IFMR MUN 2019

ALL INDIA POLITICAL

PARTY MEET (AIPPM)

BACKGROUND GUIDE

Agenda: Reviewing the Policies and the Poll Promises

of the Modi Led NDA Government
 LETTER FROM THE EXECUTIVE BOARD

It is indeed a great honour to welcome you all to the All India Political Parties
meet at IFMR MUN 2019. I congratulate you on your decision for being part of the
AIPPM. The Executive Board will leave no stone unturned to assure quality debate
in the committee. It has been observed that AIPPM is not simulated too often in the
south Indian debating circuit. Considering this, the agendas have been chosen with
special reference to the present developments in Indian Politics to ease out the
research and facilitate debate. We have tried to make the background guide simple
and as informative as a background guide needs to be. We’re expecting that the
members come up with good solutions to the problems, not those which have been
proposed earlier. Think of the problem as your own, try to think from the point of
view of a responsible politician and have a constructive approach. AIPPM is a
technically sound committee, but we will keep some room to make the committee
simple, fun and productive with rhetoric and mudslinging. The marking scheme
will be declared in the beginning of the committee so as to maintain transparency
and facilitate effective debate. Reuters, Government Reports, UN reports shall be
considered as credential proofs in committee while any further reports from
Regional/International News Agencies shall be considered as persuasive proof. On
a very serious note, the members are requested to refrain from using internet
during the committee sessions unless allowed by the Executive Board. We expect
productive sessions from the delegates. Read the background guide thoroughly and
research well. Consider the guide as the stepping stone for your research and don’t
stay within its limits. Good Luck!

Rudraksh
KeertivasanGupta Roshaan Patnaik Gourav Dhona
Speaker Deputy Speaker Scribe
 CORRUPTION FRONT

RAFALE DEAL- Jet, set, Go!

What is the Rafale aircraft?

 Rafale is a twin-engine medium multi-role combat aircraft.

 It is manufactured by the French company Dassault Aviation.
 Dassault claims Rafale has 'Omnirole'.
 This is the capability to perform several actions at the same time.
 Rafale can carry out both air-to-ground as well as air-to-air attacks.

How did the deal evolve?

Indian Air Force (IAF) raised the requirement for Medium Multi Role Combat Aircraft (MMRCA) in
2007.
 This was to replace the aging fleet of MiG aircratfs.
 Tender - Tenders for 126 Medium Multi Role Combat Aircraft (MMRCA) fighters were issued
by India in 2007. It was an open competition between companies including Dasault Aviation of
France. Dassault was announced as the lowest bidder in 2012.
 Earlier Deal - Of the 126 jets required, 18 fighters were to be imported in a fly-away condition.
Hindustan Aeronautics Ltd (HAL) would manufacture the remaining 108 jets.
This was agreed to be with Transfer of Technology (ToT) from Dassault.
 Stall - India and France were unable to decide on a price for the jets.
The workshare agreement between HAL and Dassault Aviation was signed in 2014 but with the
new NDA government in place, clarity on the progress of the deal remained unclear.
 New deal - On PM's visit to France in 2015, India’s intention to buy 36 Rafale aircraft in “fly-
away” condition was announced.
Defense Minister announced the previous 126 fighter jet deal to be dead. Subsequently, the deal for the
acquisition of 36 aircraft was signed by the Defense Ministers of India and France in 2016. This was done
through a government-to-government deal.
What are the present concerns?

ToT - The current deal has a 50% offset component.

Accordingly, Dassault will manufacture items worth 50% of the deals in India. However, the absence of
transfer of technology (ToT) component is raised as an issue. Also, no role is guaranteed for any Indian
public sector company, including HAL.

Deal - The present deal as direct government-to-government agreement, as against the earlier open
tender is criticized. Also, the 36 fighters are said to be purchased at a much higher price than earlier
negotiated.
 What is the dispute with sharing price details?

