regulate acquisition, mergers, takeovers.
• Liberalization and its associated developments, i.e. deregulation, privatization and extensive financial liberalization has made it important.
• Greater role of corporate in the presnt world effecting wider array of public. Hence their regulation and control takes primacy over all others.


 EVOLUTION OF CORPORATE GOVERNANCE FRAMEWORK IN INDIA:
• Companies act of 1956 provided for basic framework for regulation of all the companies in india.
• SecuritiesContract Regulations Act, 1956 provided for rules and provisions to be complied by the companies.
• SEBI Act, 1992 empowered it to control the corporate in listings and recognitions and enforce discipline in the share markets.
• A separate ministry of corporate affairs has been set up in the government to look into such issues.
• A committee set up under the chairman ship of rahulbajaj by CII ,the CII released the code called “Desirable Corporate Governance”. It looked intovarious aspects of Corporate Governance and was first to criticize nominee directors and suggested dilution of government stake in companies.
• SEBI had set up a Commission under Kumarmanlagam Birla. This committee covered issues relating to protection of investor interest, promotion oftransparency, building international standards in terms of disclosure of information.
• The Department of Companies Affairs (DCA) modified the Companies Act, 1956. It undertakes periodic review and brings about amendments in the Companies Act, 1956. In 1999, the Act introduced the provision relating to nomination facilities for shareholders and share buybacks and for formation of Investor education and protection fund.
• The Department of Corporate Affairs constituted Naresh Chandra Committee in 2002. The committee talks extensively about the statuary auditor-company relationship, rotation of statutory audit firms/partners, procedure for appointment of auditors and determination of audit fees, true and fair statement of financial affairs of companies.
• SEBI appointed Narayan Murthy Committee in 2002. Its report mainly focuses on and makes mandatory recommendations regarding responsibilities of audit committee, quality of financial disclosure, requiring boards to assess and disclose business risks in the company’s annual reports.
• Clause 49 of the Listing Agreement : has enlisted following requirements for the corporate governance;
 Independence of board
 Independence of directors
 Duties and remuneration of board and directors
 Role of audit committee and auditors.
 Appointments and powers of independent directors.
• In December 2009, Ministry of Corporate Affairs specified Voluntary Guidelines on Corporate Governance. These guidelines provide for a set of good practices, which will 8help the companies to strengthen their internal governance processes and may be voluntarily adopted by the Indian Public companies.
• In March 2012, Ministry of Corporate Affairs constituted a committee under the Chairmanship of Mr. Adi Godrej, Chairman, Godrej Industries Limited, to formulate policy document on Corporate Governance. In September, 2012 the Committee submitted its document, specifying seventeen guiding principles on corporate governance.
• The Companies bill waiting to become companies act 2013, mandates the novel CORPORATE SOCIAL RESPONSIBILITY principle. This would enhance the corporate governance.




ISSUES IN CORPORATE GOVERNANCE:
• Value based corporate culture
• Holistic view
• Compliance with laws
• Disclosure, transparency, & accountability
• Corporate governance and human resource management
• Innovation
• Necessity of judicial reforms
• Globalization helping Indian companies to become global giants based on good corporate governance
• Lessons from Corporate failure
Inclusion of ethics in corporate governance is the important aspect in the improvement of corporate governance.
ETHICAL CORPORATE GOVERNANCE
1. shortest - definitions is, to quote Lord Moulton, "obedience to the unenforceable".
2. Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.
NEED FOR ETHICS IN BUSINESS:
• Ethics help make relationships mutually pleasant and productive- imbibes a sense of community among members- a sense of belongingness to society.
• Ethics are the guiding principles for any endeavour.
• To stop business malpractices
• Improve customers confidence
• Survival of business
• Safeguarding customer rights
• Protecting the interest of employees and shareholders
• Develop good relations
• Healthy competition and consumer satisfaction.


            RECENT INITIATIVES TO ENHANCE CORPORATE GOVERNANCE IN INDIA:
1. Green Initiatives in the Corporate Governance : The Ministry of corporate affairs has allowed paperless compliances by the companies and Registrar of Companies under the provisions of the Companies Act, 1956 .
2. Simplification in Procedures and Process under Companies Act, 1956
3. e-Payments in the Ministry: The payment of filing fee by the companies has been made completely online
4. adoption of International Financial Reporting Standards (IFRS)
5. Investor awareness programmes
6. The Companies Bill, 2012
7. Reorganisation of field offices.
8. Easy Exit Scheme, 2011
9. Setting up of Indian Institute of Corporate Affairs (IICA)
10. Limited Liability Partnership Act
11. National Company Law Tribunal (NCLT)
12. New  Bills on Multi State Societies and Multi State Partnerships
13. Various orientation programmes for Directors throughCentres of Excellence, seminars and conferences topropagate propagate the need for following following good corporate corporategovernance practices are being organized.
14. Setting up of NFCG in partnership withstakeholders – CII, ICAI,  ICSI& FICCI.
15. Setting up of Investor Education and ProtectionFund.
16. Amendments to the Acts governing three professional institutes(ICAI/ICSI/ICWAI) (ICAI/ICSI/ICWAI) with a view to strengthen strengthen the disciplinary disciplinarymechanism and bring transparency in their working.
17. Empowering SEBI under the SEBI – Clause 49 for greater regulation and monitoring of companies
18. Mandatory corporate social responsibility (CSR) under the companies act 2013.


THE ULTIMATE AIM OF CORPORATE GOVERNANCE IS FOR A PROSPEROUS INDIA








 BIBLIOGRAPHY
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1357290354602.pdf
http://psrcentre.org/images/extraimages/312018.pdf
Wikipedia
Voluntary Guidelines on Corporate Governance, The Ministry of Corporate Affairs, December 2009


             By,
                  Vinay kumar thammi,