G20 Endorses India’s Concerns On Black Money, Beyond

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The G20 Summit concluded here Sunday with its leaders endorsing India’s concerns over black money, while promising a new global transparency standard that will modernize international tax rules and allow automatic exchange of related information between governments to curb illicit outflow of money estimated at over $1 trillion annually.

India, being represented at the summit by Prime Minister Narendra Modi, immediately called this development an unprecedented success, and said the next step will be the delivery of an action plan, along with the Organisation of Economic Cooperation and Development (OECD). The two forums represent 44 countries and 90 per cent of the world economy.

“We are taking actions to ensure the fairness of the international tax system and to secure countries’ revenue bases. Profits should be taxed where economic activities deriving the profits are performed and where value is created,” the G20 leaders said in a joint communique at the end of the eighth summit, promising to finalise work by end-2015.

This was precisely what Prime Minister Narendra Modi had specifically said and sought during a session on “Delivering Global Economic Resilience” on the second day of the summit in this west Australian city, while also wanting systems that will help countries in getting back the ill-gotten monies stashed away abroad.

“At this Summit, G20 Leaders have endorsed a new global transparency standard that will leave no place for tax cheats to hide. More than 90 jurisdictions will begin automatic exchange of tax information, using a common reporting standard by 2017 or 2018,” said Australian Prime Minister Tony Abbot, the summit chair and host.

India has no official estimates of illegal money stashed away overseas, but the unofficial ones range from $466 billion to $1.4 trillion.

In fact, according to Indian interlocutors, such strong words on illicit money and imposition of curbs in the communique would not have been possible without India’s intervention, since the original draft did not contain a language that was satisfactory for India.

They said the prime minister and his official team led by his Sherpa, Railway Minister Suresh Prabhu, got strong endorsements for New Delhi’s stand, notable Brazil and South Africa, to make this happen.

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ESTIMATES OF GROSS DOMESTIC PRODUCT FOR THE FIRST QUARTER (APRIL - JUNE) 2014 - 15

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QUICK ESTIMATES OF INDEX OF INDUSTRIAL PRODUCTION AND USE - BASED INDEX FOR THE MONTH OF AUGUST,2014

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India Development Update – October 2014 (World Bank Group) - Click to Download

Report No: AUS10373

Growth rebounded strongly in the first quarter of fiscal year 2015 ( Q1 FY2015 ) as industrial activity accelerated. While the services sector continues to be the main engine of the Indian economy, growth improved to 5.7 percent year over year in Q1 FY2015 mainly because industrial activity accelerated to 4.2 percent year over year, the fastest pace since Q4 FY2012. Activities related to construction,electricity, gas and water supply grew robustly and demand for capital and basic goods increased. Investment accelerated sharply to 7 percent year - over - year in Q1 FY2014 from an average growth of 0.3 percent year - over - years since Q1 FY2013. Agricultural activity slowed in Q1 FY2014 as the untimely rains in March adversely affected the winter crop.

The current account deficit narrowed to pre - global crisis levels and capital inflows surged. The 18 percent depreciation in the rupee between May and August, 2013, and the recovery in India’s major export markets helped stimulate export demand. Simultaneously,restrictions on gold imports, stable global crude prices, and rising import costs due to exchange rate depreciation reduced imports. Consequently, the Q1 FY2015 current account deficit came down to 1.6 percent of GDP, close to pre- global crisis levels. Capital flows improved markedly as both portfolio investments by Foreign Institutional Investors (FIIs) and Foreign Direct Investment ( FDI ) increased, with the reserve coverage rising to almost seven months of imports. Following last year’s depreciation episode , the exchange rate has remained stable and recovered more than half of its losses from the lowest point.

