New Move To Ease Travel Woes of The Differently-Abled: Chennai

New move to ease travel woes
of the differently-abled
Ramya Kannan tober, highlights bringing in ment and facilities in consul- appointed to settle com-
amendments to the existing tation with government plaints between different
CHENNAI: The Asok Kumar CAR and covers other im- departments overseeing im- service providers and pas-
Committee which examined portant areas hitherto not plementation of the Persons sengers. A comprehensive
ways to make air travel has- covered.
covered with Disabilities Act. Inter- disabled–friendly airport
sle-free for persons with dis- “What we have tried to do nal audits should be intro- design has also been drawn
abilities and reduced is to make air travel comfort- duced to ensure that up, according to committee
mobility has assessed the able for all and with dignity,” assistive devices are availa- member Rahul Cherian Ja-
current situation at airports says Mr. Asok Kumar, Chair- ble in good condition and cob, who is with Inclusive
across the country and made person of the committee. persons handling these Planet, Centre for Disability,
recommendations to ease “With every step there are equipments are well trained. Law and Policy.
their travails.
travails numerous difficulties if you The draft, which is being cir- The committee has also
The committee was con- put yourself in the shoes of culated for comments, also urged the Ministry to ensure
stituted by the Union Minis- persons with disabilities, insists that responsibilities compliance of recommenda-
try of Civil Aviation to and different agencies are be fixed on each stakeholder tions within three years at
review the existing Civil constantly shifting respon- – not just airport and air- major airports, and then at
Aviation Requirements on sibilities. We have addressed lines, but agents, ticketing other airports in a phased
Carriage by Air of Persons all that.” websites, airport operator manner; and also address the
with Disability and/or Per- Primary, and key, among and CISF also.
also suggested mechanism for
sons with Reduced Mobility the recommendations are A complaints resolution meeting cost of implementa-
(CAR); examine best practic- suggestions to clearly allo- officer to deal with these is- tion. Significantly, it has also
es in the world and present a cate responsibility between sues relating to persons with built into the recommenda-
detailed set of guidelines to airports and airlines to avoid disabilities must be appoint- tions, penal provisions for all
improve experience. The re- delays and inconveniences ed at each airport. An om- violators, including private
port, which was ready in Oc- and to standardise equip- budsman
budsma is also to be airlines.
Print Release http://www.pib.nic.in/newsite/PrintRelease.aspx
Press Information Bureau

Government of India
Ministry of Civil Aviation
14-May-2013 18:04 IST
Air India to Implement Dholakia Committee Recommendations in a Time Bound Manner
The Minister for Civil Aviation Shri Ajit Singh, while addressing mediapersons at a press conference here,
has said that the Government has accepted the recommendations of
Prof. Dholakia Committee Report on Cost Cutting in Air India and sent to Air India for immediate
implementation. The Committee has made total 47 recommendations. Air India expects a saving of about 500
crores in next 6 months by implementing some of the recommendations of the Committee. Air India has
constituted a Committee comprising of the following to implement the recommendation of Cost Cutting Committee
in a time-bound
manner :
i) Shri Nasir Ali, Joint Managing Director, AI

ii) Shri Deepak Brara, Commercial Director, AI
iii) Shri S. Venkat, Director Finance
The main recommendation which Air India is going to implement is to evolve a model based on an ideal
mix of best practices of LCC model while retaining the core features of full service carrier. The main
recommendations are given below:
1. Charging for food in the domestic sector and rationalizing it in the international sector.
2. Unbundling of services to passengers and advertisement space.
3. 0% commission and ticket booking through website.
4. Shift from full MRO to preventive maintenance and power by the hour concept –technical & efficiency audit of
engineering.
5. Strict enforcement of simplified excess baggage charges.
6. Dynamic pricing and passenger upgrade.
7. Flights not meeting variable costs need to be restructured or withdrawn to eliminate
additional losses and point to point rather than multi-sector operations.
8. Idle aircrafts to be used on most profitable sectors or surrendered; and underutilized assets like luxury lounges, time slots
at busy International airports, land, buildings, floors, hangar space and hotels to be leased out or sold.
9. Surplus crew to be relocated as per crew pattern requirements and SOD movement curtailed.
10. As per DPE instructions, no encashment of SL and lapsable PL – also at foreign stations.
11. Temporary posting of employees should stop.
12. Transport and hotels for pilots and crew and their layover pattern.
13. Excessive and unjustified allowances to pilots and crew to be stopped.
14. Extra reimbursements should be merged with allowances within limit of 50% of revised basic as per DPE guidelines; and
training should be provided to those with more than 3 years of service left before retirement.
15. Free or subsidized transport facility to be stopped and extra transport allowance over and above the normal transport
allowance not to be provided.
16. Canteen services at non-factory areas to be withdrawn and at factory areas to be outsourced with revised rates.
17. Closure of 18 off-line stations and recall of IBOs.
18. 14 Flight Despatchers plus 10 EMS-QMS staff to be hired.
19. Strong accountability at all levels, efficiency audit and private investments in the long run.
Pawan Hans has performed a remarkable turn-around this year compared to its performance during
previous fiscal when it had a net loss of Rs. 10.35 crores. Pawan Hans has achieved a net profit of Rs. 7.70 crores
for the financial year 2012-13. PHL has achieved the highest ever operating revenue of Rs. 458.30 crores.Profit
from its operations of Rs. 39.17 crores is also the highest ever since its formation. Compared to last financial year,
1 of 2 6/14/2013 11:31 AM
Print Release http://www.pib.nic.in/newsite/PrintRelease.aspx
PHL have flown around 1000 hours more to earn this all time high revenue. The Company bagged new orders from
M/s British Gas Limited, Power Grid Corporation and Governments of Arunachal Pradesh, Himachal Pradesh,
Meghalaya, Mizoram, Assam, Tripura and Sikkim. Various cost reduction measures were also taken including
control in over-time, extended duty allowances and special compensation paid earlier leading to a saving of Rs.
3.20 crores. A new Eastern Region with headquarter at Guwahati was created to monitor deployments in North-
Eastern Region, more efficiently.
The Government has decided to create A.N.S. Corporation from the existing Airports Authority of India for
providing A.N.S. services.The Cabinet Note for establishment of C.A.A. has already been circulated and is
expected to be cleared by the Cabinet very soon. It is proposed to bring C.A.A. Bill in the coming Monsoon
Session of the Parliament.It is proposed to create a separate Aviation Security Force to take care of the airport
security. The proposal has been finalized by the Ministry and has been circulated to other Ministries for their
comments.The newly developed Chennai and Kolkata airports are proposed to be managed professionally by
engaging private partners through PPP/JV route. The offers in this regard would be invited through an international
bid very soon.
*****
UM/SA/IK
2 of 2 6/14/2013 11:31 AM
REPORT OF THE COMMITTEE ON
ROADMAP FOR FISCAL CONSOLIDATION
Vijay L Kelkar - Chairman

Indira Rajaraman - Member
Sanjiv Misra - Member
SEPTEMBER 2012
FOREWORD
This Committee was mandated by the Finance Minister to give a report outlining a roadmap
for fiscal consolidation in a medium term framework in pursuit of the FRBM Act and related
targets. The Committee was expected to complete this task by the end of August.
The Committee met several times to deliberate these issues. During our discussions, the
Secretary of each department of the Finance Ministry and the Chief Economic Advisor gave
us the benefit of their valuable views. Similarly, the Ministry of Petroleum and Natural Gas
and Department of Fertilizer give their inputs. The Budget Division and Economic Division
of the Ministry of Finance assisted the Committee in all its deliberations. While all the data
were provided by the Budget and Economic Divisions, we take responsibility for our analysis
and projections.
The Committee was charged with the task of introducing mid-term corrections in the current
fiscal year 2012-13 and to chart a medium term framework on this basis, for the remaining
time horizon of the Thirteenth Finance Commission. These corrections have to be necessarily
feasible from a political economy perspective so as to carry credibility.
Keeping both urgency and credibility as touchstones, we have proposed necessary policy
actions which are within the realm of the feasibility. While proposing a frontal attack on
inequitable subsidies, we have kept in mind the need for maintaining the sinews of growth as
well as the social protection needs of disadvantaged sections of our society. By protecting
public investment and reducing public borrowing, we would “crowd in” private investment
and thus achieve higher growth and employment.
The Committee wishes to place on record its special thanks to the Budget Division and
Economic Division of the Ministry of Finance. We hope that this report and subsequent
public discussions will enable the Government to take the policy actions recommended in this
report.
Vijay Kelkar, Chairman

Indira Rajaraman, Member
Sanjiv Misra, Member
September 03, 2012
Contents
1. Fiscal Consolidation........................................................................................................................ 1
1.1. Why Fiscal Consolidation? ..................................................................................................... 1
1.2. Fiscal Consolidation in India .................................................................................................. 1
1.3. The Do-Nothing Scenario ....................................................................................................... 2
1.4. The Financial Health of OMC’s.............................................................................................. 3
1.5. Conclusion .............................................................................................................................. 3
2. Assessment of the base year............................................................................................................ 5
2.1. Policy Interventions ................................................................................................................ 7
2.1.1. Tax Measures .................................................................................................................. 7
2.1.2. Disinvestment Receipts ................................................................................................... 8
2.1.3. Subsidies ......................................................................................................................... 8
2.1.4. Plan Expenditure ........................................................................................................... 11
2.2. Deficits .................................................................................................................................. 11
2.3. Social Impact ........................................................................................................................ 12
3. Fiscal Roadmap for the Medium Term ......................................................................................... 14
3.1. Gross Domestic Product........................................................................................................ 14
3.2. Tax Revenues ........................................................................................................................ 15
3.3. Disinvestment Receipts ......................................................................................................... 15
3.4. Subsidies ............................................................................................................................... 15
3.5. Rightsizing Plan expenditure ................................................................................................ 16
3.6. Structural Roadmap: Supply Side Reforms .......................................................................... 16
3.7. Fiscal Roadmap ..................................................................................................................... 17
Annexes ................................................................................................................................................ 18
Annex 1: Figures ............................................................................................................................... 18
Annex 2: Base Year Assessment (Rupees crore) .............................................................................. 19
Annex 3: Base Year Assessment (per cent of GDP) ......................................................................... 20
Annex 4: Recommendations on Tax Measures................................................................................. 21
Annex 5: Disinvestment of stake in PSU’s by GOI ......................................................................... 26
Annex 6: Role of Technology in Managing Expenditure ................................................................. 29
1.
Fiscal Consolidation
1.1. Why Fiscal Consolidation?
The Indian economy is presently poised on the edge of a fiscal precipice, making
corrective measures aimed at speedy fiscal consolidation an imperative necessity if serious
adverse consequences stemming from this situation are to be averted in an efficient and
timely manner. A careful analysis of the trends in the current year, 2012-13, suggests a likely
fiscal deficit of around 6.1 percent which is far higher than the budget estimate of 5.1 percent
of GDP, if immediate mid-year corrective actions are not taken. Runaway fiscal deficits,
leading to unsustainable levels of public debt, can cause diverse forms of macroeconomic
imbalances varying with the means through which the deficit is financed. High fiscal deficits
tend to heighten inflation, reduce room for monetary policy stimulus, increase the risk of
external sector imbalances and dampen private investment, growth and employment. The
current account deficit was already high at 4.2 percent of GDP in 2011-12 and could
deteriorate further. Apart from this, the consequences of not quickly taking credible effective
measures for correcting the current fiscal deficit is likely to be a sovereign credit downgrade
and flight of foreign capital. This will invariably further weaken the rupee and negatively
impact the capital markets and the banking sector. In addition, the situation leaves little head
room for counter-cyclical policy measures in the event of another global crisis. The growing
fiscal deficit also leaves limited monetary space for lowering interest rates to stimulate
private investment and growth. In a country where millions of young, both skilled and
unskilled, enter the labour force each year, a growth slowdown is inefficient, inequitable, and
potentially politically destabilizing. It is the poor and the unemployed who will suffer the
most in the event of sluggish growth and consequent political instability.
1.2. Fiscal Consolidation in India

After three years of deliberations, the Fiscal Responsibility and Budget Management
Act (FRBMA) was enacted in 2003. The fiscal improvement from FY 2002-03 to 2007-08
saw a rise in foreign reserves providing unprecedented import cover and global confidence
(Annex 1, Figure 1). This fiscal discipline fed into other economic variables in a positive
manner. The aggregate disbursements of the central and state governments showed an
increase in capital outlays from 11.87 percent in 2002-03 to 18.59 percent 2007-08 (as
1
percentage of aggregate disbursements). The lowering of the government’s fiscal deficit
(GFD) was accompanied by a benign inflationary environment, lower real interest rates and
significant increase in private sector investment. It must be mentioned of course, that global
economic conditions were also favourable during this period (Annex 1, Figure 2).
The twin deficits hypothesis implies that, given a certain level of private savings, an
increase in the government deficit will have to be balanced by either a reduction in private
investment or an increase in the Current Account Deficit (CAD.) The CAD then needs to be
financed through external capital inflows, government external debt or drawdown of foreign
exchange reserves. Government’s funding of the deficit through domestic sources tends to be
inflationary. Even when the government does not explicitly use seigniorage, if the central
bank has to auction government bonds and have adequate takers it needs to create enough
1
liquidity. The RBI indicates that it has been doing so in recent years . This increase in
liquidity can be inflationary.
Given this background, the recent increase in government deficits, the investment
decline, the rigidity of inflation, the pronounced IIP decline and the widening of the CAD are
all pointers to a deepening fiscal crisis.
1.3. The Do-Nothing Scenario

The rationale for a credible and effective fiscal consolidation in the current context is
built on three main grounds: (a) we are in state of high fiscal stress, with a “do-nothing”
approach likely to result in a Central Government fiscal deficit of 6.1 per cent of GDP in the
current year 2012-13; this could result from a likely shortfall in gross tax revenues by around
Rupees 60,000 crore and higher than budgeted expenditures on subsidies, by about Rupees
70,000 crore ; (b) this fiscal stress is also compounding the problem of twin deficits, with the
current account deficit at 4.2 per cent of GDP last year, and possibly at 4.3 per cent of GDP
this year, at a time when the world market and capitals flows are exceedingly fragile and
where financing of this magnitude is creating huge risks for macroeconomic and external
stability; and (c) the gross borrowing requirement, already high, is likely to exceed last year’s
level by a large margin (5.8 per cent of GDP versus 5.4 per cent of GDP last year), leading to
crowding-out of private sector financing for investment. Foreign exchange reserves are
1
“Reserve Bank credit to the Centre has been the dominant source of increase in reserve money since 2008-09.
This is because government borrowing shot up significantly in the wake of the global financial crisis and
necessitated active management of liquidity in the form of unwinding/de-sequestering of market stabilisation
scheme (MSS) balances (in 2008-09 and 2009-10). Besides, there were large scale injections under liquidity
adjustment facility (LAF) and open market operations (OMO) purchase auctions during times of liquidity duress
in these three years.” (RBI, Annual Report 2010-2011)
2
falling, and the currency is especially vulnerable. The combination is reminiscent of the
situation last seen in 1990-91.
1.4. The Financial Health of OMC’s

A worrying aspect related to the need for fiscal consolidation is the financial health of
the Oil Marketing Companies (OMCs). While there appears to have been some correction in
2009-2010, possibly due to petrol price deregulation the situation remains grim. It could
worsen with a rise in crude prices and a ballooning of the oil subsidy burden. If the OMCs are
not adequately funded against their under recoveries there is a genuine risk that is analogous
to the case of the state electricity boards, the high debt of the OMCs could lead them into
financial crisis. This in turn, could not only cause an oil supply breakdown resulting in
immense public hardship but also adversely impact the banking system from where such debt
is sourced.
1.5. Conclusion
A clearer perspective emerges when the present domestic fiscal situation is viewed
against the backdrop of comparative emerging economy parameters. Cross-country
benchmarking suggests that India is clearly an outlier in terms of major fiscal indicators and
currently has the least room for counter-cyclical fiscal policy response if conditions take a
turn for the worse in global markets, second only to Egypt among 27 major emerging
markets, measured in terms of inflation, real interest rates, exchange rates, current account
deficits, cyclically adjusted budget balances and general government debt levels2. The
situation is all the more dangerous now, much more so than in the past, because we have a
surge in young people looking for jobs. If the elasticity of employment to GDP growth is 0.4
then growth of about 7 per cent per annum would give us 2.8 per cent employment growth.
With a labour force growth of 2.5 per cent, this would provide adequate employment
oppurtunities. However, if growth slips to say six percent or below, and employment growth
slows below 2.4 per cent, unemployment would rise.
We cannot overemphasize the need and urgency of fiscal consolidation. Growth is

faltering and inflation seems to be embedded. The external payment situation is flashing red
lights. The global economy is likely to be more turbulent, making financing of the large
external payment deficits very challenging. Potentially, if no action is taken, we are likely to
be in a worse situation than in 1991 for several reasons. Energy prices are at much more
2
The Economist, 25th January, 2012
3
elevated levels while our import dependence is now even greater. The Indian economy now is
much more open and global developments have greater impact than before. India’s
“demographic bulge” demands higher growth to meet the rising aspirations of our young
generation. In order words, our economy may be encountering a “perfect storm.”
There is yet another strategic consideration for us now. It is imperative that as a

responsible nuclear power, India pursues a responsible fiscal policy. This will enable us to
retain our strategic autonomy.
The process of fiscal consolidation will no doubt cause some short term pain which
should be equitably shared. With determined policy action and astute political statesmanship,
the pain of voluntary fiscal correction now will forestall the pain of externally enforced
involuntary fiscal correction later.
4
2.
Assessment of the base year
The budget for 2012-13 assumed a nominal growth rate of 14 per cent over the
advance estimates of GDP of 2011-12. The Fiscal Deficit has been budgeted at 5.1 per cent of
GDP the Revenue Deficit at 3.4 per cent of GDP. The Effective Revenue Deficit is budgeted
at 1.8 per cent of GDP.
We have assessed the receipts and expenditure for 2012-13 afresh, given the current
macroeconomic and fiscal situation assuming no corrective steps are taken. In our assessment
the nominal GDP growth for the year would be at 13.5 per cent over the quick estimate of
GDP for 2011-12, which is lower than the advance estimate.
The first and foremost impact of the slowdown in the economy is expected to be on
tax collections. The budget has assumed an overall 19.5 per cent growth in tax collection in
2012-13 over the revised estimates (RE) for 2011-12. The actual tax collection in 2011-12
itself was Rupees 10,000 crore lower than the RE for 2011-12. Thus, to achieve the budget
targets for 2012-13, a growth of 21 per cent is required over actual collections in 2011-12.
Based on the collection trends of the first four months and correcting for the effect of
the indirect tax exemptions on petroleum products and the direct tax refunds for 2011-12, we
have assessed that the tax to GDP ratio will fall from 10.6 per cent as budgeted for 2012-13,
to 10.1 per cent in 2012-13. This shortfall is a combined effect of reduced corporate profits,
slowdown in industrial output and lower growth in imports. In our assessment, the shortfall
would have been even higher if the base and rate of Service Tax had not been increased. To
some extent, the reforms in Service Tax have neutralized the shortfall in collections from
other sources.
On the disinvestment side, it would be extremely difficult for the Government to

move ahead with its disinvestment programme, given the subdued equity market conditions.
In our assessment, a conservative estimate for disinvestment receipts, if no policy
interventions are made, would stand at around Rupees 10,000 crore.
On the expenditure side, subsidies pose the greatest fiscal risk. Although petrol has
been deregulated and price correction is taking place on a regular basis now, the under
5
recoveries of OMCs on diesel, LPG and kerosene, with no price revisions in the past 26
months, wide variation in international prices and weakening of the rupee, have reached
unsustainable levels. Out of the budget estimate of Rupees 43,500 crore, the Government has
already released Rupees 38,500 crore towards under recovery of OMCs of 2011-12. In our
assessment, if no steps are taken, the additional burden for government for the first three
quarters of the current year would amount to Rupees 51,500 crore, even if it is assumed that
international prices soften a bit.
On fertilizer subsidy, there is an alarming distortion in usage pattern mainly caused

due to asymmetry in the pricing formula for Urea and P&K fertilizers. On the P&K front,
since the prices are decontrolled and subsidy is capped, domestic prices reflect international
prices. However, the prices of urea which are administratively set, have been revised only
once since 2002. This has caused severe under pricing and correspondingly excessive usage
of urea. This will further exacerbate the adverse impact on soil quality and agricultural
productivity over the medium and long term. Projecting from the current trend of fertiliser
consumption, in our assessment there would be an additional requirement of fertiliser subsidy
of Rupees 10,000 crore over and above the budgeted amount.
On food subsidy the Government has announced additional allocation of food grains
during the course of 2012-13, which may result in additional cash outgo based on the offtake
against these allocations. It is therefore expected that there might be an additional cash outgo
of around Rupees 10,000 crore on account of food subsidy. Expenditure on the food subsidy
will stand at Rupees 85,000 crore against the budgetary estimates of Rupees 75,000 crore.
This projection is made without taking into account the impact of enacting a National Food
Security Bill, with enhanced coverage and entitlements.
The food subsidy has increased substantially in recent years on account of widening
gap between the central issue price of wheat and rice and the economic cost of delivering
these foodgrains. Huge stocks and associated carrying costs with it have further increased the
outgo on this count. To address the issue Government has to initiate measures to:
a) Reduce stocks held in the Central Pool;

b) Reduce the gap between the issue price and economic cost;
In the short run this reduction will only be possible through increases in Central Issue
price of foodgrains and faster liquidation of stocks held in the Central Pool. The increase may
6
be targeted to shield poorer sections of the society by limiting the price increases to
consumers above the poverty line (APL).
Overall, we feel that if no steps are taken, the subsidy expenditure would go up from
1.9 per cent of the budgeted levels to 2.6 per cent of the reassessed GDP.
The additional expenditure on subsidies will partially get neutralized by some savings
on the plan expenditure side. Keeping in view that the budgeted level of Plan expenditure is
26 per cent higher than the previous year’s plan expenditure, there will in the normal course
be a saving of around Rupees 20,000 crore in plan expenditure. This has been the usual
pattern in past years, with exceptions such as 2008-09, when the plan expenditure was higher
than budgeted due to the stimulus package that year to offset the global crisis, and 2010-11
when government received a large one-time non-tax receipt from 3G auctions.
Based on the above assessment of the GDP growth rate, the receipts and expenditure
of Central Government, the fiscal deficit is assessed to reach 6.1 per cent of GDP in the
current year if no proactive policy action is taken to prevent the fiscal slide. As explained in
the previous chapter, this will have serious macroeconomic implications.
2.1. Policy Interventions

There is an urgent need to take immediate steps to minimize the resource shortfall and
keep expenditures within control. In the next half of this chapter, we discuss the policy
actions required and the impact on the fiscal situation if these actions are taken. On this basis,
we construct a reform scenario.
2.1.1. Tax Measures

