Vision Ias October 2014

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OCTOBER 2014

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TABLE OF CONTENTS

POLITY ...................................................................................................................................................................................... 5

Government bills and legislations ....................................................................................................................................................... 5 Cleanliness campaign ...................................................................................................................................................................................................................... 5 New Bill for banning Child Labour ........................................................................................................................................................................................... 5 Rural Electrification in India and its woes ............................................................................................................................................................................ 6

Administrative Reforms ........................................................................................................................................................................... 7 High speed internet to be introduced in all kerala panchayats .................................................................................................................................. 7 NJAC bill has not removed flaws of collegium System .................................................................................................................................................... 7 RtI weakened by neglect ................................................................................................................................................................................................................ 7 Codification of Privileges proposed ......................................................................................................................................................................................... 8 Two thirds of prison inmates in india are undertrials .................................................................................................................................................... 8 Govt. cuts non PLan spending 10% .......................................................................................................................................................................................... 8

Miscellaneous ................................................................................................................................................................................................ 9 Abolishing death penalty ............................................................................................................................................................................................................... 9 Deaths due to stampedes .............................................................................................................................................................................................................. 9 MEA to oversee FOREIGN investment in states ...............................................................................................................................................................10 Encounters in india ........................................................................................................................................................................................................................10 Surrogacy related iSSUEs ............................................................................................................................................................................................................11

ECONOMY ............................................................................................................................................................................. 13

World Bank predicts 5.6 % growth ................................................................................................................................................. 13

Optimistic predictions about the near future of Indian economy ..................................................................................... 13

Risks and challenges to the economy.............................................................................................................................................. 13

Update on RBIs fourth Bi-Monthly Monetary Policy : ............................................................................................................ 13

Deepakh Parekh Committee on Infrastructure submits its last report: ......................................................................... 14

Global Investment Facility launched: ............................................................................................................................................. 14

Japan Plus team formed to steer Japanese investment: ......................................................................................................... 14

Vodafone wins a major Transfer Pricing case : ......................................................................................................................... 15

Cooling off in Inflation:.......................................................................................................................................................................... 15 a. WPI ....................................................................................................................................................................................................................................................15 b. CPI ......................................................................................................................................................................................................................................................16

Arvind Subramanian appointed as new Chief Economic Advisor: .................................................................................... 16

Reforms in Direct Benefit Transfer for LPG: ................................................................................................................................ 16

Setting up Asian Infrastructure Investment Bank : ................................................................................................................. 16

Channelizing Corporate funds into Governments Cleanliness efforts: ........................................................................... 17

India still a laggard in Ease of Doing Business Index: .......................................................................................................... 17

World Bank assessment on Indian economy: ............................................................................................................................. 17

IMF revises its outlook on India: ...................................................................................................................................................... 18

New Urea Investment Policy notified: ............................................................................................................................................ 18

A big reform in form of Diesel deregulation: .............................................................................................................................. 19

Lower IIP numbers for August disappoints : ............................................................................................................................... 19

DIPP constitutes think-tank to draft new IPR policy : ............................................................................................................ 20

Flipkart Big Billion Day Mega sales: Raising questions on Indian E-commerce: ..................................................... 20 a. Predatory pricing : .....................................................................................................................................................................................................................20 b. FDI issues: ......................................................................................................................................................................................................................................21 c. Tax issues: ......................................................................................................................................................................................................................................21 d. Sourcing issues: ...........................................................................................................................................................................................................................22

SOCIAL ISSUES ..................................................................................................................................................................... 23

DecrimInalization of suicides ............................................................................................................................................................. 23

Corporates Come out in Support of Girl Sanitation ................................................................................................................. 23

Increased toilet coverage has had little impact ........................................................................................................................ 23

Women Related ......................................................................................................................................................................................... 24 Majority indian women engaged in unpaid housework ...............................................................................................................................................24


Controlling Dengue in India .......................................................................................................................................................................................................24

HEALTH ................................................................................................................................................................................................... 26

Reducing tobacco usage ....................................................................................................................................................................... 26

Tacklinge the menace of TB ................................................................................................................................................................ 26

Malnourishment Witnessed sharp decline in India .................................................................................................................. 27

Stock Out Of Vital Medicines ............................................................................................................................................................... 28

Risk of Ebola in India ............................................................................................................................................................................. 28

Rural Stint as a part of Medical Curriculum ............................................................................................................................... 29

ENVIRONMENT ................................................................................................................................................................... 30

Climate change a public health issue: Jairam ............................................................................................................................. 30

India will be renewables superpower, says energy minister, Piyush Goyal .................................................................. 30

INDIA AND WORLD ........................................................................................................................................................... 31

India-USA ..................................................................................................................................................................................................... 31 Joint statement .................................................................................................................................................................................................................................31 US asked not to pressurise India to reject cancer drug license ................................................................................................................................31 Chinas reaction on Modis USA visit ......................................................................................................................................................................................31

India-China ................................................................................................................................................................................................. 32 India signs up for Chinas Asian bank ....................................................................................................................................................................................32 Beefing up the infrastructure along the border in Arunachal Pradesh ................................................................................................................32

India and Nepal ........................................................................................................................................................................................ 32 Landmark Energy Agreement ...................................................................................................................................................................................................32

India-Sri Lanka ......................................................................................................................................................................................... 33 Yal Devi Express ..............................................................................................................................................................................................................................33 Colombo allays Delhis concern over China........................................................................................................................................................................33 Fisherman issue ...............................................................................................................................................................................................................................33

India-Russia ................................................................................................................................................................................................ 33 BrahMos ...............................................................................................................................................................................................................................................33

SAARC ............................................................................................................................................................................................................ 33 SAARC power grid...........................................................................................................................................................................................................................33 Common education agenda ........................................................................................................................................................................................................34

India-Pakistan ........................................................................................................................................................................................... 34 Kashmir issue ....................................................................................................................................................................................................................................34 Ceasefire violations ........................................................................................................................................................................................................................34 India offers to help Pakistan eradicate polio .....................................................................................................................................................................35

India-UN ....................................................................................................................................................................................................... 35 India contributes $1 million to UN womens body .........................................................................................................................................................35 Indian cop wins UNs International Female Police Peacekeeper Award..............................................................................................................35

India-UK ....................................................................................................................................................................................................... 36 Britain, Ireland inks visa deal to benefit Chinese, Indian travellers .......................................................................................................................36

India-Norway ............................................................................................................................................................................................. 36 India, Norway set to clinch accord on N-safety ................................................................................................................................................................36

India- Vietnam........................................................................................................................................................................................... 36

Indian diaspora ......................................................................................................................................................................................... 36 Obama appoints Indian-American attorney to DoJ ........................................................................................................................................................36

Memorandum of Understanding (MoU) for cooperation in the field of oil and gas between India and

Mozambique ............................................................................................................................................................................................... 37

Ratification of the Nagoya-Kuala Lumpur supplementary protocol on liability and redress to the

Cartagena protocol on bio-safety by India .................................................................................................................................. 37

