Government constitutes a five Member Committee to comprehensively review and give recommendations on the FRBM roadmap for the future

Government constitutes a five Member Committee to comprehensively review and give recommendations on the FRBM roadmap for the future

In pursuance of the Budget Announcement 2016-17, the Government has constituted a five Member Committee to comprehensively review and give recommendations on the FRBM roadmap for the future.

The composition of the FRBM Review Committee is as follows:

(i)Shri N.K. Singh, Former Revenue Secretary & Expenditure Secretary &Former Member of Parliament(Rajya Sabha) : Chairman

(ii)Shri Sumit Bose, Former Finance & Revenue Secretary: Member

(iii)Dr. Arvind Subramanian, Chief Economic Advised (CEA) : Member

(iv) Shri Urijit Patel,Deputy Governor,RBI: Member

(v) Shri Rathin Roy, Director, NIPFP: Member

The Terms of Reference (ToR) of the Committee are as under:

(i) To review the working of the FRBM Act over last 12 years and to suggest the way forward, keeping in view the broad objective of fiscal consolidation and prudence and the changes required in the context of the uncertainty and volatility in the global economy;
(ii) To look into various aspects, factors, considerations going into determining the FRBM targets
(iii) To examine the need and feasibility of having a ‘fiscal deficit range’ as the target in place of the existing fixed numbers(percentage of GDP) as fiscal deficit target; if so, the specific recommendations of the Committee thereon; and
(iv) To examine the need and feasibility of aligning the fiscal expansion or contraction with credit contraction or expansion respectively in the economy.

The Committee will make its assessment and provide its views on the expected impact of its recommendations on the General Government deficit and other FRBM parameters. The Committee will also examine and give recommendations on any other aspect considered relevant in relation to the determination and implementation of the FRBM roadmap. The Committee may be entrusted with additional ToR, if considered necessary. In this context, the Committee may consult Departments/Agencies of Government, experts and institutions, as considered necessary, and determine its own procedures.

The Budget Division of Department of Economic Affairs, Ministry of Finance will provide necessary secretarial and logistics support to the Committee.

The Committee shall submit its Report to Government by the 31st October, 2016.

Narendra Modi’s Iran visit to focus on boosting energy, trade ties

Narendra Modi’s Iran visit to focus on boosting energy, trade ties
Narendra Modi to make the 22-23 May trip at the invitation of Iranian president Hassan Rouhani

Prime Minister Narendra Modi will be visiting Iran over the weekend on a two-day trip that is expected to boost bilateral energy and trade ties besides giving a fillip to India’s connectivity plans in its extended neighbourhood.

India’s external affairs ministry announced the visit in a press statement on Tuesday in which it said that Modi was making the 22-23 May trip at the invitation of Iranian president Hassan Rouhani.

Modi and Rouhani have met earlier at Ufa in Russia, on the sidelines of a Shanghai Cooperation Organization meeting.

Modi’s visit to Iran comes after his visits to the UAE and Saudi Arabia and ahead of trips to Qatar and Israel. It comes at a time of flux in the Middle East with the rise of the radical Sunni Islamic State militant group and an Iran freed of sanctions, which has made countries like Saudi Arabia and Israel wary of the rise of the Shia majority country.

“During the visit, the prime minister will call on the supreme leader of Iran (Ali Khamenei) and will hold talks on a wide range of subjects of mutual interest with President Rouhani.

“India and Iran share longstanding civilizational ties. Iran is situated in India’s extended neighbourhood and the two countries have significant overlap in their economic and security space.

“The visit of the prime minister to Iran will seek to build on these commonalities by focussing on specific cooperation in regional connectivity and infrastructure, developing energy partnership, boosting bilateral trade, facilitating people-to-people interaction in various spheres and promoting peace and stability in the region,” the statement said.

Modi’s visit will provide “a timely thrust to the ongoing efforts of the two countries and their business entities to expand bilateral cooperation and mutually benefit from new opportunities in the wake of lifting of secondary sanctions against Iran earlier this year,” it added.

Iran has been a major source of energy for Asia’s third largest economy even during the period when the US imposed crippling sanctions on financial institutions dealing with Iran, making it impossible for countries buying crude oil from the Shia country to pay their bills. The sanctions—aimed at curbing Iran’s allegedly clandestine nuclear programme—were lifted last year after Iran struck a deal with Russia, the US and its other Western allies to allow international monitors to inspect its nuclear facilities.

Earlier this month, India’s ambassador to Iran Saurabh Kumar was cited by media reports as saying that India was accelerating a plan to pay nearly $6.5 billion it owes Teheran for crude oil imports.

