02-07.10planningcommission.gov.in/news/ddigest/oct14/daily digest...part a: news pertaining to...
TRANSCRIPT
PART A: News pertaining to Planning Commission
02-07.10.2014 Compiled by:
S. Wadhawan, ALIO and Communication, IT & Information Division Mrs. Varsha Satija, SLIA Planning Commission Library
[Note : Now the Daily Digest is divided into two parts: Part A contains News
pertaining to Planning Commission and Part B contains general News and
Views]
Appointment of US-based economist Arvind Subramanian as India adviser
hits Narendra Modi hurdle
The Economic Times: 02.10.2014
Prime Minister Narendra Modi has not decided whether to appoint U.S.-based economist Arvind
Subramanian as the government's chief economic adviser, a senior government source told
Reuters, in a delay that may impact policy and budget preparations.
Subramanian, a senior fellow at the Peterson Institute for International Economics, was informally
recommended to the post by Finance Minister Arun Jaitley more than a month ago but Modi still
wants to discuss the appointment, the source said.
Jaitley was admitted to a private hospital in New Delhi on Sept. 1 for gastric bypass surgery to
treat a long-standing diabetic condition. He was re-admitted to hospital last week and has yet to be
discharged.
"It was still under consultation between the finance minister and the prime minister. Then the
finance minister got sick," the source said.
Nationalist leader Modi has unleashed a slew of measures aimed at making India a more
attractive place to do business, but has disappointed some backers who had hoped he would take
more decisive action to promote a recovery.
Other senior advisory positions remain unfilled, including in the prime minister's office, leading
some of Modi's reform-minded followers to worry about a lack of economic heavyweights in the
administration.
The post of chief economic adviser is a high-profile position that was last filled by another
internationally renowned academic long based in the United States, former International Monetary
Fund chief economist Raghuram Rajan, who is now India's central bank governor.
Traditionally, the chief adviser is responsible for producing the annual Economic Survey - a
document on the state of economy that underpins the drafting of the budget - and a mid-year
economic update that is presented to parliament.
Jaitley's first full-year budget is due in February.
The government is also discussing whether to change the remit of the economic adviser to include
wider responsibilities, another source said.
Last month, Modi closed the Planning Commission, a lingering vestige of India's early attempt
to mimic the Soviet command economy. Now the government is considering whether to make the
role of economic adviser part of an institution to replace the Planning Commission, the second
source said.
"There is a consensus that we need economic advisers in the finance ministry and the government.
The appointment of chief economic adviser is also linked to the restructured
planning commission itself that could be manned by a few advisers," the second source said. He
said a decision was imminent.
Subramanian was educated in India and Britain and went on to serve at the IMF and at the
forerunner to the World Trade Organization, before taking senior academic posts at Harvard and
Johns Hopkins universities in the United States.
2. Manthan Samvaad Sets Young and Restless Thinking
Rahul V Pisharody and Suhas Yellapantula,The New Indian Express:
03.10.2014
It was a celebration of fresh thoughts, new ideas, serious discussions, tough questions and a quest
for answers during the second edition of Manthan Samvaad which took place here on Thursday.
The day-long event featured distinguished speakers from across the country, who provided great
insight into and a fresh perspective on a wide range of topics. The guest speakers included Kalpana
Kannabiran, sociologist and director of the Council for Social development, Hyderabad; Arun
Maira, former member of the Planning Commission of India; Yogendra Yadav, member and chief
spokesperson of Aam Aadmi Party; KT Ravindran, architect; Shekhar Gupta, journalist; and
Vandana Shiva, environmental activist.
Formed in 2005, Manthan emerged as a platform for people from across the world to share their
thoughts and engage in high-quality debates: be it on the Internet or at other public meetings.
“We started Manthan because we felt that there was no free space to express ourselves and to
engage in thought-provoking conversation, along with a stimulation of thoughts and ideas,” said
MR Vikram, founding member and trustee of Manthan.
Stressing the importance of conversation and dialogue in a society, he said, “Conversation is the
most important part of democracy. We need to bring back interesting conversations, serious
discussions and stimulating thoughts.”
After drawing an overwhelming response on social media and other forums, members of Manthan
decided to take things to the next level by organising Manthan Samvaad in 2013. “As part of
Manthan Samvaad, every year on October 2, we invite distinguished speakers, who have an ability
to engage with the audience and participate in a healthy discussion. We would like to have many
more forums in different cities and would like to see more youngsters be a part of Manthan,” said
Chandana Chakrabarti, member of Manthan.
Manthan Samvaad-2014 witnessed an enthusiastic participation from different sections of people
from all age groups. “I found the discussions to be highly interesting and engaging. It’s nice to
have a platform where we can discuss social and political issues related to the country. I also liked
the fact that they invited accomplished speakers who had strong views on the subjects they spoke
on,” said Nikhil Maddirala, who works at Deloitte.
The event kicked off with a lecture on a bill of rights for women by Kalpana Kannabiran, followed
by a session on reforming our institutions by Arun Maira. Well-known politician and AAP leader
Yogendra Yadav spoke about the future of alternative politics. The afternoon session included a
lecture by Shekhar Gupta on ‘The Rise of an Impatient New India’. Renowned architect KT
Ravindran provided an insight into the future of our cities and environmental activist Vandana
Shiva reflected on the future of agriculture in the country.
Women Should Fight for Rights, says Kalpana Kannabiran
Sociologist and legal scholar Kalpana Kannabiran called upon women to protest against violence
and crime. “If a woman is molested, it is her right to go to the police and report the crime. Sadly,
a large number of crimes go unreported and it is important for women to fight for their rights and
report any atrocities or violence against them,” she said. Kalpana, who is currently director of the
Council for Social Development in Hyderabad, also laid emphasis on the seriousness of domestic
violence. “When is it bad enough for it to be termed as violence?” she asked. “The numbers of
well-educated women _ doctors, journalists, professionals of every kind _ abused in the worst
terms by their husbands who were also doctors, lawyers and teachers was astounding,” she
added. Emphasising the need for people to change their mentality, she concluded by calling for
an end to violence against women in society.
