• Infrastructure Issues
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Editorial
Greetings from the Editor and welcome to this new venture, a newsletter which will seek to present a quarterly summary of news relating to policy developments. Many friends have written to us in the past that they would be happy to get a succinct report of news in the area of governance. A test issue for the period: January—March 1999 was also circulated widely. Responses were overwhelming and thus this first edition is now in your hands. 

As one will observe, the news have been culled from various sources and put into a snippety form under various heads: Infrastructure Issues, Environment & Energy Issues, Business & Industry Issues, Trade Policy Issues, Economic Issues, Development Issues, Consumer Issues, Food & Agriculture Issues, Science & Technology  Issues, Governance Issues,  and Accountability  Issues. As an advocacy group, our purpose is also to keep a watch on these issues which will impact and affect the progress of the nation, economic development and ultimately improvement in living standards. It will disseminate information and intervene, where and when required, individually and collectively.

Our credo is to promote good governance through reduced government, independent regulation and deeper civil society participation. This will reflect in the manner in which we have selected the news and reported about them. 

In conclusion, we would like to have a regular interaction with our readers, which will help us to go ahead on this mission.
 
 

That’s what competition can do, lower prices with better quality. Funnily, the Government does not release the refund payment immediately if I have travelled by private airlines to attend a Government-sponsored meeting, even to a non-government representative like me. 
Thus, it seeks to stifle competition. And, the private carriers do not complain!

The same logic was seen in a recent policy directive on offering market development assistance to exporters, who wish to visit Latin America to promote exports with Government aid for their travel. The order says: “For sales, study tours and trade delegations small exporters will get Market Development Allowance as 90% of their economy class air ticket through Air India (AI), and for others 75% of the air fare”. 

We all know that AI does not have flights to South America. Our Governments (various) have seen to its downfall over a period of time. It used to be a first class airline. Successive chairmen have been unsuccessful in turning it around. Not only that, it has also not been able to claim its rightful share of flights from the bilateral arrangements, as it does not have sufficient aircrafts. It does a code-share arrangement with the foreign airline and picks up few pieces of silver. For example, for all the flights, which AI could not operate to London, it now has an arrangement with Virgin. In one way it is good, as it will offer competition to British Airways (BA), which is otherwise an arrogant airline. 

While BA, which is a private carrier, operates as the UK flag carrier, the Government of India does not think of giving our private airlines, such as Jet Airways, the missed opportunity. It is so silly. After all, if it is an Indian carrier, it will bring in revenue for the country and provide jobs to Indians. 
We saw the somersaults on the foreign investment policy when Tatas applied for approval of their partnership with Singapore Airlines. The new policy for foreign investment is that the investor should not be a foreign airline. Literally, it means that a German sausage manufacturer can be a foreign partner but not Lufthansa, which has one of the best reputations in the field.
Be that as it may, it is high time that the Government addresses these anomalies, rather than just think of privatising Indian Airlines or even disinvesting in Air India.
 
 

User Charges for Core Sectors
Mndatory implementation of user charges appears to be the sole method of attracting private investment in the core sector. Investments and progress of projects in various infrastructure sectors have been considerably affected by the lack of commercialisation at user end. Projects in power sector are negatively affected due to poor financial health of the consumer and the state electricity boards. 

For example, out of 193 central projects, only 44 projects were progressing on schedule. The average costs over-run is around 19 percent for mega projects. The Government now seems to have realised that in the power sector fresh capacities by private sector can come in only on commercial terms.  However, implementation of user charges in the road sector has led to heated debates. 
On the railway front too, it has been suggested cross-subsidisation needs to be contained to minimise the losses. The Confederation of the Indian Industry (CII) had also called for a definite, transparent and concrete policy framework to attract the required investment inflow in infrastructure. (ET, 29.02.00 & BS, 03.02.00)
 

New Civil Aviation Act
The Civil Aviation Ministry had proposed a comprehensive legislation, the Civil Aviation Act, 2000 and a change in the classification of aviation turbine fuel (ATF) to limit sales tax to a maximum of four percent to provide it at international prices. 

This legislation will embody the provisions of the Aircraft Act, 1934, with the necessary changes and enable the formation of the Civil Aviation Authority. This body will take over the regulatory functions of the Directorate General of Civil Aviation and bring the Bureau of Civil Aviation under its purview to ensure proper coordination and avoid overlapping of functions.

Its other main features are: encouraging private sector participation, creation of a civil aviation fund and introduction of ground handling regulations and restructuring of major airports through long-term leasing. (BS, 03.02.00)
 

ATF to be Freed
The Government has, after rounds of discussions with the Prime Minister’s Office and the oil companies, decided to decontrol the prices of ATF and, thereby, advance the dismantling of administered price mechanism (APM). This will bring it on import parity levels. The immediate effect of this would be on the bottomlines of domestic aviation companies, which are expected to reap a bonanza with ATF prices set to come down.

ATF and petrol have been priced at higher levels to cross-subsidise kerosene, LPG, etc. With international prices of ATF moving up, domestic prices have worked out lower than international prices. The subsidy on ATF is almost Re 1 per litre on an average price of Rs 15.3 per litre paid by domestic airline companies. 

While international airlines flying out of Mumbai pay $1.22 as against the ruling international price of only $0.7 to $0.9 per US gallon, domestic airlines pay more than double the international price plus a hefty sales tax, between 9 to 31 percent. It may be recalled, the Government, as part of APM dismantling process, had in 1997 decontrolled the prices of other petro-products like naphtha, furnace oil and bitumen. (ET, 15.03.00)
 

Port Authority Planned
The Department of Shipping proposed the setting up of a centralised port tariff regulatory authority on the lines of the Central Electricity Regulatory Authority.  Currently, the jurisdiction of Tariff Port Authority for Major Ports (TAMP) extends only to ports covered under Major Port Trusts Act (MPTA) and not ports set up in the states.

The proposal was made to correct the existing anomalies by incorporating changes into the MPTA, once MSDC clears the proposal. Most of the major port trusts have expressed resentment against some TAMP decisions, including the ruling that port trusts will not be allowed to levy cargo-related charges in foreign currency equivalent units.

The authority would set tariff ceilings and prescribe conditions for fixing tariffs, including specifying the fixed and variable cost components. Currently, TAMP permits tariffs only on the basis of an 18-percent rate of return. However, the Department of Shipping had recommended a 20-percent rate of return, in line with the expectations of the build, operate and transfer projects coming up in major ports. (BS, 24.02.00)

Impetus to Hardware Sector
The Government is working on removing “procedural wrangles” to give an impetus to the computer hardware sector. The Information Technology Secretary, Jayakrishnan, admitted that the hardware sector was lagging behind software. He said that the Government was committed to encourage the domestic hardware sector.

 Jayakrishnan was confident of the Information Technology Bill being introduced in the coming session of parliament shortly . Giving a low down on the status of the Bill, he said it was being vetted by the Parliamentary Standing Committee.

Official sources ruled out granting  infrastructure status to the software sector as was suggested by the Minister of Information Technology, Pramod Mahajan. It was argued that such a step was not required as the Government had given a large number of concessions. 
(TH, 29.01.00)

DoT to Wave in Net Link
The Cabinet has cleared a Rs 1,000-crore project of the Department of Telecommunications (DoT) to upgrade 20,000 km fibre optic cable across the country from the current bandwidth of three to ten GBPS with a provision for further enhancement to 100 GBPS. This is a part of DoT’s efforts to usher in a second wave of Internet revolution using wavelength division multiplexing access technology (WDMA).

“We have the technology to upgrade the carrying capacity of our network by as much as 100 times…at only 10 times the cost of establishing the old network…Imagination alone is the limiting factor for application of new technology…TV’s accessing Internet through the cable will be able to provide multimedia facilities if the cable TV operators revamp their own technology,” former Director-General of National Informatics Centre, N. Seshagiri, said at a seminar on the ‘Role of Cable TV and Interactive TV in Internet Services.’

This would lead to the establishment of a high bandwidth backbone for the Internet and result in efficient access to it. He added, TV operators would then need to provide only the last mile access to cable TV viewers to surf the Internet. (BS, 09.02.00)

Broadcasting Bill
Inaugurating the sixth international conference and exhibition on terrestrial and satellite broadcasting organised by the Broadcast Engineering Society, Minister for Information and Broadcasting (I&B), Arun Jaitley, said the benefits of advancement in broadcasting must percolate to the lowest strata of the society. Though the world considers India an IT superpower, it needs to strengthen the system to live up to people’s expectations.

Government was working on a draft “comprehensive” broadcasting legislation, the benefits of which would be felt on Indian society. He said preventing technology from entering India would mean repeating “the mistake that delayed television by 20 years…And history will not forgive us.” I&B Secretary, Y.N. Chaturvedi, said digital transmission was significant as it would enable convergence of computers and TVs.

K. Kasturirangan, Indian Space Research Organisation (ISRO) Chairman, said digitalisation allowed broadcasters to supplement traditional programming with interactive services. ISRO was working with several state governments to set up “gramsat pilot projects” to reach the rural audiences and provide broadcasting, interactive training and computer connectivity. (BS, 03.02.00)

Playing It Safe for Railways
A high-powered committee was constituted by the Railways to ensure the safety and security of the travelling public and its property. It is comprised of the Chairman of the Railways Board, Member (Staff) of Railway Board, the Director-General of Railway Protection Force (RPF), the Special Secretary Home, the Chief Secretary of West Bengal and senior officials of five States adversely affected by militancy.

At a meeting, Mamta Banerjee, the Railway Minister, expressed concern over terrorist activities affecting the movement of trains and railway property in the North-East, Jammu & Kashmir and parts of Andhra Pradesh. 

The Railways have no control over either the RPF or the GRP. The piquant situation is the Railways do not even have the power to lodge a first hand information report and are, therefore, ill-equipped to handle security. (BL, 17.01.00)
 

Airlines to Enhance Capacity
The Director General of Civil Aviation (DGCA) has granted permission to all international airlines operating out of India to fly additional flights or for bringing bigger aircraft on an existing flight to clear the passenger rush during March.

The decision comes in the wake of reports about Air India and other international airlines off-loading ticketed passengers on over-booked flights. A meeting of all airlines was held to resolve the issue. It was decided at the meeting that for Air Traffic Control purposes, the airlines would have to take a flight clearance number from the office of the DGCA if they operate bigger aircraft or additional flights.

The situation would be reviewed and, if necessary, the decision would be extended. The meeting was attended by representatives of 32 airlines, including Aeroflot, Air France, Air India, British Airways, Emirates, Gulf Air, KLM and Lufthansa. (TH, 11.03.00)
 

Injury Prevention
The Planning Commission will set up a task force to suggest policies and institutionlised structures for injury prevention and safety promotion. K.C. Pant, Deputy Chairman of the Commission said speed-limiting devices built into vehicles and traffic-calming measures hold the greatest promise in the country.

Pant attributed the high rate of fatalities to the inadequacy of highways and roads to meet traffic demands. Roughly, around eight-lac people die of accidental injury every year, of which 70,000 lives are claimed by traffic accidents alone, Ashok Joshi, Tranport Secretary said, unlike communicable diseases, there is no vaccine or effective drug for injury prevention and control, Uton Muchtar Rafei, Regional Director, WHO said. 

Efficient use of road space and the use of three wheelers fitted with four-stroke engines would lead to safety and less pollution, Dinesh Mohan, Professor with Indian Institute of Technology (IIT) Delhi said. He added, “Safety should be promoted as a fundamental human right…It is our societal and moral responsibility to design our products, environment and laws so that people find it easy and convenient to behave in a safe manner without sacrificing their needs to earn a living and fulfill…societal obligations.”   (FE, 06.03.00)
 

TRAI Bill Approved 
The Telecom Regulatory Authority of India (TRAI) Amendment Bill, 2000 was passed by the Rajya Sabha. The Bill seeks to strengthen TRAI’s recommendatory powers. However, it sets up a separate Telecom Dispute Settlement and Appellate Tribunal to assume the adjudicatory powers previously exercised by the regulator. 

The Communications Minister, Ram Vilas Paswan, rejected the Opposition demand to refer the Bill to the Parliamentary Standing Committee prior to its being adopted by Parliament. Following the promulgation of TRAI (Amendment) Ordinance 2000, the Government had disbanded the previous TRAI, Chaired by Justice S.S. Sodhi, and appointed a new one, headed by former State Bank of India Chairman, M.S. Verma. 

Paswan said as the Ordinance was lapsing on April 6, and the Parliament was going into recess on March 16, the reconstituted TRAI would be rendered infructuous. The Opposition charged the Government with rushing through the amendment Bill at a time when the Budget was barely three weeks away. 

They also criticised the provision to exclude decisions taken by the authority vis-à-vis tariff fixation and inter connect charges from the purview of the Comptrollerand Auditor General of India. 
(BL, 15.03.00)
 

Mamta Rolls Back
Yashwant Sinha’s hard budget rhetoric was blown to smithers by his colleague from Calcutta. The rail mantri, Mamta Banerjee, handed him a Rs 1,000-crore fatter budget-support bill to pamper voters. Didi had bet the voters, who found the passenger rail fares unchanged, would reward the Trinamool Congress for her budget.

However, spending cutbacks might make rail travel less safe and comfortable than ever before. Moreover, a fall in earnings could finally shunt the railways into bankruptcy.

The recipe for ‘Mamta’s Gravy Train’ includes:

Passengers: Fares untouched, free travel for school girls upto class 12, 19 new trains, traffic to grow five percent.

Freight Shock: Five percent hike, essential commodities exempted, seven percent increase in parcel, luggage and cars, hike for core sectors less than five percent.

Finances Derailed: Traffic to earn Rs 35,929 crore, total working expenses Rs 35,552 crore, extra earnings of Rs 850 crore, Rs. 500 crore from leasing right of way to fibre optic cable, budgetary support Rs 3,540 crore, plan out lay11,000 crore, Rs 1,500 crore dividend deferred.  (ET, 26.02.00)
 

Energy Audits 
P.R. Kumaramangalam, Minister for Power, inaugurated a series of workshops organised by PFC to provide an opportunity for interaction between senior Central Government and power utilities’ officials. 

The workshops recommended: • Energy audits to bring down distribution losses; • A metering programme to install high accuracy, pre-paid, time-of-the-day meters and remote metering devices, etc.; • Regularisation of irregular connections and disconnection of unmetered connections to plug revenue leakage; • All billed/unbilled consumers be metered; • Computerisation of billing system; Restriction of receivables to a 60-day sale; • Introduction of incentives/disincentives at appropriate levels/billing centres; • Time-bound liquidation of Government and Municipal receivables and ensuring payment of current bills; • Enactment of Central Act on restructuring of SEBs to provide fillip to restructuring of power sector and flow of funds; • Reforming states should prepare own reform action plan • State Governments help restructured entities during transition period; • State Governments create a separate fund to meet past liabilities; and availability of funding from PFC and REC.(TOI, 03.02.00)
 

France Enters Indian Water
Vivendi, the French multinational group with a turnover of over $40bns and over 2,60,000 employees spread across 100 countries, is planning to enter India’s water and utilities sector, according to former French Minister, Thierry de Beauce, Vivendi’s head of International Affairs. In view of the vast scope for providing water to people, Vivendi was interested in making substantial investments in this area.

Though the elite had sufficient supplies of potable water, problems of the masses remained acute. Vivendi’s expertise and investment could provide the requisite support. The focus would be more on operations and maintenance of water and utilities than building new waterworks. The Central Government was keen on putting water on the concurrent list to boost investments in the sector. 
The Group was founded in 1853 in the name of Compagnie General des Eaux as a public services company with rights to distribute water to Paris and Lyon, the two largest cities in France. Gradually, it diversified into energy, waste management and real estate and expanded its operations across the globe.  (TH, 30.01.00)
 

Privatising Water Sector
The Urban Development Ministry was finalising a policy to privatise urban water supply, sewerage, sanitation and solid waste management sectors. It envisages allowing 100 percent foreign investment in these sectors through automatic approval route. The modes of implementation of the process would be left to State Governments. The Centre would only coordinate and monitor the deployment of funds from multilateral institutions.

Water distribution losses, estimated to be around 45 percent, imply revenue realisation of only 55 percent. To strengthen the structural aspects of municipalities and local bodies, the Ministry is also formulating an action plan. “Corporatisation of local bodies (is) essential…to tie-up their finances for various infrastructure projects…they could mop up funds…either from the markets or institutions,” Ministry officials said.

On the availability of funds or private initiative, they added, ample funds are available but the response of the states is not very encouraging. The Ministry is planning to organise road shows in different states to educate and technically help them to take advantage of the fund.  Hudco, Industrial Credit and Investment Corporation of India, etc., are funding agencies for the $200mn Asian Development Bank loan.  (BS, 14.02.00)
 

Enhanced Power to NHAI
The Government is embarking on second phase of road sector reforms by enhancing the powers of the National Highways Authority of India (NHAI). Though an autonomous body, it was hampered by the lack of quick decision making process. The Government appears to have finally woken up to the need of a single window rather than a multi-agency clearance system, resulting in unnecessary delays. 