Earlier deal - The previous government's price for 126 aircrafts was never finalized, and no contract
was signed or executed.
Hence, no official figure on the price was ever given.
New Deal - Recently, the Defense Minister declined to share the cost of the Rafale fighters under the
new deal, with Rajya Sabha.
It was said that the price details were "classified information". This was as per the Inter-
Governmental Agreement (IGA) between the Governments of India and France.
Accordingly, material exchanged under IGA is governed by the provisions of the Security Agreement.
However, in 2016, Minister of State for Defense had shared the price in the Lok Sabha in a written reply.
The basic price of each Rafale aircraft was said to be around Rs 670 crore. At the time of its signing,
the 36-aircraft deal was said to be worth around Rs 59,000 crore.

What is the Security Agreement?

 Security - Signed between the two nations in 2008, it has some confidentiality provisions. It relates to
Protection of Classified Information and Material in the field of Defence. For any contract or sub-
contracting contract with classified information and material, a security annex shall be drawn up. The
competent security authority from the information forwarding party shall specify what has to be
protected by the receiving party.

 Renewal - It was specified that the Agreement shall remain in force for a period of 10 years. It shall be
renewed by "tacit consent" for new 5-year period. Accordingly, the agreement will continue unless one
of the Parties notifies its intention to not renew. This has to be given in writing 6 months prior to the end
of the current period of validity. The initial 10-year life of the Agreement signed in 2008, ended on
January 24, 2018. It is not clear if it has been renewed by tacit consent by the government.

Opposition says deal gone haywire!

 The opposition blames the government for promoting of “Crony Capitalistic Friends” at the cost
of a defense public sector unit, Hindustan Aeronautics limited.
 The opposition alleges that the deal signed with France doesn’t carter for technology transfer and
has caused an insurmountable loss to the exchequer. The Rafale deal has 50 percent offset clause,
a large part of which is to be executed by a very newly registered joint ventured company of the
Anil Ambani owned reliance defence.
 Congress leader Rahul Gandhi claims that in his discussion with French President Hollande, the
ex-President said that there is no secrecy pact that exists between the countries.

Supreme Court Judgment!

The supreme court of India on the 14th December 2018 gave the government a clean chit on the
procurement of these jets and dismissed petitions seeking a direction to CBI to register an FIR for alleged
irregularities in the deal. Court said:-
  There is no occasion to doubt the decision making process in the deal
 There is a necessity to induct fourth and fifth generation fighter aircraft and the country
cannot remain without jets.
 Not the court’s job to deal with the comparative details of the pricing and offset partner.
 No material to show that the deal is commercial favoritism.
 No wrong doing in the selection of Indian offset partners by dassault Aviation.
 Questions raised on Rafael deal only after ex President Hollande came out with a
statement, which can’t be the basis of judicial review.
 The decision to procure 36 or 126 fighter jets lies with the government, can’t compel the
government.
 Nobody questioned the procurement of jets when the deal was finalized in September
2016.

VYAPAM

What is Vyapam?
The Madhya Pradesh Professional Examination Board (MPPBP), the government body responsible for
conducting several entrance tests in the State, is popularly known as ‘Vyapam’ (Hindi acronym for
Vyavsayik Pareeksha Mandal). These entrance tests are used for recruitment to government jobs and
admissions to educational institutes in the State.

What is the scam all about?

The scam, which has been in the news recently, is an admission and recruitment scam involving
politicians, senior government officials, business-persons and others in Madhya Pradesh. In it,
undeserving candidates bribed politicians and MPPEB officials, through middlemen, to get high ranks in
the entrance tests or secure jobs.
Many of those who discovered these sordid facts — whistleblowers and journalists responsible for
unearthing the details — have died in a spate of suspicious incidents. The three main whistleblowers —
social activists Dr Anand Rai and Ashish Chaturvedi, and IT consultant Prashant Pandey — have been
receiving death threats.

How did they hoodwink authorities?

