The Gist May_June 2013 - Www.upscportal.com

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Contents

GIST OF THE HINDU ........................... .......................... ........................... ......................... 2Hypertension Major Contribu tor to Avoida ble Deaths in India: WHO ........................................................................................ 2

No Capital Gains Tax for NIMZs ........................................................................................................................................................ 2

Vienna Meet Sees Divisions on Indias Entry into NSG .................................................................................................................. 3The P-5 Clu b .................................. ........................................ ......................................... ........................................ ................................ 4Antarct ica Concerns Grow as Tourism Numbers Rise ......................................................................................................................5

Abel Prize for Belgian Pierre Deligne ................................................................................................................................................. 6Universal , Rights-based Goals ....................................... ........................................ ........................................ ........................................ 7Promot ing Gender Equa lity and Womens Eights ............................................................................................................................ 7

India up in Arms against Imbalance in ATT Draft ......................................................................................................................... 8BRICS and Morta r for Indias Global Role ...................................... ........................................ ........................................ ................... 8ISRO Plans a New High-resolution Earth Satell ite ........................................................................................................................... 9

UNDP Brackets India with Equator ial Guinea in Human Development Index ........................................................................ 1 0Police Reforms Gender Equa lity ....................................................................................................................................................... 1 1Black Carbon from South Asia Melting Tibetan Glaciers ............................................................................................................. 1 5

Nuclear Cooperat ion, Key to Mul tiple Projects: Kazakhstan .................................................................................................... 1 5

GIST OF YOJANA ........................ ........................... .......................... ........................... ..... 17Budget Proposa lsAs Overview ........................................................................................................................................................ 1 7Growth in GDP at Factor Cost at 20045 Prices (Percent) ........................................................................................................ 2 0

Budget 201314 and Beyond: What it Means for Fiscal Consolidat ion? ................................................................................. 2 4Budget: Concepts and Terminologies ............................................................................................................................................... 2 6A Power Sector Review of Budget .................................................................................................................................................... 2 8

Agriculture and Budget ........................................................................................................................................................................ 3 0Procedur es for Foreign Portfolio Investors Simpl ified ................................................................................................................ 3 2Social Sector Outla ysAs Assessment .............................................................................................................................................. 3 5

Indias Defence Budjet ........................................................................................................................................................................ 3 9Land Use and Agrarain Relat ions ...................................................................................................................................................... 4 2Land Management can Improve Rural Econo my ......................................................................................................................... 4 2

KURUKSHETRA................................................................................................................ 43Poverty in Ind ia ................................................................................................................................................................................... 4 3Strategy to Develop Degraded Land ................................................................................................................................................ 4 4Land Acqusition in India Need for a Paradigm Shift ..................................................................................................................... 4 5

Global Hunger Index, 2012 ............................................................................................................................................................... 4 8Panel on Clima te Change .................................................................................................................................................................. 4 8

PRESS INFORMATION BUREAU ........................ .......................... ........................... ..... 49Human Development Index ............................................................................................................................................................. 4 9

Millennium Development Goal s ...................................................................................................................................................... 4 9Planning Commission Hosting Google Hangout ............................................................................................................................ 5 05th BRICS Summit - eThekwini Declarat ion and Action Plan ................................................................................................... 5 1

SCIENCE REPORTER ...................................................................................................... 58100th India n Science Congress at Kolka ta ..................................................................................................................................... 5 9Recommenda tions of the Congress .................................................................................................................................................. 5 9Plants Behave a Lot Like Humans! ................................................................................................................................................. 6 0

COURTESY:

The Hindu

Yojana

Kurukshetra

Press Information Bureau

Science Reporter


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Gist of

THEHINDU

HYPERTENSION MAJOR CONTRIBUTORTOAVOIDABLE DEATHSIN INDIA: WHO

The World Health Organisation (WHO) isfinalising a set of nine voluntary globaltargets that will help in reducing non-communicable diseases (NCDs), particularlyhypertension which is a major contributorto cardio-vascular diseases.

The voluntary targets being discussed arereduction in premature mortality from NCDs

by 25 per cent by 2020 by reducing intakeof alcohol and physical inactivity by 10 percent each and intake of salt/sodium by 30

per cent. Th is wil l reduce high bloodpressure incidence by 25 per cent.

Use of tobacco is targeted to be broughtdown by 30 per cent in addition to improving

medicines, technology and counselling. Hypertension is a major contributor to

avoidable death and disease in India, too,with an increasing impact in the rural areas.

Over 140 million people are believed to besuffering from high blood pressure in thecountry and the number is expected to crossthe 214 million mark in 2030. Hypertension isa major risk factor for cardio-vasculardiseases that killed 2.7 million people in 2004and will result in the death of over 4 million

people by 2030.

NO CAPITAL GAINS TAXFOR NIMZS The Central Government, came out with sops

for setting up of National Investment andManufacturing Zones (NIMZs) doling outvarious benefits, including exemption from

capital gains tax and eligibility for viabilitygap funding.

According to the document notified by theDepartment of Industrial Policy and

Promotion (DIPP), the units in the NIMZswill be exempted from capital gains tax onsale of plant and machinery.

The tax break will be granted in case of re-investment of sale consideration within threeyears for purchase of new plant andmachinery in any other unit located in thesame NIMZ or another NIMZ.

NIMZs will now be eligible for Viability GapFunding, which cannot exceed 20 per centof the project cost. As per the norms,developers of NIMZs will be allowed to raisefunds through external commercial

borrowings (ECBs) for developing theinternal infrastructure. Soft loans frommultilateral institutions will be explored forfunding infrastructure development in

NIMZ. Similarly, assistance would be provided for

negotiating non-sovereign multilateral loansby providing back-to-back suppor t, ifnecessary. On the issue of labour policy,the government will put in place a job lossscheme to enable units to pay suitablecompensation, in the eventuality ofclosures, through insurance.

The compensation under this instrument

would be equivalent to 20 days average payfor every completed year of continuousservice, or any part thereof in excess of sixmonths, it said.

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The government has proposed to set up 11NIMZs to en hance th e sh are ofmanufacturing in gross domestic product(GDP) to 25 per cent within a decade andcreating 100 million jobs. Welcoming the newnorms, Federation of Indian Chambers ofCommerce and Industry (FICCI) said theseguidelines provided a clarity and directionto investors on how the NIMZs needed to

be developed.

VIENNA MEET SEESDIVISIONSON INDIAS ENTRYINTO NSG

The United States and three other big powersthis week argued for allowing nuclear-armed

India into an atomic export control group,but China and several European statesappeared doubtful about the move,diplomats said.

The divisions were in evidence duringclosed-door talks of the 46-nation NuclearSuppliers Group on whether India could joinand become the NSGs only member outsidethe Non-Proliferation Treaty (NPT), theysaid.

The U.S., France, Britain and Russia wereamong those which backed India Asiasthird largest economy while smaller

European states such as Ireland, theNe th er lands and Switzer la nd hadreservations.

China stressed need for equal treatment inSouth Asia, an apparent reference to its allyPakistan, which is also outside the NPT andhas also tested atomic bombs.

The NSG which includes the U.S., Russia,China, European Union countries and someothers is a cartel that tries to ensure thatcivilian nuclear exports are not diverted formilitary purposes.

India and Pakistan, which have fought three

wars, have both refused to sign the 189-nation NPT, which would oblige them to scrapnuclear weapons.

Close relations between China and Pakistanreflect a long-standing shared wariness of

their common neighbour, India, and a desireto counter U.S. influence across the region.

IRANIAN NUCLEARPROGRAMME &WESTERN CONCERN

Iran and the P5+1 group of world powers inAlmaty are the first to indicate the emergenceof a possible way out of the stalemate overthe Islamic Republics nuclear programme.

In the talks, the P5+1 dropped three earlierdemands: that Iran stop enriching uraniumto a 20 per cent concentration of the U-235isotope, that it close down its heavilyfortified Fordow enrichment plant, and thatit send its stockpile of enriched fuel abroad.

The United States now issues blanketwaivers for countries which buy Iranian oil.Secondly, the EU General Court has ruledEU sanctions on two major Iranian banksunlawful. And yet, sanctions have hit Iranseconomy and its people hard: the rial hasfallen 40 per cent in the past year, andunemployment is rising.

American and European bans have alsointimidated many countries and privatecompanies into suspending Iranian links. Soanything which helps reverse the sanctionstide ought to be welcomed by Tehran.