The Rs 54,000-crore National Highway Development Project (NHDP), Prime Minister’s pet project, will allow more operational and financial freedom to NHAI. The programme includes four-laning of over 13,000 kms of national highway of the golden quadrangle, connecting the four metropolitan cities of Delhi, Mumbai, Chennai and Calcutta, and the two corridors connecting Srinagar with Kanyakumari in the north-south section and Silchar with Saurashtra in the east-west section. 
The Government proposes to set up a road fund and a cabinet note is being prepared to set up a road fund board to oversee its functioning. With the fund in place and more powers to NHAI, the Government plans to provide a direct linkage between the road fund board and the NHAI to remove ground level roadblocks. (ET, 24.03.00)
 

Revamping State Electricity Board
Soaring subsidies and compensation crunch has tripped SEBs’ revenue inflow. Several SEBs are now set to go in for major financial revamping with the Union Power Ministry setting up a special fund for power utilities to undertake investment in sub-transmission and distribution projects, including provision of meters at all levels. This would reduce transmission and distribution (T&D) losses and improve their operational efficiency.

Assistance will be given only to states willing to carry out reforms and corporatise operations. Currently, three SEBs are in discussion with the Ministry. Grid Corporation of Orissa has approached the Ministry for conversion of its payables to the generators into tax-free bonds, reschedulement of loans to Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) and additional soft loans of Rs 206 crore.

Andhra Pradesh has requested the Government to avail a special assistance of Rs 1,000 crore (50 percent grant and 50 percent loan) from the World Bank to support the state government’s restructuring efforts. The Centre plans to provide financial support to Karnataka, which has recently passed the Reforms Bill and unbundled its SEB, to upgrade its sub-T&D network in a phased manner.  (ET, 29.02.00 & 10.03.00) 
 

Foreign Briefs

Georgia’s Virtual Town Mall
LaGrange in Georgia (USA) is about to perform a giant leap in internet faith by providing free web access to almost all its residents simply by switching on their television sets. City officials envisage an online village where residents can pay their utility bills, renew driving licences, access student report cards or find baby sitters online. (FT, 22.03.00)

Turkey to Auction Telecom Stake
Turkey is to auction a 20-percent stake in the state-owned Turk Telecom, worth at least $10bn, to an international consortium by July. The Government would sell a further 14 percent of the company’s shares to the public. It has already undertaken to sell another five percent to the employees of Turk Telecom and postal administration. (FT, 06.03.00)

Bulgaria Closer to Voice Telephony 
OTE, Greece’s public telecommunications operator, and KPN of The Netherlands moved closer to an agreement with the Bulgarian Government on acquiring a 51 percent stake in the country’s telecoms utiltiy. With this acquisition, OTE would become the leading fixed wire operator in the Balkans. (FT, 28.01.00)

Microphones in German Bedrooms
The Big Brother show, a German prime-time TV programme showing intimate details of the lives of 10 volunteers incarcerated for 100 days in a makeshift home having 23 cameras and 59 microphones, unsettled the TV watchdog and faces a possible blackout for undermining human dignity. Every other week, viewers select a participant to be ejected. Survival to the end of the 100 days carries a prize of $125,000. (FT, 04.03.00)

Online Power Trading Markets
Sparked by European Union’s (EU) decision to introduce greater competition, online electricity trading markets are being planned by Nordpool, world’s biggest electricity trading exchange operator, and National Grid, the British transmission group, in the UK and ParisBourse, which runs France’s financial markets, in France. (FT, 20.03.00)

Telecom Privatisation
As Turkey cleared the way for telecommunication market’s privatisation by 2004, the Czech Republic delayed its liberation by two years, dealing a blow to foreign telecom companies preparing to challenge the state-owned national carrier. However, European Commission (EC) may take legal steps to force EU states to open to competition the “last mile” of telephone lines, unless they take action voluntarily.   (FT, 28.01.00 & 17.02.00)

EU Creates ‘Net Generation’
The EU launched an initiative, to be taken up by individual Governments, for creating a new generation of Internet-savvy school children and workers able to challenge the US domination in the IT sector. It includes plans to link up every EU school to the Internet and introduce special Internet training for the 15-nation bloc’s teachers. (BL, 09.02.00) 

‘Electricity Commandos’ Retaliate
When German and French utilities paid $1.1bn for stakes in Hungarian electricity distribution sector in 1995, they expected new challenges. However, theft of electricity through theft of pylons was not one of them. The Distributors have formed ‘electricity commandos’ to fight the thieves back - the rich people, not the poor ones. (FT, 03.03.00)
 

State Briefs

AP Power Distribution
As part of its power sector reforms, the Andhra Pradesh Government and AP Transmission Corporation Ltd are in the process of establishing four major distribution companies. The power-starved state, purchasing power from other states, has also taken up the tasks of energy audit and checking power pilferage.   (BL, 22.03.00)

Karnataka Tariff ‘Philosophy’
The Karnataka Electricity Regulatory Commission has issued a ‘tariff philosophy’ to regulate tariff revision and cross subsidies. The policy should: 
•  state revision frequency and factors forcing it; 
•  specify period and amount of cross-subsidy reduction; 
•  have only one revision per year; 
•  explain its stand; and 
•  prescribe manner in which generating companies can enter agreements for sale of power. (BS,16.02.00)

Orissa Not Worth Emulating
The Government admitted to power sector reforms show-cased by Orissa not being the appropriate model for other States. While power generation and distribution was in private hands, transmission was with the Government saddled with liabilities. Uttar Pradesh example was better where all three organisations had clean books.   (BL, 08.03.00)

Unbundling Maharashtra SEB
Under pressure from World Bank to carry out reforms for a loan, Maharashtra attempts to unbundle its state electricity board the UP way. The exercise would be around generation, transmission, distribution and retail supply functions. Government intends to empower the state regulatory commission to regulate, supervise and control the sector.   (ET, 24.02.00)

Bengal Power Regulator
The quasi-judicial West Bengal (WB) State Regulatory Commission, Chaired by Justice Santosh Foujdar, started functioning almost a year after its announcement. It is basically a judicial body and would try to strike a balance after hearing the concerned parties. WB power sector was unique with many organisations on the scene. (BL, 29.02.00)

MP’s Rural Cyber Cafes
Twenty-one rur al cyber cafes known as suchnalayas covering 311 gram panchayats in five blocks of Dhar district of Madhya Pradesh have been opened. Benefits now available to villages are availability of information on mandis, khasras and khatonis, registration of public grievances and e-mail. This would bring about economic prosperity, engineer social change and render public offices and bureaucracy more transparent.    (TH, 14.01.00) 
 
 

India, US Sign Controversial Pact
The US President, Bill Clinton, has pledged nearly $250mns in aid from various agencies for clean energy and water projects in India. A memorandum of understanding in the field of renewable energy was signed between the Solar Energy Centre of the Ministry of Non-Conventional Energy Sources and the National Renewable Energy Laboratory of the US Department of Energy.

An agreement was signed between the External Affairs Minister, Jaswant Singh, and the US Secretary of State, Madeleine Albright.  It envisages the creation of a consultation group on clean energy and environment. It covers various renewable energy programmes, including exchange of information and personnel. 

According to R. K. Pachauri, Director, Tata Energy Research Institute, the Union Government has hurriedly cobbled up the agreement to please the visiting US President. He said any voluntary commitment by India to reduce emission of greenhouse gases would put its leadership position in the G-77 group in jeopardy while negotiating the “framework convention on climate change”.

The Indian Government has given “techno-economic clearance” to 57 conventional power generation projects between Indian and US firms, since 1991. Out of these, 20 have US based developers.  (BL, 23.03.00  & TOI, 25.03.00)
 

Energy Conservation Bill 
The energy conservation Bill was introduced in the Lok Sabha. The Bill seeks to put in place a comprehensive legislation for efficient use of energy and its conservation through the creation of a statutory authority with appropriate powers called the Bureau of Energy Efficiency. P.R. Kumaramanglam, the Union Power Minister, who piloted the Bill, said there is enormous scope for reducing energy consumption by adopting energy efficiency measures in various sectors of the economy.

The Bill proposes a merger of the extant Energy Management Centre with the new, to be formed, Bureau to effectively co-ordinate with designated consumers and agencies for performing the functions necessary for efficient use of energy and conservation. The functions and powers include, to recommend to the centre, the norms for process and energy consumption standards for equipment and appliances. 

The Bill also seeks to confer power upon the Union Government to specify the norms for process and energy consumption standards for any equipment or appliance, which consumes, generally transmits or supplies energy. It will have the power to impose penalties in case of contravention of proposed legislation.  (BL, 25.02.00)
 
 

Hydrocarbon Vision 2025
The report of ‘Hydrocarbon Vision 2025’, finalised by a high powered group of ministers (GoM), has remained non-committal on the two critical issues of market access to private sector refineries and disinvestment of oil companies. According to the Petroleum Minister, Ram Naik, the Hydrocarbon Vision 2025 document would prescribe a policy approach in the petroleum sector for the next 25 years.

The report also indicates that the Government will develop appropriate policies for disinvestment of the oil companies with the objective of realising maximum shareholder value. The sub-group, appointed by the Government to deliberate on this issue, had recommended phased sell-off of majority stakes in all oil companies except Indian Oil Corporation, Oil and Natural Gas Corporation and Gas Authority of India.

The Government will be setting up an expert group to study the issue of access of petro-product distribution involving the terms for private sector refining companies, as well as future foreign refining companies, to participate in the petro-product distribution market. The entry cost for downstream marketing activity involves an investment of Rs 2,000 crore.   (FT, 24.02.00  & BL, 25.02.00) 
 

CNG for Delhi Buses?
Tata Energy Research Institute (TERI) has questioned the need for the bus fleet of the Delhi Transport Corporation to be run on Compressed Natural Gas (CNG). The Centre for Science and Environment (CSE) had been strongly campaigning for reducing the use of diesel vehicles in the capital.

The diesel controversy took a new turn as TERI and CSE have locked horns on the suitability of CNG as an alternative for reducing air pollution in Delhi. The Supreme Court has already ordered Delhi buses to switch over from diesel to CNG and the Delhi Government had decided to run 100 Delhi Transport Corporation’s buses on CNG.

TERI had argued that even CNG is not very environmentally friendly since it emits the green house methane that depletes the ozone air and causes global warming. However, CSE has contended that in view of the pollution problem in Delhi, the benefits of moving from diesel to CNG cannot be disputed. If CNG is used in place of diesel, it will go a long way in eliminating emissions of toxic particulates. Hence, emission of environmentally harmful gases would be low. (TH, 02.02.00 & BS, 05.02.00)
 
 

Uniform Pollution Norms
The Government has formulated uniform consent procedure for implementation of pollution control laws in operating and establishing industrial projects. The draft notification issued by the Ministry of Environment aims at bringing in more transparency and expeditious decision-making in the functioning of the State Pollution Control Boards (SPCB) and Pollution Control Committees (PCCs) of the Union territories in the implementation of water and air pollution control laws.

The notification, issued under the Environment (Protection) Act, will bring uniformity in the process of grant and renewal of consent of SPCB and PCCs and provide a level playing field to the industries for regulating investment for sustainable development.

The pollution control bodies have also been given the responsibility of preparing a list of non-polluting industries in the category of small, cottage and tiny sectors for granting a simplified consent for 10 years. The notification also stipulates that, for the inspection of industries, the pollution control boards should visit large and medium industries at least once in three months and small industries once a year.   (BL, 14.01.00)
 

Disposing N-waste
The Atomic Energy Commission (AEC) Chairman, R. Chidambaram, said India does not forsee a problem in disposing off its nuclear waste for the next 40-50 years. Till then, some technology will be developed for its safe disposal. He also added that the developed countries were doing research to develop a technology by which nuclear waste disposal would be free from hazards.

He said the Bhabha Atomic Research Centre’s scientists have developed a glass chamber where nuclear disposal can be warehoused for 30-40 years without any hazard. After that, with the development of new technology, it will be disposed off easily. The Nuclear Power Corporation would set up six units of 220 MW each and 12 units of 500 MW each. The present capacity generation of country’s nuclear power unit is 2,280 MW.

The AEC chief said India had set a target of producing 20,000 MW of nuclear power. Of this, 7,000 MW would be produced using light water, 2,500 MW and two units of 1,000 MW through fast breeder second generation reactor. The rest would be produced using heavy water technology. In the fast breeder reactors, plutonium would be used as fuel with thorium as blanket. (TOI, 27.02.00) 
 
 

Oil Recycling Norms
A core group has been constituted by the Ministry of Environment and Forests for making it obligatory for oil companies to help waste oil recycling industries to re-refine oil for reuse. The oil companies, besides helping re-cyclers to re-refine the waste and used oil, will also buy a good portion of the finished product to encourage legitimate recycling activities.  The Ministry had suggested that the oil companies should buy back at least 15 percent of the re-refined produce. 

In case of differences of view, the core group has to decide. It is also required to legally define what is an oil company, what can be considered as waste oil and used oil, what kind of oil is fit for recycling and reuse, in what tangible ways are oil companies and refinery installations required to promote re-refining and other related aspects.

According to the proposed draft rules, the oil companies to which new rules will apply are those that sell, import or refine crude oil. Waste oil has been defined as one that has become unsuitable by use and that cannot be reused. The draft also says that the lube oil should be refined from the crude oil and should become contaminated by use to be considered as used oil. (BL, 25.01.00)
 

Reducing Greenhouse Emissions
UK-BASED Energy and Environment Consultants Glonet Technology and Trade (GT&T) proposes to work closely with central and state power utilities for introducing state-of-the-art Clean Development Mechanism (CDM) technologies to cut down green-house emissions. GT&T will work with Delhi Vidyut Board for introduction of search technologies at its coal-fired power 
stations where green-house emissions are high.

The developed countries are bound to deploy technologies like CDM for reducing green-house emissions in various core industry segments under Article 12 of the Kyoto Protocol. Developing countries like India are outside the ambit of the Kyoto Protocol.

Emissions trading is a lucrative business worldwide operating through a system of credits, wherein every one tonne reduction in carbon dioxide through deployment of a clean technology will attract roughly $35 in credits. Considering that green house emissions from coal fired power plants are very high, the potential is staggering. A modest reduction of a million tonnes over a specific period would rake in US $35mn in credits which the project partners will share. (ET, 02.03.00)
 

Aerosols Affecting Air Quality
Dr. A.P. Mitra, former Director General, Council for Scientific and Industrial Research, said the persistent presence of a huge thick cloud of aerosol, of the size of the US, has been detected by monitoring the aerosol plumes from the Indian sub-continent and their transport to the Indian Ocean region under an International experiment.

He said that the results of this Indian Ocean Experiment could revise the climate change scenario. India was the major partner in this experiment, involving scientists from the Europe, Maldives and Mauritius. Reduction in incoming radiation due to the aerosol could have an “appreciable impact” on crop production.

The data from OCEANSAT (satellite) was expected to provide improved inputs to the Indian weather services and for ocean state monitoring, said M. S. Narayanan of Space Application Centre, Ahmedabad. Sethuraman of North Carolina State University spoke about the improved prediction of tropical cyclone tracks using satellite measured rainfall data and aircraft data. He added that the models would have considerable potential for India in cyclone prediction.(TH, 05.02.00)
 

‘Global Warming’ in India
According to the Editor of the magazine “The Ecologist” published from London, by 2080, the temperature in India may rise by seven degrees Celsius because of global warming. The ice caps are melting at a rapid pace. If they melt fully, any of the financial nerve centres of the world – New York, London or Mumbai – or big island cities will perish.

According to S. Retallack, guest Editor of the magazine, in Antarctica, the ice caps have shown huge cracks and are slowly melting and breaking away from the main icebergs. Spreading of oil companies, increase in mining activities and emissions by vehicles are adding to the global warming. (TOI, 12.03.00)
 

Bio-safety Protocol 
since time immemorial, humans have used their hands to interact with the environment and built tools to reshape the environment and the toolmakers themselves. In a way, the toolmakers were genetically modified by the tools they created. Humans generally think with their hands. The caution that humans exercise while dealing with the unknown is reflected in the precautionary principle, included in the international Biosafety Protocol.

It is on the basis of this principle that countries seek to curb trade in genetically modified organisms or GMOs. The adoption of the international Biosafety Protocol is in fact a step forward in ensuring that the Precautionary Principle is taken into consideration while dealing with GMOs. The protocol will not override the rights and obligations under other international agreements. 

Developing countries like India, where a large number of people are ignorant about GMOs, have the task of raising awareness about GM products. Indian delegates, who attended the United Nations Environment Programme meeting, believe GM products pose no threat to India. However, all related matters must be dealt carefully until their safety is proved. (DTE, 29.02.00)
 
 

Growth in Industry Sectors
According to the Associations Council of the Confederation of the Indian Industry’s survey, over 53 percent of the sectors registered high growth rates of over 10 percent between April and November 1999. Nineteen percent recorded “excellent” growth rates of over 20 percent and 34 registered 10-20 percent. Though cars, auto components and IT sectors showed higher production rate, sugar, vanapati and colour picture tubes were lower. 

