Cabinet Approves National Policy on Information Technology 2012

The Cabinet has recently approved the National Policy on Information Technology 2012. The Policy aims to leverage Information & Communication Technology (ICT) to address the ountry’s economic and developmental challenges. The policy is rooted in the conviction that ICT has the power to transform the lives of people.

ICT and Electronics are contributing significantly to the Indian economy, society and governance. IT is a key driver of the knowledge based global economy. The right policies and investment in infrastructure can strengthen and enhance India’s position as a global IT power-house. Use of IT can transform our economy, enhance equity and lead to improvement in development indices. The Policy envisages the growth of the IT market to USD 300 Billion and creation of additional 10 million employments by 2020.

The thrust areas of the policy include:

1. To increase revenues of IT and ITES (Information Technology Enabled Services) Industry from 100 Billion USD currently to 300 Billion USD by 2020 and expand exports from 69 Billion USD currently to 200 Billion USD by 2020.

2. To gain significant global market-share in emerging technologies and Services.

3. To promote innovation and R&D in cutting edge technologies and development of applications and solutions in areas like localization, location based services, mobile value added services, Cloud Computing, Social Media and Utility models.

4. To encourage adoption of ICTs in key economic and strategic sectors to improve their competitiveness and productivity.

5. To provide fiscal benefits to SMEs and Startups for adoption of IT in value creation

6. To create a pool of 10 million additional skilled manpower in ICT.

7. To make at least one individual in every household e-literate.

8. To provide for mandatory delivery of and affordable access to all public services in electronic mode.

9. To enhance transparency, accountability, efficiency, reliability and decentralization in Government and in particular, in delivery of public services.

10. To leverage ICT for key Social Sector initiatives like Education, Health, Rural Development and Financial Services to promote equity and quality.

11. To make India the global hub for development of language technologies, to encourage and facilitate development of content accessible in all Indian languages and thereby help bridge the digital divide.

12. To enable access of content and ICT applications by differently-abled people to foster inclusive development.

13. To leverage ICT for expanding the workforce and enabling life-long learning.

14. To strengthen the Regulatory and Security Framework for ensuring a Secure and legally compliant Cyberspace ecosystem.

15. To adopt Open standards and promote open source and open technologies

The policy attempts to optimally leverage India’s global edge in ICT to advance national competitiveness in other sectors, particularly those of strategic and economic importance. The Policy will promote an inclusive and equitable society. The Policy is oriented towards use of ICT to consciously promote decentralization and empowerment of citizens.

Integration of Ayush in Health Care System under National Rural Health Mission

After the launch of NRHM, the Ministry of Health and Family Welfare has taken several steps for strengthening health care facilities by integrating AYUSH systems in national health care delivery systems. The integration is facilitated by appointing or co-locating AYUSH doctors & supporting staff and creating infrastructure according to local needs.

There were 640 districts, 6431 blocks and 638588 villages incorporating 605 District Hospitals (DHs), 4535 Community Health Centres (CHCs) and 23673 Primary Health Centres (PHCs) till March 2011. Out of these, AYUSH facilities had been co-located with 416 District Hospitals, 2942 Community Health Centres and 9559 Primary Health Centres during 2011. About 68.76% District hospitals had been co-located with AYUSH facilities till 2011. All the District hospitals existing in the states and union territories of Goa, Haryana, Jharkhand, Maharashtra, Mizoram, Sikkim, Tamil Nadu, Tripura, Lakshadweep and Puducherry had been co-located with AYUSH facilities, whereas, the states having more than 50% of the District hospitals co-located with AYUSH facilities were Chhattisgarh, Punjab, Madhya Pradesh, and Uttarakhand., There had been no co-location of AYUSH facilities in the Districts hospitals of the remaining 12 states and union territories.

Nearly 65% Community Health Centre’s had been co-located with AYUSH facilities till 2011. All the CHCs existing in the states and union territories of Andhra Pradesh, Goa, Nagaland, Orissa, Manipur, Tamil Nadu, Uttar Pradesh, Uttarakhand, Andaman & Nicobar Islands, Chandigarh, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep and Puducherry had been co-located with AYUSH facilities., whereas, the states having more than 50% of the CHCs co-located with AYUSH facilities were Chhattisgarh, Haryana, Jharkhand, Maharashtra, Meghalaya, Punjab, Tripura and West Bengal. The states having more than 25% but less than 50% of the CHCs co-located with AYUSH facilities were Arunachal Pradesh, Gujarat and Rajasthan. The states having less than 25% CHCs co-located with AYUSH facilities were Madhya Pradesh only. No co-location of AYUSH facilities had been observed in CHCs in the remaining 8 states and union territories.

About 40.4% Primary Health Centre’s had been co-located with AYUSH facilities till 2011. All the PHC existing in the Union Territory of D&N Haveli, Daman & Diu and Puducherry, Jammu and Kashmir, A& N Islands, and Lakshadweep have been co-located. The States/ Union Territories having more than 50% of the PHCs co-located with AYUSH facilities were Goa, Andhra Pradesh, Gujarat, Manipur, Orissa, Rajasthan, Tamilnadu and Tripura, States having more than 25% but less than 50% of the PHCs co-located with AYUSH facilities, were Karnataka, Meghalaya West Bengal, Chhattisgarh, Maharashtra, Uttar Pradesh and Punjab. The states and union territories having less than 25% of the Primary Health Centres co-located with AYUSH facilities were Arunachal Pradesh, Haryana, Himachal Pradesh, Madhya Pradesh and Uttarakhand.

