CURRENT AFFAIRS (13.06.

2013)
1. UPA all set to push for ordinance on Food Bill today Ignoring concerns expressed by allies and civil society groups, the United Progressive Alliance government is all set to push for an ordinance on the Food Security Bill. The revised Bill along with Food Ministrys 81 amendments will be tabled for approval in the Union Cabinet meeting on Thursday. Food Minister K.V. Thomas and key ally and NCP chief Sharad Pawar are known to have expressed concern over taking the ordinance route. Some of the allies have also let it be known that the proposal for an ordinance was moved during the previous Cabinet meeting without prior consultation. The Cabinet however, did not take it up. It is learnt that Mr. Thomas met Congress president Sonia Gandhi last week after which he spoke to UPA allies, including Mr. Pawar, Rashtriya Lok Dal chief Ajit Singh and Farooq Abdullah of the National Conference to get them on board. Both Mr. Pawar and Mr. Ajit Singh have made it a point to attend Thursdays Cabinet meeting. Despite his reservations, Mr. Pawar stated recently that he was not against the Bill, indicating his willingness to go along with whatever the Cabinet decides. The government has justified an ordinance on the ground that the Opposition had thwarted all its attempts to bring the Bill in Parliament (although the revised Bill was brought on the last day of the budget session) and that the rollout would take at least six months. There is also a view that in case the principal Opposition party, the Bharatiya Janata Party, does not allow Parliament to function and the ordinance cannot be ratified by Parliament, then the UPA will go to the polls with the claim that the BJP did not allow a rightsbased bill to be passed. Parties stand On its part, the BJP wants to show its support for the Bill by seeking an early monsoon session or a special session to debate it. The Left parties will move amendments mainly for a universal public distribution system. The Trinamool Congress, Biju Janata Dal and All-India Anna Dravida Munnetra Kazhagam will also move amendments. The Samajwadi Party, which supports the UPA from outside, has opposed the Bill terming it anti-farmer. However, it appears that the UPA, particularly the Congress, wants to go it alone, this being an election promise. Already some of the States have enacted rights-based food Bill and several others are providing foodgrain through the public distribution system. The Food Bill seeks to provide rice at Rs. 3 per kg, wheat at Rs. 2 per kg and millets at
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Re. 1 per kg per month to 67 per cent of the population to be identified by the State governments. Each beneficiary will be entitled to 5 kg per month as against 35 kg per household at present. 2. Stunting a country Indias paradox of fast economic growth across several years and chronic malnutrition in a significant section of the population is well known. It has vast numbers of stunted children whose nutritional status is so poor that infectious diseases increase the danger of death. About 34 per cent of girls aged 15 to 19 are stunted in the country, according to a major review of global undernutrition by The Lancet . These adolescents, part of the post-liberalisation generation, have benefited the least from economic growth. Without active intervention to improve their access to appropriate food, the young women are bound to face complications during pregnancy and many are certain to deliver stunted babies, continuing the distressing cycle. What these insights underscore is the need for the political class to make the struggle against malnutrition a national priority. It is evident that in the absence of scaled-up programmes to build the health of the child and the teenager, and to provide opportunities for education and skill-building, India cannot really reap the so-called demographic dividend of a large young population. Neither can it substantially reduce its shameful levels of maternal and child mortality, attributable in good measure to lack of nutrients in the diet. A quarter of all maternal deaths occur due to anaemia, and 19 per cent due to calcium deficiency, both of which cause often-fatal complications at childbirth, as The Lancet data confirm. Although India has some intervention programmes in place to provide iron supplements to women, there is evidence to suggest that this has not been scaled up in rural areas. Supplemental nutrition efforts are also hampered by superstition and rumour about effects on unborn children. These are communication challenges that the National Rural Health Mission must pursue vigorously. The broader task would be to improve universal access to nutrients through a basket of commodities including pulses, fruits and vegetables that can be supplied through a variety of channels. Clearly, the Public Distribution System and community-run not-for-profit institutions would form the backbone of such an effort. What is often forgotten in the discussion is the importance of early childhood nutrition crucially, the first 1,000 days for life-long health. Given this causality, the UPA government should have come up with a Food Security law that provides universal access to nutritious food, and such legislation should have received wide support across the political spectrum. Regrettably, most politicians

have failed to grasp the importance of this social investment. It is now for civil society to press the agenda 3. An innovation that changed the poll landscape The Election Commission of India has emerged, over the last 63 years, as one of our most respected institutions. Over these six decades, this constitutional body has developed new skills almost with each general election, and latterly even with each election to the State Assemblies, to remain not static but evolutionary; constantly striving to widen the inclusive and egalitarian framework, aiming thus for the widening of the voting processes. India is a caste-based society with deeply rooted social hierarchies. However, universal adult franchise proved to be a gamechanger, for each vote carries equal value. Democratic elections have enabled the traditionally marginalised groups to take the democratic route towards empowerment. Indeed, the process of democratisation of castes has turned out to be the most significant social development of 20th century India. Both political parties and individual candidates have had to accept a policy of reconciliation rather than confrontation. The constitutional provision reserving seats for the Scheduled Castes and the Scheduled Tribes has given them a minimum guarantee of participation in governance. From the first election itself, this worked wonders in levelling the playing field, which in turn led India to witness the growth of major leaders from the erstwhile marginalised sections occupying key elected positions in many States. Largest liberal democracy By virtue of holding its first national election in 1951-52, India achieved the status of the worlds largest liberal democracy. Dr. B.R. Ambedkar and the other founding fathers believed universal suffrage was a necessary pre-condition, although Indias literacy level was an abysmal 16 per cent in 1947. The succ ess of that election, which was also its first marker of equality, belied the many sceptics who felt that the electoral exercise was doomed to failure. A natural extension of this basic approach was the inclusion of universal adult franchise with the raison detre that man or woman, rich or poor, upper caste or lower, irrespective of creed or religion, the voter was brought through the electoral roll on to a common platform. The age-old inequalities were, at one stroke, sought to be eliminated or at least substantially diminished by conferring political equality. This amongst other measures reflected a very enlightened, mature and significantly bold vision, particularly if we recall that in many countries different groups, especially women, had to struggle long and hard to obtain franchise.