Tracing Indias Black Money- Only case-specific information can be disclosed: Switzerland ............................. 38

WORLD AFFAIRS ................................................................................................................................................................ 39

Israel Palestine conflict ..................................................................................................................................................................... 39 Gaza reconstruction conference in Cairo .............................................................................................................................................................................39 UN criticises Israel for settlement plans ..............................................................................................................................................................................39


IS (Islamic state) ...................................................................................................................................................................................... 39 Turkish Parliament votes for military action against IS ..............................................................................................................................................39 Heavy fighting hits Kobani, a Kurdish Syrian town ........................................................................................................................................................39

Ukraine crisis ............................................................................................................................................................................................. 40 Fighting rages in Ukraine ............................................................................................................................................................................................................40 Moscow, Kiev clinch deal on gas supply...............................................................................................................................................................................40

China .............................................................................................................................................................................................................. 40 Dongfeng-31B ...................................................................................................................................................................................................................................40 China-Russia gas deal ....................................................................................................................................................................................................................40

Hong Kong Talks ...................................................................................................................................................................................... 41

Nigerias truce is shaky ......................................................................................................................................................................... 41


POLITY

GOVERNMENT BILLS AND LEGISLATIONS

CLEANLINESS CAMPAIGN

Prime Minister Narendra Modi launched a five-year Clean India campaign, or Swachh Bharat Mission, on

2nd October, by wielding the broom himself

The campaign will culminate on the 150th birth anniversary of Mahatma Gandhi in 2019.

As per estimates prepared by the Ministries of Urban Development and Rural Development, Rs. 2 lakh crores

will be spent on the Mission over the next five years

Besides invoking Mahatma Gandhi, the government has decided to rope in religious leaders to drive the

Mission

SOME OTHER IMPORTANT DETAILS

The Centre is hoping that the States will pick up 25 per cent of the tab and corporates will dole out

generously through their Corporate Social Responsibility (CSR) corpus for the national endeavour.

Other key components of the campaign include eradication of manual scavenging, solid waste management

and converting waste into wealth.

ANALYSIS

Surely, the Swachh Bharat Abhiyan has been successful as an event in increasing public awareness of the

importance of sanitation. The imagery of the Prime Minister taking time off to wield the broom in central

Delhi might be of some effect in some areas for some time. But if country was hoping for mass participation

in a cleanliness drive that would keep India perpetually clean, public policy must go far beyond symbolism.

If Indias villages and towns are to be dirt-free, what is required is not the involvement of each and every

citizen for two hours every week in the clean-up. While that would lend a Gandhian touch of personal

involvement, it would surely be a colossal waste of productive hours of skilled personnel

Efforts must be made to de-stigmatise the act of cleaning, and the participation of citizens in large numbers in

a mass cleaning exercise, even if as a one-off or annual event, will have a positive effect.

The government may not be able to do everything, but voluntarism cannot be a substitute for strengthening

civic infrastructure. For ensuring cleanliness and hygiene and improving solid waste management, Indias civic

bodies will need to be at the centre of the Clean India Campaign.

The Swachh Bharat Abhiyan will have to be a sustainable programme, and its success ought not to depend on

the hours each citizen puts in to sweep streets.

NEW BILL FOR BANNING CHILD LABOUR

The proposed amendments to the Act (Child Labour (Prohibition and Regulation) will for the first time ban

employment of children below 14 years in any occupation, bringing the law in consistency with the Right to

Children to Free and Compulsory Education Act 2009. The Bill prohibits employment of adolescents aged 14-

18 years in hazardous occupations.


The Bill will regulate conditions of work for adolescents, and of children working in audio-visual

entertainment industry. In 1996, the Supreme Court had prescribed a penalty of Rs. 20,000 from employers

and Rs. 5,000 from State government for every child worker rescued. This will now be introduced in law and

indexed to price rise

The 1986 law prohibits employing children only in certain occupations such as mines, work in hazardous

process and with inflammable substances or explosives.

Minors working in middle class homes as domestic workers and those employed at hotels, dhabas were

included as a category of child labourers only after an amendment in 2006.

RURAL ELECTRIFICATION IN INDIA AND ITS WOES

DEFINITION OF BEING ELECTRIFIED

A decade ago, a village was deemed electrified if it had a single light bulb connection.

Subsequently, the definition was upgraded requiring at least ten per cent of homes to be electrified including

all common or public areas such as schools and clinics.

IMPLICATION OF THE DEFINITION

Based on these definition, the flagship Central government programme Rajiv Gandhi Grameen Vidyutikaran

Yojana (RGGVY) electrified over 18,000 villages annually for several years, leaving out only some five per cent

remote and distant villages which were being targeted for off-grid (decentralised) electrification.

However, the 2011 Census showed that if we considered household-level data, only 55.3 per cent of rural

homes used electricity as the primary source for lighting.

The central government says that ensuring supply of power is the responsibility of the concerned State power

utility. RGGVY does not have any role to play in this regard. Concerned power utility may be approached for

the same.

PROBLEM OF LOAD SHEDDING

Load-shedding the bane of Indias power supply system is far worse in rural areas than metros or large

cities. There are regular reports in newspapers of 15 hours of load-shedding in some areas.

Until there is power supply available in villages, a household isnt meaningfully electrified, though it may have

a line laid out.

In theory, there is meant to be a schedule for load-shedding, but many areas also face unscheduled load-

shedding. Rural areas face an additional challenge in the supply schedule due to the use of irrigation pump

sets, which are heavily subsidized and need three-phase power supply

Most States only give the so-called single-phase supply during the evening which is good for households but

not for most pump sets.

PANDIT DEEN DAYAL UADHYAYA FEEDER SEGREGATION PROGRAMME

GUJARAT EXAMPLE A FEASIBILITY?

There is a proposed scheme of feeder segregation in rural areas to separate households from pump set

supply, allowing them uninterrupted supply. This was originally implemented successfully in Gujarat, and now

by the national-level Pandit Deendayal Upadhyaya Feeder Segregation programme.

However, there are a few reasons to be cautious of taking the practice to the national level, since other

States have tried similar programmes with varying levels of success. State-to-State variations were recently

documented in a major World Bank report apart from other studies. Feeder segregation will only help the

evening peak to the extent of avoiding unwanted pump set loads on single-phase supply through phase

converters. This is only a small fraction since most pumps are already segregated as per phase supply. Most

States have a large deficit, with the exception of Gujarat.

Also, the consumer profile in Gujarat is different from many other States, amenable to rural non-pump set

loads. Lastly, any scheme requires political will for enforcement and consumer trust in the utilities or the

government, which again varies from State to State.


WAY AHEAD

Feeder segregation should be taken up in parts, applying viability analysis to choose deployments instead of

blanket roll-outs. Thinking of the future, instead of just differentiation of households from pump sets

which can be done in the most part in phases it would be better if we think of the next level of

transformation and put in place smart meters to differentiate one consumer from another. With such a

scheme in place, not only can we give a minimum threshold, but also a lifeline supply of electricity to all

consumers, including during shortfall.