Arun Maira Calls for Revamp of Institutions
Former member of the Planning Commission of India, Arun Maira stressed upon the need to
reform the institutions that govern us. Arun gave an insight into the work he did at the Planning
Commission and explained why institutions need to be revamped. “The crisis of our times is the
growing distrust among citizens in the institutions that govern their lives. These include institutions
of democracy and the increased existence of capitalism. Citizens are losing faith in their leaders,”
he said. Maira, who is also former India chairman of Boston Consulting Group, felt that it was
imperative that all citizens in the country were taken care of and that people must introspect to
move forward as a democracy. “India needs to take care of all its children, including the
malnourished and under-educated. We also need new kinds of dialogue. Let us be more
argumentative and more creative and let us together try to achieve, political, social and economic
freedom for all citizens,” he said.
Yogendra Yadav Bats for Alternative Politics
One of the most awaited speakers at the Manthan Samvaad-2014 was well-known psephologist
and Aam Aadmi Party leader Yogendra Yadav who spoke on alternative politics and a need for
change in democracy. “The general perception among the country’s youth is that all politicians are
corrupt and everything that is wrong in our country is because of politics. Today, my singular
achievement and source of happiness is that everyday I meet someone young and smart who is
willing to devote himself or herself to politics,” he said. Reacting to the ‘Swachh Bharat’ campaign
launched by prime minister Narendra Modi, Yadav said, “Swachh Bharat should not just be about
cleaning dirt on the streets but instead be about cleaning the entire environment and communities.
It should also be cleaning our conscience. We can use this opportunity to turn into something
broader.”
Shekhar cautions against ‘Illiberalism’
Eminent journalist and consulting editor of the India Today group Shekhar Gupta drew the
attention of the audience to various incidents of the recent past in Indian sports. Talking about
nationalism versus patriotism, he said that nationalism was the first enemy of peace. Arguing the
changing trends in the way issues have been dealt with by the judiciary under the pressure of
changing political scenario and media dynamics in the country, and also the way the political
executive passed the judicial appointments bill, he cautioned against the rising ‘illiberalism in’
certain spectrum with no media or public outrage as against the times of Emergency. According
to him, Indian judiciary was transforming from reformative to restitutive. Taking on a question
why rising impatience among youth should be seen in the negative, Gupta said there was nothing
wrong being impatient. “Impatience should lead to reforming the process or system and not halt
or say we do not want any reform,” he said.
KT Ravindran Critical of Smart Cities Concept
KT Ravindran, former dean, School of Planning and Architecture, New Delhi, who is also on the
five-member committee set up by the Union home ministry to recommend the location of a new
capital for Andhra Pradesh headed by former Union urban development secretary K.
Sivaramakrishnan, spoke about conservation of heritage of cities in creation of modern urban
spaces. He said that while planning a new city one needs to study the history of the present moment
and only by doing so, he added, one would be able to project a future. According to him, urban
spaces were a complex organism and it would be a daunting task to develop a larger narrative. To
address migration, transportation, housing for poor, conservation of land, water, waste disposal
and balancing of environment and development while safeguarding culture and identity were
important driving forces in developing a new city. He added that good governance and public
partnership were equally necessary. He was also critical of the concept of smart cities and age of
urban designs.
Organic Farming Need of Hour: Vandana Shiva
Invoking Gandhiji on his birth anniversary on Thursday, envoronmental activist Vandana Shiva
was highly critical of genetic engineering on foods and crops. “Agriculture, which is is all about
maintaining soil, conserving water and renewing biodiversity, today has been totally transferred
into a system of promoting purchase inputs leftover from chemicals,” she stated and added that
organic farming was the solution to food and nutritional security of the country. According to her,
the nation’s greater claims of young population as an asset served no purpose as half of the children
were not receiving food. “Every forth Indian today is hungry and every second child is stunted and
wasted. Solution to malnutrition is bio-fortification,” she added. “We are made to feel culturally
we should not grow our food while fast food is everywhere. Diversity is the answer to all the food
and agrarian crisis. Independent bio-safety assessment is what Americans are doing now. Eating
good food is also our fundamental right,” she concluded.
3. Officials in a fix after withdrawal of notification regarding the constitution
of the Planning Commission
Yogima Sharma, The Economic Times: 04.10.2014
Careers of several senior bureaucrats of the Planning Commission have been in limbo since Prime
Minister Narendra Modi, in his Independence Day address, sounded the death knell for the 64-
year old institution that formulated five-year plans and influenced policy decisions during its
heyday.
The promotion of a joint advisor, who has had a record of outstanding performance throughout his
career, has got stuck at the highest level while another senior officer, who has put in 10 years in
the commission, has been waiting for her cadre to place her out. "My promotion within the
commission was cleared by the top brass here but got stuck at the Cabinet level because the
government has decided to wind up the institution itself. This is despite an outstanding
performance each year in more than two decades of service," the joint advisor told ET on condition
of anonymity.
The dismal state of affairs is evident in the corridors of Yojana Bhawan, headquarters of the
commission, where officers have neither much work nor any growth prospects in sight. "I have
been requesting my cadre to take me out of the commission, but they are waiting to see what the
new government does with the several economic service officers working here," said an advisor
in the commission
The Cabinet declared last month that the notification regarding the constitution of the Planning
Commission stands withdrawn. There are at least 200 officers, at the rank of advisors, joint
advisors and directors, in the commission out of the total staff strength of nearly 1,000. "No
ministry officials are now seeking our views on the draft Cabinet notes. It is only the final Cabinet
note that comes to us, that too very rarely, leave alone our views on policy matters," another
advisor in the commission said. According to several officers, the most disappointing thing is that
even the planning secretary Sindhushree Khullar has not even once, directly or indirectly conveyed
to them that she will stand by her team to ensure that all members are well placed.
"She is in the Prime Minister's Office several times a day, almost every day, but not even once has
she communicated with us on what lies ahead for us," said an officer, requesting not to be named.
The PMO has roped in Khullar to resolve interministerial issues of infrastructure and sanitation.
