Civil Aviation Ministry Discusses Draft Civil Aviation Policy with States

Minister of Civil Aviation, Shri P. Ashok Gajapathi Raju inaugurated the Meeting of Chief Ministers and State Civil Aviation Ministers in New Delhi today to discuss the Draft Civil Aviation Policy and other issues related to civil aviation sector. Speaking on the occasion, the Minister said the civil aviation sector in India has been growing steadily registering a growth of 13.8% during the last 10 years. He said, though the rate of growth came down during the last two years due to the overall economic slowdown, it is recovering fast, with the year 2013-14 showing a growth of 6%. Shri Raju expressed concern that despite high growth rates ,most of the airlines in the country are reported to have incurred losses and some airlines are struggling to stay afloat. He said, though there is a need for helicopter operations in India, helicopter population in the country has not improved in recent years. The number of small aircraft and seaplanes is stagnant. The Minister said that the aviation industry as such is seriously affected by high operational costs including cost of aviation turbine fuel, service tax and other charges, shortages of maintenance facilities, high foreign exchange rate, competition from foreign airlines etc. There is a high customs duty on import of private aircrafts and helicopters. Shri Raju stated that aviation is now acknowledged as a growth engine, which has a force multiplier effect. He said that as per global estimates, for every $100 of input, there is $325 worth of output generated while for every 100 jobs created by aviation industry, there are 610 jobs created in other industries. Highlighting close linkages between tourism and civil aviation sectors, the Minister said more than 90% of the international tourists arrive by air. He said that according to a study conducted in 2009, the aviation sector has contributed 0.5% directly and 1.5% with catalytic effects to the Indian GDP and this, when coupled with the tourism sector’s contribution of 5%, works out to be a significant 6.5% of the GDP. He said acknowledging the role of civil aviation in the overall growth of economy, Government has proposed a Draft Civil Aviation Policy. Civial Aviation Minister said that India’s impressive growth in international and domestic trade over past few years has augured well for the air-cargo industry. However, he said, the current share of air-cargo compared to other modes of cargo-transportation is fairly low in India. The Minister added that the growth in the passenger and cargo traffic requires significant investments in terms of construction of new airports, expansion and modernization of existing airports, improvement in connecting infrastructure and better airspace management. Shri Raju underlined that the real challenge is to manage phenomenal growth of air traffic with safety. He said, the increase in air traffic has not only increased demand of aircraft but also posed a challenge to meet the airport and air navigation infrastructure to ensure safe, orderly and efficient operations. Earlier speaking on the occasion, Minister of State for Civil Aviation, Tourism (Independent Charge) and Culture (Independent Charge) Dr. Mahesh Sharma said that the three Ministries, i.e. Civil Aviation, Tourism and Culture have to work together to realize the great potential that India has in the civil aviation sector. He emphasized on improving air connectivity to remote areas. Highlighting the role civil aviation plays in an economy like India, the Minister stated a multi-model approach is the need of the hour for the development of the sector.

Pradhan Mantri Krishi Sinchai Yojana

PM urges fast-tracking of pro-farmer initiatives, chairs high-level meeting on Pradhan Mantri Krishi Sinchai Yojana