Among sectors showing growths of 10-20 percent, only flat/sheet glass showed an increase in production. Rest, more or less, maintained status quo. Sectors recording high growth include cement, refinery, electronic components, ceramics, paints, ball and roller bearings, alcoholic beverages, paper and telecom and construction equipment. 

Almost 40 percent sectors recorded moderate growths, below 1 percent. Sectors reporting negative growth include scooters, tea, malted food, nylon filament yarn, black and white televisions, hydro-electric and glass tableware. Of the 41 export sectors reporting data, only seven reported a growth of over 20 percent. Nine sectors recorded export growth of 10 percent. Fifteen sectors reported negative export growth. (BL, 13.01.00) 
 

Comprehensive Policy for SSIs
According to the Minister of State for Small Scale Industries (SSIs), Vasundara Raje, the Government was coming out with a comprehensive policy for the small sector. It was strengthening its institutional mechanism to take action against imports not in line with World Trade Organisation (WTO) agreements. Although the country was opposed to linking trade with environment, health and safety and other standards, the industry on its own should lay emphasis on them. 

It was also reviewing subsidies in place and reorienting them to make them WTO compatible. Experts pointed out the Government should not worry about phasing out all the subsidies because of WTO compulsion as some were actually WTO compliant. Former Deputy Director-General, WTO, Anwarul Hoda, pointed out that footnote 2 of the Agreement on Subsidies and Countervailing Measures provides a basis for treating subsidies to small and medium enterprises (SME).

Project Coordinator of United Nations Conference on Trade and Development (UNCTAD), Veena Jha, said other policies not covered by WTO rules and disciplines include special institutions for lending to SMEs, establishment of sub-contracting and complementary linkages between large and small industry, vendor development programmes for encouraging sub-contracting to SMEs, simplified procedures and reservation of production specified items only for SMEs.(FE, 19.03.00)
 

Bill on Conduct of Auditors
T.S. Krishnamurthy, Secretary, Department of Company Affairs, described the Companies (Second Amendment) Bill, 1999 as a “not so heavy” peace of legislation. He told company secretaries and chartered accountants at a session that it was intended for investor protection and good corporate governance and undesirable company practices like non-disclosure of information to investors and non-filing of accounts have to go. 

The Government was keen on introducing safeguard measures, especially to new areas such as sweat equity, inter-corporate loans, buyback of shares, investor protection funds. He described clause 126, disqualification of directors, as the most significant item of the Bill. He dismissed the viewpoint of such a harsh clause deterring an eminent person from joining boards of companies. 

He observed directorship was a serious business and eminent persons should have adequate defence against defaults and need not fear losing directorship. He  said auditors were guardians of public interest and strongly defended the amendment clause to Section 226 relating to disqualification of auditors for holding any security of the company. (BL, 29.01.00)
 

Crackdown on Dubious NBFCs
In a massive public education exercise and a multi-regulatory strategy to tighten the noose around the neck of dubious non-banking finance companies (NBFCs), the Reserve Bank of India (RBI) will update and extensively publicise the list of both registered NBFCs and those denied registration every six months. The State Governments, police and other regulatory agencies would also be involved in putting an effective checks-and-balances system in place.

The exercise will be operationalised once the RBI publishes the names of the short-listed close to 600 NBFCs out of the total 6,000 that have sought registration. While only those 600 fulfilling the norms of net-owned funds (NOF) of Rs 25 lakh for accepting public deposits are poised to get category A, the rest would get category B, which means they could deal only in loans and advances, not public deposits.

The entry of more NBFCs to public deposit would be difficult following recent RBI decision to hike the NOF to Rs 2 crore. It will formally reject the registration of those NBFCs failing to meet NOF guideline. RBI has decided to allow only those NBFCs to freely open their branches in states other than the state of registration which have NOF over Rs 50 crore.  (ET, 26.02.00)
 
 

Upsetting FDI Inflows
The Economic Survey 1999-2000 expressed serious concern over the falling inflow of foreign direct investments (FDI), a consequence of a substantial reduction in approvals. This would upset the Government’s medium-term target of a $10bn inflow. The Survey, however, expressed the optimism that the recent expansion of the automatic route for approval of FDI proposal, coupled with further liberalisation, should reverse the trend. 

Inflows during the first eight months of 1999-2000 were lower at $1330mn compared with $1610mn in the corresponding period last fiscal. While the inflows from Mauritius declined to $590 in 1998-99 from $900 in the previous year, those of the US declined to $453mn from $687mn. Japan and Italy, however, increased their investments.

Though the engineering sector remained at the top of FDI recipients consecutively for the last three years, there was a steady decline in the quantum of inflows to the sector. Chemicals and allied products, however, witnessed a 46 percent decline in 1998-99 over the previous year. Inflows into the services sector increased to $368.5mn in 1998 from $321.3 in 1997-98. The actual inflow as a proportion of approvals improved significantly from 21.1 percent in 1997 to 32 percent in 1998.     (BS, 29.02.2000 & FT, 20.02.2000)

                               1991   1992   1993   1994   1995   1996   1997   1998    Total 
                                                                                                          (’91 to ’98) 
Approvals
Rs crore                   739  5256  11189  13590  37489  39453  57149  28783  193648 
US$ million               325  1781   3559    4332   11245  11142 15752    6975    55111
Actual Inflows
  Rs crore                 351  675   1786   3009   6720   8431   12085   9116  42173 
US$ million               155  233    574     958   2100   2383     3330   2230  11963 
Actual inflows as %
of Approvals
(In US$ terms)           47.7   13.1   16.1   22.1   18.7   21.4   21.1   32   21.7 

Note: The approval and actual inflows figures include NRI direct investments approved by RBI, but exclude flows under acquisition of shares of Indian companies by non-residents.
 

Tourism Initiative
The World Travel and Tourism Council (WTTC) launched the first Indian initiative envisaging bringing India’s top-most travel and tourism stock-holders together to accelerate the industry’s growth. It will identify six priority areas in travel and tourism strategy for the next five years, to be reviewed every year. One state would be focused upon for developing a tourism-driven economy.

Jean-Claude Baumgarten, Chairman, WTTC, launching the initiative said, “…there is a vast opportunity for India to grow…if a fundamentally new approach to tourism is adopted…to realise India’s potential.”  P.R.S. Oberoi, Vice Chairman and Managing Director, the Oberoi Group, said, “…for a sustainable expansion of its share in the world travel and tourism market, India needs a coherent and cohesive regional policy framework. WTTC will work in tandem with the existing associations to intensify efforts in addressing issues which cut across various segments of the industry.”

WTTC will implement a direct communication programme aimed at the policy makers at the local and national level, leveraging the influence of its founder members. It will also introduce its proven satellite accounting procedures in India.  (BS, 19.02.00)
 

Trade Union Act to be Amended
 In a bid to check multiplicity of trade unions, the Government decided to amend the 1926 Trade Unions Act in the current session of the Parliament. The Cabinet was of the view it would promote internal democracy in trade unions and make them more responsible and accountable. 

The amendment seeks to enhance the number of employees from the current seven persons to 10 percent of the total workforce for forming a Union and getting it registered. 

This would help in reducing the number of unions. It would also streamline the functioning of unions by making it mandatory to hold annual elections and auditing of the accounts. It was also proposed no more than one-third of the office bearers, subject to a maximum of five, could be outsiders. Federation of Indian Chambers of Commerce & Indusry (FICCI) has welcomed the move.               (FE, 08.03.00) 
 

Norms on Insurance Ads
The Insurance Regulatory and Development Authority (IRDA) was planning to announce guidelines for insurance firms on advertisement of insurance products. The norms are likely to be finalised by April, along with other rules pertaining to accounting, rural insurance, taxation and broker, agent and surveyors’ regulations. 

Though the IRDA Act was passed in the last winter session, the authority is yet to be constituted. It is likely to be a ‘lean and thin’ body with six members, including the Chairman, from amongst the representatives from the fields of life insurance, actuarial, etc. The Government has also to form the Insurance Advisory Council. 

The RBI was also expected to announce strict norms for the entry of NBFCs into the insurance sector which, if finalised, would exclude most banks from making forays into the sector. IRDA has also set up a committee to draft a Vision 2000 and beyond for the Tariff Advisory Committee (TAC).  Once the market matures, it is likely to be deregulated. Private insurance firms are expected to begin operations by the end of the year. (BS, 21.02.00 & BL, 27.02.00)
 

Directors to be Liable for Deaths
The British Government was planning to change the law to make it easier to prosecute company directors for management failings that cause fatal accidents. The decision to take action comes four years after the Law Commission, which examines possible law reforms, recommended action. It follows a series of tragedies for which nobody has been successfully prosecuted. The Home Office said it would soon hold consultations on making the directors liable for collective management failure to prevent accidents.

Government hopes of effecting reform through the courts were dashed by a landmark ruling of the Court of Appeal which backed the acquittal of Great Western Trains on charges arising from a London train crash in 1997, in which seven people died. It supported a High Court ruling that the “unsatisfactory state” of the law made it impossible to secure a corporate manslaughter conviction.
Despite thousands of deaths in work-related accidents over the past two decades, five companies have been convicted for corporate manslaughter. Executives have been convicted twice. (FT, 16.02.00)
 

Make Captive Mining Attractive
The Government has decided to deregulate the prices, production and distribution of coal in the country by amending the Indian Colliery Order of 1945. The move would make captive coal mining attractive. Under the present regime, Public sector Coal India Ltd (CIL) commands a premium of around Rs 400 per ton in the open market. This is because captive coal mining remains unattractive owing to a price differential. 

The Government currently has the power to restrict prices, production and distribution through the Colliery Controller. Hence, it was reluctant to completely repeal the Order, as this would render it toothless. It had earlier committed to decontrol all grades of coking coal by January 1, 2000. The latest decision is likely to affect the prices of E, F and G grades of coal, which will be completely deregulated. 

This will enable CIL and Singarelli Collieries Company Ltd (SCCL), the other public sector unit, to price E, F and G grade non-coking coal in line with the ruling market price. The greatest impact of this will be on power plants. CIL and SCCL are currently allowed to fix the prices of E, F and G grades of non-coking coal once every six months by updating the cost indices as per the market escalation formula. (BS, 04.01.00) 
 

BIFR to Wind up Haldia Unit
The Board for Industrial and Financial Reconstruction (BIFR) has advised the Union Government to wind up the Haldia unit of Hindustan Fertiliser Corporation (HFC), which has not operated for a single day since it was set up two decades ago. Owing to various problems, including mismatch of technologies, the plant was never commissioned. The workers, however, have been drawing their pay and all benefits without having any work.

 Over a year ago, the Haldia unit had two suitors, Indian Oil Corporation and the Paharpur Cooling Towers, both of which opted out. The BIFR has asked HFC and ICICI Ltd, the revival plan operating agency, to submit a package for its units at Barauni in Bihar and Durgapur in West Bengal by June 30, but not at government exchequer’s cost. HFC had a cumulative loss of Rs 3,400 crore as on March 31, 1999. During 1999-2000, Union Government gave a non-plan support of Rs 107 crore and for the next financial year it has earmarked only Rs 65 crore.

The Union Ministry of Chemicals and Fertilisers has already earmarked Rs 350 crores for revival of the fourth unit at Namrup in Assam. At Namrup, a modernisation cum expansion project is already under way, in which second unit would be revamped and third unit’s capacity would be doubled. (FE, 21.03.00) 

Auto Technology Upgradation
Delivering the keynote address at the 5th Auto Expo 2000, Murli Manohar Joshi, Minister for Heavy Industries and Public Enterprises, called on the domestic automotive industry to adopt environment-friendly technologies and explore the possibility of mergers, acquisitions and consolidations to enhance their operations to globally competitive levels. 

While this may be in the form of technology absorption, fresh investments in research and development would be critical. He also called for exploitation and  creation of a larger niche for exports and taking advantage of the sizeable and well spread-out engineering and technical talent available in the country. This could be achieved by better coordination between with the local technical and engineering institutes.

Venu Srinivasan, President, Society of Indian Automobile Manufacturers, said the  industry currently employees over two lakh people directly and one crore indirectly. It contributes four percent, around Rs 36,000 crore  to GDP and aims to reach eight percent in the next decade. The car and two-wheeler industries were poised to grow four and two-and-a-half times, respectively, in next ten years. He sought Government aid in investment in oil industry to bring parity between Indian and western emission standards.  (BL, 19.01.00)
 

Futures Trading in Tea
The Union Minister for Commerce, Murasoli Maran, mooted the idea of developing forward and futures markets to ensure stability in tea prices. Speaking at the India International Millennium Tea Convention, he emphasised the need for evolving risk management tools for tea industry. The peculiarity of the industry is the trading of 85 percent of the total world tea production through auctions, which are spot markets.

The industry, facing a stiff competition from coffee and carbonated drinks, should systematically go in for generic promotion of tea by emphasisng the discovery of anti-oxidants in tea, its anti-carcinogenic property and the rediscovery of extraordinary revival and relaxing properties of tea. The projected annual growth rate of tea consumption worldwide was just moderate. Therefore, the entire tea fraternity should rise above their brand loyalties and cooperate in a joint venture for promotion of tea. 

He underlined the desirability of achieving higher value-addition in tea to ensure better returns to developing countries, which are largely trading in tea in its commodity form only. He also emphasised the urgent need to harmonise various technical standards being used by the importing countries. This would result in the elimination of a major non-tariff trade barrier in the tea trade. (TH, 23.03.00) 
 

Reining in Bank Boards
The Hong Kong Monetary Authority (HKMA) has proposed some changes to the duties of bank directors, including separation of functions of chairmen and chief executives, the South China Morning Post (SCMP) reported. This attempt to create “checks and balances” may 
reflect HKMA’s dissatisfaction with the functioning of some banks in the mainland. 

The review of the duties of bank boards is likely to target more rigorous policing of Section 83 of the Banking ordinance dealing with procedures for providing unsecured loans to interested parties. The new guidelines are also likely to limit the number of boards on which a bank director may sit, minimum number and frequency of board meetings that should be held and board meeting attendance rules for bank heads.

In Hong Kong, two bank directors hold dual posts at their institutions and atleast in two cases bank chiefs sit on the board of more than 20 companies. The Hong Kong Association of Banks said it had to submit a response to the HKMA proposal. (BL, 24.02.00) 
 

IT Co Silences Over 35s
Infosys Technologies, the Nasdaq-listed Information Technology (IT) company that is India’s top glamour stock, had banned employees over 35 from addressing its annual brainstorming conference. “This is ageism. We do not dispute this,” said one (42-year-old) senior Infosys executive. The age ceiling at the Bangalore conference was disclosed by N.R. Narayana Murthy, 53, founder Chairman and Chief Executive Officer of the company.

Murthy told an IT conference in Bombay that youth invigorated a company and he was more interested in listening to the vision of the young. He said the global software sector was changing so quickly that it required people of mental agility, innovation and high energy. He is only one of four of Infosys’ 5,000 employees over 50. N.S. Raghavan, 56-year-old co-founder, has already retired. An Infosys employee’s average age is 26. (FT, 07.02.00)
 

US Banks Lead Indian M&A
Merger fever is poised to rise in 2000 with banks jostling to expand, auto-pharma-media sectors getting swept, IT units hunting for strategic fits, cellphone businesses tying knots and commodity companies seeking economies of scale. Names of likely suitors and probable targets are being bandied about amid swirling talk of potential alliances. However, denials are also flowing in good measure. Some mergers will seek to mesh firms’ divergent market focus, allowing the merged entity to cross sell products. 

JM Morgan Stanley and DSP Merrill Lynch, leading US banks, are first and second in league of advisors on mergers and acquisitions. Takeovers in India rose fourfold last year, the sharpest rise by value since the launch of market reforms nearly 10 years ago. Pharmaceuticals, media and auto industries are poised for massive growth. However, their development would depend on possible realignments among the existing players. Recent mergers have been friendly because sellers outnumber buyers but the takeover environment is likely to become hostile. (FT, 18.02.00 & ET, 25.02 & 04.01. 00)
 
 

Fragile WTO Foundations
The recent landmark ruling of a dispute settlement panel, permitting the use of unilateral trade sanctions by the US, has underlined the fragile foundations of the World Trade Organisation (WTO). It has held that the provisions of the US Trade Act of 1974, designed to take unilateral action against the country’s trade partners, do not, in any way, violate the commitments taken by it under the WTO. 

The ruling allows the US to use unilateral action against countries perceived by it as undermining its trade interests, conveniently bypassing the multilateral system. The ruling is more significant as no less than 11 countries added their weight to the complaint by joining in the dispute as third parties. It was the combined strength of the arguments that some of the more important players in the WTO were sidelined. 

The ruling sets at rest the speculation of the US finding ways of providing legitimacy to the controversial provisions of its Trade Act 1974, which provides for unilateral action. Among the more stark examples of the threatened use of unilateral action of trade retaliation by a major trading country in multilateral negotiations is the pressure put on India.   (ET, 19.02.00)
 

EU May Ease Restrictions
In a move enabling Indian importers to increase their shipments to Europe by Rs 150 crore, the European Commission (EC) planned to partially lift the ban on operation of exceptional flexibilities in textiles and clothing quota. The proposal envisaged permission to use flexibilities up to 3,500 tonnes of textile and clothing. If India complied with its commitments on textile sector, the full flexibility volume of 8,000 tonnes would be made operational in due course of time. India has partially fulfilled its commitments on tariffs.

