Friday 17 February 2017

Posted by at No comments:

Anti-profiteering measures of GST bill

GST bill, 2014

Draft model GST bill, 2016

Following are the salient features of draft GST bill:-
  1. All forms of “supply” of goods and services will attract CGST (central levy) and SGST (state levy).
  2.  The liability to pay CGST/SGST in relation to supply of goods and services will arise on the date of:
    1. Issue of invoice,
    2. Receipt of payment, whichever is the earliest.
  3. The tax rate for CGST and SGST will not exceed 14%.
  4.  GST Council will make recommendations to center on exemptions to GST.
  5. The central government may, by law, setup an authority to examine if reduction in tax rate has resulted in commensurate reduction in prices of goods and services.
  6. Every person who makes supply of goods and services and whose turnover exceeds Rs 20 lakh has to register in every state in which he conducts business.  The turnover threshold is Rs 10 lakh for special category states.
  7. Every taxpayer shall be assigned a GST compliance rating score based on his record of compliance with the provisions of this Bill.
  8. Every taxpayer while paying taxes on outputs, may take credit equivalent to taxes paid on inputs.
  9. The central government may, by law, setup an authority to examine if reduction in tax rate has resulted in commensurate reduction in prices of goods and services.  The Authority may impose a penalty if prices have not been reduced.

Benefits 

  • GST will reduce the complexity of taxes.
  • It can facilitate seamless movement of goods across states.
  • It will reduce the transaction costs of businesses.
  • The procedure of GST registration would also be made simple, thereby improving the ease of starting a business in India.
  • There are expectations among experts that with GST, we may see 2% jump in GDP growth.
  • GST will plug the leakage of tax. This, in turn, gives more money in the government exchequer.
  • Companies which are under unorganized sector will come under the tax regime.
  • Number of tax departments will reduce which in turn may lead to less corruption.
  • In the long run, the lower tax burden can decrease the prices of goods and services.

Anti-profiteering measures introduced in GST

Section 163 of the new Model GST Law proposes to ‘constitute an Authority, or entrust an existing Authority constituted under any law’, which shall regulate prices during the temporary inflation phase for a prescribed period.
The authority will examine whether input tax credits availed by any (registered) taxable person or the reduction in the price on account of any reduction in the tax rate have actually resulted in a commensurate reduction in the price of the said goods and/or services supplied by him.
The said authority may have many powers along with power to penalise any person found guilty of not reducing their prices in accordance with the reduction in tax cost as ascertained above.
“The central government may, by law, setup an authority to examine if reduction in tax rate has resulted in commensurate reduction in prices of goods and services.  The Authority may impose a penalty if prices have not been reduced.”
  • Government has introduced the provisions regarding setting up an authority that will take the task of to monitor the prices businesses charge for goods and services, but no mention has been made as to who will undertake this task.
  • As the model GST law has not yet been enacted, it is not likely that an authority will be constituted or appointed soon.
  • Some international experiences prove that anti-profiteering provisions are only effective if there is a significant lead-in time to allow the relevant authority to educate consumers and businesses.
  • It is this education process that has the greatest impact on consumer confidence and business behaviour.
  • But with a short “lead-in” time before the GST commences, the authorities have little or no time to exert any such influence.

Need for anti-profiteering measure

  • Countries like Canada, New Zealand, Australia and Malaysia have witnessed increased in inflation following the implementation of the GST.
  • Changes proposed under GST regime would result in improved profit margin at every stage of supply chain.
  • And there is high possibility that businesses may not pass on this benefit to the customers.
  • Therefore there need to be a mechanism to ensure that the profit be passed on to the consumer.

Some international experiences

Australia’s example
Australia in July 2000 replaced a series of inefficient taxes with a GST in July 2000 and enacted similar anti-profiteering measures.
The Australian Competition and Consumer Commission (ACCC) was charged with the responsibility of monitoring prices 12 months before the commencement of GST.
The focus of Australian Competition and Consumer Commission was:-
  • On educating consumers and businesses
  • Publication of pricing guidelines,
  • Communication strategies for different market segments
  • And “hot lines” for consumers and businesses to get advice
Education was supported by extensive and sophisticated monitoring of prices leading up to the introduction of GST.
Malaysian experience
  • Malaysia also introduced an anti-profiteering provision, along with the introduction of GST in April 2015.
  • However, it led to widespread litigation and was found to be administratively difficult to implement.