Turkey’s Halkbank has been identified to facilitate the payment and the money will be paid in euros, Kumar said.

Modi’s visit is also expected to see progress on New Delhi’s proposal for allowing ONGC Videsh Ltd (OVL) to develop the Farzad B gas field in Iran.

OVL, along with Oil India Ltd and Indian Oil Corporation Ltd, had earlier invested about $100 million in the Farzad B gas field, but production could not be started as Indian companies found it difficult to stay engaged in the hydrocarbon sector due to sanctions imposed by the US and the European Union.

New Delhi conveyed to Tehran its interest to return to the project after sanctions were eased last year.

India is also keen on developing Iran’s Chabahar port which could ease India’s connectivity problems vis-a-vis landlocked Afghanistan. India is to equip and operate two berths in Chabahar Port Phase-I with capital investment of $85.21 million and annual revenue expenditure of $22.95 million on a 10-year lease. India, Afghanistan and Iran have finalised a trilateral transport and transit deal, which will allow Indian exporters to utilise the Chabahar Port, besides gaining access to markets in Afghanistan through Zahedan in the West Asian country.

The judiciary is shifting the balance of power

The judiciary is shifting the balance of power
It is increasingly becoming the first port of call for solving all problems

Usually known to be measured with his words, finance minister Arun Jaitley cut loose with scathing criticism of the Indian judiciary on the floor of the Rajya Sabha last Thursday. He blamed the judiciary for actively encroaching on the powers of legislative and executive authorities. He claimed that “step by step, brick by brick, the edifice of India’s legislature is being destroyed” by the judiciary. Through a number of judgements, including the one Jaitley referred to in his Rajya Sabha intervention—ordering the creation of a National Disaster Mitigation Fund while national and state disaster response funds already exist—the judiciary has appropriated for itself a role far beyond its primary duties of dispensing justice and interpreting laws.

This encroachment is clearly a matter of huge concern. And to that extent, Jaitley is right. As far as his choice of words is concerned, it is also an indicator of how repeatedly used camouflaged phrases like “judicial overreach” have been incapable of instigating any self-correction by the honourable judges.

The judiciary in India is often called the most powerful among its tribe globally. While the creative interpretations of the text of law had started earlier, the post-Emergency phase marked a distinct turnaround in the Indian judiciary’s activism. After the ignominious failure to protect the fundamental rights of the citizens in ADM Jabalpur vs Shivakant Shukla (1976), the court believed a constitutional correction would be insufficient. So, the pursuance of constitutional legitimacy was replaced—in the words of Lavanya Rajamani and Arghya Sengupta—“by a quest for popular legitimacy”. A series of judgements, most notably S.P. Gupta vs President of India and others (1981), gave rise to a new legal instrument called public interest litigation. This instrument allowed “public-spirited individuals seeking judicial redress” on a variety of matters beyond what would be permitted by the traditional rule of locus standi, which specifically addressed the concerns of aggrieved citizens.

Through several judgements thereafter, the judiciary has unhesitatingly shuffled into the roles of both the legislature and the executive. It assumed wide powers in matters of protection of the environment. This process was, however, aided by the executive which dithered in taking politically difficult decisions that might have invited wrath from their constituencies. The overzealousness of the judiciary and the neglect by the executive helped along a gradual obliteration of the separation of powers between the judiciary, the legislature and the executive.

Jaitley is not the only one to speak out. When quizzed about the Supreme Court decision to move Indian Premier League matches out of Maharashtra given the drought in Latur and other parts of the state by an interviewer on NDTV, transport and shipping minister Nitin Gadkari said: “If judges want to do our job, they can resign and contest elections.” Not just the drought, the courts have also evidenced their concerns about the problem of pollution in the National Capital Region. Among a spate of orders, the apex court has doubled the entry tax on trucks entering Delhi. The intention is indeed laudable. But here is a question that should be considered by anyone making such a decision. Who will bear this tax—the truck owners or the citizens of Delhi? Well, it depends on the demand elasticity of goods in Delhi, an overwhelmingly consuming state. This example is ample proof of why the courts which are ill-equipped to weigh the economic, environmental and political costs involved should keep away from such issues.

To be fair, the judiciary has its own complaints of the executive. Speaking at the chief ministers and chief justices conference, chief justice of India T.S. Thakur grew emotional talking about the long backlog of pending cases. He blamed the centre for moving slow on the appointment of judges and increasing the number of courts and judges. Thakur may indeed be right, but he could have also looked at the propensity of the judiciary to continually expand its sphere of operations and the consequent effect on the backlog.

