Civil Services News February

Feb 2015
Economic Survey
Union Budget
Railways Budget
Islamic State (IS)
Disinvestment Compiled By:-
Mandeep Mittal
Petrogate mandeep.iitd@gmail.com
Saradha Chit Fund Scam 9891403625
Union Budget 2015-2016 ............................................................................................................................................................. 4
Budget: How is it prepared ........................................................................................................................................................ 20
Railway Budget .......................................................................................................................................................................... 25
National News
Secrets for sale........................................................................................................................................................................... 35
Official Secrets Act ..................................................................................................................................................................... 40
Call to amend the Preamble ...................................................................................................................................................... 44
Sushma Swaraj visits China ........................................................................................................................................................ 51
Indo-China border dispute ......................................................................................................................................................... 53
Smart Cities ................................................................................................................................................................................ 59
Hunt for Black Money ................................................................................................................................................................ 61
Ceasefire Violations along Indo-Pak Border .............................................................................................................................. 62
Spectrum Auctions ..................................................................................................................................................................... 65
Swine Flu .................................................................................................................................................................................... 66
Injectable Polio Vaccine ............................................................................................................................................................. 67
Evidence-Informed Policymaking .............................................................................................................................................. 68
Resilient Cities Project ............................................................................................................................................................... 70
MEA Clarification on Indo-US Nuclear Deal ............................................................................................................................... 71
Non Proliferation Treaty ............................................................................................................................................................ 73
CTBT ........................................................................................................................................................................................... 79
India’s Afghan silk route in jeopardy ......................................................................................................................................... 81
57 year old Indian beaten mercilessly by Police in US ............................................................................................................... 83
Arguments against recommendations of HLC on restructuring FCI .......................................................................................... 84
Indian thermal power plants inefficient: CSE Study .................................................................................................................. 87
High pollution cuts short Indian lives by 3 years ....................................................................................................................... 90
Criticism of the Draft National Health Policy ............................................................................................................................. 91
Supreme Court judgement on benefits to reconverts ............................................................................................................... 92
Permanent membership of Security Council still elusive for India ............................................................................................ 94
Railways, reforms and resistance .............................................................................................................................................. 95
Training of healthcare providers................................................................................................................................................ 97
India should be vary of acceding to US demands on emission cuts .......................................................................................... 97
Soil Health Cards ........................................................................................................................................................................ 99
Nalanda University ................................................................................................................................................................... 101
Feburary 2015 Page 1

Empowering the states ............................................................................................................................................................ 103
Need to give thrust to Immunisation Programme ................................................................................................................... 104
Growing gap between Indian and Chinese Railways ............................................................................................................... 105
Saradha Chit Fund Scam: Explained ......................................................................................................................................... 107
Economic Survey
Economic Outlook, Prospects and Policy Challenges .............................................................................................................. 112
Wiping Every Tear from Every Eye: JAM Trinity....................................................................................................................... 117
Need for balance between ‘Make in India’ and ‘Skilling India’ ................................................................................................ 121
A Double-Digit Economic Growth Trajectory is now a Possibility ............................................................................................ 123
Government Committed to Fiscal Consolidation ..................................................................................................................... 124
India’s National Solar Mission Being Scaled up Five-Fold to 100,000 Megawatts................................................................... 127
Reform of Railway’s Structure, Commercial Practices, Overhaul of Technology .................................................................... 129
Skill Development and Employment are major Challenges: Economic Survey ....................................................................... 131
Services Sector Clocks Double Digit Growth ............................................................................................................................ 132
External Sector is returning to the path of strength and resilience ........................................................................................ 133
Inflation shows a declining trend ............................................................................................................................................. 135
From Carbon Subsidy to Carbon Tax: India’s Green Actions ................................................................................................... 136
Food Subsidy ............................................................................................................................................................................ 137
Magazines
Survey shows a 30 per cent increase in the tiger population .................................................................................................. 140
Swiss Leaks ............................................................................................................................................................................... 143
Network Traffic Analysis - Netra .............................................................................................................................................. 145
Solution to eliminate black money lies in India ....................................................................................................................... 148
Economy
Base Year Revision ................................................................................................................................................................... 151
Kerosene subsidy needs reform .............................................................................................................................................. 152
Coal India Disinvestment ......................................................................................................................................................... 153
Stock Markets: Explained......................................................................................................................................................... 154
Disinvestment: Explained ........................................................................................................................................................ 158
Rising NPAs of Indian Banks ..................................................................................................................................................... 164
Index of Eight Core Industries - December, 2014 .................................................................................................................... 165

PIB
New De-worming Initiative launched ...................................................................................................................................... 166
Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY)............................................................................................. 167
Ensuring 24X7 Power to all Rural Household .......................................................................................................................... 171
Digital India .............................................................................................................................................................................. 172
Make in India - Defence Sector ................................................................................................................................................ 175
Make in India ........................................................................................................................................................................... 178
Science and Technology

Internet in Orbit ....................................................................................................................................................................... 180
Mitochondrial Disease ............................................................................................................................................................. 181
Alternate to Injections Developed ........................................................................................................................................... 183
Facebook launches Internet.org in India ................................................................................................................................. 184
Indian woman with Swyer Syndrome gives birth .................................................................................................................... 186
State of affairs of Science & Technology in India..................................................................................................................... 188
How aerosols affect tropical rainfall ........................................................................................................................................ 189
International
Islamic State ............................................................................................................................................................................. 191
Islamic State in Libya................................................................................................................................................................ 201
Transition in Saudi Arabia ........................................................................................................................................................ 206

Union Budget 2015-2016
Allocating Rs. 70,000 crore for public spending on infrastructure to stimulate growth in the economy, Union
Budget 2015-16 proposed a 5 per cent cut in corporate tax, abolished wealth tax and replaced it with an additional
2 per cent surcharge on the tax collected from the super-rich with incomes in excess of Rs. 1 crore.
Presenting the Modi government‘s first full-year budget in Parliament, Union Finance Minister Arun Jaitley said
the corporate tax was proposed to be lowered from 30 per cent to 25 per cent over the next four years and would
go hand in hand with a rollback in sops and exemptions enjoyed by companies.
―The credibility of the Indian economy has been re-

established; the world is predicting that it‘s India‘s
chance to fly. As the PM has mentioned many times —
we are a round-the-clock, round-the-year
government,‖ Mr. Jaitley said.
The budget raised excise duty and service tax rates,

pushing up retail prices of several goods and services.
Mr. Jaitley left untouched personal income tax rates

for 2015-16, but rewarded the middle class with a
higher limit for deduction of Rs. 25,000 on health
insurance premium against the existing Rs. 15,000.
The limit will go up from Rs. 20,000 to Rs 30,000 for

senior citizens. The deduction of Rs. 30,000 for
medical treatment spending is proposed for those over
80 years old without health insurance cover.
The proposals, said Mr. Jaitley, would not only promote health care but also enhance the savings rate in the
economy.
Locally made mobile handsets, tablets, microwave ovens and packaged fruits are likely to be cheaper on
reductions proposed in various duties and taxes. Mr. Jaitley proposed a 25 per cent hike in the duty on cigarettes,
cigars and cheroots. The key construction industry input, cement, too is likely to become costlier.
The service tax plus education cess is proposed to be hiked from 12.36 per cent to 14 per cent which is likely to
increase costs of air travel, eating out and beauty services.
Centre to spend its way to growth

Finance minister Arun Jaitley‘s first full Budget is based on the premise that increasing public investments in
infrastructure is one of the main ways to boost growth, even as he got a statistical reprieve that has helped project
GDP growth between 8 per cent and 8.5 per cent in 2015-16.
While Jaitley chose to shift fiscal deficit goalposts for 2015-16, he is clearly looking to raise public investments
through other channels such as public sector firms and channelising savings into gold deposits and gold bonds.
This is in line with the Economic Survey‘s suggestion to switch expenditure from consumption to savings.

Accordingly, PSUs have been mandated to increase their capital spends or the Internal and Extra Budgetary
Resources (IEBR) by 28 per cent to Rs 3,17,889 crore in 2015-16 from the Budget estimate of Rs 2,47,941 crore
this fiscal. It also marks a Rs 80,844 crore increase over the revised estimate of Rs 2,37,045 crore this fiscal.
―It is no secret that the major slippage in the last decade has been on the infrastructure front. Our infrastructure
does not match our growth ambitions. There is a pressing need to increase public investment,‖ Jaitley stressed in
his speech.
This push to capital spending by PSUs marks the sharpest rise since 2010-11 when the IEBR component was
raised to Rs 2,43,884 crore from Rs 2,08,081 crore BE in 2009-10. Better infrastructure would also help attract
more investments, in turn giving a push to economic growth and job creation.
―Postponing the achievement of 3 per cent fiscal deficit target to make space for more public investment is
admirable as India is still on its recovery phase.The areas of discomfort are the shift from the direct tax bucket to
an indirect tax bucket which might impede the tax buoyancy of the government to meet the fiscal deficit,‖ said
Arun Singh, senior economist, Dun & Bradstreet (India).
Jaitley is hoping that higher growth will improve tax buoyancy and ease pressure on the fisc but has tried to keep
projections more realistic. Gross tax revenue is estimated at Rs 9,19,842 crore in 2015-16, marginally lower than
Rs 9,77,258 crore in BE 2014-15. It will increase from 9.9 per cent of GDP in RE 2014-15 to 10.3 per cent in 2015-
16, marking a growth of 15.8 per cent over the previous RE.
The Budget, despite the disinvestment target of Rs 69,500 crore, has kept a projected non-tax revenue at a modest
Rs 2,21,733 crore in 2015-16 as against the BE of Rs 2,12,505 crore in 2014-15, underlining that ―growth in this
component of revenue is limited as is expected that in next two years it will register modest growth‖. But giving a
miss to the interim report of the Expenditure Finance Commission that suggested expenditure control, the Budget
has only marginally slashed its total expenditure to Rs 17,77,477 crore in 2015-16.
Stake sales on track

The Finance minister has set an aggressive target of Rs 69,500 crore to be mobilised through strategic sales in
state-owned companies, undeterred by the dismal outcome of the government‘s disinvestment efforts during the
current fiscal. The government has set a target of Rs 41,000 crore through minority stake sales in public sector
units, and an additional Rs 28,500 crore through strategic sales in a number of state-owned companies.
While 2014-15 has been one of the best years for the equity markets, which
has surged to new highs, the government has been unable to ride this tide
and meet stake sale targets.
In the revised estimates, disinvestment receipts have been pegged at Rs

26,353 crore, as against the target of Rs 43,425 crore set in 2014-15. In
addition, Rs 5,000 crore will be raised from PSU Exchange Traded Fund.
―We have an elaborate disinvestment roadmap in front of us. As far as
strategic sales are concerned, certainly we are not averse to the idea.
Wherever we find the possibility existing, we will certainly consider it,‖ finance minister Arun Jaitley told the
reporters.

New law to curb black money
Making a strong statement against the illegal money stashed in foreign accounts abroad, Finance Minister Arun
Jaitley said that a comprehensive new law will be introduced in the current session of Parliament for effectively
dealing with the menace of black money.
The proposed law will not only make concealment of income and assets located abroad and evasion of tax on them
a prosecutable offence with a punishment of rigorous imprisonment of up to 10 years, it will also attract a penalty
of 300 per cent of the tax amount. The offence will be non-compoundable and the offenders won‘t be allowed to
approach the settlement commission, the Finance Minister said while tabling the Budget 2015-16 in the Lok
Sabha.
―Recognising the limitations under the existing legislation, we have taken a considered decision to enact a
comprehensive new law on black money to specifically deal with such money stashed away abroad. To this end, I
propose to introduce a Bill in the current session of Parliament,‖ Jaitley said.
Non-filing of returns or filing of returns with inadequate disclosure of foreign assets will be liable for prosecution
with punishment of rigorous imprisonment of up to 7 years, according to the proposed legislation.
Further, for domestic black money, a new and more comprehensive Benami Transactions (Prohibition) Bill will be
introduced in the current session to enable confiscation of benami property and provide for prosecution.
Daksha Baxi, executive director, Khaitan & Co, said, ―Such harsh measures should act as a significant deterrent to
keeping the illegal monies outside India. Encouraging and facilitating transactions through credit and debit cards
and dis-incentivising cash transactions should help in curbing generation of domestic black money, though the
details of these provisions need to be examined.‖
The announcement comes amid the raging debate on the so-called Swiss list, which, as reported by The Indian
Express, contained 1,195 Indian HSBC clients, double of the 628 names which were provided to the Supreme
Court. Last year in May, on the directions of the SC, the government had formed a Special Investigation Team
(SIT) to probe the cases of black money. The SIT has already submitted two reports to the apex court while the
scope of probe has been widened with the doubling of the HSBC Swiss list.
The BJP-led government has come under attack from the Opposition over not delivering on its promise to bring
black money back into the country. Last year‘s Lok Sabha elections were centred around the issue of black money,
where the then UPA government was pushed to the wall by the BJP on its failure to effectively deal with the issue.
Steps to curb generation of black money in real estate

In order to tackle the black money menace, Finance Minister Arun Jaitley announced in his budget that cash
transactions of more than Rs 20,000 in purchase of immovable property will not be allowed. Quoting the
Permanent Account Number, or PAN, has been made mandatory for real estate transactions of more than Rs1
lakh.
―The Finance Bill includes a proposal to amend the Income Tax Act to prohibit acceptance or payment of an
advance of Rs 20,000 or more in cash for purchase of immovable property. Quoting of PAN is being made
mandatory for any purchase or sale exceeding the value of Rs 1 lakh,‖ Jaitley said.
Market experts say that the intent of the government is good and looks to reduce the black money transaction in
the sector but it may be tough to implement it. While home buyers will have to make all payments exceeding Rs
20,000 by way of cheque, experts feel that it is tough to track them.

―It is practically very tough to stop such transactions. It will be difficult for the government to produce evidence
against such transactions,‖ said a real estate expert who did not wish to be named. In another move to curb the
flow of black money, the government is looking to announce steps that will discourage cash transactions and
encourage card-based transactions.
―Now that a majority of Indians have or can have a RuPay debit card, I propose to introduce soon several
measures that will incentivise credit or debit card transactions, and disincentivise cash transactions,‖ said Jaitley.
Boosting investment in gold

Very soon, India will have its own gold coin inscribed with the Ashok Chakra. This is one of the three big moves
the Budget entails in the direction of boosting investment in the yellow metal, thanks to the under-control current
account deficit. The other two steps are the launch of a gold monetisation scheme and a sovereign gold bond.
―India is one of the largest consumers of gold in the world and imports as much as 800 to 1,000 tonnes, mostly,
this gold is neither traded nor monetised,‖ Finance Minister Arun Jaitley said on Saturday while presenting the
Union Budget 2015-16.
Jaitley proposed ―to commence work on developing an Indian gold coin, which will carry the Ashok Chakra on its
face‖. This, he said, would help reduce the demand for gold coins minted outside India and also help recycle the
gold available in the country. However, the 10 per cent import duty on gold would remain.
The response to the other two plans — a gold monetisation scheme and a sovereign gold bond — would largely
depend on their design as similar schemes in the past failed to take off. The gold monetisation scheme would
replace both the present gold deposit and gold metal loan scheme, allowing depositors to earn interest on their
gold metal accounts and for jewellers to obtain loans against gold. Similarly, the sovereign gold bond would have a
fixed interest rate and be redeemable in cash in order to discourage purchase of the yellow metal.
The Centre had imposed restrictions on gold imports in 2013 when the CAD touched a record 4.7 per cent of the
GDP in 2012-13. The CAD is estimated at 1.3 per cent of the GDP in the current fiscal and at less than 1 per cent in
2015-16. With an improvement in the CAD, the RBI had in November 2014 withdrew the 80:20 scheme, under
which 20 per cent of the gold imported had to be exported back.
Gold imports in January declined to 38 tonnes from 142 tonnes in April 2014. In 2012-13, the country had
imported 845 tonnes.
Centre cautious on subsidies
For all the talk of the JAM Trinity — Jan Dhan, Aadhaar and Mobile — in the
latest Economic Survey, there is little in the Union Budget to show any major
move to rationalise subsidies or replace these with targeted direct benefit
transfers (DBT).
The Budget has made a provision of Rs 2,43,810.98 crore for 2015-16, which is
below the revised estimates of Rs 2,66,691.84 crore for the current fiscal. But
this reduction is entirely on account of petroleum subsidy, which is projected to
fall by over Rs 30,000 crore mainly courtesy lower global oil prices.
On the other hand, subsidies on food and fertilisers are set to go up. ―This
reflects over-caution when it comes to big-ticket subsidies. It appears the
government does not want to extend DBT beyond LPG cylinders or scholarship
schemes,‖ said Ashok Gulati, former chairman of the Commission for

Agricultural Costs and Prices.
According to him, the over-caution with regard to food and fertiliser subsidy wasn‘t good for Indian agriculture.
The farm sector grew by 4.1 per cent during the 11th Five-Year Plan period (2007-08 to 2011-12).
―The last three years have seen average growth of 2 per cent. At a time when crop prices are falling, the focus
should have been on reducing cultivation costs, requiring a redirection of spending from subsidies to public
investment in farm R&D, rural roads and other infrastructure,‖ Gulati said.
The Budget has kept the fertiliser subsidy for 2015-16 virtually unchanged from the current fiscal‘s levels. ―That by
itself indicates no plans as of now to increase maximum retail prices. This is more so in the case of urea, where
there were expectations of a phased programme of decontrol with a fixed per-tonne subsidy as in other fertilisers,‖
an industry analyst said.
But the fertiliser industry is not

happy. ―We will be ending this fiscal
with outstanding subsidy dues of Rs
40,000 crore. The budgetary
provision of under Rs 73,000 crore
does not take care of this. Overall, it is
a disappointing budget,‖ said Satish
Chander, Director General, Fertiliser
Association of India.
Similarly on food, there has been no

attempt to implement any of the
recommendations of the Shanta
Kumar high-level committee for
restructuring of the Food Corporation
of India.
The panel had suggested instituting a system of cash transfers in place of physical grain delivery through ration
shops over a 2-3 year period. This transition was to be first attempted in cities with population above one million.
The committee had also sought to reduce the coverage of the National Food Security Act (NFSA) from 67 per cent
of the population to around 40 per cent.
But going by the provisions in the Budget — Rs 1,24,419 crore, of which Rs 64,919 crore is towards the
implementation of NFSA — there is no move to implement either the Shanta Kumar panel‘s report or DBT. In this
case, too, the subsidy provided will not be enough to cover the estimated outstanding dues of around Rs 50,000
crore owed to the FCI as on March 31, 2015.
Armed forces get a modest hike

Finance Minister Arun Jaitley made a budgetary provision of Rs 2,46,727 crore for the defence forces, 7.74 per
cent more than the budgetary allocation of Rs 2,29,000 crore in the last fiscal. The provision for capital
expenditure — the much needed component for modernisation of the forces — remained more or less unchanged
at Rs 94,588 crore as against last year‘s budgetary estimate of Rs 94,587.95 crore. In fact, in the ongoing financial
year, the government underspent on the modernisation of the forces by Rs 12,622 crore as shown by the revised
estimates.
―Defence of every square inch of our mother land comes before anything else. So far, we have been over dependent
on imports, with its attendant unwelcome spin-offs. Our government has already permitted FDI in defence so that
Indian-controlled entities also become manufacturers of defence equipments, not only for us, but for export,‖
Jaitley said in his Budget speech even as he stressed on the ―Make in India‖ policy to achieve greater self-
sufficiency in the area of ―defence equipment, including aircraft‖.

Adding that his government has been ―both transparent and quick‖ in making defence equipment-related
purchase decisions, ―thus keeping our defence forces ready for any eventuality‖, Jaitley said he has provided
―adequately for the needs of the Armed Forces‖.
As against his speech in July, his first after having taken over as the Finance Minister, Jaitley‘s speech made no
specific mention of One Rank One Pension (OROP) scheme or creation of war memorial for which a provision of
Rs 100 crore was made during the government‘s maiden Budget. Speaking later, Jaitley said, ―The methodology of
calculating One Rank, One Pension is an issue pending between the services and the Defence Ministry.‖
In fact, some of the heads which were announced in the previous Budget — for instance defence railway network
which was given a budgetary provision of Rs 1,000 crore in July — was allotted Rs 500 crore.
Under the Rs 94,588 crore capital expenditures that are likely to follow, the Army will be spending approximately
Rs 26,300 crore on buying equipment. The Air Force will spend about Rs 33,000 crore while the Navy will spend
about Rs 24,000 crore. While the ministry underspent the money it had received the provision for 2014-15 by
about 12,622 crore, the capital allocation for the next year will decide how the modernisation of the defence forces,
which are in dire need of modern equipment, shapes up.
New flagship micro irrigation scheme

Pradhan Mantri Krishi Sinchai Yojana (PMKSY) is aimed at ensuring access to water to every farm (―Har Khet Ko
Pani‖) and improving water use efficiency (―Per Drop More Crop‖).
The total allocation to PMKSY for 2015-16 has been budgeted at Rs 5,300
crore, which includes Rs 1,800 crore towards micro-irrigation. The
remaining sums have been drawn mainly from old schemes such as the
erstwhile Integrated Watershed Management Programme and the
Acceleration Irrigation Benefit and Flood Management Programme.
―PMKSY will be on the lines of the Pradhan Mantri Gram Sadak Yojana for
building rural roads launched during the time of the last NDA government
under Atal Bihari Vajpayee. The new scheme will provide end-to-end
solutions in the irrigation supply chain, including the water source, the
distribution network and farm-level application,‖ said officials. Besides,
another new scheme to support organic farming — the Paramparagat Krishi
Vikas Yojana — has been launched with an allocation of Rs 300 crore.
On the other hand, the agriculture ministry‘s flagship programmes under the
UPA like the Rashtriya Krishi Vikas Yojana will see a huge cutback. The
Budget has provided only Rs 4,500 crore towards this programme in 2015-
16, as against Rs 8,444 crore in the revised estimates for the current fiscal
and Rs 9,954 crore in the original Budget Estimates.
In fact, the total Plan outlay for the department for agriculture and
cooperation has been reduced during the coming fiscal from Rs 22,260.55
crore for 2014-15 (BE). ―The main reason for this is the higher central tax
devolutions to states from the 14th Finance Commission award. As a result,
in many centrally-sponsored schemes, the state‘s share in revenue
expenditures has gone up. The overall spending is unlikely to fall,‖ said
sources.
The department of agricultural research and education has also seen a

marginal reduction in budgeted Plan allocation from Rs 3,715 crore in 2014-
15 to Rs 3,691 crore in the ensuing fiscal.

Five new UMPPs
In his Budget proposals, Finance Minister Arun Jaitley announced plans to auction five new ultra mega power
projects (UMPPs) in the plug-and-play mode to ensure their smooth execution and help ―unlock‖ investments to
the tune of Rs 1 lakh crore.
He said five UMPPs, each of 4,000 MW, would be auctioned in the given mode to minimise the need for investors
to secure multiple approvals. ―All clearances and linkages will be in place before the project is awarded by a
transparent auction system. This should unlock investments to the extent of Rs 1 lakh crore,‖ he said.
Under the ―plug-and-play‖ mode, coal linkages and indicative green clearances are expected to be ensured to
simplify mining and faster execution. ―The government would also consider similar plug-and-play projects in
other infrastructure projects such as roads, ports, rail lines, airports etc,‖ said Jaitley.
He said the second unit of Kudankulam Nuclear

Power Station would be commissioned in the
next fiscal. So far, four UMPPs have been
awarded, of which Sasan (Madhya Pradesh),
Krishnapatnam (Andhra Pradesh) and Tilaiya
(Jharkhand) have been bagged by Reliance
Power, while Tata Power is operating the
Mundra UMPP in Gujarat.
The proposal to set up the mega plants follows

cancellation of the bids for UMPPs earlier
proposed at Bedabahal (Orissa) and Cheyyur
(Tamil Nadu) due to tepid response from the
private sector and lack of enthusiasm from the bankers. The power ministry has constituted an expert committee
to examine the efficacy of the methodology adopted for these mega plants. The bidding process for these two
plants is likely to be initiated this year.
―The capex of the public sector units is expected to be Rs 3,17,889 crore, an increase of approximately Rs 80,844
crore over revised estimates of 2014-15. In fact, all told, investment in infrastructure will go up by Rs 70,000 crore
in 2015-16, over the year 2014-15 from the Centre‘s funds and resources of central public sector enterprises,‖ he
said.
Jaitley also proposed to increase the clean energy cess on coal from Rs 100 to Rs 200 per metric tonne of coal, to
finance cleaning the Ganga and other environment initiatives. The coal firms are expected to realise the increased
cess from their customers, which could hit thermal power prices.
Expert panel to work on replacing multiple permissions

Finance Minister Arun Jaitley said an expert committee would be constituted to suggest ways to replace the
requirement of prior multiple permissions with a pre-existing regulatory mechanism, as a key measure to revive
investors‘ confidence in the country‘s infrastructure sector.
Presenting the Budget, Jaitley said investors lose substantial time and resources in getting multiple permissions to
operate their projects. With a view to ease doing business in India, the government has already launched a e-biz
portal wherein investors can apply for 14 regulatory permissions through a single window. ―We aim towards
easing of doing business in India,‖ he said.

―I intend to appoint an expert committee for this purpose to examine the possibility and prepare a draft legislation
where the need for multiple prior permissions can be replaced with a pre-existing regulatory mechanism,‖ Jaitley
said in his speech.
Acknowledging that disputes arising in public contracts take long time to resolve and that the process is very
costly, Jaitley proposed that the government would introduce a Public Contracts (Resolution of Disputes) Bill to
streamline institutional arrangements for resolution of such disputes. For early resolution of commercial disputes,
the Budget proposed setting up exclusive commercial divisions in various courts based on the recommendations
of the 253rd report of the Law Commission. Accordingly, a Bill would be introduced in Parliament after consulting
stakeholders in this regard, Jaitley said.
Jaitley announced setting up of the Atal Innovation Mission (AIM) with an initial corpus of Rs 150 crore. AIM will
be an innovation promotion platform involving academics, entrepreneurs, and researchers and draw upon
national and international experiences to foster a culture of innovation, R&D and scientific research in India.
Service tax increased

Eating out, using credit and debit cards, cabs and mobile phones have all become expensive, thanks to the hike in
service tax in the Union Budget presented on Saturday. The government has increased the service tax to 14 per
cent from the current 12.36 per cent.
―To facilitate a smooth transition to levy of tax on services, by both the Centre and the states, the service tax rate is
being increased from 12 per cent plus education cesses to 14 per cent. The education cess and secondary and
higher education cess shall be subsumed into the new service tax rate. The revised rate shall come into effect from
a date to be notified,‖ Finance Minister Arun Jaitley said in his Budget speech as he explained the rationale behind
the move.
The decision will now make several services including cable and DTH services, beauty parlour charges, courier
service, laundry services, ordering stock broking, asset management and insurance more expensive. Packaged
fruits and vegetables will, however, become cheaper as pre-cooling, ripening, retail packing and labelling of these
items have been exempted from the service tax.
Further, the negative list of services has also been pruned by bringing some services under the tax net. Experts
interpreted the tax hike as a step towards GST though a deviation from the recommendation of the 13th Finance
Commission. ―Increase in service tax rate suggests that the GST rate would not be the one single rate
recommended by the 13th Finance Commission. It could now well be in the range of 20 per cent plus, which
implies substantial exemptions from the GST base,‖ Satya Poddar, tax partner, EY India, said.
The government has also put an enabling provision in the Service Tax Act to empower the Centre to impose a
Swachh Bharat cess on all or certain taxable services at a rate of 2 per cent on the value of such taxable services.
The proceeds from this will be used for the Swachh Bharat initiatives.
Life insurance service provided by way of Varishtha Pension Bima Yojna, however, has been exempted from
service tax along with the ambulance services and admissions to museums, zoos, national parks and wild life
sanctuaries.
Negative service list

The list has been pruned, paving way for taxing services like access to amusement facility; entertainment events
like concerts and pageants where admission fee is above Rs 500; service by way of carrying out processes for
production or manufacture of alcohol; all service provided by the government to business entities; and
construction, commissioning or installation of original work pertaining to an airport or port.

Railways, roads to get more funds
Stepping up public expenditure in infrastructure projects, Finance Minister Arun Jaitley proposed increased
allocation of Rs 70,000 crore in the sector in 2015-16 over the current year. While the allocation in roads sector
has been increased by Rs 14,031 crore, in the railways it has gone up by Rs 10,050 crore.
Jaitley said that to increase investment in the sector, public investment will have to be increased because private
sector investment is still muted and the public-private partnership (PPP) model is weak. ―Our infrastructure does
not match our growth ambitions. There is a pressing need to increase public investment,‖ said Jaitley. The capital
expenditure (CAPEX) of the public sector units is expected to be Rs 3,17,889 crore in the coming financial year, an
increase of about Rs 80,844 crore over revised estimates of 2014-15.
The Finance Minister also announced the formation of a National Investment and Infrastructure Fund and said he
would permit tax-free bonds for raising resources for rail, road and irrigation projects.
―I intend to establish a National Investment and Infrastructure Fund which will find monies to ensure an annual
flow of Rs 20,000 crore to it — Rs 20,000 crore is what the government will be giving. This will enable the trust to
raise debt in terms of investors equity in infra finance companies, like the Indian Railway Finance Corp. Ltd and
the National Housing Board. The infra finance companies can then leverage this extra equity manifold,‖ Jaitley
said.
He further said that the private-public partnership (PPP) mode of infrastructure development has to be revisited
and revitalised.
Bank for SMEs

The government has announced that it would set up MUDRA, a bank to finance the setting up of small and micro-
units and thereby encourage entrepreneurship among SC/STs and OBCs.
While presenting Union Budget 2015-16, Finance Minister Arun Jaitley announced that the government would set
up the Micro Units Development Refinance Agency (MUDRA) Bank with a corpus of
Rs 20,000 crore and a credit guarantee corpus of Rs 3,000 crore. The Mudra Bank will refinance institutions
through the newly-announced Pradhan Mantri Mudra Yojana.
The proposed bank is part of the government‘s Skill India programme and is in line with its focus on job-creation,
a big priority as 54 per cent of the Indian population is less than 25 years of age and about 12 million workers join
the workforce annually. Jaitley, who launched a slew of initiatives for job creation and skill development, used the
word ―skill‖ 12 times in his Budget speech.
―While large corporate and business entities have a role to play, this has to be complemented by informal sector
enterprises which generate maximum employment,‖ he said while presenting the Budget, stressing that members
of SC, ST and OBC community will be given priority in lending.
The move would help provide easy capital and funding to such businesses. There are over 5.77 crore small
business units, mostly individual proprietorship, which run small manufacturing, trading or service businesses of
which 62 per cent are owned by SC/ST.
―These measures will greatly increase the confidence of our young educated and skilled workers who are able to
become first-generation enterprises, and existing small businesses will be able to expand their activities. Just as
we are banking the unbanked, we are also funding the unfunded,‖ Jaitley said.
Welcoming the move, T M Bhasin, chairman, Indian Banks Association, said the Mudra Bank will strengthen
SMEs.

To boost entrepreneurship, Jaitley also announced a Rs 1,000 crore corpus for a new Self-Employment and Talent
Utilisation (SETU) fund that would support all aspects of start-up businesses and other self-employment
activities, particularly in technology-driven areas.
Jaitley also announced a National Skills Mission that would consolidate skill initiatives spread across several
ministries and allow for standard procedures and outcomes across 31 Sector Skill Councils. The Ministry of Skill
Development and Entrepreneurship is already working on a blueprint for the mission, which is likely to be
launched over the next few months. Less than five per cent of the Indian workforce has formal skill training.
The minister also promised a more liberal system of raising global capital, incubation facilities in centres of
excellence, funding for seed capital and ease of doing business — measures the government hopes will create 1
lakh jobs in the technology sector.
―The stress on skilling by various schemes and reforms focused on the youth coupled with the decision to give
employees an option to opt for their PF or EPFO contribution will definitely give a fillip to job creation. Apart
from infrastructure, the allocation of
Rs 1,000 crore towards the start-up eco-system will further drive the employment opportunities in the sector,‖
said Ashok Reddy, MD and co-founder, TeamLease Services.
Skill development initiatives

The government announced the launch of two
new schemes to promote skill development
and employability — the Atal Innovation
Mission and the Deen Dayal Upadhyaya
Grameen Kaushalya Yojana.
The first, AIM, will be an ―Innovation

Promotion Platform‖ in the NITI Aayog
involving academics, entrepreneurs and
researchers and draw upon national and
international experiences to foster a culture of
innovation, R&D and scientific research in
India. The platform will also promote a
network of world-class innovation hubs in
India. An initial corpus of Rs 150 crore has
been earmarked for this mission.
The second scheme — the Deen Dayal

Upadhyay Gramin Kaushal Yojana — a corpus
of Rs 1,500 crore and is aimed at enhancing
the employability of rural youth. Under this
programme, disbursements would be made
through a digital voucher directly into the
student‘s bank account as part of the
government‘s skill development initiative.
Finance Minister Arun Jaitley said,
―Enhancing the employability of rural youth is
the key to unlocking India‘s demographic dividend.

Health sector disappointed
With no increase in allocation for healthcare, the Union Budget 2015 has been disappointing for many in the
sector.
―The allocated healthcare budget for this year is about Rs. 33,150 crore. In 2014-15, the budget was Rs. 39,238
crore, which was slashed by 20 per cent in December. This healthcare budget is the lowest since 2012-13. It does
not send out the right message at all,‖ said Ameera Shah, CEO of Metropolis Healthcare, in a statement.
However, there have been a few welcome measures. With Tamil Nadu, and Chennai in particular, being a hub for
medical tourism, the visa-on-arrival facility for 150 additional countries, in a phased manner, has been seen as a
move in the right direction.
―This will go a long way in facilitating medical tourism, which is a growth industry that showcases India‘s world-
class health facilities while contributing to foreign exchange,‖ said Suneeta Reddy, managing director, Apollo
Hospitals. Chennai‘s medical tourism sector is expected to be worth about Rs. 9,500 crore by 2015, according to
The Associated Chambers of Commerce and Industry of India.
Other moves that have been welcomed include the increase in health insurance premium exemption from Rs.
15,000 to Rs. 25,000, and accident insurance of Rs. 2 lakh for a premium of Rs. 12 per year for the poor and
underprivileged. ―These measures will encourage more people to seek health insurance coverage and will be very
helpful,‖ said P.V.A. Mohandas, founder, MIOT Hospitals.
Spending on healthcare is believed to be one of the primary causes of debt in India. Out-of-pocket expenditure on
health is estimated to be around 70 per cent. Tobacco cessation, too, may make some headway with the excise
duty on cigarettes being increased.
Similar increases are proposed on cigars, cheroots and cigarillos. The excise duty on cut tobacco is also being
increased from Rs. 60 per kg to Rs. 70 per kg.
The reduction in excise duty — from 24 per cent to 12.5 per cent — on chassis for ambulances will attract more
investment leading to improved pre-hospital care, said a GVK-EMRI official.
On the whole, however, more needs to be done in the areas of preventive healthcare, and physical and educational
infrastructure to support the health sector. Also, it must be ensured that healthcare funds are spent in the right
areas, the experts said.
Budget expands social security net

The BJP‘s first full budget made a strong push towards expanding the social security net for vulnerable
populations. However, the details of the proposals were met with mixed reactions, with analysts pointing out that
the poorest were still excluded.
―A large proportion of India‘s population is without insurance of any kind -- health, accidental or life. Worryingly,
as our young population ages, it is also going to be pension-less,‖ Union Finance Minister Arun Jaitley said in his
speech. His statement reflects a reality first brought to light by the 2011 Census, which showed that India‘s
southern States had already achieved replacement levels of fertility, and the country would need to start dealing
with a growing proportion of elderly people in its population.
Mr. Jaitley announced three insurance schemes — Pradhan Mantri Suraksha Bima Yojna, which will cover
accidental death risk of Rs. 2 lakh for a premium of Rs. 12 per year, Atal Pension Yojana, a contributory pension
scheme, and the Pradhan Mantri Jeevan Jyoti Bima Yojana, to provide both natural and accidental death cover of
Rs. 2 lakh with a premium of Rs. 330 per year, for the age group 18-50.

For the Atal Pension Yojana, the government will contribute 50 per cent of the beneficiaries‘ premium up to Rs.
1,000 per year for five years in new Jan Dhan accounts opened before December 31, 2015.
The budget had additional offers for senior citizens. Mr. Jaitley proposed the creation of a Senior Citizen Welfare
Fund which would appropriate unclaimed deposits in the Public Provident Fund and the Employee Provident
Fund. This would subsidise the premiums of vulnerable groups. He also proposed a new scheme to provide
physical aid and assisted living devices for poor senior citizens.
Nikhil Dey of Mazdoor Kisan Shakti Sangathan and Pension Parishad welcomed the schemes that provided death
covers, but criticised the government for failing to enact a comprehensive universal pension scheme. ―What has
been announced is a contributory pension scheme, but what true social security would be is a non-contributory
universal pension scheme,‖ he said, adding that the poor did not have the money to invest in such schemes.
Moreover, the government has cut allocations to the National Social Assistance Programme, which provides
pensions to the elderly, widows and differently abled people, by Rs. 1,000 crore in the new budget.
―That scheme provides just Rs. 200 in pensions, a sum the previous government had promised to raise. What was
needed was for this sum to be raised and the scheme to be strengthened,‖ Mr. Dey said.
Other middle income countries have far wider social security nets; in Brazil, rural workers aged over 60 and all of
the poor get a pension equal to the minimum wage without having contributed while they worked.
Education
The allocation for the Department of School Education and Literacy in the Union Human Resource Development
Ministry has seen a drastic drop; primarily owing to the government‘s decision to pass on 42 per cent of net tax
receipts to the States as per the recommendation of the 14th Finance Commission.
With the effective administration of school education essentially a job of the States, this Department is among the
sectors that has taken a hit owing to the acceptance of the Finance Commission recommendations. From the
revised estimates for 2014-15 of Rs. 46,805 crores, the allocation has dropped to Rs. 42,219 crore. The quantum of
the shift in allocation has, however, not been spelt out in the budget documents; so there is no telling how much
the States will have to spend on school education.
Stating that significant sums that will be spent by the States on these programmes will ensure a quantum leap in
expenditures in these areas (including education), Finance Minister Arun Jaitley in his budget speech urged States
to enhance resources effectively in such areas where the Centre is devolving tax money to them.
He also sought to package the drop in allocation as good tidings; stating that in spite of the large increase in
devolution to States, which implies reduced fiscal space for the Centre in the same proportion, the government is
committed to the welfare of the poor and the neo-middle class.
The overall allocation for education sector, including higher education, is Rs. 68,968 crore.
Though some of the Indian Institutes of Technology — announced in recent budgets — are still nowhere near
completion with difficulties in finding a permanent address and enough faculty, new IITs have been lined up.
Accordingly, the Higher Education Department allocation has been increased from the 2014-15 revised estimate of
Rs.23,700 crore to Rs. 26,855 crore. This is a tad higher than the original budgetary allocation for the current year
which stood at Rs. 27,656 crore.

Macroeconomic trends

There were some big new developments the budget, but the stories emerged from the Budget‘s fine print, not the
speech in Parliament.
1. The biggest story of this Budget is a major change in the way the Union Government spends its money. Earlier
Finance Minister Arun Jaitley had announced that the government had accepted the recommendations of the 14th
Finance Commission and raised the States‘ share in the net proceeds of union tax revenues from 32 per cent to 42
per cent.
With more of its pie going directly to States to spend as they like, the Union Government would begin reducing its
allocations to the State plan and wind up some Centrally Sponsored Schemes. This has already happened in this
budget.
The major change is a big increase in States‘ share in taxes and duties, and a big decrease in plan assistance to
States and UTs. The bottom three categories make up transfers to States; as a proportion to total government
spending all transfers to States taken together haven‘t grown.
In absolute terms, total transfers to States have indeed grown.
2. What does this mean for Central Government spending on major welfare ministries and key social sector
schemes? The cut has been particularly dramatic for some; the Panchayati Raj Ministry has gone from Rs. 7,000
crore in last year‘s Budget estimates to Rs 3400 crore in the revised estimates to just Rs 95 crore in this Budget.
Of course, the money hasn‘t been ‗cut‘ so

to speak; more money has gone to States
which are now freer to spend the money
as they choose. ―We shouldn‘t call it a fall.
The money has gone to States and it is up
to them to spend it on important sectors
like health and sanitation,‖ an official of
the Ministry of Drinking Water and
Sanitation said.

3. Where does this leave major official schemes?
Some have been completely wound up; these include

the Backward Regions Grant Funds, a scheme for the
strengthening of panchayats, a scheme for the
modernisation of police forces, and the National e-
Governance Plan. States have to decide whether they
would like to continue with the scheme or not. For an
additional 24 schemes, States will now have to
shoulder a greater burden as the Union Government
takes a step back. These include flagship schemes
including the Swachh Bharat Abhiyaan, the National
Health Mission, the Rashtriya Madhyamik Shiksha
Abhiyaan, the Integrated Child Development Scheme,
the National AIDS and STD Control Programme and
the Rural Housing scheme. Thirty-one schemes,
including the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the Mid Day Meal
Scheme, the Sarva Shiksha Abhiyaan and scholarship schemes, will remain fully funded by the central
government.
4. Spending on Defence grew a little and spending on subsidies fell a little; the gap between the two as a share of
total expenditure is the smallest it has been in a while.
5. Borrowings form nearly a quarter of the government‘s receipts; India‘s internationally low tax-GDP ratio has
not improved yet.
6. The share of schemes focussed on women in the total budget is extremely low, data compiled by my colleague
Ajai Sreevatsan shows. But as he points out, more money has gone to the States, and presumably they should be
making their own women-friendly schemes.

7. Tax concessions and relaxations on customs duty and excise - collectively known as revenue foregone - are
meanwhile a large and growing amount, up to Rs 5.89 lakh crore in 2014-15. Exemptions on diamonds and gold
are the biggest contributors to revenue foregone.
To put that number in perspective, the total

revenue foregone by India in tax exemptions in
2014-15 was more than the amount the Indian
government needed to borrow from the market
in this last year to be able to fully fund its
budget.

Budget: How is it prepared?
The Union Budget of India, referred to as the annual Financial Statement in Article 112 of the Constitution of
India, is the annual budget of the Republic of India, presented each year on the last working day of February by
the Finance Minister of India in Parliament. The budget has to be passed by the House before it can come into
effect on April 1, the start of India's financial year.
References to budget can be found in Kautilya‘s Arthashastra. It states that the Chancellor should first estimate
revenue from each place and sphere of activity under different heads of accounts and then arrive at a grand total.
The actual revenue is to be estimated by adding receipts into the treasury for current year and delayed payments
received which were due in earlier year/s. From this deduct the expenditure on king, standard rations, other
exemptions granted by King and authorised postponement of payments into treasury. The outstanding revenues
were estimated from work under construction for which revenue will accrue on completion, unpaid fines,
unrecoverable dues, uncollectible sums, advances to be repaid by officers etc.
The origins of the modern Budget can be traced to the Norman period, where two departments dealt with
finance—the Treasury and the Exchequer. The Treasury received and paid out money on behalf of the monarch.
The Exchequer, had a 'lower office' which received money, and an 'upper office', concerned with regulating the
Kings‘ accounts.
The term ‗budget‘ has been derived from the old French word ‗bougette‘, which means a leather bag or wallet. The
first use of the term 'budget' may date back to 1733 financial statement by Walpole as Prime Minister and
Chancellor of the Exchequer. A cartoon of him opening a patent medicine seller's wares was published at the time,
as a satirical comment with the caption 'The Budget Opened'. ('Budge' is an old word for a bag or small case).
Initially, ―budget‖ referred solely to the Chancellor‘s annual speech on the nation‘s finances. Now, the term is used
for an annual financial statement of income and expenditure of a government.
Indian Budget process

The budget is prepared by the Finance Minister with the assistance
of number of advisors and bureaucrats. The Finance Minister seeks
the view of the industry captains and economists prior to
preparation. Various accounting and finance related organisations
send in their opinions and suggestions .The budgeting exercise in
India remains mainly the domain of bureaucrats to participate and
influence the outcomes.
Normally, the budget-making process starts in the third quarter of

the financial year. The budget has four stages viz., (1) estimates of
expenditures and revenues, (2) first estimate of deficit, (3) narrowing
of deficit and (4) presentation and approval of budget.
Stage 1: Estimates of expenditures and revenues

Part A: Estimates of expenditure
The process begins with various ministries providing initial estimates of plan and non-plan expenditures. The
ministries discuss the plan expenditures with the Planning Commission. The Planning commission allocates
resources for continuing plan programmes and decides on the new programmes that can be undertaken on the

basis of a tentative estimate or resources available, that is provided to it by the finance ministry. The financial
advisors of the ministries prepare the non-plan expenditures. The expenditure secretary consolidates them and
after intensive discussion with financial advisors, budget estimates are set for the ensuing fiscal year.
The majority of the non-plan expenditure is accounted for by interest payments, subsidies (mainly on food and
fertilisers) and wage payments to employees.
*Now the Planning Commission has been dismantled. It‘s functions are performed by the finance ministry.
Part B: Estimates of revenue

Apart from estimating the expenditure, an assessment of expected revenues likely to flow into the government
treasury has to done as a concurrent exercise. Revenue receipts are of two types - capital and current receipts.
Capital receipts include repayment of loans given by the government, receipts from divestment of public-sector
equity and borrowings—both domestic and external. Current receipts include mainly, tax revenues, receipts by
way of dividends from public-sector units and interest payments on loans given out by the central government.
The amounts to be received by way of tax revenues is estimated on the basis of existing rates of taxation and
taking into consideration the likely growth and inflation rate over the ensuing fiscal year.
On the capital receipts side, targeted amounts to be realised through divestment of public sector equity and
amounts to be realised by way of repayments of loans is made. All the estimates are provided to the revenue
secretary.
STAGE 2: First estimates of deficit

After the estimates of revenue and expenditure are made, they are matched together. This provides the first
estimate of expected shortfall in revenue to meet projected expenditure. The government then, in consultation
with the chief economic advisor, decides on the optimum level of borrowings to meet this deficit. The figure of
external borrowings is known as much of the external borrowing by the government consists of bilateral and
multilateral assistance which is known by the time budget exercises are undertaken. The level of domestic
borrowing depends partly on the desired level of fiscal deficit that the government targets for itself. A part of the
revenue gap is left unfilled to be met through the issue of ad hoc treasury bills.
STAGE 3: Narrowing of the deficit

After the targets for the fiscal deficits and the overall budget deficit is decided, any remaining shortfall is filled
through a revision in tax rates if feasible , keeping in mind the fiscal incentive structure the government wishes to
put in place to stimulate the growth in different sectors. Following the initial plans, if any changes need to be
made adjustments are made to the expenditure; usually the plan expenditure has to be modified. The non plan
expenditure comprises of interest payments, subsidies and administrative expenditure. Due to the political
sensitivities involved in reducing subsidies, non-plan expenditure of the government is inflexible about changing
it and it is the plan expenditures which get the axe after pre-emption have already been made for non-plan
expenditure.
STAGE 4: The Budget

The presentation of the Budget for the ensuing fiscal year (beginning April 1) is usually done on the last working
day of February. The Indian constitution has made the Parliament supreme in financial matters. The Union
government, under Article 112 of the constitution, is required to lay an annual financial statement of estimated
receipts and expenditure before both Houses of Parliament.
It can levy taxes or disburse funds only on approval in both houses of Parliament. However, the proposal for
taxation or expenditure has to be initiated within the Council of Ministers--specifically by the Minister of Finance.

The Finance Minister presents before the Parliament, a financial statement detailing the estimated receipts and
expenditures of the central government for the forthcoming fiscal year and a review of the current fiscal year.
Under Article 114 of the Constitution, the government can withdraw money from the Consolidated Fund of India
only on approval from Parliament and so it has to get the Appropriation Bills approved by Parliament. This
authorises the executive to spend money. Article 265 of the Constitution prohibits the government from collecting
any taxes without the authority of law. Therefore, the government comes up with the Finance Bill. The Bill may
levy new taxes, modify the existing tax structure or continue the existing tax structure beyond the period approved
by Parliament earlier.
The bills are forwarded to the Rajya Sabha for comment. The Lok Sabha, however, is not obligated to accept the
comments and the Rajya Sabha cannot delay passage of these bills. The bills become law when signed by the
President. The Lok Sabha cannot increase the request for funds submitted by the executive, nor can it authorize
new expenditures.
The proposals in the budget come into force on April 1. Between the presentation and effective date there is a gap
of 1 month during which the Lok Sabha can review and modify the government's budget proposals. This does not
happen most of the time and the Parliamentary scrutiny of proposals and the passage of the budget gets
completed in May, well after the commencement of the new fiscal year. Since the proposed budget has to be
effective from April 1, the government usually seeks an interim approval to meet emergent expenditures that have
to be incurred pending the approval of the budget. This is called the vote-on-account and the sanctions given by
the passage of the vote-on-account get automatically overridden once the Budget is approved by Parliament.
What happens once the budget is tabled in Parliament?

The budget session of Parliament runs from the latter part of February to May every year. After the budget is
tabled, a general discussion on the broad budget measures takes place. No voting takes place at this stage.
Parliament then goes into recess for about three weeks while detailed estimates of ministries‘ expenditure, called
Demands for Grants, are examined by Standing Committees of Parliament.
What are Standing Committees and what is their role?

The detailed Demands for Grants are examined by Standing Committees which together oversee the work of all
the ministries. There are 24 such committees including ones on industry, home affairs, defence and finance. These
committees submit reports to the Lok Sabha on each ministry‘s Demands for Grants.
What happens once the reports are submitted?

Once such reports are submitted, a detailed discussion takes place in Parliament, according to a timetable. During
the discussion, MPs can call for ‗cut motions‘ which can reduce the grant amount for the respective ministry to Re
1 (to signify disapproval of the policies of that ministry), or by a specific amount (an ‗Economy‘ cut), or by a token
amount of Rs 100 (to express a specific grievance).
What is „guillotining‟?
The Demands for Grants which have not been voted on by the last day fixed for the purpose are ‗guillotined‘, i.e.
they are voted upon together. Interestingly, the Demands for Grants of almost all ministries except two or three
are guillotined in this way.
What are the final steps in the budget process?

After voting on Demands for Grants, an Appropriation Bill is introduced and voted on, which authorises the
government to spend money from the Consolidated Fund (which consists of all revenues, interest earnings and
fresh borrowings of the government). The Finance Bill is then taken up and passed in the Lok Sabha. During the
year, if the government needs to spend any money which has not been voted on by Parliament, it can introduce

supplementary Demands for Grants (if the expenditure on a specific head exceeds the amount that has been voted
for it). Only the Lok Sabha has the power to approve the budget; the Rajya Sabha can only propose amendments
which the lower house of Parliament may or may not accept.
Are there certain items of expenditure which are not voted on in Parliament?
There are certain items of expenditure which are not voted on by Parliament but are charged directly to the
consolidated fund – these include the salaries and allowances of the President, judges of the supreme court etc.
Interest paid by the government on its debt is also charged directly to the fund.
Budget documents
The Union Budget comprises various documents. The first one is the speech of the Finance Ministry, which he
reads in the Lok Sabha. The Budget speech provides the direction in which the government wishes to move in the
coming financial year, the growth targets and the major thrust areas. The Finance Minister spells the broad tax
policy measures in his speech. The speech lists the problems being faced by the country on the economic front and
indicates the government‘s response to them. The speech also includes various expenditures and tax proposals.
The other important documents are:
Key to Budget: This document provides an understanding of the budget documents
Budget Highlights: This statement gives the key features of the budget
Annual Financial Statement: Annual Financial statement is the main document. This statement shows the
receipts and payments of the government under the three parts in which government accounts are kept.
Consolidated Fund- Resources raised by the government through taxes, loans, dividends from PSUs and banks
form the Consolidated Fund.
Contingency Fund- It is at the government‘s disposal to meet unforeseen expenditure.
Public Account- The amount collected by the government acting as a banker .e.g. PF, small savings collections.
Finance Bill: The Finance Bill includes the tax proposals and the tax rates. It provided the fine print of the
budget
Memorandum: Explanatory Memorandum provides a quick overview of tax provisions contained in the Finance
Bill.
Budget at a Glance: Budget at a Glance provides an overview of government finances. It‘s more like a balance-
sheet of the Union. It gives a broad break up of tax revenues, other receipts, expenditure-plan and no-plan
allocation of outlays by ministries and resource transfer to states and Union Territories. Progress towards
implementation of Budget proposals announced in previous years are listed in the Implementation Budget.
Expenditure Budget: Expenditure Budget Volume I and II explain the provisions made. While Volume I
explains the provisions ministry-wise, Volume II analyses expenditure trend over the years with regard to Plan
and non-Plan expenditure.
Receipts Budget: Receipts Budget gives details of revenue receipts and capital receipts and explains the
estimates so as to make them intelligible to an ordinary citizen. It also include trend of receipts over the years and
details of external assistance

Customs & Central Excise: This document gives the customs and excise notifications.
Implementation of Budget Announcements: This contains status of implementation on initiatives

announced by the Finance Minister in the Budget Speech.
Macro Economic Framework Statement: The Macro-economic Framework Statement, as enjoined by the
Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act), contains an assessment of the growth
prospects of the economy with specific underlying assumptions. It contains assessment regarding the GDP growth
rate, fiscal balance of the Central Government and the external sector balance of the economy.
Medium Term Fiscal Policy Statement: The Medium-term Fiscal Policy Statement, as enjoined by the
FRBM Act sets forth a three year rolling target for specific fiscal indicators along with underlying assumptions.
The statement includes an assessment of sustainability relating to balance between revenue receipts and revenue
expenditure and the use of capital receipts including market borrowings for generation of productive assets.
Fiscal Policy Strategy Statement: The Fiscal Policy Strategy Statement, as enjoined by the FRBM Act,
contains the policies of the Central Government for the ensuing financial year relating to taxation, expenditure,
lending and investments, administered pricing, borrowings and guarantees. It outlines the strategic priorities of
the Government in the fiscal area, how the current policies are in conformity with sound fiscal management
principles and rationale for any major deviation in key fiscal measures.
Conclusion: The budget documents are fascinating. These documents are not just numbers. Scrutinising them,
one can understand the intention of the government, its priorities, its policies, and its allocation of financial
resources, among different regions, sectors, industries which create a sea change in the lives of the people affected
by it. Budget numbers express an enormous volume of information. One trained in budget analysis can discover
the government's expressed as well as hidden priorities. They may be interested in rural development by-creating
employment opportunities, or providing elementary education to children, drinking water facilities to the villages,
or health services in remote areas or whether their focus is on urban development with creation of industries ,
satellite towns , improvement in facilities or it wants to provide optimum resources to both.

Railway Budget
Railway Minister Suresh Prabhu, presenting the Narendra Modi government‘s first full-year Railway Budget, left
passenger fares untouched and steered clear of announcing any new trains. Instead, he launched a slew of
measures aimed at making train travel easier, more comfortable and safer.
The passenger-friendly proposals include SMS

alerts for train timings, provision for Wi-Fi
facility in 400 stations, user-friendly ladders
for upper berths, 17,000 bio-toilets, and
installation of cameras for the safety of women
travelers. Also, it has been proposed that
tickets can now be booked four months in
advance (from two months earlier), and those
travelling unreserved can buy a ticket within
five minutes.
The fund allotment for passenger amenities has

been increased by 67 per cent, he said,
requesting corporates, non-governmental
organisations (NGOs), charitable institutions
and religious bodies to come forward and
invest generously for passenger amenities from
their CSR (corporate social responsibility) funds.
―Over the next five years, IR [Indian Railways] has to go through a transformation,‖ said Mr. Prabhu, outlining
better customer experience, safety, capacity expansion and financial sustainability as the goals.
Toward achieving this, the Minister emphasised on partnerships, and indicated that some Rs. 8.5 lakh crore
would need to be invested in the next five years. Also important for such a transformation would be revamped
systems and processes, he added.
Mr. Prabhu pointed to an

―improvement‖ in the financial
performance of 2014-15. His
target, therefore, for 2015-16 is
an operating ratio — a key
metric that shows the
percentage of money spent on
the money earned — of 88.5 per
cent. That figure was 91.8 per
cent in 2014-15 and 93.6 per
cent in 2013-14. This, he said,
would be the best operating
ratio in the last nine years.
Fresh revenues were raised

through an increase in freight

rates on coal, iron ore and steel, a move that will be operational from April 1, and bring about Rs. 4,000 crore.
The budget also made it clear that Railways would be an integral part of Prime Minister Narendra Modi‘s pet
schemes such as Swachh Bharat, Make in India, and Digital India. This, according to Vishwas Udgirkar, Senior
Director, Deloitte in India, shows that ―the Railway Budget is not a document in isolation.‖
Later, at a press conference, Mr. Prabhu elaborated on this question. He said, ―Nowhere in the world is there a
question of where the money is going to come from. The same question was put to me when I was a power
minister — where is the money going to come from? We got $150 billion after the Electricity Act 2003 was passed.
So, for creating infrastructure, we cannot just depend on only one source: gross budgetary support.‖
Inter-metro trains to hit high speeds

Turned into a focal point for the Railways by Prime
Minister Narendra Modi, who has often referred to
the ―Bullet Train‖ on the lines of high-speed trains
being operated in Japan and China, the project only
finds a fleeting mention in the 2015-16 Railway
Budget.
In his budget speech in the Lok Sabha, Railway

Minister Suresh Prabhu reiterated the commitment of
the government to ―pursue with vigour special
projects like high-speed rail corridor between
Mumbai and Ahmedabad.‖ The feasibility study for
this is at an advanced stage and the report is expected
by this mid-year.
The White Paper on the status of the Railways also

referred to the 534-km-long Mumbai-Ahmedabad
high-speed corridor, estimated to cost about Rs.
63,180 crore, and the Chennai-Bengaluru-Mysuru
high-speed corridor. Both the projects will be
implemented only when found to be financially
viable.
But what looks viable in the near future is increasing

the speed on some busy inter-metro corridors.
Indicating this in his budget speech, the Minister said
the speed of nine railway corridors will be increased from the existing 110 kmph and 130 kmph to 160 kmph and
200 kmph respectively so that inter-metro journeys like Delhi-Kolkata and Delhi-Mumbai can be completed
overnight.
―This will involve upgradation of tracks, including turnouts and rolling stock, to higher standards as well as the
adoption of improved methods of track recording, monitoring and maintenance,‖ he added.
Railway Ministry officials said trials for running a semi-high speed train like Shatabdi Express on the Delhi-Agra
corridor have been completed and the report of the Commissioner of Railway Safety is expected within a month.
―This high-speed train is likely to start running within the next couple of months,‖ the official said.

Railways to look beyond budgetary support for funds
Railway Minister Suresh Prabhu said the organisation could not depend on budgetary resources alone to fund
expansion and stressed the need for tapping external funds. Some agencies had already made commitments for
the current year, he said.
His maiden budget proposed an investment of Rs. 8,50,000 crore in the next five years. While the budget did not
offer any clues to where the money would come from, Mr. Prabhu highlighted some of the means of sourcing
funds. ―For creating infrastructure, we cannot just depend on only one source: gross budgetary support. The
Finance Minister also raises money from the market… Why cannot we do the same thing?‖ .
'Money is not a great issue'

Railway Minister Suresh Prabhu said a public sector undertaking with a net worth of Rs. 15,000 crore could be
leveraged 3-4 times for undertaking projects on a commercial basis. ―The amount we can get through such an
exercise could be even more than what we can expect from gross budgetary support.‖
He said a large government-owned institution had already committed Rs. 20,000 crore for the current year.
Another had committed Rs. 10,000 crore. However, he did not name the institutions. ―We are talking to the World
Bank, the Asian Development Bank and the International Finance Corporation; all of them are aligned to our
internal priorities. So, money is not a great issue,‖ he said.
In his budget speech, he spoke about pension funds showing interest in investing in railway projects. He also
announced a plan to create an independent finance cell on the Railway Board to mull over ways of raising funds.
Relying on the single source, the gross budgetary support, and if it does not come then the Railways has to restrict
its expansion plans. ―That is why railways have suffered. We could not invest in capacity addition.‖
Mr. Prabhu also acknowledged the problems in public-private partnership and proposed a mechanism to redress
grievances.
Technology to be tapped for better services
Railway Minister Suresh Prabhu‘s maiden

budget offers a lot of hope to the IT and telecom
sectors as the Ministry taps technology to
enhance the efficiency of the rail sector.
Some of the measures he announced are 24X7

helpline number 138 and toll-free number 182
for security-related complaints. Commenting on
the budget, Prime Minister Narendra Modi
tweeted: ―I am particularly delighted that for
the 1st time, there is a concrete vision for
technology upgradation & modernisation of the
Railways.‖
Mr. Prabhu said in his speech: ―The Railways will develop a multi-lingual e-portal and will offer unreserved tickets
on smartphones and Wi-Fi will be provided at B category stations.‖ About Rs. 5,000 crore has been earmarked for
information technology, and research.

Another major technological advancement is the introduction of hand-held terminals to travelling ticket
examiners (TTEs) for verification of passengers and downloading charts. Travellers can order food and disposable
bed rolls through the IRCTC website at the time of booking tickets. The Railways are also planning to introduce
on-board entertainment on select Shatabdi trains on licence fee basis.
Apart from these, they will add surveillance cameras on a pilot basis in selected mainline coaches and ladies‘
compartments of suburban coaches without intruding into privacy. The Ministry plans to use the power of IT to
provide information on latest berth availability, station navigation system, bar coded/RFID tracking of parcels
and freight wagons, and automated parcel warehouses among others.
It will introduce a centrally-managed Railway Display Network in over 2000 stations in the next two years. Mr.
Prabhu also emphasised on the need for collaboration with institutes to develop technology and innovation for the
improvement of Railways. The Railways are planning to work with IIT-Kanpur to design a project based on radio
signal for warnings at unmanned level crossings.
Other proposals are research centres in select universities for fundamental research and ‗Malaviya Chair‘ for
Railway Technology at IIT (BHU), Varanasi. Also, an innovation council called ―Kayakalp‖ for business re-
engineering and introducing a spirit of innovation in the Railways is planned. A technology portal to invite
innovative solutions is another proposal.
Freight rates for select products hiked

Though there was no increase in passenger fares, Railway Minister Suresh Prabhu has proposed hike in freight
rates for select commodities. The freight rate for coal transport will increase by 6.3 per cent. For iron ore, it will go
up by 2.7 per cent and for cement and steel by 0.8 per cent. Freight charges for the transport of urea and grains
will also go up by 10 per cent.
In the wake of declining diesel

prices, it was expected that
freight rates would not be
increased. In his press
conference post-budget, Mr.
Prabhu played down the freight
increase. It was done to
rationalise tariff on different set
of commodities, he explained.
―You will see some commodity
prices coming down and some
going up. Freight rates for long
distance will be less. It will have
a marginal impact,‖ he said.
The move to increase freight rate has attracted sharp reactions, however. ―The 6.30 per cent hike in freight rates
for coal will dent a range of industries, and is also out of whack with the Make in India spirit. Along with the 0.8
per cent hike in steel freight, this is a double whammy that could have been avoided,‖ Ravi Uppal, MD and Group
CEO JSPL, said.
―This may likely impact Railways‘ plans to arrest its sliding transport market share in freight. This may further
increase existing imbalances in freight rates vis-à-vis passenger rates,‖ Vishwas Udgirkar, Senior Director,
Deloitte India, said. ―The total impact of freight hike on cement and coal is expected to be Rs. 20/tonne, which is

Re. 1/bag. We believe that the impact of Rs. 20/tonne or Re. 1/bag is very marginal considering the average total
cost of Rs. 4,000/tonne for major players,‖ Vijay Goel, analyst at Karvy, said in a research note, post the budget.
Now book your rail ticket 4 months in advance

Railway passengers soon will be able to book your rail ticket four months in advance instead of two months at
present. In his Railway budget speech in Lok Sabha, Railway Minister Suresh Prabhu said advance reservation
period has been extended from 60 days at present to 120 days to check the rising menace of touts.
Asked when the decision will be implemented, Minister of State for Railways Manoj Sinha told reporters later that
it would come into force in the next fortnight. Incidentally, the advance reservation period earlier was 120 days
but was reduced to 60 days about two years back, a step the railways had then said was initiated to also check the
tout menace. Member Traffic Ajay Shukla said advancing the reservation period once again to 120 days would
discourage the touts as it involves more cancellation charges. Mr. Prabhu announced introduction of ‗operation
five minutes‘ scheme under which ticketless passengers can get regular tickets within five minutes of entering
station.
Provision of modified ‗hot buttons‘, coin vending machines and ‗single destination teller windows‘ will drastically
reduce the transaction time, the Minister said. For the differently-abled travellers, a special initiative is also being
launched whereby they can purchase concessional e-tickets after one-time registration. It is also proposed to work
towards developing a multilingual e-ticketing portal. ―We will move towards crediting all refunds through the
banking system,‖ the Minister said.
Noting that in Central, Western and Southern Railway suburban sections, a pilot project of issuing unreserved
tickets on smart phones has already been started, he said the facility would be progressively introduced to all
stations. Automatic ticket vending machines have been installed at many stations.