According to varied reports from whistleblowers, the following tricks were used by those involved in the
scam:
Impersonation: All the information of the candidate remained the same, except the photograph. The
candidate’s photograph was replaced by that of the impersonator and after the exam, it was changed back
to the original. Obviously, the impersonators were brilliant students and they received huge sums to keep
their mouths shut.
Engine and bogie system: A person was strategically made to sit in front of the candidate in question.
The person let them copy from his sheet or exchanged the sheet with them at the end of the exam.
OMR sheets: The candidates in question were asked to leave their answer sheets blank and were given
high marks in the exam. Or they were supplied with solved OMR sheets before they took the exam.

The bloody timeline

Possibly one of the more sinister scams to have come to the fore in India, the Vyapam story has left a trail
of blood and gore. From the time people began sniffing around to dig out the truth in 2009, as many as 50
people (others say the toll could be as high as 156) have died mysteriously. Some 35 have died since
2012, and this year’s toll is eight. Some killed themselves; others suffered heart-attacks and accidents.
Here’s a round-up of some of the most talked about deaths.
January 2012: Namrata Damodar, a 19-year-old medical student accused in the scam, was found dead on
the railway tracks near Ujjain. While the police had filed ‘suicide’ as the reason in the closure report, in a
latest development, three doctors had said her death was result of ‘violent asphyxia as a result of
smothering’, which they had maintained from the beginning. Dr BB Purohit, one of those who performed
the autopsy, said there were bruises on the nose and mouth of the woman, indicating strangulation.
July 4, 2014: Dean of Netaji Subhas Chandra Bose Medical College, Jabalpur, Dr DK Sakalle’s burnt
body was found in his home. He was looking into cases of fake admissions in the medical college.

Pradhan Mantri Fasal Bima Yojana Scam

 PMFBY will provide a comprehensive insurance cover against failure of the crop thus helping
in stabilizing the income of the farmers and encourage them for adoption of innovative
practices.
 The Scheme can cover all Food & Oilseeds crops and Annual Commercial/Horticultural Crops
for which past yield data is available and for which requisite number of Crop Cutting
Experiments (CCEs) will be conducted being a part of the General Crop Estimation Survey
(GCES).
 The scheme is compulsory for loanee farmer obtaining Crop Loan /KCC account for notified
crops. However, voluntary for Other/ non loanee farmers who have insurable interest in the
insured crop(s).
 The Maximum Premium payable by the farmers will be 2% for all Kharif Food & Oilseeds
crops, 1.5% for Rabi Food & Oilseeds crops and 5% for Annual Commercial/Horticultural
Crops.
 The difference between premium and the rate of Insurance charges payable by farmers shall be
shared equally by the Centre and State.
  The seasonality discipline shall be same for loanee and non-loanee farmers.

 The scheme will be implemented by AIC and other empanelled private general insurance
companies. Selection of Implementing Agency (IA) will be done by the concered State
Government through bidding.
 The existing State Level Co-ordination Committee on Crop Insurance (SLCCCI), Sub-
Committee to SLCCCI, District Level Monitoring Committee (DLMC) shall be responsible for
proper management of the Scheme.
 The Scheme shall be implemented on an ‘Area Approach basis.’ The unit of insurance shall be
Village/Village Panchayat level for major crops and for other crops it may be a unit of size
above the level of Village/Village Panchayat.

 The Loss assessment for crop losses due to non-preventable natural risks will be on Area
approach.

 In case majority of insured crops of a notified area are prevented from sowing/planting the
insured crops due to adverse weather conditions that will be eligible for indemnity claims upto
maximum of 25% of the sum-insured.
 However losses due to localised perils (Hailstorm, landslide & inundation) andPost-
Harvest losses due to specified perils, (Cyclone/Cyclonic rain & Unseasonal rains) shall be
assessed at the affected insured field of the individual insured farmer.