She has presented all infrastructure reviews in the past four months and played a key role in the
roll-out of the Swachh Bharat Abhiyan on Thursday.
Khullar did not respond to an email query sent by ET.NC Saxena, a former secretary of the
Planning Commission said that the officers, being government employees, need not worry for their
salaries even if they did not have much work in the interim period. "However, since the new
institution is likely to be thinner, they will either have to go back to their cadres or get absorbed in
other ministries," he said.
Although the government has sought suggestions of experts and public as well as the erstwhile
commission through a Cabinet note, it is yet to firm up its view on the new institution that will
replace the commission. Arun Maira, member in the previous commission said that the government
ought to act fast or else it might have to backtrack on the idea.
"The government needs to quickly define the structure of the new institution and figure out how
much of its manpower requirement could be fulfilled by the existing officials," he said. "The inertia
in the existing system is so strong that if you delay the process for long there is a possibility that
the government will have to reverse its decision or we may end up getting a diluted version of the
institution envisaged by them," Maira added, citing the example of the Independent Evaluation
Office (IEO). The IEO was set up through a Cabinet order after the approval of the National
Development Council.
However, the Modi-led NDA government, which took charge in May, closed down the IEO and
decided to strengthen the Programme Evaluation Organisation, which has existed since 1952. The
Planning Commission played a key role, most recently during the tenure of the previous UPA
government, largely because of the closeness between its then deputy chairman Montek Singh
Ahluwalia and then PM Manmohan Singh.
The institution, which determined allocation of planned funds to states, influenced policy decisions
especially with regard to infrastructure sectors. This resulted in a lot of discontent among various
ministries that often criticised the commission for its overarching role. Ahluwalia could not be
reached for comment.
4. A plan for coal
The Indian Express: 06.10.2014
There is a fascinating ongoing debate on how to price coal. But in the noise, sensible principles on
pricing non-renewable resources like coal have become casualties. India is short of metallurgical
coal but has an almost unlimited stock of power-grade coal. Oversight agencies and public sector
companies are sternly told to work out the cost of production and accordingly price the coal. There
is a comical aspect to all of this.
Is the price of coal the cost of mining it? This question was raised at the golden jubilee celebration
of the Central Bureau of Investigation during a special session on coal prices. I was asked to
participate in this session by the CBI director and, out of curiosity, accepted the invitation.
I tried to answer this question in a series of reports on coal prices in the mid-1980s, with the help
of commissioned work from some of the country’s top economists, who were young then but have
since become superstars. They had to make some reasonable assumptions, such as what the output
of coal over the next four to five years would be. There were technical issues that had to be factored
in, too, like shift lengths, gaseousness, ore strength and so on. These were measured and helped
determine the long-term marginal cost and, consequently, coal prices. It would be unwise, both
from the environmental angle and also from the point of view of inter-generational equity, to only
mine open fields of coal and leave the reserves underneath untouched.
These days, planning is out of fashion in government. But in an expert meeting called by the
Planning Commission before it was abolished, experienced hands argued that in areas like
demographics, energy, water, land and non-renewable resources, long-term considerations are
important. If for no other reason than the future welfare of our children.
I remember working out estimates and projections for what the coal sector woulould look like by
2020 at the beginning of this century. Kirit Parikh kept this work up in the Planning Commission
and updated it after correcting for slippages in the base in his fuel policy report. So, there are ways
of developing long-term coal prices. It is not impossible.
There was a time that such exercises were taken seriously by the government. I have set prices for
agricultural products in my capacity as chairman of the Agriculture Price Commission in 1982 (the
body was later renamed the Commission for Agricultural Costs and Prices) and as chairman,
Bureau of Industrial Costs and Pricing. If the courts ever wanted an explanation, they would send
somebody over and we would be very happy to spell out the details of our work. Usually, they
were of the view that if an expert panel had taken a particular position, that would not be
questioned.
Nowadays, the market dictates the terms. But can we ignore the long-term costs to society from
exploiting our natural resource endowment? Transparency is an all-time essential and facts should
always be made public. In any case, our understanding of environmental costs is also much
improved. But to ignore the basic factors at play would imperil our inheritance of natural resources
and the welfare of future generations. I hope somebody out there is listening.
5. Will we get a 'Clean India' in near future?
Shaili Chopra, Daily News and Analysis: 06.10.2014
Since the new PM Narendra Modi has come to power there is the big hope that the focus would
move from planning to execution, from talk to walk, from roughs into fairways. An example to tee
this off was the scrapping of the planning commission once considered central to UPA's economic
blueprint. Modi has since launched several campaigns all of which have India Inc taking up the
cause and driving it ahead. This includes the support for the girl child, the push for sanitation, and
now the latest since the week gone by – 'Clean India.'
I was returning on a Jet Airways flight from Delhi to Mumbai and I noted that the airline has
moved its Save The Child in-flight campaign to The Clean India campaign. The oil PSUs across
the country have put up massive posters on fuel pumps advertising the Swacch Bharat Mission.
Many companies are putting aside corporate social responsibility corpus towards this too.
Both industry bodies are participating too. The Federation of Indian Chambers of Commerce and
Industry (FICCI) started cleaning activities at its own headquarters here.
"We are happy and encouraged by the prime minister's call for a 'Clean India' by 2019. FICCI
shares his vision for 'Swachch Bharat' and agrees that the entire nation needs to come forward and
commit itself to this noble initiative," said A. Didar Singh, secretary general, FICCI. CII too has
undertaken a sanitation drive of building 10,000 toilets.
It's great to see this started off. Here's a look at what must be considered beyond a good plan.
One, implementation. Who will execute this? How will it sustain? Five people using the broom
for a photo-op isn't going to clean this country. We need checks and more checks. When Modi
arrived at a police station in Delhi to clean it, he was appalled with what he saw. That tells us that
if police stations face such dire cleanliness challenges, then there remains a big question mark on
how the rest of the country will implement Swachh Bharat.