Way ahead

  • The policy framing process may be considerably easier than the administrative task of implementing anti-profiteering measures in practice.
  • It would be rather difficult to find out the profiteers from the rest.
  • If global experiences are to be leveraged, India may need to implement these measures at least three months aheadof the GST implementation date.
  • A three-month buffer shall ensure that industry has enough time to recalibrate their cost accounts in the current regime.
  • India has a competitive, open and growing market. Both Indian businesses and consumers are well placed to enjoy the benefits of GST, without government price monitoring.
  • Central and state governments should try to make it easier for businesses to comply with the GST rather than imposing another compliance regime.
Posted by at No comments:

Repairing India- China relations


Background

The provocations from China amount to a sort of ‘hostility’ against our nationhood, from their staking claim over the state of Arunachal Pradesh, occupation of the Shaksgam Valley in Ladakh, pumping up Pakistan with military, nuclear and missile capabilities – a brazen recourse to destabilize India, negation of New Delhi’s stance on terrorism with its incomprehensible stand on the listing of known terrorist Masood Azhar under the U.N. Security Council’s 1267 Committee, China’s obduracy on India’s Nuclear Suppliers Group (NSG) bid, the deployment of Chinese military and engineering assets in Pakistan-occupied Kashmir and the development of the China-Pakistan Economic Corridor (CPEC) exemplify Beijing’s obsessive antipathy towards India.
In this context, the Chinese Ambassador to India, Luo Zhaohui, has recently put forward some suggestions for improvement of bilateral ties between China and India.

What are the suggestions made?

  • A friendship and cooperation treaty.
  • A free trade agreement (FTA) to boost bilateral relations.
  • Joining of hands on China’s One Belt, One Road (OBOR) initiative.
  • Resolve the boundary question based on negotiations held so far.
Let us examine the suggestions made, in detail:

Could there be a hidden agenda behind the suggestions?

It could be part of an effort within the Chinese establishment to review relations with neighbours like India, given the strategic uncertainties generated by the advent of Donald Trump’s.
  • Trump had made a phone call to Taiwanese President, Tsai Ing-webefore he took office;
  • He had also proclaimed intention to impose punitive tariffs on Chinese goods.
  • The new U.S. Secretary of State, Rex Tillerson of Trump’s administrations had thinly disguised threats against China’s building of artificial islands in the disputed areas in the South China Sea.
All this have generated concern in Beijing.

Do the suggestions made hold any water?

  • The state bilateral relations is soar and the extent of unresolved political and security issues are many, there is also huge deficit in the trade balance, a treaty of friendship and cooperation may only look good on paper but cannot be a transformative document.
  • The suggestion FTA is forward-looking. Trade between India and China has grown to an annual volume of $70 billion (2015-16). Chinese investments under Make in India in infrastructure development, solar energy and smart cities will be helpful. An FTA that is goods-centred will obviously not benefit India given the huge trade in goods imbalance that favours China. An FTA that is comprehensive, covering goods and services, cross-border investment, R&D, standards and dispute resolution would be worth exploring for India.

Why is India reluctant to join OBOR initiative?

India’s reaction to China’s OBOR has been non-committal, mainly because of the CPEC through Pakistan-occupied Kashmir. At the same time, India is a part of the frontline membership of the Asian Infrastructure Investment Bank (AIIB) that is funding OBOR.
The provisions of the 1963 China-Pakistan Boundary Agreement which conceded the disputed nature of the territory (in what Pakistan now calls Gilgit-Baltistan but what is a part of Jammu and Kashmir) covered under the agreement but today the Chinese have chosen to disregard the sovereignty issues surrounding the dispute between India and Pakistan over the State of J&K.

What can India do as a counter measure to CPEC?