We can also easily give socially important users such as schools and clinics 24*7 power supply. This is before

the many other benefits of a smart grid.

The earlier view of electricity as a commodity at a fixed price is changing, as we now recognise that not all

units of power are equal the time of day, location, and even source (fuel) impact its cost, price and value.

The most valuable energy for a household is the first unit of power, invariably used for lighting and charging a

mobile phone. Thus, we need meaningful electricity service, not merely a wire connection to every

household.

ADMINISTRATIVE REFORMS

HIGH SPEED INTERNET TO BE INTRODUCED IN ALL KERALA PANCHAYATS

Kerala would become the first State to have high-speed Internet connecting all the panchayats in the State by

March next year

Of the 800 km of cable needed for the project, 150 km had already been laid.

The panchayats would provide office space for setting up the broadband connection and facilitate laying of

cable. Each panchayat would have to set apart 50 sq ft of office space for the getting the connectivity.

NJAC BILL HAS NOT REMOVED FLAWS OF COLLEGIUM SYSTEM

Law Commission Chairman Justice A.P. Shah has criticised the proposed law in its present form as

disquieting. According to Justice Shah it may perpetuate a culture of trade-offs and sycophancy present in

the collegium system of appointment.

As per him Constitutional Courts of this country cannot be run like closed country clubs. Pointing to

controversies like that of Justice P.D. Dinakaran, he said this opaque mode of functioning by the collegium

has been one of its major failings.

Since 1993, the Supreme Court has been packed with Chief Justices of High Courts elevated by the

collegium merely due to their seniority, and without looking at merit and other objective qualifications. This,

has led to a decline in the standard of judges.

He pointed to how non-judicial members in the NJAC can veto a candidate irrespective of the views of three

judicial members, including the Chief Justice of India.

*For a background of NJAC read VisionIas current affairs of previous months.

RTI WEAKENED BY NEGLECT

An independent assessment of the functioning of the Right to Information Act 2005 in the last two years in

five States has found alarmingly high levels of pendency of appeals and several instances of violations of

mandatory norms of pro-active disclosure under Section 4 of the RTI Act.

Report pointed out that while previously three attempts to dilute the law by the central government through

amendments in 2006, 2008, 2013, had failed following public outcry; the Act was now being weakened

through neglect of important appointments and lack of provisions of resources at State level.

The Central Chief Information Commission is headless since no chief has been appointed since August when

the post fell vacant. This will increase the already massive pendency of over 25,000 cases. The delay in this

appointment raises issues about the legal validity of orders passed in the interim.


CODIFICATION OF PRIVILEGES PROPOSED

The All India Whips Conference has called upon Parliament and the legislatures to consider codification of

privileges to remove the uncertainty surrounding them and address the anxieties of the people and the press.

The Union Minister for Parliamentary Affairs would form a panel from members attending the conference to

codify privileges and then pursue that with the presiding officers to be adopted by the respective Houses.

The meeting called for ensuring discipline and decorum in the functioning of Parliament and legislatures to

live up to the expectations of the people.

It emphasised that the legislature, the executive and the judiciary had clear-cut roles to play, must respect

one other and should not encroach upon each others domain.

The meeting recommended the number of working days a year to be fixed for legislatures.

Expressing concern over the growing indiscipline and lack of decorum in the Houses, the meeting

recommended that some sort of code was considered desirable for maintaining discipline and decorum in the

House. It went on to recommend a code of conduct for members, which should be adopted on a consensus.

TWO THIRDS OF PRISON INMATES IN INDIA ARE UNDERTRIALS

As per the latest data, two of every three persons incarcerated in India have not yet been convicted of any

crime, and Muslims are over-represented among such undertrials

The number of convicts grew by 1.4 per cent from 2012 to 2013, but the number of undertrials shot up by 9.3

per cent during the period.

Men make up 96 per cent of all prison inmates. Nearly 2,000 children of women inmates live behind bars, 80

per cent of those women being undertrials.

A sharp increase in the number of undertrials charged with crimes against women contributes to the rise in

the number of all undertrials. The number of those incarcerated on charges of rape rose by over 30 per cent

from 2012 to 2013, and the number facing charges of molestation grew by over 50 per cent. The number of

men convicted of rape rose dramatically too, by 16 per cent the biggest increase among major sections of

the Indian Penal Code.

Undertrials are younger than convicts nearly half are under the age of 30 and over 70 per cent have not

completed school. Muslims form 21 per cent of them. On the other hand, 17 per cent of those convicted are

Muslims.

STATEWISE STATISTICS

Among the 2.8 lakh undertrials, over 3,000 have been behind bars for over five years. Between them, Uttar

Pradesh and Bihar are home to 1,500 of those undertrials. Most undertrials 60 per cent of them have,

however, been behind bars for less than six months.

While most States have a little over twice as many undertrials as convicts, Bihar has a staggering six times as

many

ANALYSIS

These numbers definitely point to a failure of the delivery of justice, but it also appears that the system is

unequally unjust

The disproportionate presence of members of the Scheduled Castes and Scheduled Tribes and Muslims

among undertrials points not simply to a technical breakdown but also to the increased vulnerability of these

groups, and probably bias.

GOVT. CUTS NON PLAN SPENDING 10%

The Finance Ministry has ordered a mandatory 10 per cent cut in the Centres non-Plan expenditure for 2014-

15.

The cut does not cover interest payment, repayment of debt, defence capital, salaries, pension or Finance

Commission grants to States

Subsidies will face the brunt of the cuts.


The objective of the fiscal prudence and economy measures was the need to rationalise expenditure and

optimise available resources.

The Government revived its standard measures, including curbs on conferences abroad or in five-star hotels,

purchase of vehicles and staff cars, travel curbs on flying first class and ban on new posts.

MISCELLANEOUS

ABOLISHING DEATH PENALTY

In an increasing number of countries around the world, capital punishment now belongs to history. Among

the 192 countries recognised by the United Nations, 140 have abolished the death penalty.

Three times, the General Assembly of the United Nations has passed resolutions by powerful majorities

calling for a universal moratorium on the death penalty, pending its full abolition. Along with the United

States, however, a number of countries in Asia (including China, India and Japan), the Middle East and the

Arab World are still retentionist although the frequency of use of the death penalty varies widely.

INTERNATIONAL EFFORTS

The European Union has made the abolition of capital punishment one of the preconditions for membership.

The European Court of Human Rights in Strasbourg forbids extradition by the Member States of the Council

of Europe of anyone that could be sentenced to death in a country that has retained capital punishment.

Another significant milestone was the Rome Treaty creating the International Criminal Court which envisages

life imprisonment for crimes against humanity.

In June 2013, Madrid hosted the 5th Congress against the death penalty bringing together government and

civil society representatives, academia, lawyers and individuals striving for abolition.

