policywatch · inside this issue facebook admits sharing user data .....2 uber elevate to launch...

PolicyWatchPolicyWatchVolume 19, No.3 July-September 2018

Covering developmentson policy responses,policy implementationand policy distortionson a quarterly basis.Comments are welcome.

The Brave NewWorld ofTransportation� Paran Balakrishnan ......... 8

Economy Grew in DoubleDigits Twice in UPA Rule� Asit Ranjan Mishra ....... 11

ANewModel of Distributed,Accessible, AffordableCancer Care in India ........ 20

What will Happen afterthe 2019 Elections?� Arun Maira ................... 23

Published by Consumer Unity & Trust Society (CUTS), D-217, Bhaskar Marg, Bani Park, Jaipur 302 016, IndiaPhone: 91.141.228 2821, Fax: 91.141.228 2485 Email: [email protected], Website: www.cuts-ccier.org

Also at Delhi, Kolkata and Chittorgarh (India); Lusaka (Zambia); Nairobi (Kenya); Accra (Ghana); Hanoi (Vietnam); Geneva (Switzerland); and Washington DC (USA)

�The reformer has enemies inall those who profit by the oldorder and only lukewarmdefenders in all those whowould profit by the new�.Machiavelli in The Prince

H IGHL IGHTS

I N S I D E T H I S I S S U E

Facebook Admits SharingUser Data ............................... 2

Uber Elevate to LaunchAerial Taxi Service in India ...... 3

India Aims for 100GW SolarPower ...................................... 5

Launching India PostPayments Bank ...................... 6

NITI MOVEs on Air Pollution ..10

Kerala Tops in Governance ...16

Deregulation underthe Modi Government

Modi Government is nearing its term-completion � keen to list itsachievements, it has deployed the entiremachinery to spread itsmessage.

One success story propagated by the Government is regulatory reform orderegulation. It involves eliminating archaic laws and rationalizing existinglaws. The objective is to optimize regulatory stock and flow to reduceregulatory burden on different stakeholders.

The government has scrapped1,178 laws.Of these, 335 were Acts amending existinglaws, 16 were Acts repealing existing laws,and 758wereActs authorizing appropriationof funds. All these Acts had outlived theirutility. Only 69 Acts were operational whenrepealed. By Government�s own admission,most of the Acts repealed were irrelevant.The last repeal was in 2015. In 2017, tworepeal and amending Bills were introducedto scrap around 239 Acts. The Bills are yet to be passed.

The Government�s resources are limited and should be used judiciously.Repeal of inoperative legislations might not be the best tool for regulatoryreform when the objective is to highlight it as a major achievement.

In addition to the repeals, the Government has amended 65 existinglegislations and introduced 33 new legislations. Around 39 ordinances havebeen issued. While the new Acts intend to address stakeholders� problems �this is unlikely to happen soon. Interpretation, administration, compliance,and transition-related challenges are keeping affected parties busy, resultingin high compliance costs.

Such ex-ante assessments of objectives, costs and benefits form the core ofregulatory impact assessment (RIA) framework, a globally recognized goodpractice in law-making adopted by different countries. RIA is applied fordesigning new legislations, reviewing the existing laws� effectiveness anddesigning amendments.

For instance, the Government ofMaharashtra issued theMaharashtra CityTaxi Rules to regulate taxis linked with app-based aggregators. Utilizing theRIA framework, we estimated that if the rules are adopted, the per day cost toconsumers and drivers may increase by 40 percent and 93 percent respectively.

Similarly, the Government of Rajasthan is considering amending theRajasthan Shops and Commercial Establishments Act. Based on a rapid cost-benefit analysis, we found that the total net monetary cost to stakeholders islikely to increase marginally.

Several expert committees have recommended RIA for India. At present,the Better Regulatory Advisory Group (BRAG) is considering adoption ofRIA. As member of BRAG, we too have suggested a model for adopting RIA.The Government should consider these suggestions to attain its deregulationagenda and ensure ease of living for all.

This cover story has been abridged from an article by Pradeep S Mehta published in Minton July 17, 2018.

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2 July-September 2018 PolicyWatch

COMMUNICATION

I N F R A S T R U C T U R E

Though a final decision hasn�tbeen made, the deliberations comewhile the United States and India arelocked in a dispute over US tariffincreases and on the Indian policy ofcapping prices of medical devices,which hurtsAmerican pharmaceuticalcompanies.The issue could further

undermine already strained economicrelations between India and theUnited States. (Reuters, 20.08.18)

Vodafone-Idea MergerThe Department of

Telecommunications has givenconditional approval to the mergerof Vodafone India with Idea Cellular,where it has sought overM7,200 crorefrom both companies on account ofone-time spectrum charges andspectrum liberalisation fees.DoT has sought a bank guarantee

of more than M3,300 crore from IdeaCellular for itsOTSCandM3,900 crorefromVodafone India, themarket priceof administrative spectrum less than4.4MHz that was given to the number2 carrier when it began operations.

(ET, 09.07.18)

Price Wars Hurt TelcosThe telecom industry�s annual

revenue could shrink 6-8 percent thisyear as the price war continuesbetween Reliance Jio Infocomm andolder telcos Bharti Airtel, VodafoneIndia and Idea Cellular, whichwill bethe most affected, with realisationsfrom data set to hit rock bottom, sayanalysts.

They expect �the corrosive effectof competition� to cut the combinedgross revenue of the older telcos by14-16 percent in FY19 as they mayfocus on �retaining subscriber marketshare.�A fall in AGR means lower

government revenue because telecomcompanies pay their licence fee andspectrum usage charges based onAGR. The telecom regulator cut theinterconnect usage charge (IUC) forvoice calls by 57 percent to 6 paise aminute, startingOctober 2017, from14paise a minute earlier. (ET, 09.08.18)

Content Providers BenefitContent companies have been the

biggest beneficiaries of the telecomtariff war as the increased dataconsumption has been led by onlinemovies, serials, and sports. Contentproviders like Eros, Shemaroo andSonyLIV have increased their userbase by almost five times sinceReliance Jio brought down data tariffsfrom M225 to M10 per GB after itslaunch in September 2016.�A combination of two factors has

helped drive usage � one is thedecrease in data tariff and the other isthe increase in data speeds, enablingseamless video streaming,� saidHirenGada, CEO and CFO, ShemarooEntertainment.The result is that over-the-top

players are raking in themoolah. OTTcontent is giving users the flexibilityof anytime, anywhere viewership.

(BL, 08.07.18)

Blanket Ban not a RealityThe telecom department does not

intend to impose blanket ban onmessaging apps and platforms, but isseeking technical solutions to curbspecific instances of misuse, TelecomSecretary Aruna Sundararajan saidtoday.The government has taken a stern

view of false news doing the roundson social media platforms, and askedWhatsApp to take urgent measuresto curb the circulation of suchmessages and, more importantly,identify its originators.Taking note of themisuse of social

media platforms, the government is�seriously considering� changes inrules that would require social mediaplatforms to locate their grievanceofficer in India.Such grievance officer would not

only track grievances on real-timebasis but also to inform lawenforcement agencies, Prasad hadsaid. (ET, 23.08.18)

Challenging Data LocalisationUS trade groups, representing

companies such asAmazon,AmericanExpress andMicrosoft, have opposedIndia�s push to store data locally. Thatpush comes amid rising global effortsto protect user data but is one thatcould hit planned investments by thefirms in the Indian market, where thecompanies currently have limited datastorage.

Facebook Admits Sharing User DataFacebook admitted to sharing user data with 52 companies,

including Chinese firms, weeks after it was reported thatthe social media giant formed data-sharing partnerships withcell phone makers, giving them access to details of users andtheir friends.

The social media giant�s acknowledgement came as a partof a more than 700-page document to the US House Energyand Commerce Committee. Facebook yesterday revealed thepartnerships shedding light on its behaviour related tocustomer data in the wake of a scandal involving the Britishpolitical consulting firm Cambridge Analytica, where dataof 87 million people was improperly shared, it said.

The list featured major tech companies such as Apple,Amazon, BlackBerry and Samsung. Other firms that featuredon the list include Alibaba, Qualcomm and Pantech. But the list also includes four Chinese firms that US intelligencehas flagged as national security threats � Huawei, Lenovo, Oppo and TCL. (BL, 01.07.18)

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3July-September 2018 PolicyWatch

TRANSPORT


Scrapping not before 2019The 2019 General Elections seem

to have cast a shadow over the much-talked-about new scrapping policy forcommercial vehicles. The proposal,which was to be sent to the UnionCabinet, is seeing fresh round ofdiscussions.The Road Ministry is engaging

with states to make the policy moreeffective, sources in the know saidadding that the Ministry is alsoconsidering offering interest ratesubvention for buying new vehicles.Based on the parameters such as

usage and emission, over 7 lakhvehicles will have to be scrapped,which is 25 percent of all vehiclesproduced during the period and stillon road. (BL, 12.10.18)

Helicopters Boosting TourismTravelling in theHimalayan states

is set to undergo a sea change withmost tourist hotspots in the regiongetting helicopter services in themonths to come, starting withUttarakhand in October. The trend isalso set to boost the helicopter marketin India, something companies likeAirbus have set their sights on.The government is now in the

process of offering fresh routes underUDAN next month that will seek toconnect iconic cities likeVaranasi andGaya to different towns. Besidesimproving regional connectivity, thegovernment is also working on plansto step up the overall airport andheliport capacity to meet the risingdemand for air travel. (Mint, 19.10.18)

Linking RiversWork on five major river linking

projects, including the one that wouldtransfer surplus water fromGodavarito Cauvery, is expected to commencefrom December, Minister forTransportation,Water Resources andGanga Rejuvenation, Nitin Gadkarisaid.Among the projects, two are

linked to bringing surplus water fromIndravati River, a tributary ofGodavari to Cauvery, to solve thewater woes of Tamil Nadu, Gadkari

said while addressing a nationalconference on new water policyregime for India, organised jointly bythe Shiv Nadar University and ShivNadar Foundation. (BL, 27.10.18)

Powering EV RevolutionIn the emerging electric vehicle

(EV) revolution, two-and-three-wheelers and buses will drive thegrowth over the next 6-7 years.Electric carsmayhaveaminimumroleduring this period, according to awhite paper on EV revolution byEnergyAlternatives India (EAI).Asfar as electric cars are concerned,several things such as range, batterysystems, charging infrastructure,upfront cost are all still majorchallenges.But in the case of two-wheelers,

particularly scooters, the averagedaily distance is well within theavailable range, and the possibilityof charging overnight at home,makesit easier for adoption.In the case of three-wheelers, the

added benefit is the lower runningcost, which could be a big draw forcommercial three-wheelers (especiallypassenger). (BL, 14.10.18)

Drone Do�s and Don�tsWant to fly a drone? Now you

can do it, albeit under a slew ofregulations issued by thegovernment. The new drone policyallows recreational, personal orcommercial use of drones fromDecember this year but with several

riders. The chief one being the dronecan be flown only within the line ofsight of the person using it. Thiseffectively rules out drones being usedfor delivery of goods, a prospect thathad been exciting many.The government has, however,

assured that it would prepareguidelines in future for allowing useof drones even beyond the line ofsight. Drones can be used for a slewof commercial purposes such as aerialsurvey of real estate projects,especially in hills; for personalpurposes such as photography; andfor educational purposes such aswithin colleges for training.