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Anticipating that the caste based social hierarchy would play a restricting role in ensuring the equality of citizenship rights in the elections, the lawmakers made specific provisions in law. Accordingly, undue influence at elections is an electoral offence under Section 171C of the Indian Penal Code. Any voluntary interference or attempt at interfering with the free exercise of any electoral right constitutes the crime of undue influence at an election. Section 123 (2) of the Representation of Peoples Act 1951 defines any direct or indirect interference with the free exercise of any electoral right as a corrupt practice. Special provisions were also made to safeguard the interests of voters belonging to the Scheduled Castes and the Scheduled Tribes. Thus, forcing or intimidating a member of a Scheduled Caste or Tribe not to vote or to vote (for) a particular candidate or to vote in a manner other than that provided by law is an offence under Section (3) (1) (v) of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989. Notwithstanding these legal provisions, almost every election after Independence witnessed violence, threats and intimidation of SC voters. Reporting on the Indian elections a journalist of Associated Press was to write: Armies formed by local politicians have intimidated villages during every election in the underdeveloped farmland of northern India ... on election day, hired thugs prevent many voters from reaching polling stations. Other voters arrive to find their ballots have already been cast (Arthur Max, Private Armies, Associated Press, April 12, 1996) The conduct of elections in Indias largest state, Uttar Pradesh, has always been one of the Commissions biggest challenges, given its size and social complexities. While preparing for the 2007 Assembly elections, the Commission used technology and its now computerised rolls to find out which areas (townships, villages and tolas) had not voted for long periods in previous elections. This gave us many valuable insights on how to approach this mammoth problem. Our preparation began with a bye-election to the Aurai Assembly in December 2005. During the campaign period, voters from the weaker sections complained to the Election Observer that in the past they had difficulties in accessing the polling stations due to intimidation by local musclemen. The observer brought this to the notice of R. Balakrishnan, then Deputy Election Commissioner in charge of Uttar Pradesh. On the forenoon of the poll day, the observer noticed that in one particular polling station, voters from the weaker sections had not come to vote. The observer went to the particular village and saw a few hundred voters being prevented by a handful of armed men from casting their votes. Taking the help of the local police, the voters were enabled to proceed to the polling station. This was the observers report: Towards end of the polling, I visited a few villages where there had been complaints of stopping of Dalit voters. There appears to be some
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truth in such allegations. I met several Dalit voters who showed me their I cards issued by the Election Commission and complained they had been unable to vote because the dominant castes had warned them not to proceed to the polling booths. There was no intimidation in or near the polling booths as such ... No immediate remedy in this regard suggests itself, since it is not possible for the electoral officers or police to patrol the villages so intensively as to provide security/escort to every voter from his doorstep to the polling booth. The same situation would be faced even if a re-poll were to be ordered in such areas. DEC Balakrishnan submitted the details of these incidents to the Commission. Clearly, the traditional approach of safeguarding only the 100-metre periphery around a polling station would no longer suffice. Here then lay the genesis of a search for an institutional method to identify the areas likely to be affected by such threats as also to track the people who are likely to create such disturbances. This meant stepping out of the traditional crease to address the problem at source. A detailed concept paper emerged which the Commission endorsed. From this was born a new methodology which we named Vulnerability Mapping, borrowing the term from Disaster Management. Now we aimed at the identification of habitats and segments of voters vulnerable to intimidation in the past, with a view to taking advance measures to prevent the commission of such offences. This method brought a new focus to ensure clear accountability, give visibility to institutional intervention and send a no-nonsense message about the seriousness of elections. It proved to be an effective confidence building measure. A watershed In the process of mapping vulnerability, the election managers during the mammoth 2007 U.P. elections identified as many as 27,831 polling stations (out of 1,10,763 polling stations spread over 403 constituencies) as vulnerable on the basis of past incidents and current feedback. As many as 15,000 habitats were identified as especially vulnerable. More than one lakh people were identified as potential trouble makers. Proper accountability was created within the security system to monitor them, and various preventive measures were initiated under preventive section of law. Typically, we found that a vulnerable voter had to walk through areas of intimidation to cast a vote. We then created auxiliary polling stations and parked them in at the vulnerable pockets themselves. Now there was no need to walk through hostile territory. Several hundred new auxiliary polling stations proved to be a game-changer which is why I termed the 2007 U.P. election a watershed.