Shome Committee GAAR Report submitted by the to Finanace Ministry

The GAAR report was submitted on 1 September 2012 to the finance minister of India by the Shome Committee constituted by the Central Board of Direct Taxes, after the approval of Prime Minister of India. The committee in its report has tried to create a balance in between the investors being invited to the country and protection of the tax base from tax avoidance and evasion, using aggressive tax planning. The major findings of the GAAR’s committee to create a balance in between the investors and chances of tax avoidance and evasion includes:
1. Tax Evasion, Tax Mitigation and Tax Avoidance
2. Overcharging Principle Applicability of GAAR
3. Monetary Threshold
4. Arm’s Length Test
5. Test to Misuse or Abuse the Provisions of Act
6. Factors for determination of Commercial Substance
7. Grandfathering of existing Investments
8. GAAR will not override the CBDT circular 789 of 2000 with respect to the tax-treaty in between India and Mauritius
9. GAAR will not be applicable at places where so ever anti-avoidance provisions are in existence in the treaty of tax and any type of anti-avoidance rule exists in the Act
10. Impermissible Avoidance arrangements
11. Tax abolition in cases of gains that rises out by the transfer of listed securities
12. Foreign Institutional Investors
13. Corresponding adjustments
14. Implementation of the Onus on the revenue authority
15. Tax Withholding
16. Definition of the term Connected Person
17. Constitution of approval panel
18. Time limit for GAAR provisions
19. AAR to pass ruling within 6 months
20. Prescription of Statutory forms
21. Implementation issue
22. Reporting requirements

The committee in its findings has stated that the GAAR guidelines should be introduced in the country at the time of economic stability. Hence, it has recommended the postponement of its implementation by 3 years. Committee’s recommendation also states about the implementation of the findings with complete spirit and has laid emphasis on transition period of the taxpayers and preparedness of the administrators. To provide clarity on GAAR’s applicability provisions in different situations 27 illustrations were made and are mentioned under different conditions like:
1. Tax Mitigation- GAAR can’t be invoked
2. Tax Avoidance- SAAR is applicable hence GAAR is not invoked
3. Court Approved Amalgamations or demergers
4. Tax Avoidance- GAAR invoked
5. Tax Evasion can directly be dealt of law without invoking the GAAR
Following the Finance Act 2012, the introduction of the General Anti-Avoidance Rules (GAAR) was done into the Income Tax Act, 1961. The committee briefly analysed the provisions of GAAR as per the inputs available from stakeholders and following the recommendations made the amendments in the Act were made for finalization of the guidelines for the Income Tax Rules, 1962.

Shome’s Committee:

The expert committee on GAAR (General Anti-Avoidance Rules) was constituted under the Chairmanship of Dr. Parthasarsthi Shome with members, namely Shri N. Rangachary (Former Chairman of IRDA and CBDT), Dr. Ajay Shah (Prof. NIPFP) and Shri Sunil Gupta (Joint Secretary-Tax Policy and Legislation, Department of Revenue) for undertaking the consultations of stakeholders and finalization of guidelines for GAAR. The main objective of the committee was to get feedbacks from the stakeholders and prepare new guidelines or to amend the previous guidelines after examining the things finely.The committee was constituted by the Central Board of Direct Taxes after being approved by the Prime Minister of India.

The committee formed referred to following terms:

• To receive feedback from both public and stakeholders on the Guideline of GAAR mentioned on the website of Government of India.
• To rework on the guidelines following the feedback received and examining the same and then publish the same in form of second draft
• To find out and finalise, guidelines along with an road-map for implementation of GAAR and submit it to the government

Analysis of the GAAR provisions 

The provisions for the GAAR are mention in Chapter X-A (Section 95 to 102) of the Act. Presented provisions allow the authority of tax, despite of containing anything in the Act with clear declaration on the arrangements made for assesses (estimated value, nature or extent of amount of the fine) that has entered into the impermissible avoidance arrangement to face the consequences with regard to the tax liability determined by the arrangement.

Pradhan Mantri Swasthya Suraksha Yojana

The Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) aims at correcting the imbalances in the availability of affordable healthcare facilities in the different parts of the country in general, and augmenting facilities for quality medical education in the under-served States in particular. The scheme was approved in March 2006.

The first phase in the PMSSY has two components - setting up of six institutions in the line of AIIMS; and upgradation of 13 existing Government medical college institutions.

It has been decided to set up 6 AIIMS-like institutions, one each in the States of Bihar (Patna), Chattisgarh (Raipur), Madhya Pradesh (Bhopal), Orissa (Bhubaneswar), Rajasthan (Jodhpur) and Uttaranchal (Rishikesh) at an estimated cost of Rs 840 crores per institution. These States have been identified on the basis of various socio-economic indicators like human development index, literacy rate, population below poverty line and per capital income and health indicators like population to bed ratio, prevalence rate of serious communicable diseases, infant mortality rate etc. Each institution will have a 960 bedded hospital (500 beds for the medical college hospital; 300 beds for Speciality/Super Speciality; 100 beds for ICU/Accident trauma; 30 beds for Physical Medicine & Rehabilitation and 30 beds for Ayush) intended to provide healthcare facilities in 42 Speciality/Super-Speciality disciplines. Medical College will have 100 UG intake besides facilities for imparting PG/doctoral courses in various disciplines, largely based on Medical Council of India (MCI) norms and also nursing college conforming to Nursing Council norms.    

In addition to this, 13 existing medical institutions spread over 10 States will also be upgraded, with an outlay of Rs. 120 crores (Rs. 100 crores from Central Government and   Rs. 20 crores from State Government) for each institution. These institutions are Government Medical College, Jammu, Jammu & Kashmir, Government Medical College, Srinagar, Jammu & Kashmir, Kolkatta Medical College, Kolkatta, West Bengal, Sanjay Gandhi Post Graduate Institute of Medical Sciences, Lucknow, Uttar Pradesh, Institute of Medical Sciences, BHU, Varanasi, Uttar Pardesh, Nizam Institute of Medical Sciences, Hyderabad, Andhra Pradesh, Sri Venkateshwara Institute of Medical Sciences, Tirupati, Andhra Pradesh, Government. Medical College, Salem, Tamil Nadu, B.J. Medical College, Ahmedabad, Gujarat, Bangalore Medical College, Bangalore, Karnataka, Government Medical College, Thiruvananthapuram, Kerala, Rajendra Institute of Medical Sciences (RIMS), Ranchi and Grants Medical College & Sir J.J. Group of Hospitals, Mumbai, Maharashtra. 

In the second phase of PMSSY, the Government has approved the setting up of two more AIIMS-like institutions, one each in the States of West Bengal and Uttar Pradesh and upgradation of six medical college institutions namely Government Medical College, Amritsar, Punjab; Government Medical College, Tanda, Himachal Pradesh; Government Medical College, Madurai, Tamil Nadu; Government Medical College, Nagpur, Maharashtra, Jawaharlal Nehru Medical College of Aligarh Muslim University, Aligarh and Pt. B.D. Sharma Postgraduate Institute of Medical Sciences, Rohtak. The estimated cost for each AIIMS-like institution is Rs. 823 crore. For upgradation of medical college institutions, Central Government will contribute Rs. 125 crore each.