  1. India should explore the development of connectivity between Tibet and India, especially through the Sikkim sector into Bengal. The old route between Lhasa and Kolkata via Nathu La was the most easily traversed route; this is a road that provided for the transport of goods and services between Tibet and the outside world through India. This can be a true test of Chinese positivity; it would also be approval for India to open a Trade Office in Lhasa in place of the old Consulate General that operated there until 1962.
  2. An opening of ties between India and the Xinjiang region of China is also worth examining. Providing for air connectivity between Urumqi, the capital of Xinjiang province and New Delhi as one of the OBOR linkages would help the promotion of people-to-people ties, trade and commercial contact and could also help open a new chapter in counter-terrorism cooperation between India and China. The two countries have a common interest in curbing religious radicalism and terrorism. Kashmir and Xinjiang, both contiguous neighbours, have similar challenges posed by terrorism and separatist movements.

A final word of caution

Maturity of approach and strategic patience is a way forward.There has been peace between the two countries, from the 1970s till date;it deserves preservation and not disturbance. Competitive coexistence, with a clear delineation of areas of difference and how to manage them, the promotion of business and people-centred connectivity, and mutual confidence-building with tension-reduction measures cannot do any harm as such. But border problem can take time to be solved.
China is anxious to find a new market for its huge reserves of surplus cash and as another avenue for investment, and India is an attractive and huge market. Undoubtedly it will benefit if China invests in India’s infrastructure (Roads, flyovers, railways, hydro-electric projects, multi-storey office and residential buildings, are sectors that can benefit from Chinese investment) but India will need to carefully decide the direction in which to steer Chinese business as otherwise, in a democratic set up such as India’s, China will soon acquire a powerful business lobby capable of adversely influencing national strategic decisions.
In order to ensure strategic flexibility and increased investment, we must balance by offering similar competitive opportunities to other countries like Japan, Taiwan and Singapore. India can particularly benefit in the hi-tech, advanced electronics and defence sectors by encouraging investments from Japan and Taiwan on very preferential terms.
Posted by at No comments:

Electoral Bonds and Transparency in Electoral Funding 

Introduction

The need for transparency in political funding has been at the centre of the debate on electoral reforms in this context, couple of measures on electoral funding reforms were announced by finance minister Arun Jaitley in the budget aimed at cleaning up political funding—which is long considered to be the biggest source of black money.
  • The government accepted the Election Commission’s (EC) recommendation of capping anonymous donation to Rs2000 down from Rs20000.
  • It also introduced the first-of-its-kind “electoral bonds” as a means of donating to political parties.
The opinion whether the move is good or bad is divided as the move has been debated intensely over the last two days. We bring to you both sides of the debate in this column so that you have a comprehensive coverage at one place.
Before that we shall clear some basic questions:

What are Electoral bonds?

While all details on electoral bonds are not out yet, here’s what is known: a person wishing to donate to a political party can purchase these bonds from an authorized bank using cheques or digital payment methods. These bonds shall be redeemable only in the designated account of a registered political party.
On the face of it, these bonds look like bearer bonds. These are instruments which are not registered in the name of a specific owner and will pay to whoever bears them.

How can the banks issue such bonds?

Section 31 of the RBI Act gives power, as of today, to issue bearer bonds only to RBI and the government. The bearer bond has the characteristic of a currency. That is why the power is not given to a bank.To let commercial banks issue these bonds, the government will have to amend the RBI Act.

Has such a step been taken before?

This is not the first time that the government has issued bearer bonds.
In 1987, the then government floated a development bond called Indira Vikas Patra, which was issued through post offices. Since this had the characteristic of a bearer bond, it conferred anonymity to the holders of this bond. However, it was finally discontinued after it was suspected that these bonds were used as a conduit for laundering black money.

What are the benefits of the move?

Some experts claim, the announcement will bring more transparency on who the donor and donee is, and is in line with the EC’s view that curbs on anonymous donations would help keep a check on parties that are formed only with “an eye on availing the benefits of income tax exemption.
There are many bogus political parties which have been registered with the Election Commission and accept donations but never contest election. These parties had become avenues of dumping ill-gotten money and a check on their financial transactions will definitely help the government achieve its goal of eliminating corruption and black money from the system.

Why some experts are sceptic about it?