The impact was clearly visible on poll day. The ECI observers did a marvellous job. They tracked every vulnerable location. As the electoral administration had identified the potential trouble makers by name and forewarned them there against violence, there was no threat or intimidation on the poll day. The U.P. elections, for the first time in years, were violence-free. Vidya Subrahmaniam, writing in Frontline on May 19, 2007, summed it up thus: In Lucknow, where I start my journey, local journalists breathlessly talk about an election that has not been this free and fair in decades. They eulogise the Election Commission of India for making this possible and speak of Dalits in the remotest villages trooping out to cast their votes in many cases for the first time since Independence. This is a miracle, they say.Vulnerability mapping ensured accountability, gave visibility to the Election Commissions work, and sent a no-nonsense message to trouble makers 4. The politics of Myanmar versus Burma A three-day conference of the World Economic Forum for East Asia concluded last week in Naypyitaw. It was the first time Myanmar had hosted an international gathering of such magnitude. It was attended by around 900 participants from over 50 countries, including political and business leaders. Myanmar President Thein Sein opened the forum. Though the forums objective was to discuss the issues facing developing economies in the region, a great interest in the socio-economic reforms of the host country was quite evident. On the sidelines of the forum, a globally televised BBC debate was held on the subject, Myanmar: What Future? Panellists included Opposition leader Aung San Suu Kyi, U Soe Thein, Minister of the Presidents Office, and Zin Mar Aung, ex-poli tical prisoner and activist.Besides other issues, the debate was divided on the very name of the country. Though they all refer to the same country, some used Burma and others used Myanmar. For example, the BBC moderator, Aung San Suu Kyi, and Zin Mar Aung preferred Burma, while Minister Soe Thein and the majority of questioners from the audience used Myanmar. Does the name matter in Myanmar politics? Is there any significance of using one over the other? And why does this issue still linger 13 years after the country was renamed in 1989? Circumstances First of all, the issue is historical as well as political. The controversy surrounding the name started with the political circumstances under which it was renamed. It was the State Law and Order Restoration Council military government that renamed the country from Union of Burma to Union of Myanmar. Similarly, the
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name of the capital city was changed from Rangoon to Yangon. During British rule, the name of the country was Burma. At the 1947 Panglong conference, and in the preceding months, the majority Burman group led by General Aung San made several attempts to convince the frontier people, who are today designated as the countrys ethnic minorities, to join the Union. Since British colonial administration, there has been deep mistrust toward the majority Burman group by other ethnic nationalities. It was under such circumstances that the term Union of Burma was coined in an attempt to give a sense of unity and belonging to the diverse ethnic groups under a new independent Burma. Had the frontier people not agreed to join the Union of Burma, the countrys independence could have been either delayed or only territories occupied by the Burman ethnic group may have been recognised as Burma by the British. On past and people There are two basic arguments about the name change. First, the military leaders argue that as the name Burma was given or used by the colonial rulers, it should be replaced with an indigenous name. This also implies that using a different name symbolises freedom from the legacy of colonial administration. The second argument is that the term Burma refers to only one group of people and the usage of Myanmar is inclusive of all ethnic nationalities of the country. In Burmese or Myanmar language, Burma is known as either Myanma or Bama. Myanma is the written, literary name of the country, while Bama is the spoken name of the country. In terms of meaning, there is no difference. Both names still refer to the majority group of people in the country, who are also referred to as Burmans. Though the name was changed in 1989, the people of Myanmar and the international community continue to use two different names. For example, most democracy activists and some Western countries, particularly the United States and Great Britain, continue to use the old name. On the other hand, the Myanmar government and its supporters and sympathisers, and a vast majority of the international community, including the U.N., use the new name. Those who prefer Burma, argue that it was an undemocratic government that changed the countrys name without the consent or mandate of the people. They also argue that there is no fundamental difference between the two names, since both still refer to one group of people. To them, the name change should only happen if a democratically elected government decides to do so with majority approval in Parliament. They also argue that the term Burma is easier to pronounce and remember. However, with the gradual democratic reforms in the country, the

new name has become more popular than ever before and the international community has gradually recognised it. Democracy and name If the current pattern of democratic transition continues and the international community establishes normal diplomatic relations with the country, it is likely that the new name will eventually be used for all official diplomatic dealings, including by the U.S. and the United Kingdom. Nevertheless, the old name may not easily be forgotten or abandoned by some in Myanmar society, especially among the older generation and within the expatriate community. Until a democratically elected government officially mandates and recognises the name change permanently, the countrys old name will still linger in Myanmar politics in the foreseeable future. Since the issue is historical as well as political, the usage of one name over the other still carries political significance although both names basically refer to one particular group of people. Even 13 years after its renaming, Burmans continue to be divided over how to call their country 5. Giving teeth to the serious fraud office The recent scam involving the Saradha group of companies has once again brought into sharp focus the need for effective investigation and prosecution of corporate fraud. The Saradha group allegedly utilised a consortium of companies with multiple cross linkages to set in motion an elaborate Ponzi scheme. The scheme was touted as a realty business and there were frequent changes in its operational strategy in an attempt to avoid scrutiny by regulatory authorities. In addition to the Saradha group, it is suspected that several companies are currently running fraudulent chit fund schemes in West Bengal. In an attempt to rein in the operations of such companies, the Central government has announced a probe by the Serious Fraud Investigation Office (SFIO). The genesis The SFIO was established in 2003, as a body of the Ministry of Corporate Affairs, on the basis of the recommendations in the Naresh Chandra Committee Report on Corporate Audit and Governance. The committee felt that there was a need to establish a multi-disciplinary team that not only uncovers the fraud, but is able to direct and supervise prosecutions under various economic legislations through appropriate agencies. As per its charter, the SFIO is to investigate those cases that are complex in nature and involve inter-departmental and multi-disciplinary ramifications. Accordingly, the staff of the SFIO includes experts in varied fields
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such as accountancy, forensic auditing, investigation, law, taxation, information technology, capital markets and financial transactions. Among the high profile cases investigated by the SFIO, the Satyam scandal is perhaps the most notorious. The SFIO has also probed the alleged Rs.870 crore fraud in Reebok India. It has also spearheaded the investigation into Sesa Goas alleged over and under invoicing of exports and imports worth over Rs.1,000 crore. Under the Companies Bill Despite the tough remit set for the SFIO and the complex nature of the cases handled by it, the functioning of this non-statutory body is hemmed in on many sides. Its powers are largely restricted to examination of documents and it does not have the powers of search, seizure and arrest. The SFIO also operates within an elaborate matrix of investigating bodies with overlapping authority over such cases; the CBI, the Central Economic Intelligence Bureau, the Reserve Bank of India and the Securities and Exchange Board of India (SEBI) being some of the other bodies which have also been granted investigative roles and powers. Keeping these shortcomings in mind, the Companies Bill 2012 (which was passed in Parliament in December last year) has attempted to strengthen the SFIO. In its new avatar , the SFIO will be a statutory body with the ability to initiate prosecution when directed by the Central government. The investigation report filed by the SFIO with the criminal court, for framing of charges, will be deemed to be a report filed by the police under the Code of Criminal Procedure. This measure will avoid duplication of duties and delay. The director of the SFIO will have the power to arrest persons if he has reason to believe that such persons are guilty of certain offences, including fraud under the Companies Bill. An investigator of the SFIO will have the powers vested in a civil court under the Code of Civil Procedure with respect to discovery and production of books of accounts and other documents, the inspection of books, registers and other documents and the summoning of and enforcing of attendance of persons. Significantly, the Bill attempts to pre-empt the confusion caused by multiple agencies investigating the same case. Where a case has been assigned to the SFIO, no other investigating agency of the Central or the State government is to proceed with investigation. Further, any other investigating agency, State government, police or income tax authority having information or documents with respect to an offence being investigated by the SFIO is required to make such documents available to the SFIO.