In the third phase of PMSSY, it is proposed to upgrade the following existing medical college institutions namely Government Medical College, Jhansi, Uttar Pradesh; Government Medical College, Rewa, Madhya Pradesh; Government Medical College, Gorakhpur, Uttar Pradesh; Government Medical College, Dharbanga, Bihar; Government Medical College, Kozhikode, Kerala; Vijaynagar Institute of Medical Sciences, Bellary, Karnataka and Government Medical College, Muzaffarpur, Bihar.

The project cost for upgradation of each medical college institution has been estimated at Rs. 150 crores per institution, out of which Central Government will contribute Rs. 125 crores and the remaining Rs. 25 crore will be borne by the respective State Governments.

It is hoped that consequent to the successful implementation of PMSSY, better and affordable healthcare facilities will be easily accessible to one and all in the country.

NATIONAL RURAL HEALTH MISSION

Recognizing the importance of Health in the process of economic and social development and improving the quality of life of our citizens, the Government of India has launched the National Rural Health Mission to carry out necessary architectural correction in the basic health care delivery system. The Mission adopts a synergistic approach by relating health to determinants of good health viz. segments of nutrition, sanitation, hygiene and safe drinking water. It also aims at mainstreaming the Indian systems of medicine to facilitate health care. National Rural Health Mission was launched on 12th April, 2005 with an objective to provide effective health care to the rural population, the disadvantaged groups including women and children by improving access, enabling community ownership, strengthening public health systems for efficient service delivery, enhancing equity and accountability and promoting decentralization The scheme proposes a number of new mechanisms for healthcare delivery including training local residents as Accredited Social Health Activists (ASHA) and the Janani Surakshay Yojana (motherhood protection program). It also aims at improving hygiene and sanitation infrastructure. It is the most ambitious rural health initiative ever. The mission has a special focus on 18 states Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Jammu and Kashmir, Manipur, Mizoram, Meghalaya, Madhya Pradesh, Nagaland, Orissa, Rajasthan, Sikkim, Tripura, Uttarakhand and Uttar Pradesh. Goals of NHRM a) Reduction in Infant Mortality Rate (IMR) and Maternal Mortality Ratio (MMR) b) Universal access to public health services such as Women’s health, child health, water, sanitation &hygiene, immunization, and Nutrition c) Prevention and control of communicable and non-communicable diseases, including locally endemic diseases d) Access to integrated comprehensive primary healthcare e) Population stabilization, gender and demographic balance. f) Revitalize local health traditions and mainstream AYUSH. g) Promotion of healthy life styles. Salient features of NHRM: • Innovation in Human Resource Management Promote access to improved healthcare at household level through the Accredited Social Health Activist (ASHA). ASHA would act as a bridge between the Auxiliary Nurse and the village Midwives and be accountable to the Panchayat. ASHA would facilitate in the implementation of the Village Health Plan along with Anganwadi worker, ANM, functionaries of other Departments, and Self Help Group members, under the leadership of the Village Health Committee of the Panchayat. • Strengthening Public Health Delivery in India New concept of Indian Public Health Standards introduced. They are set of standards envisaged to improve the quality of health care delivery in the country under the National Rural Health Mission. • Strengthening PHCs Mission aims at Strengthening PHC for quality preventive, promotive, curative, and supervisory and Outreach services through adequate and regular supply of essential quality drugs and equipment (including Supply of Auto Disabled Syringes for immunization) to PHCs. Provision of 24 hour service in 50% PHCs by addressing shortage of doctors, especially in high focus States, through mainstreaming AYUSH manpower. • Strengthen CHCs Infrastructure strengthening of CHCs by implementation of IPHS standards which includes Promotion of Stakeholder Committees (Rogi Kalyan Samitis) for hospital management and developing standards of services and costs in hospital care. • Decentralized Planning This includes “District Health Mission” at the District level and the “State Health Mission” at the state level. District Health Plan would be a reflection of synergy between Village Health Plans, State and National priorities for Health, Water Supply, Sanitation and Nutrition. It also includes involvement of PRIs in planning process to improve access of facilities. • Strengthening Disease Control Mechanisms National Disease Control Programmes for Malaria, TB, Kala Azar, Filaria, Blindness & Iodine Deficiency and Integrated Disease Surveillance Programme has been integrated under the Mission, for improved programme delivery and new Initiatives have been launched for control of Non Communicable Diseases. Further disease surveillance system at village level would be strengthened. Supply of generic drugs (both AYUSH & Allopathic) for common ailments at village, SC, PHC/CHC level will also be included.

