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MARCH 2012 Get Previous Issues Free of Cost on Our Website: www.changetabloid.com GOVT & POLITY COVERAGE Cabinet Approved National Policy on NDPS The Union Cabinet of India on 12 January 2012 approved the Narcotics Drugs and Psychotropic Substances (NDPS) policy, with the objective of checking illicit production of psychotropic substances, curb drug abuse and stop trafficking of such items. The new policy will help in controlling the proliferation of black money. The Cabinet meeting was chaired by Prime Minister Manmohan Singh. The NDPS policy will lead to reduction in crime and improvement in public health. It aims at social re-integration of victims of drug abuse. The salient features of the policy are as follows: (i) The policy recommends production of Concentrate of Poppy Straw (CPS) in India by a company or body corporate. This would enable India to retain its status of a traditional supplier of Opiate Raw Material (ORM) to the rest of world, while remaining competitive. (ii) The consumption of poppy straw by addicts will be gradually reduced and finally stopped in a time frame decided by the States. (iii) On the illicit cultivation of poppy and cannabis, the policy emphasizes use of satellite imageries for detection of illicit crop and its subsequent eradication and development of alternate means of livelihood in respect of cultivators in pockets of traditional illicit cultivation. (iv) The private sector may be allowed production of alkaloids from opium. At present alkaloids from opium are produced only in Government Opium and Alkaloid Factories (GOAFs). (v) Non-intrusive methods of regulating the manufacture, trade and use of such psychotropic substances will be introduced, (vi) Emphasis will be laid on adequate access to morphine and other opioids necessary for palliative care, a strategy to address street peddlers of drugs, periodic surveys of drug abuse to gauge the extent, pattern and nature of drug abuse in the country, recognition of de-addiction centers, (vii) There will be a time bound plan of action, detailing the steps to be taken by different Ministries/ Departments/ agencies, in response to the recommendations of the International Narcotics Control Board. The policy attempts to curb the menace of drug abuse and contains provisions for treatment, rehabilitation and social re-integration of victims of drug abuse. Implementation of the provisions of the policy will lead to reduction of crime, improvement in public health and uplifting of the social milieu. The NDPS Policy will serve as a guide to various Ministries and organizations and re-assert India‘s commitment to combat the drug menace in a holistic manner. BACKGROUND: There are four broad aspects of narcotic drugs and psychotropic substances – (i) Administration of the NDPS Act and Rules framed there under, (ii) Legal production, manufacturing, trade and use of narcotic drugs and psychotropic substances for medical and scientific uses, (iii) Drug (Illicit) supply reduction, and (iv) Drug (Illicit) demand reduction. Cabinet Cleared Counter-Terrorism Centre The Cabinet Committee on Security on 12 January 2012 approved the setting up of a National Counter Terrorism Centre (NCTC) to counter terrorism effectively. The NCTC was proposed by the Ministry of Home Affairs. It will be a single window organisation that will gather and disseminate intelligence to central and state security organisations. A notification for the appointment of Directors and other members of core team of the NCTC will be issued soon. Govt Extends Visa on Arrival Facility to Boost Foreign Tourist Arrivals In order to help double the foreign tourist arrivals, government has decided to extend Visa-on-Arrival facility to Goa, Hyderabad, Kochi and Bangaluru airports within next one year. The decision to extend the facility at four more airports was taken at the first inter-ministerial coordination committee for tourism sector. Government had set up an inter-ministerial coordination committee for tourism sector under the chairmanship of the Principal Secretary to the Prime Minister Pulok Chatterji to resolve inter-ministerial and industry issues and promotes tourism. Currently, Visa-on-Arrival is extended to 11 countries including Japan, Philippines, Singapore, New Zealand, Vietnam and Finland. The facility is now available at four international airports at Delhi, Mumbai, Kolkata and Chennai. There were 6.29 million foreign tourists in 2011, out of which 12,761 had availed the scheme. Chatterji said tourism should be pro-poor and focus on employment creation. He emphasized the need to give tourism a major fillip during the 12th Plan so as to more than double the number of foreign tourists