Special focus areas

Indian Railways – Statistics
The Indian Railways transported 8,397 million people last year, or over 23 million people a day. These people
between them travelled 1,159 billion kilometres on Indian trains last year, which means they could have
circumnavigated the earth 29 million times. They earned the railways Rs 37,000 crore last year, roughly a quarter
of its revenues.
More than half of the railways‘ passengers – 4,500 million every year - travel on its suburban rail networks, in big
cities like Mumbai, Delhi, Kolkata and Chennai, but it‘s journeys in the rest of the country that brings in the
money.
The Railways are unequivocally propelled along by the poor of the country; sleeper class and second class
passengers between them formed over 95 per cent of all passengers last year. They also contributed over 70 per
cent of earnings from passengers.

But overall, freight has contributed to a growing proportion of the railways‘ revenues over the years. A look at the
main goods transported by the railways gives a clear indication of how central the railways is to the Indian
economy.
What do the railways spend their money on?
The number of employees in the Railways, India‘s largest employer and one of the world‘s ten largest, has barely
grown since 1950, but as government salaries grow, so has the wage bill. Ultimately, the railways have a serious
productivity problem.

What this has meant is that very little of what the Railways earns is left for it to invest; it‘s Operating Ratio
(working expenses to gross earnings) has grown to a whopping, which means that just 6p of every rupee is left
over after its expenses.
For commuters, one major concern, apart from the railways‘ ability to grow its routes and seats as fast as
prospective commuters, is safety. The White Paper brought out by the government claimed that India had fewer
fatalities on trains than Europe.
But this is because the Railways do not count deaths from what they call ―accidental falling‖ in these statistics,
which account for nine deaths every day on Mumbai‘s trains alone. Add just Mumbai‘s numbers – from the
Government Railway Police‘s annual report – to this figure, and the picture looks very different.

Secrets for sale
For a corporate espionage scandal dubbed Filegate, the story began, appropriately, with a break-in. On the night
of February 18, Delhi Police arrested three government contract staffers for illegally entering the offices of the
petroleum ministry in Shastri Bhawan. Nine 'secret' documents of the ministry were recovered from them. They
included monthly reports, correspondence and input material for the national gas grid to be proposed in the
Union Budget. The employees led police down a veritable rabbit hole of incriminating documents from the coal
and power ministries. The 2010 leak of the Niira Radia tapes exposed corporate India's dependence on lobbyists
to influence government policy. Five years later, Filegate has blown the lid off an elaborate information bazaar in
the Capital.
Police say companies profited from the stolen

information. They have so far arrested two energy
consultants- Santanu Saikia and Prayas Jain-and
five senior energy firm executives- Rishi Anand of
ADAG Reliance, Subhash Chandra of Jubilant
Energy, Vinay Kumar of Essar, Shailesh Saxena of
RIL and K.K. Naik of Cairns.
That the Filegate probe was monitored by National

Security Adviser Ajit Doval and the Intelligence
Bureau (IB) indicates the dismay in the top echelons
of government over the leakage of information. The
arrests, which came after two months of surveillance
by the IB, was the government's proverbial shot across the bows of Corporate India. The ripples are being felt in
Mumbai where India Inc anxiously watches the investigations. "That it is a message for the corporate sector is not
in question. It is also a message for the bureaucracy," says political analyst Santosh Desai.
Few items as nondescript as an antiquated blue-brown cardboard file bound in string evoke as much awe in
Lutyens' Delhi. This is because the sheafs of light green noting sheets with handwritten notes on the margins con-
tinue to be harbingers of government policy. In the information bazaar, the government file is the new currency,
sometimes sold to multiple bidders.
A refinery throughput report or a technical note on spectrum pricing or even routine inter-departmental
communications may not excite hard-boiled researchers. But for companies intent on decoding the drift of
government policy, these documents are paydirt. Government files and reports are valuable road maps to navigate
the treacherous minefield of an opaque policy environment.
Fuelling the anxiety of businessmen is the obsessive secrecy that surrounds government decision-making and the
inaccessibility of bureaucrats. "Letters are never replied to, our requests for appointments are never heeded to by
bureaucrats," says a Delhi-based industrialist.
The flip side of this secrecy is a culture of lax security where senior officials freely use private email accounts and
vital files are manually carried around by the lowest paid employees in the department-on an average each file
passes through a dozen hands each day as it travels between offices for approvals. Over the past decade how-ever,
leaks have ceased to make news in Delhi. Thousands of classified documents, including top-secret military
procurement plans, correspondence and secret cabinet briefing notes from the Prime Minister's Office (PMO),
have sprung out of virtually all the sensitive offices on Raisina Hill.

Even so, the petroleum ministry break-in was audacious in its brazenness. Government employees forged vehicle
passes and made duplicate keys to access petroleum ministry offices. They even disabled CCTV cameras, which
were installed there last year after the ministry asked the Intelligence Bureau to find out how CPI leader Gurudas
Dasgupta was able to access information in real time.

This break-in coincides with a rising trend of industrial espionage. A 2012 Assocham survey on corporate
espionage interviewed around 1,500 CEOs and EDs. About 900 said they indulged in corporate espionage and
bugged offices of their rivals by planting moles in rival firms. Many of them planted people in minor jobs such as
receptionists and peons.
Lawyer and anti-corruption activist Prashant Bhushan says the petroleum ministry break-in confirms the whiff of
corporate espionage hinted at in the Radia tapes. "A well-organised machinery was at work within the ministry,"
Bhushan says.
Greasing the wheels of this machinery are corporate budgets for 'liaison units' that could be several crores of
rupees depending on the group's size. Nearly 50 per cent of its expenses are dubbed miscellaneous expenses
generally used as 'facilitation fees'. The transformation of this cottage industry into an organised sector mirrors
corporate India's rising fortunes.
The owner of a Delhi-based Rs.300 crore infrastructure firm pegs his cost of 'acquiring new business' at 2 per cent
or nearly Rs.6 crore. The money is spent on entertaining officials and for information.
The new information warriors are an army of 'corporate communication officers' appointed by all business houses
to keep abreast of government. They have fancy designations, starting salaries of over Rs.1 lakh a month and are
often complemented by private consultants, many of whom are retired government servants in touch with their
former associates in the administration.

The KRA for the job is access to politicians, bureaucrats who matter in vital ministries relating to petroleum, coal
and telecommunications where government policy can directly impact a firm's bottom lines. A senior executive of
a US-based MNC complains about the unfair competitive advantage Indian companies have because they employ
such liaison officers. "We can only rely on our brand name and the sheer weight of investments we can bring in,"
he says.
The information is used by planners to update their business decisions and pre-empt government policy moves.
Access to a regular information flow helps them follow up proposals specifically related to individual corporate
houses, or matters related to competition. In the defence ministry for instance, information can translate into a
massive competitive advantage. Leaked documents such as the Long Term Perspective Plans help arms
manufacturers know of requirements of the armed forces well in advance. Arms dealers and lobbyists then use
this information to influence the specifications of equipment even as they are being finalised within various
service headquarters. This ensures a narrow playing field when tenders are finalised. Information is valued
according to its office of origin. A report-a euphemism for multiple sheets of paper that could be budget inputs or
ministerial discussions-can fetch upwards of Rs.50,000. A paper from the PMO can fetch up to Rs.5 lakh.
The policymaking process is tracked as it begins at the level of section officer of a department and goes up to the
cabinet for approval. One frequent Raisina Hill corporate visitor grades information into liquid, semi-solid and
solid, with solid commanding a premium. "Liquid signals policy intent, solid means policy action."
Photocopying files is passe. Smartphones now come loaded with apps such as Scanbot that enable quality scans of
documents. They are uploaded on cloud servers hosted out of the country. There's no paper trail. "Files with
signatures and notings command a premium because plain documents are suspected to be forgeries," says a
revenue officer. The desperation of business houses has also resulted in the emergence of a parallel army of
consultants. These consultants create networks which include junior employees in ministries
Police say the network of junior government employees in the petroleum ministry-Asharam Singh, a peon, and
two former multi-tasking staff at Shastri Bhawan, Lalta Prasad and Rakesh Kumar-vacuumed information and fed
them to energy consultants Santanu Saikia and Prayas Jain. The duo sold it to companies.
Saikia's family claims that he has been framed because one of his energy websites published a story on an alleged
fraud committed by one petroleum firm. "He exposed a scam and the government went after him," Saikia's
relative says.
A senior official for one of the business houses named by the police in the petroleum ministry break-in, denies
they buy information. "Big corporate houses don't need to hire intermediaries. They can get information with two
phone calls. And documents are regularly leaked by disgruntled bureaucrats," says the official.
Liberalisation unleashed the power of the Indian private sector but also made the government the custodian of
state secrets. Before telecom liberalisation, the Wireless Planning & Coordination Wing was so nondescript that it
did not even find place in Sanchar Bhawan. The telecom revolution has made this office, located in Dak Bhavan,
most sought-after because it holds India's spectrum blueprint, the lifeblood of the telecom sector.
"Since liberalisation, certain business groups enjoyed an edge over rivals because of access to politicians and
bureaucrats and monopolised sectors such as hydrocarbons, aviation and telecom. The recent incident has
exposed this nexus," says Rajya Sabha member and founder of Jupiter Capital, Rajeev Chandrasekhar.
The importance of low-grade employees could be gleaned from the fact that Subhash Chandra, the arrested
corporate executive, worked as a typist with the under secretary's PA in the Petroleum ministry until 2011. He
then joined Jubilant Energy, one of the firms that police say had received stolen documents, as a senior executive.

The fiercely competitive business has just not forced companies to create new jobs such as 'file chasers' but also
pushed them to resort to sponsoring questions in Parliament, or even influence governments directly-as in the
2013 scandal where US retailer Walmart allegedly spent $25 million in lobbying fees to lobby the Indian
government to ease restrictions on foreign direct investment in the retail industry. Following this the company
launched an internal probe and delayed its India operations.
Information gleaned from government documents helps companies lobby with government. Policy analyst and PR
firm Perfect Relations founder Dilip Cherian draws the line between professional lobbying and "nefarious
activities going on in the name of lobbying". "Our job is to form opinion on the merit of a policy and it's done only
after a policy is announced or a debate is going on over a policy. The scam in the petroleum ministry is nothing but
theft of documents. It's a kind of insider trading and no professional lobbyist indulges in such practices," he says.
However, lobbying doesn't necessarily happen by Cherian's rule-book. Corporate lobbyist Deepak Talwar, who
was named in one CBI preliminary inquiry registered in the Radia tapes case, is said to have visited the official
residence of the then CBI chief Ranjit Sinha at least 63 times in 15 months between May 2013 and August 2014.
According to probe agencies, Talwar obtained clearances for a telecom company, Telcordia, from various agencies
despite security objections raised by the home ministry. MNP Interconnection Tele-com Solutions India Pvt Ltd-a
joint venture between Telcordia and Deepak Talwar Consultants Pvt Ltd- is one of only two companies that had
been licensed to implement mobile number portability.
Transparent government
Former CBI director R.K. Raghavan outlines a score of short-term measures to improve physical security in
chaotic government offices. These include appointing full-time directors accountable for security in sensitive
ministries, controlling access to copying machines and sequestering sensitive areas in each building where
confidential information is handled. Some of these measures are already being implemented by the government in
the wake of Filegate. The long-term issue of progressively eliminating paper files needs to be undertaken.
Former home secretary G.K. Pillai is for the government to make information easily accessible. "As far as possible,
the government should upload all information on the internet to prevent such break-ins," he says.
The answer, as former Information Commissioner Shailesh Gandhi says, is for the government to implement its
vision for Digital India in its own offices. "Government offices are awash in paper files. There is no space to store
them or retrieve them. The system clings to paper files because of inertia and a vested interest that corruption will
be eliminated if they disappear," he says.
The government's paperless office drive has been a nonstarter. In 2011, the PMO began using an e-office soft-ware
to create a paperless office. The software, developed by the National Informatics Centre, has files that travel
within a secure intranet. Four years later, the PMO is the only government department to use e-files.
Securing files is only one part of the solution. A key reason for the corporate obsession for information lies in the
opacity of government.
Industry bodies say the only way to end corporate snooping is to introduce complete transparency and demolish
the walls of secrecy around the process of decision-making. "What we need is strong regulators, open decision
making," says Assocham Secretary General D.S. Rawat. "Even Budget making should be done in a transparent
manner and this practice of changing and altering tax slabs and rates every year should be stopped. There should
be long-term policies with clear vision and fair, transparent rules of the game".
The benefits of e-Governance are clearly visible. One business-man explains he bagged a Rs.1,500-crore
Engineering Procurement and Construction contract for installing transformers through online bids. The bid was

processed in just 45 days as opposed to a year. It cut out an army of middlemen he would have other-wise
employed in the process.
Last year, the Directorate General of Acquisition, a sensitive Ministry of Defence department that procures arms,
began a system of monthly informal meetings with industry representatives.
The solution could lie in a relook at the entire architecture of confidentiality in government and the indiscriminate
classification of even routine government documents as secret. "Archaic laws such as the Official Secrets Act must
be repealed. Lobbying must be legalised and regulated through a statutory enactment," says Congress
spokesperson Manish Tewari.
Removing the premium on information could create a level playing field. When the buying stops, the break-ins for
information can too.
Official Secrets Act

Prosecution and penalties
The act prescribes penalties for:

Spying
Communications with foreign agents
Wrongful communication of information
Unauthorized use of uniforms, falsification of reports, forgery, impersonation and false documents
Interfering with officers of the police or members of the Armed Forces of the Union etc.
Punishments under the Act range from three to fourteen years imprisonment. A person prosecuted under this Act
can be charged with the crime even if the action was unintentional. The Act only empowers persons in positions of
authority to handle official secrets, and others who handle it in prohibited areas or outside them are liable for
punishment.
In any proceedings against a person for an offence under this Act, the fact that he has been in communication
with, or attempted to communicate with a foreign agent, whether within or outside India is relevant and enough
to necessitate prosecution. Under the Act, search warrants may be issued at any time if the magistrate feels that
based on the evidence in front of them, there is enough danger to the security of the state.
Uninterested members of the public may be excluded from court proceedings if the prosecution feels that any
information which is going to be passed on during the proceedings is sensitive. This also includes media; so the
journalists will not be allowed to cover that particular case.
When a company is seen as the offender under this Act, everyone involved with the management of the company
including the board of directors can be liable for punishment. In the case of a newspaper everyone including the
editor, publisher and the proprietor can be jailed for an offence.
Conflict with right to information - In the OSA clause 6, information from any governmental office is
considered official information, hence it can be used to override Right to Information Act 2005 requests. This has
drawn harsh criticism.

Iftikhar Gilani case - In June 2002, Gilani was arrested under the Official Secrets Act (OSA) for possessing a
paper published by the Institute of Strategic Studies, Islamabad, detailing among other things, the deployment of
Indian troops in Indian-held Kashmir. The document was anything but classified: it was available on the Internet,
and moreover, as it had originated in Pakistan, it clearly didn't qualify as an 'official secret' of the Indian
government. Yet, evidence was fabricated - Intelligence Bureau officials altered the words 'Indian-held Kashmir'
in the document to 'Jammu and Kashmir' to suggest it was an Indian document.
The first military report suggested that the information he was accused of holding was "secret" despite being
publicly available. The second military intelligence report contradicted this, stating that there was no "official
secret". The military reported that, "the information contained in the document is easily available" and "the
documents carries no security classified information and the information seems to have been gathered from open
sources". On January 13, 2003, the government withdrew its case against him. Gilani was released the same
month.
Delhi high court Judgement - The Delhi high court greatly reduced the powers of the act by ruling that
publication of a document merely labelled ‗secret‘ shall not render a person liable for punishment under the law.
Petrogate - If police also invokes Official Secrets Act (OSA), the prosecution may find it hard to justify charges
under this law, meant to be used against spies undermining national security. Section 3 of OSA makes it clear that
a person is liable to be punished only if information obtained by him is intended to be "useful to an enemy or...
relates to a matter the disclosure of which is likely to affect sovereignty or integrity of India, the security of the
state or friendly relations with foreign states".
This is the main reason why in 2009 a Delhi court discharged Santanu Saikia in an OSA case which had been
booked against him for publishing a secret Cabinet note on disinvestment, a document that was unlikely to have
any security repercussions.
Important sections of the act
3. Penalties for spying
(1) If any person for any purpose prejudicial to the safety or interests of the State-
(a) approaches, inspects, passes over or is in the vicinity of, or enters, any prohibited place; or
(b) makes any sketch, plan, model, or note which is calculated to be or might be or is intended to be, directly or
indirectly, useful to an enemy; or
(c) obtains, collects, records or publishes or communicates to any other person any secret official code or pass
word, or any sketch, plan, model, article or note or other document or information which is calculated to be or
might be or is intended to be, directly or indirectly, useful to an enemy [or which relates to a matter the
disclosure of which is likely to affect the sovereignty and integrity of India, the security of the State or friendly
relations with foreign States];
he shall be punishable with imprisonment for a term which may extend, where the offence is committed in
relation to any work of defence, arsenal, naval, military or air force establishment or station, mine, minefield,
factory, dockyard, camp, ship or aircraft or otherwise in relation to the naval, military or air force affairs of
Government or in relation to any secret official code, to fourteen years and in other cases to three years.
5. Wrongful communication, etc., of information
(1) If any person having in his possession or control any secret official code or pass word or any sketch, plan,
model, article, note, document or information which relates to or is used in a prohibited place or relates to

anything in such a place, 4[or which is likely to assist, directly or indirectly, an enemy or which relates to a matter
the disclosure of which is likely to affect the sovereignty and integrity of India, the security of the State or friendly
relations with foreign States or which has been made or obtained in contravention of this Act,] or which has been
entrusted in confidence to him by any person holding office under Government, or which he has obtained or to
which he has had access owing to his position as a person who holds or has held office under Government, or as
person who holds or has held a contract made on behalf of Government, or as a person who is or has been
employed under a person who holds or has held such an office or contract-
(a) Wilfully communicates the code or pass word, sketch, plan, model, article, note, document or information
to any person other than a person
to whom he is authorised to communicate it or a Court of Justice or a person to whom it is, in the interests of
the State, his duty to communicate it; or
(b) Uses, the information in his possession for the benefit of any foreign power or in any other manner
prejudicial to the safety of the State; or
(c) retains the sketch, plan, model, article, note or document in his possession or control when he has
no right to retain it, or when it is contrary to his duty to retain it, or wilfully fails to comply with all directions
issued by lawful authority with regard to the return or disposal thereof ; or
(d) fails to take reasonable care of, or so conducts himself as to endanger the safety of, the sketch, plan,
model, article, note, document, secret official code or pass word or information;
He shall be guilty of an offence under this section.
(2) If any person voluntarily receives any secret official code or pass world or any sketch, plan. Model, article,
note, document or information knowing or having reasonable ground to believe, at the time when he receives it,
that the code, pass word, sketch, plan, model, article, note, document or information is communicated in
contravention of this Act, he shall be guilty of an offence under this section.
(3) If any person having in his possession or control any sketch, plan, model, article, note, document or
information, which relates to munitions of war communicates it, directly or indirectly, to any foreign power or in
any other manner prejudicial to the safety or interests of the State, he shall be guilty of an offence under this
section.
(4) A person guilty of an offence under this section shall be punishable with imprisonment for a term which may
extend to three years, or with fine, or with both.
6. Unauthorised use of uniforms; falsification of reports, forgery, personation, and false

documents
(1) If any person for the purpose of gaining admission or of assisting any other person to gain admission to a
prohibited place or for any other purpose prejudicial to the safety of the State-
(a) uses or wears, without lawful authority, any naval, military, air force, police or other official uniform, or
any uniform so nearly resembling the same as to be calculated to deceive, or falsely represents himself to be a
person who is or has been entitled to use or wear any such uniform; or
(b) orally, or in writing in any declaration or application, or in any document signed by him or on his behalf,
knowingly makes or connives at the making of any false statement or any omission; or
(c) forges, alters, or tampers with any passport or any naval, military, air force, police, or official pass, permit,
certificate, licence, or other document of a similar character (hereinafter in this section referred to as an
official document) or knowingly uses or has in his possession any such forged, altered, or irregular official
document; or

(d) personates, of falsely represents himself to be, a person holding, or in the employment of a person
holding, office under Government, or to be or not to be a person to whom an official document or secret
official code or pass word has been duly issued or communicated, or with intent to obtain an official
document, secret official code or pass word, whether for himself or any other person, knowingly makes any
false statement; or
(e) uses, or has in his possession or under his control, without the authority of the department of the
Government or the authority concerned, any die, seal or stamp of or belonging to, or used, made or provided
by, any department of the Government, or by any diplomatic, naval, military, or air force authority appointed
by or acting under the authority of Government, or any die, seal or stamp so nearly resembling any such die,
seal or stamp as to be calculated to deceive, or counterfeits any such die, seal or stamp, or knowingly uses, or
has in his possession or under his control, any such counterfeited die, seal or stamp;
He shall be guilty of an offence under this section.
(2) If any person for any purpose prejudicial to the safety of the State-
(a) retains any official document, whether or not completed or issued for use, when he has no right to retain
it, or when it is contrary to his duty to retain it, or wilfully fails to comply with any direction issued by any
department of the Government or any person authorised by such department with regard to the return or
disposal thereof; or
(b) allows any other person to have possession of any official document issued for his use alone, or
communicates any secret official code or pass word so issued, or, without lawful authority or excuse, has in his
possession any official document or secret official code or pass word issued for the use of some person other
than himself, or, on obtaining possession of any official document by finding or otherwise, wilfully fails to
restore it to the person or authority by whom or for whose use it was issued, or to a police officer; or
(3) A person guilty of an offence under this section shall be punishable with imprisonment for a term which may
extend to three years, or with fine, or with both.

Call to amend the Preamble
Union Minister and Bharatiya Janata Party leader Ravi Shankar Prasad calling for a national debate on whether
the words ―socialist‖ and ―secular‖ should continue to be part of the Preamble to the Constitution in the wake of
the controversy over the Central government using a ―watermark of the original Preamble‖ in advertisements
released in the print media on the occasion of Republic Day — which did not have those words — has set off a
debate on a constitutional amendment made during the period of the Emergency. It followed the Shiv Sena‘s
demand that the two key words be dropped altogether from the amended Preamble.
In conceptually adding the words to the Preamble by means of the Constitution (42nd Amendment) Act, 1976,
wherein the words ―Sovereign Democratic Republic‖ were substituted with ―Sovereign Socialist Secular
Democratic Republic‖, the Statement of Objects and Reasons appended to that Bill said it was to ―spell out
expressly the high ideals of socialism, secularism and the integrity of the nation, to make the directive principles
more comprehensive and give them precedence over those fundamental rights which have been allowed to be
relied upon to frustrate socio-economic reforms for implementing the directive principles.‖ That the working of
the Constitution shows shortcomings, that the insertion of these two words was done during the period of the
Emergency under Prime Minister Indira Gandhi and that the Indian ethos is ‗inherently secular‘, making the
inclusion redundant, are the main arguments put forward by the ruling dispensation now.
As many legal pundits have convincingly shown, the Preamble embodies the ―basic philosophy and fundamental
values on which the Constitution is based‖. The inclusion of the words ―socialist‖ and ―secular‖ is best seen as an
explication of the ideals modern India has drawn directly from the freedom struggle. Upendra Baxi, citing the
great constitutional historian Granville Austin — despite his differences with him — recalls how the ―roots of the
directive principles‖ could be traced to the 1931 Karachi Congress resolution, and to the ―two streams of socialist
and nationalist sentiments in India that had been flowing ever faster since the late 1920s.‖
Even the Morarji Desai-led Janata Party government, in which the Jan Sangh was a constituent, did not think it
necessary to delist these two words when they enacted the 44th Amendment to nullify the objectionable features
introduced in the 42nd Amendment Act. Political scientists also emphasise that in the S.R. Bommai case, the
Supreme Court held that ―secularism is an integral part‖ of the Constitution‘s basic structure. With or without the
amended Preamble, the Indian Constitution will remain secular, but the signal the dropping of the words would
send will be disconcerting to the minorities.
Preamble:
WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST
SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens:
JUSTICE, social, economic and political;
LIBERTY of thought, expression, belief, faith and worship;
EQUALITY of status and of opportunity;
and to promote among them all
FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation;
IN OUR CONSTITUENT ASSEMBLY this twenty-sixth day of November, 1949, do HEREBY ADOPT, ENACT
AND GIVE TO OURSELVES THIS CONSTITUTION.

Provisions of the Indian Constitution related to Religious Rights
Article 15 - Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth
(1) The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth
or any of them.
(2) No citizen shall, on ground only of religion, race, caste, sex, place of birth or any of them, be subject to any
disability, liability, restriction or condition with regard to –
(a) access to shops, public restaurants, hotels and places of public entertainment; or
(b) the use of wells, tanks, bathing ghats, roads and places of public resort maintained whole or partly out
of State funds or dedicated to the use of general public.
Article 16 - Equality of opportunity in matters of public employment

(2) No citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them,
be ineligible for, or discriminated against in respect of, any employment or office under the State.
(5) Nothing in this article shall affect the operation of any law which provides that the incumbent of an office in
connection with the affairs of any religious or denominational institution or any member of the governing body
thereof shall be a person professing a particular religion or belonging to a particular denomination.
Article 23 - Prohibition of traffic in human beings and forced labour

(1) Traffic in human beings and begar and other similar forms of forced labour are prohibited and any
contravention of this provision shall be an offence punishable in accordance with law.
(2) Nothing in this article shall prevent the State from imposing compulsory service for public purposes, and in
imposing such service the State shall not make any discrimination on ground only of religion, race, caste or class
or any of them.
Article 25 - Freedom of conscience and free profession, practice and propagation of religion
(1) Subject to public order, morality and health and to the other provisions of this Part, all persons are equally
entitled to freedom of conscience and the right freely to profess, practice and propagate religion.
(2) Nothing in this article shall affect the operation of any existing law or prevent the State from making any law -
(a) regulating or restricting any economic, financial, political or other secular activity which may be
associated with religious practice;
(b) providing for social welfare and reform or the throwing open of Hindu religious institutions of a public
character to all classes and sections of Hindus.
Explanation I: The wearing and carrying of kirpans shall be deemed to be included in the profession of the Sikh
religion.
Explanation II: In sub-Clause (b) of clause (2), the reference to Hindus shall be construed as including a reference
to persons professing the Sikh, Jaina or Buddhist religion, and the reference to Hindu religious institutions shall
be construed accordingly.
Article 26 - Freedom to manage religious affairs

Subject to public order, morality and health, every religious denomination or any section thereof shall have the
right-
(a) to establish and maintain institutions for religious and charitable purposes;

(b) to manage its own affairs in matters of religion;
(c) to own and acquire movable and immovable property; and
(d) to administer such property in accordance with law.
Article 27 - Freedom as to payment of taxes for promotion of any particular religion

No person shall be compelled to pay any taxes, the proceeds of which are specifically appropriated in payment of
expenses for the promotion or maintenance of any particular religion or religious denomination.
Article 28 - Freedom as to attendance at religious instruction or religious worship in certain educational

institutions
(1) No religious instruction shall be provided in any educational institution wholly maintained out of State funds.
(2) Nothing in clause (1) shall apply to an educational institution which is administered by the State but has been
established under any endowment or trust which requires that religious instruction shall be imparted in such
institution.
(3) No person attending any educational institution recognised by the State or receiving aid out of State funds
shall be required to take part in any religious instruction that may be imparted in such institution or to attend any
religious worship that may be conducted in such institution or in any premises attached thereto unless such
person or, if such person is minor, his guardian has given his consent thereto.
Article 29 - Protection of interests of minorities

(2) No citizen shall be denied admission into any educational institution maintained by the State or receiving aid
out of State funds on grounds only of religion, race, caste, language or any of them.
Article 30 - Right of minorities to establish and administer educational institutions

(1) All minorities, whether based on religion or language, shall have the right to establish and administer
educational institutions of their choice.
(1A) In making any law providing for the compulsory acquisition of any property of an educational institution
established and administered by a minority, referred to in clause (1), the State shall ensure that the amount fixed
by or determined under such law for the acquisition of such property is such as would not restrict or abrogate the
right guaranteed under that clause.
(2) The State shall not, in granting aid to educational institutions, discriminate against any educational institution
on the ground that it is under the management of a minority, whether based on religion or language.
Article 51A - Fundamental duties

It shall be the duty of every citizen of India –
(...)
(e) to promote harmony and the spirit of common brotherhood amongst all the people of India transcending
religious, linguistic and regional or sectional diversities; to renounce practices derogatory to the dignity of
women;
(...)

Secularism in India
The 42nd Amendment to the Constitution of India enacted
in 1976, added the word secular to the Preamble. India
does not have an official state religion. The people of India
have freedom of religion, and the state treats all individuals
as equal citizens regardless of their religion.
The provisions of the Constitution of India indicate that it

endeavors to build in India the philosophy of secularism on
freedom, equality and tolerance in the field of religion.
Viewed in this context it is clear that the Constitution does
not build a wall of separation between the state and
religion. The essence of secularism is that the state is non-
partisan in its relations to citizens, no matter to whatever
religion they belong.
Thus, the distinguishing features of a secular democracy as

contemplated by the constitution are: (i) The state will not
identify itself with or be controlled by any religion; (ii)
While the state guarantees to everyone the right to profess
whatever religion one chooses to follow (which includes
also the right to be an agnostic or an atheist), it will not
accord any preferential treatment to any of them; (iii) No
discrimination will be shown by the state against any
person on account of his religion and faith; (iv) The right of every citizen, subject to any general condition to enter
any office under the state will be equal to that of his fellow citizens.
- Which religion should be followed by a person?
- Can a State compel its citizens to follow a particular religion?
- Can a State have its own religion?
- Can a Government of a State give preferential treatment to the followers of a particular religion?
The answer to all these questions is negative if the has adopted the theory of secularism. A secular state is neither
supposed to compel its citizens to adopt a particular religion nor it can give preferential treatment to the followers
of particular religion. Secularism eliminates God from the matters of the state. India is a secular country. The term
‗secular‘ denotes the threefold relationship among man, state and religion. The word Secular has not been defined
or explained under the Constitution in 1950 or in 1976 when it was made part of the preamble. A Secular State
means that the one that protects all religions equally and does not uphold any religion as the State religion. Unlike
in England where the Queen is the Head of the Protestant Church in India there is no provision to make any
religion the 'established Church'. The state observes an attitude of neutrality and impartiality towards all religions.
In the West, the word secular implies three things: freedom of religion, equal citizenship to each citizen regardless
of his or her religion, and the separation of religion and state. One of the core principles in the constitution of
Western democracies has been this separation, with the state asserting its political authority in matters of law,
while accepting every individual‘s right to pursue his or her own religion. Everyone is equal under law, and subject
to the same laws irrespective of his or her religion. In contrast, in India, the word secular does not imply
separation of religion and state. It means equal treatment of all religions.

Secularism as practiced in India, with its marked differences with Western practice of secularism, is a
controversial topic in India. Supporters of the Indian concept of secularism claim it respects Muslim men‘s
religious rights and recognizes that they are culturally different from Indians of other religions. Supporters of this
form of secularism claim that any attempt to introduce a uniform civil code, that is equal laws for every citizen
irrespective of his or her religion, would impose majoritarian Hindu sensibilities and ideals, something that is
unacceptable to Muslim Indians. Opponents argue that India's acceptance of Sharia and religious laws violates the
principle of equal human rights, discriminates against Muslim women, allows unelected religious personalities to
interpret religious laws, and creates plurality of unequal citizenship; they suggest India should move towards
separating religion and state.
India's personal laws - on matters such as marriage, divorce, inheritance, alimony - vary with an individual's
religion. Muslim Indians have Sharia based Muslim Personal Law, while Hindus, Christians, Sikhs and other non-
Muslim Indians live under common law. The attempt to respect unequal, religious law has created a number of
issues in India such as acceptability of child marriage, polygamy, unequal inheritance rights, extrajudicial
unilateral divorce rights and conflicting interpretations of religious books.
Goa is the only state in India which has Uniform Civil Code. The Goa Civil Code, also called the Goa Family Law, is
the set of civil laws that governs the residents of the Indian state of Goa. In India, as a whole, there are religion-
specific civil codes that separately govern adherents of different religions. Goa is an exception to that rule, in that
a single secular code/law governs all Goans, irrespective of religion, ethnicity or linguistic affiliation.
Positive freedom of religion- One of the basic civil liberties of an individual is the liberty of his mind and his
conscience. Preservation of liberty of the mind, conscience and thought being the greatest liberty alone can make
possible and meaningful other liberties. If the mind and conscience of human is in chain, all the other liberties
would become meaningless. A free mind and a free conscience, therefore is the essential, integral and
indispensable foundation of all other civil liberties.
The Constitution of India, being the supreme law of the nation recognizes the religious liberty of both the
individuals as well as associations of individual united by common beliefs, practices & discipline. The individual
and collective aspects of freedom of religion can be summarized in this order:
Individual Freedom of Religion- The term ‗religion‘ has not defined in the constitution but the meaning given
by the Supreme Court of India to the religion can be referred here, the Supreme Court in Commissioner, H.R.E.
Vs. L.T. Swammiar held:
Religion is a matter of faith with individuals or communities and it is not necessarily theistic. A religion has its
basis in a system of beliefs or doctrines, which are regarded by those who profess that religion as conducive to
their spiritual well being. A religion may not only lay down a code of ethnical rules for its followers to accept, it
might prescribe rituals and observances, ceremonies and modes of worship, which are regarded as integral parts
of religion and these forms and observance might extend even to matters of food and dress.
The freedom of religion guaranteed under Indian constitution is not confined to its citizens but extends to ‗all
persons including aliens.‘ This point, was underlined by the Supreme Court in RatiLal Panchand Vs. State of
Bombay as it is very important because substantial number of foreign Christian missionaries in India were
engaged at that time in propagating their faith among the adherents of other religions.
Article 25 (2) provides broad sweeping power of interference to the state in religious matters. This Article imposes
drastic limitations on the rights guaranteed under Article 25(1) and reflects the peculiar needs of Indian society. It
is important to mention here that law providing for the very extensive supervision by the state about temple
administration has been enacted by virtue of this provision. Here it would not be out place to state that the

extensive modification of Hindu personal law (marriage, divorce, adoption, succession etc.) has been effected by
legislation based on the provision permitting measures of social welfare and social reform.
The same constitutional provision permits legislation opening Hindu religious institutions of a public character to
all classes and sections of India. Harijan temple entry laws have been enacted by many of the state legislatures.
The Central Untouchability (Offences) Act of 1955 provides that any attempt to prevent Harijans from exercising
their right to enter the temple is punishable with imprisonment or fine or with both. Therefore it must be clear
that a secular civil law is equally applicable to all Indian citizens.
Collective Freedom of Religion
Religious denominations as well as individuals have certain

important rights spelt out under Article 26. The term
‗religious denomination‘ has not been defined under the
Constitution. The Hon‘ble Supreme Court has accepted the
definition given in Oxford Dictionary, that defines as ‗a
collection of individuals classed together under the same
name a religious sect of body having a common faith and
organization and designated by a distinctive name.‘ The
Supreme Court in number of cases held that Arya Smaj,
Anandmarga, Vaishanave, The followers of
Madhawacharya and other religious teachers, though not
separate religions, yet these are separate religious
denomination and enjoys the protection under Article 26 of the Constitution.
Negative Freedom of Religion: Individual and State

The second component of secular state, the concept of citizenship is based on the idea that the individual, not the
group is the basic unit. The individual is confronted by the state which imposes duties and responsibilities upon
him; in return the state guarantees rights and grants privileges to the individual. The sum of these individual-
state relationships constitutes the meaning of citizenship. There are numbers of provisions dealing with citizen‘s
relations with state in social spheres. The provisions based on non discrimination in political functions have also
been dealt with under the Constitution.
Neutral Freedom of Religion- Separation of state and religion is the third principle of secular state that
preserves the integrity of the other two relationships, freedom of religion and citizenship. Here one must be
conscious about the relationship of the religion and the state. The institution of religion came in existence prior to
state. It came into being to establish a social order in ancient times because at that time there was neither any law
nor any institution like state was in existence. The main purpose of institution of religion was to regulate the
activities of individual on the basis of religion and religion was the supreme law. The institution of state came
later- so in present scenario, the society is based on the delicate balance maintained between both of these
institutions namely state and religion. Both are independent in their spheres and it must be so because
centralization of powers in one agency would lead to anarchism. Once the principle of separation of state and
religion is abandoned, the way is open for state interference in the individual‘s religions liberty, and for state
discrimination against him if he happens to dissent from the official creed.
Earlier religion was considered superior to state, because it played an important role in regulating actions of
human beings and it was the way for human beings towards the god but in present scenario, it must be kept in
mind that the first role is being played by the state and as regards to the relation of individual with god, the
domain is totally free. The religion has become subordinate in these days and the state is the main unit of the
society. So there are number of important areas in which state interference in religious matter is permitted by the
Constitution.

Shah Bano case
Not only did the Shah Bano case challenge Muslim personal (Sharia) law, it triggered a debate and paved the way
for Muslim women‘s fight for justice. Shah Bano, a 62 year old woman from Indore, was divorced by her husband
in 1978. Unable to support herself and her five children, she moved the courts to be granted maintenance from her
ex-husband. Seven years and several judgments later, the Supreme Court ruled in favour of granting Shah Bano
alimony. Largely seen as a threat to Sharia law by some Muslims, what followed a debate over the constitutionality
of including different marriage and personal laws for different religion.
The case was significant for several reasons. In giving its judgment, the Court ordered maintenance with an upper
limit of Rs. 500 monthly, under Section 125 of the Code of Criminal Procedure, 1973, which applies to all citizens
regardless of caste or religion. Although seen by many as a secular judgment, it invoked a strong reaction from the
Muslim community, which felt that the judgment was an encroachment on Muslim Sharia law.
The backlash from the Muslim community prompted the government to begin parliamentary procedures that, in
essence, overturned the Supreme Court‘s decision. The Muslim Women Act (Protection of Rights on Divorce),
1986, was passed amidst great controversy and debate. Many argued that it was a way to appease the minority
group that was threatening agitation.
The act allowed maintenance to a divorced woman only during the period of iddat, or till 90 days after the divorce,
according to the provisions of Islamic law. This was in stark contrast to Section 125 of the Code of Criminal
Procedure. The 'liability' of husband to pay the maintenance was thus restricted to the period of the iddat only. In
case the woman has no means to support herself, or has no relatives that can look after her, a magistrate can order
the state WAKF board to provide sustainable maintenance to the woman and any dependent children.
It does not define an upper limit to the maintenance. It states that women may seek reasonable and fair
compensation during the iddat, and that any children borne of the marriage are entitled to a further maintenance
as well. Because there is no upper limit to the compensation, it is not unusual for Muslim divorcees to receive
large lump-sums from their former husbands. (In 2009, the courts ruled that Section 125 of the CPC (1973)
applies to Muslim women as well, and that alimony can be sought after the period of iddat ends as long as the
woman does not remarry.)

Sushma Swaraj visits China
Sushma Swaraj with Jiang Jiangao, Director of State Council of Information in Beijing
At the end of a day (1st Feb) packed with engagements that included talks with her counterpart Wang Yi and the
leaders of China‘s Communist Party, Swaraj said that Prime Minister Modi and President Xi Jinping were ready to
discuss ―out of the box‖ ideas to resolve the longstanding and contentious border issues. India shares a 3,488-km
border with China, and incursions by Chinese soldiers had overshadowed talks during Xi‘s visit to India in
September. ―I told them during the talks that let us not pass on this dispute to the next generation. They
responded positively,‖ Swaraj said.
It has now been decided to set up a contact group comprising officials to deliberate on a range of issues, including
trade and investment. India suffers a trade deficit of almost $ 40 billion with China. Bilateral trade in 2014 topped
$ 65 billion. National Security Adviser Ajit Doval is expected to meet his Chinese counterpart ahead of Modi‘s visit
to prepare the ground for what Swaraj reiterated would be an ―outcome-driven‖ visit.
In answer to a pointed question on whether the Chinese side had made any reference to US President Barack
Obama‘s recent visit to India and the mention of disputes in the South China Sea in the joint statement, Swaraj
said: ―That was a different visit. There was no shadow of the Obama visit during the talks today. Our relations with
other countries are independent of America. There was no discussion on South China Sea.‖
She also said India was willing to extend ―synergy-based endorsement‖ to China‘s proposed Maritime Silk Route,
and not a ―blanket endorsement‖. ―India is interested in BCIM (Bangladesh-China-India-Myanmar) and ASEAN
connectivity,‖ the minister said.
―We need investment. We hope to attract $ 20 billion from

China on two industrial parks and railway systems. They
have already started investing,‖ Swaraj said. She said India
had sought increased market access for pharmaceutical,
agricultural and software services to bridge the trade deficit.

She said her maiden visit to China also focused on opening the additional route for the Kailash Manasorvar Yatra
for which preparations are on. Alternate route for Mansarovar opens this June. The route is expected to provide
more comfortable journey experience to pilgrims with a facility to travel to Kailash-Manasarovar directly by buses.
APEC doors open for India

India will soon be a member of the Asia-Pacific Economic Cooperation (APEC), a powerful international grouping
of 21 countries including the United States and Japan, which promotes free trade among its members.
At the end of the 13th meeting of RIC (Russia, India, China) foreign ministers, External Affairs Minister Sushma
Swaraj said on Monday(2nd Feb), ―India‘s participation in APEC has been welcomed by both China and Russia.‖
During the BRICS summit in Fortaleza in Brazil last July, Chinese President Xi Jinping had invited Prime
Minister Narendra Modi to attend the APEC trade forum meeting in Beijing in November 2014, but New Delhi
later realised this was only a side event, and did not participate.
―Acknowledging India‘s important role in driving global economic growth, and supporting the openness of APEC,
China and Russia would welcome India‘s participation in APEC,‖ the joint communique issued after the RIC
foreign ministers meeting stated.
―Russia and China have also welcomed our participation in SCO (Shanghai Cooperation Organisation),‖ Swaraj
said. SCO, formed in 2001, is a Eurasian bloc that includes Tajikistan, Kazakhstan, Uzbekistan and Kyrgyzstan
besides China and Russia. The joint communique, however, said, ―China and Russia welcomed India‘s application
for full membership of SCO and supported India to join the SCO after completing all necessary negotiations and
legal processes.‖
Swaraj also said the RIC has supported a 1996 proposal tabled by India in the United Nations on countering
terrorism. ―Both Russia and China have accepted the proposal,‖ she said, indicating that the Comprehensive
Convention on International Terrorism (CCIT) may finally see the light of day.
The joint statement, however, left scope for interpretation. ―They (RIC) called for early conclusion of negotiations
on the Comprehensive Convention on International Terrorism,‖ it said.
As it received Moscow and Beijing‘s backing for an entry into APEC, India endorsed the launch of the Free Trade
Area of the Asia-Pacific (FTAAP). Observers say that the China-led initiative is meant to counter the less inclusive
Trans-Pacific Partnership (TPP), another free trade agreement championed by Washington, but which pointedly
excludes Beijing.
The Chinese got India and Russia to sign on a proposal to have a new U.N.-driven collective security arrangement
in the Asia–Pacific that seemed to counter the U.S. ―Pivot to Asia‖ policy, which provides the doctrinal basis for
the amassment of forces by Washington and its allies in the Asia-Pacific, seemingly to contain China‘s rise.
The tri-nation communiqué steered by visiting Indian External Affairs Minister Sushma Swaraj and her
counterparts from Russia and China —Sergei Lavrov and Wang Yi — advocated ―the development of an open,
inclusive, indivisible and transparent security and cooperation architecture in the region on the basis of
universally recognised principles of international law.‖
As they accelerated their drive to tap oil and gas in Siberia, the three Ministers ―explored potential for cooperation
in oil and natural gas production and transportation, as well as in other fields of energy, high tech, environmental
protection and connectivity‖.
China and Russia have already signed a $400 billion long term energy deal that would ensure supply of gas for 30
years to the Beijing-Tianjin-Hibei industrial belt through the ―Power of Siberia‖ pipeline. The two countries have

also signed, in principle, a similar agreement that would bring gas from Russia‘s Yamal Plateau to China along the
western Altai route.
India‘s oil giant ONGC Videsh has also been involved in negotiation for a foothold in the Arctic shelf. The joint
communiqué also called for the immediate reform of the international financial system to increase the voice and
representation of emerging markets and developing countries, with a focus on the implementation of the 2010
IMF Quota and Governance Reform by the end of this year.
The three Ministers stressed the need for international financial institutions to provide more resources to promote
development. As the Ukrainian crisis swirls and Moscow faces economic curbs, the three Ministers made it plain
that they ―opposed forced regime change in any country from the outside or imposition of unilateral sanctions
based on domestic laws‖.
Swaraj also had a bilateral meeting with her Russian counterpart Sergey Lavrov. This was their first meeting after
Russian President Vladimir Putin‘s visit to India in December. The two ministers had discussions on the high-
level bilateral interactions that are likely during the year, including at the BRICS summit in Russia in July.
During the day, Swaraj launched the Visit India programme along with Chinese Vice-Premier Wang Yang. The
tourism programme, to be jointly promoted by the two countries, will strive to increase the number of outbound
tourists from China to India in 2015. And 2016 will be a Visit China Year in India.
Indo-China border dispute

On assuming power, the People‗s Republic of China (PRC) renounced all prior foreign agreements as unequal
treaties imposed upon it during the "century of humiliation" and demanded renegotiation of all borders. The Sino-
India border remains the only major territorial dispute, other than South China Sea disputes, that China has not
resolved.
The territory stretching from the jungles of northern Myanmar, westward to the Karakoram Range, and
northward to the edge of the Tibetan plateau can be seen as a single geopolitical system referred to as the
Himalayan-Tibetan massif. The ruggedness of this terrain makes movement of men and materiel extremely
difficult, thus preventing Indian and Chinese civilizations from intermingling or projecting military power in these
remote areas effectively. Not until 1962 did the Chinese and Indian armies fight each other over these desolate
heights, thus altering the geopolitics of the region significantly.
The McMahon Line boundary dispute is at the heart of relations between China and India. China has land and sea
boundary issues with 14 neighbors, mostly for historical reasons. The Chinese have two major claims on what
India deems its own territory. One claim, in the western sector, is on Aksai Chin in the northeastern section of
Ladakh District in Jammu and Kashmir. The other claim is in the eastern sector over a region included in the
British-designated North-East Frontier Agency, the disputed part of which India renamed Arunachal Pradesh and
made a state. In the fight over these areas in 1962, the well-trained and well-armed troops of the Chinese People's
Liberation Army overpowered the Indian troops, who had not been properly acclimatized to fighting at high
altitudes.
In the early 20th Century Britain sought to advance its line of control and establish buffer zones around its colony
in South Asia. In 1913-1914 representatives of China, Tibet and Britain negotiated a treaty in India: the Simla
Convention. Sir Henry McMahon, the foreign secretary of British India at the time, drew up the 550 mile (890
km) McMahon Line as the border between British India and Tibet during the Simla Conference. The so-called
McMahon Line, drawn primarily on the highest watershed principle, demarcated what had previously been

unclaimed or undefined borders
between Britain and Tibet. The
McMahon line moved British
control substantially northwards.
The Tibetan and British
representatives at the conference
agreed to the line, which ceded
Tawang and other Tibetan areas to
the imperial British Empire.
However the Chinese
representative refused to accept
the line. Peking claimed territory
in this far north down to the
border of the plains of Assam.
A slow forward move towards the

McMahon Line was begun on the
ground, to establish a new de facto
boundary. The McMahon Line was
then forgotten until about 1935
when the British government
decided to publish the documents
in the 1937 edition of
Aitchison's Collection of Treaties.
The NEFA (North East Frontier
Agency) was created in 1954. On 7
November 1959, Zhou En-lai
proposed that both sides should
withdraw their troops twenty
kilometers from the McMahon
line. The issue was quiet during the decade of cordial Sino-Indian relations, but erupted again during the Sino-
Indian War of 1962. During the 1962 war, the PRC captured most of the NEFA. However, China soon declared
victory and voluntarily withdrew back to the McMahon Line.
China is in occupation of approximately 38,000 sq. kms of Indian territory in Jammu and Kashmir. In addition,
under the so-called China-Pakistan "Boundary Agreement" of 1963, Pakistan ceded 5,180 sq. kms. of Indian
territory in Pakistan Occupied Kashmir to China. China claims approximately 90,000 sq. kms. of Indian territory
in Arunachal Pradesh and about 2000 sq. kms. in the Middle Sector of the India-China boundary. Beijing has
stated that it does not recognise Arunachal Pradesh.
The border between China and India has never been officially delimited. China's position on the eastern part of
the border between the two countries is consistent. Not a single Chinese government recognizes the "illegal"
McMahon Line. For China, the McMahon Line, stands as a symbol of imperialist aggression on the country. The
so-called "Arunachal Pradesh" dispute is China's most intractable border issue. Because the gap between the
positions of China and India is wide, it is difficult for both nations to reach consensus.
Since the 1962 war, each side continued to improve its military and logistics capabilities in the disputed regions.
China has continued its occupation of the Aksai Chin area, through which it built a strategic highway linking Tibet
and Xinjiang autonomous region.

Barring an armed clash at Nathu La in eastern Sikkim in 1967, the border between India and China (Tibet) – and
specifically the ill-defined Line of Actual Control (LAC) in Ladakh/Aksai Chin and Arunachal Pradesh - had
remained free of any major incidents through the 1970s and the early 1980s. While relations between the two
countries remained cool, official statements from Beijing and New Delhi professed a desire to solve the border
tangle peacefully through mutual consultations. Beginning in December 1981, officials from both countries held
yearly talks on the border issue.
With the improvement of logistics on the Indian side, the Indian Army sought to reinforce and strengthen forward
areas in Arunachal Pradesh in the early 1980s. Patrols resumed in 1981 and by the summer of 1984 India had
established an observation post on the bank of the Sumdorong Chu [referred to as Sangduoluo He in the Chinese
media].
In February 1987, India established the so-called Arunachal Pradesh in its ["illegally occupied"] Chinese-claimed
territories south of the McMahon Line. The Chinese side made solemn statements on many occasions that China
never recognizes the "illegal" McMahon Line and the "so-called" Arunachal Pradesh. After these events, and
India's conversion of Arunachal Pradesh from union territory to state, tensions between China and India
escalated. Both sides moved to reinforce their capabilities in the area, but neither ruled out further negotiations of
their dispute.
China, which had always maintained a large military presence in Tibet, was said to have moved in 20,000 troops
by early 1987, along with heavy artillery and helicopters. By early April, it had moved 8 divisions to eastern Tibet
as a prelude to possible belligerent action. Reinforcements on the Indian side began with Operation Falcon in late
1986, and continued through early 1987 under Exercise Chequerboard. This massive air-land exercise involved 10
Divisions of the Indian Army and several squadrons of the IAF. The Indian Army moved 3 divisions to positions
around Wangdung, where they were supplied solely by air. These reinforcements were over and above the 50,000
troops already present across Arunachal Pradesh.
Although India enjoyed air superiority in 1987, rough parity on the ground existed between the two military
forces, which had a combined total of nearly 400,000 troops near the border. Most observers believe that the
mountainous terrain, high-altitude climate, and concomitant logistic difficulties made it unlikely that a protracted
or large scale conflict would erupt on the Sino-Indian border.
That the Sino-Indian border has not suffered any major disruptions since 1986, as compared to the incessant
firing incidents and infiltration on the Indo-Pak borders, made the Sino-Indian border an example of good
neighbourly relations.
In December 1988, Indian Prime Minister Rajiv Gandhi visited China. The Prime Ministers of the two countries
agreed to settle the boundary questions through the guiding principle of "Mutual Understanding and
Accommodation and Mutual Adjustment". Agreement was reached that while seeking for the mutually acceptable
solution to the boundary questions, the two countries should develop their relations in other fields and make
efforts to create the atmosphere and conditions conducive to the settlement of the boundary questions. The two
sides agreed to establish a Joint Working Group (JWG) on the boundary questions at the Vice-Foreign Ministerial
level.
An Agreement on the Maintenance of Peace and Tranquility along the Line of Actual Control in the India-China
Border Areas was signed on 7 September 1993. After more than thirty years of border tension and stalemate, high-
level bilateral talks were held in New Delhi starting in February 1994 to foster "confidence-building measures"
between the defense forces of India and China, and a new period of better relations began. In November 1995, the
two sides dismantled the guard posts in close proximity to each other along the borderline in Wangdong area,
making the situation in the border areas more stable. During President Jiang Zemin's visit to India in the end of
November 1996, the Governments of China and India signed the Agreement on Confidence Building Measures in

the Military Field along the Line of Actual Control in the China-India Border Areas, which is an important step for
the building of mutual trust between the two countries. These Agreements provide an institutional framework for
the maintenance of peace and tranquility in the border areas.
Border 'encounters' between India and China are not rare and arise from the very real disagreements that exist
between the two sides in demarcating the LCA on the ground. Such incidents have usually been handled, not in
full media glare, but by the two sides discreetly withdrawing to their earlier positions.
The two sides withdrew sentries along the eastern section that were considered to be too close to each other.
During early 1990s, India unilaterally withdrew about 35,000 troops from its eastern sector. On the other hand,
the PLA maintains a force between 180,000 and 300,000 soldiers and has directly ruled Tibet from 1950 to 1976,
and indirectly thereafter. Tibet today is connected to other military regions through four-lane highways and
strategic roads. And Beijing's capability to airlift troops from its other neighbouring military regions has advanced
very far from its comparative inability to use air force in 1962.
During the Indian Prime Minister's visit to China in June 2003 India and China signed a Memorandum on
Expanding Border Trade, which adds Nathula as another pass on the India-China border for conducting border
trade. The Indian side has agreed to designate Changgu of Sikkim state as the venue for border trade market,
while the Chinese side has agreed to designate Renqinggang of the Tibet Autonomous Region as the venue for
border trade market.
During Chinese Premier Wen Jiabao's visit to India in April 2005, the two sides signed an agreement on political
settlement of the boundary issue, setting guidelines and principles. In the agreement, China and India affirmed
their readiness to seek a fair, reasonable and mutually acceptable solution to the boundary issue through equal
and friendly negotiations.
India after 1962 adopted a policy to not develop the border areas. The idea was that if India developed the border
areas, the Chinese can easily use these facilities in the event of a war. This policy had changed by 2008. To redress
the situation arising out of poor road connectivity which has hampered the operational capability of the Border
Guarding Forces deployed along the India-China border, the Government has decided to undertake phase-wise
construction of 27 road links totaling 608 Km in the border areas along the India-China border in the States of
Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Sikkim and Arunachal Pradesh at an estimated cost of
Rs.912.00 crores. The work of construction of 2 roads in Arunachal Pradesh has started.
The two sides have differences in perception of the Line of Actual Control (LAC) in the India-China border areas.
Both sides carry out patrolling activity in the India-China border areas. Transgressions of the LAC are taken up
through diplomatic channels and at Border Personnel Meetings/Flag Meetings. India and China seek a fair,
reasonable and mutually acceptable settlement of the boundary question through peaceful consultations.
Chinese President Hu Jintao met with Indian Prime Minister Manmohan Singh in Sanya City, south China's
Hainan Province, April 13, 2011. Hu said China is willing to further push forward negotiations on border issues on
the basis of peace and friendliness, equal consultation, mutual respect and understanding. The two sides should
consider setting up a consultation and coordination mechanism on border issues so as to achieve consensus as
soon as possible and to better maintain peace and stability at the border regions before the issues are solved.
Border tensions between China and India flared after New Delhi claimed a contingent of 30 to 50 PLA soldiers
crossed about 12 miles beyond the Line of Actual Control between the two countries on 15 April 2012 and stayed
there for three weeks. According to New Delhi, PLA soldiers frequently conduct border incursions (more than 600
times over the last three years) but do not usually cross more than a few miles over the Line of Actual Control nor
stay there longer than several hours. Beijing denied Chinese troops had crossed into the Indian territory.

President Xi Jinping met Indian Prime Minister Manmohan Singh at the BRICS Summit in Durban, South Africa,
29 March 2013. Xi urged both sides to use special representatives to strive for a fair, rational framework that can
lead to a solution to the border issue as soon as possible. India will abide by political guidelines set by both sides
and seek a solution to the border issue with a commitment to safeguarding peace, Singh said. Since 2003, more
than a dozen rounds of talks had been launched to resolve the border disputes. But ties have still been occasionally
strained by the issue and overshadowed by closer India-US relations amid Washington's accelerating Asia "pivot"
policy.
Beijing and New Delhi resolved the April border impasse in May after a series of talks and agreed to pursue a
formal agreement to build trust and confidence between the border troops. The two sides signed the agreement
during the Indian prime minister‘s trip to China in October 2013. China and India concluded a border defense
cooperation pact 24 October 2013, making it a highlight of Indian Prime Minister Manmohan Singh's visit to the
Asian neighbor. The Indian Express newspaper said the pact also puts no restrictions on India developing border
infrastructure or enhancing military capabilities along the border. It quoted India's Ambassador to China S. Jai
Shanker as saying: "This principle allows both countries to take appropriate measures according to their own
security needs."
Nevertheless, the potential for periodic low-level confrontations between border patrols to escalate will persist.
Indian media have reported several additional albeit briefer incursions by Chinese troops since the April standoff.
Furthermore, both China and India continue to boost their militaries‘ capabilities on the border, adding to mutual
suspicion. This has left both sides sensitive to each other‘s border activities and disposed toward worst-case
perceptions of the other sides‘ intentions and activities.
In April 2013 India claimed, referencing their own perception of the Line of Actual Control (LAC) location, that
Chinese troops had established a camp in the Daulat Beg Oldi sector, 10 km on their side of the Line of Actual
Control. This figure was later revised to a 19 km claim. According to Indian media, the incursion included Chinese
military helicopters entering Indian airspace to drop supplies to the troops. However, Chinese officials denied any
trespassing having taken place. Soldiers from both countries briefly set up camps on the ill-defined frontier facing
each other, but the tension was defused when both sides pulled back soldiers in early May. In September 2014,
India and China had a standoff at the LAC, when Indian workers began constructing a canal in the border village
of Demchok, and Chinese civilians protested with the army's support. It ended after about three weeks, when both
sides agreed to withdraw troops.

Smart Cities
There are many notions of what constitutes a smart city. Often, it is defined as a city where information and
communication technology is used. While this is important to achieve the goals of a smart city, it is not, by itself, a
goal. In the Indian context, where we face massive increases in urban population and plan to build 100 smart
cities, it is vital to be clear about the objectives of such a project. A city draws people because it provides access to
employment and livelihoods. This calls for spatial organisation that is sensitive to Indian socio-economic realities.
The city has to be smart for Indians of all socio-economic background.
The functioning of a city

depends on access — to jobs
and public services such as
schools, colleges, hospitals,
markets. If the costs of travel
are minimal, the city serves its
main function of providing
access. At the same time, life in
the city has to be comfortable.
For that one needs housing,
clean and adequate water,
sanitation, solid waste
collection and disposal, a clean
environment, 24/7 power
supply, safety and recreational
facilities. The cost of providing
public services and access depends critically on how the city is structured or planned. Unfortunately, planned
cities have not worked well. Often, they are too rigid and do not evolve as the city grows.
Yet, some planning is needed. It has to be minimal and flexible in order to respond to changing needs. For a
sustainable low-carbon city, travel, particularly motorised travel, must be minimised. A dense city with mixed
development, where most trips can be short and made by non-motorised transport, could serve the purpose. To
reduce pollution and energy consumption, public transport has to be the first choice, after walking or cycling.
While private motorised transport is unavoidable, it has to be minimised. More fuel-efficient, hybrid or fully
electric vehicles could help reduce air pollution. However, travel needs and patterns change over time. With more
than one worker in a family working in different parts of the city, not all can live next to work. Job mobility and
multi-worker households are increasingly becoming the norm as women join the workforce. Rigidity in the
housing market makes some travel for jobs unavoidable.
The denser the city, the smaller the trip length. So a major issue in planning a city is how dense it should be. Civil
engineer Shirish Patel and associates did an excellent analysis of this question. Density, that is, persons per
hectare, depends on a number of things. First, how much built-up area a person needs or wants. This varies with
income. The average built-up area per person in Mumbai island city is 5.8-9.62 square metre per person,
depending on the locality. In Manhattan, New York, it is more than 65 sq m per person. With economic growth,
people would want to live in larger apartments, and the city‘s plan has to provide for that.
Density also depends on how much public ground area per person is available on roads, footpaths, schools,
hospitals, police stations etc. In India, this should take into account the needs of small traders and hawkers. In
Manhattan, public ground area per person is an average of 24.6 sq m. In Mumbai, it is around 6.5 sq m per
person. If one accepts 20 sq m per person as the norm then density will depend on how much built up area per
person is provided. If we consider 6 sq m per person as adequate in one of the most crowded wards of Mumbai

then density should be 385 persons per hectare. With a built up area of 20 sq m per person, the density would be
250 persons per hectare.
Energy used in transport varies inversely with density. With a density of around 12 persons per hectare, Houston
consumes 75 gigajoules per person per year person (around 1,800 kilogrammes of oil equivalent, kgoe). In
European cities with densities between 30 to 75 persons per hectare, mostly with good public transport, the
energy used in transport varies from 240 to 430 kgoe. To reduce energy used for transport, it is important to have
cities with high density, with cycle paths and public transport.
So how should the envisaged 100 smart cities be planned? Each city has to grow around a kernel of activities that
will attract people. One can expect it to grow to a population of around 1,00,000 within 10 years, and reach one
million in another 20 years. A broad layout plan should be made, including services such as roads with footpaths
and cycle paths, public transport, water supply, sewerage systems and electricity distribution networks. The right
of way over land needed for these arteries should be obtained early.
Density can be controlled by controlling floor area ratio and number of family units. The use value of a piece of
urban land depends on access to facilities, jobs, recreation, education and health institutions. This depends on
how the city infrastructure develops and has little to do what the owner of a piece of land does by herself. It is
public investment that brings value to the property. This accretion of value when public facilities are provided
should be captured by the city government. This can be done by increasing the permissible floor area ratio and
auctioning what is additional. This can help generate resources for further development of infrastructure.
What role can information and communication technology play in making the city function better? It can help
reduce travel time and energy use, making traffic movement efficient through real-time control of traffic signals,
information on traffic congestion and directions to vehicles to take alternate routes. It can facilitate charging for
road use and levy congestion charges, depending on how much time a vehicle has spent in specific areas of the
city. E-commerce can provide competitive markets even when shops are scattered. Hawkers and small traders
who do home delivery are already connected by mobile. Smart electricity meters and time of day pricing can
motivate consumers to reduce peak demand.
To realise these benefits, free WiFi should be available to all. Besides an internet to which any one can log on, an
―internet of things‖ should also be set up. Thus every traffic light, every electricity meter, every public utility, water
pipeline and pollution monitor could be connected to the internet. Microprocessors are becoming cheaper by the
day and the cost should be worth the gains of connecting things.