Two, supporting infrastructure. We possibly can't find a permanent solution in septic tanks or
piling up garbage in dumps at city outskirts. Are we things of a solid clearing network? Are we
considering underground trash storage until it's moved to bio gas plants like countries like Turkey
do? Who will be watching over this implementation? While physical infrastructure is one, there is
a dearth of education with respect to hygiene and cleanliness – who is undertaking that?
Three, taking ownership. Cleanliness is a matter of attitude and upbringing. Perhaps this is a good
time to start that along with having campaigns and drives. This can be done by corporations too in
a big way as institutional ownership is a great method of ensuring that such a plan can go viral
through employees.
It's all very well for corporations to move funds out of one public service to another. It's also very
headline-grabbing to know how much money has been pledged for toilets and cleanliness. But the
solution is being part of the problem-solving at all levels. And India Inc must now start sincerely
thinking about that given that it appears the PM is serious and any effort in this direction will not
only gain companies brownie points with the PM but also with the nation's public at large.
6. Choice of techniques
GOVIND BHATTACHARJEE, The Statesman: 06.10.2014
"An institution is the lengthened shadow of one man", Emerson had observed. Undoubtedly, the
Planning Commission was nurtured under the overstretched shadows of the socialist ideals of
Nehru. While the Modi Government's decision to consign it to the dustbin of history was most
welcome, one cannot but look without apprehension into the government's consideration to create
a replacement institution. Institutions have a life of their own, and once established, they cannot
simply be wished away. If its replacement inherits any of the weaknesses that had made the
Planning Commission such a dysfunctional but growth-obstructing institution, the substitute will
also continue to corrupt our governance system for a long time. We ought to be very careful in
resurrecting it in another form, without adequate thought and clarity about its intended role and
purpose.
With its unrestrained powers and authority, the Planning Commission was serving powerful
interests that ensured its survival for such a long time. Its abolition is no guarantee that these
interests will let go of their privileges so easily ~ they are more than likely to stage a come-back,
albeit in a different guise. This chain needs to be broken irrevocably, before history repeats itself.
History is replete with examples of new incarnations of old institutions having inherited the
character and shortcomings of those they have replaced. As a nation with an abundance of talent
and entrepreneurial capacity, we need to consider if we really need another institution in place of
the Planning Commission to guide the nation by their own ideas.
It may be interesting and instructive to draw from the experiences of other countries in this regard
~ for example, the BRICS countries India is often grouped with. In the erstwhile Soviet Union, the
State Planning Committee, known as Gosplan, was responsible for central economic planning
since its inception in 1923, till the dissolution of the Soviet Union in 1991. Gosplan was
responsible for creation and administration of a series of five-year plans governing the economy
of the USSR, much like the Planning Commission in India during 1950-2014, or the State Planning
Commission in China during 1952-1998. But after the break-up of the Soviet Union, countries that
rose from its debris have shifted determinedly from planned economies to market economies by
adopting liberalisation, privatisation and globalisation as the only way forward, and some of these
countries, like Estonia, have registered GDP growth exceeding 8 per cent, transiting into advanced
economies. Russia does not have a centralised planning system anymore; the state control that had
marked six decades of overwhelming dominance of all investment, production and consumption
decisions by the Communist Party is now a nightmare of the past. The country is grappling today
with the decrepit legacy of its earlier centralised planning system.
Like the proverbial phoenix, China has risen from the ashes of the Cultural Revolution that ended
in 1976. Chinese planning had initially followed the same Soviet model adopted by us. Till the
economic reforms began under Deng Xiao-Ping in the late 1970s, private industry was virtually
non-existent in China, and industry was dominated by state enterprises and a rigid and coercive
regulatory regime characterised by command and control. All resources ~ land, labour, raw
materials and capital ~ were provided by the State which determined the production and
distribution plans and their final output. But since the 1990s, as reforms heralding China's
movement towards a market economy took firm hold, planning became more and more indicative,
engaging only with projections, trends and bottlenecks while allowing and encouraging the private
sector to grow and compete with each other and also with State-run enterprises. As the State
gradually withdrew from control of economic activities, in 1998, the State Planning Commission
was restructured. It was merged with the Commission for Restructuring the Economic System,
established in 1982 to direct economic reforms, and renamed the State Development Planning
Commission. In 2006, it was further rechristened the National Development and Reforms
Commission (NDRC), omitting the word 'Planning'. This indicated a paradigm shift to declare that
China was no longer a centrally planned economy.
We may recollect that at the end of the Seventies, India was ahead of China in terms of socio-
economic development. The early years of the present century saw India and China being
bracketed together as 'Chindia', when our growth nearly matched China's. But courtesy the
disastrous decade of UPA rule, China today is light years ahead of us and we are unlikely to catch
up with it ever again. Nobody recalls 'Chindia' anymore, and comparison with China may be out
of place. So let's see how Brazil has fared.
Till the early 1990s, Brazil was mired in a web of crises, much like our own. About 40 per cent
of the population were poor ~ half of them sunk in absolute poverty characterised by severe
deprivation of basic human needs. With Gini coefficient measuring 0.6, it also had one of the
highest income inequalities in the world. Poverty, exclusion and backwardness made the country
a potential volcano, ready to erupt at any moment. Under its new 1988 constitution, it undertook
extensive reforms by liberalisation of trade and financial sectors, decentralisation and deregulation,
elimination of forex barriers, privatisation and enforcement of fiscal discipline. By bolstering the
market to generate income and designing innovative social sector programmes like Bolsa Familia
delivered through a system of conditional cash transfers, it had eliminated absolute poverty just
within a decade. By 2012, its per capita income rose to $ 11690 and poverty ratio shrunk to only
9 per cent of the population. Today the gap between India and Brazil is as wide as the distance that
separates them. In 2012, India's per capita annual income was only $ 1440, and even at a much
lesser poverty line drawn by our now-defunct Planning Commission, India's poor constituted 21.9
per cent of our population.