Adequate? While the new framework is a definite step forward, the dependence on the Central government to institute investigations is of some concern. Under the Companies Bill, in order for the SFIO to investigate a company, the Central government must be of the opinion that such investigation is necessary. Additionally, the SFIO may initiate prosecution only when the Central government directs it to do so. The alleged involvement of politicos in the Saradha scam, as well as the recent uproar over the governments interference with the CBI investigation into Coalgate, sharply highlights the danger of such dependence. Further, the efficacy of the SFIO will also be determined largely by the adequacy of resources and manpower devoted to it by the Central government. It is interesting to note that SEBI also has the powers of a civil court with respect to production of documents powers which have been granted to the SFIO under the Companies Bill. The Saradha group, nevertheless, allegedly avoided providing pertinent information to SEBI by doing a document dump of cartons of irrelevant information. The absence of adequate resources and manpower could, thus, quite easily thwart the new SFIO. It remains to be seen whether SFIOs authority to arrest will act as a sufficient deterrent to such attempts to cloud the investigation. One must also keep in mind that the changes contemplated by the Companies Bill are of import only after a scandal breaks out. These measures are not pre-emptive in nature and they are not likely to have a significant effect on the stage at which the government becomes aware of a fraudulent scheme in motion. There is, therefore, an imperative need to strengthen scrutiny at the level of the Registrar of Companies the first level of detecting the problem. A company is required to submit various documents to the Registrar as a part of the compliance requirements under law. An SFIO investigation may be based on a Registrars report that a companys affairs are being carried out in an unsatisfactory manner. It is also essential to create linkages between complaints made at the first instance by private individuals with the police and other regulatory bodies, on the one hand, and investigative bodies such as the SFIO, on the other hand. Effective corporate governance is, thus, predicated on coordinated action of the various enforcement agencies. While recent attempts to strengthen the investigation agency probing major fraud are welcome, its dependence on the Central government to initiate action is cause for concern

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6. Women seeking ante-natal care more likely to go in for ultrasound scan: study Ultrasonography is not done only for sex selection Contrary to the general belief that a majority of pregnant women undergo ultrasonography (USG) only for sex selection, a study shows that 80 per cent of them have given live birth and the remaining had either undergone a pregnancy loss or both live births and abortion. Only 5.4 per cent women who had reported at least one pregnancy loss including still birth, spontaneous abortion and induced abortion, had also undergone an ultrasound test during the reference period. Statistics also revealed that women seeking ante-natal care and those who were alerted for any pregnancy complications were more likely to undergo USG test. Women who were alerted for any complications were significantly more likely to have undergone an ultrasound test. The analysis has also shown a higher likelihood of use of ultrasound among women with only one daughter compared to those having only one son. In a paper Understanding the role of ultrasound in improving maternal care in India, Sushanta K. Banerjee of Ipas -India and Sanjay K. Mohanty of International Institute for Population Sciences have examined the linkages between pregnancy loss (including induced abortions, spontaneous abortions and still births) using the data of the third round of National Family Health Survey, and concluded that increased use in USG is predominantly due to increase in prenatal care and to identify pregnancy complications. The study is based on 41,376 women who were pregnant anytime during the past five years. Among them, 80 per cent had given one or more births in the given period without any pregnancy loss while 20 per cent had at least one pregnancy loss. No pregnancy loss Of those who had at least one USG for any of their pregnancies during the reference period, 80 per cent had one (51 per cent) or more (29 per cent) live births without any pregnancy loss, 9 per cent had one live birth and one loss, 5 per cent had one loss and two or more live births, another five per cent had one or more loss and no birth and one had two or more losses and one or two more births. In other words, the majority of the women who had undergone at least one USG had at least one live birth in the reference period. Among women who had only a live birth, 29 per cent had a USG done compared to 36 per cent among those who had at least one loss or both live births and loss. However, the analysis based on NFHS data has some limitations as it cannot be identified whether the loss is due to induced abortion, spontaneous or still birth.