arriving in India and further encourage domestic tourism. Govt directed States to Tighten Norms in Granting Licenses to New Medical Institutes The Union government of India on 14 January 2012 directed all the states to tighten norms in granting licenses to open new medical institutes, and ensure fire safety provisions mandatory, for launching any such new ventures. The Home Ministry order came weeks after a devastating fire at the Kolkata hospital, which claimed more than 90 lives. The states were directed to ensure that hospital building bylaws provide for mandatory fire safety provisions and without such provisions; no Licence should be given to anyone for setting up any hospitals. The state governments were asked to ensure that all hospitals and nursing homes equip their institutions with the required freighting gadgets, to avoid any untoward incident. The Home Ministry also directed that mock drills should be conducted in some of these hospitals and nursing homes, to see how doctors and nursing staff respond in case of an emergency, and their patient evacuation plans. Election Commission Banned Exit Polls The Election Commission of India banned exit polls during the entire period when elections to the five state assemblies would be held, in accordance with the relevant provisions of the Representation of the People Act, 1951. Under the provisions, displaying any election matter, including results of any opinion poll or any other poll survey, in any electronic media, would be prohibited. The election Commission notified the period between 7am on 28 January, 2012 and 5.30pm on 3 March, 2012 as the period during which conducting any exit poll or disseminating the result of any exit poll would be prohibited. While 28 January 2012 is the first day of polling in Manipur, 3 March 2012 is the last day of polling in Goa and Uttar Pradesh. Approval for funding Phase-Ill of the UIDAI The Cabinet Committee on Unique Identification Authority of India related issues (CC-UIDAI) approved commencement of Phase-Ill of the UID scheme at an estimated cost of Rs.8,814.75 crore which subsumes the earlier approval of Rs.3,023.01 crore, and comprises costs for issue of 20 crore Aadhaar numbers through Multiple Registrars upto March 2012, printing and delivery of 20 crore Aadhaar letters, technology and other support infrastructure cost for creation, storage and maintenance of data and services for leveraging the uses of Aadhaar for the entire estimated resident population upto March 2017. PM fast Tracks move on Private Sector Investment in Inland Waterway Transport The Prime Minister has initiated a move to fast track the development and use of Inland Waterways Transport involving the private sector and Public Sector Undertakings. The initiative will harness huge potential of inland waterways in transporting bulk cargo like coal, food grains, fertilizers, project cargo, fly ash, Over Dimensional Cargo and containers at competitive cost for the public and private sector companies. Adequate use of waterways will also ease the burden on rail and road infrastructure. At a meeting of the inter-ministerial coordination committee Principal Secretary to the Prime Minister informed that a tripartite agreement signed between the National Thermal Power Corporation, Inland Waterways Authority of India and a private developer has led to competitive transportation rates for the NTPC while private sector investment of about Rs 650 crore has been committed. This agreement relates to the Farakka Power Project. The following decisions were also agreed upon in the meeting: • NTPC will provide long term cargo commitment for 3 million metric tons of coal for Barh power project once all its five units are operational by 2016-17. • The execution of Coal handling facility at Jogighopa and rail connectivity will be taken up under the Non Lapsable Central Pool of Resources (NLCPR) scheme. • Food Corporation of India will expeditiously provide long term cargo commitment for 3 years for transportation of foodgrains to Tripura and Assam from Kolkata and within Assam. • MEA will try to extend the period of Trade and Transit Protocol beyond March 2012 when it comes for renewal to provide longer certainty to vessel operators. Further, efforts shall be made for early completion of Ashuganj multimodal port by Bangladesh and its regular use as a transit port. • Ministry of Shipping will consider providing additional money, if need be, to ensure night navigation facilities on Indo-Bangladesh Protocol route. • ONGC and Oil India will convey a firm commitment of cargo through IWT in two weeks to IWAI. • CONCOR will provide firm commitment for transportation of part of their container cargo from Pandu through IWT. • The progress on