NATIONAL RURAL LIVELIHOOD MISSION

The National Rural Livelihood Mission (NRLM) was established in June 2010 by the Government of India, to be implemented in all States of the country, to establish efficient and sustainable institutions of the rural poor that enable them to increase household income through livelihood enhancements and improved access to financial and selected public services. NRLM have special focus on the poorest households, who are currently dependant on MGNREGA. These families will be supported to broaden their livelihoods through assets and skill acquisition. This will enhance the quality of their livelihoods significantly. Brief history Pursuant to the recommendations of Hashim Committee, this Ministry restructured all the Rural Development and Poverty Alleviation programmes such as IRDP, TRYSEM, DWCRA, SITRA, GKY, and Million Wells Scheme with a view to improving the efficacy of programmes. All these Schemes were merged into a single self employment programme known as Swarna Jayanti Gram Swarozgar Yojana (SGSY). The Ministry of Rural Development has decided to re-design and re-structure the ongoing Swarna Jayanti Gram Swarojgar Yojana (SGSY) into National Livelihood Mission (NRLM). The idea has been conceived as a cornerstone of national poverty reduction strategy. The objective of the Mission is to reduce poverty among rural BPL by promoting diversified and gainful self-employment and wage employment opportunities which would lead to an appreciable increase in income on sustainable basis. A comprehensive livelihoods approach encompassing four interrelated tasks: a)    Mobilizing all rural, poor households into effective self help groups (SHGs) and SHG federations; b)    Enhancing access to credit and other financial, technical, and marketing services; c)    Building capacities and skills for gainful and sustainable livelihoods; and d)    Improving the delivery of social and economic support services to poor. Thus the objectives of NRLM are: 1.    Universal social mobilization; 2.    Formation of people's institutions; 3.    Universal financial inclusion; 4.    Training and capacity building and 5.    Enhanced package of economic assistance for setting-up of micro enterprises and larger role for Self Help Groups (SHGs) National Rural Livelihoods Mission is a Centrally Sponsored Scheme and the financing of the programme will be shared between the Centre and the States in the ratio of 75:25, except in case of the North Eastern States where it will be on 90:10 basis.  There are two major strategic shifts under NRLM: a)    NRLM is a demand driven programme and the states formulate their own poverty reduction action plans based on their past experience, resources and skills base; and b)    NRLM will provide for a professional support structure for programme implementation at all levels from the national up to the block level in different streams. The Rural Livelihoods Mission has a three-tier interdependent structure. At the apex of the structure is the National Rural Livelihoods Mission, under the Ministry of Rural Development, Govt. of India. At the State level, there is an umbrella organization under the State Department of Rural Development/ Department which is responsible for implementing self-employment/rural livelihoods promotion programs. The State level Mission with dedicated professionals and domain experts under the State department of Rural Department will be guided financially, technically and supported by the NRLM on need basis. The National and the State Mission will have a symbiotic relationship. They will have mutual access to the knowledge and services in the area of rural livelihoods. The National Rural Livelihoods Mission (NRLM) seeks to provide greater focus and momentum to poverty reduction to achieve the Millennium Development Goal by 2015.This entails a rapid increase in viable livelihoods among poor rural households (as well as urban ones). In the longer run, the NRLM is to ensure broad-based inclusive growth and reduce disparities by spreading its benefits from ‘islands of growth’ across the communities, sectors and regions. ROLE OF BANKS IN NRLM The role of Banks will be of prime importance under NRLM as a source of credit for the poor at reasonable rates. NRLM will focus on getting banks to lend to the poor by making them bankable clients through smart use of subsidy. NRLM will focus on women as the best way of reaching out to the whole family is through the woman. There will be a special focus on vulnerable sections: scheduled tribes, scheduled castes, minorities, women headed families, etc. The second focus of NRLM would be rural youth of the country who are unemployed. They will be supported through placement linked skill development projects through which their skills will be upgraded through short term training courses in sectors which have high demand for services. On June 2011 Government of India renamed the National Rural Livelihood Mission as ‘AAJEEVIKA’. Aided in part through investment support by the World Bank, the Mission aims at creating efficient and effective institutional platforms of the rural poor enabling them to increase household income through sustainable livelihood enhancements and improved access to financial services.

Shimla Municipal Corporation introduced Green Tax

Shimla Municipal Corporation on 15 September 2012 introduced Green Tax on Shimla entry of vehicles not registered in Himachal Pradesh. The Corporation Commissioner M.P. Sood stated that the vehicles crossing the entry points of the town will have to pay the imposed tax. The tax will be imposed on automobiles on both commercial and non-commercial category.

By imposing the tax, the corporation will increase its revenue by Rs 6 crore per year. The taxes will be charged on the four entry points of the city namely, Totu, Tara Devi, Dhalli and Mahali.

Tax imposed as per the category of vehicles:

1. Two wheelers- Rs 100 per entry
2. Car- Rs 200 per entry
3. Utility Vehicles- Rs300 per entry
4. Bus/truck- Rs 500 per entry

Prime Minister led National Investment Board

Finance Minister P. Chidambaram on 15 September 2012 pitched for institutionalization of a National Investment Board under the leadership of Prime Minister. The formation of the board will help in speeding the approval of the proposals, for the mega projects and their implementation. Formation of the board will help the country in achieving the targeted growth for the twelfth five year of 8.2 percent. 

At the meeting of the full planning commission under the chairmanship of Prime Minister Manmohan Singh, the finance minister expressed his concern on the delayed implementation of the mega projects and stressed on the fact that the decision made by the National Investment Board (NIB) to be taken as the final decision. Chidambaram also insisted interference by any other authority on the approvals and decisions made by the NIB will be entertained. He also added to his statement that NIB’s role will be limited to the projects with investments of Rs 1000 crore or more.

Full Plan panel endorses 8.2% growth target for 12th Plan

The Full Planning Commission chaired by Prime Minister Manmohan Singh on September 15 approved the 12th Plan (2012-17) draft document endorsing the scaling-down of the annual average economic growth target to 8.2 per cent from the 9 per cent envisaged earlier, keeping in view the fragile economic environment.

Briefing reporters after the meeting, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: “The Full Planning Commission approved the draft 12th Five-Year Plan document, subject to certain suggestions made in the meeting… The full Commission endorsed the revised growth target of 8.2 per cent for the 12th Plan, which is necessary to achieve inclusive growth.”

As per practice, the draft document will now have to be vetted by the Union Cabinet and then placed for final approval before the National Development Council (NDC), the country’s highest decision-making body, comprising the Chief Ministers of all States and Union Territories, and the Full Planning Co

At Saturday’s meeting of the full Plan panel, which was attended by Commission members and all key Cabinet members — though Railway Minister Mukul Roy (belonging to the Trinamool Congress) was not present — the Prime Minister gave an overview of the economic scenario and the circumstances in which the GDP growth target for the five-year period had to be lowered and what needed to be done to attain inclusive growth.

Keeping in view the fragile economic recovery and uncertain global environment, Mr. Ahluwalia pointed out that the 12th Plan growth target of 8.2 per cent, as compared to 7.9 per cent achieved in the 11th Plan period, was “actually a realistic target” for the five-year period, although it was lower than the nine per cent envisaged earlier in the Approach Paper.

Mr. Ahluwalia pointed out that the 12th Plan strategy would be to provide flexibility to States in utilisation of funds provided to them under various Centrally-sponsored schemes (CSS) with the liberty to make State-specific guidelines under these programmes for incurring expenditure.