The latest P5+1 offer is proof that the hard-line positions the U.S. has taken on theIranian nuclear issue in the past have beencounterproductive.

Two years ago, the Obama administrationscuttled a Turkish-Brazilian proposal thatwould have involved Iran shipping a majorchunk of its 3.5 per cent enriched uraniumstockpile to Turkey in exchange for enough20 per cent uranium to produce medicalisotopes at the Tehran Research Reactor.

By killing that deal, the U.S. merely ensuredthat the Iranians went ahead and produced

the 20 per cent uranium themselves. It was to sidestep this sort of outcome thatthe former head of the International AtomicEnergy Agency, Mohammed el-Baradei, hadfirst floated the idea of a freeze in sanctions




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on Iran in exchange for a freeze in enrichment.The Almaty offer suggests the U.S. hasfinally understood that this is the only wayto move forward.

THE P-5 CLUB The exclusive P-5 (Permanent Five) club.

Theirs is an entrenched reluctance to sharethe high table with others and, from their

perspective, understandably so. Presently, at least two of them would be hard

put to just ify their privileged position.Frequently, the P-5 mouth platitudes to

please the aspirants, even whi lst theirnegotiators at the United Nations do

whatever it takes to hold back progress. Second, the UfC or the Coffee Club countries

which at best total 10-11, including ourneighbour on the west, along with Italy anda few others. Secure in the knowledge thatthey would never make it to the expandedsetting, they work overtime to create fissuresand stall forward movement to keep thehouse divided.

Need for s128 Votes

For Security Council reform to take place, aminimum of 128 votes will be required in the GeneralAssembly on a resolution calling for expansion in

both th e ca tegori es. In a subsequent ph ase,individual countries would have to demonstratetheir ability to garner 128 votes for theircandidatures. Ratification by legislatures ofmember states would then make possible theCharter amendment.

Why is the present juncture a make or break

scenario?

Celestial Fireball

The 2012 DA14 asteroid tracked in advancedid not harm us; it skimmed past nearly27,600 km from the Earth on February 15.

But the same day, a meteor, unconnected with2012 DA14, came out of the blue and explodedover Chelyabinsk, Russia at 9.25 am local timeinjuring more than a thousand people. It hasmany firsts to its credit.

The 55-foot meteor weighed about 10,000tonnes before it entered Earths atmosphere.

It is the largest known celestial object tostrike Earth more than a century after the onethat came crashing down over the TunguskaRiver in Siberia in 1908.

The Chelyabinsk meteor had a speed of only18 km per second, far less than the April 22,2012 Sutters Mill record speed of 28.6 km

per second. Once th e Russian meteorentered the atmosphere, a combination of

pressure and heat caused it to break apart19-24 kilometres above the earth producinga fireball that blazed across the sky.According to the Russian Geographic

Society, the bright flare was more than 2,500degree C.

The disintegration took place 32.5 secondsafter it entered the atmosphere, and releasedan estimated energy of nearly 500 kilotons,

NASA notes. The shockwaves caused by the explosion

shattered glass and damaged manybuildings. The infrasound produced by themeteor was the strongest ever detected bythe Comprehensive Test Ban TreatyOrganisation (CTBT) sensors.

CITES Convention

The Convention on International Trade inEndangered Species (CITES), the only treatythat regulates international trade in wildlife,has banned any trade in tiger parts, eitherdomestically or internationally.

The trade, so far, thus has been understoodas illegal. But here is the shocker: a newinvestigation in China by the UnitedKingdom-basedEnvironmental InvestigationAgency (EIA) has found that domestic tradein China in tiger parts, for skins and tigerwine, is allowed, nurtured, and legalised.

CITES has begun its 16th Conference of

Parties (CoP16) in Bangkok, Thailand(March 3-14).

The issue of stockpiles and their sale willcome up again, but these internationalnegotiations, while otherwise useful, will be




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far from adequate to secure our wildlife. Aslong as stockpiles exist, the only way forIndia to save its elephants, tigers (and otherwidely poached animals) is to enforcedomestic protection.

CITES classifies species under differentAppendices, consequent to internationalthreats from poaching and rarity of thespecies.

Elephants, both Asian and African, are onAppendix 1, with a ban on trade in ivory.Several African states allow trophy huntingand management-based culling quotas forshooting elephants.

There are thus tonnes of ivory in stockpiles

in several African countries. Consequently,several countries demand licences for thelegal sale of elephant ivory.

In 2007, CITES allowed a one-off sale of ivoryin government-held stockpiles for Botswana,South Africa and Namibia. At CoP16, CITESwill discuss the workings of a decision-making mechanism for further sale of ivory.

This will remain a pulsating threat to wildelephants in India and African countries.

Consider the numbers: a new study showsthat 11,000 elephants have been poached inGabon since 2004; this year, poachers in

Kenya killed a family of 11 elephants. Lastyear, in what is perhaps a newly documentedtrend, poachers shot down thousands ofelephants, using machine guns fired fromUgandan helicopters, in Congo (and perhapsin other countries as well). In India, the forestdepartment works hard to ensure the safetyof elephants, and the threat of poachers, whoare adaptive in the killing of severallucrative species as well as enforcers whoget in the way, is always a real one.

Given the global scenario, at this CITESmeeting, India will find itself sandwiched

between demand and supply forces: bothlegal, and illegal in the garb of legal. Thisoutlines with even more urgency the need tokeep our own forests safe, and not dependon transnational regimes to save our species.

ANTARCTICA CONCERNS GROWAS

TOURISM NUMBERS RISEIn a remote, frozen, almost pristine land where

the only human residents are involved in research,that tourism comes with risks, for both the continentand the tourists. Boats pollute water and air, andcreate the potential for more devastatingenvironmental damage. When something goeswrong, help can be an exceptionally long way off.The downturn triggered by the economic meltdowncreated an opportunity for the 50 countries that shareresponsibility through the Antarctic Treaty to setrules to manage tourism, but little has been done. Aninternational committee on Antarctica has produced

just two mandatory rules since it was formed, andneither of those is yet in force. Its not just thenumbers of tourists but the activities that arechanging.

A major worry is that a large cruise shipcarrying thousands of passengers will run intotrouble in these ice-clogged, storm-prone and poorlycharted waters, creating an environmentallydisastrous oil spill and a humanitarian crisis for thesparsely resourced Antarctic research stations anddistant nations to respond to. The United States has

been criticised on environmental grounds for buildinga 1,600-kilometre (995-mile) ice road from McMurdoStation to the South Pole on which tractors drag fueland supplies on sleds. The road provides a morereliable alternative to frequently grounded airservices.

A Trial Drug Raises hope to Eradicate

Malaria

A candidate drug (ELQ-300) was foundcapable of treating and preventing malariainfection, and even blocking transmissionduring a trial on mice.

While the currently available drugs targetthe parasite at the blood stage of infection,the candidate drug was able to target both

the liver and blood stages. Going beyond destroying the parasite in the

body, the drug (quinolone-3-diaryether) wasfound to be effective in preventing infection

by attacking the parasite forms that are




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crucial to disease transmission (gametocytes,and the vector stages zygote, ookineteand oocyst).

Any drug that does even half of what ELQ-300 is capable of will be a boon nearly 200million people in the world suffer from malariaevery year, and the mortality is as high as 1.2million. To make matters worse, resistance tocurrently available drugs is emerging.

Two candidate drugs ELQ-300 and P4Q-391 were tested against bothPlasmodium

f a l c i p a r u m a n dP l a s m o d i u mvivax species . Isolates ofP.

falciparum andP. vivax taken from patientsinfected with malaria in southern Papua,

Indonesia were tested using both the drugcandidates. ELQ-300 was found to besuperior against both drug-resistant species.

ABEL PRIZEFOR BELGIAN PIERRE DELIGNEBelgian mathematician Pierre Deligne, who is

regarded as one of the most celebratedmathematicians of the 20th century, has been chosenfor this years prestigious Abel Prize in Mathematics.The 69-year-old professor emeritus of the Institute ofAdvanced Study, Princeton, is being awarded for hisseminal contributions to algebraic geometry and fortheir transformative impact on number theory,

representation theory and related fields. SUBMARINE VARIANTOFBRAHMOS TEST-FIRED

The maiden flight of the submarine variantof the Indo-Russian supersonic cruisemissile, BrahMos, was successful when itwas test-fired from a pontoon offVisakhapatnam in the Bay of Bengal.