Hunt for Black Money
India has a tremendous opportunity to increase its
influence on the world stage. With the second largest
population, 10th largest economy, and strategic position
among G-20 countries, Prime Minister Narendra Modi can,
if he chooses, speak articulately for billions of people
struggling for a fair share of the world‘s riches. At home, his
nation continues to face significant challenges in the areas
of education, health, sanitation, and inequality. This
dichotomy of having a foot in two camps simultaneously —
among the richest and poorest nations — provides the
platform on which India can seek a much-improved global
economic consensus.
There is no doubt that some of India‘s poverty problems are

related to the amount of illicit money — so-called ―black
money‖ — that leaves the economy each year. Recent
analysis from Global Financial Integrity shows that in 2012
(the most recent year for which data is available) India‘s
illicit outflows were approximately $95 billion. To put this figure in perspective, in the same year, the combined
total of foreign direct investment and foreign aid flowing into India was under $26 billion. More, the 2012 illicit
flows figure is nine times higher than the country‘s outflows in 2003. And, for the 10-year period ending 2012, the
nation lost $440 billion in illicit capital.
Modi‘s campaign pledge to find and return India‘s black money held in overseas accounts was a fine way to
maintain focus on this critically important problem. He has taken positive steps to address the issue, including
appointing a Special Investigation Team to seek the return of black money and providing the Supreme Court with
the names of 627 people who may have committed massive tax evasion.
The difficulty in retrieving money already lost is becoming readily apparent to Modi‘s team of corrupt money
hunters. Recently reported problems in getting Switzerland to provide information on Indian bank account
holders is a prime example of the monumental task facing any nation trying to locate, freeze and retrieve illicit
assets. This is a herculean task requiring time, money and expertise in international law and forensic accounting
in order to navigate the byzantine regulations of various jurisdictions, which are created, in many instances,
primarily to help depositors avoid detection.
On this issue, the conundrum for Modi is how to continue working on a campaign promise that is difficult to fulfil,
while also curtailing the ongoing outflow of black money, and at the same time increasing FDI. Fortunately, a
window is open that will enable him to do just that, while also presenting a chance for him to take the reins of
global leadership.
Foreign aid will continue to be a significant source of funding for poorer countries. But much more important to
emerging markets is legitimate trade — trade that respects the letter and intent of laws and regulations governing
VAT collections, customs duties, banking statutes and corporate taxation. This is not how the world works today.
Instead, we currently look the other way as over-invoiced imports and under-invoiced exports (and vice versa) are
used to shift hundreds of billions of dollars out of India and trillions of dollars out of the rest of the developing
world. Slowing the amount of illicit money that exits economies through trade fraud can retain vast resources in
countries for poverty alleviation and economic growth.

This misinvoicing — the deliberate misrepresentation of the value of goods being shipped — is not a source of
black money; it is the mechanism through which black money leaves a country. Recent data shows that, on
average, close to 80 per cent of all cross-border illicit flows move through this method. Among Least Developed
Countries, this is closer to 90 per cent. For India, it is — according to the nation‘s official data filed with the
International Monetary Fund — 99 per cent.
The positive side of this challenge is that affordable, commercially available, trade databases would allow customs
departments to determine quickly if goods are being misinvoiced. Giving customs officials the ability to identify
and interdict misinvoiced trade in real time is a game-changer for development efforts. What is needed is a global
consensus that this needs to be done. Modi can be the catalyst to see that this happens.
Ceasefire Violations along Indo-Pak Border

The conclusion of a number of significant agreements by India and the United States during President Barack
Obama‘s recent visit to New Delhi has attracted a great deal of adverse commentary from Islamabad. Prime
Minister Nawaz Sharif‘s Foreign Affairs pointsman Sartaj Aziz has voiced serious concerns about the regional
―strategic imbalance‖ arising out of the Indo-U.S. deals at a time when Indo-Pak relations have reached a new low
due to ceasefire violations along the LoC (Line of Control) and the International Border (IB). Pakistan, according
to him, ―is examining the imbalance and the possible ways and means for redressing it.‖ Strategic assessments
such as these, made in the wake of the recent spate of violence along the border, could potentially lead to a
renewed standoff between the South Asian adversaries. There is therefore an urgent need to put in place
mechanisms to get the relationship back on track.
The India-Pakistan ceasefire agreement is dead, after

having survived hundreds of ceasefire violations since
its inception in 2003. It is no less than a miracle that
this agreement actually lasted over 11 years despite
there being absolutely no document guiding it. New
Delhi and Islamabad should now begin negotiations
to conclude a new ceasefire agreement instead of
engaging in a ―mortar-for-bullet‖ game of military
one-upmanship and killing each other‘s soldiers and
hapless villagers residing astride the contested lines
in Jammu and Kashmir.
The LoC was put in place by the Simla Agreement of

July 1972 replacing the ceasefire line created by the
Karachi Agreement of 1948. The current ceasefire
agreement governs the cessation of hostilities along
the India-Pakistan border created by the Simla
Agreement. The agreement does not define the
modalities, rules or Standard Operating Procedures
(SOPs) to manage the ceasefire on the LoC and the IB.
Villagers sit on the debris of their house after it was damaged
during the recent exchange of fire between Pakistan and
India

Indeed, the absence of a structured ceasefire agreement is one of the major reasons behind the incidents that take
place along the LoC and the IB.
Causes of violations
To understand what can be done to contain the hostilities along the LoC and IB, we need to appreciate why they
break out in the first place. To explain these incidents using just one such cause — a cover for infiltration of
militants into Kashmir from the Pakistani side — is misleading.
One of the major causes of ceasefire violations is indeed the deliberate firing by Pakistani troops in order to
provide cover for the infiltrators trying to enter Jammu and Kashmir. Clearly, this is intentional and part of
Pakistan‘s traditional policy towards India. That said, given the progressive reduction in the infiltration attempts
on the LoC and IB witnessed over the past decade or so, one must concede that ‗providing covering fire‘ is not the
most significant cause for ceasefire violations.
Secondly, firing also takes place in response to various political developments in India or Pakistan, or is generally
reflective of the state of affairs between the two states. The ceasefire agreement tends to hold during peace
processes and fruitful dialogues as was witnessed during the period from 2004 to 2007. The recent spate of
ceasefire violations, then, was also a result of the complete absence of any bilateral engagement between the two
sides.
The third major cause is the construction, repair or enhancement of defence works on either side. This happens
because there is a lack of clarity regarding whether or not new constructions are allowed along the LoC. The 1949
Karachi Agreement does not allow construction within 500 meters on either side of the LoC but the Simla
agreement is silent on the issue. Even though the August 2005 Indo-Pak joint statement agreed ―not to develop
any new posts and defence works along the LoC,‖ both sides seem to be violating this.
When civilians, livestock and Kashmiri returnees (from Pakistan-occupied Kashmir) cross the LoC, the two sides
tend to engage in firing. Such incidents happen because there are no agreed-upon SOPs to govern such
movements on the India-Pakistan border. Hostilities also break out due to confusions over the LoC itself: lack of
clarity about who controls what and which piece of land falls on whose side. Such confusions exist because of the
absence of a proper demarcation of the LoC as well as the fact that over the decades, the demarcating line itself
has become less clear due to natural causes such as soil erosion, rains, snowfall, landslides, etc. Such territorial
confusions in an unfriendly atmosphere lead to hostilities.
Finally, there are also deliberate provocations in order to test the resolve of the forces on the other side. Military
commanders on either side often narrate stories of how the personal traits and inclinations of local commanders
often lead to major military standoffs. Egos of individual commanders can and do impact the balance of nerves
when detailed SOPs about the implementation of the ceasefire agreement are absent.
Defence construction
First of all, there is an urgent need for a clearly written down ceasefire agreement. A new agreement, after
appropriate negotiations, should be signed by the two Premiers, and not communicated by the Director-General
of Military Operations (DGMO) over phone as was the case in 2003.
Second, joint SOPs should be developed to govern issues relating to crossings, returnees etc. Indian and Pakistani
forces manning the border have their own respective SOPs catering to various situations and eventualities, but
that‘s not enough. It is also important for both sides to draft joint SOPs to ensure that inadvertent crossings,
returnees and movement of livestock do not provoke firing by either side.
Third, there should be more clarity on the issue of defence construction along the LoC. The two sides could specify
the distance to keep while making new constructions, besides specifying the kind of constructions to be allowed.

Likewise, there is also an urgent need to jointly demarcate the LoC in order to avoid territorial
misunderstandings.
Once these major steps are taken, Islamabad and New Delhi should ensure that there is more regularity to the
meetings of DGMOs. Direct and frequent engagement at the level of DGMOs has its own importance from a
conflict de-escalation point of view.
Sensitive sectors on the LoC and IB should be identified and joint measures should be undertaken to avoid
incidents and repel infiltration attempts, even though the latter is possible only if Islamabad is serious about
preventing infiltration. The two sides should also consider joint investigations of ceasefire violations and joint
patrolling of sensitive areas.
None of the above steps can be translated into policy if there is no bilateral dialogue between India and Pakistan.
Not only that structured bilateral dialogue process is absent, there is hardly any engagement between the two
sides other than the grossly inadequate High Commission-level contacts. The back channel diplomacy which had
‗famously‘ brought the two sides very close to a Kashmir deal in 2007 has also been non-existent since the
formation of the new government in New Delhi. The responsibility of initiating a dialogue with Islamabad
undeniably lay with New Delhi, which unilaterally cancelled the dialogue process in August this year.
New Delhi should, therefore, get off the diplomatic high horse it is now riding in its own strategic interest, and
negotiate a new ceasefire agreement with Islamabad.

Spectrum Auctions
One more round of spectrum auction has brought the telecom sector back in news. Telecom sector stocks have
been volatile as competitive bids have raised the spectrum auction prices. The sector creates a sense of awe on
account of technical jargons surrounding it. Here is an attempt to demystify the sector, understand what is
spectrum, why and how are they being auctioned and how would it impact the companies who are the winners and
what does it mean to the losers.
Let‟s understand what is being sold -- Spectrum.

We were first introduced to spectrum in school when we saw that seven colours were produced when a white light
hits a glass prism. In simple terms, spectrum can be considered as a range of all lights of various wavelengths. But
light is part of a larger spectrum called the electromagnetic (EM) spectrum. EM spectrum has in it a range of
similar EM radiations like visible light, infrared light, ultraviolet light, X-rays and the one that is useful to us here
is radio waves. As these are all radiations, they travel and spread as they go.
Waves are defined by attributes of wavelength (length of the wave), amplitude (height of the wave) and frequency
(number of cycles per seconds). Radio waves are those that have frequency of 3 kHz (3000 cycle per second) to
300 GHz (3 billion cycles per second). Audible frequency for human is between 20 Hz to 20,000 Hz.
Consider waves moving around us at different speeds (frequencies) between 3 kHz and 300 GHz. Different
frequencies are utilised for different purposes. The Radio FM stations air their channels around the 100 MHz
frequencies. Out of these, government of India has selected two -- 900 MHz and 1800 MHz to be auctioned to
telecom companies. Higher frequencies can carry more data per second. As in case of radio, any company winning
the licence of using a frequency has a natural monopoly over the band.
By auctioning spectrum, government is actually attempting spectrum management. Like land, mineral, oil, gas
and water are exclusive property of a state, so is radio frequencies. Governments manage these frequencies, as it is
scarce, for various uses like telecom, radio, television and defence. Increasing applications and new technologies
such as 2G, 3G and 4G has further created a need for more spectrum. Within each frequency, government splits it
up into circles (cities or states) and divides it to various users.
What does it mean for the winners and losers?

While the winners get the exclusive right to use the spectrum, those who have lost the bid in that area will not be
able to operate in it. They will not be able to get subscribers in the area where they do not have a licence. However,
if a consumer has a connection of the particular telecom operator and travels to an area where the operator is not
present, he will be charged interconnect user charges.
How do spectrum prices impact consumers?

There are two ways a telecom company can recover their investment in getting the spectrum license. First is by
increasing their consumer base and second is by increasing their tariffs.
For an existing player, increasing customer base is difficult in the current scenario, thus the only option left is to
increase tariffs. But that's easier said than done given the current competetive scenario. Companies are thus
introducing new applications to supplement their revenue.

Swine Flu
The Health Ministry had said that the countrywide toll from swine flu had reached 485 till February 12, which is
already more than double the number of deaths reported in the whole of 2014.
The Statement came after 11 more persons succumbed to swine flu in different parts of Rajasthan, taking the toll
from the H1N1 virus in the State to 153 this year. Rajasthan and Gujarat have witnessed the maximum number of
deaths so far due to the disease while Maharashtra, Madhya Pradesh and Telangana, too, have been significantly
affected by swine flu.
The toll from swine flu till Saturday in Gujarat was 136 even as the State reported 130 new cases. According to a
bulletin issued by the Telangana government, in the current year (from January 1 till February 13), 3,045 samples
were tested, of which 1,006 were found to be positive. The number of deaths due to swine flu and other
complications stood at 46 in the State. In 2014, there were 937 reported cases of swine flu in the country and the
disease had claimed 218 lives.
What is swine flu?

The H1N1 virus was called the ‗swine flu virus‘ because in 2009, after it first started surfacing globally among
humans, it was found to be similar to a virus circulating in the respiratory tracts of pigs. It was first isolated in the
USA in 1930 in pigs. It is now circulating like other influenza viruses in humans, and spreads through droplet
infections.
Is there a surge in swine flu this year?

Since November-December in 2014, there has been a global increase in the incidence of swine flu compared to
2013, which saw a low. Experts are still trying to analyse if this is part of the cyclical trend seen in all annual
viruses, or if there is a mutation in the strain of H1N1. Depending on minor mutations in proteins, the antigen of
the virus can change, which could explain why there is no herd immunity against the strain prevalent this year —
and hence the spike in cases.
Can swine flu spread by eating pork products?

Several international agencies including WHO and the Center for Disease Control in the USA have said that
although similar virus strains circulate in pigs, there is no risk of the H1N1 virus spreading from cooked and
properly cleaned pork products. Cross infection from pigs to humans is extremely rare.
When should you get tested for H1N1?

The ideal time is between three and four days after the first onset of any common flu symptoms like fever, cough
and cold. The antigen of the virus is detectable after 2-3 days, and tests positive until the fourth day. From the fifth
day, when the body starts producing antibodies, the antigen disappears, and does not show in tests.
What are the symptoms of H1N1 infection?

The symptoms are similar to any common flu — fever, cough, cold and an upset stomach. Symptoms of the virus
spreading to the lower respiratory tract or the lungs — which leads to most complications — include wheezing,
sputum in the cough and chest pain.
Is there a high-risk group for H1N1?

Anybody who is not exposed to the virus can get H1N1, like other influenzas. But groups likely to get aggravated
symptoms include children and the elderly, those who have co-morbid conditions like hypertension and diabetes,
pregnant women, and immuno-compromised people such as patients of cancer or those afflicted by HIV.

Injectable Polio Vaccine
India will introduce injectable polio vaccine in its universal immunisation programme from October. This is a part
of the World health Organisation‘s polio endgame strategy. With its last reported case of a wild polio infection
dating back to January 2011, India last year completed the three-year mandatory period that a country needs to
stay free of fresh infections to be counted among countries that have eradicated the virus.
―As part of the polio endgame strategy we will start administering injectable polio vaccine to children as part of
the routine immunisation programme from October,‖ additional health secretary C K Mishra said. The vaccine
also known as Inactivated Polio Virus (IPV) is administered as an intramuscular injection. It has been a long-
standing demand of health experts that India should move to the injectable vaccine to minimise chances of
vaccine-acquired polio infection.
The National Technical Advisory Group on Immunisation had recommended in May last year that IPV should be
made a part of UIP, along with two other vaccines like rotavirus and measles-rubella. IPV is not recommended for
routine use in polio-endemic countries or in developing countries at risk of poliovirus importations. In these
countries, oral polio vaccines — either trivalent, bivalent or monovalent, depending on local epidemiology — are
used. However as countries move on from being polio endemic to polio free, IPV is the vaccine of choice.
Though India will move to IPV in the routine immunisation, oral polio vaccine cannot be entirely done away with.
The world over, even in countries that have eradicated polio, the oral vaccine is used to contain sudden outbreaks
as had happened in Netherlands in 1992. This is because IPV cannot stop virus transmission.
―OPV is the vaccine of choice in case of an outbreak and even if we move to IPV we have to be prepared for all
contingencies. That is why even if OPV use is discontinued in routine immunisation the vaccine may have to be
brought back at short notice,‖ a senior health ministry official said.
OPV - The OPV is a live but weakened form of the virus

which makes the body produce antibodies against it
without developing into the disease. Given as oral drops,
it protects not only the person who has taken them but
also others living around him.
Once the live vaccine virus is introduced into the body, it
spreads to others through the water supply, the sewage
system or food and drinking water. This way an entire
household, and sometimes whole communities, can get
protected as the vaccine virus helps them develop
antibodies against the disease.
A major concern about the oral polio vaccine (OPV) is its known ability to revert to a form that can achieve
neurological infection and cause paralysis. Clinical disease, including paralysis, caused by vaccine-derived
poliovirus (VDPV) is indistinguishable from that caused by wild polioviruses. This is believed to be a rare event,
but outbreaks of vaccine-associated paralytic poliomyelitis (VAPP) have been reported, and tend to occur in areas
of low coverage by OPV, presumably because the OPV is itself protective against the related outbreak strain.
IPV - Inactivated polio vaccine (IPV) was developed in 1955 by Dr Jonas Salk. Also called the ―Salk vaccine‖, IPV
consists of inactivated (killed) poliovirus strains of all three poliovirus types. IPV is given by intramuscular
injection and needs to be administered by a trained health worker. The inactivated polio vaccine produces
antibodies in the blood to all three types of poliovirus. In the event of infection, these antibodies prevent the
spread of the virus to the central nervous system and protect against paralysis.

Advantages of IPV
As IPV is not a 'live' vaccine, it carries no risk of vaccine-associated polio paralysis.
IPV triggers an excellent protective immune response in most people.
Disadvantages
IPV induces very low levels of immunity in the intestine. As a result, when a person immunized with IPV is
infected with wild poliovirus, the virus can still multiply inside the intestines and be shed in the faeces, risking
continued circulation.
IPV is over five times more expensive than oral polio vaccine.
Administering the vaccine requires trained health workers and sterile injection equipment and procedures.
Evidence-Informed Policymaking
Speaking from the ramparts of the Red Fort last August, Prime Minister Narendra Modi had announced the need
to replace the Planning Commission with a new institution that could lead India into the 21st century. The NITI
Aayog will work towards furthering cooperative federalism. It is meant to serve as a state-of-the-art resource
centre for research on policy innovations, propagate a culture of high-quality monitoring and evaluation as well as
promote collaboration between policymakers and researchers. These are laudable ideals, but what exactly will the
NITI Aayog do different from the old Planning Commission to meet these objectives?
Evidence-informed policy and practice could provide the

NITI Aayog with a distinct and effective approach to meet
its mandate. Simply put, evidence-informed policymaking is
an approach that aims to integrate the best available
scientific evidence into the design of public policies.
Central and state governments make hundreds of policy

decisions, small and big, every day that have an impact on
millions of lives: How can government schools improve the
quality of learning at the primary level? How can we
effectively fight malnutrition among children? How should
payments in MGNREGA be structured to reduce delays and
corruption? Good intentions alone are not enough to address these and many other vexing development issues,
often because it is difficult to predict or change people‘s behaviour. Fortunately, many of these policy questions
have been rigorously researched, including through randomised controlled trials, widely regarded as the ―gold
standard‖ for measuring impact, leading to valuable insights into which policies work, which don‘t and why.
But not all of this research finds its way into government policies. This is often because we lack a unifying
mechanism within government that can synthesise a diverse array of scientific evidence, from India and other
developing countries, and provide coherent recommendations for policymakers. To be sure, this isn‘t easy. This is
also why a centrally located government think tank like the NITI Aayog, which can command the necessary
resources and attention, is well placed to play this role. By ensuring that a policy innovation from any state,
regardless of the party in power, gets due attention and becomes a template for other states as long as it is backed
by rigorous scientific evidence, the NITI Aayog can give a unique meaning to the idea of cooperative federalism. In
policy areas where evidence is scarce, the NITI Aayog can actively promote collaborations between policymakers

and researchers by funding and rigorously testing policy innovations at the pilot stage, before recommending
them for scale.
Institutions promoting evidence-informed policymaking at the national level are increasingly gaining traction
around the world. In 2010, UK Prime Minister David Cameron set up a Behavioural Insights Team, also called the
―nudge unit‖, which later spurred a network of ―What Works Centres‖, established to improve the way
government creates, shares and uses high-quality evidence for decision-making.
The results have been impressive. The unit‘s work has led to an increase in tax collection rates by altering the
messages of reminder letters, boosted court fine payments by sending personalised text reminders and improved
the effectiveness of a job counselling programme.
In 2013, the White House too set up a Social and Behavioural Sciences Team with an identical mission — to
explore how social and behavioural insights can be used by federal agencies to design public policies that work
better, cost less and serve citizens better. This was preceded by a What Works Clearinghouse, set up by the US
department of education in 2002, to provide a resource centre that could guide informed decision-making in
education policies. Till date, the centre has reviewed more than 10,500 studies, on topics that range from
improving adolescent literacy to helping students with learning disabilities.
The initiatives of the UK and US governments mirror the larger movement in international development towards
rigorous impact evaluations as well as greater use of empirical evidence and behavioural insights in designing
social programmes. This comes from a realisation that despite decades of effort in designing and implementing
anti-poverty programmes, there is little consensus on the most effective strategies for improving the lives of the
poor. Reflecting this thought, the World Development Report 2015, the flagship report of the World Bank, focuses
on mind, society and behaviour and makes a strong case for the application of behavioural science in
development.
To achieve this in practice will require the NITI Aayog to overcome two key challenges: accessing high-quality
researchers in multiple disciplines who can partner with policymakers, and creating a willingness among
policymakers to learn from evidence instead of relying solely on intuitions or ideologies. However, there is no
reason to believe this can‘t be done in India as it has in the UK and US. In fact, the state of Tamil Nadu has already
taken a step in this direction.
Last year, the government of Tamil Nadu entered into a partnership with the Abdul Latif Jameel Poverty Action
Lab (J-PAL) to institutionalise the use of evidence in policymaking by rigorously evaluating innovative
programmes before they are scaled up, strengthening monitoring systems and enhancing the officials‘ capacity to
generate and use data. In perhaps a first for any state government in India, the Tamil Nadu government also set
up an Innovation Fund, with an annual allocation of Rs 150 crore, through which any government agency can
access resources for pilot innovation programmes through a competitive process. There is sustained commitment
across the highest levels of the government of Tamil Nadu to advance evidence-informed policymaking through
these initiatives. In a short span of time, five evaluations of promising interventions have been initiated, covering
preventative health, school education and skill development, with many more in the pipeline.
If the Tamil Nadu government can challenge its officials to find creative and rigorously tested solutions to reduce
poverty, the government of India certainly can as well. Indeed, this was Tamil Nadu Chief Minister O.
Panneerselvam‘s recommendation to the prime minister at the recent meeting of chief ministers in Delhi, held to
discuss the new institution to replace the Planning Commission. Citing his government‘s efforts to promote the
use of evidence, Panneerselvam said, ―Tamil Nadu would welcome a similar move towards empirical evidence-
based policymaking at the government of India level as well.‖ The ball is in the NITI Aayog‘s court.

Resilient Cities Project
Bengaluru, Chennai and Surat could each
soon have an adviser with an unlikely
title: chief resilience officer.
The advisers will have the mandate to
work with all stakeholders to make their
cities resilient to shocks and stresses amid
rapid urbanisation. And helping them in
decision-making will be advanced tools
such as those that can navigate big data.
All this because the three cities have made

it to the 100 Resilient Cities project, run
by the New York-based non-profit
organisation Rockefeller Foundation. The
Foundation has so far chosen 67 cities
worldwide, including Amman in Jordan,
London in England, New York in the U.S. and Melbourne in Australia.
The financial commitment for the project is $100 million. This doesn‘t mean each city gets $1 million. What the
cities would get are funds to recruit the chief resilience officer. Other than that, support would be in the form of
tools, people and the network.
Last week, Michael Berkowitz, managing director of the 100 Resilient Cities project, told The Hindu that it was
aimed at helping cities organise themselves around their key challenges and help them access resources or best
practices efficiently to meet those challenges.
The common challenges in the three Indian cities, as listed in the project‘s website, are flooding, infrastructure
inadequacies and pollution. Additionally, Bangalore has to deal with poor transport, while its southern neighbour
Chennai has to contend with overpopulation and a constant threat of cyclones. Surat, which two decades ago faced
a deadly outbreak of plague, also has disease-outbreak and rising sea levels listed as challenges. Water will remain
among the key challenges for Bengaluru, as it now depends on pumped water from the Cauvery nearly 100 km
away.
Bengaluru, Chennai share water woes

A.R. Shivakumar, a scientist from the Karnataka State Council for Science and Technology, Indian Institute of
Science, said he believes that half of the installed borewells in Bengaluru city have stopped yielding water. ―Unless
rainwater harvesting is followed in a big way, water will be hard to come by in Bengaluru,‖ he said at a workshop
on lakes held on Saturday.
Researcher T.V. Ramachandra, from the Centre for Ecological Sciences at the Indian Institute of Science, had in a
research paper pointed out that ―the visualised outcome for 2020 indicates certain doomsday for Bangalore city
with the current lopsided approaches in urban planning.‖
He had then concluded on a grim note: ―This will lead to further changes in the regional climate; enhanced
pollutants in air and water, increase of temperature, consequent thriving of disease vectors and loss of vital
natural resources.‖

Raj Cherubal, Director (Projects), Chennai City Connect, described as a platform for industry associations and
civic organisations, listed flooding and shrinking of water bodies as top issues for Chennai. Then, ―there are
several poor people living near the river banks. We need to figure out what are the alternatives available for them,‖
he said.
Mr. Cherubal said: ―Every city has gone through something bitter and then change. Great cities globally were bad
and had dirty river moving through and then they changed. So, Chennai is not facing something new now.‖
Chennai, Bengaluru and Surat all find a place on the list of top 10 metropolitan areas in India by population. But
why do only they find a place on the Resilient Cities list from India? It isn‘t as if the other Indian cities were free
from the problems of rapid urbanisation.
For getting in, cities need to apply, and then a panel of judges has to review those applications. And what the panel
is looking for, as the project‘s FAQ section puts it, are ―innovative mayors, a recent catalyst for change, a history of
building partnerships‖ and an ability to work with a wide range of stakeholders.
There is no timeline for the project, said a Chennai Corporation official, who wished anonymity. The official said
at a recent council meeting that the details of this project were submitted to the State government, whose approval
is needed for work to start.
MEA Clarification on Indo-US Nuclear Deal

Clarifying the government‘s position on a series of issues surrounding the India-U.S. civilian agreement two weeks
after President Barack Obama and Prime Minister Narendra Modi announced a ―breakthrough,‖ the Ministry of
External Affairs was categorical that there would be no change in the Civil Liability for Nuclear Damages Act
(CLND 2010). The clarifications were part of a memorandum handed over by India to U.S. officials.
In a press release on Sunday(8th Feb), the Ministry provided responses to 19 ―frequently asked questions‖ on the
India-U.S. nuclear deal making it clear that the government was not making changes to the Civil Liability for
Nuclear Damages (CLND) Act, 2011, but would read the Act to mean that the supplier‘s liability was not a
mandatory part of the contracts to be signed.
The need for supplier‘s liability has been raised in the recent past after the Fukushima nuclear plant disaster in
Japan raised questions about the manufacture of the reactor and parts, and the possible damages of as much as
$200 billion. However, U.S. manufacturers and even Indian suppliers have raised concerns over the CLND law
saying it will be unviable for them to conduct nuclear business in India with the risk of that kind of liability being
―channelled‖ to the suppliers. The Ministry makes it clear that immediate liability for any incident will be
channelled only to the operator — in this case the public sector unit Nuclear Power Corporation of India Ltd.
Key takeaways
Supplier’s liability is not necessary:
In Answer 8, the Ministry writes about Section 17(b), which gives the operator a ―right to recourse‖ — suing the
supplier. The Ministry says this will be possible only if under Section 6a, it is written in the contract between the
NPCIL and the supplier. The explanation goes on to say that while the ―right to recourse‖ is permitted, it is not
required or necessary.

The tort law or civil damages suit clause for victims does not apply to suppliers:
In Answer 12, the Ministry writes about Section 46, which refers to the right of victims to sue in case of a nuclear
accident according to ―tort‖ law. It says Parliament debates over the CLND had rejected amendments to include
the supplier, and therefore, the supplier cannot be liable under this kind of ―class-action suit.‖
However, Left party members, who had tried to push for those amendments, counter this. ―The NDA government
is clearly trying to do everything that it accused the UPA government of. Victim‘s rights are simply not being
upheld in all of this,‖ CPI leader D. Raja told The Hindu shortly after the press release was put out.
Amount of liability will be capped, and paid for from insurance pool:
The FAQs speak of the liability in case there is a nuclear incident, which will be capped at $300 million SDRs (The
special drawing right is an international reserve asset, created by the IMF in 1969 to supplement its member
countries‘ official reserves. Its value is based on a basket of four key international currencies, and the SDRs can be
exchanged for freely usable currencies) or Rs. 2,610 crore.
In addition, the NPCIL is only liable up to Rs. 1,500 crore, and the Union government will pay the balance Rs.
1,110 crore. Any damages above this will come from an international fund, once India ratifies the international
convention on supplementary compensation for nuclear liability. This effectively means that the supplier will not
be liable, and even the operator will be liable only for a small fraction of what victims will need, given the recent
example of $200 billion for the Fukushima disaster.
The insurance pool will in any case be paid for by the government and government-owned insurers from public
taxes in a 50:50 ratio.
The Ministry said the text for administrative arrangements between India and the U.S. had been ―finalised,‖ and
would now head straight for negotiations. ―It will be now up to the companies to follow up with their own
negotiations and come up with viable techno-commercial offers and contracts consistent with our law and our
practice so that reactors built with international collaboration can start contributing to strengthening India‘s
energy security and India‘s clean energy options,‖ the release said.
However, U.S. Assistant Secretary of State Nisha Biswal, in an answer to a question from The Hindu , said the two
sides were still ―trading papers‖ on the issue. The Ministry has also not clarified on the ―tracking‖ requirements of
the U.S. on nuclear material in India in its press release. However, when asked specifically about the reports on
data sharing with the U.S., Ministry spokesperson Syed Akbaruddin would only say, ―There will be no bilateral
safeguards.‖
In a reply to The Hindu , he said, ―Our approach is consistent with our practice and international legal obligations.
Nuclear material obligated to the U.S. will remain under IAEA safeguards.‖
However, the Ministry did not respond to the possibility of a ―new offer‖ of data sharing under annual meetings
between India and the U.S. officials.
The release seeks to dispel some of the worries over the negotiations with the U.S. However, its answers may raise
more questions, particularly in Parliament when it meets later this month.

Non Proliferation Treaty
The Treaty on the Non-Proliferation of Nuclear Weapons, commonly known as the Non-Proliferation
Treaty or NPT, is an international treaty whose objective is to prevent the spread of nuclear weapons and weapons
technology, to promote cooperation in the peaceful uses of nuclear energy, and to further the goal of achieving
nuclear disarmament and general and complete disarmament.
Opened for signature in 1968, the Treaty entered into force in 1970. On 11 May 1995, the Treaty was extended
indefinitely. More countries have adhered to the NPT than any other arms limitation and disarmament
agreement, a testament to the Treaty's significance. A total of 190 states have joined the Treaty, though North
Korea, which acceded to the NPT in 1985 but never came into compliance, announced its withdrawal in
2003. Four UN member states have never joined the NPT: India, Israel, Pakistan and South Sudan.
The treaty recognizes five states as nuclear-weapon states: the United States, Russia, the United Kingdom, France,
and China (also the five permanent members of the United Nations Security Council). Four other states are known
or believed to possess nuclear weapons: India, Pakistan and North Korea have openly tested and declared that
they possess nuclear weapons, while Israel has had a policy of opacity regarding its nuclear weapons program.
The NPT consists of a preamble and eleven articles. Although the concept of "pillars" is not expressed anywhere in
the NPT, the treaty is nevertheless sometimes interpreted as a three-pillar system, with an implicit balance among
them:
1. non-proliferation,
2. disarmament, and
3. the right to peacefully use nuclear technology.
The NPT is often seen to be based on a central bargain: ―the NPT non-nuclear-weapon states agree never to
acquire nuclear weapons and the NPT nuclear-weapon states in exchange agree to share the benefits of peaceful

nuclear technology and to pursue nuclear disarmament aimed at the ultimate elimination of their nuclear
arsenals‖. The treaty is reviewed every five years in meetings called Review Conferences of the Parties to the
Treaty of Non-Proliferation of Nuclear Weapons. Even though the treaty was originally conceived with a limited
duration of 25 years, the signing parties decided, by consensus, to extend the treaty indefinitely and without
conditions during the Review Conference in New York City on 11 May 1995.
At the time the NPT was proposed, there were predictions of 25–30 nuclear weapon states within 20 years.
Instead, over forty years later, five states are not parties to the NPT, and they include the only four additional
states believed to possess nuclear weapons. Several additional measures have been adopted to strengthen the NPT
and the broader nuclear nonproliferation regime and make it difficult for states to acquire the capability to
produce nuclear weapons, including the export controls of the Nuclear Suppliers Group and the enhanced
verification measures of the IAEA Additional Protocol.
Critics argue that the NPT cannot stop the proliferation of nuclear weapons or the motivation to acquire them.
They express disappointment with the limited progress on nuclear disarmament, where the five authorized
nuclear weapons states still have 22,000 warheads in their combined stockpile and have shown a reluctance to
disarm further. Several high-ranking officials within the United Nations have said that they can do little to stop
states using nuclear reactors to produce nuclear weapons.
Key Articles
Article I: Each nuclear-weapons state (NWS) undertakes not to transfer, to any recipient, nuclear weapons, or
other nuclear explosive devices, and not to assist any non-nuclear weapon state to manufacture or acquire such
weapons or devices.
Article II: Each non-NWS party undertakes not to receive, from any source, nuclear weapons, or other nuclear
explosive devices; not to manufacture or acquire such weapons or devices; and not to receive any assistance in
their manufacture.
Article III: Each non-NWS party undertakes to conclude an agreement with the IAEA for the application of its
safeguards to all nuclear material in all of the state's peaceful nuclear activities and to prevent diversion of such
material to nuclear weapons or other nuclear explosive devices.
Article IV:
1. Nothing in this Treaty shall be interpreted as affecting the inalienable right of all the Parties to the Treaty to
develop research, production and use of nuclear energy for peaceful purposes without discrimination and in
conformity with Articles I and II of this Treaty.
2. All the Parties to the Treaty undertake to facilitate, and have the right to participate in, the fullest possible
exchange of equipment, materials and scientific and technological information for the peaceful uses of
nuclear energy. Parties to the Treaty in a position to do so shall also co-operate in contributing alone or
together with other States or international organizations to the further development of the applications of
nuclear energy for peaceful purposes, especially in the territories of non-nuclear-weapon States Party to the
Treaty, with due consideration for the needs of the developing areas of the world.
Article VI: Each party "undertakes to pursue negotiations in good faith on effective measures relating to cessation
of the nuclear arms race at an early date and to nuclear disarmament, and on a Treaty on general and complete
disarmament under strict and effective international control".
Article X. Establishes the right to withdraw from the Treaty giving 3 months' notice. It also establishes the
duration of the Treaty (25 years before 1995 Extension Initiative).

First pillar: non-proliferation
Five states are recognized by the Non-Proliferation Treaty as nuclear weapon states (NWS): China (signed 1992),
France (1992), the Soviet Union (1968; obligations and rights now assumed by the Russian Federation), the
United Kingdom (1968), and the United States (1968) (The United States, UK, and the Soviet Union – the World
War II's ―Big Three‖ — were the only states openly possessing such weapons among the original ratifiers of the
treaty, which entered into force in 1970). These five nations are also the five permanent members of the United
Nations Security Council.
These five NWS agree not to transfer "nuclear weapons or other nuclear explosive devices" and "not in any way to
assist, encourage, or induce" a non-nuclear weapon state (NNWS) to acquire nuclear weapons (Article I). NNWS
parties to the NPT agree not to "receive," "manufacture" or "acquire" nuclear weapons or to "seek or receive any
assistance in the manufacture of nuclear weapons" (Article II). NNWS parties also agree to accept safeguards by
the International Atomic Energy Agency (IAEA) to verify that they are not diverting nuclear energy from peaceful
uses to nuclear weapons or other nuclear explosive devices (Article III).
The five NWS parties have made undertakings not to use their nuclear weapons against a non-NWS party except
in response to a nuclear attack, or a conventional attack in alliance with a Nuclear Weapons State. However, these
undertakings have not been incorporated formally into the treaty, and the exact details have varied over time. The
U.S. also had nuclear warheads targeted at North Korea, a non-NWS, from 1959 until 1991. The previous United
Kingdom Secretary of State for Defence, Geoff Hoon, has also explicitly invoked the possibility of the use of the
country's nuclear weapons in response to a non-conventional attack by "rogue states".
Second pillar: disarmament

Article VI of the NPT represents the only binding commitment in a multilateral treaty to the goal of disarmament
by the nuclear-weapon States. The NPT's preamble contains language affirming the desire of treaty signatories to
ease international tension and strengthen international trust so as to create someday the conditions for a halt to
the production of nuclear weapons, and treaty on general and complete disarmament that liquidates, in particular,
nuclear weapons and their delivery vehicles from national arsenals.
The wording of the NPT's Article VI arguably imposes only a vague obligation on all NPT signatories to move in
the general direction of nuclear and total disarmament, saying, "Each of the Parties to the Treaty undertakes to
pursue negotiations in good faith on effective measures relating to cessation of the nuclear arms race at an early
date and to nuclear disarmament, and on a treaty on general and complete disarmament." Under this
interpretation, Article VI does not strictly require all signatories to actually conclude a disarmament treaty.
Rather, it only requires them "to negotiate in good faith."
On the other hand, some governments, especially non-nuclear-weapon states belonging to the Non-Aligned
Movement, have interpreted Article VI's language as being anything but vague. In their view, Article VI constitutes
a formal and specific obligation on the NPT-recognized nuclear-weapon states to disarm themselves of nuclear
weapons, and argue that these states have failed to meet their obligation. The International Court of Justice (ICJ),
in its advisory opinion on the Legality of the Threat or Use of Nuclear Weapons, issued 8 July 1996, unanimously
interprets the text of Article VI as implying that- "There exists an obligation to pursue in good faith and bring to a
conclusion negotiations leading to nuclear disarmament in all its aspects under strict and effective international
control."
The ICJ opinion notes that this obligation involves all NPT parties (not just the nuclear weapon states) and does
not suggest a specific time frame for nuclear disarmament.
Critics of the NPT-recognized nuclear-weapon states (the United States, Russia, China, France, and the United
Kingdom) sometimes argue that what they view as the failure of the NPT-recognized nuclear weapon states to
disarm themselves of nuclear weapons, especially in the post–Cold War era, has angered some non-nuclear-

weapon NPT signatories of the NPT. Such failure, these critics add, provides justification for the non-nuclear-
weapon signatories to quit the NPT and develop their own nuclear arsenals.
Other observers have suggested that the linkage between proliferation and disarmament may also work the other
way, i.e., that the failure to resolve proliferation threats in Iran and North Korea, for instance, will cripple the
prospects for disarmament. No current nuclear weapons state, the argument goes, would seriously consider
eliminating its last nuclear weapons without high confidence that other countries would not acquire them. Some
observers have even suggested that the very progress of disarmament by the superpowers—which has led to the
elimination of thousands of weapons and delivery systems—could eventually make the possession of nuclear
weapons more attractive by increasing the perceived strategic value of a small arsenal. As one U.S. official and
NPT expert warned in 2007, "logic suggests that as the number of nuclear weapons decreases, the 'marginal
utility' of a nuclear weapon as an instrument of military power increases. At the extreme, which it is precisely
disarmament's hope to create, the strategic utility of even one or two nuclear weapons would be huge."
Third pillar: peaceful use of nuclear energy

The third pillar allows for and agrees upon the transfer of nuclear technology and materials to NPT signatory
countries for the development of civilian nuclear energy programs in those countries, as long as they can
demonstrate that their nuclear programs are not being used for the development of nuclear weapons.
Since very few of the states with nuclear energy programs are
willing to abandon the use of nuclear energy, the third pillar of
the NPT under Article IV provides other states with the
possibility to do the same, but under conditions intended to
make it difficult to develop nuclear weapons.
The treaty recognizes the inalienable right of sovereign states to

use nuclear energy for peaceful purposes, but restricts this right
for NPT parties to be exercised "in conformity with Articles I
and II" (the basic non-proliferation obligations that constitute
the "first pillar" of the Treaty). As the commercially
popular light water reactor nuclear power station uses enriched
uranium fuel, it follows that states must be able either to enrich
uranium or purchase it on an international market. Mohamed
ElBaradei, then Director General of the International Atomic Energy Agency, has called the spread of enrichment
and reprocessing capabilities the "Achilles' heel" of the nuclear nonproliferation regime. As of 2007, 13 states have
an enrichment capability.
Because the availability of fissile material has long been considered the principal obstacle to, and "pacing element"
for, a country's nuclear weapons development effort, it was declared a major emphasis of U.S. policy in 2004 to
prevent the further spread of uranium enrichment and plutonium reprocessing (a.k.a. "ENR")
technology. Countries possessing ENR capabilities, it is feared, have what is in effect the option of using this
capability to produce fissile material for weapons use on demand, thus giving them what has been termed a
"virtual" nuclear weapons program. The degree to which NPT members have a "right" to ENR technology
notwithstanding its potentially grave proliferation implications, therefore, is at the cutting edge of policy and legal
debates surrounding the meaning of Article IV and its relation to Articles I, II, and III of the Treaty.
Countries that have signed the treaty as Non-Nuclear Weapons States and maintained that status have an
unbroken record of not building nuclear weapons. However, Iraq was cited by the IAEA with punitive sanctions
enacted against it by the UN Security Council for violating its NPT safeguards obligations; North Korea never

came into compliance with its NPT safeguards agreement and was cited repeatedly for these violations, and later
withdrew from the NPT and tested multiple nuclear devices; Iran was found in non-compliance with its NPT
safeguards obligations in an unusual non-consensus decision because it "failed in a number of instances over an
extended period of time" to report aspects of its enrichment program; and Libya pursued a clandestine nuclear
weapons program before abandoning it in December 2003.
In 1991 Romania reported previously undeclared nuclear activities by the former regime and the IAEA reported
this non-compliance to the Security Council for information only. In some regions, the fact that all neighbors are
verifiably free of nuclear weapons reduces any pressure individual states might feel to build those weapons
themselves, even if neighbors are known to have peaceful nuclear energy programs that might otherwise be
suspicious. In this, the treaty works as designed.
India, Israel, and Pakistan

Three states—India, Israel, and Pakistan—have never signed the treaty. India and Pakistan are confirmed nuclear
powers, and Israel has a long-standing policy of deliberate ambiguity. India argues that the NPT creates a club of
"nuclear haves" and a larger group of "nuclear have-nots" by restricting the legal possession of nuclear weapons to
those states that tested them before 1967, but the treaty never explains on what ethical grounds such a distinction
is valid. India's then External Affairs Minister Pranab Mukherjee said during a visit to Tokyo in 2007: "If India
did not sign the NPT, it is not because of its lack of commitment for non-proliferation, but because we consider
NPT as a flawed treaty and it did not recognize the need for universal, non-discriminatory verification and
treatment."
India and Pakistan have publicly announced possession of nuclear weapons and have detonated nuclear devices in
tests, India having first done so in 1974 and Pakistan following suit in 1998 in response to another Indian test.
India is estimated to have enough fissile material for more than 150 warheads. Pakistan reportedly has between
80 and 120 warheads. India was among the few countries to have a no first use policy, a pledge not to use nuclear
weapons unless first attacked by an adversary using nuclear weapons, however India's NSA Shivshankar
Menon signaled a significant shift from "no first use" to "no first use against non-nuclear weapon states" in a
speech on the occasion of Golden Jubilee celebrations of the National Defence College in New Delhi on 21 October
2010, a doctrine Menon said reflected India's "strategic culture, with its emphasis on minimal deterrence".
According to leaked intelligence, Israel has been developing nuclear weapons at its Dimona site in the Negev since
1958, and many nonproliferation analysts like David Albright estimate that Israel may have stockpiled between
100 to 200 warheads using the plutonium reprocessed from Dimona. The Israeli government refuses to confirm
or deny possession of nuclear weapons, although this is now regarded as an open secret after Israeli low level
nuclear technician Mordechai Vanunu—subsequently arrested and sentenced for treason by Israel—published
evidence about the program to the British Sunday Times in 1986.
In early March 2006, India and the United States finalized an agreement to restart cooperation on civilian nuclear
technology. Under the deal India has committed to classify 14 of its 22 nuclear power plants as being for civilian
use and to place them under IAEA safeguards. Mohamed ElBaradei, then Director General of the IAEA, welcomed
the deal by calling India "an important partner in the non-proliferation regime."
In December 2006, United States Congress approved the United States-India Peaceful Atomic Energy
Cooperation Act that was cemented during President Bush's visit to India earlier in the year. The legislation allows
for the transfer of civilian nuclear material to India. Despite its status outside the Nuclear Non-Proliferation
Treaty, India was granted these transactions on the basis of its clean non-proliferation record, and India's need for
energy fueled by its rapid industrialization and a billion-plus population.

On 1 August 2008, the IAEA approved the India Safeguards Agreement and on 6 September 2008, India was
granted the waiver at the Nuclear Suppliers Group(NSG) meeting held in Vienna, Austria. The consensus was
arrived after overcoming misgivings expressed by Austria, Ireland and New Zealand and is an unprecedented step
in giving exemption to a country, which has not signed the NPT and the Comprehensive Test Ban Treaty (CTBT).
The NSG Guidelines currently rule out nuclear exports by all major suppliers to Pakistan and Israel, with very
narrow exceptions, since neither has full-scope IAEA safeguards (i.e. safeguards on all its nuclear activities).
Attempts by Pakistan to reach a similar agreement have been rebuffed by the United States and other NSG
members. The argument put forth is that not only does Pakistan lack the same energy requirements but that the
track record of Pakistan as a nuclear proliferator makes it impossible for it to have any sort of nuclear deal in the
near future. By 2010, China reportedly signed a civil nuclear deal with Pakistan claiming that the deal was
"peaceful."
In the Pakistan-China case, the parties did not seek formal approval from the nuclear suppliers group, and China
preferred to "grandfather" the reactor. Exponents of arms control denounced the China-Pakistan deal as they did
in case of U.S.-India deal claiming that both the deals violate the NPT by facilitating nuclear programmes in states
which are not parties to the NPT.
As of January 2011, Australia, one of the top three producers and home to worlds largest known reserves, had
continued its refusal to export Uranium to India despite diplomatic pressure from India. In November 2011 the
Australian Prime Minister announced a desire to allow exports to India, a policy change which was authorized by
her party's national conference in December.
On 4 December 2011, Prime Minister Julia Gillard overturned Australia's long-standing ban on exporting uranium
to India. She further said "We should take a decision in the national interest, a decision about strengthening our
strategic partnership with India in this the Asian century," and said that any agreement to sell uranium to India
would include strict safeguards to ensure it would only be used for civilian purposes, and not end up in nuclear
weapons.
On Sep 5, 2014; Australian Prime Minister Tony Abbott sealed a civil nuclear deal to sell uranium to India. "We
signed a nuclear cooperation agreement because Australia trusts India to do the right thing in this area, as it has
been doing in other areas," Abbott told reporters after he and Indian Prime Minister Narendra Modi signed a pact
to sell uranium for peaceful power generation.

CTBT
The Comprehensive Nuclear-Test-Ban Treaty (CTBT) is a multilateral treaty by which states agree to ban
all nuclear explosions in all environments, for military or civilian purposes. It was adopted by the United Nations
General Assembly on 10 September 1996[1] but it has not entered into force due to the non-ratification of eight
specific states.
To date, over 2,000 nuclear tests have been carried out at different locations all over the world. Arms control
advocates had campaigned for the adoption of a treaty banning all nuclear explosions since the early 1950s, when
public concern was aroused as a result of radioactive fall-out from atmospheric nuclear tests and the escalating
arms race. Over 50 nuclear explosions were registered between 16 July 1945, when the first nuclear explosive test
was conducted by the United States at White Sands Missile Range near Alamogordo, New Mexico, and 31
December 1953. Prime Minister Nehru of India voiced the heightened international concern in 1954, when he
proposed the elimination of all nuclear test explosions worldwide. However, within the context of the Cold War,
skepticism about the capability to verify compliance with a comprehensive nuclear test ban treaty posed a major
obstacle to any agreement.
Partial Test Ban Treaty

Limited success was achieved with the signing of the Partial Test Ban Treaty in 1963, which banned nuclear tests
in the atmosphere, underwater and in space, but not underground. Neither France nor China signed the PTBT.
However, the treaty was ratified by the United States after an 80 to 19 vote in the United States Senate. While the
PTBT reduced atmospheric fallout, underground nuclear testing can also vent radioactivity into the atmosphere,
and radioactivity released underground may seep into the ground water. Moreover, the PTBT had no restraining
effects on the further development of nuclear warheads.
Nuclear Non-proliferation Treaty

A major step towards non-proliferation of nuclear weapons came with the signing of the Nuclear Non-
proliferation Treaty (NPT) in 1968. Under the NPT, non-nuclear weapon states were prohibited from, among
other things, possessing, manufacturing or acquiring nuclear weapons or other nuclear explosive devices. All
signatories, including nuclear weapon states, were committed to the goal of total nuclear disarmament.
Negotiations for the CTBT

Given the political situation prevailing in the subsequent decades, little progress was made in nuclear
disarmament until the end of the Cold War in 1991. Parties to the PTBT held an amendment conference that year
to discuss a proposal to convert the Treaty into an instrument banning all nuclear-weapon tests; with strong
support from the UN General Assembly, negotiations for a comprehensive test-ban treaty began in 1993.
Adoption of the CTBT

Intensive efforts were made over the next three years to draft the Treaty text and its two annexes. However,
the Conference on Disarmament, in which negotiations were being held, did not succeed in reaching consensus on
the adoption of the text. Under the direction of Prime Minister John Howard and Foreign Ministe rAlexander
Downer, Australia then sent the text to the United Nations General Assembly in New York, where it was submitted
as a draft resolution. On 10 September 1996, the Comprehensive Test-Ban Treaty (CTBT) was adopted by a large
majority, exceeding two-thirds of the General Assembly's Membership.

Obligations under CTBT
(Article I):
1. Each State Party undertakes not to carry out any nuclear weapon test explosion or any other nuclear
explosion, and to prohibit and prevent any such nuclear explosion at any place under its jurisdiction or
control.
2. Each State Party undertakes, furthermore, to refrain from causing, encouraging, or in any way participating in
the carrying out of any nuclear weapon test explosion or any other nuclear explosion.
Status
The Treaty was adopted by the United Nations General Assembly on 10 September 1996. It opened for signature
in New York on 24 September 1996, when it was signed by 71 States, including five of the eight then nuclear-
capable states. As of September 2014, 163 states have ratified the CTBT and another 20 states have signed but not
ratified it.
The treaty will enter into force 180 days after the 44 states listed in Annex 2 of the treaty have ratified it. These
"Annex 2 states" are states that participated in the CTBT‘s negotiations between 1994 and 1996 and possessed
nuclear power reactors or research reactors at that time. As of 2013, eight Annex 2 states have not ratified the
treaty: China, Egypt, Iran, Israel and the United States has signed but not ratified the Treaty; India, North
Korea and Pakistan have not signed it. In 1998, India said it would only sign the treaty if the United States
presented a schedule for eliminating its nuclear stockpile, a condition the United States rejected.
Monitoring of the CTBT

Geophysical and other technologies are used to monitor for compliance with the Treaty: forensic
seismology, hydroacoustics, infrasound, and radionuclide monitoring. The technologies are used to monitor the
underground, the waters and the atmosphere for any sign of a nuclear explosion. Statistical theories and methods
are integral to CTBT monitoring providing confidence in verification analysis. Once the Treaty enters into force,
on site inspection will be provided for where concerns about compliance arise.
The Preparatory Commission for the Comprehensive Test Ban Treaty Organization (CTBTO), an international
organization headquartered in Vienna, Austria, was created to build the verification regime, including
establishment and provisional operation of the network of monitoring stations, the creation of an international
data centre, and development of the On Site Inspection capability.
The monitoring network (International Monitoring System) consists of 337 facilities located all over the globe. As
of May 2012, more than 260 facilities have been certified. The monitoring stations register data that is transmitted
to the international data centre in Vienna for processing and analysis. The data are sent to states that have signed
the Treaty.
Nuclear testing after CTBT adoption

Three countries have tested nuclear weapons since the CTBT opened for signature in 1996. India and Pakistan
both carried out two sets of tests in 1998. North Korea carried out three announced tests in 2006, 2009 and 2013.
All three North Korean tests were picked up by the International Monitoring System set up by the Comprehensive
Nuclear-Test-Ban Treaty Organization Preparatory Commission.

India‟s Afghan silk route in jeopardy
Fears are mounting for the future of an ambitious plan to link India with Afghanistan through a new-age Silk
Road network running through the Iranian port of Chabahar. Iran pressed National Security Advisor Ajit Doval
for commitments on the port, road and rail project during his visit to Iran, but was told that New Delhi is
unwilling to add to the $100 million promised in 2013.
New Delhi‘s second thoughts on the project are driven by concerns that the looming pullout of United States
troops, which has already led to a sharp escalation in fighting across Afghanistan, may scuttle a $10.8 billion iron-
ore and steel project by a Steel Authority of India Limited-led consortium at Hajigak.
Indian diplomats have also pointed to new strains in Kabul‘s relationship with Delhi. President Ashraf Gani‘s
government in Kabul dropped requests for Indian weapons aid in a bid to soothe Pakistani sensitivities.
―I think the bottom line is that no one is sure what the situation in Afghanistan is going to be like in a year, let
alone two decades‖, says Sushant Sareen, an analyst at the Vivekananda International Foundation in New Delhi.
―It would be foolish to gamble billions on a guess‖.
For both Iran and India, the project still makes strategic sense: the countries helped finance and train anti-Taliban
forces from 1998 to 2001 — a time when the US came close to recognising the Islamist regime. In addition, Iran
and India share concerns over Pakistan, with whom both have clashed on their borders in recent months.
In his meeting with Doval, the head of Iran‘s Supreme National Security Council, Ali Shamkhani, underlined those
shared interests, saying the countries are like ―neighbours without joint borders‖.

However, the fluid situation in Afghanistan means neither country is willing to spend resources on building the
expensive train and road transit routes. The Chabahar project was born in 2002, following the defeat of the
Taliban regime, as India searched for an access route to land-locked Afghanistan, that would be free of Pakistan‘s
control. The project was to have given India access to markets and mineral resources. In turn, Afghanistan would
have been freed from the leverage Pakistan now exercises over it.
In 2003, Afghanistan, India and Iran signed an agreement to develop the Chabahar-Zaranj-Delaram route. Later
that year, India began work on rebuilding the highway running from Zaranj to Delaram, connecting southern
Afghanistan to Iran. The route has been used for trade between India and Iran, though transport costs remain
high compared to the road from Kabul to the Wagah border, through Pakistan.
Following then-Iranian President Mohammed Khatami‘s 2003 visit to India, the two countries signed an
agreement that led to Ashok Leyland Projects being given charge of developing the port and future rail line.
Progress on the project was slow, in part disputes over tariffs and transit regulations proved difficult to resolve.
The upgraded road from Afghanistan to Chabahar also fell behind schedule. But in 2010, when SAIL began
negotiations for its Hajigak project, New Delhi made a renewed effort to speed up work. The Ministries of
Railways and Mines were also involved in discussions to build a railway line to carry out ore from Hajigak to
Chabahar.
In contrast, China has pushed forward aggressively on Chabahar, offering an $75 million credit line for ongoing
work on the port. Like India, China has plans to invest in Afghanistan‘s mineral wealth — in its case, a copper
mine at Mes Ainak. Its principal interest in Chabahar, though, is to handle oil from its estimated $14 billion
investments in fields at Yadavaran, South Pars, Masjed-i-Suleiman and Azadegan.
For its part, Iran is working on several separate projects to boost connectivity in Afghanistan. In addition to an
under-construction 176-kilometre train line from Messhad to Herat, the country is financing the construction of a
5-kilometre tunnel in Tajikistan, which would link Iran, through Herat, and Mazar-e-Sharif, to China.
Lost in transit
Zaranj-Delaram highway: Indian-built road, completed in 2009, connects Iran via the highway to the main
Kandahar-Herat highway. Businesses complain it has become dangerous because of Islamist gangs and criminals
Chabahar-Iranshahr-Zahedan-Milak road: Iranian-built road connects Chabahar to Afghan border; now

being upgraded. 700 km shorter, when complete, to Kabul-Karachi road
Chabahar-Faraj-Bam railway: Iranian project, will give access from port to Iranian rail network connecting
to central, west Asia
Chabahar-Zaranj-Delaram-Hajigak rly: Indian-Iranian project, would link future Indian iron-ore mining
operations at Hajigak to Chabahar, 900 kilometres away
Chabahar-Zahedan-Mashhad railway: Iranian project, connecting port to north-eastern Iran

57 year old Indian beaten mercilessly by Police in US
When 57-year-old Sureshbhai Patel decided to take a walk across the quiet suburban neighbourhood in Madison,
Alabama, where he had been staying with his son, he might not have expected to be lying in a hospital bed
partially paralysed from spinal column injuries a few hours later after a violent encounter with the local police.
Yet this was precisely what happened after Eric Parker, a Madison police officer, who has now been arrested and
faces suspension from the force for his unprovoked aggression toward a harmless individual, decided that
smashing Mr. Patel‘s face into the asphalt during a routine stop-and-frisk was the appropriate course of action
under the circumstances.
The incident, whose disturbing violence was captured in the ―dash-cam‖ video of the police officer‘s car, resulted
in justified outrage not only within the Indian-American community, but also elicited a sharp reaction from
India‘s Ministry of External Affairs, whose spokesperson Syed Akbaruddin made a direct reference to the use of
―excessive force‖ by police.
Prejudice towards minorities

The episode begs two questions. First, how often are Indians thus
victimised by local law enforcement agencies in the U.S.? Second,
―Excessive compared to what?‖ The short answer to the first question
is: not as frequently as other minorities such as African-Americans but
often enough to suggest a similar prejudice.
The most recent, notable case of an Indian national left to the mercies
of American law enforcement rule books was Devyani Khobragade,
whose diplomatic credentials could not save her from an invasive strip
search by the U.S. Marshals. The former Deputy Consul General was
not even the highest-ranking diplomatic officer to be handled in a
manner that could be considered beyond the realm of normal protocol.
In December 2010 former Indian Ambassador to the U.S., Meera
Shankar, was pulled out of a passenger security line and subjected to
an intimate pat-down at Jackson-Evers International Airport in
Mississippi, an incident that once again fomented anger in New Delhi.
In February 2011 Krittika Biswas, daughter of the Indian Vice-Consul

in New York, was handcuffed publicly in her school, wrongfully arrested and detained with criminals overnight on
allegations that she had sent obscene e-mails to a teacher, which were ultimately proven false. In 2010, Vijay
Kumar, an Indian filmmaker, was jailed for 20 days after he was arrested in Houston International Airport for
carrying ―Jihadi literature‖ in his baggage even though, ironically, the material was intended for a lecture he was
set to deliver to the Hindu Congress of America on an interfaith discussion between Hindus and Muslims.
These and numerous other instances of law enforcement excesses against persons of South Asian origin, which
have occurred since 9/11, arguably reflect deep prejudices linking the community to terrorists, to outsourcers who
steal American jobs, or just plain outsiders to white Anglo-Saxon culture, the ―purest‖ form of racial bias based on
skin colour.