(ET, 28.08.18)

Helmets Save LivesTwo-wheeler accident deaths are

quite rampant in Tamil Nadu, but 2017was an exceptional year whenwearinghelmets was made mandatory.In 2016, 72 percent of fatality in

two-wheeler accidents was due tonon-wearing of helmets but thisnumber came down to 52 percent in2017, because wearing helmets wasmade mandatory and policemenpenalised offenders, according to ananalysis of road accidents and roadsafety measures in Tamil Nadu.Government officials are worried

about the increasing fatalities inaccidents involving two-wheeler. Thereport said that licences of driversinvolved in fatal accidents should besuspended for six months.

(BL, 27.06.18)

Uber Elevate to LaunchAerial Taxi Service in India

In five years you may be able totake a ride from Gurgaon to

Connaught Place in Delhi, or fromMumbai airport to Churchgate in theheart of the city, in a matter ofminutes through aerial e-taxis run byUber.

The taxi aggregator is looking tostart its ridesharing service Uber Airin Delhi, Mumbai and Bengaluru by2023, company officials said. Thefares in the short term are likely tobe around M200 for a km, and Uber believes it could fall to M50 per km.

(ET, 31.08.18)

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OIL & GAS


National Policy on BiofuelsLess than three months of the

UnionCabinet approving theNationalPolicy on Biofuels � 2018, questionsare being raised on the lack oftransparency in adopting the policyboth in terms of technology andfunding.�The government needs to revisit

its policy. India needs to adopt aholistic approach to meet theconsistent targets of ethanol blending,which is at abysmal levels at present,�said an industry observer, terming thepolicy as short-sighted and non-sustainable in the current form.Any gap between supply and

demand can be met through importsand parallely work on adopting newertechnology can continue. And as thedomestic industry is able to meet thelocal demand, dependence on importcan be reduced. (BL, 20.08.18)

Twist in the Petrol-diesel SagaThe government is not against

petrol and diesel but the emphasis isto increase the share of alternate fuelssuch as ethanol and methanol, whichcost lower and are environmentfriendly, Union Road Transport andHighways Minister Nitin Gadkarisaid.The tone of the comment is in

stark contrast to his warning toautomakers last year to switch to

alternative fuel or else get�bulldozed�. The government hassaved M16,000 crore for the Delhi-Mumbai highway by acquiring landin backward and tribal areas inRajasthan, Madhya Pradesh andGujarat. (ET, 06.08.18)

Adani BagsMaximumLicencesAdani won rights to retail CNG to

automobiles and piped cooking gasto households in six cities on its ownand another five in joint venture withstate-owned Indian Oil Corp.Billionaire GautamAdani�s group onFriday emerged as the biggest winnerof gas retailing licences, winningrights to sell CNG in 11 cities,includingAllahabad.�Based upon the bids evaluations

PNGRB in its 79th Boardmeeting heldon 3rd August, approved issue ofLetters of Intent (LoI) to the 18successful bidders for 48 geographicalareas (GAs),� it said. The regulatorsaid bids for remainingGAs are beingevaluated and outcome of the samewill be announced shortly.

(Mint, 03.08.18)

Oil Realities Show the RoadThere�s been a flare-up in the

politics of automotive oil pricing oflate. The Bharat Bandh called byopposition parties was to protestrecord retail prices of diesel and petrol.But policymakers in charge need tostay the course, for now.

We also need to reform andmodernise oil taxes, so as to put paidto the high-cost and cascading tax-on-tax regime at each stage of outputfor the main petro-goods, and bringall petro-products under the goodsand services tax regime, albeit withlimited tax set-offs for oil items, as isthe norm globally.The bottom line is that we must

widen the indirect tax base and notrely so much on oil revenues.

(ET, 14.09.18)

Appealing PCPIR PolicyVizag-Kakinada region has huge

potential due to good connectivity.The Centre plans to revise thepetroleum, chemicals and petro-chemicals industrial region (PCPIR)policy with the involvement of allstakeholders to make it moreattractive, according to UnionSecretary of the Department ofChemicals and Petrochemicals, PRaghavendra Rao.Giving a presentation on the

potential and investmentopportunities in theVKPCPIR,Vice-Chairman of Visakhapatnam UrbanDevelopment Authority (VUDA) PBasanthKumar saidVUDAwas hand-holding the PCPIR project andsufficient land was available for thepotential investors in the anchor unitsin this region.Six SEZs are operating in the

PCPIR region and the Stategovernment is providing allinfrastructural facilities with externallinkages supported by the Centre, headded. (BL, 13.08.18)

Tweak in �Arm�s Length Sale�The oil ministry is considering

redefining �arm�s length sale� for oiland gas contracts to include sale toan affiliate, which would allow aproducer to sell its output to a relatedparty, people familiar with the mattersaid.All contracts related to oil, natural

gas and coal bedmethane (CBM) havethe provision of arm�s length sale,which prevents producers from doingrelated-party sale. In cases whereblocks were awarded without anauction to state firms, the government,not companies, allocates oil and gasto customers. (ET, 10.09.18)

Government to Roll outAlternative Fuel Policy

The new policy will be aimed to supporting the automakers to raiseproduction of battery powered and alternate fuel vehicles, as part of

efforts to trim down the rising oil import bill. Taking note of the industrywide demand, Prime Minister Narendra Modi hinted that the government

will soon come out with anew policy on electricvehicles and alternate fuelunits to strengthen the e-mobility drive in India.

Stating that commonpublic transport must be thecornerstone of mobility, Modisaid that congestion freemobility is critical to checkeconomic and environmental

costs. The summit deliberated on topics such as electrification, reinventingpublic transport, alternative fuels, role of data analytics in goods transportand logistics. (ET, 08.09.18)

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POWER


Policies Hurting Solar BoomIndia� solar power goals are

currently groping in the dark. In thesecond quarter of 2018, the number ofnew solar installations in the countryfell 52 percent compared to the first.Mercom India said the declinewas

expected due to �uncertainties aroundtrade cases,module price fluctuations,and power purchase agreementrenegotiations after record low bidsthat contributed to the tender andauction slowdown in 2017.�Large-scale solar power projects

that account for most of theinstallations fell almost 60 percentfrom the first quarter. However,rooftop installations grew 6 percent.Mercom said that the drop in 2018solar power installations is mostly inlarge-scale projects due to the lack ofa strong project pipeline.

(ET, 03.09.18)

Private Power Now in TNBreaking new ground in power

distribution, Tamil Nadu will soonhave a private licensee for thedistribution of electricity. The StateElectricity Regulatory Commission(TNERC) has permitted the IndiaPowerCorporation (Tuticorin) PrivateLimited (IPCTPL), a Kolkata-basedcompany, to provide electricity tounits in the multi-product specialeconomic zone (SEZ) at Nanguneri inTirunelveli district.The term of the licence would be

25 yearswith retrospective effect from19 January 2017, the date on whichthe IPCTPL was recognised by theCentral government�s Commercedepartment as co-developer. Thismeans that the licence will be in forcetill 18 January 2042. (Quint, 04.09.18)

Power Sector Bad Loans WoesThe Allahabad High Court has

refused to stay the application of thecentral bank�s February circular on thepower sector. Power firmswere hopingto escape the NPA (non-performingasset) tag by seeking exemption fromthis circular, which forced banks tolabel restructured accounts as badloans.

Media reports say the High Courthas asked the government to file anassessment report in two weeks. Ifpower companies are not exempt, theimpact on banks will be severe.The Reserve Bank of India�s

financial stability report had alsopointed to the risk of a substantial risein bank bad loans from the powersector. (Mint, 19.07.18)

EasingMining NormsThe Centre is favourably

evaluating proposals seeking alegislative solution to resume mininginGoa andOdisha. The apex court hadquashed the renewal of 88 miningleases.The Goa State Assembly also

passed a resolution asking the Centreto seek measures to restart mining.One of the proposals on the table isan Ordinance to the Goa, Daman andDiu Mining Concessions (Abolitionand Declaration as Mining Leases)Act, 1987.Mining lobbies said an immediate

resumption of mining in the State canhappen if the Centre tweaks theapplicable date of theAct, effectivelyextending the mining leases.

(BL, 14.08.18)

New Solar Scheme ReadyA new 12 gigawatts solar energy

scheme, which has been deftly craftedto mandate local manufacturingwithout violatingWTO�s trade rules,is in the final stages of approval, andwill help local industry withstand the

onslaught of cheap imports, seniorgovernment officials said.In the latest development of the

safeguards case, the directorategeneral of trade restrictions last weekrecommended up to 25 percentsafeguard duty on imports fromChinaand Malaysia for a period of twoyears. �Even if the safeguard duty isimposed, increased costs can be easilyabsorbed by developers as prices ofChinese solar cells are going tocrash,� the official said, referring tothe recent Chinese governmentdecision to scale down solar capacityaddition. (ET, 23.07.18)

Revised PPA Tariff StructureThe end appears to be in sight for

the issues plaguing the imported coal-based power plants in Gujarat ownedby theAdanis, the Tatas and the EssarGroup. The high-powered committee(HPC) appointed by the Stategovernment in July has suggested thatthe tariff structure of the powerpurchase agreements (PPAs) berevised. The companies had sought arevision since the projects depend oncoal imported from Indonesia.�If power plants are unable to

recover the actual fuel costs, giventhe thin margins, they cannot sustainoperations beyond a few months.Also, they run out of this abilityquicker as coal prices go up, as theyare now, with global coal prices at afive-year high,� saidKameswara Rao,Leader, Power andMining, PwC India.

(BL, 03.09.18)

India Aims for 100GW Solar PowerIndia is confident of achieving its ambitious target of 100 gigawatts (GW)

solar power by 2022 despite the imposition of a safeguard duty onimported solar components, said the top bureaucrat in the ministry of newand renewable energy.

�The problem is thatwhile safeguard duty hasbeenannounced, completeclarity is still not availableon the exact mechanicsand applicability,� saidVinay Rustagi, ManagingDirector at consulting firm Bridge to India. �Some of the on-going tendersare stuck as a result because bids were submitted before duty decision butauctions will happen after the decision date. This uncertainty may last for afew more weeks, unfortunately.� (Mint, 07.08.18)


F I N A N C I A L S E C T O R

in 2017-18 from just 638 pieces a yearago. Counterfeiting was also high inboth M100 and M50 notes.