ARGUMENTS AGAINST DEATH PENALTY

The case for abolition is based on the following cumulative and trenchant arguments, each one of which on

its own should be sufficient:

Two wrongs do not compensate for each other under any higher moral code;

The right to life is unconditional and universal;

The fear of capital punishment (e.g. for rape) may cause a criminal to kill his victim, thus removing a witness;

A miscarriage of justice in wrongfully convicting and sentencing a person to death cannot be revoked;

There is no statistical link between the death penalty and the reduction of criminality;

There are other and better ways to deter serious crimes

DEATHS DUE TO STAMPEDES

The notoriety that India seems to have acquired over the decades for deadly stampedes, has once again been

brought into focus. Tragedy after deadly tragedy at such venues, mostly at religious events, has become a

continuing story.

The loss of 33 lives in the latest stampede during Dasara ceremonies at Patnas Gandhi Maidan is but one

more in the cavalcade.

It was less than two years ago, during Chhath Puja celebrations in another part of Patna, that 21 people were

killed in a stampede after a makeshift bridge collapsed.

And it was a year ago, in October 2013, that a stampede in Madhya Pradesh left more than 110 people dead.

ANALYSIS

Given that it was an annual event that typically attracted lakhs of people, the lack of preparedness on the

part of the administrative machinery is prima facie clear.

It should be a no-brainer to state the importance of efficient risk-mapping, crowd management and fool-

proof security arrangements wherever people congregate in large numbers in a country of a billion-plus

people.


Given the frequency of and the toll from such incidents, the Central government should advise States to put

in place a mandatory security protocol to handle all large-scale crowd situations.

Disaster preparedness has in recent years emerged as an area of priority, but in the case of known danger

zones there does not seem to be a matching realisation that security arrangements to pre-empt tragedies are

essential.

Managing and regulating large crowds and avoiding overcrowding should be key elements of the strategy.

Effective communication and security systems should serve to ensure that panic does not lead to

uncontrolled crowd surges.

In the process of facilitating VVIP movement, the safety of the common person should not get short shrift.

The nation cannot afford to go from one tragedy to another with lessons not learnt, and accountability not

fixed.

MEA TO OVERSEE FOREIGN INVESTMENT IN STATES

Aiming to streamline foreign infrastructure investment, the government has announced a new division in the

Ministry of External Affairs (MEA), appointing a joint secretary for Centre-State relations.

The new post will increase engagement between the MEA and State governments to coordinate State

delegations visiting abroad, passport issues and political clearances, as well as to set up a database of State-

level tie-ups and work on sister cities.

With more foreign dignitaries expressing their desire to visit cities other than Delhi, the special section will

also coordinate visits to Tier Two cities. However, the new division will not deal with policy disagreements of

the kind seen between the Centre and Tamil Nadu over Sri Lanka and with West Bengal over the Teesta

accord with Bangladesh.

ENCOUNTERS IN INDIA

ISSUES RELATED TO ENCOUNTERS

Making impartial investigations into killings in police encounters constitutes an area of governance that is

quite delicate and controversial. The police version often gains traction in the media, and support from the

ruling party and the administration often helps a cover-up. On the other hand, the gunning down of dreaded

criminals or extremists in genuine exchanges of fire may also be questioned by interested parties.

SUPREME COURT RULING A POSITIVE STEP

The recent Supreme Court verdict laying down detailed guidelines on how the police and administration

should respond to a death in an alleged encounter, seeks to put in place a proper mechanism that will set at

rest all doubt and speculation about the issue of encounters in India


The first requirement being an independent and impartial investigation, the court has now laid down a

standard procedure, which will operate in addition to existing provisions in the Code of Criminal Procedure

(CrPC) relating to unnatural deaths. Section 176 of the CrPC already provides for an enquiry by a judicial

magistrate in such cases.

Other guidelines cover investigations by the CID or a police station from another station-house, establishing

the victims identity, preservation of evidence on the spot, preparation of a rough sketch of the scene,

recovery of fingerprints, videography of the autopsy, and informing the next of kin of the deceased at the

earliest.

Holding the magisterial enquiry and keeping the National Human Rights Commission informed are other

requirements.

As a general rule, the court has asked the State governments to send a report once in six months (January 15

and July 15 every year) on all incidents of death in police firing, in a prescribed format.

BUT CHALLENGES GALORE

Ending impunity and ensuring impartiality in probes subsequent to death at the hands of the police are easier

said than achieved in some conflict-hit regions. As the Supreme Court itself has pointed out, one cannot be

oblivious to the fact that the police in India have to perform a delicate task, especially wherever extremism

and organised crime have taken strong roots.

However, it has also noted that even such criminals must be dealt with by the police in an efficient and

effective manner and brought to justice by following the rule of law. The Courts guidelines are by and large

practicable, but it requires political will and an alert civil society to ensure their implementation.

A scientific, well-documented investigation that results in a decisive finding, which the law now demands, is

not beyond the capability of a modern police force.

SURROGACY RELATED ISSUES

With a range of alternative medical solutions to childlessness becoming available, surrogacy has emerged as

one route for many couples. While some countries have banned the practice, commercial gestational

surrogacy, in which a woman is paid to have a baby to whom she has no genetic link, has caught on in

countries such as Mexico and India

REASONS FOR GROWTH IN INDIA

Relatively inexpensive medical facilities, know-how in reproductive technology, and the availability of

women, largely from poor socio-economic situations and who are willing to take up the task, have aided the

growth. Today there are thousands of clinics in India that offer such services.

GENERAL ISSUES RELATED TO SURROGACY

From what was generally confined to close relatives or friends in altruistic mode, the network has become

extended, with payment of money to surrogate mothers becoming the norm.

Services are even being advertised. Such commercialisation of motherhood has raised ethical, philosophical,

and social questions and raised fears of the exploitation of women as baby-producers, and the possibility of

selective breeding.

In several instances, complications have arisen regarding the interests and rights of the surrogate mother,

child, and intending parents. Yet, there are no clear legal provisions in place yet.

ISSUES RELATED TO FOREIGN NATIONALS

Letting single parents and foreign nationals to have children through surrogates in India is one issue in focus.

The question relating to the citizenship of children born through an Indian surrogate and claimed by a foreign

couple is one outstanding issue.

Unscrupulous or mismanaged agencies could wreak havoc with lives. Many surrogacy agencies claim they are

offering a legitimate service but in truth they operate in a grey area. The absence of appropriate legal

provisions to ensure that surrogate mothers, who often enter into loosely drafted agreements with

commissioning parents, do not become vulnerable is a serious issue.


Right now, the surrogate mother could find herself with a child she did not plan for, should the clients change

their mind.

On the other hand, the big worry of the intending parents would be that the baby may not be handed over to

them

The view to disallow foreign nationals stems from the concern over citizenship rights of children born to

Indian surrogate mothers as several countries have banned surrogacy and do not recognize the children born

through assisted means as their citizens.

SUPREME COURT DIRECTIVE

In September, the Supreme Court had asked the government to clarify its stand on the citizenship of children

born via an Indian surrogate mother in India, but whose biological mother is a foreign national.

Under the Constitution, a child born here from an Indian surrogate mother is entitled to Indian citizenship,

but what happens if the biological mother is a foreign citizen and the child applies for citizenship of that

country is the issue that the court examined.