It marked a global first in the vertical launchof a supersonic cruise missile from anunderwater platform.

The anti-ship version of the potent missile,with a range of 290 km, blasted off from the

pontoon. The capability has been proven and the

missile is ready for fitment on the Navysfuture submarines under Project 75-I,.

Oslo Summit Asks: Is Melting Arctic Sea

Ice a boon or a bane? With India applying for observer status on

the intergovernmental Arctic Council, alongwith China and other countries, the meltingsea ice and its consequences, mainly in termsof opportunities for exploration of naturalresources in the Arctic region, is a crucialdebate.

At the first Arctic Summit organised by TheEconomistin Oslo on Tuesday, though Indiawas not represented, climate change issuesfigured as much as the regions undiscoverednatural resources, which many countries and

oil companies are eyeing. While India set up a research station in theArctic in the 2008, and is keen on a say in thearea, its neighbour is far ahead of it.AChinese icebreaker made a three-month

journey in the Arctic Ocean last year, thusbecoming the first Asian ship to navigatethrough the treacherous waters.

Putting Bharat on an

Equal Footing with India

Mr. David Cameron is co-chair, along withIndonesian President Susilo BambangYudhoyono and Liberian President Ellen

Johnson Sirleaf, of a 27-member High LevelPanel of Eminent Persons (HLP) to makerecommendations regarding the vision andshape of a post-2015 development agenda.

The Panel was set up by United NationsSecretary-General Ban Ki-moon and has metthree times till now.

The inter-governmental process ofnegotiating and adopting new goals will startwith the U.N. General Assembly in September2013 and will conclude by 2015.

India, home to a large segment of humanityand quite far from meeting the present

Millennium Development Goals (MDGs), willhave a key role to play in the agreement overa relevant development framework for post-2015.




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UNIVERSAL, RIGHTS-BASED GOALS

A universal set of goals based on principles ofhuman rights should be applicable to all countries.The world is no longer divided into north-south, oreast-west. The world order has moved from a G7world to a G20 world, with the poor living largely inmiddle-income rather than low-income countries andwith aid no longer being the main way out of poverty.

In such a world, we cannot have one set ofgoals for the developing world and another one forthe developed world, whose only responsibility inthe old world order was to provide aid. We need toensure that we live in a more equal and sustainableworld, adopting principles of equity and common

good but with differentiated responsibilities to attainthat.

Tackling Social Exclusion

Eradication of extreme poverty would meanfocusing on the one-third of worlds people withdaily income below $1.25 who live in India. However,we need sharper focus on the bottom 20 per cent ofthe population and at the root causes of poverty andinequality. In India, and elsewhere, this group wouldconsist of groups socially excluded because ofdiscrimination on the basis of caste, religion, ethnicity,or gender. This needs to be tackled at the policy level,rather than just focusing on secular economic growth

as the sole means to eliminate poverty.Combating Inequality

We also need to look at inequality and therelationship between the rich and the poor say theratio between the income and wealth of the top 20 percent and the bottom 20 per cent of the population.This would focus attention on correcting andadjusting the pattern of development during the lastdecade that has led to widening inequalitiesworldwide, with the rich enjoying a disproportionateshare of the gains from development, and very slow

progress in poverty reduction.

PROMOTING GENDER

EQUALITYAND WOMENS EIGHTS

We need much stronger emphasis on genderequality compared to the last round of MDGs. Astrong goal building on the commitments already

made under the Beijing Platform in 1995 and theConvention on the Elimination of All Forms ofDiscrimination Against Women (Cedaw) ensuringwomens economic, social and political r ights isessential. This could be translated into targets onequal ownership of property, including land, aviolence-free life, and equitable representation in law-making bodies.

Combining Inclusiveness and

Sustainability

The Rio+20 Conference in June 2012established an Open Working Group of 30 membersto propose sustainable development goals (SDGs)for presentation to the U.N. General Assembly. The

new MDGs and the SDGs need to be combined intoone set of goals that have both inclusiveness andsustainability.

Introducing Monitoring and

Accountability

The current MDGs have no monitoringmechanism, eliminating accountability. Once the newgoals are adopted, each country needs to set up atripartite mechanism including the government,civil society, and the private sector to monitor

progress in the attainment of the new MDGs.

Giant Leap in the Theory of Universe

The European Space Agency (ESA) unveiledthe most detailed map yet of relic radiationfrom the Big Bang, revealing data it hopeswill shed light on the creation and expansionof our Universe.

The 50-million pixels, all-sky image of theoldest light adds an edge of precision to someexisting theories, defining more precisely thecomposition of the Universe and its age about 80 million years older than previouslythought.

The map is composed of data gathered byESAs Planck satellite, launched in May 2009

to study Cosmic Microwave Background the remains of ancient radiation emitted asthe Universe started cooling after the BigBang.




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INDIAUPIN ARMSAGAINST

IMBALANCE IN ATT DRAFT India may ask western countries to look for

new customers for their defence equipmentas it feels they were instrumental in loadingthe Arms Trade Treaty (ATT) againstimporters. The Treaty will come up for votingat the U.N. on April 2.

India feels let down by the West butwelcomed assurances by France and Russiaof keeping the ATT out in all future defencecontracts.

As the largest arms importer in the world,India is concerned about the imbalance in

the ATTs final draft. While it allowsexporters to unilaterally cancel contracts, aprovision to safeguard the interests ofimporters was quietly dropped.

India has not endorsed the treaty text. Thegovernment will take a position after athorough review. The value of a treaty thatdoes not ensure universal adherence would

be obviously questionable, warned thesources, fearing that the decision to ramthrough the ATT by a vote would mean itwill go the same way as the Oslo Accord oncluster munitions did.

The ATT aims at regulating $ 70 billion worthof annual trade in arms. It is expected to be amore effective instrument than the voluntaryU.N. register for conventional arms.

The third area where Indian views and thetext of the final draft do not coincide is theexclusion of gifts and loans from the purviewof the Treaty. Sources said this was becauseof a deal cut between China and the EuropeanUnion early on in the negotiations.

BRICS ANDMORTARFORINDIAS GLOBAL ROLE

India is at a unique geopolitical moment. On

the one hand its neighbourhood and thelarger Asian continent are beingunpredictably redefined.

India and China are chart ing newgeographies of contests, the Indian Ocean

and South China Sea. The Arab Spring hasexposed the fundamental inadequacies inMiddle Eastern and North African governingstructures but has also given rise to anuncertain political future in an importantenergy-producing region. Last, but certainlynot least, Chinas growing assertiveness inthe Asia-Pacific region has led to increased,if sometimes seemingly unnecessary, conflictwith neighbours in Southeast Asia and Japan.

On the other hand, the world is seeing a once-in-a-century churn. The global board ofdirectors that sit on the high table and definerules for conduct of political and economicgovernance are now unrecognisable from the

lot just after World War II. India must seize the moment to shape these

revisions of rules devised by the Atlanticcountries and defend its growth anddevelopment interests in areas such as trade,Intellectual Property Rights (IPR), space,climate, and energy policy, among others.

Regional order and global governance areboth in flux and demanding Indias attention.This is not unique by itself. What is differentthis time around is that India has the capacity,increased capabilities and enhanced level ofdemonstrated intent to engage with this dual

external relations challenge. In order to attainthe global power status it desires, India mustwalk and chew gum at the same time. It musttend to its immediate and extended Asianneighbourhood while also engaging with thetask of shaping a new rules-based politicaland economic order. BRICS represents auniquely appropriate platform and flexiblemechanism with which India can address thisdual imperative.

Engaging with China and Russia in anenvironment free of the sharp edges often wroughtin bilateral negotiations will catalyse congruence overan array of mutually important issues. Any stableAsian order must have at its core, a certain level ofaccord among these three large continental powers.The past would need to be defrayed and the path forfuture integration would need to sidestep suspicion




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and history. Annual BRICS summit-level discussionson political and economic matters allow the threecountries such an arena of tactical camaraderie. Thecurrent moment allows a unique opportunity for thethree to shape a new construct for Asia amidst theregional flux. Perhaps at some stage it may beworthwhile having a summit level RIC meeting on thesidelines of BRICS to discuss this Asian project.

On resetting and reshaping economic andpolitical governance, BRICS has the potential to bethe new (and often criticised) game changer. Thesheer size and rate of growth of intra-BRICS trade andeconomic exchange will allow each of these countriesto exert their collective weight for their individualgains. Who gains more should not matter, as long as

every member benefits from this dispensation and theorder is visibly equitable.