A bench headed by Thakur himself has been, in recent times, trying to fix the air connectivity to Shimla. And over the past few days, Olympic medallist Sushil Kumar had moved the Delhi high court to help him make the cut for Rio Olympics 2016. Even as the court has refused to interfere, this is another example, if any was needed, to show that the courts have become the first port of call for all problems—from air-connectivity of Shimla to securing nomination in the Olympics.

Has the Indian judiciary taken too much upon its shoulders?

Government opens special channel to speed up patent grant process

Government opens special channel to speed up patent grant process
The government, in a first, aims to process patent applications within 6 to 12 months as against the normal route which takes 5 to 7 years
The government, in a first, has opened a special window to process patent applications within 6 to 12 months as against the normal route which takes 5 to 7 years. The easy route will be open only to start-ups and firms willing to file patents for new innovations first in India, thereby recognising the Indian patent office as a competent International Searching Authority (ISA) or International Preliminary Examining Authority (IPEA).

The Department of Industrial Policy and Promotion (DIPP) notified on Monday the amended patent rules which included the provision among others. But the Controller General of Patents Designs and Trademarks will only take up a limited number of applications under the fast-track route in one year. There are 18 patent offices classified as ISA or IPEA in the world.

“India is the 17th ISA. We have kept this condition to popularize Indian ISA for patent filings. We expect start-ups and Indian companies to use this route,” a DIPP official said on condition of anonymity.

Now when an applicant files a “request for examination” which is a completed application form, it takes the Indian patent office 5-7 years to do the first examination. Then, based on the questions or contests by other parties, the patent office gives 12 months to respond to the original applicant after which it either grants or rejects the patent. The final award of patent depends on how soon the applicant responds to the queries. The centre is trying to bring down the first examination period to 18 months by March 2018 for applications filed through the normal route.

The time to be taken to complete the first examination has not been specified in the amended rules and it will be separately notified through an executive order, the official said.

The fast-track facility will be available for start-ups set up anywhere in the world if they satisfy the definition of a start-up by DIPP. “Under the World Trade Organisation rules, we have to give national treatment and cannot discriminate against a company from another country,” the official said.

India has defined a start-up as one that has been set up in less than five years and whose turnover is less than Rs.25 crore. This definition will also be applicable to foreign start-ups.

DIPP has also recognised start-ups as individuals rather than companies and has cut their application fees. For example, initial application fee for a start-up is Rs.1,600, equivalent for an individual person and the fee for request for examination is Rs.4,000. If the start-up wants to expedite its patent application, it has to pay double the fee. The application fees for small and medium enterprises and large companies go up by 2.5 times and 3 times, respectively.

Through the amended rules, DIPP has also for the first time introduced cases under which firms can ask for a refund of patent application fee if one withdraws the application.

“There are a lot of applications pending with us unnecessarily when the party is not even interested in pursuing it. They filed an application earlier thinking that they had a grand idea. After working on it for a year, they realized that it was of no use or could not be commercialized or it’s not viable. Now, they can just file an application to withdraw and we will return the fee. If the patent application has reached the stage of ‘request for examination’, still the applicant can withdraw it and we will refund 90% of the application fee,” the official said.

In countries such as Japan, 10-15% of the applications get withdrawn. In India, the number of pending patent applications are around 240,000.

SBI merger: India may soon have a global Top 50 bank

SBI merger: India may soon have a global Top 50 bank
SBI, associates begin talks for a merger which would create an entity with a balance sheet of Rs37 trillion

India took its first step towards creating a large bank with the country’s largest lender State Bank of India (SBI) and its five associate banks initiating a merger process. All six are state-owned.

A merger would create a banking behemoth with a balance sheet size of Rs.37 trillion, SBI chairman Arundhati Bhattacharya said. That would be more than five times the Rs.7.2 trillion balance sheet size of India’s second largest lender, ICICI Bank Ltd.

The combined entity, however, would still be quite small by global standards. SBI was at rank 52 in the world in terms of assets in 2015, according to Bloomberg, and a merger will see it break into the top 50. All else remaining the same, the combined entity would be ranked 45th.

India has flirted with the idea of bank consolidation for years. Several state-owned lenders are much too small to be viable in any significant way, and some experts believe that larger banks can serve the banking needs of the country’s retail and commercial borrowers better.

On Tuesday, boards of SBI and the associate banks met individually in Mumbai and decided to begin merger talks with the parent.

“State Bank of India has informed BSE that SBI is seeking “in principle sanction” of the Central Government to enter into negotiation with the subsidiary banks (State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore) and Bharatiya Mahila Bank Limited to acquire their businesses including assets and liabilities,” SBI said in a statement to stock exchanges.