Why the farmer rights groups and state government are unhappy?
1. The government’s claim about reduction in premium for the farmer is not wholly true. The existing
NAIS, which has fairly low premiums of 1.5-3.5% for foodgrains and oilseeds crops and actuarial rates
for horticultural and cash crops, is already run in 14 states. The Modified NAIS (MNAIS) with higher
premium rates is run in only six states. States where NAIS runs with lower premium rates than MNAIS
still have very low coverage of farmers and area under crop insurance. Thus the problems related to
insurance run far deeper than premium rates.
2. The government’s expectation that insurance cover will go up from existing 23% to 50% in three
years appears to be based more on hope than any evidence. Previous experience has belied all such hopes.
There does not seem to be a political will to offer a universal coverage to all farmers, all crops against all
forms of damage and at all stages of crop cycle, even though agrarian crisis and farmers’ suicides are
mounting with every season.
3. For the same reason, the government’s claims about a big expansion in subsidies is a hyperbole for
the coverage may not go up. Besides, the subsidies are to be borne in a 50:50 ratio between Centre and
State. It is unclear yet if the states have agreed to bear their share of the subsidies.
4. There does not seem to be anything in this scheme to address the problem of tenant farmers who bear
the risk of crop failure but are not entitled for compensation and insurance payments. The new crop
insurance scheme has nothing concrete for identification of cultivators and bringing them under crop
insurance cover.
5. While the declaration about bringing localized risks and post-harvest damages within the scope of
insurance is to be welcomed, it appears that risks such as destruction by wild animals are still not covered.
6. One key problem of crop loss or damage compensation, the unit of assessment, remains unaddressed
in the new scheme. Farmers movements have been demanding for long that the unit of crop-damage
assessment should be reduced from tehsil/block/panchayat to the village and if possible to the individual
farm.
7. Another critical issue relates to the method of damage assessment. The new scheme, as most of the
existing ones, is a yield-based insurance scheme that depends critically on “Crop-Cutting Experiment”
[CCE] methodology. This method is limited to mono-crop farms and needs much technical improvement
in its sampling. It is unclear whether the new scheme has made any such improvement. It is also unclear
whether the benchmark of a normal yield has been changed to incorporate a rolling average of the last few
years or the best years of the last decade.
8. The government has highlighted the use of remote sensing technology, but the scientists themselves
are not sure about how remote sensing technology or other technologies can replace CCEs other than
come in useful for verifying (and may be not assessing) some localized risk and damage/loss.
9. It is not clear if the new scheme has taken any steps to delink enrolment of cultivators from banks
being used as the transaction points by insurance companies. When all loanee and non-loanee farmers are
covered directly by the crop insurance company which has to come to the forefront (rather than being
invisible hiding behind the banker as of today), the accountability in the entire insurance process will be
more explicit and in favour of farmers.
10. While the move towards payment of insurance amount directly to bank account of the farmers is to be
welcomed, it is vital that the payment be made to saving bank account and not the loan account that the
banks can access to recover their loan. Or else these schemes have become loan insurance for the banks
rather than crop insurance for the farmers.

ECONOMIC FRONT

DEMONETISATION
INTRODUCTION

The unique experiment with demonetisation, announced on November 8, 2016 by the Prime
Minister has established that the Central Government is serious about tackling the menace of
corruption. The relentless fight against corruption was further reflected in the Union Budget of
February 1, 2017 through restrictions on funding of political parties and on cash transactions;
and the current year’s budget (2018) includes some extensive provisions to push infrastructure
for digitalization as well. The experiment of demonetisation by the Government has largely been
successful in educating the masses about the benefits of electronic payments and digitalization.
Initially, broadly, demonetisation of high currency notes had a two-fold objective – first, choking
the funding channels of militancy and terrorism from across the border and to fight corruption.
Since then, in continuing the focus on corruption, government has placed emphasis on digitizing
India. The amount of demonetised notes which subsequently returned to the Reserve Bank of
India (RBI) between November 8 and December 31, 2016 strongly demonstrate that corruption is
rampant in the economy.