Implementation issues, however, remain unresolved, said Pascal Lamy, EC Trade Commissioner. In contrast, the Indian Government contended that all commitments have been fulfilled. If exceptional facilities are made operational, Indian exporters could utilise unused quota of one category in another. If the entire exceptional flexibility is utilised, exports to the EU would increase by Rs 500 crore.

Other issues taken up during Lamy’s visit included the position of the two sides on WTO, automobile import related problems, restrictions on import of hides and skins and anti-dumping. However, there was no visible progress on the issues. The EU was not in favour of WTO norms envisaging sanctions for violating labour standards.   (ET, 08.03.00) 
 

India, EU Initiatives
India and the European Union (EU) have agreed to launch two initiatives, going beyond relations at the official level to embrace civil society concerns. Pascal Lamy, European Commissioner for Trade, delivering a special lecture on issues concerning Indo-European trade at the Indian Institute for foreign Trade (IIFT), said the initiatives were EU-India think Tank Network and EU-India Round Table on Bilateral Relations. 

Lamy observed that the EU was India’s most important partner in trade investment and development co-operation and accounted for over a quarter of India’s exports and imports. The EU is also the biggest partner in development cooperation and the second largest sources of foreign direct investment.

India accounts for just 1.3 percent of the total EU imports of goods. In services, the figure is lower at 1 percent. It also receives only 0.6 percent of the total EU’s world wide investments, a poor return for a country comprising 17 percent of the world population. Hence, a joint effort is required to harness this vast potential.   (BL, 08.03.00)
 

Indo-US Commercial Dialogue
India and the United States have agreed to work together to achieve a global consensus on crucial issues facing the WTO. According to the Commerce and Industry Minister, Murasoli Maran, they did not want a Seattle. He added India was eager to maintain a multilateral rules-based trading system and a new round of trade negotiations should not be launched until a consensus was reached between member countries. 

He said that Indo-U.S. relations had been volatile and estranged in the past. Both countries should throw out the old cold war baggage and begin ties on a fresh note.    Maran and W. Daley, the visiting US Commerce Secretary, signed the terms of reference for the Indo-U.S. commercial dialogue, creating an institutional mechanism for cooperation in the trade and investment sector. 
The dialogue will act as a forum where emerging issues affecting bilateral trade will be discussed. This will enable the sub-committees to pursue specific projects. It will take place through Government to Government meetings at the Ministerial level followed by joint Government-private sector meetings. (TH, 24.03.00)
 

Ceiling on Crude Oil Prices
The Union Petroleum Ministry decided to slap a ceiling on crude prices for national oil companies. The increase in the crude price of $6 to $10 a barrel is good news for the oil pool account, which is sinking deeply into the red due to enormous subsidies on kerosene and cooking gas.

The ceiling of Rs 5.570 per tonne will ensure that the difference between the administered price and the global price flows steadily into the oil pool account. Without the ceiling, the Oil and Natural Gas Corporation (ONGC) and Oil India Limited’s (OIL) earnings could have been higher. They are entitled to 77.5 percent of the free on board (FOB) price prevailing in the world market. Beginning April 1, ONGC and OIL are entitled to 80 percent of the international crude price, which is inching its way beyond the $30 a barrel mark.

Not withstanding the sales margins of ONGC and OIL, the ceiling price should have got considerably plumper since the middle of the last year, when they were paid a floor price of Rs 3.469 a tonne, inclusive of royalty and cess, to ensure that these companies earned a crude price of $6.46 a barrel when global rates were close to $19 a barrel.  (FE, 13.03.00)
 

Empower Tariff Commission
The Tariff Commission has expressed its keenness to handle anti-dumping and safeguard matters when the customs tariff structure is gaining importance due to the Government’s plan to phase out quantitative restrictions on imports. The Commission also wants statutory powers and appointment of members to carry out its mandate.

According to the sources in the Commerce and Industry Ministry, the Commission had sought appointment of members as decided earlier. There are plans to study and advise on market access offer from trading partners under the World Trade Organisation framework.  The Commission is mandated to look into tariff rationalisation and evolve an overall tariff structure as per its revised terms of reference.  (ET, 04.03.00)
 

UK Seeks Investment Opportunities
A UK trade and investment delegation led by the former UK High Commissioner, Nicholas Fenn, had been to India looking for new investment opportunities. The co-leader of the delegation, the former UK Minister of State for Foreign Affairs, Jeremy Hanley, said the delegation would look at prospects for investment following three years of slow growth. The scenario was bright for reviving the Indo-UK partnership following BJP Government’s decision of implementing reforms.

Hanley said that the areas of interest include banking and financial services sector, privatisation, infrastructure and power generation and transmission as well as civil aviation and telecom. According to the UK High Commissioner, UK did not support the concept of sanctions to uphold the core labour standards.

The UK companies were interested in making investments in environment technologies, especially in the water sector. UK is India’s second largest trading partner, ahead of Germany and Japan and also the largest cumulative investor. It also ranks third for new investments. ( TH, 18.01.00)
 

Indo-Lanka Pact
The India-Sri Lanka free trade agreement came into effect, paving the way for a large-scale liberalisation of bilateral trade in thousands of goods. The Indian High Commission, marking the operationalisation of the pact, launched a new Internet Web site, www.indiahcsl.org. It provides information on products listed for free trade between the two countries and contains details of the agreement, including information on trade and commerce, passport, visa services, Indian cultural centre, tourism and education. 

Fresh data revealed that Sri Lanka’s exports to India over 1991-1999 had increased 3.5 times from $13mn to $47mn In contrast, Indian exports to Sri Lanka declined by 5.3 percent to $510 mn The surge in Sri Lankan exports reduced the trade gap between the two countries to $463 mn from $501mn. 

Sri Lankan industry could use the new free trade agreement as a launching pad for further increase in its exports to India. Besides Sri Lanka getting the ‘most favoured nation’ treatment for the duties in India, the pact lifts quantitative restrictions on many items from Sri-Lanka. The agreement came into effect with India formally listing its negative list of items in the Budget. (BL, 02.03.00)
 

Review of Export Profit Tax
The Government said that the Reserve Bank of India would cut the Bank Rate to facilitate lowering of lending rates by commercial banks to boost investments. According to the Minister of State for Finance, V. Dhananjay Kumar, the RBI had already indicated its intention to lower the Bank Rate. He said, on a total export turnover of about Rs. 140,000 crore, in rupee terms, tax earnings are estimated to be about Rs. 400 crore and the figure does not seem to be alarming.

The Government was firm on phasing out all concessions under Sec. 80 of the Income-tax Act. The President, Federation of Indian Exporters, Navratan Samdria, said that the withdrawl of tax exemption on export profits would hurt exports badly. He added, exporters needed Government support at this crucial juncture as after many years of stagnation and even negative growth, exports had shown signs of recovery and growth in the current year. 

Some exporters said the sudden announcement of withdrawal of tax exemption might disrupt their schedules as most orders for the coming year were booked in advance and demanded at least one year’s time to implement such changes. (TH, 10.03.00)
 

Transaction Cost Ombudsman
According to the Finance Ministry, transaction costs of Indian exports would come down with the functioning of the proposed Ombudsman for the export sector. Though the Ombudsman will not exercise any statutory powers under the Customs Act, it will help reduce delays in granting benefits due for exporters, in accordance with the law. It will also facilitate the redressal of their grievances.
The Director General of Foreign Trade (DGFT) said that Indian exports have to emerge from the shadow of single digit growth and move ahead to meet global competition. This called for concerted efforts by both the export sector and the Government.

The proposed ombudsman will function independently of customs and the DGFT and will not be an appendage to the Department of Revenue. The Ombudsman, functioning out of Mumbai under the administrative control of the Ministry of Commerce, would be appointed from a panel of senior retired officers. (BL, 14.01.00  & 19.01.00)
 

Tariffs Hit Sugar Imports
The traders and industry sources said that sugar imports have stopped after the rise in import tariffs and the imposition of marketing restrictions on imported supplies. According to an official of one of India’s leading sugar importing firms, there was no market left for imported sugar and whatever shipments had come were for contracts made much earlier. The Government, through successive moves, had raised sugar import duties to a prohibitive 60 percent from five percent in the past two years.

Industry officials said sugar imports were minimal compared with total output, but the influx of shipments at a time when domestic industry was already grappling with a bumper crop had severely weakened the market sentiment.  (ET, 23.02.00  & BL, 24.02.00) 
 

Tax Body for Cross-border Deals
The Finance Ministry is toying with the idea of setting up a directorate of foreign taxation, which can deal with all the cross-border transactions and related issues. The Directorate is likely to have a ‘field staff’, which can actually check the authenticity of all such transactions. At present the Central Board of Direct Taxes (CBDT) has a foreign tax division (FTD) for dealing with international taxation. 
Its role is mainly confined to policy issues pertaining to international tax matters, including negotiations on double tax avoidance agreements. The need for a special directorate arose in view of the increasing cross border transactions and the resultant complications in the tax issues arising from such transactions. The Ministry of Finance has set up a committee to look into the entire gamut of transfer pricing and e-commerce. 

The volume of e-commerce expected to take place in the country by the year-end is about Rs 300 crore. The directorate is being conceived as a body that will function independently, like the investigation wing of the of the I-T Department. The CBDT will also have a standing committee exclusively for international taxation. (ET, 24.02.00)
 
 

Corporates Bite Sinha’s Bullet
The markets reel under new taxes worth Rs 6,900 crores for the financial year 2000-2001. The salient features of Sinha’s lacklustre Budget are: • MRP based assessment extended; • Sops on venture export exemptions to be phased out; • Defence spending up 30 percent; • FII limit in companies hiked to 40 percent; • GPF rate reduced to 11 percent; • Act to protect NBFC depositors; • Insurance for the poorest; • Corporatisation of Public Sector Utilities; • Single rate central VAT introduced; • Peak import duty rate cut to 35 percent; • Duty cut on crude, petro-products; • Duties on IT, telecom imports cut; • Surcharge for non corporates; • Subsidies on food, fertiliser cut; • Duties on IT, telecom imports cut; • Divestment proceeds to retire debt; • Excise duty hiked on cigarettes; • Tax on dividend distributed up; • Farm houses income to be taxed; • MAT rationalised; • Government stake in banks to be cut; • Fiscal deficit pegged at 5.1 percent of GDP and export exemptions to be phased out.

Though Sinha claims of balancing the need for fiscal consolidation with the need to nurture the recovery phase of growth cycle, major opposition parties, several industry associations and experts have criticised the budget as being status quoist, with no major direction to address the concerns of the real economy. (BL, 29.02.2000) 
 

Creating India Fever 
The Government has decided to free foreign direct investment (FDI) and give most investment proposals “automatic” clearance, in an effort to make the policy transparent and liberal. The Confederation of Indian Industry (CII) said that the decision to undertake a review exercise by a group of Ministers to prune the negative list was a positive one.

According to the Commerce and Industry Minister, Murasoli Maran, the expanded automatic list for FDI had the potential of creating an “Indian Fever” among foreign investors. He also said that the Foreign Investment Promotion Board (FIPB) will gradually whither away and the role of the RBI would increase.

The liberalisation aims to bring India closer to its target of attracting $10bn in FDI this year, up from last year’s $4bn. Also, the prescribed foreign equity ceilings in some sectors have been raised and sectors such as advertising and film industry are also being opened up to foreign ownership.        (ET  & FT, 03.02.00)

Tiger-style Economic Growth
The World Bank said  India could achieve annual economic growth of 7.5 percent or more, close to the East Asian tiger levels if serious economic reforms are implemented. India’s growth of six percent in the last fiscal year was among the world’s best, but good harvests masked a deceleration in other sectors, sparked by a slow down in the pace of reform and the large public sector deficit.
The report emphasised the large and growing difference between the states. The lack of tariff reform, weak infra structure, protective labour laws and investment restrictions have contributed to a weak export performance.

According to the former Union Revenue Secretary, M. R. Sivaraman, India’s GDP is grossly underestimated due to large-scale non-disclosure of incomes. He added, if GDP is correctly estimated, India’ fiscal deficit, as a percentage of GDP, would be lesser than the one assumed in the Budget.(BL, 06.02.00  & FT,16.02.00)
 

Focus on Overseas Investment
The foreign economic policy will focus on overseas investment by the Indian companies to expand trade, a top external affairs ministry official said. Sudhir Devare, economic relations secretary in Ministry of Economic Affairs said that the economic growth will drive Indian trade in the first decade of the 21st century and worldwide trends show that trade follows investment.

He said that Indian investments abroad will be an important element of economic diplomacy to boost presence abroad. The trend for overseas investment has gathered pace in 1999 especially in information technology. However, lot more needs to be done to step up the flow of external investments.     (TOI, 03.01.00) 
 

New Selloff Policy
The Cabinet Committee on Disinvestment (CCD) will spell out a new divestment policy. It will lay down a sector-wise and time-bound strategy for 58 Central public sector undertakings and attempt to delink the divestment programme from the imperatives of the fiscal deficit.

According to the top Government officials, the new strategy was envisaged keeping in mind the rapidly changing macro outlook in the light of the dismantling of quantitative restrictions on the balance of payments, the administered price mechanism for petroleum products and withdrawal of international voice monopoly accorded to Videsh Sanchar Nigam Limited. The CCD had also initiated the process of reducing Government equity below the majority mark of 51 percent and handing over the day-to-day management to the private sector.

The Union Minister of Disinvestment said that the Government has been working on attractive options to ensure adequate safeguards for employees and will evolve a long-term strategy on disinvestment.   (BS, 03.02.00 & ET, 23.03.00)
 

Sinha Raps Industry
The Finance Minister, Yashwant Sinha, stated that the political consensus on economic reforms was on the retreat. He accused the industry of double-speak on the issue of subsidies. He virtually ruled out any relaxations in the budget proposals on direct and indirect taxes.

Sinha claimed that the economy was in the pink of its health, despite oil prices ruling high at the same level as in 1991. He cautioned that the real crisis was in balancing the Centre’s budget and stressed the need for fiscal discipline at the state and central level. On specific tax proposals, he held that the 7.5 percent flat rate of Minimum Alternate Tax (MAT) on book profits was meant to tax those zero-tax companies, which were outside the purview of the existing MAT system. It had also cleaned up the complicated system to bring in more companies under the fold.

Sinha also flayed industry on its apprehensions regarding the transaction “value based” assessment in excise. (BL, 16.03.00)
 

End of Import QRs
India will be moving rapidly to a regime in which tariffs will replace quantitative restrictions (QRs) as a means of regulating imports. The Government has also chosen not to publicise the agreement with the US. The Government finally reached an agreement with its major trading partners, other than the US, to remove all QRs by the year 2003.

However, with the US insisting on an accelerated phase out, the case went to a World Trade Organisation disputes panel, which last year ruled against India. The cost of the agreement is that all import QRs will be removed by 2001. First, the removal of all QRs could lead to an anomalous situation and second, the Government can replace the QRs with import tariffs.

The removal of all QRs is unlikely to lead to a flood of imports. There is bound to be a dislocation in specific sectors, especially those where the cost of production is well above the global average.    (TH, 06.01.00)
 

Don’t Invest PF Proceeds
The trade unions demanded that the Government takes stringent action against bank defaulters, particularly those industrialists of the CII, who had suggested that weak banks be wound up. They also called for raising the income tax exemption limit to Rs 1 lakh and demanded restoration of tariff on coal and steel.

The General Secretary of the Centre of Indian Trade Union, M. K. Pandhe, said the union leaders were critical of the Government’s economic policies.Pandhe also said the Finance Minister had agreed to a day-long dialogue with trade union leaders on various outstanding issues.
They also demanded that the Government raise the existing interest rate on the Employees Provident Fund corpus. It called for making the Provident Fund Act applicable to all establishments in the country and a phased manufacturing programme for encouraging domestic production.      (BS, 07.01.00)
 

The State of the States
The State Government’s revenue deficit had been increasing sharply. The fiscal marksmanship of the State Government, i.e. their accuracy with their Budget estimates, has not been too sharp. The transfer of resources from the Centre continues to play a key role in the States Budgets. 
The revenue deficit of states has been estimated to be Rs 26,439 crore in 1998-99, up over three times in as many years.  The crisis would have happened even without salary hikes as support to loss-making public sector enterprises, unwarranted subsidies like power, road transport and interest on debt also causes deficit.

This inevitably leads to further borrowings from small saving accounts like postal deposits, cuts in operational expenditure, reduced spending on primary education and rural health care and delays in paying salaries, pensions and gratuity.  The State Governments are going into a debt trap, incurring more and more debt  for financing salaries and interest. (BS, 03.02.00  & BL, 21.02.00)
 

Changing Rules of Commerce
The economic relationship between the US and India will be shaped by a different and powerful force in the future as both the countries have realised that technology is changing rules of commerce. According to James A Harman, US Exim Bank president, the great economic powers of the future will be those countries that can harness the powers of great minds, ever-advancing technology and communication. 

