The Economic Survey is, for the most part, a dour defence of the UP A government with occasional flashes of exdting strokeplay, contained in a section cautiously titled ‘policy reform options’. Most of the reform options are likely to enrage the Left and are thus likely to be implemented by a future government. These include-measures intended to bring about a supply-side response such as amending the Coal Mines (Nationalisation) Act to allow private investment, and privatising old mines. These also call for transparent and quick award oflicences and faster environmental clearance. Reforms which require legislation, such as raising the FDI limit in insurance to 49% are right now not feasible, many other supply-side measures like selling old oilfields to attract FDI, bundled with advanced oil recovery technologies, can be carried out by the executive. Listing of unlisted PSUs, such as BSNL, should also be possible. The bold proposal for 100% FDI in private banks prepared to operate only in rural areas does not need legislative sanction, provided the finance ministry can persuade the RBI. This should be accompanied by liberal branch licensing rules for all banks including foreign ones and allowing the latter to take over Indian private sector banks. Allowing FDI in retail, including 100% in luxury retail, is also possible through executive action, though not very likely given the UPA chairperson’s apparent reservations. And forget about amending the Factory Act to raise working hours to 60: the Left will never agree to it. The survey’s suggestion to decontrol drugs will run into resistance from the administrative ministry which wants to increase controls while sugar decontrol would be meaningful if it takes away the states’ powers to fix irrationally high prices for sugar cane. The survey makes a case for reducing the fiscal defidt by pointing out that it leads to lowerreal interest rates as the government stops pre-empting resources. It also enhances the ability to raise spending and cut taxes in case of a slowdown. But the survey seems unsure of meeting the FRBM target of reducing revenue defidt to zero by the end of fiscal 2008-09 . The solution is to trim the fertiliser subsidy and get rid of unproductive ‘off-budget’ sops to petrol, diesel and LPG.
Archive for March 9th, 2008
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UGC GIVES NO MARKS FOR INNOVATIONS
March 9th, 2008 
krishna When in doubt, set up a committee to prepare an action plan. This is the way our education establishment works and the University Grants Commission (UGC) is no exception. It has been directed by the HRD Ministry to work out; you guessed it, an action plan on the modalities of establishing 16 new varsities and 370 new colleges in backward blocks. The UGC, it would appear, has suddenly woken up to the fact that universities with 500-600 affiliated colleges are facing difficulties in monitoring quality. Like delimitation, the UGC also wants to carve out smaller universities from existing ones. Nothing wrong with all this; we do need more central universities and colleges. But will this really solve the problems in the higher education sector? Going by past experience, the answer would be no. Wire money online to India with Xoom.com for as low as $4.99. The 11th Five Year Plan is to increase – outlay in higher and technical education ten times, an amount of Rs 84,743 crore. This is a positive step and could, if utilised effectively, increase enrolment in higher education. India suffers from a very poor 7 per cent enrolment rate in higher education as opposed to an average of 25 per cent in other developing countries. In the developed world, it ranges from 60 per cent to 100 per cent. We are looking, optimistically, at a rate of 15 per cent by 2012 that is bound to fall short going by our tardy record. The UGC’s proposal for 16 varsities is just over half of the 30 proposed in the new scheme of things. The bulk of the money allotted is to go into upgrading facilities in existing central universities. This raises doubts as to how much will actually go into the new ones proposed. The UGC seems to be going down the ‘quantity over quality’ path. The lacunae are also seen in the step-motherly treatment meted out to graduate varsities. If these are neglected, this will reflect on the caliber of students who go into the postgraduate courses offered by central universities. Graduate-level colleges don’t have qualified teachers, are hampered by outdated or no infrastructure, and lack innovation vis-a-vis new disciplines. In other words, they churn out unemployable graduates. If the base of our higher education system is weak, the entire edifice will totter as it is doing now. We need more central universities, but [...]
LET SUN NOT SET FOR IT
March 9th, 2008 krishna Information technology and telecommunications are the key sectors supporting the country’s phenomenal growth. We expect the finance minister to give due importance to the sector while finalising his Budget. Wire money online to India with Xoom.com for as low as $4.99. One of the top concerns is the expiry of tax concessions available to the IT industry after fiscal 2008-09. The industry gets tax exemptions under the section 10A/10B of the Income-Tax (1- T) Act under the software technology parks of India (STPI) scheme. The scheme, however, would come to an end in 2009 under the sunset clause mentioned therein. The finance ministry should realise that the software sector is one of the largest employers in the service sector and is growing at over 33% year. Employment by the sector is growing at 26 % a year. It is also a major contributor to export earnings. Total export from the sector is expected to touch $40 billion this year and $60 billion by 2010. Also, the sector contributed 5.3% of the country’s GDP in fiscal 2008, a big jump from 1.2% in fiscal 1998. However, the sector has been badly affected in the last one year because of a steep rise of the rupee. If the government does not address the sector’s problems it would give wrong signals to the industry and would see a decline in investment and forex earning. It should also be noted that small and medium companies cannot move to SEZs very easily, and would be badly affected by the expiry of the scheme. Also, the government should protect the BPO sector which is facing intense competition from other countries – like Russia, Ukraine, Hungary, the Czech Republic, Vietnam and the Philippines. Many of these countries are offering tax holidays, free space, reimbursement of salaries and training costs, among other sops to companies setting up centres. Most of these companies also have superior infrastructure, resulting in lower operational cost. Also, it is the tier III & IV cities that actually offer cost advantage to the companies coming to India. Not continuing tax incentives beyond 2009 may result in an adverse impact on the development of the IT/ITeS industry in tier III & IV cities. This would lead to the increase in the cost of operations. I hope the FM finds some ways to ward off such lurking dangers. Also, I expect that he takes some steps [...]
RIGHT CODE FOR NRI’s
March 9th, 2008 krishna There are real life encounters which defy legislative solutions. The huge Indian diaspora in 130 countries abroad, today exports from their foreign homes unique family law problems in the Indian domain which do not find ready answers in existing Indian matrimonial legislation. Hence, judicial innovation to carve out individual relief in distinct NRI family disputes is necessitated on a case-to-case basis. But these are not consistent statutory remedies. In a unique recent decision of the Delhi High Court, the order of the matrimonial court in the wife’s divorce petition in India, granting her monthly maintenance of Rs 11 lakh besides awarding her Rs 1lakh in litigation expenses to be paid by the NRI husband living in the US, was set aside on two grounds. Firstly; the husband was denied opportunity to contest proceedings in India and secondly; because the matrimonial court had treated the income of the husband in USA as the measure to grant monthly maintenance to the wife who was living in India. According to the High Court, for payment of maintenance to a wife in India by a husband living abroad and earning in foreign currency; the quantum of maintenance has to be considered in accordance with standards, cost of living and other related factors in India to work out loss of dependence. However, in an earlier decision of the Delhi High Court, in the case of an abandoned Indian wife, the husband living in the US was directed to pay 1,000 US dollars per month besides litigation expenses of 5,000 US dollars to the wife as per the formula of one third of the salary of the husband in US which was payable to the wife. The Court took serious note that abandoned wives dumped by spouses living in foreign countries are not immune from compliance with orders passed by Indian Courts under the Hindu Marriage Act. The logic and reasoning in the latter judgment is undoubtedly appealing. If the dependent Indian spouse is dumped on Indian soil, she has every right to be maintained in accordance with the living standards and income of her spouse living abroad. If she is unjustifiably denied rights of cohabitation by her spouse of abroad, she must be compensated in measure of the currency in which he earns and spends and not as per the currency of the country in which she is forcibly abandoned to live. Why should the [...]