(DNA, 30.08.18)

RBIagainstErringBankAuditorsThe Reserve Bank of India has

decided to put in place a frameworkto take appropriate action againstbanks� Statutory Auditors (SAs) forany lapses observed in conductingthe audit. The move comes in thebackdrop of bad loans and fraudscoming to light in the banking systemin a big way in recent years.Any enforcement action,

including issuance of CautionaryAdvice, on an audit firm will becommunicated to the Institute ofChartered Accountants of India(ICAI), the professional body of theaudit community, as and when suchaction is taken. The fact of suchcommunication to the ICAI will alsobe placed in the public domain by theRBI. (BL, 29.06.18)

Regulators Frown on LICIRDAI, RBI may not be keen on

the insurance giant turning tobanking. The Finance Ministry saidthe boards of state-owned LifeInsuranceCorporation and IDBIBankwill take a decision on the proposedstake sale. LIC is understood to beconsidering a proposal to buy a 40percent stake in the beleaguered IDBIBank.Observers have pointed out the

added burden that this deal would

Disinvestment CollectionStating that theModi government

had identified about 25 Central PublicSector Enterprises (CPSEs) forstrategic disinvestment, AtanuChakraborty, Secretary, Departmentof Investment and Public AssetManagement (DIPAM) said that thecurrent regime has doubled itscollection from disinvestment in thelast four years comparedwith theUPAregime.The official said that the Modi

government used differentinstruments for disinvestmentsincluding IPO, buy-backs, offer-for-sale and strategic disinvestment.When asked if ONGC will be

privatised in the coming days, theofficial said that currently, 68 percentof the stake in the company wasowned by the government and therest by the public. (IE, 20.07.18)

Counter Feiting UncheckedThe introduction of the new

currency notes has failed to checkcounterfeiting. There was a sharp risein the counterfeit notes of the newdenominated currency notes of M500and M2000, according to the latestfigures put out by Reserve Bank ofIndia (RBI) in its annual report for2017-18.Counterfeits in the newly

denominatedM500 notes rose sharplyto 9,892 pieces in 2017-18 from just199 pieces in the year-ago period. Inthe M2,000 denominated notes, thecounterfeit notes rose to 17,929 pieces

place on LIC, and the public moneythat it has a responsibility to invest.The Centre is looking at options torecapitalise IDBIBank,which sawbadloans rise to M55,588 crore in March2018. The lender had receivedM10,610 crore as capital infusion fromthe Centre in 2017-18. (BL, 25.06.18)

States� Finance under PressurePay revisions, interest payments

and farm loan waivers are stressingstate government finances yet again,the Reserve Bank of India (RBI) saidin a report.States have budgeted a gross

fiscal deficit (GFD) of 2.6 percent ofgross domestic product (GDP) duringFY19, with 11 states budgeting above3 percent, RBI said in its annual reporttitled State Finances: A Study ofBudgets. The revised estimate forGFD-GDP for FY18 stood at 3.1percent.Fiscal 2018 is the third

consecutive year, wherein states havefailed to meet their gross fiscal deficit(GFD) target, the central bank said,adding that this comes despiteexpectations of an improvement onhigher devolution from the centre.

(Mint, 12.07.18)

RBI Favours ARC FormationThe Reserve Bank of India has

seconded the Rural ElectrificationCorporation�s proposal to form anAsset Reconstruction Company(ARC) to take over stressed assets inthe power sector.On the power sector�s request for

a relaxation from the circular thatmandates initiation of liquidationproceedings for a debt servicingdefault beyond 180 days, the RBIstood firm.But, the Department of Financial

Services has decided not to endorsethe RBI�s suggestions. It has citedthe key recommendations of the 37thReport of the Parliamentary StandingCommittee on Energy. The DFS hasrecommended that a high-levelempowered committee look into theproblems of Independent PowerProducers with a view to bring themout of the non-performing asset orstressed asset quagmire.

(BL, 27.07.18)

Launching India Post PaymentsBankPrime Minister Narendra Modi

launched on August 21, 2018the long-awaited India PostPayments Bank (IPPB) that will haveat least one branch in every districtand focus on financial services inrural areas, a senior official said.�Two branches of the bank arealready operational. Rest of the 648branches will be launched acrosscountry in every district�, a seniorofficial said.

�Government is trying to link allthe 1.55 lakh post office brancheswith IPPB services by the end of this year,� the official said. This will createthe country�s largest banking network with direct presence at village level.

(Mint, 06.08.18)

Press

TrustofIndia



Agovernment-appointed committee led by Justice BNSrikrishna prepared a �data protection framework

for India�. NandanNilekani, formerUnique IdentificationAuthority of India (UIDAI) Chairman and Architect ofthe biometric-basedAadhaar identification number, in aninterview emphasized the need for the committee toaddress key issues: including data collection, consentand the need for accountability in cases of misuse of data.

On application of new data privacy law ongovernment and private agencies:There should be a broader law on data protection and

privacy, which applies to everyone and Aadhaar willdefinitely be a part of this. The fact is that we have tothank Aadhaar for bringing in a modern data privacyregime in India.Eight years ago, in May 2010, I wrote to the Prime

Minister, saying that we should have a data privacy lawand I�m glad eight years later, it looks like it�s going tocome. There is a fundamental right to privacy, but thestate in the pursuit of certain social and nationalobjectives, can circumscribeAadhaar.

Although Aadhaar has facilitated a data privacyregime, there are debates onmisuse of Aadhaar:Starting with my letter in May 2010, and then

Department of Personnel and Training took up the matterof drafting a privacy law and then theAPShahCommitteeof whichAshok Pal Singh of UIDAIwas amember. Then,theAadhaar case led to the government saying that therewas no fundamental right to privacy, which went to theSupreme Court (SC) nine-judge bench.

� Edited excerpts from an exclusive interview with Nandan Nilekani, former Unique Identification Authority of India (UIDAI)Chairman. Published inMint on July 25, 2018.

Law on privacy, data protection shouldapply to everyone: Nandan Nilekani

Nandan Nilekani emphasisedthe need to address keyissues, including datacollection, consent and theneed for accountability incases of misuse of data.

The arguments on Aadhaar led to the impetus to firstof all define privacy as a fundamental right, and underwhat conditions privacy can be circumscribed. TheAadhaar Bill was passed by the government, and then theSC upheld the decision ofmandatory linkage of PAN cardswith Aadhaar. Now, there are two important things�thedraft law from the Srikrishna committee and the SCjudgment. All this wouldn�t have happened but forAadhaar.

On how can Aadhaar be regulated to stop themisuse:Aadhaar has a very strong privacy protection. It is

designed for privacy. It�s not a data collectionmechanism.It�s an ID verificationmechanism.The database is federatedand in different databases. Now, with additionalsafeguards that have come with virtual ID, tokenizationand face authentication, Aadhaar is definitely designedfor privacy.

Expectations from the Srikrishna committeereport:There are two things: fundamental right to privacy and

data protection law. The Srikrishna committee report willlay out the framework for data collection, theresponsibilities of the people who collect data, how dothey take consent, what is the accountability of theseorganisations if they misuse the data, and so on and soforth. The real story is about the data empowerment thatis happening in India.

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The Brave New World of TransportationParan Balakrishnan*

� Writes for The Hindu.Abridged version of an article published in The Hindu Business Line, June 27, 2018

It�s clear we�re on the verge of an urbantransportation revolution that couldreshape the bursting-at-the-seams citiesthat we live in and definitively change howpeople get around.

When it comes to bicycling, there�s never been anydoubt the Dutch are world champions. Many pedal

upwards of 1,000 miles a year in the famously flat, low-lying country. In fact, biking is so popular the Dutch nowface a new menace on their roads. Too many cycles �some of them, using electric pedal-power � are causingtraffic jams in bike lanes. Worse, cycle deaths haveovertaken car deaths in the Netherlands. E-bikes are beingblamed for the spike in fatalities.Cross now to Paris which pioneered bike-sharing over

a decade ago. There, two US electric-scooter companies,Lime and Bird, are launching e-scooters and seeking towoo ultra-short-distance commuters who aren�t afraid ofjumping onto a vehicle that�s only just graduated frombeing a child�s toy. The arch-rivals, part of a growing bandof e-scooter start-ups that assert they�re solving the �last-mile� transportation problem, are hoping to replicate inEurope the electric-scooter rental mania sweeping theUS.Even Indian companies are looking to cash in on the

two-wheeler boom. Hero Cycles, has just launched its e-bike, Lectro EZephyr, which is equipped with a throttle togive it scooty-like convenience. Hero is looking atproducing10-12 e-bikemodels. It�s clearwe�re on the vergeof an urban transportation revolution that could reshapethe bursting-at-the-seams cities.

DisruptivemodesHuge money is being poured into the transportation

systems that are competing for space on the road andeven building their own tubes or tunnels that will allowsuper-fast transit at hitherto undreamt of land speeds.These disruptive transportation modes range at the lowerend from electric scooters to electrically-powered cycles.At the other end of the transportation spectrum,

there�s Elon Musk�s Boring Company which promises totransport vehicles on pods at speeds of up to 150mph,and which has just won a contract to build a tunnel fromChicago�s O�Hare Airport to the city�s Downtown Looparea.The transportation system that has caught the eye of

India�s planners is the Hyperloop, which is now beingbuilt by companies like Hyperloop TransportationTechnologies and Richard Branson�s Virgin HyperloopOne. Branson�s company has already signed a deal withMaharashtra to build a tunnel that will take passengersbetween the two cities in 25 minutes flat in magneticallypropelled ground shuttles inside a vacuum tube. The lineis also looking at connectingMumbai�s Chhatrapati ShivajiAirport and the yet-to-be-built Navi Mumbai airport.Maharashtra Government officials say they could haveMumbai-Pune up and running by around 2025.

Dubai is looking at a Hyperloop system that will makethe trip to nearby Abu Dhabi a 12-minute affair. And theSouth Koreans want Hyperloop TT to have a 200-kmhyperloop system in place in four years between Seouland Busan. Evenmore ambitiously, by 2020HyperloopTTis looking at running a service all the way from Vienna toBratislava in Slovakia and on to Budapest. Hyperloop TThas also signed an agreement with Ukraine.The amazing part of all this is that while the Hyperloop

companies have carried out tests on short stretches, theyhaven�t actually put any people into high-speed pods yet.They�re confidently predicting it won�t be difficult becausethe technology�s very similar to the one used by maglevtrains using magnetic levitation that have long been inexistence in Japan, South Korea and China.Still, safety issues remain immense and engineering

challenges are major. The Hyperloop will be working in avacuum inside a tunnel and will be able to hit speeds ofaround 1,200kmph - twice the speed of maglev transportsystems. Costs are also a factor that might stall theseprojects because hyperloop transportation systems havetomove in straight lines. In India that might pose problemsof land acquisition. And underground tunnels would pushup costs hugely. Be that as it may, a brave newtransportation world is dawning globally.

USLibrary

ofCongress



* Abridged version of an op-ed published inMint on September 20, 2018.

Implications of Data MirroringPradeep S Mehta*

The data processed by the companies is not only used offshore to track and profile users,but is also fed as fuel into modern technologies like AI and the Internet of Things (IoT)

Data is the new oil and a driver of growth and change.India is supposed to become data rich before

becoming economically rich. This digital growth is beingpushed by large foreign digital companies. They are largelyfuelled by the data of their users. And they are beingwelcomed by the establishment as is evident by the visitsof the prime minister and Union information technologyminister to SiliconValley over the past few years as part ofthe Digital India campaign.

Indian users today are accessing digital technology-drivenservices not only within India�s national boundaries, butalso outside its jurisdiction. Consequently, these foreignservice providers are free to process the personal data ofmillions of Indians within their own shores. Theadvancement of digital tools and technology in areas suchas artificial intelligence (AI) has enabled them to monitorand profile user behaviour, granting them the potentialpower to influence their decisions through targetedcommunications.

Many experts have been ringing the alarm bells for thepast few years, warning the government of digitalcolonialism by such companies. Data is considered astrategic asset, and data driven network effects coupledwith user feedback loops have given first mover advantageto the more developed western world. The data processedby these companies is not only used offshore to track andprofile users, but is also fed as fuel into moderntechnologies likeAI and the Internet ofThings (IoT),whichare touted to be the drivers of modern manufacturing,service delivery and governance. Perhaps that�s whySilicon Valley is expected to lead the way in researching,implementing and controlling digital technologies -earning it the reputation of being the new Rome.

The Srikrishna committee in its draft data protectionbill has rightly observed that the freedom to share

personal data in the digital economy works selectively inthe interests of certain countries that have been earlymovers. These countries can support a completely opendigital economy without any detriment to their nationalinterests by virtue of their technological advancement. Itgoes on to state that popular websites owned by foreignentities refuse to provide data to Indian law enforcementagencies in many instances. It has also flagged otherrelated critical issues in the realm of personal dataprotection and data sovereignty.

However, it remains to be seenwhether the billwill backfirewith respect to the potential threat of data colonialism.