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Urban poor in India: Addressing the challenges  - Click to Download

India's urban population has grown rapidly over the last century from 25 million in 1901 to 377 million in 2011 which constitute 31.2 percent of the total opulation in the country. But the urban areas have failed to meet the demands of this increasing population pressure resulting in large gaps in provisioning of basic amenities of housing, drinking water, sewerage, transportation etc. Deprivation of such services has resulted in burgeoning of slums with conditions unfit for human habitation. Most of the urban poor are involved in informal sector activities where there is a constant threat of eviction, removal, confiscation of goods and almost non-existent social security cover. At present, 17.7 percent of urban population comprising 65 million people lives in slums (Census 2011). The pace of urbanisation is likely to accelerate over time and it is estimated that by 2030, another 250 million people would be added to the Indian cities. If not handled appropriately, this will give rise to creation of more slums and rise in urban poor. The report of the 'Expert Group to review the methodology for measurement of Poverty' headed by C. Rangarajan has put the number of urban poor at 102.5 million in 2011-12, surviving on daily consumption expenditure of Rs.47 or less. However, it is argued by many that instead of measuring urban poverty just in terms of consumption expenditure, it needs to be defined in terms of access/nonaccess to basic amenities.

Issues of urban poverty :

The poverty alleviation programmes of the government were completely rural centric earlier. It was only after the Seventh Five Year Plan that urban poverty was considered as a separate issue by the policy makers, this shift in understanding that urban poverty is not a mere spillover of rural poverty and hence needs to be dealt with separately was a positive step forward. Further, the rate of decline in urban poverty is slower and also uneven compared to rural poverty. Around 40 percent of the urban poor are concentrated in the States of Bihar, Madhya Pradesh, Odisha, Rajasthan, and Uttar Pradesh. Average urban consumption has been rising much faster than rural consumption. In fact, the gap between the two has widened considerably over the last decade and has been accompanied by increasing inequality between different sections of urban society. According to NSS 68th round, the richest 10 percent of the population in urban areas have an average Monthly Per Capita Expenditure (MPCE) about 11 times more than that of the bottom 10 percent whereas the same figure is 7 times for the rural areas.

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Black Money and Its Footprints -  Click to Download

High net worth entities and the banks aiding tax evasion should be the focus of the probe.

It required harsh comments from a visibly upset bench of the Supreme Court for the government to hand over the information it has received from foreign countries, particulars that would presumably help identify money illegally held abroad and aid in bringing its Indian-resident holders to book. “Why are you trying to keep a protective umbrella for these people?” the bench of Chief Justice H L Dattu and Justices Ranjana P Desai and Madan B Lokur asked, and asserted that “unless we monitor the probe, nothing is going to come of it”. Why is the Bharatiya Janata Party-led union government proving as reluctant as the earlier Congress Party-led government in recovering the money illegally held abroad and booking its resident Indian holders?

The Bharatiya Janata Party had emitted a lot of hot air about the huge amounts of “black money” of Indian origin that are stashed in Swiss banks and even made tall promises that when it came to power it would take prompt action to bring the moolah back. Indeed, the public really believed it meant business, for soon after assuming office at the centre, the Narendra Modi-led government appointed a Special Investigation Team (SIT) to begin the process of accomplishing the task. Actually, the Modi government really had no option but to constitute an SIT. Ram Jethmalani had filed a public interest litigation in March 2009 which sought the Supreme Court’s intervention to order the government to take appropriate measures to bring back the money which allegedly has been kept illegally in foreign banks by resident Indians. The Supreme Court had passed an order in July 2011 obliging the government to set up an SIT to initiate the process. The Congress-led government adopted various delaying tactics, even filed a review petition, but upon the dismissal of this petition, the government had no other alternative but to constitute the SIT.

But five months had gone by since the institution of the SIT and the government was in possession of the relevant information from governments such as France, Germany and Switzerland, but it resorted to the same alibi of the previous Congress-led government, that the confidentiality clause in the tax agreements with the foreign governments prohibits the disclosure of the information provided. But can such clauses be valid even in judicial proceedings? Rightly, the Supreme Court dismissed the government’s plea. So are there now grounds for optimism of an ultimately positive outcome? Despite the Court monitoring the SIT it is not in a position to look into the details of the investigation, with the income tax department and the enforcement directorate controlled by the government. One cannot be optimistic about the investigations being fair. Besides, high net worth individuals and companies appoint portfolio managers to manage their funds parked overseas and bank deposits are just one type of asset in their diversified portfolios of financial and non-financial assets. And, in today’s financial world, deposits in Swiss banks can be moved in quick time into other assets in other tax havens and offshore financial centres, perhaps even brought back for another round of business in India.

