Strategy | 10 November 2014 India Politics
INDIA MODI-fied | Vol 6 Research Team ([email protected]) India Politics | INDIA MODI-fied Vol 6
INDIA MODI-fied: Volume-6 | A full team to push reform and legislative agenda
The mandate of 2014 has ushered a majority government after three decades, generating enormous expectations out of Narendra Modi-led government. In the MODI-fied series, we chronicle this change spanning areas of polity, external relations, economic management and governance.
In volume-6 of our India MODI-fied series, we have a closer look at the expanded Cabinet, its composition and changes in the important portfolio. While the government has made a beginning in various areas of reform already, it has given a push post state elections and also hinted at giving it a further push in the coming months. Finally, we take a detailed look at the pending bills to gauge the change it would usher when some of it are passed in the coming Winter session of Parliament.
Contents
Page No.
Modi-Government 2.0 assumes charge ...... 3
Enhanced capacity to drive reform ...... 6
Legislations that can change India ...... 7
Dipankar Mitra ([email protected]); +91 22 3982 5405 Ashish Gupta ([email protected]); +91 22 3982 5544
Investors are advised to refer through disclosures made at the end of the Research Report.
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Modi-Government 2.0 assumes charge The full team expands to 66 with many new faces and changes
Please refer to our India Prime Minister Mr. Narendra Modi made the first changes to his Cabinet after a Strategy note “Good days period of nearly six months since assuming office in May 2014. The key highlights ahead…” for detail discussion are: dated 19 May 2014 21 additional Ministers inducted; MoS saw the bulk increase: In all 21 Ministers were inducted taking the total strength of Council of Ministers to 66 (including Mr Narendra Modi). Out of these, four were of Cabinet rank while three were Ministers of State with independent charge. The maximum additions were, however, at the first level of Ministers of State, which saw their strength increasing from 12 in May ’14 to 26 currently. New Ministry added: Mr Narendra Modi, with his penchant for Ayurveda and Yoga, has made Mr. Shripad Naik - Minister of State (Independent Charge) of Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homoeopathy (AYUSH). New Cabinet Ministers given important ministries: The new faces in the Cabinet were given important portfolios of Defence, Railways, Health and Family Welfare and Rural Development, Panchayati Raj and Drinking Water and Sanitation. Key changes in Ministries: Mr. Harsh Vardhan was divested from the Ministry of Health and Family Welfare and inducted to the Ministry of Science and Technology and Earth Sciences. Similarly, the portfolio of Mr. Sadanand Gowda was transferred from Ministry of Railways to Ministry of Law & Justice. Only one women minister added: Of the 21 new ministers inducted, only one is a woman. Thus, there are eight women candidates in the Council of Ministers. Previous NDA-experienced Ministers: Many Ministers added had a previous stint in the NDA 1999 Government. Some of them have a background in RSS to.