There are a few benefits that India must seekthrough and with the BRICS. First, there are manymultilateral organisations within which a BRICS-

bloc can exert significant leverage. The U.N. andWorld Trade Organization are two such forums. Whilegeopolitical and economic thinking among BRICS isnot always in-sync, where there is consensus (andthe areas are increasing rapidly) BRICS could be acompelling voice. Like they did on the debates onnon-interference and Responsibility to Protect.Similarly, Indias views on climate change, financial

norms, trade rules and so on could also benefit fromBRICSs aggregate voice. Of course the UNSCmembership issue strikes a discordant note but itshould not cannibalise the possible coming togetheron other matters.

ISRO PLANSANEW HIGH-RESOLUTION EARTH SATELLITE

The Indian Space Research Organisation isto build a remote sensing satellite, Cartosat-3, capable of taking images of the earth witha resolution of 0.25 metres.

Currently, GeoEye-1 produces the highest

resolution earth images taken by acommercial satellite. The Americanspacecraft, launched in September 2008, iscapable of taking panchromatic images with0.41 metre resolution. WorldView-2, another

satellite operated by the same company,Digital Globe, offers a best resolution of 0.46metres. However, in accordance with U.S.regulations, commercially released imagesfrom these satellites are degraded to 0.5 metreresolution.

Digital Globe plans to launch WorldView-3next year, which will supply images with aresolution of 0.31 metres. Cartosat-3s camerawould better that performance. In the wordsof one expert, this satellites images couldallow a scooter to be distinguished from acar.

In 1988, ISRO launched Indias firstoperational remote-sensing satellite, IRS-1A.

The best resolution its cameras couldprovide was about 36 metres. Seven yearslater, IRS-1C went into space, with a

panchromatic camera that had a resolutionof 5.8 metres. It supplied the highestresolution images available from any civiliansatellite in the world till Ikonos, an Americansatellite launched in 1999, began takingimages with better than one-metre resolution.India launched the Technology ExperimentSatellite in 2001, followed some years later

by the Cartosat-2 series of satellites thatcould take images with 0.8 metre resolution.

GIVING PANTHERA TIGRISA CHANCE India was once the only home to the worlds

big four cats the lion, tiger, cheetah andleopard. It also played host to over 13 percent of global avian species, an impressivenumber of mammalians and an enviable

presence of Lepidopterans (a large order ofinsects that includes moths and butterflies).

However, once the Mughals, the Britishbureaucracy and Indias feudal aristocracyestablished the hunting of animals to be theultimate symbol of manhood and nobility, itwas only a matter of time before severalspecies became extinct.

The earliest recorded extinction was that ofthe Himalayan Mountain Quail in 1876,followed by the cheetah, when the Rajah of




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Korwai in northern Madhya Pradesh shotthe last three (a mother and her two cubs) on

November 24, 1947. Today, according to theInternational Union for Conservation of

Nature, nearly 84 bird species are endangeredwhile among mammals, the tiger is teeteringon the brink of extinction.

The common Indian is least concernedwhether the tiger survives or perishes. Nordoes he care about the consequences ofglobal warming or the diminishing green gene

pool and biodiversity, which are the key tohuman survival.

India boasts of being home to about 70 percent of surviving tigers in the world, do I

have a feasible plan of action for the speciesassured survival?(a) through an ordinance, place all tiger

reserves and contiguous sanctuariesand protected/notified forests in thecountry, together with all their currentadministrative assets and liabilities,under the existing National TigerConservation Authority (NTCA) for adecade. Offset the loss of revenue toStates arising from this ordinance forthe period of its operation, throughspecial budgetary allocations.

(b) concurrently, bring the NTCA under the

Prime Ministers Office.(c) hold an annual tiger revival audit by

an independent body of three to fiveexperts, drawn from within and outsidethe country. Induct 30 per cent newmembers to the audit team each yearand retire an equal number from the

previous team.(d) the Prime Minister must take the annual

audit findings as fresh inputs, formandatory implementation and to keepParliament informed.

(e) place a moratorium on de-notificationsand or alteration of boundaries ofexisting national parks, tiger reserves,wildlife sanctuaries and notified forests

both by Parliament and by Statelegislatures, through the sameordinance.

(f) enact stringent legislation to deal withpoaching

(g) create a save the tiger caucus (in thephraseology and practice of the U.S.Capitol Hill) in both Houses ofParliament and State Legislatures, toregularly monitor results and progresson recommendations of the revival auditand insist on midcourse correctionwhen circumstances so demand.

Emperor Ashoka chose the Asiatic Lion asthe symbol of Indias nationhood. Twenty-two centuries later, the Democratic Republicof India placed the Royal Bengal Tiger on asimilar pedestal as the national animal. Let

us arise to save both. Let all Indians be fired up by the optimism ofDame Jane Goodall, the British primatologist,ethologist, anthropologist, and U.N.Messenger of Peace, who, when asked byan interviewer in September 2009 if she

believed there was hope for animals andtheir world, said: At one time (the 1980s)there were just 12 Californian Condors [thelargest North American land bird and on theverge of extinction] in the wild and one incaptivity.

UNDP BRACKETS INDIAWITH EQUATORIALGUINEAIN HUMAN DEVELOPMENT INDEX

India has been ranked 136 among 187countries evaluated for human developmentindex (HDI) a measure for assessing

progr ess in li fe expectan cy, access toknowledge and a decent standard of livingor gross national income per capita.

The Human Development Report of theUnited Nations Development Programme(UNDP) for 2013, released, puts Indias HDIvalue for the last year at 0.554, placing it inthe medium human development category,which it shares with Equatorial Guinea.

On the positive side, Indias HDI value wentup from 0.345 to 0.554 between 1980 and 2012,an increase of 61 per cent or an averageannual increase of 1.5 per cent.




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Interestingly, the report notes that socialmovements and the specific issues mediahighlight do not always result in politicaltransformations benefiting the broadersociety.

There is a word of appreciation for India for itspolicies on internal conflicts. India has shown thatwhile policing may be more effective in curbingviolence in the short term, redistribution and overalldevelopment are better strategies to prevent andcontain civil unrest in the medium term, the reportsays, referring to Operation Green Hunt launchedagainst Maoists, which has come under sharpcriticism from human rights activists within thecountry. The other initiatives that have been lauded

are the right to education and the rural employmentguarantee scheme that provides up to 100 days ofunskilled manual labour to eligible poor at astatutory minimum wage. This initiative [the jobguarantee scheme] is promising because it providesaccess to income and some insurance for the pooragainst the vagaries of seasonal work and affordsindividual the self-respect and empowermentassociated with work.

Despite Indias progress, its HDI of 0.554 isbelow the average of 0.64 for countries in the mediumhuman development group, and of 0.558 for countriesin South Asia. From South Asia, countries which areclose to Indias HDI rank and population size are

Bangladesh and Pakistan with HDIs ranked 146 each.But the report points out that the ranking masksinequality in the distribution of human developmentacross the population.

Even on the Gender Inequality Index inequalities in reproductive health, empowerment andeconomic activity India has been ranked 132ndamong the 148 countries for which data is available.In India, only 10.9 per cent of the parliamentary seatsare held by women, and 26.6 per cent of adult womenhave reached a secondary or higher level ofeducation, compared with 50.4 per cent of their malecounterparts. For every 100,000 live births, 200

women die of causes related to pregnancy, and femaleparticipation in the labour market is 29 per cent,compared with 80.7 per cent for men.

As for the Multidimensional Poverty Index(MPI), which identifies multiple deprivations in the

same household in education, health and livingstandard, Indias value averages out at 0.283, a littleabove Bangladeshs and Pakistans. The figures forevaluating MPI have been drawn from the 2005-06survey, according to which 53.7 per cent of the

population lived in multidimensional poverty, whilean additional 16.4 per cent were vulnerable to multipledeprivations.

POLICE REFORMS GENDER EQUALITY Behind the rot is the Police Act of 1861

legislated by the British after the IndianMutiny of 1857 to impose a police force upontheir subjects, which could be used solely toconsolidate and perpetuate their rule, says

Mr. Singh. It has been over a century since the need for

reforms was initially felt. The first IndianPolice Commission of 1902-03 found that the

police force throughout the country is in amost unsatisfactory condition; that abusesare common everywhere; that this involvesgreat injury to the people and discredit tothe government; and that radical reforms areurgently necessary.

