Current Affairs - 2 March 2016

General Affairs 

PM Narendra Modi Forms Task Force To Rationalise Central Government Staff

• NEW DELHI:  Prime Minister Narendra Modi has constituted a five-member task force to rationalise central government staff and ensure their maximum optimisation.
  
  The task force will be headed by Establishment Officer and Additional Secretary in Department of Personnel and Training (DoPT) Rajiv Kumar and it will submit its report next month, officials said today.
  
  The prime minister has approved the proposal to constitute a task force to examine the issues of rationalisation and optimisation of human resource in various ministries to align them with financial resources and focus areas of the government, they said.
  
  Minister of State for Personnel Jitendra Singh said rationalisation of staff is of paramount importance for good governance.
  
  "This decision has been taken keeping in line with the Modi government's commitment of maximum governance and minimum government. We are also considering restructuring existing tribunals, autonomous bodies and central public sector undertakings to ensure better optimisation of human resource," he told news agency PTI in New Delhi.
  
  The task force has two joint secretaries from Cabinet Secretariat, one each from the DoPT and Department of Expenditure as members, the officials said.
  
  In his Budget speech for 2016-17, Finance Minister Arun Jaitley had said a task force has been constituted for rationalisation of human resources in various ministries.
  
  "A comprehensive review and rationalisation of autonomous bodies is also underway," he had said.
  
  As per its Terms of Reference (ToR), the task force will take stock and recommend measures to optimise senior positions in the Government of India, covering the posts in the secretariat and outside the secretariat including Chief Vigilance Officers - who act as a distant arm of Central Vigilance Commission to check corruption, various autonomous bodies, regulatory bodies, attached and subordinate offices.
  
  It will also review roles and requirements of these posts, including eligibility criteria and recommend measures to achieve synergy and convergence of purposes and resources, the ToR said.
  
  The task force will review the processes involved in filling these posts and recommend rationalisation and is required "to examine and incorporate global best practices in this regard", it said.
  
  There are about 50 lakh central government employees working in various ministries.

Nitish Kumar To Take Part In 13th Convention Of Nepali Congress

• PATNA:  Bihar Chief Minister and senior JD(U) leader Nitish Kumar will participate in the 13th national convention of Nepal's ruling Nepali Congress at Kathmandu.
  
  Mr Kumar left for Delhi today from where he would fly to Kathmandu tomorrow.
  
  He told reporters in the state Legislative Assembly premises that he is going to Nepal to take part in the 13th annual convention on March 3.
  
  He said he had received invitation from Nepali Congress in this regard.
  
  "Though I am going to Nepal primarily to take part in the convention of Nepali Congress, I would meet other people also there," Mr Kumar said.
  
  He said Indian Embassy would decide his programme in Nepal.
  
  Leaders of Madhesi Movement, including chairman of Sanghiya Samajbadi Forum Nepal Upendra Yadav, Sadbhawana Party Chair Rajendra Mahato and Tarai Madhes Sadbhawana Party chief Mahendra Raya Yadav had in the first week of February met Mr Kumar in Patna seeking support for their agitation.
  
  They had also met Rashtriya Janata Dal president Lalu Prasad on February 2.
  
  In reply to a question about the visit of Prime Minister Narendra Modi on the closing ceremony of the centenary function of the Patna High Court on March 12, Mr Kumar said he would welcome the prime minister.

Ishrat Affidavit Changed Due To Political Reasons, Says BJP's RK Singh

• NEW DELHI:  Joining the debate, former Union home secretary RK Singh today claimed that the affidavit on the controversial Ishrat Jehan case was changed due to political reasons.
  
  "The main question is who asked for a change and for what reason. Obviously politics was played," he told news agency PTI.
  
  Mr Singh's predecessor GK Pillai said former home minister P Chidambaram had changed the affidavit, which originally described Ishrat and her slain aides as LeT operatives.
  
  

  Mr Singh, now BJP lawmaker from Bihar, said what was the reason for the change of the affidavit when the Intelligence Bureau had said that Ishrat had links with Lashkar-e-Taiba terrorists.
  