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On doctors advice Results also show that among women who had given live birth and did not have any loss, a significantly higher proportion (45 per cent) of them availed the USG test. These women were not seeking USG for identification of sex of the foetus but were possibly interested in its progress based on a medical practition ers advice. An analysis of 16,000 women also found that among those who were alerted for pregnancy complications like vaginal bleeding, 64 per cent of them were likely to go for USG compared to 38 per cent who were not alerted. Similarly, those who were alerted to any kind of three complications (vaginal bleeding, convulsions but not due to fever and prolonged labour), 60 per cent had undergone USG compared to 37 per cent of their counterparts who were not alerted for any complications. 7. Child domestic work suffers from statistical invisibility: ILO The world over, around 15 million children work as paid or unpaid domestic workers, of which at least 10.5 million are below the legal minimum age, according to an International Labour Organization (ILO) report titled Ending Child Labour in Domestic Work , released on the occasion of World Day Against Child Labour. These children work under conditions either hazardous or tantamount to slavery says the report. Not surprisingly, in these slavery-like conditions where physical, mental and sexual abuse is rampant the report establishes through individual case studies from across the world girls far outnumber boys. In fact, 71.3 per cent of children employed between the ages of five and 17 in domestic work are girls (2008 statistics). The report looks at the many factors that contribute to the abusive situation around domestic child labour; the vulnerability to physical and sexual abuse, the impact on health, how they move far from their homes and families leading to isolation and discrimination. Collection of data Significantly, the ILO observes that this sector in general suffers from statistical invisibility, and emphasises the need to work toward collecting data on child labour, an imperative to policy-making. This, it notes, has hindered action in this sector. The ILO recommends stepping up research efforts particularly by public institutions to improve methodologies to capture and monitor the number of child domestic workers and working conditions, with a focus on those at the bottom rung. The report notes that worldwide only 10 per cent of all domestic workers are covered by general labour legislation, while a fourth are completely excluded from national labour legislations. As a policy instrument, it suggests that
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the inclusion of domestic workers in labour law can make a su bstantial contribution to the creation of decent work opportunities and the professionalisation of the growing domestic workers sector. Education key The ILO reiterates the role of governments in providing more accessible and quality education, and ensuring this is a realistic and attractive option for those at risk of labour situations and their families. The report states: Measures to improve education and make it more accessible range from building schools to the reduction or elimination of direct and indirect costs, improved teacher training and curriculum reform. It adds that a common theme among all interventions to date has been linking trade union child labour efforts to broader national and international initiatives to ensure education for all and improve education quality. In its recommendations, the ILO calls for increased regulation through inspections, more labour laws that deal with legal working age and working conditions, and punitive action. 8. Solar Mission-II projects to have 75% local content Bidding for 750 MW to start next month The Government has decided that 75 per cent of 750 MW solar projects, to be offered under the second phase of Jawaharlal Nehru National Solar Mission, will be built with local content. This has put to rest all uncertainties pertaining to the use of local content in the Mission because of US pressure. We want to encourage domestic industry also. The bidding would start in the coming month, said Farooq Abdullah, Ministry of New & Renewable Energy (MNRE). The US has dragged India to the World Trade Organisation (WTO) over mandating of domestic sourcing in the first phase of the Mission. WIND POWER The MNRE would move a proposal to the Cabinet to re-instate accelerated depreciation benefit to wind power generators. We hope in the next couple of weeks, it will go to the Cabinet. We want to give accelerated depreciation for two years. At the same time, Generation Based Incentive Scheme would continue for a longer period, said Abdullah. The scrapping of accelerat ed depreciation benefit to wind power generators has hit the competitiveness of small and medium enterprises sector, the largest investors in captive wind power projects, according to the Indian Wind Power Association.
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Frances Solairedirect unit Solairedirect Energy India Private Ltd, the subsidiary of Paris-based Solairedirect Group, on Wednesday announced the commissioning of its 5-MW solar park in Rajasthan. This is the first project of the European company in India. We have bid under Punjab policy for 20 MW. The bids are likely to open on Friday and we expect our bid to be competitive, said Gaurav Sood, Managing Director for the Indian unit. We are also looking to sign power purchase agreements with private developers, Sood told mediapersons. The company bagged the Rajasthan project under Jawaharlal Nehru National Solar Mission in December 2011 at Rs 7.49 per kWh. 9. Patnaik seeks special status for Odisha; slams Centres political discrimination After Bihar Chief Ministers show of strength in Delhis Ramlila Grounds in March, Odisha Chief Minister Naveen Patnaik too, brought his demand for special status for the State at the Centres doors on Wednesday. Addressing a rally of thousands of Biju Janata Dal (BJD) workers here, Patnaik accused the Manmohan Singh-led UPA Government of following a policy of political discrimination in grant of Central assistance and reiterated his demand for special category status. The UPA Government is following different policies for different States, Patnaik said, alleging that the self-interest of the Congress party had become the sole criteria for Central assistance ignoring the just demands of States like Odisha that fulfil all the criteria required for grant of special status. The Central Government has been giving funds to different States on political considerations. Should the money paid by crores of taxpayers be used for a narrow interest of a political party? he said. Pegging his demand for special status with Oriya dignity and aspirations of the four crore people of the State, Patnaik attacked both the Congress and the BJP in Odisha for describing the Delhi gathering as an amusement rally. Speaking in Odiya, which he said to be not too comfortable with, Patnaik also invoked the cause of the poor tribals living in and around mining areas and blamed the Centre for their neglect. I strongly believe if Odisha is given special category status, we can root out poverty from Odisha in less than a decade, he added. 