The government also knows that the return flow of such capital takes the form of foreign direct investment through beneficial tax jurisdictions, the raising of funds by Indian companies through global depository receipts, and investment in Indian stock markets through participatory notes, as has been mentioned in the Congress-led government’s Black Money: White Paper, dated May 2012. The latter, the participatory note – an instrument which permits a foreign investor to invest in Indian securities but remain anonymous to Indian regulators – an easy route to money laundering, is still going strong. If the Modi government really wants to prevent money laundering it should do away with the participatory note. Indeed, like the Congress-led government, this government too welcomes the preferential routing of foreign investment through tax havens like Mauritius and Singapore even though it knows that this route is used by foreign investors to avoid payment of taxes and to conceal the identity of the ultimate investors from the regulatory authority, and that resident Indians are using this route to invest in their own companies.

The size of India’s black economy has advanced dramatically since the 1990s, according to one estimate, from 40% of the country’s official gross domestic product in 1995-96 to 50% of the same in 2005-06. We are reminded of the ancient Roman myth of Cacus. This Roman mythological figure used to steal oxen by dragging them backwards into his den so that the footprints seemed to suggest that the stolen oxen had, in the first place, strayed out from his den, and he was merely drawing them back in. If we choose to limit our investigation to only what is immediately apparent, namely, the footprints that some of the “crooks” – Jethmalani called even those who were aiding the cover-up by that name – (perhaps) deliberately leave behind (i e, deposits in Swiss bank accounts as one such ruse), then we will never get to the truth of the matter. In the real world of globalised finance, where investment portfolios for the major centres are combined, where the markets (stock, bond, money, real estate, government securities, forex and commodities) tick almost round-the-clock from Tokyo Monday morning to New York Friday 5 pm, via London, Frankfurt, etc, in between (and the digital books are passed at the appropriate times), tracking such practices as “round tripping” – discovering the real footprints – is going to be exceedingly difficult. It would be better to focus on tracing the footprints of the black incomes where they are generated, i e, in India itself.

Maharashtra, Tamil Nadu & K’taka top states in collecting health insurance premium: ASSOCHAM  -  Click to Download

The state of Maharashtra has emerged on top for collecting highest health insurance premium worth over Rs 4,370 crore as of financial year 2012-13, according to a sector-specific analysis conducted by apex industry body ASSOCHAM.

“Clocking a growth rate of over 76 per cent, health premium collected by Maharashtra had increased from over Rs 2,480 crore in 2009-10 to over Rs 4,370 crore as of 2012-13,” according to an analysis titled ‘State-wise health insurance: An overview,’ conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

Tamil Nadu (Rs 1,780 crore) and Karnataka (Rs 1,400 crore) also figure among top states for collecting high health insurance premium throughout the country.

“Maharashtra, Tamil Nadu and Karnataka together account for over half of the gross health premium income worth over Rs collected in Indian states and union territories as of FY 2012-13 on the back of several new initiatives to expand coverage to vulnerable poor and to deepen the benefit coverage taken by the Central and State Governments to promote health insurance coverage and spending in the country,” said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the chamber’s analysis.

“The Central government should work towards providing basic minimum health insurance coverage to all citizens at nominal rate of premium,” said Mr Rawat. “India is grappling with poor penetration of health insurance and the government must take steps to increase the same.”

In terms of growth rate, Bihar has ranked on top as the health insurance premium collected by the state increased significantly from just about Rs 7 crore in 2009-10 to over Rs 315 crore in 2012-13 thereby clocking over 4,000 per cent rate of growth, noted the analysis done by the ASSOCHAM Economic Research Bureau (AERB).

The total health insurance premium collection in India has also grown at a growth rate of over 88 per cent i.e. from about Rs 7,980 crore to over Rs 15,000 crore during the aforesaid period.

Andhra Pradesh is the only state where the health insurance premium collection has dipped by over 13 per cent i.e. from about Rs 800 crore in 2009-10 to about Rs 695 crore in 2012-13.