No protection
Whatever the motivation of the law enforcement officials involved in each case, the cause for greatest alarm stems
from the fact that local law enforcement in the U.S., whether the police, the Transportation Security
Administration, the U.S. Marshals Service, or a similar entity, is in some senses a law unto itself and the federal
government can be powerless to intervene in the process, even in the interest of bilateral harmony. In the Patel
case a State Department spokesperson meekly deferred to local investigators while extending an apology from the
Secretary of State.
The fear for visitors such as Mr. Patel and Mr. Kumar, or residents such as Ms. Khobragade and Ms. Biswas, is
that even where remedies and recourse exist in law for compensatory and punitive damages, there is far less to
protect them from the actual acts of violence being inflicted in the first place, and that is a profound difference.
This brings us to the second question of ―Excessive compared to what?‖ If the bloodied nose that the frail Indian
grandfather ended up with thanks to the judo-style throw-down by Parker is compared to the killing of unarmed
and innocent African-American Akai Gurley by a New York police officer, then it was not excessive.
If the spinal column injury received by Mr. Patel is compared to the six bullet wounds of unarmed Michael Brown
in a lethal encounter with white police officer Darren Wilson in Ferguson, Missouri, then it was not excessive.
If the trauma inflicted upon Mr. Patel by the police is compared to the shooting dead of Miriam Carey, Trayvon
Martin or Eric Garner , all African-Americans who were unarmed when they died, then it was not excessive.
Yet excessive it was, and in some ways Mr. Patel may have been more fortunate than many African-Americans
who have found themselves in a similar situation. Indeed, it is possible that an even worse fate could have befallen
Mr. Patel had he not clearly said ―India‖ several times in reply to the police officers advancing menacingly upon
him, even as he tried to explain ―No English.‖
That the police initially believed he might be African-American could not be ruled out since the 9-1-1 call alerting
authorities to a ―suspicious‖ Mr. Patel complained of a ―skinny black guy‖ peering into neighbourhood garages.
Mr. Patel may have also had a lucky escape when he reached into his pocket at some point to pull out a
handkerchief, an action that would in many a case have resulted in instant death by gunfire in the land where the
right to bear arms is enshrined in the constitution.
Arguments against recommendations of HLC on

restructuring FCI
Within months of assuming office, the BJP-led National Democratic Alliance government set up a High Level
Committee (HLC) in August 2014 to restructure, reorient and reform the Food Corporation of India (FCI). The
eight-member HLC was chaired by senior BJP leader, Shanta Kumar, and included prominent economist Ashok
Gulati. On January 22, 2015, the HLC submitted its report to the government and made its recommendations
public.
In the short run, the committee recommends that the National Food Security Act (NFSA) 2013 be curtailed. In
particular, the NFSA entails providing subsidised food to about 67 per cent of the population, and the committee
recommends that the coverage be brought down to 40 per cent. In the medium run, the committee recommends
that the current public distribution system (PDS) be replaced by a cash transfer system. This will mean that the
state will no longer have to be responsible for distributing food to vulnerable sections of the population. Hence,

the state will no longer need to procure food from farmers, and store it. Since the current system of procurement,
storage and transportation is primarily managed by the FCI, the medium term vision of the HLC implies that the
FCI can, in due course, be folded up.
The overall thrust of the HLC‘s recommendations, if implemented, would whittle down the operation of the FCI in
the short run and completely dismantle it in the medium run. The HLC has advanced two broad set of arguments
as justifications for its recommendations. Critical scrutiny shows that both are fallacious.
Changed situation
The first set of arguments of the HLC relates to changes in the situation in the country as regards food production
and consumption since the crisis period of the mid-1960s. Today, India produces more food grains than it
consumes, even exporting substantial amounts to the world market. It has a large public stockholding of food
grains and is comfortably placed as regards foreign exchange reserves. All this is in stark contrast to the situation
in the mid-1960s. Moreover, consumption patterns of households have displayed a shift away from cereals. This
changed situation, in the opinion of the HLC, calls for a change in the role of the FCI.
The HLC, however, has ignored the fact that India continues to be plagued by large scale hunger and malnutrition.
Data from the National Sample Survey (NSS) shows that in 2009-10 the vast majority of the population was
consuming less than the 2010 Indian Council of Medical Research calorie norms. If we look at trends over time,
the same data also shows that average calorie and protein intake have declined over the past few decades.
Evidence on more direct measures of under-nutrition – like the proportion of underweight and stunted children –
are equally grim.
Fulfilling its objectives

Given these well known facts and trends on hunger and malnutrition, it seems foolhardy to use the fact of a
changed production situation in the domestic economy to argue for the dismantling the FCI. A more sensible
route would be to use increased domestic production to directly address the problems of hunger and malnutrition.
In this strategy, the FCI is bound to play a more rather than less important role.
The second set of arguments given by the HLC as justification relate to the claim that the FCI has not been
fulfilling its three key objectives in recent years: providing price support to farmers, delivering food through the
PDS, and reducing volatility of food prices (and addressing food security) through public stockholding. According
to the HLC, failure to meet the objective of providing price support is shown by the fact that in 2012-13 only six
per cent of agricultural households sold any food grains to procurement agencies. Failure on the PDS front is
attested by massive leakages from the system. Food grains rotting in FCI warehouses highlight the failure of the
system of public stockholding.
The fact that only six per cent of agricultural households sold paddy or rice to any procurement agency in 2012-13
is really striking. The Situation Assessment Survey of Agricultural Households conducted by the National Sample
Survey Organisation during the 70th Round (2013) of the NSS – the data source that allowed the HLC to compute
the figure of six per cent – shows why. The NSS data reveals that the vast majority of agricultural households were
not aware of the existence of minimum support price (MSP), and an even larger proportion were not aware of
procurement agencies (about 80 per cent for paddy and 70 per cent for wheat). Of the households that were aware
of MSP but did not sell to procurement agencies, a large proportion did so for lack of procurement infrastructure
at the local level. Moreover, if we go back 10 years and look at data from the previous (and first) Situation
Assessment Survey of Farmers in 2003, we see a large variation across States in awareness of MSP, with Haryana,
Kerala, Punjab and Tamil Nadu showing high awareness.
One can see that the reason for low use of procurement is lack of information. The other reason is lack of enabling
infrastructure at the local level. States which have managed to put such infrastructure in place and disseminate

information about procurement saw greater participation. Thus, the HLC‘s conclusion that the procurement
system is not working is misleading.
The second claim of the HLC is that the PDS is a failure because of massive leakage. But, what do we know about
the extent of leakage, its spatial and temporal patterns?
The existing literature on PDS in India has highlighted three important patterns. First, there is a secular decline in
leakage over the past decade. Second, there is a large variation in the extent of leakage across states with some
States like Andhra Pradesh, Himachal Pradesh, Karnataka, Kerala and Tamil Nadu consistently reporting low
leakage. Third, and more interestingly, many States like Bihar, Assam, Chhattisgarh, Jharkhand and Uttarakhand,
have improved considerably over time with respect to leakage from the PDS. The conclusion that would be
consistent with the findings of this literature is not that the system needs to be dismantled but that the strategies
adopted by successful states are replicated in the other States.
The third claim of the HLC is that the FCI has ended up with excess stocks of food grains. Since storage of food
grains is costly, it represents a waste of resources that could have been used elsewhere and in more productive
ways. We agree with this and would go further to argue that excessive stocks of food grains on the one hand, and
prevalence of widespread hunger and malnutrition on the other immediately call for an expansion of the PDS
operations.
To sum up, neither the changed situation with respect to domestic food production nor the functioning of the FCI
with respect to meeting its key objectives lends credence to the argument that the FCI, and with it the whole food
management system, needs to be curtailed.
Note: For detailed recommendations of HLC see the January edition of Civil Services News

Indian thermal power plants inefficient: CSE Study
Indian coal-based thermal power plants are some of the most inefficient in the world - says a two-year long
research study by Centre for Science and Environment (CSE). The study, done under CSE‘s Green Rating Project
(GRP), is the first of its kind rating of this industrial sector for its environmental performance and compliance.
CSE analysed and rated 47 coal-based thermal power plants from across the country on a variety of environmental
and energy parameters. About half of all the plants operating in 2011-12 were selected for the rating.
In a statement, CSE director general Sunita Narain said, ―The objective of the study was to give a clear picture of
the environmental performance of the sector. Our finding is that in India, where the demand for power is
increasing, power plants are performing way below the global benchmarks. Given the rapid increase in coal-based
power projected by the government, stress on precious resources like water and land will increase and air and
water pollution will worsen, unless corrective measures are taken by the industry and policy-makers.‖
Speaking about the rating programme, Chandra Bhushan, CSE‘s deputy director general, said: ―The Green Rating
Project is one of the very few public-disclosure projects in the world in which a non-governmental, non-industry
organisation rates the environmental performance of industries and makes the results public. We follow a robust
and transparent process and the outcomes of our ratings have been used by companies as well as policymakers to
improve policies and practices.‖
The project, started in 1997, has so far rated five major industrial sectors of India – pulp and paper, iron and steel,
chlor-alkali, cement and automobiles. The coal-based power sector is the sixth it has rated.
What did the rating study find?

―Our analysis essentially says that this sector has a lot of room for improvement,‖ points out Bhushan. The key
findings of the rating exercise were:

The sector‘s overall score was a low 23 per cent (a plant adopting all the best practices would have scored 80
per cent). The average efficiency of the plants in the study was 32.8 per cent, one of the lowest among major
coal-based power producing countries. Average CO2 emission was 1.08 kg/kWh, 14 per cent higher than
China‘s.
The top performers were West Bengal-based CESC-Budge Budge, followed by JSEWL-Toranagallu
(Karnataka), Tata-Trombay (Maharashtra) and JSW-Ratnagiri (Maharashtra). They scored between 45-50
per cent. In addition, Tata-Mundra (Gujarat) received an award for having the highest energy efficiency, while
Gujarat Industries Power Company Ltd (GIPCL), Surat, won an award for lowest water use.
A disappointing 40 per cent of the plants in the study received less than a 20 per cent score, pointing to the
dismal state of the sector.
India‘s thermal power plants are estimated to withdraw around 22 billion cubic metre of water, which is over
half of India‘s domestic water need. Even the plants with cooling towers use an average of 4 m3/MWh; the
average water consumption in Chinese plants is 2.5 m3/MWh.
Fifty-five per cent of the units were violating air pollution standards which are already extremely lax –
particulate matter (PM) norms are at 150-350 mg/Nm3 (milligram per normal metre cube) compared to
Chinese norms of 30 mg/Nm3.
Fly ash disposal remains a major problem. Presently, only about 50-60 per cent of the 170 million odd tonne
of fly ash generated by the sector is ―utilized‖; the remaining is dumped into poorly designed and maintained
ash ponds. Currently, about a billion tonnes of these toxic ashes lie dumped in these ponds, polluting land, air
and water. By 2021-22, the sector will produce 300 million tonnes of fly ash every year.
Ash slurry, which has toxic heavy metals, was found in river and reservoirs of 20 plants. Test done CSE lab
found that nearly 40 per cent of the plants did not meet the basic total suspended solid (TSS) norms for
effluents discharged by them. 60 percent plants had not installed effluent and sewage treatment plants
Thirty-six of the 47 plants were unable to meet the MoEF‘s mandated target of utilizing 90 per cent of the
solid waste (ash) generated – average use was only 54 per cent.
The performance of the NTPC Ltd., the largest coal-power producing company in India, was found to be below
par. NTPC did not disclose its data, and hence was rated based on a primary survey and publicly available
information. The six plants of NTPC that were rated received scores of 16-28 per cent. The poorest of the lot
was Delhi‘s Badarpur plant.
The rating study methodology

Industries assessed under the GRP project are awarded leaves for their performance – the highest being five
leaves and the lowest being none. In the current rating, only four plants scored between 40 and 60 per cent and
received the Three Leaves award.
The project selected a diverse group of plants from all regions, of various vintages, sizes and technologies and
owned by all major companies, including state and central ones, to ensure as wide a representation as possible.
GRP is a participatory process -- companies voluntarily disclose data and permit the GRP team to independently
scrutinise the plants and their records.
The plants were rated on around 60 parameters covering everything from coal and water use and plant efficiency
to air and water pollution and ash management. Local community views and impacts on them were given due
weightage along with the plants‘ compliance record and environment policies. The ratings involve comparing the
performance of the plants against the best practices.
Priyavrat Bhati, programme director of CSE‘s Sustainable Industrialisation team (which is behind this rating
project), said: ―The most striking part of the ranking is that 20 plants did not get a single leaf, which is a reflection
of their particularly poor environmental performance. Some of the plants did not want to participate. Yet, we

assessed them on the basis of field-level surveys and publicly available data.‖ He added: ―We were encouraged by
the transparency showed by a number of state-owned plants that voluntarily disclosed data despite being
inefficient and highly polluting.‖
What is the way ahead?

National norms for PM are very weak and need to be brought in line with global standards.
National norms for SOx, NOx and mercury are absent and need to be established with short breathing room to
install new abatement technologies.
Monitoring by regulators should be strengthened – they should be given more powers (including imposing
stiff penalties) to enforce compliance.
Ash policy should support higher usage of ash. Utilisation targets for individual plants should keep in mind
scope for utilisation.
Coal washing capacity needs to be doubled to meet increased use.
Regulations/incentives to ensure improvement in capacity utilisation.
Approvals for new capacities should be only for supercritical/ultra supercritical plants.
Old inefficient plants should be closed at an aggressive pace.
Efficiency improvement schemes like Perform, Achieve and Trade (PAT) should be strengthened with
ambitious targets and more thorough analysis of plants‘ performance.
The dispatch order (i.e. the sequence in which plants are asked to supply power) should ensure polluting
plants are not called first because they are the cheaper.
Clearances given to new capacities should be based on best achievable water consumption practices and
levels.
Water tariffs should increase to curb excessive use.
Chandra Bhushan said, ―The good news is that environment damage can be limited – technologies exist to cut air
pollutants, while ash generated from burning coal can be gainfully used. We found some of the plants
implementing these technologies. However, a concerted effort by the industry and regulators is urgently
required.‖ Narain added: ―The bottom line is that we cannot afford to continue discounting the environmental and
health costs of polluting coal-based power plants. This is the clear message from our rating. We hope that the
industry and government will listen to this message and act on it.‖

High pollution cuts short Indian lives by 3 years
Over half of India‘s population is exposed to deadly air pollution and live in areas where fine particulate matter
pollution is above the country‘s standards for what is considered safe.
Using a combination of ground-level in situ measurements and satellite-based remote sensing data, a new study
by economists from three U.S. universities — Chicago, Harvard and Yale — has calculated that 660 million people
live in areas that exceed the Indian National Ambient Air Quality Standard (NAAQS) for fine particulate matter
(PM 2.5) pollution.
The study ‗Lower Pollution Longer Lives, Life Expectancy Gains if India Reduced Particulate Matter Pollution‘, by
Michael Greenstone, Janhavi Nilekani, Rohini Pande, Nicholas Ryan, Anant Sudarshan and Anish Sugathan was
published in the Economic and Political Weekly. It shows that if India reverses this trend to meet its air quality
standards, those 660 million people would gain about 3.2 years onto their lives, and compliance with Indian air
quality standards would save 2.1 billion life-years.
It suggests improved monitoring, civil penalties and pricing scheme to reduce pollution.
Mr. Greenstone, an author of the study and director of the Energy Policy Institute at the University of Chicago,
told The Hindu on phone that all 600 districts were covered in India and wherever available, direct measurements
from the Central Pollution Control Board (CPCB) monitoring stations were used and when that was not available,
satellite data was used.
He said air quality and economic growth do not have to be in conflict. The study draws from an earlier study he
carried out in China in which he and his co-authors compared pollution in north China — where a policy
subsidised coal use for home heating — with south China.
High health costs

―We used the relationship between particulates and life expectancy estimated in the China study and applied it to
the Indian levels of air pollution to produce our central estimate of about three years reduction in life expectancy.
We also compared this to estimates from other studies that say something about life expectancy reductions or
infant mortality and reported those results in the paper. The general message of high health costs remains
unchanged,‖ said Mr. Sudarshan, one of the authors, in an e-mail response to questions.
―Using only CPCB data, the highest air pollution levels on average have been recorded in the National Capital
Region of Delhi, followed closely by Gwalior,‖ he said.

Criticism of the Draft National Health Policy
Recently, the Central government invited comments on its Draft National Health Policy (DNHP). The DNHP
provides an exhaustive coverage of health issues and challenges facing this much neglected sector. Its major
recommendations are making health a justiciable right and denial of care an offence; provisioning of health
services through a strengthened public health delivery system in partnership with the private sector; enhancing
public spending from the current level of 1 per cent of GDP to 2.5 per cent; mobilising resources through
enhanced taxation on alcohol and tobacco, extractive industries, medical tourism and a special health cess, etc.
Essentially, the DNHP reiterated the continuance of existing strategies.
The DNHP is the usual please-all document and is cost neutral. Basically, since the last national health policy in
2002, over six well-researched reports have been published, stating the ills that plague India‘s health system and
providing solutions. The non-implementation of the several excellent recommendations is on account of the lack
of political will and the institutional incapacity to reform.
The DNHP needs to, however, be read against the backdrop of reduced funding for health. In the first three years
of the 12th Plan, health got less than 25 per cent of the resources against its allocation of Rs 3 lakh crore provided
for the five years, not to mention another 20 per cent cut imposed recently. Read with the composition of the Niti
Ayog, which consists of macroeconomists, and given that the deliberations of its first meeting did not mention
health, there is concern whether this government, in its hot pursuit of growth, may continue the past tradition of
ignoring social sectors like health and education.
The argument to enhance public spending on health rests on two grounds. First, the centrality of health to
development and economic growth. While 12 per cent of absenteeism among industrial labour is on account of ill
health, the demographic dividend can be reaped only if the youth are healthy and productive. Second, the state‘s
primary obligation is to deliver public goods as an entitlement. This cannot be left to the market. A more
comprehensive redefinition of poverty, to imply not just employment and incomes but also access to good quality
health, education and nutrition, is essential for building capabilities. Clearly, health and wellbeing is not just a
question of doctors, hospitals and free drugs but open parks, clean air and water, uncontaminated food and a safe
and clean environment as well.
The DNHP needs to take a position on important policy issues — Centre-state relations and greater
decentralisation. The DNHP does not mention this aspect and, instead, merely points out that the Central share
needs to increase from the current level of 34 to 40 per cent of total public health spending. With the actual
implementation then dependent on the fiscal positions of the states, a view needs to be taken on how to enhance
their capacity to achieve health goals. In such an environment of constrained finances, prioritisation becomes
inevitable, giving rise to two issues: One, to what extent the Centre should lay down principles and goals for states
to achieve as conditional for its grants, leaving states to design their implementation strategies. And two, what
such national goals should be — worry about the remuneration to community workers or to capacitate the states‘
technical and administrative abilities to deliver the wider definition of comprehensive primary care as an
entitlement to all its citizens as a first immediate goal? Or, neglecting this primary responsibility, to assist states to
launch hospital insurance programmes?
As India‘s disease burden is not spread equally among all socio-economic population groups or regions, there is a
need for differential strategies. If two-thirds of maternal, infant and under-five mortality and the burden of
communicable diseases are concentrated in less than 200 of the 670 districts, and if these districts have no
infrastructure for delivery of services, the people are poor, illiterate and have no access to basic goods, where even
a sub-centre takes more than an hour to reach due to no road and transport connectivity, and since infectious

diseases do not respect boundaries, should the Centre take the primary responsibility of helping such states to
achieve a measure of equalisation? It could decisively intervene with a differentially funded strategy to be
implemented in a mission mode, Centrally-monitored and directed till requisite capacity at the local level is
developed. Or should it continue to treat all states equally and allow the disparities to widen, with no significant
window for the catch-up of historical inequities? What principles must guide the Centre in making such choices?
Finally, the DNHP is full of contradictions regarding the role of the private sector. A public-private mix entails
reforms in the way financing and governance are structured in health. To begin with, bodies like the Medical
Council of India, constituted in 1933, need to be revamped to meet human resource challenges. Besides, laws need
to be put in place to make the private sector more accountable. There are, at present, neither grievance redress
mechanisms nor malpractice or fraud laws to regulate unscrupulous providers gaming the system. Governing the
private sector will then require financial and institutional reform, a set of skills and competencies that
governments and public authorities at all levels of administration seriously lack and need to develop. These need
to be clearly addressed, with a roadmap.
The issues facing the health sector are politically sensitive. These need a political and not bureaucratic response.
We need to build a political consensus to rectify distortions that have undermined India‘s health system, not
another national health policy giving a wishlist of ideal scenarios. The time has come to make hard choices and
take the big leaps for transformative change.
The prime minister should appoint a high-level committee under the chairmanship of the health minister
consisting of representatives of all major political parties to draft the national health policy, reflecting the
combined vision of what we want our health system to be 15 years hence. Only then will the policy carry
credibility, be an implementable document and one that state governments can be held accountable to. Anything
less will be yet another bureaucratic exercise with no political traction. The health sector, more than ever, requires
political leadership at the highest level to pull it out of its dire straits. The common citizenry expects this and more
from a government elected on the promise of delivering development and wellbeing.
Supreme Court judgement on benefits to reconverts

The Supreme Court ruled in a recent judgement that a ‗re-convert‘ to Hinduism from Christianity would be
entitled to quota benefits as long as his great-grandfather was a Dalit, and the ‗community‘ accepted his return.
What was the case before the court?

In 1984, one K P Manu, a Christian man then aged 24, converted to Hinduism. His great grandfather was a Pulaya
(Dalit) Hindu, but his grandfather had embraced Christianity, taken a new name, and married a Hindu Ezhava
woman who had converted to Christianity. Manu‘s father was Christian, and so was his mother.
After re-conversion, the Akhila Bharatha Ayappa Seva Sangham certified his re-entry as a Pulaya, and the
tehsildar issued a caste certificate. However, his availing of facilities available to Hindu Dalits was challenged, and
the Kerala High Court upheld the objection. Manu appealed to the Supreme Court. The two-judge bench
comprising Justices Dipak Misra and V Gopala Gowda set aside the High Court order, and ruled that Manu was
entitled to quota benefits.

So substantively, what does the order do?
It allows the children of second generation converts to Christianity to re-convert to being Dalit Hindus, and avail
of benefits such as reservations in government jobs. The court expanded the scope of an earlier judgment passed
by a constitution bench of the Supreme Court, saying, ―If a person born to Christian parents, who had converted to
Christianity from the Scheduled Caste Hindu, can avail the benefits of the caste certificate after embracing
Hinduism, there cannot be any soundness of logic that he cannot avail similar benefits because his grandparents
were converted and he was born to parents who were Christians.‖
Did the court lay down any conditions?

Three. The individual must re-convert to Hinduism; s/he must revert to the specific Dalit caste to which s/he
belonged, and return to caste practices; and the ―community‖ must accept the re-conversion.
What was the basis of the order?

The court cited several studies and quotes to establish that converting to Christianity did not take the caste stigma
away. It relied heavily on the constitution bench order on Principal, Guntur Medical vs Y Mohan Rao delivered on
April 6, 1976, allowing re-coversion to Hinduism to avail of the benefits of caste reservation. It stretched the order
to allow even second-generation converts to return to Hinduism to qualify for Dalit reservations, so far not
available to Dalit Christians and Dalit Muslims.
What are the larger issues around this order?

Broadly two. One, the ‗ghar wapsi‘ debate stirred by the actions of several groups closely linked to the ruling BJP.
And two, the ongoing debate on whether Dalits who convert to Christianity and Islam should be accorded benefits
that are available to Hindu Dalits.
What is the religion-reservation debate?

The understanding that ‗untouchability‘ is alien to Christianity and Islam, and is known only to faiths that
originated in the subcontinent, resulted in the Constitution (Scheduled Castes) Order, 1950, which prohibited
Dalit converts to Christianity or Islam from being recognised as Scheduled Castes.
This presidential Order was passed in ―exercise of the powers conferred by clause (1) of Article 341 of the
Constitution of India‖, but remains a sticking point in Indian politics even today. Those who claim it is wrong to
exclude Christian or Muslim Dalits, say so on the basis of the constitutionally guaranteed equality of all religions,
and argue that exclusion amounts to discrimination against non-Hindus.
The National Commission for Religious and Linguistic Minorities, which submitted its report to the Centre in
2007, argued in favour of extending reservations to Dalits of all faiths. However, others argue that once Dalits
decide to leave the Hindu fold, it must be accepted that their social and economic lot has improved, and they can
no longer avail of benefits of being Hindu without being Hindu — and that it would encourage conversion if
reservations were offered to non-Hindu Dalits as well.
So, do Dalit Christians and Muslims not get any reservations?

The Mandal Commission and the Backward Castes Commissions in states recognise several backward caste
categories amongst non-Hindus. They do get reservations, but as backward castes, not as Dalits or SCs.

Permanent membership of Security Council still
elusive for India
Each time an Indian dignitary goes abroad or a foreign one visits India, both sides scramble for a formulation on
India‘s candidature for permanent membership of the United Nations Security Council (UNSC). This pleases
India, though it doesn‘t move us any closer to New Delhi‘s diplomatic holy grail. If China or the United States is
involved, the excitement is even higher. But the fresh formulations are mostly old wine in a new bottle: the
substance is the same, though the presentation is appealing and open to different interpretations. The tantalising
horseshoe table of the UNSC remains elusive, except for the occasional two-year rendezvous. The net result of our
35-year campaign is that we are elected to the UNSC less often these days than before, despite our increased
geopolitical and economic importance.
US President Barack Obama thought he was giving India the next best thing after the nuclear deal when, in 2010,
he declared in Parliament: ―In the years ahead, I look forward to a reformed United Nations Security Council that
includes India as a permanent member‖. The US had not said anything similar before. But Obama‘s futuristic and
conditional formulation had no practical meaning. Worse, news leaked that the US intelligence agencies were
keeping a watch on India‘s activities on UNSC reform. Unless the US proposes to build consensus on a particular
package for expansion, verbal support has no meaning. The reality is that there is no plan that could enjoy the
support of two-thirds of the General Assembly, including the permanent members — not even the latest proposal
by Kofi Annan and Gro Brundtland.
Obama did not improve the quality of his support during his visit this year. He just repeated the 2010 formulation
in a different way. The message was loud and clear: the US is not ready for UNSC reform.
A section of the Indian media portrayed a change for the better in the Chinese position during Sushma Swaraj‘s
visit. But, in fact, the Chinese line has remained the same — it favours the involvement of developing countries in
the UNSC and respects India‘s willingness to play a bigger role in the council. This is what its foreign ministry
spokesperson, Hua Chunying, said in answer to a question. It was added that China would not support Japan and
that a broad consensus was necessary to make reform possible. This has detracted from China‘s ―respect‖ for
India. Pakistan promptly informed Obama that India was not qualified to be a permanent member so long as the
Kashmir issue is unresolved. This appears to have been orchestrated to counter the American and Chinese
statements.
The latest in the series of proposals put forward by the ―elders‖, Annan and Brundtland, on the occasion of the
70th anniversary of the UN doesn‘t have a better chance of acceptance than those made by others on the 50th and
60th anniversaries. In fact, it is a modified version of one of the plans contained in Annan‘s report, ―In Larger
Freedom‖. The elders steer clear of the quagmire of permanent membership and advocate periodic elections for
longer-term non-permanent members. ―Instead of new permanent members, let us have a new category of
members, serving a much longer term than the non-permanent ones and eligible for immediate re-election. In
other words, they would be permanent, provided they retained the confidence of other member states. Surely that
is more democratic,‖ they said.
Would any of the permanent members get re-elected if the same formula were applied to them? The self-discipline
being imposed on the permanent members is hazy and not likely to be accepted. A large majority of members
would rather have the veto abolished.
Contrary to the general impression, it is not just the permanent members which are unenthusiastic about
additional permanent members. Most countries, other than the candidates and aspirants, have nothing to gain

from having more permanent members. They would rather the non-permanent membership be expanded so that
they could have a chance to serve on the UNSC. Even countries that have pledged to back India or other
candidates may not support an expansion. They are hoping that the permanent members will block such moves.
There is, of course, the ―coffee club‖, promoted by Pakistan, Italy etc, which openly oppose any expansion. They
will enthusiastically support Annan and Brundtland‘s proposal that the council closely consult members that are
likely to be affected by UNSC decisions.
While it is widely acknowledged that the present composition of the UNSC is outdated and more developing
countries should be represented, there is no support for new permanent members with a veto. The only possible
option is to have new permanent members without a veto or non-permanent members with longer terms and
provisions for immediate reelection. Intensive efforts will be made during the 70th anniversary of the UN to find a
formula. The UK and France are reportedly keen to resolve this issue soon because they are afraid the longer it
takes, the greater the pressure on them to step down in favour of an EU representative. For India, the horseshoe
table may still prove elusive.
Railways, reforms and resistance

Reform is not an end in itself but a
means to achieve certain clear
objectives. In the case of the Indian
Railways, reforms are aimed at
ensuring adequate investments in a
vital infrastructure sector for
achieving a growth rate that keeps
ahead of the economy as a whole,
while providing quality transport
service at minimum cost to society.
For achieving these objectives,
reforms can be classified broadly as
those relating to its finances and
those concerning its organisational structure. Some measures no doubt overlap.
Reforms imply change. It is human nature to resist change. In the case of the Railways, reforms, or even the mere
intention to reform, can invite severe backlash from those within the system who see an existential threat in any
such move. Further, changes to the organisational structure, apart from internal resistance, can disrupt an already
functioning system during the transition period that can have serious consequences to the economy. The path is
unclear; the outcome uncertain. A few examples will bring out the complexities involved.
A reform measure suggested in the past by more than one committee to tone up the Railways‘s finances is to
unbundle ―non-core‖ activities such as health care and manufacture of rolling stock (mostly locomotives and
coaches). Without entering into a debate on the pros and cons of the present arrangement, what needs stressing is
that these two activities between them employ about one lakh personnel out of a total strength of about 13.1 lakh.
Any such move will be stoutly resisted by the employees.

A peculiar feature of the Railways is that unlike a commercial undertaking, the salary levels of the employees are
not fixed in relation to the earning potential of the organisation, but by an extraneous agency instead. The Central
Pay Commission sets the pay scales of all central government employees every 10 years. Further, in the case of the
Railways, the pension liabilities are met out of its own earnings and not from the Consolidated Fund of India, as in
the case of the other Ministries. On the other hand, on the revenues front, the constraints in having a
remunerative pricing for passenger traffic are too well known to require reiteration. Cross subsidisation through
freight traffic earnings has its limits as, beyond a point, higher freight tariffs can become counterproductive by
driving away traffic. Internal resource generation is affected. This decadal shock treatment by the Pay Commission
is inevitable so long as the Railways remain an undertaking under the Central government with civil service status
for its employees. Any change in this status will be resisted by the employees.
Converting the Indian Railways into a government-owned corporation is a reform measure that was suggested by
the Rakesh Mohan Committee (2001), mainly as a means to attract private investment and to streamline its
functioning. Another advantage claimed in favour of this measure is that it keeps the organisation at ‗arm‘s length‘
from the government, leading to greater functional autonomy. But mere corporatisation without intra-sector
competition will be a cosmetic exercise. Besides, even with competition, in the Indian context, it would seem that
the length of the ‗arm ‗is very short and is subject to considerable twisting (as in the case of Air India.) Introducing
intra-sector competition further complicates the process, as in the case of that controversial ‗P‘ word:
‗privatisation‘.
The question of privatisation

There is no bigger controversial and emotionally charged subject associated with reforms in the Railways than the
‗P‘ word. The arguments at both ends of the spectrum are often ideologically driven, dogmatic and ill-informed.
The issue has been resolved to some extent by the recent unequivocal declaration by the Prime Minister that the
Railways will not be privatised. But saying that the Railways will not be privatised is not to say that railway
operations in India will not be thrown open to the private sector at some future date. What are the implications?
The incentives that drive the private sector, positive and negative, are the profit motive on the one hand and the
existential threat of going out of business on the other. But privatisation without competition will degenerate into
an oligopoly. To introduce an element of competition in rail operations, it will be necessary to separate the
ownership and the management of infrastructure (track, signalling, stations, etc.) from train operations to allow
either multiple operators to access the same track (route) or to have a system of franchise for particular routes.
Thus the entry of private players in railway operations along with a government-owned entity requires a
fundamental reorganisation of the Railways. It is not about change of ownership alone, unlike many other sectors.
Problems of coordination escalate to another level of complexity. The bureaucratic state will be replaced by the
contract state. Effective regulation becomes critical and so also the speedy resolution of disputes that are bound to
arise from time to time. The limited experience of the Railways so far in executing projects in the PPP mode has
not been without its share of problems. Adding to all this is the reality peculiar to this country: the political
establishment across the spectrum, whether in power or outside, is loath to let go of some measure of control over
a crucial infrastructure sector that is seen as a vote garnering machine.
It should now be obvious why there has not been any movement towards significant ‗reforms‘ in the Railways. The
process is complex, can invite severe staff backlash and can disrupt a reasonably well-functioning system, with
serious consequences for the economy. Further the process is rife with uncertainty and can test the commitment
and perseverance of any government, even one with a comfortable majority in Parliament. Significant reforms
also need a modicum of consensus among all stake holders including the political establishment and cannot be
rammed down from above through executive fiats and diktats. More committees are certainly not the answer.

Training of healthcare providers
The failure of successive governments in India, especially those in States that have the highest mortality rates
among children younger than five years, to address the critical issue of training health-care providers in rural
areas to correctly diagnose and treat children suffering from diarrhoea and pneumonia, has had tragic
consequences. These ailments account for the maximum number of under-5 mortality incidence in the country.
That the poor management of sick children by health care providers is a major causal factor for under-5 mortality
has been brought out by a study carried out in rural Bihar.
As other studies have shown, what is true for Bihar will be largely valid for other States as well. That the 340
health-care providers studied seldom practised what little they knew about treating children suffering from the
two health complications is a poignant reminder of the state of the health-care system in rural India. Only 3.5 per
cent of the practitioners prescribed the correct treatment using life-saving oral rehydration salts (ORS) alone for
children with simple, uncomplicated diarrhoea. Instead, nearly 69 per cent of them prescribed potentially
dangerous drugs, including antibiotics, along with ORS; an equal percentage of them prescribed drugs without
any ORS. The record was only slightly better in the case of pneumonia. The quality of diagnosis also left much to
be desired.
These findings explain why Bihar has the country‘s highest infant mortality rate of 55 per 1,000 live births. In
2010, the under-5 mortality in India from diarrhoea and pneumonia was over 600,000, the highest in the world in
terms of absolute numbers. In the same year, India was one of the five countries that accounted for nearly 50 per
cent of the deaths globally from diarrhoea and pneumonia in this age group. Hence, it is hard to fathom why India
did next to nothing to train and equip health-care providers to diagnose and treat children.
Bangladesh has not seen any drop in the incidence of acute diarrhoeal disease, but has reduced its under-5
mortality rate by 75 per cent between 1980 and 2011, largely by reducing mortality from the two diseases by
means of better case management even in rural areas. In 2006-2007, as much as 76 per cent of children with
diarrhoea in rural Bangladesh received ORS, a 2013 paper in The Lancet says. India has indeed done well in
reducing under-5 mortality numbers from 2.5 million in 2001 to 1.5 million in 2011. But with only 10 months left
to achieve the critical Millennium Development Goal No. 4 of 38 deaths per 1,000 live births among children
under five, India can ill-afford to continue with its indifferent attitude to health care in rural areas.
India should be vary of acceding to US demands on

emission cuts
Nothing substantial was concluded on trade and climate change during US President Barack Obama‘s recent visit
to India, despite expectations that agreements in those areas would be key outcomes of the summit. On the latter,
before the visit, senior White House officials had stated they were hoping to ink a deal along the lines of the
agreement Obama signed with Chinese President Xi Jinping in November last year. But the fact that no such deal
was concluded does not mean Obama or the US establishment will stop treating climate change as a bilateral
issue, or that they will not try to cajole India into taking on targets to reduce greenhouse gas (GHG) emissions.
It is not surprising that Obama, in the last two years of his presidency, should do so. There is limited scope for him
to push his domestic agenda on climate change. Thus, bilateral deals on climate, as with China, have taken on

importance. But the irony of Obama seeking curbs on India‘s GHG emissions is inescapable. The US Senate twice
rejected that humans are causing climate change as recently as January, even as their own scientific bodies
unequivocally concluded that 2014 was the warmest year on record. Thwarted as he is on the domestic front,
Obama seeks bilateral accords with China and, now, India. Parenthetically, the Obama-Xi accord to reduce US
GHG emissions by 26-28 per cent in 2025 compared to 2005 means little. Without the force of a globally binding
treaty agreed under the auspices of the UN Framework Convention on Climate Change (UNFCCC), bilateral deals
mean little. It is also evident that many American politicians and the public have little appetite for deep and rapid
cuts in their own emissions. At the same time, they are beating up on India for using coal to eliminate the energy
poverty of its people.
The climate bilateralism Obama pursues sets a dangerous precedent that undermines the multilateral framework
under which the world seeks a meaningful global treaty on climate change. The key principles of this treaty, as
articulated in the UNFCCC, are of equity and ―common but differentiated responsibilities‖ (CBDR), whereby rich
countries were to take the lead in addressing climate change in accordance with their level of development and
historical contribution to the problem. In bypassing this multilateral framework, Obama is re-enacting the ad hoc
Copenhagen agreement he cobbled together in the dying hours of the 15th Conference of the Parties (COP 15).
The most surreal moment of the 15 hours he spent there in 2009 was when he reportedly burst into a room where
the BASIC leaders were gathered. An hour later, with the ―accord‖ drafted, he confronted another roomful of
leaders from the EU, Australia and Canada and made them agree to it. It was at best a statement of intent and at
worst a dangerous distraction, even a threat to global negotiations under UN auspices. As expected, nothing much
came of it.
Obama‘s agenda is aligned with that of the US, which would like to undo the UNFCCC and blur the distinction
between developed and developing nations along the CBDR principle. In its view, large emerging economies, such
as India and China, should also take on cuts in GHG emissions, since they now emit large amounts. This ignores
the historical contribution of countries that were early industrialisers. Further, the principle of equity embedded
in the UNFCCC implies it is unfair that a country such as the US, with less than 5 per cent of the world population,
should account for 16 per cent of current emissions of GHGs, and for almost 30 per cent of cumulative emissions
of carbon dioxide since 1850.
The most productive manner in which India should respond to this bilateralism is not to stonewall or push back
on Obama‘s and the US‘s demands. Instead, it should proactively propose the year and level at which its emissions
will peak. In this context, the former prime minister‘s statement in June 2007 at the G8+5 summit in
Heiligendamm, Germany would come handy — namely, India‘s per capita GHG emissions would never exceed
those of developed countries, even while pursuing policies of development and economic growth. What this means
is that India is willing to negotiate on the basis of equal per capita emissions, and this could also be used to
formulate a peak year and a peak level of emissions. It is time our government converted such a statement and the
principles of the UNFCCC into a formal negotiating position.

Soil Health Cards
Prime Minister Narendra Modi has launched a nationwide ‗Soil Health Card‘ scheme from Suratgarh in
Rajasthan.
What exactly is this new scheme?

It aims to provide a soil health card to every
farmer in India over the next three years. Taking
the country‘s total cultivable area of around 141
million hectares and an average holding of one
hectare, it means distributing 141 million cards.
The plan is to cover 30 million farmers in 2015
and 55 million each in the following two years.
Isn‟t that too ambitious?

On the face of it, yes. Issuing the cards requires
collecting soil samples from individual fields
and testing these in laboratories. A soil testing
laboratory can analyse 10,000-odd samples on
an average annually. If one-third of 141 million
fields are to be covered every year, we would need 4,700 laboratories, as against only about 1,250 —1,050
stationary and 200 mobile — today. How this capacity gap is going to be bridged isn‘t clear. But given that the
government wants soil testing to be done once in three years in every field, it opens up opportunities for the
setting up of laboratories ―by a new class of entrepreneurs even in small towns‖, according to Modi.
If I am a farmer, what will my soil health card show?

It will tell me the quality and fertility status of the soil in my field. Such an analysis is based on quantitative
parameters, both physical and chemical. The former relate to soil depth, colour, texture, surface/subsurface
hardness, compaction, etc. The chemical parameters include soil pH (to indicate acidity or alkalinity), electrical
conductivity (a measure of salinity) and the levels of available nutrients: primary (nitrogen, phosphorous, potash),
secondary (sulphur, calcium, magnesium) and micro (iron, zinc, copper, manganese, boron, molybdenum).
What use is such information to me as a farmer?

The quality and yields of the crops I grow are significantly influenced by the capacity of my soil to supply plant
nutrients in the desired amounts to facilitate optimal growth. It is more than useful to know what is good or bad
about my soil. If it is acidic, I need to apply lime, just as soil alkalinity and salinity can be substantially corrected
through gypsum treatment and ensuring no water-logging.
Will this help reduce my fertiliser consumption?

Fertiliser consumption depends not just on the available plant nutrients in my soil, but also what crops I am
growing. Wheat or rice, for example, require more nitrogen, while phosphorous is the most important nutrient in
pulses and potassium is indispensable for tomato, banana or pineapple.
Information on soil nutrient status is not meant to reduce fertiliser consumption as much as helping choose the
right fertilisers in the right combination. Currently, I may be applying two bags of urea, which only contains 46
per cent nitrogen. If my field is deficient in sulphur, it might make sense to replace one bag of urea with
ammonium sulphate that has 20.6 per cent nitrogen and also 24 per cent sulphur.

Over time, as soil testing becomes an established practice, the market could shift increasingly to customised
fertilisers. Instead of selling plain urea or di-ammonium phosphate, companies may start offering the same
fertilisers fortified with zinc or boron. Further, they could introduce customised products, tailored for particular
crops in specific regions (say, potato in Farrukhabad or groundnut in Anantapur).
Why is the government pushing the soil health card scheme?

The scheme is intended to promote balanced fertilisation, leading to
improved soil health. But no less important a consideration is containing
the mounting fertiliser subsidy bill, which, if fully provided for, comes to
over Rs 100,000 crore annually. Two-thirds of this is on account of urea
alone. If the scheme helps in weaning away farmers from overuse of urea,
both they as well as the government stand to gain. Besides, it could make
urea price decontrol politically more acceptable.
How much will soil testing cost?

Soil testing laboratories are now typically charging Rs 150 or so per
sample for basic parameters: pH, electrical conductivity, and primary
and secondary nutrient content. For micronutrients, the cost can be Rs
100 or more per parameters. This is because their testing requires use of costly reagents and equipment such as
atomic absorption spectrophotometer (AAS).
An AAS costs anywhere between Rs 15 and Rs 25 lakh, while other equipment (pH and conductivity meters,
shaking apparatus, electronic balance, drying oven, etc) come for another Rs 10 lakh. If one were to also add
chemicals, glassware, standby generator and other materials, the capital cost for a testing laboratory may be
upwards of Rs 75 lakh. All these costs — plus salaries to lab technicians and utility charges — have to be recouped
from farmers or the government in case it chooses to subsidise soil testing.

Nalanda University
Around 800 years after it was razed by foreign invaders, Nalanda University has reopened its doors in an attempt
to reclaim its ancient glory of an international knowledge destination.
The new university, set up on a sprawling 443-acre campus built near the ruins of the ancient seat of learning in
Bihar, aims to rebuild the intellectual rigour of the old school initially with a school of environmental studies and a
school of historical studies.
The government has sanctioned Rs 2,700 crore to raise the new university, which has begun with seven faculty
members and 15 students, and will go on have seven schools for postgraduate and doctorate students by 2020.
"Our ethos will be the same as the Nalanda University of the yore, but in a modern avatar," vice-chancellor Gopa
Sabharwal said at the opening at the International Convention Centre at Rajgir, a Buddhist pilgrimage centre
about 100 km from Patna and 12 km from the ruins of the earlier Nalanda University.
A university official said more than 1,000 students from 40 countries had sought admission in the new university.
Nalanda, which existed long before Harvard and Cambridge were set up, was a centre of excellence not just for
philosophy and Buddhist studies but also for literature and mathematics. At its peak, the university
accommodated over 10,000 students and 2,000 teachers. It also attracted intellectuals from around the world,
including Chinese scholar Hieun Tsang who spent nearly 15 years at the university in the fifth century AD.
On 28 March 2006 then President of India A.P.J.Abdul Kalam proposed the idea while addressing the Joint
Session of the Bihar Vidhan Mandal for revival of Nalanda university. The Nalanda University Bill, 2010 was
passed on 21 August 2010 in Rajya Sabha and 26 August 2010 in Lok Sabha. The bill received Presidential assent
on 21 September 2010 thereby becoming an Act. The University came into existence on 25 November 2010, when
the Act was implemented.
A group of scholars led by Nobel laureate Amartya Sen have helped to revive Nalanda, which seeks to establish a
21st century university that maintains the heritage of its predecessor. The ministry of external affairs will support
six students from Cambodia, Myanmar, Laos and Vietnam at Nalanda, which has been revived as part of a wider
Asian renaissance.
Started during the reign of Gupta king Sakraditya in the fifth century AD, Nalanda was razed to the ground by
Turkish invaders in 1193 AD.
An initiative of the Indian government and 18 East Asia Summit (EAS) countries, the university has received
foreign support. Sources said China had committed $1 million for the project and Australia, about A$1million,
while Japan and Singapore are financing the construction work on the campus.
Recent controversy
On February 19, 2015 Amartya Sen wrote an open letter to the Governing Board expressing regret that he had to
leave the post of chancellor by June 2015 due to the Central Government's deliberate inaction over his term
renewal decision. He lamented political interference in academic matters.

Comments on the controversy
Nalanda University and the South Asian University (SAU) were conceived by the UPA government as world-class
institutions that, while being located in India, would be outside the purview of the University Grants Commission
and government regulations.
This special dispensation was meant to allow these universities to draw on government of India funding but
recruit international faculty and students, and develop curricula in line with international best practices. They
were to be treated as international organisations (like the World Bank and UN agencies), exempt from taxation
and eligible for diplomatic immunities and privileges.
In 2007, a Nalanda Mentor Group (NMG) was set up, with Amartya Sen as chair. It was tasked with guiding the
process of setting up the university. Seven years and many meetings later, Nalanda University opened its doors in
Rajgir, Bihar, with a handful of faculty and students. Sen has been vocal in blaming the government for this delay
and this disappointing state, but closer scrutiny reveals a much more complex landscape. Indeed, it shows the
NMG in less than favourable light.
Controversy has dogged this project from its inception. The first visitor of the university, former President A.P.J.
Abdul Kalam, dissociated himself from the project in 2011. In 2013-14, the ministry of finance, then under P.
Chidambaram, objected to the manner in which the special dispensation was being operated. The Comptroller and
Auditor General (CAG), too, has been critical.
The ministry of external affairs (MEA) has had its misgivings. As foreign minister, S.M. Krishna recorded his
objection to the opaque manner in which Sen selected the vice chancellor and asked for a fresh approach. The
relevant file noting is available. Krishna was overruled by the Prime Minister‘s Office (PMO) under Manmohan
Singh.
To be fair, innovating within government is difficult. Creating an ―offshore‖ university like Nalanda requires not
just an ability to innovate but also the dexterity to navigate the framework of parliamentary accountability and
government rules and procedures in creating new precedents. While this was not entirely the responsibility of the
NMG and the chancellor, the choice of vice chancellor proved to be remarkably inauspicious.
As a government official told this writer in the winter of 2013, ―A mid-level academic, at one of the affiliated
colleges of Delhi University, with no known experience in institution-building, was selected to steer this flagship
project, apparently over more respected names. We don‘t know why.‖ How was the vice chancellor selected? There
is no available history of advertisements, global searches, and candidate interviews with wide-ranging panels.
All that the government has is a letter from Amartya Sen to the MEA. It says he has ―considered‖ three names —
Gopa Sabharwal, Pratap Bhanu Mehta and Ramachandra Guha — and selected Sabharwal. It does not say who
else was on the longlist or shortlist. It does not invite comments and consultation on a reappraisal or expansion of
the list of names on offer.
This was the arbitrariness that both Kalam and Krishna objected to. The manner of selection of the vice chancellor
drew negative comments from the CAG as well. Further, it was questioned in Parliament. The CAG also objected
to the propriety and procedure of fixing the salary of the vice chancellor. This was done by the NMG, by then re-
designated as the interim governing board. The annual salary was fixed at $80,000 (tax-free).
Nalanda University has received small grants from countries that are participants in the East Asia Summit but the
bulk of its funding comes from the Indian taxpayer. Over the coming five or six years, it is estimated that the

government will spend Rs 2,700 crore on the Nalanda University project. Surely, this necessitates some
accountability and at least as much transparency as is expected from the government? This was exactly the issue
the CAG raised.
Quite unconscionably, even the BJP-led government has not constituted a formal governing board for Nalanda
University. It has allowed the NMG/ interim arrangement to continue. All that is happening is Sen‘s term as
chancellor is expiring in July 2015. As such, he will stop being a member of the interim governing board. Earlier
this year, the government told the interim governing board that it would not be giving the current chancellor (Sen)
a fresh term. It asked the interim governing board to recommend three names for chancellorship. Sen has
described this as an infringement of academic independence.
Importantly, Sen has not come up with any other example of such infringement. He has not accused the MEA or
the government of intervening on any issue of recruitment of academics or development of curricula. The efforts
of the ministry to reconcile the university‘s autonomy with the MEA‘s accountability to Parliament were not
helped by the NMG insisting that autonomy meant complete freedom to set its own rules on how taxpayer money
was to be spent.
Questions posed by the MEA were repeatedly fobbed off by citing ―academic autonomy‖. In 2013, the MEA
reviewed the project and concluded management capacity was a major constraint in meeting deadlines. No
registrar was appointed for three years. A thin crew of a vice chancellor and a dean of academic affairs (on
secondment from Delhi University), with limited experience, a finance officer (with no relevant experience of
project finance) and two consultants could not be entrusted with institution-building of this magnitude.
The MEA then proposed sending a senior civil servant, with a relevant professional background, to handle non-
academic work relating to the project for a two or three year period. The NMG protested, labelling this
government interference and bureaucratisation. Manmohan Singh‘s PMO backed the NMG.
Empowering the states

The broad contours of a cooperative federal polity where the Centre and States engage as equal partners in
development is now emerging after the government accepted the recommendations of the Fourteenth Finance
Commission. The FFC, headed by former RBI Governor Y.V. Reddy, has broken new ground by recommending a
move away from scheme and grants-based support to States to a greater devolution of funds from the Centre‘s
divisible pool of tax revenues. Thus, it has recommended that the Centre share 42 per cent of the divisible pool
with the States, which is 10 percentage points higher than what is the case now. By accepting the recommendation
despite the fact that it would lead to a sharp drop in its own share of revenues at a time of fiscal pressures, the
Centre has sent out an unequivocal signal of its commitment to the principle of ‗cooperative federalism‘. The
phrase was first mentioned by Prime Minister Narendra Modi in the context of his decision to replace the
Planning Commission with the NITI Aayog. Indeed, the FFC‘s report, along with the setting up of the NITI Aayog
and the consensus on the implementation of the Goods and Services Tax, are important components of the
emerging federal landscape where the Centre confers greater freedom and responsibility on the latter by devolving
greater resources to them.
Consequent to the higher devolution of funds, the Centre is likely to re-evaluate several schemes that it sponsors
for the States. This is a natural consequence as the Centre needs to offset its loss of revenue even as States devise
their own spending programmes tailored to their needs. It is a fact that some States have been weighed down by

the need to cough up their share of funds for Centrally sponsored schemes even if such schemes are not relevant to
their needs. For example, for a State such as Kerala with its high literacy levels, a scheme to promote primary
education is not relevant, just as one promoting power generation is not relevant to a power-surplus State such as
Gujarat. The key to the success of this experiment in cooperative federalism lies in how well the States use the
higher revenues and the accompanying freedom to frame their development priorities. Some of the better-
developed States such as Tamil Nadu might feel aggrieved at a reduction in their share of devolved funds,
ironically because of their better development metrics relative to other States. But this is federalism at work,
because the resources freed up thus go to support another State that might be lagging behind on development
parameters and per capita income. What is important is whether the FFC has adopted logical and fair measures
while designing the allocations — which it indeed has done.
Need to give thrust to Immunisation Programme

Despite advances in health, the incidence of mortality in India, owing to childbirth-related causes, inadequate
neonatal care and childhood diseases, continues to be very high. Of the over 1.3 million deaths every year of
children below the age of five, a large number is caused by diseases like diarrhoea, pneumonia and measles that
can be prevented by vaccination. Some districts have an under-five child mortality rate (U5MR) that is higher than
that of sub-Saharan African countries. For example, Rayagada in Odisha has the highest U5MR of 133 deaths for
1,000 live births. And this is despite India having the world‘s largest immunisation programme largely available
free of cost.
Even though India‘s Universal Immunisation Programme (UIP) is the largest in the world in terms of the number
of beneficiaries as well as the quantity of vaccines used, there is still a huge unreached population of 7.2 million
out of the total 27 million children born annually. Assam, Bihar, Madhya Pradesh, Odisha, Rajasthan and Uttar
Pradesh have immunisation levels lower than the national average. Lack of awareness, insufficient information as
well as misperception about vaccination among some parents contribute to the lukewarm response to routine
immunisation schemes initiated by the government so far. The problem is further compounded by the inadequate
public health system that does not have sufficient reach in some areas.
Between 2009 and 2013, the immunisation coverage increased from 61 to 65 per cent, that is, with an increase of
1percentage point per year. With 35 per cent of children still not receiving any or partial immunisation coverage,
the government has adopted a mission mode, via Mission Indradhanush, to immunise all children by 2020
against seven vaccine preventable diseases, namely, tuberculosis, diphtheria, pertussis, tetanus, poliomyelitis,
measles and hepatitis B.
But a lot more needs to be done. India is lagging in meeting the challenge of the Millennium Development Goals
(MDGs) with respect to targets to reduce the incidence of infant and under-5 child mortality rates. It is ultimately
up to the political class to rise to the challenge of raising awareness on the issues of childhood diseases and health.
Political will is needed to put the cause of child survival high on the list of the governance agenda. Only that can
ensure better coordination among various government departments that today work separately on preventive
measures like hygiene, sanitation, nutrition and immunisation.
The successful eradication of polio, with India not reporting a single case for the last four years, has raised hopes
that life-saving interventions can be replicated for other preventable diseases. But that will not happen on its own.
It requires decisions to be taken and implemented. Now that we have tasted success with polio, we must boost

routine immunisation by strengthening the health systems in terms of reach, quality, cost effectiveness and the
introduction of new vaccines in the immunisation portfolio. For this, increased fiscal allocation is a must.
Immunisation can not only stem the vicious cycle of infectious diseases but also impact other aspects of child
health. Let‘s look, for instance, at the link between immunisation and malnutrition. There is a growing body of
evidence that vaccines can help prevent some of the chronic consequences of malnourishment. A recent study
showed that children receiving the full immunisation coverage are less likely to display signs of stunting.
Malnutrition has deleterious effects on the overall development of the child, extracting a lifelong toll of negative
economic consequences. Immunisation, then, also becomes a key strategy to help check the incidence of
malnutrition and its long-term consequences, and thus has a crucial role if India is to really benefit from a
demographic dividend.
In addition to initiatives that target the public health delivery system directly, key investments need to be made
also in strengthening the hands of other stakeholders, like domestic pharmaceutical companies. Indian vaccine
manufacturers have already established a global presence, supplying, for example, a staggering 90 per cent of all
measles vaccines worldwide, as well as half of the World Health Organisation (WHO) demand for DPT and BCG
vaccines against tuberculosis.
Appropriate government policies must incentivise Indian vaccine companies to enhance their manufacturing
capabilities as well as R&D capabilities. Government programmes, such as Make in India, can achieve these
objectives by encouraging the transfer of those technologies and knowledge that are necessary for the autonomous
development and manufacture of vaccines for both domestic and international markets. Since India‘s own
domestic consumption of vaccines is also high, as is the case with the international markets it serves, this would
be a win-win proposition.
The timing of such a policy-led boost can be crucial. Recently, there has emerged an uninformed but powerful
anti-vaccination movement in the West that threatens to set back decades of health gains. Measles is making a
comeback in the US, following several years of reduced vaccinations. This has happened due to uninformed
parents being influenced by the anti-vaccination rantings of self-styled gurus and celebrities. Fortunately, the likes
of Hillary Clinton are pushing back, pointing out the overwhelming scientific evidence in favour of vaccines.
Against this backdrop, a bold, renewed commitment by India to the immunisation imperative will help us deal
with our own less than satisfactory record of combating childhood diseases. And considering the looming year-
end review of the MDGs, India has a window of opportunity to take a leading role in setting the global agenda on
child health.
Growing gap between Indian and Chinese Railways

Thanks to the British Raj, India had a head start over China in the 19th century. The British built the first
experimental rail line in the subcontinent near Chennai in 1836. In China, it was a British company, Jardine,
Matheson and Company, which laid the first tracks in Shanghai in 1876. The line connected British and American
territorial settlements with the Wusong docks on the Huangpu River. But the local governor of Shanghai quickly
dismantled it, accusing the British of building the line without the permission of the emperor in Beijing.

By the turn of the 20th century, the subcontinent had nearly 15,000 km of railway track, in comparison to just
600 km in China. After Partition and Independence in 1947, India‘s rail network was nearly 54,000 km. China, in
contrast, had about 27,000 km, of which barely 8,000 km was usable because of the civil war. Since
Independence, China has nearly quadrupled its rail network to about 1,10,000 km. India has added barely 11,000
km of track.
The total span of the rail network is only one measure of India‘s slowdown relative to China. Once the leader in the
development of railways in the non-Western world, India is no longer at the cutting edge. As far back as the late
19th century, the Indian Railways was laying tracks in distant lands of Africa and surveying potential rail routes to
China through Burma. New Delhi now desperately needs foreign collaboration to come up to speed with the rest of
the world, thanks to misguided policies of self-reliance and massive mismanagement over the last many decades.
The Chinese railways, in the reform era unveiled by Deng Xiaoping in the late 1970s, eagerly sought foreign
collaboration, absorbed the technology, mastered it and has now begun to export it. Consider the development of
high-speed railways in China. If Delhi turned its back on emerging technologies two decades ago, Beijing is now
the leader. China launched its first high-speed rail line in 2003. A decade later, its high-speed network spans more
than 12,000 km. China wants to expand its rapid rail network to about 25,000 km and connect all cities with a
population of 500,000.
Strategic Clarity
Both Chinese nationalists and the communists understood the importance of railways in unifying the nation,
integrating domestic markets, promoting economic development, securing far-flung frontiers and promoting
Chinese influence abroad. These were, in fact, the very motives that drove the Raj to build an expansive rail
network on the subcontinent that stretched from Tinsukia in the east to Quetta in the West, and from Peshawar in
the north to Dhanushkodi in the South.
If the British Raj understood the strategic significance of the railways, the rulers of independent India squandered
the inherited advantage and have wrecked the system rather than build on it. In China, the first president of the
first republic, Sun Yat Sen, dreamt of connecting the entire country through a massive rail network. That dream
has been realised in full measure by his communist successors.
Impudent Vision
The Chinese Communist Party leadership has also built on Sun‘s plans to extend the Chinese railways to far-flung
corners of the Eurasian landmass. The breathtaking scope of China‘s vision can be gauged by the plans to build a
railway line from Northeast China to the United States through Russia and China. They want to connect China to
California through Siberia. If and when it is built, the 13,000 km railway line will be the longest in the world.
The boldest part of the plan is to build a 200 km underwater tunnel in the Bering Strait, which connects Asia to
North America. To cap it all, Chinese companies say they will fully fund and construct the link. From Alaska to
Argentina and from Africa to Australia, railway diplomacy has become one of the central themes of China‘s
international engagement. Armed with technology and massive financial resources, Chinese companies are
competing with each other to win railway contracts around the world.
In Delhi, the Modi government has said all the right things about the long-overdue modernisation of the Indian
Railways. It has pressed the railways to look at high-speed corridors. The PM has demanded early implementation
of the long-pending projects on connecting India‘s border regions with railways. The NDA government has also
reached out to China and Japan for collaboration on railways, including on high-speed trains and heavy haulage.
But turning the talk into reality was never going to be easy. The budget this week will show if the government‘s
political will is strong enough to prevail over the entrenched conservatism of the Indian Railways establishment.

Saradha Chit Fund Scam: Explained
What is a “Chit fund”?
According to the Chit Funds Act,
1982, a chit is an arrangement under
which a person enters into an
agreement with a specified number
of persons that every one of them
shall subscribe a certain sum of
money by way of periodical
installments over a definite period
and that each such subscriber shall,
in his turn, as determined by lot or
by auction or by tender or in such
other manner as may be specified in
the chit agreement, be entitled to the
prize amount. This can be
complicated to understand – so let‘s
take a simple example:
A, B, C, D and E put in 10000 rupees each. They have an aggregate fund of rupees 50000. This fund is the chit
fund. Now the fund will be auctioned to the person who is willing to give maximum discount. ―B‖ is willing to give
a discount of 2000 rupees, i.e. he wants 48000 rupees, ―C‖ is willing to give a discount of 2500 rupees (he wants
50,000 – 2500 = 47,500 rupees) and ―D‖ is willing to give a discount of 5000 rupees (he wants 50,000 – 5000 =
45,000 rupees), which is the maximum discount offered by any one of them. So, ―D‖ will get the amount left after
deducting the discount and organisational charges say 1000 rupees. Therefore ―D‖ will get 50,000 –
5000[discount] – 1000[organisational charges], that is, 44,000 rupees. The remaining 6000 will be divided
equally among A,B,C,D and E.
Benefit: D gets a larger sum of money in hand than what he could have afforded which can be used for various
purposes like expanding business or buying a car etc. This has been made possible by pooling of funds of several
other people. In another cycle, the same money will be pooled for the benefit of another participant. A chit
fund does not have pre-determined return as in the case of corporate deposits and MLM schemes. The return
depends on various factors like discount and organiser‘s charges.
What is a Collective Investment Scheme (CIS)?

According to Section 11 AA (2) of the SEBI Act, any scheme or arrangement made or offered by any company
under which the contributions, or payments made by the investors, are pooled and utilised with a view to receive
profits, income, produce or property, and is managed on behalf of the investors is a CIS. Investors do not have day
to day control over the management and operation of such scheme or arrangement.
Difference between chit-fund, MLM company, corporate deposits and chit funds
Multi-level marketing or MLM schemes - An MLM company is one which is involved in multi-level
marketing. It is a plan for the distribution of products whereby participants earn money by supplying products to
other participants in the same plan. They, in turn, make their money by supplying the same products to other
participants. It is possible for multi-level marketing businesses to generate funds by sale and distribution of
genuine products or services (Amway, Tupperware etc.) – however, often MLM businesses generate money

exclusively by charging enrolment or subscription fees from new participants, and the fraction of revenues
generated from sale of products and services is nil or insignificant, in which case they become similar to Ponzi
schemes (see below for a description of Ponzi schemes).
Most multi-level marketing schemes in India qualify as money circulation schemes under the Prize Chits and
Money Circulation Schemes (Banning) Act, 1978 Act and are hence illegal, unless the schemes are carefully
structured to be compliant with the law. Note that even if a particular MLM scheme has been structured to be
compliant with the law, it does not prevent risk of investigative proceedings being initiated by the police against
the promoters of such schemes.
Ponzi schemes – A ponzi scheme is a fraudulent investment operation that pays returns to its investors from
their own money or the money paid by subsequent investors, rather than from profit earned by the individual or
organization running the operation.
Corporate deposits – Corporate deposits are very similar to fixed deposits, with the difference that the deposit
is made with a company instead of a bank. The company pays a fixed rate of interest on the deposit according to
the terms and conditions on which the deposits were invited from the public. Note, in the case of deposits it is
understood that the company will repay depositors from the money generated from conducting its business.
Understanding the Saradha group‟s activities

Saradha group was running a wide variety of collective investment schemes. The group appointed agents who
were recruited from local rural communities – these agents collected money from the public by issuing secured
debentures and redeemable preferential bonds on commission basis. This money was raised by over 100
companies under the Saradha Group.
Debenture is a type of debt instrument that is not secured by physical assets or collateral. Debentures are backed
only by the general creditworthiness and reputation of the issuer. Bond buyers generally purchase debentures
based on the belief that the bond issuer is unlikely to default on the repayment.
In India, raising money from the public (whether it is by equity, debentures or deposits) attracts jurisdiction of a
regulatory authority such as the Registrar of Companies in case of deposits or SEBI (in case of debentures, etc.).
Usually, these regulations prescribe the duration, maturity period, return and other conditions pertaining to these
instruments, and a number of reporting obligations towards regulators and stakeholders. Such provisions usually
prevent businesses from defrauding the public to raise money, and thus help in protecting investor interest.
SEBI has acted against the Saradha group because the group companies would have been required to comply with
its regulations pertaining to collective investment schemes while raising bonds and debentures, which has not
been done. Earlier, the Sahara group had run into trouble with the SEBI, as some companies within its group had
raised funds from the public without getting listed on stock exchanges.
Why was it a CIS and not a Chit Fund?

A chit fund cannot declare in advance the return an individual is likely to make, given the way its structured. The
fact that a rate of return was promised in advance clearly means that Saradha group was not running a chit fund
but something else. Moreover, the investors did not have day to day control over the scheme and the money would
come to them only at maturity, which makes it a collective investment scheme.