Indian economy since Demonetisation

India, a Tax Non-Compliant Society.In India, tax to GDP ratio at 18 percent is nearly half that of
advanced countries (Chart 1). The low tax to GDP ratio is mainly because India remains a tax-
non-compliant society as the number of income tax payers has been generally low over the years.
In a population of 1.2 billion, there are just about 37 million people filing individual tax returns.
Of these, only 7.6 million people declare income above Rs.5 lakh, with salaried class accounting
for 5.6 million people. In India, only 20 lakh people claim income above Rs.50 lakh. Still
interestingly, of the 56 million informal sector individual enterprises, only 18 million file returns.
And, of the 1.4 million registered companies only 0.6 million file returns, and companies
showing profit of more than Rs. 1 crore are just about 36,448.4 This trend continues in spite of
the country having a large market for luxury villas and cars; ever rising gold demand; booming
stock market; and a large number of high net worth individuals. However, after demonetisation,
the number of returns filed as on August 5, 2017 were 24.7 percent higher compared to previous
year. Advance tax collections of Personal Income Tax grew by 41.79 percent over the last year.
Personal income tax under Self-Assessment Tax grew at 34.25 percent over the last year. Hence,
demonetisation seems to have worked in making India more tax compliant and giving our fiscal
policy more bandwidth. The jolt of demonetisation to push this ratio up probably proved out to
be a big boon.

Impact Of Demonetisation On The Indian Economy

 On Small Scale Industries: Businesses like the textile industry, salons, restaurants, and
seasonal businesses are low capital enterprises and work on the basis of liquidity
preference. Demonetisation gravely impacted their revenue collection and threatened
their existence to an extent.
 On Black Money: Though only a small portion of black money is stored in the form of
cash and majority is in the form of physical assets like gold, land, and building,
demonetisation of the rupee 500 and 1000 notes might take out a lot of black money from
the economy.
  On the General Economic Situation: Till months after demonetisation the general
economic situation was disturbed. The public had to queue up outside banks to exchange
their old currency for new ones. Households lacked liquidity and could not do
transactions for daily items. Small shopkeepers who only accepted cash went into losses
and some even shut down.
 On Inflation: The Reserve Bank of India (RBI) considers the Wholesale price index
(WPI) and the Consumer Price Index (CPI) to measure inflation. Demonetisation is
expected to reduce inflation as consumers have cut down on spending and aggregate
demand has considerably fallen. According to government press releases, the official
WPI for ‘All Commodities’ (Base: 2004-05=100) for the month of December, 2016
declined by 0.2 percent to 182.8 (provisional) from 183.1 (provisional) for the previous
month. The index started rising during the month of January and rose by 1.0 percent to
184.6 (provisional) from 182.8 (provisional) for the previous month. This may be
correlated with the availability of cash with people which led to increased spending.
 On Terror Funding: Demonetisation was aimed as a clean-up of the economy where Fake
Indian Currency Notes (FICN) would be checked. It is aimed at rendering all fake notes
of rupees 500 and 1000 useless and thus drastically affecting illegal funding of terror
groups in Jammu and Kashmir, states in the North-East, and Naxalism-influenced states.
 On Political Parties: Many Political Parties use large amounts of undeclared cash to
campaign for elections and meet other requirements. Due to Demonetisation such acts
might get restricted to an extent and parties will have to formulate new strategies.
 Towards a Digital Economy: Absence of liquid cash has led to people making
transactions using cheques or account transfers. They have also switched to virtual
wallets like Paytm which allows electronic transfer of money. All this might result in a
digital economy where transactions are being recorded and the economy has more white
money. This might increase the government’s tax revenue.

Quantitative Analysis Of The Impact Of Demonetisation On The Indian Economy

As per the data published in hand book of statistics on Indian Economy by RBI, GDP at Market
price fell approximately by 1 percent as compared to previous financial year. It registered a
growth of 7.11 % from previous year as compared to the 8.01% growth witnessed during 2015-
16. Table 1 indicates that GDP lost its growth streak of 4 years in the financial year 2016-17.
GDP growth rate increased from 5.46% in 2012-13 to 8.01% in the year 2015-16.

