Unshackling the states from central schemes

A large number of central schemes end up curbing the autonomy of states

n some ways, the thunder of finance minister Arun Jaitley’s first full-year budget was stolen by the Fourteenth Finance Commission (FFC) report. Released just a few days before the budget speech was made, the FFC brought in significant changes in state-centre finances by increasing the devolution to states from 32% to 42% of the net Union tax receipts. With fewer funds to disburse, the Union budget delinked as many as eight centrally sponsored schemes (CSS) from the support of the Union government. Many others were now to be implemented with altered financing patterns.

A recent report of a sub-group of chief ministers offers the Union government an institutional framework to further consolidate the salutary trends in fiscal devolution under the new emblem of cooperative federalism. Over the years, proliferation of CSS has greatly curbed the autonomy of the state governments. The greater the devolution through these one-size-fits-all CSS, the lesser is the untied fund available to the state governments. The budget of 2014-15 made provisions for 66 CSS out of which 17 were declared ‘flagship schemes’. The non-flagship schemes received low budgetary provisions spread thin among sectors and between states. The states had to still implement these schemes in order to avail of the matching grant from the centre.

The sub-group constituted under the aegis of NITI Aayog “to examine the current CSS and recommend their suitable rationalization” has suggested a better and lighter framework. The sub-group has recommended pruning the number of CSS down to 30 from 50 in 2015-16 and 66 the year before. This step, if implemented, will be a welcome part of the next budget.

The sub-group has further asked the CSS to be divided into core schemes and optional schemes. The core schemes will require mandatory implementation by the states, and the centre will fund 100% share for the Union territories, 90% for the eight north-eastern (NE) and three Himalayan states, and 60% for the rest of the states. The corresponding figures for the optional schemes are 100%, 80% and 50%, respectively.

In the proposed structure, the states will have the flexibility of choosing the optional schemes they want to implement. The fund meant for the scheme opted out by any state can be used in other schemes. The states will be free to deselect some components of a scheme they are implementing. The sub-group also recommends increasing the flexi-funds—meant to provide greater flexibility to spend on diverse requirements under the overall objective of the scheme—from 10% to 25%. In short, the mantra is to unshackle the states from the firm grip of central schemes.

Interestingly, the use of the phrase “8 NE and 3 Himalayan states” instead of “special category states” has important implications if this report is accepted. One, it means the generous terms of funding from the Union government for central schemes in these states is likely to be retained. Two, the discontinuation of block grants undertaken in 2015-16 seems irreversible. The special category states were disproportionate beneficiaries of the block grants—including Normal Central Assistance, one-time Additional Central Assistance, Special Central Assistance and Special Plan Assistance—which have now been subsumed into the increased FFC devolutions.

Three, the phrase “special category” may eventually be phased out. The formulation of these states as “8 NE and 3 Himalayan states” is an inkling in that direction. Four, this will bring a much-needed end to the practice of states queuing up for special category status. Some sops extended to special category states do not do away with the need for these states to improve their state capacities and public finances. On 29 October, at a press conference in Patna in response to a question on Bihar’s demand for special category status, Jaitley remarked that the era of special category status to states is over. Unsurprisingly, the chief ministers of the special category states—both part of the sub-group and otherwise—are not very pleased.

The constitution of the sub-group was an excellent example of involving the states in the decision-making process. The next budget provides the central government to further empower the states by pruning the number of CSS. The eventual elimination of special category status will also do good to the very states which are the current beneficiaries.

Should the next Union budget further reduce the number of centrally sponsored schemes?

The progressive decline of the Indian Parliament

The Lok Sabha has been progressively setting aside fewer days to meet, and meeting even less on those allotted days

The Lok Sabha—the running of which rests with representatives elected by the people of India—has been in a perennial state of decline. It has been progressively setting aside fewer days to meet, and meeting even less on those allotted days. As a result, it is squabbling more and discussing less, and then trying to make up for lost time by pushing through legislation faster. Even the current majority government has failed to rewrite that script.

Parliament is convening, and sitting, for fewer days

The first Congress government in 1952 and the last Congress-led government in 2009 were both in power for about 1,800 days. But the 1952 group of MPs spent almost twice as many days in the Lok Sabha as the 2009 group. This decline has been progressive during these 57 years, across governments. Even the currenty Bharatiya Janata Party (BJP)-led government is averaging numbers similar to those of the last two Congress-led governments.