10. French nuclear reactors to be tested in China prior to supply for Jaitapur The nuclear reactors of French company Areva will go into production first in China before being supplied to Jaitapur in Maharashtra. Areva will supply China
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two reactors that are under construction, said French Ambassador to India Francois Richier. You will see for yourself how safe the reactors are when they work in China, he said to clear apprehensions on safety. France is also going to build similar reactors in Jaitapur. He was speaking to members of the CII here in an interactive session. The Jaitapur Nuclear Power Project in Maharashtra comprises 6X1,650 MW light water reactors to be built in cooperation with France to generate 9,900 MW of power. If built, it will be one of the largest nuclear power generating stations in the world by net electrical power rating. Areva and Nuclear Power Corporation of India have signed a multi-billion contract worth around $9.3 billion for the project. There is no French nuclear equipment or reactor in India. This will come in the future but is still in the concept stage, he said. This will lead to joint collaboration in future in nuclear energy, which will be critical for Indias power needs, he said. Negotiations on supply of reactors for the Jaitapur plant are going on as several issues are stake. This includes the price of equipment and financial details of the project that is valued at close to $10 billion. It takes time, but we are confident that at the end, this will fly. It (deal) should be finalised in a matter of months, but how many, I do not know. But they (officials) are working hard, he said. Richier said that the reactors that are supposed to be supplied to Jaitapur nuclear power plant are Fukushima resistant, provided some things are modified. However, this no big deal, he said. France gets nearly 80 per cent of its electricity from nuclear power. And after the Fukushima incident in Japan, in which the reactors were damaged due to a Tsunami, the French government has decided to audit all its reactors on safety, he told newspersons on the sidelines of the meeting. Maharashtra is in need of more electricity and nuclear reactors will provide it in bulk and cheap. Each mode of power generation comes with its own risks but nuclear power is the safest in the world, he insisted. The Areva Group, which reported annual revenues of 9.342 billion for 2012, has delivered 98 nuclear reactors worldwide, and four of its EPR reactors are under construction at Olkiluoto 3 (Finland), Flamanville 3 (France), Taishan 1 and 2 (China), and one is planned at Hinkley Point in the UK. On Tamil Nadu, Richier said that the State was a hot spot for French companies to set up their operations. There are nearly 75 CEOs of French companies located in the State. In India, France has a total investment worth $18 billion of which nearly 25 per cent is in Tamil Nadu, he said. 11. GST won't be a game-changer, only a name changer The Empowered Committee of State Finance Ministers' design squeezes out the politics from the new tax but makes it unacceptable as an alternative to the existing structure

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"There is no politics in GST... It will not fetch any votes to any political party." This is how Sushil Kumar Modi, Bihar's finance minister and chair of the Empowered Committee (EC) of State Finance Ministers, summarised his description of the design of the Goods and Services Tax (GST) at a recent meeting with national chambers and tax professionals. The price he had to pay to win consensus of the foot-dragging states was to make it so banal and insipid that it would largely preserve the status quo of the taxes that they levy. He might succeed in making GST inevitable, but it will not be a "game-changer", only a "name changer". It is not something that will set the Indian economy free from the cage of the Hindu rate of growth. Under the EC model, GST will have two components: one levied by the Centre (CGST), and the other by the states (SGST). Both will apply to a common base of goods and services. Goods will be classified in four baskets: exempt from tax, taxable at a nominal rate (mainly precious metals taxable at one to two per cent), taxable at the concessional rate, and taxable at the standard rate. The base for goods, as well as their division into the four baskets, will be the same as what it is under the value-added tax (VAT) currently levied by the states. The status quo will also prevail for the base for services. The current base for the service tax levied by the Centre will be adopted for both CGST and SGST, except that it will be broadened to include those services currently under the exclusive domain of the states (for example, movie admissions). This status quo for the base would mean no tangible reduction in tax-cascading that occurs through taxation of raw materials, parts, and capital goods acquired for use in production and distribution in exempt sectors. GST has been estimated to provide a boost to the gross domestic product of 0.9 to 1.7 per cent, but all of this is critically dependent on a substantial reduction in cascading. There will be no GST on real property and, thus, no credit or offset allowed for the building materials and equipment acquired for use in commercial and industrial construction. Petroleum will come within the scope of GST under the Constitution, but is kept outside the GST law at least initially. There will be no credit for the taxes on exploration, development, refining or distribution of petroleum. The alcohol industry will continue to suffer the pain of cascading in perpetuity since it will be excluded (exempted) from the GST domain within the Constitution itself.