South Africa of course was a different story because of its apartheid past that ended only in 1994,
when its first democratic elections were held and the African National Congress came to power. It
started with a Development and Reforms Programme as the primary socio-economic programme,
which ultimately was transformed into the New Growth Path (GNP) under the current President
Jacob Zuma. Under GNP, a National Planning Commission (NPC) was set up in 2009 to chart out
a roadmap for development with a 20-year horizon. In 2013, it finally came up with the 'National
Developmental Plans ~ 2030'. NPC, however, is not a Government entity but a body of 26 experts
from outside, appointed by the President to advise on matters impacting long-term development.
It is perhaps too early to assess its impact and efficacy.
A central overarching body is thus not a necessary prerequisite for development. The 73rd
Amendment to our Constitution provides for planning at the grassroots level of villages, and
consolidation of these plans all the way up. This way a realistic plan can be made by considering
the local needs and addressing the implementation bottlenecks, since people actually responsible
for implementation will be involved in this bottoms-up planning process. Planning must be a
responsibility of states, which cannot be relegated to technocrats and experts on any pretext. It
should be the priority and responsibility of the elected representatives who should drive the process
through consensus and involvement of all stakeholders including experts. The process of
consensus-based planning will ensure efficiency of the plan, and involvement of elected
representatives will strengthen the accountability mechanism. If a think-tank is imposed upon the
nation, the weight of the tank may sometimes become an obstruction and a weariness, leading
again to inertia and what can perhaps be called fossilism. We need not cling to the old ways after
life has completely departed out of them.
The writer is a senior civil servant.
7. Parekh Panel Lowers Infra Investment Target by 40%
The Economic Times: 07.10.2014
India not in a position to meet the 12th Plan target as private investments have slowed down
New Delhi: India is set to miss its ambitious infrastructure investment target of $1 trillion for the
12th Five-Year Plan (2012-17) after dismal performance in the first two years, a high-level
committee on financing of infrastructure has said. The committee chaired by Deepak Parekh, set
up by the previous UPA government, has scaled down the infrastructure investment projections
for the 12th plan by nearly 40% to .` 30.90 lakh crore from .` 51.46 lakh crore it projected in an
interim report in 2012. “The committee noted that the anticipated investment in infrastructure
during 2012-13 has reached a level lower than 2008-09 while the pace of investment has not picked
up even during 2013-14 and several bottlenecks and barriers have continued to persist,” the panel
said in its report sent to the Prime Minister’s Office. “In view of the above, it is unlikely that the
12th plan projections made earlier would materialise,” it added. Yogima.Sharma
@timesgroup.com The scaling down of infrastructure investment targets has come on the back of
severe decline in projected private sector investment due to virtual collapse of public-private
partnership projects in the country. According to the report, the share of private investment is now
projected at 39.19% of the total investment during 2012-17, down from 48% envisaged earlier.
During the 11th Plan period, share of private money in total infrastructure investments was
36.87%. The Planning Commission under the UPA government in 2012 had projected an
infrastructure investment target of .` 55.74 lakh crore, or $1 trillion, during the 12th plan period,
after the Parekh panel had recommended it to be .` 51.46 lakh crore. And the National
Development Council had approved the plan panel’s target. The revised investment projection of.
` 30.9 lakh crore is only about 10% higher than. ` 27.3 lakh crore investments made in
infrastructure sectors in the country during the 11th Plan period. Total infrastructure investments
in 2012-13 at. ` 4,93,725 crore was only 66% of the earlier estimated .` 7,47,976 crore, according
to the Parekh panel report. Investments in 2013-14 are estimated at. ` 5, 40,170 crore, 62.8 % of
the original target of. ` 8,60,067 crore. Vinayak Chatterjee, co-founder, chairman and managing
director at infrastructure services firm Feedback Infra Pvt Ltd, blamed distorted policies of the
previous government for poor private investment flow into the sector. “The country already had a
backlog of 50 years of poor infrastructure. With this kind of startling bad performance, which
happened due to backlog of distorted policies in the last three years of the UPA government, people
are now saddled with excess capacity and bad loans,” he said. Chatterjee said the Narendra Modi
government needs to massively step up public expenditure by diverting a part of the previous
government’s welfare schemes to infrastructure development.
8. Nehru anniv: Cong says its grand plans forced PM to change tune
The Times of India: 07.10.2014
New Delhi: Top global names may descend in New Delhi to commemorate the birth anniversary
of Jawaharlal Nehru, a reason that Congress believes forced Narendra Modi to acknowledge the
first prime minister at an election rally ion Haryana after months of confrontation with the rival
camp.
Congress is learnt to have finalized the programme for an international conference with invites to
political leaders and intellectuals across continents.
It is likely to be the on the lines of the international meet the party organized on Gandhi as part of
programmes on the 75th anniversary of the Dandi March.
A galaxy of foreign and Indian names in India would throw the spotlight on Nehru just when the
Congress icon is under attack from BJP after Narendra Modi’s ascent to power. The saffron
strongman has chosen to train his guns at Nehru, starting with positing him against Sardar Patel
and then making a symbolic assault on him by disbanding the Planning Commission as a
‘Nehruvian legacy’. Congress has spent the four months of Modi regime questioning him on his
hostility for Nehru.
Given the backdrop, it was surprising that PM Modi on Monday mentioned Nehru by his popular
appellation “Chacha” at a rally in Haryana and announced a special cleanliness drive on November
14.
“The PM seems to have come to know about our plan and that is the reason why he is talking about
Nehru. We are not dependent on government to celebrate our icon,” a senior Congress leader said.
If Nehru is the toast of a conference in the national capital, it would take the clash between Modi
and Congress over him to a higher pitch.
Congress chief Sonia Gandhi in September formed aparty panel for implementation of Nehru
anniversary programmes- a step, sources said, was necessitated by indications that the Centre was
cold to moving on the UPA’s decision that government would hold year-long events in celebration.