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The effect is felt less in the quantity of legislation…

Measured in terms of government tenure, the number of bills being passed by Lok Sabhas in the past decade has seen a 20-40% drop over the first two. However, measured in terms of how much Parliament meets, there has not been a corresponding drop in bills passed. This suggests that the Lok Sabha is passing bills faster, raising questions about whether these pieces of legislation were adequately discussed before being cleared.

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…and more in the quality of discourse that nourishes governance

Speaking in Parliament last week, Prime Minister Narendra Modi said “conversation and debates are the soul of Parliament”. That soul is under serious assault. Torn between the polarity of no work—caused by a hostile, tit-for-tat opposition—and the speedy passage of bills to make up for lost time, there’s virtually no time or inclination for discourse that richens a democracy.

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Women Entrepreneurship Development Programme

Women Entrepreneurship Development Programme

The Ministry is implementing schemes for imparting training and to promote women entrepreneurship by setting up micro, small and medium enterprises in the rural and urban areas of the country through Khadi & Village Industries Commission (KVIC) and Coir Board.

KVIC conducts skill development and Entrepreneurship Development Programme (EDP), to encourage participation of women, KVIC offers free training to women under skill development programme.

Ministry of Micro, Small and Medium Enterprises (MSME) is implementing Prime Minister’s Employment Generation Programme (PMEGP), a major credit-linked subsidy scheme since 2008-09, to promote and set up micro, small and medium enterprises and to generate employment in rural and urban areas of the country. The maximum cost of the project under PMEGP scheme is Rs.25.00 lakhs for manufacturing sector units and Rs.10.00 lakhs for units under service sector. Under the scheme the women entrepreneurs are provided 25% and 35% subsidies for the project set up in urban and rural areas respectively. For women beneficiaries, own contribution is only 5% of the project cost while for general category it is 10%.  All the entrepreneurs including women are eligible for 2 weeks Entrepreneurship Development Programme (EDP) after the sanction of their projects from banks for financial assistance to setup their unit and also imparting training under EDP. The State-wise funds allocated for the year 2015-16 including women is:

Setting up of NIMZs

Setting up of NIMZs

Government has granted “in-principle” approval to a total of 20 National Investment and Manufacturing Zones (NIMZs). Of these, 12 NIMZs are located outside the Delhi-Mumbai Industrial Corridor (DMIC) region. These are:

(i) Nagpur in Maharashtra;
(ii) Tumkur in Karnataka;
(iii) Chittoor in Andhra Pradesh;
(iv) Prakasam in Andhra Pradesh;
(v) Medak in Telangana;
(vi) Kolar in Karnataka;
(vii) Bidar in Karnataka;
(viii) Gulbarga in Karnataka;
(ix) Jajpur in Odisha;
(x) Ramanathapuram in Tamil Nadu;
(xi) Auraiya in Uttar Pradesh; and
(xii) Jhanshi in Uttar Pradesh.

Out of these NIMZs, the Government has granted final approval to the NIMZ at Prakasam in Andhra Pradesh on 6th October, 2015

Under phase-I of the DMIC project, 8 Investment Regions have also been accorded ‘in-principle’ approval of Government for setting up as NIMZs as per guidelines approved by the Cabinet. These are:

i. Ahmedabad-Dholera Investment Region, Gujarat
ii. Shendra-Bidkin Industrial Park city near Aurangabad, Maharashtra
iii. Manesar-Bawal Investment Region, Haryana
iv. Khushkhera-Bhiwadi-Neemrana Investment Region, Rajasthan
v. Pithampur-Dhar-Mhow Investment Region, Madhya Pradesh
vi. Dadri-Noida-Ghaziabad Investment Region, Uttar Pradesh
vii. Dighi Port Industrial Area, Maharashtra ; and
viii. Jodhpur-Pali-Marwar Region in Rajasthan

The Government of India has approved a fund of Rs. 17,500 crores as a Revolving Corpus for development of trunk infrastructure in the DMIC region. The Government of Japan has announced their financial support for DMIC project to an extent of US$ 4.5 billion in the first phase for projects with Japanese participation through a mix of Japan International Cooperation Agency (JICA) and Japan Bank for International Cooperation (JBIC) lending.