VIEWS AGAINST DENYING THE RIGHT TO FOREIGN NATIONALS

The view among experts looking into the new Assisted Reproductive Technologies (Regulation) Bill 2014 that

single parents and foreign nationals should not be allowed to have children through surrogates in India has

come in for criticism.

As per them the government cannot deprive single men or women of the right to having children through

surrogacy. There is a need to change the language of the legislation and surrogacy should be allowed to

persons not only couples

Petitioner who challenged the single parent restrictions on surrogacy, said the ban would be untenable as the

law permitted single parents and foreign nationals to adopt under the Juvenile Justice Act and any contrary

move might not be permissible under the Fundamental Rights given to all persons.

Any restriction on foreign parent, single or couple, may be questioned as foreigners, irrespective of marital

status, are allowed inter-country adoptions under Indian law. The Supreme Court allows religion and gender-

free secular adoptions. Even transgenders will have rights. A restrictive law controlling foreign parent

surrogacy, like adoptions, may be the better legal option, rather than banning it altogether. A right to

reproductive autonomy as part of Right to Life under Article 21 is available even to foreigners as persons

and cannot be unreasonably curtailed.


ECONOMY

WORLD BANK PREDICTS 5.6 % GROWTH

A World Bank report, released recently, said that India's GDP is likely to expand at 5.6 % this fiscal as reforms

gain momentum and the growth is expected to accelerate as proposed measures such as the Goods and Services

Tax (GST) will give a boost to the manufacturing sector. In the following years, the gross domestic product (GDP)

growth is likely to rise further to 6.4 per cent and 7 per cent in 2015-16 and 2016-17, respectively.

OPTIMISTIC PREDICTIONS ABOUT THE NEAR FUTURE OF INDIAN ECONOMY

India's growth is likely to accelerate towards its high long-run potential and implementation of the GST

as well as dismantling of inter-State check posts can significantly improve the global competitiveness of

Indian manufacturing firms. Implementing the GST will transform India into a common market, eliminate

inefficient tax cascading, and go a long way in boosting the manufacturing sector.

The transformational impact of reform, particularly if enhanced by a systematic dismantling of inter-

State check posts, can dramatically boost competitiveness and help offset both domestic and external

risks to the outlook.

With economic reforms gaining momentum, long-term prospects for growth remain bright for India. To

realise its full potential, India needs to continue making progress on its domestic reforms agenda and

encourage investments. The government's efforts at improving the performance of the manufacturing

sector will lead to more jobs for young Indian women and men.

Improved growth prospects in the U.S. will support India s merchandise and services exports, while

stronger remittance inflows and declining oil prices are expected to support domestic demand.

RISKS AND CHALLENGES TO THE ECONOMY

The projections may face risks from external shocks, such as financial market disruptions on the back of

monetary policy changes in high income countries, slower global growth, higher oil prices, and adverse

investor sentiment on geo-political tensions in the Middle East and Eastern Europe.

In the domestic front energy supply, fiscal pressures from weak revenue collection in short term can

pose challenges. However, risks could be mitigated to a large extent by focusing on reforms that help the

manufacturing sector.

UPDATE ON RBIS FOURTH BI-MONTHLY MONETARY POLICY :

The fourth Bi-Monthly Monetary Policy statement was announced by Reserve Bank of India (RBI) in September.

It kept the key interest rates unchanged despite wider industry demand to cut the same to give boost to the

economy. However, the RBI cited high WPI rates as the primary reason to keep the key rates unchanged. RBI

might keep rates unchanged for the greater part of 2015. While the RBI is fairly confident of reaching its target of

8 per cent retail inflation by January, 2015, it is far less certain about its medium-term target of 6 per cent by

January, 2016. Thus, in order to continue on track to reach the inflation target, rate cuts are not expected in near

future. It made following changes in the key policy parameters:

The Repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent.

The Cash Reserve Ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time

liabilities (NDTL).

Reduced the Statutory Liquidity Ratio under the Export Credit Refinance (ECR) facility from 32 per cent

of eligible export credit outstanding to 15 per cent with effect from 10 October 2014.

Continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo

rate and liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking

system through auctions.

Continue with daily one-day term repos and reverse repos to smooth liquidity


The reverse repo rate under the LAF remains unchanged at 7.0 per cent and the marginal standing

facility (MSF) rate and the Bank Rate at 9.0 per cent.

DEEPAKH PAREKH COMMITTEE ON INFRASTRUCTURE SUBMITS ITS LAST

REPORT:

Deepakh Parekh headed Committee on Infrastructure submitted its last report in October. The last report deals

broadly with power infrastructure in the country. It recommends on the issue of competitiveness, power

production, rationalization of tariff system and improving financial health of distribution companies. The salient

features of this report are:

The report recommends establishing a PPP model for power distribution, starting first with the cities

It asks Central government to provide for viability gap funding for public sector distribution companies.

In order to increase the competitiveness of the power market it recommends earmarking 15% of power

generation of the central PSUs for open access customers .It will help reduce reliance of open access

customers on state controlled power distribution companies. It will thus help in attracting the open

access clientele. This is also expected to increase investment in the electricity sector.

A graded tariff system (based on the paying capacity of the customers) to be set up. It further

recommends moving high income households, commercial consumer and industries to market based

pricing. The consumers subject to market based pricing may be allowed to choose from different

suppliers of electricity. Low income consumers, however, should be subject to low tariffs and their

requirements should be met with supplies from depreciated power station

It comments that privatization of coal mining wherein Coal India or its arms/subsidiaries can retain

ownership of mines can go a long way in improving net power production in the country.

It suggests GOI to constitute a High level task force headed by a deputy governor of RBI to decide on

measures to restore the health of power projects facing financial trouble due to scarcity of fuel

GLOBAL INVESTMENT FACILITY LAUNCHED:

WB has launched a Global Investment Facility (GIF).It aims to fulfill the infrastructure needs of emerging

and developing economies.

It will identify projects that are financially viable and channel funds towards them.

The GIF will collaborate with other international and multilateral agencies which provide loans and

financial assistance to countries across the globe. It will also help these agencies with its expertise in

financing, supervising and implementing projects.

GIF could provide assistance in ensuring that all the regulatory, environmental and social safeguards are

met with while investing in large scale infrastructure projects.

GIF will also work with private entities like asset management companies, private equity firms, pensions

and insurance funds and commercial banks to tap into multiple sources of funding.

It will also try to promote sustainable development by focusing on climate friendly infrastructure and

those that boost trade.

JAPAN PLUS TEAM FORMED TO STEER JAPANESE INVESTMENT:

Japan Plus management will help to manage the promised $35billion by Japan under various

agreements and initiatives agreed to by India and Japan during PM Modis visit to Japan.

The amount is proposed to be invested over the next 5 years via PPP and overseas development

assistance.