They call it a half-baked move. The Section 29C of the Representation of People Act, 1951, allowed political parties to accept donations of Rs 20,000 from anonymous individuals. This has now been reduced to Rs 2,000. This basically means that all the political party receiving cash donations needs to do is to split one cash donation of Rs 20,000, into ten cash donations of Rs 2,000, and continue with the system as it has evolved.
Earlier, those who did not want to declare donations used to issue receipts for Rs 19,999. Now they will do the same for Rs 1,999.
All that the parties will now have to do is find more people to lend their names to these donations, or better still, find more names of unsuspecting people to be listed as cash donors. The proposal does not disrupt the flow of illicit political donations but only channels it differently, and will not reduce the proportion of cash from unverifiable sources in the total donations received.

Other debates

The government move to amend the Act to allow commercial banks to issue such bonds is leading to some discomfort among RBI officials who feel it will erode some of the central bank’s authority.
This will unnecessarily fragment the note-issuing authority’s capacity. The government can do without amending the Act. But since RBI is creation of RBI Act, there is no question of the erosion of RBI’s autonomy or authority.

Suggestions for stronger reforms

  1. They should have placed a cap on the amount a party may receive in cash as a donation or much better still if government is serious about cleaning up electoral funding they would have simply banned cash donations to political parties and at the same time there would be no donations from unknown sources. If individuals in this country are expected to go cashless and make use of digital payment mechanisms, the political parties should be expected to do the same as well. It is much easier for them to get the necessary infrastructure in place.
  2. The proposal to allow donors to purchase electoral bonds from banks against cheque and digital payments to be given to registered political parties for redemption, meant to cater to donors’ need to remain anonymous to rival political parties, which hardly contributes to transparency. Indeed, donors should not enjoy any anonymity, before tax authorities or the general public. The absence of such anonymity, of course, will bring down the level of contributions from corporate houses and other entities to parties.
  3. Plain and simple, bring all the political parties under the purview of the RTI Act.

Conclusion

Government seem to have missed their“loha garam hai maar do hathoda”moment, to clean up the face of electoral funding in India with intense debate around it.
Experts feel this is the first step towards cleaning up political funding, and more measures would need to be taken.
As former election commissioner S Y Quraishi told The Indian Express, “It is a positive move and also an acknowledgment that political funding is an issue that needs to be addressed. As the Budget also says, this is the first step and not the final one. I hope this will be taken to the logical conclusion.”
Posted by at No comments:

Disaster Management – Oil Spill near the Chennai coastline

Context
Two ships, one tanker carrying petrol and lube oil, and the other carrying LPG, collided outside the Kamarajar Port in Ennore leading to a major oil spill in the coastline.
What is an oil spill?
An oil spill is the release of a liquid petroleum hydrocarbon into the environment, especially marine areas, due to human activity, and is a form of pollution. The term is usually applied to marine oil spills, where oil is released into the ocean or coastal waters, but may also occur on land.
What happens when oil spills?
The effects of oil pollution are devastating and well documented.
Effects on Marine life:
  • Since most oils float, the creatures most affected by oil are animals like fishes, seabirds, turtles that are found on the sea surface or on shorelines if the oil comes ashore. They are killed in greater numbers than other kinds of creatures.
  • Several dead turtles and hatchlings coated with the black oil were washed ashore and discovered among the boulders near north Chennai coast.
  • Sea animals caught in an oil spill, on being exposed to toxic petroleum products often results in lower reproductive rates, organ damage and death. The effects remain for long period of time.
Effects on Humans:
  • Direct exposure to oil spill – a variety of health effects may develop when the oil spill occurs close to where people live or work and may come in contact with humans through breathing gaseous oil compounds and/or oil compounds adsorbed on particulate matter (dispersed through air). Another exposure pathway may relate to activities in contaminated ground (e.g., soil) or through skin adsorption when touching spilled material.