Background
India has a large, low-income, rural population with limited access to formal banking facilities. A web of parallel,
informal banking arose to fill the vacuum. At its centre were moneylenders, who used to charge exorbitant rates of
interest. To curb this practice, several Moneylenders Acts were enacted by the State governments of India by the
1950s. However failure to replace the role of moneylenders gave rise to unscrupulous financial operators that
operated Ponzi schemes.
The relatively prosperous rural economy of West Bengal had previously relied on small savings schemes run by
the Indian Postal Service. However, low rates of interest in the 1980s and 1990s encouraged the rise of several
Ponzi schemes in speculative ventures such as Sanchayita Investments, Overland Investment Company, Verona
Credit and Commercial Investment Company. Together, these scams eliminated close to 10
billion (US$160 million) in investor wealth. Despite a history of Ponzi schemes, the continuing decline in interest
rates, rapid financialisation of household savings, lack of financial literacy and investor awareness, political
patronage, absence of adequate legal deterrence, and regulatory arbitrage encouraged the growth of similar
companies. These companies either raised their funds through legitimate channels such as collective investment
schemes, non-convertible debentures and preference shares, or illegitimately through hoax financial instruments
such as teak bonds, potato bonds or fictitious ventures in agro-export, construction and manufacturing. As of
2013, 80% of multi-level marketing and finance schemes against which complaints have been received are based
in West Bengal, giving the state the title of "Ponzi capital of India". It is estimated that these Ponzi funds have
amassed around 10 trillion (US$160 billion) from unsuspecting depositors in Eastern India.
Financial operations - 95% of the fund was collected in the last three years of the scam. The companies
that comprised Saradha Group were incorporated in 2006. Its name is a cacography of Sarada Devi, the wife and
spiritual counterpart of Ramakrishna Paramahamsa—a nineteenth century mystic of Bengal. This duplicitous
association gave Saradha Group a veneer of respectability. Like all Ponzi schemes, Saradha Group promised
astronomical returns in fanciful but credible investments. Its funds were sold on commission by agents recruited
from local rural communities. Between 25 and 40% of the deposit was returned to these agents as commissions
and lucrative gifts to quickly build up a wide agent pyramid. The group used a nexus of companies to launder
money and evade regulators.
Initially, the frontline companies collected money from the public by issuing secured debentures and redeemable
preferential bonds. Under Indian Securities regulations and section 67 of the Indian Companies Act (1956), a
company cannot raise capital from more than 50 people without issuing a proper prospectus and balance sheet.
Its accounts must be audited and it must also have explicit permission to operate from the market
regulator Securities and Exchange Board of India (SEBI).
SEBI first confronted Saradha Group in 2009. Saradha Group adapted by opening up to 200 new companies to
create more cross-holdings. This created an extremely complex tiered corporate structure to confound SEBI by
hampering their ability to consolidate blame. SEBI persisted in its investigation through 2010. Saradha Group
reacted by changing its methods of raising capital. In West Bengal, Jharkhand, Assam and Chhattisgarh, it began
operating variations of collective investment schemes (CIS) involving tourism packages, forward travel and hotel
booking timeshare credit transfer, real estate, infrastructure finance, and motorcycle manufacturing.Investors
were rarely informed about the true nature of their investments. Instead, many were told they would get high
returns after a fixed period. With other investors, the investment was fraudulently sold in the form of a chit fund.
Under the Chit Fund Act (1982), chit funds are regulated by state governments rather than SEBI.
SEBI warned the state government of West Bengal about Saradha Group's chit fund activities in 2011,again
prompting Saradha Group to change its methods. This time, it acquired and sold large numbers of shares of

various listed companies then embezzled the proceeds of the sale through accounts which have not been
identified. Meanwhile, Saradha Group started laundering a large portion of its funds to Dubai, South Africa and
Singapore. By 2012, SEBI was able to classify the group's activities as collective investment schemes rather than
chit funds—and demanded that it immediately stop operating its investment schemes until it received permission
to operate from SEBI. Saradha Group did not comply with this ruling and continued to operate until its collapse in
April 2013.
Building brand and non-financial businesses

Like previous Ponzi schemes, Saradha
Group invested heavily in the building of its
brand. With enormous funds at its disposal,
Saradha invested in high visibility sectors,
such as the Bengali film industry, where it
recruited actress and Trinamool
Congress (TMC) Member of
Parliament (MP) Satabdi Roy as its brand
ambassador. Bollywood actor and TMC
MP Mithun Chakraborty was brought in as
the brand ambassador of Saradha Group's
media platform.
Saradha Group also enlisted Kunal Ghosh,

another TMC MP, as the CEO of the media
group. Under Kunal Ghosh, the group
acquired and established local television channels and newspapers, investing around 9.88
billion (US$160 million) in the media group. By 2013, it employed over 1,500 journalists and owned eight
newspapers printed in five languages. It also owned Bengali news channels Tara Newzand Channel 10, Bengali
general entertainment channels Tara Muzic and Tara Bangla, Punjabi general entertainment channel Tara
Punjabi, an international channel aimed at the Indian diaspora, TV South East Asia and one FM radio station.
In 2011, Saradha Group bought Global Automobiles, a heavily indebted motorcycle company as a front for the
latest version of its Ponzi scheme. Global Automobiles immediately stopped most production but kept 150
workers on its payroll who "pretended to work whenever truckloads and busloads of prospective depositors of
Saradha Realty visited the plant for a first-hand check before investing". It also bought similar shell companies
like West Bengal Awadhoot Agro Private Ltd, located in North 24-Parganas, and Landmark Cement in Bankura to
showcase them to agents and depositors and convince them that the Saradha Group had diversified interests.
As part of its corporate social responsibility program, Saradha Group donated motorcycles to the Kolkata Police.
On 19 July 2011, it persuaded Mamata Banerjee, the Chief Minister of West Bengal, to use its ambulances and
motorcycles for the Jangalmahal area of West Midnapore. To further etch itself in the socio-cultural milieu of
Bengal, Saradha Group invested in football rivals and the best-known football clubs in Bengal: Mohun Bagan
A.C. ( 18 million in 2010–11) and East Bengal F.C. ( 35 million since 2010). The group also sponsored
various Durga Puja celebrations organised by local political leaders.
Political patronage
Allegedly several political leaders received financial support from Saradha Group, including MPs of TMC, the
incumbent ruling party of West Bengal. MP Kunal Ghosh drew a salary of 1.6 million (US$25,000) per month
from Saradha Group, as an employee of the group. MP Srinjoy Bose was directly involved with the group's media
operations. Transport Minister Madan Mitra headed the employees' union of the group and publicly encouraged

people to invest their savings with it. Sudipto Sen, the group's charirman and managing director, reportedly
spent 18.6 million (US$290,000) to buy paintings by Mamata Banerjee, whose government later issued a
notification that public libraries should buy and display Saradha Group newspapers. The group bought the loss-
making company Landmark Cement, which was co-owned by textiles minister Shyamapada Mukherjee. The group
also had financial dealings with Ganesh Dey, the confidential assistant of the finance minister of the erstwhile Left
Front government, who was later expelled.
Politicians outside West Bengal also benefited from Saradha Group. Himanta Biswa Sarma, the Health and
Education Minister of Assam, may have profited personally from the Ponzi scheme. Sen said he paid 250
million (US$3.9 million) to Manoranjana Sinh, wife of former Congress MP from Assam and Central Government
Cabinet minister Matang Sinh, 30 million (US$470,000) to her father K.N Gupta to buy shares in a television
channel—allegedly at an inflated price. According to officials investigating the case, the actual amount paid could
be almost double of what is being claimed. Some commentators state that this Ponzi scheme survived for so long
because of its heavy political patronage.
Collapse
The earliest public warnings about the reckless and fradulent CIS in West Bengal started in 2009 from
MPs Somendra Nath Mitra and Abu Hasem Khan Choudhuryand. Apart from the SEBI investigation, no executive
actions were taken at this time. On 7th December 2012, Reserve Bank of India(RBI) governor Duvvuri Subbarao
said that the West Bengal government should initiate suo motu action against companies that were indulging in
financial malpractice. By that time, the Saradha Group Ponzi scheme was already beginning to unravel. In
January 2013, the group's cash inflow was, for the first time, less than its cash payouts. This outcome is inevitable
in a Ponzi scheme that is allowed to run full course. Sudipto Sen tried but failed to calm uneasy depositors and
agents, and could not increase inflow of funds.
On 6th April 2013, Sen wrote an 18-page confessional letter to the CBI, in which he admitted that he had paid large
sums of money to several politicians. He also stated that TMC leader Kunal Ghosh had forced him to enter into
loss-making media ventures and blackmailed him into selling one of his television channels at below market
price.[91] Sen fled after posting this letter on 10 April. In his absence, the Ponzi scheme unravelled. On 17th April,
around 600 collection agents claiming to be associated with Saradha Group assembled at the headquarters of
TMC and demanded government intervention. Despondency quickly spread across Bengal.
On 18th April, an arrest warrant for Sudipto Sen was issued. By 20th April, the news of potentially the largest Ponzi
scheme in India had become headline news in West Bengal, and then front-page news nationally. After evading
the authorities for a week, Sudipto Sen, Debjani Mukherjee and Arvind Singh Chauhan were arrested
in Sonmarg, Kashmir, on 23 April 2013. On the same day, SEBI stated that both chain marketing and forward
contracts are forms of CIS, and officially asked Saradha Group to immediately desist from raising any further
capital and return all deposits within three months.
The Central Government through the Income Tax Department and Enforcement Directorate launched a multi-
agency probe to investigate the Saradha scam. In May 2014, the Supreme Court of India, citing inter-state
ramifications, possible international money laundering, serious regulatory failures and alleged political nexus,
transferred all investigations into the Saradha Scam and other Ponzi schemes to the Central Bureau of
Investigation (CBI). Many prominent personalities were arrested for their involvement in the scam including
two Members of Parliament - Kunal Ghosh and Srinjoy Bose, former West Bengal Director General of Police -
Rajat Majumdar, a top football club official - Debabrata Sarkar, Sports and Transport minister in the West Bengal
Government – Madan Mitra

Economic Outlook, Prospects and Policy Challenges
Macroeconomic review and outlook
Macroeconomic fundamentals in 2014-15 have dramatically improved. Highlights are:
Inflation has declined by over 6 percentage points since late 2013.
The current account deficit has declined from a peak of 6.7 percent of GDP (in Q3, 2012-13) to an
estimated 1.0 percent in the coming fiscal year.
Foreign portfolio flows have stabilized the rupee, exerting downward pressure on long-term interest
rates, reflected in yields on 10-year government securities, and contributed to the surge in equity
prices.
In response to the favourable terms of trade shock (especially with regard to oil), macroeconomic
policy has appropriately balanced government savings (two-thirds) and private consumption (one-
third).
After a nearly 12-quarter phase of deceleration, real GDP has been growing at 7.2 percent on average
since 2013-14, based on the new growth estimates of the Central Statistics Office. Notwithstanding the
new estimates, the balance of evidence suggests that India is a recovering, but not yet a surging,
economy.

From a cross-country perspective, a Rational Investor Ratings Index (RIRI) which combines indicators of
macro-stability with growth, illustrates that India ranks amongst the most attractive investment destinations.
It ranks well above the mean for its investment grade category (BBB), and also above the mean for the
investment category above it (on the basis of the new growth estimates).
Several reforms have been undertaken and more are on the anvil. The introduction of the GST and expanding
direct benefit transfers can be game-changers.
Structural shifts in the inflationary process are underway due to lower oil prices, deceleration in agriculture
prices and wages, and dramatically improved household inflation expectations. Going forward inflation is
likely to remain in the 5-5.5 percent range, creating space for easing of monetary conditions.
In the short run, growth will receive a boost from the cumulative impact of reforms, lower oil prices, likely
monetary policy easing facilitated by lower inflation and improved inflationary expectations, and forecasts of
a normal monsoon in 2015-16. Using the new estimate for 2014-15 as the base, GDP growth at constant
market prices is expected to accelerate to between 8.1 and 8.5 percent in 2015-16.
Medium-term prospects will be conditioned by the ―balance sheet syndrome with Indian characteristics‖ that
has the potential to hold back rapid increases in private sector investment. Private investment must be the
engine of long-run growth. However, there is a case for reviving targeted public investment as an engine of
growth in the short run to complement and crowd-in private investment.
India can balance the short-term imperative of boosting public investment to revitalize growth with the need
to maintain fiscal discipline. Expenditure control, and expenditure switching from consumption to
investment, will be the key.
The outlook is favourable for the current account deficit and its financing. A likely surfeit, rather than scarcity,
of foreign capital will complicate exchange rate management. Reconciling the benefits of these flows with
their impact on exports and the current account remains an important challenge going forward.
India faces an export challenge, reflected in the fact that the share of manufacturing and services exports in
GDP has stagnated in the last five years. The external trading environment is less benign in two ways: partner
country growth and their absorption of Indian exports has slowed, and mega-regional trade agreements being
negotiated by the major trading nations in Asia and Europe threaten to exclude India and place its exports at a
competitive disadvantage.
India is increasingly young, middle-class, and aspirational but remains stubbornly male. Several indicators
suggest that gender inequality is persistent and high. In the short run, the renewed emphasis on family
planning targets, backed by misaligned incentives, is undermining the health and reproductive autonomy of
women.

Fiscal Framework
India must adhere to the medium-term fiscal deficit target of 3 percent of GDP. This will provide the fiscal
space to insure against future shocks and also to move closer to the fiscal performance of its emerging market
peers.
India must also reverse the trajectory of recent years and move toward the golden rule of eliminating revenue
deficits and ensuring that, over the cycle, borrowing is only for capital formation.
Expenditure control combined with recovering growth and the introduction of the GST will ensure that
medium term targets are comfortably met.
In the short run, the need for accelerated fiscal consolidation is lessened by the dramatically changed macro-
circumstances and the less-than-optimal nature of pro-cyclical policy. The ability to do so will be conditioned
by the recommendations of the Fourteenth Finance Commission (FFC).
Nevertheless, to ensure fiscal credibility and consistency with medium-term goals, the process of expenditure
control to reduce the fiscal deficit should be initiated. At the same time, the quality of expenditure needs to be
shifted from consumption, by reducing subsidies, towards investment.
Finally, implementing the FFC recommendations will lead to states accounting for a large share of total tax
revenue. This has the important implication that, going forward, India‘s public finances must be viewed at the
consolidated level and not just at the level of the central government. If recent trends in state-level fiscal
management continue, the fiscal position at the consolidated level will be on a sustainable path.
Subsidies and the JAM Number Trinity Solution

The debate is not about whether but how best to provide support to the poor and vulnerable. The government
subsidises a wide variety of goods and services with the aim of making them affordable for the poor, including:
rice, wheat, pulses, sugar, railways, kerosene, LPG, naphtha, iron ore, fertiliser, electricity, water.
The direct fiscal cost of these select subsidies is roughly Rs. 378,000 crore or 4.2 percent of 2011-12
GDP. This is roughly how much it would cost to raise the expenditure of every household to the level of a
35thpercentile household (well above the 21.9percent Tendulkar Committee poverty line).
Are these subsidies effectively targeted at the poor? Unfortunately, subsidies can sometimes be regressive and
suffer from leakages. For example, electricity subsidies by definition only help electrified households. Even in
the case of kerosene, 41 percent of PDS kerosene is lost as leakage and only 46 percent of the remaining 59
percent is consumed by households that are poor.
The JAM Number Trinity – Jan Dhan Yojana, Aadhaar, Mobile – can enable the State to transfer financial
resources to the poor in a progressive manner without leakages and with minimal distorting effects.
The Investment Challenge

The stock of stalled projects stands at about 7 percent of GDP, accounted for mostly by the private sector.
Manufacturing and infrastructure account for most of the stalled projects. Changed market conditions and
impeded regulatory clearances are the prominent reasons for stalling in private and public sectors,
respectively.
This has weakened the balance sheets of the corporate sector and public sector banks, which in turn is
constraining future private investment, completing a vicious circle.
Despite high rates of stalling, and weak balance sheets, the stock market valuations of companies with stalled
projects are quite robust, which is a puzzle.
Combining the situation of Indian public sector banks and corporate balance sheets suggests that the
expectation that the private sector will drive investment needs to be moderated. In this light, public
investment may need to step in to ramp up capital formation and recreate an environment to crowd-in the
private sector.

The Banking Challenge
The Indian banking balance sheet is suffering from ‗double financial repression‘. On the liabilities side, high
inflation lowered real rates of return on deposits. On the assets side, statutory liquidity ratio (SLR) and
priority sector lending (PSL) requirements have depressed returns to bank assets. As inflation moderates and
the banking sector exits liability-side repression, it is a good time to consider addressing the asset-side
counterpart.
Private sector banks did not partake in the biggest private-sector-fuelled growth episode in Indian history
during 2005-2012. This is reflected in the near-constant share of private sector banks in deposits and
advances in those years.
There is substantial variation in the performance of the public sector banks, so that they should not be
perceived as a homogenous block while formulating policy.
Putting Public Investment on Track – the Rail Route to Higher Growth.

The Indian Railways over the years have been on a ‗route to nowhere‘ characterized by underinvestment
resulting in lack of capacity addition and network congestion; neglect of commercial objectives; poor service
provision; and consequent financial weakness. These have cumulated to below-potential contribution to
economic growth.
Very modest hikes in passenger tariffs and cross-subsidisation of passenger services from freight operations
over the years have meant that Indian (PPP-adjusted) freight rates remain among the highest in the world,
with the railways ceding significant share in freight traffic to roads (that is typically more costly and energy
inefficient).
As a result, the competitiveness of Indian industry has been undermined. Calculations reveal that China
carries about thrice as much coal freight per hour vis-à-vis India. Coal is transported in India at more than
twice the cost vis-à-vis China, and it takes 1.3 times longer to do so.

Econometric evidence suggests that the railways public investment multiplier (the effect of a Rs. 1 increase in
public investment in the railways on overall output) is around 5.
However, in the long run, the railways must be commercially viable and public support must be linked to
railway reforms: adoption of commercial practices; tariff rationalization; and technology overhaul.
Skill India to Complement Make in India

What should we ‗Make in India‘? Sectors that are capable of facilitating structural transformation in an
emerging economy must:
Have a high level of productivity.
Show convergence to the technological frontier over time.
Draw in resources from the rest of the economy to spread the fruits of growth.
Be aligned with the economy‘s comparative advantage.
Registered manufacturing, construction and several service sectors - particularly business services - perform
well on these various characteristics. A key concern with these sectors however is that they are rather skill-
intensive and do not match the skill profile of the Indian labour force.
India could bolster the Make in India initiative, which requires improving infrastructure and reforming labor
and land laws by complementing it with the Skilling India initiative. This would enable a larger section of the
population to benefit from the structural transformation that such sectors will facilitate.
A National Market for Agricultural Commodities

Markets in agricultural products are regulated under the Agricultural Produce Market Committee (APMC) Act
enacted by State Governments. India has not one, not 29, but thousands of agricultural markets.
APMCs levy multiple fees which are non-transparent, and hence a source of political power.
The Model APMC Act, 2003 could benefit from drawing upon the ‗Karnataka Model‘ that has successfully
introduced an integrated single licensing system. The key here is to remove the barriers that militate against
the creation of choice for farmers and against the creation of marketing infrastructure by the private sector.

Climate Change
India has cut subsidies and increased taxes on fossil fuels (petrol and diesel along with a coal cess) turning a
carbon subsidy regime into one of carbon taxation.
In light of the recent falling global coal prices and the large health costs associated with coal, there may be
room for further rationalization of coal pricing. The impact of any such changes on affordable energy for the
poor must be taken into account.
On the whole, the move to substantial carbon taxation combined with India‘s ambitious solar power program
suggests that India can make substantial contributions to the forthcoming Paris negotiations on climate
change.
The Fourteenth Finance Commission

The FFC marks a watershed in the history of Indian federalism. Unprecedented increases in tax devolution
will confer more fiscal autonomy on the states. This will be enhanced by the FFC-induced imperative of having
to reduce the scale of other central transfers to the states. In other words, states will now have greater
autonomy both on the revenue and expenditure fronts.
All states stand to gain from extra resources although there will be some variation between the states.
FFC transfers are highly progressive; that is, states with lower per capita NSDP (Net State Domestic Product)
receive on average much larger transfers per capita. In contrast, plan transfers were much less progressive.
The concern that more transfers will undermine fiscal discipline is not warranted because states as a whole
have been more prudent than the centre in recent years.
Wiping Every Tear from Every Eye: JAM Trinity

Both the Central and State Government subsidize the price of wide range of products with the expressed intention
of making them affordable for the poor. Rice, wheat, pulses, sugar kerosene, LPG, naphtha, water, electricity,
diesel, fertilizer, iron ore, railways - these are just a few of the commodities and services that the Government
subsidizes. There is always a question over how much of these benefits actually reach the poor.
Price subsidies are often regressive: It means that a rich household benefits more from the subsidy than
a poor household.
Price subsidies in electricity can only benefit the (relatively wealthy) 67.2 percent of household that are
electrified.
The poorest 50 percent of households consume only 25 percent of LPG.
Major part (51 percent) of subsidized kerosene is consumed by the non-poor and almost 15 percent of
subsidized kerosene is actually consumed by relatively well-off (the richest 40 percent).
A large fraction of price subsidies allocated to water utilities (upto 85 percent) are spent on subsidizing private
taps when 60 percent of poor household get their water from public taps.
Controlled rail prices actually provide more benefits for wealthy household than poor households.

Price subsidies can distort markets in ways that ultimately hurt the poor
This contributes to food price inflation that disproportionately hurts poor households who tend to have
uncertain income streams and lack the assets to weather economic shocks.
High MSPs and price subsidies for water together lead to water-intensive cultivation that causes water tables
to drop, which hurts farmers, especially those without irrigation.
In order to cross subsidize low passenger fares, freight tariffs in railways are among the highest in the world.
This reduces the competitiveness of Indian manufacturing and raises the cost of manufactured goods that all
households, including the poor, consume.
Benefits from fertilizer price subsidies accrue to the fertilizer manufacturer and richer farmer, not the
intended beneficiary, the poor farmer.
Leakages seriously undermine the effectiveness of product subsidies. Recent academic research on the subject of
PDS leakages (kerosene, rice, wheat etc.) has found that leakages are still unacceptably high. Recent experimental
evidence documents that unconditional cash transfers, if targeted well can boost household consumption and
asset ownership, reduce food security problems for the ultra-poor and opportunities of leakage.
PDS Leakages:
Item Leakages (In crores)
Kerosene 10000
Rice 5800
Wheat 12600
The JAM number trinity solution

The JAM Number Trinity - Jan Dhan
Yojana, Aadhaar and Mobile numbers -
allows the state to offer support to poor
households in a targeted and less distortive
way. As of December 2013 over 720 million
citizens had been allocated an Aadhaar card.
By December 2015 the total number of
Aadhaar enrolments in the country is
expected to exceed 1 billion. Linking the
Aadhaar Number to an active bank account is
the key to implementing income transfers.
With the introduction of Jan Dhan Yojana, the

number of bank accounts is expected to
increase further and this offers a great
opportunity to target and transfer financial resources to the poor.
Two alternative financial delivery mechanisms are given below:
Mobile Money
With over 900 million cell phone users and close to 600 million unique users, mobile money offers a
complementary mechanism of delivering direct benefits to a large proportion of the population. And this
number is increasing at a rate of 2.82 million per month.
Aadhaar registrations include the mobile numbers of a customer, the operational bottlenecks required to
connect mobile numbers with unique identification codes is also small.

Post Offices
India has the largest Postal Network in the world with over 1,55,015 Post Offices of which 89.76 percent are in
the rural areas.
Similar to the mobile money framework, the Post Office can seamlessly fit into the Aadhaar linked benefits-
transfer architecture by applying for an IFSC code which will allow post offices to start seeding Aadhaar linked
accounts.
Converting all subsidies into direct benefit transfers is therefore a laudable goal of government policy. Even as it
focuses on second generation and third generation reforms in factor markets, India will then be able to complete
the basic first generation of economic reforms.

Major Reform Initiatives Undertaken by Government
in Banking, Insurance and Financial Sector
Economic Survey 2014- 15 states that liquidity conditions (money supply) have remained broadly balanced during
2014-2015 except for some temporary tight conditions due to delayed government expenditure. Steps taken by
the Reserve Bank of India (RBI) played a positive role in managing the liquidity conditions.
Till January 2015, RBI had kept the policy rates unchanged. As inflationary conditions eased, RBI softened
the monetary policy by cutting the Repo rate by 25 basis points in January 2015 (from 8% to 7.75%).
The Reserve Bank of India (RBI) also adopted new Consumer Price Index (combined) as the measure for
nominal anchor (Headline CPI) for policy communication.
Economic Survey 2014- 15 also mentions about the many reform initiatives undertaken in the banking
sector during 2014- 2015. These include:
1. Banks being allowed to raise capital from the market to meet capital adequacy norms by diluting the
government‘s stake up to 52 per cent.
2. Pradhan Mantri Jan Dhan Yojana launched to provide universal access to banking facilities with at least one
basic banking account for every household.
3. In April 2014, two applicants have been granted ‗in principle‘ approval to set-up new banks in the private sector
within 18 months.
4. RBI released guidelines and invited applications for setting up payments banks and local area banks.
According to the Economic

Survey, FY 2014- 2015 saw
some stress on the asset
quality of the Scheduled
Commercial Banks as there
was an increase in gross NPA
(Non Performing Advances)
to the total gross advances.
NPAs increased from 4.1%
(March 2014) to 4.5%
(September 2014). As on
June 2014, five subsectors -
Infrastructure, Textiles, Iron
& Steel, Mining and Aviation
accounted for 54% of total stressed advances of Public Sector Banks.
Actions taken by RBI to deal with NPAs

1) Issued guidelines, prompting banks to act as soon as a sign of stress is noticed in borrower‘s actions and not to
wait for it to become an NPA.
2) Tightened norms for Asset Reconstruction Companies, increasing the minimum investment in security
receipts to 15% from 5%.
3) Issued guidelines to bring flexibility in project loans to infrastructure and core industry projects.

2014- 2015 also saw a decline in the growth of bank credit due to high accretion of NRI deposits and also due to
low deposit mobilization. Economic Survey points out that insurance penetration in India has grown from 2.3% in
2000 t0 3.9% in 2013. This insurance penetration level compares well with the emerging market economies. The
sector registered a growth of 9.4% during 2013-14 with Life Insurance Corporation of India registering 13.5%
growth.
Promulgation of Insurances Laws (Amendment) Ordinance 2014:

To remove archaic and redundant provisions in insurance laws
Empowering Insurance Regulatory and Development Authority to enable more effective regulation
To increase the foreign equity cap in Indian Insurance Companies from 26% to 49%
Equity Markets continue to do well for the financial year 2014- 2015. The benchmark indices, BSE Sensex and
Nifty showed a general upward trend in the current year with growth rates of 29.9% and 31.4% year on year.
Need for balance between „Make in India‟ and „Skilling

India‟
Economic Survey 2014-15 discusses ―Make in India‖, the flagship initiative and a key policy objective of the new
government. The Survey contemplates ―What should India make? Manufacturing or Services? ‖ As a prelude, the
Survey states that, in order to bring about expansion and structural transformation, India should utilize its
dominant resource of unskilled labour.

The survey distinguishes registered manufacturing (formal sector) from the general manufacturing which covers
informal sector as well. The Economic Survey recognizes registered manufacturing as having ―the potential for
structural transformation.‖ Registered manufacturing exhibits high productivity compared to other sectors of the
economy.
However, the Economic Survey

observes that manufacturing
productivity in India lags behind
other nations. The Survey points
out that all Indian states exhibit
declining share of manufacturing
in the State GDP. In addition, the
Survey identifies that registered
manufacturing couldn‘t bridge
regional disparities in India. In
addition to this, registered
manufacturing now in India has
been identified as skill intensive
which is not in line with the India‘s
comparative advantage in
unskilled labour.
The Economic Survey identifies four factors for non development of manufacturing as an engine of economic
growth –
• Distortions in Labour Market
• Distortions in Capital Market
• Distortions in Land Market
• Specialization not in line with India‘s comparative advantage in unskilled labour
Certain subsectors of services – financial services and business services, exhibit higher productivity levels than
registered manufacturing. However, these sectors being highly skill intensive (excluding construction) are out of
line with the skill profile of the Indian labour force. They are unlikely to generate widely shared and inclusive
growth. However, the survey observes that the service sector has the potential for domestic growth convergence
across regions.
Hence, the survey redrafts the question of manufacturing versus service. It posits that the real question should be
whether we want to concentrate on non-skilled labor intensive sectors or the development of skill intensive sector.
The Economic Survey concludes that Indian growth should balance the nation‘s comparative advantage in
availability of low skilled labour with skill development required by future generations to take advantage of lost
opportunities. The registered manufacturing must be expanded to take leverage of India‘s abundant unskilled
labour. While ―Make in India‖ occupies prominence as an important goal, the future trajectory of Indian
Development depends on both ―Make in India‖ and ―Skilling India‖, the Economic Survey says.

A Double-Digit Economic Growth Trajectory is now a
Possibility
Indian Economy is looking-up with brighter prospects amongst the world‘s major economies today. The
Economic Survey 2014-15 indicates that a clear political mandate for reform and a benign external environment
now is expected to propel India on to a double digit trajectory. It states that Indian economy appears to have now
gone past the economic slowdown, persistent inflation, elevated fiscal deficit, slackening domestic demand,
external account imbalances and oscillating value of the rupee.
The Economic Survey taking into consideration the change of base year by the Central Statistics Office of the
National Accounts series from 2004-05 to 2011-12, states that growth at market prices for 2015-16 is expected to
be 8.1-to 8.5 per cent.
The growth rate in GDP at constant (2011-12) market prices in 2012-13 was 5.1 per cent, which increased to 6.9
percent in 2013-14 and it is expected to further increase to 7.4 per cent in 2014-15 (According to advance
estimates). The change in methodology by the Central Statistics Office has also introduced the concept of Gross
Value Added (GVA) at the aggregate and various sectoral levels.
The Economic Survey says that expectation for such a growth rate is also due to a number of reforms that have
already been undertaken and more that are being planned for. The Survey enlists various reform measures like
de-regulation of diesel price, taxing energy products, replacing cooking gas subsidy by direct transfer on national
scale, passing an Ordinance to reform the coal sector via auctions, increasing the FDI caps in defence, insurance
etc.
The Survey also commended the far reaching changes brought about on the issue of sharing of revenues between
the Centre and States as recommended by the 14th Finance Commission.
The Survey says that decline in inflation by over 6 percentage points since late 2013 and also reduction of current
account deficit from a peak of 6.7 per cent of GDP in the third quarter of 2012-13 to about 1 per cent in the coming
fiscal year has made India an attractive investment destination well above most other countries.
The expected high growth rate in the coming year in the favourable economic environment has created a historic
movement of opportunity to propel India into a double-digit growth trajectory to attain the fundamental objective
of ―wiping every tear from every eye‖ of the vulnerable and poor people of the country, the survey says. It also
gives an opportunity to the increasingly young, middle-class and aspirational India to realize its full potential.
The growth estimates of over 8 per cent for the current year is on expectations that the monsoon will be
favourable, as it was forecast to be normal, compared to last year. However the growth rate in Gross Value Added
(GVA) at basic prices in agriculture is projected to decline from 3.7 per cent in 2013-14, an exceptionally good
previous year from the point of view of rainfall, to 1.1 per cent in 2014-15, the current year with not-so-favourable
monsoon.
The Economic Survey has also drawn our attention to certain other stagnating or declining elements of the
economy in the recent past.
It says that the growth in 2014-15 is largely driven by domestic demand. There is hardly any external support to
growth in 2014-15, as the growth in exports is projected to be only 0.9 per cent and the growth rate of imports,
around (-) 0.5 per cent. The deceleration in imports owes substantially to the sharp decline in international oil
prices in the current year that reduced the oil import bill.

It also says that there has been a decline in the rate of gross domestic saving, from 33.9 per cent of the GDP in
2011-12 to 31.8 per cent in 2012-13 and further to 30.6 per cent in 2013-14, caused majorly by the sharp decline in
the rate of household physical savings. Further it states that investment rate over the past years, as measured by
Gross capital formation (GCF) as a percentage of GDP declined from 38.2 per cent in 2011-12 to 36.6 per cent in
2012-13 and further to 32.3 per cent in 2013-14.
On investments the Survey had significantly commented that while private investment must remain the primary
engine of long-run growth, the public investment, especially in the railways, will have to play an important role at
least in the interim, to revive growth and to deepen physical connectivity.
This Economic Survey prescribes, what it calls, a golden rule of fiscal policy saying that governments are expected
to borrow over the cycle only to finance investment and not to fund current expenditures. It urged the government
to aim at bringing down the centre‘s fiscal deficit down to 3 per cent of GDP.
In an exclusive Chapter relating to the Fourteenth Finance Commission (FFC) the Economic Survey quoted both
Pt. Jawahar Lal Nehru, the first Prime Minister of the country and the current Prime Minister Shri Narendra Modi
and said that adoption of the recommendations of the FFC and the creation of Niti Ayog would further take
forward the Government‘s vision of cooperative and competitive federalism.
Government Committed to Fiscal Consolidation

The Government remains committed to fiscal consolidation. The Economic Survey 2014-15 presented in
Parliament states that the deficit target of 4.1% as envisaged in the Budget 2014-15 will be met. However, should
the revenues not pick-up sufficiently, there would be need to persist with some compression in expenditure so as
to meet the deficit target. It says that achieving the target is a daunting task in the backdrop of only a moderate
increase in indirect taxes and a large subsidy bill despite significant decline in the oil subsidies burden in the
current year. The Economic Survey mentions that going forward enhanced revenue generation is a priority.
The fiscal consolidation plan as enunciated in Budget Estimates (BE) for 2014-15 entailed an increase in the tax to
GDP ratio and non-debt receipts to GDP ratio to 10.6 per cent and 9.8 per cent respectively, and a continuance of
the low level of total expenditure to GDP ratio at 13.9 per cent. The envisaged growth for Gross Tax Revenue
(GTR) was 17.7 per cent over RE 2013-14 and 19.8 per cent over the Provisional Account (PA) 2013-14. Economic
Survey states that the Budget for 2014-15 estimated GDP growth rate of 13.4% and growth in overall gross tax
revenue at 19.8% over the last year but this seems to be an overestimation, given the trends in GDP growth and
growth in GTR. Several important and path breaking initiatives for reviving the economy and promoting
investment in the manufacturing sector were taken, and measures for rationalization of tax provision so as to
reduce litigation were introduced. Modernization of business processes of tax administration are being under
taken in order to raise revenue and improve the ease of doing business.
The Economic Survey says that in the current financial, the Government has disinvested its equity in SAIL, Coal
India and others and realized about Rs 24,000 crore so far. The recovery of loans has been declining because of
the Finance Commission‘s recommendations.
In 2014-15, the centrally sponsored schemes were restructured into 66 programmes for greater synergy and
effective implementations. Central assistance to states and Union Territories for their plans increased from Rs 1.1

lakh crore in RE 2013-14 to Rs 3.38 lakh crore in BE 2014-15. The energy, transport, social service, and industry
and mineral sectors got the maximum share in the central plan of 2014-15.
Non plan expenditure constituted around 68% of total expenditure in BE 2014-15. Expenditure like interest
payment, subsidies, defence service, pension, and non plan revenue expenditure constituted around 87.4% of total
non plan revenue expenditure in BE 2014-15. The rationalization and re-prioritization of non-plan revenue
expenditure is expected to play a vital role in the process of fiscal consolidation and targeting expenditure more
towards inclusive and sustained development. Among the subsidies, the under-recoveries on petroleum products
are expected to be Rs. 74,664 crore during 2014-15 against Rs 1,39,869 crore in 2013-14. The Survey says that
rationalization of food subsidies is still an area where more effort is required.
The provisional outcome of April-December 2014-15 was released on 30th January, 2015 by CGA (Controller
General of Accounts). Fiscal deficit stood at Rs 5.32 lakh crore which is 100.2 per cent of BE and higher than the
last five years average of 77.7 per cent. The revenue deficit for April-December 2014 is estimated at 106.2% of BE.
This implies that for fiscal marksmanship this year too some expenditure compression may have to be
undertaken. In order to obviate the need for large scale expenditure reduction, the Government has however put
in place some additional revenue mobilization efforts.
The growth in gross tax revenue increased by 7% in comparison to the corresponding period of 2013-14. The non-
tax revenue during the period registered an increase of 27.3% over the same period of last year. On the
expenditure side of Union government account, the notable trends during April-December 2014 include a
shortfall in growth in Plan and non-Plan expenditure vis-à-vis the corresponding period of the previous year.
Indirect taxes growth at 6.2 % in 2014-15 (April-December) is much lower than 25.8% over the corresponding
period of 2013-14. Direct taxes collected in the first 9 months in the year are broadly in the same level as in the
corresponding period of the last year. 6.2% growth at expenditure in April – December 2014 over the
corresponding period in the previous year has helped in containing fiscal deficit for the first three quarters of the
current fiscal.
The Economic Survey says that going forward, enhanced revenue generation is a priority. The implementation of a
well-designed Goods and Services Tax (GST) and other tax reforms would also play the crucial role in this regard.
Overhauling the subsidy regime which should entail further reducing fuel (LPG and kerosene) subsidies, tackling
fertilizer subsidies, moving to Aadhaar based direct cash transfers of food subsidy would pave the way for
expenditure rationalization. Fiscal consolidation is a necessity but the quality of consolidation is imperative to
make it sustainable. To achieve this end it would be necessary put in place a medium to long term fiscal policy
frame work with explicit revenue, expenditure and deficit targets.

Macro Level and Sectoral Initiatives Undertaken to
Improve Industrial Growth
The Index of Industrial production (IIP) suggests that industrial sector is recovering slowly with a 2.1 percent
growth in April - December 2014-15 against the 0.1 per cent in the same period last year. The Economic Survey
says that the recovery is led by the infrastructure sectors namely electricity, coal and cement. Mining sector
growth has turned positive while manufacturing growth continues to remain tepid, registering growth of 1.2 % in
April – December 2014-15. The Survey observes that the low growth in manufacturing is mainly due to high rate
of interest, infrastructure bottlenecks, and low domestic and external demand.
The Economic Survey 2014-15 points out that the latest Gross Domestic Products estimates, based on new
methodology and with 2011-12 as a base year, points towards industrial recovery which is in contrast to earlier
perception about slow industrial growth during the last three years.
To improve industrial growth, the Economic Survey says that the new Government has emphasized on rapidly
improving ease of doing business, skill development and launching fresh initiatives like Make in India and Digital
India, creating National Industrial Corridors Authority, streamlining environment and forest clearances and
labour reforms. To overcome critical constraints, holding up use of land and natural resources, the Government
has taken actions to remove regulatory uncertainty by passing Ordinances to streamline land acquisition, e-
auction of coal blocks for private companies and auction of iron ore and other new coal mines.
In infrastructure, the Survey mentions that the focus of the Government has been on resolving long pending
issues like pricing of gas, establishing processes and procedures for transparent auction of coal and minerals and
improving power generation and distribution.
According to the Survey, during April–December 2014 – 15, the overall growth in the eight core industries has
improved marginally to 4.4 per cent compared to 4.1 per cent in the same period last year. Electricity, coal and
cement boosted the performance while natural gas, fertilizers, crude oil, refinery products and steel accounted for
moderation in growth. The improved performance in electricity is due to high growth in thermal generation, in
coal mining due to higher production by Coal India Limited and captive mining and in cement due to capacity
addition. Natural gas and crude oil production have decline because of no major discoveries and problems with
old oil fields. Domestic steel production is affected by slow down in domestic demand and cheaper imports.
Fertilizer production has contracted mainly because of non-availability of gas.
The pre-budget Economic Survey notes that 3.61 crores MSMEs contributes 37.5% of the country‘s GDP have a
critical role in boosting industrial growth and ensuring the success of the Make in India programme. It further
states that a number of schemes are being implemented for the establishment of new MSMEs and growth and
development of the existing ones.
According to the Survey, an investor-friendly FDI policy has been put in place whereby FDI upto 100% is
permitted under the automatic route in most sectors / activities. In 2014, FDI policy has been further liberalized.
FDI upto 49% through the Government route have been permitted in the Defence industry. Higher FDI has also
been allowed on a case to case basis. FDI upto 100% through automatic route has been permitted in construction,
operation and maintenance of identified railways transport infrastructure. Norms related to minimum land area,
capitalization and repatriation of funds for FDI in construction, development projects have been further
liberalized. During April-November 2014, total FDI inflows (including equity inflow, reinvested earnings, and
other capital) were US $27.4 billion, while FDI equity inflows were US $ 18.9 billion, the Economic Survey adds.

In the power sector, the Economic Survey describes that the government has taken several decisions to provide
24X7 power across the country by 2019 which includes steps for increasing power generation, strengthening of
transmission and distribution, separation of feeder and metering of power to consumers. To improve the
distribution of power, two new schemes have been launched namely Integrated Power Development Schemes and
Deendayal Upadhyaya Gram Jyoti Yojana. The Electricity (Amendment) Bill 2014 has been introduced in the Lok
Sabha to usher in reforms in the power sector, promote competition and efficiency in operation and improve the
quality of supply of electricity, the Survey mentions.
According to the Survey, to provide a big push to solar energy, that two new schemes namely, Scheme for
Development of Solar Parks and Ultra Mega Solar Power Projects and Pilot-cum-Demonstration Projects for
Development of Grid Connected Solar PV Power plants on Canal Banks and Canal Tops were rolled out in
December 2014.
Regarding Railways, the Economic Survey listed out key focus areas which include creation of capacity,
modernization of network, improvement in asset utilization and productivity, modernization of rolling stock and
maintenance practices, and improvement in the quality of services. Investments are being prioritized in important
areas like Dedicated Freight Corridors (DFCs), high speed rail, high capacity rolling stock, last mile rail linkages,
and port connectivity, the Survey adds.
In the road sector, efforts have been undertaken to resolve problems associated with projects which are yet to be
completed and the setting up of National Highways and Infrastructure Development Corporation Ltd. for speedy
implementation of highway projects in the north-east.In civil aviation sector, there has been healthy increase in
international passengers and cargo handled at Indian airports during 2014-15. The major initiatives are
implementation of PPP projects at four airports of the AAI, setting up of greenfield airports and development of
small airports in Tier II and Tier III cities.
Three new schemes viz., the Swachh Bharat Mission (SBM), Heritage City Development and Augmentation Yojana
(HRIDAY), and Smart City Scheme have been announced for development of urban infrastructure, says the
Economic Survey.
India‟s National Solar Mission Being Scaled up Five-

Fold to 100,000 Megawatts
The Economic Survey 2014-15 says that
India has made considerable progress in
tackling climate change issues. The year
2015 is going to witness new agreements
on climate change and sustainable
development. India has been following
action-oriented policies to bring rapid
development to its people while
purposefully addressing climate change.
India has been one of the foremost
advocates of long-terms global
cooperation in combating climate change
in accordance with the principles and
provisions of the UN Framework

Convention on Climate Change (UNFCCC).
India launched its National Action Plan on Climate Change way back in 2008 and is currently revisiting National
Missions in the light of new scientific information and technological advances.
India‘s total renewable power installed capacity as on 31st December 2014 has reached 33.8 GegaWatts(GW).
Wind energy continues to dominate this share accounting for 66 per cent of installed capacity followed by
biomass, small hydro power and solar power. India‘s National solar Mission is being scaled up five-fold to
1,00,000 megawatts by 2022 In the next five years proposals are likely to generate business opportunities of the
order of 160 billion US Dollars in the renewable energy sector. It offers very good opportunity for businesses to set
and scale up industry, leapfrog technologies and create volumes. Some of India‘s major immediate plans on
renewable energy include scaling up cumulative installed capacity to 170 gegawatts (GW) and establishing a
National University for Renewable Energy.
India introduced the clean energy cess on coal in 2010 which very few countries have in the world. This has been
doubled to Rs.100 per tonne in 2014. The total collection so far under the National Clean Energy Fund NCEF has
crossed Rs. 17,000 crores and till September 2014, 46 clean energy projects worth Rs.16,511.43 crores have been
recommended for funding out of this fund.
Efforts are also under way by the government to build India‘s institutional capacity for mobilizing climate change
finance. India has set a National Adaptation Fund with an initial corpus of Rs.100 crores in 2014 to support
adaptation actions to combat the challenges of climate change in sectors like agriculture, water and forestry.
The Survey says the global agreement on climate change expected by December, 2015 under the UNFCCC
applicable to all countries must be ambitious, comprehensive, equitable and balanced taking into account the
huge development needs of developing countries. It should address the genuine requirements of developing
countries like India by providing them equitable carbon and development space to achieve sustainable
development and eradicate poverty. Simultaneously, the multilateral Green Climate Fund (GCF) under the
UNFCCC has made progress and is now ready for business with around US$ 10 billion pledged to it by the
contributing Parties. At the country level, institutional mechanism required to access the GCF resources are being
set up.
Prime Minister Shri Narendra Modi in his address in UN General Assembly in September, 2014 said ―We should
be honest in shouldering our responsibilities in meeting the challenges. The world community has agreed on a
beautiful balance of collective action – common but differentiated responsibilities. This should form the basis of
continued action.‖ India‘s stand in the ongoing negotiations has been guided by the principle of Equity and
Common but Differentiated Responsibilities (CBDR). India believes that the climate change agreement of 2015
should take into consideration a whole gamut of issues including adaptation, finance, technology development
and transfer, capacity building, transparency of action and support in a balanced manner and loss and damage in
addition to mitigation.
The latest scientific findings have estimated that out of the carbon budget (CO2 emissions) of 2,900 Giga tonnes
(Gt), only 1,000 Gt remains to be used between now and 2100 in order to limit the temperature increase to 2°C.
Most of the current and cumulative carbon budget has been used by the developed countries. The World
Resources Institute estimates that if emissions continue unabated, the remaining budget will last only 30 more
years. The key issue therefore for designing emission reduction commitment is how the remaining carbon budget
needs to be allocated with a fair burden sharing mechanism. India‘s contribution to cumulative global CO2
emissions (1850-2011) was a meager 3 per cent as against 21 per cent by USA and 18 per cent by the EU.

The Economic Survey 2014-15 focuses on sustainable development goals for India saying that the challenges for
India are manifold. India is at the threshold of an urban flare-up. With more than a billion population, India has
to address the problems associated with increasing urbanization, tackle the problem of eradicating poverty,
providing energy access to all and address other developmental priorities. It says that hidden in these challenges
are great opportunities. Unlike many countries, India has a young population and therefore can reap the fruits of
demographic dividend. With more than half of the India of 2030 yet to be built, we have an opportunity to avoid
excessive dependence on fossil fuel based energy systems and carbon lock-ins that many industrialized countries
face today. A conscious policy framework which takes into account both developmental needs and environmental
considerations could help turn the challenges into opportunities, the Economic Survey suggests.
India‘s development plans lay a balanced emphasis on economic development and the environment. The country
has witnessed the introduction of landmark environmental measures for conservation of rivers, improvement of
urban air quality, enhanced forestation, significant increase in installed capacity of renewable energy
technologies, shift towards public transport and enhancing rural and urban infrastructure. Recent key initiatives
include the Swachh Bharat Mission, Clean Ganga Plan, scaling up of the National Solar Mission fivefold from
20,000 MW to 1,00,000 MW with an additional investment requirement of US $ 100 billion, development of 100
smart cities with integrated policies for sustainable development and preparations for developing a National Air
Quality Index and a National Air Quality Scheme.
Reform of Railway‟s Structure, Commercial Practices,

Overhaul of Technology
The Economic Survey 2014-15 recommends that greater public investment in the railways would boost aggregate
growth and the competitiveness of Indian manufacturing substantially. Discussing the specific role of Indian
railways in driving future Indian growth, the Survey says that there is merit in the case for reviving public
investment as a key engine of growth in the short run - not to substitute for private investment but to compliment
and promote further private investment. The Survey says that public investment in an efficient rail network can

have positive effect on both manufacturing and aggregate output and the effects are permanent. It advocates that
there is a need for bold, accelerated programme of investment in dedicated freight corridors (DFCs) that can
parallel the Golden Quadrilateral in the road sector along with associated industrial corridors. The present
government can do for the neglected railways sector what the previous NDA government under the then Prime
Minister Atal Bihari Vajpayee did for rural roads. This impetus has the potential to boost greater private
investment and do so without jeopardizing India‘s public debt dynamics. Such an initiative will transform Indian
manufacturing industry with ―Make in India‖ becoming a reality. With the separation of freight traffic, passenger
trains can then be speeded up substantially with marginal investments, the Survey analyses.
The Survey calls for large public investment in railways as there is a strong case for channeling resources to
transport infrastructure in India given the widely known spillover effects of transport networks to link markets,
reduce a variety of costs, boost agglomeration economies, and improve the competitiveness of the economy,
especially manufacturing which tends to be logistics intensive. Today, the ‗lifeline of the nation‘ operates over
19,000 trains carrying 23 million passengers and over 3 million tonnes of freight per day while employing over 13
lakh people.
The Survey indicates that successive plans have allocated less resources to the railways compared to the transport
sector and the share of railways in the total plan outlay is currently only 5.5% vis-à-vis about 11% for the other
transport sectors and its share in overall development expenditure has remained low at below 2% over the past
decade. China invests eleven times as much in per capita terms and underinvestment in the Indian Railways is
also indicated by congestion, strained capacity, poor services, and weak financial health. Greater public
investments once utilized efficiently can help the railways to overcome some of these problems.
In the long run, the railways must be commercially viable and public support for the railways should be restricted
to (i) equity support for investment by the corporatized railways entities and (ii) for funding the universal service
obligations that it provides. In the interim, there is scope for public support of railways, including through
assistance via the general budget.
However, any public support should be clearly linked to serious reform: of the structure of the railways; of their
adoption of commercial practices; of rationalizing tariff policies; and through an overhaul of technology,
recommends the Economic Survey 2014-15.

Skill Development and Employment are major
Challenges: Economic Survey
There is a dual challenge of
developing skills and utilizing
them in a proper way. The
Economic Survey 2014-15 has
stated that as per the Labour
Bureau Report 2014, the present
skilled workforce in India is only
2 percent, which is much lower
when compared to other
developing nations. As per the
report, the number of persons
aged 15 years or above who
have received or will be
receiving skills training is
merely 6.8 percent.
The Economic Survey 2014-15 stated that as per the National Skill Development Corporation there is an
incremental need of 120 million skilled people in the non-farm sector for the period 2013-22. The current capacity
for skilling is grossly inadequate and needs to be speedily scaled up to meet immediate skill needs of the country.
The poor skill levels among India‘s workforce are attributed to dearth of a formal vocational education framework,
with wide variation in quality, high school dropout rates, inadequate skills training capacity, negative perception
towards skilling, and lack of ‗industry ready‘ skills even in professional courses (Labour Bureau Report 2014).
Some recent initiatives that aim to enhance access, equality, quality, innovation in the area of higher and
vocational education are the Rashtriya Uchchatar Shiksha Abhiyan, Technical Education Quality Improvement
Programme, and National Skill Qualification Framework.
A dedicated Department of Skill Development and Entrepreneurship has been created under the Ministry of Skill
Development, Entrepreneurship, Youth Affairs and Sports to accord focused attention in this area. The Deen
Dayal Upadhyaya Grameen Koushalya Yojana for poor
rural youth and Nai Manzil for education and skill
development of minority dropouts have also been set
up.
The Economic Survey has shown the cause for concern

is the deceleration in the compound annual growth rate
of employment during 2004-05 to 2011-12 to 0.5
percent from 2.8 percent during 1999-2000 to 2004-05
as against growth rate of 2.9 percent and 0.4 percent
respectively in the labour force for the same periods.
There have also been structural changes: for the first

time, the share of the primary sector in total
employment has dipped below the halfway mark
(declined from 58.5 per cent in 2004-05 to 48.9 per cent
in 2011-12), while employment in the secondary and

tertiary sectors increased to 24.3 per cent and 26.8 per cent respectively in 2011-12 from 18.1 per cent and 23.4 per
cent respectively in 2004-05. Self-employment continues to dominate, with a 52.2 per cent share in total
employment.
There are other issues of concern like poor employment growth in rural areas, particularly among females.
Though employment of rural males is slightly better than that of females, long-term trends indicate a low and
stagnant growth. Such trends call for diversification of livelihood in rural areas from agriculture to non-
agriculture activities. In order to improve generation of productive employment under the Mahatma Gandhi
National Rural Employment Guarantee Act (MGNREGA), the Intensive and Participatory Planning Exercise
(IPPE) has been initiated to prepare the labour budget for financial year 2015-16 in selected 2500 backward
blocks using participatory rural appraisal technique. Emphasis has been laid on agriculture and allied activities to
ensure that at least 60 per cent of the works in a district in terms of cost is for creation of productive assets linked
to agriculture and allied activities through development of land, water, and trees.
The Economic Survey 2014-15 has concluded that a major impediment to the pace of quality employment
generation in India is the small share of manufacturing in total employment. However, data from the 68th NSSO
round (2011-12) indicates a revival in employment growth in manufacturing from 11 percent in 2009-10 to 12.6
percent in 2011-12. This is significant given that the National Manufacturing Policy 2011 has set a target of
creating 100 million jobs by 2022. Promoting growth of micro, small, and medium enterprises is critical from the
perspective of job creation which has been recognized as a prime mover of the development agenda in India.
Services Sector Clocks Double Digit Growth

India‘s dynamic Services Sector clocked double
digit growth rate of 10.6 per cent as per the
Advance Estimate during the current financial
year, as compared to 9.1 per cent in the last fiscal
(FY 2013-14). Contributing almost 72.4 per cent of
the growth in the GDP in the year 2013, India had
the second fastest growing Services Sector, next
only to China. The Economic Survey notes that this
Sector accounts for more than half of India‘s Gross
Value Added (GVA) growth and including
Construction, a borderline Service, the Services
share is 59.6 per cent with a growth rate of 8.1 per
cent.
The Services Sector also has the highest share of

54.6 per cent in the Gross Capital Formation (GCF)
of Rs. 35.4 lakhs in 2013-14. The growth rate of
Services GCF at 3.1 per cent has also been higher
than the total GCF growth of 1.4 per cent, offsetting
the negative GCF growth in Agriculture, Industry
and Manufacturing.
The 10.6 per cent estimated growth in the Services

Sector is mainly due to better performance in Financial, Real Estate and Professional Services besides Public

Administration, Defence and Other Services. There was also good growth in Trade, Hotels, Transport,
Communication and related Services.
The Services Sector also continues to dominate the FDI equity inflows into the country. During 2014-15 (April to
November), the FDI inflows into Services grew by 105.8 per cent compared to 22.2 per cent growth in overall FDI
inflows.
In the first half of 2014-15, Services exports grew by 3.7 per cent to US $ 75.9 billon while import of Services grew
by 5.0 per cent to US $ 39.9 billon, resulting in net Services growth of 2.4 per cent. Net Services has been a major
source of financing India‘s trade deficit in recent years. India‘s major Services exports in 2013-14 were Computer
Services with 45.8 per cent share and Other Business Services making up 18.8 per cent share. However, in the first
half of 2014-15 export growth decelerated further for Computer Services and was negative for Other Business
Services. But, growth was robust for Travel at 18 per cent with pick up in Foreign Tourist Arrivals.
The Services Sector is also the dominant sector in most states of India with a share of more than 40 per cent in the
Gross State Domestic Product in FY 2013-14 except for Arunachal Pradesh and Sikkim. The major Services in
most of the states with high share are trade, hotels and restaurants followed by Real Estate, ownership of
dwellings and Business Services. In 2013-14, Bihar had the highest Services growth of 17.3 per cent and
Uttarkhand the lowest of 5.5 per cent. Bihar has been recording double-digit growth in the Services Sector in the
last five years due to high growth in trade, hotels and restaurants.
The Economic Survey identifies Services Sector negotiations at WTO as bearing special significance for India and
calls for removing many market access barriers and domestic regulations to realize the full potential of India‘s
Services Sector.
External Sector is returning to the path of strength

and resilience
As per the Economic Survey, the outlook for the external sector is perhaps the most favorable since the 2008
global financial crisis and especially compared to 2012-13, when elevated oil and gold imports fuelled a surge in
the current account deficit.
The Global Economy is likely to

gain strength if lower global crude
petroleum prices drive the
demand recovery process in
emerging markets. After the
global crisis of 2008, the global
economy came under a cloud of
uncertainty and prolonged
weakness in euro area particularly
since 2011. This led the IMF to
revise the global growth
downwards. The global economic
environment appears poised for a
change for the better with recent

sharp fall in the international prices of crude petroleum which is expected to boost global aggregate demand.
Over the last ten years India‘s Merchandise Trade (on custom basis) increased manifold from US$ 195.1 billion in
2004-05 to US$ 764.6 billion in 2013-14 helping in improving India‘s share in global exports and imports from
0.8% to 1.0% respectively in 2004 to 1.7% and 2.5% in 2013.
The Economic Survey says the overall trade performance signals an opportune time for withdrawal of
restrictions on gold.
The financial inflows in excess of the financial requirements has helped shore up foreign exchange reserves
(US$ 328.7 billion at the end of January,2015). These have helped lessen the vulnerability concern that led to
serious stress last year.
Reconciling the benefits of the financial inflows with their impact on exports and the current account remains
an important challenge going forward.
In 2013-14, India‘s trade deficit (on custom basis) declined to US$ 135.8 billion from a high level of 190.3
billion in 2012-13 mainly on account of a decline in the growth of imports even though growth in exports was
sluggish at 4.7%.
The decline in imports owed to lower growth in oil imports (0.4%) and negative growth in gold and silver imports.
Some of the Trade Policy Measures Taken by the Government:
To promote domestic manufacturing capabilities different schemes namely FPS (Focus Product Scheme),
FMS (Focus Market Scheme), VKGUY (Vishesh Krishi and Gram Udyog Yojana), Served From India Scheme,
Agriculture Infrastructure Incentive Scheme (AIIS) for import of goods can be utilized for payment of excise
duty for domestic procurement. This is an important measure for import substitution and will help save
foreign exchange and create additional employment.
Similarly scrips issued under the FPS, FMS, Vishesh Krishi and Gram Udyog Yojana(VKGUY) schemes can be
utilized for payment of service tax.
To diversify India‘s export, seven new markets (Algeria, Aruba, Austria, Cambodia, Myanmar, Netherlands,
Antilles and Ukraine) have been added to FMS and 7 new markets(Belize, Chile, El Salvador, Guatemala,
Honduras, Morocco and Uruguay) to Special FMS, 46 items to MLFPS and 12 new markets for first time and
100 new products to FPS list.
Indian trade portal (www.indiantradeportal.in) was launched on 8th December, 2014.
Even though 2013-14 witnessed a sharp depreciation of the rupee in the initial part of the year with significant
reserve drawdown, steps taken by the government and the Reserve Bank of India (RBI) resulted in a rise in the
stock of foreign exchange reserves which was placed at US$ 304.2 billion at end-March 2014 as against US$292.0
billion at end-March, 2014.
In the first half of 2014-15, India‘s foreign exchange reserves increased by US$ 18.1 billion on BoP basis (that is
excluding valuation effect). Economic Survey says among the major economies with current account deficit, India
is the second largest foreign exchange reserve holder after Brazil.
Post 1991 BoP crisis India‘s prudent external debt policy and management with a focus on sustainability, solvency
and liquidity have helped contain the increase in size of external debt to moderate level. India‘s total external debt
stock at end March 2014 stood at US$ 442.3 billion 8.0 per cent more than the end-March 2013 level.
The rise in the external debt during the period was due to long term debt particularly NRI deposits and
commercial borrowings.

At the end of September, 2014, a long term debt accounted for 81.1% of the total external debt vis-a-vis 79.8 per
cent at the end of March, 2014 and short term debt accounted for 18.9% of the total external debt vis-à-vis 20.2%
at the end of March, 2014.
The net external commercial borrowing has also increased from US$ 2.4 billion in 2013-14 to US $3.4 billion in
2014-15.
Inflation shows a declining trend

The year 2014-15 (April-December) witnessed a substantial decline in inflation. According to the Economic
Survey 2014-15, the Average Wholesale Price Index (WPI) (base year 2004-05 = 100) inflation declined to 3.4% in
2014-15 (April-December) as compared to an average of 6% during 2013-14. The WPI inflation even breached the
psychological level of 0% in November, 2014 and January, 2015.
The decline was caused by lower food and

fuel prices. During the first quarter of
2014-15, WPI headline inflation stood at
5.8% as mainly food and fuel prices were
high. In the second and third quarters of
2014-15, WPI inflation declined to 3.9%
and 0.5% respectively. WPI food inflation
which remained high at 9.4% during 2013-
14 moderated to 4.8% during April-
December, 2014 following a sharp
correction in vegetable prices and
moderation in prices of cereals and eggs,
meat and fish.
The retail inflation as measured by the

Consumer Price Index (CPI) (base year
2010= 100) moderated significantly since
the second quarter of 2014-15. It declined
to an all time low of 5% in Q3 of 2014-15 after having remained stubbornly sticky at around 9-10% for the last two
years.
During the third quarter of 2014-15, the CPI food inflation declined considerably due to seasonal softening of food
and vegetable prices after the late arrival of monsoon exerted some pressure on vegetable prices during June-
August, 2014. CPI inflation in the fuel and light group registered a consistent decline during 2014-15, touching
3.4% in the third quarter following the sharp decline in International Crude Oil prices.
The main factors causing moderation in inflation include both global factors as well as domestic measures. Global
factors, namely persistent decline in crude prices and softness in the global prices of tradables, particularly edible
oils and even coal, helped moderate headline inflation. The tight monetary policy helped contain demand
pressures, creating a buffer against any external shock and keeping volatility in the value of the Rupee under
check. During the last one year the Rupee remained relatively stable vis-à-vis the currency of peer emerging
countries, which too had a sobering influence on inflation. Moderation in wage rate growth reduced demand
pressures on protein based items.

Swift and decisive steps taken by the Government also helped to control the stubbornly persistent inflation—
particularly food inflation. The decline in inflation is found to be substantial in commodities where the
Government had taken effective measures. The Government took a series of measures to improve availability of
food-grains and de-clog the distribution channel. Some of the major steps taken recently in this regard include:
a. Allocation of additional 5 million tonnes of rice to below and above poverty line (BPL and APL) families in the
states, pending implementation of the National Food Security Act (NFSA), and allocation of 10 million tonnes
of wheat under open market sales for domestic market in 2014-15
b. Moderation in increase in the MSPs during the last and current season
c. Advisory to the states to allow free movement of fruits and vegetables by delisting them from the Agricultural
Produce Marketing Committee (APMC) Act
d. Bringing onions and potatoes under the purview of the Essential Commodities Act 1955, thereby allowing
state Governments to impose stock limits to deal with cartelization and hoarding, and making violation of
stock limits a non-bailable offence
e. Imposing a minimum export price (MEP) of US$ 450 per MT for potatoes with effect from 26 June, 2014 and
US$ 300 per MT for onions with effect from 21 August, 2014
From Carbon Subsidy to Carbon Tax: India‟s Green

Actions
Economic Survey 2014-15 acknowledges the green actions taken by India, including imposing significantly higher
taxation on petroleum products and thereby reenergizing the renewable energy sector. India shifted from a carbon
subsidization regime to one of significant carbon taxation regime, from a negative price to an implicit positive
price on carbon emissions.
India has cut subsidies and increased taxes on fossil fuels (petrol and diesel) turning a carbon subsidy regime into
one of carbon taxation, by putting an effective price on emissions. This has significantly increased petrol and
diesel price while serving as price signal to reduce fuel burnt and hence CO2 emissions.
Calculating CO2 emission reductions from measures taken for petrol and diesel suggests that there will be a net
reduction of 11 million tons of CO2 emissions in less than a year compared to the baseline or 0.6 percent of India‘s
annual emissions.
In addition, India has increased the coal cess from Rs.50 per ton to Rs.100 per ton, which is equivalent to a carbon
tax of about US$ 1 per ton. A higher tax on coal offsets the domestic externalities including health cost of coal for
power generation. The Economic Survey points out that any rationalization of coal pricing must take account of
the implications for power prices and hence access to energy for the poorest in India which is and must remain a
fundamental objective of policy.
The Economic Survey observes that there is still a long way to go with potential large gains still to be reaped from
reform of coal pricing and further reform of petroleum pricing policies. Broadly, the move to substantial carbon
taxation combined with India‘s ambitious solar power program suggests that India can make substantial
contributions to the forthcoming Paris negotiations on climate change.