With regard to rationalisation of subsidies, he said the Commission would take follow-up action on Finance Minister P. Chidambaram’s suggestion with regard to cash transfers pertaining to food, fuel and fertiliser subsidies. He hoped that the exercise of cash transfer of subsidies would be completed by March 2017, which marks the end of the 12th Plan period.

As for the concerns expressed by Mr. Chidambaram that reducing the subsidy burden to 1.2 per cent of the GDP by 2016-17 from the 1.9 per cent estimated in the Budget for 2012-13 was optimistic, Mr. Ahluwalia said: “I agree that these are all ambitious targets. Plan is all about ambition”.

The three scenarios

Earlier, justifying the hike in diesel prices and advocating the need for “courage and some risks” to break the policy logjam, the Prime Minister presented three economic scenarios — “Strong inclusive growth”, “Insufficient action” and “policy logjam” — as unveiled by the draft document and argued in favour of the first one for the country needed close to a $1-trillion investment in the infrastructure sector during the period.

“I believe that we can make Scenario I possible. It will take courage and some risks but it should be our endeavour to ensure that it materialises. The country deserves no less,” Dr. Singh said.

Dr. Singh pointed out that the Plan document’s central message was that all stated objectives can be achieved provided policies are put in place to take care of the weaknesses.

Providing, for the first time, a choice to policymakers as to what they desire, the Plan document noted that under the ‘Strong Inclusive Growth’ scenario, one could expect a number of virtuous cycles to start operating, leading to positive results on both growth and inclusion. “This is the scenario we should aim for,” it said.

Scenario II (Insufficient action) is described as a state of partial action with weak implementation. In this scenario, the virtuous cycles that reinforce growth in Scenario I do not kick in and growth can easily slow down to 6 to 6.5 per cent.

Driving home the point of aspiring for higher growth, Dr. Singh noted that the second scenario would make it hard to achieve inclusiveness. “This is where we will end up if we make only half-hearted efforts and slip in implementation. It is my sincere hope that we do not do so.”

Scenario III (Policy logjam), Dr. Singh said, reflected a situation where for one reason or the other, most of the policies needed to achieve Scenario I are not taken. “If this continues for any length of time, vicious cycles begin to set in and growth could easily collapse to about five per cent per year, with very poor outcomes on inclusion.

“I urge everyone interested in the country’s future to understand fully the implications of this scenario. They will quickly come to an agreement that the people of India deserve better than this,” Dr. Singh said.

Grow, Transform and Sustain – The Mantra for Indian PSUs

India’s central public sector enterprises have undergone a cycle of transformation since the introduction of liberal economic policies a couple of decades ago.  Many believed that the public sector enterprises will simply wither away because of competition and their inefficiency; or they will be subsumed by the private sector because of the divestment programme.  However, as the experience has shown, the Central Public Sector Enterprises (CPSEs) continue to have a critical role to play in many businesses, especially in the strategic sectors.  Many CPSEs have proved their critics wrong by becoming extremely efficient and competitive.

In the strategic sectors of our economy, CPSEs are needed to ensure that the national and the social priorities are guaranteed – in terms of assured supply and affordable prices.  Infrastructure, energy, healthcare, defence are such areas where it cannot be left entirely to the markets.  In fact, the CPSEs are needed to create, balance and sustain the market in these sectors.  Even in the business and consumer services sector, the CPSEs are needed to ensure adequate and fair competition and stabilize the market.

However, at the same time, the CPSEs cannot take such role for granted for future also.  They cannot be allowed to become complacent.  Efficient and effective management is essential to ensure that the CPSEs continue to fulfill their obligations to the country.  Indian CPSEs need to be competitive at home against the global competitors and become multinationals themselves.  By striving to become multinationals, Indian CPSEs will be following the best management and operational benchmarks in the world, making it easier for them to be competitive at home and also in global arena.

Most of CPSEs are profitable despite operating with the constraints of public service priorities.  Of the 248 CPSEs, 220 are currently operational and of those 158 are profitable.  That is an impressive 70 per cent plus mark for a group that also includes a large number of legacy companies taken over as sick private sector units.  The operating efficiency of the CPSEs is also quite good in the prevailing dullness in the economy.  Last year, i.e. 2010-11, CPSEs delivered dividend of Rs. 35,681 crore.  Importantly, there has been significant improvement in the revenue and profitability levels of the CPSEs.  So, the CPSEs are making a substantial contribution to the country’s economic growth.  Even on the stockmarkets, the listed 45 odd CPSEs make nearly 20 per cent of the value of all listed Indian stocks.  Clearly, Indian public sector has the size and the efficiency to entertain ambitions of going global.  The CPSEs can also build and be parts of global supply chains.  In doing so, they can achieve an edge in technological and managerial innovation and help Indian economy grow at a faster rate.

Already, many Indian CPSEs are global giants.  Most of the petroleum PSEs are now multinationals and helping secure energy fuels for now and the future.  In the heavy engineering, infrastructure and project services too, Indian CPSEs have significant presence overseas.  Now, the power sector CPSEs are set to spread out in the world.  Given their experience of working in resource constrained and politically obstructive environment, Indian CPSEs are well equipped to do business in the other developing parts of the world, particularly Southeast Asia and Africa.

The Government has taken steps to help the Central Public Sector Enterprises (CPSEs) to improve their operations and competitiveness at home.  The Maharatana and Navaratna CPSEs have been allowed to invest in assets overseas and undertake joint ventures abroad.

The CPSEs are continuing to invest even in the prevailing slowdown.  Much of this money is being invested in the critical sectors such as energy and infrastructure.  This investment will have a multiplier effect on the economy.  Also, a significant part of the fresh investment this year is going into capacity building overseas.  This investment has been made possible by the CPSEs strong performance during the past few years, which have yielded adequate cash surpluses for investment.  The government has also allowed the CPSEs to use their cash surpluses to buy others’ stocks in order to aggregate their complementary strengths.

Steps have also been taken to improve efficiency of these investments.  Majority of the CPSEs have been signing MOUs with the Government which cover not only the financial results but also the outcomes in areas such as corporate governance, research and development and corporate social responsibility.  A vast majority of the MOU signing CPSEs have been meeting or exceeding their targets.  A comprehensive review of the MOU system is underway and revamped MOU system would be put in place shortly.