  • Indirect exposure through consumption of contaminated food or water – especially relevant in the case of consumption of fish that was in contact or in an oil spill polluted environment. This is because some oil components have ability to “bioaccumulate” in living organisms. This means that if a fish lives in a polluted environment, it will keep adsorbing in its body some oil components (without excretion) which may reach concentrations several orders of magnitude higher than those of the surrounding waters. Through consumption of such polluted fish meat, humans may become seriously exposed to higher concentrations of oil components than in the surrounding environment or as compared to ingestion of the polluted water or bathing in the polluted water.
Effects on Economy:
  • When precious crude oil or refined petroleum is lost, it affects the amount of petroleum and gas available for use. This means more barrels have to be imported from other countries.
  • The process of cleaning the oil spill requires a lot of financing. Although the company responsible for the oil spills and their effects has to clean it up, there is a lot of government help required at this point.
  • The local tourism industry suffers a huge setback as most of the tourists stay away from such places.
  • Due to this, various activities such as sailing, swimming, rafting, fishing cannot be performed.
  • Industries that rely on sea water to carry on their day to day activities halt their operations till it gets cleaned.
  • The workers who are to clean up the spill face tremendous health problems later in life as well. Their medical treatment has to be paid for and becomes the responsibility of the government. Putting all the methods of recovery into place and monitoring them takes away resources from other more important work and hits the economy in small but powerful ways.
Indication of Lack of disaster preparedness of India
  • The port initially denied any significant environmental damage from oil, but as the scale of the disaster began to unfold, and a large number of dead turtles and fish were washed ashore, it became obvious that the spill had not been quickly contained.
  • The pollution response equipment for all major ports and 26 non-major ports is funded to the extent of 50% by the Centre, casting a responsibility on ports to contribute the other half and build the capabilities to handle disasters.
  • But looking at the clean-up work being done on war-footing being carried out in several areas and involving of volunteers, it smacks of disaster-unpreparedness of ports showing they have not fulfilled the responsibility.
  • Similar was the case in Mumbai Oil spill of 2010 where Jawaharlal Nehru Port authorities were clueless and did nothing to help Coast Guards.
This latest incident shows India has still not learnt lessons as oil sludge is being removed manually using large buckets.
Consequences of failure
  • The hiding of facts after an oil spill is counterproductive could erode the confidence of the international community in the country’s ability to fulfil its commitments within the UN system to protect marine life and biodiversity since the impact is prolonged and are bound to come to fore.
  • Failure to safeguard marine turtle and bird habitats, for example, is a clear violation of the provisions of the Convention on the Conservation of Migratory Species of Wild Animals, and its specific memorandum on the Indian Ocean-Southeast Asian region to which India is a signatory.
  • This spill may spell disaster for the Olive Ridley Turtles, as these come near the shores of Chennai between January and March.
Where does the liability lie?
  • National Union of Fishermen has filed a PIL in the Madras High Court.
  • A FIR has been filed against the two ships involved in collision – MT Dawn Kanchipuram and MT BW Maple.
  • The recovery of compensation and costs from the owners of the vessels will be done, as they were commercial cargo ships, they are usually insured.
  • Coast Guard IG and MD of the Kamarajar Port have said that, it was vessel’s responsibility to report matters correctly and they have under-reported it. Strict action must be taken against them.
What has to be done now?
  • TERI has been working on bio-remedial methods to clean up oil spills. They have developed a technology called OilZapper, a cocktail of bacteria that feed on the oil and degrade the hydrocarbons.
  • The timely advice from agencies such as the Indian National Centre for Ocean Information Services, which is mandated to forecast the course of an oil spill, will be of tremendous importance now.
  • An independent inquiry is vital to determine whether the training and acquisition of equipment to handle such accidents for all agencies passed muster.
  • International Convention on Oil Pollution Preparedness, Response and Co-operation (OPRC):(Adoption: 1990; Entry into force: 1995)

The Convention calls for the establishment of stockpiles of oil spill combating equipment, the holding of oil spill combating exercises and the development of detailed plans for dealing with pollution incidents. All ports should be cross checked for the mandate given by the convention.
What is the theoretical frame-work for such issues?
  • Government approved National Oil Spill Disaster Contingency Plan (NOS-DCP) in Nov 1993, designating the Indian Coastal Guard as the Central Coordinating Authority.

  • In 2015, Coast Guards revised the NOS-DCP to meet international standards, setting up an Online Oil Spill Advisory System that places India amongst the select few countries that have indigenously developed capabilities of prediction of trajectory of oil spills, mapping environmental sensitivities in coastal zones, deployment of aerial dispersant spray system and facilitating regional oil spill contingency plans.

  • India also ratified in 2015, the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (Bunker Convention) which ensures adequate, prompt and effective compensation for damage caused by oil spills.