  "She knew about her accomplice Javed Sheikh, that Javed had links with terrorists. She went to two places with Javed. She knew what was she doing with Javed," he said.
  
  Mr Pillai on Sunday claimed that as home minister during UPA government, Congress leader Chidambaram had recalled the file a month after the original affidavit, which described Ishrat and her slain aides as LeT operatives, was filed in Supreme Court.
  
  "Only after the affidavit was revised, as directed by the minister, did the file come to me," Mr Pillai is quoted as saying by a media report.
  
  The then UPA government had submitted two affidavits - one that the four, who were killed in an alleged fake encounter, were terrorists and the second saying there was no conclusive evidence - within two months in 2009.
  
  Mr Chidambaram yesterday said the second affidavit in the Ishrat Jehan encounter case was "absolutely correct" and as minister then "I accept the responsibility".
  
  Mr Chidambaram also expressed disappointment over Mr Pillai distancing himself from the affidavit issue despite being "equally responsible".
  
  Ishrat, Javed Shaikh alias Pranesh Pillai, Amjadali Akbarali Rana and Zeeshan Johar were killed in an encounter with Gujarat Police on the outskirts of Ahmedabad on June 15, 2004.
  
  The city crime branch had then said that those killed in the encounters were LeT terrorists and had landed in Gujarat to kill the then chief minister Narendra Modi.

JNU Row: Delhi High Court To Decide Kanhaiya Kumar's Fate Tomorrow

• NEW DELHI:  Jawaharlal Nehru University Students Union (JNUSU) president Kanhaiya Kumar's fate will be decided tomorrow by the Delhi High Court which is likely to pronounce its order on his bail plea in the sedition case.
  
  Justice Pratibha Rani had yesterday reserved the order after over three hours of hearing on the bail plea of Mr Kumar who is accused of raising anti-India slogans inside JNU campus during an event organised on February 9.
  
  During the hearing, while Mr Kumar's counsel had argued that the student leader had never raised any slogans against the nation, Delhi
  
  

  Police had maintained that there was evidence that he and others were shouting anti-India slogans and were holding Afzal Guru's posters.
  
  Police had claimed that Mr Kumar was "not cooperating" in the probe and even came out with "contradictory" statements in joint interrogation by Intelligence Bureau (IB) and Delhi Police.
  
  The defence lawyers including senior advocate Kapil Sibal had countered the allegations saying there were "some outsiders with covered faces who raised anti-India slogans and Mr Kumar was seen in CCTV footage asking them for their identity cards."
  
  The bench had also asked tough questions to the police on slapping sedition charge on the accused and asked it to show evidence against him of his "active role" in raising anti- India slogans.
  
  Mr Kumar had also distanced himself from Umar Khalid and Anirban Bhattacharya, the two other accused arrested in the case.
  
  During the hearing, the Delhi government's counsel had urged the court to grant bail to Mr Kumar, who is currently in Tihar Jail under judicial custody.
  
  He was arrested on February 12 in the case which was registered under sections 124 A (sedition) and 120B (criminal conspiracy) of the IPC.
  
  According to the police, a group of students had on February 9 held an event in the campus and allegedly shouted slogans against the hanging of Parliament attack convict Guru.

NCP Questions PM Narendra Modi's Silence On Communal Polarisation

• NEW DELHI:  Nationalist Congress Party (NCP) chief Sharad Pawar today faulted Prime Minister Narendra Modi for remaining silent on issues like the Jawaharlal Nehru University (JNU) row and demanded immediate sacking of Union Minister Ram Shankar Katheria over his alleged hate speech in Agra.
  
  A former agriculture minister, Mr Pawar said he did not find the Union Budget to be a "pro-farmer exercise" but felt there were only "lot of slogans".
  
  Replying to questions at a press conference, Mr Pawar alleged politics of communal polarisation was being played in the country since the Narendra Modi government assumed office.
  
  "Communal fever... Temperature is rising. An atmosphere of fear is being created in which small groups and minorities are being targeted. But there is no place for such an important issue in the Prime Minister's Man Ki Baat programme," he said.
  