The Government has also been taking steps through, the Board for Reconstruction of Public Sector Enterprises (BRPSE) and Government approved revival packages to ensure that the performance of loss-making CPSEs could be improved.  We are also taking new initiatives such as enhancement of the age of superannuation from 58 to 60 years and grant of 1997 pay scales to the employees of sick and loss-making CPSEs as these steps can give them the incentive to make extra effort to get out of the red.

Even as the CPSEs move towards becoming globally competitive and going global, they still have to play their role as the catalysts of development and opportunity.  The CPSEs will continue to go to hinterlands to seed industries there and they will continue to invest in creating employment and economic opportunities for the deprived.  The government would like the CPSEs to integrate India’s rural economy into the mainstream.  However, it is upto the CPSEs themselves to continue to prove their relevance and they will survive only if the public sees them performing a useful function and only if they can compete with the best in the world at home and overseas.

Autonomy and more freedom are crucial for achieving this objective.  In fact freedom is not complete if it does not include freedom to commit mistakes and take risks.  Keeping this in view, it is the Government’s endeavour to enhance freedom and autonomy to CPSE management and an exercise in this direction has already begun.

SEBI

To reform the financial services sector especially the securities market, the Securities and Exchange Board of India (SEBI) was established by the Government of India in 1988 through an executive resolution, and was subsequently upgraded as fully autonomous body (a statutory board) in the year 1992 with the passing of the Securities and Exchange Board of India Act (SEBI Act) on 30th January 1992.

The Securities and Exchange Board of India is the sole regulator for the securities market in India.

The SEBI is managed by six members, i.e. by the chairman who is nominated by central government & two members, i.e. officers of central ministry, one member from the RBI & the remaining two are nominated by the central government.

SEBI is headquartered in Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi, Kolkata, Chennai and Ahmedabad.

The basic objectives of the Board were identified as: 

• to protect the interests of investors in securities;
• to promote the development of Securities Market;
• to regulate the securities market and
• for matters connected therewith or incidental thereto.

SEBI has to be responsive to the needs of three groups, which constitute:

• the issuers of securities
• the investors
• the market intermediaries.

To the investors, the SEBI strives to assure that their rights are protected; they are enabled to make informed choices and decisions in financial dealings.

To the issuer, the SEBI strives to provide a transparent and efficient market where they are able to raise resources but meet regulatory obligations.

To the intermediaries, the SEBI strives to render a market in which they can compete freely and operate in a manner which gives the investors and market participants that the market is efficient, orderly and fair.

Functions and responsibilities

The main functions of Security and Exchange Board of India is to introduce some important regulatory measures, market registration norms with eligibility criteria, code of conduct for intermediaries such as issue bankers, merchant bankers, brokers, sub-brokers, registrars, portfolio managers, credit rating agencies and others connected to securities market.

In order to make the securities market safe and transparent to investors SEBI has also introduced the comprehensive regulatory measures, prescribed registration norms, the eligibility criteria, the code of obligations and the code of conduct for different intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers, credit rating agencies, underwriters and others. It has framed bye-laws, risk identification and risk management systems for Clearing houses of stock exchanges, surveillance system etc.

Thus salient functions are summed as:

REGULATORY FUNCTIONS: 

a) Registration of brokers and sub-brokers and other players in the market.
b) Registration of collective investments schemes and Mutual Funds.
c) Regulation of stock exchanges and other self-regulatory organisations (SRO) merchant banks etc
d) Prohibition of all fraudulent and unfair trade practices
e) Controlling Insider Trading and take over bids and imposing penalties for such practices

DEVELOPMENT FUNCTIONS:

a) Investor education
b) Training of intermediaries.
c) Promotion of fair practices and Code of conduct.
d) Conducting Research and Publishing information useful to all market participants.

SEBI Complaints Redress System

SCORES is a web based centralized grievance redress system of SEBI. SCORES enables investors to lodge and follow up their complaints and track the status of redressal of such complaints online from the above website from anywhere. This enables the market intermediaries and listed companies to receive the complaints online from investors, redress such complaints and report redressal online.

INDIA IN FIGURES 2012

Employment to Tribals

National Scheduled Tribes Finance and Development Corporation (NSTFDC) has signed refinance agreements with National Cooperative Development Corporation (NCDC), seven Public Sector Banks namely State Bank of India, Central Bank of India, Syndicate Bank, Dena Bank, Vijaya Bank, Union Bank of India and UCO Bank; and seven Regional Rural Banks namely Assam Gramin Vikash Bank (Assam), Baitarani Gramya Bank (Odisha), Vananchal Gramin Bank (Jharkhand), Tripura Gramin Bank (Tripura), Baroda Gujarat Gramin Bank (Gujarat), Dena Gujarat Gramin Bank (Gujarat) and Sharda Gramin Bank (Madhya Pradesh) for providing concessional loan to the people belonging to the Scheduled Tribes (ST) community for enhancing their self employment opportunities.

The terms and conditions of the said agreements, inter-alia, include implementation of schemes by Banks/ NCDC in line with the lending norms of NSTFDC, timely repayment, arbitration mechanism, etc. NSTFDC has launched a scheme for facilitating professional and technical education including Ph.D. in India among tribals. Under the scheme titled “Adivasi Shiksha Rrinn Yojana (ASRY)”, loan up to Rs 5.00 lakh can be provided covering expenses towards fees, books, computer, study tours, boarding & lodging, etc. The interest chargeable is @ 6% p.a. Interest subsidy is available for the moratorium period. About 1.5 lakh people belonging to the Scheduled Tribes have benefited from the above mentioned agreements and ASRY up to 31.08.2012. Details of activites of NSTFDC is given below:

National Scheduled Tribes Finance and Development Corporation (NSTFDC), under the Ministry of Tribal Affairs, implements schemes for self-employment of Scheduled Tribes. Under the schemes, NSTFDC provides concessional financial assistance to individuals or groups of STs for undertaking Income Generating Activities.

The salient features of the major schemes of NSTFDC are:

• Term Loan scheme: NSTFDC provides Term Loan for viable projects costing up to Rs 10.00 lakh per unit. The financial assistance is extended up to 90% of the cost of the project and the balance is met by way of subsidy/ promoter`s contribution/ margin money. The interest rate chargeable is 6% p.a. for loan up to Rs 5.00 lakh and 8% p.a. for loan exceeding Rs 5.00 lakh.