The path recommended by the committee to accomplishthe feat is mandating local storage of a copy of user�sdata, or data mirroring, something which has not gonedown well with its critics. It has also been argued byindustry players, academia and consumer groups thatmandating data mirroring will raise entry barriers in theIndian market and adversely impact a variety of smallerdomestic stakeholders.

Valid concerns in this regard are based on the premisethat large foreign companies will be able to mobilise

the requisite resources to invest in setting up their datacentres (DCs) within India, though the same may not bepossible for smaller domestic companies. The possibleenhanced costs of setting up or renting such infrastructurealong with the non-availability of cheaper foreign cloudservices may affect their business interests. It may alsoimpact their access to the use of the latest technology.

Such entry barriers, coupled with fears of potential long-term adverse impact on innovation and economic growth,may deepen the existing issues of monopolisation of dataand the digital economy.

Though with the right intention, it seems that thecommittee has taken themost obvious path to achieve

data sovereignty without exploring other and possiblybetter alternatives. The observation of the committeemustbe treated as a recommendation.

There is a need for regulatory impact assessment or cost-benefit analysis (CBA) of the proposed data mirroringmandate before its enactment and implementation. Thiseffectively means that though a draft law has beenformulated, it is yet to be determinedwhether datamirroringwill do more harm than good.

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T R A D E & E C O N O M I C S

India-USmustBoost TradeIndia seeks US partnership to

boost various sectors and grow thebilateral trade to USD 500-600 billionfromUSD125 billion currently, with agood strategy under a stipulated time,said the Commerce and IndustryMinister Suresh Prabhu.�The US-India bilateral trade is

declining for various reasons and weshould not be happy with bilateraltrade of USD 125 billion.Wemust seta clear cut target of USD 500-600billion in a stipulated time period�,mentioned Prabhu.Further, he calledUS to join hands

with India to explore exportopportunities in 54 African nations,where both US and India can jointlypitch for exports of American andIndian products. (ET, 06.09.18)

IBC is a Deep ReformKumar Mangalam Birla, the 51-

year-old chairman of Aditya BirlaGroup, expects the Indian economyto grow between 7 percent and 8percent over the next few years,because of a slew of reforms such asimplementation of goods and servicestax, demonetization and theInsolvency and Bankruptcy Code.�I think we�re seeing improved

levels of governance in corporateIndia and the government.We�re trulyintegrating with the world economy. Ithink there�s a definite deep cut that�shappened and IBC is a deep reform,�Birla said. (Mint, 27.07.18)

Minimum Wage may BackfireThe recent clash between the

Delhi high court and the stategovernment over the quashing of thegovernment�s notification onminimum wages has reignited thedebate on minimum wages in India.Neoclassical economists have longwarned against setting a wage floor,arguing that a government regulatedprice for labour can distort labourmarkets and have the unintendedeffect of reducing employment.This consensus has now begun

to crack, with a number of empiricalstudies suggesting that an increasein minimum wages may not actuallyreduce jobs. (Mint, 07.08.18)

RaisingBusiness EfficiencyThe GST implementation led to

increased efficiency for businessesby reducing their transportation time,on account of absence of statebarriers. One-third of the respondentssaw a downward movement in thewholesale prices of their supplies.Nearly 30 percent of the

respondents witnessed a fall in theretail prices of their supplies, amidconcerns that the tax regimemay leadto a spike in inflation. A majority ofrespondents witnessed no change intheir supply prices. On productioncoverage under the GST, 87 percentof the respondents indicated that theproducts manufactured by them havebeen listed or classified under GST.

(IE, 02.07.18)

Beware of Free E-gift CardsThink twice before accepting e-

gift cards offered online. Fakewebsites entice people with lucrativeoffers and ask them to initiate aprocess to receive the code. Securityexperts say cyber criminals are ableto sell users� data to third-partypartner sites by redirecting themto fake websites for some bogustasks.

The success of these new fraudschemes is based on criminalsexploiting the desire among users toget something for free. Cyber securityexperts warn netizens to be carefulwhile sharing their personal detailsonline. (BL, 30.07.18)

Apple with TRAI�s DND AppApple may comply with the

Telecom Regulatory Authority ofIndia�s (TRAI)Do notDisturb (DND)app in its upcoming version of iOS(iOS 12).Apple had earlier said it hadno intention to do so. However, TRAIstood firm that if Apple has to selliPhones in India, it would have tocomply with the existing norms.TRAI Chairman RS Sharma said,

�We are essentially saying that thesmartphone users should be enabledto complain about UnsolicitedCommercial Communications (UCC).It is not necessary that TRAI�s DNDapp is allowed.Any operating systemcan develop their own application toenable the complaint.�

(BL, 07.08.18)

The government will frame a comprehensive air-pollution policy for cities which is likely to leverage

shared mobility, electric vehicle mobility and zero-emission mobility. �We will come out with acomprehensive policy thatwill address all issues relatedto mobility,� said Amitabh Kant, CEO of Niti Aayog.

MOVE is a global mobility summit being organisedby the Niti Aayog and other stakeholder ministries,including the ministry of road transport and highways.

Through this summit, the government aims toencourage synergiesbetween indigenous industries suchas automobile manufacturing, IT, electronics andtelecommunications and integration with global supplychains. (ET, 30.08.18)

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NITI MOVEs on Air Pollution


T R A D E & E C O N O M I C S

India�s economy grew in doubledigits twice during the previousUnited Progressive AllianceGovernment (UPA) under PrimeMinister Manmohan Singh, 10.23percent in 2007-08 and 10.78 percentin 2010-11, according to back seriescalculations by a committee appointedby the National StatisticalCommission.

However, the average gross domesticproduct (GDP) growth during latePrimeMinisterAtal BihariVajpayee�stime (1998-99 to 2003-04) has beenbrought down marginally to 5.73percent from 5.9 percent.

The calculations have been made bya sub-committee headed by NRBhanumurthy, professor at theNational Institute of Public Financeand Policy (NIPFP), within thecommittee on Real Sector Statisticsheaded by SudiptoMundle, emeritusprofessor at the institute.Bhanumurthy was tasked to link theold and new GDP series through theback series data, which has beenmissing since the government shiftedthe base year to 2011-12 from 2004-05. The missing data had made itdifficult for economists tomake long-term GDP growth forecasts.

The estimates of GDP and otherrelated aggregates for the period

1993-94 to 2013-14 have beencalculated by the committee using aso-called production shift method.Anadvisory committee on NationalAccounts Statistics will now gothrough the calculations before it isfinally vetted by the NationalStatistical Commission.

From1994-95 to2002-03,GDPgrowthunder the new series has been

* Business Journalist at Mint. This is an abridged version of a news item published inMint on August 17, 2018.

calculated to be lower than estimates under the old series, while between 2003-04 to 2011-12, the economy seems to have grown faster than earlier estimated.

The sub-committee observed that in the case of GDP at market price, therevised series appears to be smooth and comparable to the new series.

�However, when we look at the growth rates, there are some differences,although not significant, and this is largely because of the �discrepancy�variable, which is found to be highly volatile,� the committee added.

The real sector committee under Mundle, which also looked into sectoralstatistics of agriculture, industry and services as well as micro-macro datalinkages, recommended that artificial intelligence-based data cleaning and newbig data sources such as internet, andpoint of sale data, should be used byall statistical authorities across thecountry for improving the data base ofthe Indian economy.

The Indian economy grew at theslowest pace in four years at 6.7percent in 2017-18 under the twin blowof demonetization of high valuecurrencies and implementation of thegoods and services tax.

The International Monetary Fund has projected that the economy willaccelerate to 7.3 percent in 2018-19 with investment reviving and

consumption demand remaining strong.

However, growing external risks such as an intensifying trade war and volatileoil prices may hamper India�s growth story, IMF said.

The Indian economy grewat the slowest pace infour years at 6.7 percentin 2017-18 under the twinblow of demonetization ofhigh value currencies andimplementation of thegoods and services tax

Economy Grew in DoubleDigits Twice in UPA Rule

Asit Ranjan Mishra*


R E P O R T D E S K

Male-Female Leader RatioWorldwide, there are less than four

women for every 10men in leadershippositions. In the Asia-Pacific regionincluding India, the ratio dropped to1:10, according to a recent report byMcKinsey Global Institute. In EastAsia, there are only 12-20 womenleaders for every 100men.In India, women�s representation

is 43 percent among tertiary educatedgraduates, 25 percent among entry-level professionals, 4 percent in seniormanagement and 11 percent amongboardmembers.In Australia, New Zealand, and

Singapore, the gender imbalance isnotable. The Philippines, atraditionally matriarchal society only15 percent of the board members arewomen. (IE, 27.06.18)

Urban-rural Mobile OwnershipIndia may well be the fastest-

growing mobile phone market, butthere is a 22 percent gap between itsurban and rural populations in mobileownership and it even trails behindPakistan, Bangladesh and Kenya, anew study says.Kenya has 9 percent urban-rural

handset ownership divide,Bangladesh 7 percent, and Pakistanhas mere 5 percent disparity,according to a study by Sri Lanka-based pro-poor think tank LIRNEasia.India�s urban-rural mobile ownershipdivide is the largest among Asiancountries. About 55 percent mobileusers in the country use basic phonesthat have no Internet access.

Around 16 percent handsets arefeature phones and 28 percent smartphones. The findings are based on asurvey of 38,005 households andindividuals across 18 developingcountries through a 90-minute longengagement.The NDA government has placed

considerable emphasis on growth ofinternet and broadband in the countryas part of its Digital India campaignand indicated India�s internetconnections stood at 431.21million asof June, 2017.While India has lowestInternet penetration, it has highestdata usage. (Mint, 07.08.18)

993 Deaths inMonsoonApart fromKerala, the other flood-

hit states are Uttar Pradesh, WestBengal, Karnataka andAssam.WhileKerala reported the highest loss oflives due to floods nearly 400 deaths,UP saw 204 deaths,West Bengal 195,Karnataka 161 and Assam 46. Thedamage caused to crops, houses andpublic utilitieswas in excess ofM4,745crore annually with 12 percent of thecountry�s geographical area beingflood-prone.The Home Ministry carried out

risk assessment of 640 districts in thecountry and created a nationalresilience index based on performanceof states and Union Territories onDRR measures like risk assessment,risk prevention and mitigation. Thestudy showed that the level ofresilience to disaster was very low andneeded �considerable improvement�.

(ToI, 27.08.18)

India�s Economic is an ElephantIndia has achieved rapid progress

in the four years of the NationalDemocratic Alliance (NDA)government, becoming the sixthlargest economy in the world and isnow going to power global growth,PrimeMinisterNarendraModi said onIndia�s 72nd Independence Day. IMFmission chief for India Ranil Salgadorecently described India as an elephantthat has started running, with itseconomy projected to grow at 7.3percent in 2018-19.IMF trimmed India�s growth

projection for 2018-19 by 10 basispoints in July, citing negative effectsof higher crude oil prices on domesticdemand and faster-than-anticipatedmonetary policy tightening becauseof higher-than-expected inflation.

(Mint, 15.08.18)

Delhi most Investor FriendlyDelhi replacedGujarat as themost

investor-friendly state in the latestNationalCouncil ofAppliedEconomicResearch (NCAER) State InvestmentPotential Index (N-SIPI). N-SIPI 2018has been constructed on the basis ofsix pillars under four broad categories- factor-driven (land and labour),efficiency-driven (infrastructure),growth-driven (economic climate, andpolitical stability and governance),and perceptions driven (responses tothe surveys).This is based on extensive survey

conducted covering 1,049 industrialunits across 20major states andDelhi.