After reaching a high of 11.9 per cent in 2007-08, there has been a decline in
the Tax-to-GDP ratio, to 10.1 per cent in 2011-12, by actuals for the year. This decline was
caused in part due to the fiscal stimulus extended by Government through concessionary tax
measures, and subsequently by the economic downturn. To achieve a sustainable fiscal
consolidation it is essential to return to the highs of Tax-to-GDP ratio achieved in 2007-08.
There is therefore need to initiate interventions for greater buoyancy in revenue mobilization.
The Tax-to-GDP ratio for BE 2012-13 is estimated at 10.6 per cent. As discussed in the
previous chapter, in a business as usual scenario, this ratio will dip to 10.1 due to shortfalls in
collection. With the policy interventions, the shortfall can be limited and the tax GDP ratio
for 2012-13 could end up at 10.3 per cent.
7
A comprehensive strategy should comprise a range of measures relating to tax policy
and administration as indicated in Annex 4.
2.1.2. Disinvestment Receipts

In accelerating the disinvestment program, there are two policy concerns: (1) how to
get the sale price right and (2) how to reduce risks for retail investors. Some instruments
which could overcome these two concerns are summarised in Annex 5. These new
instruments will take away the need for the government to fix prices as they will be market
driven with government retaining the possibility of sharing upside when markets move up.3
Equally, by creating the Exchange Traded Fund (ETF), a market related instrument, we will
be reducing risks particularly of retail investors as they will be diversifying their portfolio
with investments in more than one blue-chip public sector company. This will have two
additional benefits, viz., (i) give retail investors better investment options than investing in
gold and (ii) it will promote portfolio capital inflows. Both of these will have beneficial
impact on the exchange rate and also on inflation.
In addition to these, an additional source is the disinvestment of minority government

equity stakes in private entities, such as the holdings in SUUTI, HZL and BALCO. There is
practically no economic or strategic rationale for holding on to these minority share holdings
in such companies, which are essentially privately owned. Since divestment in these
companies will meet a substantial part of the disinvestment target fixed for the current year, it
is necessary that the Government take effective steps expeditiously to realize these receipts.
In our assessment, if these measures are adopted, the disinvestment target by the
budget estimates, of Rupees 30,000 crore, can be achieved.
It is also the case that CPSEs are carrying large cash balances on their books. The first
best principle is to expedite sound investment in key areas by these CPSEs. If the CPSEs are,
however, unable to find good investment outlets during this fiscal year, then the Government,
should, as majority owner, call for a special dividend on a “use it or lose it” principle.
2.1.3. Subsidies
Expenditure on subsidies is a major portion of Government expenditure and has
witnessed major expansion in the recent past. Of the overall subsidies, the subsidies on
Petroleum, Fertilizer and Food make up more than 90 per cent. It was planned in 2012-13 to
3
“Sell on Tap” approach for disinvestment on the line of the RBI, “Sell on Tap” of government debt is a special
case of the “options model” described in the Annex 5.
8
contain subsidies within 2 per cent of the GDP. However, with the depreciating Rupee and oil
prices in international market remaining sticky, subsidies are projected to rise to 2.6 per cent
of GDP. After discussions with the Ministry of Petroleum and Natural Gas, and Department
of Fertilizers, the following measures are suggested for reducing subsidies to 2 per cent in
2013-14 and 1.8 per cent in 2014-15.
Petroleum Subsidy
Subsidy on diesel has been a major contributor to fiscal slippage in recent years. The
price of diesel has not been revised in the last 26 months and the under recovery has
increased to Rs. 13.50 per litre. Although diesel prices have been deregulated in principle,
prices are still being administered by the Government. At this stage, even if the diesel prices
are not fully deregulated there is an urgent need for an immediate price increase. The price
adjustment should be done in small successive steps and the Government should move to
complete deregulation of diesel as early as possible.
Our policy objectives should at a minimum aim to eliminate half of the diesel per unit
subsidy during this year itself by March 31, 2013, and the remaining half over the next fiscal
year. Similarly, our policy goal should be to eliminate the LPG subsidy by 2014-15 by
reducing it by 25 per cent this year, with the remaining 75 per cent reduction over the next 2
years. For kerosene, the objective should be to reduce the subsidy by one-third by 2014-15.
Our recommendation is to immediately increase the price of diesel by Rupees 4 per
litre, of kerosene by Rupees 2 per litre and of LPG by Rupees 50 per cylinder. Smaller and
more frequent price revisions should be taken as necessary subsequently to meet the goals
specified in the previous paragraph, and left to the discretion to the OMCs, who should be
duly empowered to make such revisions. This would reduce the projected under recovery by
Rupees 20,000 crore for the next half year. We have analysed the price revisions in the last
20 years and we have observed that price increases of this level have never led to any serious
resistance. Even recently, the retail prices of diesel and LPG were recalibrated by similar
amounts in many states to reflect state levies. This change went almost unnoticed. Thus, the
strategy that the government should adopt is to keep adjusting the price on a regular basis in
incremental steps towards eventual deregulation of diesel and an affordable level of subsidy
on LPG and kerosene. Regarding LPG, there is also a recommendation of the Committee on
direct cash transfer of subsidy headed by Shri Nandan Nilekani to cap the number of
subsidized cylinders. A quick decision on this recommendation should be taken and the
reform taken forward.
9
Fertilizer Subsidy
The most urgent reform required on the fertilizer subsidy front is revision in the price
of urea. This will not only reduce the subsidy burden but would also reduce the unsustainable
imbalance in the current consumption pattern of fertilizer in the country. This is most
necessary from the viewpoint of long term soil quality and agricultural productivity. The
Department of Fertilizers propose to increase the MRP of Urea by 10 per cent during the first
year, with any further increase being limited to any increase in the pooled gas price and in
fixed cost. The price increase mechanism proposed is summarized below:
(i) Increases in the pool price of overall energy i.e. Natural Gas, FO/LSHS and
Naphtha, may be considered for increasing the retail price under modified
NPS-III policy.
(ii) To compensate for the increase in fixed cost, it is suggested that a benchmark
portion of fixed cost can be linked to WPI for commodities and MRP to that
extent can be increased every year, in addition to the increase in pooled gas
price.
(iii) The Department of Fertilizers could be authorized to decide on the amount of
the MRP increase every fiscal year.
We recommend that since considerable work has already been done on this proposal,
it should be brought into effect immediately. In subsequent years, regular increases in urea
prices should be carried out to close the wide gap between urea and P&K fertilizer to enable
efficient use of fertilizers and better agricultural productivity.
Food Subsidy
On food subsidy, there is a need to increase the Central Issue Price (CIP). The
Minimum Support Prices (MSP) are decided every year and it is advisable that every time the
MSP is revised, the CIP should be revised in the same proportion as the MSP.
Progressive reduction in food subsidy also needs to be achieved through reduction in

administrative cost associated with economic cost. It may be pertinent to mention here that
various overheads comprise nearly one-third of the consumer subsidy requirement of FCI. It
should be possible to effect reduction in food subsidy through more efficient foodgrain
delivery operations in the medium term. Regarding subsidy on sugar, there is a need to
remove the system of levy sugar, which is only about 10% of the total consumption of the
sugar in the country, and to remove the existing controls on the flow of non-levy sugar.
10
Government also needs to initiate measures to direct the subsidies to the beneficiary.
Even with reduced budgetary allocations it may be possible to leverage full benefits by
proper targeting of subsidies. In this regard, a growing body of evidence suggests that the
introduction of direct transfer of cash subsidies may be a more efficient way of reaching the
beneficiaries.
The Committee is of the view that the Food Security Bill, which is on the anvil, may
be appropriately phased taking into account the present difficult fiscal challenges.
In our assessment, the above steps can help contain total subsidy expenditure at 2.2
per cent of GDP in 2012-13.
2.1.4. Plan Expenditure

As observed earlier the plan expenditure is budgeted to increase by almost 26 per cent
over the last year’s actual plan expenditure. It has also been stated that as per the current pace
of expenditure, there would be some unintended savings in plan expenditure. However, with
a view to keep the deficit at an acceptable level, there is a need to take proactive measures to
keep the plan expenditure under a further check. In our assessment, through proper
prioritization and efficient use of available resources, the saving under plan expenditure can
be increased by another Rupees 20,000 crore. This can be easily done by reallocations across
schemes. It is vital that these cuts are made without in any way affecting benefits to
malnourished children and lactating and pregnant mothers, and employment generation
which protect the most vulnerable segments of the Indian population. There is so much
leakage in Plan schemes that by better design and targeting it should be easily possible to
actually improve outcomes while at the same time cutting expenditure. But for this to be
possible, the Planning Commission has to improve its monitoring systems, and keep a very
careful watch on the downstream deployment of its expenditures.
It is also important to protect allocations for schemes that lead to creation of capital
assets, either through direct expenditure or through grants to other implementing agencies.
2.2. Deficits
With these policy interventions, the Government will be able to close the current
fiscal year with a fiscal deficit of 5.2 per cent of the GDP. The details of the assessment can
be seen in the Annex 2 and 3. This level of correction is not only desirable to ensure the right
environment for economic growth but is also achievable. The policy interventions are tough
11
and touch almost all sections of the society but we feel that such achievements cannot happen
unless the burden is equitably shared.
(% of GDP)
2012-13 Assessment Budget No Reform Reform
Gross Tax Revenue 10.6 10.1 10.3
Net-Centre’s Tax Revenue 7.6 7.2 7.4
Non Tax Revenue 1.6 1.6 1.6
Total-Revenue Receipts 9.2 8.9 9.0
Non debt Capital Receipts 0.4 0.2 0.4
TOTAL- RECEIPTS 9.6 9.1 9.4
Non-Plan Expenditure 9.5 10.2 9.8
On Revenue Account 8.5 9.3 8.9
of which Subsidies 1.9 2.6 2.2
On Capital Account 1.0 0.9 0.9
Plan Expenditure 5.1 5.0 4.8
TOTAL EXPENDITURE 14.7 15.2 14.6
GiA for CapEx 1.6 1.6 1.6
Deficits
Revenue Deficit 3.4 4.4 3.7
Effective Revenue Deficit 1.8 2.8 2.1
Fiscal Deficit 5.1 6.1 5.2
2.3. Social Impact

The measures outlined will be undoubtedly expected to have significant short-term
negative impact on incomes and spending of all households. At an important level, however,
the consequences and pain would be even worse were these widely spread fiscal
consolidation measures not be pursued – because a do-nothing approach would mean the risk
of a much larger adjustment of incomes and spending forced by the markets, both domestic
and international, with a spiraling fiscal deficit and its consequences for much slower growth,
rising unemployment, and higher inflation. The fiscal consolidation measures are thus
essential to protect the economy and all households from these worse impacts.
Some of the specific price adjustments proposed, as on fuel, would be, nevertheless,
expected to have an immediate negative impact on all households and the poor by raising
short-term inflation. However, past experience suggests that these short term inflation
impacts would be relatively limited; furthermore, they would be expected to be followed by a
lowering of overall headline inflation because of lower fiscal deficits and borrowing by the
12
Government. In time, such lower inflation, which matters especially for poorer households,
would also be expected to be followed by an easing of tight money policies, helping all
households. In addition, given the large food stocks available, and the ability to import
essential commodities such as pulses and oilseeds, the Government should be much more
pro-active this year in ensuring that food price inflation remains moderate, especially given a
deficiency in rainfall. Such calamity related spending must have direct access to special funds
and should be protected.
The Government should be encouraged, for example, to expand social protection

needs specifically targeted to protect incomes of the poorest households. One of the ways this
could be done this year is to ensure that the MGNREGA scheme, which has been effective in
reaching below-poverty households, should not be fiscally constrained in 2012-13. It is
possible that we should expect to see a demand-led rise in MGNREGA spending. In addition,
because the farming sector has been affected by deficient rainfall, although good rainfall in
August has helped to bridge the deficits, priority schemes by the states and the Centre for
helping the farm sector to deal with the immediate needs for special assistance for replanting
crops, diesel subsidies for water in severely rainfall deficient districts and areas, and access to
seeds, fertilizer and credit should be protected and augmented. In addition, medium-term
measures for drought-proofing agriculture particularly through watershed conservation
should also be expedited and expanded.
13
3.
Fiscal Roadmap for the Medium Term
In the medium term, the Government will have to further consolidate what will be
achieved during 2012-13. The economic dividends of these policy interventions and reduced
deficits will start becoming visible in the coming years. In our prescription, we have
projected that Government will build upon the consolidation that it would achieve in 2012-
13. Although no time horizon has been prescribed for the medium term roadmap that we have
to prescribe, we have made our projections till 2014-15. From 2015-16, the Fourteenth
Finance Commission will be prescribing some roadmap for Centre and States and that would
form the basis for the fiscal policy of the Government.
In the base year of 2012-13, it is possible to achieve a Fiscal deficit target of 5.2 per
cent with various policy initiatives, which involve limiting expenditure on subsidies, meeting
the tax receipts and disinvestment targets set at the budgetary estimates stage and effecting
savings in Plan expenditure by rationalizing expenditure. The committee examined various
measures which are needed to be undertaken by Government for fiscal consolidation in the
medium term. These measures include:
i. Raising the Tax-to-GDP ratio;

ii. Policy measures for pruning expenditure on subsidies and other items of expenditure;
iii. Rightsizing the size of Plan support; and
iv. Steps for increasing disinvestment proceeds.
3.1. Gross Domestic Product

While we have assessed that the nominal growth in the current year would be 13.5 per
cent, in the coming years, the growth will pick up due to the improved fiscal performance,
various other policy interventions of the Government and expected improvement in the
international scenario. In our assessment, the nominal GDP for 2013-14 and 2014-15 would
be 14.5 per cent and 15 per cent respectively.
14
3.2. Tax Revenues
The package of tax measures recommended in Annex 4, when carried out in 2012-13
would show result in 2013-14 and help reverse the tax-GDP slide. It is projected that the tax-
GDP ratio would increase from 10.3% in 2012-13 to 11.1 percent in 2014-15.
3.3. Disinvestment Receipts

On the disinvestment front, in our assessment, Government should raise Rupees
30,000 crore in the next two years. In this regard, we would like to reiterate the Finance
Commission’s recommendation that the current system of using disinvestment proceeds for
meeting expenditure targeted towards creating capital assets should be continued.
Over the next 24-36 months, there is yet another policy instrument for raising
resources for development and that is monetizing government’s unutilized and under-utilized
land resources. These resources can finance infrastructure needs particularly in urban areas.
Such a policy has been effectively utilized in many countries including USA, France, Canada,
Australia and China. For monetizing land resources, the potential is considerable given the
under-utilized prime lands of PSU’s, Port Trusts, Railways, etc. Towards this we recommend
setting up of a group to work out the policy framework and institutional modalities.
These higher levels of disinvestment will be changing the composition of the balance
sheet of the public sector enabling the replacement of capital assets with those that are more
in line with emerging and new needs of the national economy.
3.4. Subsidies
In the previous chapter, we have recommended an immediate increase in Petroleum
prices. This should be continued in the next year in such a way that the prices of diesel are
fully deregulated by the start of 2014-15. The prices of kerosene and LPG also should be
revised regularly to keep the subsidy levels at affordable levels. By the year 2014-15, the
fiscal benefit of the price increase will consist of a first order reduction in expenditure on
subsidies, and a second order effect from the enhanced profits of upstream oil marketing
companies.
On fertilizer subsidies also, the effort should be to continuously revise the prices of
Urea to ensure a healthy N-P-K mix in the usage of fertilizer.
15
With these measures, the subsidy levels can be limited to 1.7 per cent and 1.5 per cent
of GDP in the years 2013-14 and 2014-15 respectively.
3.5. Rightsizing Plan expenditure

In the first year of the Twelfth Plan, an allocation of Rupees 5,21,025 crore has been
made. This represents an increase of nearly 26 per cent over actual Plan expenditure of
Rupees 4,13,513 crore for 2011-12. Such high growth in Plan outlay needs to be seen in the
perspective of Plan allocation being increased by 34.2 per cent in 2008-09 on year on year
basis vis-à-vis 2007-08. This was the enhanced base on which Plan allocations for subsequent
years were based. The objective of growth in successive Plan was in pursuance of
expansionary fiscal policies to spur growth in the economy.
To carry out fiscal consolidation it is required to correct this base in the Twelfth Plan.
Actual utilization of Plan resources will be a more accurate base for estimating growth in the
Plan allocation for the XII Plan. Accordingly, a growth of 15 per cent and 18 per cent in
2013-14 and 2014-15 respectively over the corrected base of 2012-13 is suggested. A higher
growth is provided for in 2014-15 as the fund requirement for most projects envisaged in the
Twelfth Plan may be highest in the middle of the Plan period.
Annex 6 presents the recommendations of the Nandan Nilekani and other Committees
to harness IT to increase efficiency of public expenditure and improve outcomes.
3.6. Structural Roadmap: Supply Side Reforms

In addition to the fiscal consolidation, it is imperative that structural reforms to
improve and accelerate growth are also undertaken. While this Committee does not go into
the specifics of that, it is clear that the largest impacts will come from measures to accelerate
infrastructure investment, in power, roads, railways and others. At the same time, reducing
the regulatory and business climate impediments to private investment are essential, from
pricing to taxation and access to land and other resources. In terms of other sectors, the
manufacturing and exports sectors important for employment generation, especially in small-
scale manufacturing. Proposals for financial sector deepening in domestic capital markets,
banking and insurance are pending and should be expedited. Several initiatives are possible to
improve agricultural sector productivity and finally more rapid progress on the national
project on skill development will have a great impact on growth, employment and equity.
Overall, these supply side measures are as important as supplements to the fiscal
consolidation recommended in this report.
16
3.7. Fiscal Roadmap
If the measures indicated above are undertaken by Government, we recommend the
following roadmap for the Central Government.
(% of GDP)
2012-13 2013-14 2014-15
Budget No Reform Reform Projections
Gross Tax Revenue 10.6 10.1 10.3 10.6 11.1
Net-Centre’s Tax Revenue 7.6 7.2 7.4 7.6 7.9
Non Tax Revenue 1.6 1.6 1.6 1.4 1.3
Total-Revenue Receipts 9.2 8.9 9.0 9.0 9.2
Non debt Capital Receipts 0.4 0.2 0.4 0.3 0.3
TOTAL- RECEIPTS 9.6 9.1 9.4 9.3 9.5
Non-Plan Expenditure 9.5 10.2 9.8 9.1 8.5
On Revenue Account 8.5 9.3 8.9 8.2 7.6
of which Subsidies 1.9 2.6 2.2 1.7 1.5
On Capital Account 1.0 0.9 0.9 0.9 0.9
Plan Expenditure 5.1 5.0 4.8 4.9 4.9
TOTAL EXPENDITURE 14.7 15.2 14.6 13.9 13.4
GiA for CapEx 1.6 1.6 1.6 1.9 2.0
Deficits
Revenue Deficit 3.4 4.4 3.7 2.8 2.0
Effective Revenue Deficit 1.8 2.8 2.1 0.9 0.0
Fiscal Deficit 5.1 6.1 5.2 4.6 3.9
Primary Deficit 1.9 2.9 2.0 1.4 0.9
Debt 45.5 46.7 46.1 44.9 42.9
17
Annexes
Annex 1: Figures
Figure 1: Fiscal Deficits and the Balance of Payments as percentage of GDP
(1980-81 to 2009-10)
20
15
10
-5
Gross fiscal deficit CAD/GDP Import cover of reserves in months
Data source: Reserve Bank of India database, http://dbie.rbi.org.in.
Figure 2: Crowding out and its reverse
30
25
20
15
10
Gross Fiscal Deficit Revenue Deficit Private Capital Formation
Data source: Reserve Bank of India database, http://dbie.rbi.org.in.
18
Annex 2: Base Year Assessment (Rupees crore)
2011-12 2012-13
No Reform
Revised Budget Reform Scenario Difference
GDP 8912179 10159884 10051330 10051330
Gross Tax Revenue 901664 1077612 1015184 1035287 20103
Net-Centre’s Tax Revenue 642252 771071 726364 740748 14383
Non Tax Revenue 124737 164614 164614 164614 0
Total-Revenue Receipts 766989 935685 890978 905361 14383
Non Debt Capital Receipts 29751 41650 21650 41650 20000
Recovery of Loans 14258 11650 11650 11650
Disinvestment 15493 30000 10000 30000 20000
TOTAL- RECEIPTS 796740 977335 912628 947012 34383
Non-Plan Expenditure 892116 969900 1027320 987014 -40306
On Revenue Account 815740 865596 937016 896710 -40306
On Capital Account 76376 104304 90304 90304
Interest Payments 275618 319759 319759 319759
Defence Expenditure 170937 193407 193407 193407
Capital Expenditure 66144 79579 79579 79579
Subsidies 216297 190015 261435 221129 -40306
A. Major Subsidies 208503 179554 250974 210668 -40306
Food 72823 75000 85000 75000 -10000
Fertillizer Subsidy 67199 60974 70974 60974 -10000
Petroleum Subsidy 68481 43580 95000 75000 -20000
B. Other Subsidies 7794 10461 10461 10461
Grants to State & U.T. 55322 64211 64211 64211
Pensions 56190 63183 63183 63183
Other NPRE 107519 114598 114598 114598
Other NPCE 10232 24726 10726 10726
Plan Expenditure 426604 521025 501025 481025 -20000
TOTAL EXPENDITURE 1318720 1490925 1528345 1468039 -60306
GiA for CapEx 137505 164673 164673 164673
Deficits
Revenue Deficit 394951 350425 446551 371862 -74689
Effective Revenue Deficit 257446 185752 281879 207189 -74689
Fiscal Deficit 521979 513590 615717 521028 -94689
Primary Deficit 246362 193831 295958 201268 -94689
19
Annex 3: Base Year Assessment (per cent of GDP)
2011-12 2012-13
No Reform
Revised Budget Reform Scenario Difference
Gross Tax Revenue 10.2 10.6 10.1 10.3 0.2
Net-Centre’s Tax Revenue 7.3 7.6 7.2 7.4 0.1
Non Tax Revenue 1.4 1.6 1.6 1.6 0.0
Total-Revenue Receipts 8.7 9.2 8.9 9.0 0.1
Non Debt Capital Receipts 0.3 0.4 0.2 0.4 0.2
TOTAL- RECEIPTS 9.0 9.6 9.1 9.4 0.3
Non-Plan Expenditure 10.1 9.5 10.2 9.8 -0.4
On Revenue Account 9.2 8.5 9.3 8.9 -0.4
On Capital Account 0.9 1.0 0.9 0.9
Interest Payments 3.1 3.1 3.2 3.2
Defence Expenditure 1.9 1.9 1.9 1.9
Capital Expenditure 0.7 0.8 0.8 0.8
Subsidies 2.4 1.9 2.6 2.2 -0.4
Grants to State & U.T. 0.6 0.6 0.6 0.6
Pensions 0.6 0.6 0.6 0.6
Other NPRE 1.2 1.1 1.1 1.1
Other NPCE 0.1 0.2 0.1 0.1
Plan Expenditure 4.8 5.1 5.0 4.8 -0.2
TOTAL EXPENDITURE 14.9 14.7 15.2 14.6 -0.6
GiA for CapEx 1.6 1.6 1.6 1.6
Deficits
Revenue Deficit 4.5 3.4 4.4 3.7 -0.7
Effective Revenue Deficit 2.9 1.8 2.8 2.1 -0.7
Fiscal Deficit 5.9 5.1 6.1 5.2 -0.9
Primary Deficit 2.8 1.9 2.9 2.0 -0.9
20
Annex 4: Recommendations on Tax Measures
A. On Direct Taxes
1. The Direct Taxes Code Bill, 2010 which intends to revamp the law relating to
direct taxes is likely to result in considerable unacceptable losses on a continuing
basis. Given the low tax-GDP ratio and the existing fiscal crisis, there is
absolutely no fiscal space for such large revenue loss. Therefore, the Direct Taxes
Code Bill, 2010 should be comprehensively reviewed before it is enacted into law
for implementation.
2. It is now well recognized that tax administration is tax policy. The tax
administration needs to enhance its ability to effectively detect and penalize non-
compliance and provide quality taxpayer services to promote voluntary
compliance. Since 2004, the Income Tax Department has been electronically
obtaining a large volume of information from third-parties through the Tax
Information Network and Annual Information Returns. Further, the electronic
reporting of information relating to tax payments and tax deduction at source
(TDS) was also introduced to facilitate error free digitization of tax related
information. These initiatives created a perception of enhanced ability of the
ability of the Department to detect non-compliance resulting in improved
compliance. Overtime, there is a growing perception that the tax administration is
unable to harness the large volume of information collected by it since it lacks
data mining skills. Further, the scope of AIR in terms of its coverage has remained
frozen since it was first introduced in 2004. Taxpayers have found new methods
and avenues for parking there undisclosed income to escape detection. Similarly,
the Department is better equipped to detect non-compliance with the provisions of
TDS, advance tax and self-assessment tax since the reporting system (both by
third parties and self) is largely computerized. However, there are several gaps in
the administrative procedure for collection and reporting of TDS thereby
undermining the efficiency of the tax administration both in terms of enforcement
and taxpayers’ services. Accordingly, the following measures are recommended to
improve efficiency of the tax administration:-
a. Establish a data-warehousing and data-mining infrastructure within the tax
administration and build capacity for undertaking data mining and
taxpayer profiling. The tax administration should introduce one-year
21
intensive and mandatory induction training in data-mining for all direct
recruit inspectors and Assistant Commissioners. The training could be
organized in co-operation with large IT companies. The programme should
gradually be extended to in-service Inspectors and Assistant and Deputy
Commissioners.
b. Modernize the outdated and ineffective scrutiny and investigation
processes by shifting from the current system of carrying out a post-
mortem after two years to real-time verification of transactions reported
under TDS, AIR and STRs sent by the Financial Intelligence Unit (FIU).
c. A large volume of data continues to be collected by the Central
Information Branch. The problems associated with this method of
collection are well-documented in the various reports on tax reforms by
various expert committees in the past. This system should be fully-
integrated with the AIR to facilitate cross-verification. The CIB should be
assigned the responsibility of managing the composite data-base and
undertaking verification.
d. The requirement of obtaining PAN is mandatory for taxpayers and those
undertaking specific transactions. Therefore, a large number section of the
population remained outside the scope of PAN. This has adversely
affected the quality of information received and therefore, the efficacy of
TIN. Accordingly, the law should be amended to provide quoting of PAN
or the UID in all economic transactions including bank accounts, fixed
deposits with banks, all financial transactions, all salary payments and all
immoveable property transactions. This requirement should be mandatory
irrespective of –
i. the amount/level of transaction so as to prevent splitting of
transaction; and
ii. whether the person is liable to tax or not.
e. Undertake reconciliation of the ITR and TDS database for-
i. expanding and deepening of the tax base; and
ii. Identifying those deductors who have issued TDS certificates to
deductees but have failed to report the deduction and also failed to
remit the amount to the Central Government. Enforce collection of
such unpaid amount.
22
f. Undertake data-mining of ITRs and TDS returns to-
i. identify all deductors who have claimed to have deducted the tax but
have failed to remit the same to the account of the Central
Government. Enforce collection of such unpaid amount; and
ii. identify all taxpayers who have failed to pay to self-assessment tax
and enforce immediate collection;
g. Since there is no interest liability if the shortfall is less than 10 percent of
the total liability, there is a tendency to defer payment of advance tax. This
tendency is more pronounced when the cost of borrowing is high. In order
to discourage taxpayers from deferring payment of advance tax, identify
all cases where self-assessment tax has been paid or payable and take steps
to prevent deferment of advance tax.
h. Amend the provisions of all tax laws to charge interest at rates which
reflects the market rate of interest to the defaulters and a penalty for such
default4;
i. TDS administration should be re-engineered to optimize efficiency and
minimize leakages. In this regard, a notification no S.O. 858 (E) dated 25th
March, 2009 streamlining the compliance management of TDS was issued
but later withdrawn since the tax administration was not prepared to
implement. Since more than three years have elapsed, the notification
should be re-issued;
j. The Income Tax Department should immediately set-up a separate
Directorate of Risk Management for designing a robust risk management
system which will improve the efficiency of the tax administration and
enhance transparency;
k. Non-issue of refunds is a constant source of grievance for taxpayers. When