NDA increases its council of ministers by 21 Ministers of State saw bulk of the increase No. of Ministers Cabinet Ministers Minister of State (Ind. charge) 77 Minister of State 70 68 66
37 29 26 45 37 12 10 7 13 7 10 33 26 29 23 27
NDA (1999) UPA (2004) UPA (2009) NDA 1.0 NDA 2.0 NDA (1999) UPA (2004) UPA (2009) NDA 1.0 NDA 2.0 (2014) (2014) (2014) (2014)
*No of ministers includes PM of India Source: GoI, MOSL Source: GoI, MOSL
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Ministers in age group of 50-65 years rise sharply since UPA regime (%) Average age (years) of Ministers comparable to UPA regime
Above 65 years Between 50-65 years Under 50 yrs UPA (2009) NDA 1.0 (2014) NDA 2.0 (2014) 62 17 17 27 60 60 58 57 57 53 51 52 47 70 73
26 13 11 Cabinet Ministers of States Ministers of States UPA (2009) NDA 1.0 (2014) NDA 2.0 (2014) Ministers (Ind charge)
Source: Government of India, MOSL Source: Government of India, MOSL
Key changes in portfolios of Cabinet Ministers and MoS (Ind charge) Ministry Present Earlier Information and Broadcasting Arun Jaitley Prakash Javadekar Defence Manohar Parrikar Arun Jaitely Railways Suresh Prabhu D V Sadananda Gowda Law and Justice D V Sadananda Gowda Ravi Shankar Prasad Health and Family Welfare Jagat Prakash Nadda Harsh Vardhan Rural Development, Panchayati Raj and Chaudhary Birender Singh Nitin Gadkari Drinking Water and Sanitation Science and Technology, Earth Sciences Harsh Vardhan Dr Jitendra Singh Statistics and Programme Implementation General V K Singh Inderjit Singh Rao Development of North Eastern Region Dr Jitendra Singh General V K Singh Labour and Employment Bandaru Dattatreya Narendra S Tomar Skill Development and Entrepreneurship Rajiv Pratap Rudy Sarbananda Sonowal Ayurveda, Yoga & Naturopathy, Unani, Shripad Yesso Naik NA Siddha and Homoeopathy (AYUSH) Culture and Tourism Dr Mahesh Sharma Shripad Yesso Naik
Source: Cabinet Secretariat, MOSL
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New Cabinet Ministers and Ministers of State (Independent charge) inducted Sr. Name of the minister Portfolio Brief background No. (Age) 1. Manohar Parrikar (58) Ministry of Defence A metallurgical engineering graduate from IIT-Bombay, he has a reputation for honesty and simplicity. As Chief Minister (CM) of Goa, he was praised as the 'Common Man's CM' for flying without security or entourage and carrying his own briefcase.
2. Suresh Prabhu (61) Ministry of Railways Chemical and Fertilizer minister in the first NDA government and then later became the environment minister in NDA regime Former Shiv Sena member and is part of international bodies on sustainable growth and climate change A law degree holder with doctorate in climate change from Germany, Prabhu is a strong votary of a balance between economic development and environment protection 3. Jagat Prakash Nadda (54) Ministry of Health and One of the youngest legislators to be elected to Himachal assembly Family Welfare His big leap into politics started during Emergency in 1977 as Akhil Bhartiya Vidyarthi Parishad secretary Known to maintain a low profile and a disciplined solider of the RSS
4. Chaudhary Birender Ministry of Rural A long-time Congress man, he joined the BJP before assembly Singh (68) Development; Ministry elections in Haryana this August of Panchayati Raj and In his long political career, he had been Congress in-charge for Ministry of Drinking many states such as Uttarakhand and Himachal, and was the Water and Sanitation chairperson of many parliamentary standing committees Had joined the BJP apparently on the assurance that he would get
a Union cabinet berth 5. Bandaru Dattatreya (67) MoS (Ind charge) of Minister in the first NDA government and was president of the BJP Labour and in newly created state of Telangana Employment An RSS activist, was the founding member of the party in residual Andhra Pradesh and chairperson of several parliamentary standing committees
6. Rajiv Pratap Rudy (52) MoS (Ind charge) of Inducted as one of the youngest ministers in the NDA government Skill Development and in 2000 (at an age of 38 years) Entrepreneurship and Minister of state and elevated with independent charge three MoS of Parliamentary years later and given the important portfolio of civil aviation Affairs Alumni of Punjab University and MP from Bihar; in-charge of the party in Maharashtra, where BJP emerged as the largest single party in the recently concluded assembly elections 7. Dr Mahesh Sharma (55) MoS (Ind charge) of A doctor by profession and MP from Gautam Budh Nagar, Noida Culture; MoS (Ind Runs several charitable hospitals and clinics in the National Capital charge) of Tourism and Territory region MoS of Civil Aviation Long associate of the RSS and is former Noida MLA from the BJP
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Please refer to our MODI-fied Enhanced capacity to drive reforms Vol-5” for detail discussion dated 19 Oct 2014 Post state elections, hints of reforms speeding up Bold reforms initiated post Assembly elections In the first five months, the new government concentrated on bringing down food inflation, walk the path of fiscal prudence, intiated measures to address concerns of investment climate and industrial downturn and largely continued with the welfare programmes of the earlier UPA regime with a moderate tweak. With the initiation of labor and energy sector reforms, the government has now addressed concerns in certain quarters on the pace and extent of reforms.
Economic reforms by Modi government Food inflation: One of the first measure by the new government was to restrict MSP hikes to a minimal magnitude and reduce scope for state governments to give away higher food subsidy besides imposing restrictions on trade. The measures proved to be effective in bringing down food inflation despite drought. Fiscal prudence: The new government adhered to the fiscal consolidation path laid by earlier government while the commodity crash has made the job easier. To meet the fiscal goals the government mandated at 10% cut in non-plan expenditure excluding committed expenditures for all Departments and enforced austerity measures to curtail travel and tour related expenditures. Investment climate and industry: Measures include: i) referring disputed transfer pricing tax cases to a separate Commission, ii) on-line environmental clearances, iii) facilitating FDI in defense (through higher limits of 49%), railways (100% FDI), construction, etc. iv) rejigging bureaucracy, restructuring Cabinet committees, lesser discretion in tax enforcement, repealing outdated laws, etc.; v) restoration of SEZ benefits, vi) extending validity of industrial license, vii) scheme for competitiveness of capital goods sector, viii) cut in excise duty for auto sector, ix) clarifying definition of FDI and FII, x) payment of outstanding fertilizer subsidy bill, xi) deregulation of diesel price, xii) special management team to facilitate and fast track investment proposals from Japan, etc. Labor reform: Measures include: i) online compliance of 16 out of 44 labour laws and a transparent and accountable labor inspection regime, ii) reimbursement of 50% of stipend incurred by manufacturing units for training, iii) responsive vocational training, iv) expanded and flexible insurance scheme for laborers. Infrastructure; Approved several big ticket investment projects, ii) built flexibility in the road sector by converting PPP projects to EPC and change in model concession agreement, ii) hike in railway fares, iii) new gas pricing formula, iv) measures to monetize E&P discoveries. Foreign policy: Engagement with key countries and leaders - Japan, China and US; breaking ice with neighbors. Other measures included extending normal validity of visa for US citizens to 10 years. Continuation of welfare schemes with tweak: Most of the big welfare schemes of the previous government continued including Food Security, UIDAI, urban poverty alleviation, etc. Some were given renewed thrust e.g. financial inclusion, toilet and cleanliness, pension, etc. However, NREGA was tweaked to suit agriculture.
Source: MOSL
Government hints at speeding up reforms The Finance Minister (also formally Government’s spokesperson after the expansion of the Cabinet) expressed his intention to pursue an “aggressive reforms agenda” over the next few months to help get the country get back to a high-growth trajectory and on the radar of investors. Amendment to the Land Acquisition Act, Insurance bill, a “rational” tax policy, and divestment of public sector banks’ holdings to 52% were cited as the next targets along with GST.
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The areas of work-in-progress remain formidable too. Among them are resolution of core sector issues including expediting coal blocks auction and meaningful kickstart to mega projects.
Few areas of work-in-progress
1 Tax reforms: Resolution of issues related to GAAR and roll out of DTC/GST. Coal and power: Prompt auctioning of cancelled coal blocks and establishing rail linkages; 2 taking forward SEB restructuring, revamping T&D infrastructure, feeder separation
3 Disinvestment: Avoid bunching up of disinvestment issues towards the last quarters
4 Agriculture: Common agri market, APMC reform, agri rail network, National Fertilizer policy Land acquisition: Suitable amendment to the Act to create enabling framework for 5 industrial development. Mega projects: Meaningful push to big development agendas including ‘Make in India’, housing for all by 2020, development of inland waterways, ‘Digital India’ plan to connect all
villages, Industrial parks, Smart cities, Bullet Trains, ‘Sagar Mala’ to connect all ports, urban 6 transport infrastructure viz., metro rail in all cities with a population of 0.1m and above, etc.