Apart from twenty NIMZs which have been accorded “in-principle” approval and in which one has been accorded final approval, the Government has received three more proposals for setting up of NIMZ outside the Delhi-Mumbai Industrial Corridor region from Government of Gujarat (Two) and Government of Tamil Nadu (One). The concerned State Governments have been requested for further clarifications/ details about these proposals.

FDI in E-Commerce Sector

FDI in E-Commerce Sector

As per the extant FDI policy, FDI up to 100% under the automatic route is permitted in companies engaged in e-commerce provided that such companies would engage only in Business to Business (B2B) e-commerce. Further, it has been decided an entity will be permitted to undertake retail trading through e-commerce under the following circumstances:

(i) A manufacturer is permitted to sell its products manufactured in India through e-commerce retail.

(ii) A single brand retail trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce.

(iii) An Indian manufacturer is permitted to sell its own single brand products through e-commerce retail. Indian manufacturer would be the investee company, which is the owner of the Indian brand and which in manufactures in India, in of value, at least 70% of its products in house, and sources, at most 30% from Indian manufacturers.

The Government, with a view to simplify and liberalise FDI policy and to ensure that India remains increasingly attractive and investor-friendly investment destination, undertakes stakeholders consultations with concerned Ministries/ Departments, Apex Industries Chambers and other organizations. Consultations, in this regard, were held with the stakeholders including States and industry representatives.

India’s Ranking in Global Innovation Index

India’s Ranking in Global Innovation Index

            “The Global Innovation Index” (GII) is a publication brought out by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO) as co-publishers, and their Knowledge Partners. The Confederation of Indian Industry (CII) was their knowledge partner from India for the year 2015. India’s position in the GII rankings during current year and last three years is as under:

Year	2015	2014	2013	2012
India’s Ranking	81	76	66	64

           

The Global Innovation Index (GII) 2015 covers 141 economies around the world and uses 79 indicators across a range of themes. The rankings are based on data collected during earlier years and thus do not truly reflect the status in the country in 2015. For example, the data for India’s overall R&D spending pertains to the year 2010, and the significant amount of spending done by Industry and Government on R&D in last 5 years has not been captured and does not get reflected in the ranking. The GII Report itself states that there are certain areas where data could not be captured because of the non-availability of standard international indicators, and even if some of these areas have produced good innovation advantage for a country like India, it does not translate into ranking.  At the same time, the Report states that India still needs to implement substantial reforms in its innovation policy in order to further improve its innovation performance.

            Though India’s ranking for the year 2015 stands at 81 as against 76 in 2014, this is not a true reflection of the status in the country in 2015. The Report itself identifies India as the top economy in GII rankings in Central and Southern Asia and also as one of the middle income group countries which is narrowing the gap in the innovation quality due to improved quality in higher education institutions. The GII 2015 report states that over the years, India has developed a stable foundation for scientific, technological, and business education by setting up centers of excellence such as the Indian Institutes of Science (IISC), the Indian Institutes of Technology (IITs), and the Indian Institutes of Management (IIMs). The Report further notes that the strength of scholarly publications from India has been a key proponent for driving innovation capacity. The Report acknowledges that India has leapfrogged, leaving others in its category behind, in areas like mobile networks, information technology, and broadband. This revolution in communications has affected a pace of knowledge creation and dissemination in the economy that is unprecedented in Indian history. It has helped to transform innovation-driven entrepreneurship from the point of aspiration to the point of reality for the people of India.

                        The Government has taken various measures for promotion and growth of scientific research in the country. These measures include successive increase in plan allocations for Scientific Departments, setting up of new institutions for science education and research, creation of centres of excellence for research and facilities in emerging and frontline S&T areas in academic and national institutes, establishment of new and attractive fellowships for both research students and scientists, recent substantial revision of fellowships for research students, strengthening infrastructure for Research and Development (R&D) in universities, encouraging public-private R&D partnerships, recognition of R&D units and national awards for outstanding R&D for industries and setting up of Technology Business Incubators and Innovation and Entrepreneurship Development Centers.