Food Subsidy
The Economic Survey 2014-15 has acknowledged that the Food Subsidy Bill has increased substantially in the past
few years, putting a severe strain on the public exchequer.
An amount of Rs. 107823.75 crore has been released as Food Subsidy during the year 2014-15 (upto January 9,
2015). This is a substantial increase of 20.15% over 2013-14 when an amount of Rs. 89740 crore was released as
food subsidy.
Provision of minimum nutritional support to the poor through subsidized foodgrains and ensuring price stability
in different states are the twin objectives of the food security system. The Economic Survey states that while the
economic cost of wheat and rice has continuously gone up, the issue price has been kept unchanged since July 1,
2002. This has resulted in large amounts of subsidy on foodgrains distributed through the TPDS/NFSA and other
welfare schemes.
The Economic Survey also states that agriculture and food sector needs huge investment in research, education,
extension, irrigation, fertilizers, and laboratories to test soil, water and commodities, warehousing, cold-
storage. Rationalization of subsidies and better targeting of beneficiaries would release resources for public
investment in agriculture.
The survey opines that the focus of public expenditure for agriculture so far has been on provision of subsidies
(public expenditure in agriculture is only one-fourth of expenditure towards food and fertilizer subsidies) and it is
time we shifted towards investments to boost productivity. Recommendations of Shanta Kumar Committee
provide useful suggestions for the future road-map of food-policy, says the Economic Survey.

Create National Common Market in Agricultural
Commodities: Economic Survey
The Economic Survey emphasizes on the need for a national common agricultural market and identifies un-
integrated and distortion ridden agricultural market as the one of the most striking problems in agriculture
growth.
The Economic Survey suggests 3 incremental steps as possible solution, building on the Budget 2014 recognition
for setting up a national market, farmers‘ markets and need for the Central Government and the State
Government to work closely to reorient their respective APMC Acts.
1. It may be possible to get all States to drop fruits and vegetables from APMC schedule of regulated
commodities and followed by other commodities.
2. State governments should also be specifically persuaded to provide policy support for alternative or special
markets in private sector.
3. In view of the difficulties in attracting domestic capital for setting-up marketing infrastructure, liberalization
in FDI in retail could create possibilities for filling in the massive investment and infrastructure deficit in
supply chain inefficiencies.
As a last resort, the Economic Survey suggests using Constitutional provisions to create a national common
market for agricultural commodities. The Concurrent List Entry 33 covers trade and commerce, production,
supply and distribution of food stuff including edible oilseeds and oils, raw cotton, raw jute etc. Entry 42 of Union
List - ‗Interstate trade and commerce‘ also allows a role for the Union.
Presently, markets in agricultural products are regulated under the Agricultural Produce Market Committee
(APMC) Act enacted by respective State Government. This Act notifies agricultural commodities produced in the
region such as cereal, pulses, edible oilseed and even chicken, goat etc. The first sale in these commodities can be
conducted only under the aegis of APMC through the commission agents licensed by the APMC. The typical
amenities available in or around the APMC are: auction halls, weigh bridges, godowns, shops for retailers,
farmer‘s amenity center etc. Various taxes, fees/charges and cess levied on the trades conducted in the Mandis are
also notified under the Act.

Currently, APMCs charge multiple fees, of substantial magnitude, that are non-transparent. They charge a market
fee from buyers, and they charge a licensing fee from the commissioning agents and a whole range of
functionaries. In addition, commissioning agents charge commission fees on transactions between buyers and
farmers.
These statutory levies/mandi taxes, VAT etc. varying from state to state are the major source of market distortion.
Such high level of taxes at the first level of trading has significant cascading effects on the price.
The APMC Act treats APMC as an arm of the state and the market fee as the tax levied by the state, rather than fee
charged for providing services. This provision acts as a major impediment to creating national common market.
The APMC operations are hidden from scrutiny as the fee collected is not under State legislature approval.
Also the commissions charged by commission agents are exorbitant as they are often charged on entire value of
product sold rather than the net value. There is a perception that the positions in market committees and market
boards are occupied by the politically influential leading to the formation of cartels in APMC.
Ministry of Agriculture developed a Model APMC Act, 2003 for the freedom of farmers to sell their produce. The
farmers could sell their produce directly to the contract-sponsors or in the market set up by private individuals,
consumers or producers. The Model Act also increases the competitiveness of the market of agricultural produce
by allowing common registration of market intermediaries. Many of the States have partially adopted the
provisions of model Act and some states such as Karnataka have adopted changes to create greater competition
within State. Karnataka Model provides for a single licensing system, offers automated auction and post auction
facilities. It also facilitates warehouse-based sale of produce, commodity funding, price dissemination by
leveraging technology and private sector investment in marketing infrastructure.
However, the Model APMC Act does not go far enough to create a national or even state level common market for
agriculture commodities. The Act retains the mandatory requirement of the buyers having to pay APMC charges
even when the produce is sold directly outside the APMC area. Though the Model Act provides for setting up of
markets by private sector, this is not adequate to create competition even within the state since the owner will
have to collect fees/taxes on behalf of the APMC in addition to their own charges.
Economic Survey reemphasize that India needs a national common market for agricultural commodities by
making the Agricultural Produce Market Committee just one among many options available for the farmers to sell
their produce.

FRONTLINE
Survey shows a 30 per cent increase in the tiger

population
The results of the third round of a four-yearly population estimation of tigers, co-predators, and prey, undertaken
simultaneously in January 2014 in potential tiger forests of 18 States, have revealed that there are now 2,226
tigers in the country, an impressive increase of 30 per cent over the 2010 tiger population of 1,706 and around 58
per cent over the 2006 number of 1,411. Besides, the country can now also take pride in supporting around 70 per
cent of the world tiger population. Going down memory lane for a bit, one recalls that in 2002, the last tiger
estimation by the old pug- mark (footprint) method had thrown up a figure of 3,700 tigers, and the 2006 figure of
only 1,411 tigers, arrived at by a more reliable and robust new methodology, was a big shocker whose
reverberations, compounded by conservation fiascos in some protected areas in the country, were felt for a long
time and that helped strengthen tiger conservation immensely.

The reconstitution and rechristening of Project Tiger as the National Tiger Conservation Authority, a statutory
body; suitable amendments to the Wildlife (Protection) Act, 1972; effective coordination between the Centre and
the States; and the constitution of some powerful committees were some of the important features of the
revamped and reinvigorated conservation organisational structures.
Tiger, technology and tallies

Before 2006, the estimation of tiger population in the country used to be conducted by the pug-mark
methodology. This indirect method of counting tigers, taken as a total count, was based on the identification and
documentation of the pug marks of tigers, tigresses and their cubs in the wild, on the broad assumption that each
tiger or tigress possesses morphometrically distinct pug marks. It was, however, realised that the method had
many shortcomings which led to either under-count or over-count. The method, which used the expert knowledge
system, came to be regarded as subjective and lent much scope for conjectures and arguments, and thus also for
controversies.
At that time there was no computer, and the main thrust of conservation was on overall preservation of wildlife
species. Besides, the entry of conservation science into wildlife management was late and rather slow. New field
methodologies, concepts and ideas, however, gradually got infused into tiger conservation practices.
Against the above backdrop, the National Tiger Conservation Authority, together with some forest officers of
Madhya Pradesh and field biologists of the Wildlife Institute of India, developed a new methodology, or a
comprehensive monitoring protocol, known as ―Monitoring Tigers, Co-predators, Prey and their Habitats‖. The
technique involved state-of-the-art technology involving geographic information system, remote sensing, camera
traps, and relevant computer software for analysis. Carried out throughout the around 3,78,000 square kilometre
forest area of the country, this ambitious exercise involved around half a million data collection man-days of the
State forest departments and thousands of trained field biologists, volunteers and observers in a well-conducted
week-long programme in January 2014.
Technically speaking, the dynamics of this increase in tiger population is more or less on expected lines. First of
all, almost all the major tiger reserves in the country have registered increases and contributed significantly to the
total population of their respective States. Managed forest areas in recognised and prominent tiger landscapes in
the country with requisite welfare factors have also added to the respective tallies. No wonder the Western Ghats
landscape, with all its diverse floral and faunal riches, has shown a substantial increase in tigers, and the
Mudumalai-Bandipur-Nagarhole- Wayanad landscape is now said to foster the world‘s largest single tiger
population. Karnataka has successfully defended its coveted status as the ―tiger State of India‖ with 406 super
cats. It is followed by Uttarakhand and Madhya Pradesh with 340 and 308 tigers respectively.
Rough road to recovery

Over the years, closer tie-ups between the National Tiger Conservation Authority and the tiger States, mutual
appreciation of each other‘s concerns/reservations, and, of course, joint commitment to conserving this
magnificent species, our national animal, have been mainly responsible for this tremendous success in
conservation.
The media, some celebrities and activists have also played their roles well. Mutual understanding between the
Centre and the States and conviction on this great cause have helped evolve a wide range of policies, strategies and
initiatives to protect and manage tigers for their natural and unhindered growth.
The tiger is a conservation-dependent species and responds perceptibly well to conservation measures. Primarily,
it only needs protection against persistent threats and availability of a good prey base. The Panna Tiger Reserve in
Madhya Pradesh is an excellent example of how a totally desolate forest can be changed into a tiger landscape in a
few years.
The history of tiger conservation in India is rather chequered, with frequent highs and lows. These situations have
caused either complacency or panic, rendering little help in conservation. The tiger‘s path to recovery was fraught

with a wide range of threats. It was the close Centre-State cooperation that gradually made things better. An
impressive network of 47 tiger reserves with a total area of around 68,677 sq. km in representative forest areas
throughout the country has lent tremendous support to the exclusivity of tiger conservation. Adherence to the
core-buffer strategy for the management of tiger reserves has ensured creation of buffer zones in almost all tiger
reserves to mainstream conservation concerns in these human-dominated areas.
Protection, the topmost conservation practice, has been strengthened throughout the year under area-specific
strategies to prevent forest and wildlife offences. Special Tiger Protection Forces were mobilised commendably in
several tiger reserves.
Attractive packages are being offered for village relocation and people are willingly moving out of protected areas
to join national mainstream of development. This scenario has helped reclaim extremely important chunks of
forest land to develop them into good wildlife habitats. The constitution of a multidisciplinary ―Tiger and Other
Endangered Species Crime Control Bureau‖ has imparted considerable professionalism in the investigation of
offences/ poaching of tigers and other high-profile endangered species.
Every tiger reserve is evaluated under a ―Management Effectiveness Evaluation‖ system at regular intervals with a
view to understanding its managerial/budgetary constraints and help it improve its management. Practice of
conservation science has also been encouraged in tiger reserves. This has resulted in scientific
monitoring/assessment of floral and faunal status, including four-yearly estimation/monitoring of tigers, co-
predators, prey and wildlife habitats. The staff of managed forests are regularly sensitised about wildlife
conservation issues.
The tiger reserve managements also organise workshops/hands-on training to acquaint these personnel with basic
protection and investigation practices. Now, it is also mandatory for working plans of managed forests to have a
separate chapter on proposed wildlife conservation activities for the respective areas. Besides undertaking the
above generic conservation practices, Madhya Pradesh has received accolades for continual improvement of
wildlife habitats in terms of prey base, rearing and training of orphaned tiger cubs for successful rewilding,
capture and translocation of tigers under reintroduction programmes, and the tremendously successful
restoration of tigers in the Panna Tiger Reserve.
No complacency in conservation
We have to accept the home truth that saving tigers in a country like India, with its inherent problems of
population and poverty that result in a great demand for rapid economic growth, is a Herculean task. It will be
self-delusional to expect that the tiger population will reach a very high mark in the coming years and will allow us
to relax and lower our guard for some years. We are left with no scope for complacency. There are still many
threats, some still unidentified, running silently counter to the conservation efforts.
Around half of the 47 tiger reserves have critical tiger habitat (CTH) zones smaller than 700 sq. km, some even
smaller than 500 sq. km. We have to find ways to expand these zones, for instance, by offering attractive monetary
packages along with permanent government jobs/ loans for business, etc., for village relocation.
This may sound fanciful, but let us not forget that it is only these protected areas that actually form source
populations of tigers. Besides, while most effective habitat corridors have already been identified, actual action to
restore and strengthen them needs to be taken early. This task is enormous and requires new approaches and
ideas, especially to deal with the human/livelihood aspect of this undertaking.
These ecological corridors are densely inhabited and form a large number of weak links. A viable tiger population
needs a good prey base, whose survival itself depends on healthy habitats. Wildlife habitats need special attention
for improvement, depending upon their types and management objectives. They also need to be monitored
regularly for any rampant adverse change such as weed infestation, appearance of unpalatable grass species,
change in grassland communities, and insect attack/disease. Many ecological intricacies are also cropping up in
wildlife ecosystems that need to be understood from the standpoint of climate change.

Wildlife managers, fortunately all science graduates and postgraduates, need to be interested in the practice of
conservation science in protected areas. This is so important that this can only be ignored at the managers‘ own
peril. Besides using basic field instruments and computer applications, undertaking management techniques and
reviewing monitoring data, they also need to be welcoming to new ideas/field methodologies emanating from
premier institutions.
India is a vibrant democracy, and no conservation project can be successful without public support. Therefore,
people, especially in tiger landscapes, need to be kept in good humour in all possible ways—for instance,
employment through conservation, eco-development of villages, joint management, ecotourism, etc.
And lastly and most importantly, protection of forests, wildlife and its habitats must form the topmost
conservation practice in protected areas. As far as conservation practices outside protected areas and tiger
reserves are concerned, it still needs a lot of patience and persuasion to inculcate this culture. Burdened with
multifarious responsibilities of pure forestry and forest activities, the staff of managed forest cannot be expected
to do much better in the near future. Training and skill development need to be pursued unceasingly.
Swiss Leaks
THE revelations following a three-month-long investigation by The Indian Express, the International Consortium
of Investigative Journalists (ICIJ) and Le Monde in Paris have once again blown the lid off banking secrecy
jurisdictions that enable individuals and corporations to hide vast amounts of unaccounted and untaxed wealth.
The Swiss Leaks project has revealed the names of 1,195 Indians, including high-profile industrialists and
politicians, with accounts in the banking giant HSBC‘s Geneva branch. The ICIJ investigation ranks India ―16th
among the countries with the largest dollar amounts in the leaked Swiss files‖. The revelations are of great
significance to India because the Supreme Court-appointed Special Investigation Team (SIT) is already looking
into the black money Indians have stashed in offshore tax havens.
As per The Indian Express report, prominent account holders in the HSBC list include businessmen Mukesh
Ambani and Anil Ambani; top diamond traders Rusell Mehta and Anoop Mehta; and former Maharashtra Chief
Minister Narayan Rane, his wife Neelam Narayan Rane and son Nilesh. The Ambanis and Narayan Rane have
denied holding any illegal bank accounts abroad.
The Swiss Leaks project is based on 60,000 leaked files, which provide details of about 100,000 HSBC clients and
their bank accounts. The clients hold more than $100 billion in total. The ICIJ website informs that the data come
from three types of internal bank files from different time periods. ―One [of these files] reflects clients and their
associated private accounts at the Swiss branch of the bank mostly from 1988 to 2007.‖
The leaked files also include a snapshot of the maximum amounts in the clients‘ accounts during 2006 and 2007
as well as notes on the clients and conversations with them made by bank employees during 2005.
On February 9, Union Finance Minister Arun Jaitley told the media: ―Some new names have been revealed whose
veracity would be checked by the authorities.‖ He said the government had sought information in more than 600
cases from foreign jurisdictions in suspected cases of tax evasion.
In 2014, the National Democratic Alliance (NDA) government constituted a 13-member SIT in pursuance of a
2011 directive of the Supreme Court. The court‘s intervention was in response to a petition filed in 2009 by the
renowned lawyer Ram Jethmalani. The United Progressive Alliance (UPA) government had dragged its feet on the
issue of black money for several years, citing international treaty obligations. It did not facilitate the setting up of
the SIT.

The SIT was assigned the responsibility of initiation of proceedings and prosecution of all issues relating to
matters arising from unaccounted money held by Hassan Ali Khan, a Pune-based horse racing punter and
businessman, and his associate, Kashinath Tapuriah, a Kolkata-based businessman. The SIT was also looking into
other known instances of stashing away of black money in foreign banks by Indians or other entities operating in
India as well as dealing with new matters with respect to unaccounted money stashed abroad that may come to
light in the course of such investigations.
The Swiss Leaks revelations are expected to considerably expand the scope of the SIT investigations. SIT vice-
chairman Arijit Pasayat said: ―We will consider all new cases where there is evidence of black money.‖
As per the latest SIT report submitted to the Supreme Court in December 2014, out of the 628 Indian account
holders in HSBC Geneva, 201 are non-residents or are non-traceable. Actionable evidence has only been found
against 427 cases.
Jaitley told the media that the Centre had completed assessment of 350 foreign accounts and tax evasion
proceedings had been initiated against 60 account holders.
Information sharing
It is important to note, however, that the data that are available to the investigating journalists at present are
leaked data provided by a whistle-blower. In 2008, Herve Falciani, an employee with HSBC in Geneva, leaked vast
amounts of data on account holders to the French government. The French government shared the data with
India in 2011. The recent investigation has, however, revealed the names of many more Indians who have
accounts with the bank.
The revelations have underlined the failure of bilateral and multilateral instruments to cope with the menace of
unaccounted wealth. Markus Meinzer of the Tax Justice Network pointed out in an email interview to Frontline:
―It reveals how the demands to exchange data simply among tax administrations are not good enough. It is
becoming increasingly clear that even in the presumably ‗well-governed‘ Organisation for Economic Cooperation
and Development [OECD] countries, data available to tax administrations has not always been used to prosecute
but is ‗lost‘ or only leads to tax collections but no prosecutions. This shows that governments must be much more
open about details, for instance on multinational corporations financial reporting.‖
In fact, the issues that remain unaddressed are the ways in which tax havens share information about untaxed
wealth in their banks with the developing world. The regulations released by the OECD on country-by-country
reporting on February 6 pose several difficulties in the way of a seamless sharing of information. In a blog post,
Richard Murphy of Tax Research UK provides a detailed criticism of the regulations. He notes that the OECD
requires that country-by-country reporting should never be available in the public domain. The OECD is backing
large multinational companies‘ demands that their accounts should remain as opaque as possible. He further
notes that the regulations provide for a global accounting standard to measure unaccounted wealth with no
discussion on a post-implementation review. He notes: ―To put it politely, these measures, in combination, appear
to be the USA trying to strangle the impact of country-by-country reporting at birth. When coupled with the
failure to share this data of developing countries, that I‘ve already noted, this is a bad day for country-by-country
reporting, and for progress in seeking to make sure that multinational corporations pay the right amount of tax
that they owe in the right country that they owe it.‖
Pooja Rangaprasad of the Centre for Budget Governance and Accountability pointed out the problems that
persisted with the OECD model for Automatic Information Exchange, ―The automatic information exchange will
start off from 2017. However, there are a number of problems with the automatic information exchange model as
it exists at present. It gives enough leverage to the tax havens such as Switzerland to refuse information to the
developing countries. Also, some developed countries continue to insist on standards of confidentiality when

information is provided to the developing countries. However, there is no global standard of confidentiality as yet
which only makes exchange of information more difficult.‖
About the future course of investigations of the names on the HSBC list, she said: ―At present, the process of
obtaining information from Switzerland is cumbersome. A large amount of information is required to be provided
about the account holders for the government to be able to obtain information about their offshore accounts.‖
She also pointed out the failure of regulatory mechanisms to rein in erring banks. ―This is not just an issue about
the HSBC bank, but a larger issue of the lack of enough checks and balances on the banking system which allows
hiding of untaxed, unaccounted wealth. As per the findings of the investigation, the bank was complicit in the
process.‖
The Swiss Leaks revelations do not address the issue of generation of black money. In 2011, the National Institute
of Public Finance and Policy (NIPFP), the National Institute of Financial Management (NIFM) and the National
Council of Applied Economic Research (NCAER) conducted a study on black money. Pooja Rangaprasad said:
―The NIPFP report was submitted last year but it is yet to be released in the public domain.‖
Estimates about India‘s black economy vary. A July 2010 report of the World Bank estimated the ―Shadow
Economies‖ of 162 countries between 1999 and 2007. The figures for India in these two years were 20.7 per cent
and 23.2 per cent of the gross domestic product (GDP) respectively. A study by the Global Financial Integrity puts
the figure at 3 per cent of the economic output between 2002 and 2011. There are problems in estimating black
money generation accurately as it is often generated through corruption and crime and involves complex offshore
financial instruments.
Network Traffic Analysis - Netra

Security agencies are handicapped in keeping an
eye on internet. No Indian agency – either
civilian or military – has the ability to intercept
the encrypted traffic which flows in and out of
the country. In January 2014, the government
introduced an internet monitoring system,
called Network Traffic Analysis aka Netra, for
capturing dubious traffic flowing through the
internet service providers. The agencies claimed
that Netra would be able to identify keywords
like, ‗bomb‘, ‗attack‘, ‗kill‘, used on social media
sites, emails, chats, instant messaging, internet
calls, blogs, etc. It turns out that the agencies
turn blind when it comes to traffic flowing on
sites where data is encrypted like Gmail,
Facebook, Twitter, WhatsApp, and Yahoo
(partly).
The watchful eye

Netra was developed by the Bengaluru-based Centre for Artificial Intelligence and Robotics (CAIR), a laboratory
under the defence research and development organisation (DRDO). The government provided this tool to the
cabinet secretariat, intelligence bureau and anti-terror bodies of state polices. Agencies like enforcement
directorate, directorate of revenue intelligence, signals intelligence are said to be using Netra. Netra is believed to
be part of the central monitoring system, which provides for telephonic and internet related communications. It is

being deployed by the centre for development of telematics (CDOT). The monitoring, however, has not fetched
results so far.
Typically, the internet service providers have gateways to pass traffic flowing through internet lines at city, state
and national levels. To intercept this data it is mirrored in a separate server in real time and analysed for
keywords. The interception system decodes the filtered information and presents it in a readable format.
Since Netra ‗probes‘, the monitoring tool deployed at gateways, cannot decrypt the encrypted data, the whole
exercise becomes pointless. The agencies find themselves helpless in case of internet calls, where data is
encrypted. Calls made through voice over internet protocol (VoIP) are also difficult to trace, as the procedure for
tracing them is long and cannot be done in real time. This all owes to poor expertise in the country in cryptology.
Agencies can only request service providers like Google, Facebook and Twitter, who have US-based servers, to
provide communication details. A few agencies are learned to have some ‗arrangements‘ with their US
counterparts; and sometimes they succeed in obtaining data. It is not without reason that the national security
agency (NSA) of the US is said to be the top recruiter of mathematicians, who help it in enhancing the
cryptography expertise, said a senior official who has served at central intelligence organisation. The Indian
communications interception system is also inadequate as agencies don‘t have enough high-end hardware and
software.
One of the ways to monitor internet is to intercept at the national gateway, where undersea cables enter the
geographical boundary. The information flowing in the form of IP packets through internet cables carry huge data;
running into several Terabit and Pitabit. The agencies are not equipped to deal with such mammoth data. Several
experts Governance Now spoke to believed that law enforcement agencies (LEAs) have not kept up with advances
in communication technologies.
It is important to note here that the agencies have adequate resources to monitor the GSM traffic – calls made
through mobile phones. It could be done centrally, said Dr Arvind Chaturvedi, additional SP, special task force,
Uttar Pradesh police. One need not be present physically to tap a phone call. The Uttar Pradesh police, however, is
not using Netra; it is using a solution developed by a US-based agency. It is also facing the same encryption
challenge like in the case of Netra.
Surveillance – an uphill task

VK Mittal, a former senior scientist with NTRO, said none of the central intelligence and investigation agencies
have the manpower and (technical) resources to keep a watch over the internet. Communication technology has
become too complex to be managed by the existing expertise, he added.
―A committee was formed in 1995 to set up a lab (CAIR) for devising a cyber interception system. Later, the DRDO
was also tasked with developing an internet monitoring system. It has been more than two years and we have still
not progressed much,‖ Mittal said.
Additionally, one can search for a number of spoofing and encryption software freely available on net. They can be
easily downloaded in computers and mobile phones and used for making calls and messages which can‘t be traced
by the intelligence agencies. Both Chaturvedi and Mittal believe no Indian agency has expertise to deal with these
new applications.
The officials also think that agencies are not even exploring and analysing information available in the public
domain including social media sites, referred as open source intelligence (OSI). Analysis of this information is not
appreciated by the LEAs. Ironically, it is one of the most common tool used by businesses for targeting their
products and services. Messages posted on social media sites are analysed to ascertain public mood and
sentiments under OSI.

Applications meant for extracting data, called web crawler, are deployed to source data from social media and
other websites. Crawlers also extract data for specific keywords. This information is then analysed and aggregated
into actionable input.
Twitter provides ‗firehose access‘, an analysis of tweets, sentiment, key influencers, trend, geolocation, profile and
clout score of users on subscription basis. ―Media agencies and multinational brands subscribe to this service to
strengthen their products and customer base,‖ said Tarun Wig, consultant, INNEFU, a Delhi-based company
providing cyber security and open source intelligence solutions.
―The agencies don‘t take social media seriously. They don‘t have tools for open source intelligence,‖ said a senior
official with another organisation which provides cyber forensics and communications technologies.
―For police, social media is another beat. Nonetheless, it is still not a priority for the law enforcement agencies,‖
said Muktesh Chander, special commissioner of police, Delhi police. He has also served as director at NTRO.
During a recent visit to NTRO Ajit Doval, national security advisor, instructed formation of a joint working group
committee comprising members of IB and NTRO for cyber monitoring. Several such committees have been
formed in the last 10-12 years and nothing has come out, Mittal said.
There is also an issue of coordination and data sharing between Indian LEAs and foreign agencies. A New York
Times investigation, quoting reports leaked by ex-NSA agent Edward Snowden, showed that the 26/11 Mumbai
attack could have been averted had Indian, US and British agencies shared computer data sourced by these
agencies.
In August 2012, fake messages and pictures related to Assam violence were circulated. This led to an exodus of
people belonging to the northeast from Bengaluru and Pune. A video of the lynching of a couple of youths,
apparently shot in Pakistan, went viral on WhatsApp during Muzaffarnagar communal violence. It was used to
aggravate hatred against Muslims. Also, an online propaganda came to light when a British news channel exposed
a Bengaluru-based techie Mehdi Masroor Biswas. He ran Twitter handle @ShamiWitness, which had nearly
18,000 followers, some of them included likeminded IS sympathisers in Europe and West Asia. By the time
agencies responded in all these cases, the damage was already done.
What needs to be done?

It is imperative to improve coordination between Indian agencies and their foreign counterparts. Equally
important, said Atul Gupta, partner, IT advisory, KPMG, is enhancing the skillset of LEA officials to keep pace
with changing technologies. A national cryptology centre is also needed. This will not only help the security
establishment, but also strengthen the e-commerce ecosystem. Also, there is an immediate need to curb the brain
drain from DRDO and CAIR. Since financial compensation in the government is too low in comparison to the
private sector, youngsters do not stay beyond two years in these organisations, explains Gupta.

Solution to eliminate black money lies in India
Prime minister Narendra Modi has no doubt hit the global sweet spot by identifying the corrosive potential of
black money to slowly eat away the entrails of the painstakingly architected world economic and political system.
In many ways it has already left its acidic burn marks in several arenas, ranging from the sudden resurgence of
transnational drug cartels dealing with ultra high-end chemical cocktails to international terrorism spearheaded
by the likes of ISIS, and closer home by Hafiz Saeed and his various offshoot units.
Black money is a strange animal.

For one, it really doesn‘t have any
colour. That is a minor aside.
What makes it really complicated
is the multiple forms that it takes,
and manner in which it ingratiates
itself in both the formal and
informal sectors of the world
economy. Any tranche of money or
parts of it that cannot be fully
traced by the institutional
frameworks can possibly be
defined as black money. In short,
any money that cannot be
accounted for by the national
and/or multilateral formal
financial systems can possibly be
defined as black money.
Like most things in life, black

money has two sides to it: a demand side and a supply side. Modi is primarily referring to the demand side,
essentially asking countries to either stop their nudge-and-wink policy towards so-called tax and banking havens
or being one. He‘s right, and his solution of bringing in greater financial transparency in multilateral transactions
and global trade through a digitally networked system of monitoring and evaluation is something that has been
advocated for some time by think tanks, scholars and multilateral institutions like Organisation of Economic
Cooperation and Development (OECD). Modi‘s got the big picture right in pointing towards the direction of
digitalising all forms of money so that transactions are electronically recorded.
In the way Modi is looking at black money, however, there is the supply side problem that‘s not acknowledged or
addressed. Modi‘s digital solution, while the right step forward, cannot work if the supply side dynamics of the
black market economy, or for that matter informal economy, is not taken into consideration.
To explain it through an analogy, Modi‘s demand side solution is like providing a high-definition digital television
even when the cabling system and the signals are still delivering analogue signals. The real challenge for Team
Modi is to seriously start looking at digital financial solutions along with an overhaul of the administrative, tax
and monetary systems to decisively take care of the supply side dynamics.
One of the main breeding grounds for an informal economy and a parallel system of money transfer and
commercial transaction is the cesspool created by the poor and inconsistent quality of the governance framework.
There are multiple strands to this complex cesspool. It has the capacity to generate finances in a self-sustaining
manner required to nurture it. Additionally, it also has the ability to lead transactions that start in the formal
monetary sector, tracked and above board, into a nebulous world where it turns untraceable and by default

unaccountable. This is where Modi and his team will have to make a distinction between ‗big‘ black money and
‗small‘ black money. Modi‘s international push, for instance, is mainly targeted at big black money.
For sake of understanding and convenience, big black money can be defined as massive chunks of money ranging
in crores that have been stashed away in hidden offshore accounts or in informal financial systems and
instruments, popularly known in India as the hawala trade. Such chunks are usually the result of kickbacks and
payouts, or worse the product of siphoning off of the government coffers. In short big black money is the product
of big corruption. Both, ironically, are far better organised than the entire formal national and multilateral
financial system. They have to be, in order to circumvent the rules, regulations and enforcement mechanisms of
the formal system. And both are an indication of the hollowness of the governance structure that has allowed the
evolution of a parallel ‗formalised‘ structure for the easy transfer, transport and a transaction system for big black
money.
Then there is small black money. Again, for the sake of convenience and understanding, small black money can be
defined as amounts as tiny as Rs 50 that can get exchanged between people in an informal and untraceable
manner. By itself, it is often seen as an issue not worthy of concerted policy attention, but in conjunction with
other such small amounts the network effect of small black money is far more corrosive than big black money.
Let‘s take an example, a use case as the management consultants would call it. Say you are a tax-paying employee
of a leading software firm in India. Every single paisa of your salary is completely above board; your taxes and
provident fund contributions are deducted at source, and you invest certain part of your savings in completely
above-board tax-friendly instruments. Let‘s assume for a moment that your driving licence is up for renewal.
Finding the entire process of getting it done cumbersome you approach an agent and give him Rs 2,000.
Of course, there is no receipt. The agent gives an officer Rs 1,000 at the local RTO and you get your licence. Now,
that Rs 2,000, which started its journey as accounted cash, has been suddenly converted into unaccounted money.
The financial system of checks and balances have lost track of it. The agent and officer can either pump it back
into the formal system – buying a shirt for Rs 1,000 from a retail store – or keep it in some locker or under the
mattress for some other purpose. Usually it‘s a mix of both, with say Rs 500 going towards grocery shopping in a
retail store, and rest being stashed away. In short, only half the original value gets back into the formal financial
system. Now, imagine this daily reality for 300 million middle-class Indians.
Now, imagine it for 1.2 billion Indians. Small black money is actually several times larger than the big black
money. It impacts the daily quality of life or governance as people understand it. Modi needs to focus on tackling
small black money if he is serious about substantially constricting the life-flow to big black money. To revisit the
TV analogy, small black money is like the cabling system carrying analogue signals. So what‘s the solution? There
are three concerted steps that Modi and his team need to start taking on a war-footing. Two of these steps are
completely in the nature of digital technology solutions, and one is in the form of creating an enabling policy,
administrative and tax environment for the first two steps to have their necessary impact.
The first step is to start creating an integrated system of financial monitoring, transaction and delivery so that
every single paisa is tracked.
There are efforts to bring in more people into the formal financial system – the jan dhan yojana is one such
attempt. The ultimate aim, however, should be to integrate all governance, corporate and transaction services into
one single digital card. There are, of course, privacy concerns, but in my mind stopping the corrosion of daily life
far outweighs any other concern. The ideal aim, sort of a vision, should be to completely eliminate paper money
from our daily lives. The technology, platforms, algorithms, hardware, delivery systems are all available.
Nothing, actually, is in the concept or even the prototype stage. There are proven use cases and solutions
available, all of course existing in isolation. If Modi and his team are serious about implementing his pre-poll

promise of ‗maximum governance and minimum government‘, this massive technology push has to be made. One
need not look far to understand how the passport sewa kendras (PSKs) have practically made agents and sundry
officials powerless, and moneyless.
The second step is to remove physical interfaces as much as possible in day-to-day administrative and corporate
systems. Today, electronic and digital governance solutions are being implemented in a manner in which only
certain portions of the work flow are digitalised. Let‘s take Aadhaar card as an example. While the capturing of the
biometric and physical data is completely digital and so is the issuing of the card, the last-mile delivery to the
recipient is through India Post. This is where the majority of problems come up, in terms of non-delivery and
cases of postmen asking for money.
Digital governance solutions have to essentially convert every single part of the work-flow into one self-sustaining
loop, where the customer/recipient has the option to demand for a physical interface only in the rare case of the
loop breaking. Moreover, electronic governance solutions are still not integrating monetary systems and financial
transactions, say the payment of fees for several civic services, into the overall digital governance framework.
The third step is to immediately weed out unwanted and unnecessarily policy frameworks, rules and regulations.
Such a clean-up is required in order to change the mindset of the bureaucratic framework from one of leverage
and power to that of service delivery. To explain this case, take the so-called tax deducted at source (TDS)
certificates and tax returns. Not only are you expected to file taxes, which is completely legitimate and justified
and which the government should be tracking completely, you are also supposed to send a certificate to the
government that you are paying your taxes, a sort of sworn affidavit (another one of those mindless exercises), but
also additionally give the government the computation that you have made in calculating the taxes due to the
government. In short, both these administrative tools essentially make you or your organisation an unpaid book-
keeper for the government. It‘s a symptom of a larger mindset that treats people, businesses and organisations as
subjects who need to be eternally grateful to the powers that be. Such a mindset is visible in every single
governance or civic service supposedly to be provided by the government. Digital solutions will not work if the
untamed jungle of policy, administrative, tax and governance framework is not weeded out thoroughly.
Modi and his team have got their sights on the big chunks of money stashed away in offshore accounts, financial
instruments and properties. It‘s worthy cause. Yet their commitment towards fundamentally eliminating black
money will always be treated with doubt unless they move quickly and decisively in rolling out digital solutions
that eliminate physical governance interfaces and put a lid on small corruption and small black money and make
our lives liveable.

Base Year Revision
The government has released a new series of national income accounts, revising the base year from 2004-05 to
2011-12. The revision, along with reclassification of various components within the GDP, has pushed India‘s real
growth estimate for 2013-14 to 6.9 per cent from the earlier 5 per cent (at market prices). This article explains the
logic of base year changes, and how it impacts growth.
What is a base year? Why is it needed?
A base year is a reference year with respect to which GDP numbers for the following as well as preceding years are
computed. Because the patterns of consumption and the commodity composition of the economy change, any
comparison among numbers needs to be pegged to a reference year.
Why does it have to be revised?

Precisely because the indicators are fluid. Also, changes in ways of data compilation, new classification systems,
and new sources of data need to be factored in. Incorporating new data sets results in corrections in levels of GDP,
which affect a wide range of indicators such as trends in public expenditure, taxes and public sector debt.
How often is the base year revised?

Economic structures undergo significant changes every 5-10 years. Some research houses say the base year should
be changed every five years to update/estimate national accounts in line with the latest available data. All
countries revise base years of national accounts in accordance with recommendations of the SNA (System of
National Accounts), an internationally agreed upon set of standards.
How does the change in base year impact growth numbers?

Annual growth rates are not impacted significantly. This is because the increase in the size of the economy takes
place for all following and preceding years. The change from 5 per cent to 6.9 per cent appears large, but these two
numbers are with reference to different base years, and are pegged to different sets of data.
How many times have base years been revised in India?

The first national income estimates published in 1956 took FY ‘49 as the base year. Since then there have been
seven changes, including the latest one, in which the base year of national accounts was changed from FY ‘05 to
FY ‘12.
What major changes have been incorporated in the current series?

The corporate sector — both manufacturing and services — will be covered comprehensively by incorporating the
annual accounts of companies filed with the Ministry of Corporate Affairs. Partnership firms covered under

Limited Liability Partnership Act have been covered too. Activities of rural and urban local bodies have been
covered better. The series will also incorporate results of recent NSS surveys, and adopt an ―Effective Labour
Input Method‖ for un-incorporated manufacturing and services enterprises.
Kerosene subsidy needs reform

The finance minister plans to scrap the supply of subsidised kerosene through the public distribution system
(PDS) and high time, too. To begin with, why has the kerosene subsidy needed reform for decades and yet reform
never materialised?
Kerosene obtained through the PDS, being cheaper, is used to adulterate diesel and petrol. Kerosene leakages in
the PDS are estimated to be 40 per cent of total allocations. The diversion is lucrative for distributors, who bribe
government officials to get licences to distribute the fuel. Kerosene and petrol station dealerships are much in
demand as they fetch huge returns through fuel diversion. The government has quotas for awarding such
dealerships. In 2004, when corruption was discovered in the awarding of service-station concessions, the
Supreme Court cancelled all contracts and ordered the government to distribute them more transparently.
Ending the subsidy would put an end to the adulteration that causes a loss to the government treasury. Second,
kerosene blended with petrol and diesel causes engine damage, affecting vehicle life. A third benefit of ending the
subsidy would be that air pollution from the inefficient combustion of adulterated fuel would be reduced. Fourth,
the substitution of kerosene with solar lamps could help reduce the oil import bill. Fifth, fuel diversion has meant
that, sometimes, India‘s poor have to go without lights or are unable to cook, because they cannot access their
quota of kerosene even though the fuel is abundant at higher prices on the parallel market.
The B.K. Chaturvedi Committee of 2008, using NSS data from 2005, noted that rural households use kerosene
primarily for lighting and only 1 per cent use it for cooking, a fact confirmed by Census 2011. With the increase in
electrification, the rural use of kerosene for lighting has fallen. The committee recommended that rural
households below the poverty line should be given one solar lantern, which would only cost roughly two-thirds of
the total annual subsidy on PDS kerosene. This policy was not implemented.
Reform has been tried before. In 2005, global positioning systems were fitted to kerosene distributor trucks,
aimed at preventing the diversion of fuel, but the programme was wound up in 2008. In 2006, the government
introduced the marking of subsidised kerosene with a dye — once again, the programme closed in 2008. Those
who benefit from the corruption proved too powerful to allow reform. In 2007, the petroleum ministry wanted to
implement a foolproof smartcard system as an experiment in three states, Bihar, Maharashtra and Uttarakhand.
However, all three declined the offer and the plans fell through.
Over the last decade, if PDS kerosene had been distributed in two-litre polypacks, packaged before they reached
the refinery gates, the ―consumption‖ of kerosene would have declined sharply. It could not have been diverted as
easily as it can be from the current cylinders. Savings from confining the kerosene subsidy to BPL households
would release more resources than needed to supply all BPL households with solar lamps (at Rs 1,800 per piece ).
The cost of solar lamps for the entire BPL population would be only Rs 7,350 crore. But solar lamps will only be
given out slowly. Until then, access to kerosene would need to continue. We can easily estimate the kerosene
needs of the BPL population.
As for LPG, we suggest that only BPL households be eligible for kerosene. We estimate, based on NSS 2011-12,
that 94.5 per cent of rural BPL households (or nearly 41 million households) use kerosene mostly for lighting. In
urban areas, 77 per cent of BPL households (or nearly 8 million households) use kerosene, presumably mostly for
cooking, and for lighting only during power outages. In other words, a total of 49 million BPL households use

kerosene in India. Presumably, many households above the poverty line continue to use kerosene too, for back-up
lighting and cooking needs, but we are assuming that they would not be eligible for the subsidy in any case.
Assuming 10 litres of kerosene is used by each BPL household monthly, and the PDS retail selling price is Rs 14.96
(as in 2014), the annual out-of-pocket expenditure for all BPL households is Rs 8,817 crore. The subsidy cost to
the government was Rs 28,215 crore in 2011-12. By confining the kerosene subsidy to BPL households, Rs 19,397
crore could be saved annually by the government.
Thankfully, in 2015, the Centre plans to ask states to provide subsidised kerosene only to unelectrified households.
States with near 100 per cent electrification will be incentivised to become kerosene-free. In the remaining states,
unelectrified households can choose between a cash subsidy in lieu of kerosene allocation and an upfront subsidy
for greener solar lighting systems. For budget 2015-16, cuts in the Centre‘s social sector spending allocation is
aimed at aligning plan expenditure with subdued revenue collections. Hopefully, kerosene subsidy reform will not
be sabotaged this time around.
Coal India Disinvestment

The government can justifiably feel a sense of relief at the success of the recent round of Coal India Limited (CIL)
disinvestment which has brought in some much-needed funds to its anaemic coffers. In what was the biggest
equity offering ever in the country, the offer for sale of 10 per cent of its stake in CIL fetched the government a
whopping Rs.24,557 crore, more than half of the budgeted proceeds of Rs.43,425 crore from disinvestment this
fiscal year. To put the CIL sale in perspective, the government had managed to raise just Rs.1,719 crore until now
in this fiscal through the sale of shares in Steel Authority of India. If the government is to keep its promise of
keeping the fiscal deficit at 4.1 per cent of GDP in 2014-15, achieving the budgeted revenues from disinvestment is
crucial. The budgeted fiscal deficit for the entire year was exceeded in the first nine months until December 2014
since tax revenues did not grow at the expected pace. The government will also have to look at non-tax revenues
such as from disinvestment to fill the fiscal hole. Hence the spectrum auction, coming up in March, and the
disinvestment in other PSUs such as ONGC and NHPC, assume great importance.
The CIL disinvestment may not have been so successful but for some generous help from domestic institutional
investors, particularly insurance companies. As much as Rs.11,360 crore, which is half of the total sum raised,
came from insurance companies led by the LIC, with the latter accounting for a bulk of the applications in this
category. Of course, the LIC may have seen genuine promise in CIL while investing its money. Yet, this is nothing
more than money moving from one hand of the government to the other given that the LIC is wholly owned by the
Centre. Of course, foreign institutional investors (FIIs) have also put in Rs.5,919 crore in the CIL offer, which is
encouraging. The government would do well to reappraise the entire disinvestment programme which has so far,
disappointingly, amounted to nothing more than selling off a few pieces of family silver to tide over difficult times.
What is required is a privatisation programme whose objective will not merely be to raise funds for the exchequer
but to reform the public sector space. The government should identify public sector units that are languishing for
want of capital and technology and bring in strategic private partners to rejuvenate them. The trade unions too
will be on board to support such schemes that will safeguard jobs in these companies. Eventually, the Central
government should divest itself of enterprises in sectors such as steel and cement production, focussing instead on
improving social services such as health care and education.

Stock Markets: Explained
Let's start with some basic definitions. A share of
stock is literally a share in the ownership of a
company. When you buy a share of stock, you're
entitled to a small fraction of the assets and
earnings of that company. Assets include
everything the company owns (buildings,
equipment, trademarks), and earnings are all of
the money the company brings in from selling its
products and services.
Why would a company want to share its assets

and earnings with the general public? Because it
needs the money. Companies only have two ways
to raise money to cover start-up costs or expand the business: It can either borrow money (a process known
as debt financing) or sell stock (also known as equity financing).
The disadvantage of borrowing money is that the company has to pay back the loan with interest. By selling stock,
however, the company gets money with fewer strings attached. There is no interest to pay and no requirement to
even pay the money back at all. Even better, equity financing distributes the risk of doing business among a large
pool of investors (stockholders). If the company fails, the founders don't lose all of their money; they lose several
thousand smaller chunks of other people's money.
Perhaps the best way to explain how stocks and the stock market work is to use an example. For the remainder of
this article, we'll use a hypothetical pizza business to help explain the basic principles behind issuing and buying
stock. We'll start with the reasons why a restaurant owner would issue stock to the public.
Selling Shares
Let's say that you've always dreamed of opening a pizzeria. You love pizza, and you've done your homework to
figure out how much it would cost to launch a new pizza business and how much money you could expect to earn
each year in profit. The building and equipment would cost $500,000 up front, and annual expenses (ingredients,
employee salaries, utilities) would cost an additional $250,000. With annual earnings of $325,000, you expect to
make a $75,000 profit each year. Not bad.
The only problem is that you don't have $750,000 (building + equipment + expenses) in cash to cover all of those
costs. You could take out a loan, but that accrues interest. What about finding investors who would give you
money in exchange for a share of the ownership of the restaurant?
This is the logic that companies use when they make the decision to issue stock to private or public investors. They
believe that the company will be profitable enough that investors will see a good return. In this case, if investors
paid a total of $750,000 for shares in the pizza restaurant, they could expect to earn $75,000 annually. That's a
solid 10 percent return.
As the owner of the pizza restaurant, you can set the initial price of the company, as well as the total number of
shares of stock you want to sell. Interestingly, the price of the pizza business doesn't have to correlate with the
actual value of the assets or the company's current profitability. You can set the price so that it reflects the future
value of the investment. For example, if you set the price at $750,000, investors could expect a 10 percent return.
If you set the price at twice that much, $1,500,000, investors would still get a respectable 5 percent return.

If you issue a lot of shares, that would lower the price of each individual share, perhaps making the stock more
attractive to lone investors. Another consideration is ownership. Each person who buys a share of stock essentially
owns a piece of the company and has a say in how the company is run. We'll talk more about shareholders in a
later section. But for now, it's important to understand that, as the owner, you may wish to buy a majority of the
available shares yourself so that you remain in majority control of the company.
Let's talk about stock exchanges - the clearinghouses where the world's biggest companies sell shares by the
millions each day.
A Stock Exchange
Let's get back to our pizzeria example. If you want to
launch one and are interested in attracting a pool of
investors, where would you find these people? You
could place an ad in the paper or online, or you could
simply contact friends and family. But what if some
of your initial investors decide a year later that they
want to sell their shares? They would each have to go
out and find a new buyer, which might prove
difficult, especially if the company isn't performing
very well.
A stock market solves this problem. Stocks in publicly traded companies are bought and sold at a stock
market (also known as a stock exchange). The New York Stock Exchange (NYSE) is an example of such a market.
In your neighborhood, you have a "supermarket" that sells food. The reason you go the supermarket is because
you can go to one place and buy all of the different types of food that you need in one stop. The NYSE is a
supermarket for stocks. The NYSE can be thought of as a big room where everyone who wants to buy and sell
shares of stocks can go to buy and sell.
Modern stock exchanges make buying and selling easy. You don't have to actually travel to New York to visit the
New York Stock Exchange. You can call a stock broker who does business with the NYSE, or you can buy and sell
stocks online for a small fee.
Most of the trading in the Indian stock market takes place on its two stock exchanges: the Bombay Stock
Exchange (BSE) and the National Stock Exchange(NSE). The BSE has been in existence since 1875. The NSE, on
the other hand, was founded in 1992 and started trading in 1994. However, both exchanges follow the same
trading mechanism, trading hours, settlement process, etc. At the last count, the BSE had about 4,700 listed firms,
whereas the rival NSE had about 1,200. Out of all the listed firms on the BSE, only about 500 firms constitute
more than 90% of its market capitalization; the rest of the crowd consists of highly illiquid shares.
If these exchanges didn't exist, buying or selling stock would be a lot harder. You'd have to place a classified ad in
the newspaper, wait for a call and haggle on a price whenever you wanted to sell stock. With an exchange in place,
you can buy and sell shares instantly.
Stock exchanges have an interesting side effect. Because all the buying and selling is concentrated in one place,
and since it's all done electronically, we can track the constantly fluctuating price of a stock in real time. Investors
can watch, for example, how a stock's price reacts to news from the company, media reports, national economic
news and lots of other factors.
For example, all publicly traded companies need to issue quarterly earnings reports through the Securities and
Exchange Board of India (SEBI). If those earnings are lackluster, shareholders might decide to sell some of their

stock, which would lower the stock price. But if the newspaper reports an overall increase in the popularity of
pizza, more people might buy shares and the price would go back up.
Shareholders
Shareholders are the people who own shares of stock in a company. Collectively, the shareholders are the owners
of the company, since each share of stock entitles the owner to a say in how the corporation is run. Shareholders
elect a board of directors to make the company's major decisions, such as the number of shares to be issued to the
public.
Interestingly, not all corporations decide to have public

shareholders. Corporations can choose to be privately or
publicly held. In a privately held company, the shares of
stock are all owned by a small group of people who know
one another. They buy and sell their shares amongst
themselves. A publicly held company is owned by
thousands of people who trade their shares on a public
stock exchange.
Trying to please thousands of anonymous shareholders is

a difficult task for any corporation. So why do they do it?
The main reason that companies choose to issue stock to
the public is to raise a large quantity of investment capital quickly through an initial public offering (IPO). The
corporation might sell one million shares of stock at $20 a share to raise $20 million in a short amount of time
(that's a simplification, however -- the brokerage house in charge of the IPO will extract its fee from the $20
million). The company then invests the $20 million in equipment and employees.
But what do the shareholders get out the relationship? If the corporation chooses to pay an annual dividend, then
shareholders will receive a cut of the profits every year. Very few young companies issue dividends, however.
They're more likely to issue growth stocks, in which all of the profits are reinvested. In this case, shareholders are
banking on the fact that the right corporate management will help the company grow and generate even more
profit. It's this potential for future success that will help determine the stock price on the open market. And if the
shareholder holds onto a growth stock for long enough, he could eventually sell it for a significant gain.
Stock Prices
Stock prices aren't fixed. From the second a stock is sold to the public, its price will rise and fall based on free
market forces. It is these ever-shifting market forces that make short-term movements of the stock market so
difficult to predict. And that is precisely the reason why short-term stock market investing is so risky.
Market forces aren't a total mystery, though. We know, for example, that prices rise and fall primarily because of
changes in supply and demand. In a free market system, the price of any commodity will rise as demand for it
increases, as long as there's a fixed amount of the commodity in circulation. The same is true for stocks. If there
are a fixed number of shares in circulation, then the price of the stock will rise as more people want to buy it, and
fall as more people want to sell it.
Beyond supply and demand, the logic behind stock prices gets a little fuzzy. Since supply of stock is generally
fixed, the riddle is to figure out what influences demand. Why do people want to buy or sell a certain
stock? Earnings and profit certainly play a large role. If your pizzeria posts record sales in the most recent quarter,
then it will probably attract more investors, pushing up the stock price. But earnings only tell half the story. There
is local and global competition to consider, the rising costs of pizza ingredients, the possible unionization of pizza

delivery boys and more. Professional stock analysts and brokers (as well as amateur investors) try to take all of
these factors into account when trying to predict the future movements of a stock's price.
After all, it's the change in a stock's price over time that determines its ultimate value to shareholders. The key to
investing is "buy low, sell high." You want to buy a stock at $2 a share and then sell it when it's $20 a share. The
safest way to buy low and sell high is to invest in a slow growth stock -- usually an established company with a
long track record of success like Coca-Cola or IBM -- and hold onto it for many years. This allows the stock price to
weather short-term fluctuations, but average steady growth over time. A much riskier investment strategy is to try
to pick the "next big thing" and cash out quickly after the stock price skyrockets.
The inherent risk of the stock market is that any number of forces -- logical or otherwise -- can push prices up or
down. In recent years, we've witnessed the boom and consequent bust of two large stock market bubbles that
formed around the Internet sector in the early 2000s and the housing market six years later. In both cases,
commodities became overvalued, and investors poured money into unprofitable or unsustainable markets. When
the truth came out, investors rushed to sell, sending stock prices through the floor.
Mutual Funds
A mutual fund is a professionally-managed trust that pools the savings of many investors and invests them in
securities like stocks, bonds, short-term money market instruments and commodities such as precious metals.
Investors in a mutual fund have a common financial goal and their money is invested in different asset classes in
accordance with the fund‘s investment objective. Investments in mutual funds entail comparatively small
amounts, giving retail investors the advantage of having finance professionals control their money even if it is a
few thousand rupees.
Mutual funds are pooled investment vehicles actively managed either by professional fund managers or passively
tracked by an index or industry. The funds are generally well diversified to offset potential losses. They offer an
attractive way for savings to be managed in a passive manner without paying high fees or requiring constant
attention from individual investors. Mutual funds present an option for investors who lack the time or knowledge
to make traditional and complex investment decisions. By putting your money in a mutual fund, you permit the
portfolio manager to make those essential decisions for you.
A mutual fund is set up in the form of a trust that has a Sponsor, Trustees, Asset Management Company (AMC).
The trust is established by a sponsor(s) who is like a promoter of a company and the said Trust is registered with
Securities and Exchange Board of India (SEBI) as a Mutual Fund. The Trustees of the mutual fund hold its
property for the benefit of unit holders. An Asset Management Company (AMC) approved by SEBI manages the
fund by making investments in various types of securities.
The trustees are vested with the power of superintendence and direction over the AMC. They monitor the
performance and compliance of SEBI regulations by the mutual fund. The trustees are vested with the general
power of superintendence and direction over AMC. They manage the performance and compliance of SEBI
Regulations by the mutual fund.

Disinvestment: Explained
Definition of Disinvestment
At the very basic level, disinvestment can be explained as follows:
―Investment refers to the conversion of money or cash into securities, debentures, bonds or any other claims on
money. As follows, disinvestment involves the conversion of money claims or securities into money or cash.‖
Disinvestment can also be defined as the action of an organisation (or government) selling or liquidating an asset
or subsidiary. It is also referred to as ‗divestment‘ or ‗divestiture.‘ In most contexts, disinvestment typically refers
to sale from the government, partly or fully, of a government-owned enterprise. A company or a government
organisation will typically disinvest an asset either as a strategic move for the company, or for raising resources to
meet general/specific needs.
Objectives of Disinvestment
The new economic policy initiated in July 1991
clearly indicated that PSUs had shown a very
negative rate of return on capital employed.
Inefficient PSUs had become and were continuing to
be a drag on the Government‘s resources turning to
be more of liabilities to the Government than being
assets. Many undertakings traditionally established
as pillars of growth had become a burden on the
economy. The national gross domestic product and
gross national savings were also getting adversely
affected by low returns from PSUs. About 10 to 15 %
of the total gross domestic savings were getting
reduced on account of low savings from PSUs. In
relation to the capital employed, the levels of profits
were too low. Of the various factors responsible for low profits in the PSUs, the following were identified as
particularly important:
Price policy of public sector undertakings

Under–utilisation of capacity
Problems related to planning and construction of projects
Problems of labour, personnel and management
Lack of autonomy
Hence, the need for the Government to get rid of these units and to concentrate on core activities was identified.
The Government also took a view that it should move out of non-core businesses, especially the ones where the
private sector had now entered in a significant way. Finally, disinvestment was also seen by the Government to
raise funds for meeting general/specific needs. In this direction, the Government adopted the 'Disinvestment
Policy'. This was identified as an active tool to reduce the burden of financing the PSUs. The following main
objectives of disinvestment were outlined:
To reduce the financial burden on the Government

To improve public finances
To introduce, competition and market discipline
To fund growth

To encourage wider share of ownership
To depoliticise non-essential services
Importance of Disinvestment
Presently, the Government has about Rs. 2 lakh crore locked up in PSUs. Disinvestment of the Government stake
is, thus, far too significant. The importance of disinvestment lies in utilisation of funds for:
Financing the increasing fiscal deficit
Financing large-scale infrastructure development
For investing in the economy to encourage spending
For retiring Government debt- Almost 40-45% of the Centre‘s revenue receipts go towards repaying public
debt/interest
For social programs like health and education
Disinvestment also assumes significance due to the prevalence of an increasingly competitive environment, which
makes it difficult for many PSUs to operate profitably. This leads to a rapid erosion of value of the public assets
making it critical to disinvest early to realize a high value.
Different Approaches to Disinvestment

There are primarily three different approaches to disinvestments (from the sellers‘ i.e. Government‘s perspective)
Minority Disinvestment - A minority disinvestment is one such that, at the end of it, the government retains a
majority stake in the company, typically greater than 51%, thus ensuring management control. Historically,
minority stakes have been either auctioned off to institutions (financial) or offloaded to the public by way of an
Offer for Sale. The present government has made a policy statement that all disinvestments would only be
minority disinvestments via Public Offers.
Examples of minority sales via auctioning to institutions go back into the early and mid 90s. Some of them were
Andrew Yule & Co. Ltd., CMC Ltd. etc. Examples of minority sales via Offer for Sale include recent issues of Power
Grid Corp. of India Ltd., Rural Electrification Corp. Ltd., NTPC Ltd., NHPC Ltd. etc.
Majority Disinvestment - A majority disinvestment is one in which the government, post disinvestment,
retains a minority stake in the company i.e. it sells off a majority stake. Historically, majority disinvestments have
been typically made to strategic partners. These partners could be other CPSEs themselves, a few examples being
BRPL to IOC, MRL to IOC, and KRL to BPCL. Alternatively, these can be private entities, like the sale of Modern
Foods to Hindustan Lever, BALCO to Sterlite, CMC to TCS etc.
Again, like in the case of minority disinvestment, the stake can also be offloaded by way of an Offer for Sale,
separately or in conjunction with a sale to a strategic partner.
Complete Privatisation - Complete privatisation is a form of majority disinvestment wherein 100% control of
the company is passed on to a buyer. Examples of this include 18 hotel properties of ITDC and 3 hotel properties
of HCI. Disinvestment and Privatisation are often loosely used interchangeably. There is, however, a vital
difference between the two. Disinvestment may or may not result in Privatisation. When the Government retains
26% of the shares carrying voting powers while selling the remaining to a strategic buyer, it would have
disinvested, but would not have ‗privatised‘, because with 26%, it can still stall vital decisions for which generally a
special resolution (three-fourths majority) is required.
For the first four decades after Independence, the country was pursuing a path of development in which the public
sector was expected to be the engine of growth. However, the public sector overgrew itself and its shortcomings
started manifesting in low capacity utilisation and low efficiency due to over manning, low work ethics, over
capitalisation due to substantial time and cost over runs, inability to innovate, take quick and timely decisions,

large interference in decision making process etc. Hence, a decision was taken in 1991 to follow the path of
Disinvestment.
Historical Perspective
Period from 1991-92 - 2000-01
The change process in India began in the year 1991-92, with 31 selected PSUs disinvested for Rs.3,038 crore. In
August 1996, the Disinvestment Commission, chaired by G.V. Ramakrishna was set up to advice, supervise,
monitor and publicize gradual disinvestment of Indian PSUs. It submitted 13 reports covering recommendations
on privatisation of 57 PSUs. Dr. R.H. Patil subsequently took up the chairmanship of this Commission in July
2001.However, the Disinvestment Commission ceased to exist in May 2004.
The Department of Disinvestment was set up as a separate department in December, 1999 and was later renamed
as Ministry of Disinvestment from September, 2001. From May, 2004, the Department of Disinvestment became
one of the Departments under the Ministry of Finance.
Against an aggregate target of Rs. 54,300 crore to be raised from PSU disinvestment from 1991-92 to 2000-01, the
Government managed to raise just Rs. 20,078.62 crore (less than half). Interestingly, the government was able to
meet its annual target in only 3 (out of 10) years. In 1993-94, the proceeds from PSU disinvestment were nil over a
target amount of Rs. 3,500 crore.
The reasons for such low proceeds from disinvestment against the actual target set were:
Unfavorable market conditions

Offers made by the government were not attractive for private sector investors
Lot of opposition on the valuation process
No clear-cut policy on disinvestment
Strong opposition from employee and trade unions
Lack of transparency in the process
Lack of political will
This was the period when disinvestment happened primarily by way of sale of minority stakes of the PSUs through
domestic or international issue of shares in small tranches. The value realized through the sale of shares, even in
blue chip companies like IOC, BPCL, HPCL, GAIL & VSNL, however, was low since the control still lay with the
government.
Most of these offers of minority stakes during this period were picked up by the domestic financial institutions.
Unit Trust of India was one such major institution.
Period from 2001-02 - 2003-04

This was the period when maximum number of disinvestments took place. These took the shape of either strategic
sales (involving an effective transfer of control and management to a private entity) or an offer for sale to the
public, with the government still retaining control of the management. Some of the companies which witnessed a
strategic sale included:
BHARAT ALUMINIUM CO.LTD.

CMC LTD.
HINDUSTAN ZINC LTD.
HOTEL CORP.OF INDIA LTD. (3 PROPERTIES: CENTAUR HOTEL,JUHU BEACH, CENTAUR HOTEL
AIRPORT,MUMBAI & INDO HOKKE HOTELS LTD.,RAJGIR)
HTL LTD.