  Asked whether he felt the Modi government was vindictive after NCP leader Chhagan Bhujbal faced ED raids, Mr Pawar initially said one should not react immediately to such actions.
  
  Later, he said there are "no bad days" for those who have been agreeing with the government.
  
  Briefing on the deliberations at NCP's working committee meeting here yesterday, Mr Pawar said the party adopted a resolution, condemning the "blatantly communal" speech of Mr Katheria, Union Minister of State for HRD, while addressing a condolence meeting for VHP worker Arun Mahaur, who was shot dead on February 25.
  
  "The NCP demands that the minister be immediately dismissed and legal action be taken against him," he said.
  
  Criticisng the Budget proposals, he said the move to tax 60 per cent of withdrawals from provident fund and a ceiling on employers contribution would "lead to unrest".
  
  He said the raising of the service tax to 15 per cent would lead to further price rise.
  
  Mr Pawar, who was Agriculture Minister for 10 years during UPA rule, did not share the government's optimism that the income of farmers could be doubled within the next few years.
  
  If this was to be achieved, there should be substantial step-up in the outlay for agriculture each year, he said.

Business Affairs 

Government expects to collect Rs 8,000 crore from two new cesses

• There were more cesses announced in this budget. The government plans to raise Rs 5,000 crore by levying a 0.5 per cent Krishi Kalyan cess on all taxable services. With this cess, the service tax rate is now 15 per cent.

  The cess would be used exclusively for financing initiatives relating to improvement of agriculture and welfare of farmers. The cess would come into force from 1 June 2016.

  Besides, there is infrastructure cess to be levied on cars and SUVs. The cess would be 1 per cent on small petrol, LPG, CNG cars, 2.5 per cent on diesel cars of certain capacity and 4 per cent on other higher engine capacity vehicles and SUVs.

  Last year, the government had imposed Swachh Bhart cess on all taxable services. As per the revised estimate, the government collected Rs 3,750 crore through Swachh Bharat Cess in for 2015/16. In the next financial year the government hopes to collect Rs 10,000 crore through the Swachh Bharat Cess. The government hopes to collect Rs 3,000 crore from infrastructure cess.

  The government also renamed the Clean Energy Cess to 'Clean Environment Cess' and simultaneously increase its rate from Rs 200 per tonne to Rs 400 per tonne. Due to this increase the government hopes to more than double the collection through this cess from Rs 12,623 crore to Rs 26,148 crore

  In a post-budget press conference, when asked why the government is continuously levying so many cesses, finance minister Arun Jaitley said that the government need money to spend on infrastructure and at same time maintaining the fiscal deficit target of 3.5 per cent in the next financial year.

  He further said that once the GST is implemented, these cesses would automatically get subsumed.

  Meanwhile, the government abolished 13 cesses, levied by various Ministries in which revenue collection is less than Rs 50 crore in a year. This the finance minister said was done to reduce multiplicity of taxes, associated cascading and to reduce cost of collection. 

RBI may go for 50 bps easing in 2016; Nifty target 7,500: UBS

• The Reserve Bank is likely to go for a 50-basis point rate cut this calender year as the Budget gives the central bank sufficient room to adopt a more accommodative stance, UBS said in a research note, adding that its Nifty target is 7,500.

  According to the global financial services major, the Budget has given more preference to stability rather than growth and this should give more room to cut key policy rates.

  "We now expect 50 bps of policy rate cut in calendar year 2016 (from 25 bps) as the Budget should give RBI sufficient space," UBS said in a research note.

  Rather than opting for any growth-boosting stimulus, the Budget has stuck to the fiscal deficit of 3.5 per cent of GDP for 2016-17.

  However, the consolidation is of "poor quality", UBS said in the note, adding that "more than half the consolidation is due to divestment or telecom spectrum sales this does not increase the pool of savings for the private sector, inhibiting growth".

  The global brokerage firm said it expects no acceleration in real GDP growth (7.4 per cent in 2016-17 as against 7.6 per cent in 2015-16). "We now forecast Nifty earnings growth of 10 per cent in 2016-17," it said.