The GII: 2015 also recognizes the strides being made by India in this regard. The report states, inter alia, that Government of India has “established an aligned Ministry for Skill Development and Entrepreneurship. This is a step forward. With the intervention of the government and the private sector, the level of innovation in Indian industry is also growing and more and more Indian SMEs are coming forward to invest in collaborative R&D.” Citing an example, the report further states that public-private partnership platforms such as the Global Innovation and Technology Alliance, a not-for-profit organization, are opening up opportunities for Indian companies to join with their foreign counterparts and develop products and technology through joint R&D programmes. The report also acknowledges that “In India’s most recent Union budget presented in February 2015, the government placed considerable emphasis on rapid development in the SME sector by addressing the funding issue. It has created a fund of Rs. 20,000 crore with a credit guarantee of Rs. 3,000 crore for entrepreneurs in this sector. In addition, it set aside Rs. 1,000 crore for a Techno-Financial, Incubation and Facilitation Programme to support all aspects of start-up businesses, and other self-employment activities, particularly in technology-driven areas. The Ministry of Micro, Small & Medium Enterprises has launched Intellectual Property Facilitation Centres in different parts of the country with the aim of creating an intellectual property culture within SMEs by looking at protection, capacity building, information services, and counselling and advisory services regarding IPR.”

“The Global Initiative of Academic Networks” (GIAN)

Union Minister of Human Resource Development, Smt. Smriti Irani Launches “The Global Initiative of Academic Networks” (GIAN)

“The Global Initiative of Academic Networks” (GIAN) programme was formally launched by the Union Minister for Human Resource Development, Smt. Smriti Zubin Irani today, at the IIT Gandhi Nagar. While speaking at Launch of GIAN, HRD Minister said that this initiative, GIAN brings into practice the belief of 'Vasudhaiv Kutumbakam'. Inspired by the vision of the Prime Minister and responding to his wish to ensure early implementation to facilitate the needs of institutions, faculty and students to embrace new knowledge frontiers. The fact that this vision of the Prime Minister has translated into action within a time span of just one year is a reflection of the team work between the Ministry of Human Resource Development and the institutions of higher learning. She said, “While our Hon Prime Minister Shri Narendra Modi has given the clarion call of Make In India, GIAN is our effort to tell the world "Come, Teach In India".

The Global Initiative of Academic Networks (GIAN) is a new and catalytic programme of the Ministry of Human Resource Development, one with potentially far reaching impact. It is intended to enlarge and deepen the interface of India’s institutions of higher learning and globally recognised institutions of academic eminence. Over the next year or so, faculty from highly rated institutions abroad will visit India, interact and partner with their counterparts and with students, and deliver specialised courses.

The two courses - one at IIT Gandhinagar and the other at IIT Kharagpur – launched today would be the first in setting the trend and tenor of the programme, two eminent academicians began their courses - 3D Digitization for Cultural Heritage, delivered by Professor Marco Callieri, Visual Computing Lab, ISTI-CNR, Italy at the IIT Gandhi Nagar, and another course at IIT Kharagpur by Professor Nico Verdonschot, faculty of the Radboud University Medical Center Nijmege, University of Twente, Netherlands on Orthopaedic Biomechanics: Implants and Biomaterials.

In the weeks and months to come, the academic interface will enlarge, and increasingly enable international academic collaboration. Most importantly, the GIAN programme offers a basis and a platform for a long-term cooperation.

From abroad, faculty from 38 countries are presently scheduled to deliver courses, including 46 academics from the USA, 9 from the UK, 6 each from Germany and Australia, and 2 from Israel. The list of countries includes Russia, Japan, Singapore, Sweden, Switzerland, Portrugal, Netherlands, Malaysia and South Korea. This remarkable array of academicians will span 13 disciplines and 352 courses to be taught in 68 national institutions.

The courses vary in duration from 1 week to 3 weeks depending on the subject and are free for students from the host institution, at nominal charges for others and webcast live as well. Webcasting will allow students across the country to benefit, in real time, providing access to high quality educational content. To encourage and make possible continued access to course content and delivery, it would be placed on the website of the concerned institution.

These lectures would be made available later to the students across the country through the SWAYAM, the MOOCs platform and the National Digital Library. A web portal (gian.iitkgp.ac.in) has been designed by IIT Kharagpur to allow electronic registration and online assessment.

The Minister for Education, Government of Gujarat Sri Bhupendrasinh Chudasama was present on the occasion, along with a large number of stakeholders of the education sector, including specialists, teachers and students.