Click here for enlarge
Similar statements were issued by the three listed associate banks—State Bank of Mysore, State Bank of Travancore and State Bank of Bikaner and Jaipur.

The effort is “purely exploratory” at this stage and there is no certainty that the process will result in an eventual merger, SBI added in its statement.

Efforts at bank consolidation, to create large lenders with the size and scale to fulfil the funding needs of a growing economy, have failed to make headway in the past because of resistance by unions fearful of job losses.

Taking note of Tuesday’s development, the All India Bank Employees Association (AIBEA) called for an all-India strike on 20 May to oppose the intended consolidation.

The consolidation process is being driven by the government, which is keen to reform the banking sector that’s now weighed down by bad loans.

In an interview to Business Standard on Monday, finance minister Arun Jaitley hinted that the government was looking at bank consolidation with some urgency. When asked what the government’s timeline was, Jaitley responded: “Wait for a few days”.

SBI had seven associates, of which it merged two—State Bank of Saurashtra and State Bank of Indore—with itself over the last 10 years. The five remaining associate banks have a cumulative advances base of Rs.3.78 trillion and a deposit base of Rs.5.03 trillion, according to their last reported numbers.

SBI, the parent bank, had advances of Rs.13.91 trillion and deposits of Rs.16.71 trillion as of the end of the December quarter.

“There are a lot of synergies between the banks. Currently there is a lot of duplication,” Bhattacharya said. “For instance, each bank runs its own individual treasury. Once you start rationalizing all this, the bank will get a lot of cost benefits.

“We will now start talking to all constituents including the employees. Can’t give a timeline but would like to do it as soon as possible,” she added.

A. Krishna Kumar, a former managing director of SBI, said the merger of associates should probably have happened a long time ago.

“But it should be understood that the process will take time. It should not be rushed through. You have to think it through carefully and implement it well,” said Kumar, adding that overlaps between these banks will have to be dealt with patiently.

“There will definitely be an overlap in terms of branches and employees. Each of these associates was working independently and, particularly in the large cities, were competing with the parent bank. You will have to rationalize these branches over time while ensuring that employees are redeployed appropriately.”

Bank consolidation was proposed by the government in March at a congregation of bankers and government officials where various issues pertaining to banks were discussed. Jaitley had said that all bankers supported the idea of consolidation among public sector banks and that the country needed a handful of large banks instead of a large number of small banks.

What has strengthened the case for such mergers at this stage is the need to infuse capital in state-owned banks that are burdened by a large pile of non-performing assets—the result of an economic downturn that made it difficult for many over-extended corporate borrowers to repay debt.

“Consolidation is no longer a luxury for the banking system, it is a need. Earlier, the argument was capital efficiency, saying that the government would have had to shell out more for multiple banks from the same group, hence consolidation would help. But today, NPA (non-performing asset) management and quicker resolution seems to be a bigger reason working in favour of consolidation,” said Ashvin Parekh, managing partner of Ashvin Parekh Advisory Services Llp.

Publicly traded banks in India added nearly Rs.1 trillion in bad loans in the quarter ended 31 December, an increase of 29% compared with end-September, as lenders responded to a central bank call to accelerate recognition of stressed assets.

This led to a surge in provisions and, consequently, a drop in profits.

The government has committed to infusing Rs.25,000 crore into state-owned banks this year as part of an overall plan to infuse Rs.70,000 crore over three years. The first tranche of Rs.25,000 crore was allotted to banks in fiscal 2016.

Rating agencies have said the amount of capital needed by these banks will be far in excess of what the government is in a position to provide.

India Ratings and Research Pvt. Ltd estimates that banks need a total of Rs.3.7 trillion between fiscal 2017 and 2019 to meet Basel-III norms.

india snubs Pakistan’s objection to draft Geospatial Bill

india snubs Pakistan’s objection to draft Geospatial Bill
Pakistan foreign office expressed “serious concern” to the UN over the draft Geospatial Bill in the Indian Parliament over the map of Kashmir
Pakistan on Tuesday opposed a draft Indian legislation that seeks to penalise anyone misrepresenting India’s geographical boundaries, drawing a swift and sharp rebuke by New Delhi.

A statement from the Pakistani foreign office, forwarded by the high commission in New Delhi, said that Pakistan had “expressed serious concern to the United Nations Secretary General and the President of the UN Security Council (UNSC)... with regard to the Indian government’s efforts to introduce a controversial ‘Geospatial Information Regulation Bill’ in the Indian Parliament.