tax administration issues refund, it inspires taxpayers’ confidence in the
tax administration. Taxpayers err on the side of revenue and pay excess
tax. This has a positive effect on compliance. Therefore, all pending
refunds should be issued at the earliest. This will also improve liquidity of
4
For example, the market rate of interest for defaulting companies is generally as high as 18 percent to 20
percent. If we assume a penal component of 4 percent, the interest rate for default in payment of tax should be in
the range of 22 percent to 24 percent.
23
taxpayers and reduce their dependence on market borrowings at a
relatively high interest rate.
l. Another source of constant grievance relates to failure of the tax
administration to carry out rectifications and appeal effect. The
Department should create a national portal to enable taxpayers to file
applications seeking rectifications and appeal effect. This will enable the
management in the tax administration to monitor progress in the disposal
of such applications.
m. A 360 degree profile of all taxpaying individuals and institutions should be
created to help decrease tax evasion and tax fraud. This profile should also
draw information from the AIR, TDS and other databases of the Income
tax Department.
n. Online verification of PAN could be made mandatory for all high value
transactions, in order to reduce black money transactions.
B. On Indirect Taxes
1. The Union Excise Duties (UED) and Service Tax (ST) must be reformed so as to
be in a state of preparedness for smooth integration of these levies into the Goods
and Services Tax. The standard rate of 12 percent should be progressively reduced
to align with the GST rate of 8 percent proposed for the Central GST. This will
send out positive signals regarding Government’s commitment to introduce GST.
2. The list of commodities subject to UED at a lower rate of 6 percent should be
comprehensively reviewed to restrict it to merit goods. The rate of tax in the case
of all other goods should be increased to the standard rate. Similarly, list of all
commodities liable to tax at rates lower than 6 percent should also be reviewed to
restrict it to merit goods.
3. The negative list of services introduced in the Union Budget, 2012 should be
reviewed for further pruning. For example, there is no case for exempting non-
profit organizations from the Service Tax levy. Similarly, exempting
infrastructure projects from the levy implies that the tax on inputs is embedded
into the cost of the infrastructure resulting in higher project cost. Further, even
where exemption from UED and ST is justified, as a general rule, the supplier of
goods and services should have the option to opt into the system.
24
4. The exemption granted to railways for transportation of goods and passengers (of
higher class) is valid upto 30.09.2012. This exemption should not be extended
beyond this date.
5. CBEC should put in place a robust information system to increase the deterrence
level and the cost of evasion. Since both Union Excise Duties and Service Tax are
VAT-type, the information system should provide for a mechanism for cross-
verification of all claims for input-tax credit. At present, such a mechanism does
not exist. As a result, the ability of the Excise Department to detect fraudulent
claims is severely undermined. Under the Kerala VAT regime the dealer must
electronically provide invoice-wise details of all sales to, and purchases from,
registered dealers. This enables the Department to cross-verify every claim for
input tax credit and identify mismatches for further investigation. A similar model
for verification of TDS already exists in the Income Tax Department. Therefore,
CBEC should also develop a similar model for comprehensive cross-
verification of claims for input tax credit. This will significantly improve the
economics of non-compliance in favour of the tax administration. Further, this
should be implemented immediately and need to wait till the introduction of the
GST.
6. Effort should be made to expedite the implementation of the Goods and Services
Tax as recommended by the Thirteenth Finance Commission (TFC).This will
enhance output, exports and tax revenues. Even though the roll-out of GST from
1st April, 2013 does not appear to be feasible, the passage of the pending
Constitutional Amendment relating to introduction of GST in the Winter Session
of the Parliament would send out very strong signal to trade and industry about
Government’s serious intent to move forward on this issue.
25
Annex 5: Disinvestment of stake in PSU’s by GOI
The Securities and Exchange Board of India (SEBI) has created a new mechanism called
‘Offer for sale (OFS) that would inter-alia facilitate divestment of government stake in public
sector undertakings by using the secondary market mechanism of stock exchanges. This
facility has been available since February 2012.
Offer for sale (OFS) model

The first issue of stake sale by GOI in ONGC was held in March 2012 as per the above
mechanism. There have been several suggestions from market participants to make the
process attractive and simple for investors, eliminate situations arising out of price volatility
and further deepen the mechanism to facilitate divestment of stake sale by GOI and
promoters. Taking into account several suggestions/feedback from market participants, SEBI
issued modified guidelines in the month of July 2012. The modifications, inter-alia has
facilitated participation by institutions by providing them an option of paying 25% of the
order value at the order entry level instead of 100% of the order value as upfront margins.
Also the settlement cycle was reduced from T + 2 to T +1, thereby shortening the period for
which the investors are out of funds. Post these revisions, no divestment by GOI has
happened through the use of OFS till now.
OFS, in a way facilitates institutional investors and is generally open for a day. The
divestment plans are significantly larger in size. To achieve significant stake sales over one
day time horizon for one security at a time pose serious challenges. Also, concentrating huge
volume sales on a single day may have the risk of being affected by sudden fluctuation in
prices. GOI through RBI raises debt funds through on-tap mechanism. Borrowing that idea, it
is proposed that an on-tap model as described below as ‘Call option ‘model may be
considered.
Call option model

Under this option, the GOI may offer for sale, simultaneously, multiple securities over a
period of time until the divestment targets are achieved. Investors desirous of purchasing
these securities may pay a small premium on the date of such decision through the online
system that may be provided by the Stock exchanges. For example, say for a stock valued at
Rs.350, GOI may provide an option to the investors to buy a share at say Rs.350, or Rs.360
or Rs.370, over a time horizon, say three months. An investor prefers the option of buying the
26
stock at Rs.350 within the time period by paying a premium of Rs.1 on that day. This
premium amount shall be collected from the investor and passed on to GOI on the next day.
If the investor does not want to exercise this option, the premium is forfeited. This process
can be repeated regularly (say each week).
The salient features of this proposal are: –
1. Provides an opportunity to sell regularly as against a large stake sale on a single day.
This is to address the issue of wide fluctuation in market prices arising out of
additional flow of liquidity in to the market and to avoid market price volatility, if
any.
2. Provides investors an opportunity to buy an option which can be exercised upon
favorable market conditions. This is to address the concern of investors that prices fall
after the issue is successfully completed.
3. Provides both the GOI and investors to realize at multiple price points as per the
prevailing market conditions. This is to address the issue of “a single day” liquidity
requirements faced by investors, single price based on that day’s market conditions
which may change over the period of time and freedom to exercise at varying prices
based on their assessment of market conditions.
4. Provides GOI an opportunity to decide on a price range within which it intends to
divest its holdings through a transparent process of the online stock exchange
mechanism. This is to address several issues – a. how a single price was determined b.
how the quantum of sale was determined at a single price and on only a given day c. if
the price was less than what it could have actually fetched etc.
ETF model
One of the purposes of divestment could be to broad base the shareholders and encourage
retail investors to participate. GOI may also like to sell all the stocks that it holds instead of a
select few. One of the proposals in this regard is creation of an “Exchange Traded Fund”
comprising of all the listed securities of CPSUs held by GOI. It is learnt that there are around
50 such securities. ETFs offer a number of advantages to the retail investors. The following
are some of the benefits:
1. ETFs provide the benefit of diversification to retail investors who cannot afford to use
their meager resources to acquire and hold a diversified portfolio
27
2. Low cost access to market through passive investment strategy leading to low
charges. Since an ETF is listed on an Exchange, costs of distribution are much lower
and the reach is wider. These savings in cost are passed on to the investors in the form
of lower costs. Further, the structure helps reduce collection, disbursement and other
processing charges.
3. ETFs are highly flexible and can be used as a tool for gaining instant exposure to the
equity markets,
GOI, through an AMC can create an ETF based on the basket of securities held by them. The
securities held by GOI include a few which are not regularly traded or whose financial
performance is not very good. Instead of using all the securities to create a basket, initially,
GOI may like to consider the option of creating a basket with securities having a good
financial track record. This route may be attractive for retail investors and may be made
available through multiple tranches reducing the risk of fluctuation of prices and also the
impact cost for GOI.
28
Annex 6: Role of Technology in Managing Expenditure
1. The Budget Speech of 2008-09 stated that “There is a need for effective monitoring,
evaluation and accounting system for the funds that are disbursed by the Central Government
to State Governments, district level agencies and other implementing agencies as Plan
Expenditure.” As a result, the Central Plan Scheme Monitoring System (CPSMS) has been
set up by the CGA. Going forward, the Report of the Technology Advisory Group for Unique
Projects report provides a blueprint for setting up an Expenditure Information Network (EIN),
which is designed to track Government Expenditure in real-time from the Ministry of Finance
to the last mile. The EIN will lead to efficient utilization of funds, since funds can be
allocated just-in-time when the expenditure is incurred, rather than well in advance of the
actual spending. The design of the EIN makes it possible to operate across multiple levels of
Government, across various types of Government bodies, and provides real-time end-to-end
visibility, transparency and full accountability for all expenditure.
2. Aadhaar can be accepted as proof of identity (POI) and proof of address (POA) for
banking, financial services, LPG, and various other Government services at the Central,
State, and Local Government levels. The linkage of Aadhaar for service delivery will help
ensure the transfer of Government benefits to the intended beneficiaries, while curbing
expenditure on fakes, duplicates, and ghosts.
3. All Electronic Benefit Transfer (EBT) payments can be made electronically into the
bank accounts of the beneficiaries. This will curb leakage and siphoning of money intended
for beneficiaries. Efficiency of payments in social safety net programs (MGNREGS, SSP,
JSY, IAY, payments to Asha workers and Anganwadi workers, etc.) will ensure that these
programs deliver the intended policy goals. A detailed blueprint for implementation is
provided in the Report of the Task Force on an Aadhaar-enabled unified Payments
Infrastructure5.
4. The Report of the Task Force on direct transfer of subsidy for LPG, Kerosene, and
Fertilizers6 has recommended the movement of subsidized goods at market prices, and
making Direct Transfer of Subsidy (DTS) payments into bank accounts of the beneficiaries.
This will also help reduce the expenditure on subsidies.
5
http://finmin.nic.in/reports/Report_Task_Force_Aadhaar_PaymentInfra.pdf
6
http://finmin.nic.in/reports/Interim_report_Task_Force_DTS.pdf
29
5. The Report of the Task Force on an IT Strategy for PDS and an implementable
solution for the direct transfer of subsidy for food and kerosene7 has provided a flexible
architecture for modernizing PDS operations by setting up a Public Distribution System
Network (PDSN). In light of the Food Security Bill, it is essential to reform the procurement
and distribution of foodgrains through the use of IT, so that pilferage of foodgrains can be
curbed, which further reduces expenditure.
6. The Committee on Public Procurement has made recommendations on the usage of