He said India can be considered a true global birthplace of technology as the concept of the number zero and the Arabic numeral system was born here and over the years it has served as a breeding ground for sophisticated analytical ideas. 

The new e-economy is helping cut costs and improve companies’ productivity. The spread of this new economy and strong exports prompted UNICE, the association of European employers organisations,  to revise upwards its forecasts of economic growth for the current year. It now expects both the EU and the 11-nation euro-zone to grow at 3.1 percent in 2000 compared with forecasts of 2.7 percent and 2.8 percent respectively last November.(ET, 16.03.00  & FT, 21.03.00) 
 

Bent Oil Economy
India’s oil economy is threatening to keel over again with the world oil prices reaching a nine-year high and the oil pool deficit slated to touch Rs 8,000 crore. The Finance Minister’s decision to marginally cut duties, without touching subsidies, can only worsen the pool economics. The gap between international and domestic prices of petro-products has been rising.

The oil pool account has to bear a larger burden of subsidies and the deficit is growing at a much faster pace. While international crude prices are ruling at around $30 a barrel, the oil pool deficit is growing by over Rs 2,500 crore per month. While the pool is being drained by about Rs 13 crore per month due to the difference in the Aviation Turbine Fuel prices, subsidies on account of diesel increase the deficit by Rs 880 crore every month. 

The oil pool’s inability to pay the companies in time would affect the liquidity position of the oil companies. The Finance Ministry has put the ball in the Petroleum Ministry’s court for hard decisions. (ET, 03.03.00)
 

Annuity-based Tolling
The Government has indicated that it has been considering a shift in its policy regarding imposition of tolls on road users. Under the annuity based tolling, the road users are not subject to any tolling directly and the Government is also not under any strain to hand out payments immediately. While outlining the future outlook for the road sector in the country, the Government stated in the Economic Survey for 1999-2000 that under the existing conditions and circumstances, a significant policy shift towards annuity based payment mechanism is being contemplated.

The success of the system would depend directly on the setting up of a central road fund, which will be utilised to make payments to the concessionnaire. It has been debated in the official fora whether the Government should go in for direct tolling, shadow tolling or annuity based tolling.

In such a scenario, the Government might have to appoint independent agencies, which could lead to huge additional costs. One view within the Government has been that the best recourse for the Government would be to go in for annuity based payments, which had been reiterated in the Economic Survey. (ET, 29.02.00)
 

Global Corporate Platform
Prime Minister Atal Bihari Vajpai said the Government would hike investment on research and development (R&D) to one percent of gross domestic product in the current year and two percent over the next five years. 

Urging the scientists for improving standards of science education, promoting India’s traditional knowledge, spreading the culture of venture capital and increasing awarness about intellectual property rights, Vajpai said the synergy between existing institutions and assets should be increased to make the country a global corporate platform.(TOI, 31.03.00)
 
 

Population Time Bomb 
India’s population will cross one billion mark on May 11 this year. It would then become the second nation in the world boasting of a billion plus population. This is not only a drain on the nation’s limited resources but also spells ecological disaster. A study by Tata Energy Research Institute says that environment degradation will accentuate to the point of crisis if timely actions are not taken.

According to demographer K. Srinivasan of Population Foundation of India, the task will become more daunting as seventeen million people continue to add to the population every year, till the current rate of growth slows down. The Minister of State for Health and Family Welfare, Z.T. Shanmugam, said unless the will of all sections is summoned and all possible resources are harnessed, the current trend will lead India to become the most populous country by 2050.

The National Population Policy (NPP), 2000 provides a policy framework for advancing goals and prioritising strategies on this national threat. It also favours a National Commission on Population, which would oversee and review the implementation of policy. (BL, 30.02.00  & 09.03.00; BS, 24.02.00)
 

Increasing Suicide Cases
The country’s largest state, Madhya Pradesh, witnessed a spurt in suicide cases. Recent statistics show that suicide cases in the state, which had earlier been hovering around nine percent per one lakh, would climb up once the new data is arrived at. A sociological study conducted by the Barkatullah University has revealed that more men than women commit suicide and more than half of the suicides were committed by people in the 14-29 age group.

Among the 1998 suicide deaths, the method resorted to by the maximum number of people (2,789) was consuming insecticides. Hanging (2,687) followed this, while 1,187 people resorted to self-immolation. As many as 1,337 such deaths were caused due to family problems while in the remaining 4,190 cases, the causes were not known. The rate of suicide was found to be more prevalent among the higher educational strata. 

Sumit Roy, a clinical psychologist, concurs there has been a lot of cross-cultural intrusion, which is gradually leading to disentangling of basic 
social and cultural values and a person becomes more vulnerable to neurosis and depression under such circumstances.   (TH, 25.01.00  & TOI, 25.01.00)
 

Urban Local Body Reforms 
A comprehensive policy has been initiated by the Ministry of Urban Development for reforming urban local bodies and attracting private investment in the sector without any guaranteed returns. According to the official sources, a policy paper would be submitted to the Prime Minister’s taskforce on infrastructure to prepare detailed guidelines for State Governments and urban local bodies.

The policy framework would also focus on discouraging the practice of providing state government guarantees for projects. A uniform method of levying water tariffs based on full-cost recovery was also recommended. For improving revenue, there will be privatisation of collection of bills and taxes from consumers of municipal services.

Besides, there had been a high level of losses on water distribution lines. Distribution losses have been 45 percent. This implies that only 55 percent of the revenue is realised. It was suggested to privatise these distribution lines for correcting the defects and improving the revenue flow. Some of the privatisation methods include leasing of distribution lines through deferred payment mechanisms.  (BS, 19.01.00)
 

Virtual Banking for Rural India
One of India’s leading financial institutions has been planning to bring “virtual” banking into India’s rural communities by using Internet and module telephony. Industrial Credit and Investment Corporation of India (ICICI) would use India’s public call office system to make available shared, hand held devices to monitor and access accounts and make transfer payments. This way, even remote villages would have access to a telephone.

The bank would look at ways of making automatic teller machines usable for illiterate farmers. The bank’s move brings the concept of microcredit, which has helped boost the incomes of the world’s poorest people, much closer to main stream commercial banking.  K. V. Kamath, ICICI Chief Executive, said  ICICI has been conducting pilot schemes with the mainly non-profitmaking voluntary organisations operating microcredit schemes lending very small sums to the very poor.

According to Bimal Jalan, Governor, Reserve Bank of India, ICICI’s plan was not impractical. Grameen Bank, the pioneering microcredit institution in Bangladesh, had done a fairly good job of establishing connectivity through mobile phones. Similarly, India has been well connected through the public call office system.   (FT, 17.03.00)
 

Improving Education
The study conducted by Sanshodhan, a research and advocacy wing of Mussoorie based Non Government Organisation (NGO),  Society for Integrated Development of Himalayas, reveals that people are not happy with the present education system and its exclusive focus on imparting information.

The plan expenditure for education has increased by Rs 1000 crore and non-plan expenditure has been cut by one percent. The Minister for Human Resource Development, Murli Manohar Joshi’s dream project for elementary education, the Sarva Shiksha Abhiyan (SSA), aims at providing a comprehensive scheme for every Indian child’s elementary education by the year 2001.
Indira Gandhi National Open University’s Vice Chancellor, A.W. Khan, also announced that, with the commissioning of the uplinking facility, the country’s first educational channel, “DD-Gyan Darshan”, would be launched this year.  (TH, 03.01.00  & BS, 09.02.00)
 

Knowledge Super-Power
The Planning Commission has constituted an 11-member task force for India’s development as a knowledge society for implementing the Prime Minister’s five point agenda for making India a knowledge super power.

According to an official release, the task force will assess the current status of knowledge in the society and suggest strategies and a plan of action for a new education system for the 21st century to make India a super knowledge nation. 

The task force will also consider global networking, education for developing a learning society, vibrant industry-academia interaction in policy making and implementation & economic and business strategic alliance, built on capabilities and opportunities (BS, 17.02.00)
 

Insat-3B Aided Rural Development
India’s own satellite-based mobile telephony services were to become operational with the launch of Insat-3B satellite in February from Kourou in French Guyana on a launch vehicle of French company Arianespace, V.S. Ramamurthy, Secretary, Department of Science and Technology, said at the 87th Indian Science Congress. 

India’s first body to help develop and commercialise indigenous technology, nicknamed ‘Incubator’, was to be opened at Anna University, Chennai. Two more ‘Incubators’ would follow it. A telemedicine project was also initiated with the financial support from the Technology Development Board. Through this, experts in referral hospitals in cities would be able to advise patients in remote areas.
Medical reports, including X-rays and scanned images, would be sent over digital telephone network to doctors for their advice. This project involves several laboratories of the Defence Research and Development Organisation and a 200-bed hospital in Vijayanagaram, Andhra Pradesh, and would be completed by 2001. (BS, 05.01.00) 
 

Clinching WB Deal
The Karnataka Government is set to clinch Rs 10,000 crore funding deal from the World Bank for the state’s six sectors, including infrastructure and power sectors. Sources close to the state’s negotiating team said that the state will have to adhere strictly to deadlines set for completing the projects, in case the bank agrees to fund the sectors. 

The initial hurdles for seeking funds from World Bank had been overcome with the Government throwing open the infrastructure and urban development sectors for private sector participation. According to a study conducted by an independent agency, the fiscal position of Karnataka is better than most states in the country, with the ratio of revenue deficit to the net state domestic product becoming less than one percent.

An A.F. Ferguson report has suggested that the state should raise resources from international multilateral agencies like the World Bank, Asian Development Bank and others to fund its programmes in agriculture, health, education, water and waste management. (BS, 02.02.00)
 

Draft Policy for Slum Act
A national slum policy that appeals to all State Governments has been proposed for establishing a working group to ensure that institutional arrangements, legislative framework and other necessary actions conform to the new slum policy. It should also consider the steps to be taken by State Governments to tackle the problems of slums.

The draft also recommends formulating an Integrated Municipal Development Plan (IMDP) aiming to implement slum development and urban development programmes in conformity with the policy, which emphasises the principle of community participation. Every urban body was expected to establish concrete structure for ensuring community participation in social and economic development of the urban poor.

The Union Finance Minister, Yashwant Sinha, has accorded high priority to human resource development in the union budget through policies emphasising on weakest sections of society. “Housing for all” has been identified as a priority area in the agenda for governance.  (TH, 01.03.00  & 13.03.00)
 

Rising Rural Poverty
Inspite of the fast moving world and increasing globalisation, basic issues like poverty and inequality still reign supreme. Rural poverty rose by 3.42 percentage points in the first seven years of the current decade and the proportion of the rural population in the poverty bracket had risen to 38.46 percent from 35.05 percent.

The Indian Rural Development Report, 1999, prepared by National Institute of Rural Development (NIRD), says that economic growth per se will not guarantee a reduction in poverty across the country. However, poverty reduction is possible if the rate of economic growth is above eight percent. It does not follow that the poor are concerned with  increase in their incomes only. 

The Finance Minister, Yashwant Sinha, announced the launch of a new scheme, the ‘Pradhan Mantri Gramodaya Yojna’, to undertake time-bound programmes in rural areas. The stress on the rural poor remained quite pronounced in the budget as improvement in rural lives was promised. The Government has also been considering the setting up of a special fund to cater to ‘innovative projects’ in rural areas for implementation of special schemes for rural development.(BS, 07.01.00 & BL, 09.02.00) 
 

Soaring Unemployment
The most daunting challenge facing the country is providing employment not only for the additions to the labour force but also for reducing the backlog of accumulated unemployment from the past. The focus of employment strategies should be shifted towards creating conditions leading to better living. 

According to the 54th round of the National Sample Survey (NSS) for 1998, the proportion of unemployed population has generally been higher in urban than in rural areas and among females than males, when compared with that of the 47th round conducted in the beginning of the reforms era in 1991 (July-December).

The Survey also says that the Second National Commission on labour, set up in 1998, has decided to set up six study groups, initially, for an in-depth study of labour related issues. The NSS Organisation report points out that 54th round was conducted for a six month period with a smaller sample size and some key estimates were presented at the broad levels only for the major states and groups of smaller states and union territories. (BL, 29.02.00  & BS, 24.01.00)

                Public       Private Total Organised
                sector       sector          sector
1991          1.52          1.24             1.44
1992          0.80          2.21             1.21
1993          0.60          0.06             0.44
1994          0.62          1.01             0.73
1995          0.11          1.63             0.55
1996          -0.19         5.62             1.51
1997          0.67          2.04             1.09
1988          -0.09         1.72             0.46

Safeguarding Consumers
A.V. Divecha, Chairman, Monopolies and Restrictive Trade Practices Commission (MRTPC), said with the emergence of competitive markets, competition law has become necessary to protect the interest of consumers. The consumer must be enabled to have the best bargain at the most competitive price. Cartelisation should be eliminated, whether it is from within or outside the country. MRTPC has asked for more powers for the proposed Competition Law Commission, including penal powers and control over its investigating agency.

The Commission said the new body should have more powers to enable it to impose penalties up to Rs 25 lakh. Any investigating agency, created under the new legislation, should be under the control of the Commission, even for closure of proceedings on the basis of complaints received by it. 

MRTPC sources said that the overlapping of Consumer Protection Act and the MRTPC Act would have to be resolved. It was also suggested by the members of the Commission that exclusive jurisdiction should be conferred upon such a Commission with respect to matters to be dealt with to the exclusion of any other judicial or quasi-judicial forum. According to Law Minister, R. Jethmalani, the new law would incorporate anti-trust provisions to ensure that monopolies could not emerge from mergers and acquisitions.    (TOI, 03.02.00  & BL, 23.03.00)
 

Advantage, Importer
The budget has set the tone for the freeing of consumer goods imports in the coming months. This will help the middle-class buyer but put the domestic producer on notice. The Finance Minister has said the domestic industry must face competition from the global market. The Government has decided to free import of 715 items, mostly consumer goods that were so far on the negative or restricted list of imports.

These items can now be imported at 35 percent customs duty plus a surcharge of 10 percent. This means an efficient US or European producer of consumer goods can remain competitive in India even after paying a customs duty of 35 percent plus freight charges. 

The domestic producer has to be better in quality and price than an importer. The quality will be a bigger challenge for the domestic producer as the middle class buyer is often willing to pay a marginally higher price for better quality.  (ET, 01.03.00)
 

Railways Reject Rs 500 Notes
The handwritten notices on the railway reservation counters at Charbagh station in Luckhnow requested the public not to give Rs 500 notes. According to an elderely counter clerk, the railway authorities have decided to discourage transaction in Rs 500 notes. With no sound system of detecting fake notes flooding the market, it is clear that the railway authorities have decided to play it safe. 

The railway officials admitted that the self-imposed restriction is causing customers undue harassment. However, they have no option but to stop accepting Rs 500 notes.

The clerk said that often fake currency was being received by the railways. They had no means of detecting it. If fake note is received despite all precautions, banks refuse to accept it. As a result, railway employees have to pay from their pockets. If fake notes keep coming in, a clerk was likely to lose his salary in a couple of days.    (TOI, 25.03.00)
 

SC on Insurance Claim
The Supreme Court has ruled that a general insurance company cannot claim the benefit of an ‘exclusion cost’ which is neither a part of the contract of insurance nor disclosed to the insured person in a given case. 

Justice S.N. Phukan, delivering the judgement of the bench, reversed the orders of the National Consumer Disputes Redressal Commission (NCDRC), which set aside the orders of the Rajasthan State Consumer Redressal Commission, directing the respondent-insurance company to idemnify the loss incurred by the appellant by making a payment of Rs. 4,66,873 with interest at the rate of 18 percent per annum. 

According to the bench, both the insured and the insurer have a duty of disclosing all material facts to the best of their knowledge. The Apex Court Bench held the view of the NCDRC as ‘not correct’. The view of NCDRC was that it was equally the responsibility of the respondent to call for the terms and conditions, even if not sent by the appellant as alleged, to understand the extent of risk covered under the policy and the associated aspects. On an appeal from the respondent-insurance company, the NCDRC had set aside the State Commission’s orders.  (TH, 13.03.00)
 

Essential Commodities Bill
The Government introduced the Essential Commodities Amendment Bill 2000 in the Lok Sabha aiming at checking black-marketing and hoarding. The proposed bill seeks to make all offences under the Act cognisable and non-bailable, execpt certain offences that are technical in nature. 
The Bill has extended the maximum period of imprisonment in case of conviction and summary trials to two years, as against one year under the existing provisions of the Act. The summary trials would not be mandatory for enabling courts to impose imprisonment up to seven years as under the existing Act. The Centre shall, however, retain the enabling power to provide for summary trial in appropriate cases by issuing notification. 

The Bill also allows ‘minor variations’ between physical and recorded stocks on account of climatic conditions from being considered as offences punishable under the Act. 