  According to UBS, markets appear reasonably valued and some re-rating is expected, supported by likely 50 bps of rate cuts in calender 2016, which implies lower cost of capital.

  "Our revised end-2016 Nifty target is 7,500; our downside scenario implies a Nifty value of 6,500," it said, adding that the Budget is unlikely to alter the market trajectory and the global risk environment should drive markets near-term.

  A day after suffering losses following the presentation of the Union Budget, the benchmark Sensex bounced back and was trading with gains of 620 points today at 23,622.11 in afternoon trade, bolstered by renewed hopes of a rate cut by the Reserve Bank amid positive Asian cues.

Budget mixed bag for IT, start-ups: Nasscom

• The union budget for 2016-17 was a mixed bag for the Indian IT industry and start-ups, as its proposals were less than expected with caveats, the industry's apex body Nasscom said on Monday.

  "The budget is a mixed for the technology and services sector, as clarification and simplification boost business and more technology adoption in governance is a step in right direction," the National Association of Software and Services Companies (Nasscom) said in a statement.

  On the Start-up India action plan the government unveiled in mid-January, it said caveats could be a dampener and more needed to be done to promote the nascent sector.

  "In the backdrop of global economic volatility, there are unmet expectations on policy announcements that enable ease of doing business for our sector. The budget partially covers our wish list on policy bottlenecks, including ease of business, nurturing start-ups, products and e-commerce sector," Nasscom chairman B.V.R. Mohan Reddy said in the statement.

  Terming extension of section 10AA for SEZ (special economic zones units till 2020 a positive outcome, he also said imposition of MAT (Minimum Alternative Tax) on startups would not allow the full impact of benefits to be realised.

  On Finance Minister Arun Jaitley's stress on leveraging technology to transform India, Nasscom president R. Chandrashekhar said the initiatives in the budget would help to implement Digital India programme and provide effective citizen services.

  "The government should build a public-private partnership model for technology adoption across small and medium businesses, land record modernisation, Aadhar adoption and procurement platforms. We will address procedural issues that impact the sector," he said.

  Nasscom, however, regretted that the budget did not address its plea on removal of dual levies on software products; domestic investors facing higher tax rates due to angel taxation and higher long-term capital gains tax and transfer pricing issues related to safe harbour margins.

Budget 2016-17: Over Rs 7,290 cr allocated for AMRUT, 'Smart Cities'

• The government today allocated about Rs 7,296 crore for two central schemes -- Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and 'Smart Cities' Mission.

  The general budget 2016-17 earmarked an amount of Rs 3,205 cr for the development of 100 smart cities across the country by 2020, while nearly Rs 4,091 crore for AMRUT.

  Under the smart cities projects, names of the first 20 cities, including Bhubaneswar, Pune, Ahmedabad, Chennai and Bhopal, were announced late last month.

  Urban Development Ministry had in June last year released the guidelines and mission statement for the project to develop 100 such cities.

  The focus of the mission, a flagship programme of the Modi government, includes provision of clean water, setting up of sanitation and solid waste management systems, efficient mobility and public transportation and affordable housing.

  The next 40 cities would be announced in the second phase and the rest in the third phase.

  Under the programme, each selected city will be given Rs 500 crore over a period of five years by the Centre with the respective states expected to make a matching contribution.

  As regards AMRUT, it was launched by Prime Minister Narendra Modi in June 2015 with the mission of providing basic services, including water supply, sewerage, urban transport and building of amenities in cities to improve quality of life.

PSUs to monetise idle assets; Disinvestment Dept renamed

• Reflecting a new approach on PSUs, government on Monday said it will encourage them to monetise idle assets for funding investments, while renaming the Department of Disinvestment as the Department of Investment and Public Asset Management (DIPAM).

  Presenting the Budget for 2016-17, Finance Minister Arun Jaitley also said that NITI Aayog will identify state-owned companies that would be eligible for strategic sale.

  He said the government will leverage the assets of CPSEs for generation of resources for investment in new projects.

  "Change in the name of the department clearly underlines the new approach of the government. It is committed to efficient management and leveraging its investment in the CPSEs for expansion of economic activities as well as attracting fresh investments," Disinvestment Secretary Neeraj Gupta told PTI.