PM: NREGA should be integrated with the overall plan of Pradhan Mantri Krishi Sinchai Yojana In yet another initiative aimed at benefiting farmers, the Prime Minister has asked concerned Departments and Ministries of the Union Government to fast-track the Pradhan Mantri Krishi Sinchai Yojana. Today`s meeting follows yesterday`s decision by the Union Cabinet, in which amendments to the Land Acquisition Act, 2013, were cleared. The amendments include the pro-farmer step of bringing 13 most frequently used Acts for Land Acquisition for the Central Government Projects into the purview of the Land Acquisition Act, thus benefiting a large number of farmers whose land is acquired for such projects. Chairing a high-level meeting involving the Ministries of Agriculture, Water Resources, Rural Development, the Prime Minister called for a multi-pronged approach to the ultimate goal of providing irrigation for every farm through the Pradhan Mantri Krishi Sinchai Yojana. The Prime Minister noted that NREGA had been used over the past few years for creation and augmentation of irrigation assets. He said that NREGA should be integrated with the overall plan of Pradhan Mantri Krishi Sinchai Yojana. He also called for precise monitoring of outcomes in this regard. At the macro-level, the Prime Minister asked the Ministry of Water Resources to identify river-interlinking projects that could be immediately taken up. The Prime Minister called for comprehensive mapping and identification of water bodies across the country. He said satellite imagery and 3D photography could be used to guide villages to best possible sources of irrigation. The Prime Minister has asked concerned departments to look into the possibility of identifying progressive farmers, who could take the lead in implementing water conservation and innovative irrigation techniques. The Prime Minister has also called for integrating water recycling projects of key towns and cities, to irrigation in nearby rural areas. He emphasized the importance of generating consciousness among people towards water conservation.

Tipping points and Goldilocks conditions

Many, if not most, observers of the Indian economy see 2015 as a year of decisive and positive movement. Malcolm Gladwell's concept of the tipping point is used by some as a characterisation of the moment. A number of forces converge to create a significant and discontinuous change, in this case, for the better. The investment bank Nomura, for example, sees 2015 as a Goldilocks moment for India, a term used in astronomy to describe a situation in which conditions are "just right" for the emergence of life on a planet. In this view, conditions that are supportive of a steady and sustainable acceleration of growth are falling into place.

As we look ahead to 2015 and beyond, it is useful to look back; in particular to two possibly similar moments in the Indian economy's timeline. Since 1991, we have seen two growth spurts - 1994-1997, when the average rate of growth was over seven per cent and 2003-08, when it came close to nine per cent. Both episodes offer valuable lessons about what mix of conditions supports rapid growth in India and how changes in the mix can cause growth to slow.

In the first episode, a favourable backdrop was provided by nine successive normal monsoons (1988-96), which generated rural demand and contributed to keeping inflation in check. The reforms of 1991 opened up massive investment opportunities as a result of de-licensing. Investment spending boomed, stimulating growth. And the significant depreciation in the rupee that the reform strategy engineered caused a boom in exports, to which information technology (IT) was just beginning to contribute during that period.

But the party was over almost as soon as it had begun. A bad monsoon in 1997 was a setback. The East Asian crisis saw the currencies of many competing exporters depreciate very sharply, impacting exports. And inflation surged, partly demand-driven but also as a result of investment imbalances exerting pressure on capacities in many sectors, including infrastructure. Growth fell back to around the five per cent mark for the next five years, raising serious questions about the economic benefits of the entire reform agenda.

Things changed in 2003. Here again, it is possible to identify a number of pre-conditions and concomitants that featured in that five-year phase. Low inflation, supported by soft global commodity prices, were clearly a factor. There was also the tailwind provided by buoyant global growth. These contributed to an investment surge, which appeared to be much more balanced than in the previous episode. An important contributor to this was the role of public investment.

Capital spending as a share of total government spending at the central level rose to a post-liberalisation high of 23 per cent during this period. The most visible manifestation of this was the National Highway Development Programme, initiated in 2001, which had a classic public expenditure multiplier effect on the economy. Further, committed public investment also helped to facilitate an increase in private investment. This, together with significant increases in productivity, which businesses struggling in a period of sluggish growth had achieved, brought about a dramatic increase in capital efficiency. A factor that played a decisive role was the rapid growth in telecom capacity and capability. For a while, it helped offset other infrastructural bottlenecks. Conference calls and e-mailing was possible even when stuck in endless traffic jams or airport congestion.