9. FUELLING ‘MAKE IN INDIA’
Biswajit Dhar & KS Chalapati Rao, The Financial Express: 07.10.2014 ZoomBookmarkSharePrintListenTranslate
Domestic funding will play a crucial role. Foreign investment can, at best, complement the govt’s
efforts
The government can work at improving the tax-to-GDP ratio to garner resources for the initiative. At the
same time, the
outflow of capital to tax havens needs to be arrested
Domestic funding will play a crucial role. Foreign investment can, at best, complement the govt’s
efforts Last month, Prime Minister Modi launched his most ambitious project, “Make in India”. This
initiative is the latest and the most expansive of the attempts that successive governments have made
to revive the country’s manufacturing sector over the past decade. In 2006, the National Manufacturing
Competitiveness Council (NMCC) had formulated the National Manufacturing Strategy, which underlined
the need to increase manufacturing growth to double digits that would enable the share of
manufacturing in the country’s GDP to reach 23% by 2015. The UPA II government made further
pronouncements for reviving the manufacturing sector through its National Manufacturing Policy in
2011. This time, the target was to increase the share of manufacturing from 16% at the beginning of
the current decade to 25% at the end of the decade. Around the same time, the Planning Commission
unveiled its National Manufacturing Plan, as a part of the 12th Five Year Plan, that spoke of increasing
the share of manufacturing from 16% to 25% by 2025. As against the earlier projections, the Make in
India initiative has set its sights to increase the share of manufacturing to 25% by 2022, a task which
would require stupendous effort, now that the share of manufacturing has slid to 12% of GDP. According
to this new initiative, the increase in manufacturing output will result in the creation of 100 million new
jobs.
Although the Make in India initiative has identified a slew of areas which it would cover, there are
a few that would need to be prioritised. These are infrastructure, clusters of small and medium
enterprises (SMEs), skill formation and innovation. These have been the major choke-points that have
seriously affected the performance of the country’s manufacturing sector over the past couple of decades
in particular, and would therefore need to be addressed immediately if the declining trend in the share
of manufacturing in GDP is to be arrested. While it designs programmes to get these choke-points out
of the way, the government must also be prepared to play the role of the prime mover, for these are
areas which are typically characterised by “market failures”.
Creating the infrastructure for the manufacturing sector to take-off would, no doubt, pose the
biggest challenge, both in terms of the financial resources that would be required and also the
institutional arrangements necessary for ensuring that the identified projects deliver in the shortest
possible time. Over the past few years, several estimates have indicated that India’s infrastructural
deficit would require in excess of $1 trillion over a five-year period. These estimates imply that India
would have to increase its gross fixed capital formation by at least 50% to meet the infrastructure
needs. It may be mentioned here that the past estimates may understate the resource requirements of
manufacturing sector revival envisaged in the Make in India initiative since this initiative includes
development of at least five smart cities and several industrial corridors modelled on the Delhi-Mumbai
Industriduction and marketing centres. SME clusters have, thus, enhanced the global competitiveness
of the SMEs, generated and spread innovations, and distributed broad-based benefits. It must, however,
be pointed out that the state played a major role in enabling the SMEs overcome many of the
disadvantages that these enterprises generally face; from raising resources to finding the proper
marketing channels to maximise their returns.
Key to the all-round improvement of manufacturing capacities is the infusion of state-of-the-art
technologies. Strengthening the technological sinews of the manufacturing sector has at least two
immediate imperatives. First, the manufacturing sector needs to improve its competitiveness in order
to meaningfully participate in the economic integration processes to which India has committed itself.
The economic integration agreements that India had for malised during the past decade have secured
very few benefits, owing largely from the inability of the manufacturing sector to improve its presence
in the markets of the partner countries. India is currently engaged in an East Asian economic integration
process through the Regional Compreal Corridor.
The clusters of SMEs have to be the backbone of the manufacturing sector revival for two reasons.
First, these are the only enterprises that can provide the impetus for employment generation. Secondly,
almost all the sectors that are identified as the thrust areas by the government rely heavily on the SMEs
and, therefore, the future of these sectors depends entirely upon the performance of these enterprises.
Furthermore, clusters have a long history of successes, beginning with Europe and then in Japan and
Korea. But nowhere has this form of organisation seen as much of success as it has in China, where
Deng Xiaoping’s policy of promoting SME clusters formed the basis of the emergence of this country as
the “factory of the world”. Typically, these clusters are made up of professional towns and villages that
function as production hubs, with one or more towns specialising in the production of one product. This
model has seen the development of large-scale specialised prohensive Economic Partnership (RCEP),
and therefore improving the competitiveness of the manufacturing sector has become extremely urgent.
The second imperative is to meet the challenge of climate change. Although India has decided to
meet the challenge of climate change without being subjected to binding international commitments for
reducing its carbon footprint, it would nonetheless have to find expedient ways of reducing the emissions
of greenhouse gases.
Access to technologies that meet India’s immediate needs has been a formidable barrier. India has
insisted in several forums on the importance of technology transfer, but little of substance has happened
since the market for technology is tightly controlled by the owners of patented technologies. There
seems to be no other option left but to focus on the domestic ingenuities for developing the technologies
that the Indian industry needs. For this to happen, the government would have to put an innovation
strategy as the centre-piece of the Make in India initiative. This model lies at the heart of the
phenomenal success of Japan and Korea, and more recently, China. Interestingly, while laying down the
“Make it in America” strategy for the revival of the manufacturing sector in the United States, President
Obama had given a key role to the innovation policy.
Where does the Make in India initiative get its investible funds from? This question has been left
unanswered during the unveiling of the initiative, except for the fact that foreign direct investment (FDI)
has received critical mention. But it should be fairly obvious that the success of the Make in India
initiative would depend on the ability of the government to mobilise resources for funding this ambitious
project. Foreign investment can at best complement the efforts that the government makes, a strategy
that China followed with unquestioned success. President Obama has underlined his ambition of
transforming the United States into a manufacturing hub by investing billions of Federal dollars, besides
insisting that the American firms should “discourage outsourcing, and encourage insourcing”.
Garnering resources should not be an overtly daunting task for a government that is intending to
transform the country’s manufacturing sector. There are several important sources that the government
can tap into, including improving the tax to GDP ratio, which has mostly remained in single digit, through
better compliance and preventing leakages. At the same time, sustained efforts must be made to ensure
that outflow of capital can be arrested, which have fuelled tax havens like Mauritius.