(Mint, 03.08.18)

India Lost One-third of Coastlineto Soil Erosion in 1990-2016

West Bengal and Puducherry coastlines aremost vulnerable to erosion, according to the report

Almost one-third of India�s 6,632km coastline was lost about 234.25 sqkm of land to the sea due to soil erosion between 1990 and 2016, said

a National Centre for Coastal Research (NCCR) report. The report, NationalAssessment of Shoreline Changes along Indian coast, which mapped theshoreline changes along the Indian coast for the last 26 years, found West

Bengal (63 percent) and Puducherry (57 percent) are most-vulnerable to erosion, followed by Kerala and TamilNadu at 45 percent and 41 percent, respectively.

Odisha on the eastern coast is the only state witnessed expansion of more than 50 percent. Coastal populationwill bear the maximum brunt of coastal erosion, especially villages and recent habitations, including buildings,hotels and resorts which are at risk, according to NCCR. Dams on river basins have reduced the flow of sedimentsto the coasts. Such analysis would help in improving preparedness to face coastal hazards such as storm surges andTsunamis. (Mint, 15.08.18)

Reuters


USSecretary of StateMike Pompeo and Pentagon chiefJimMattis visitedNewDelhi in September first week

for an inaugural set of high-level meetings. It is anothersign the West wants to deepen cooperation with India asa hedge against China.But former Indian officials say an understaffed foreign

ministry is holding back PrimeMinister NarendraModi�splan to seek greater global influence in line with hiscountry�s fast-growing $2.6 trillion economy. The nationof 1.3 billion people only deploys around as manydiplomats as New Zealand, which has a population ofaround 5million.The need for a well-staffed foreign ministry in New

Delhi is only growing more urgent, particularly as USPresident Donald Trump�s administration emphasizesoutreach to the �Indo-Pacific� region in a bid to elevateIndia as a counterweight to China. New Delhi has startedtaking a leading role in pushing back against China�s Beltand Road infrastructure initiative, which is encroachingon India�s South Asian backyard.India also has lots of unfinished goals. It is angling

for a permanent seat on the United Nations SecurityCouncil and membership in the Nuclear Suppliers Group,while trying to defend the global mobility of its ITworkersoverseas as protectionism rises.With roughly 940 foreign service officers, India has

one of themost understaffed diplomatic corps of anymajorcountry. It is just slightly higher than New Zealand�s 885officers, or Singapore�s 850. It�s vastly outnumbered bythe Japanese and Australian services of around 6,000people, the estimated 7,500 diplomats of rival China andthe US State Department�s service of nearly 14,000.

We need the manpowerIndia�s foreign ministry is aware of the shortage has

increased recruitment to around 35 new officers annuallyand borrowed defense and economic experts from otherministries on deputation. In 2016, it was still 140 officersshort of its sanctioned strength of 912 diplomats. It hasalso failed to conduct mandated reviews of its foreignservice every two years. The last review had taken place12 years earlier, in 2004.India has been unable to reciprocate the opening of

embassies in many Latin American countries because ofa shortage of Spanish-speaking officers. Many Indianembassies abroad also have only one ambassador andone other international diplomatic-rank officer, leading to

India has 1.3 Billion People,but Fewer than 1000 Diplomats

Iain Marlow*

* The Writer is a correspondent for Bloomberg News, New Delhi.This article is an abridged version of a feature published in Bloomberg Quint on August 31, 2018.

R E P O R T D E S K

functions being performed by lower-level or local staffthat is mostly under-qualified for the assigned task.The quality of candidates choosing the Foreign

Service has declined.As foreign travel has become morecommonplace and the glamour of diplomatic service hasfaded, talented candidates have started choosing to joinIndia�smore powerful administrative, tax or police services.The shortage is particularly pronounced at a timewhen

Modi has increased his foreign travel, visiting nearly 60countries in just four years. Modi has made five visitseach to the US and China and four visits each to Russiaand Germany. But thin staffing makes it difficult for Indiato follow up on his headline-generating outreach.

Stable allyHowever, western allies view India as a reliable

democracy in a tricky neighborhood. Though NewDelhilacks Beijing�s cash, the country still makes loans tocountries in South Asia and Africa as it hopes to expandits influence. In March 2018, Modi approved plans toopen 18 new missions inAfrica between 2018 and 2021,including one inDjibouti, where China has amilitary base.

Colonial-era examThe shortage of diplomats persists, however, due to a

bureaucratic hiring process in which the ministry can takeonly those who pass India�s colonial-era civil servicesexam. Many think the time has come for a broaderexpansion and reform process that opens up the ministryto more short-term consultants and experts, even if careerforeign service officers have generally pushed backagainst these moves.

www.aadhim

arg.com


C O R P O R A T E G O V E R N A N C E

Inverse Cadre of Independent, Non-executiveDirectors: The Directors� Collective

* This article has been taken from Prnewswire.com published on September 13, 2018.

traditional, old-economy businesssectors such as industrials andmaterials, the average age of theoldest board member is 96 years.

The collaboration is designed to guidecorporate directors in carryinggovernance and complianceresponsibilities as India Inc. preparesfor the complex demands placed uponboardmembers and senior executivesby the Companies Act, 2013, thelisting regulations of the Securitiesand Exchange Board of India, andother upcoming industry-specificregulations.

The Directors� Collective isassembling a holistic suite ofknowledge assets � encompassingeducational publications andbenchmarking research; immersiveworkshops, webcasts and othertraining programs; and peernetworking groups. The acceptanceof several Kotak Committeerecommendations is expected to helpmove the needle towards morebalanced, independent and effectiveboards in organizations across thecountry. Over a period of time, thiswill be a key enabler to deliverunlocked value for shareholders.

Over the last few years, Indiancompanies have increasingly

embraced the notion of independentboard leadership promoted by manycorporate governance codes aroundthe world. Still, CEO duality (thepracticewhere the CEO also holds thepost of board chair) continues to beobserved in nearly a third of theNIFTY500companies and, evenwhenthe two roles are separate, the chair israrely an independent director.Acrossindustries, 31.4 percent of CEOs alsolead the board of directors, with thehighest numbers in sectors such asreal estate, where the promoter-ownership structure is prevalent. Ofnon-CEOchairs, only 17 percentmeetindependence standards. Undernewly issued recommendations by theSecurities and Exchange Boardof India (SEBI), however, it will soonbe mandatory for top-500 listedentities to ensure that the chairpersonbe a non-executive director.

The demand for a cadre ofprofessional board members, whichthe country is still developing, is likelyto increase, prompting companies toconsider candidates with a wide arrayof backgrounds and skills. These aresome of the findings from CorporateBoard Practices � 2018 IndiaEdition, which was published by TheDirectors� Collective�, a partnershipamongTheConferenceBoard,KPMGin India, and Russell ReynoldsAssociates.

The report is a comprehensive reviewof board composition, governancepolicies and executive remunerationdisclosuremade by Indian companiesthat are publicly traded in the NIFTY500 index. It was designed as apractical resource for directors,general counsel, and companysecretaries interested in remainingapprised of corporate governancetrends and in benchmarking theircompany�s practices against its peers.

This study, in particular, signals theimportance for organisations toinstitute a rigorous process for boardrefreshment and director recruitmentso as to meet new regulatoryexpectations for independence anddiversity.

Other key findings include:� Progress on director engagementhas been tangible, but companiesshould consider making better useof newly allowed technologies toimproveboardmeeting attendance.

� To increase the effectiveness ofmanagement oversight, companiesshould pursue a new generationof business talent for their boardmembership. Data shows that theaverage age of directors exceedsinternational standards, withseveral directors in their ninetieswho continue to serve on the basisof a special resolution exemptingthem from statutory rules. In

Corporate GovernanceDevelopments in India are FuelingDemand for a Diverse Cadre ofIndependent, NonexecutiveDirectors, concludes new report byThe Directors� Collective�

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G O V E R N A N C E & R E F O R M S

Branding change is a lot easier than showcasingperformance, especially in politics.And this is the big

challengeBJP has taken upon itself for 2019 � to politicallybrand sarkari initiatives, key reforms, schemes and doles.

So, what�s new?After all, previous governments have alsosought re-election on similar grounds. The change is inthe execution. For the first time, we have the party edificetaking the lead in the exercise to brand the performance ofits government.

The logic, of course, is to ensure effective political branding,which is usually a casualty when dealt out by thegovernment�s own publicity machinery. Yet, the earliergeneral consensus was that the GoI set-up had betterpenetration and reach to carry the message than ad hocparty structures, often hampered by ground-level internalbickering and patronage.

The reincarnatedBJP, however, boasts of amore committed,better oiled systemwith deeper reach, down to every pollingbooth, of the kind which is currently unparalleled by anyother party. Perhaps, the only comparison could be withthe CPI (M) in its prime inWest Bengal.

Congress, ever since Indira Gandhi, has largely dependedon the government system. In fact, theNehru-Gandhi familyhas traditionally trusted the GoI set-up, includingintelligence agencies, more than its party loop largely dueto the conspiring nature of Congress�s internal politics.

BJP, on the other hand, appears far more self-contained-which iswhywhen the first phase of theGramSwaraj

Abhiyan, aGoI initiative to ensure 100 percent achievementof seven schemes in targeted villages was completed, theclaimwasmade from theBJP headquarters. Party PresidentAmit Shah gave out the figures himself from the first phase,and announced the launch of the second phase.

At the core of this enterprise is the unison in leadershipbetween government and party. This has led to seamlesscoordination at all levels. Cabinet ministers are nowrequired to be present in the party office on designateddays.Asort of working roster has been created with juniorministers also taking turns.

Chief Ministers of BJP-ruled states come to Delhi for aperiodic review with not just the PM, but also the partypresident. The objective: there should be no gaps in policy-planning, mirroring and execution between Centre, partyand state government.

* Deputy Executive Editor, The Economic Times.Abridged version of an article published in The Economic Times on September 10, 2018.

This is in sharp contrast to, say, NDA 1, when eventhough the late Pramod Mahajan ran an electrifying

�India Shining� campaign, there were just toomany powercentres, starting with RSS, LKAdvani and other factions,to achieve the kind of unity of purpose needed for BJP tobreak new ground in states where it wasn�t strong.

Modi and Shah bring a completely new equation to thetable, where clearly the PM is the principal power centre,but the party president is clearly established as Number 2.

Having said that, the political branding of governmentinitiatives as the mainstay of a campaign will requireconsiderable innovation, given that party structuresusually work on polarising caste and religious groups.But this time, BJPhas realised that there�s more to gain bybranding the government. First, it�s the clearestassociation with Brand Modi, which is what theunquantified �Modi voter�will seek to identify.

Next, by having the first-mover advantage, BJP is ableto own schemes like PradhanMantri UjjwalaYojana

and Ujala (Unnat Jyoti byAffordable LEDs forAll) in thestates. Regional parties have, in the past, successfullyrebranded central schemes to show it as their own forpolitical benefit. On that score, not only has BJP pushedthese parties on the back foot, it has also, throughAyushman Bharat, eclipsed other, more elaborate healthschemes in other states.

Finally, the pro-poor push through GoI schemes alsoattempts to ring-fence disparate caste groups that votedfor BJP and belong to economically underprivilegedsegments. This will give BJP a new dedicated class ofvoters � or so it hopes, even for the future.

Either way, it�s a new strategy, one where the party, notthe government, is at the heart of governance propaganda.The outcome, undoubtedly, will also deliver its own set ofunknown power variables.

BJP has Party, not Government, at theHeart of Governance Propaganda

PranabDhal Somanta*

DNA


G O V E R N A N C E & R E F O R M S

Government to Launch Enterprise-level SurveyThe government is looking at various data sources and has started

releasing enrolment data for Employees Provident Fund Organisation(EPFO) as an indicator. As per latest data, 41.26 lakh enrolments wererecorded in the EPFO database for Sept 2017-April 2018.The government has already launched a new employment survey called

Periodic Labour Force Survey, whichwill replace theAnnual EmploymentandUnemployment Survey undertaken by the Labour Bureau. This surveyis being conducted by NSSO and it will provide estimates of variouslabour force indicators on quarterly basis for urban areas and annualbasis for both rural and urban areas, at State/UT and all-India level.

(IE, 04.07.18)

Law Ministry Concerned over Simultaneous PollsTheUnionLawMinistry has sought answers from theLawCommission

to threemain issues regarding the holding of simultaneous elections acrossIndia about the rationale of reducing cost, whether the move might�undermine the depth and the democratic fabric of Indian polity� andwhether the model code of conduct affected developmental work.On the issue of model code of conduct, the ministry has said that it is

argued in favour of simultaneous elections that onceMCC is imposed �alldevelopmental activities come to a standstill in the state� and added that�consequently, frequent elections have a deleterious effect on the social-economic development of the states.� (ET, 27.06.18)

Robust Policy and Good Governance CrucialFormerWorld Bank Chief Economist Nicholas Stern said the next 20

years will be decisive in the world history and there is need to have�robust policy� and �good governance� to provide clear and convincingsignals. Elaborating on the theme of sustainable infrastructure, Stern saidsustainable infrastructure is crucial and lies at the core of inclusive growth,the sustainable development goals and climate change.Stern Review Report on the Economics of Climate Change, produced

by a team led by Stern � released in October 2006 � says that climatechange is described as an economic externality which is the largest evermarket failure. (IE, 26.06.18)

C A G N E W S

CAG Pulls up Water MinistrySixteenmajormulti-purposewater

projects, taken up on an expeditiousbasis about a decade ago, are nowherenear completion, with no work beingundertaken in as many as 11 projects,said Comptroller and AuditorGeneral�s (CAG�s) report. This isdespite the incumbent government�smuch-wanted focus on improvingirrigation facilities in the country.All 16 major water resource

development and irrigation projectsundertaken under the AcceleratedIrrigationBenefits Programme (AIBP)in February 2008 �were languishingdue to land acquisition, inter-Statecoordination, financial constraintsand issues relating to rehabilitationand re-settlement of affectedpopulation�, the government auditorstated. (BL, 20.07.18)

Delay in Trains ProbedIn 2017-18, Indian Railways had

the worst punctuality performance inthree years. About 30 percent of thetrains ran late in 2017-18, accordingtoofficial data. FromApril 2017-March2018, the punctuality of mail andexpress trainswas 71.39 percent, downfrom 76.69 percent in 2016-17, whichis a deterioration of 5.30 percent.When CAG looked into the

reasons for this delay, it found someserious flaws in government�sM1 lakhcrore station redevelopment plans.There is not enough space for trainson stations which is the main causeof delays. (DNA, 10.08.18)

Budget EstimateWoesThe CAG has pulled up the

Chhattisgarh government for �over-budgeted� estimates in 2016-17,saying the government shouldprepare the budget as per the actualneed.The finance department should

rationalise the budget preparationexercise so that the persisting gapbetween budget estimates and actualsis bridged, Principal AccountantGeneral (Audit), Chhattisgarh, BijayKumar Mohanty said. Thegovernment should prepare thebudget as per the actual need andensure its optimum utilisation, headded. (moneycontrol.com, 13.09.18)

Kerala Tops in GovernanceKerala stands as the best governed state in the country and

Karnataka is in the fourth position, said the Public AffairsIndex 2018 released by the think tank Public Affairs Centre (PAC)here. Tamil Nadu, Telangana, Karnataka and Gujarat followedKerala among the top five states delivering good governance,according tothe report.R e l e a s e dannually since2016, theindexexaminesgove rnanceperformance inthe statesthrough a data-based framework, ranking them on social and economicdevelopment they are able to provide.

Founded in 1994 by renowned Indian economist and scholarlate Samuel Paul, the think tank works to mobilise a demand forbetter governance in the country (NIE, 22.08.18)

www.indianexpress.com


P A R L I A M E N T A R Y R O U N D U P

RS Passes Amendments toAnti-corruption Law

Remya Nair, Gopika Gopa Kumar & Pretika Khanna*

* Authors are associated with Live Mint.Abridged version of an article published inMint on July 19, 2018.

In a move aimed at providing reliefto bankers and helping them takebusiness decisions without fear, theRajya Sabha passed the PreventionofCorruption (Amendment)Act, 2013.The Bill was finally passed with 43amendments to the original Billincluding an extension on the periodfor citizens to report the bribe given(from 7 to 14 days) and replacementof the Lokpal/Lokayukta with a�competent authority� for who wouldsanction a probe against a publicservant, among other provisions.

This move comes at a time whenbankers are facing intense scrutiny fortheir lending decisions with manyformer and current bankers arrestedby investigative agencies over loansthat have now turned non-performing.Bankers have been awaiting theamendments for a long time and haveargued that they should not beprosecuted for lending decisionsmade honestly.

The amended Bill proposes a�shield� for government

employees, including those retired,from prosecution by making itmandatory for investigating agencieslike theCBI to takeprior approval fromcompetent authority beforeconducting any enquiry against them.

These amendments were first broughtby the UPA government in 2013.According to the amendments, a

police officer will now have to takeprior permission from appropriateauthorities while pursuing cases.Further, bankers cannot be pulledunder the corruption law unless theyhave accumulated assetsdisproportionate to their income orhave misappropriated assetsentrusted to them.

�The amendment to Prevention ofCorruption Act is a welcomedevelopment and brings comfort tobankers who have discharged theirduties in a bona fide manner,� saidRajnishKumar, Chairman, StateBankof India.

The Prevention of Corruption(Amendment) Bill, 2013 amends

the archaic Prevention of CorruptionAct, 1988. The bill will now go to theLok Sabha for the Lower House�snod.

According to the provisions of theBill, criminal misconduct will nowinclude only two offences �misappropriating of propertyentrusted to you as well as amassingassets disproportionate to knownsources of income.

�The need for prior permission froman appropriate authority beforepursuing investigations works infavour of the bankers�, said a personfamiliar with the development.

This move comes at a timewhen bankers are facingintense scrutiny for theirlending decisions with manyformer and current bankersarrested by investigativeagencies over loans that havenow turned non-performing

www.scroll.in/

�Under the older law, even providinga pecuniary advantage is a criminalmisconduct. By that definition, even aloan given by a banker can be definedas providing pecuniary advantage�,the person mentioned above said.

Last month, the Pune Policearrested Bank of Maharashtra

managing director and CEORavindraMarathe, besides other officials, in analleged M2,000 crore scam, involvingreal estate developer DSKulkarni.

It said the provisions of the law underwhich the arrests were made do notapply to banks. There have beenmanyother instances of probes againstbankers � both serving and former� including one against former IDBIBank executives Kishor Kharat andMelwyn Rego over aM600 crore loanto C Sivasankaran�s firms and anotheragainst former Canara Bank chairmanand managing director S Raman in acase relating toWinsome Diamonds.

Anand Sharma, Deputy Leader ofthe Opposition in the Rajya

Sabha pointed out that no Lokpal hasbeen appointed by the NarendraModigovernment and that the provision oftaking prior permission fromLokayuktas or Lokpals for proceedingagainst public servants has become anon-starter. Instead, it would bepreferable if the power to grantpermission lies with the government,he said.


E X P E R T C O R N E R

India�s FocusonNutritionSecurityIndia�s focus needs to shift from

food security to nutrition security sothat attention is paid not only to caloriesand proteins but also to micronutrients,renowned geneticist MS Swaminathansaid.He said that if one wants healthy

mothers and children, there needs to beeradication of three kinds of hunger �protein hunger, caused by deficiency ofprotein, calorie hunger, caused bydeficiency of calories, and hiddenhunger caused by deficiency ofmicronutrients such as iodine and iron.

�I strongly believe we need tomovefrom food security to nutrition security,where not only calories and proteinsbut also micronutrients are taken careof�, he said. (BL, 20.08.18)

Income Support Help to FarmersPolicymakers are using the wrong

instrument to support farmers and theright one would be to use an incomepolicy to keep them afloat, said notedagricultural economistAshok Gulati.�When prices collapse, if you want

to help farmers who have been affected,don�t tweak the price policy; insteadgive them direct income support. Thatway you don�tmess upwith themarket,�said Gulati, who is Infosys Chairprofessor at ICRIER, said.Today, it is not demand and supply

determining the prices of agri-commodities but the pricing policyadopted by the government. This is notsustainable, he said. (BL, 06.09.18)

Weak but Potential InnovatorIndia is weak in innovation but has

the potential to improve its positionwithincrease in investments in research,Minister Counsellor inDelegation of EUto India Tania Friederichs.�We have looked at a couple of third

world countries and according to allrankings... India is a very weakinnovator but of course the potential isthere. We do see a very quickevolution,� he said.At the event, ICRIER and European

Business and Technology Centrereleased a joint white paper on India asan innovation economy, which showedthat India�s rank on the networkedreadiness index has plummeted to 91stposition in 2016. (ToI, 27.06.18)

E D U C A T I O N S E C T O R

UGC to be ReplacedThe Central Government uploaded a draft law on replacing the higher

education regulatory authority, University Grants Commission, with a newregulator and sought feedback from various stakeholders. The proposedregulatory authority will be freed of funding activities and will focus solelyon academic matters.Funding and grants will be dealt with directly by the ministry of human

resource development. The new bill is likely to be tabled during themonsoonsession of Parliament.The draft law, called theHigher EducationCommissionof India Act, 2018 (Repeal of University Grants Commission Act), wasuploaded on the HRDministry website. (ToI, 28.06.18)

Blockchain Solution for Education SectorOne of the biggest challenges recruiters and higher educational

institutions face is ascertaining the authenticity of the school and collegecertificates of the candidates.With the incidence of doctored certificates growing, recruiters and

companies have been seeking the help of verification companies, which arefound to be not too well-equipped to identify the fake certificates.Zebi Data, a start-up building blockchain technologies, for various sectors

such as revenue and hospitality, has built an exclusive blockchain platformfor the education sector.TheEduChain platformhas already bagged the IIIT (International Institute

of Information Technology � Basar) as a client for deploying the platform.(BL, 06.08.18)

Vocational Training RegulatorIndia may soon have a separate regulatory agency on �vocational

training�, providing much-needed fillip to the country�s skilling efforts.This new regulator, which is likely to soon get the approval of highest

level of government, will look to bring �quality enforcement� of variousskilling initiatives through the mechanism of regulating the awarding body,official sources said.However, the new regulator will not look to regulate the training provider,

they said. Indications are that two existing semi-regulatory bodies are likelyto bemerged to create the new regulatory body. Currently, nearly 95 percentof all skilling-related spends of India are from public funds. (BL, 19.07.18)

Free, Non-discriminatoryEducation

Education for all and to universalise it was our national goal afterindependence. The architects of our Constitution made education

for all till elementary level between the age group of 6 to 14, a DirectivePrinciple of State Policy enshrined in part-IV of the Constitution.

Thus it has becomeour constitutionalobligation to put theideals into practicewhich was later ontranslated into action bythe Constitution (EightySixth Amendment) Act,2002.