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Exemptions are rampant in the service sector, as well. The most notable is the exemption for virtually the entire infrastructure sector. This means no offset for the taxes that get embedded in the cost of highways, bridges, railways, and international shipping. There is speculation that electricity generation and distribution may also meet the same fate. Health and education sectors are also exempted, but the amount of cascading in these sectors is relatively small. The Central Sales Tax (CST) and the entry tax are other major sources of cascading under the current system. Both of these were to be subsumed under GST, except for an entry tax levied and collected by municipalities. The states have now sought a broader exception for the entry tax, i.e., for any entry tax in lieu of Octroi levied by the state. The states also remain apprehensive of revenue loss from the elimination of CST. They are actively considering options to continue it at two or four per cent. With neither a pruning of the exemptions nor any change in the composition of the concessional rate basket, the revenue-neutral rate for SGST is being worked out to be close to the current rate, which is approximately 12.5 per cent. Assuming full harmonisation of CGST and SGST tax bases, the CGST revenue-neutral rate could also be in the 10 per cent-plus range, yielding a combined rate of 22.5 per centplus. A tax at this rate would be bad economics and bad politics. It would erode compliance, and be susceptible to leakages and intense pressures for further exemptions. It would be a drag on the service tax, which would experience a near doubling of the tax burden from the current rate of 12.36 per cent. For goods, the combined CGST+SGST rate would remain approximately the same as the current VAT plus the central excise rate. However, with conversion of the invisible central excise into a visible CGST, consumers would find GST twice as painful. Little wonder that Modi is soliciting advice from the national chambers on creative ways of hiding the tax from the consumers. GST may be inevitable, but few would be enthralled by the model the EC has developed. State governments would be well advised to go back to the drawing board and put some politics back into the GST design by broadening its base and lowering the rates. Without it, GST will remain a mirage - a squandered opportunity for visionary reform of our tax system. 12. Interests in conflict Coal probe shows business in politics needs to be tackled
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The Central Bureau of Investigation on Tuesday raided, and registered a first information report against, two Congress politicians. They are Naveen Jindal, who owns Jindal Steel and Power Ltd (JSPL) and is a member of the Lok Sabha; and the Andhra film maker-turned-Rajya Sabha member Dasari Narayana Rao, once minister of state for coal. Essentially, a company in Mr Jindal's group is alleged to have bought, through an intermediary company, shares in Mr Rao's Saubhagya Media at prices more than three times the market rate. The difference, it is being argued, was the payment for allowing the allocation of several captive coal mines to JSPL's operations, which vastly helped that company's bottom line. On the one hand, this is a fairly straightforward accusation of corruption and bribery; if it is proved, there exist laws to deal with it. On the other hand, it throws up further knotty questions. After all, it is worth noting that Mr Jindal and Mr Rao were both men of business - and both were from the same party. Nor are they alone; an increasing number of members of Parliament (MPs) are businessmen who have entered politics, or senior politicians who have extensive business interests in either their own names or in those of close associates and family members. In this case, if an attempt was indeed made to pay off Mr Rao, it was thought possible to try and conceal it under the cloak of regular business transactions. Matters can get even worse when the direct pay-offs are replaced with more complex transactions perhaps business favours of one sort or another, or crucial information. Yet India's thinking on conflict-of-interest issues remains sadly backward. This is not to say that India has no regulations on the books. Lok Sabha members, for example, are expected to declare their assets and liabilities - if not their actual interests. Before joining a debate, an MP is expected to declare all personal or pecuniary interests in the matter at hand. Ministers are forbidden to have any connections with businesses that are related to the work they conduct for the government. The Rajya Sabha maintains a register of members' interests, which includes lists of consultancies and majority shareholdings, but it is far from exhaustive. It is not made public. The primary check on any overlap between business and political interests of an MP is his or her fellow parliamentarians - Lok Sabha members' votes can be "challenged" by another member if a conflict of interest is perceived; the House ethics committee is expected to investigate any declarations of conflict.

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The sad truth, however, is these genteel systems have not evolved enough to match the rapidly changing ways in which administrative processes can be subverted. Even in the United States, where a substantial ethics staff examines declared interests of Congress members and federal employees to discover conflicts and require divestiture of officials' holdings, loopholes are regularly discovered - most recently, regarding insider trading. In India, no declarations or challenges have been issued in many years. Meanwhile, the Election Commission is supposed to take up complaints of unethical behaviour by ministers; it has long failed to do so, or even to make the Rajya Sabha's book of interests public - which might have made Mr Jindal and Mr Rao more cautious. The mechanisms exist, but it seems they do so only on paper. If there are loopholes in the current regulatory system, they need to be plugged. Politicians and bureaucrats need to realise public opinion will not sit by while the regulatory system rusts. 13. Tightening constraints to inclusive development Rapid and inclusive growth in the medium term does not look too likely if one examines the array of unattended constraints The current economic discussion focuses on managing the ongoing stresses on our external finances and an almost desperate search to revive economic growth from its meagre five per cent annual rate. As I wrote recently, neither of these is going to be easy ("BoP: Zero Dark Thirteen?", March 14, and "Early exit from economic stress?", May 9). Today, let us lift our gaze beyond these short-run exigencies and assess the prospects for reverting to a high (and inclusive) growth trajectory in the medium term. The outlook does not look too promising if one examines the array of unattended constraints that are getting sharper by the year. To keep it manageable, let me focus on just four such constraints, which have strong sociopolitical roots that render them especially intractable. Anti-employment laws Twenty years after a draft Cabinet note was readied to loosen our exceptionally restrictive labour laws (one of Indira Gandhi's most damaging, anti-poor economic legacies), no progress has been achieved. The consequences continue to be profoundly (and increasingly) negative. Sixty-five years after Independence, over 90 per cent of our 500-million strong labour force ekes out its living in "informal