The team has been set up by DIPP (Department Of Industrial Policy and Promotion) and is operational

since October 8. It consists of government officials from both countries

The team is tasked with providing assistance with respect to initiating, attracting, facilitating and fast-

tracking of Japanese investments in India. The team will be responsible for all areas

of investment promotion, research, outreach and issues post investment. It will also help identify areas

for Indo-Japan collaboration and viable projects for Japanese investment.


Japan is the fourth largest foreign investor in India. It contributes to approximately 8% of Indias total FDI

inflows.

VODAFONE WINS A MAJOR TRANSFER PRICING CASE :

Vodafone Group Plc has had a major judicial victory, with Bombay HC ruling in its favor in a INR 3,200

crore transfer pricing dispute.

The income tax department had issued a show cause notice to Vodafone on in January, asking the

company to pay Rs 3,200 crore as transfer pricing adjustment. The department said the shares issued to

Vodafone's parent company had been undervalued.

However, the Court stated that there is no taxable income coming from issuance of shares.

The case was a fallout of an earlier transfer-pricing order that sought to add Rs 8,500 crore to the

taxable income of the company from the sale of its BPO unit to an offshore entity. The

Vodafone India Services Pvt. Ltd. Was involved in a case where the Income Tax department had accused

the company of under-pricing the shares in a rights issue to the parent firm for fiscal 2009-2010 and had

issued a show-cause notice to Vodafone India in January.

Transfer pricing refers to the practice of arm's length pricing for transactions between group

companies based in different countries to ensure that a fair price-- one that would have been charged

to an unrelated party-- is levied.

Funding a subsidiary through the share purchase route is a common practice among multinational

corporations (MNCs). The MNCs typically view this as a capital transaction and out of the transfer-

pricing net. The I-T department, however, disputes this claim.

The judgment correctly addresses the question of applicability of transfer pricing law to share issuance

and has thwarted the blatant attempt of tax authorities to tax hypothetical income.

The verdict endorses a unanimous view that the income tax authority has no case to defend the transfer

pricing adjustment due to undervaluation of share prices. It goes to support the view that income should

be generated in the first place to lead to such provisions. It also ensures that secondary adjustment

proposed by the tax authorities by re-characterization of premium as loan is not valid.

It is important, as it has wide-scale repercussions on international firms involved in similar tax disputes in

India. Even, many Indian companies are contesting such disputes.

The verdict at large will serve as a major boost to the foreign investor sentiment and result in higher FDI

for India in future.

COOLING OFF IN INFLATION:

There was a general cooling in inflation for the month of the September with both the benchmark measures,

WPI & CPI falling:

A. WPI

Provisional estimate for WPI for September 2014 came out to be at 2.38%.This is a five year low.

The decline is attributed to decline in food and fuel prices.

The 2.38% inflation rate is the lowest since October 2009. Wholesale price inflation stood at 3.74% in

August and 7.05% in September 2013. Inflation in manufactured products and; fuel and power segment

stood at 3.54% and 4.54% respectively in August 2014

Food inflation has fallen to nearly two and a half year low of 3.52%. Inflation in vegetables has fallen to

14.98%. Inflation in milk, eggs, meat and fish have showed a market decline. The food basket has been

on a declining trend since May itself. However, in September, the prices of fruits and potatoes rose.

Inflation in manufactured products fell to 2.84%. Overall WPI inflation has been declining for the fourth

straight month.


B. CPI

Inflation cooled for the month of September 2014, with CPI standing at 6.46 percent as compared to the

7.3 percent in August 2014. The CPI inflation data was released by the Ministry of Statistics and

Programme Implementation .

This is a second consecutive fall, primarily due to lower food and fuel costs.

This fall is the lowest since the new series of Consumer Price Index was released in January 2012.

The retail inflation is 6.34 percent in urban areas and 6.68 percent in rural areas in September in 2014.

Even though there has been a cooling off in inflation RBI is expected to maintain its key interest rate at the same

level. It is primarily because of its long term targets on inflation. The RBI primarily factors in the CPI (Consumer

Price Index) rates while determining policy The RBI is expected to reduce the CPI inflation to 8 percent by

January 2015 and to 6 percent by January 2016.The target is expected to be achieved if the current downward

inflation trends maintain.

ARVIND SUBRAMANIAN APPOINTED AS NEW CHIEF ECONOMIC ADVISOR:

Renowned economist Arvind Subramanian has been appointed the Chief Economic Advisor (CEA). He will

serve the post for the next three years.

The CEA is the economic advisor to the Government of India, and works directly under the Ministry of

Finance.

The CEA primary role is to help prepare next fiscals budget. Accordingly, the new CEA has identified two

areas of focus for the Indian economy, namely, maintaining macro-economic stability and creating

conditions conducive for rapid investment and growth.

Arvind Subramanian's core competence in areas like economic growth, international trade and

intellectual property rights will play major factor in his role as CEA.

The CEA is the ex-officio cadre controlling authority of the IES (Indian Economic Service).

The CEA enjoys rank and pay equivalent to that of a Secretary to Government of India.

REFORMs IN DIRECT BENEFIT TRANSFER FOR LPG:

Some major reforms have been approved in Direct Benefits Transfer for LPG by the Union Cabinet. The scheme is

set to be launched with these modification:

Government has decided to keep the subsidy amount to be given per domestic subsidized LPG cylinder

fixed.

In future the cash subsidies can be received by linking the Aadhaar number with LPG connection and

having a bank account as the primary option.

The future beneficiaries can also receive the cash subsidies by directly linking their LPG connection with

their bank account, and may or may not include Aadhaar as the secondary option.

However, the government has clarified that in consonance with SC ruling Aadhar number will not be

made compulsory to avail benefits.

Any bank account opened under newly introduced Jan Dhan Yojana can also be linked with the LPG

connection .

It is proposed that the modified scheme will be launched in 54 districts from November 15, 2014 and in

the rest of the country from January 1, 2015. It will also be implemented in mission mode between 10

November and 1 January 2015

SETTING UP ASIAN INFRASTRUCTURE INVESTMENT BANK :

Asian Infrastructure Investment Bank is set to become reality with 21 countries including India signing an

agreement for the same.

AIIB along with BRICS bank is being pushed by China in its quest for balance of power with the WB, IMF

and ADB all being controlled/dominated by the US, EU and Japan respectively.


According to the agreement, the authorized capital of AIIB is US $100 bn and the initial subscribed

capital is expected to be around US $50 bn.

Headquarters of the AIIB will be at Beijing, and the bank is expected to be operational in 2015.

The 21 members of the AIIB are China, India, Mongolia, Nepal, Oman, Qatar, Sri

Lanka, Thailand, Malaysia, Singapore, Uzbekistan, Vietnam,

Philippines, Pakistan, Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Laos, and Myanmar

Three countries conspicuous by their absence are Australia , Indonesia and South Korea.

China has wanted Indias participation with the proposal being discussed on sidelines of various summit

level meets.

The new bank is expected to function as a rich resource base for capital for infrastructure financing, and

thereby provide an impetus to regional development by playing a complementary role to multilateral

agencies such as the ADB and IMF.