electronic portals for public procurement. In the context of the Public Procurement Bill, the
appropriate use of technology can ensure competitive, transparent, and fair bidding by
vendors, leading to judicious usage of Government funds.
Government debt
The creation of the National Treasury Management Agency (NTMA) will help
streamline the process of Government borrowing. The combination of fully electronic tax
collections processed by the Tax Information Network (TIN) for direct taxes and Goods and
Services Network (GSTN) for indirect taxes, and real-time information on Government
spending collected through the Expenditure Information Network provides a unified view of
Government finances. This information can be leveraged by the NTMA in order to borrow
funds on a just-in-time basis, which can significantly reduce the interest payments for
Government debt. The architecture for the NTMA is described in the Report of the
Technology Advisory Group for Unique Projects.
Electronic Payments
The movement towards electronic payments for all Government transactions, and a
general reduction in the usage of cash in the economy will help transition from the informal
economy to the formal economy. This will help curb corruption, increase transparency and
accountability. An efficient and ubiquitous large and small value electronic payment system
throughout the country will make it possible for Government to accurately predict and collect
revenues on the one hand, while managing expenditure efficiently on the other hand.
7
http://finmin.nic.in/reports/IT_Strategy_PDS.pdf
30
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New regime, multiple challenges - The Hindu http://www.thehindu.com/business/Industry/new-regime-multiple-challeng...
Business » Industry
Published: July 7, 2013 21:50 IST | Updated: July 7, 2013 21:51 IST
New regime, multiple challenges
Tejesh Chitlangi
The devil lies in the details and one needs to see how the proposals are implemented. As multiple regulators will have to put their acts
together, any turf wars should be avoided.
The Securities and Exchange Board of India (SEBI) in December 2012 had set up a committee to suggest measures
for rationalisation of foreign portfolio investments in India.
The foreign portfolio investments consist of investments in Indian listed securities by foreign institutional investors
(FIIs), Sub-Accounts of such FIIs, Non-Resident Indians (NRIs) and Qualified Foreign Investors (QFIs).
The committee, under the chairmanship of former Cabinet Secretary K. M Chandrasekhar submitted its report to
SEBI on June 12, which endorsed the 2013 budget proposals for uniform registration and other liberalised
investment norms for foreign portfolio investors. SEBI, in its recent meeting on June 25, has accepted the
committee’s recommendations, which are likely to be implemented soon.
The key recommendations, which have been accepted by SEBI, are summarised as follows:
Entry norms
First, uniform entry norms for foreign investors such as FIIs, Sub Accounts and QFIs (excluding NRIs), by merging
them into a new investor class termed as ‘Foreign Portfolio Investors’ (FPIs).
Second doing away with prior SEBI registration for FII/Sub-Accounts and instead register them as FPI with a SEBI
authorised Designated Depository Participant (DDP).
Third, a risk-based approach to be adopted while conducting know your client (KYC) and registering the FPIs with
DDPs.
To achieve this, the FPIs would be divided in to three categories.
Category I will consist of Government entities such as sovereign wealth funds, foreign central banks. Category II will
consist of regulated entities such as banks, investment managers, broad-based funds etc and Category III would be
the residual category.
1 of 3 7/9/2013 12:47 PM
The KYC norms for Category I would be simplest and most stringent for Category III.
Fourth, foreign portfolio investments would mean investments by any investor or investor group up to 10 per cent of
the equity of an Indian company.
Proposals look promising
Investments beyond 10 per cent would be considered as Foreign Direct Investment (FDI).
he proposals (on the face of it) look promising for foreign investors and Indian markets. However, on a finer
analysis one would find certain issues and concerns which may arise while implementing the recommendations.
Some of them are discussed below:
First, doing away with SEBI registration for FII/Sub-Accounts and mandating them to be registered with DDPs is
essentially a delegation without significantly diluting the registration requirements.
Rigorous processes
To draw inference, rigorous processes are applicable on QFIs for opening account with qualified depository
participants (QDPs). QDPs are also entrusted with the responsibility to follow the applicable domestic laws of the
QFIs.
Such similar norms would be applicable on DDPs and in fact additional qualifications to register as a DDP
(compared to QDP registration) with SEBI have been proposed. For instance, a DDP is proposed to have a
custodian licence, should be an authorised dealer Category I bank, have a multinational presence etc.
Such rigorous requirements were not prescribed for QDPs under QFI regime, as a result of which many of the
existing QDPs would not qualify as a DDP.
A one year grace period for QDPs to qualify as DDPs has been recommended, but may not be sufficient.
Transition
Second, it needs to be seen that how the transition happens for already registered FIIs, Sub-Accounts and QFIs. Will
they continue to be governed by the old norms or new procedures would be prescribed for them to migrate, needs to
be seen. Amendments (and where applicable, repeals) would be required in SEBI laws, Foreign Exchange
Management laws, FDI regime and it will be a tedious process.
Third, an investment limit of 10 per cent of paid-up equity capital of an Indian company has been prescribed per FPI
entity.
Ownership of more than 50 per cent in two or more FPIs for common beneficial owners will result in shareholding
of such FPIs to be clubbed in order to compute the 10 per cent investment limit. 50 per cent seems to be on the
higher side as the same may allow the offshore investors to structure their investments in a manner which may
indirectly and in spirit violate the sanctity of the 10 per cent investment limit.
SEBI and RBI may need to consider some alternative computation methodology in this regard.
Participatory notes
Fourth, it is proposed that FPIs under Category I and II can issue participatory-notes. The Category II also consists
of broad-based funds. Many such funds typically register as sub-accounts under the SEBI FII regime.
Sub-Accounts were prohibited by SEBI from issuing P-Notes in 2007. SEBI therefore needs to be more careful while
framing the final policy in this regard.
The devil lies in the details and one needs to see how the proposals are implemented. As multiple regulators will
have to put their acts together, any turf wars should be avoided. The success of the new regime would also depend
on DDPs who will have to balance their regulatory and commercial goals.
Relaxing the entry requirements to an extent of facilitating round tripping and inflow of black money is not desirable
and the new norms should ensure that quality and source of inflows is clean and intact. India’s sound internal
policies safeguarded its economy from the tremors of global slowdown which saw several world economies and
giants fail. One would expect that good work to continue.
The author is Partner, IC Legal (Advocates & Solicitors), Mumbai
Keywords: Securities and Exchange Board of India, SEBI, foreign portfolio investments, foreign institutional
investors, FIIs
Printable version | Jul 9, 2013 12:47:13 PM | http://www.thehindu.com/business/Industry/new-regime-multiple-challenges/article4889131.ece
© The Hindu
2 of 3 7/9/2013 12:47 PM
3 of 3 7/9/2013 12:47 PM
Rangarajan panel
suggests average of
global prices for gas
NEW DELHI: The Prime Minis-
ter-appointed Rangarajan
Committee has suggested
mandating a price of domes-
tically-produced natural gas
at an average of international
hub prices and cost of import-
ed LNG instead of the present
mechanism of market
discovery.
discover
The panel, in its report
made public on Wednesday,
suggested first taking an aver-
age of the U.S., Europe and
Japanese hub or market price
and then averaging it out with
the netback price of imported C. Rangarajan
liquefied natural gas (LNG) to
give the sale price of domes- reviewed after five years.. On
tically-produced gas.
gas the future exploration con-
The panel headed by C. tracts, it said “a close scrutiny
Rangarajan, Chairman, Eco- of costs becomes critical for
nomic Advisory Council to the government since there is
the Prime Minister, said the incentive for contractors to
PSC provided for arm’s book as cost expenses that do
length pricing and prior gov- not reflect the true economic
ernment approval of the for- cost to the contractor (for ex-
mula or basis for gas pricing, ample, through transfer
subject to policy on natural pricing)”.
pricing)
gas pricing. Stating that costost recovery
is at the root of the problems
Arm’s length price experienced, it proposed to
“Since no market-deter- dispense with it, in favour of
mined arm’s length price cur- sharing of the overall reve-
rently obtains domestically nues of the contractor, with-
and nor is this likely to hap- out setting off any costs.
costs
pen for several more years, a “The share will be deter-
policy on pricing of natural mined through a competitive
gas has been proposed,”
proposed it bid process for future PSCs,”
said. the report said. The he commit-
“The committee recom- tee has also recommended
mended deriving one price that an extended tax holiday
from “the volume-weighted of 10 years, as against 7 years
netback price to producers at already available for all
(LNG) exporting country blocks, be granted for blocks
well-head for Indian imports having a substantial portion
for the trailing 12 months.”
months involving drilling offshore at
Simultaneously, the vol- a depth of more than 1,500
ume-weighted price of U.S.’ metres, since the cost of a sin-
Henry Hub, U.K.’s NBP and gle well can be as high as $150
Japan Custom Cleared prices million.
million
for the trailing 12 months be Further, the committee has
calculated. recommended extending the
“The arm’s length price timeframe for exploration in
thus computed as the average future PSCs for frontier,
of the two price estimates deep-water (offshore, at more
would apply equally to all sec- than 400 m depth) and ultra-
tors,” it said. deep water (offshore, at more
The suggested formula than 1,500 m depth)
will apply to pricing decisions blocks from eight years to ten
made in future, and can be years.
years — PTI
Srikrishna panel moots Indian Financial Code Bill
Special Correspondent nancial regulator, the com- sion has suggested Financial dian Financial Code Bill times larger than the present to be smooth. For, apart from three areas —- regulation-
mission has asserted — will Sector Appellate Tribunal containing 450 clauses and level, and is likely to be bigger the legislative changes re- making, executive functions
NEW DELHI: Aiming to reform comprise four existing agen- (FSAT), Resolution Corpora- six schedules is to give effect than the United States GDP quired through Parliamen- and administrative law
financial sector regulations cies which will be merged into tion, Financial Redressal to its recommendations. today...The aspiration of
as of today...T tary approval, the fact that functions.
for the longer term in keeping one. These are the Securities Agency, Public Debt Manage- Explaining why the vast the Commission is to draft a the Commission’s recom- As for capital control, it
with systemic risks involved and Exchange Board of India ment Agency and FSDC (Fi- changes in the system of fi- body of law that will stand the mendations are marked by said the Finance Ministry
in financial management, the (SEBI), the Forward Markets nancial Stability and nancial regulation and man- test of time.” dissenting notes by four should make rules for in-
government-appointed Fi- Commission (FMC), the In- Council). The
Development Council) agement is necessary, the The Commission, which members — P. J. Nayak, K. J. bound capital flows, while the
nancial Sector Legislative Re- surance Regulatory and De- existing Securities Appellate report said: “The Commis- submitted its report to Fi- Udeshi, Y. H. Malegam and onus of making rules for out-
forms Commission (FSLRC) velopment Authority (IRDA) Tribunal (SAT), it said, will be sion is mindful that over the nance Minister P. Chidamba- Jayanth R. Varma on a host of bound capital flows should
headed by Justice B. N. Srik- and the Pension Fund Regu- subsumed into FSAT and the coming 25 to 30 years, Indian ram last week, had 10 specific issues is an indica- RBI. However,
rest with the RBI
rishna has proposed an Indi- latory and Development Au- existing Deposit Insurance GDP is likely to become eight members, apart from its tions of the hurdles in the one of the dissent notes per-
an Financial Code Bill to thority (PFRDA). and Credit Guarantee Corpo- Chairman Mr. Justice Srik- way. This is despite the fact tains to this provision.
enable creation of a unified Envisioning a full transi- ration of India (DICGC) will rishna. It may be recalled that that the report said: “The The FSLRC went on to say:
financial regulator while lim- tion into a set of small and be subsumed into the Resolu- with a view to strengthening Commission believes that “At present, in India, there is
iting the role of the Reserve implementable measures, the tion Corporation. the mechanism for maintain- this proposed financial regu- a confusing situation with
Bank of India (RBI) to mone- FSLRC said the “existing RBI While the existing FSDC ing financial stability, finan- latory architecture is a mod- regulators utilising many in-
tary management.
management will continue to exist, though will continue to exist though cial sector development and est step away from present struments such as regula-
As per the proposed regu- functions.” In
with modified functions. with modified functions and a inter-regulatory coordina- practice, embeds important tions, guidelines, circulars,
latory architecture recom- all, the Commission suggest- statutory framework, the tion, the government, in con- improvements, and will serve letters, notices and press re-
mended by the Commission, ed seven agencies and each of Commission has recom- sultation with the financial India well in coming years.” leases. The draft Code re-
whose report was put in pub- them will have distinct mended two new creations – sector regulators, had set up Arguing the need for the quires all regulators to
lic domain on Thursday, the functions. a Financial Redressal Agency the FSDC in December, 2010. changes recommended, the operate through a small num-
unified financial agency Apart from the RBI along (FRA) and a new Debt Man- Implementation of the re- report said the actual func- ber of well defined instru-
(UFA) — and not a unified fi- with the UFA, the Commis- agement Office. The draft In- port, however, is not expected tioning of the regulator lies in ments only”.
Panel favours single regulator for
financial sector barring banks
The proposed
d Unified Financial Agency will subsume the functions of SEBI, IRDA
NEW DELHI: A government-ap- tem would continue to be be a statutory body, called He also clarified that there
pointed panel, on Friday, sug- regulated by the RBI. Government will bring in legislative changes in Resolution Corporation, would not be a super regu-
gested a super regulator, The FSLRC, headed by Jus- 25 existing Acts to facilitate the new structure which will oversee all system- lator architecture.
architectur
merging oversight functions tice B. N. Srikrishna, in its fi- atically important financial “In the Approach Paper
of market, commodity, insur- nal report, also suggested Recommends doing away with multiple agency institutions for generation of where did you get the term
ance and pension regulators, doing away with the multiple architecture for scanning foreign capital inflows early warning signals to super regulator? Super regu-
while leaving the banking agency architecture for scan- promptly deal with any weak- lator means somebody who is
business regulation under the ning foreign capital inflows. ness in the system. regulator of all regulators. It
Reserve Bank of India. At present, the FDI policy resources for government in 20-25 existing Acts to facil- Mr. Justice Srikrishna said was neither in the approach
The Unified Financial is framed by the Department expenses. itate the new structure. that Financial Sector Devel- paper nor in the final report.
Agency (UFA), as suggested of Industrial Policy and Pro- At present, the government Mr. Justice Srikrishna said opment Council (FSDC) There will be only one regu-
by the Financial Sector Legis- motion (DIPP),
((DIPP)), while FDI raises funds by issuing bonds the final report was on the should be given statutory lator,”
lator, Mr. Justice Srikrishna
lative Reforms Commission proposals are cleared by the through the RBI. lines of the Approach Paper powers. The FSDC is headed said.
(FSLRC), would subsume the Foreign Investment Promo- The report, Mr. Chidamba- that the panel had come out by the Finance Minister, with In the Budget 2013-14
functions of key agencies tion Board (FIPB) after get- ram said, would be made pub- in October last year. heads of all financial sector speech, Mr. Chidambaram
such as the Securities and Ex- ting due clearances from lic in 3-4 days. “I intend to “Most of them are in line regulators as its members. had said: “It is our intention
change Board of India, the In- various agencies such as the brief the Prime Minister ei- with the Approach Paper. But As per the proposal, there to examine the recommenda-
surance Regulatory and Enforcement Directorate, the ther today or tomorrow and there are certain issues on would be three new agencies tions and act quickly and de-
Development Authority, the Central Bureau of Investiga- in the next 3-4 days it will be which we have now more in- besides the RBI and the cisively so that our financial
Pension Fund Regulatory and tion (CBI) and the RBI. placed in the public domain,” puts. So, they have been mod- FSDC. These would be the sector stands on sound legal
Development Authority and The report, which was sub- he said. ified,” he said, adding that the UFA, the DMO and Resolu- foundations and remains
the Forward Markets mitted to Finance Minister P. Once the recommenda- changes could be implement- tion Corporation. well-regulated, efficient and
Commission. Chidambaram, also suggested tions of the panel are adopted over a period. Mr. Justice Srikrishna said internationally competitive.”
Banking operations, mone- setting up of a debt manage- ed, the government will have As per the recommenda- there was no conflict between The FSLRC report is in two
tary policy and payment sys- ment office (DMO) for raising to bring in legislative changes tions of the panel, there will the proposed two regulators. volumes. — PTI
‘One-stop centres’ to help rape victims mooted
Usha Mehra report for sensitisation of police, media and coordination between police & transport departments
Sandeep Joshi should have a nurse, a gynae- increasing the number of the recommendations. “The whenever anyone was in
cologist, a police inspector, a ‘Centre should have a nurse, a gynaecologist, a PCR vans and public trans- Commission prepared the re- distress.
NEW DELHI: Criticising the Del- forensic expert and a counsel- police inspector, a forensic expert & a port vehicles in Delhi, the report ahead of time. It has con- Itt suggested amendment to
hi Police and the Delhi Trans- lor — all under one roof — so counsellor’ port said. It pointed out that centrated on three to four Section 231 of Cr.PC dealing
port Department for lack of that once a rape victim reac- when the gang rape accused principal issues — sensitisa- with evidence recorded by
coordination leading to seri- hes there, she should be prop- Commission suggests that girls should be taught were driving the bus, there tion of police, coordination of judge being treated as ‘exam-
ous lapses in public safety and erly examined. And if prima about good and bad gestures was no PCR van to stop the the police and transport de- ination on chief’ and that
security, the Justice Usha facie the case is that of sexual vehicle or police picket on the partments and sensitisation there should be provision for
Mehra Commission has assault, a magistrate should roads. The Commission was of the media,” he added. cross-examination through
called for establishment of a be called immediately for re- the police and the transport dination between the Delhi set up to inquire into various video conferencing.
“one-stop centre” each at a cording the victim’s state- department led to the bus police and their counterparts aspect of the gang rape in- Push button The Commission suggested
notified hospital in each zone ment for speedy action and used in the December 16 in neighbouring satellite cident in December last year, In its report, the Commis- separation of the investiga-
in Delhi to help rape victims expeditious disposal of the gang-rape plying uninter- townships (Noida, Gurgaon, identify the lapses on the part sion suggested that “girls tion agency from law and or-
and ensure speedy puni- case. rupted despite being fined Ghaziabad, Faridabad) when of the police or any other au- should be taught about good der duties, while action
shment to culprits. “Such a system exists in many times. “Despite being a crime takes place. “Rules thority, and suggest measures and bad gestures.” A system should be taken against auto
The former Delhi High Bangladesh, Malaysia and ‘challaned’ [penalised] many must be framed on how to co- to improve the safety and se- should be put in place in rickshaws which refuse to
Court Judge, who submitted South Africa… we can have it times, there was no action to ordinate. There should be curity of women. which there should bee a push carry commuters and enhan-
her report to Union Law Min- in India also,” she said. prevent plying of the bus.” sensitisation at all levels,” she Mr. Ashwani Kumar said button in mobile phones cement of the DTC bus fleet
ister Ashwani Kumar over the According to the report, Similarly, there were no said. the Union Government through which the family or as public transport in Delhi
weekend, said the centre lack of coordination between rules to ensure effective coor- There is an urgentt need for would take suitable action on police could be reached was not adequate.
NBFCs: Law and Practice: Report of the Usha Thorat Committee http://nbfclawindia.blogspot.in/2012/04/report-of-usha-thorat-committee.html
1 of 3 15-Dec-12 3:58 PM
2 of 3 15-Dec-12 3:58 PM
3 of 3 15-Dec-12 3:58 PM
• for reforming the regulatory environment for doing business in India
• suggested a string of legal, administrative and regulatory reforms to make the country a
better and easier place for doing business
• set up in August last year after India was ranked very low at 132nd position in World
Bank’s ease of doing business list among total 183 countries
• Made as many as 20 recommendations. These are classified in five broad categories --
legal reforms, regulatory architecture, boosting efficacy of regulatory process, enabling
MSMEs, and addressing state level issues.
Recommendations
• suggested simpler drafting of rules to avoid leaving room for interpretations,
• Greater autonomy to regulators, transparency in selection of heads for regulatory
bodies,
• Incentives for states undertaking key reforms
• Faster resolution of disputes through arbitration mechanism and consent settlements.
• Termed retrospective taxation a “significant disincentive” for entities wishing to do
business in India- This is a major area where improvements should be attempted sooner
rather than later since business cannot take corrective action retrospectively
• He observed that “the plethora of laws and regulation” in India has failed to keep pace
with time.
• Infusion of professionalism in regulatory bodies through right selection and capacity
building.
• use of information technology (IT): More effective use of IT can address multiple
problems such as access to correct information, exchange of best practices and so on.”
• Stressing the need for an easier set of regulations for micro, small and medium
enterprises, the panel said the large enterprises may have the wherewithal to deal with
the complex business environment, but a greater coordination amongst ministries and
policymakers is required for MSMEs. For MSMEs it is necessary to have single window
channels of compliance to help small business entities and also a hassle free tax payment
regime.
• It has also asked the central and state governments to review all the regulations
affecting ease of doing business to reflect the modern day trade and commerce.
• The panel laid emphasis on the need to encourage arbitration to resolve contractual
disputes.
• On appointments and supervision of regulatory authorities, the panel said these matters
should be decided in a “far more transparent manner”.
• financial autonomy to regulators for a “genuine functional autonomy”
• Accountability can be ensured by making the heads and board level persons of
regulatory bodies appear before an appropriate Parliamentary Committee once in six
months to report on past developments and a broad plan of action.
• It also recommended a self-evaluation by every regulator once in three years and
putting out the same in public domain.
• The panel has also suggested a two-stage consultative for all new regulations, wherein
a revised draft can be put up for comments after the first round of stakeholder
consultation.
• Suggesting a system similar to the one in place at capital markets regulator Sebi, the
panel has recommended putting in place a consent mechanism in place across all
business areas for settlement of matters of relatively lower significance.
• It is necessary to ensure that simplicity and clarity should inform the content of
regulation, leaving no part of it open to different interpretations by different persons“.
• The panel also expressed concern over different authorities writing “different, often
conflicting, rules and regulations governing identical activities, thus creating avoidable
confusion in the regulated space“. “Therefore, it is recommended that every organisation
tasked with the writing of regulations should have a provision for an advance authority
business areas for settlement of matters of relatively lower significance.
• It is necessary to ensure that simplicity and clarity should inform the content of
regulation, leaving no part of it open to different interpretations by different persons“.
• The panel also expressed concern over different authorities writing “different, often
conflicting, rules and regulations governing identical activities, thus creating avoidable
confusion in the regulated space“. “Therefore, it is recommended that every organisation
tasked with the writing of regulations should have a provision for an advance authority
for rulings.
• Setting up a regulatory review authority and a sunset clause for all new regulations
and regulatory agencies.
• As regards the new entrants to the business environment, there should be facilitation
centres to help deal with the complexities of filling cumbersome forms and dealing with
other procedural issues.
• The panel also recommended that the grant of permissions or the decision not to grant
permissions should be taken within a prescribed time period, failing which there should
be a provision for deemed permission.
• To address state-level issues, the panel said that each state government can appoint a
nodal person and a nodal office, which can be the single point contact for persons
intending to obtain information on procedures and conditions for setting up a business.
Committee recommends that State Governments that make significant progress in this
matter should be appropriately incentivised.
• There should be built into the system an appellate process where a person aggrieved by
an order of rejection may, as a matter of right, approach a superior authority for
reconsideration of the matter on merits.
K. Kasturirangan-led 10-member panel High-Level Working Group (HLWG) Presented its
report on Western Ghats to MoEF (Ministry of Environment and Forests)
K. Kasturirangan-led 10-member panel High-Level Working Group (HLWG) has prepared a
report on Western Ghats which suggests for ban on development activities in 60,000 sq km
ecologically sensitive area spread over Gujarat, Karnataka, Maharashtra, Goa, Kerala and Tamil
Nadu.
Objective: K.Kasturirangan panel was formed to study and advise Govt on the earlier report of
ecologist Madhav Gadgil-led Western Ghats Ecology Expert Panel (WGEEP).
Some Facts:
• Around 37% of the total area defined as the boundary of the Western Ghats is
ecologically sensitive.
• This area is of about 60,000 sq km and it spreads over the states of Goa, Gujarat,
Karnataka, Kerala, Maharashtra and Tamil Nadu.
What were the key suggestions made by the K. Kasturirangan led HLWG?
• K.Kasturirangan panel has moved away from the suggestions of the Gadgil panel.
• The HLWG has suggested a prohibitive regimen on those activities which have the most
interference and harmful impact on the environment.
• The report notes, “environmentally sound development cannot preclude livelihood and
economic options for this region… the answer (to the question of how to manage and
conserve the Ghats) will not lie in removing these economic options, but in providing
better incentives to move them towards greener and more sustainable practices”.
• Promotion of Ecotourism along the ecologically-volatile Western Ghats to preserve the
depleting natural wealth of the area
• Economically empower the local population
• Incentivize green growth in the Western Ghats – i.e. supervising forests and bettering
their productivity to ascertain inclusive growth and economical gains for local
communities; integrating forest accounts into state and national economic assessments;
initiating an ecosystem service fund to help villages around the forests; promoting
sustainable agriculture and; encouraging ecotourism for local benefits.
• Establish a Decision Support and Monitoring Centre for Geospatial Analysis and
Policy Support in the Western Ghats, which will supervise changes and propose state
government on policy reform and all such reports must be in the public domain.
• High-resolution map, delimiting ecologically sensitive areas, down to each village
settlement, must be put in the public domain so that people can be involved in taking
decisions about environment.
• The HLWG report draws upon the basic framework suggested by WGEEP to use
remote sensing technologies to demarcate the ecologically sensitive areas of the
Western Ghats but with two key differences:-
First: it used satellite data, down to 24 m resolution, as against 9 km used by WGEEP.
This finer resolution was possible because of the collaboration with NRSC/ISRO, which used
datasets to distinguish vegetation types over the landscape of the entire Western Ghats.
Second: it distinguishes between the cultural and the natural landscape of the region.
Using remote sensing technology, it has found that the cultural landscape – which includes
human settlements, agricultural fields and plantations – covers 58.44% of the region.
The natural landscape ranges over the remaining 41.56 %.
Thus, HLWG has moved away from the suggestions of the Expert Panel, which had
recommended a blanket approach consisting of guidelines for sector-wise activities, which would
be permitted in the ecologically sensitive zones.
What were the key suggestions made by the Madhav Gadgil led WGEEP earlier?
Earlier, the WGEEP had suggested that:
• Entire Western Ghats be declared as an ecologically sensitive area.
• 3 levels of categorization for the regulatory measures for protection would be imposed.
• 3 levels of categorization for the regulatory measures for protection would be imposed.
• Establishment of the Western Ghats Ecology Authority for management of the Ghats.
• A blanket approach comprising of road map for sector-wise activities, which could be
permitted in the ecologically sensitive zones.
Lord Justice Leveson delivered a withering verdict on their behaviour, calling it “reckless” and
“outrageous’’ and accused the media of putting sensational-ism above public interest, saying that
there was “recklessness in prioritising sensational stories. The inquiry exposed the shortcomings
of the current structure, in which the Press Complaints Commission, despite having held itself up
as a regulator, was no more than an ineffectual body that handled complaints and lacked
independence.
Recommendations:
• establishment of a genuinely independent and effective system of self-regulation with the
dual role of promoting high standards of journalism and protecting the rights of
individuals
• In order to ensure independence, it proposes that the board and chair of the regulatory
body all be appointed through fair and open processes. The board should comprise a
majority that is independent of the press yet include a sufficient number of people with
experience of the industry. The latter may be former editors and senior or academic
journalists, but they cannot be serving editors or members of parliament or the
government.
• Submitting to the supervision of the regulator would be voluntary but participation would
be incentivised by the prospect of belonging to an arbitral system that would give
significant cost and damages advantages in libel or privacy actions.
• The most controversial feature of the report is a recommendation for legislation to
underpin the independent self-regulatory system. This did not imply state control. The
proposed egislation was not meant to “establish” the new body but only to “recognise” an
independent regulatory regime as the public had no confidence in the industry-controlled
Press Complaints Commission. The report does not take into account the possibility of a
well-meaning statutory intervention today being reshaped incrementally in the future into
a charter of overzealous encroachment and control. The road towards state control tends
to begin, as ever, with mild intentions.
• tighten data protection laws so that journalists could collect personal information only
when they intended to publish it-It could hamper investigative journalism
• Office of Communications (Ofcom), the tv and radio broadcasting regulator, supervising
the proposed press regulator- seems to conflate two different regimes without thinking
through its institutional implications. Ofcom is a powerful regulatory body, he pointed
out—and “critiques think the way out should be trying to reduce concentrations of
power.”
• a limit on a single newspaper group’s share of the market
If they are enacted, the result will neither be the demolition of press freedom that newspapers
have warned against, nor the brave, well-behaved press that victims want to see. Lord Justice
Leveson’s proposal to create an outfit that could hear libel cases cheaply is a good way of
compelling newspapers to sign up to it. The Economist has argued for something similar. But
there are great dangers in a press law, and the suggestion that Ofcom should oversee the new
body is worrying. Regulation has an alarming tendency to creep. The entire press (including this
newspaper) will be bound by rules set up for tabloids. The celebrity-quizzing judge (Leverson)
showed scant interest in serious journalism.
Prime Minister David Cameron was on Friday reported to be considering a BBC-style Royal
Charter to create an independent press watchdog in the wake of the Leveson report whose key
recommendation — a statutory regulatory mechanism — has been rejected by the government. A
Royal Charter, it is thought, would ensure that the new body is completely independent of the
newspaper industry as its terms cannot be altered without the government’s approval. It would
also protect the press from government interference — as in the case of the BBC.
Royal Charters have been used to establish a number of independent institutions including the
Bank of England and various Royal Colleges.
Bank of England and various Royal Colleges.
The Rangachary Committee was set up in July 2012 to "Review Taxation of Development
Centres and the IT Sector" and to "finalise the Safe Harbour Transfer Pricing provisions". The
first report on Taxation of Development Centers and the lT Sector was released in July 2013. The
second report on the "Transfer Pricing Safe Harbour" recommendations has been released now.
Broad terms of reference as under:
1. Engage in consultations with stakeholders and related government departments to finalize
the approach to Taxation of Development Centres and suggest any circulars that need to be
issued.
2. Engage in sector-wise consultations and finalize the safe harbour provisions announced in
Budget 2010, sector-by-sector. The Committee will also suggest any necessary circulars that may
need to be issued.
3. Examine issues relating to taxation of IT sector and suggest any clarifications that may be
required
Subsequently, the Government of India approved the considered suggestion of
Rangachary Committee that it may finalize the Safe Harbour Rules in the following sector/
activities:
(i) IT Sector
(ii) ITES Sector
(iii) Contract R&D in the IT and Pharmaceutical Sector
(iv) Financial transactions-Outbound loans
(v) Financial Transactions-Corporate Guarantees
(vi) Auto Ancillaries-Original Equipment Manufacturers
• Recommended that the profit split method (PSM), which leads to higher taxation, should
be used with extreme "care and caution". A proper application of PSM would necessitate
the availability of adequate and reliable data with regard to profits attributable to various
functions, risks and geographies, said the first report of the committee made public today.
Besides PSM, there are five other methods for computing tax liability under the transfer
pricing rules. These include resale price method, cost plus method, comparable
uncontrolled price method and transactional net margin method.
Based on the recommendations and with few modifications govt. issued following rules”
• Safe harbour for the sectors recommended by the Rangachary Committee shall be
applicable for two assessment years beginning from 2013-14.
• Safe harbour rules shall not be applicable in respect of an international transaction
entered into with an associated enterprise located in any country or territory notified
under section 94A of the Income-tax Act, 1961, or in a no tax or low tax country or
territory.
• Safe harbour rules shall be applicable only where a taxpayer exercises his option to be
governed by such rules in a specified form to be furnished before the due date of filing of
return.
• Where the Transfer Pricing Officer is of the opinion that the option exercised by
the assessee is valid, he shall intimate acceptance of transfer price declared by
the assessee to the assessing officer and the assessee within a period of six months from
the end of the month in which reference under section 92CA is received from the
assessing officer. Where he is of the opinion that the option exercised is not valid, he shall
proceed to determine the arm’s length price in respect of the international transactions
entered into by the assessee in accordance with sections 92C and 92CA without having
regard to the safe harbour margin or price as specified in the rules.
• A taxpayer opting for safe harbour rules shall not be allowed to invoke Mutual
Agreement Procedure (MAP) provided under the relevant DTAAs.
• Where the safe harbour rules are not applicable in the case of an assessee, engaged in
providing contract research and development services with insignificant risks, the
providing contract research and development services with insignificant risks, the
Transactional Net Margin Method (TNMM) shall be considered as the most appropriate
method for the determination of arm’s length price unless it is shown by the assessee that
it is not feasible to apply this method in the facts and circumstances of the case.
•
•
• Defined sexual assault as “intentional touching of another person when such act of
touching is of a sexual nature and is without the recipient’s consent” and also “using
words, acts or gestures towards or in the presence of another person which create an
unwelcome threat of a sexual nature or result in an unwelcome advance.
• the minimum sentence for a rapist should be enhanced from 7 years to 10
• a new constitutional authority like the CAG for dealing with issues related to education
and non-discrimination of women and children.
• review of the continuance of the Armed Forces (Special Powers) Act (AFSPA) in the
context of extending legal protection to women in conflict areas
• Simple procedural protocols must be put in place to avoid situations where the police
refuse to register cases against paramilitary personnel
• bringing sexual violence against women by members of the armed forces or uniformed
personnel under the purview of ordinary criminal law;
• taking special care to ensure the safety of women who are complainants and witnesses in
cases of sexual assault by the armed forced
• setting up special commissioners for women’s safety and security in all areas of conflict
in the country. The commissioners must be vested with adequate powers to monitor and
initiate action and initiate criminal prosecution.
• strict adherence to laws related to detention of women during specified hours of the day.
• law enforcement agencies should be insulated from political influence,
• amendments to Section 33A requiring the making of a declaration (by MPs and MLAs)
about the pendency of any criminal case, whether cognisance has been taken of it. A
certificate from the Registrar of the High Court should be necessary for the validity of the
nomination. We also suggest that, in the event cognisance has been taken by a magistrate
of an offence ... the candidate ought to be disqualified from participating in the electoral
process,
• Asked the government to ensure Khap Panchayats do not interfere with choices made by
people regarding marriage.
• Considering the difficulties encountered by physically challenged women at each stage of
the criminal-legal process, right from filing an FIR to testifying in court during trial, they
be exempted from coming to the police station and making repeated visits to courts for
testimony
• when a physically or mentally challenged woman lodged a complained of rape or sexual
harassment, the complaint should be re-corded by a woman police officer at the residence
of such woman, or wherever she was comfortable. The complaint should be recorded in
the presence of a special educator or interpreter, depending on the need of the
complainant. The entire process of recording the complaint should be videographed under
Section 154 of the Cr P.C
• marriage or any other intimate relationship between a man and a woman is “not a valid”
defence against sexual crimes like rape
• addition of new sections in the Indian Panel Code so that those committing the acts of
voyeurism, stalking and acid attacks are penalized severely
Criticism
• It is puzzling that the report does not mention a mandatory rehabilitation package or did
not review the existing schemes of rehabilitation
• there is no concrete recommendation regarding a time-bound procedure for cases of rape
or the setting up of fast track courts
69 proposals of
Ashok Chawla
panel accepted
NEW DELHI: The government, “At the end of the meeting,
on Friday, accepted 69 rec- it was decided that all the 69
ommendations of the Ashok agreed recommendations
Chawla committee to ensure would be pursued for imple-
transparency in allocation mentation by individual Min-
and pricing of natural re- istries in a timely manner.
sources such as land, coal, Detailed timelines will be fi-
petroleum and natural gas. nalised,” the Prime Minister’s
The decision to accept the Office said.
recommendations was taken The Department of Eco-
at a meeting chaired by Prime nomic Affairs made a pre-
Minister Manmohan Singh sentation on the
and attended by several min- recommendations in the
isters, including Pranab Muk- meeting.
herjee, Jayanthi Natrajan and The Committee,, underr for-
S. Jaipal
p Reddy. y mer Finance Secretary, was
In its report,
p , submitted to constitued in January 2011 to
the ggovernment in May, y, 2011,, examine the approach for al-
the Committee on Allocation locating natural resources.
of Natural Resources h had rec- The purpose was to obtain
ommended,, amongg other recommendations that would
things,
g , thatt all future telecom enhance transparency, effec-
licenses should be “unified li- tiveness and sustainability in
censes” and spectrum
p delin- the allocation, pricing and
license.
ked from the licen utilisation of natural re-
In the case of government
g sources through open, trans-
land,, it suggested
gg competitive
p parent and competitive
and transparent
p e-auctions to mechanisms.
curtail the discretionaryy pow- The recommendations
ers of decision makers. have been accepted in the
It had ggiven 81 recommen- backdrop of government fac-
dations of which 69 were ac- ing flak on large-scale corrup-
cepted by Group of Ministers tion in allocation of natural
on corruption headed by the resources, such as telecom
Finance Minister. spectrum. — PTI