Increase in healthcare costs, rise in per-capita incomes, increasing burden of new diseases, health-related risks and high financial burden on poor eroding their incomes are certain key factors contributing towards the growth of health insurance market in India which is growing at a compounded annual growth rate (CAGR) of about 20 per cent and is likely to cross Rs 32,000 crore mark by 2016-17 from the level of about Rs 13,000 crore recorded as of 2011-12 owing to rising income levels together with growing health insurance premium, according to an ASSOCHAM study titled ‘Health Insurance in India-A review,’ released last year.

The ASSOCHAM projection is based on average of the compounded annual growth rate (CAGR) of about 6.7 per cent for income levels of people during 2004-05 and 2011-12 together with 32.5 per cent CAGR of health insurance premium during 2006-07 and 2011-12.

Over 65 per cent of people covered by health insurance sector in India come under the ambit of private companies, whereas the public insurance companies account for coverage of only 35 per cent people, pointed out the study.

While the public sector insurance companies garner maximum share of premium to the tune of about 61.5 per cent arising out of health insurance sector in India, the private health insurers account for just about 38.5 per cent of the premium.

Though, individual agents bring in most business thereby accounting for about 73 per cent share, however, with a share of about 37 per cent, the direct business is the major contributor in terms of premium collected followed by individual agents (32 per cent share) and brokers (21 per cent share), added the ASSOCHAM study.

While referrals constitute a meager 0.1 percent in terms of both the number of policies sold as well as the medical insurance premium they collect.

With the health insurance assuming greater significance by the day, the ASSOCHAM has suggested the Insurance Regulatory Development Authority (IRDA) to evolve a mechanism which shall ensure that private insurance companies do not skim the market by focusing on rich and upper class clients and in the process neglect a major section of India’s population.

The success and sustainability of health insurance sector in India would depend upon the development of a strong governance framework, efficient management and monitoring systems alongside introduction of cost containing and product improvement mechanisms, the study added further.

Addressing the coverage gap is a huge challenge for the insurance industry owing wing to low public spending on health together with high levels of informal or unorganized labor, a large dispersed rural population, high levels of poverty and lower number of service providers serving the poor, noted the ASSOCHAM study.

The priorities for government for healthcare financing must be such that it covers the basic objectives of affordability, reach and quality of services, it suggested.

In its study, ASSOCHAM has called for an alternative cost sharing mechanism where health insurance is considered as an efficient mechanism through pooling of health care burden so that all sections of the society are able to afford healthcare services.

State-Wise Gross Direct Premium Income – Health

(in Rs Crores)

India voted against UN draft resolution on NPT -  Click to Download

India on 31 October 2014 voted against the provisions of UN draft resolution that called on all those countries including India that have not joined the Nuclear Non-Proliferation Treaty (NPT) to accede to it as non-nuclear weapon states.

India also rejected the provision which stressed on fundamental role of NPT in achieving nuclear disarmament and non-proliferation and urged India, Israel and Pakistan to accede promptly to NPT as non-nuclear weapon state and place all their nuclear facility under IAEA safeguards.

However, India abstained from voting on the provision that reiterated the immediate start of negotiations in the Conference on Disarmament on a treaty banning the production of fissile material for nuclear weapons.

India also abstained from voting on a provision that would have the Assembly stress the importance of the universalisation of the IAEA safeguard agreements to include states which had not yet adopted and implemented such an agreement.

India’s stand

India rejected the provision saying that there is no question of it acceding to the NPT as a non-nuclear weapon state. It further said that nuclear weapons are an integral part of national security of India and will remain so, pending non- discriminatory and global nuclear disarmament.

India said it remains committed to the goal of complete elimination of nuclear arms and continued to support a time-bound programme for global, verifiable and non-discriminatory nuclear disarmament.

Other countries rejecting the provisions of UN draft resolution on NPT

The provision asking the countries to accede to NPT as non-nuclear weapon state was also rejected by Democratic People's Republic of Korea and Israel though the provision was retained by 164 in favour.