As per the estimates of the Central Statistics Office, all the sectors of the economy faced
different situations in Q1 of the financial year 2017-18. According to these estimates, the GVA
at constant prices in Q1 of 2017-18 was rupees 2904128 crores as compared to rupees 2751407
crores in the Q1 of the previous financial year. This shows a decline in growth from 7.6% in
2016-17 to 5.6% in 2017-18 (see table 2)
Sectors in the economy such as Construction, Agriculture, Forestry & Fishing which employ a
large number of daily wage workers and have liquidity preference witnessed a decline in growth.
Agriculture grew by 2.3% in Q1 of 2017-18 as compared to 2.5% in Q1 of 2016-17,
Construction grew at a rate of 2.3% in Q1 of 2017-18 and witnessed a drop of 0.2% since the Q1
of 2016-17.

Manufacturing, which is the most important indicator of economic growth and employment has
grown at a very slow rate post demonetisation. It grew by only 1.2% in Q1 of 2017-18 as
compared to a massive growth of 10.7% in Q1 of 2016-17.

Goods & Service Tax

INTRODUCTION

GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service
Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July
2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax
that is levied on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods
and services. This law has replaced many indirect tax laws that previously existed in India.

GST is one indirect tax for the entire country.

Advantages of GST

1. GST eliminates the cascading effect of tax

2. Higher threshold for registration
3. Composition scheme for small businesses
4. Simple and easy online procedure
5. The number of compliances is lesser
6. Defined treatment for E-commerce operators
7. Improved efficiency of logistics
8. Unorganized sector is regulated under GST

Disadvantages of GST

1. Increased costs due to software purchase

 2. Being GST-compliant
3. GST will mean an increase in operational costs
4. GST came into effect in the middle of the financial year
5. GST is an online taxation system
MAKE IN INDIA

Prime Minister Narendra Modi launched the Make in India initiative on September 25, 2014,
with the primary goal of making India a global manufacturing hub, by encouraging both
multinational as well as domestic companies to manufacture their products within the country.
Led by the Department of Industrial Policy and Promotion, the initiative aims to raise the
contribution of the manufacturing sector to 25% of the Gross Domestic Product (GDP) by the
year 2025 from its current 16%. Make in India has introduced multiple new initiatives,
promoting foreign direct investment, implementing intellectual property rights and developing
the manufacturing sector.

It targets 25 sectors of the economy which range from automobile to Information Technology
(IT) & Business Process Management (BPM), the details of each can be viewed on the official
site (www.makeinindia.com).

It also seeks to facilitate job creation, foster innovation, enhance skill development and protect
intellectual property. The logo of ‘Make in India’ – a lion made of gear wheels – itself reflects
the integral role of manufacturing in government’s vision and national development.

After the campaign’s well-marketed launch, Modi’s flagship Make in India policy has given rise
to some positive outcomes. In the three years since the introduction of the policy, India’s rank in
the World Bank’s Ease of Doing Business has climbed four places, from 142 in 2014 to 100 in
2017. In addition, in 2015, India surpassed China to become the top destination for FDI in the
Asia-Pacific, seeing approximately US$63 billion worth of investment flow into the country.

While the recent policy changes are making solid headway, the sobering fact is that
manufacturers still face significant hurdles in the country. A closer look reveals that, despite the
fact that some major companies, like Samsung, have found synergy and opened manufacturing
hubs in India, the majority of FDI since the campaign’s inauguration is still in the services sector,
which attracted 60 per cent of India’s total FDI inflows from 2016 to 2017.