these decisions will be reviewed in two months time by the Principal Secretary to PM. India Post Signs MoU with Air India for Logistics Post Air Service India Post signed an MOU with Air India for carriage of “Logistics Post Air” Service by Air India. This service will help the customers to send their consignments to different parts of the country, especially to the North- Eastern region without difficulty. This MOU will meet the huge demand for Logistics Post Air Service for hassle free dispatch of consignments to different parts of the country including the North East. India Post in collaboration with Air India plans to start this service from 15 cities initially to meet the demand from the customers. These cities are Ahmedabad, Agartala, Bangalore, Chennai, Delhi, Guwahati, Hyderabad, Imphal, Kolkata, Lucknow, Mumbai, Nagpur, Patna, Pune and Trivendrum. Of these, three are in the North East. India Post will deliver the consignment of Logistics Post Air to Air India at the point of delivery of the departure station and will also collect it at the arrival station. Booking, handling, packing, delivery etc. will be done by the India Post. Air India will only transport the consignment from one station to another station. This service will be extended to other cities in a phased manner. Union Cabinet Renamed the Mana Airport at Raipur as the Swami Vivekananda Airport The NCTC was created in the wake of 26/11 Mumbai terror attack. It will work under the Union Home Ministry. A senior IPS officer of the rank of Additional Director General of Police and above will head the elite counterterror body. The NCTC will also coordinate with relevant approved for incurring expenditure upto March 2017, renaming of the Mana Airport at Raipur in Chattisgarh Out of amount of Rs.8814.75 crore that has been The Union Cabinet of India on 24 January 2012 approved probe and intelligence agencies to ensure that the Rs.2412.67 crore would be towards recurring expenditure as the Swami Vivekanand Airport, Raipur. The decision perpetrators of terror are brought to justice besides including IT operational cost and recurring was taken at the Cabinet meeting chaired by Prime maintaining a comprehensive data base of terrorists, their establishment cost and Rs.6402.08 crore would be Minister Manmohan Singh in New Delhi. Swami associates and supporters. towards non-recurring project related expenditure. Vivekanand, spent a major part of his life in Raipur. CHANGE THE ONLY CONSTANT THING : We Bring You More Informative and Detailed Coverage Every Month 10
MARCH 2012 India Signs International Tax Treaty to Deal with Tax Evasion In yet another move that would help India in getting information about the black money stashed abroad, India has gone ahead and has inked the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, a multilateral agreement which promotes international co-operation while respecting the rights of taxpayers. This would send a strong signal that India and the other 31 signatory countries have joined hands together to ensure that individuals and multinational enterprises pay the right amount of tax, at the right time and in the right place. The Convention provides for administrative cooperation between the parties in the assessment and collection of taxes, with a view to combating tax avoidance and evasion, according to an OECD statement. With taxpayers increasingly operating on a global basis, tax authorities are moving from bilateral to multilateral cooperation and from exchange of information on request to other forms of co-operation. The convention is an effective and practical tool to help tax authorities in their everyday work. “India has moved very quickly since its commitment to the Convention at the November 2011, G20 ceremony in Cannes and I expect it will be the first non-OECD G20 country for which the updated Convention is in force,’’ said Jeffrey Owens, Director of the OECD Centre for Tax Policy and Administration. Signatories to the amended Convention are: Argentina, Australia, Belgium, Brazil, Canada, Denmark, Finland, France, Georgia, Germany, Iceland, India, Indonesia, Ireland, Italy, Japan, Korea, Mexico, Moldova, Netherlands, Norway, Poland, Portugal, Russia, Slovenia, South Africa, Spain, Sweden, Turkey, Ukraine, the United Kingdom, and the United States. The Convention was signed by Sanjay Kumar Mishra, Joint Secretary, Foreign Tax and Tax Research Division, Department of Revenue in the presence of Deputy Secretary-General of OECD, Rintaro Tamaki. This instrument hitherto available for the members of OECD and Council of Europe were amended in 2010 and open for all countries in June 2011. The Convention was amended to respond to the 2009 G20 Summit call for developing a broader