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The train to nowhere
RAGHU DAYAL Will the Railways finally listen to some sage advice?
D
IFFERENT from the sources”, also highlighting Research Institute and Centres. vation that the status quoq ante
previous rail safetyy
p creeping
p g infirmities, namely, y “ Without in any way doubting forr onlyy operating
p g and technical
committees, mostlyy led lack of empowerment
p at the a need for an efficacious safety officers beingg considered for
byy retired eminent jjudges,
g the functional level”, its organisa- architecture and audit mecha- crucial posts
p of divisional man-
latest, the Kakodkar rail safetyy tion “centralised, top heavy and nism, the proposal of a statu- agers
g and general
g managers
g be
review committee comprised p of hierarchical along depart- tory Railway Safety Authority restored, with a minimum
eminent scientists, technolo- mental lines”. A litany of mal- would deserve much more de- tenure of three years. It would
ggists and engineers.
g With a view adies afflicting IR is exacer- liberation. Prudence would de- be much like the army where
to assessing the adequacy of bated by obdurate resistance to mand there be no undue em- the division and corps com-
railway safety systems and the sane advice. phasis of oversight lest it turn mands are led only by the fight-
growing gap in infrastructure Although IR’s finances re- out to be counter-productive. ing arms.
and technologies to cope with main perilous,
p it has persisted
p No doubt, aids like several The committee rues the “im-
them, the bulk of the 106 rec- withh “ridiculouslyy low fares” for advanced signalling systems plementation
p bug”.
g The non-
ommendations incorporated in a decade, notwithstandingg a 300 recommended would enhance implementation
p bugg does not
the Kakodkar report,
p with a per cent increase in input costs. safety and enable faster and bite IR alone; selective amnesia
projected
p j implementation
p cost Again, the emaciated patient is more modern transit facilities. is government’s forte. Railways
of Rs103,110 crore, under- flogged to carry more load on Viewed in this pperspective,
p the are an integral part of the social
scores the salience of effective its back. As the committee be- projected
p j cost of Rs 20,000 milieu and national ethos.
good governance, the lack of moans, more and more passen- crore on equipping
q pp g 19,000 route Charting a roadmap for IR to
which has pushed Indian Rail- ger trains are introduced on the km on busy corridors will
w be an garner resources for imple-
ways to “the brink of collapse”. overloaded infrastructure, ren- investment well worth its while. menting its recommendations,
Not that there was any panic it has rightly specified timelines
situation for the committee to The committee has rightly specified timelines and and also executing agencies to
be constituted in September
p executing agencies to be in place. be in p
place.
2011. IR’s safetyy record has IR can ill afford to overlook
been steadilyy improving
p g over dering it vulnerable to unsafe So also the proposal to incur three aspects:
p first, the imple-
p
the decade: the incidence of ac- and unsatisfactory services. additional investment of Rs mentation of the recommen-
cidents pper million train kilo- The committee’s recom- 10,000 crore over five years
y on dations must ensure scrupulousp
metres fell from 0.44 in 2002-03 mendations in regard to a sig- the induction of new LHB pas- appraisal
pp of existingg where-
to a record low of 0.15 in 2010- nificant revamp of IR’s R&D senger coaches to t replace the withal at all installations and
11; total casualties ((deaths and eco-system would need further existing ICF coaches which infrastructure, especially
injuries)
j ) likewise decreasing consideration for an appropri-
pp p have outlived their utility. manpower and minimising of
from 1,400 to 84844. Fortuitously, ate strategy.
gy Its current R&D In a bold, swift move, let the unit cost of operation;
the accident affecting the Kalka infrastructure, woefullyy inade- IR eliminate within five years
y second, itself symptomatic of
Mail near Fatehpur on July 10, quate and anachronistic, needs
q all its 32,735 level crossings
g — operational efficiency, safety
2011, resulting in 71 fatalities active participation
p p of the scien- 17,839 manned and 14,896 should be viewed as integral to
and 264 injuries, raised an tific and technology commu- unmanned — as recommended. all operations, not in isolation;
alarm over rail safety standards nity, besides institutional link- Involvingg as it would an and, third, an accident signifies
and practices. ages with centres of excellence. estimated expense of Rs 50,000 a breakdown in efficiency and
The Kakodkar committee As IR must meaningfully hike crore, it would appear expedi- thus the need to do the utmost
report echoes the prevalent its R&D spend, it would natu- ent, especially in the context of to avoid it.
public perception of IR steadily rally examine the recom- much higher speeds of trains,
sliding into a moribund entity, mended structure off the pro-
p and their number, contem- The writer was the first MD
and focuses on its “grim picture posed Railwayy Research and
p plated by IR. of the Container Corporation
of inadequate performance due Development
p Council and its There appears considerable of India Limited
to poor infrastructure and re- ancillary arms such as Railway merit in the committee’s obser- express@expressindia.com
Change train toilets, discharge wrecking tracks: panel
AVISHEK G DASTIDAR
NEW DELHI, FEBRUARY 20 Because of the pH content of the ‘CHANGE LAW TO PREVENT DEATHS’
toilet discharge, there is NEARLY 15,000 people die every Mumbai, on whose suburban network
EVERY R ttime
ime a p
passenger
g uses the widespread corrosion of the rails. year because of encroachments, the most such deaths occur.
toilet on a train, he makes the In- Maintenance workers also often refuse trespassing and illegal crossing of
dian Railways a little more dan- tracks, the Kakodkar committee has ‘NO CIVILISED society can accept
gerous, says an expert committee to service the undercarriage... estimated. It has suggested amending such massacre on their own railway
reviewing railway safety. ANIL KAKODKAR, Committee chief the law and setting up a task force in system,’ the report has said.
The Anil Kakodkar commit-
tee has observed thatt human ex- tracks be discontinued in all of the completed the field trials to de- tent etc. of the toilet discharge,
g tion, thee Kakodkar committee has
crement has corroded a signifi-
g Railways’s
y 43,000 coaches within ploy them in passenger coaches. there is widespread corrosion of asked for the elimination of all
cant percentage
p g of the country’s
y five years. “Otherwise Indian During its examination of rail- the rails.
rails These toilets need to be level crossings.
total 1.1 lakh kilometres of tracks. Railways may continue to face the way maintenance sheds, the discontinued,” Kakodkar told The Replacing over 32,000 cross-
The discharge g has led to a de- acute problem of rail track corro- Kakodkar committee found evi- Indian Express. “We also found ings with overbridges and subways
creasing lifespan for rails, adding sion... and refusal by railwaymen dence to show discharge from toi- that maintenance workers often over the next five years would re-
to the cost of running the massive in maintenance of tracks and lets corrodes rails, clips and liners refuse to service the undercar- quire
q Rs 50,000 crore, but the
railway network. coaches,” the report says. which hold the tracks together, riage of the trains because dis- Railways y would save Rs 7,000
The committee hass recom- The Railways have been ex- and the undercarriage. charge from toilets keep the un- crore byy wayy of not havingg to
mended that toilets that discharge
g perimenting with zero-discharge “It is one of the life limitingg dercarriage extremely dirty.” maintain the crossings, and
their contents directly on the toilets for years but have not yet factors... because of the pH con- In another key recommenda- through road cess, says the report.
PRESS RELEASE
RESERVE BANK OF INDIA

, , . . . , 400001
: www.rbi.org.in/hindi
________________________________________________________________________________________________________
DEPARTMENT OF COMMUNICATION, Central Office, S.B.S.Marg, Mumbai 400001 Website: www.rbi.org.in
/Phone: 91 22 2266 0502 /Fax: 91 22 2266 0358 email: helpdoc@rbi.org.in
February 21, 2012
Report of the Nair Committee on Priority Sector Lending
The Reserve Bank of India released on its website today, the report of the Committee
(Chairman: Shri M V Nair, Chairman, Union Bank of India) constituted to re-examine the
existing classification and suggest revised guidelines with regard to priority sector lending and
related issues.
The Reserve Bank has sought views/comments on the report of the Committee from
banks, non-bank financial institutions, other institutions and members of public. Suggestions
and comments on the Report may be sent by March 31, 2012 to the Chief General Manager-in-
Charge, Reserve Bank of India, Rural Planning & Credit Department, Central Office, 10th floor,
Central Office Building, Shahid Bhagat Singh Marg, Mumbai-400001 and by email.
Final circular on priority sector lending will be issued after receiving feedback, comments
and suggestions on the Report.
Constitution of the Committee
The Reserve Bank had constituted the Committee under the chairmanship of Shri. M. V.
Nair on August 25, 2011 pursuant to the announcement made in the Monetary Policy Statement
2011-12. The Committee was to re-examine the existing classification and suggest revised
guidelines with regard to priority sector lending and related issues. The Committee had 10
Members from diverse fields and Dr. Deepali Pant Joshi, CGM-in-Charge, Rural Planning and
Credit Department, Reserve Bank of India was its Member Secretary. The Committee was
given a broad-based terms of reference.
Major Recommendations of the Committee are:
By adopting a wide and exhaustive consultation process, the Committee identified key
issues facing diverse segments and sections of society; examined them thoroughly and made
recommendations that would support achieving the objectives of directed lending.
1. The target of domestic scheduled commercial banks for lending to priority sector may be
retained at 40 per cent of adjusted net bank credit (ANBC) or credit equivalent of off-
balance sheet exposure (CEOBE), whichever is higher.
2. The sector ‘agriculture and allied activities’ may be a composite sector within priority
sector, by doing away with distinction between direct and indirect agriculture. The targets
for agriculture and allied activities may be 18 per cent of ANBC or CEOBE, whichever is
higher.
3. A sub target for small and marginal farmers within agriculture and allied activities is
recommended, equivalent to 9 per cent of ANBC or CEOBE, whichever is higher to be
achieved in stages by 2015-16.
4. The MSE sector may continue to be under priority sector. Within MSE sector, a sub
target for micro enterprises is recommended equivalent to 7 per cent of ANBC or
CEOBE, whichever is higher, to be achieved in stages by 2013-14.
5. Banks may be encouraged to ensure that the number of outstanding beneficiary

accounts under ‘small and marginal farmers’ and micro enterprises’ each register a
minimum annual growth rate of 15 per cent.
6. The loans to housing and education may continue to be under priority sector. Loans for
construction/purchase of one dwelling unit per individual up to Rs.25 lakh; loans up to
Rs.2 lakh in rural and semi urban areas and up to Rs.5 lakh in other centres for repair of
damaged dwelling units may be granted under priority sector.
7. In order to encourage construction of dwelling units for Economically Weaker Sections

(EWS) and Low Income Groups (LIG), housing loans granted to these individuals may
be included in Weaker Sections Category.
8. All loans to women under priority sector may also be counted under loans to weaker
sections.
9. Limit under priority sector for loans for studies in India may be increased to Rs. 15 lakh
and Rs. 25 lakh in case of studies abroad, from existing limit of Rs 10 lakh and Rs 20
lakh, respectively.
10. The priority sector target for foreign banks may be increased to 40 per cent of ANBC or
CEOBE, whichever is higher with sub-targets of 15 per cent for exports and 15 per cent
for MSE sector, within which 7 per cent may be earmarked for micro enterprises.
11. The committee recommends allowing non-tradable priority sector lending certificates
(PSLCs) on pilot basis with domestic scheduled commercial banks, foreign banks and
regional rural banks as market players.
12. Bank loans to non-bank financial intermediaries for on-lending to specified segments
may be allowed to be reckoned for classification under priority sector, up to a maximum
of 5 per cent of ANBC or CEOBE, whichever is higher, subject to certain due diligence
and documentation standards.
13. The present system of report-based reporting has certain limitations and it may be
improved through data-based reporting. There is a need to address the issues in data
reporting like pre-defined parameters, reference date, periodicity, unit of reporting, etc.
The recommendations of the Committee are expected to have significant impact in

addressing issue of directing lending to those who have lack of access to credit and to those
sectors which generate large employment. It is hoped that these recommendations would
promote country’s developmental and inclusive goals.
Alpana Killawala
Press Release : 2011-2012/1334 Chief General Manager
Panel on Railways steers clear of fare hike
EXPRESS NEWS SERVICE ger-kilometre
ger-
ge r--ki
kilo
lome
metr basis
tree ba
basisiss to help levying a “safety cess” on privatising any part of the
NEW DELHI, FEBRUARY 27 bridge a funds gap of Rs passengers, the Sam Pitroda Railways. “There are vari-
16,469 crore after generating report does not mention any ous ways of funding the
ENSING a political the entire money from vari- amount the surcharge is ex- modernisation process. The
backlash, the much- ous sources. pected to mop p up.
p report has not talked about
S awaited report p of the It hass called
call
ca lled
ed fo creating
forr cr
crea
eati
ting
ng a Not
Not calling
call
callin
ingg for
for a fare
fare hike
hike fares,” Trivedi said.
Expert
Expe
Ex pert
p Group
rt Gr
Grou
oup p fo Moderni-
forr Mo
Mode dernrni-
i- ‘Modernisation
‘Mod
‘M oder
erninisa
satition
on Fund’
Fund
Fu nd’’ and straightaway
stra
st raig
ight
ghtawaway while
ayy wh
whil recom-
ilee re
reco
com-
m- According
Acco
Ac cord
rdin
ingg to th Pitroda
thee Pi
Pitr
trod
odaa
sation
sati
sa tion
on of the the Indian
Indi
In dian
an Rail-
Rail
Ra il-- one of the recommenda- mending
mend
me ndiningg a “surcharge”—
“sur
“s urch
chararge
ge”” committee,
comm
co mmit itte
tee,
e, thethe Railways
Rail
Ra ilwa
waysy
ys
ways
ways hash skirted the issue of tions to bridge g the funds gap g p which, if applied, could needs
need
ne edss a total
tota
to tall of Rs 5.6
5.6 lakh
lakh
a “fare hike” even though g it is to divest
dive
di vest
st Indian
Indi
In dian
an Railways’
Rail
Ra ilwa
ways
yys’’ mean an increase in the pas- crore
cror
cr oree in th
thee ne
next
xt fi
five years
ve yye
year
arss
has recommended
reco
re comm
mmen ende ded d that
that stakes
stak
st akeses in its its own
own PSUs PSUs senger fares in a roundabout for
for all
all recommended
reco
re comm
mmen ende
ded d mo
mod- d-
the
the Ra Railways
Raililwa
ways needs
yys ne
neededss to gge
gen-n- during the 12th Five-Year way — is being seen as a ernisation
erni
er nisa
sati
tion
on initiatives.
init
initia
iati
tive
ves.
s.
erate
erat
er atee over
over Rs 2 lakh lakh crore
cror
cr oree Plan period. move to preempt any politi- Pitroda said the Railway
on itsits own
own in the the next
next five
five During discussions with Dinesh Trivedi addresses the media after receiving cal backlash. Ministry will not be able to
years
yyear
earss to part-fund
part
pa
p rt-f-fun
und d a massive
mass
ma ssiv
ivee the Planning Commission report of the ‘Expert Group for Modernisation of the Terming the committee’s fund the massive upgrade
upgrade
upgr
up grad
adee process.
proc
pr ocesess.s. last month, the committee is Indian Railways’ in New Delhi on Monday. AMIT MEHRA report a “doctor’s prescrip- job on its own. “It requires
The committee has re rec-
c- learnt to have considered tion to save an ailing pa- participation from the gov-
ommended
omme
om mendndeded levying
levy
le vyin
yingg a “mod-
“mod
“m od-- going for an increase in pas- report and a surcharge for Unlike the Anil
Anil Kakod-
Kako
Ka kod-
d- tient”, Railway Minister Di- ernment as well. But Rail-
ernisation
erni
er nisa
sati
tion
on su surcharge”
surcrcha
hargrge”
ge” on senger fares, but that has modernisation has been in- kar
kar committee
comm
commititte
teee report,
repo
re port
p rt,, which
whic
which
h nesh Trivedi, however, ways needs to generate its
passengers
pass
pa ssen
engegers
rs on a pe per-passen-
per-r--pa
pass
ssen
en-- been removed in the final cluded. sought
soug
so ught ‘Safety
ht a ‘S
‘Saf
afet Fund’
etyy Fu
Fundnd’’ by clarified there was no way of own resources too.”
Pitroda Committeee report | Indian Railway Employee http://indianrailwayemployee.com/content/report-modernisation-indian-...
Articles Mutual Transfer Establishment Rules Recent Comments Forums Railway/RRB Books
Report on Modernisation of Indian Railways by Sam

Pitroda
Expert Group on Modernisation of Indian Railways by Sam Pitroda submitted its report in Feb
2012. The Group was constituted to suggest ways and means to modernize Indian Railways to
meet the challenges of economic growth, cater to the aspirations of common man, the needs of
changing technology while ensuring at the same time socio economic requirements of the
country.
Major recommendations of the Group include:
Modernisation of 19,000 km of track.