Significantly, the Bill proposes to exempt “component parts and accessories of automobiles” from the purview of the Act.     (BL  & TH, 09.03.00)
 

Devices to Air Customers
The Standing Committee of Secretaries for Public Grievance Redress had asked the Ministry of Civil Aviation to constitute a team to conduct checks at important airports for obtaining first-hand information about customer services. Prabhat Kumar, who chaired the Committee, recommended that the Citizen’s Charter for Air India be reviewed and those for the Indian Airlines and Airports Authority of India be finalised expeditiously.

The Committee also directed that the grievances appearing in newspapers should be investigated for prompt action and suggested that the grievance redress machinery of the Ministry be reviewed by the highest level. The Cabinet Secretary addressed all secretaries to ensure greater accessibility of senior officers, particularly at the Joint Secretary level, to review the pendency of grievances.

According to the guidelines issued by the Department of Administrative Reforms and Public Grievances for strengthening the grievances redress mechanism of the Central Government Ministries, a Joint Secretary level official is to be designated as Director of Public and Staff Grievances.The norms for acknowledgement and disposal of grievances should be fixed, publicised and mentioned in the annual reports. (TH, 16.03.00)
 

Shock Therapy for Power Theft
The draft electricity Bill 2000 proposes setting up a state-level transmission corporation, Transco, a 31-member national advisory committee to advise the Central Electricity Regulatory Commission (CERC) on matters of policy, stiff penalties for power theft and a joint power regulatory commission of two or more contiguous states.

Providing for a transitional arrangement before the eventual unbundling of state electricity boards (SEBs), the draft addresses concerns such as job security of employees in the SEBs. All States will formulate a transfer scheme to implement the Act and courts will not have any jurisdiction to hear suits against the Commission or Transco. 

The Bill suggests the appointment of electric inspectors and consumer protection officers, with the powers of a civil court. Appeals against their decisions should be lodged against the regulatory commission. The draft paper proposes that regional transmissions should oversee grid operations but can be complemented by creating state transmission centres. The centre will be free to charge a fee from people engaged in intra-state or inter-state transmission. (TT, 18.03.00)
 

Global c-service
For launching India’s first global c-service company, Customer asset.com, leading professionals in the IT industry have come together. According to their press release, Customer asset.com, incorporated in Mauritius, will have wholly owned subsidiaries in India. The U.K. and the U.S will offer a complete range of high quality customer interaction and data management services tailored to meet the needs of dot.com clients.

The company’s CEO-designate, K. Ganesh, said that Customer-asset.com would leverage an offshore model to capitalise on the huge opportunity that customer interaction and management services represent globally.

The release said that Customer asset.com would invest Rs 60 crore in the first year and would deliver real-time, high quality, cost efficient customer interaction and management services to help dot.com companies manage their customers as strategic assets. (TH, 16.03.00)
 

Overcharging Consumers
The Government is to regulate cash, cheque and plastic card networks after a Treaury-commissioned report blamed banks for much of an estimated $4.75bn-$7.9bn  overcharging of consumers and small businesses.

Ministers found the recommendation for a new licensing regime in Don Cruickshank’s report “compelling”.  Gordon Brown, the Chancellor of the Exchequer, will draw on the report in the budget and signal the Government’s willingness to legislate to improve competition.

Cruickshank said banks were making “supernormal” profits from personal and small business banking and thanked the “old regulatory contract”- where the Government gave banks privileges in return for co-operation in policy making. He rejected intervention in retail banking because competition is increasing. The report also prompted an angry reaction from banks, but left the market unmoved, with the bank sector up slightly.  (N D,  21.03.00)
 

Users Sue AOL
A class-action lawsuit was filed against America Online (AOL) on behalf of 8mn of its customers, claiming the latest version of its software crippled existing Internet accounts with rival companies. The lawsuit, filed in the district court in Alexandria, near AOL’s corporate headquarters, follows scores of complaints lodged by customers of the Online service about problems encountered by them after installing version 5.0 of AOL’s internet software.

According to Rich D’Amato of AOL the lawsuit had “no basis in fact or law”. AOL said complaints about interference by its software were overblown and the result of customers not understanding that on their clicking “yes” during installation to allow AOL to become their default internet browser, AOL largely took over all the computer online functions. 

Part of the legal claims were filed under the auspices of a federal computer crimes law typically cited by US attorneys prosecuting hackers and according to Lloyd Gathings, a lawyer involved in the case, the act provides criminal and civil liability on anyone who alters the programmes. (ND, 03.02.00)
 

Fraud Website 
Securities regulators said  they had filed and settled civil fraud charges against the operator of a website that falsely claimed subscribers could view and mimic the real-time trades of a successful day-trader.

David A Rudnick of Cumberland Foreside, Maine, and his firm, Dynamic-Daytrader, were charged with violating federal anti-fraud provisions by posting bogus statements on the site. The supposed trades made by the site’s day trader were not real and the prices at which the “trades” were made were either fictitious or not available to the general public. The site claimed that the head trader earned a return of more than 747 percent in 1999.

According to James Adelman, the SEC’s associate district administrator, though Rudnick was not a licensed investment adviser but was charged with violating antifraud provisions based on his conduct. Rudnick, who neither admitted nor denied the allegations, agreed to repay $40,107 in subscription revenues, plus pre-judgement interest and faces a $15,000 civil penalty against his firm. (FE, 21.03.00)
 

Shopping, a Leisure
According to the findings of two studies, Retail Vision 2005 and Consumer Outlook, carried out by Kurt Salmon Associates (KSA), organised retailing looks set to boom, from Rs 5,000 crore to almost Rs 30,000 crore in five years with 51 percent of the Indian consumers indicating that shopping relaxed them and over 40 percent of the consumers saying they expect to spend more time in shopping in 2000.

Apart from the major metros, cities like Ahmedabad, Pune, Lucknow, Indore and Coimbatore have shown substantial retail presence, with modern retail formats like supermarkets, department stores and specialty chains. The Study also showed consumers are generally more satisfied with the service provided by the organised retailers. Consumers are increasingly seeing them as providing “value for money”. 

Consumers are also attracted by dinning out and watching movies. They want market to be easily accessible, with a wide range of products, brands and facilitating services like  easy parking. The largest beneficiary of these preferences is going to be the malls, bringing a complete leisure experience to the consumers. (ET, 05.02.00)
 
 

Foodgrains Target Ambitious
The Planning Commission has fixed the foodgrains output target for the year 2000-2001 at 210 million tonnes. The Centre had further increased the minimum support price (MSP) for wheat by Rs 5 to Rs 580 in the current Rabi season. The target for rice production has been set at 90 million tonnes, wheat at 74 million tonnes, coarse cereals at 33 million tonnes and pulses at 15 million tonnes.

The Government claims to have drawn up an action plan on the basis of regionally differentiated strategy suited to different agro-climatic zones. But the available information suggests that the Government has no well-defined strategy that seeks to address some of the basic issues of agriculture. Also, the main features of the strategy, as culled from parliament debates, do not reveal any new or significant measures that the Government proposes to adopt for realising the target.

As food demand will be unrelenting, consumption demand projection appears realistic. However, the production targets seem to be ambitious and the question arises whether the present agricultural systems would permit such a rate of growth and the Central and State Governments have the will and commitment to change.  (BL & FE 23.02.00)
 

Farmers’ Ire
The need to remove restrictions on the production and trade of agricultural commodities was expressed by the various speakers at National Farmers’ Conference. The Shetkari Sanghatana leader, Sharad Joshi, said that the farmers expect the Government to keep its hands off the agricultural markets in the country. He also said that the Government’s priority should be the removal of restrictions on agricultural trade. Successive Governments at the Centre were responsible for the distortion of agricultural trade and the depressed price of the agricultural commodities. 

The Centre must take immediate cognisance of the simmering discontent in the farming community over a casual or indifferent approach of the policy-makers towards problems. The Conference urged farmers to abstain from paying all taxes, cess and loan instalments until the Government initiated measures to provide access to market technology.

The remedy to unremunerative prices and restricted market access lies not in reducing output but improving productivity and marketing infrastructure. Attempts should be made to address the intrinsic efficiencies of agriculture.    (BL, 16.03.00  & 22.03.00)
 

Cargill to Buy from Farmers
According to a top company official, the US commodity major, Cargill, will directly purchase wheat from Indian farmers during the ensuing harvesting season to meet its processing requirements. Hardeep Singh, Cargill’s head for India and Pakistan said wheat would be directly purchased for meeting the mills’ requirement. He said, the Government’s decision to increase the MSP for wheat has made exports  ‘impossible’.

Singh also pointed out that Indian wheat will find no export market due to the minimum support price mechanism being operated by the Government. Cargill, which trades in grains such as rice, wheat and imports of vegetable oils, has set up a wheat processing plant in Noida to cater to the bulk flour requirements of companies engaged in packed flour marketing. 

The company would continue to trade in the domestic market unless grains’ cost was reduced. Cargill would restrict its purchases to good quality wheat from any part of the country. The Government has no intentions of putting a ban on the purchase of wheat by commodity trading houses till the farmers get remunerative prices. (TH, 22.03.00)
 

Rat Droppings in Wheat?
The Government is finally ensuring that wheat flour is free of rat droppings. The rule which allows five pieces of rat excreta and hair in one kg of cereals and pulses under the prevention of Food Adulteration Act is being amended through a gazette notification. It was reported earlier that a 100-kg sack of wheat can legally contain 500 droppings as well as hair of rats.

The Union Health Ministry’s apex expert committee and the Central Committee on food standards reviewed the rule and a change was recommended. The notification for making the amendments was also issued. The changed rule states that wheat flour will be free of contamination from rodent hair and excreta at the pre-milling stage.

According to the Health Ministry Officials, in future, products such as atta, maida and suji would be prepared from wheat totally free from rodent hair and excreta. This would be very helpful for the food inspectors in enabling them to check samples of wheat just before milling to ensure they are free of such contaminants.  (TOI, 08.03.00) 
 

Karela, Jamun & Brinjal Patented 
A petition in the Supreme Court alleged that close on the heels of basmati rice being patented by the Rice Tec Inc of the US, karela (bitter gourd), jamun (blackberry) and brinjal have been patented by another American company, Cromak Research Inc.

The Court issued notice to Union Agriculture Ministry, as petitioner Research Foundation for Science, Technology and Ecology charged it with failure to protect country’s biodiversity despite their assurance in this regard. The counsel, Sanjay Parikh, while appearing for the petitioner, said that the Attorney General Soli Sorabjee had informed the court in 1998 about the action taken by Government in protecting the biodiversity by bringing in the biodiversity legislation.

Giving details of the bio-piracy, continuing despite Government’s assurances, Parikh said, karela, jamun, gurmar and brinjal were patented, under number US6900240, by Cromak Research Inc for anti-diabetic properties. (ET, 14.03.00)
 

‘Chalk in Milk Powder’
The Delhi Milk Scheme (DMS), a Government undertaking, has admitted in the Delhi High Court that chalk powder was found in a consignment of skimmed milk powder (SMP) received from Gujarat in May last year. In an affidavit filed before the court, the DMS said the consignments were received on May 18 and 19 last year and  chalk powder was detected by DMS on May 20. The chalk powder (21 bags) was segregated from the SMP received from the Gujarat Cooperative Marketing Federation (GCMF). 

The affidavit followed a notice by the court to the DMS on public interest litigation filed by the United Communist Party of India, seeking an enquiry into the incident. The matter was further probed by the Prevention of Food Adulteration Department (PFAD) on the direction of a city court in June last year. 

The affidavit also said that Amul, which had sent the SMP supply from Mehsana in Gujarat, has already filed a case and the PFAD, which conducted a thorough probe, had taken samples from the DMS plant  and godown. (TH, 28.02.00)
 

Food Subsidies Cut
The Union Budget has made significant cuts in all classes of farm subsidies including food subsidy. Food subsidy has been reduced to Rs 8,100 crore from Rs 9,200 crore in 1988-99 revised estimates while sugar subsidy has been reduced to Rs 110 crore from Rs 360 crore in 1998-99 budgetary estimate.

This has increased the access to subsidised food for below the poverty line families by doubling the allocation of foodgrains from10 kg to 20 kg per family per month. The issue price of foodgrains for the below poverty line families is being fixed at 50 percent of the economic cost. 

The Expenditure Secretary, C.M. Vasudev, defending the steps taken by the Government, explained that the new PDS would cost the Government more. He pointed out that the Government’s PDS bill had gone up by Rs 2,000 crore because people below the poverty line would, henceforth, be eligible to double their earlier entitlement of 10 kgs per head per month.  (FE, 30.02.00 & ET, 02.03.00) 
 

Time for Blue Revolution
Maharashtra Macchimar Sang president, Bhai Bhandarakar, said small fisherman, fighting a losing battle for survival against mechanised fishing trawlers, will soon be relegated to the chapters of history. After the Green Revolution of the 70s, it was time to think about and pursue Blue Revolution - fish farming.

The Coastal Regulation Zone (CRZ) mentioned in the Environment Protection Act, 1986, of the Ministry of Environment and Forests, (MOEF), has its own limitations. Hatchery and agriculture are permitted activities in the CRZ notification of 500 m of the high tide line (HDL). There is, however, no separate mention of fisheries.

Unfortunately, though the world is racing for aquaculture, India is yet to realise the value of this sector. While ports are recognised as activities requiring water front facilities, coastal aquaculture, a sea or creek based activity, is not. This must be set right by the Government by enacting a comprehensive Aquaculture Bill, plugging all the loopholes so that coastal aquaculture would attract the much needed recognition as a tool for food and economic security of the nation.  (TOI, 04.02.00  & BL, 06.03.00) 
 

Govt to Improve Cotton Yield
The Government would spend Rs 600 crore over five years from 1999 to 2003 onTechnology Mission for cotton development in order to improve both the yield and quality of cotton produced in the country. Cleared by the Union Cabinet, the mission, comprising four mini-missions, will seek to raise the income of the cotton growers by reducing the cost of cultivation through technology. 
The mission charter also envisaged improvement in the infrastructure of marketyards by providing better marketing and processing facilities through upgrading and modernising the existing ginning and pressing factories. Also, cotton yield per hectare is to be raised from the current level of 256 kg lint to 388 kg lint. 

Agriculture Ministry and the Textile Ministry would implement two mini-missions each. The Agriculture Ministry would be the nodal agency for two mini-missions dealing with cultivation and harvesting. (TH, 19.01.00)
 

Sinking Unions to Swim Together 
Trade Unions (TU) are not reconciled to their marginalisation. They are working out a survival strategy to sink their political differences and come together. National-level TUs would have to appear a united house on larger issues and appear to be both responsive and responsible. They are aware they better hang together, else they will hang separately.
The Government’s privatisation programme, which often means retrenchment of workers and downscaling of social security, has given the TUs a sense of urgency. TUs, which barely represent 3-4 percent of the total labour force, were in complete disarray under the impact of the liberalisation policy.

Although workers were being laid off and permanent labour was being replaced with contract workers, TUs appeared helpless. The division of TUs, as realised by many TUs on political lines, was making the movement virtually toothless.  (BT, 09.03.00)
 

TRIPs Agreement
The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs), imposes on all member states the introduction of plant variety protection either through patents or alternative system. It forces all states to conform to existing practices in the developed countries which had already introduced plant variety protection before 1994.

Both patents and plant breeders’ rights are monopoly rights, which seek to give the private sector incentives to enter the seed business. The main difference between the two is that the latter provides rights, which are less extensive than the former.

TRIPs does not imply in any way that member states have to adopt plant breeders’ rights if they do not wish to introduce patents on plant varieties. However, there has been pressure on developing countries to choose plant breeders’ rights as an alternative to patents. (TH, 05.04.00)
 

Eating at Wh(e)at Price?
The Government’s decision of increasing the price of wheat for the Public Distribution System (PDS) is expected to lead to a substantial increase in the open market wheat sale prices to the private sector by the Food Corporation of India. The families coming Below Poverty Line (BPL) category, for which Central Issue Price has been enhanced to 50 percent of the economic cost, will have to pay Rs 4.20 a kg of wheat.

The Centre proposed to hike the price of foodgrains under open market sale. It also plans to contain the economic cost of procurement of foodgrains. It also hopes to strengthen the delivery system of disbursement of the foodgrains to the targeted population to plug diversions. About 35 percent of foodgrains meant for the poor have been diverted to the open market.

The Consumer Affairs and Public Distribution Minister, Shanta Kumar, said it was a sensible decision taking, keeping in mind the state of the economy and the issue of re-vamping the PDS that favoured the modifications made. He said that the move is for the benefit of the poor and considerable thought went into the decision to link the central issue price of foodgrains with the economic cost. (TOI, 03.03.00 & 09.03.00)
 
 

More Funds for R&D
The Prime Minister, Atal Bihari Vajpayee, has promised to hike the investments in research and development  (R&D) to one percent of the GDP from the current 0.86 percent and up to two percent over the next five years, with a commitment to remove restrictive bureaucratic hurdles for the progress of science and technology in India.

Scientists and technologists have demanded tax and customs duty exemptions to capital goods for R&D and urged the Government to give incentives for super technological projects and fundamental research. They also suggested that the country should take up herbal research in a more co-ordinated manner. 