• Adivasi Mahila Sashaktikaran Yojana (AMSY): This is an exclusive scheme for economic development of Scheduled Tribes women. Loans up to 90% for projects costing up to Rs 50,000/- are provided at highly concessional interest rate of 4% p.a.

• Micro Credit Scheme for Self Help Groups: The Corporation provides loans up to Rs 35,000/- per member and Rs 5.00 lakh per Self Help Group (SHG). The interest rate chargeable is 6% p.a.

• Assistance to TRIFED empanelled Artisans: NSTFDC provides concessional finance to tribal artisans empanelled with TRIFED towards working capital and purchase of project related assets. Financial assistance is provided up to Rs 50,000/- to individuals and up to Rs 5.00 lakh to SHGs (with a ceiling of Rs 35,000/- per member) and cooperative societies. The interest rate chargeable is 4% p.a. from ST women and 6% p.a. from SHGs and others.

Per Capita Income of Tribals

As per information received from the Ministry of Statistics and Programme Implementation, social group-wise per capita income is not maintained. However, State-wise percentage of population below poverty line (social group-wise) is given in Annexure.

          The Ministry of Tribal Affairs supplements the efforts of other Ministries like Ministry of Rural Development, Ministry of Labour and Employment, etc. in economic upliftment of the tribals in the country. The Ministry of Tribal Affairs is implementing a programme titled “Special Central Assistance to Tribal Sub-Plan (SCA to TSP) for employment-cum-income generation activities of BPL Scheduled Tribes. The ultimate objective of this programme is to boost the demand-based income-generation and thus raise the economic and social status of tribals.

          

Click here to see Annexure

Union cabinet approved interest subsidy for farmer loans

The Union Cabinet on 6 September 2012 gave its approval to continue interest subsidy to Public Sector Banks (PSBs), Regional Rural Banks (RRBs), Cooperatives Banks and NABARD enabling them to provide short-term crop loans of up to Rs 3 lakhs to farmers at 7% p.a. during the year 2012-13.

It was also decided to provide additional interest subsidy of 3% p.a. to those farmers who repay loans within one year of disbursement in the current fiscal year.

The Cabinet allowed the release of 10901 crore Rupees as interest subvention for 2012-13. Interest subsidy is allowed for small and marginal farmers having Kisan Credit Cards for loan. The Cabinet approved the release of 442 crore rupees as interest subsidy to small and marginal farmers having Kisan Credit Cards against negotiable warehouse receipts, for post-harvest.

Centre has subsidized short-term crop loans to farmers since 2006-07 to ensure the availability of crop loans to farmers of upto Rs.3 lakh at 7% p.a. Banks have been consistently meeting the target set for agriculture credit flow in the past years. For the year 2012-13, the target for agricultural credit flow has been raised to Rs 575000 crore from Rs 475000 crore in the year 2011-12.

Rashtriya Swasthya Bima Yojana

Rashtriya Swasthya Bima Yojana has been extended to licensed porters, licensed vendors and licensed hawkers on the Railways in consultation with Ministry of Labour & Employment. Railways are facilitating below poverty line beneficiaries for coverage under the scheme being implemented by the concerned State Governments. In the case of above poverty line beneficiaries, 75 per cent of the premium will be borne by the Railways subject to a maximum of Rs. 565/- per family per annum, whichever is less and the remaining 25 per cent to be contributed by the beneficiaries, who will also have to pay an amount of Rs. 30/- per family per year as registration/renewal fee.

National Family Benefit Scheme

The Ministry of Rural Development is implementing, through State Governments and UT Administrations, a scheme namely National Family Benefit Scheme (NFBS). Under this scheme, earlier a provision of grant of Rs. 5,000/- was made in case of natural death of BPL primary bread winner. The primary BPL bread winner specified in the scheme, whether male or female, had to be a member of the household whose earning contributed substantially to the total household income. The death of such primary bread winner occurring whilst he/she was in the age group of 18 to 64 years. In the year 1998, the amount of benefit has been raised to Rs. 10,000/- in case of death due to natural causes as well as accidental causes.

The funds are released to State Governments and UTs by Ministry of Finance as Additional Central Assistance. The National Family Benefit Scheme is a sub-scheme of the National Social Assistance Programme (NSAP) and details of funds released sub-scheme wise to State/UTs are not maintained. These sub-schemes are only for BPL families.

UNIDO Findings on Industrial Growth

According to a Report of United Nations Industrial Development Organization (UNIDO) the world manufacturing output rose by 5.5. per cent in the third quarter of 2011, compared to the same period of 2010. This growth is mainly attributed to developing countries, whose manufacturing output increased by 13 per cent.

There has been some moderation in the growth rate of industrial production as measured in the Index of Industrial Production (IIP). The IIP growth rate in the fourth quarter (Jan-March) 2011-12 was 0.6% as compared to the growth rate registered of 7.9% in the corresponding quarter of previous year (Jan-March) 2010-11.

The major sectors that have adversely affected IIP growth are manufacturing and mining. Major reasons for the decline in manufacturing include global economic uncertainty, sluggish domestic demand, hardening of interest rates etc., whereas regulatory and environmental issues, court orders, decline in international demand for metallic minerals etc. Are affecting production in the mining sector.

Recent data on Poverty in India

Below Poverty Line Population in (%)

Survey Year          Rural   Urban  Total

1993-94                       50.1       31.8       45.3

2004-05                       41.8        25.7      37.2

2009-10                       33.8        20.9      29.8

 States

Poverty ratio in Himachal Pradesh, Madhya Pradesh, Maharashtra, Orissa, Sikkim, Tamil Nadu, Karnataka and Uttarakhand has declined by about 10 percentage points more.

In Assam, Meghalaya, Manipur, Mizoram and Nagaland, poverty in 2009-10 has increased.

Some of the bigger states such as Bihar, Chhattisgarh and Uttar Pradesh have shown only marginal decline in poverty ratio, particular in rural areas. States with high incidence of poverty are Bihar at (53.5 per cent), Chhattisgarh (48.7 per cent), Manipur (47.1 per cent), Jharkhand (39.1), Assam (37.9 percent) and Uttar Pradesh (37.7 per cent)

Social Groups

In rural areas, Scheduled Tribes exhibit the highest level of poverty (47.4%), followed by Scheduled Castes (SCs), (42.3%), and Other Backward Castes (OBC), (31.9%), against 33.8% for all classes.