A formula based on GDP and PPP is expected to be used to decide on voting rights of the different

countries. India is expected to be the second largest share holder of AIIB after China.

CHANNELIZING CORPORATE FUNDS INTO GOVERNMENTS CLEANLINESS EFFORTS:

In a bid to boost its efforts at cleanliness and sanitation , Government has decided to allow the

companies to account contributions made to Swach Bharat Kosh (SBK) and Clean Ganga Fund (CGF) ,

under compulsory CSR spending mandated by the Companies Act. The contributions will count as being

made for social welfare work.

Ministry of Corporate Affairs (MCA) amended Schedule VII of the Companies Act 2013 in order to

reflect the above contributions. Now, donations to Swach Bharat Kosh(SBK) will fall under 'activities

for improving sanitation' whereas donations towards Clean Ganga Fund will qualify as an 'activity for

conservation of natural resources and maintaining the quality of water'.

Schedule VII of Companies Act, 2013, lists the activities and endeavors that can count as CSR.

SBK was set up to attract CSR funds from the corporate sector and contributions from individuals and

philanthropists. The funds accumulated in the SBK will be utilized to achieve the objective of

Clean India or Swachh Bharat by 2019 through Swachh Bharat Mission.

The CGF was constituted to fund activities to clean and conserve the river, Ganga. The CGF also accepts

voluntary contributions from NRIs and PIOs towards the CGF. It is headed by Finance Minister.

INDIA STILL A LAGGARD IN EASE OF DOING BUSINESS INDEX:

World Bank has released its recent report titled, Doing Business 2015: Going Beyond Efficiency. This is flagship

report of World Bank measuring ease of doing business across various countries. The report seeks to measure

the regulations that enhance business activity and those that restrict it. The report quantifies indicators on

business regulations and the protection of property rights and then compares it across 189 economies and over

different time periods. This is 12th such report , which points out that :

India dropped two places to rank 142nd in the Ease of Doing Business.

Indias points score improved in six out of 10 criteria, remained unchanged on three criteria, and fell in

the ease of paying taxes criterion. The countrys overall score increased to 53.97 from 52.78 a year ago,

even as the ranking fell.

India improved its performance in the newly introduced category of protecting minority investors.

However, India was top reformer in South Asia having undertaken 20 reformative measures.

WORLD BANK ASSESSMENT ON INDIAN ECONOMY:

India Development Update, a bi-annual report by World Bank, has projected Indian economy to grow at 5.6

percent in the current FY 2014-15 , 6.4 percent in FY 2015-16 and 7 percent in FY 2016-17.The World Bank has

emphasized on continuing domestic reforms and encouraging investments so as to achieve higher growth rates.

In the report World Bank has pointed out:


Growth is expected to accelerate as proposed measures such as the Goods and Service tax will give a

boost to the manufacturing sector. Implementing the Goods and Services Tax (GST) will help transform

India into a common market, eliminate inefficient tax cascading, and go a long way in boosting the

manufacturing sector.

The report states that the rebounding of growth in the economy has been mainly due to a strong

industrial recovery. Other economic indicators have also improved with increased capital flows,

moderation of inflation, stabilization of the exchange rate and also growing investor confidence.

Domestic demand is also expected to increase due to declining crude oil prices

The report points out that Indias favorable demographics, relatively high savings, recent policies and

efforts to improve skills and education, and domestic market integration makes longer term growth

potential of India very high.

Another factor favoring the growth prospects of India are improving economic conditions in US, which

will, in turn, lead to increased merchandise and services exports from India to USA and stronger

remittance inflows

The Update points out the external risks to the economy such as financial market disruptions on the

back of monetary policy changes in high income countries, slower global growth, higher oil prices, and

adverse investor sentiment due to geo-political tensions in the Middle East and Eastern Europe. The

possible sources of risk from internal challenges are stable energy supply and fiscal pressures from weak

revenue collection in the short term.

Taking various required steps to boost manufacturing can help to mitigate the above pointed out risks.

IMF REVISES ITS OUTLOOK ON INDIA:

IMF has released its latest World Economic Outlook. In this report, IMF has revised Indias 2014 GDP growth

projection marginally upwards to 5.6% from its July forecast of 5.4%. It has further pointed out that :

There has been upward revision in confidence in Indian economy. This provides Indian government an

opportunity to embark on much-needed structural reforms.

The report said growth in India is likely to increase in the remaining period of 2014 as well as in the

entire 2015 because exports and investment will continue to pick up and more than offset the effect of

an unfavorable monsoon on agricultural growth earlier in the year.

However, it has left its projection for Indias 2015 GDP growth unchanged at 6.4%.

World Bank has pointed out that India should ensure an improvement in investment conditions, remove

infrastructure bottlenecks in the power sector. According to IMF, infrastructure bottlenecks in India are

not just a medium-term worry but remain a constraint even on near-term growth.

In order to raise competitiveness and productivity, India must implement reforms in education sector,

labour market , and product markets.

IMF, for the third time in 2014, has slashed its projections for global economic growth. The IMF WEO

report projected world output to grow at 3.3% this year (0.1% down from its July WEO update). It has

forecast the world output growth in 2015 at 3.8% (a 0.2% cut from its July forecast).

NEW UREA INVESTMENT POLICY NOTIFIED:

The fertilizer ministry has notified new Urea Investment Policy for setting up and expansion of urea

plants.

In the first policy statement in February 2014 , there was a provision of guaranteed buyback. The

extremely favorable proposal meant that GOI received proposals to set up new Urea plants entailing

capacity addition of 16 million tonnes, whereas the shortfall between demand and production of urea

is around 8 million tonne which is met through imports.

Following this, the ministry proposed for dropping the guaranteed buyback clause and replacing it with

the Rs 300 crore bank guarantees so that only interested players approach for setting up of new urea

projects. PSUs firms have been exempted from it.

The companies will get a subsidy on production only if the urea production starts in the next 5 years. The

subsidy will continue till 8 years after the commencement of production.


A BIG REFORM IN FORM OF DIESEL DEREGULATION:

The government took a big reform measure by deregulating diesel prices. The government will no longer

decide the selling price of diesel in the country. That decision will now be taken by oil retailers such as

Indian Oil Corp, BPCL and HPCL.

This is expected to ease the amount of fuel subsidy spent by the government thereby helping it to keep

fiscal deficit within a limit.

Diesel prices will now be market-linked. That means if global crude prices rise, customers will have to

pay more for buying diesel and vice versa.

Diesel prices were cut by a sharp Rs. 3.37 per litre after the decision because global crude prices have

fallen to a four-year low below $90 per dollar. Oil retailers have been making a profit on selling diesel

since September 16.

The cut in diesel prices will lead to a further cool off in inflation. That's because diesel is the most used

fuel product in the agriculture sector and the transportation industry, both of which have a direct

bearing on food prices. Lower inflation will improve purchasing capacity of common people.

A further fall in inflation will pressure the Reserve Bank to cut rates. That will further boost demand in

the economy.