This fiscal pattern was facilitated by the larger commitment to fiscal consolidation reflected in the Fiscal Responsibility and Budget Management Act of 2003. India's experience during the 2003-08 episode demonstrates that high growth can be achieved even as the fiscal deficit is being rolled back, as long as a greater proportion of expenditure is being used to create assets. In my view, this didn't go far enough, but even at the levels attained, the benefits were visible. The final contributor to the Goldilocks phase was the balance of payments. IT and IT-enabled services exports grew rapidly, helping to narrow the current account deficit, even taking it to surplus in three of those years.

However, as in the previous episode, headwinds began to manifest during the growth spurt itself. Inflation became a problem, aggravated by surging commodity - particularly oil - and food prices. The financial crisis of 2008 created adverse global conditions, weakening some of the growth drivers that the economy had benefited from earlier. There was, of course, a short-lived recovery after the crisis, but this was based on the monetary and the fiscal response to the crisis, rather than the more robust force of private investment, which was decelerating. Significantly, the share of public expenditure allocated to capital formation has declined considerably from its peak. The current account deficit ballooned to an unprecedented 4.8 per cent of gross domestic product, a result of a number of factors, including the massive increase in coal imports for electricity generation.

Be that as it may, many things have changed in the economic environment in 2014, both globally and domestically. The robust United States recovery and significantly lower oil prices bring back into play tailwinds similar to 2003. The latter helps considerably in narrowing both fiscal and current account deficits. Inflation has moderated significantly, as a result of slow growth and less pressure from food and energy prices.

But it is still too early to invoke tipping points and Goldilocks conditions. Two factors that might spoil the party are the state of infrastructure and, related to this in part, the state of the banking system. The first calls for a return to an increased role for public spending on infrastructure, along the lines of the highway programme in its initial stages. Relying predominantly on private capital for infrastructure has proved to be infeasible. The second requires a substantial restructuring of bank balance sheets, with, possibly, a large capital infusion as part of the package. Both are going to be fiscally costly, and politically and administratively challenging.

The thing about tipping points and Goldilocks conditions is that they don't emerge overnight. Lots of things have to fall into place, many out of the government's control. The first episode came three years after liberalisation and lasted three years. The second came six years later and lasted five. Patience and persistence are key to achieving them and even they don't guarantee sustainability. Regardless, it is incumbent on the government to keep trying.

The institutional gap Transforming institutions key to India's development

Several recent analyses of the differences in growth anddevelopment experiences across countries highlight the critical role that institutions have played in the process. While there is clearly no single model of institutions, the lesson from such comparative studies of development is that key institutions have to function effectively. They must have clearly defined goals in relation to development objectives, and they have to persistently meet those goals. An important insight from this approach is that growth begins to sputter when appropriate institutional transitions do not take place. Those that were successful in a particular context do not necessarily work well when the context changes and can become hindrances to sustaining growth. India's current development strategy is only about three decades old, which is a very short period in institutional history terms, but there is already widespread concern about the functioning of several institutional structures. Pre-liberalisation structures have not adequately adapted to new realities and requirements. Important post-liberalisation structures, meanwhile, clearly struggle to develop the capabilities needed to perform effectively in a rapidly evolving environment.

In the former category are the very foundations of a modern democratic system - the executive, the legislature and the judiciary. At both the central and state levels, the executive has come to be viewed with increasing scepticism on account of visible corruption, the promotion of narrow interests - family, community and cronies - and indifference to the policy issues in their domains. Yes, there are a few good men and women who embody the attributes necessary to make the system work, but are they enough to deal with incredibly complex issues and the system itself? As for legislatures, at the state level, they barely meet to carry out their critical function of debate. Parliament is not sufficiently productive. The judiciary rarely entertains basic economic considerations. This results in a vitiated business and investment environment, severely hindering growth prospects.

In the latter group are mainly the various regulatory agencies that were set up over the past couple of decades. While given appropriate and significant powers under the laws that govern them, several factors have worked to undermine their effectiveness. The power of appointment of chairpersons and members still rests exclusively with the government. This power and its occasional arbitrary use serve to undermine the perception of independence, which in turn dilutes the effectiveness of such institutions. In a few instances, there has been inordinate delay in empowering the institutions set up under the relevant laws, which represent lost opportunities for the sector concerned.