IBP CO.LTD.
MARUTI SUZUKI INDIA LTD.
MODERN FOOD INDUSTRIES (INDIA) LTD.
PARADEEP PHOSPHATES LTD.
TATA COMMUNICATIONS LTD.
The valuations realized by this route were found to be substantially higher than those from minority stake
sales. During this period, against an aggregate target of Rs. 38,500 crore to be raised from PSU disinvestment, the
Government managed to raise Rs. 21,163.68 crore.
Period from 2004-05 - 2008-09

The issue of PSU disinvestment remained a contentious issue through this period. As a result, the disinvestment
agenda stagnated during this period. In the 5 years from 2003-04 to 2008-09, the total receipts from
disinvestments were only Rs. 8515.93 crore.
2009-10-2013-14
A stable government and improved stock market conditions initially led to a renewed thrust on disinvestments.
The Government started the process by selling minority stakes in listed and unlisted (profit-making) PSUs. This
period saw disinvestments in companies such as NHPC Ltd., Oil India Ltd., NTPC Ltd., REC, NMDC, SJVN, EIL,
CIL, MOIL, etc. through public offers.
However, from 2011 onwards, disinvestment activity slowed down considerably. As against a target of Rs.40,000
crore for 2011-12, the Government was able to raise only Rs.14,000 crore. However, the subsequent years saw
some improvement and the Government was able to raise Rs. 23,857 crore against a target of Rs. 30,000 crore
(Revised Target : Rs. 24,000 crore) in 2012-13 and Rs. 21,321 against a target of Rs. 54,000 (Revised Target
: Rs. 19,027 crore) in 2013-14.
2014-15 onwards
The NDA Government has set an ambitious disinvesment target of Rs. 58,425 crore. As such, 2014-15 is likely to
see some big ticket disinvestments taking place.
Arguments against Disinvestment

There have been several arguments that have been raised against disinvestment, both specific as well as general in
nature. Some of them are listed below, with their counter-arguments (in italics):
The Government will forego dividends on the equity holdings by selling off its stakes. According to the Public
Enterprises Survey 2007-08, the Central PSUs taken together contributed Rs. 19,423 crore to the central
exchequer in 2007-08 as dividends, witnessing an increase of over Rs. 4,000 crore from 2005-06.
Considerable disinvestment of government's stakes in CPSEs would squeeze this important source of revenue
for the Government.
Apart from generating a one-time sale amount, a lot of these stake sales have also resulted in higher annual
revenues for the government, thus nullifying the effect of loss of dividends. More so, while they were
dividend yielding, there were annual outgoes associated with them, thus again nullifying the effect of
dividends. Moreover, the loss of dividends, if any, is well compensated by gains in capital appreciation.
A nationwide survey conducted by the NCAER in 2007-08 revealed that only 0.5% of Indian households
invest in equities. A recent article in The Economist (21st May 2009) estimates this section to be 0.7% of
Indian households. Thus, in case the public offer route is followed, it would imply transferring the common

ownership of the PSUs by all Indians into the private ownership of 0.5-0.7% of Indians. Thus essentially
implying that the real beneficiaries would not be the ordinary retail investor but institutional investors.
While the current equity penetration remains low, it is precisely these PSU IPOs themselves that present the
best opportunity of widening the retail base. To also ensure that institutional investors do not run away
with the bulk of this sale, curbs and measures can be put in place that ensure only retail participation in
these issues.
Using funds made available from disinvestment to bridge the fiscal deficit is an unhealthy and a short term
practice. It is said that it is equivalent of selling 'family silver' to meet short term monetary requirements.
Borrowing which is the currently used practice for bridging fiscal deficit, should continue to be used since
while borrowing, the government has to make interest payments in the future against a one-time borrowing
from the market, in the case of disinvestment, future streams of income from dividends are forgone against a
one-time receipt from the sale of stakes.
Letting go of these assets is best in the long term interest of the tax payers as the current yield on these
investments in abysmally low. Even if the funds from the sale are not utilised for bridging fiscal deficit, a
much better utilisation of these funds would be investments into critical sectors such as healthcare,
education and infrastructure or for retiring government debt rather than letting the low yielding capital
remain locked in these assets.
Effective tax rate for the CPSEs taken together in 2006-07 was 30.78%, while the average effective tax rate for
private sector companies in the same year was 19.5% only (as per the Statement on Revenue Forgone,
Receipts Budget, 2008-09). Criticism stems from the fact that while not only a major tax revenue source will
be lost, the private sector which ideally should be paying an equivalent tax rate is exempted due to tax
concessions.
As mentioned above, while there will be a loss in terms of dividend and tax income, this shortfall would be
more than adequately compensated by revenues and capital gains. More so, the returns on capital employed
for the entire PSU sector is very low and the government can find alternate avenues for deploying this
capital which would yield far better returns, both monetarily and otherwise. All the same, revisions need to
be made in tax laws to ensure that all such loopholes currently being exploited by the corporate sector are
closed.
Profit making PSUs should not be disinvested as they are performing well in any which way
A good example against this criticism would be BALCO which was a profit making company that earned the
Government an average dividend (over eight years) of Rs. 5.69 cr every year on the equity sold. The
Government post-disinvestment, however started getting Rs. 82.65 crore every year. Similarly, CMC was a
very well managed and profitable company, yet the average dividend was only 0.80 crore. The
Government's benefit, post-disinvestment however was Rs. 15.2 crore annually. Similarly, Maruti Udyog
Ltd. gave average returns to the tune of Rs. 13 crore annually to the Govt. and IPCL gave Rs.16.24 crore on
equity sold against Rs. 242 crore and 149 crore respectively post-disinvestment. There can possibly be no
justification of maintaining public sector character in such companies, especially them being non-core
sectors.

Employees of PSUs would lose jobs
Past privatisations have shown that these fears are totally unfounded. Some of the companies started the
process of restructuring and accepted some voluntary retirement applications but no retrenchments were
made. These companies gave VRS to the employees, at scales, which were normally higher than the
Government VRS.
It has been reported that the response to VRS offered to employees before disinvestment was also sometimes
lukewarm as the employees expected a better package after privatisation by the strategic buyer, if and when
VRS was offered to them. Very often additional recruitment also took place in privatised companies and the
wages increased. To give an example, wages increased by an average of Rs. 1600 per employee in Modern
Food Industries Limited in spite of the fact that the company had to approach BIFR within months of being
privatised.
Complete Privatisation may result in public monopolies becoming private monopolies, which would then
exploit their position to increase costs of various services and earn higher profits
It needs to be ensured that Privatisation leads to greater competition in all cases.
Complete Privatisation results in a situation where political compulsions may make companies being sold
cheap to preferred parties
The process followed for Privatisation needs to be very fair and transparent to ensure a situation such as
this does not arise
A majority stake sale done to another CPSE results in no real change in ownership, and is thus just hogwash
This is fair to some extent, though it must be realized that some of the CPSEs are very well run, competitive
and profit making. Thus, a sale of a loss making CPSE to a well performing CPSE can be a proposition well
worth considering.
Public Offer being the chosen approach for Disinvestments does not yield the best realisation on the assets
and is a far too time consuming process. Auctioning to financial institutions (QIBs) should be the preferred
modus operandi since it gives the best realisation on the assets, and has minimal transaction cost
While the realisation on assets might be higher in case of an auctioning process, it must be remembered that
the Government is not a private enterprise and hence should not be looking at short-term gains. It should
look at the greater good and sell these stakes by public offers to increase retail participation in the capital
markets as well as to increase the depth and width of the capital markets. In any case, the loss is minimal as
very small stakes are being sold. The real gains for the government lie in the appreciation post-listing. Let
us look at the PSU IPOs since 2004 with a trading period of over 1 year. The value of the government
holding, courtesy the market, has gone up nearly 3 times from Rs. 238124 crore on the issue date
to Rs.451131.29 crore (as on 16 February 2015).

Rising NPAs of Indian Banks
Many banks have reported sharp increases in non-performing assets (NPAs) in their last quarter results. And
significantly, this time it‘s not just the usual suspects — public sector banks (PSBs). While the bad loans for the
likes of Indian Overseas Bank, UCO Bank, PNB and Bank of Baroda have gone up, the fact that even the country‘s
largest private sector lender, ICICI Bank, has shown a significant rise in both NPAs and ―restructured‖ advances is
cause for further worry. Indeed, it is the slippage of restructured loans — those whose original maturities may
have been extended or interest rates lowered – into NPAs that tells a larger story. The restructuring of these
advances was predicated on the assumption of the economy turning around, enhancing the borrowers‘ ability to
meet their servicing obligations. Instead, we are seeing more and more restructured loans turning into NPAs,
indicative of no real recovery on the ground.
This situation is dangerous when stressed assets — NPAs plus restructured loans — were already 10.7 per cent of
total bank advances as on September 2014, with the ratio at 12.9 per cent for PSBs. If bad debts continue to
mount, it will force banks to make higher provisioning against losses, thereby cramping their capacity to lend and
undermining even a fledgling recovery. High domestic interest rates will only worsen things, as banks find better
rated corporates preferring to raise cheaper funds through offshore bond issues. High interest rates and sluggish
growth will, moreover, make it difficult for distressed borrowers to repay, further adding to the NPAs.
It is high time the government starts acting on, rather than simply recognising, the above problem. More than a
month has passed since the bankers‘ retreat or Gyan Sangam that even the prime minister, finance minister and
RBI governor attended, but many PSBs are still without chairmen. Today, state-owned banks desperately require
capital infusion, which can only come from the markets. But will investors put money in concerns that are
headless and whose boards aren‘t empowered to take commercially prudent decisions? One indicator of what the
markets think about banks — mainly PSBs — is that while the BSE Sensex has fallen 2.9 per cent in the last eight
trading sessions, the Bankex index has dropped even more by 8.4 per cent. A lowering of policy interest rates by
the RBI, alongside implementation of structural reforms in PSBs making them professional board-run entities,
are calls that can brook no further delay. The banking system is today in the state it was in 2001 — and the worst
might still be some quarters ahead.

Index of Eight Core Industries - December, 2014
The Eight Core Industries comprise nearly 38 % of the weight of items included in the Index of Industrial
Production (IIP). The combined Index of Eight Core Industries stands at 172.7 in December, 2014, which is 2.4 %
higher compared to the index of December, 2013. Its cumulative growth during April to December, 2014-15 was
4.4 %.
Coal - Coal production (weight: 4.38 %) increased by 7.5 % in December, 2014 over December, 2013. Its
cumulative index during April to December, 2014-15 increased by 9.1 % over corresponding period of previous
year.
Crude Oil - Crude Oil production (weight: 5.22 %) declined by 1.4 % in December, 2014 over December, 2013.
The cumulative index of Crude Oil during April to December, 2014-15 declined by 0.9 % over the corresponding
period of previous year.
Natural Gas - The Natural Gas production (weight: 1.71 %) declined by 3.5 % in December, 2014. Its cumulative
index during April to December, 2014-15 declined by 5.1 % over the corresponding period of previous year.
Refinery Products (0.93% of Crude Throughput) - Petroleum Refinery production (weight: 5.94%)
increased by 6.1 % in December, 2014. Its cumulative index during April to December, 2014-15 increased by 0.2 %
over the corresponding period of previous year.
Fertilizers - Fertilizer production (weight: 1.25%) declined by 1.6 % in December, 2014. Its cumulative index
during April to December, 2014-15 declined by 1.4 % over the corresponding period of previous year.
Steel (Alloy + Non-Alloy) - Steel production (weight: 6.68%) declined by 2.4 % in December, 2014. Its
cumulative index during April to December, 2014-15 increased by 1.6 % over the corresponding period of previous
year.
Cement - Cement production (weight: 2.41%) increased by 3.8 % in December, 2014. Its cumulative growth
during April to December, 2014-15 was 7.9 % over the corresponding period of previous year.
Electricity - Electricity generation (weight: 10.32%) increased by 3.7 % in December, 2014 and it registered a
cumulative growth of 9.7 % during April to December, 2014-15over the corresponding period of previous year.

New De-worming Initiative launched
National De-worming Day was observed on 10th February 2015. In this connection union ministry of Health &
Family Welfare launched the National De-worming initiative at Jaipur, on 9th Feb 2015.
De-worming
It is administering an antihelmintic drug to a human or animal to rid them of parasites, such as roundworm,
hookworms, flukes and tapeworm. Mass deworming campaigns of school children have been used both as a
preventive as well as a treatment method for helminthiasis which includes soil transmitted helminthiasis in
children. Children can be treated by administering for example Mebendazole and Albendazole. The cost is
relatively low. One tablet of Albendazole rids the child of parasitic worms which live in the child‘s intestines and
eat the nutrients the child needs for healthy mental and physical development. This tablet is safe for both infected
and non-infected children and has a pleasant flavor.
Helminths
They are a group of parasites commonly referred to as worms and include schistosomes and soil-transmitted
helminths. Such infections are among the most common infections in developing countries. While mild infections
often go unnoticed, more severe worm infections can lead to abdominal pain, iron-deficiency anemia,
malnutrition, stunting, and wasting. Infections can also cause cognitive impairment as well as tissue damage that
may require corrective surgery
WHO recommendations
To reduce the worm burden, WHO recommends periodic drug treatment (De-worming) of all school-age children
living in endemic areas. WHO is of the view that treating children for worms—which affect an estimated 600
million school-aged children worldwide—improves school attendance, health, and long-run productivity. Oral de-
worming drugs are extremely effective at killing most varieties of worms with a single dose, at negligible cost.
So, de-worming treatment is not only highly effective and inexpensive, it is easy to administer through public
schools and brings benefits to children years after treatment. With hundreds of millions of children still at risk of
worm infection worldwide, providing free school-based de-worming treatment is an easy policy ―win‖ for health,
education, and development.
Government Initiatives
School Health program under National Rural Health Mission (NRHM), provides for De-worming as per national
guidelines on bi-annually supervised schedule. In the state of Bihar world‘s largest school-based de-worming
initiative was taken up earlier and also the Delhi government had conducted such campaigns. According to WHO
estimates, nearly 24 crore children in the age group of 1-14 years are at risk of intestinal parasitic worm
infestation.
The new De-worming Initiative of the Health Ministry aims to de-worm all pre-school and school-age children
(enrolled and non-enrolled) between the ages of 1-19 years. In the first phase about 14 crore children across eleven
States/UT of Assam, Bihar, Chhattisgarh, Dadra & Nagar Haveli, Haryana, Karnataka, Maharashtra, Madhya
Pradesh, Rajasthan, Tamil Nadu and Tripura will be covered; while nearly 10 crore will be targeted in the second
phase. In the first phase staring from the National De-worming Day on 10th February 2015, Albendazole tablets
will be given to all targeted children; half tablet to 1-2 years children and one full tablet for 2-19 years. The
children who are left out will be covered by a mop-up round to be carried out till 14th February 2015.
Union Health Minister has emphasized the need to target intestinal parasitic worms among the children to
achieve status of being ‗Worm-free‘ in India, after getting the ‗Polio-free‘ status,. He has appealed to all MPs,

MLAs, and local public representatives in addition to school teachers, ASHAs and Anganwadi workers for
converging and supporting the Government in its mission to achieve Worm Free India.
This initiative needs to be coupled with improved sanitation, hygiene, and availability of safe drinking water for
reducing worm load with active partnership and participation of the other ministries such as M/o Women and
Child Development, M/o Human Resources Development, M/o Panchayati Raj and M/o Water and Sanitation.
The deworming initiative is expected to help in achieving the aim of ‗Swachh Bharat‟ as envisioned by the Prime
Minister. This small, time tested initiative can have multiplier effect on various sectors like health, education,
development at negligible cost.
Deen Dayal Upadhyaya Grameen Kaushalya Yojana

(DDU-GKY)
According to Census 2011, India has 55 million potential workers between the ages of 15 and 35 years in rural
areas. At the same time, the world is expected to face a shortage of 57 million workers by 2020. This presents a
historic opportunity for India to transform its demographic surplus into a demographic dividend. The Ministry of
Rural Development implements DDU-GKY to drive this national agenda for inclusive growth, by developing skills
and productive capacity of the rural youth from poor families.
There are several challenges preventing India‘s rural poor from competing in the modern market, such as the lack
of formal education and marketable skills. DDU-GKY bridges this gap by funding training projects benchmarked
to global standards, with an emphasis on placement, retention, career progression and foreign placement.
Features
Enable Poor and Marginalized to Access Benefits - Demand led skill training at no cost to the rural
poor
Inclusive Program Design - Mandatory coverage of socially disadvantaged groups (SC/ST 50%; Minority
15%; Women 33%)
Shifting Emphasis from Training to Career Progression - Pioneers in providing incentives for job
retention, career progression and foreign placements
Greater Support for Placed Candidates - Post-placement support, migration support and alumni
network
Proactive Approach to Build Placement Partnerships - Guaranteed Placement for at least 75% trained
candidates
Enhancing the Capacity of Implementation Partners - Nurturing new training service providers and
developing their skills
Regional Focus - Greater emphasis on projects for poor rural youth in Jammu and Kashmir (HIMAYAT),
the North-East region and 27 Left-Wing Extremist (LWE) districts (ROSHINI)
Standards-led Delivery - All program activities are subject to Standard Operating Procedures that are not
open to interpretation by local inspectors. All inspections are supported by geo-tagged, time stamped
videos/photographs

Implementation Model
DDU-GKY follows a 3-tier implementation model. The DDU-GKY National Unit at MoRD functions as the
policy-making, technical support and facilitation agency. The DDU-GKY State Missions provide implementation
support; and the Project Implementing Agencies (PIAs) implement the programme through skilling and
placement projects.
Project Funding Support

DDU-GKY provides funding support for placement linked skilling projects that address the market demand with
funding support ranging from Rs. 25,696 to over Rs. 1 lakh per person, depending on the duration of the project
and whether the project is residential or non-residential. DDU-GKY funds projects with training duration from
576 hours (3 months) to 2304 hours (12 months).
Funding components include support for training costs, boarding and lodging (residential programmes),
transportation costs, post-placement support costs, career progression and retention support costs.
In funding projects, priority is given to PIAs offering:

Foreign Placement
Captive Employment: Those PIAs or organizations that take up skill training to meet internal ongoing HR
needs
Industry Internships: Support for internships with co-funding from industry
Champion Employers: PIAs who can assure skill training and placement for a minimum of 10,000 DDU-GKY
trainees in a span of 2 years
Educational Institution of High Repute: Institutes with a minimum National Assessment and Accreditation
Council (NAAC) grading of 3.5 or Community Colleges with University Grants Commission (UGC)/ All India
Council for Technical Education (AICTE) funding willing to take up DDU-GKY projects
Training Requirements
DDU-GKY funds a variety of skill training programs covering over 250 trades across a range of sectors such as
Retail, Hospitality , Health, Construction, Automotive, Leather, Electrical, Plumbing, Gems and Jewelry, to name
a few. The only mandate is that skill training should be demand based and lead to placement of at least 75% of the
trainees.
The trade specific skills are required to follow the curriculum and norms prescribed by specified national
agencies: the National Council for Vocational Training and Sector Skills Councils. In addition to the trade specific
skills, training must be provided in employability and soft skills, functional English and functional Informational
technology literacy so that the training can build cross cutting essential skills.
Training Quality Assurance

Through the National Policy on Skill Development, 2009, India recognized the need for the development of a
national qualification framework that would transcend both general education and vocational education and
training. Accordingly, GOI has notified the National Skills Qualification Framework (NSQF) in order to develop
nationally standardized, and internationally comparable qualification mechanism for skill training programs
which can also provide for interoperability with the mainstream education system.
In line with NSQF, DDU-GKY mandates independent third party assessment and certification by assessment
bodies empanelled by the NCVT or SSCs.
Scale and Impact

DDU-GKY is applicable to the entire country. The scheme is being implemented currently in 33
States/UTs across 610 districts partnering currently with over 202 PIAs covering more than 250 trades across 50+

sectors. So far, from the year 2004-05 till 30th November 2014, a total of 10.94 lakh candidates have been trained
and a total of 8.51 lakh candidates have been given placement.
Programmes and Initiatives of Department of

Telecommunications
1. Growth in the reach of telecommunications is one of the key drivers of socio-economic development. The
performance of the Telecommunication sector during 2014-15 has been encouraging with approximately 30
million new telephone connections added during April to October, 2014. Overall teledensity in the country has
increased from 75.23% at the beginning of the financial year to 77.12% at the end of November, 2014, while total
broadband connections have touched 82.22 million.
2. In order to ensure equity in access and to accelerate the socio-economic growth in the rural areas, the
Government has planned to connect all 2,50,000 Gram Panchayats in the country with minimum 100 Mbps
bandwidth under the National Optical Fibre Network Project (NOFN). Cable laying has been completed to about
5000 villages and the project is likely to be completed by 31.12.2016.
3. Basic telephony activity is critical for every part of the country. The Government has identified
approximately 55,691 villages as per 2011 census which do not yet have telecom connectivity. Based on a
comprehensive GIS mapping of these villages, a decision has been taken to progressively cover all uncovered
villages with telecommunication services. In the first phase, a comprehensive development plan for North-
Eastern region at a cost of Rs. 5336 crores has been launched which will provide mobile coverage to 8621
uncovered villages, all national highways in NE and also strengthen the transmission network in these States. The
project will be supplemented through OFC Network augmentation between Block headquarters and District
headquarters in Meghalaya, Manipur, Tripura, Mizoram, Arunachal Pradesh and Nagaland.
4. In order to provide telecommunication connectivity in the Left Wing Extremism (LWE) affected areas and
support local population and security forces in these areas, a scheme has been launched to provide mobile services
in 2199 locations at a total cost of Rs. 3567 crores across 10 States. The project is likely to be completed by
September, 2015 and is being funded by the Universal Services Obligation Fund (USOF).
5. The Government will progressively initiate work to ensure voice connectivity in uncovered villages in
Himalayan States (J&K, Himachal Pradesh) and border States (Rajasthan, Gujarat, Punjab and
Haryana). Focused infrastructure projects are being planned to ensure connectivity to the Andaman Islands and
Lakshadweep through submarine cable and augmented satellite connectivity.
6. The Government is committed to further the objectives of ‗Make in India‘. C-DOT has developed Next
Generation Networks, Wireless Broadband and Network Management Systems which are supporting domestic
telecom players. Appropriate measures will be taken to create test beds for use of developers of indigenous
telecom technology products. Test beds shall also be created for testing & certification of telecom products so as
to ensure supply of quality products meeting the prescribed standards including safety, security and seamless
operation of such products.
7. The Government is deeply committed to the principles of Good Governance and transparency in the award
of spectrum to the service providers. There are plans to conduct the auction of spectrum in 1800 MHz, 900 MHz
and 800 MHz bands. The auction of spectrum in 2100 MHz band is also planned along with auction of spectrum
in 1800 MHz, 900 MHz and 800 MHz bands. A roadmap will also be chalked out for providing more spectrum,

as per the National Telecom Policy 2012, to serve public interest keeping in view the principles of affordable and
reliable communication services.
8. The Government will ensure the security of its communication infrastructure since National security in the
present world is closely linked with it. The Government, therefore, committed to put in place a series of measures
to protect and preserve our communication network in the same manner as we protect our borders.
9. The Government is also committed to provide indigenous, state-of-the-art and cost-effective total telecom
solutions. Centre for Development of Telematics (C-DOT), which is India's premier telecommunications R&D
centre, is not only developing technologies but also helping in creating an eco-system for large scale telecom
equipment manufacturing. After taking dial-tone to villages and hinterlands, C-DOT has now focussed its vision
on the next goal, of taking broadband to the masses. The institution is totally focussed on making the Internet a
reality for the rural population and providing access to e-governance, e-education, e-medicine, e-banking, for
empowerment of citizens using communications technology. It has developed technologies in optical
communications (GPON), Next Generation Networks (Softswitches, Gateways, Routers, Switches), Wireless
broadband (WiFi and LTE), Software Applications (GyanSetu), and Network Management, thus providing a
complete bouquet of technologies to the telecom eco-system.
National Optical Fibre Network (NOFN)

World‘s largest rural broadband connectivity project through optical fibre
All 2.5 lakh Gram Panchayats in India to be connected on optical fibre
Minimum 100 Mbps bandwidth at each Gram Panchayat
NOFN to be Non discriminatory Access infrastructure for all Service Providers
Approx 6 lakh Km new incremental optical fibre cable to be laid
Indigenous equipment design and manufacturing under ―Make in India‖
High Capacity Network Management System and Network Operation Centre
Digital India is a flagship initiative of the Government of India to integrate the government departments and the
people of India to ensure effective governance. It also aims at ensuring that the government services are made
available to citizens electronically by reducing paperwork. NOFN network is an important step towards realization
of this ambitious vision of rural empowerment by facilitating delivery of following services:
e-Governance services such as Land records, Birth/Death certificates, Aadhar based services, NREGA etc.
e-Healthcare like online medical consultations, medical records, medicine supply, Pan India exchange of
patient information etc.
e-Education aiming at delivery of quality education in all schools at villages, Digital literacy programme etc.
Public Internet Access including availability of Internet services to villages, delivery of Internet based
services by Common Service Centres (CSCs), enabling flexibility of choosing the service provider by the end-
customers etc.
e-commerce such as Rural banking through online transactions and ATMs, online purchases and online
transactions for utilities like railway bookings, electricity bill payments etc as well as online selling of rural
goods etc.
Utilities for Panchayats:
Panchayat Management - Gram sabha meetings, village records, updating of citizen databases, effective
performance monitoring of Panchayats.
Community Participation - Intra-village, Intra-district sharing of practices and resources Communication
with Block, and District.

Knowledge Dissemination - Sharing of Agricultural practices, productivity techniques, Small enterprises,
Vocational learning.
Delivery of Citizen Services - Delivery of services including Health, Education and Finance, etc. A single point
of Government-to-citizen interaction for Centrally sponsored/Central sector/ State sponsored schemes and
Grievance redressal.
Developmental planning - Road, transportation and power connectivity; knowledge connectivity in the form
of good educational & training institutions. Provision of drinking water and upgradation of existing health
facilities. Market connectivity to enable farmers to get the best prices for their produce.
The project is being implemented by three central PSUs (CPSUs) namely BSNL, PGCIL and Railtel in the phase
first and being managed by the Government of India entity, Bharat Broad Band Nigam Limited (BBNL). A key
feature of the project is that the GPON equipment used in the project has been indigenously designed and
developed by C-DOT and manufactured domestically.
Ensuring 24X7 Power to all Rural Household

Power sector is a critical infrastructure element required for the smooth functioning of the economy. An efficient,
resilient and financially healthy power sector is essential for growth and poverty reduction. The availability of
reliable, quality and affordable power helps in the rapid agriculture, industrial and overall economic development
of the state. The Government of India is committed to improve the quality of life of its citizens by providing each
household access to electricity, round the clock.
Presently, power supply in rural areas in many parts of the country is inadequate and unreliable. In rural areas of
the country, the agricultural and non-agricultural load (domestic and non-domestic) are typically catered to
through common distribution network. The distribution utilities resort to frequent load shedding in rural areas to
mitigate the gap between supply and demand, which affects power supply to agricultural consumers as well as
non-agricultural consumers owing to common distribution network. Further, the demand of electricity in rural
areas is increasing day by day due to increase in customer base, changes in lifestyle and consumption pattern
which requires continual strengthening and augmentation of distribution network. Therefore, strengthening and
augmentation of sub-transmission & distribution infrastructure is also considered necessary to ensure reliable and
quality power supply in rural areas.
Feeder separation in rural areas refers to supply of electricity to agricultural consumers and to non-agricultural
consumers separately through dedicated feeders. This arrangement allows the distribution company to ensure
adequate and reliable power to farmers as well as to rural households. This will ensure reliable and adequate
power supply to farmers resulting in high productivity and farm security. Besides, the rural households will get
24x7 power supply thereby improving the quality of life in rural areas and also give a boost to economic activity.
Finance Minister in his Budget speech for 2014-15 announced that "Power is a vital input for economic growth
and the Government is committed to providing 24x7 uninterrupted power supply to all homes. ―Deendayal
Upadhyaya Gram Jyoti Yojana‖ for feeder separation will be launched to augment power supply to the rural areas
and for strengthening sub-transmission and distribution systems".
After inter-ministerial consultations, feedback from States and other stakeholder, Government of India
launched "Deendayal Upadhyaya Gram Jyoti Yojana" (DDUGJY) with the objectives; (a) To separate agriculture
and non-agriculture feeders to facilitate Discoms in the judicious rostering of supply to agricultural & non-
agricultural consumers (b) Strengthening and augmentation of sub-transmission & distribution infrastructure
including metering in rural areas and (c) Rural electrification including micro-grid and off-grid distribution
network. The scheme is an improvement over the previous programmes as it provides cafeteria approach to the

States in prioritising their needs rather than a straight jacketed approach of 'one size fits all'. The scheme covers
all villages, habitations & hamlets/dhanis and with special dispensation for hilly/special category States.
Under the scheme, Govt. of India is providing financial support in the form of grant maximum up to 75% of total
project cost (90%, in case of special category States) to the Discoms for implementation of the scheme. All
Discoms including Private Sector Discoms are eligible for availing financial support under the scheme. The
scheme particularly targets incapacities of distribution network by decreasing Aggregate Technical and
Commercial losses including theft with emphasis on energy accounting through 100% metering at all levels. The
scheme will be implemented within five years during the 12th and 13th Plans in cooperation with the Discoms and
the State Governments. Implementation framework along with operational guidelines for implementation of the
scheme have been released and Discoms of the States are in the process of formulation of projects.
Effective and efficient implementation of scheme will lead to viable and reliable electricity services resulting in
increased productivity in agriculture & labour, improvement in delivery of health & education, access to
communications (radio, telephone, television, mobile), improved lighting after sunset, facilitating use of time and
energy saving in mills, motors & pumps, increasing public safety through outdoor lighting. Household
electrification also increases the likely hood that women would study and earn income. The scheme after its
implementation should be able to achieve 100% household electrification fulfilling the goal of 24x7 accessibility,
availability, reliability, quality and affordable power by 2019.
Digital India
Government of India has approved the ‗Digital India‘ programme with the vision to transform India into a
digitally empowered society and knowledge economy. Digital India is an umbrella programme that covers
multiple Government Ministries and Departments. It weaves together a large number of ideas and thoughts into a
single, comprehensive vision so that each of them can be implemented as part of a larger goal. Each individual
element stands on its own, but is also part of the entire Government. Digital India is implemented by the entire
Government and being coordinated by the Department of Electronics & Information Technology (DeitY).
The vision of Digital India is centred on three key areas, viz., (i) Infrastructure as a Utility to Every Citizen (ii)
Governance and Services on Demand and (iii) Digital Empowerment of Citizens. Digital India aims to provide the
much needed thrust to the following nine pillars of growth areas as summarised below:
Broadband Highways
This covers three sub components, namely Broadband for All Rural, Broadband for All Urban and National
Information Infrastructure.
Under Broadband for All Rural, 250 thousand village Panchayats would be covered by December, 2016.
DoT will be the nodal Department and the project cost is estimated to be approximately Rs. 32,000 Cr.
Under Broadband for All Urban, Virtual Network Operators would be leveraged for service delivery and
communication infrastructure in new urban development and buildings would be mandated.
National Information Infrastructure would integrate the networks like SWAN, NKN and NOFN along
with cloud enabled National and State Data Centres. It will also have provision for horizontal connectivity to
100, 50, 20 and 5 government offices/ service outlets at state, district, block and panchayat levels respectively.
DeitY will be the nodal department and the project cost is estimated to be around Rs 15,686 Cr for
implementation in 2 years and maintenance & support for 5 years.

Universal Access to Mobile Connectivity
The initiative is to focus on network penetration and fill the gaps in connectivity in the country.
All together 42,300 uncovered villages will be covered for providing universal mobile connectivity in the
country.
DoT will be the nodal department and project cost will be around Rs 16,000 Cr during FY 2014-18.
Public Internet Access Programme

The two sub components of Public Internet Access Programme are Common Service Centres and Post Offices
as multi-service centres.
Common Service Centres would be strengthened and its number would be increased from approximately
135,000 operational at present to 250,000 i.e. one CSC in each Gram Panchayat. CSCs would be made viable,
multi-functional end-points for delivery of government and business services. DeitY would be the nodal
department to implement the scheme.
A total of 150,000 Post Offices are proposed to be converted into multi service centres. Department of Posts
would be the nodal department to implement this scheme.
e-Governance – Reforming Government through Technology

Government Business Process Re-engineering using IT to improve transactions is the most critical for
transformation across government and therefore needs to be implemented by all ministries/ departments.
The guiding principles for reforming government through technology are:
a) Form simplification and field reduction – Forms should be made simple and user friendly and only
minimum and necessary information should be collected.
b) Online applications, tracking of their status and interface between departments should be provided.
c) Use of online repositories e.g. school certificates, voter ID cards, etc. should be mandated so that
citizens are not required to submit these documents in physical form.
d) Integration of services and platforms, e.g. UIDAI, Payment Gateway, Mobile Platform, Electronic
Data Interchange (EDI) etc. should be mandated to facilitate integrated and interoperable service
delivery to citizens and businesses.
Electronic Databases – all databases and information should be electronic and not manual.
Workflow Automation Inside Government – The workflow inside government departments and agencies
should be automated to enable efficient government processes and also to allow visibility of these processes to
the citizens.
Public Grievance Redressal - IT should be used to automate, respond and analyze data to identify and resolve
persistent problems. These would be largely process improvements.
e-Kranti (NeGP 2.0) – Electronic delivery of services
There are 31 Mission Mode Projects under different stages of e-governance project lifecycle. Further, 10 new
MMPs have been added to e-Kranti by the Apex Committee on National e-Governance Plan (NeGP) headed by
the Cabinet Secretary in its meeting held on 18th March 2014.
Technology for Education - All Schools will be connected with broadband. Free wifi will be provided in all
secondary and higher secondary schools (coverage would be around 250,000 schools). A programme on
digital literacy would be taken up at the national level. MOOCs –Massive Online Open Courses shall be
developed and leveraged for e-Education.
Technology for Health - e-Healthcare would cover online medical consultation, online medical records, online
medicine supply, pan-India exchange for patient information. Pilots shall be undertaken in 2015 and full
coverage would be provided in 3 years.

Technology for Farmers - This would facilitate farmers to get real time price information, online ordering of
inputs and online cash, loan and relief payment with mobile banking.
a. Technology for Security - Mobile based emergency services and disaster related services would be provided
to citizens on real time basis so as to take precautionary measures well in time and minimize loss of lives and
properties.
b. Technology for Financial Inclusion - Financial Inclusion shall be strengthened using Mobile Banking,
Micro-ATM program and CSCs/ Post Offices.
c. Technology for Justice - Interoperable Criminal Justice System shall be strengthened by leveraging e-
Courts, e-Police, e-Jails and e-Prosecution.
d. Technology for Planning - National GIS Mission Mode Project would be implemented to facilitate GIS
based decision making for project planning, conceptualization, design and development.
e. Technology for Cyber Security - National Cyber Security Co-ordination Center would be set up to ensure
safe and secure cyber-space within the country.
Information for All

Open Data platform and online hosting of information & documents would facilitate open and easy access to
information for citizens.
Government shall pro-actively engage through social media and web based platforms to inform
citizens.MyGov.in has already been launched as a medium to exchange ideas/ suggestions with Government.
It will facilitate 2-way communication between citizens and government.
Online messaging to citizens on special occasions/programs would be facilitated through emails and SMSes.
The above would largely utilise existing infrastructure and would need limited additional resources.
Electronics Manufacturing – Target NET ZERO Imports

Target NET ZERO Imports is a striking demonstration of intent.
This ambitious goal requires coordinated action on many fronts
1) Taxation, incentives
2) Economies of scale, eliminate cost disadvantages
3) Focus areas – FABS, Fab-less design, Set top boxes, VSATs, Mobiles, Consumer & Medical Electronics,
Smart Energy meters, Smart cards, micro-ATMs
4) Incubators, clusters
5) Skill development
6) Government procurement
There are many ongoing programs which will be fine-tuned.
Existing structures are inadequate to handle this goal and need strengthening.
IT for Jobs
1 Cr students from smaller towns & villages will be trained for IT sector jobs over 5 years. DeitY would be
the nodal department for this scheme.
BPOs would be set up in every north-eastern state to facilitate ICT enabled growth in these states. DeitY would
be the nodal department for this scheme.
3 lakh service delivery agents would be trained as part of skill development to run viable businesses delivering
IT services. DeitY would be the nodal department for this scheme.
5 lakh rural workforce would be trained by the Telecom Service Providers (TSPs) to cater to their own needs.
Department of Telecom (DoT) would be the nodal department for this scheme.

Early Harvest Programmes
IT Platform for Messages - A Mass Messaging Application has been developed by DeitY that will cover elected
representatives and all Government employees. 1.36 Cr mobiles and 22 Lakh emails are part of the database.
Government Greetings to be e-Greetings - Basket of e-Greetings templates have been made available.
Crowd sourcing of e-Greetings through MyGov platform has been ensured. E-Greetings portal has been made
live on 14th August 2014.
Biometric attendance - It will cover all Central Govt. Offices in Delhi and is already operational in DeitY and
has been initiated in the Department of Urban Development. On-boarding has also started in other departments.
Wi-Fi in All Universities - All universities on the National Knowledge Network (NKN) shall be covered under
this scheme. Ministry of HRD is the nodal ministry for implementing this scheme.
Secure Email within Government - Email would be the primary mode of communication. Phase-I
upgradation for 10 lakh employees has been completed. In Phase II, infrastructure would be further upgraded to
cover 50 lakh employees by March 2015 at a cost of Rs 98 Cr. DeitY is the nodal department for this scheme.
Standardize Government Email Design - Standardised templates for Government email are under
preparation and would be ready by October 2014. This would be implemented by DeitY.
Public Wi-fi hotspots - Cities with population of over 1 million and tourist centres would be provided with
public wi-fi hotspots to promote digital cities. The scheme would be implemented by DoT and MoUD.
School Books to be eBooks - All books shall be converted into eBooks. Min. of HRD/ DeitY would be the nodal
agencies for this scheme.
SMS based weather information, disaster alerts - SMS based weather information and disaster alerts
would be provided. DeitY‘s Mobile Seva Platform is already ready and available for this purpose. MoES (IMD) /
MHA (NDMA) would be the nodal organizations for implementing this scheme.
National Portal for Lost & Found children - This would facilitate real time information gathering and
sharing on the lost and found children and would go a long way to check crime and improve timely response.
DeitY/ DoWCD would be the nodal departments for this project.
Make in India - Defence Sector

Achieving self-reliance and reducing dependence on foreign countries in defence is a necessity today rather than a
choice, both for strategic and economic reasons. The Government in the past has created production capabilities
in defence in form of Ordnance Factories and Public Sector Undertakings to cater to the requirements of our
Armed Forces. However, there is a need to enlarge the role of Indian private sector as well to develop capabilities
and capacities for production of various defence equipments.
Our Prime Minister has taken a very important initiative in form of ‗Make in India‘ to promote and encourage
domestic manufacturing of various items. The requirement for domestic production of defence equipment is
more than for any other sector because it will not only save precious foreign exchange but will also address the
national security concerns.
Government being the only consumer, ‗Make in India‘ in defence sector will be driven by our procurement
policy. The Government policy of promoting domestic defence industry is adequately reflected in the Defence
Procurement Policy, wherein preferential treatment is given to ‗Buy (Indian)‘ and ‗Buy and Make (Indian)‘
categories of acquisition over ‗Buy (Global)‘. In the days to come, import is going to be the rarest of the rare
option and first opportunity would be given to the Indian Industry to develop and manufacture the required
systems. As Indian companies presently may not have adequate capabilities in terms of technology, they are
encouraged to partner with foreign companies for joint ventures, technology transfer arrangements and tie-ups.

If we look at the profile of Acceptance of Necessity (AONs) granted by Defence Acquisition Council (DAC) in the
last couple of months after the new Government has come to power, proposals worth more than Rs.65,000 crores
have been categorized under ‗Buy (Indian)‘ and ‗Buy and Make (Indian)‘. The process of further orienting the
Defence Procurement Procedure towards procurement from domestic industry will continue in future as
well. The procurement process would be made more efficient, time bound and predictable so that the industry
can plan its investment and R & D well in advance to meet the requirement of our armed forces.
Till now, there were many entry barriers for the domestic industry to enter into defence sector in terms of
licensing, FDI policy restrictions etc. In the last six months, the Government has taken several policy initiatives to
ease the process of entry into defence manufacturing. The most important is the liberalization of the FDI policy
regime for Defence sector to encourage foreign investment in the sector. FDI up to 49% is allowed through
Government route (with FIPB approval). FDI above 49% is also allowed on a case-to-case basis with the approval
of Cabinet Committee on Security wherever the proposal is likely to result in access to modern and state-of-the-art
technology in the country. Restrictions in earlier policy related to Foreign Institutional Investment (FII) and
majority shareholding to be held by single Indian shareholder have been removed.
Even though private sector industry was allowed to enter in defence manufacturing since 2001, after obtaining
industrial licence under IDR Act, the process of obtaining industrial licence was very cumbersome and used to act
as a major road block for the industry, particularly small and medium industry, who were in the business of
making part, components, sub systems and sub-assemblies. The Government liberalized the licensing policy and
now most of the components, parts, raw materials, testing equipments, production machinery, castings, forgings
etc. have been taken out from the purview of licensing. The companies desirous of manufacturing such items no
longer require industrial licence and will also not be subjected to FDI ceiling of 49%. A comprehensive Security
Manual indicating the security architecture to be followed by various class of industries has been put in public
domain, so that companies could easily access the same and follow it accordingly. The initial validity of industrial
licence has been increased from two to three years.
For the first time, a Defence Export Strategy has been formulated and has been put in public domain. The strategy
outlines specific initiatives to be taken by the Government for encouraging the export of defence items. It is aimed
at making the domestic industry more sustainable in the long run as the industry cannot sustain purely on
domestic demand. A Standard Operating Procedure (SOP) for issue of NOC for export of military stores has been
finalised and has also been put in public domain. Requirement of End User Certificate (EUC) to be signed and
stamped by Government authorities has been dispensed with for most of the defence items, particularly parts,
components, sub-systems and sub-assemblies. This will largely ease out the export by the domestic industry. A
web-based online system to receive applications for NOC for export of military stores has been developed and has
been put in place.
There is a big opportunity in the defence sector for both domestic and foreign investors. We have the third largest
armed force in the world with an annual budget of about US$ 38 billion and 40% of this is used for capital
acquisition. In the next 7-8 years, we would be investing more than US$ 130 billion in modernization of our
armed forces and with the present policy of MAKE IN INDIA, the onus is now on the industry to make best use of
this opportunity for the benefit of both the business as well as the nation. Besides, under offset more than Rs.
25000 crore obligations are to be discharged in next 7-8 years.
While on the one hand, Government is making necessary policy changes with regard to procurement, investment
including FDI, licensing, export etc., the industry also needs to come up and accept the challenge of up-gradation
in terms of technology and required investments. Defence is the sector which requires huge investments and
technology and is driven by innovation. The industry, therefore, has also to change its mindset and think for long
term rather than temporary gains. We need to focus more on Research and Development and state of the art

manufacturing capabilities. The Government is fully committed to create an eco-system for the domestic industry
to rise and to provide a level-playing field to all sectors of industry, both public and private.
Agreement on the New Development Bank and the

BRICS Contingent Reserve Agreement
The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, gave its approval for establishing the New
Development Bank (NDB) and the BRICS Contingent Reserve Arrangement (CRA). The New Development Bank
will mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging
economies and developing countries, to supplement existing efforts of multilateral and regional financial
institutions for global growth and development.
The establishment of the Bank will help India and other signatory countries to raise and avail resources for their
infrastructure and sustainable development projects. It would also reflect the close relations among BRICS
countries, while providing a powerful instrument for increasing their economic cooperation.
The BRICS CRA proposes to provide short-term liquidity support to the members through currency swaps to help
mitigating BOP crisis situation, in case such a situation arises. The BRICS CRA will help India and other signatory
countries to forestall short-term liquidity pressures, provide mutual support and further strengthen financial
stability. It would also contribute to strengthening the global financial safety net and complement existing
international arrangements (from IMF) as an additional line of defence.
The Agreement will enter into force and the Bank will begin operations only after all member countries deposit
their instruments of ratification with Brazil. It will also provide the force of law to the commitments made by India
in the inter-governmental agreement of the NDB including privileges and immunities that are to be extended to
the Bank and its employees as specified in the Articles of Agreement.
Central Banks of the member countries will also have to finalize an Inter-Central Bank Agreement containing the
operational details of swap transactions and the Standing Committee`s Operational Procedures (SCOP) before the
arrangement can be operational.
Signing of the Agreement for the establishment of the New Development Bank is expected to allow India to raise
and obtain more resources for the much needed infrastructure development, the lack of which is coming in the
way of inclusiveness and growth as of now. Besides, the governance structure and decision making in the Bank
will be equitable unlike the existing multilateral development banks.
So far infrastructure financing in India has been done from two public sources: Government and existing
multilateral development banks. These have been supplemented by private sector contributions through Public-
Private Partnership projects. However, in the context of fiscal consolidation, declining resources of existing MDBs
and risk-averse private sector, the New Development Bank to be established by BRICS countries will make
available additional resources thereby recycling the savings accumulated in emerging countries which are
presently being locked up in Treasury bonds having much lower returns.
Signing of the Agreement is the first step towards economic cooperation of BRICS countries for pursuance of
common goals. BRICS CRA will ensure equity and inclusiveness by providing a backup safety net arrangement in
place that will allow the Government of India to go ahead with its necessary and bold policy decisions without

being concerned about the international economic development that may lead to domestic imbalances and worsen
BOP position.
The BRICS CRA is expected to serve the needs of our emerging economy in boosting access to additional foreign
exchange reserves, should such situation arise. So far IMF support is the primary safety net that is available to
India in case any BOP crisis situation arises. Pending the IMF governance reforms, India does not have much say
in the IMF decisions. The proposed CRA will provide an alternative approach. This will also provide yet another
window for our economy to engage with the BRICS in a more fruitful manner.
Make in India
The Government has launched the ‗Make in India‘ Programme to promote manufacturing in the country. The
―Make in India" initiative is based on four pillars, which have been identified to give boost to entrepreneurship in
India, not only in manufacturing but also other sectors. The four pillars are:
New Processes: `Make in India` recognizes `ease of doing business` as the single most important factor to
promote entrepreneurship. A number of initiatives have already been undertaken to ease business
environment.
New Infrastructure: Government intends to develop industrial corridors and smart cities, create world
class infrastructure with state-of-the-art technology and high-speed communication. Innovation and research
activities are supported through a fast paced registration system and improved infrastructure for IPR
registration. The requirement of skills for industry are to be identified and accordingly development of
workforce to be taken up.
New Sectors: FDI has been opened up in Defence Production, Insurance, Medical Devices, Construction and
Railway infrastructure in a big way. Similarly FDI has been allowed in Insurance and Medical Devices.
New Mindset: In order to partner with industry in economic development of the country Government shall
act as a facilitator and not a regulator.
Components of the initiative are equally available to all regions of the country. The following sectors have been
included in the ‗Make in India‘ programme:
Auto Components, Automobiles, Aviation, Biotechnology, Chemicals, Construction, Defence Manufacturing,

Electrical Machinery, Electronic System Design and Manufacturing, Food Processing, IT and BPM, Leather,
Media and Entertainment, Mining, Oil and Gas, Pharmaceuticals, Ports, Railways, Roads and Highways,
Renewable Energy, Space, Textiles, Thermal Power, Tourism and Hospitality, Wellness
An investor facilitation cell has been created under ‗Make in India‘ Programme. So far this cell has handled 7100
queries from the investor and about 250 meetings have been convened by the cell with potential investors.
Other measures taken by the Government to boost manufacturing sector in the country as follows:
1) 14 Government of India services has been integrated with online single window under e-Biz portal.
2) Creation of Investor Facilitation Cell in `Invest India` to assist, guide and handhold investors during the
various phases of business life cycle.
3) Information on 25 sectors has been put up on `Make in India`s web portal (http://www.makeinindia.com)
along with details of FDI Policy, National Manufacturing Policy, Intellectual Property Rights and Delhi
Mumbai Industrial Corridor and other National Industrial Corridors.
4) Ordinance has been issued to make land acquisition easier for important projects.

5) A number of items have been taken off the licensing requirement from Defence products`list. Similarly, items
of dual use have also been taken off the licensing requirement.
6) The Ministry of Labour and Employment has developed a unified Web Portal ‗Shram Suvidha`. This portal
facilitates:
a. Allotment of Unique Labour Identification Number (UN) to units;

b. Filing of single self-certified online return for 16 labour laws;
c. Random computerized inspections based on objective criteria;
d. Reports to be uploaded by inspectors within 72 hours of inspection;

Internet in Orbit
Google has never shied from spending big to find ways to connect more people to the Internet. Over the last two
years, its ideas have included fleets of little satellites, solar-powered drones that would fly around the world and
balloons that float high into the stratosphere, beaming the Internet to those below.
Google and mutual fund giant Fidelity have announced a $1 billion investment into Space Exploration
Technologies, a growing private rocket company also known as SpaceX. The firm could give Google a way to put
its devices into outer space.
With that growing collection of devices in

the sky, Google believes it can spread the
Internet to under-served areas around the
world. The investments also reflect self-
interest, since the more people who are
connected directly to Google, the more ads it
can show them. And that is how Google
makes its money.
Google‘s interest in satellites is not original.

Last month, the Virgin Group and
Qualcomm, a maker of communications
semiconductors, announced they had
invested in OneWeb, a network of Internet
connectivity satellites, while Planet Labs, a
maker of shoebox-size satellites that offer Earth imagery, announced Tuesday it had received $95 million in
financing.
Last year, Facebook bought a British drone maker and hired a bevy of top aerospace scientists, with the goal of
deploying high-altitude, unmanned planes to deliver Internet service to parts of the world that have little
connectivity now. The company is also experimenting with satellites and lasers to deliver Internet services.

The companies have different technologies and different ideas for making money, but all assume that there is no
economic way to physically wire the world‘s under-served consumers. So the only way to do it is with satellites and
other wireless technologies.
The interest in satellites also extends to services. Last year, Google spent about $500 million to buy Skybox
Imaging, a maker of small high-resolution imaging satellites that could do things like monitor crops or map the
terrain below a forest canopy.
But be it imaging or connections, the recent interest in satellites stems from a reduction in satellite cost. Unlike
the first space race, when governments had to make almost everything themselves, there are now all kinds of off-
the-shelf chips, batteries and other components that can be mixed and matched. And just as the camera on your
mobile phone becomes better with each upgrade, the advancement in space imaging technology has been rapid.
―Aerospace is following business because the dominant research and development dollars are no longer in the Air
Force or NASA, but they are in Google and Apple and all these places pushing the boundaries of miniaturised
electronics,‖ said Will Marshall, co-founder and chief executive of Planet Labs. There is nothing new about
connecting to the Internet via satellite. People do it on airplanes, at sea and in remote corners of the world. ViaSat,
a satellite company, beams satellite Internet to 700,000 homes and apartments in the United States. But this is
done with bigger, higher-orbiting satellites that sit in a geosynchronous orbit, meaning they move at the same
speed as the earth and so stay above a fixed point.
Mark Dankberg, ViaSat chief executive, estimated that dozens of companies around the world are working on
satellite-based Internet services that are regional in scope and use these higher-orbit technologies.
Low-Earth-orbit satellites are already revolutionising imaging technologies by allowing companies to receive
continuously updated pictures of earth, which lets them do things like measure a mall‘s hourly parking lot traffic.
But whether these satellites can be used to connect people to the Internet more cheaply has yet to be proved,
Dankberg said. One advantage is that low-Earth satellites could have less lag between typing a search into Google
and receiving the results.
But since most of the world is water and barren land, Dankberg said, a fleet of Internet-connected satellites would
have many of its components hovering over unpopulated areas. ―It has yet to be proven that lots of little satellites
can provide Internet more cheaply than a handful of big ones,‖ he said.
Mitochondrial Disease
Mitochondrial disease is a group of disorders caused by dysfunctional mitochondria, the organelles that generate
energy for the cell. Mitochondria are found in every cell of the human body except red blood cells, and convert the
energy of food molecules into the ATP that powers most cell functions. When the mitochondria aren't working
properly, the effects are particularly apparent in parts of the body with high energy requirements, such as the
nervous system, skeletal muscles and heart.
Symptoms include poor growth, loss of muscle coordination, muscle weakness, visual problems, hearing
problems, learning disabilities, heart disease, liver disease, kidney disease, gastrointestinal disorders, respiratory
disorders, neurological problems, autonomic dysfunction and dementia.
The body, and each mutation is modulated by other genome variants, the mutation that in one individual may
cause liver disease might in another person cause a brain disorder. The severity of the specific defect may also be
great or small. Some minor defects cause only "exercise intolerance", with no serious illness or disability. Defects

often affect the operation of the mitochondria and multiple tissues more severely, leading to multi-system
diseases. Mitochondrial diseases as a rule are worse when the defective mitochondria are present in
the muscles, cerebrum, or nerves, because these cells use more energy than most other cells in the body.
Mitochondrial disorders differ from other genetic disorders affecting the muscles in a number of ways. Most
significantly, although mitochondrial disease can present as a "pure myopathy," meaning that only the skeletal or
heart muscles are affected, it more often causes problems in many different organ systems, including the nervous,
visual, renal (kidneys), digestive and circulatory systems.
Mitochondrial diseases are sometimes (about 15% of the time) caused by mutations in the mitochondrial
DNA that affect mitochondrial function. Other causes of mitochondrial disease are mutations in genes of
the nuclear DNA, whose gene products are imported into the Mitochondria (Mitochondrial proteins) as well as
acquired mitochondrial conditions. Mitochondrial diseases take on unique characteristics both because of the way
the diseases are often inherited and because mitochondria are so critical to cell function. The subclass of these
diseases that have neuromuscular disease symptoms are often called a mitochondrial myopathy.
Spindle transfer, where the nuclear DNA is transferred to another healthy egg cell leaving the defective
mitochondrial DNA behind, is a potential treatment procedure that has been successfully carried out on
monkeys. Using a similar pronuclear transfer technique, researchers at Newcastle University successfully
transplanted healthy DNA in human eggs from women with mitochondrial disease into the eggs of women donors
who were unaffected. The resulting embryo carries nuclear DNA from the mother and father and mitochondrial
DNA from the egg donor. In such cases, ethical questions have been raised regarding biological motherhood, since
the child receives genes and gene regulatory molecules from two different women. Using genetic engineering in
attempts to produce babies free of mitochondrial disease is controversial in some circles and raises
important ethical issues.
The United Kingdom‘s House of Commons has voted overwhelmingly (Feb 2015) to allow British researchers to
pursue mitochondrial DNA replacement therapy which would allow women who carry disease-causing mutations
in their mitochondrial genes to give birth to genetically related children free of mitochondrial disease.
The measure has been controversial, especially because it would alter the DNA of an embryo in a way that could
be passed on to future generations. Some scientists and nongovernmental organizations have argued that not
enough is known about possible side effects of the technique to go forward in human patients.
Some scientists have argued that potential mismatches between donated mtDNA and host nuclear DNA could
cause unanticipated problems. However, several ethical and scientific reviews and a public consultation in the
United Kingdom all supported allowing the Human Fertilisation and Embryology Authority (HFEA) to grant
licenses for experimental use of the technique in humans.
Regulators in the United States are also considering whether to allow the technique. The Food and Drug
Administration held a 2-day hearing on the science of mtDNA replacement last year. They have asked the Institute
of Medicine to issue a consensus study on the ethical and social policy issues the technique raises. The committee
held its first meeting on 27 January.

Alternate to Injections Developed
Scientists at the Indian Institute of Science have
successfully tested an alternative to syringes for drug
delivery.
The method, tested on mice, delivers medicine through

tiny capsules when triggered by a micro-shock wave.
Developing methods for alternative delivery of drugs has

gained importance considering the large number of
infections that are spread through contaminated, non-
sterilised syringes. ―Each year, 1.3 million early deaths
are caused by unsafe injections,‖ said Dipshikha
Chakravortty, a biologist on the team of aerospace
engineers and cell biologists who developed the model.
Their research was published in the journal The Royal
Society of Chemistry last month.
The researchers designed tiny biocapsules made of a

polymer (spermidine-dextran sulfate or Sper–DS). The
capsules are so small that 10 of the biggest ones could be
placed in a length of one millimetre. The capsules are
loaded with either insulin or the antibiotic ciprofloxacin.
They are then placed on the infection site — for instance,
external diabetic wounds — and are triggered by micro-
shock waves produced by a handheld machine.
―The micro-shock waves we create last a millionth of a second, and affect a small area. They don‘t affect living cells
in the body,‖ said Jagadeesh Gopalan, Professor, Department of Aerospace Engineering, IISc.
The result, say the researchers, is that a controlled portion of the drug is released with every shock wave (on an
average 20 per cent of the medicine is released with every wave). Almost 90 per cent of the drug release was
observed when the particles were exposed to micro-shock waves five times. ―It can be used where there is a need
for frequent injections (diabetes, for instance). This method can help do away with invasive procedures,‖ Ms.
Chakravortty said.
Added benefit
The shock waves have an added benefit, the researchers noted. Infections by bacteria such as
Staphylococcus (cause of foot infections that people living with diabetes are susceptible to) are lethal as they form
a biofilm around the protein in the cell. The shock waves tear this biofilm and aid the treatment, scientists said.

Facebook launches Internet.org in India
Facebook has announced a tie-up with Reliance Communications to launch Internet.org in India, bringing to the
land of a billion-plus people a service that the social media giant says helps affordable Internet access but whose
critics disapprove its restrictiveness.
India now becomes the sixth destination for Internet.org, a Facebook-led initiative envisaged about a year-and-a-
half back with six other founding partners, including Samsung and Qualcomm. The service has already been
launched in Zambia, Tanzania, Kenya, Colombia and Ghana.
Facebook‘s 30-year-old founder and CEO Mark Zuckerberg announced the development on his social network. He
posted, ―More than a billion people in India don‘t have access to the internet. That means they can‘t enjoy the
same opportunities many of us take for granted, and the entire world is robbed of their ideas and creativity.‖
The tie-up gives subscribers of the Anil Ambani-led Reliance Communications who have Internet-enabled
handsets free access to 38 Websites – a mix of news, music, education, weather and health sites. The list includes
Facebook, Wikipedia, and Reliance Astrology. The lone search option available is Microsoft‘s Bing. They can be
accessed via an Android app.
Gurdeep Singh, CEO, Consumer Business, Reliance Communications, said during the launch in Mumbai, ―This
partnership will not only accelerate internet penetration In India, it will also open new socioeconomic
opportunities to users in fields like education, information and commerce.‖
Chris Daniels, Vice President of Internet.org at Facebook, said, ―This is a big step forward in our efforts to connect
everyone in India to the internet and help people discover new tools and information that can create more jobs
and opportunities.‖
Critics, however, see little altruism in Internet.org. Rather, what they see is a huge challenge to the neutrality of
the Internet. Their point is that a selective access to the Internet makes it extremely difficult for rivals not part of
the service.
Internet activist and director of the Center for Civic Media at MIT, Ethan Zuckerman, told The Hindu in an email
interview that "If Facebook were donating millions or billions to upgrade infrastructure - or even to lobby mobile
phone carriers for cheaper data services for all - it would be less troubling. But instead, they're offering a limited
version of the internet, one that centers on Facebook, to low-income internet users. That raises real concerns that
this is not a charitable effort, but a customer acquisition strategy."
Pranesh Prakash, Policy Director of the Bengaluru-based research and advocacy organisation The Centre for
Internet & Society, said he is worried about the long-term consequences. ―The Internet.org model violates most
definitions of net neutrality, as it provides access to a limited menu of services claiming to be the Internet — being
based on a cable TV model — rather than providing actual access to the Internet at a low cost.‖
He said, ―Since it is an exclusive deal with a single mobile service provider, it also calls into question the
genuineness of Mark Zuckerberg‘s publicly-stated motive of bringing the Internet to a billion people and bridging
the digital divide.‖
It isn‘t clear how Facebook and Reliance would bear the cost of the free service. What Facebook said in its annual
report of 2013 is that it would continue to invest in projects even if it doesn‘t have a clear path to monetisation,
―such as our commitment to the Internet.org initiative to increase global Internet access.‖

Even prior to the internet.org initiative, companies such as Facebook and Twitter have individually worked out
deals with telecom companies in fast-growing markets to make their services free for subscribers. Research firm
eMarketer had forecast India to be the fastest-growing geography for Facebook in terms of users in 2014.
Internet.org
Facebook has launched this project in partnership with Samsung, Ericsson, MediaTek, Nokia, Opera and
Qualcomm. The project is aimed at bringing affordable Internet access to billions of people who do not have
access to it. The companies are working together on data-compression technologies and cheap, high-quality
smartphones to make the web access cheaper. While it might seem like the whole world is connected, just one-
third of the globe‘s population has Internet access, and adoption is only growing at 9 percent. Internet.org aims to
speed up that rate.
The three major initiatives of the partnership are:
1. Making access affordable through cheaper smartphones, and working with mobile operators to extend
Internet access to underserved communities.
2. Using data more efficiently so people don‘t run up high costs. Internet.org partners look to build data-
compression tools, bolster network efficiency, and improve data caching.
3. Helping businesses drive access to grow mobile businesses sustainably. Partners aim to create mutually
beneficial incentives for app developers, device OEMs, and operators that will get more people online. The
companies will also work together to help mobile devices support more languages to demolish barriers to
usage.
The push is rooted in altruism and global community, but may eventually serve to boost the businesses of all
mobile companies. By enlarging the pie — getting more people online — everyone in the mobile business could
benefit. That includes Facebook and the device manufacturers spearheading this project, but also the carriers, app
developers, e-commerce companies, advertisers, and even artists who distribute their work via mobile.
Google has long been a pioneer in accessibility projects. Its latest, Project Loon, aims to bring Internet to
disconnected community by beaming them a 3G signal from giant balloons. In the past Google has offered free
Gmail access over SMS in Africa, while Twitter has worked with international carriers to let people tweet without
paying for data.
Zuckerberg says Facebook has invested $1 billion into accessibility initiatives over the last few years, though
they‘ve mostly focused on connecting people to its own service. The Facebook Zero program provides free access
to a stripped-down feature phone version of the social network through carriers in the developing world. The idea
is that if Facebook can get low-tech mobile users hooked early, they‘ll stick with it and stay connected to their
social graph as they move on to smartphones.
Criticism of Internet.org
1) “Internet for All” really means “Facebook for All.”

Critics argue, ―Facebook wants more Internet customers because it has exhausted the connected world and it
needs to grow.‖ Indeed, having already signed-up some 1.15 billion users, Facebook‘s growth is now slowing — and
many believe that the vast majority of the approximately 2.7 billion people worldwide with Internet connections
who want to sign up for Facebook have already done so. Zuckerberg has himself acknowledged that Facebook
stands to ―benefit from‖ improving global access to the Internet, though he rejected as ―crazy‖ criticism of that
reality.
2) The Internet does not cause economic growth.