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sector" occupations with scant job security and low incomes. Industrial employers have every reason to avoid taking on new "regular" employees and to shy away from large-scale operations in labour-intensive sectors like textiles, garments, leather products, toys and electronics, which were the hallmark of hugely successful employment-intensive industrialisation in East Asia since 1970. Little wonder that formal sector wage employment has stagnated, total employment has grown little in the most recent period (2004-05 to 2009-10) for which reasonable data are available and the share of agriculture in total employment has remained unusually high (around 50 per cent) despite the sharp drop in the sector's share in GDP (to 15 per cent). The much-touted "demographic dividend" of a youth bulge is being frittered away by our benighted labour policies and could easily morph into a massive, intractable problem of job scarcity, unemployment and underemployment. The huge disincentives to employ workers in large and medium-sized industrial units have also seriously stunted the growth of our manufacturing sector, which has stagnated at 15 to 16 per cent of GDP for many years, compared to 30 per cent plus in most East Asian nations including China. Of course, other factors have also mattered but probably less than our exceptionally restrictive labour laws. With the stagnation of labour-intensive manufacturing, where will the "youth bulge" find low-skill employment? In sum, our labour laws continue to grievously weaken the most effective mechanism for assuring "inclusiveness" in the development process for our most abundant resource of low-skill labour. Fiscal populism Broadly defined, the second major constraint on rapid, broad-based growth is the penchant for fiscal populism, fuelled by competitive, short-horizon politics at all levels of government. This has at least two dimensions: a propensity for premature launching of ill-designed entitlement programmes (for example, legal rights to work, education, food and so on); and a widespread "subsidy culture". The first has been massively strengthened during the last nine years of the United Progressive Alliance government, without first undertaking the reforms necessary to make these programmes effective and efficient. This means continuation of massive leakages (for example, estimated at 50 per cent and higher in the public food distribution system), rampant corruption and rent-seeking and strong vested
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interests against reform (to, say, conditional cash transfers or voucher systems). Both types of fiscal populism spawn high fiscal deficits with their attendant growth-retarding dangers of high inflation, large external imbalances and high interest rates and debt. The second, "the subsidy culture", has a longer history and continues to undermine the economic viability of key sectors. Electricity subsidies (especially for agriculture) have contributed majorly to the parlous situation of our electric power sector. They have also led to over-pumping and falling water tables in much of North and West India, amplifying the looming crisis in water availability. Foodgrain subsidies have distorted the agricultural economy and retarded the development of non-food crops. The growing subsidy on urea fertiliser has seriously weakened soil fertility. The massive diesel subsidy (now declining) has weakened energy security and hurt the environment. The explosive growth of mobile telephony in the last 15 years has demonstrated that subsidies are unnecessary for high growth and inclusive reach of a sector. But old habits die hard. Weaknesses in governance and administration Governance and administration are huge subjects. They clearly affect all dimensions of economic and social life, especially for poorer segments of society. They determine the quality of personal safety, justice, property rights, contract enforcement and the delivery of publicly provided goods and services. Worryingly, there are clear signs that governance has been deteriorating over time. There are at least two broad reasons for this. First, over time, politics has become more of a "business" and less about public service and ideological commitment. Huge sums are raised and spent on campaigning for office and "politicking" between elections (mostly under the table), which have then to be paid off by various subversions of public policies and decisions. "Crony capitalism" has increased greatly, especially in resource sectors, such as mining, land allocation/use, telecom spectrum and large government contracts. Secondly, it is generally agreed that the quality and probity of civil services have worsened over time for many reasons, including: the quality of entrants (for decades, many of the best people have opted for the growing opportunities outside
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government services); the ramping up of caste-based reservations or quotas since 1990, which has severely diluted the meritocracy principle; the increasing "politicisation" of public administration at all levels and the growing spread of bribery and corruption in government-citizen transactions. Taken together, the entropy in governance is likely to hurt future development. The challenge of urbanization Normally, development experience worldwide suggests that urbanisation is associated with higher productivity and growth. However, in India, this association may be diluted by the well-known weakness of governance institutions in our cities and towns. Can anyone recall the name of a prominent mayor? Until the early 1990s the Indian Constitution did not recognise sub-national governments below the level of state governments. The "third tier" was missing. The passage of the 73rd and 74th Amendments in 1993 corrected this lacuna and accorded a role to panchayati raj rural elected institutions and urban local bodies (ULCs). Although this was a major step forward, municipalities and other ULCs remain largely fledgling institutions with limited powers for mobilising and allocating resources. Against this background, the expected increase in India's urban population by over 200 million between 2010 and 2030 poses a daunting challenge for urban governance. While there are some signs of hope, the general outlook is far from reassuring. Without a much more serious effort at urban institution building by the central and state governments, the realistic prospect is for rapid expansion of illgoverned and under-financed urban habitations, which impede the reaping of the economies of agglomeration associated with well-functioning cities and towns. Such inchoate urbanisation may prove less an asset and more a drag on rapid, inclusive development in the long term. So, all things considered, the return to high growth with inclusion poses arduous challenges in the years ahead. 14. Stem coal scams by scrapping captive mining The CBI has filed a first information report (FIR), formally charging Congress MP industrialist Naveen Jindal and the former junior minister for coal, Dasari Narayana Rao, in the coal mines allocation case. They are charged with fraud and corruption: the CBI alleges that Jindal's firms misrepresented facts and paid an
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amount of Rs 2.25 crore into Rao's company to get the coal mines allocated to them. In the past, many coal mines have been allocated in fairly dubious circumstances by the government to private players. The government's auditor reckons that between 2005 and 2009, over 15,350 million tonnes of coal under the ground, worth about Rs 1.86 lakh crore, have been allocated. This valuation may not be accurate. But the fact remains that unless India overhauls its entire policy governing coal, such instances of arbitrary allocation will continue. Coal mining was nationalised by law in 1973, creating one state-owned behemoth Coal IndiaBSE -2.09 % (CIL) to mine and sell coal. Today, CILBSE -2.09 % is a listed company but is plagued by inefficiencies and being probed by the Competition Commission of India for abuse of its monopoly powers. Meanwhile, the government decided that to speed up growth, captive coal mines could be allocated for companies generating power or making metals or cement. Thus was born the flawed policy of arbitrary allocation of coal mines. This policy must change. The government must first scrap the Coal Mines Nationalisation Act of 1973. It should then allow qualified mining companies from India and overseas to mine coal in the country. The most transparent way of deciding who will get these licences would be to auction the revenue share or royalty that will go to the Centre and states. For each mine, the company that quotes the highest revenue share should get to exploit it. A dedicated portion of the governments' share of revenues should be used to compensate locals affected by mining, rehabilitate them to lead a dignified life. This policy will bring dividends for all stakeholders in society and eliminate graft.

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