  He further said that the government will adopt a comprehensive investment management strategy, not limited merely to disinvestments in equity to augment resources.

  "It will require policy synergy in various inter-linked issues, such as leverage ratio, capital restructuring, financial restructuring for revival, CAPEX, dividend, bonus share, resource augmentation through disinvestment of equity and assets etc," Gupta said.

  In his Budget speech, Jaitley said: "We will encourage CPSEs to divest individual assets like land, manufacturing unit to release their asset value for making investments in new projects. We will adopt a comprehensive approach for efficient management of the government investment in CPSEs by addressing issued such as capital restructuring, dividend, bonus shares."

  The government will soon come out with a comprehensive policy for strategic stake sale that will detail the mode as well as valuation methodology for outright sale of even profit making companies.

  The government aims to collect Rs 56,500 crore through disinvestment in PSUs in the next fiscal, 2016-17.

  Of the total budgeted proceeds, Rs 36,000 crore is estimated to come from minority stake sale in PSUs, and the remaining Rs 20,500 crore is projected to come from strategic sale in both profit and loss-making companies.

  As regards the current year, the government has been able to meet less than half the budget estimates at Rs 25,312 crore as against the target of Rs 69,500 crore.

General Awareness

Services Sector remains the Key Driver of Economic Growth contributing almost 66.1% in 2015-16

• • The services sector in India has remained the most vibrant sector in terms of contribution to national and state incomes, trade flows, FDI inflows, and employment.  According to the Economic Survey 2015-16 tabled in Parliament, the services sector contributed almost 66.1% of its gross value added growth in 2015-16 becoming the important net foreign exchange earner and the most attractive sector for FDI (Foreign Direct Investment) inflows.  Despite the slow down in the post crisis period (2010-14) India showed the fastest service sector growth with a CAGR (Compound Annual Growth Rate) of 8.6% followed by China at 8.4%. In 2014 India’s services sector growth at 10.3% was noticeably higher than China at 8.0%.  As per the ILO (International Labour Organisation) report on “Global Employment and Social Outlook : Trends 2015” job creation in the coming years will be mainly in the service sector.

    
    

    FDI

    
    

    In 2014, FDI in India at 34billion US$ increased by 22% over 2013.  There has been a significant growth in FDI inflows in 2014-15 and 2015-16(April – October) in general and in Services Sector in particular. In 2014-15, FDI inflows to the Services Sector grew by a whopping 70.4% to 16.4 billion US$.  This rising trend is continuing in the first seven months of 2015-16 with the FDI equity inflows in the services sector growing by 74.7% to 14.8 billion US$.  Significant FDI related liberalization has taken place in a number of sectors to ensure that India remains a increasingly attractive investment destination. 

    
    

    India’s Services Trade

    
    

    Services exports have been a dynamic element of India’s trade and globalization in recent years.  India’s services export grew from 16.8 billion US$ in 2001 to 155.6 billion US $ in 2014 which constitutes 7.5% of the GDP making the country the 8^th largest services exporter in the world.   The overall openness of the economy reflected by total trade including services as a percentage of GDP shows a higher degree of openness at 50% in 2014-15 compared to 38% in 2004-05.

    
    

    India’s Services Import at 81.1 billion US$ grew by 3.3% in 2014-15 . The Government has taken policy initiatives to promote services exports which include the Service Export from India Scheme (SEIS) and organizing Global Exhibition on Services (GES).

    
    

    Tourism

    
    

    Tourism is a major engine of economic growth, and a generator of employment of diverse kinds.  According to Economic Survey India’s tourism growth which was 10.2% in terms of foreign Tourist Arrival (FTA) and 9.7% in terms of foreign exchange Earnings(FEE) in 2014 decelerated to 4.5% in terms of FTAs and fell by 2.8% in terms of FEEs in 2015.  The lower growth in FTAs and fall in FEEs in 2015 is due to negative or low growth in FTAs from high spending tourists originating  from European countries like France, Germany and UK.  However, domestic tourism continues to be an important contributor to the sector providing much needed resilience  In 2014 it grew by 12.9%. The top five states in domestic tourist visits in 2014 are Tamil Nadu, Uttar Pradesh, Karnataka, Maharashtra and Andhra Pradesh. In 2014-15, Government has launched two schemes for thematic development of tourism, these are Swadesh Darshan and National Mission on Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD).  To promote medical tourism, the Government has launched India’s Healthcare Portal and Advantage Health Care India.