These efforts would be better served if India plays an effective role in the efforts being made by
the G-20 to address base erosion and profit shifting (BEPS). Since the St. Petersburg Summit in 2013,
the G-20 members are engaged in discussions to ensure that inter national and domestic tax rules do
not allow foreign fir ms to reduce overall taxes by artificially shifting profits to low-tax jurisdictions.
Successfully addressing BEPS will not only help the gover nment to resolve tax disputes with foreign fir
ms, but also meet the election commitment of bringing back illegal funds stashed abroad. Dhar is
Professor, Centre for Economic Studies and Planning, JNU and Rao is
Professor, Institute for Studies in Industrial Development, New Delhi
PART B
NEWS AND VIEWS
Monday, 7th October 2014
Communication, IT & Information Division Phone # 2525
Polity : Congress goes to poll panel over Modi Radio address
Economy : RBI may need to raise rates to contain Inflation: IMF paper
Planning : CBEC to port regulators: Need faster Customs clearances
Editorial : Don’t rush in when Angels seek counsel
The Economic Times oate: 1 ltol th
Page No. ;6sd,;wJ
Don't Rush inWhenAngels Seek CounselFor debate on revamping monetary policy
T'lte gov€rnment ls r€Dorbedly moving to olethaul tbecomtry's monetsly pollcy ftame$ort. It must achle!€clarity on what the poltcy goal would he, wto wollld setthe policy and in what Ilanner and how mac$DrudeE'tial concerns wolrld be incorporeted into the exerclseWhen the linancla.l crlsts of 3txj8 hit the c,orl4 Ealrytbin8i carDe cralhing down, amohg them the notlon tbatan inllatioD-tarSetlng, autonomouB cenbal batlk rcpreseirts the gold stardard of eflective monetary poucy AB
the Urjtt Patel corulittee r€port noted, "There ls a con'sensus gatheriDg internationely that mouetary policyshould move away from its narlolg focus @ hllation tcwards a Eultiple t rSet.multlple lnstruDent approach{rithout stlerving ftom a commitnent b prtce slabilityolcr the mealiu.rll term. "
Having notod theconsensu3, the trDort alSerted a case
of lndien exceptionaltsm. It called not oily for iDlladon'targeting but also for instituthg tbe conaurner Flce ln_
dcx as the tar8et to be coDuolLd, nev_
er mlnd tbat 570^ of il comprtses foodard ffrDltwhose priccs are largely tm_
mure to policy rate tweak6. Ltr hblcterim budSet 2014, P ChtdambaEmwsnted moneta.ry poucy to ad&€€sboth growth and Lnll,atlon. The Finan'cial S€ctor Lglslathc Reforms Com'
Diasion (!SLRC) tlought the gorErnrnent should deter'mine the objectiv€ of monelary policy 8nd that a seven'
member colnmitlee should declde on changes in the policy variable to achielD that goa.l, throueh transparent vollng.'Ihis i6 eminenuy d€stable.
McEconcr€tely frnanclalstab ttywhichisadetermi'nant of macroeconomic atabltt]l shouldfr8rrIeas enob_jectilc. Ihe ISLRC leales hcorporation of this macr+prudential objectbe to the govemmDnt- The evampedBritish model of deatlng an erpUcit dacmprualenti.alr€gulator wlthln t]re ceDtla.l bank js wortb cfiElderlnS.Ctoirly a debate oD formulating monetary polta, wtthrnaholistic frame\lork of flnancistr€8!lation i3 deskable,befol,Jushlng in to forrn a system thet prol€s lnadequa'te to lhe challenges of the dav
E1ts{,v
The Indian Express
SH RLI:TI SRIVASTAT'{t tcw Oeurr, tX.rosiR 6-
MID incrcasing
rariD thc WTo
Datc:''Page No.
cuslums clearincf irAnlu*20tI
'o remow coDstr;is
for inrernoriuoal trade. Enr-lier thc ,mpon aEd €xpocargo, deliv.r.d ar a uheeher ct.arance Iacitiricswere unavailable, had ro w,ittill rhe facititics op€ncd tomwe on lo tft.ir desriratioir.
To ..movc rhe pitinS upot car8d. thc ficasure er.arnounced on a pilor bariiat D€thi. Bansrto,e, Ctrco-trai, and Muobar errDofl.ard C[cnn.'. Koli.r,Kandla ad J Np4 Murbai;
7Jroh,"\T
I Upgrade facilities and increase manpower says customs board
CBEO to poil resuhffiG; i6dri" ftster customs clearances
r r Jd! fao I rariofl alrr.cmed t.rhc cenrrJi borrd of erciseand curloB (CBEC) hasisked regutarory apcncic!handtirg ctGarrncei ro uo-Brade theirfacitnics aod i;.crcase their mntrpower atranoll3 porr. to facilirlr€round-rtre-.loclclcsran cs.
India bylt lo ratify thcag.e€ment,a ley arcao, in-r c rc.sr for daetop.d EtioDrtlar would rcducc lradserioll cost and rmoolhcr thcm0vcmco! of clrgo acros,lhcSlobe.
All \yTo incmberu ar.simpi'fyne or havc atreidv\impltficd &eir cunom, pro_c.durcs in view of rhc rm_pcndingagrc?o€nt.
ln a meelirg chaired byr€v.nu. secrerrry Shrk-rilant! Das last moDih.Jtencieu itrctudinr food!J rc b , nd srandarJ;u rho.ilyot lndia (FSSAI). otarlprotecrioo. quarannne odstoragc departmcnL. arimit't
uarantine depanmenr and
! allwTo n€mb.E aE srmPlit.rn9 ornavearroadystmptfi !d |€i,ostonE pD.edrl?3 in vielr ofth€
I Agenci€r indudno rr5At seEarled 10 -ben.hmaditfieir
infi"-nrudr,reandm.np eircouipdiol 24X7 oper.rroo5at porB!n or.Lrlo bnng dowi rhe &re liir-
toeiph!24{7 ponop.Euonrannounced two yeaB ba(l orh€r.s.n.bha,rbenroudhdine d;"ijiiJii,i",i"il*.",p",t
t A boadl|as atted th.m roarles! tki, dw.I rm;. the votum h6Fat.t ""a'""po*",,"q,i,ud ;ii;;;,H:,:ffi ff
":,Hffi.dru8: cootrollcr of Indi,amorg orhers, $er€ asked to"bcncltmart rI€ir inf .asrruc_turc arId manpowcr reouireilfor l4X7 op.ratioff at purr\u order to brim rlown th.