The simple point is that the nexus between the nature and quality of institutions and the performance of the economy is now beyond doubt or question. This is a matter of considerable public debate in the Indian context. But as the country prepares to bid goodbye to 2014, it becomes even more clear that a strategic perspective on the roles that different institutions need to play, the structures that are best suited to these roles and on a transition road map is sorely needed.

10 landmark judgments of 2014

Largesse of natural resources stopped
The most resounding judgment which the Supreme Courtdelivered this year was the one cancelling about 200 coal mining licences on August 25, after setting up a special court a month earlier to try the guilty. The ruling in the public interest petition, Common Cause vs Union of India, is the most important decision since the judgment two years earlier cancelling 2G spectrum licences.

Go-ahead for corruption probes
Related to the corruption issue were two other judgments: one which held that the Central Bureau of Investigation did not need sanction from higher authorities to investigate top bureaucrats (Subramanian Swamy vs Union of India) and the other which ruled that private companies that share revenue from natural resources like spectrum with the government would be subjected to CAG audit. It said so while dismissing the appeal of the Association of Unified Telecom Services Providers.

Tribulations of tribunals
The recent trend of setting up tribunals in various sectors to lighten high courts' burden and speed up decisions suffered a setback again when the Supreme Court struck down the National Tax Tribunal Act on grounds that it encroached upon the power of the judiciary and the principle of separation of powers (Madras Bar Association vs Union of India).

Bid to unclog cheque-bounce cases
The Supreme Court has dealt with scores of appeals and issued two dozen
guidelines to sort out legal conundrums invented by drawers, payees and their counsel. One such judgment is Giriraj Proteins Ltd vs D M Finance. In Gunmala Sales Ltd vs Navkar Infra Projects Ltd, the court dealt with the liability of directors of a company which issues cheques which are dishonoured by banks and laid down principles not quite comforting to the directors.

Directors in the dock
It is not just in cheque-bounce cases that directors find the law too dense and uncomfortable. In other fields also the rulings will keep them on the edge of their executive chairs. In the case of Sushil Ansal vs State, the court dismissed the appeals of industrialists Sushil and Gopal Ansal against their conviction in the complaint of Association of Victims of Upahaar Tragedy.

Discordant notes in labour law
On the labour law front, the Supreme Court has been generally sympathetic to contract workers and daily wagers. This month, it directed the Food Corporation to regularise 49 workers who were kept as casual employees for a long time, holding the practice as an "unfair labour practice." However, in the judgment, Nand Kumar vs State of Bihar, the court rejected the prayer for regularisation of daily wagers who were employed for two decades by the State Agricultural Produce Marketing Board.

Remedy as bad as disease
Arbitration and conciliation have been recommended to avoid delays and expenses. But these alternative disputes resolution mechanism has also got mired in myriad ills. The courts are moved at every stage on flimsy grounds. Wrangles over choice of arbitrators, jurisdiction and execution of foreign awards are some of the sore points. In one typical case, N-E Railway vs Tripple Engg Works, arbitration had not started even for two decades and the Supreme Court appointed an arbitrator to set the ball rolling.

SC unburdens environment cases
After several years of grappling with depredation of forests and rivers in public interest cases, the Supreme Court has passed on much of the work to the National Green Tribunal set up recently. Earlier, the court had dealt with illegal mining in ore-rich states, prising open the corrupt nexus between politicians and industries.

New land acquisition law at work
The new land acquisition law has been invoked by the court to strike down take-overs on emergency basis, without paying compensation and not using the land for more than five years for the declared purpose. In the latest case, Velaxan vs Union of India, the acquisition was struck down under the new law.

Creditors' chase of borrowers gets longer
Judgments on the rights of secured creditors and borrowers under the Securitisation Act and the Sick Industries Act continue to worry both sides. In the latest legal bout, KSL Industries vs Arihant Threads, the creditors of sick companies lost their battle when the court decided that the latter Act will prevail over the Debt Recovery Act, protecting sick units.