Strengthening of 11,250 bridges.
Eliminating all Level crossings.
Automatic signaling on A and B routes. Retired Employees Liberalized Health
Cab signaling system . Scheme (RELHS-97) Reopened for all Railway
GSM based mobile train control system on A,B,C routes. Pensioners
Introduction of new generation locos – electric locos of 9,000 and 12,000 HP and High Updated List of Holiday Homes
Power diesel locos of 5500 HP.
Introduction high speed LHB coaches with 160/200 kmph.
RECENT COMMENTS
Introduction of high haul freight bogies.
Modernisation of 100 major stations. dear all concerned.....some
Development of 34 multi modal logistic parks. 5 hours 2 min ago
To set up real time information system. For this goods guard degree
Internet access at 342 railway stations. 5 hours 5 min ago
To attract private investment through PP models for freight terminals, high speed
sir, can i check my father
railway lines, leasing wagons, coach and loco manufacturing renewable energy
generation etc. 5 hours 40 min ago
Mission mode approach for 15 focus areas – track and bridges, signaling, rolling stock, There are no provisions for
stations, dedicated freight corridors, High speed trains, review of existing and proposed 6 hours 46 min ago
projects, ICT, indigenous development, safety, funding and human recourses.
Normally no. You can write
Construction of Eastern and Western Freight Corridors.
6 hours 52 min ago
Construction of high speed Railway line between Ahmedabad and Mumbai with a speed
of 300 kmph. Full checkup hota hai.
Establish Indian Institute of Railway Research. 6 hours 53 min ago
To offer Graduate programme in Railway Technology in IITs and Railway Management in Gateman can be suitable for
IIMs. 6 hours 55 min ago
Revamping accounting system on business lines.
Substitute recruitment is
Empower Zonal Railways in investment decision with accountability for return on capital,
6 hours 56 min ago
transport output, safety and profitability.
Total funding requirement for implementation of committee report will be Rs.8,22,671 For JE Diploma from
crores for next five years. It proposes this from Rs. 2,50,000 crore from budgetary 6 hours 58 min ago
support, Rs. 2,01,805 crore from Internal generation and rest by leasing/borrowing,
Post retirement passes are
dividend rebate, road safety fund.
7 hours 1 min ago
‹ Multi Modal Transport up Throughput ›
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Makeover for
small savings
A
fter months of dithering, the government has
accepted most of the recommendations of the
Shyamala Gopinath Committee, which was
set up at the instance of the 13th Finance
Commission to review the parameters of the National
Small Savings Fund (NSSF) and the various small sav-
ings schemes. TThe most significant of them is to link the
return on the small savings instruments to market
rates, a step that will have major implications for the
finances of the Centre and the States. S Surely, there will
be greater transparency in interest rates as the small
savings instruments are being benchmarked to yields
on government securities, and this in turn will pave the
way for a more cost-effective management of public
finances at the Central and State levels. Presumably,
the market-oriented rates on the small savings in-
struments will revive popular interest, which has of
late been flagging as depositors started migrating to
banks. Indeed, the Centre recently announced public
borrowing of about Rs.53,000 crore over and above
what was budgeted for to offset the shortfall in collec-
tions under various small savings schemes. Even with
their new market orientation, small savings instru-
ments will still be subject to government control, al-
though to a lesser degree than before. The contrast
with the banking system is particularly striking in one
key area: while the interest rate on savings deposits
with banks has been freed recently, that on post office
savings bank deposits remains controlled, though it has
been raised from 3.5 per cent to 4 per cent.
The committee has done well to recognise the role of
the various small savings schemes in catering to the
thrift needs of different sections of the population.
Only one scheme — the Kisan Vikas Patra — has been
recommended for closure. The most popular scheme,
the Public Provident Fund, gets a substantial boost.
PPF deposits will now carry an n interest of 8.60 per ccent
instead of 8 per cent. More significantly, individuals
can invest a larger amount,, up to Rs.1 lakh, iin a year and
claim tax rebate under Section 80C of the Income Tax
Act. At present, the ceiling is Rs.70,000. However,
borrowing from the PPF has become costlier. Rules
relating to post office deposit schemes have been re-
laxed, with the depositor given the option to close the
deposit before maturity. The Senior Citizen Savings
Scheme will continue to offer 9 per cent for investment
up to Rs.15 lakh. The scheme, which was popular at a
time banks were offering very low rates, is bound to be
less attractive now. Small savings schemes will contin-
ue to be relevant as a means of furthering financial
inclusion.
Farce in three parts
Amitabh Mattoo and Happymon Jacob been on proposing new political ideas. And
The interlocutors’ report on Jammu and here, not only are there no novel ideas, even
O
n May 24, 2012, the Ministry of the proposals (borrowed mostly from other
Home Affairs (MHA) made public Kashmir contributes little towards reports) are embedded in the “grand” idea of
the report submitted to it by the the establishment of a Constitutional Com-
interlocutors on Jammu and building a genuine reconciliation mittee, to review all acts and articles of the
Kashmir appointed in the midst of the 2010 Constitution of India extended to the State
uprising in the Kashmir valley. The group of in the State after the Delhi Agreement of 1952. In other
three interlocutors has produced a report words, the Report — on the most critical
that is rich in detail, based on extensive field- utors has suggested, needs to be read in three issue — passes the buck and recommends
work, elegantly written, and apparently well parts: a situation report, a set of political that New Delhi look for someone who is
meaning. However, we remain deeply scepti- ideas for discussion, and a road map recom- regarded in high esteem in the State and the
cal that the public dissemination of such a mending confidence-building measures rest of the country to do the job.
report — or a public debate on the findings/ (CBM) and dialogue. Most informed observ- On other related issues too, the Report
e lost recommendations — will help to build sus- ers of Jammu and Kashmir would gain little falls well short of expectations. The report
differ- tainable peace in Jammu and Kashmir. Not by reading the “situation report.” does not give importance to delivering jus-
surprisingly, there are virtually no takers for The CBMs are well known and, in fact, do tice to those people wronged over the last
eing a the report among the stakeholders in the little to advance the work produced by the two decades. The report also fights shy of
ray at State and even the MHA has distanced itself Prime Minister’s Working Groups. Set up identifying some of the other primary causes
de the from the work that it commissioned from during the second round table conference of of the problems in the Jammu and Kashmir
P has the interlocutors, by adding the following the Prime Minister in May 2006, the five conflict: including the widespread rigging of
house caveat: “The view expressed in the Report working groups had a specific agenda: (i) elections, and the political high-handedness
are the views of the interlocutors. The Gov- confidence-building measures (CBMs) of New Delhi in J&K.
ernment has not yet taken any decisions on across segments of society in the State; (ii)
being the Report.” In fact, we believe that the re- strengthening relations across the Line of Truth and reconciliation
is no lease of the report — instead of doing any Control in Kashmir; (iii) economic devel- The report talks about the need to set up a
est to good — will prove to be counter-productive opment; (iv) ensuring good governance; and Truth and Reconciliation Commission
BJP’s and could further strengthen the sentiment (v) Centre-State relations. Apart from the (TRC). However, the report treats the whole
some in the State that the government of India is working group on Centre-State relations, all concept of a TRC in a very casual manner. It
not serious about a resolution of the prob- others submitted their reports in April 2007. says, for example, “even if justice cannot be
. Not lems of Jammu and Kashmir. We have rea- The government had, in principle, accepted provided for all victims of violence, if some of
aitley son to believe that the recent ineptitude in the recommendations and virtually commit- those guilty of human rights abuses, includ-
gainst dealing with the State stems from the deci- ted itself to their implementation. ing militants, were to ask forgiveness from
aged, sion that the Prime Minister would discon- For instance, Hamid Ansari chaired the the families of their victims, it would provide
angh- tinue to have direct oversight over the affairs group on CBMs in the State, and it included closure for many.”
shine of the State. Contrast the “Naya” Jammu and as substance. Consider the history of the last representatives from all mainstream politi- The report also suffers from a serious lack
Kashmir vision articulated by the Prime half a century. Almost every political crisis cal parties and groups. The group’s agenda of focus. The report’s recommendations ad-
ef did Minister in 2005 with the obtuse legalese and political agreement has been possible included the following: measures to improve dress issues that trivialise the real problems
win a articulated, ad nauseum, by the Home through initiatives led by heavyweights and the condition of the people affected by mil- of the State. For instance, by recommending
pping Ministry. backed by the political leadership of the itancy, schemes to rehabilitate all widows inter-regional dance and theatre competi-
otably We have fundamental problems with al- country. and orphans affected by militancy, issues tions, cultural talks about inter-regional cul-
itions most all aspects of what has turned out to be It was Lal Bahadur Shastri who was de- relating to the relaxation of conditions ture, and establishing “an art gallery in
a farcical exercise: beginning with the ap- puted by Prime Minister Jawaharlal Nehru which have foresworn militancy, an effective Srinagar,” the interlocutors undermine the
ay the pointment of non-political interlocutors; in 1963 to help defuse the crisis following the rehabilitation policy, including employ- gravitas that a report of this kind should
merg- and the structure and content of the report theft of the Prophet’s relic. While the chief of ment, for Kashmiri Pandit migrants, an ap- have, if it is to be taken seriously.
they have produced. the Intelligence Bureau, B.N. Mullik, also proach considering issues relating to return Finally, how does one evaluate a report of
er he Ever since September 25, 2010, when the played a vital role and enjoyed Nehru’s confi- of Kashmiri youth from areas controlled by this kind? It has not managed to reach out to
or he Cabinet Committee on Security (CCS) final- dence, it was Shastri who was the public face Pakistan, and measures to protect and pre- important segments in Kashmir, it has not
rm as ised the eight point political initiative on of the initiative. serve the unique cultural and religious heri- produced any sort of consensus in J&K or in
Jammu and Kashmir, at the height of the tage of the State. New Delhi, and its impact is not likely to be
g Mr. crises in Kashmir when over 100 people had The three parts The group had recommended, among oth- felt in “grand” political terms. This report, at
was of been killed, expectations were raised that aThe 1974 Kashmir accord was possible er things, a review and revocation of laws best, is an academic exercise of little policy
e the because of the confidence that G. Parthasar-
seasoned politician would lead the panel of that impinge on the fundamental rights of consequence. The fact is there exist valuable
neral thi enjoyed of then Prime Minister Indira
interlocutors. This perception was built on common citizens, such as the Armed Forces documents and reports, which have, in great
Gandhi. Similarly, in the 1990s, interlocu-
the successful all-party delegation that had (Special Powers) Act (AFSPA), review of detail, explained the possible trajectories for
visited the State. The announcement of a tors like Rajesh Pilot and George Fernandes cases of persons in jails and general amnesty building peace in the State. It was not yet
better
three-member non-political team provoked were able to make a difference because they for those under trial for minor offences, de- another document that we needed to resolve
ot his created a perception that they were leading a
widespread anger and hostility and even in- vising effective rehabilitation policies for the multiple conflicts in the State, but a
ooper vited ridicule. Although the three membersserious political initiative backed by the Kashmiri Pandits and a comprehensive genuine political process of reconciliation
is the were undoubtedly professionals, who had highest political authority in the land. In- package to enable them to return to their between the people of the State and New
. Mo- deed even the mandate of the panel of in-
excelled in their respective fields, the im- original residences and for the Kashmiri Delhi. Many dissidents from the State op-
feels terlocutors had been defined in the most
pression was created that the panel had been youth in Pakistan-controlled areas, who may posed this panel of interlocutors because
non-anodyne terms: “The three interlocu-
finalised without due diligence or a serious have joined militancy for monetary consid- they believed that the group did not have a
gainst application of mind by those who are quitetors appointed by the Govt. have been en- erations or misguided ideological reasons, mandate to negotiate peace, and that this
n part oblivious to the complexities of the prob-trusted with the responsibility of measures to strengthen the State human was merely a diversionary tactic to buy time.
m the undertaking a sustained dialogue with the
lems in the State and were insensitive to the rights commission, and setting up of a State One-and-half-years later, they stand
e is a sentiment of the people living there. people of Jammu & Kashmir to understand commission for minorities. The interlocu- vindicated.
ogres- their problems and chart a course for the tors’ report, in no way, improves on these (Amitabh Mattoo and Happymon Jacob
On symbolism and substance future.” recommendations. are Professors at the School of International
at its
In J&K, symbolism is almost as important The Report, itself, as one of the interloc- The only real value addition could have Studies, Jawaharlal Nehru University.)
P-led
with a LETTERS TO THE EDITOR Letters emailed to letters@thehindu.co.in must carry the full
postal address and the full name or the name with initials.
‘Kashmir settlement should apply on both sides of LoC’
Interlocutors’ report moots expansion of trade and travel, joint plan for Indus basin
Special Correspondent pared by Dileep Padgaonkar, for a period of three years. A medical relief measures dur- State, and in any case, it was
CHENNAI: If the psychological

Radha Kumar and M.M. Ansa-
ri and submitted to Union
KASHMIR INTERLOCUTORS REPORT unilateral decision to this ef-
fect could also be considered,
ing epidemics and natural
disasters.
next to impossible to unilater-
ally abrogate the Treaty as
trauma of the people of Jam- Home Minister P. Chidamba- the report added. Banking fa- On the waters issue, the re- there is no exit clause. Even at
mu and Kashmir in the last ram last October. It has yet to On easing trade and travel, permit procedures are ex- nent Resident Certificate; cilities should be provided on port speaks of the potential the peak of hostilities towards
six decades is to end, a settle- be made public. the report speaks of near-uni- tremely cumbersome, so completion of security clear- both sides of the LoC and the for convergence. The India- India, the thought of nullify-
ment to the disputes arising Notingg thatt the situation on versal support in all parts of much so that the buses often ance within a maximum peri- barter system done away Pakistan Indus Waters Treaty ing the Treaty had not crossed
out of the division of different the Pakistani side of the LoC the former princely State to run at 10 to 20 per cent capac- od of 30 working days; with. has had a grievously adverse minds in Pakistan, the report
parts of the erstwhile prince- was rather different from that inter-Kashmiri trade and ity. Trade has remained on a provision of multiple entry- Besides, customs checks impact on the State. The limi- observed.
ly State between India and on the Indian side, the final re- travel. In this context, the re- primitive barter basis, ironi- exit permits valid for one year; should be swift, especially for tations imposed by the Treaty Among the proposals on the
Pakistan should apply on port of the ggroup
p pppoints to the port referred to the recom- cally in a world where money and permission to relatives to perishable items. Scanners to enhancing water storage table for a solution to the wa-
both sides of the Line of Con- lack of freedoms and autono- mendation of the Prime travels more easily than peo- see off or receive travellers at should be used to clear trucks capacities on the rivers on the ters issue is an integrated de-
trol, according to a key rec- myy in Azad Jammu and Kash- Minister’s Working Group on ple or goods.” the border post. to save on time consumed in Indian side has curbed both velopment plan for the
ommendation of the Group of mir and the Northern Areas or Strengthening Relations Among the requirements Also, in order to ease trade, checking every item. Trucks the hydro-power generation conservation of the Indus Ba-
Interlocutors for Jammu and Gilgit-Baltistan. A large num- across the LoC on opening identified in the memoranda the report suggested that fairs should be allowed to go direct- capacity of the State as well as sin. This would take into full
Kashmir. ber of legal and constitutional more cross LoC routes and re- were to open all routes across be organised in towns closest ly to their destinations, or al- stymied efforts for irrigating account the linkages between
The group
g p identifies three reforms and changes on the laxation of restrictions on the LoC, such as Jhangani- to the LoC on both sides. An- ternatively transport depots land, the report pointed out. water, land, the users, the en-
aspects
p to the harmonisation ground will be required on the who could travel to include Mirpur, Mendhar-Kotli, Jam- nual or biannual haats or mar- should be created in areas ad- These factors, in turn, have vironment and the infrastruc-
of relations across the LoC: Pakistani side if the same po- pilgrims, medical patients mu-Sialkot, Skardu-Kargil, ket fairs could be held jacent to the LoC. failed to attract investment in ture. It would have to focus on
ensuringg the same quantum
q litical, economic and cultural and tourists, if necessary, uni- Turtuk-Khapulu, Chamb- between the check points on The report also recom- the State. better cooperative manage-
of political,
p , economic and freedoms are to be offered laterally by India. Nonian to Mirpur (across Mu- both sides of the LoC. The list mends the setting up of con- The group argues that the ment of shared water re-
cultural freedoms obtains in across the LoC. However,, the At the same time, the report nawar-Tawi), Gurez-Astoor- of export and import items sultative committees with answer to the waters issue sources. “Vast amounts of
all p
parts of the erstwhile prin-
p report
p adds,, the 2009 Gilgit-
g noted that the group had re- Gilgit and Titwal-Chilham should be enlarged regardless members from each legisla- does not lie in the abrogation financial and technical re-
celyy State;; expansion of trade Baltistan reforms packagep g ceived a number of memoran- (across the Neelam Valley), of their provenance and with- ture on both sides, along with of the Treaty, but in rendering sources would be needed to
and travel;; and resolution of brought
g the Pakistani side of da from traders’ associations and to ease travel procedures. out any restrictions on the experts, to facilitate activities it more effective. Under the attain these goals,” the report
the water-sharing issue. the State closer towards har- and from travellers on the bu- Measures to ease travel would quantity of traded goods. Cus- in areas such as agriculture, Treaty, India was duty-bound said, “in addition of course to
The report, a copy of which monisingg relations with the reaucratic difficulties in pro- include issue of travel permit toms duties should be ex- environment protection, tou- to comply with the obliga- the political will of all
is with The Hindu, was pre- Indian side. moting trade and travel. “The on the strength of the Perma- empted on a reciprocal basis rism, exchange visits, and tions as an upper riparian stakeholders.”
Kashmir report rules out ‘simple return to pre-1953 situation’
... Continued from Page g 1 tions, the report mandated, by the President hereafter Kashmir are willing to enter noted that no permanent so- representatives on the other Governor from a list of names doms depended
p on the cred-
The CC,, the report
p said, must be reached through con- under the said clauses as from into a settlement, the door lution can be achieved unless side of the LoC. prepared
p p byy the State Gov- ibilityy of the dialogue
g process,
p ,
should be future-oriented in sensus so that they are ac- the date of the final order,” can always be kept p open
p for it applied to those parts of the * The group wanted promo- ernment in consultation with implementation
p of keyy Confi-
that it should conduct its re- ceptable to all stakeholders the report added. Pakistan to jjoin.” The keyy ob- former princely State that tion of Track II interactions opposition
pp parties,
p , to hold dence Buildingg Measures,, and
view solely on the basis of the represented in the State As- However, the group mem- jjective,, it added,, was to make were now under Pakistani ad- for a resolution on both sides fresh election within three buildingg a consensus among
powers the State needs to ad- sembly and Parliament. The bers believed that many of the the Line of Control irrelevant. ministration. “Any attempt at of the LoC. It wanted the re- months if Article 356 is used. stakeholders.
dress the political, economic, next step would be for the Central laws made applicable “It should become a symbol
y of harmonisation of Centre- sumption
p of Government of As the action of the Governor * The CBMs suggestedgg in-
social and cultural interests, President, in exercise of the to the State over the past six Concord and Cooperation.” State relations and devolu- India-Hurriyat
y dialogue
g at in the use of Article 356 was cluded speeding
p g upp of reforms
concerns, grievances and as- powers conferred by Clauses decades “should not give rise A hassle-free movement of tion of powers at the regional, the earliest opportunity. Pa- now justiciable, it suggested related to human rights g and
p
pirations of the p p in all
people (1) and (3) of Article 370, to to any strong objections” as people, goods and services district and panchayat/mu- kistan and Pakistani-admin- that the present arrangement rule of law,, amendment of the
the three regions,
g , Jammu, issue an order incorporating these were “fairly innocuous across the LoC and the Inter- nicipality levels across the istered areas should be on its use should continue. Public Safetyy Act,, and review
Kashmir and Ladakh, and all the recommendations. This laws that have been beneficial national Border must be LoC,, therefore,, willl necessi- encouraged to enter into dia- * Three Regional
g Councils,, of the Disturbed Areas Act
the sub-regions and commu- will have to be ratified by a Bill to the State and its people.” swiftly ensured leading to in- tate wide-rangingg g constitu- logue on the recommenda- one each for Jammu,, Kashmir and the Armed Forces Special p
nities. “In this connection,, in both Houses of Parliament The ggroup,
p, chaired byy Di- stitutionalised cooperation tional change
g in tions fine-tuned by the CC and Ladakh,, would be created Powers Act. It also called for a
the Committee will also need and by each House in the leepp Padgaonkar,
g , and includ- between the two parts of the Pakistan-administered Jam- and the points that emerged withh Ladakh no longerg a divi- Judicial Commission to look
to reflect on the q quantum of State legislature by a margin ingg Radha Kumar and M.M. former princely State. Anoth- mu and Kashmir. If agreed,g , from the GoI-Hurriyat sion of Kashmir.. The p propor-
p into the unmarked graves, g ,
legislative,
g , financial and ad- of not less than two-thirds Ansari, ssubmitted its report er recommendation was to such harmonisation will per- p dialogue. tion of officers from the All with emphasis
p on identifica-
ministrative p powers that the majority. It will then be pre- to Union Home Minister P. take all appropriate
pp p measures mit the development
p of joint
j * Amongg other recommen- India Services would be grad-
g tion of missing/disappeared
g/ pp
State ggovernment should del- sented to the President for Chidambaram last year. to regard
g J&K as a bridge
g be- institutions across the LoC dations were to replace p the uallyy reduced in favour of offi- persons. In order to ensure
p
egate
g to the three regions
g at assent. p
The report said the search tween South and Central for development,
p , resource word “Temporary”
p y from the cers from the State civil better implementation
p of the
all levels of governance — the “Once this process is over, for a solution in J&K should Asia. ggeneration and other com- headingg of Article 370 with service. CBMs,, the group g p recom-
regional, district and Clauses (1) and (3) of Article not be made contingent on In its suggestion for har- mon matters,” tthe group said, the word “Special”
p as has The report noted that the mended the establishment of
Panchayat/Municipality.” 370 shall cease to be operative India-Pakistan talks. “If the monisation of relations and recommended that these been used for other States un- roadmap leading to political, an empowered
p group to mon-
The CC’s recommenda- and no orders shall be made stakeholders in Jammu and across the LoC, the report issues be discussed with the der Article 371,, tto appoint the economic and cultural free- itor them.
‘Defence Ministry must respond positively to move to amend AFSPA’
The Armed Forces (Special Powers) Act was more the symbol of a problem than its cause, say Interlocutors
Special Correspondent The Jeevan Reddy Com- transfer to the Jammu and tary CBMs agreed between of the families of the disap-
CHENNAI: The Ministry