Dr. Mashelkar, Director General of the Council of Scientific and Industrial Research  (CSIR), enunciated a new ‘panchsheel’ for the new millenium. Its ingredients include child-centred education, woman-centred family, human-centred development, knowledge-centred society and innovation-centred India.(BL, 04.01.00  & 12.01.00)

Drugs Control Authority 
A high powered committee has suggested the setting up of a ‘central drugs standard control organisation’ for competing effectively in the global market.  Mashelkar lead the committee and came up with an ambitious plan to improve the pharmaceutical R&D base in the country as well as prepare the industry for the patent regime.

The committee also recommended several measures to strengthen and modernise the existing infrastructure. According to the committee, certain basic changes were necessary in the legislation to allow import of animals, contract research and providing a legal status for institutional animal ethics committee   on the medical research front. 

A separate ‘drug development promotion foundation’ has been proposed for promoting R&D, autonomous and independent of the government. Some leading Indian drug manufacturers had recently decided to move out of the country due to several problems. In fact, an industry suffered huge losses after activists released some experimental animals undergoing trials for a cancer drug. However, the government is hoping to reverse the trend. (TOI, 25.01.00)
 

India Can Achieve Goals
A.P.J.  Abdul Kalam, Principal Scientific Advisor to the Government, said that successes in nuclear, space and defence sectors demonstrate India’s capability to achieve higher levels of technological goals in spite of technology denials and control regimes. Pokhran nuclear tests, test firing of Agni-II and launch of polar satellite launch vehicle are the events showing this capability.

Kalam said India should achieve self-reliance in defence needs of weapons and equipment and it has to be economically and commercially powerful to become a developed country. Technological goals can be achieved if there are mission-oriented programmes with leadership and political commitment.

He also added that the vision of a developed India can be realised through the “technology vision 2020 mission” comprising of 17 technology packages in core sectors such as agriculture and food, health care, infrastructure and strategic industries. The vision deals with agro-food processing, food and agriculture, health care, electric power, civil aviation, waterways, engineering industries, life sciences and biotechnology, materials and processing.     (TOI, 12.03.00)
 

Use Science, but Respect Nature
Richard Ernst, the 1991 Nobel laureate in Chemistry, commented that the indiscriminate pursuit of science and technology, without any respect for nature, could spell doom for humanity. While delivering the 87th session of the Indian Science Congress, Ernst emphasised the need to temper scientific and technological pursuit with respect for the universal and ethical principles of humanity.  Science and humanity need to co-exist.

Ernst scoffed at the vision of colonising planets and termed the enormous expenditure on space exploration as an absurd pursuit, which was not aimed at improving the life of man. He said the eastern schools of thought such as Hinduism, Buddhism and Shintoism contained essential treatises, which could guide man in coexisting with nature and India is in a unique position to provide leadership in several such aspects.

According to him, scientists were predicting an end to the process of ageing in the third millenium through compounds, which could help enhance intelligence or use the wisdom inherent in the basic principles of humanity, to exist harmoniously with nature. Also the purpose of science and technology is to help in understanding nature and improve life for the common man. (TOI, 07.01.00)
 

Patient-assisted Suicide?
The results of a study reveal that physicians from Netherlands are more likely to support euthanasia than their US counterparts. However, a similar number of doctors from both countries are willing to provide morphine for relieving pain and helping patients who want to end their lives. American physicians are reported to be resistant to performing the final life-ending action but were willing to help patients who want to end their life. 

Nearly 60 percent of Dutch physicians supported euthanasia for patients in extreme pain, compared with 24 percent of American physicians. Just over 50 percent doctors in both countries supported the idea and about 96 percent supported increasing morphine levels to relieve pain. It was also noted that long term treatment with pain-relieving narcotics might become a heavy financial burden under the US health care system.

Dutch physicians were more likely to have helped the patients to end their lives, as a result of different legal climates in the two countries. In Netherlands, physician-assisted suicide is not legal but doctors are not likely to be prosecuted. The state legislature of Oregon had voted to legalise physician-assisted suicide at the time of the study but court challenges had blocked the measure’s implementation.   (TOI, 21.01.00) 
 

$1bn Technology Institute
A group of IT entrepreneurs in India and the US have plans of setting up a Global Institute of Science and Technology (GIST) in India which would require a billion dollars in funding. So far, $300 million has been committed for GIST by  some entrepreneurs.

Purnendu Chatterjee of investment fund Chatterjee Group, said that tie-ups between  GIST and leading US-based universities and technology institutes is being planned and university of California, Berkeley, has already tied-up with GIST to provide faculty and research report. He also said that various opportunities with the State Governments are going to be explored to set up the institute as an autonomous body.

The University of Berkeley, California had already tied-up with GIST. Its Vice-Chancellor (university relations), Donald A McQuade, said they want to provide the best faculty and resources to GIST and ensure it develops as a global centre for best faculty and students with world class research facilities. He pointed out that his university had been around for over 130 years, but had acquired a global character fairly recently and GIST, on the other hand, has this as an assumption right at the beginning. (TOI, 24.03.00)
 
 

Constitution Review Panel 
The Centre finally announced setting up an 11-member Constitution review Commission to be chaired by Justice M.N. Venkatachalaiah. It has been asked to make its recommendations within a year. The Cabinet resolution constituting the commission said that the National Agenda for governance contains a pledge that a commission shall be appointed to review the constitution in the light of more than 50 years of its working and  make suitable recommendations for any possible changes. 

Thus, the Commission shall review the working of the constitution within the framework of parliamentary form of Government without tampering with the basic features. 

The Commission shall decide its own procedure and hear and entertain all persons, representations and communications, which, in the opinion of the commission, shall facilitate its work and final recommendation. The funding of the Commission will be through separate budgetary allocation by the Government.   (TH, 24.02.00)
 

Racist Sentenced to Watch Gandhi
Marvin Schlosser, a superior US Court Judge in Mount Holly, sentenced three leaders of a racist group to probation, community service and possible jail term. He also ordered them to watch the movies Gandhi and Schindlers’s list, read the books Roots and Native Son and write essays on the meaning and impact of hate.

The local chapter of the National Association for the Advancement of coloured people and the Anti-Defamation League criticised the sentences for Jason Goncarz, Daniel Sentak and Jeffrey Harvey of North Hanover and said they were very light. Crew, the group of teenage boys and a girl, repeatedly visited minority neighbour-hoods and yelled racial slurs from car windows, smashed windows in houses and, in one case, threw an animal carcass on the lawn of an elderly woman’s home. 

The judge said all the three men must write reports on the movies and books. He said the men, all in their early 20s, touched life in the most negative ways and it was sad commentary that they could find nothing else to do with their time. The three had pleaded guilty to various acts of harassment and a single count of conspiracy. (ET, 03.01.00) 
 

Freedom of Information Bill
The Union Minister of Law, Justice and Company Affairs, Ram Jethmalani, stated that the Centre would introduce a draft Bill on its proposed legislation on ‘freedom of information’. The Bill seeks to define ‘freedom of information’. 

He said the bill proceeds on a theory that prima facie all information will have to be disclosed and refusal to give information will only be by way of exceptions. Stressing the need for exception or exemption, he said freedom of information can sometimes be ruinous. 

He also added that a right to appeal against refusal to provide information has been specified in the draft Bill. An appellate authority will look into the appeals of persons aggrieved with the decision of the public information officers. He allayed the concerns of participants and asserted that, through the bill, the entire bureaucracy will be made subservient to the public information officers.  (BL, 22.01.00)
 

Regulate Pension System
The creation of an autonomous authority to oversee and regulate the functioning of pension system and replacement of public provident fund with a new scheme for the unorganised sector was recommended by an expert committee. 

The committee also recommended that premature withdrawals from the Employees’ Provident Fund should be allowed only in the event of permanent disability or death as, because of the present system of liberal withdrawals, and poor returns, the workers were faced with highly inadequate terminal accumulations of less than Rs. 25,000 per member.

The panel was set up to examine policy issues connected with old-age income security.  The Union Minister for Social Justice and Empowerment, Maneka Gandhi, said the Government would study the recommendations and come out with follow up action at the earliest.  (TH, 18.01.00)
 

Digitisation for E-governance
The Planning Secretary of Andhra Pradesh said that the Andhra Pradesh Development Monitoring System (APDMS), containing a rich database of information covering natural resources, infrastructure, land use, socio-economic development indicators down to the habitation level, is the first experiment in the country set up to give a new direction to Development Planning. The use of this digested system implementation of Government schemes can be effectively monitored, loopholes can be identified and work can be re-prioritised.

The APDMS, which will be used as a tool to leapfrog into e-governance, is a digitised information powerhouse covering 23 districts, 1,125 mandals, 294 Assembly constituencies, 28,245 revenue villages and 67,505 habitations in the state on a 1:50,000 scale. The digitised information system will provide round-the-clock access to all the Ministers and Secretaries through Intranet. 

The project had generated nationwide interest. Maharashtra would also implement such e-governance projects. As a part of its e-governance project, the Maharashtra government will link all the state Government headquarters and up to taluk level offices using optical fibre cable network. (BS, 02.02.00  & 03.02.00)
 

Internet Patents
Amazon.com Inc. Chief Executive Jeff Bezos responded to complaints about the online retailer’s use of patents by urging changes in legal protections for Internet related innovations. In an open letter posted on Amazon.com’s web site, Bezos suggested that software and business-method patents should last three to five years; all patents lasting 17 years. He also suggested allowing outsiders to comment on proposed software patents before they are issued and offered to fund a software repository that patent examiners could use to determine if an idea truly is novel-the standard innovations that must be met to be awarded patent protection.

Amazon.com is one of many companies that have rushed to patent business processes that use the Internet. Critics complain that many of these patents reward trivial innovations and those patent examiners do not do a good job of looking for similar existing software.

Most of Bezos’s proposals have been raised by others previously, but there has been little consensus on changing patent law. The software repository might be easiest to achieve as it would not require an act of congress.  (WSJ, 11.03.00)
 

Trade Secrets Bill
C.T. Benjamin, Secretary, Department of Industrial Development, Ministry of Commerce and Industry, stated that the Centre is in the process of drafting a legislation on Undisclosed Information as a part of its on-going efforts to comply with the obligations placed by the World Trade Organisation on Trade-Related aspects of Intellectual Property Rights (TRIPS).

He said that his department was concerned with only five out of the eight TRIPs-related legislations that are being enacted or already enacted to comply with the requirements of the TRIPs agreement. The Trademarks Bill and the Geographical Indications Bill had already been passed, the Designs Bill has been passed by the Rajya Sabha and is pending before the Lok Sabha. The Patent Bill is before the Joint Select Committee of the Parliament.

Participants at the General Session of the Institute of Intellectual Property Development underscored the need for further improvement in patent drafting skills in the country, with more foreign companies like Sony, GE and IBM looking at India drafting and filing of patent applications. (BL, 11.03.00)
 

Deciding Taxable Income
The Supreme Court has ruled that Dearness Allowance (DA), City Compensatory Allowance (CCA) and House Rent Allowance (HRA) received by the employees of the Central Government undertakings, bank employees, State Government employees and general insurance employees would be taxable income. The bench ruled that CCA paid to employees was not taxable income.

The court said it may be true that Government or statutory corporations pay less than what is required to be reimbursed and receipt of CCA could not be termed as ‘profit’ in common parlance. It also said, “However equitable it may be, CCA cannot be held to be ‘profit’ in the hands of the assessee or it is not share out of profit, yet it cannot be helped (being taxed) in view of the inclusive and exclusive meanings given under the Act”. 

As such, it was not possible to accept the counsel’s contention that CCA could not be said to be profit, gain or additional salary and such income would be in addition to the salary. Hence, it will be part and parcel of salary and would be taxable. (TOI & TH, 07.03.00)
 

No Promotions for NPAs Bankers 
The Ministry of Finance will debar senior managers in public sector banks and financial institutions responsible for performing accounts (NPAs) from promotions and lateral movements to other institutions in the banking industry. The ministry is upset about senior managers who have built a reputation for siding with certain bad accounts lobbying for higher positions in other institutions in the industry.

The circular being finalised will lay down guidelines for selection of top personnel making it difficult for managers who have been even remotely connected with bad accounts to get elevated. The guidelines will require managers to fulfill several micro requirements, which are expected to act as a sieve to separate the good from the bad. Top level selections have to pass an interview for which board comprises experts drawn from outside government as well.

The first set of guidelines from the Reserve Bank of India had left grey areas of which banks can enter insurance. Some banks felt that the guidelines discriminated against them unfairly. Thus, they represented to reconsider entry norms into insurance and spell out clearly their reservations on NPAs.  (FE, 16.03.00)
 

Net All Corrupt Officials
While it is difficult to gauge the level of corruption among Indian individuals, India has been ranked 73 among 99 countries picked up by the Transparency International in its Corruption Perception Index in 1999.

The Chief Vigilance Commissioner, N. Vittal, said that the Central Vigilance Commission (CVC) proposed to complete the list of corrupt officials in all government departments and display them. He said their department would bring out names of corrupt officials in all the 60 departments which were under the purview of CVC. Displaying of the names of corrupt officials was to make the vigilance department more transparent. 

Vittal also added that his aim was to instil confidence among the people that Government was a ‘service provider’ and public was a ‘consumer’. He assured that CVC would be following proceedings against corrupt officials till they were punished or acquitted. For encouraging greater transparency in Government departments, CVC has issued a circular to display all such orders where discretion has been used, which will also be a measure to check corruption. (BL, 17.01.00 ET, 04.03.00)
 

Talk Downsizing, Add Flab
Contrary to the impression that the government is shedding excess weight, it has actually been adding more flab the past few years. This year is unlikely to be different. The telltale story of the expanding girth of the Government is visible in the expenditure document of the Union Budget that lists the additional manpower demand of every department and, hence, the additional cost.
The data presented in the expenditure budget shows that the Central Government employed 3.82 million employees this year, which is just over 81,000 more than the 3.75 million employed last year. The addition to the rolls is projected to slow down during the next fiscal. Even so, 28,000 extra employees are projected to join the Government during 2000-01. 

As a consequence of increase in employment, the government’s wage bill would increase from Rs 30,095 crore in fiscal 1998-99 to Rs 38,698 crore this fiscal. The amount spend on salaries is slated to fall because of the arrears in the wage bill for fiscal 1998-99 and 1999-00. They have become due during the two years as the pay commission’s award was implemented in stages.                         (ET, 08.02.00 & 06.03.00)
 
 

Foolproof Defection Law
The Lok Sabha Speaker, G.M.C. Balayogi, said a ‘fool proof’ legislation was expected to be ready to deal with political defections. The issue of defection is closely linked to the prestige of two important institutions in a democracy – the legislature and its presiding officer. (ET, 07.01.00)

Solar Power Project
The Minister of State for Non-conventional Energy Sources, M. Kannappan, said the Government has  approved the establishment of a 140-MW integrated solar combined cycle power project at Mathania in Rajasthan as a Centrally assisted project. He also said that the Ministry of Non-conventional Energy Sources had prepared a draft renewable energy policy statement to enhance contribution to renewables in meeting rural energy needs. (BL, 25.02.00)

Bank Defaulters
According to the Minister of State for Finance, Balasaheb Patil, an amount of Rs 18,547.68 crore was outstanding from 3,379 bank defaulters with dues over Rs one crore as on March, 31 last year. A total of 7,345 cases of evasion of Central excise were found in 1998-99, the Minister of State for Finance, Dhananjay Kumar said. (PTI, 03.03.00)

Transmitters
The Government is according high priority to improve All India Radio and Doordarshan Services in border areas and 16 high power TV transmitters and 77 very low power transmitter projects are under various stages of implementation in Indo-Pakistan border areas. (PTI, 03.03.00)

Mine Mishaps
The Minister of State for Mines and Minerals, Rita Verma, said a total of 107 people were killed and 390 injured in accidents in Coal India Limited since 1999. (PTI, 03.03.00)

Ticketless Travellers
The Rajya Sabha was informed that the menace of ticketless travellers continued to plague Indian Railways in 1999, with 88.26 lakh people travelling without ticket or with an improper ticket. The Minister of External affairs, Jaswant Singh, said that the Railways, however, realised Rs 106.78 crores between April-December 1999 as penalty from these ticketless travellers.  (PTI, 03.03.00)

Derailments
A total of 322 derailments, including 223 goods trains, marked the year 1999 for Indian Railways, resulting in a loss of about Rs. 43.67 crore. Jaswant Singh said  228 derailments were caused by the failure of railway staff while equipment failure resulted in 17 derailments.  (BL, 03.03.00)

Forged Travel Documents Detected
The Minister of State for External Affairs, Ajit Kumar Panja, informed the Rajya Sabha that a total of 1,469 cases of Indians attempting to leave the country on forged travel documents were detected at international airports during 1999. (BL, 03.03.00)

Extradition
According to Ajit Kumar Panja, Minister of State for External Affairs, India has signed extradition treaties with 11 countries including Belgium, Bhutan, Hong Kong, UAE, the UK, the Netherlands, Russian Federation, Switzerland and the US. There is no proposal to sign extradition treaties with Bangladesh, Myanmar and China. (BL, 03.03.00)