multilateral approach to improve the effectiveness of exchange of information, co-operation between the countries in the assessment and collection of taxes, with a view to combating tax avoidance and evasion. Many more countries are expected to sign the Convention in future. This provides for a wider network of countries cooperating in exchange of information, assistance in tax collection. The salient features of this convention include: • It is based on international standard of transparency and exchange of information; • This instrument is multilateral and a single legal basis for multi-country co-operation as against the DTAAs/TIEAs which are bilateral. • It provides for an extensive network and there will be consistent application of provisions leaving limited scope for deviation; • It provides extensive forms of co-operation among the signatories on all taxes; • It not only facilitates the exchange of information, but also provides for assistance in the recovery of taxes. • This will give a fillip to the efforts of the Government in bringing the Indian money illegally stashed abroad. The convention provides for simultaneous tax examinations and participation in tax examinations in other countries. It further provides for examination of tax affairs of the taxpayers simultaneously in their own territory and share the relevant information to each other. This allows tax officials to entering into the territory of the other country to interview individuals and examine records. It also provides for automatic exchange of information and spontaneous exchange of information and also allows exchange of past information in criminal tax matters. For More Current Coverage and Daily Updates Visit Our Website: www.changetabloid.com ECONOMY COVERAGE Economic Growth Revised Down to 8.4% for 2010-11 The Union government on 31 January 2012 revised the economic growth rate for 2010-2011 financial year to 8.4 percent in comparison to the previous estimate of 8.5 percent. The Indian economy grew 8.4% in 2010-11, lower than the previous estimate of 8.5%, on the back of strong farm sector and services sector growth. The Indian economy, Asia’s third-largest slowed in recent quarters due to the impact of the global slowdown, high inflation and high interest rates. Policymakers estimated growth in 2011-12 to be close to 7%. 8.4% expansion in the gross domestic product (GDP) during 2010-11 was achieved due to high growth in transport, storage and communication (14.7%), financing, insurance, real estate and business services (10.4%), trade, hotels and restaurants (9%) and construction (8%). At constant prices, the primary sector- agriculture, forestry and fishing, showed a high growth of 7% during 2010-11 as against 1% during the year 2009-10. The growth rate of secondary sector stood at 7.2% and that of the service sector is 9.3% during 2010-11. Gross Domestic Product (GDP) Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices in 2010-11 was estimated at Rs. 4885954 crore as against Rs. 4507637 crore in 2009-10 registering a growth of 8.4 per cent during the year which is same as in the year 2009-10. At current prices, GDP in 2010-11 was estimated at Rs. 7157412 crore as against Rs. 6091485 crore in 2009-10, showing an increase of 17.5 per cent during the year. Gross National Income The Gross National Income registered a growth of 7.9 per cent in 2010-11 over 2009-10. India’s per capita income grew by 15.6 per cent to Rs.53331 in 2010-11, crossing the Rs.50000-mark for the first time. In real terms based on 2004-05 prices, the per capita income grew by a slower 6.4 per cent to Rs.35993 in 2010-11 as compared to Rs.33843 in 2009-10. Private Final Consumption Expenditure The per capita Private Final Consumption Expenditure (PFCE) in the domestic market in 2010-11 was estimated to be Rs. 36760 at current prices and Rs. 26,029 at constant (2004-05) prices as against Rs. 31812 and Rs. 24379 respectively in 2009-10. Gross Domestic Savings The gross domestic savings at current prices in 2010-11 was estimated at Rs.24.81 lakh crore which constituted 32.3 per cent of the country’s GDP at market prices. Gross domestic saving of India that has over 1.2 billion population, increased by 32.3 per cent to Rs.2481931 crore in 2010-11 as compared to Rs.2182970 crore in 2009- 10. The savings rate in 2010-11 declined from 2009-10. The decline was attributed to decrease in the rates of financial savings of household sector from 12.9 per cent to 10 per cent and the private corporate sector from 8.2 per cent to 7.9 per cent. However, the rate of savings of the public sector increased to 1.7 per cent in 2010-11 as compared to 0.2 per cent in the previous year. Gross Domestic Capital Formation The gross domestic capital