In urban areas, SCs have Head Count Ratio of 34.1% followed by STs (30.4%) and OBC (24.3%) against 20.9% for all classes. In rural Bihar and Chhattisgarh, nearly two-third of SCs and STs are poor, whereas in state such as Manipur, Orissa and Uttar Pradesh the poverty ratio for these groups is more than half.

Religious Groups

Sikhs have lowest Head Count Ratio in rural areas (11.9%) whereas in urban areas, Christians have the lowest proportion (12.9%) of poor. In rural areas, the Head Count Ratio for Muslims in very high in states such as Assam (53.6%), Uttar Pradesh (44.4%), West Bengal (34.4%) and Gujarat (31.4%). In urban areas poverty ratio at all India level in highest for Muslims (33.9%). Similarly, for urban areas the poverty ratio is high for Muslims in states such  as Rajasthan (29.5%), Uttar Pradesh (49.5%), Gujarat (42.4%), Bihar (56.5%) and West Bengal (34.9%)

Occupational Categories

Nearly 50% of agricultural labourers and 40% of other labourers are below the poverty line in rual areas, whereas in urban areas, the poverty ratio for casual labourers is 47.1%. Those in regular wage/salaried employment have the lowest proportion of poor. In the agriculturally prosperous state of Haryana, 55.9% agricultural labourers are poor, wheareas in Punjab t is 35.6%. The HCR of casual labourers in urban areas is very high in Bihar (86%), Assam (89%), Orissa (58.8), Punjab (56.3%), Uttar Pradesh (67.6%) and West Bengal (53.7%).

Highlights

1. Only about 46% of household have toilet facilities
2. As per the Household Consumer Expenditure Survey for 2009-10, 29.9 per cent of the population is under BPL
3.  Rural poverty declined by 8 percentage points, urban poverty down by 4.8 per cetn
4.  Poverty has gone up in the north-eastern States of Assam, Meghalaya, Manipur, Mizoram and Nagaland
5.  Bihar has the highest incidence of poverty at 53.5 per cent.
6.  Among social groups in the rural areas, Scheduled Tribes (47.4 per cent) suffer the highest level of poverty.
7.  Among social groups in the urban areas, Scheduled Castes (34.1 per cent)suffer the highest level of poverty.
8.  Among religious groups in the rural areas, Sikhs have the lowest level of poverty at 11.9 per cent
9.  Among religious groups in the urban areas, Christians have the lowest level of poverty at 12.9 per cent
10.  Both in rural and urban areas, Muslims have a high level of poverty ranging from 29 per cent to 53 per cent
11. Just 32% of households use treated water for drinking
12. About 17% of the households still fetch drinking water from a source located more than 500 m in rural areas 100 m in urban areas
13. About 11% more households have got access to electricity between the years 2001 and 2011.
14. About 45% households owns a cycle which remains the primary mode of transportation. 

• Poverty - Types and Indicators

1. Poverty can be of different types like absolute poverty and relative poverty. There may be many other classifications like urban poverty, rural poverty, primary poverty, secondary poverty and many more. Whatever be the type of poverty, the basic reason has always been lack of adequate income. Here comes the role of unemployment behind poverty.

   Lack of employment opportunities and the consequential income disparity bring about mass poverty in most of the developing and underdeveloped economies of the world.

   Absolute Poverty

   Poverty is usually measured as either absolute or relative poverty (the later being actually an index of income inequality). Absolute poverty refers to a set standard which is consistent over time and between countries.

   The World Bank defines extreme poverty as living on less than US $1.25 (PPP) per day, and moderate poverty as less than $ 2 a day (but note that a person or family with access to subsistence resources, e.g. subsistence farmers, may have low cash income without a correspondingly low standard of living - they are not living on their cash income but using it as a top up). It estimates that in 2001, 1.1 billion people had consumption level below 1$ a day and 2.7$ billion lived on less than $2 a day.

   Relative Poverty

   Relative poverty views poverty as socially defined and dependent on social context, hence relative poverty is a measure of income inequality. Usually, relative poverty is measured as the percentage of population with income less than some fixed proportion of median income. There are several other income inequality metrics, for example for Gini coefficient or the Theil Index.

   Relative poverty measures are used as official poverty rates in several developed countries. As such these poverty statistics  measure inequality rather than material deprivation or hardship. The measurements are usually based on a person's yearly income and frequently take no account of total wealth. The main poverty line used in the OECD and the European Union is based on 'economic distance' a level of income is set at 60% of the medial household income. 

   Multidimensional Poverty Index

   The multidimensional Poverty Index (MPI) was developed in 2010 ny Oxford Poverty and Human Development Initiative and the United Nations Development Program. The MPI is an index of acute multidimensional povety. It reflects deprivations in very rudimentary services and core human functioning for people across 104 countries. Although deeply constrained by data limitations, MPI reveals a different pattern of poverty than income poverty, as it illuminates a different set of deprivations.

   The MPI has three dimensions - health, education, and standard of living. These are measured using ten indicators. Each dimension and each indicator within a dimension is equally weighted.

   
   

   These 10 indicators are used to calculate the MPI:

   Education (each indicator is weighted equally at 1/6)

   • Years of Schooling - Deprived if no household member has completed five years of schooling.
   • Child Enrollment - Deprived if any school aged child is not attending school in years 1 to 8.

   
   

   Health (each indicator is weighted equally at 1/6)

   • Child Mortality - Deprived if any child has died in the family
   • Nutrition - Deprived if any adult or child for whom there is nutritional information is malnourished.

   
   

   Standard of Living (each indicator is weighted equally at 1/18)

   • Electricity - Deprived if the household has no electricity.
   • Sanitation - Deprived if they do not have an improved toilet or if their toiled is shared (MDG Definition).
   • Drinking Water - Deprived if the household does not have access to clean drinking water or clean water is more than 30 minutes walk from home (MDG Definition).
   • Floor - Deprived if the household has dirt, sand or dung floor.
   • Cooking Fuel - Deprived if they cook with wood, charcoal or dung.
   • