Covering developments on policy responses, policy implementation and policy distortions on a quarterly basis. PPoolicyWatchlicyWatch Comments are welcome. Volume 15, No. 2 April-June 2014 From Yojana Bhawan to Sudhar Bhawan he new Government means business and to do so many of our institutions Twill be resurrected with alignment to our federal nature, where the Prime Minister and the Chief Ministers will govern the country. The reform of I N S I D E T H I S I S S U E Planning Commission, in this regard, will be an important step. The Planning Commission underwent some soul searching but it was another Corporation on War Path ......3 perfunctory exercise before the end of Congress rule. Five years ago when Price Revision Opposed ......4 Arun Maira was appointed, he was asked to prepare a blueprint to turn the plan body into a Systems Reform Commission. Alas! His efforts did not succeed, Fiscal Deficit Narrows ..........6 because of sheer inertia and status quoism. Bad Loans Hurts India’s As one sets out to review the Recovery ............................ 10 performance of the Commission, India 15th on Wealth List ... 12 two fundamental issues strike upfront. First, is the Commission Flaws in the Health efficiently carrying out its Sector................................. 15 assigned roles? And second, are Competition Law the Commission’s roles attuned Awareness ........................ 21 to the political and economic realities of the country? The H I G H L I G H TS answer is an unequivocal no to www.harvardpolitics.com both the questions. Government Will Provide The Commission has become a Ministry but without accountability to the Electricity to All Within Parliament. The Deputy Chairman is a ‘Minister’ with independent charge Five Years ........................ 7 along with an Administrative Secretary, to who all officers report. Members are ranked as ‘Ministers of State’ for protocol purposes, and like Ministers of 9 Percent Growth, a State in other Ministries, have no say in the matter of personnel management Pipedream .......................13 in the divisions they are responsible for. Further, being run like a government department, the Commission’s Dumping Good Laws members, staff and officers remain unaccountable and are not subject to Will Hurt the Economy ...11 performance evaluation and review. There is an urgent need for the Commission to reform itself into a high quality, action oriented organisation. Rigorous Indian Companies May selection and evaluation processes must be put in place to enable only the Go Dutch to Meet CSR brilliant to gain entry in the reformed Commission. Independent professionals Norms .............................14 must be allowed to compete with the civil servants for appointments, and retired civil servants must be declared ineligible. Know Your Ministries .....16 The Commission should be capable of evolving with needs of the economy, and its actions must be open to public scrutiny. The Commission should shift its focus from simple top down planning to perspective planning based on a bottom up approach. It also needs to function as a repository of knowledge across various areas of governance and should become a smaller tech-enabled Reforms and Development Commission with regional centres in our states. Only when Yojana Aayog (Planning Commission) is transformed into Sudhar “The reformer has enemies in all those who and Vikas Aayog, (Reforms and Development Commission) can its place in the profit by the old order and only lukewarm prevailing political-economic scenario, be justified. Otherwise, it will end up defenders in all those who would profit by justifying Jeffrey E. Garten’s words, ‘A vision without execution is hallucination’. the new.” Machiavelli in The Prince Published by Consumer Unity & Trust Society (CUTS), D-217, Bhaskar Marg, Bani Park, Jaipur 302 016, India Phone: 91.141.228 2821, Fax: 91.141.228 2485 Email: [email protected], Website: www.cuts-ccier.org Printed by: Jaipur Printers P. Ltd., M.I. Road, Jaipur 302 001, India. I N F R A S T R U C T U R E COMMUNICATION which has reduced to 11 percent at components, may be introduced from present. TRAI has issued a number July. of directions and orders to the service At present, finished telecom Restore Trust providers. (NDTV, 30.05.14) equipment attracts zero duty but 10- in Telecom 15 percent is imposed on components. nsuring customer satisfaction and RJIL’s Free Wi-Fi Services Till now, around $12.8 billion has been Erestoring the declining investor Reliance Jio Infocomm Limited invested in telecom equipment sentiment will be the key areas of (RJIL) is rolling out mobile network manufacturing, with 75 percent of the focus for the new Telecom Minister, and WiFi hotspot services for free in FDI coming in during 2007-12, which Ravishankar Prasad who said that Ahmadabad, Baroda and Surat is considered small by global since in telecom100 