Source: MOSL
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Legislations that can change India Heavy legislative agenda awaits Winter session
Legislations of far-reaching changes await the Winter session of Parliament scheduled to be held between Nov 24-Dec 23, 2014. The proposed legislations span the areas of general economy that seek to encourage economic activity, provide efficient transactions and uphold sanctity of economic contracts. Enabling legislations aimed at orderly development of various sectors have been lined up too. Finally, an entire set of legislations relates to enhancing the government’s capacity to deliver and improve interactions between government and citizens. Indeed, the present government can use its massive mandate to clear many of these legislations. While the principle Opposition (Congress) has extended support to three of these legislations already in the areas of GST, Insurance and coal block allocation, the government can count on its allies and others for issue-based support at Rajya Sabha too where it is a minority.
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Pending legislations can provide an enormous boost to economy when passed Area Name of the Bill Brief summary
I. ECONOMY Insurance The Insurance Laws Raises the limit to 49% and allows entry of foreign reinsurers (companies that insure (Amendment) Bill, 2008 insurance companies). Also, provides for permanent registration of insurance companies and permits the holder of a life insurance policy to name the beneficiary. GST The Constitution (115th To introduce the Goods and Services Tax to give concurrent taxing powers to both the Amendment) Bill 2011 (GST Union and States. Bill) DTC The Direct Taxes Code, 2013 A comprehensive revision of laws related to direct taxation. Land (Revised) Land Titling Bill, To provide for the establishment, administration and management of a system of 2011 conclusive property titles with title guarantee and indemnification against losses due to inaccuracies in property titles. Regulators Regulatory Reform Bill To govern the constitution, powers and functioning of the regulatory commissions for public utilities and generally for taking measures conducive to development of public utility industries, determination of tariff, enforcement of performance standards, promoting investment and competition and for protecting the interests of consumers. Registration The Registration Makes registration of immovable property mandatory irrespective of duration. (Amendment) Bill, 2013 Standards Proposal to amend BIS Act To make BIS as a "National standards body" and to empower it for "conformity assessment" and include "services" in its ambit. Innovation National Innovation Act, 2008 To facilitate public, private or public- private partnership initiatives for building an Innovation support system to encourage Innovation. Tech The Indian Institutes of Seeks to declare certain institutions of information technology to be institutions of education Information Technology Bill, national importance and creates mechanisms to establish new Indian Institutes of 2013 Information Technology. Employment The Employment Exchanges Expands the definition of employees, tweaks the mandatory notification criteria, revises exchange (Compulsory Notification of the panalty amount. Vacancies) Amendment Bill, 2013 RTI The Right to Information Removes political parties from the ambit of the definition of public authorities and hence (Amendment) Bill, 2013 from the purview of the RTI Act. Wildlife The Wildlife Protection For the protection and conservation of wild animals, birds and plants, also as a part of (Amendment) Bill, 2013 commitment to fulfil international treaties CITES. II. SECTORS Coal The Coal Mines To enable the central government to prescribe the conditions for private mining of coal in (Nationalisation) Amendment terms of location and minimum size. Bill, 2000 Coal The Coal Regulatory To establish a Coal Regulatory Authority of India (CRAI) to develop and regulate coal Regulator Authority Bill, 2013 sector. MMDR Mines and Minerals To consolidate and amend the law relating to the scientific development and regulation of Development and Regulation mines and minerals. Bill (MMDR)-2011 Real estate The Real Estate (Regulation The Bill regulates transactions between buyers and promoters of residential real estate and Development) BillI, 2013 projects. It establishes state level regulatory authorities called Real Estate Regulatory Authorities (RERAs). Construction The Building and Other Creates funds and other protection for workers. Construction Workers Related Laws (Amendment) Bill Road Road Transport and Safety To provide a scientifically planned and evolving framework for the safety of all road users. Bill 2014 Ports Port Regulatory Authority Bill, For the establishment of Regulatory Authorities to regulate rates for the facilities and 2011 services provided at the ports and to monitor the performance standards of port facilities and services. Civil aviation The Civil Aviation Authority of Sets up a Civil Aviation Authority (CAA) to replace Directorate General of Civil Aviation India Bill, 2013 (DGCA) as the civil aviation safety regulator Micro- Micro Finance For growth and development of micro finance institutions and regulation of micro finance finance Institutions(Development and institutions Regulation) Bill
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CIS The Securities Laws Widens the definition of Collective Investment Schemes (CIS) to include all pooling of (Amendment) Bill, 2013 funds of Rs 100 crore or above. Gives SEBI explicit powers to order disgorgement of unfair gains. Telecom The Telecom Regulatory Amends the Telecom Regulatory Authority of India Act, 1997. Relaxes certain conditions Authority Of India on eligibility for members of Trai (Amendment) Bill, 2008 Shipping Shipping Trade Practices Bill, To provide for bringing transparency in trade practices adopted by maritime transport 2008 logistics service providers. Merchant The Merchant Shipping Proposes to amend the Merchant Shipping Act, 1958, to bring it in conformity with the Shipping (Second Amendment) Bill, ILO’s Maritime Labour Convention, 2006 2013 Bio-tech The Biotechnology Regulatory Sets up an independent authority, the Biotechnology Regulatory Authority of India (BRAI), Authority Authority of India Bill, 2013 to regulate organisms and products of modern biotechnology Bio-tech Regional Centre for Establishment of an institution of national importance to be known as the Regional Centre Biotechnology Bill, 2014 for Biotechnology for training and education as a category II institution under the auspices of UNESCO. Bio-security The Agricultural Biosecurity To establish an integrated national biosecurity system covering plant, animal and marine Bill, 2013 issues to combat threats of bioterrorism from pests and weeds. Broadcasting Broadcasting Services To promote facilitate and develop in an orderly manner the carriage and content of Regulation Bill, 2007 Broadcasting. Medical The Indian Medical Council The Act provides for the constitution of the Medical Council of India (MCI) to (a) maintain (Amendment) Bill, 2013 standards of medical education. Detective The Private Detective Provides for the regulation and licensing of private detective agencies operating in India. Agencies (Regulation) Bill, 2007 Health The National Commission For To establishes a mechanism to determine and regulate the standard of health education. education Human Resources For Health Bill, 2011 III. GOVT. SERVICE UID National Identification Provides for the establishment of the National Identification Authority of India for the Authority of India Bill, 2010 purpose of issuing unique identification numbers to individuals residing in India. Grievance Citizens Right to Grievance To lay down an obligation upon every public authority to publish citizens charter stating Redress Bill, 2011 therein the time within which specified goods shall be supplied and services be rendered and provide for a grievance redressal mechanism. Procurement (Revised) Public Procurement To regulate public procurement with the objectives of ensuring transparency, fair and Bill, 2012 equitable treatment. E-service Electronic Service Delivery Bill To provide for delivery of public services by the Government to all persons by electronic mode to enhance transparency, efficiency, accountability, accessibility and reliability of such services. Model law Model Public Service Law To cover functionaries providing important social services like education, health, rural development, etc., and commit them to their duties and for that purpose Corruption The Prevention Of Corruption Makes the act of bribing a public servant a criminal offence & creates provisions to cover (Amendment) Bill, 2013 all aspects of bribery, including defi nitions of various elements of bribery.
Source: PRS, MOSL
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