The government’s ambitious goal to increase the gross domestic product share of manufacturing
from a current 16.5 per cent to 25 per cent by 2020 is not yet on track. Global companies have
been unsparing in their criticism over the country’s poor industrial safety records and failure to
enforce environmental manufacturing policies. Vague regulations that have yet to be
streamlined, a shallow supply chain ecosystem, and inefficient bureaucracies are additional
challenges that remains steeped in the old India. Weak infrastructure has also hindered the Make
in India program. While Modi’s list of national-building projects showcases growth in
infrastructure through the futuristic Smart Cities Mission, the provisions set out for this initiative
have not yet come to fruition in a way to stimulate growth in the industrial sector that Make in
India needs to succeed.

LINK:

http://www.makeinindia.com/policy/new-initiatives

START UP INDIA

Government of India launched Startup India campaign to encourage entrepreneurship in India’s

young generation who despite being skilled and able to launch their own ventures become
dependent upon various types of jobs and remain under employed.

A startup is an entity that is headquartered in India which was opened less than seven years ago
and has an annual turnover less than ₹25 crore (US$3.9 million).

Ministry of HRD, Department of Science and Technology have partnered in an initiative to set
up 75 Startup support hubs in the National Institutes of Technology (NITs), IITs, IISERs and
NIPERs.

The Reserve Bank of India has assured to take steps to help improve the ‘ease of doing business’
in the country and contribute to an ecosystem that is conducive for the growth of start-up
businesses.

Success of Startup India campaign

In last 2-3 years, there has been increase in startups in versatile areas like retail, food delivery,
consulting, e-commerce, medical services, delivery services, fitness among others. On an
average 800 startups are born every year. Startups are evolving in terms of product capabilities,
networking, taking calculated risks venturing into new spaces.

Delhi NCR and Bangalore has highest number of startups predominantly because of economic
activities of population of both cities. Cities like Jaipur, Chandigarh, Chennai, and Jodhpur are
witnessing increasing startup activities. Successful startup like Zo rooms was conceived in small
city like Jodhpur. Southern States like Karnataka, Kerala, Andhra Pradesh and Telangana have
shown better results than the rest of the country in terms of their policies implementations for
supporting startups. These states have focused on improving infrastructure, especially in the
Tier-II cities. Launch of "Kerala IT Mission", which focus on fetching ₹50 billion (US$780
million) in investments for the State's startup ecosystem is a great example Kerala has made
India's first telecom incubator Startup village in 2012. The state also matches the funding raised
by its incubator from Central government in 1:1 ratio. Telangana has launched the largest
incubation center in India as "T-Hub".
Challenges and hurdles

Startups are facing many challenges and hurdles despite commitment by the Government to
provide all the support and finance. The biggest challenge before success of campaign is
parameters of Ease of doing business, corruption, availability of skilled labor among others.

Startups find it difficult to have access to credit. Attracting investors to fund ventures or getting
loans from banks are perennial problems for startups. Despite all the commitment, Banks are not
giving loans to startups without prior credit history. Many times despite raising sufficient initial
capital, startups find it difficult to survive as they can’t match revenue and burn rate mostly
because of changed economic factors. Finding right skilled human power is another biggest
challenge before startups. India’s need of skilled labour is so huge that National Skill
Development Corporation (NSDC) has been mandated to skill 150 million Indians by 2022. For
a startup, it is difficult to attract and hire talent and skilled workers, since they cannot match
salary level given by large, established companies and also cannot offer job security on long term
basis. Startup failures are looked down upon. Failures are not met with encouraging advices in
most of the cases.

People are sensitive towards risks and rewards and Indian economy which is highly price
sensitive, worsens the situation. Right kind of mentorship is not available. Available mentorship
and skill enhancement may not be accessible in all the cases. So though someone has potential to
start something and may be that idea is really revolutionary but if that doesn’t meet right
guidance to turn it into a successful business then that idea remain irrelevant. Huge, diverse
demographics makes it really hard to capture consumer’s mindset in Indian Market

LINK:http://www.mbauniverse.com/group-discussion/topic/business-economy/startup-india-
boosting-entrepreneurship

Independence of Constitutional and Statutory Bodies

1. Reserve Bank of India

India’s government is conducting a dangerous experiment in economic management. Recently,

following renewed pressure to conform to the government’s thinking, the head of the Reserve
Bank of India, Urjit Patel, resigned, citing “personal reasons.”