Pointing to graphs drawn from a McKinsey study that purportedly show the Internet is increasingly contributing
to GDP growth in developing countries, Zuckerberg presented a vision of a world in which low-cost Internet
access, innovative business models, and highly efficient apps for mobile devices would grow the economic pie in
developed and developing markets alike.
But correlation is not causation. For our purposes, the Internet in and of itself will not solve the structural
problems in the developing world. Think about it this way – the economic advantages that the developed world
has, often on the back of the developing world, could be fostering Internet growth, rather than the other way
around. Even the McKinsey report itself was careful not to overstate the cause-and-effect: ―Of course, these are
just correlations. Causality still needs to be fully proved and we welcome additional work in this field.‖
3) Issue of net neutrality

As Internet.org takes hold, it could put app developers in a headlock in emerging markets. Either they add their
apps to Facebook's platform or users ignore their apps because mobile operators will charge data fees on them.
And that could trap people into joining Facebook to get access to the helpful mobile apps they want, everything
from online classes to loan application apps.
Apart from issues of making Facebook the gateway to the web and the primary source of access to content
publications who selects which sites are offered free via Internet.org and why? By giving access to these sites,
Facebook and telecom provider with which it ties up (Reliance in India) essentially ensure that consumption for
some portals become free, and some remain paid. The consumers in emerging markets are cost-conscious, and
they‘re likely to lean towards what is cheaper. This puts telecom provider and Facebook in a situation where they
are king-makers and can effectively extract a payment for ensuring that some sites dominate others. This violates
the basic principles of net neutrality.
Indian woman with Swyer Syndrome gives birth

Swyer syndrome is a condition in which individuals with one X chromosome and one Y chromosome in each cell,
the pattern normally found in males, have a female appearance. People with this disorder have female external
genitalia and a normal uterus and Fallopian tubes. However, they do not have functional gonads (ovaries or
testes). Instead, they have undeveloped clumps of tissue called streak gonads. These abnormal gonads often
become cancerous, so they are usually removed surgically early in life.
People with Swyer syndrome are typically raised as females and have a female gender identity. Affected
individuals usually begin hormone replacement therapy during adolescence to induce menstruation and
development of female secondary sex characteristics such as breast enlargement and body hair. Hormone
replacement therapy also helps prevent reduced bone density (osteopenia). Women with this disorder do not
produce eggs, but may be able to become pregnant with a donated egg or embryo.
How common is Swyer syndrome?
Swyer syndrome has been estimated to occur in approximately 1 in 30,000 people.
What genes are related to Swyer syndrome?
People normally have 46 chromosomes in each cell. Two of the 46 chromosomes, known as X and Y, are called sex
chromosomes because they help determine whether a person will develop male or female sex characteristics.
Females typically have two X chromosomes (46,XX), and males ordinarily have one X chromosome and one Y

chromosome (46,XY). After seven years of marriage and no child, 32-year-old Urvashi Sharma (name changed on
request) was informed that she was ―genetically male since birth‖. It, however, took just 30 seconds for her
husband to recover from the shock and say, ―You are still my wife.‖ On February 6, Meerut-based ―genetically
male‖ Urvashi, who had no ovaries and an infantile uterus, became the first known Indian with such a condition to
give birth to twins.
Urvashi, too, has a streak testes, no ovaries, and thus an extremely rare form of infertility. Till Meerut-based Dr
Sunil K Jindal used assisted reproductive technique (ART) to help her conceive. He administered oestrogen and
progesterone injections for four to six months, which helped expand her uterus to an almost-normal size. ―Once
Urvashi started menstruating, it was an indication that the uterus had developed an endometrial lining thickness
of 5.5-6 mm, and was ready to nurture an embryo,‖ says Jindal, adding that periods can start ―even without ovum
production‖. Once the uterus was ready, the embryo — formed in a lab with a donor‘s eggs and the husband‘s
sperms through the intra-cytoplasmic sperm injection — was injected into it.
Planting the embryo in the uterus was just half the work done. ―Since her body is genetically male and cannot
sustain a pregnancy on its own, she was given a daily injection of oestrogen and vaginal capsules for nine months
until delivery,‖ he says.
Till now, six other women with XY gonadal dysgenesis have given birth to babies across the world — including in
Iceland (1997), England (2007), Serbia (2008), Greece (2011) and the United Kingdom (2015). The most recent
case is of 28-year-old Hayley Haynes who gave birth to twins on January 30 this year in the UK. In India, Dr
Kamini Rao, the Bangalore-based IVF expert credited with India‘s first successful SIFT (Semen Intra Fallopian
Transfer) baby which involves external push to sperms to enter the fallopian tube, claims she has four ―genetically
male‖ women waiting in line to conceive a baby.
e reaches puberty and does not menstruate. But that‘s only if doctors diagnose the condition. Unlike in the UK, for
example, where Haynes learnt of her condition at the age of 19, women in India are not aware of it till they get
married and fail to conceive. At the first hint — absence of menstruation — doctors prescribe sympotamic
treatment. ―When patients complain of not menstruating, doctors give them oestrogen and progesterone tablets
that thicken the uterus walls and artificially induce menstruation,‖ says Rao, adding that the lack of diagnosis has
led to ―under-reporting of the condition‖. No official data, however, exists on the prevalence of the disorder in the
country.
Another problem with diagnosing the disorder, says Rao, is the variation in the symptoms. ―There are several
variations. Sometimes the person may not have lower one-third of their vagina in which case we have to artificially
create it. In other instances, the upper portion may not be formed entirely. There are very few characteristics that
help in diagnosing the patients. The only factor persistent in all patients of Swyer‘s syndrome is the absence of
ovaries,‖ she says.
The condition is diagnosed with karyotyping, a laboratory technique use to map chromosomes. In Urvashi‘s case,
no expert told her about karyotyping till she consulted Jindal. ―Doctors do not consider the possibility of XY
chromosomes as the patient has female organs externally. They think the organs are just not fully formed and
presence of a uterus, vagina and fallopian tube makes them believe the person is biologically female. The absence
of ovaries in the ultrasound image does not encourage karyotyping either,‖ Jindal said.
A person with gonadal dysgenesis is infertile, but can enjoy a normal sexual life because of the presence of a
vagina and other external genitalia.
Jindal, who runs an IVF clinic, says the ART used on ―genetically male‖ women is similar to the one used on post-
menopausal women who wish to conceive but can‘t as their bodies do not produce enough oestrogen. However,
the use of the ART on ―genetically male‖ women is a relatively new idea in India, says Rao, and thus no successful
child birth was reported until now.

State of affairs of Science & Technology in India
A pall of gloom has set in the world of Indian Science, Technology, Agriculture and Medicine (STEAM) over the
last two years or so. And it has nothing (not yet) to do with who runs the government. First an across-the-board
cut of over 30 per cent of the allotted budget was imposed by the previous government, leading to last-minute
dropping of projects and delays in existing ones. And the present government has neither restored the cut nor
added anything yet. Going by indications, it might not improve significantly. We heard a decade ago that the
budget for STEAM will improve from the then 0.8 per cent of GDP to over 2 per cent in a gradual manner. Yes, it
did rise to almost 1 per cent but dropped back in real terms soon. Indian efforts in STEAM are fast losing steam.
So is higher education.
To a large extent, the ruling dispensations are to blame, though fat pocket industries cannot be left blameless.
Unlike in Europe, Japan or the US, private industries and/or industrialists here do not have foundations or
similar entities that support research by others; they at best support in-house research and development. Thus,
most of us have to depend entirely on the central and state governments for support. State governments support
research more by lip service than lakhs of rupees.
The earlier government had in place not one but two scientific advisory panels, had STEAM experts members in
the Planning Commission, and these bodies did bring about some changes and plans for action. We are hoping the
present government too would seek similar or better advice and counsel, but it is yet to be. They have so far
extolled past achievements (real and imagined) rather than explore tomorrow‘s science.
More often than not, ministers declare that they will open more IITs, IIMs, AIIMSs and Central Universities and
so forth, often in rural places with little or no academic contacts with peers, as often happens in cities. Politicians
are particularly enamoured with the success of some of these elite institutes, and think they can do the same
within a few years by allotting hundreds of acre and promising billions of rupees, which may or may not come.
But, bricks and mortar do not an IIT make. Today, over 30 such institutions have mushroomed across the
country, and most remain headless, and the heads of already existing institutions are asked to nurse, nurture and
mentor the newbies — a bureaucratic double-whammy solution. Getting the right people and letting them loose to
experiment is the trick, but such autonomy is anathema for the rulers. Expert committees meet and recommend
what they consider as the right men/women for the job, but the minister dismisses the recommendation and
offers the job to the person of his/her choice — a classic example of ‗he who pays calls the tune.‘ And we want
excellence!
As Professor Amartya Sen said recently: ―Academic governance in India remains so deeply vulnerable to the
opinions of the ruling government.‖ So true. Oxford is not run by David Brown, nor is Harvard by Obama. Domain
expertise, independence in decision making and autonomy — three conditions extolled by experts as essential for
success need to be guaranteed. This was how the original 5 IITs and 5 central universities gained their name and
fame. This is how the Indian Institute of Science has remained an outstanding institution for over 100 years.
Politicians, please keep out of these!
It is worse when you call the tune, but not even pay. Over the last couple of years, the allocated budget of the
government R &D labs, and grants for research project, has been cut by as much as 35 per cent. Some labs have
had to pay salaries for their staff from internal funds. Researchers go around with letters that have sanctioned
sums of money as grants for their research projects, but the promised money has not come yet.
It is a marvel that despite all these, many scientists and academicians continue to perform well. I know of at least
half a dozen youngsters who have published world class research publications very recently. Almost all of these are
patentable and can bring wealth. A couple of them, given timely (indeed immediate) support, can be fine-tuned to
generate potential treatment for the rampant viral disease swine flu if a targeted programme is launched with

urgency and funded. They need help and hand-holding. The NIH model in the U.S. screens such publications and
helps the authors get patents and allow licensing. We have two brilliant scientists heading the Department of
Biotechnology and the Department of Science and Technology. I request them to look into this aspect of screening
potential breakthroughs and assist the author in patenting and licensing, and launch a program, just as China did
(and succeeded with the SARS virus).
Independent India was founded and has developed largely by making friends with science. And in doing so, it
relied on the wisdom and commitment of some scientists and economists who thought big. The government
respected their views and acted on them, without any major interference. Plans were made, money was budgeted
and spent, and we have progressed. This trend has been good to us, but in recent times this is being given the go
by. The science academies have played positive roles and continue to do so, by mentoring young researchers,
offering academic advice, discussing and debating with the relevant ministers. What we need is to continue to
have spokespersons, even ―lobbyists‖ as the U.S. term has it, academies and professional societies interacting with
government assert themselves and taking on a role of advocacy. In such absence the budget for STEAM will
continue to be sub-optimal.
How aerosols affect tropical rainfall

The inter-tropical convergence zone (ITCZ), a belt of precipitation caused by the trade winds (which blow from
east to west in the north and southern hemispheres near the equator) has been shifting southwards in Central
America since 1900, when the industrial revolution and associated atmospheric pollution began in real earnest.
The reason for this shift according to a new study is the cooling effect of aerosols which, produced in large
quantities due to industrialisation reflect sun‘s heat back into space and work in contrast to green house gases
which trap atmospheric heat and cause global warming. Cooling of the atmosphere results in less rainfall and dry
conditions while warming leads to evaporation, convection and rainfall. The study found that since 1900 there has
been a steady increase in rainfall in the southern tropics, in contrast to a steady decrease in the northern tropics
and the ITCZ has shifted southwards in the Central American region.
The study was conducted by lead- author Dr. Harriet E. Ridley, Department of Earth Sciences, University of
Durham, Durham, UK and others. The researchers analysed a stalagmite found in a cave in Belize (a Central
American nation) to construct a record of rainfall patterns in the region over the past 450 years. This site is near
the northernmost extent of the ITCZ, a remarkably sensitive location for reconstructing even minor variations in
ITCZ position.The work was published recently in the journal Nature Geoscience.
The team measured Carbon -13 (δ13C) isotope levels over this period in the various layers of the stalagmite.
Carbon isotope serves as a good proxy for rainfall as recorded in the stalagmite over the thousands of years of its
formation. The authors support this view using instrumental data from the region.
Stalagmites grow incrementally as drops of water seep through the overlying rock. The growth of the stalagmite is
therefore linked to the amount of water reaching it, which is in part controlled by rainfall. Furthermore, every
drop of water reaching the cave has a unique chemical signature which is controlled by the prevailing climate,
most often temperature and rainfall amount. This chemical signature is then incorporated into the stalagmite
layers as it grows. By 'chemical signature' in this case, is meant oxygen and carbon isotopes. At the Belize cave site
the carbon isotope value of each layer of the stalagmite is controlled by the amount of water dripping onto the
stalagmite and therefore the amount of rainfall. As this carbon isotope values change through time one can see

how rainfall has changed. The stalagmite portions were dated by measuring Uranium-Thorium ratios over the
past centuries.
U-Th dating is based on the radioactive decay of uranium-234 to thorium-230. This decay is part of a much longer
decay series. In order to conduct Uranium-Thorium dating, powder samples (19 in this case) spread between the
top and bottom of the stalagmite were taken.
‖A key factor in the method is that uranium is soluble in water while the daughter products are non-soluble. This
means that uranium is present in water which seeps into limestone caves and is incorporated into stalagmites but
it's non-soluble daughter products are not. Daughter isotopes present in the sample increase through time as the
uranium decays and the ratio of the uranium to the thorium is measured to provide an age estimate,‖ clarified Dr.
Ridley in an email to this correspondent.
The study revealed that rainfall in the Northern Tropics where Belize is situated indeed declined dramatically
since 1900 when the industrial revolution began. The authors point to increased aerosol concentrations in the
Northern Tropics of Central America as the likely cause. There have been drying events even before 1900, but
these coincided with Northern Hemisphere volcanic eruptions which sent aerosols into the atmosphere causing
cooling and therefore, dry conditions. Similarly, volcanic eruptions in the southern hemisphere resulted in
temporary cooling in the southern tropics.

Islamic State
Islamic State (IS) is a radical Islamist group that has seized large swathes of territory in eastern Syria and across
northern and western Iraq.
Its brutal tactics - including mass killings and abductions of members of religious and ethnic minorities, as well as
the beheadings of soldiers and journalists - have sparked fear and outrage across the world and prompted US
military intervention.
What are its origins?

IS can trace its roots back to the late Abu Musab al-Zarqawi, a Jordanian who set up Tawhid wa al-Jihad in 2002.
A year after the US-led invasion of Iraq, Zarqawi pledged allegiance to Osama Bin Laden and formed al-Qaeda in
Iraq (AQI), which became a major force in the insurgency. The tactics of Abu Musab al-Zarqawi were considered
too extreme by al-Qaeda leaders.
After Zarqawi's death in 2006, AQI created an umbrella organisation, Islamic State in Iraq (ISI). ISI was steadily
weakened by the US troop surge and the creation of Sahwa (Awakening) councils by Sunni Arab tribesmen who
rejected its brutality. After becoming leader in 2010, Baghdadi rebuilt ISI's capabilities. By 2013, it was once again
carrying out dozens of attacks a month in Iraq. It had also joined the rebellion against President Bashar al-Assad
in Syria, setting up the al-Nusra Front.
Very little is known about al-Baghdadi, but a biography posted on jihadist websites in 2013 said he earned a
doctorate in Islamic studies from a university in Baghdad. He formed the militant group in Salaheddin and Diyala
provinces north of the Iraqi capital before joining al Qaeda in Iraq. Al-Baghdadi was detained for four years in
Camp Bucca, which was a U.S.-run prison in southern Iraq. He was released in 2009. After ISIS declared the
creation of the so-called "Islamic State," he began using the name Al-Khalifah Ibrahim, and now goes by that
name with his followers.
In April 2013, Baghdadi announced the merger of his forces in Iraq and Syria and the creation of the Islamic State
in Iraq and the Levant (ISIS). The leaders of al-Nusra and al-Qaeda rejected the move, but fighters loyal to
Baghdadi split from al-Nusra and helped Isis remain in Syria.

At the end of December 2013, ISIS shifted its focus back to Iraq and exploited a political stand-off between the
Shia-led government and the minority Sunni Arab community. Aided by tribesmen, the group took control of the
central city of Falluja.
IS fighters celebrate their victory in Iraq
In June 2014, ISIS overran the northern city of Mosul, and then advanced southwards towards Baghdad. At the
end of the month, after consolidating its hold over dozens of cities and towns, ISIS declared the creation of a
caliphate and changed its name to Islamic State.
What does IS want?

The group aims to establish a "caliphate", a state ruled by a single political and religious leader according to
Islamic law, or Sharia.
Although currently limited to Iraq and Syria, IS has promised to "break the borders" of Jordan and Lebanon and
to "free Palestine". It attracts support from Muslims across the world and demands that all swear allegiance to its
leader - Ibrahim Awad Ibrahim Ali al-Badri al-Samarrai, better known as Abu Bakr al-Baghdadi.
Some estimate that IS and its allies control about 40,000 sq km (15,000 sq miles) of Iraq and Syria - roughly the
size of Belgium. Others believe they control closer to 90,000 sq km (35,000 sq miles) - about the size of Jordan.
That territory includes cities - Mosul, Tikrit, Falluja and Tal Afar in Iraq; Raqqa in Syria - oil fields, dams, main
roads and border crossings.
Eight million people are believed to be living under partial or full IS control, where the group implements a strict
interpretation of Sharia, forcing women to wear veils, non-Muslims to pay a special tax or convert, and imposing
punishments that include floggings and executions.

Religious minorities, particularly Iraq's Yazidis, have been targeted by Islamic State
What weapons does IS have?

IS fighters have access to, and are capable of using, a wide variety of small arms and heavy weapons, including
truck-mounted machine-guns, rocket launchers, anti-aircraft guns and portable surface-to-air missile systems.
They have also captured tanks and armoured vehicles from the Syrian and Iraqi armies. Their haul of vehicles
from the Iraqi army includes Humvees and bomb-proof trucks that were originally manufactured for the US
military.The group is believed to have a flexible supply chain that ensures a constant supply of ammunition and
small arms for its fighters.
Where does IS get its money from?

Islamic State is reported to have $2bn (£1.2bn) in cash and assets, making it the world's wealthiest militant group.
Initially, much of its financial support came from individuals in Arab Gulf states. Today, IS is a largely self-
financed organisation, earning millions of dollars a month from the oil and gas fields it controls, as well as from
taxation, tolls, smuggling, extortion and kidnapping. The offensive in Iraq has also been lucrative, giving it access
to cash held in major banks in cities and towns it has seized.
Why are their tactics so brutal?

IS members are jihadists who adhere to an extreme interpretation of Sunni Islam and consider themselves the
only true believers. They hold that the rest of the world is made up of unbelievers who seek to destroy Islam,
justifying attacks against other Muslims and non-Muslims alike.
Beheadings, crucifixions and mass shootings have been used to terrorise their enemies. IS members have justified
such atrocities by citing the Koranic verses that talk of "striking off the heads" of unbelievers, but Muslims have
denounced them. Even al-Qaeda leader Ayman al-Zawahiri, who disavowed IS in February over its actions in
Syria, warned Zarqawi in 2005 that such brutality loses "Muslim hearts and minds".

Timeline:
Origins and development

1999: Originally called Jama'at al-Tawhid wal-Jihad (The Group of Monotheism and Jihad) or JTJ, and founded
by Abu Musab al-Zarqawi, a Jordanian national living in Iraq, the Sunni Islamist group forms with the purpose of
overthrowing the government of Jordan.
2004-06: After the invasion of Iraq in 2003, al-Zarqawi pledges his loyalty to Osama Bin Laden. The group now
calls itself Tanzim Qaidat al-Jihad fi Bilad al-Rafidayn or "Organization of Jihad's Base in the Land of the Two
Rivers," although it is often described as "Al Qaeda in Iraq." The group's new stated objective is to fight US
coalition troops and their Iraqi allies. Beginning in 2006, Nuri al-Maliki's predominantly Shiite government
begins to exclude Sunnis from government positions.
2005-09: Although the US Department of Defense claims that Abu Bakr al-Baghdadi was held in Camp Bucca, a
detention camp in southeastern Iraq, for only a matter of months in 2004, newspapers including the Washington
Post and New York Times say it was four years. Today al-Baghdadi is the leader of IS.
2011: As the US finishes its withdrawal from Iraq, the "Islamic State of Iraq" sees its ranks double in size. The
group continues to launch attacks against Shiite tribal militias, Iraqi police and the Iraqi army, which is largely
Shiite. Next door, the Syrian Civil War begins in March.
Break with al-Qaeda

October 2013: Al-Qaeda leader Ayman al-Zawahiri demands that the "Islamic State of Iraq and the Levant"
disband and leave the formerly allied Syrian rebel group the al-Nusra Front in charge of operations against Bashar
al-Assad's government. Al-Baghdadi refuses.

February 2014: Following months of internal strife, ISIL or ISIS (Islamic State of Iraq and the Levant or Islamic
State of Iraq and Syria) breaks away from al-Qaeda and al-Nusra. ISIS changes its focus from challenging al-
Assads government to creating an Islamic caliphate that covers the region.
April 30, 2014: Elections are held in Iraq. Prime Minister al-Maliki's coalition looks to be in a strong position,
setting off what will become the worst wave of violence in Iraq since 2008.
ISIS ramps up its violent profile

June 7, 2014: ISIS fighters storm Anbar University in Ramadi, blowing up a bridge on campus and detaining
dozens of students.
June 10, 2014: ISIS militants seize Iraq's second-largest city, Mosul, overnight. They take control of government
buildings, prisons, and TV stations. The Iraqi army isn't strong enough to stop them. This garners ISIS widespread
media attention, where their large numbers and unprecedented financial safety net is highlighted. Neighboring
countries like Saudi Arabia and Jordan begin to strengthen their border patrols in the wake of this attack.
June 11, 2014: The day after taking Mosul, ISIS fighters capture the city of Tikrit. Representatives of the US
Department of State as well as Iran's Foreign Minister offer their support to the Iraqi government. Refugees flee to
Iraqi Kurdistan.
June 15, 2014: Whereas many militant groups or governments try to hide evidence of massacres, ISISposts
pictures on the Internet of thousands of bodies, those of Iraqi soldiers who fled a nearby base for fear of the
extremists.
June 29, 2014: The terrorist group shortens its name to "Islamic State" or IS and declares al-Baghdadi caliph of
all Muslims.
July 10, 2014: Kurdish leaders call on al-

Maliki to resign after he accuses Kurdistan
of hiding IS troops, a charge they
vehemently deny.
July 19, 2014: The jihadists in Mosul give

Christians still living in the city the choice
to convert to Islam or leave the "caliphate".
Thousands flee before the 'deadline' two
days later.
August 6, 2014: Kurds join the fight

against IS as militants take the city of
Sinjar, stronghold of the minority Yazidi
community. Yazidism is an ancient
monotheistic religion found primarily in
Iraq's Nineveh province, of which Mosul is
the capital. Misunderstood as 'devil
worshippers,' Yazidis were persecuted by Saddam Hussein's government as well.
The West intervenes

August 8, 2014: The United States military begins aseries of airstrikes on IS targets in Northern Iraq, but
President Obama rules out the use of ground troops.

August 14, 2014: Prime Minister Nuri al-Maliki resigns after having previously refused to step aside despite
mounting pressure to do so. He expresses his support for his replacement, Haider al-Abadi, during a televised
statement. The UN Security Council and the US call on al-Abadi to form a more inclusive government than that of
al-Maliki.
August 20, 2014: The FBI confirms that a video alleging to show the beheading of US journalist James Foley by
an IS fighter is authentic. In the video, Foley reads a prepared statement criticizing President Obama's actions in
the Middle East. The jihadist threatens that if President Obama does not end his aerial attacks on IS, the group
will also kill journalist Steven Sotloff. The militant's British accent brings attention to the large number of Western
Muslims who have joined the jihadist cause, some of whom come from Germany.
August 25, 2014: Syrian President Bashar al-Assad offers to help the West fight Islamic State, though many
Western countries have actively opposed his regime since the Syrian Civil War began in 2011. Berlin makes it clear
it has no intention of working with Damascus.
August 31, 2014: The German government decides to send machine guns and anti-tank missiles to Kurdish
troops fighting IS in Iraq. This represents a major change to Germany's normally pacifist international outlook.
September 2, 2014: IS release a video they claim shows the beheading of US citizen and journalist Steven
Sotloff. Like Foley, Sotloff was forced to read an anti-American statement. Also like the previous video, another
man, this time British aid worker David Cawthorne Haines, is threatened with death if Barack Obama does not
halt US airstrikes in Iraq.
September 8, 2014: The Iraqi parliament approves Prime Minister al-Abadi's new government. It is
conditionally supported by Kurdistan's autonomous government as long as it meets their demands with regards to
their share of the federal budget and Kurdistan's oil reserves.
September 10, 2014: US Secretary of State John Kerry arrives in Baghdad, an unannounced stop on a tour of
the Middle East meant to build an anti-Islamic State coalition. Kerry expresses support for al-Abadi but reiterates
that it depends on the condition he creates an ethnically inclusive government.
September 10, 2014: Speaking the night before the 13th anniversary of the September 11 attacks, President
Obama gives a television address in which he promises to "degrade and ultimately destroy" Islamic State and
announces a broader anti-terrorism strategy that will expand to include targets in Syria. On the same day, German
Interior Minister Thomas de Maizière announces at a press conference that membership in the extremist
organization is now banned in Germany.
September 11, 2014 - The CIA announces

that the number of people fighting for IS may
be more than three times the previous
estimates. Analysts and U.S. officials initially
estimated there were as many as 10,000
fighters, but now IS can "muster between
20,000 and 31,500 fighters across Iraq and
Syria," a CIA spokesman tells CNN.
Abu Bakr al-Baghdadi
September 13, 2014 - IS militants post video on a website associated with the group, showing the apparent
execution of British aid worker David Haines.This makes him the third Western captive to be killed by the Islamist

extremist group in recent weeks. IS directs a statement at British Prime Minister David Cameron, threatening
more destruction if Britain continues its "evil alliance with America." At the end of the video, the executioner
threatens the life of Alan Henning, another British citizen held captive. The executioner appears to be the same
one who killed both Steven Sotloff and James Foley.
September 23, 2014 - The United States carries out airstrikes against IS. The bombing is focused on the IS
stronghold of Raqqa, a city in northern Syria.
October 3, 2014 - IS releases a video showing the apparent beheading of hostage Alan Henning. It blames the
killing on the UK for joining the U.S.-led bombing campaign against IS in Iraq and Syria. In the same video, the
group threatens the life of American aid worker Peter Kassig, also known as Abdul-Rahman Kassig.
November 3, 2014 - The Iraqi government announces IS militants have killed 322 members of the Albu Minr
tribe in a recent series of executions. According to Sheikh Nabil Al-Ga'oud, a leader in the Albu Minr tribe, the
latest of these incidents occurred November 1, in which 75 members of the tribe were killed near the town of Hit.
November 13, 2014 - An IS social media account posts an audio message purportedly recorded by leader Abu
Bakr al-Baghdadi. The speaker is heard saying the U.S.-led coalition to destroy IS is "terrified, weak and
powerless." The 17-minute audio says the coalition's effort has been a "failure" and the coalition will be "forced" to
"send ground forces to their deaths and destruction." The speaker also urges Islamic State fighters to take their
battle everywhere and "light the Earth with fire upon all tyrants," and mentions U.S. President Barack Obama's
plan to deploy 1,500 additional U.S. troops to Iraq "under the claim they are advisers." CNN cannot confirm the
authenticity of the online message or when it was recorded.
November 14, 2014 - The U.N. Independent International Commission of Inquiry on Syria concludes that IS
has committed war crimes and crimes against humanity, and leaders of the militant group should be held
accountable by organizations such as the International Criminal Court.
November 16, 2014 - IS militants claim to have beheaded American hostage Peter Kassig in a video published
to the Internet. Peter Kassig, also known as Abdul-Rahman Kassig, is the fifth Westerner whom IS claims to have
beheaded via video messages.
January 20, 2015 - IS demands $200 million from Japan in exchange for the lives of two Japanese hostages,
Kenji Goto and Haruna Yukawa.
January 22, 2015 - U.S. diplomatic officials say that coalition airstrikes have killed thousands of IS fighters to
date, including half of the top command of the terror group. The number may be as high as 6,000 or higher,
according to U.S. ambassador to Iraq Stuart Jones.
January 24, 2015 - Posted online is a video of hostage Kenji Goto, holding a photo of beheaded hostage Haruna
Yukawa. A voice in the video demands the release of terror suspect Sajida al-Rishawi, from Jordan, in exchange
for Kenji Goto.
January 31, 2015 - IS releases a video online showing the decapitated body of journalist Kenji Goto.
February 3, 2015 - Video and still images posted online by IS supportersapparently show Jordanian military
pilot Moath al-Kasasbeh being burned alive while confined in a cage. Jordanian state TV says that al-Kaseasbeh
was killed on January 3.
February 5, 2015 - Jordanian fighter jets carry out airstrikes over Syria, reportedly hitting IS training centers
and arms and ammunition depots in IS's de facto capital, Raqqa. Foreign Minister Nasser Judeh claims the
airstrikes are just the beginning of Jordan's retaliation over the murder of Moath al-Kasasbeh.

February 6, 2015 - In an online post, IS claims that Jordanian airstrikes killed American hostage Kayla Jean
Mueller. The post contains a picture of a collapsed building, which IS claims Mueller was buried beneath. There is
no proof of her death. Jordanian Interior Minister Hussein Majali calls the online post a "PR stunt." The
Pentagon estimates IS has about 20,000 to 30,000 fighters.
February 11, 2015 - U.S. President Barack Obama asks Congress to formallyauthorize use of military force
against IS.
February 15, 2015 - In a new propaganda video released by IS, the group appears to behead 21 Egyptian
Christians on a Libyan beach. On February 16th, Egyptian warplanes stage airstrikes against IS targets in Libya in
retaliation.
Indian youth being radicalized by terrorists

From being almost unheard of in India a few years ago to becoming a group that has horrified people with its
brutal execution of hostages, the latest being the burning alive of a Jordanian pilot, the Islamic State has emerged
as one of the most powerful and dreaded terrorist organisations.
But just how much of a threat does it pose to India, especially after its move to appoint a new commander for
Khurasan, the historic name for the area encompassing Afghanistan, Pakistan, Central Asia and parts of India?
In October last year, when information had already emerged about small groups of young men from Maharashtra
and Tamil Nadu going to West Asia to join the ranks of the group, National Security Advisor Ajit Doval had said
the threat from the IS or al Qaeda was not so great that it couldn't be dealt with by India.
"Right now we are very closely monitoring (the situation) and I don't think that the threats are of that magnitude
from either one of them which we are not in a position to cope (with)," Doval said at a security conference in
Delhi.
But intelligence officials and security analysts say there is now an urgent need for India to keep its guard up and
closely monitor the activities of the IS and groups that are aligned to it, especially in neighbouring Pakistan.
Ever since it emerged in mid-2014 that four young men from the Mumbai suburb of Kalyan had joined a group of
Shia pilgrims and gone to Iraq to fight with the IS, evidence has mounted of radicalised Indians, including women,
trying to make their way to West Asia to join the terror group's ranks.
One of the four youngsters from Kalyan, Areeb Majeed, was wounded in fighting in Syria and brought back to
India by intelligence operatives after he surfaced in Turkey. Majeed has told security officials that he had seen at
least 13 Indian men at a terror training camp in Syria.
Recently Turkey deported nine Indians, including women and children, because officials suspected they were
trying to go to Syria to join the IS. On January 16, security officials arrested 32-year-old Salman Mohiuddin at
Hyderabad airport over fears that he was flying out of the country to join IS.
"The problem is two-fold: keeping track of all methods being used to radicalise and recruit Indians, and the threat
posed by Indians who may return to the country undetected after being trained by the IS," an intelligence
operative, who did not want to be named, told Hindustan Times.
"Right now, people are talking about the men from Kalyan and those who have been arrested before they could
reach Iraq and Syria. But there could be others who evaded the net and made it to West Asia to join the IS," the
intelligence operative said.

Keeping track of recruitment methods, security officials said, includes monitoring websites and social media
platforms usually used by jihadi groups to disseminate propaganda. "We also need to zoom in on the reasons why
some people are going to join IS--is it just bravado, or were they radicalised on the internet, or were there other
local factors? This will help us come up with better counter-measures," said a security official who did not want to
be named as he wasn't authorised to speak to the media.
In December, the role of social media in promoting the activities of groups like the IS became evident when police
in Bengaluru arrested 24-year-old engineer Mehdi Masroor Biswas for allegedly running the influential Twitter
account @ShamiWitness. The account had become a hub for propaganda. Biswas was charged for cyber-terrorism
offences and crimes against the state though officials said they believed he did not have direct links to the IS.
Intelligence officials and security analysts agreed that India could not afford to let down its guard even though the
IS did not pose an immediate threat to the country.
"These militants cannot take over our country or our government but it requires only 10 militants to carry out a
spectacular attack like the one in Mumbai to change the course of foreign policies of countries," said Tufail Ahmad
Director of South Asia Studies Project at the Middle East Media Research Institute who specialises in tracking
jihadi movements in South Asia.
"The threat from the IS could become very real if comes via Pakistan. There are already indications that the IS has
established some footprints in Pakistan and the Inter-Services Intelligence could co-opt such a group for targeting
India," he said.
IS has named breakaway Pakistani Taliban leader Hafiz Saeed Khan as the "wali" or governor of Khurasan. The
move came barely four months after al Qaeda announced the formation of a new wing for the Indian
subcontinent. Both al Qaeda and IS have launched a push to gain a foothold among Pakistan's numerous terror
groups.
"There are also reports that small groups of cadres of Pakistan's Lashkar-e-Jhangvi have gone to Iraq to join the IS
since 2011 and 2012. IS chief Abu Bakr al-Baghdadi has also spent time in Afghanistan and reportedly the border
regions of Pakistan," Ahmad said.
Though India has had experience of dealing with threats from Pakistan-based terror groups like Lashkar-e-Taiba
and Jaish-e-Mohammed for more than two decades, a whole new approach and new methods will be needed to
cope with organisations like the IS which banks heavily on social media and the internet to spread its message,
said Commodore (retired) C Uday Bhaskar, director of the Society for Policy Studies.
"Many of us don't understand the reach and impact of current communication technology, especially the impact of
social media, which is the new way of provoking cognitive responses. The target obviously are youth who may be
unemployed but aware--young men in small towns who may be affected by events such as 'ghar wapsi' but feel
they cannot respond," he said.
"So though the IS may not be a tangible or direct threat right now and it may not have crossed the median, the
government will have to keep a close watch on all these developments," Bhaskar said.
Threat for India: Islamic State, Al Qaeda and Taliban

On October 2, 2014, a powerful IED went off accidentally at a secret bomb- making factory of a group known as Al
Jihad in rural West Bengal. Investigators identified the module as handiwork of Bengali, an Indian Mujahedeen –
Qaeda-Jamat-ul-Mujahideen Bangladesh-affiliated terrorist leader. Perennially at the forefront of home-grown
and Pakistan-induced terrorism, India is suddenly surrounded by a spurt of terrorist threats from Al Qaeda; the

Islamic State, also known as IS, ISIS or ISIL; and the Haqqani network, used interchangeably as Taliban – all
groups that had historically avoided the Indian theater.
Three specific but complex trends explain the abrupt rise in threats from terrorists.
First, the terrorist threats in South Asian countries are extricable linked. If suppressed in one place, they break out
in another; rogue jihadists wander from the frontlines in Kashmir to those in Afghanistan or Iraq. In Afghanistan,
87,000 NATO troops fighting insurgents are retreating. By the end of 2014, the United States will leave behind
10,000 trainers as per the US-Afghan Bilateral Security Agreement. While NATO troops withdraw, after a 13-year
war, Al Qaeda, Taliban and Pakistani associates are proclaiming victories. A rising number of bold assaults in
Afghanistan signals balance tilting in favor of militants.
As the NATO troops withdraw, some in Pakistan would direct militants against India. The Islamic State, as
warned by J.N. Choudhury, director general of India‘s elite National Security Guards, is the latest and most lethal
entrant, encouraging ―multi-city multiple attacks‖ on India.
India‘s contemporary terrorist threat is a reflection of history repeating itself. In 1989, Pakistan‘s Inter-Services
Intelligence was triumphant after its victory in Afghanistan and eager to replicate guerrilla war in Kashmir. India
was caught unprepared, and Kashmir plunged into militancy. After the United States invaded Afghanistan in
2001, some militant groups left Kashmir to join Afghan jihad.
Since 2001, some forces in the Pakistan Army tried to shift the focus of terrorist groups from the Af-Pak region to
India and were even linked to the commando-styled Mumbai attacks of 2008. NATO‘s withdrawal from
Afghanistan renders a generation of Af-Pak jihadists jobless, and many spare fighters will turn attention to India.
This process has already started. The Haqqani Network, which the Pakistan Army consistently declines to attack,
is collaborating with LeT and Al Qaeda to hit Indian interests in Kabul and Kashmir. Farman Sinwari, a Landi
Kotal resident and old Kashmir hand, as Al Qaeda chief in Pakistan is an added ace for the combined militant
forces in Kashmir. Since his appointment in 2012, militancy has escalated in Kashmir.
If local Kashmiris lend support to any of the overseas groups, the terrorist threat to India would increase
manifold. With the rise of IS, there have been sporadic protest marches in urban Kashmir, where, as reported by
the Srinagar-based 15 Corps Commander, Kashmiris have hit the streets, wielding the black IS banner.
Besides Al Qaeda, Haqqani and IS, India confronts threats from Pakistani militants. A by-product of the US
presence in Afghanistan was significantly reduced terrorism in India. Once this protection is removed, India will
again be exposed to terrorists from Pakistan and their sympathizers. In December 2012, former Tehrik-e-Taliban
Pakistan chief Hakimullah Mehsud demanded the Pakistan army to stop engaging against Afghan insurgents and
refocus on the war of revenge against India. Such demands will automatically be fulfilled once NATO troops
vacated Afghanistan. The Pakistan Army initiated two major border skirmishes in January 2013 and October 2014
– perhaps because attacks on India remain the sole instrument for repairing the relationship with militants.
Therefore, threat to India from motley groups of militants now operating in Af-Pak region is real and looming.
A second trend is the influx of Wahhabi preachers in India since 2013 to radicalize the 7,000 registered
madrassas in India, preparing these institutions as potential recruitment grounds for the likes of Al Qaeda, IS and
Taliban. In a classified dossier, India‘s Intelligence Bureau reported that 25,000 Wahhabi scholars from 20
countries visited eight Indian states – Uttar Pradesh, Rajasthan, Chhattisgarh, Andhra Pradesh, Kerala, Bihar,
Maharashtra and Jharkhand – and addressed 1.2 million, preaching conservative, hard-line Islamic doctrine and
implementation of Sharia law in its strictest form. Terrorist organizations like the Indian Mujahedeen, notorious
for plying militant ideologies in India, have been facilitating the influx of hardened foreign terrorist groups.

India‘s 176 million Muslims represent about 15 percent of India‘s population. Most adhere to the moderate Berlevi
form of Islam, but in recent times it‘s estimated that as many as 20 percent have been lured to Wahhabi ideology.
India is susceptible to the extremist snare.
The third trend is inter-organizational competition in between Al Qaeda and IS to stretch their area of influence
and enlist support of disgruntled Indian Muslims who have so far been choreographed by Pakistan. So far, Indian
Muslims have resisted the temptation of joining extremist groups like Al Qaeda. None of the 9/11 conspirators or
other Al Qaeda–sponsored attackers were traced to India. Similarly, no attack on India has directly been linked to
Al Qaeda. In 2006, for the first time Osama bin Laden spoke of India and Kashmir referring a ―Zionist-Hindu war
against Muslims.‖ However, since 2001 many Indian youths have been enticed to jihad in the trenches of
Federally Administered Tribal Areas in Pakistan and in Afghanistan where they were introduced to Al Qaeda and
Taliban dogma. Before such relationships could fully develop, bin Laden was captured and killed. Soon afterward,
IS – carved out of Al Qaeda by disgruntled and impatient jihadists – started recruiting Indian Muslims.
Painstakingly, Al Qaeda refocused attention on India, opening a branch in the name of Qaedat al-Jihad in
September 2014.
Al Qaeda chief Ayaman al Zawahiri claimed that it took two years of hard work, precisely after the appointment of
Shinwari as Al Qaeda chief in Pakistan, to establish Qaedat al-Jihad. India‘s National Investigation Agency busted
al Jihad‘s activities in rural West Bengal in October 2014, and classified documents indicated that Indian
Mujahedeen terrorists mulled ties with Al Qaeda and Taliban to attack India. Revelation about the
mujahedeen intention to obtain a nuclear bomb from Pakistan to attack the Indian city of Surat, a city in Gujarat,
sent shock waves throughout India.
Some 25 Indian Muslim youths have already responded to IS chief Abu Bakr al-Baghdadi‘s call in Syria, and many
more may be on their way to join – any of whom could bring IS ideology back into India.
Prime Minister Narendra Modi, a strategic novice, has left vital national security issues unattended. The Modi
government successfully silenced Pakistan‘s October border misadventure by stretching the firing line towards
civilian installations inside Pakistan Occupied Kashmir with explicit intention to build internal civilian pressure
against the Pakistan Army. However, when Pakistan clandestinely sends numerous militants, India is defensive at
best.
Post-2015, Afghanistan will be the launching pad of international terrorism, a place where extremists will find safe
haven. Using Afghanistan as springboard, the militants could restart jihad and chaos in India.
The Modi government must adopt a two-prong policy. One is to pre-empt and counter terrorists by profiling
existing and potential militants, creating a dedicated national anti-terror workforce, integrating inputs from
academic in policymaking and ensuring fair and fast judicial scrutiny. The other is to work on social sites by
checking Wahhabi indoctrination, removing Muslim ghettoization, modernizing madrassa education, and
supporting small-scale entrepreneurship initiated by semi-skilled illiterate Muslims along with other Indian
citizens.
Islamic State in Libya

Libya‘s ―Islamic State‖ paraded 21 Egyptian workers along the Mediterranean. The IS fighters, dressed in black,
then killed the Egyptians, dressed in orange jumpsuits. One of the IS men speaks, in English, of the beheadings in
Syria before he says, ―… we are on the south of Rome, on the land of Islam, Libya, sending another message.‖ It is
a direct provocation to both the Egyptians and to the West. ―The sea you‘ve hidden Sheikh Osama bin Laden‘s
body in, we swear to Allah we will mix it with your blood.‖ The braggadocio is familiar, as are the acts.

Within 24 hours, Egypt and the West responded as IS hoped. Three Egyptian jet fighters bombed eight targets in
the eastern Libyan city of Derna, the hub of the ―Islamic State.‖ Italy and France are eager to join in the
intervention. Sources in the city say that some civilians (including four children) died in the Egyptian bombing,
which also hit sites associated with the entrenched Islamist movement. Derna has been in the ledger of political
Islam since the 1990s. That it is now in the claw of the IS should not be a surprise. Fighters from Derna have long
gone to fight in the battlefields of modern jihad — Chechnya, Afghanistan, Iraq, and Syria. Foreign fighters, such
as the speaker in the video, have also been known to take refuge there. A pipeline drew fighters from Derna to
northern Syria via Turkey, and then back home. This pipeline was well known to western, Gulf Arab and Turkish
intelligence. They had allowed it to flourish. It is precisely the social consequences of that pipeline that worries the
Europeans.
Kuwait on the Mediterranean
In 2008, Saif al-Islam Qadhafi told a friend that he wanted to turn Libya into ―Kuwait on the Mediterranean.‖ Oil-
rich Libya had not been able to convert its wealth into a paradise for its people. Over the course of the rule of his
father, Muammar Qadhafi, Libya had turned the social wealth into social goods — high social indicators
demonstrate this fact amply. By the 1980s, however, it had become clear that the Qadhafi regime had neither the
imagination nor the will to diversify Libya out of its reliance upon oil exports and to draw these newly educated
people into the political system. Qadhafi tasked Saif al-Islam to ―modernize‖ Libya. They drew on expatriate
Libyans to ―reform‖ the system — which meant, all too often, steady plans for giving away national assets to
private hands. Domestic unhappiness — even from among those who had no desire to remove the Qadhafi system
— was crushed. The most powerful challenge to the state came from the Islamists — the Libyan Islamic Fighting
Group, whose members were thrown into prison, executed or exiled. Those in exile joined the
internationaljihadi networks.
In 2011, discontent against the Qadhafi regime drew people onto the streets. The mélange of groups that desired
something else was startling — there were the highly-educated liberals who had benefited from the oil revenue,
the diasporic business elites who had been collaborating with Saif al-Islam, the oldjihadis who saw an immense
opportunity, ordinary Libyans who had stayed in the shadows but now saw a place for themselves. Rebellions are
often produced out of such diversity, and Libya in 2011 did not disappoint. Sections of the military hastily defected
to the rebellion, the city of Benghazi was lost to the Qadhafis and then the armed phase opened up. It would likely
have taken a long time for the rebels to succeed, but in that interim they would have had to create some form of
political agreement. As it turned out, geopolitical enmity against Qadhafi from the Gulf Arabs and the West
resulted in a NATO bombardment that destroyed Libya‘s infrastructure. It produced the conditions for a free-for-
all.
Libyan politics fragmented, with the archipelago of cities being held by their various militias, with foreign backers
finding their own friends here and there, and with conflict over Tripoli‘s resources at the centre of the emerging
civil war. Early signs of danger were callously ignored by the new leadership — worker unrest in the oilfields over
wages and protests by former fighters who wanted more from their new country. Neither the workers nor
the thuwar (revolutionaries) saw the new government as theirs. The cult of the thuwar was all that was permitted
— the rebels could hold onto their guns and be treated as saviours, but they were not integrated into either a new
military or into the new institutions.
Complex alliances
Absent political agreement, chaos became the mode in Libya from 2012 onwards. The execution of Qadhafi in
broad daylight had the same kind of effect as the execution of Saddam Hussein in Iraq — in both cases,
opportunities to allow these men and their supporters to surrender were squandered. It was as if the new
dispensation in both Iraq and Libya could be created from scratch, with the older regimes consigned to the dust

heap. But these older currents did not disappear. They would reappear in ways unforeseen in western and Gulf
Arab capitals. In Iraq, many Ba‘athists and cashiered army men created an alliance with the Islamic State. Much
the same seems to have happened in Libya. It is the only explanation for the Islamic State‘s ability to take and hold
Sirte, the birthplace of Qadhafi and the epicentre of his influence.
“The Islamic State in Libya is not merely a Libyan problem but a regional one. The chaos in the country has
allowed radical Islamists from across North Africa to take refuge there.”
After NATO‘s intervention in 2011, radical Islamists in Benghazi who had fought on NATO‘s side formed Ansar al-
Sharia. It then turned on the West and was party to the 2012 attack on the U.S. Consulate in Benghazi, during
which the U.S. Ambassador Chris Stevens was killed. Recently, a rogue Libyan general, Khalifa Haftar, has
conducted Operation Karama (Dignity) against Ansar al-Sharia with mixed success. Many Ansar al-Sharia fighters
have decamped to Sirte and to Derna to join IS.
The Islamic State in Libya is not merely a Libyan problem but a regional one. The chaos in the country has allowed
radical Islamists from across North Africa to take refuge here. As well, older connections with radical Islamists
across the Sahara desert, in Mali for instance, are part of their world. Al Qaeda of the Maghreb, centred in Mali,
had made alliances with disgruntled Tuareg nationalists, kidnappers of tourists, and trans-Saharan smugglers (of
people, drugs and weapons). It operated as much as a criminal gang as a franchise of al-Qaeda. IS has links to
these networks, including the trafficking of goods and people. These are moneymaking enterprises that have
supplanted older trades as northern Africa suffers from acute desiccation caused by climate change. Absent of
alternatives, a growing Sahara grows criminality.
Regional solutions
A source in the Pentagon suggests that Washington has no appetite for a serious engagement in Libya. He spoke of
the need to rearm and refinance the Egyptian military. Washington, it appears, would like Egypt to take charge of
this war against IS. But bombing runs by Egypt have reopened political fissures in Libya. The Muslim
Brotherhood-dominated government in Tripoli considers the Egyptian bombings a violation of Libyan
sovereignty. Khalifa Haftar has, so far, supported them as he did the August 2014 air strikes by Egypt and the
United Arab Emirates around Tripoli. Egypt‘s entry into the conflict is precisely what the Islamic State wants.
Egypt‘s harsh crackdown on all Islamists will likely afford the Islamic State recruits inside Egypt. Pressure needs
to be brought on the Egyptian government to cease its harsh repression of its critics. Rather than maintain peace,
this only creates the most dangerous extremism.
It is naive to believe that aerial bombardment here or there will sort out the problems with the Islamic State. We
have entered a new period in the history of the region. Longer-term strategies need to be worked out. Last August,
the foreign ministers of North Africa met in Cairo to discuss the security challenge posed by Libya. They zeroed in
on two immediate steps that need to be taken. First, that a unified government be formed in Tripoli. The only way
to allow for this to happen is for the ―cold war‖ between regional parties to be ended. Tensions between the Qatar-
Turkey backed Tripoli government and the Saudi-UAE-Egypt-West backed Tobruk government remain. The UN
cannot facilitate a dialogue unless the regional enmity is lessened and unless pressure is brought to bear on all
sides to join a political process. Second, that the countries ―organize a common effort‖ to deal with the issue of
porous borders and trafficking. Included in this should be the trafficking of jihadis from Libya to Syria, and from
the world into Libya. Nothing has been done on this front. If a regional solution is not incubated, Libya is in
danger of becoming a Somalia on the Mediterranean.

Sectarian conflict in Pakistan
Three major sectarian attacks (in Rawalpindi, Punjab, earlier in January; in Shikarpur, Sindh, recently; and in
Peshawar) after the horrific Peshawar attack in December in Khyber Pakhtunkhwa highlight the other war within
Pakistan. Though there has always been a sectarian fault line within the country, what is happening today is much
more lethal than the earlier violence witnessed primarily in Punjab during the 1980s and 1990s.
There are at least five factors, which should make the ongoing sectarian war in Pakistan different from its earlier
avatars, and more difficult to combat.
Geographic spread
First, the sheer geographic spread of the sectarian violence. Sectarian violence during the 1980s and 1990s was
centred in a few districts of Punjab (in and around Jhang), select pockets of Karachi city, and in Khurram Agency
in the Federally Administered Tribal Areas (FATA).
Today, incidents of sectarian violence cover the entire country. From attacks on the Shia pilgrims visiting Iran in
Balochistan to bus passengers on the Karakoram Highway in Gilgit-Baltistan, and from Khyber and Khurram
Agencies in FATA to the city of Karachi, the new sectarian war in Pakistan is not restricted to any one geographic
region. The nature and extent of violence against the Hazara community in Balochistan is also a new
phenomenon. In fact, Balochistan has always witnessed violence on separatism but never on a sectarian basis.
Shiite Muslim women condemning the attack in Shikarpur, Sindh province, Pakistan
Intensity and violence

The second major difference in Pakistan‘s sectarian war today is related to its intensity and violence. Today,
militants use suicide bombing in mosques belonging to the Shia and Ahmadiyya communities; the extent of
human and material damage is substantial today when compared to the past.

Emergence of the Tehreek-e-Taliban Pakistan (TTP) during the last decade seems to have provided a bridge in
linking the dots in this violence. In fact, the TTP and the erstwhile sectarian groups based in Punjab have become
symbiotic today. The presence of Punjabi sectarian groups in the violence against Shia communities in FATA and
Balochistan is no coincidence. Had it not been for this link, the sectarian groups would not have had access to
either weapons or training, including training for suicide bombers.
The third major difference in the sectarian war is related to its external linkages. During the 1980s and 1990s, the
sectarian differences within the country were primarily fuelled by the Cold War between Pakistan and Iran.
President General Zia‘s zealousness led to the emergence of sectarian groups such as the Sipah-e-Sahaba Pakistan
(SSP) and Lahkar-e-Jhangvi during this period, as a counter to groups in Iran and Afghanistan.
Today, the primary external driver of Pakistan‘s sectarian violence is no longer limited to the differences between
Tehran and Islamabad. The larger Shia-Sunni Cold War led by Iran and Saudi Arabia, and more importantly the
rise of the Islamic State in the Iraq-Syria region have unleashed a new sectarian war elsewhere. Sectarian groups
within Pakistan are no more dependent on local and state sources for their survival. They are well endowed,
thanks to the unregulated funds pouring in primarily from the Gulf region. In the near future, dangers of the IS
providing an ideological lead to sectarian groups within Pakistan cannot be completely ruled out. If that happens,
the sectarian war within Pakistan may escalate even further.
The fourth major difference between the sectarian war in Pakistan today and then is related to the ability of the
state to control it. It was no secret that in the 1980s and 1990s, the sectarian groups in Punjab had the support of
the establishment. With funding support from outside and with TTP linkages, sectarian groups in Pakistan no
longer need the establishment; their survival is secure and expansion assured.
Perhaps, the state may still retain some contacts and influence over the sectarian groups in select pockets, for
example in Balochistan. But in Punjab today, the state may neither be able to control nor calibrate the sectarian
violence. Worse, the state — both political and military establishment — seems to be afraid in targeting these
sectarian groups. Consider the case of Mumtaz Qadri, the assassin of Salman Taseer, Governor of Punjab. How to
explain the disappearance of case records from the courts, witnesses not turning up, and the government turning
a blind eye to pro-Qadri lawyers carrying him on their shoulders in full view of the courts?
The fear of sectarian war expanding and becoming centred in Pakistan‘s heartland (read Punjab), is the biggest
nightmare for the country today. As long as the fighting takes place in the FATA, the state can use the military, air
force, and even U.S. drones to target the militants. When it comes to the heartland, it cannot use any of the above,
and will have to be heavily dependent on the police force. How confident is the establishment today that the local
police will be able to combat sectarian militants?
Change in discourse
Sectarian militancy is also a new phenomenon in terms of its ability to neutralise the erstwhile ethnic and
nationalist movements in Balochistan and Sindh. With no outlets to reach out to the state and with the
governance process worsening day by day, the sectarian groups may be able to project themselves better than the
nationalist movements — either of Sindhi or Balochi varieties. In the short term it may yield a dividend for the
central government, as it is happening in Balochistan; as the sectarian war here has substantially changed the
discourse from when it was led by the tribal Baloch Sardars. In the long run, however, it will hurt Pakistan even
more.

Transition in Saudi Arabia
The death of Saudi Arabia's absolute ruler, Abdullah bin Abdulaziz, on January 23 rd brings to an end an era in
which the richest Gulf country played a pivotal role in regional politics. Although King Abdullah formally assumed
the throne only in 2005, he was the de facto ruler after his half-brother King Fahd was laid low by a debilitating
stroke in the mid-1990s. Since the death of Ibn Saud, the country‘s founder, in 1953, the throne has alternated
between his 53 sons. Abdullah has been succeeded by another brother of his, Crown Prince Salman bin Abdulaziz
al Saud. King Salman is said to be around 70 years old. The new Crown
Prince, chosen by the ―allegiance council‖ comprising members of the
royal family, is the 68-year-old Prince Muqrin, the youngest son of King
Saud. For the first time, however, a Deputy Crown Prince has been
appointed.
The new succession order, announced with unusual speed, prepares the
ground for a generational shift. The Deputy Crown Prince is the
influential Interior Minister, Mohammed bin Nayyef. He is a grandson of
King Saud. Nayyef spearheaded the fight against Al Qaeda, which
launched many high-profile terror attacks in the kingdom in the past
decade. The terrorist threat to the kingdom is likely to increase with the
spectacular rise of the Islamic State (I.S.) in the region. A top Army
general was among those killed in an I.S. attack on a Saudi border post in
early January.
Saudi Arabia is part of the military alliance cobbled up by the United

States to take on the I.S. King Abdullah wanted a similar alliance to take
on the Syrian government. According to reports in the U.S. media, the
late monarch was disappointed with President Barack Obama‘s eleventh-
hour decision to refrain from ordering military strikes against Syria in
Abdullah bin Abd al-Aziz
2013. Senator John McCain, speaking to the U.S. media after the death of
the Saudi King, said the Saudi Air Force was all set to launch raids on Syria in alliance with U.S. and French
forces. Air strikes involving U.S. and Saudi war planes did finally happen in Syria, but with the tacit agreement of
the Syrian government as the targets were I.S.-held areas.
There was no love lost between the Saudi King and another Arab leader, Muammar Qaddafi of Libya. The two had
famously got into a slanging match at an Arab League summit, with King Abdullah hurling the choicest epithets in
chaste Arabic. The only republican leader in the region, King Abdullah apparently had a soft corner for former
Egyptian President Hosni Mubarak. He blamed the U.S. for standing aside and letting street opinion prevail in
Egypt. Saudi officials told the media that the King was so upset when Obama told him on the phone about the
decision to distance the U.S. government from Mubarak that he abruptly ended the conversation. The ouster of
Mubarak was even more unpalatable to the Saudi royalty as it led to democratic elections and the rise of the
Muslim Brotherhood to power in the most influential and populous Arab country.
The Saudis and their allies in the region then worked overtime to ensure that the mandate of the people was
compromised. The King ensured that the Saudi government provided the military government in Cairo the funds
and aid necessary to keep the Egyptian economy afloat. He no doubt played a big role in persuading other Gulf
monarchies to follow suit and take a tough line on the pro-democracy movements in the region.

Before the Egyptian revolution was crushed, the Saudis under the leadership of King Abdullah helped shore up the
monarchy in neighbouring Bahrain. The predominantly Shia population of the small kingdom had been
demanding free elections and more representation. There were widespread protests in the capital Manama in
2012 and 2013. The protests were put down with force. To ensure the continuance of the monarchy, Saudi Arabia
and the United Arab Emirates (UAE) sent in a ―peacekeeping‖ force, which remains in place there even today.
King Abdullah, as the WikiLeaks documents showed, viewed another neighbouring country, Iran, as an existential
threat. ―Cut off the head of the snake‖ in Tehran, he urges the U.S. in one of the leaked texts. The late King wanted
the U.S. to take military action against Iran. He saw an Iranian hand everywhere in the region, be it in Yemen,
Lebanon or Bahrain. But for Iranian and Russian assistance to the government in Damascus in crucial military
and diplomatic fronts, King Abdullah‘s dream of effecting regime change in Syria would have materialised.
Despite Iran going out of its way to repair relations with the Saudi
kingdom, the King never seemed to have overcome his hostility. For all
practical purposes, the Saudi monarchy and the Israeli political
establishment were united in their goal of keeping Iran isolated. Saudi
Arabia and Israel are vehemently opposed to a nuclear deal between the
U.S. and Iran. The religious hierarchy in Saudi Arabia, from which the
monarchy draws much of its legitimacy to rule, views Shias as apostates.
The sectarian divide, which has fuelled the wars in Iraq, Syria and other
parts of the region, was widened by the sermons and public lectures of
Saudi clerics operating under the benign eye of the monarchy.
The fundamentalist beliefs of the I.S. and other jehadist groups are deeply
influenced by the Wahhabi ideology, which remains the cornerstone of
the Saudi state. The House of Saud had formed an alliance with a cleric,
Hassan Wahab, in the late 19th century. King Saud had in fact married
one of his daughters. The I.S. uses Saudi-style textbooks in schools in the
areas they control. The group‘s penchant for beheading seems to be
inspired by similar practices in Saudi Arabia. Thieves and drug dealers
are routinely beheaded in Saudi Arabia. The Shia minority, which is
around 15 per cent of the population of the kingdom, has for long felt
discriminated. The Saudi establishment is fearful that a strong Iran could
Crown Prince Salman bin Abdulaziz
al Saud, who has been crowned the encourage legitimate Shia political aspirations in the kingdom.
new King
Under King Abdullah, the Saudis did not give up their propensity to use ―oil‖ as a weapon in geopolitics. The
kingdom is the biggest producer of crude oil. One of the most important decisions taken by the Saudi monarch
was to keep on pumping oil at the same levels despite gas prices slumping to record lows since the middle of last
year. Many factors seem to have dictated the Saudi decision. The Saudis had tried to influence Russia in 2014 by
offering to sign multibillion arms contracts. But Moscow has remained committed to the Syrian government. The
continuing Saudi inaction as oil prices plummeted has adversely hit the Russian economy. Also hit is the
struggling Iranian economy. Prices have slumped below $50 a barrel from $100 a barrel last year. The U.S.‘ shale
oil industry has no doubt taken a blow as a result of plummeting oil prices, but its nemesis in the region, the left-
wing government in Venezuela, which depends on oil exports to subsidise its economy, is reeling from the impact.
The drop in oil prices has led to a $38.6-billion deficit in the kingdom‘s 2015 budget. The new rulers will not have
to worry in the short run as the country has $750 billion in reserve. King Salman has not given any indication that
he will be reversing the current Saudi oil policy in a hurry. There are reports that the younger members of the
royal family, who number in their thousands today, are not too happy with the former King‘s policy of allowing oil

prices to fall. As it is, oil experts have predicted that prices will never reach the three-figure mark anytime in the
near future.
Under King Abdullah, the Saudi government had introduced a $400-billion stimulus package in 2008. The crisis
in the North American economy adversely affected the Saudi economy. In 2010, with the unemployment rate
among Saudi nationals rising, the government introduced a $384-billion five-year development package. Public
sector salaries were increased. But unemployment continues to be an issue in a country where half the population
is below 25 years of age. In 2011, after the Arab Spring uprisings shook the foundations of many governments in
the region, the Saudi government spent billions of dollars to improve the living conditions and pay allowances to
unemployed Saudi graduates.
Under King Abdullah, there were some incremental attempts at political reforms. Women, while still being
prohibited from driving, were allowed to vote in closely supervised municipal elections. The media were allowed
some latitude in criticising government and social policies. But during his reign, many political and human rights
activists were jailed. In November last year, the King‘s Advisory Council recommended that the government ease
its curbs on women driving. But in the very next month, two Saudi women were arrested for driving and were
tried and sentenced in a court designated to try terrorists. Raif Badawi, a Saudi citizen, whose case has now
become a cause célèbre, has been given a lengthy jail sentence along with a thousand lashes for running a website
which dared to question the archaic religious laws governing the country. Last October, a special court sentenced a
prominent Shia activist, Sheikh Nimr Bakr al-Nimr, to death for ―disobeying the King‖. His supporters claim that
his only crime was demanding more rights for women and his compatriots along with democratic rights in the
kingdom. The sentence has not been carried out so far following widespread international criticism.
Yemen in ferment
The new King will be facing many challenges. Yemen, with which Saudi Arabia shares a 1,700-kilometre-long
border, is in ferment. The Saudis are busy constructing a border fence to keep poor Yemenis and infiltrators out of
their kingdom. The rise of Houthis in Yemen is a matter of serious concern for Saudis. Houthis belong to a sect
that is closer to Shias than to Sunnis. The Saudi Army engaged them on various occasions in the past, siding with
the central government. But now the tables have been turned, with Houthis controlling the capital and much of
the country. In desperation, the Saudis are said to be funding and supplying arms to Sunni militant groups, which
are sworn enemies of Houthis. The $4 billion in Saudi aid to the impoverished country has been suspended. Al
Qaeda in the Arabian Peninsula (AQAP), which has its base in Yemen, is doing most of the fighting against
Houthis.
King Salman, according to a 2007 U.S. diplomatic cable released by WikiLeaks, is not in favour of the mild
political reforms in the kingdom and thinks they are ill-suited for a conservative country such as Saudi Arabia. He
told the U.S. Ambassador that a solution to the Palestinian-Israeli conflict was a prerequisite for regional peace
and stability.
Obama cut short his tour to India to visit Saudi Arabia to offer his condolences. Despite differences on the
approaches to be taken on Syria, Iran and other issues, U.S. and Saudi Arabia remain ―staunch allies‖ in the ―war
against terrorism‖. The U.S. is training Syrians in Saudi Arabia to take on the government in Damascus and the
I.S. simultaneously. The Saudi government is insisting that both the I.S. and Syrian President Bashar al-Assad
have to be defeated militarily. Washington is playing along with Riyadh even as it realises that the Assad
government will be around over the long haul.

Civil Services News February

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Civil Services News February

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Feb 2015

Feburary 2015 Page 1

Feburary 2015 Page 2

Science and Technology

Feburary 2015 Page 3

―The credibility of the Indian economy has been re-

The budget raised excise duty and service tax rates,

Mr. Jaitley left untouched personal income tax rates

The limit will go up from Rs. 20,000 to Rs 30,000 for

Centre to spend its way to growth

Feburary 2015 Page 4

Stake sales on track

In the revised estimates, disinvestment receipts have been pegged at Rs

Feburary 2015 Page 5

Steps to curb generation of black money in real estate

Feburary 2015 Page 6

Boosting investment in gold

Centre cautious on subsidies

Feburary 2015 Page 7

But the fertiliser industry is not

Similarly on food, there has been no

Armed forces get a modest hike

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New flagship micro irrigation scheme

The department of agricultural research and education has also seen a

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He said the second unit of Kudankulam Nuclear

The proposal to set up the mega plants follows

Expert panel to work on replacing multiple permissions

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Service tax increased

Negative service list

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Bank for SMEs

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Skill development initiatives

The first, AIM, will be an ―Innovation

The second scheme — the Deen Dayal

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Budget expands social security net

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In absolute terms, total transfers to States have indeed grown.

Of course, the money hasn‘t been ‗cut‘ so

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Some have been completely wound up; these include

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To put that number in perspective, the total

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Indian Budget process

Normally, the budget-making process starts in the third quarter of

Stage 1: Estimates of expenditures and revenues

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Part B: Estimates of revenue

STAGE 2: First estimates of deficit

STAGE 3: Narrowing of the deficit

STAGE 4: The Budget

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What happens once the budget is tabled in Parliament?

What are Standing Committees and what is their role?

What happens once the reports are submitted?

What are the final steps in the budget process?