The provision stressing on fundamental role of NPT and universally placing the nuclear facility under IAEA safeguards was also rejected by Israel, the US and Pakistan though it was retained by a recorded vote of 163 in favour.

Another provision reiterating the immediate start of negotiations in the Conference on Disarmament was retained by a recorded vote of 166 in favour to two against while India, Iran, Israel, Democratic People's Republic of Korea abstained.

The UN draft resolution on NPT

The draft resolution titled Towards a nuclear weapon-free world: accelerating the implementation of nuclear disarmament commitments was presented by the First Committee of the 193-member UN General Assembly that deals with disarmament and international security issues.

The draft resolution as a whole was approved by 166 countries and seven countries Korea, France, India, Israel, Russian Federation, the UK and the US against it.

India to launch electronic toll collection at 350 highway plazas: Minister -  Click to Download

Launching an electronic toll collection (ETC) system for the Delhi-Mumbai highway, Transport Minister Nitin Gadkari said such a facility will be extended to as many as 350 plazas by the end of next year.

“In the coming time, this system will get revolutionalised. This is our step towards a digital India. I have given orders that before March, there should be over 350 such tolls,” the minister said at an event here to launch the project.

“This will help in savings of as much as Rs.27,000 crore due to delays caused at tolls and Rs.7,000 crore worth of fuel will be saved,” Gadkari said.

“We have currently tied up with two banks — Axis Bank and ICICI Bank. More can also come,” Gadkari said, even as officials explained that the logistics for the Delhi-Mumbai toll plaza had been set up in Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra.

Around Rs.1,200 crore of fuel will be saved annually on the Delhi-Mumbai highway after the installation of the ETC system.

At present, some problems are being faced while collecting toll. People often complain of lack of uniform rates on various parts of the same highway and there are constant complaints of overcharging.

The minister added that there are 18 toll plazas on the Delhi-Mumbai highway. It takes around 10 minutes minimum for the vehicles to pay the levy which results in a loss of at least three hours’ time during the total journey.

Modi starts Clean India drive, says India can do it:

Prime Minister Narendra Modi Thursday (Oct 1,2014) symbolically wielded the broom in Dalit colony where Mahatma Gandhi once stayed to launch a unique nationwide campaign which seeks to change Indians' mindset vis-a-vis hygiene and clean up the country in five years.

In a spirited speech near the India Gate monument a short while later, Modi told a huge gathering that Indians had a responsibility to fulfill Gandhi's dream by ridding the country of dirt and filth by 2019, the 150th birth anniversary of Father of the Nation.

PUBLIC PRIVATE PARTNERSHIPS IN SCHOOL EDUCATION Learning and Insights for India

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Public-Private Partnerships can introduce innovation and investment into India’s government school system, which urgently needs to improve the quality of education. Lessons from existing models in India and international efforts at collaboration between the private and public sector show that PPPs have an

important role in improving the system.

This landscape report on Public-Private Partnership (PPP) in School Education examines the opportunity for the private sector to partner with the government to improve the quality of school education service delivery in India.

This report traces the evolution of PPPs in education in India and defines the need and opportunity for the whole school model of PPP implementation. It draws learning from domestic and international experience of PPPs to outline elements and characteristics of effective PPPs.

Opportunity for PPP in School Education

Well-designed PPPs can create models of innovation for the school system in India. Various governments at the central, state and local level are exploring and implementing PPPs in education. Three primary reasons that governments are exploring these partnerships include:

• Increasing access to school:

India has a high dropout rate from primary to secondary school, with the national Gross Enrolment Ratio (GER) falling from 118 in primary school to 34 in senior secondary school. As access at the elementary level has become nearly universal, the focus in the education system is now shifting towards increasing the quality of outcomes. PPPs can extend the reach of the government system to provide children access to schools.

• Using underutilized school infrastructure:

Across India, major metropolitan areas such as Mumbai, Chennai, Pune and Ahmedabad have experienced up to 25% decline in enrolment in government schools over the past 10 years and simultaneously their education budgets have almost doubled. These trends have resulted in a hollowing out of government schools. By getting private operators to manage high quality schools in these empty buildings, governments can effectively utilize existing infrastructure.

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