formation, an indicator of increase in physical assets, rose to Rs.292031 crore in 2010-11 at current prices as compared to Rs.2363670 crore in 2009-10. Pension Regulator PFRDA changed the Incentive Structure to boost National Pension System The poor performance of National Pension System, or NPS led the Pension Fund Regulatory and Development Authority (PFRDA) to change the incentive structure for the distributors from a fixed sum to a percentage of the investment amount. So far the points of presence or the distributors used to get a flat Rs 20 as initial subscription charge and Rs 20 for any subsequent investment. PFRDA’s measure is poised to serve two purposesbringing about a more equitable incentive structure and incentivizing the distributors to push NPS. The regulator proposed to lay down criteria for pension fund managers and grant licences to anyone who qualifies. The NPS has seven fund managers overseeing assets of Rs 10000 crore. Measures as per Bajpai Recommendation The pension regulator on the basis of the recommendation of the G.N. Bajpai committee constituted by PFRDA to review NPS, fixed the incentive at 0.25% of the subscription amount. The committee had suggested 0.50% of the investment, subject to a minimum of Rs 20 and maximum of Rs 50000. As per PFRDA’s measures announceds, a distributor will get a flat Rs 100 on initial subscription and 0.25% of the initial subscription amount. Every year on subsequent investments, the point of presence will be entitled to 0.25% of that amount. The minimum that a point of presence can charge is Rs 20 and the maximum Rs 25000. Bajpai committee had observed that the earlier structure of the pension system was amounting to the poor subsidizing the rich—a person investing Rs 6000 and a person investing Rs 1 lakh were both paying Rs 20. Also the fixed sum was acting as a deterrent to sell NPS amid better commissions-yielding products such as insurance policies. National Pension System NPS was primarily targeted at the unorganized sector, which does not have any form of social security. However, so far only about 1 million people out of a workforce of about 400 million in the unorganized sector have joined NPS. Floated for civil servants in 2004, the NPS was opened to all citizens in May 2009 to provide a pension option to 360 million informal sector workers bereft of any old-age income security. What Finance Ministry has to Say In order to raise the subscriber base of the New Pension Scheme (NPS), the Finance Ministry is currently targeting the employees of the various members of industry bodies such as the Confederation of Indian Industry (CII), the Federation of Indian Chambers of Commerce and Industry (FICCI), and the Associated Chambers of Commerce and Industry. The Ministry wrote letters to industry chambers, asking them to persuade their members to subscribe to the NPS. The government also favoured lower fee for NPS. It proposed to slash the account maintenance fee by Rs 180 to make it more attractive to workers in the informal sector. The finance ministry opposed a proposal for a 500-fold increase in the fee charged by fund managers of the New Pension Scheme. The Ministry’s representative on the board of interim pension regulator PFRDA opposed the proposal to increase the fund management fees up to 0.5% from the current 0.0009%. The ministry also rejected PFRDA’s suggestion to relax the norms for appointment of fund managers handling the NPS, a retirement savings scheme launched initially for government employees. The whole idea of the NPS is that large sections of the unorganised sector should avail the benefits. According to the Ministry, the increase of fee will act as deterrent. Railway Policy for Private Sector Participation Facing a resource constraint, Railways has come up with a new draft policy which seeks increased private participation for rail connectivity and opens the doors for foreign direct investors for expanding its network. The cash-strapped public transporter has proposed six PPP models for project execution that include creating railway connectivity on The information received under the convention can also private land and forming special purpose vehicles (SPV) for new line and gauge conversion. The policy has also be used for other purposes besides those related to tax sought to attract the state government in playing a proactive role in development and implementation of rail co-operation, for example to counter money laundering projects in their respective states. Foreign direct investors will also be allowed to participate in asset creation with the approval of the supplying state. pending clearances by Foreign Investment Promotion Board. 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