  • Since 2011, Oil Spill India (OSI), an international forum on oil spill prevention, preparedness, response and restoration systems have been showcasing best practices, technologies and experiences on oil spill management.

  • Recently in 2016 September there was a convention in Mumbai of OSI with theme “Commitment, Synergy and Excellence.”
CONCLUSION
Authorities just put everything in place, on paper. And yet, this long-term marine disaster is unfolding near the Chennai Coast. There has been sluggish response, but it may not be too late for damage control. A coordinated response, with deployment of technology to contain the spread and rescue the marine life and habitants will go a long way.
Under pressure, authorities shouldn’t just declare clean-up procedure as complete in hurry. It has to be taken to its logical conclusion where everybody would feel 100% safe
.
Posted by at No comments:

LABOUR REFORMS – Final Overhaul

It is often commented that India’s labour laws are very regressive and anti-business which may force the companies to automate, but in the face of our peaking demographic dividend, if not utilized may become a nightmare for us.
Therefore Indian government plans to overhaul the labour laws this budget session. The objective is to improve ease of doing business by providing flexibility to hire workers. There is a clear need to rationalise the multitude of labour laws at the central and state level.
What are the problems in Labour laws in India?
  • Labour is a subject in the concurrent list of the Constitution of India. Thus, both centre andstates can enact laws on labour matters.There are 44 central laws and more than 150 state laws on labour.
  • There are multiple laws onsimilar subjects like 19 laws governing conditions of work and industrial relations and 14 lawson social security and labour welfare.
The main problems are around the three acts:Industrial Disputes Act (1947), Contract Labour(1970) and Trade Union Act (1926).
The Industrial Disputes Act, 1947
  • The act mandates companies employing 100 or moreworkers to seek prior permission of the government for firing workers.
  • Itbars companies from exiting or downsizing quickly – a company needs to seek permission fromthe government three months in advance. This locks up capital in unproductive assets.
The Contract Labour (Regulation and Abolition) Act 1970
  • It was enacted to regulate the practiceof contract labour to avoid exploitation of labourers.
  • This act empowers thegovernment to prohibit contract labour in certain situations at the discretion of the government.
  • A Supreme Court judgment said that if the factory employs contract labour for work, which alsohappens to be its main activity, then contract labour should be abolished.
Although no firmwould like to use contract labour for its regular work but the legal tangle is such that someservices which are not related to the core activities but are of regular nature (such as canteen,gardening, loading-unloading etc.) may be treated as contract labour and firms may be forced tokeep such labourers on permanent roll. Due to these issues, the industry expressesdisappointment with this act because its provision defeats the purpose of employing contractlabour.
Trade Unions Act, 1926
  • This is the most archaic of all labour law and is the cast in the colonial periodand constructed along the lines of the then prevailing British law it merely provides forvoluntaryregistration of trade unions, affords certain kinds of protection and regulates rather severely theinternal affairs of the trade unions.
  • The protective clauses of the law were rendered technicallysuperfluous once the Constitution established the fundamental right of association. It is alsomentioned that while forming a union it is necessary to have 25% of members not of the same
    organization which is absurd.
Manifestations of the regressive laws
  • They discourage industrial employers to hire. The laws have resulted in companies adopting ‘hire and fire policy’ where they would hire more contractual labour without any social security.
  • The labour laws divided at the Centre and State levels, induce unwanted red-tape and bottlenecks thereby hampering the industrial growth.
  • This has constrained the growth of the MSMEs which are mostly labour intensive.
  • If our exports are closely analysed, we can find out that despite being the labour surplus country, our exports are mainly the capital intensive goods such as petroleum products, jewellery, transport equipment, pharmaceuticals.
  • Due of these problems, the manufacturing sector growth has stagnated between 14-18%. The reforms in labour laws are of utmost importance if the Make in India campaign is to succeed
Need for the Reforms
  • India’s growth rates in the 2000s are often derided as “jobless growth” sincethe service sector-led model has been capital rather than labour intensive.
  • More than 200 million Indians will reach working age over the next two decades, our demographic dividend will ripen and creatingsufficient jobs for perhaps the largest youth bulge the world has ever seen is among thetoughest challenges for the country.
  • In 2009, 84 percent of India’s manufacturers employed fewer than 50 workers, compared to 25percent in China, according to a study by consultancy firm McKinsey.
  • Nine out of 10 Indians are employed in the informal sector, where labour laws are rarely
  • We need to make the labour laws modern, so that, it encourages the employers to keep more workers in formal roles with social security benefits.
  • The compliance burden on MSMEs should be reduced to ensure the ease of doing business and simultaneously lead to jobs creation.