y of De-
h proposed the re-
mission had
peal of the AFSPA and the
Kashmir police. This step
has already been taken in
KASHMIR INTERLOCUTORS REPORT the governments of India
and Pakistan, such as hot-
peared persons. The final
step would be to try to iden-
fence needs to consider how incorporation of some of its most urban areas but could lines between commanders tify all the bodies in the un-
to respond
p positively,
p “rath- p
provisions o a new nation-
into be consolidated in rural Committees to be incorpo- p the report said. “It is diffi- and it needs to be put back on of border securityy forces,, the marked graves, and this
er than negatively,” to pro- al law,, to be called the Un- areas.” p
rated into the police, , and to cult, for example, to see a the agenda.” p
report p
said their implemen- would depend on coopera-
posals for repeal of and lawful Activities The group noted that one be made multi-ethnic.” present rationale for main- Even in the absence of tation needed to be reviewed tion from Pakistan. “The ex-
amendments to the Armed Act The Minis-
(Prevention) Act. problem that arose in 2010 The next step, p, the report
p taining three camps, belong- commitments from armed and any remaining gaps ercise will be a massive and
Forces (Special Powers) Act, try of Home Affairs had also was that the J&K police were added,, wass to review militaryy ing to different regiments, groups to ceasefire, disarm filled. time-consuming one, and all
the Group of Interlocutors recommended several not trained or equipped to p y
deployments to see whether cheek-by-jowl with each oth- and demobilise, such re- concerned should be pre-
on Jammu and Kashmir has amendments to the AFSPA, handle the transfer of duties. securityy installations can be er, as is the case in Shopian.” forms as are possible still Human rights violations pared to face the fact that
said in their final report. which will bring it in line “Current initiatives at re- rationalised through g reduc- need to be considered, the The report referred to the they might not, in the end,
While stating that the with the Criminal Procedure training,g, especially
p y in com- ingg their spread
p to a few stra- Dialogue with armed group suggested. Current large number of gross human have the full closure that
group’s
p impression
p was that Code while allowing for the munityy policing,
p as well as g locations and creatingg
tegic groups numbers for armed militants rights violations by a variety they need.”
the AFSPA was more the protections for the armed the revised p
Operating g mobile units for rapid re- Pointing to the absence of present in the State were of groups, including murder Referring to the Truth and
symbol
y of a problem than its forces that exist in every Manual,, should help p bridge
g sponse. “The desire for re- a formal commitment to cea- around 350, with bases in and torture. The issue gained Reconciliation Commission
cause, the report went on to democratic country. “These g p, but police-commu-
the gap, p deployment of military sefire or disbandment as one districts such as Sopore. In- salience with the investiga- (TRC) proposed by Chief
add: “But symbols are impor- proposals should be re- nityy relations remain vola- and/or security forces and of the obstacles to redeploy- filtration attempts have ris- tion into unmarked graves, Minister Omar Abdullah, the
tant for peace processes, and viewed by the Ministry of tile,, especially
p y in the urban installations [created as part ment, the report said such a g
en this year. A significant many of which contain bod- report said even if justice
thus the Ministry of Defence Defence, and a decision tak- areas,, and appear
pp p
to depend of counter-insurgency oper- commitment would have findingg was that all the dele- ies of militants killed in cannot be provided for all
needs to consider how to re- en at the earliest.” on the individuals in charge ations, and not prior canton- made security reforms much g
gations met byy the group
g p counter-insurgency and victims of violence,, if some of
spond positively to this issue Accordingg to the group,
g p, of district police stations. In ments] from the rural areas p
easier to implement. The p
were explicit in their view some of which are alleged to g y of human rights
those guilty g
g y
rather than negatively.” g
the goal was to arrive at a the rural areas, there is a of Jammu and Kashmir is a Prime Minister’s Workingg that troopsp should be con- be of missingg persons.
p The abuses,, includingg militants,,
The Prime Minister’s situation in which troops p problem of shortage g of police
p heartfelt desire that unites Group p on CBMs had suggest-
gg centrated on the borders and ggroup p recommended the set- g
were to ask forgiveness from
Workingg Group on Confi- will be deployed only at the but fresh recruitments the regional political parties ed that an “unconditional LoC to prevent infiltration, tingg up
p of a Judicial Commis- the families of their victims,,
dence-Building Measures borders. “A step-by-step should fill the gap. In this and dissident groups.” Given dialogue”
g with armed ggroups
p and the focus was on internal sion to establish the best it would provide closure for
had also recommended re- p
process g with the
would begin context, it should be noted the large reduction in mil- be initiated,, and some steps
p p y
redeployment alone: a procedures for identification
p many. A TRC, it said, would
viewing the Disturbed Areas Armyy remainingg in barracks that in the mountainous dis- itancy-related violence, were taken during the “Quiet
Q p
phased withdrawal of troops of the bodies in the un- also have a large impact in
Act and AFSPA, “and if pos- and transferringg anyy civilian tricts of Jammu,, which bor- some thinning or strategic Diplomacy” of 2008-09. from residential and agricul- marked graves
graves. The commis- Pakistan, altering the “Kash-
sible lifting the former and p
policingg duties to the para- der the LoC,, the felt need concentration of installa- “Since then, however, the is- tural areas. sion would see whether any mir narrative” in fundamen-
revoking the latter.” military, with their onward was for the Village Defense tions was worth considering, sue has not come up again, military-to--milli-
On the military-to-mili- of the bodies match the DNA tal ways.
J&K interlocutors’ report for reviewing all Central Acts
Vinay Kumar 176-page report underlined tary-level talks are being held Proposing a “New Com- should be encouraged to enter return of Kashmiris stranded consensus existed on a politi- an citizens.
that “the clock cannot be set between India and Pakistan pact” with the people of Jam- into a dialogue on the recom- across thee LoC;; establishing
e ga cal settlement in the state “The review will,, therefore,,
NEW DELHI: The final report of back” but felt that the “ero- in Islamabad. mu and Kashmir,, the report p mendations as fine-tuned by jjudicial commission to look through a dialogue between have to determine if — and to
the Central Government-ap- sion” of Article 370 duringg the The ggroupp of interlocutors focuses on three components
p the Constitutional Commit- into unmarked ggraves,, speed-
p all stakeholders, including what extent — the central Acts
pointed Group of Interlocu- decades needed to be “re-ap- p had held extensive delibera- — political,
p , economic and so- tee (CC), and points emerging ingg up
p human rights
g and the those who aren’t part of the and Articles of the Constitu-
tors for Jammu and Kashmir praised” to give it more
p tions with the State govern-
g cial and cultural — formingg a from the Government-Hurri- rule of law reforms. mainstream, the report p rec- tion of India,, extended with or
has ruled out a return to the powers. ment,, p political parties,
p , civil single
g p package,
g , which cannot yyat dialogue.
g It favoured an Noting that the group’s recommended that Jammu and without amendment to the
pre-1953
p position,
p , and rec- It recommended deletion society,y, stakeholders at the be accepted on a selective agreement
g between India and ommendations will meet the Kashmir should function as a state,, have dented Jammu and
ommended the settingg up p of a of the word “temporary”
p y from State and national levels. basis. Pakistan to p promote civil so- political aspirations of the all entity.
single entity Kashmir’s special
p status,, and
Constitutional Committee the headingg of Article 370,, They submitted their report Underr the political
p compo- cietyy interactions for Jammu the people of Jammu and The report
p said the State abridged
g the State govern-
g
(CC), ) to review all Central
((CC)), and from the title of Part XXI to the Union Home Minister nent,, the report
p deals with and Kashmir on both sides of Kashmir to a great extent assemblyy will submit three ment’s p powers to cater to the
Acts and Articles of the Con- of the Constitution,, and sug- g P. Chidambaram on October Centre-State relations and in- Control.
the Line of Contr without harming national in- names to the President for the people,” it said.
welfare of its people
stitution of India,, extended to ggested replacing
p g it with the 12, 2011, exactly a year after ternal devolution of powers,
p , The report recommended terest,, the interlocutors fa- post of Governor,, who will be
p The next step would be for the
the State after the signing of word “Special”
“ p as
a it has been their appointment. and suggests
gg a road map p list- that the search for solution voured creation of three appointed by the President. It President, in exercise of pow-
the 1952 Agreement. used for rest of the States un- Mr. Padgaonkar later said ingg confidence-buildingg mea- shouldn’t be made contingent Regional
g Councils,, one each also suggested that there ers under Article 370, to issue
The report of the Centre’s der Article 371. that interlocutors haven’t sures. It favours amendment
sures on India-Pakistan talks. “If for Jammu, Kashmir and should be no change g in Article an order incorporating the rec-
interlocutors — eminent The report was uploaded on recommended abolition of of the Public Safetyy Act,, re- the stakeholders in Jammu Ladakh. 356,, andd if the State govern-
g ommendations of the CC.
journalist
j Dileep Padgaon-
g Thursday on the website of Article 370. “What we have view of Disturbed Areas Act, and Kashmir are willing to en- “Parliament will make no ment is dismissed,, elections Thee report
p recommended
kar,
ka , academician Radha Ku- the Union Home Ministry for said is that we aren’t invent- and re-appraisal of applica- ter into a settlement, the door laws applicable
pp to the State should be held within three that for promotion
p of the
mar, and
an former information the benefit of the public at ing something. Under Article tion of controversial Armed can always be kept open for unless it relates to the coun- months. State’s economic self-reliance,,
commissionerr M. M. Ansari — large. “The views expressed in 371, there are several States of Forces Special Powers Act Pakistan to join. The key goal try’s
y internal and external se- The ggroupp said that the p
pro- a fresh financial agreement
g be-
suggested
gg a future-oriented the report are the views of the the Union, which have been (AFSPA).
(AFSPA) is, as Prime Minister Manmo- curity,
y, and its vital economic posed Constitutional Com- tween the Centre and the State
approach
pp (one
( that takes into interlocutors. The Govern- designated as special category The report
p favoured re- han Singh g has expressed,p , interests, especially in the ar-
interests mittee could complete p its was required.
full account the strategic,g ,p po- ment still hasn’t taken any de- states.” sumption
p of the dialogue g make the LoC irrelevant. It eas of energy and access to work in six months,, and pre-p The report made several rec-
litical,, economic and cultural cision on the report. The The report has recom- process between the Centre
p should become a symbol y of water resources,” it sent it findings
g to the Parlia- ommendations to harmonise
changesg in the State,, in India Government will welcome an mended a status q quoo in the and Hurriyat
y Conference “at Concord and Cooperation,” it recommended. Legislature.
ment and State Legislatur
g relations between people on
as a whole,, in the South-Asian informed debate on the con- use of nomenclatures in En- the earliest opportunity”. It said. The interlocutors suggest-
gg The CC should be mandated both the sides of Line of Con-
region
g and beyond,
y as a result tents of the report,” a state- gglish of the Governor and expressed the hope that such Some other recommenda- ed that the writ of autono- to conduct its review, b bearing trol,, includingg a hassle-free
of globalisation) should en- ment by the official Chief Minister,, and equiva-
q a dialogue “should yield vis- tions include speedy imple- p mous and statutoryy in mind the dual character of movement of p people
p and ggoods
able all stakeholders to reach spokesperson of the Home lent nomenclatures in Urdu ible outcomes and be made mentation of the institutions should be ex- Jammu and Kashmir — being across the LoC,, and a consulta-
a rapid agreement on the Ar- Ministry said here. may be used. Until 1965, the uninterruptible.” recommendations of the tended to the State,, and their a constituent unit of the Indi- tive mechanism, where elected
ticles of the Constitution of The interlocutors’ report Chief Minister of Jammu and Dwelling further on the Prime Minister’s working functioningg should conform an union, and enjoying a spe- representatives
p from both
India. was placed in public domain Kashmir was addressed as dialogue process, the inter- group on CBMs, in particular, to the pprovisions of the Con- cial status under Article 370 sides can deliberate on issues
While upholding
p g Article two days after the Budget Ses- ‘Wazir-e-Azam’ [Prime Min- locutors recommended that making the return of all Kash- stitution of Jammu and of the Constitution — and the of common interests like wa-
370 that gives
g special
p status sion of Parliament ended, and ister] and the Governor as ‘Sa- Pakistan and Pak-adminis- miris, mainly Pandits,, a p part Kashmir. dual character of the people — ter,, economy, tourism and
to Jammu and Kashmir, the at a time when Home Secre- dar-e-Riyasat’ [President]. tered Jammu and Kashmir of State policy;; facilitating the Pointing out that a general state subjects as well as Indi- trade.
trade
Print Release http://pib.nic.in/newsite/PrintRelease.aspx
Press Information Bureau

Government of India
31-January-2012 17:34 IST
Dharmadhikari Committee Submits its Repot to Civil Aviation Minister

The Dharmadhikari Committee submitted its repot to the Civil Aviation Minister, Shri Ajit Singh
here today. The Committee was assigned the task of examining the principle of integration across
various cadre and determination of level and seniority of post-merged Air India. The Committee
was also entrusted to examine the principle of pay and wage rationalization and restructuring
between all the employees of the erstwhile Indian Airlines and Air India.
The Committee of experts headed by Justice (Retd.) D.M.Dharmadhikari, former Judge, Supreme
Court of India was constituted by the Ministry of Civil Aviation. Other Members of the
Committee are Prof. Ravindra H. Dholakia, IIM, Ahmedabad, Shri Rajeshwar Dayal, expert on
PSU service matters and Shri Syed Nasir Ali, Member-Secretary in May 2011. The Committee
was scheduled to give its recommendations within six months. After interaction with all the
stakeholders, including various Unions/Associations of the Companies and the Management, it
submitted its Report today.
The Report submitted to the Minister, shall be examined in the Ministry and the future course of
action will subsequently be decided. The Report is expected to solve long-standing HR issues
which remained inconclusive even after five years of the merger of Indian Airlines and Air India.
PKM
1 of 1 14-Jun-12 9:27 AM
DNA: India - Dharmadhikari report highlights bias, prejudice: IPG http://www.dnaindia.com/print710.php?cid=1696934
http://www.dnaindia.com/
Dharmadhikari report highlights bias, prejudice: IPG
PTI / Friday, June 1, 2012 21:21 IST
The Indian Pilots Guild, which is spearheading the 26-day-long pilots' strike, on Friday said the Dharmadhikari report
highlights the "prejudice and bias" that airline management harbours against the erstwhile Air India employees.
In a statement, the IPG said the report was tailor-made to suit the interests of the employees of erstwhile Indian Airlines.
"We don't have a copy of the full text of Dharmadhikari report, therefore our observations are based on the reports that
have appeared in the media.
"It appears that the report is tailor-made to suit the interests of the employees of erstwhile Indian Airlines. It reinforces the
bias and prejudice that the management harbours towards the employees of erstwhile Air India vis-a-vis the employees
of erstwhile Indian Airlines," the statement said.
On the issue of seniority, the pilots said as per the recommendation, seniority would be based on qualification and date
of grade.
"Indian Airlines pilots are promoted to the higher grade in six years, whereas the same promotion for Air India pilots takes
up to 10 years. Therefore, an Indian Airlines pilot with less years of service will become senior to an Air India pilot with
more years of service," the statement said.
The agitating pilots, further said that if the report recommends common pay scales, then why the management granted a
raise of Rs one to 1.5 lakh per month to the salary of 800 odd pilots of erstwhile Indian Airlines in November 2011.
"Were the recommendations of the Dharmadhikari Committee report known? Why did the management not ask the pilots
of erstwhile Indian Airlines to wait for Dharmadhikari Committee report and instead hurriedly granted them salary raise in
November 2011? This demands an enquiry by the CAG/CVC," they said, adding this was done when the company was
making losses and the employees were facing major delays in payment of wages.
On the issue of cross utilisation of pilots, the IPG said the Dharmadhikari report mentions that the pilots may be cross
utilised between the Airbus and Boeing fleets.
"This completely ignores the cost aspect of cross training between Airbus and Boeing. This is a gross wastage of tax
payer resources. The sole purpose of this recommendation of cross utilisation is to provide career prospects benefit to
the pilots of erstwhile Indian Airlines.
"Further, if cross utilisation was supposed to be under the purview of the Dharmadhikari Committee, therefore why did
the management decide on cross utilisation (ratio of 1:1) on the Boeing 787, in October 2011, even before the
recommendations of the Dharmadhikari Committee report were known," they asked.
The now de-recognised union said that the ever since the merger, the pilots of erstwhile Indian Airlines have achieved a
salary raise and enhanced career prospects by virtue of cross-utilisation.
"Whereas the careers of the pilots of erstwhile Air India has stagnated and have in fact deteriorated vis a vis the pilots of
erstwhile Indian Airlines. Instead of being a merger of two companies, the present situation increasingly looks like a
hostile takeover of Air India by Indian Airlines," the agitating pilots said.
URL of the article: http://www.dnaindia.com/india/report_dharmadhikari-report-highlights-bias-prejudice-

ipg_1696934-all
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1 of 2 14-Jun-12 9:32 AM
DNA: India - Dharmadhikari report highlights bias, prejudice: IPG http://www.dnaindia.com/print710.php?cid=1696934
© 2005-2012 Diligent Media Corporation Ltd. All rights reserved.
2 of 2 14-Jun-12 9:32 AM
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Releases Photos Features Invitations

P re s s I n f o r m a t io n B u re a u
G o v e r n m e n t O f I n d ia
(01-June, 2012 17:17 IST )
Text of the Opening Remarks of Shri Ajit Singh at the Press Conference on Roadmap for Imlementation of Dharmadhikari
Committee Report
Following is the text of the opening remarks of Shri Ajit Singh, Union Minister of Civil Aviation at the Press Conference held here today on
roadmap for implementation of Dharmadhikari Committee Report:
“The Dharmadhikari Committee has recommended 1st April 2007 as the cut-off date for the purpose of implementing new pay-scales for the
employees of Air India [both erstwhile Air India (AI) & Indian Airlines (IA)]. There will be uniform pay-scales for all employees of erstwhile AI
and IA. For the executive cadre recommended pay-scales are as per the DPE norms and non-executive cadre pay-scales are as per the industry
norms.
“The Productivity Linked Incentive (PLI) in its present form shall be abolished. However, it will be subsumed in determination of basic pay to the
extent admissible in the Department of Public Enterprises (DPE) guidelines. The committee has also recommended profit related pay as per the
DPE guidelines, which will be linked to the profit earned by the company and achievements of various targets.
“A level mapping exercise for employees from the two erstwhile airlines shall be undertaken. This exercise is the key to successful merger of
manpower as employees of two erstwhile airlines would be placed in a unified pay-scale and common seniority. The guiding principle of inter-se
seniority would be length of service in that grade in the erstwhile AI and IA except where the promotion is consequent upon passing requisite
qualifying examination or attaining mandatory certification. In that case date of passing the exam or attaining the certificate shall be the determining
factor. However, in case of pilots and engineers, the committee has suggested that both pilots and engineers as also technicians under them should
be given line seniority based on wide and narrow body aircrafts for which they are trained and licensed.
“The committee has also recommended that the pay of all employees will be protected and allowances will be admissible as per the DPE
guidelines with some exceptions. “The Dharmadhikari Committee has recognized the need for certain allowances which are given to certain class
of employees like pilots, cabin crew and engineers as per the industry standard. However, they fall outside the scope of DPE guidelines. This
would need an approval of the Union Cabinet before these are implemented at variance with DPE guidelines. The details of such allowances
would only be disclosed after the approval of the Cabinet.
“In case where a junior employee in the given scale after all adjustments of level mapping and inter-se seniority is found to be drawing higher
basic pay than the senior employee, then the revised basic pay of the senior employee would be placed at par with the junior employee. This will
remove long standing disputes among the employees.
“There are large number of grievances regarding promotions being not given in some cadres for last few years. Promotions were specifically
frozen by the Dharmadhikari Committee in 2011 after which no promotion has taken place. The commit has now recommended a fair and
comprehensive promotion policy through the constitution of Departmental Promotion Committees (DPCs). Each DPC will have a fair
representation from erstwhile AI and IA and would also include an outside expert. The process of promotion will soon start after fixation of
inter-se seniority (which will be done maximum within a period of 45 days). The committee has suggested ways and means to put in place a policy
which will give fair chance for employees both AI and AI in their career progression.
“After implementation of the Dharmadhikari Committee report, there will be unified cadre at every level alongwith a uniform policy with regard to
working hours, passage facility and all other facilities that include accommodation, transportation, canteen, uniforms etc.
“Cross utilization of all resources including manpower and capacity building on the principle of fair and equitable opportunity to everyone shall
be the policy in the merged entity including cross training at various levels.
“As per the recommendation of the Dharmadhikari Committee, an Implementation-cum-Anomaly Committee is being constituted with
representation from both erstwhile AI and IA for implementation of various recommendations. The committee will complete the task of pay
fixation, level mapping and inter-se seniority within a period of 45 days. This committee will seek the views of employees during the course of
implementation of the Dharmadhikari Committee’s recommendations. This committee will also look into anomalies that come to its notice/raised
by employees”.
SP/ska
(Release ID :84652)
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1 of 1 14-Jun-12 9:22 AM
CIC says Vohra report annexures be made public - Times Of India http://articles.timesofindia.indiatimes.com/2012-05-13/india/3168901...
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CIC says Vohra report annexures be
made public 0 0
Manoj Mitta, TNN May 13, 2012, 06.00AM IST
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Tags: Vohra report annexures | Central Information Commission
NEW DELHI: In the pre-RTI era, the Supreme Court had ruled that it would be "severely
and detrimentally injurious" to public interest if annexures to the N N Vohra Committee
report, containing details of the alleged nexus between politicians, bureaucrats and
criminals, were disclosed.
But the Central Information Commission (CIC) has now directed that these annexures be
made public because the government had not bothered to explain its failure to disclose them
in response to an RTI application.
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CIC orders IIT to reinstate registrar The order passed by information commissioner Sushma Singh on May 10 directed the home
August 3, 2007 ministry to provide the annexures to RTI activist Subhash Chandra Agrawal within two
Transparency commission is now more transparent
weeks.
January 18, 2012
Since the government had only provided the already-public main report of 12 pages, the CIC
CIC orders change of cardiac surgeon for negligence warned the government that the government's refusal to disclose its annexures spread over
June 30, 2007 100 pages could invite penal proceedings under RTI for giving incomplete information.
IN-DEPTH COVERAGE Given the probability of the annexures to the Vohra report naming political leaders who still
Cic wield clout, the government is more likely to appeal against the CIC order than to comply
Central Information Commission with it. Though it would be hard pressed to justify the cavalier manner in which it had
withheld the annexures in its RTI reply without any explanation, the government's best bet
for letting them remain under wraps is the SC judgment of 1997 on a petition filed by MP
Dinesh Trivedi.
Though based merely on the technicality of an omission in the RTI reply, the CIC order has
for the first time raised the larger question whether the statutory immunity provided to
intelligence agencies could be penetrated when their inputs had been annexed to the report
of a high-powered body like the Vohra committee.
The Vohra committee submitted its report in 1993 in the wake of the Bombay blasts taking
off all the available information about "the activities of crime syndicates/mafia
organizations which had developed links with and were being protected by
governmentfunctionaries and political personalities."
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CIC says Vohra report annexures be made public - Times Of India http://articles.timesofindia.indiatimes.com/2012-05-13/india/3168901...
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2 of 2 30-Jun-12 9:29 AM
Ignoring Vohra report big mistake, SC told http://www.asianage.com/print/53123
Published on The Asian Age (http://www.asianage.com)