Under Article-21 (A)right to education has now become a part of fundamental rights whichspeaks in unequivocal terms that �the State shall provide free andcompulsory education to all children of the age of 6-14 years in suchmanner as the State may by law determine.� (Pioneer, 14.09.18)


H E A L T H S E C T O R

Ayush in Health ServicesIntegration of ayurveda, yoga and

other Ayush systems in the deliveryof health services is one of the thrustareas of the Indian government, UnionMinister SripadYessoNaik said as theInternational Ayurveda Congress(IAvC). Insurance coverage has beenextended to Ayush treatments and 27companies are offering 140 healthpolicies to beneficiaries in India, Naiksaid after inaugurating the fourth IAvCat Leiden in the Netherlands.Ayush refers to traditional and

non-allopathic medical systems inIndia. It includes ayurveda, yoga,unani and siddha, and alsohomeopathy. �Today, more than 27insurance companies are offering 140health insurance policies for Ayushbeneficiaries�, Naik said. (ET, 01.09.18)

Ministry Mum on J&JUnion Health Minister J P Nadda

maintained silence on the controversysurrounding the US pharma majorJohnson and Johnson�s faulty hipimplants that have allegedly cripplednearly a hundred Indian patients.When asked about the findings of theexpert committee, and if J&J will bebrought to book, Nadda said, �We aredeliberating upon the committeefindings.�For close to six months now the

Health Ministry is sitting over theexpert committee report.When askedwhy the crucial and critical report ofthe committeewas notmade availablein the public domain,Nadda said: �Weshare your concerns, however we arestill deliberating upon the matter.�

(BL, 27.08.18)

Implants/Stents to Face CapsThe government is planning to

control prices of medical devices byrestricting their trade margins, adeparture from the existingmechanismof capping prices. Once the newmechanism is decided, it will apply todevices such as cardiac stents andknee implants. The drug pricingwatchdog slashed the prices of totalknee replacement systems and theirindividual components by as much as69 percent.The move had drawn severe

criticism from the medical devices

industry, which claimed that thegovernment move would curbinnovation. This decision is expectedto lead to a saving ofM1,500 crore peryear for the people of India.

(Mint, 13.08.18)

Trade Margins CappedIndia is set to cap trade margins

on medical devices, abandoning thecurrent price control mechanism, as itseeks to curb profiteering as well asallay concerns of device makers,particularly importers of stents andknee implants, who have complainedthat price caps hurt innovation, twopeople aware of the matter said.Prime Minister Narendra Modi is

likely to accept government think tankNITIAayog�s recommendation to captrademargin at 65 percent formedicaldevices.According toNITI�s formula,the maximum retail price of a devicewill be decided by adding the trademargin to the price at the first point ofsale. (Mint, 23.09.18)

India�s Health Care CrisisIndia spends just a little over one

percent of its GDP on healthcare andthis is leading the country into �acomprehensive healthcare crisis�,according to Amartya Sen, who hascalled for greater allocation onhealthcare in India and highlightedwhat he calls �three general failures�in the country�s healthcare segment.�If India�s bad record in

healthcare is not much discussed inthe Indian press, this neglect does notindicate the presence of a tolerablelevel of healthcare in India, butreflects instead the narrow reach ofthe Indian news media, with itstraditional neglect of elementaryeducation and healthcare,� writes the84-year-old economist.Also, Sen blames MCI for not

only failing to perform its duties butalso for its designated role of lookingafter medical colleges.

(ndtv.com, 10.07.18)

Swachh Bharat Saving KidsThe number of child mortality

under the age of five in India declinedto802,000in2017fromaround1milliontwo years ago. Close to 200,000 liveshave been saved.

Health Policiesto Cover Mental

IllnessThe Mental Healthcare Act, 2017,

which came into force in Mayof 2018, says that every insurer shallmake provisions for medicalinsurance for the treatment ofmentalillness on the same basis as isavailable for treatment of physicalillnesses.

Reference is drawn to the MentalHealthcare Act, 2017 which hascome into force wef 29.5.2018. Asper Sec 21(4) of the said Act, everyinsurer shall make provision formedical insurance for treatment ofmental illness on the same basis asis available for treatment of physicalillness.

Mental health benefits cannothave more restrictive requirementsthan those which apply to physicalhealth benefits. (ET, 22.09.18)

www.canva.com

Safe drinking water, an insistenceon hand-wash, food safety, and theuse of toilets to stop open defecationare all factors that lower diarrhoealdeaths, which account for roughly 8percent of the more than 802,000under-five deaths in India in 2017, saida UN report.More than 85.2million toilets have

been built in rural India since thelaunch of Swachh Bharat Mission(Gramin) in 2014, and 459 of thecountry�s 718 districts have beingdeclared open-defecation free.

(HT, 21.09.18)


H E A L T H S E C T O R

A New Model of Distributed, Accessible,Affordable Cancer Care in India

India has a huge burden of cancer with 1.45million newcases reported in 2016, a number expected to grow at arate of 4-5 percent annually.Approximately 70 percent ofcases are reported at a late stage of disease. There issuboptimal access to quality cancer care in India, with themajority of cancer patients travelling long distances to betreated in centres of excellence.

In Tata Memorial Centre, Mumbai, Maharashtra, themajority of cancer patients were from other states of India.This leads to high out-of-pocket expenses for patients andtheir caregivers due to travel costs, which in turn translatesto high drop-out rates before completion of treatment. Astudy in 2015 found that 42.6 percent of all patients thatdropped out did so due to financial or logistical reasons.

Low levels of public health care expenditure, approximately1.4 percent of gross domestic product, and lack ofinsurance coverage are major factors that result in highhealth care costs for individuals and their families. Healthinsurance penetration levels in India stand at an abysmallylow rate of 27 percent as against 100 percent coverageinsured under publicly financed health care systems indeveloped economies such as the United Kingdom.

In order to change the current cancer care landscape inIndia, the Tata Trusts � one of India�s oldest, non-sectarian philanthropic organisations, which deploysfunds towards a whole range of community developmentprograms across � is working in partnership with multiplestate governments and central government to roll out astep-down, distributed cancer-care model.

The infrastructure development is being underpinned bymajor programs in health promotion, cancer awareness,prevention, screening, and early detection, thereby shiftingthe stage of first presentation of the disease from late stageto early-stage cancer. This will result in reduction ofmortality, and cost savings for the health care system thatcan then be passed on to the patients in terms of lowerinsurance premium or lower cost of procedures for theuninsured.

* Abridged version of an article published inDevex.com on September 13, 2018.

Asa result of poor penetration of the public insuranceschemes, in 2013-14, household health expenditure

in India was estimated at 2.72 percent of GDP andaccounted for 67.74 percent of total health expenditure.

A significant part of cancer patient�s expenditure ismedicines. A study of cancer drug prices in sevencountries found the lowest drug prices were in India andSouth Africa. But after calculating price as a percentageof wealth adjusted for the cost of living, cancer drugsappeared to be least affordable in India and China.Although the government has regulated pricing policy ofdrugs in India, loopholes are yet to be addressed.

As a percentage of cost of goods sold, the average supplychain cost of the pharma industry in India is 25 percent andthe �best-in-class� pharma in India has a cost of 18 percentas compared to 10 percent for both best-in-class pharmaand best-in-class fast-moving consumer goods, globally.Hence, pharma companies in India need to establishcentralised distribution systems to cut out theinefficiencies, ensure on-time delivery, and improve accessas a whole for their drugs to penetrate the Indian market.

Given the high incidence of cancer, the inadequatenumber of cancer treatment centres and the high

treatment cost, it is imperative that developmentorganisations integrate their efforts in cancer control withthe public health care system.

Cancer care needs to be embedded in the communitythrough a distributed care delivery system, therebyrendering long periods of hospitalisation unnecessary. Inorder to achieve these goals, innovation in a model ofdistributed cancer care, intensive efforts towards cancerprevention and early detection, and radical new policieson procurement and pricing of medical consumables anddrugs are just a few measures that are necessary to makecancer care accessible and affordable in India.

Given the high incidence of cancer, theinadequate number of cancer treatmentcentres and the high treatment cost, it isimperative that developmentorganisations integrate their efforts incancer control with the public healthcare system.


C O M P E T I T I O N I N S I G H T S

Walmart Explains ModelIndia�s National Company Law

Appellate Tribunal (NCLAT) hasasked a Walmart Inc. unit to explainits business model in India, followingan objection raised by a traders� bodyagainst its $16 billion acquisition ofe-commerce firmFlipkart.�Before going into themerit of the

appeal, we intend to know themannerin which Walmart InternationalHoldings Inc. and Flipkart Private Ltddo their business in the relevantmarket in India,� NCLAT said in anotice, asking Wal-Mart to file itsreply. The order relates to an appealpetition filed by the Confederation ofAll India Traders against CCI�sapproval of theWalmart-Flipkart deallast month. (Reuters, 07.09.18)

NCLATUpholds FineThe National Company Law

Appellate Tribunal upheld theM6,300-crore fine imposed on a groupof cement companies by theCompetition Commission of India forcartelisation.The tribunal said it finds no merit

in the plea filed by the cementcompanies challenging the antitrustregulator�s decision to penalise themanufacturers for cartelisation.InAugust 2016, the CCI ruled that

10 cement companies used theplatform provided by the CementManufacturers Association andshared details relating to prices,capacity utilisation, production anddispatch and thereby restrictedproduction and supplies in themarket.It also imposed the penalty.

(BQ, 25.07.18)

UltraTech gets CCI NodAdityaBirlaGroup firmUltraTech

has received an approval from the fairtrade regulator CompetitionCommission for the acquisition of thecement business of Century Textilesand Industries.UltraTech said it would acquire

the cement business of BK BirlaGroup company Century Textiles andIndustries through a share swap deal,a move which would furtherconsolidate its position as marketleader in the segment. CenturyTextiles has three integrated cement

units situated in Madhya Pradesh,Chhattisgarh and Maharashtra.The transaction would provide

UltraTech an opportunity to furtherstrengthen its presence in the east andcentral markets, extending itsfootprint in the West and South.

(ET, 21.08.18)

CCI Nod to Linde-Praxair DealFair trade regulator CCI has

approved the merger of industrial gasfirms Linde and Praxair, subject tocertain conditions. The deal,announced in June 2017, is worth overUSD 70 billion, according to reports.The approval comes following a

public scrutiny launched into the dealin earlier in May by the CCI. Aftercompletion of the proposedtransaction, Linde PLCwill be ownedby the two companies� currentshareholders.Munich headquarted, Linde is

primarily active in industrial gasesand medical gases, specialty gases,helium and the related engineeringand services sectors. Headquarteredin Connecticut, US, Praxair is aninternational industrial gasescompany. (ET, 07.09.18)

Esaote PenalisedThe CCI has found that the two

entities abused their dominantposition in supplying dedicatedstanding/tilting MRI (MagneticResonance Imaging) machines.

The CCI penalised Italy�s EsaoteSpA and its group entity Esaote AsiaPacific Diagnostic for unfair businesspractices in supply of certain MRImachines, according to an order.Besides imposing a fine of M9.33

lakh on the two entities (translates to10 per cent of the average relevantturnover of the preceding threefinancial years from the sale ofG-ScanMRI machines in India only), thewatchdog has directed them to�cease and desist� from indulging inanti-competitive practices.