What are the bills that are going to be passed?
  • There are four proposed laws — the Industrial Relations Code Bill 2016, Wage Code Bill 2016, the Small Factories (Regulation of Employment and Conditions of Services) Bill, and Employees Provident Fund and Miscellaneous Provisions (Amendment) Bill.
  • The Bills that are to be tabled this session are Industrial Relations Code Bill 2016, and the Wage Code Bill 2016. Through these, the government wants to merge around 40 different labour laws in to four codes of legislation by repealing unwanted laws.
  • The four codes are Wages, industrial relations, social security, and welfare, safety in work conditions.
Important features of the two bills
The Labour Code on Industrial Relations Bill 2015 will combine Industrial Disputes Act, 1947, theTrade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946.
  • Once enacted, the Labour Code will allow companies to sack as many as 300 employees
    without prior government approval. Companies are now allowed to let go of up to 100
    employees without needing government approval.
  • The definition of ‘strike’ has been widened under the code to include casual leave by 50 per centor more workers in the industry.
  • For employers employing less than 50 employees, the requirement to provide a minimum of onemonths’ notice and retrenchment compensation (severance) is to be removed.
  • The draft code raises the retrenchment/closure compensation payable to workers from 15 dayswages to 45 days wages for every completed year of service.
  • The Labour Code is modelled on the lines of a similar law in Rajasthan, where the BJP-led stategovernment approved the plan in 2014.
The Wage Code Bill provides for a floor rate of national wage that will be mandatory for allstates and across all sectors.
  • The Centre and states now set minimum wages for different categories of workers, in their respective jurisdictions.
  • Once it sees the light of day, the Wage Code will allow fixing a benchmark wage for workerswhich will have to be adhered to by the states as well. This provision will ensure a minimumwage to workers across the country. However, the states will be free to prescribe higher wages.
Criticism for the Reforms
There is stiff opposition from unions which could hinder the government’s plans to bring in a raft of labourreforms.
  • Industries are already flouting labour regulations and any dilution of the existing laws will
    compromise employees’ welfare and they think the government is insisting on changing labour laws without realizing that it is not a shortcutfor job creation
  • Another argument is that Indian workers are largely badly paid, andduring the EPF tax debate, the government said that 30 million organized sector workers are getting less than 15000 a month. So, by changing the laws you will put these poor workers in
    further trouble.
  • The trade unions have rejected the bill on the proposal of strike- that for going on strike for a day, salary of 8 days will be deducted and said that theproposed legislations have been drafted primarily from an employer’s perspective.
CONCLUSION
Labour reforms are the need of the hour not only as a thrust on Make in India and ease of doing
business, but also to ensure the demographic dividend does not turn into a nightmare of
unemployment and under-employment.The Economic Survey 2016-17 notes that the growth boost from the demographic dividend inIndia is likely to peak within the next five years.
It is challenging to make a delicate balance between the interest of the businessmen and those
of the weaker section of the society.No matter how crucial these reforms are for the benefit of
India’s economic future, their success depends on how the government implements them, given
the large population of our country.
We need a minimalist labour regime
.
Posted by at No comments:

Indo-US Relations – Engaging Trump

Introduction to Trump’s personality
Donald Trump’s personality has two parts — the transactional and the ideological.
Transactional
Right after Donald Trump took oath, he raised the slogan “We… are issuing a new decree to be heard… in every foreign capital… From this day forward, it’s going to be only America first, America first.”
This means.
  • Trump discards the ideology of free trade.
  • Restricts in-sourcing of labour into America and outsourcing of jobs, and
  • Builds new walls along America’s borders.
  • Discards Climate change agreement.
Trump believes that all international relations are based on give and take, that there is something to be gained or lost from each individual interaction with a global partner. He doesn’t want to pursue goals such as promotion of democracy, free market or human rights or even disguised American involvement with the world for several decades now.
Ideological
Trump sees the world as one in which Islam is threatening the existence of the Judeo-Christian civilisation.
No measure is too extreme in pursuing that objective of countering Islamism, as demonstrated by the attempted ban on citizens of seven Muslim-majority countries.
Where India can engage Trump?
The US was helping India expand in power and prosperity as it served the highest geopolitical interests of the United States in Asia and globally — namely, maintaining a balance of power that advantaged the liberal democracies. But it doesn’t hold water with the coming of Trump.
So, what India must be mindful of what terms and on what issues Trump would be open to dealing with India.
On the ideological front
  • At the ideological level, the defeat of radical Islamism could be a common ground between President Trump and PM Modi, but Indian government’s crackdown on U.S.-based Christian charities operating in India could be a problem as evangelical groups have far higher influence in the current White House.
  • However, fighting terrorism could be common ground for negotiations – unresolved conflict in Afghanistan, continued militancy in Pakistan, looming danger of ISIS.
Trump is also anti-China.
  • China has a massive trade relationship (annual turnover of nearly $600 billion in 2015) with America.
  • Trump has focused his ire on the huge trade deficit with China, of nearly $400 billion. He has accused Beijing of stealing American jobs and has threatened to impose a 45 per cent tariff on imports from China.
  • To put some additional political pressure on Beijing, Trump has put Taiwan and Tibet back in political play
  • On this front, India could be engaged in the long pending demand that India sign the COMCASA (Communications Compatibility and Security Agreement) that would enhance joint surveillance of Chinese vessels.
  • If the Trump administration pressures regional powers to do more to counter China, he could continue with Obama’s Pivot to Asia and continue to help build India as a balancer against China.
Indo-Pak Issues
  • In terms of Indo-Pak relations Nawaz Sharif in Pakistan media has claimed that Trump expressed a willingness to sort out Indo-Pak differences. However most people think it is unlikely.
  • During the campaign Trump called Pakistan “the most dangerous country in the world today and the only country that can check Pakistan is India”, this also reflected in statements of Defence Secy James Mattis who apparently said – US needs to stay engaged with world’s only nuclear armed Islamic Country.
  • That tougher stand can be good news for India. But it is not sure yet, if Trump’s administration will involve itself in the Kashmir issue.
Afghanistan Angle
  • The new Defence Secretary, James Mattisand National Security Adviser Michael Flynn are both Afghanistan-Pakistan veterans.
  • India’s consistent demand that the U.S. bring more pressure on Pakistan to take action against terrorist groups could be met with another demand from the Trump team — for Indian soldiers on the ground in Afghanistan.
  • In an effort to move closer to the U.S., the Vajpayee government had considered sending troops to Iraq in 2003, but aborted the move after domestic opposition.
  • India should be mindful on getting involved militarily in the middle-east or Afghanistan.
Transactional level
  • Trump administration could be willing to go a step further and favourably look at India’s pending request for Avenger armed drones and other defence technology.
  • After being designated a major defence partner by the Obama administration, India’s requests for high technology are now considered with a ‘presumption of approval’ as opposed to ‘presumption of denial’ earlier with Trump’s orientation to sell American.
Conclusion
At present India is not top of the mind for the new administration. As Trump opens multiple battlefronts domestically and internationally, the onus would be more on India to catch the attention of the new administration. Or perhaps, to stay low-key for a while, as bilateral cooperation continues on autopilot in numerous areas such as cyber security, intelligence sharing, space, disease control, maritime surveillance, agriculture, education and climate change.
  • We need to view longer term is to devise a policy framework that fully utilises India’s manpower advantages, leverages the size of its market and facilitates rapid growth in the nation’s technological capabilities through indigenous innovation and international partnerships.
  • An India that grows its domestic capabilities will be in a better position to address American concerns about jobs at home and benefit in turn from the current US lead in most advanced technologies like robotics, artificial intelligence and biotechnology.
Many watchers of India-US relations think that the pragmatism of Trump and Modi will prevail over their ideological streaks and will make them good partners. Modi’s Make in India approach and Trump’s Buy American, Hire American can go together
.
Posted by at No comments:
Subscribe to: Posts (Atom)