Home > India > Ignoring Vohra report big mistake, SC told
By editor
Created 20 Jan 2011 - 00:00
The Vohra Committee report considered to be one of the most authentic document on the
emergence of “dangerous” nexus of politician, bureaucrats and underworld syndicates, came
in for sharp focus in the Supreme Court on Wednesday in the context of Indians’ “black
accounts” in tax heavens abroad.
Senior advocate Anil Diwan arguing a petition of Ram Jethmalani on the issue, drew the
attention of the top court to the Vohra Committee report of 1993, which was not acted upon
by the successive government despite being debated in Parliament and quoted extensively
in the Jain-Hawala case verdict by the Supreme Court, while laying down guidelines for
checkmating “while collar” crimes and creation of the office of CVC as watchdog against
corruption.
“The Vohra Committee had specifically recommended to look into the emerging nexus of
politicians, bureaucrats and the underworld syndicate mafias in the eighties,” Mr Diwan said
quoting extensively from the report.
The committee had said that the “mafias were virtually running parallel government” and
painted as “dismal picture” for the country’s economy if the nexus was not broken.
“But the government did not do any thing on the report and its evaluation has come true. The
parallel economy has virtually surpassed the national economy,” Mr Diwan said while
describing the figure of $1.4 trillion black money stashed in tax heavens by Indians as “mind
boggling”.
The Vohra Committee
had warned that if the “nexus of politicians, bureaucrats and underworld mafias” was not
immediately curbed it would pose a “grave danger” for the nation’s economy as well as
governance. “But at the same time the committee had cautioned that breaking the nexus was
not easy as money and muscle powers were being used for winning elections,” Mr Diwan
argued.
He said in this backdrop, the intervention of the judiciary had become all the more
“important” to issue a direction to the government to take steps to bring back the nation’s
precious wealth when the countries with tax heavens were ready to “lift the veil” of secrecy if
they were approached.
The committee also had drawn the attention of the government how the nexus posed a threat
to the effective functioning of the “criminal justice system” as no person would muster a
courage to depose against the mafias.
“The Vohra Committee had stated that the attachment and confiscation of the properties of
the underworld syndicate would become virtually difficult,” Mr Diwan said while drawing the
attention of the court to the Constitutional provisions, which gave a right to the people of the
country to “know” how the nation’s wealth was allowed to be plundered abroad.
India Age Correspondent S.S. Negi New Delhi

Copyright © 2011 The Asian Age. All rights reserved.
1 of 2 30-Jun-12 9:30 AM
Ignoring Vohra report big mistake, SC told http://www.asianage.com/print/53123
Source URL: http://www.asianage.com/india/ignoring-vohra-report-big-mistake-sc-told-123
2 of 2 30-Jun-12 9:30 AM
A high-level committee set up by the government to examine the ‘go’ and ‘no-go’ system for
coal mining has recommended that all projects stranded due to the classification must be treated
on their merits and should be cleared sans restrictions if located at the fringes of the forests. The
committee has been set up by the Group of Ministers (GoM) on coal mining and is chaired by
Planning Commission Member B K Chaturvedi.
Chaturvedi wanted the GoM to consider nine policy issues including scrapping of go-no go
policy in forest areas for coal mining, remove condition of quorum for seeking gram sabha's
consent for projects (amending Forest Rights Act), allow 25% expansion of existing projects
without public hearing and further delegation of forest approval powers to the state government.
The committee has questioned the methodology adopted, of relying on satellite imagery alone, to
determine the ‘go’ and ‘no go’ areas. It has suggested following the usual procedure that requires
Central and state governments to assess the importance of forests through a variety of means.
The Forest Advisory Committee should evaluate coal projects on their individual merits alone,
the high-level committee suggested, irrespective of which side of the classification they fall.
“Blocks falling in the marginal forests have to be cleared in the normal way without any
restrictions. In case of wildlife sanctuaries and tiger reserves, similar adjustments were done
earlier also and rail lines or metal roads passing through such sanctuaries,” the committee said.
It has also suggested emulating international practices of permitting mining around dense forest
areas with full safeguards and has asked the government to explore the possibility of
underground mining in such areas.
The committee has also asked the environment ministry to work out measures to allow
uninterrupted coal mining operations as a result of the moratorium imposed under the
Comprehensive Environment Pollution Index (CEPI). It has suggested levying penalties on
developers failing to comply with the conditions.
In view of the difficulties faced by coal miners in obtaining clearances, the committee has
suggested that the ministries of coal and environment work jointly and evolve a strategy to
ensure that genuine cases are cleared and also the interests of the tribals be protected.
‘Entire Western Ghats ecologically sensitive’
K.S. Sudhi impact analysis of various should function in a net-
development activities in worked fashion with six
KOCHI: The Western Ghats these tracts, ideally in constituent State Western
Ecology Expert Panel conjunction with Raigad Ghats Ecology Author-
((WGEEP)) has designated
g district of Maharashtra ities, appointed jointly by
the entire hill range
g as an and Goa, must be under- the State Governments
Ecologically Sensitive taken,” preferably by the and the Central Ministry
Area. National Institute of of Environment and For-
The panel, in its report,
p , Oceanography, Goa. ests,” it has proposed.
has classified thee 142 ta- The panel recommend- The panel was asked to
luks in the Western Ghats ed that “the current mora- assess the current status
boundaryy into Ecological-
g torium on new of ecology of the Ghats
lyy Sensitive Zones (ESZ) 1, environmental clearances region, demarcate areas
2 and 3. It recommended for mining, and red and within the region that
that “no new dams based orange category polluting were to be notified as ec-
on large-scale
g storage
g be A patch of Shola forest at Nelliyampathi in industries and power ologically sensitive ones
permitted in Ecologically
p Kerala’s Palakkad district. — FILE PHOTO: plants in the plains and and make recommenda-
Sensitive Zone 1. Since K.K. MUSTAFAH coastal tracts of Ratnagiri tions for the conservation,
both the Athirappilly of and Sindhudurg districts protection and rejuvena-
Kerala and Gundia of Kar- lation with an effective allowed in ESZ 1 and 2. should be extended till tion of the entire area.
nataka hydel project sites system of social audit.” The existingg red and or- satisfactory completion of The suggestions for the
fall in Ecologically Sensi- “The moratorium on ange
g category
g y industries a carrying capacity analy- formation of the WGEA
tive Zone 1, these projects new clearances in ESZ 2 should be asked to switch sis. The moratorium may were also among its
should not be accorded can be revisited when the to zero ppollution byy 2016,, then be reviewed in the mandate.
environmental clearance,” situation improves and a with an effective system light of the findings of the It was subsequently
it said. comprehensive study on of social audit, the report study,”
y, it recommended. asked to study the entire
For Goa, the committee the impact of mining on said. It suggested
gg the forma- stretch of Ratnagiri and
headed by eminent ecol- the ecology, environment, Regarding the mining tion of a Western Ghats Sindhudurg districts, in-
ogist
g Madhav Gadgil,l, sug- human health, and biodi- and related activities in Ecology gy Authorityy cluding the coastal region
gested an “indefinite versity by a competent Ratnagiri and Sindhudurg ((WGEA), ), a statutoryy au- and to specifically exam-
moratorium on new envi- multidisciplinary team, districts, the panel said in- thorityy which enjoysj y the ine the Gundia and Athi-
ronmental clearances for working along with peo- vestigations in the plains powers under the Envi-
p rappilly hydroelectric
miningg in ESZ 1 and 2,, ple’s institutions, has and coastal tracts “sug- ronment (Protection)
( ) Act. projects. The views of the
phasingg out of miningg in
p been concluded,” , it said. gested that these are un- “As the Ghats is an exten- panel regarding the mora-
ESZ 1 byy 2016 and contin- No new p pollutingg indus- der severe environmental sive region
g spanning
p g over torium on new mining li-
uation of existingg miningg tries,, includingg coal-based and social stress.” It is es- six States,, 44 districts,, and cences in Goa were also
in ESZ 2 under strictt regu- power plants, should be sential that a “cumulative 142 taluks, the WGEA sought by the Ministry.
To know, is to protect
Madhav Gadgil & Ligia Noronha
A scientific and public scrutiny of the an objective scientific basis by explicitly stat-
O
ing the methodology and making public the
n May 23, the Ministry of Envi-
ronment and Forests (MoEF) methodology used by the expert panel nature and quality of the information used,,
alongg with its limitations. Amongst g the ma-
posted the report of the Western
Ghats Ecology Expert Panel will only add to the efforts to save jor
j lacunae in our information base was of
habitat continuity, y, and weakness of infor-
(WGEEP) on its website honouring a land- mation on streams,, rivers,, wetlands,, and
mark judgment of the Central Information the Western Ghats. ground
g water and leavingg out issues of signif-
g
Commission triggered by an activist seeking icance for the coast and coastal p plains, such
access to the material. In this judgment, the teria and assigning
g gq quantitative sensitivity as mangrove forests and khajan lands.
CIC noted that the Ministry argues that the scores to specific localities. In its 2000 re- Using the most readily quantifiable of the
release of the report, containing the metho- port, the Sen Committee had called for sys- data, we have assigned gridwise scores. Thus,
dology for demarcation of ecologically sensi- tematically mapping and recording base-line the highest maximum altitude within any
tive areas (ESA), to the public without ecological data for the country, as also to grid for a State is assigned the maximal
adequate consultations at governmental lev- design and operationalise a comprehensive score, and all other grids are ranked relative
el to refine the boundaries may lead to an ecological monitoring programme and net- to this score. An average of scores for all
influx of public proposals for declaration of work through a participative approach. Un- other quantifiable parameters is then calcu-
eco-sensitive zones. The Ministry contend- fortunately, neither had happened. There lated to assign
g a sensitivityy score to each
ed that this would impact economic progress had, however, been one development of sig- grid.
g . The scores are calculated separately
p y for
and interests. The CIC noted that imple- nificance, that of district-wise Zoning Atlas- each state since there is a marked north-
mentation of ESA proposals, before or after es for Siting of Industries (ZASI) by Central south gradient
g in terms of ecological
g varia-
the finalisation of the WGEEP report, is an and State Pollution Control Boards. Howev- bles from river Tapip to Kanyakumari.
y
executive decision. Mere apprehension of er, MoEF has not released this exercise; as a Grids with scores at the level of Protected d
proposals being put forth by citizens com- result, WGEEP had to start from scratch. Areas
Arreas and above within the same State were
mitted to environmental protection cannot assigned
g to ESZ1 category.
g y This threshold is
be said to prejudicially affect the scientific Manifold challenges appropriate
pp p since the government
g has ac-
and economic interests of the country. Given WGEEP thus needed to address manifold cepted
p since 2002 that areas adjoining
j g Pro-
this background, we are being naturally challenges; formulate the non-standard con- tected Areas need to be constituted as ESZs.
asked to explain the whole issue of ESAs. cept of ESAs, solicit suggestions from civil About 25 per cent of grids with scores at the
While the Report discusses this in detail, we society and gram sabhas on constituting lower end were assigned to ESZ3 category to
attempt to provide here a brief explanation. ESAs, develop a database on ecological pa- cater to development needs, and the balance
While doing so, we wish to emphasise that rameters for the Western Ghats region, as- to ESZ2. This implied a decision to treat up
WGEEP has not come up with a set of rigid sign Ecological Sensitivity scores and to 60 per cent of grids as belonging to PAs
prescriptions, but seeks to provide a basis for delineate zones of different levels of Ecolog- and ESZ1, and about 75 per cent of the grids
informed discussion involving the various Initially, there were no guidelines avail- ical Sensitivity over the region, suggest man- as belonging
g g to PAs,, ESZ1 or ESZ2.
levels of governance including the gram sab- able on what areas may be considered ec- agement strategies and, finally, suggest Given that the national ggoal is to maintain
has/ward sabhas. ologically sensitive, nor on working out an mechanisms for building upon what was 66 per
p cent of area under forest cover in all
appropriate management regime.
g These is- necessarily a preliminary exercise. WGEEP hill tracts and that the Western Ghats is a
WGEEP mandate sues were addressed in 2000 byy the Pronab attempted this in a fully transparent, partici- region
g of special
p significance,
g , we considered
The MoEF constituted WGEEP in March Sen Committee. The Sen Committee’s fore- patory mode, at the same time observing due it appropriate
pp p to aim at 75 p per cent beingg
2010 with a mandate to demarcate areas most criterion for identification of ESA is scientific discipline.
p treated as areas of high or highest
within the Western Ghats Region g which endemism. Western Ghats harbours well Ecological
g Sensitivity being a non-stan- significance.
significance
need to be notified as ecologically
g y sensitive,, over two thousand endemic species of flo- dard concept, WGEEP began by organising a
and make recommendations for conserva- wering plants, fish, frogs, birds and mam- web-based discussion, and publishing a pa- Next steps
tion,, protection
p and rejuvenation
j of the mals amongst the better known groups of per in Current Science. The followingg work- The data base,, methodology gy and conclu-
Western Ghats followingg consultations in- organisms, and thousands more amongst ingg definition was arrived at: ESAs as those sions of WGEEP relatingg to ESZs need to be
p p and State ggovernments. It less studied groups. Amongst themselves
volvingg people areas that are ecologically
g y and economicallyy widelyy exposed to scientific, as well as public
was also required
q to recommend the mod- these span the entire Western Ghats and all important,
p , but vulnerable even to mild dis- scrutiny. All this material should be made
alities for the establishment of the Western conceivable habitats, including highly dis- turbances and hence demand careful man- available in all regional languages as well,
Ghats Ecology gy Authorityy (WGEA)
( ) under the turbed ones. The Western Ghats region also agement. Since sensitivity scores had to be communicated to every local body and feed-
Environment (Protection) Act, 1986 (EPA). qualifies as an ESA under several other Sen arrived at within a year over this extensive back obtained from people at grass roots.
Committee criteria. tract, our focus was on accessing pertinent Such an exercise is not a pipe-dream; it was
Ecologically sensitive areas computerised databases. Fortunately, sever- successfully accomplished for Goa Regional
Thee concept
p of ecologically
g y sensitive aareas A layered approach al were available: the Western Ghats bound- Plan 2021. The feedback should then be
is very much an Indian invention,
inventi rooted in WGEEP fullyy endorsed the conclusion ary,
y, boundaries of States,, districts,, talukas,, compiled, assimilated and appropriate deci-
attempts
p byy civil societyy to use the EPA to that the entire Western Ghats tract should Shuttle Radar Topographic Mission (SRTM) sions arrived at to ensure that the rich nat-
promote
p sustainable development
p alongside be considered ecologically
g y sensitive. Howev- 90 m resolution data,
d Protected Areas, forest ural heritage of the Western Ghats is
protection of the natural heritage. The term er,, the tremendous heterogeneity
g y of envi- types of India, percent forest, unique ever- protected and utilised in a sustainable fash-
‘Ecologicallyy Fragile Area’ was first used in ronmental, social and economic conditions green elements, forest with low edge, En- ion, while equitably sharing in the benefits
1991 forr Dahanu Taluka
T in Maharashtra, fol- in the region
g led WGEEP to follow w a layered
y hanced Vegetation Index of MODIS, riverine that flow.
lowed byy the declaration of other ESAs like approach:
pp firstly,
fi y, to recognisee three levels of forests derived through drainage and forest
Mahabaleshwar-Panchgani
Mahabaleshwar--Panchgani and Matheran. ecological sensitivity
sensitivi over the region, desig- cover, data on endemic plants, vertebrates, (Madhav Gadgil,g , a former Professor of
These are all initiatives of civil societyy orga-
g nated as ESZ1, ESZ2 and ESZ3; secondly, to and dragonflies-damselflies, Red list Mam- Ecology
gy at thee Indian Institute of Science is
nisations or are a consequence
q of a resolu- suggest that the final delimitation of the mals, Important Bird Areas, and Elephant Council; Ligia
Member, National Advisory Counci
tion of the Indian Board for Wildlife in 2002 zones as well as formulation of locality spe- Corridors. Noronha is Director, Resources, Regulation
to protect
p areas upp to 10 kilometres from the cific management
g regimes
g be undertaken byy Such exercises, like the globally accepted and Global Security, The Energy and Re-
boundaries of wildlife sanctuaries and na- involvingg local bodies. This requires
q going
g g Important Bird Areas, naturally involve sub- sources Institute. They were members of
tional parks. beyond the Sen Committee’s qualitative cri- jective elements, but we sought to put it on WGEEP.)
LETTERS TO THE EDITOR

Western Ghats expert panel report out in public domain
Aarti Dhar that it hasn’t been formallyy members. pered
p by want of regulatory
accepted
p byy the Ministry, y, The WGEA would need to powers,
powers except in the case of
NEW DELHI: Recommending
g and was beingg analysed
y and function in a networked the Dahanu Taluka Ecology
scrapping
pp g of two controver- considered by the Ministry. fashion,, with six constituent Authority, established
sial hydro-power
y p p
projects
j in The expert
p p panel set up
p in State Western Ghats Ecol- through a judgment of the
Karnataka and Kerala that 2010 suggests
gg the constitu- ogy
gy Authorities,, appointed
pp Supreme Court. They are al-
had run into difficulty due to tion of a Western Ghats jointly
j y byy the State Govern- so hampered by want of fi-
opposition from environ- Ecologygy Authorityy (WGEA),
( ments and the Centre. The nancial and human
mentalists, the Western as a statutory authority ap- State Western Ghats Ecol- resources, the panel said in
Ghats Ecology Expert Panel pointed by the Ministry of ogy Authorities should in- its report.
(WGEEP) has suggested set- Environment and Forests, teract closely with the State In some cases,, no HLMC
HLLMC C
ting up of a statutory author- with the powers under Sec- Biodiversity Boards and Pol- has been in place
p for several
ity to protect the Ghats. tion 3 of the Environment lution Control Boards, as years
y at a stretch. WGEEP
The report
p of the p panel,, (Protection) Act, 1986. The well as State Planning De- proposes
p p that theyy should be
headed by Madhav Gadgil, Western Ghats have been partments administering replaced
p byy District Ecology
gy
formerly with the Indian In- identified as an extensive re- the Western Ghats Develop- p Committees in all a Western
stitute of Sciences, Banga- gion, spanning more than six ment Programmes,
g , funded Ghats districts.
lore, has called for states, 44 districts, and 142 throughg Five-Year Plans byy These District Ecology
cancellation of Karnataka’s talukas. the Planning Commission. Committees should work in
Gundia and Kerala’s Athira- It would be appropriate that collaboration with the dis-
pally hydro-projects,
p j , and Regulation lacking all the Western Ghats Devel- trict-level Zilla Parishad/
ggradual p phasingg out of Once created,, the 24- opment Plan schemes are Zilla Panchayat Biodiversity
miningg activities in ecolog- g memberr bodyy will have ecol- worked out by the State Management Committees,
icallyy highly-sensitive
g y areas ogists,
g , scientists,, represen-
p Governments with the as well as District Planning
of Goa byy 2016. tatives of civil society,y, as Authority.y Committees. Once created,
The report
p has been p put well as tribal groups,
g p , offi- Currently, y, the Ecological-
g the authority will have juris-
up p on the website of the cials from the Union Envi- lyy Sensitive Areas are ad- diction on the location of in-
Ministryy of Environment ronment Ministry, y, Planningg ministered with the help p of dustry, and land-use
and Forests,, followingg direc- Commission,, National Bio- High-Level
g Monitoringg planning. It will also be the
tions from the Central In- diversityy Authority,
y, Central Committees (HLMC),( ), ap-
p final authority in declaring
formation Commission and Pollution Control Board,, pointed
p byy the Union Minis- ecologically-sensitive areas,
a court directive, for com- and representatives
p of the tryy of Environment and where facilities like storage
ments, with a disclaimer state government as its Forests. These are ham- dam won’t be permitted.
large dams, and setting up polluting industries.
If there is one single reason to protect the whole of
the Western Ghats, it is the phenomenon of endemism.
According to reliable estimates, they have more than
1,500 endemic species of flowering plants, and at least
500 such species of fishes, amphibians, reptiles, birds,
and mammal
mammals. New species continue to be reported. It
is striking that the ghats represent an extraordinary
sliver of diverse life in a populous country and have in
fact survived with community support. The MoEF
would therefore do well to heed the advice of the expert
group and unhesitatingly reject environmental clear-
ance for two controversial dam projects — Athirapilly
in Kerala and Gundia in Karnataka. The locations of
both come under the most sensitive ecological zone

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Air India to Implement Dholakia Committee Recommendations in a Time Bound Manner

i) Shri Nasir Ali, Joint Managing Director, AI

ROADMAP FOR FISCAL CONSOLIDATION

Vijay L Kelkar - Chairman

Vijay Kelkar, Chairman

1.2. Fiscal Consolidation in India

1.3. The Do-Nothing Scenario

1.4. The Financial Health of OMC’s

We cannot overemphasize the need and urgency of fiscal consolidation. Growth is

There is yet another strategic consideration for us now. It is imperative that as a

On the disinvestment side, it would be extremely difficult for the Government to

On fertilizer subsidy, there is an alarming distortion in usage pattern mainly caused

a) Reduce stocks held in the Central Pool;

2.1. Policy Interventions

2.1.1. Tax Measures

2.1.2. Disinvestment Receipts

In addition to these, an additional source is the disinvestment of minority government

Progressive reduction in food subsidy also needs to be achieved through reduction in

2.1.4. Plan Expenditure

2.3. Social Impact

The Government should be encouraged, for example, to expand social protection

i. Raising the Tax-to-GDP ratio;

3.1. Gross Domestic Product

3.3. Disinvestment Receipts

3.5. Rightsizing Plan expenditure

3.6. Structural Roadmap: Supply Side Reforms

Gross fiscal deficit CAD/GDP Import cover of reserves in months

Data source: Reserve Bank of India database, http://dbie.rbi.org.in.

Figure 2: Crowding out and its reverse

Gross Fiscal Deficit Revenue Deficit Private Capital Formation

Data source: Reserve Bank of India database, http://dbie.rbi.org.in.

k. Non-issue of refunds is a constant source of grievance for taxpayers. When

Offer for sale (OFS) model

Call option model

The salient features of this proposal are: –

6. The Committee on Public Procurement has made recommendations on the usage of

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RESERVE BANK OF INDIA

February 21, 2012

Report of the Nair Committee on Priority Sector Lending

Constitution of the Committee

Major Recommendations of the Committee are:

5. Banks may be encouraged to ensure that the number of outstanding beneficiary

7. In order to encourage construction of dwelling units for Economically Weaker Sections

The recommendations of the Committee are expected to have significant impact in

Report on Modernisation of Indian Railways by Sam

Modernisation of 19,000 km of track.

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Control Office Application (COA)

Audit in Indian Railways

CHENNAI: If the psychological

CHENNAI: The Ministry

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Dharmadhikari Committee Submits its Repot to Civil Aviation Minister

Dharmadhikari report highlights bias, prejudice: IPG

PTI / Friday, June 1, 2012 21:21 IST

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