Several commissions and committees havestrongly recommended major changes butthe political executive continues to retain its

stranglehold on the police. Every successivegovernment finds it convenient to use,misuse and abuse the police for its partisan

political ends, Mr. Singh says. Significantly, three of the seven key Supreme

Court directions in the case were theStates were to establish State SecurityCommission (to insulate the police from

political pressure), Police EstablishmentBoard (to give autonomy in personnelmatters), and Police Complaints Authority(to look into complaints of policemisconduct).

A compliance report by the CommonwealthHuman Rights Initiative (CHRI) paints adismal picture. It says that though mostStates have set up the State SecurityCommission, they do not reflect the courts




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criteria with regard to composition, functionand powers. Andhra Pradesh, Jammu andKashmir, Orissa and Tamil Nadu have notcomplied with this directive.

Only Arunachal Pradesh, Goa, andMeghalaya are in full compliance with all thecriteria laid down by the court for PoliceEstablishment Board, while Bihar has beennon-compliant.

Ironically, no State government hasestablished Police Complaints Authoritiesat district and State levels that fully complywith the court orders. A significant minority

Uttar Pradesh, Tamil Nadu, Mizoram,Madhya Pradesh, Jammu and Kashmir and

Andhra Pradesh have completely ignoredthe directive.

Another peculiar case is that of the ModelPolice Bill, prepared in 2006 by the PoliceAct Drafting Committee (PADC) of theUnion Home Ministry, which complementsthe courts judgment. The Ministry, whichcontrols the Delhi Police, was to enact theModel Act in the National Capital so thatit could be implemented by other States (aslaw and order in a state subject), but the filehas been shuttling between North Block andthe Delhi government.

Noting that so far only 12 States haveenacted their own versions of the new PoliceAct, CHRIs Coordinator (Police ReformsProgramme) Navaz Kotwal observes: Acursory look at the recent laws shows thatmost of these new pieces of legislation areas regressive as if not more than thearchaic laws that they replaced. New lawsare being drafted in complete secrecy by asmall lobby of police officers and bureaucratswithout involving the public. They givestatutory sanction to all the bad practicesthat existed. Worryingly, these Acts tend toreduce or dilute accountability.

However, since the time the princely state ofTravancore appointed women as SpecialPolice Constables in 1933 for the first time inmodern India, progress on this front has been

tardy. While repeated recommendations statethat women should account for at least a thirdof the civil police force up to the level ofsub-inspectors, as of 2011, of a total of 16.6lakh personnel, only 93,887 were women. Thisaccounted for a mere 5.65 per cent, markingan increase of 4.6 percentage points over twodecades since 1991.

Among the States, Maharashtra has made alate surge. As of 2011, in absolute terms, ithad the highest number of women personnel,doubling the number in two years since 2009.It had 12,813 women in 2009 and the numberdoubled to 24,219 in 2011, which is 13.2 percent of the 1.82 lakh-strong force. Tamil Nadu,

an early starter, followed with the figure of15,864, also having doubled the number inthe two-year period. Yet, at the other end ofthe spectrum is Mizoram, with not onewoman in a force of 10,861 and the UnionTerritory of Daman and Diu.

Likewise, the representation of women in theCentral police forces remains dismal. Women

personnel and officers constituted a mere 2per cent of the more than two lakh troopersrecruited by paramilitary forces in the lastthree years and in the initial few months of2013. While 20,73,48 personnel were recruited

in various ranks in the CRPF, the BSF, theITBP, the SSB, the CISF, Assam Rifles andso on between 2010 and 2013, the number ofwomen among them was a mere 4,733.

Moreover, 13 States and Union Territorieshave no all-woman police stations. Accordingto data from the Bureau of Police Researchand Development, there were just 442 such

police stations across India as on January 1,2011. Tamil Nadu had the maximum numberof stations (196), followed by Uttar Pradesh(71). Beyond the numbers, for the womenwho are already in, there is a range of issuesthat need to be addressed to mainstream andempower them for the full gamut of policingfunctions. A lot remains to be done also interms of working conditions and facilitiesthat are oriented to their needs.


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DONT MUDDYTHE

KISHENGANGA VERDICTThe verdict (Part I) of the Court of Arbitration

(CoA) on the Kishenganga dispute raised by Pakistanhas gone in favour of India on the primary count ofwhether or not the project ab initio violates the IndusWaters Treaty (IWT). On a plain reading of the textof the Treaty, the project was clearly in order.Annexure D, Part 3, Section 15(iii) states, Where aPlant is located on a tributary of the Jhelum on whichPakistan has any agricultural or hydroelectric use,the water released below the plant may be delivered,if necessary, into another tributary but only to theextent that the then existing agricultural use or

hydroelectric use by Pakistan on the former tributarywould not be adversely affected.The Kishenganga is a tributary of the Jhelum

which takes the name Neelum on the Pakistan side ofKashmir. The project under construction by India onthis stem was originally planned as a 900 MW storage

project but was subsequently converted into a 330MW run-of-the river scheme following environmentaland displacement issues in the Indian catchment. Therevised project would divert Kishenganga flows east,less ecological releases, through a tunnel to join theMadmati Nullah. This in turn flows into the KashmirValley to join the Wular Lake that is drained by themain Jhelum which flows into the Pakistani side ofKashmir where it is met by the Neelum river a littleabove Muzaffarabad.

The charge of illegality raised by Pakistan wasthus clearly a red herring. The real issue was whetherPakistan would receive sufficient flows for its own930 MW Neelum-Jhelum project with a vague andfluctuating irrigation component of up to 1,30,000acres. India had agreed to let down some minimumreleases and also argued that these flows would beaugmented by other free flowing nullahs that join theriver between the Indian and Pakistan dams.

The CoA, however, has ruled that India mustmaintain a minimum rate of flow below its

Kishenganga dam and that it will determine thisquantum in its final award to be announced by theyear-end. While that award is awaited, what is notclear is whether the CoA satisfied itself about thenature and quantum of Pakistans then existing

uses: when it first raised the issue with India. Thisa matter on which the Pakistan position has beendodgy from the very start, with varying claims butlittle to show by way of then existing uses on theground.

This issue needs to be clarified beyond doubt,else it will mean that while India is held to the letterand spirit of the Treaty, Pakistan is not and its waterdemand may be arbitrarily enhanced at will. Thesecond ruling the CoA has given is on Pakistansargument that the Neutral Experts (NE) award on theBaglihar dispute is bad insofar as it permits India todeplete its dead storage in order to flush the reservoirof accumulating sediment. India earlier compromisedon this issue in the case of the Sallal project, also on

the Chenab. In the result the dam all but silted upwithin a single season, drastically reducing power

production. The CoA has however stated the rulingwould not apply to Indian projects currently underoperation or construction whose designs have beencommunicated to Pakistan and have not beenobjected to by the latter.

The fact is that against a total storage of 3.60million acre feet to which India is entitled on the threewestern rivers, the current storage is pretty near zero.All its major projects are run-of-river schemes thathave strictly determined pondages. Section 2(g) ofAnnexure D, defines a run-of-river plant as a

hydroelectric plant that develops power without LiveStorage as an integral part of the plant, except for

pondage and surcharge storages. Pondage, in turn,means Live Storage of only sufficient magnitude tomeet the fluctuations in the discharge of the turbinesarising from variations in the daily and weekly loadsof the plants. The ponded water must be returned tothe river within 24 hours, the system operating muchlike a circulating fountain.

THIRD ANTI-SUBMARINEWARFARECORVETTELAUNCHEDIN KOLKATA

In a major step towards indigenisation and

making the Navy self-reliant, the third anti-submarine warfare (ASW) corvette,designed under the ambitious Project-28 (P-28) by the Navys Directorate of NavalDesign, was launched in Kolkata.




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Aimed at enhancing the Navys underwaterwarfare capabilities, the warship, in a first ofits kind, will be fitted with indigenous state-of-the-art weapons and sensors, including amedium range gun, torpedo tube launchers,rocket launchers and close-in weaponsystem.

Being built by one of Indias leadingshipbuilders, Garden Reach Shipbuilders &Engineers Ltd. (GRSE), it has been namedafter an island Kiltan in theLakshwadweep archipelago of India.

With nearly 90% indigenisation content, thebuilding of the corvette was a major initiative.

The first GRSE-built ASW corvette, Kamorta,

is expected to be delivered to the Navy bythis year-end. It was launched on April 19,2010 and had suffered a delay of nearly oneyear.

The remaining ships, according to GRSE, willbe delivered by 2016. The fourth ASWcorvette will be launched in 2014 and built,fitted and tested and delivered to the Navyin little over 20 months.

BLACK CARBONFROM

SOUTH ASIA MELTING TIBETAN GLACIERS

Pollutants brought in by monsoon winds

from South Asia and not industrialemissions from China are behind the

melting of glaciers on the Tibetan plateau, aleading Chinese scientist has claimed.

NUCLEAR COOPERATION, KEYTO MULTIPLE

PROJECTS: KAZAKHSTAN

Kazakhstan has said interaction with India innuclear energy will open up prospects forimplementation of other breakthrough projects inmany of the priority sectors. Kazakhstan, the largestand most dynamic economy among five CentralAsian states, wants civil nuclear energy cooperationthat will benefit both countries. Kazakhstan is a major

producer and exporter of uranium and has alwayssignalled its interest in supplying its products toIndia. Its company Kazatomprom has already signed

an MoU with NPCIL. The foundation was laid withthe signing of an Inter-Governmental Agreement oncooperation in peaceful uses of nuclear energy. Thisled to Kazakhstan assuring India of supply of 2,100tonnes of uranium. We hope that our cooperation inthe nuclear field will lead to intensive cooperation inthe exchange of technology and creation of jointventures, reiterated Mr. Idrissov, who is fluent inHindi. The two sides have already agreed to set upa Centre of Excellence in information andcommunication technology at Gumilyov Eurasian

National University in Astana. As it is known, Russiatook the initiative in 2000 to establish an international

transport corridor North-South and Kazakhstanjoined it in 2003. Kazakhstan.




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YOJANA

BUDGET PROPOSALSAS OVERVIEW

U

nion Budget ended out creditably onthe main task for fiscal 2012-13. It keptthe fiscal deficit under control at 5.2

percent of GDP instead of the often feared 6 percentestimate, as late as September 2012. Thoughsuperficially the dip in the fiscal deficit is just amarginal improvement from the revised target of 5.3

percent, it is the first time since 2008-09 that the fiscaldeficit calculated by the finance ministry will dip closeto 5 percent. This is significant considering that thecurrent account deficit will also close out this fiscalalmost at 5 percent. Further, the revenue deficit has

been contained at 3.9 percent in the current fiscal andwould be brought down to 3.3 percent in 2013-14.

Budget 2013-14 has staved off the downgradefrom international rating agencies, plumped for

investment at the cost of consumption and tried tomake India a better place to invest in. In the processit has been harsh on expenditure. The FinanceMinister has used the scalpel on the subsidies too.As the medium term fiscal policy statement notesMajor subsidies in the Revised Estimates for 2012-13 have increased to Rs 2,47,854 crore as comparedto the Budget Estimates for 2012-13 of Rs 1,79,554crore. The major part of increase has come from

petroleum subsidies that went up from Rs 43,580crore in BE 2012-13 to Rs 96,880 crore in RE 2012-13.This is a 122 percent rise that the minister has clawed

back in 2013-14.

So what is the scene with major subsidies?They are budgeted at Rs 2,20,972 crore in BE 2013-14.Total subsidies are at 2.6 percent of GDP in RE 2012-13 and are budgeted to be at 2 percent of GDP in 2013-14, the commitment the finance minister has taken on

from the Vijay Kelkar committee. The subsidy bill ispegged lower by 11 percent in 2013-14. The Budgethopes to cap the total expenditure on major subsidiesincluding fuel, food and fertiliser at Rs 2,20,971.50

crore for the 201,3-14 fiscal as against Rs 2,47,854crore in the revised estimates for this fiscal.

Interestingly, the revised estimates for thisfiscal are higher by 38 percent compared to the

budget estimate of Rs 1,79,554 crore.While the oil subsidy is pegged at Rs 65,000

crore for next fiscal against the revised estimate (RE)of Rs 96,880 crore in 2012-13 fiscal, the food subsidyis estimated to rise to Rs 90,000 crore next fiscal fromthe RE of Rs 85,000 crore in 2012-13. The fertilisersubsidy is also pegged slightly lower at Rs 65,971.50crore in the next fiscal, as against the RE of Rs 65,974crore in 2012-13 fiscal.

To balance these giveaways the budget hasbuilt in an aggressive tax mobil isation target . Itincludes Rs 18,000 crore of additional revenuemobilisation measures. The same document saysWith these measures tax revenues in 2013-14 areexpected to grow at 19.1 percent. The tax to GDP ratioestimated in the Budget for 20 13-14 is 10.9 percent.Budget Estimates for 2013-14 assumes a normal taxgrowth of 17 percent over RE 2012-13 and remainingtax growth emanating from additional resourcemobilization measures.

The bleak economic outlook gives the ministerspace to keep tax giveaways to almost nil this year.Once economic growth returns next year there will be

demands for tax breaks. The fiscal policy statementpoints out As the tax to GDP ratio increases, furtherimprovements would be more gradual and difficult toachieve. The outlook for tax revenues for the years2014-15 and 2015-16 has been designed keeping this




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in mind. In a hope to reach a tax to GDP ratio of 11.9percent, the Budget has estimated a 19 percent rise inrevenue receipts to Rs 10,56,331 crore in 2013-14 ascompared to a revised estimate of Rs 8,71,828 crorefor the fiscal.

So far as the market borrowings are concerned,the gross market borrowings have been pegged at arecord Rs 6,29,009 crore in 2013-14, the net

borrowings are expected to rise to Rs 4,84,000 crore.This is just a 3.5 percent rise over the revised estimateof Rs 4,67384 crore in the current fiscal. Thedifference is due to the record redemption of bondsestimated at Rs 1,45,009 crore in 2013-14.

It is betting heavily on proceeds fromdisinvestment in state owned firms to help finance the

ambitious fiscal deficit target. The Budget hasdoubled the disinvestment target for next fiscal to Rs40,000 crore, as against a revised estimate of Rs24,000 crore in the current fiscal. In addition, thegovernment is also betting on raising Rs 14,000 crorefrom selling off its residual stake in Hindustan Zinc,Balco and SUUTI.

Though finance minister P Chidambaram didnot announce the disinvestment target in his speech,the total estimate of Rs 55,814 crore works out to thehighest target from stake sale proceeds in over adecade.

Among the sectoral initiatives the finance

minister announced that independent regulator willbe expected to provide solutions to revive amongother the road sector, which has seen a slowdown inaward and implementation of projects.

To be eligible to claim the benefits the homebuyers will have to buy their first home whose valueshould not exceed Rs 40 lakh and the home loanshould be restricted to Rs 251akh. While the loanneeds to be taken between April 1,2013 and March 31,2014, the buyer can claim the available benefit ofdeduction Rs 1 lakh over a period of two years.

In case the loan is taken in the middle of 2013-14, the buyer can claim the applicable benefit in theassessment year beginning April 2014 and theremaining amount can be claimed in the nextassessment year. For the capital markets in an effort

to bring the derivative trading in commodities and thesecurities market at par, the finance ministerannounced the commodities transaction tax (CTT) of0.01 percent of the price of the trade on allcommodities except agricultural commodities.

The finance minister also announced reductionof the securities transaction tax on equity futuresfrom existing 0.17 percent to 0.01 percent bringing

both CTT and STT at par.There is no distinction between derivative

trading in the securities market and derivative tradingin the commodities market, only the underlying assetis different. I propose to levy CTT on non-agricultural commodities futures contracts at thesame rate as on equity futures, which is at 0.01

percent of the price of the trade, said the FinanceMinister in his speech.

To revive the weakened investment climate inthe country and to quicken the implementation of

projects, th e budget 2013-14 proposed to offerincentives to companies that step in to makeinvestments. The finance minister has alsoannounced an investment a llowance of 15 percentfor all new high value investments of more than Rs100 crore over the next two financial years. The

benefit will be in addition to the current rates ofdepreciation. It has however taken couple ofmeasures to plug the loopholes for tax avoidance by

companies.But, what about inflation management? The

Reserve Bank of India would soon launch inflation-indexed bonds to make people move away from goldas the instrument of effective hedge against inflation.This will be done next fiscal. We will have our cashand debt management meeting towards the end ofthis financial year and

hopefully, from the first or second month of thenext fiscal, we will launch inflation-indexed bonds,RBI Deputy Governor HR Khan told reporters. Thecentral bank has been planning to introduce IIBs tokeep investors away from gold as a hedge againstinflation. The final surmise-a tough set of decisionsin a difficult year, that is what Budget 2013-14 will beknown as.




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12TH PLAN PROJECTS INVESTMENT OF RS 55,00,000 CRORE

IN INFRASTRUCTURE

While presenting the Budget for 2013-14, the Finance Minister P. Chidambaram said that the growth

rate of an economy is correlated with the investment rate. The key to restart the growth engine is to

attract more investment, both from domestic investors and foreign investors. He said that efforts will

be made to improve communication of the countrys policies to remove any apprehension or distrust

in the minds of investors, including fears about undue regulatory burden or application of tax laws.

Doing business in India must be seen as easy, friendly and mutually beneficial.

While every sector can absorb new investment, it is the infrastructure sector that needs large volumes

of investment. The 12th Plan projects an investments of USD 1 trillion or Rs. 55,00,000 crore in

infrastructure. The Plan envisages that the private sector will share 47 percent of the investment.Besides, India needs new and innovative instruments to mobilize funds for this order of investment.

Government has taken or will take the following measures to increase investment in infrastructure:

Infrastructure Debt Funds (IDF) will be encouraged. These funds will raise resources and, through

take-out finance, credit enhancement and other innovative means, provide long-term low-cost debt for

infrastructure projects. Four IDFs have been registered with SEBI so far and two of them were launched

in the month of February, 2013.

India Infrastructure Finance Corporation Ltd (IICL), in partnership with the Asian Development Bank,

will offer credit enhancement to infrastructure companies that wish to access the bond market to tap

long term funds.

In the last two years, a number of institutions were allowed to issue tax free bonds. They raised Rs.

30,000 crore in 2011-12 and are expected to raise about Rs. 25,000 crore in 2012-13. It is proposed

to allow some institutions to issue, tax free bonds in 2013-14, strictly based on need and capacity to

raise money in the market, upto a total sum of Rs. 50,000 crore.

Mult ilateral Development Banks are keen to assist in efforts to promote regional connectivity.Combining the Look East policy and the interests of the North Eastern States, it is proposed to seek

the assistance of the World Bank and the Asian Development Bank to build roads in the North Eastern

States and connect them to Myanmar.

NABARD operates the Rural Infrastructure Development Fund (RIDF). RIDF has successfully utilized

18 tranches so far. It is proposed to raise the corpus of RIDF-XIX in 2013-14 to Rs.20,000 crore.

Pursuant to the announcement made last year, a sum of Rs. 5000 crore will be made available to

NABARD to finance construction of warehouses, godowns, silos and cold storage units designed to store

units designed to store agricultural produce, both in the public and the private sectors. This window

will also finance, through the State Governments, construction of godowns by panchayats to enable

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GROWTHIN GDP AT FACTOR COSTAT 20045 PRICES (PERCENT)

2005 -0 6 2006-07 20 07-08 2008 -0 9 20 09 -103R

2010-112R

2011-1 21R 20 12-1 3AE

Agriculture, forestry & fishing 5.1 4.2 5.8 0.1 0.8 7.9 3.6 1.8

Mining & quarrying 1.3 7.5 3.7 2.1 5.9 4.9 -0.6 0.4

Manufacturing 10.1 14.3 10.3 4.3 11.3 9.7 2.7 1.9

Electricity, gas, & water supply 7.1 9.3 8.3 4.6 6.2 5.2 6.5 4.9

Construction 12.8 10.3 10.8 5.3 6.7 10.2 5.6 5.9

Trade, hotels, & restaurants,

transport & communication 12.0 11.6 10.9 7.5 10.4 12.3 7.0 5.2

Financing, insurance, real estate &

business se rvices 12.6 14.0 12.0 12.0 9.7 10.1 11.7 8.6

Community, social & personal services 7.1 2.8 6.9 12.5 11.7 4.3 6.0 6.8

GDP at factor cost 9.5 9.6 9.3 6.7 8.6 9.3 6.2 5.0

Source: Central Statistics Office (CSO).

Notes:

1R: First Revised Estimate,

2R: Second Revised Estimate,

3R: Third Revised Estimate,

AE: Advance Estimate.

PRIVATE FINAL CONSUMPTION EXPENDITURE: ANNUAL GROWTHAND SHARESAT 20042005 PRICE

2004-05 2006-07 2007-08 2008-09 2009-10 2010-111R 2011-122R

Annual Growth (Percent)

Food, beverages, & tobacco 3.4 6.4 3.3 0.4 5.9 5.8

Clothing & footwear 23.3 5.0 5.0 14.9 20.2 -3.9

Gross Rent, fuel, & power 3.8 4.7 3.6 6.0 4.2 6.2

Furniture, furnishings, etc. 17.1 16.1 12.2 9.0 16.6 6.2

Medical care & health services 8.7 4.5 6.9 8.9 7.6 6.2

Transport & communication 9.1 7.9 7.7 12.1 10.0 9.8

Recreation, education, & cultural services 8.4 9.8 6.8 4.0 11.8 8.1

Miscellaneous goods\ & services 21.1 28.6 20.2 15.7 7.9 19.1

Total private consumption expenditure 8.7 9.2 7.1 7.5 8.7 7.9

Share in Total (Percent)

Food, beverages, & tobacco 40.0 37.3 36.3 35.0 32.7 31.8 31.2

Clothing & footwear 6.6 8.3 8.0 7.8 8.4 9.3 8.2

Gross Rent, fuel, & power 13.8 12.6 12.1 11.7 11.5 11.1 10.9

Furniture, furnishings, etc. 3.4 3.9 4.1 4.3 4.4 4.7 4.6

Medical care & health services 5.0 5.0 4.8 4.8 4.8 4.8 4.7

Transport & communication 19.3 18.9 18.7 18.8 19.6 19.8 20.2

Recreation, education, & cultural services 3.0 3.0 3.0 3.0 2.9 3.0 3.0

Miscellaneous goods & services 8.9 11.0 13.0 14.6 15.7 15.6 17.2

Total private consumption expenditure 100.0 160.0 100.0 100.0 100.0 100.0 100.0

Source: CSO.

Notes:

1R: First Revised Estimate,

2R: Second Revised Estimate

HOW IS THE UNION BUDGET FORMULATED?

The budget process in India, like in most other countries, comprises four distinct phases:(i) Budget formulation- preparation of estimates of expenditure and receipts for the ensuing financial

year;

(ii) budget enactment- approval of the proposed Budget by the Legislature through the enactment ofFinance Bill and Appropriation Bill;(iii) budget execution- enforcement of the provisions in the Finance Act and Appropriation Act by the

government-collection of receipts and making disbursements for various services as approved bythe Legislature;




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(iv) legislative review of budget implementation- audits of governments financial operations on behalf ofthe Legislature.

Process Commences in August-September

By convention, the Union Budget for next financial year is presented in Lok Sabha by the finance ministeron the last working day of February. However, the process of budget formulation starts in the last week ofAugust or the first fortnight of September. To get the process started, the Budget Division in the Departmentof Economic Affairs under the Ministry of Finance issues the annual budget circular to all the Uniongovernment ministries/departments around August- September. The Circular contains detailed instructionsfor these ministries/ departments on the form and content of the statement of budget estimates to be

prepared by them.

Three kinds of figures in a Budget

The ministries are required to provide three different kinds of figures relating to their expenditures and

receipts during this process of budget preparation. These are: budget estimates, revised estimates andactuals.

Lets understand this in the context of Union budget 2013-14, which was presented, as usual, on 28 th ofFebruary 2013 by the Finance Minister, Shri P Chidambaram on the floor of Lok Sabha. However, the processof its formulation would have got started in August 2012 through issuance of budget circular of the BudgetDivision and this process would have continued till February 2013.

The approval of Parliament is sought for the estimated receipts/expenditures for 2013-14, which would becalled budget estimates. At the same time, the Union government, in its budget for 2013-14, would also

present revised estimates for the ongoing financial year 2012-13. The government would not seek approvalfrom Parliament of revised estimates of2012-13; but, these revised estimates allow the government toreallocate its funds among various ministries based on the implementation of the budget for 2012-13 duringthe first six months of financiala year 2012-13. Finally, ministries also report their actual receipts andexpenditures for the previous financial year 2011-12. Hence, the Union budget for 2013-14 consists of budgetestimates for 2013-14, revised estimates for 2012-13, and actual expenditures and receipts of 2011-12.

Planning Commission comes in

The ministries would provide budget estimates for plan expenditure for budget estimates for the next financialyear, only after they have discussed their respective plan schemes with the Central Planning Commission.The Planning Commission depends on the finance ministry to first arrive at the size of the gross budgetarysupport, which would be provided in the budget for the next annual plan of the Union government. In

principle, the size of each annual plan should be derived from the approved size of the overall Five-YearPlan (12th Five-Year Plan, 2012-13 to 2016-17, in the present instance). However, in practice, the size of thegross budgetary support for an annual plan also depends on the expected availability of funds with thefinance ministry for the next financial year.

Reducing deficit, a Priority

In the past few years, the finance ministry has been vociferously arguing for reduction of fiscal deficit andrevenue deficit of the Union government, citing the targets set by the Fiscal Responsibility and BudgetManagement Act and its rules. Hence, presently, the aspirations of the Planning Commission and Uniongovernment ministries with regard to spending face the legal hurdle of this Act, which has made it mandatoryfor the Union government to show the revenue deficit as nil (total revenue expenditure not exceeding total




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revenue receipts by even a single rupee) and the fiscal deficit as less than 3 per cent of GDP. This meansnew borrowing of the government in a financial year cannot exceed 3 per cent of the countrys GDP forthat year.

Final Stages of Budget Preparation

During the final stage of budget preparation, the revenue-earning ministries of the Union governmentprovide the estimates for their revenue receipts in the current fiscal year (revised estimates) and next fiscalyear (budget estimates) to the finance ministry. Subsequently, usually in the month of January, moreattention is paid to finalisation of the estimated receipts. With an idea about the total requirement ofresources to meet expenditures in the next fiscal year, the finance ministry focuses on the revenue receiptsfor the next fiscal.

At this stage of budget preparation, the finance minister examines the budget proposals prepared by theministry and makes changes in them, if required. The finance minister consults the Prime Minister, andalso briefs the Union Cabinet, about the budget at this stage. If there is any conflict between any ministryand the finance ministry with regard to the budget, the matter is supposed to be resolved by the Cabinet.

Consultations with Various Stakeholders Crucial

In the run-up to Union Budget each year, the Finance Minister holds pre-budget consultations withrelevant stakeholders. The FM also holds consultations with Finance Ministers of States/UnionTerritories as well as Trade and Industry representatives. This has great significance for the process of

budget formulation as it helps the FM take decisions on suitable fiscal policy changes to be announcedduring the budget.

For this years budget, representatives from the agriculture sector, various trade unions, economists,banking and financial institutions and also social sector groups participated in these consultations inJanuary 2013. Among others, a delegation of Peoples Budget Initiative also met Finance Ministry officialsand shared the Peoples Charter of Demands in the month of January 2013. But this year too, like in

previous years, the process started late. Desired changes in expenditure programmes and policies can

be influenced only if the consultations are begun earlier, preferably in October.Consolidation of Budget Data

As the last steps, the budget division in the finance ministry consolidates all figures to be presented inthe budget and prepares the final budget documents. The National Informatics Centre (NIC) helps the

budget division in the process of consolidation of the budget data, which has been fully computerised.At the end of this process, the finance minister takes the permission of the President of India for

presenting the Union budget to Parliament. It would be useful to point out that while the second andthe third stage in the budget cycle of our country are reasonably transparent, the first stage of actual

budget preparation cannot be said to be open. The process is rather carried out behind closed doors.

TAXATION : HIGHLIGHTS; UNION BUDGET 2013/14

Tax Savings of Rs. 2000 for assessee having taxable income upto Rs. 5 Lakhs

Additional deduction of interest upto Rs. I Lakhs for persons taking home loan (not exceeding Rs.25 Lakhs) for their first home(not exceeding Rs. 40 Lakhs) during the period 01-04-2013 to 31-03-2014

10 percent Surcharge on Individual, HUF, Partnership firms if the taxable income exceeds Rs. lCrores




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10 percent Surcharge on domestic Companies if the taxable income exceeds Rs. 10 Crore. (5percent - Surcharge if the taxable income exceeds Rs. 1 Crore) - Valid only for 1 year

5 percent Surcharge on foreign Companies if the taxable income exceeds Rs. 10 Crore. (2 percentSurcharge if the taxable income exceeds Rs. 1 Crore) - Valid only for 1 year

Surcharge on Dividend Distribution Tax etc increased from 5 percent to 10 percent Investment allowance of 15 percent for companies investing Rs. 100 Crore or more in plant and

machinery during 01-04-2013 to 31-03-2015 STT Reduced on Equity Futures/ MF Units. Commodity transaction tax introduced on non-agricultural commodities futures contracts One percent TDS on the value of the transfer of immovable property (except agricultural land)

where the consideration exceeds Rs. 50 Lakhs Gross Total Income Limit under Rajiv Gandhi Equity Savings Scheme has been increased from 10

Lakhs to 12 Lakhs which shall be allowed for three consecutive assessment years.

Service Tax

All AC restaurants (Whether serving Alcohol or not) are subjected to Service Tax Service Tax to be charged on Vehicle Parking fees

Excise

Specific Excise Duty Increased on Cigarettes, Cigars, Cheroots, Cigarillos Excise Duty increased on SUV (Except those registered as taxis) from 27 percent to 30 percent Excise duty increased on mobile phones (Pricing above Rs. 2000) from 1 percent to 6 percent

Customs Duty free jewellery allowed from abroad in case of gentleman - Rs. 50000, in case of Lady-

Rs. 100000.

DO YOU KNOW?

What is Fiscal Responsibility and Budget

Management Act?

The Fiscal Responsibility and Budget Management(FRBM) Act was enacted by the Parliament in 2003.Its objective is to institutionalise fiscal discipline,reduce fiscal deficit and improve macro economicmanagement. This law aims at promoting fiscalstability for the country on a long-term basis. Itemphasises a transparent fiscal managementsystem and a more equitable distribution of debtsover the years. This law also gives flexibility to theReserve Bank of India to undertake monetary

policy to control inflation.

Government needs resources for funding variouskinds of developmental schemes and routineexpenditures. Resources are raised through taxesand borrowing. The government can raise funds

by borrowing from the Reserve Bank of India,

financial institutions or from the public by floating

bonds. Fiscal deficit is the total expenditure minusthe revenue receipt, loan recoveries and receiptsfrom disinvestment etc. It is a measure of thegovernment borrowing in a year.

However, uncontrolled fiscal deficit is consideredharmful for the health of economy. FRBM Act wasnotified in 2004 in response to the need felt to curblarge fiscal deficit. The FRBM rules specify annualreduction targets for fiscal indicators. Originally, theact envisaged revenue deficit to be reduced to nilin five years beginning 2004-05. Fiscal deficit wasrequired to be reduced to 3 percent of GDP by 2008-09. The Act also provides exception to the

government in case of natural calamity and fornational security.

The implantation of the act was put on hold in2007-08 due to global financial crisis and the need






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for fiscal stimulus. There was a need for increased

government expenditure to create demand to fightoff the financial downturn and hence thegovernment moved away from the path of fiscalconsolidation for this period.

This law also prohibits borrowing by governmentfrom the Reserve Bank of India and purchase of

primary issues of central government securitiesafter 2006. The act asked the Central government tolay in Parliament three statements in one financialyear about the fiscal policy. To enforce fiscaldiscipline at the state level, the Twelfth financecommission provided for incentives to statesthrough conditional debt restructuring and interest

rate relief.In 2012, the FRBM was amended and it wasdecided that the FRBM would target effectiverevenue deficit in place of revenue deficit. Effectiverevenue deficit excludes capital expenditure fromrevenue deficit and thus gives space to thegovernment to spend on creation of capital assets.

The critics of this law feel, it would curb thegovernments social sector spending but there is nodenying the fact that the need for fiscalsustainability cannot be ignored.

What is GST?

The Goods & Services Tax (GST) is an indirect taxreform measure which will replace all other indirecttaxes such as Central Sales Tax, Octroi, excise duty,Service Tax and Value Added Tax (VAT) at thecentral and state levels. India will have a dual GSTsystem where states and the centre both wouldhave power to levy taxes on goods and services.Exports would be an exception and GST will not beimposed on them. Under the GST, no distinction ismade between goods and services for purpose oflevying tax. GST is a value added tax where the

person paying tax on his output is also entitled toget input tax credit on the tax paid on its inputs.

The idea of GST was first proposed in the budgetspeech of 2006-07 which had set out the deadlineof 2010 for i

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