Green Climate Fund to consider contributions from private sector

The Green Climate Fund (GCF) will consider accepting funds from the private sector in June 2015 to bolster much need finances for climate action.

GCF Executive Director Hela Cheikhrouhou said in Lima that the GCF would accept funds from private sector corporations and institutions but this will be finalised next year. The GCF which has crossed the ten billion $ mark during the U.N. climate talks, still needs much more to fill its coffers and help developing countries.

Ms. Cheikhrouhou said at a briefing that the first batch of mitigation and adaptation funds from the GCF would be disbursed by October 2015 and it was agreed during a board meeting in Barbados earlier this year that the first period of capitalisation would be for four years from 2015 to 2019. This was decided on a consensual basis. India suggested that the already existing Adaptation Fund could be used to kick-start the funding process of GCF but she said that the Adaptation Fund had its own secretariat and its own way of working, though it could be a point of reference.

The Adaptation Fund set up in 2001 was to be financed by a share of money from the Clean Development Mechanism (CDM) but is virtually stagnant now though Germany made for a fresh commitment of 55 million Euros.

The GCF is in the phase of accrediting local, regional and national implementing agencies which can have a direct access to it.

Another innovative feature of the GCF is that the Board has decided to work through intermediaries and deploy though them equity guarantees and loans and soon it will have financial instruments and partners for this purpose. By mid 2017, the GCF hopes to allot 60 per cent of its funds and hopefully that will trigger replenishing of the Fund. The period of future commitment will be decide then.

Union Minister of State for Environment Prakash Javadekar and Ministers from other developing countries have been stressing on funds for adaptation and the operationalising of the GCF.

Mr. Javadekar pointed out that that the world needs $600 to 1500 billion for climate action per year and a road map of finance was vital. An earlier study by the WRI on Fast Start Finance could also have some pointers on the operationalising of the GCF. Taryn Fransen who conducted a study in 2011 to shed light on climate finance, looked at what are the programmes that developed countries reported as climate finance.

Huge population at fluorosis risk

High fluoride levels in water in 14,132 habitations in 19 States

With drinking water in 14,132 habitations in 19 States still containing fluoride above the permissible levels, the Union Health and Family Welfare Ministry fears that a huge population is at risk of serious health conditions such as skeletal fluorosis.

The Ministry has now urged the Drinking Water and Sanitation Ministry to ensure the supply of safe drinking water in these habitations.

Data collated by the latter say Rajasthan has the highest number of such habitations (7,670), affecting 48,84,613 people. Telangana has 1,174 such districts with 19,22,783 affected people. Karnataka has 1,122 such districts and Madhya Pradesh 1,055. Assam, Andhra Pradesh, Bihar, Chattisgarh, Maharashtra, Odisha, West Bengal and Uttar Pradesh too face the problem.

The World Health Organization guideline value for fluoride is 1.5 mg per litre, with a target of between 0.8 and 1.2 mg per litre to maximise benefits and minimise harmful effects. Fluoride levels in the body depend on climate and intake of the chemical from drinking water and other sources, the WHO says.

Fluoride contamination affects the teeth and bones and long-term excessive exposure causes abdominal pain, excessive saliva, nausea, vomiting, seizures and muscle spasms.

The WHO says fluroide levels above 1.5 mg per litre causes pitting of tooth enamel and deposits in bones. Levels above 10 mg per litre cause the crippling skeletal fluorosis.

The government has started the National Programme for Prevention and Control of Fluorosis in 2008-09. In 2013-14, the programme was brought under the National Rural Health Mission, which has so far covered 111 districts.

The programme includes surveillance of fluorosis in the community, training and manpower support, establishment of diagnostic facilities, treatment and health education. The Indian Council of Medical Research has formed a task force on fluorosis to address issues related to prevention and control