Fake Currency
The Minister of External Affairs, Jaswant Singh, said the Government was aware of reports of the detention of a Pakistan embassy official by the Nepal police in Kathmandu following the seizure of counterfeit Indian currency worth Rs 50,000 in Rs 500 denomination notes from his possession. The incident gives further credence to reports received by the Government indicating evidence of Inter Services Intelligent     (ISI) involvement in the circulation of fake Indian currency in Nepal. (BL, 03.03.00)

Bagasse Power
According to M. Kannappan, the country had the potential to generate surplus power to the tune of 3500 MW from bagasse-based co-generation in sugar mills. He said a total surplus power capacity of 184 MW had already been installed in the country from bagasse-based cogeneration projects.  (BL, 25.02.00)

Terrorism
India and Britain will exchange information and cooperate bilaterally to combat global terrorism. They will also sensitise the international community on the need for global action to counter terrorism. (PTI, 03.03.00) 

Information Bill
The Minister of State for External Affairs, Vasundhra Raje, said the Government had in January 1997 constituted a working group on “right to information and promotion of open transparent Government”. She added that the Bill is presently under examination for introduction in Parliament.(PTI, 03.03.00)

Kerosene Supply to Discontinue
The Minister of State for Consumer Affairs and Public Distribution, Sriram Chauhan, said the Centre has asked the state governments to discontinue the supply of kerosene under the public distribution system (PDS) to ration card holders having liquified petroleum gas (LPG) connections. He said this had been done as PDS kerosene and LPG were subsidised items. (BL, 25.02.00)

Subsidy on Foodgrains
The subsidy paid by the Centre for foodgrains, sugar and edible oil under PDS during 1999-2000 stood at Rs 8,485 crores, said Sriram Chauhan. There was a need for consensus for providing more foodgrains to below the poverty line families under targeted PDS.(BL, 25.02.00)

Heritage Hotel Projects
The Tourism and Culture Minister, Mr. Ananth Kumar, said the Government had approved 53 heritage hotel projects, taking the total number of such hotels in the country to 115. He said the ministry was planning to set up 60 touch-screen passenger information kiosks in Delhi, Mumbai, Calcutta and Chennai at a total cost of Rs 1.34 crores to provide information about the cities to tourists. (BL, 25.02.00)

No Foreign Equity Participation
The Information and Broadcasting Minister, Arun Jaitley, told the Lok Sabha that there was no proposal under the consideration of the Government to allow 49 percent foreign equity participation in satellite channel sector. (PTI, 03.03.00)

Comptroller and Auditor General (CAG) in Action

HP University for Fee Anomalies
The CAG report placed in the Himachal assembly indicated that the Himachal University has not deposited fees realised during 1995-99 by seven departments in the University accounts. According to the report, fees from the students enrolled under non-resident Indian sponsored and self financing schemes were unauthorisedly deposited in joint bank accounts opened in the name of directors, chairpersons of the concerned departments and finance officer.

The departments are Institute of Management Studies Rs 2.29 crore, University College of Business Studies Rs 1.46 crore, Law Rs 0.19 crore, Physics Rs. 0.9 crore, Bio- Sciences Rs 0.09 crore and Chemistry Rs 0.04 crore. Out of these deposits, three departments spent Rs 1.13 crore for the purchase of vehicles, furniture, books, payment of remuneration to guest faculty, staff employed on contract and under other heads.

The Institute of Management Studies spent Rs 0.62 crore, University College of Business Studies Rs 0.48 crore and Department of Law Rs 0.03 crore.  (TOI, 22.04.00)
 

DTC Pulled Up
After drawing the Supreme Court’s ire for not adhering to the schedule for introducing non-polluting buses, the Delhi Transport Corporation (DTC) has been put on the mat by the CAG for wasteful and excessive expenditure running into crores of rupees. In its report for 1989-99, CAG has pointed out many cases of DTC losing money by ignoring the lowest bids for supplies or investing in goods and services, which were not utilised.

The CAG observed that work order for 242 bus bodies was placed in April 1998 to award the work. Also, a company of Goa, whose offer was received late, was given fabrication of 176 buses even though it did not accept the terms and conditions regarding the design and specification and rate of fabrication.

Several shortcomings were noticed in the buses, the costing for which was done on the higher side at Rs 10.40 lakh per bus instead of Rs 8.30 lakh. The DTC also made an infructuous expenditure of Rs 1.02 crore due to replacement of standard chassis with new specifications by Telco.(FE, 16.04.00)
 

Picks Holes in AP
The CAG has pointed out that the politically-sensitive subsidised rice scheme in Andhra-Pradesh remains largely untargeted, covering 81 percent of the total households while only 39 percent of the population was identified as being below poverty line (BPL). The CAG said the State Government was providing subsidised rice at the rate of Rs 3.50 per kg to twice the number of identified BPL families and the extra burden on this account worked out to Rs 675.28 crore for the period between June 1997 and March 1999.

The CAG report said there are indications of nine lakh duplicate ration cards being in circulation as of December 1998. The subsidised rice is presently being distributed to 1.13 crore households, constituting about 22.19 percent to 25.68 percent of the total households.

The review of the implementation of the scheme during the seven-year period between 1992-93 and 1998-99 revealed that as against Rs 5,756.55 crore provided in the budget, only Rs 4,863.35 crore was reported to have been spent on the scheme.(TOI, 06.04.00)
 

Critical of Andhra Pradesh
According to CAG, there was an overall deterioration in the financial condition of the State Governments during 1998-99 because liabilities grew by 51 percent. The State Government has to maintain   the daily minimum with the Reserve Bank of India (RBI) cash balance of Rs 1 crore. If the balance falls below the minimum, the deficiency has to be made good by taking ways and means advance from the RBI.

Further, the State Government resorted to raise an amount of Rs 115.85 crores from three Government companies by directing them to deposit their funds into the Personal Deposit Account to overcome its difficult ways and means position during January and February last year. The Government postponed repayment of Central loans aggregating Rs 1,770 crore due between July 1998 and March 1999. 

The CAG also pointed out the instances of inadequate budget control over expenditure. It criticised the fact that government expenditure was not evenly distributed throughout the year and there was a rush of expenditure in the month of March last year when Rs 6,707 crore was spent, accounting for 33 percent of the annual expenditure. (TH, 05.04.00)
 

Probes Paper Scam
The CAG has stepped up investigations into the affairs of Hindustan Paper Corporation Limited, which has been rocked by a marketing scandal leading to the suspension of its marketing chief. The CAG’s principal director of commercial audit and ex-officio member has sent two sets of queries.
Activities at Hindustan Paper, which was witnessing a turnaround in its fortunes largely due to financial restructuring, were severely affected after the marketing scandal was unearthed at the Delhi Office last December. Investigators have found links with some other offices in the north. An in-house investigation was ordered and a three-member team was formed.

The CAG noted that the company had not taken action against stockists whose cheques had bounced. It had instead given them undue cash incentives and other benefits and failed to collect sales tax from them. It also paid “service charges” to secure Government orders.  (FE, 14.03.00)
 

Blames Poor Tax Compliance
V. K. Shunglu, Comptroller and Auditor General, blamed poor tax compliance and dismal quality of Government expenditure as prime reasons for fiscal deficit in the country and cautioned that mere expenditure control could not be the solution for curtailing it. He said the deficit problem was further exacerbated by poor returns on high cost Central Borrowings.

According to CAG, it was important for the Centre to enhance the tax compliance for plugging the deficit and using the same for developmental purpose. Quality of expenditure is as important as the quantity and quality of expenditure has become extraordinarily poor.

He said an analysis of the expenditure of employment assurance scheme revealed that in the backward districts the expenditure on this count was lesser than in the better districts. He expressed concern that Central excise has fallen from 10 percent value of the manufacturing sector to six percent. (BL, 16.02,00)
 
 

How would you define corruption?
Corruption is a case of straying away from the straight and narrow…lack of integrity. Integrity can be…moral, intellectual and…financial. Here we are concerned about corruption in the financial sense. The World Bank defines corruption as the use of public office for private profit.

Are Indians basically corrupt?
Transparency International in Berlin ranked 99 countries according to a corruption perception index in 1999 and India’s rank is 73…Indians are still living in a feudal society with a veneer of modernity. Here the castes are the identification of an individual based not only on blood relationships but also culture, values, rituals and so on. Family bond in the country is still strong and hence nepotism is very much a part of our culture…Devi Lal…asked why he was favouring his relatives when he was in power…  shot back, “Am I expected to favour other people’s relatives?” These days much work is being done in genetics…It is possible to identify in years to come a corruption gene…a way of determining that some ethnic groups and races are inherently more corrupt than others. Until that point, we cannot talk about Indians being more corrupt.

Is the Indian value system such that it encourages corruption? The Hindu worldview holds that evil or corruption flows from avidya or ignorance. And also we are known to be resigned to evil rather than fight against it.
I cannot agree that we are resigned to corruption…the last century has seen reformers like Rajaram Mohun Roy and Narayana Guru and also several reform movements…the action taken by Adi Shankara or Budha and Mahavira…have brought reform in the society. It is true that the concept of prayaschita emboldens people to get away from their serious misdeeds through token atonement. Nirad Chaudhury in his book on Hinduism had pointed out the general perception that we are other-worldly is deceptive. We always have  “contracts with god” in the pursuits of our goals.

Your book has invited critical comments in some newspapers. And you are compared with T.N. Sheshan. He did do a courageous job in bringing about electoral reforms. Why this disenchantment with him now?
Comparing me with Sheshan is like comparing apples with oranges. I would like to be a first-rate Vittal, not a second-rate Sheshan. I think the nation should thank Sheshan for bringing about some cleanliness in our electoral system. The disillusionment of the public with Sheshan may be because of his attempt to enter politics and aspire to be President of India or Member of Parliament.

It is held that the increasing materialistic and consumerist culture is a primary source of corruption. Do you agree? 
Yes, increasing materialistic consumerism is a primary source of corruption…why corruption flourishes in our system is that we do not have an effective punishment mechanism. It is designed to encourage corruption… keeping the names of wilful defaulters in the banks secret and VDIS schemes in income tax are, in fact, system changes which encourage corruption.
So checking corruption is also a question of preaching strongly values which will promote a sense of justice and sensitivity to right and wrong. Has religion a role in all this?
Yes, religious leaders may have a role to play in inculcating a sense of values and promoting honesty. Whether it is attributed to human wickedness as in the Bible or  avidya as in the Gita, the temptation to violate codes of good conduct is a reality in man and, as chief vigilance commissioner, I think the only way this can be checked is by having effective punishment whenever there is violation of good conduct.

What are the cardinal principles involved in preventing evil?
Legal reforms to provide for better governance; measures to make the judiciary, legislature and the executive function effectively; to make the political executive and the bureaucracy accountable to the public and to ensure greater transparency in governmental functioning. Efforts made in the past to check corruption have failed because the guilty under the existing system of judicial process do not generally get punished. The conviction rate in Indian courts is only six percent. There are three crore cases pending in the Indian courts.

What are the practical steps proposed?
Like Transparency International ranking countries on the basis of a corruption perception index of all Government organisations, public sector units and banks should be prepared. The bribe giver will also be brought under the ambit of the law. Making it obligatory  for MLAs, MPs and Ministers to file property returns, framing laws for forfeiture of property of corrupt officials, mobilising youth to fight corruption, enacting a Freedom of Information Act for empowering the public and eliminating laws and procedures which cause delays and promote bribery-these are some of the measures proposed.

“I give bribes because everybody does it to get things done”- that is the normal argument of the bribe-giver. How do you propose to counter this trend?
The tendency to go with the crowd is normal and the reasonable man looks at the situation as it exists and adjusts himself and leads a peaceful life. The unreasonable man wants the world to change to his way of thinking and in the process achieve success. India needs more of the unreasonable kind. (TOI, 01.03.2000)
 
 

No Promotions for NPAs Bankers
The Ministry of Finance will debar senior managers in public sector banks and financial institutions responsible for non-performing accounts (NPAs) from promotions and lateral movements to other institutions in the banking industry. The ministry is upset about senior managers who have built a reputation for siding with certain bad accounts lobbying for higher positions in other institutions in the industry.

The circular being finalised will lay down guidelines for selection of top personnel making it difficult for managers who have been even remotely connected with bad accounts to get elevated. The guidelines will require managers to fulfill several micro requirements, which are expected to act as a sieve to separate the good from the bad. Top level selections have to pass an interview for which board comprises experts drawn from outside the Government as well.

The first set of guidelines from the Reserve Bank of India had left grey areas because of which banks can enter insurance. Some banks felt that the guidelines discriminated against them unfairly. Thus, they represented to reconsider entry norms into insurance and spell out clearly their reservations on NPAs.  (FE, 16.03.00)
 

Democratic Accountability Stressed
According to the Finance Minister, Yashwant Sinha, removing the powers of framing business regulations from the ambit of Government and vesting them with autonomous regulatory bodies would go a long way in tackling corruption.

He released a book titled ‘Fighting Corruption and Restructuring Government’ and commented that there was a need to ensure greater democratic accountability. The book was co-authored by the Central Vigilance Commissioner (CVC), N. Vittal and Dr. S. Mahalingam, National Council Member, All India Management Association.

Sinha said the country was also facing the challenge of meeting the fallouts of decentralisation, which has given increased powers to the local bodies. Speaking on the occasion, Vittal pointed out that studies of reduction in the level  of corruption can also lead to an increase in the flow of foreign direct investment in the country.  Commenting on the book, he said it had tried to place certain solutions for the cure of the problem of corruption in order to generate a national debate on the related issues. (BL, 05.01.2000)
 

Rs 5 lakhs for Custody Death
Rishipal, along with his brother and father was arrested on May 27, 1996 in Meerut. He was accused of his wife’s death. He died four days after his arrest. The cause found was “shock and haemorrhage due to ante-mortem injuries”. The affidavit in reply to his parents’petition stated that jaundice and liver failure were the cause of death. The court declared that it was a concocted story and a desperate attempt to avoid responsibility for acts committed when the victim was in judicial custody.
The Uttar Pradesh Government has been asked by the Supreme Court to pay Rs 5 lakh compensation to the parents and three orphaned children of a farmer killed in judicial custody in Meerut. The CBI was also ordered to investigate the incident and register a case as the authorities had attempted to pull the wool over the eyes of the court.

The bench comprising Justice S. P. Bharucha and Justice S. N Phukan said  they do not appreciate the death of persons in judicial custody. When such deaths occur, it is not only to the public that those holding custody are responsible but they are also responsible to the courts under whose orders they hold and such deaths are not to be appreciated.     (TOI, 16.03.00)
 
 

Subverting the Law 
The lawyers who had gone on strike across the country are protesting against proposals that have been public knowledge for over two years. The act amending the Civil Procedure Code (CPC) was passed by the parliament in 1999 and is due to be notified shortly. It aims at putting some order to the mess that litigation is in India. 

Apart from the probable income cut, the lawyers are also worried about the deletion of the intra-court appeal mechanism. This means the verdict of a single judge in a high court cannot be appealed against before a division bench. Any review will have to be sought from the Supreme Court.
The Law Minister says  it would save time; morality-overdriven lawyers claim that it would harm the interest of the poor, who will not be able to travel to Delhi to seek the reversal of an unfavourable judgement while the lawyers say that foreign legal consultants’ proposed entry should be governed by the right to reciprocity.  (IT, 06.03.00)
 

Corruption in Karnataka
According to an independent report, investors have pinpointed corruption as a major reason for the dismal progress of new projects in Karnataka. This had attracted proposals worth Rs 70,000 crore but saw only one-tenth of it completed in the post-reform period since 1991.

Other disabling factors identified by the investors include lack of infrastructure and taxation. They said manpower availability, relatively peaceful industrial relations and helpful attitudes of many officials are positive features.

The study noted that the only industries to escape corruption to a large extent were those that needed little assistance from the government and those who could easily exit from the state such as the software industry.  (BS, 05.01.00)
 
 

Nab Corrupt Officers
N. Vittal, Central Vigilance Commissioner (CVC) said he was considering ‘arranging traps’ to nab corrupt public servants and making them liable for prosecution.

He said that he was toying with the idea of empowering vigilance officers and people to ‘arrange traps’ for corrupt public servants and an enquiry could be conducted by the head of the department.

Other measures taken by the CVC include making a corrupt public servant liable for prosecution after retirement, holding back gratuity and cut in pension and pending an enquiry into corruption charge. (BS, 07.01.00)
 

RM Amongst Passengers
The passengers at the Jaipur railway station were astonished to see the Central Railway Minister, Mamta Banerjee, wandering  as a common passenger. The Minister spent almost two hours at the station before she left for Delhi.

According to the sources, the plane of Jet Airways coming from Calcutta had to land at Jaipur due to bad weather. Ms. Banerjee travelling in it refused to stay in five-star hotel and came to the railway station along with her secretary.

She enquired about the place to stay from the main ticket collector. He was surprised to see the Minister in front of him. Thereafter, all the senior officers  rushed to the station and finally she stayed in the retiring-room. The public was happy to see the Minister amongst them. She then left for Delhi by Ashram Express.  (RP, 10.02.00) 
 
 
 

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