(PTI, 27.09.18)

DLFComplaints DismissedFair trade regulator CCI has

dismissed two complaints allegingabuse of dominance against realtymajor DLF with regard to conditionsin the sale agreement of residentialapartments in Gurgaon.Apart from DLF, the complaints

were also against DLFNewGurgaonHomeDevelopers.The complainants had booked an

apartment each in separate projectsofDLFHomeDevelopers inGurgaon.In both thematters, it was alleged thatDLF and DLF New Gurgaon HomeDevelopers being dominant player inthe market, had imposed unfair andarbitrary terms and conditions in theapartment buyer�s agreement and thatsuch conduct violated the provisionof Section 4 of the CompetitionAct.

(ToI, 02.09.18)

CCI Approves ArcelorMittal�sAcquisition of Essar Steel

The Competition Commission of India (CCI) approved the acquisitionof debt-ridden Essar Steel by a consortium of ArcelorMittal and Japan�s

Nippon Steel & Sumitomo Metal Corporation. ArcelorMittal and Numetalare competing toacquire Essar Steel,currently undergoinginsolvencyproceedingsas it owes more thanM45,000 crore to over30 banks. Dealsbeyond a certainthreshold are requiredto get clearance from the CCI.

According to the notice submitted to theCCI, the proposed combinationis pursuant to a resolution plan filed by ArcelorMittal India before theresolution professional for the acquisition of Essar Steel in accordancewith the provisions of the Insolvency and Bankruptcy Code. (FP, 20.09.18)

www.wikim

edia.com


C O M P E T I T I O N I N S I G H T

* Abridged version of an article published in The Economic Times on August 09, 2018.

economic growth.� The deal has facedopposition from trader groups as wellas the Swadeshi Jagran Manch inrecent months. The Confederation ofAll India Traders (CAIT) said it willgo to court.

�It is most unfortunate that leavingaside the objections raised by CAITwith CCI, the commission hasapproved the deal,� CAIT secretarygeneral Praveen Khandelwal said.�We will move the Delhi High Courtand even Supreme Court if neededagainst the decision of CCI.�

Seller body All India OnlineVendors Association said the

�current anti-competitive practicesand violation of FDI policy as detailedin the judgement can be a problemfor Indian companies held by FlipkartSingapore.�CCI deemed suchmattersto be outside the scope of its process,a lawyer said.

�TheCCIonexamining the third-partyrepresentations in relation to�predatory practices� and �preferentialtreatment� to selected sellers, findsthat such issues are beyond thescope of CompetitionAct and can beindependently considered anddecided by the relevant regulator interms of the foreign direct investmentpolicy,� said Atul Pandey, partner atKhaitan&Co.Another lawyer said itmay possibly re-examine thematter.

�CCI, however, has found somecause for concern the

relationship between Flipkart and theseller entities controlled by it andmayrevisit the issue if more concerns areraised down the line,� said a partnerat a leading law firm.

All preference shares will beconverted into ordinary shares. As aresult, Walmart will holdapproximately 51-77 percent of theoutstanding shares of Flipkart.

The Competition Commission ofIndia (CCI) approvedWalmart�s

proposed $16-billion acquisition of amajority stake in online marketplaceFlipkart, paving the way for thebiggest deal in the country�scorporate history.

A grouping of brick-and-mortarretailers threatened to go to courtagainst the decision. In its 12-pageorder, the three-member CCI benchtook note of concerns relating to deepdiscounting and preferential treatmentto select sellers on the marketplace,adding that these �may meritexamination from competitionperspective� but are not relevant toapproval of the deal.

Wal-Mart International Holdings, Inc.(Walmart), a subsidiary of WalmartInc., had sought CCI approval foracquisition of 51-77 percent ofFlipkart.

�Considering the facts on record andthe foregoing assessment, thecommission is of the opinion that theproposed combination is not likely tohave an appreciable adverse effect oncompetition in India and therefore, thesame is hereby approved in terms ofSection 31(1) of theAct,� CCI said inits ruling.

While noting representations bytrade bodies against the deal,

CCI said that �a small number ofsellers in Flipkart�s onlinemarketplaces contributed tosubstantial sales�.

�Further, the revenue earned fromthese common customers in theonline marketplaces was relativelyless vis-à-vis the non-common sellerswhose sales on the platform wereconsiderably low. It was also seen thatthe top common customers in theFlipkart online marketplaces wereincorporated on or after 2016.�

CCI Approves Walmart-Flipkart Deal;CAIT to Move Court

According to the detailssubmitted to CCI, Walmartwill subscribe to ordinary

shares issued by Flipkart foran aggregate purchase priceof $2 billion in cash. Walmart

will also purchase thepreference and ordinaryshares of Tiger Global

Management and SoftBankbesides cofounder Sachin

Bansal for about $14 in cash.

Flipkart�s online retail business inIndia operates primarily through

two main entities � business tobusiness (B2B) unit Flipkart India PvtLtd and Flipkart Internet Pvt Ltd,which runs the online platformFlipkart.com. The B2B unit is used tosource products, for instance,exclusive launches by smartphonebrands such as Xiaomi or Samsung.This B2B unit then sells the productto various vendors, which then sellthese products on Flipkart.

These entities emerged after thegovernment of India said in 2016 thata single seller cannot account formorethan 25 percent of gross sales on anonlinemarketplace.WSRetail used tobe the biggest seller on Flipkart beforethe regulation was issued in 2016.

�We welcome the CCI�s decision,�Walmart said in a statement. �Webelieve that the combination ofWalmart�s global expertise andFlipkartwill position us for long-term successand enable us to contribute to the


S P E C I A L A R T I C L E

Therewas great uncertainty in 1999 about the outcomeof India�s national election and concern that India�s

development would be disabled by India�s competitivepolitics. The dominance of a single party, the Congress, innational and State politics was fading then. Regionalparties had gathered strength. The decade following thelandmark reforms of 1991 had seen many coalitiongovernments cobble together at the Centre and collapse,some within months. There was fear that without a strongCentre, India�s development story would fall apart.Scenarios were prepared in 2000, using systems

thinking, to project what the shape of India�s economyand democracy would be under different forms ofgovernment� strong single party, or potentially unstablecoalitions. These scenarios were summarised in a report,�Scenarios for India 2010: An Invitation to Make aDifference�.They also analysed which institutions must be

strengthened to de-risk the Indian economy from politicalinstability. Scenarios are not predictions. They areprojections of plausible outcomes. Scenarios help todevelop strategies that will make the enterprise successfulin all plausible scenarios. Four alternative outcomes offuture elections were envisaged in 2000. The same fourcan be envisaged even now. Theywere described in broadbrush terms:

The alternative scenarios:A. Kaleidoscope. In this configuration power in theCentreand in the States is shared by several parties. The qualityof the political configuration could be either:A1. Federal harmony (The parties respect each other

and learn to work together), orA2. You stab my back, I stab yours (�Politicians

provide front page entertainment�)

B.Monochrome. In this configuration one party dominatesthroughout the country. The quality of the governancecould be either:B1.Ramrajya (Magnanimous enlightened leadership,

with losers cooperating in the nation-building agenda), orB2.Volcano (Seething trouble, with losers waiting to

strike)

The outcome of the national elections in 2019 isunpredictable. It could be any of the four configurationsdescribed.We may confidently predict, however, that forsome more decades Indian politics will be in churn whileits social and economic structures are reformed.Indeed, as Samuel Huntington suggests, in �Political

Order in Changing Societies�, the proceeds of corruptioncan bind together otherwise unstable social groups. Thishas been observed in India, in the politics of UP, Bihar,

and Tamil Nadu, where the acquisition of power byhistorically suppressed communities as well as corruptiongrew at the same time.

The four �Ls�:The institutional architecture is founded on four �Ls�

�Localisation, Lateralisation, Learning, and Listening.Power must be devolved down to local levels. People

should be able to govern their own lives more directly forthe democratic ideal of �government of the people, for thepeople, by the people�, to become a reality. The need for�lateralisation� of governance with more effectivecollaboration amongst various stakeholders is required too.

The third �L� is an emphasison the system�s ability to learn,rather than on the design ofsystems for top downmonitoring and control. In 2014the NDA governmentabolished the PlanningCommission, with the intentionof promoting a competitive-cum-collaborative federalism,

and learning across the States, facilitated by a newinstitution, the NITIAayog.The fourth �L�, better listening, is critical for dialogues

that build lateral collaborations and for faster learning.Above all, it is essential for social harmony.Alas, with thespread of social media, and with even political leaderstweeting about each other, rather than talking to each other,no one seems to be listening to others� points of view.An enduring image that emerged from the scenario

analysis is an image of �FirefliesArising�.It is time to write a new story of India in which

communities of diverse people, respecting each other, andsupporting each other, are the principal agents for makingthe world better for everyone. The most effective �bigticket� reform that India�s leaders canmake is to strengthengovernance by the people in its cities and villages. OurConstitution requires it. It will strengthen India�sdemocracy, its economy, and its society.

* Former member of the Planning Commission.The article has been taken from The Hindu Business Line, published on August 24, 2018.

What will Happen after the 2019 Elections?Arun Maira*

Strengtheninggovernance bypeople in villagesand cities is thenext �big ticket�reform leadersmust undertake

SOURCESBL: TheHindu Bussiness Line,BS: Business Standard,DC: DeccanChronicle,DNA: Daily News andAnalysis,ET: The Economic Times, FE: The Financial Express,FP: FirstPost

IE: The Indian Express,Mint: LiveMint,PTI:Press Trust of India, ToI:Times of India,TH:TheHindu

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P U B L I C A T I O N S

Impact of CBET on Livelihoods and Gender in Nepaland Bhutan

This study assesses the impact ofCrossBorder EnergyTrade (CBET) ongender and livelihoodsin the South Asian region. The objective of the study to assess the socio-economic

benefits or costs accrued to the local community in general and impact on local livelihoodand the role of gender in the community in particular. �Impact of CBET on Livelihoods andGender in Nepal and Bhutan� comprises an in-depth analysis of available literature andimpact assessment studies of other regions in the world and an intensive field survey in andaround the project site, with support of the local partners. This pioneering paper lays thefoundations for the South Asian countries to foster CBET in the region.

Read the report at:http://cuts-ccier.org/CBET/pdf/Report-Impact_of_CBET_on_livelihoods_and_Gender_in_Nepal_and_Bhutan.pdf

Future of Coal in India: Will Coal be the Secret of our Energy?

This report is an attempt to unearth and understand the eminent threats and potentialopportunities for the coal sector in India. In doing do, it delves deep to understand the

structural issues, regulatory challenges, and technology disruptions in the sector. This paperis the second of the two reports on coal sector with the Indian Chamber of Commerce.

This paper can be accessed at:http://www.cuts-ccier.org/pdf/Discussion_paper-Future_of_Coal_in_India.pdf

Status of Implementation of Real Estate(Regulation and Development) Act, 2016 in Select States of India

Real Estate (Development and Regulation) Act, 2016 (RERA), a proconsumer legislationaims to protect the interest of consumers by ensuring accountability, transparency and

establishing an adjudicating mechanism for �speedy� redress of disputes. Despite a year ofestablishment, the progress made by states pertaining to implementation of the Act remainspatchy. The paper highlights the progress made by select four states and a Union Territorywith respect to adoption of the Act. Further, the paper also analyses rules framed by thestates. It attempts to highlight uniqueness of provisions of state rules and observe potentialdeviations from the Central Act.

This paper can be accessed at:http://www.cuts-ccier.org/pdf/

Status_of_Implementation_of_Real_Estate_Act_2016_in_Select_States_of_India.pdf

The news/stories in this Newsletter are compressed from several newspapers. The sources given are to be used as areference for further information, and do not indicate the literal transcript of a particular news/story. CUTS International is a not-for-profit organisation and the listing of paid news/articles is for informative and educative purposes only.

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