percent Foreign regions of Gujarat. It will use multiple standards and also has planned a $1- Direct Investment (FDI) is permitted, standards for its 4G data offering as billion venture capital fund for telecom therefore, it must be helped to come well as varying technologies, said the equipment. (TT, 15.06.14) in India, under transparent regime. report for fiscal 2013-14. RJIL is committed on innovation, Govt. Plans to Revive PSUs design and providing technologically Shares of Mahanagar Telephone advanced devices at affordable prices Nigam Limited (MTNL) surged in trade and is nearing closure of negotiations after the Government said it will take with device vendors. steps to revive ailing telecom Public In February, RJIL had purchased Sector Units (PSUs) MTNL and Bharta airwaves for M11,000 crore to offer 4G Sanchar Nigam Limited (BSNL). services in 14 circles. According to Communications and IT Minister, the report, over 44 percent of the Ravi Shankar Prasad said that steps world’s 4G services are deployed on will be taken on a priority basis to the category of airwaves. (TT, 22.05.14) revive the two PSUs that have failed to ride the boom in the Indian telecom DoT Denies CAG Allegations sector even as private operators The telecom department has said like Airtel, Vodafone and Idea grew that the merger of the Tamil Nadu and from strength to strength. He also added that fiscal policy Chennai service areas in 2005 was “I have found that MTNL and issues must be stable and there is a thought-out, rejecting the national BSNL have not received as much need of softer regulatory mechanism, auditor’s claim that it was a hasty attention as required. They need which can bring more stability to the decision that cost the exchequer proper infrastructure support. I have sector and focus on establishing a M2,400 crore and appeared to benefit asked them to improve services for broadband highway. certain telecom operators. CAG also consumer satisfaction”, added There are over half a dozen firms questioned the decision to allow the Prasad. (ET, 18.06.14) across the country, which are caught licence tenure be the later date of the up in multi-billion dollar tax issues two circles. Vodafone Loop Dispute Settled with the Indian Government In reply the Department of Within 24 hours of blocking Telecommunication (DoT) said that incoming calls from Loop Telecom including Vodafone. (DNA, 28.05.14) operators had to pay the higher of users, which has over 3 million users the two spectrum usage charges on in Mumbai, Vodafone today said it is 100 Million Change Network the combined revenue earned in the restoring their connection to its Around 100 million mobile two circles. They had proposals to network as the two companies have subscribers, about 11 percent of the merge other circles, but couldn’t reached a settlement on country’s cellphone services proceed due to non-availability of interconnection charges. customer base, have ported their spectrum and issues of entry fee and The telecom major said that these numbers, since the Mobile Number they instantly abolished roaming payments from Loop were long Portability (MNP), facility was charge thus benefitting the public. overdue, forcing it to restrict calls. As introduced nationwide over three (ET, 18.06.14) per sectoral regulator TRAI, a mobile years ago. Telecom Regulatory operator on whose network a call Authority of India (TRAI) had Thrust on Telecom Gear up originates has to pay charges of 10 prescribed a porting charge of M19, The Narendra Modi Government paisa a minute to the telecom company among the lowest in the world and plans to make the country a hub for on whose network the call terminates. has also given recommendations for the manufacture of telecom Loop Mobile is in the process of full MNP, which will allow customers equipment as this can significantly transferring its assets and customers to change their operators across any curtail the trade deficit. A structured to Bharti Airtel, under a strategic part of the country. tax set-up, which imposes higher taxes agreement announced in February, In 2011, the porting request on finished capital goods and which is estimated it to be worth M700 rejection rate was around 40 percent, electronics and lower tax on crore. (ET, 17.06.14) 2 April-June 2014 PolicyWatch I N F R A S T R U C T U R E TRANSPORT The areas identified are North-east The Finance Ministry-appointed region, with the exception of committee’s report comes at a time Fair Hike for Railways Guwhati and Bagdogra, all airports in when private-sector investments in Terming the step hike by the Jammu and Kashmir with the the road sector have dried up over the railways in passenger fares and freight exception of Jammu, all airports in past few years. as a “difficult but correct decision” Andaman and Nicobar Islands and Investments have been drying up Finance Minister, Arum Jaitley said Lakshwadeep.