Prime Minister Narendra Modi’s officials have challenged the RBI’s operational independence
before, but their latest effort marks a significant escalation. It’s a pattern seen elsewhere as well
— witness U.S. President Donald Trump’s frequent attacks on the policies of the Federal
Reserve. Too many governments seem to be forgetting why central banks need to be
independent.

When governments are in charge of monetary policy, they’re tempted to take chances with
inflation to spur short-term growth. An independent central bank can more readily gain
investors’ trust that inflation will be kept under control. The credible prospect of low inflation
promotes stability and makes it possible for interest rates to be lower than they otherwise would
be, which in turn favors growth. In much the same way, insulating financial regulation from day-
to-day political pressure improves confidence in the system’s integrity, which again is good for
growth.

2. CBI

Following the Narendra Modi government’s dramatic decision to divest Alok Verma of his
duties as the CBI director on Wednesday, opposition leaders launched a series of attacks on the
Centre for allegedly undermining the independence of India’s top investigation agency. For the
last few days, the CBI has been in the midst of unprecedented infighting between Verma and his
deputy Rakesh Asthana, who has also been asked to go on leave.While the CBI, on the orders of
Verma, filed an FIR naming Asthana as the prime accused in a bribery case, Verma found
himself on the receiving end when Asthana accused him of interfering and impeding some of the
probes headed by him. The Congress in the past has on the attack, criticising the Modi
government for using the CBI to dig up old cases against opposition leaders instead of letting the
agency act independently. It said that the CBI had become a tool for the government to fulfill its
political purposes.

3. Judiciary

In the Judicial front, the government faced a blow when the judges of the SC came out against
the Chief justice of India in a press conference. The Modi government has always been
scrutinised for their meddling with the judicial process and they were also criticised due to
blocking the appointment of Justice K.M. Joseph as an SC judge amidst a lot of controversies.

4. Governor controversy in Karnataka

The governor of Karnataka is being attacked for taking a number of controversial decisions.
Amit Shah said that the Congress did not stake claim to form government in Karnataka leaving
the governor with no option but to invite the single largest party in a hung assembly. But while
inviting Yeddyurappa to form government, Governor Vajubhai Vala did not verify the numbers
from him. His act of inviting the BJP without asking for numbers has been the root cause for the
BJP's embarrassment. The governor's decision to give 15 days' time to Yeddyurappa to prove his
majority on the floor of the house gave rise to another major controversy. The Congress moved
the Supreme Court against the governor's invitation to Yeddyurappa to form the government.
Though the court did not find fault with that, it cut down 15 days to about 24 hours to prove
majority.
The appointment of a relatively junior BJP MLA KG Bopaiah as pro tem speaker to conduct the
floor test also became a bone of contention between the Congress-JD (S) combine and the
governor.

The Congress, which was in favour of its senior-most MLA RV Deshpande for appointment as
the pro tem speaker, moved the Supreme Court again. The court rejected the Congress's plea on
the ground that on some occasions relatively junior MLAs have been appointed as the pro tem
speaker. It cited the floor test in March 2005 of the Jharkhand assembly. The then Jharkhand
Governor Syed Sibtey Razi had appointed one of the most junior MLAs Pradeep Kumar
Balmachu of the UPA as pro tem speaker to conduct the floor test allegedly for favouring
Congress-backed JMM's Shibu Soren. The cumulative effect of all these decisions was a
perception that the BJP was not just encouraging horse-trading but also indulging in it. The
charge was reinforced when several audio clips allegedly of BJP leaders offering bribes to the
Congress and JD (S) MLAs surfaced before Yeddyurappa's floor test.