'The cusrorD! _deDarl-
mcot clEar only atcr r;eiv-r08 clEarancc ccrtiticatesIrom other rcEulatorv aretr-cics. Ho*cvei, dcsoite"rtre2ar7 port opcr.ri;ns an-nounced lwo ,cars back_ulher ag.nci(s hav. b.enfound I.ckinx. this teads 1l,coqe(ion ar thcsea andejrPorls. The board has ask.,1ihem ro asses rheir ds.I
. Ar rh.rr rim(. oLher gov-rimf. rhc qrume hJndled ernnent alcncies strch ri.,n! manpnwc, requircJ t0 con(ertrcLt port aurhorjty.\pu(u ut r\ cLr.rom\ cle.rr- d,ug(,nrroiter, FSSAT andrncc,L d.!(rrment souce p.ivnt. p tiye^ tike fl,srodi'"''::'.:'!::: ! Y:" "n... u.1u-' 1,.u." ur.,u,
,.., r.nL. surc. {urd lhrt in a brnf.s.rcwere.sked ;"}n-
ro_r or.asc!. ckrramer ro, chronrse\rilh theextcndedprooucrs arc pcrdrng sincr work hours.
:,i1"'.!ii"i:ilI'ffi ,.#li[{;i;,::,1:r?,",".d ! u,pr1,lrare p d- and rrme. rledeDanncnt is
if ,irl', "l[,:]l]i :r,t l;i ;1?,lJt,ff#r.{*r.{n on J ir.( r(,r (om. dt L.nrryan.tshipp:rrbrl.Ihi!
-";:. ,,,.. .. rrsndrurc\ hared on ejrt.-.....11:,' ,,t rr h.,o /n tronic darr inrerchan8ea,,,rnc-., r . , u r J - I h . . c I
^L t ,EDl).therourlcsard.
The Indian ExpressPage No. !
h a ornplainl to ChicfEl..tion CorDDi$sioner V S
Sampall, lhe partv allucdlha( ds per guidcliner issucdbv ftc EC in rhe pa{. anv
saysthat ihepmgramme was
Congress goes topoll panel over
OCIOBER d
aUegedthar
ity"ina t iahn! violatio. -ot camr,.igier and irs "ontlthe modcl code of condncl. lir(e ro I the tusembly ele.
lions in Maharashtra and
The complaint tnrther
Date: I le\r
THE CongElr or Mondayapproached-the EleclionComnission demstuling ac-lion !g!inst hime MinrsrerNarEndra Modilot his recent
in consultation with tic.AICC leg.l departhetrt
scctctary K C Millal, whl'lodgcd thc complaint, saidModi r Mann Ki Raat prcgranmc hmadcast on Oclot er 3 wa "pan Df $rc cle.ri,ncampaiSn speciall.v phnncdand designcd" to tunher thciolerests ofihe BJP.
The Congri:ss ha\ argucdthar Modi is lh. BIP'( $ff
Modiradio address
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Pagc No. l3
I Retail inflation may shoot upto 8% by March 2015
RBI may push ratecut till fiscal-end on
'base etfecf woes.t\It.s{sr cPr rNtLATlOil : MOMENTUM AND M5TtFTEcr
NEWDELHI, (X:TOBER6
Fr*lE ..srn! othc8d-'l ii." m"t &'
'"**irt'I srzn.ling rle ccrrmtI. hanl ir uolikeh to
abandon its rnti-irrlatio;ary
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Hindustan Times
FinMin refuses toslash excise drtyon branded diesellr|p"Ti!!r RtiMII{ HAS SAIDTHAT
THE HIGH PRICE OF
BRANDEI) DIESEL IS NOT
ONLY DUE IO EXCISE
DUTY BUTATSO DUE IO
[Ew osrl: fir inaD.e ltrhlfihr! hEned dan tbe lelllcunminift's Flro€at b Edue UE.r.t* duty on bmded dle3el,dtlclr ls.lrncilt a lisecoettierthmunhuiledct!m.l illel.
Al pre*nt, mrDd die6el (lnDelhi) is beins sold al {58.97 alltru. Sal6 of brlld€d di*l @alm6t nil d@ to lhe !.i(c d]l&r.e e. Ot oynpaniBlhmu$ u€FrEleu Dini.try hrd 6ou.4hta [{ucti@ incrcisduty ro r.ror dowo the Dri.€ rlirerclc..
BEnitedfiFls(rEtDlahddies6l)e rcgd.rtuel' mixed $ilhddhlr/e6ln dihrio lslr€e th!!e.6rl,la@ of l,lhlclt
In order 10 luah lh! !al€. o{
up inAnglal ht has her turneddown by thc tDaucE nintsiry inrrs septmb€r I r l6dei" ]*aleda pet\ileum miisry ofll.lal.
Ti'. offi.tal added that thefin.n.. hlnls4 ls of the viqthai the reqtr.rl for .eductionD mi* dsty on hEnded die'el rDnnol b. a.Fd.d l. as thenign drllereoce in lhe prie isroi orly du€ lo €xcis firty butother faciom Buc[ a! hr8h baeic!rie, d€€lels lnr.f8ln €tc, A,rconUrlalo tiettnso ni}
Lreded lErtuL tuEe nrnrisrd
s.s leJl btoucb€d .s tha€rnns l,lassub6idille
'The prorGalioon tlB tre.duty orr",Tdeddieel{*ta}en
' :i",ililH'i ii.iiifiilT,,illlorv ru.2s pe! Ulr! l,o tbe prie
, alttfercne wbile utber t&lorsitu cohrlbdrrns rs mu(h as:44 82 a litre. Any rductioD inexciee duty at lhis slaae eoulitnot hm sunifi$t imlact on
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