“In violation of UNSC resolutions, the official map of India has been depicting the disputed territory of Jammu and Kashmir as part of India which is factually incorrect and legally untenable,” the Pakistani statement said.

While maps printed in India and by Indian publishers show the entire Jammu and Kashmir region as part of India, many international publications have shows the territory under Indian control differently.

“Through the passage of this Bill, the Indian government would penalize the individuals and organizations who depict Jammu and Kashmir as a disputed territory as per the United Nations Security Council (UNSC) resolutions,” the Pakistani statement said, adding that Pakistan called upon the “United Nations to uphold the UNSC resolutions and urge India to stop such acts which are in violation of international law.

“We have urged the international community and the United Nations to fulfil their commitment with the people of Jammu and Kashmir by holding an independent and impartial plebiscite under UN auspices,” it added.

India told off Pakistan in a terse response.

“The proposed Bill is an entirely internal legislative matter of India, since the whole of the state of Jammu and Kashmir is an integral part of India. Pakistan or any other party has no locus standi in the matter,” Indian foreign ministry spokesman Vikas Swarup said.

“The Government firmly rejects Pakistan’s repeated and increasing attempts to impose on the international community matters that India has always been open to address bilaterally with Pakistan,” Swarup added.

According to the draft bill, geospatial data on India cannot be obtained or distributed anywhere without the permission of a three-member Security Vetting Authority.

“False” topographic information, basically representing international boundaries that India does not accept, is punishable with a fine of up to Rs.100 crore.

The bill states that a “licence will be required for creation of maps as well as dissemination of map data. It describes geospatial information as “geospatial imagery…acquired through space or aerial platforms such as satellite, aircrafts…or digital data depicting natural…physical features.”

India currently has a National Map Policy which was introduced in 2005. The policy states that only the Survey of India can bring out ‘Open Series Maps’ for development activities. The policy, however, does not mention any punitive measures for wrong maps.

Rare sighting: Brown bears return to Kargil

Rare sighting: Brown bears return to Kargil

Wildlife officials spot ursine family in sector where their natural habitat was damaged by 1999 war.

The J&K Wildlife Department has recorded its first ever sighting of a group of eight Himalayan brown bears in Kargil’s Drass Sector, where the 1999 war had wreaked havoc with their habitats.

“The sighting of eight brown bears, including three adult females and five grown-up cubs, is a rare record. No such sighting has ever been reported from J&K, Himachal Pradesh and Uttarakhand, where these animals are distributed,” Kargil Wildlife Warden Intesar Suhail told The Hindu over phone from Kargil, 200 km away from Srinagar.

A Wildlife Department team, headed by Mr. Suhail, spotted the rare Himalayan brown bears, in Ladakh’s Drass area with mountain ranges of 16,000 to 21,000 feet, just before the sunrise on May 12.

“We trekked for two-and-a-half hours and spotted these animals. Otherwise sightings are only reported during the night, that too of a solitary bear or with a cub. Besides these eight, we expect at least three male bears to active the area,” he said.

Den nearby
Two days later, the team spotted a brown bear and a cub in the afternoon, again a rare sighting. “It seems there is a den. It is a memorable sight for me as wildlife researcher,” said Mr. Suhail.

The sighting of such relatively large numbers of Himalayan brown bears in just one wildlife zone out of four major areas of Suru, Zanskar, Drass and Kargil in the Ladakh region is a positive indication.

A brown bear requires about 100 square kilometer as its territory to survive and any human intervention disturbs its ecology. “However, in Drass, people have made videos of brown bears in different far-off areas. Besides, the Wildlife Department recorded 25 raids on cattle sheds by brown bears in the past six months in Kargil, reflecting growing numbers,” said Mr. Suhail, whose department is working on a brown bear census.

The Wildlife Department is upbeat as the increasing numbers are testimony to the fact that the negative impact of the 1999 Kargil war, with heavy artillery shelling for almost three months that devastated the bear habitat, seems to be waning.

“The Tiger Hill, one of the battle fields, was a prominent brown bear habitat. The war and the movement of troops did impact the animal’s behavior and ecology,” said Mr. Suhail.

In 2010, an extensive survey, ‘Carnivore-human conflict in Kargil and Drass’, carried by the Rufford Small Grant and the State Wildlife Department in the district did not record a single Himalayan brown bear sighting.

Only 11 indirect sightings, based on scat, scrape and pug-marks, were reported.

Sightings of brown bear, which is on the International Union for Conservation of Nature and Natural Resources' list of vulnerable animals, has come down significantly in Kashmir Valley too in the past few decades.