    
    

    Shipping & Port Services

    
    

    Around 95% of India’s trade by volume and 68% in terms of value is transported by sea.  As per UNCTAD, India with 11.7 million twenty-foot equivalent units of container (TEUs) and a  world share of 1.7%, ranked ninth in 2014 among developing countries in terms of containership operations.  A vision for coastal shipping tourism and regional development has been prepared with a view to increasing the share of the coastal/inland water-ways transport mode from 7% to 10% by 2019-20.   The cargo traffic of India ports increased by 8.2% to 1052.21 million tonnes in 2014-15.  In India’s Maritime Agenda, the target for the year 2020 is 3130 million tonnes of port capacity with an investment of approximately Rs. 2,96,000/- crores.

    
    

    IT-BPM Services

    
    

    The IT-BPM sector has demonstrated flexibility and as per the Economic Survey is expected to touch an estimated share of 9.5% of GDP and more than 45% in total services export in 2015-16.  E-commerce is expected to grow at 21.4% in 2015-16 to reach 17 billion US$.  India home to a new breed of young start ups has clearly evolved to become the third largest base of technology start ups in the world.  Within one year the number of start ups have grown by 40% creating 80,000-85,000 jobs in 2015.   This emerging sector is set  to get up a fillip with the Startup India programme.

    
    

    Research and Development Services

    
    

    As per the CSO’s(Central Statistical Organization) new method there is no separate head for R&D, it is a part of the professional scientific & technical activities including R&D which grew at 3.8% and 25.5 respectively in 2013-14 and 2014-15.  According to the Survey, India’s R&D globalization and services market is set to almost double by 2020 to 38 billion US$.  

    
    

    Consultancy Services

    
    

    According to the Survey Consultancy Services is emerging as one of the fastest growing service segments in India.  Government has taken several initiatives like the Marketing Development Assistance and Market Access Initiative Scheme among others for capacity development of domestic consultants.

    
    

    Real Estate and Housing

    
    

    This sector constituted 8.0% of the India’s GVA (Gross Value Added) in 2014-15 and grew by 9.1%.  The sector has grown at a CAGR of 8.1% since 2011-12.  However, the construction sector has witnessed a slowdown in last few years due to weakening of both domestic and global growth.  The Government has announced plans to build six crore houses by the year 2022 under the Housing for All scheme.

    
    

    Internal Trade

    
    

    According to the Survey, Rs. 12,31,073 crore trade and repair services sector, with a 10.7% share in GVA, grew by 10.8% in 2014-15.     India’s retail market is expected to grow to 1.3 trillion US$ by 2020 making India the world’s fastest growing major developing market.  The E-commerce market in India is expected to reach 16 billion US$ by the end of 2015 on the back of growing internet population and increased online shoppers.

    
    

    Media and Entertainment Services

    
    

    According to the Economic Survey, the industry has recorded unprecedented growth over the last two decades making it one of the fastest growing industries in India. It is projected to grow at a CAGR of 13.9% to reach 1964 billion rupees by 2019.  Digital advertising and gaming, which grew by 44.5% and 22.4% respectively in 2014, are projected to drive the growth of this sector in the coming years.

    
    

    Postal Services

    
    

    India Posts is the largest Postal network in world.   Towards financial inclusion, the number of post office savings bank (POSB) accounts has increased from 30.86 crore to 33.97 crore and total deposits in POSB accounts and cash certificate to Rs. 6.53 lakhs crore in the last one year.  More than 80 lakh Sukanya Samridhi Yojna accounts have been opened.  The IT Modernization Project of the Department of Posts, with a total outlay of Rs. 4909 crore, involves computerization and networking of all the post offices.