The government's subsidy bill will come down as it will no longer have to reimburse oil companies for

selling diesel at below-market price. Last year (2013-14), the government had to pay Rs. 85,000 crore for

selling diesel, LPG and kerosene at below-market prices.

As per he economic analysts the freeing up of diesel prices and the sharp fall in global crude prices is

expected to further save the government over Rs. 10,000 crore in subsidy payment this year. Lower

subsidy means the government may be able to meet its fiscal deficit target of 4.1 per cent of GDP. This

will be a big positive for the Indian economy.

Lower fiscal deficit will reduce government borrowing and increase spending on asset creation, which

will add to economic productivity.

India imports over 75 per cent of its domestic oil requirements. Oil is the biggest component of the

import bill. Falling crude prices will lead to a reduction in import bill and will have a positive impact on

rupee.

Diesel sales account for about 55 per cent of overall sales of oil marketing companies. Till now, these

companies had to sell diesel at below-market price and were later compensated by the government for

the loss in revenue. Upstream oil companies such as ONGC, Oil India and GAIL also had to contribute to

subsidies. With diesel under-recovery gone, their subsidy burden will come down and profitability will go

up.

Deregulation is also expected to bring private firms such as Reliance Industries and Essar Oil into retail

sale. Such companies do not receive government support for selling diesel at discounted rates and

currently sell via state refiners, despite having their own sales infrastructure.

LOWER IIP NUMBERS FOR AUGUST DISAPPOINTS :

The index of industrial production (IIP) rose 0.4% in August, substantially below expectation, from a year

ago, with both capital goods and consumer goods logging negative growth.

Thus, It barely expanded in August, marking a second consecutive month of weak expansion after a

relatively strong first quarter.

The stagnation in industrial production was largely because of the contraction in manufacturing sector

in the month of August. This sector has the highest weight of 75.5% in IIP.

Eleven out of 22 manufacturing sub-sectors logged negative growth in August. Production of capital

goods, an indicator of investment, contracted by 11.3% in August, marking a second consecutive month

of declines.

Production of consumer goods, and more notably consumer durables, fell for a third month running in

August, contracting by 6.9%.

Production of consumer durables, an indicator of discretionary demand and consumer sentiment,

contracted in the month of August.


The figure indicates that there is no pick up in investment. A broad-based investment revival is unlikely

to set in until prevailing structural concerns are resolved, including issues related to the ease and cost of

land acquisition. Also, expediting execution of approved projects and providing a competitive market for

coal and mining sectors is required in order to stimulate the economy.

It was expected that IIP would be around 2.5% because of strong car sales and robust core sector

numbers. Thus the low number was disappointing especially when the growth is from a low base in

August 2013 when IIP rose a similar 0.4%.

Experts were more optimistic about the second half with low commodity and crude prices expected to

help lower inflation and strengthen government finances with the monsoon turning out to be

reasonable after the initial deficiency. This will create room for the government to step up spending to

provide support to the economy till the time the private sector steps in.

However, exports might be hit because of faltering global economy. Also, erractic monsoons impact on

agriculture, negative market sentiments due to events like cancellation of coal blocks by SC combined

with overall low industrial production growth may hit the overall GDP numbers for the coming quarter.

DIPP CONSTITUTES THINK-TANK TO DRAFT NEW IPR POLICY :

A new think tank has been constituted by Department of Industrial policy and promotion ( DIPP).

It is tasked with drafting a national IPR policy and advice the government on a range of patents related

issues.

The think tank will highlight anomalies in the present IPR legislations and advise possible solutions to the

commerce ministry,.

The new think tank will also advise the government on best practices to be followed in trademark

offices, patent offices and other government offices pertaining to IPR. It will also keep the government

informed of developments in IPR cases that could have an impact on Indias IPR policy. The government

said it would also examine the issues raised by industry associations and in the media.

The panel will also prepare periodic reports on best practices followed in foreign countries.

The above panel is being constituted in context of Indias IPR regime coming under huge criticism by

other countries especially US. The US raised a number of concerns over India's IPR regime in its annual

special 301 report in April. While India is currently classified as 'priority watch list', following the out-of-

cycle review the US could have classified the country as 'priority foreign country', which is US Trade

Representative's most damaging classification that can trigger trade sanctions

India argues that differences over IPR should be resolved through a bilateral mechanism, instead of

unilateral steps such as OCR.

US companies have been questioning Indias IPR laws since the Controller General of Patents, Designs and

Trademarks decided to grant a compulsory licence to Natco Pharma to produce and sell generic versions of

Bayer-Onyxs cancer drug, Nexavar.

FLIPKART BIG BILLION DAY MEGA SALES: RAISING QUESTIONS ON INDIAN E-

COMMERCE:

Flipkart Big Billion Day sales marked a landmark in Indian e-commerce sector with the company generating intra-

day sales of more than 100 mn dollars in Gross Merchandise Value ( GMV ). e-commerce marketplaces use the

term Gross merchandise value or GMV as a measure because their revenue is actually the commission amount

from sellers. GMV is the total value of merchandise sold over a given period of time.

However, this mega sales also raised some serious issues :

A. PREDATORY PRICING :

One of the primary reasons why e-commerce sites like Flipkart can generate so much sales is the amount

of discounts they offer on the merchandise they sell. Most e-retailers use their marketing funds to

provide additional discounts to consumers, while in some cases; sellers are refunded extra money, to


offer higher discounts. These companies recommend the amount of discounts to be offered to sellers on

products and in return finance the discounts either through a cheque or through internet banking, while

others suggest prices but forgoes commissions or listing fees that marketplaces usually charge their

sellers.

However, such deep discounts have irked two stakeholders in this process:

A. Brick and Mortar Offline stores:

This segment of merchandise sellers cant match discounts offered by e-retailers owing to their business

model. They have hence alleged that such discounts are example of predatory pricing aiming to increase

their market share. CII has even officially approached GOI to rectify the situation.

Technically, to qualify as predatory pricing, a firm must sell merchandise at prices lower than cost price

to eliminate the competition and the firm must be the dominant place in the market.

Since market share of e commerce in the merchandise market as a whole is around 4-5% , technically

these discounts will not qualify as predatory pricing. Also, these firms claim that since they have market

place business model, meaning some other seller is actually selling the product on their platform, they

are only facilitator and not the actual seller. However, since these discounts are only possible because of

reimbursement offered by such firms to these sellers, it is not clear that e-retailers arguments hold.

Consumers have now started to have unrealistic expectations of prices when they go retail outlets,

which is impossible for them to match.

B. Consumer brands like LG, Samsung :

They allege that their products being sold by various sellers at prices below cost price negatively affects

their brand name.

Warranty on products sold on sites like Flipkart and Snapdeal is one issue that keeps surfacing and

companies are of opinion that goods are being sold through unauthorized channel partners, and it is akin

to buying from the grey market and will not be covered under warranty.

B. FDI ISSUES:

The FDI Circular 2014 says 100 percent FDI is permitted under the automatic route in ecommerce

provided it

Vision Ias October 2014

Documents

Transcript of Vision Ias October 2014