Indian Economy

www.thehindu.com 2017-9-1 India, U.S. eye states to boost trade ties Taking off:The proposed engagement mechanism is aimed at boosting bilateral trade and investment. India and the U.S. are working on establishing a state-level engagement mechanism to widen and deepen bilateral trade and investment ties. Towards this objective, the U.S.-India Business Council (USIBC), will unveil within a fortnight a ‘State Engagement Task force’ (SET) to ensure American and Indian companies align their interests with the priorities of the State governments of both the countries. The move comes as India and the U.S. are set to carry out a comprehensive review of bilateral trade ties. In that exercise, priority sectors will be defence and energy. While the focus in defence would include Lockheed Martin’s proposal to make F-16 fighter jets in India and the proposed sale of General Atomics Aeronautical Systems Inc. or GA-ASI’s ‘Guardian Remotely Piloted Aircraft’ to India, energy ties would cover exports of U.S. natural gas, transfer of U.S. technology on oil and gas refining, as well as the conclusion of pacts between Nuclear Power Corp. and Westinghouse Electric for six nuclear reactors in India and related project financing. Other priority areas would be smart cities (including Ajmer, Allahabad and Visakhapatnam), regional airport development in India through public private partnership, e-commerce , digital payments and medical devices. On SET, USIBC acting president Khush Choksy told The Hindu nominations had been sought from USIBC members. As part of the proposed SET, preliminary discussions had been held on skill development and entrepreneurship promotion in Nagaland, he said, adding that there had also been talks on infrastructure development and job-creating activities in eastern/north-eastern India. Similar discussions would soon be held with the U.S. State governments to identify their priorities. China way ahead According to the American Enterprise Institute, China was the ‘top import country’ for 23 U.S. States in 2016, followed by Canada (14). India was neither a ‘top import country’ nor a ‘top export country’ for any U.S. State. Industry inputs for four separatecrackIAS.com engagement channels — the comprehensive review of trade ties, forthcoming trade policy forum and the bilateral ‘commercial dialogue’ as well as the Global Entrepreneurship Summit in November — would be provided during the Global Entrepreneurship Conclave (GEC) being organised by the USIBC next month. Top government officials from India and the U.S. are likely to participate in the GEC, Mr. Choksy said. Issues like the U.S. concern over its trade deficit and India’s worries on U.S. visa ‘curbs’ would fall into a proper context once the two countries explore ways to solve the ‘larger puzzle’ of increasing bilateral goods and services trade to $500 billion, from $115 billion in 2016, Mr. Choksy said. “The USIBC wants a win-win outcome for businesses on both the sides. We are supportive of free movement of goods and services.” END Downloaded from crackIAS.com © Zuccess App by crackIAS.com www.thehindu.com 2017-9-1 After demonetisation Has demonetisation achieved its original objectives? On November 8, 2016, these were tackling corruption, counterfeit currency, and terror funding. Thereafter the Prime Minister added reducing dependence on cash. Now that we know that 99% of demonetised money has come back, the government’s estimates of how much black money would be extinguished have been proven horribly wrong. The Attorney General told the Supreme Court that he expected 4-5 lakh crore to be “neutralised”. Then, a Finance Ministry official told reporters that 3 lakh crore would not return. In the end, just 16,000 crore didn’t come back. No fresh window to return demonetised notes: Finance Ministry This means previously unbanked money has now been credited to bank accounts. As they yield returns, it will be taxed and that’s a clear gain. If large proportions are proven to be black, revenues will increase substantially.crackIAS.com The critical question is, how much of the money can the authorities establish is black? In his Budget speech, Finance Minister Arun Jaitley revealed that 4.9 lakh crore had been deposited in 1,48,000 bank accounts of a minimum value of 80 lakh, each amounting to an average deposit of 3.31 crore. At the time, Business Standard Chairman T. N. Ninan, wrote: “It’s all but certain... this is black money unearthed by notebandi.” On Wednesday, the Finance Ministry said 18 lakh accounts are under “scrutiny” and “Advance Data Analytics Tools” have identified a further 5.56 lakh. This is a huge number for the Central Board of Direct Taxes to scrutinise given that it only investigates 3 lakh accounts annually. On the assumption that most black money is detected, the economist Surjit Bhalla has calculated the additional revenue in the first year as 2.5 lakh crore with a further 1.5 lakh annually in perpetuity. If that happens, it’s a huge gain, but ‘if’ is the operative word. For now, all we can say is some black money will be identified and taxed but what proportion that is of the total and what the gain will be is unknown. Diary of an unusual year: UrjitcrackIAS.com Patel’s continued silence on demonetisation However, the objective of reducing counterfeit currency seems unachieved. In 2015, the National Investigation Agency established that at any point only 400 crore of counterfeit currency is in circulation. That’s 0.028% of total currency. Now, CNBC has calculated only 0.0007% of the returned 1,000 notes as being fake and only 0.002% of the 500 notes. In value terms the total is just 41 crore. So either a lot of fake currency hasn’t been detected or didn’t exist. In terms of tackling terror funding, the Finance Ministry has said: “As a result of demonetisation of specified bank notes, terrorist and Naxalite financing stopped almost entirely.” If true, this is a huge success, but no proof has been provided. Finally, have we reduced dependence on cash? Both in number and value, digital transactions increased sharply after November but also dipped sizeably thereafter. There were 671.49 million transactions in November, rising to 957.50 million in December before shrinking to 862.38 million in July. In value terms, it was 94 lakh crore in November, 149 lakh crore in March, and 107 lakh crore in July. So, the use of cash initially diminished but has been steadily increasing thereafter. This is a mixed picture. There’s enough for the government to claim success, but also grounds for the Opposition to be dismissive. Clearly, the demonetisation controversy continues. Karan Thapar is a broadcast journalist The new U.S. Fed Chairman is unlikely to opt for policies that might upset the President’s plan END Downloaded from crackIAS.com © Zuccess App by crackIAS.com crackIAS.com crackIAS.com www.pib.nic.in 2017-9-1 Decisive First Step towards Simplified Labour Laws: The Code on Wages, 2017 placed before Parliament Decisive First Step towards Simplified Labour Laws: The Code on Wages, 2017 placed before Parliament crackIAS.com *Deepak Razdan The Government took a decisive step towards simplifying and amalgamating the vast mass of labour laws when it presented before the nation The Code on Wages, 2017, a Bill which combines features and provisions of four existing labour laws pertaining to wages. The Bill was introduced in the Lok Sabha during the Monsoon Session of Parliament on 10th August, 2017. Intended to bring relief to both employers and employees, the Code amalgamates, simplifies and rationalises the relevant provisions of the four Central labour enactments, namely the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976. The four Acts will stand repealed with the passage of the Bill. Facilitating easier compliance of the law, the Code will ultimately create conditions for setting up of more enterprises and fresh employmentcrackIAS.com opportunities. The Statement of Objects of the Bill said the amalgamation of the laws would facilitate their implementation and remove the multiplicity of definitions and authorities, without compromising on the basic concepts of welfare and benefits to workers. The proposed legislation would bring the use of technology in its enforcement and thereby bring transparency and accountability for effective enforcement of the law. Widening the scope of minimum wages to all workers would be a big step for equity. The Bill provides for all essential elements relating to wages -- equal remuneration, its payment, and bonus. The provisions relating to wages shall be applicable to all employments covering both organised as well as un-organised sectors and the power to fix minimum wages continues to be vested in the Central as well as State Governments, in their respective spheres. There are clear definitions of employer, employee, worker, minimum wage and wages. The Code will enable the appropriate Government to determine the factors by which the minimum wages shall be fixed for different categories of employees. The factors shall be determined taking into account the skills required, the arduousness of the work assigned, geographical location of the workplace and other aspects which the appropriate Government considers necessary. Provisions relating to timely payment of wages and authorised deductions from wages, which are at present applicable only in respect of employees drawing wages up to Rs 18,000 per month, shall be made applicable to all employees irrespective

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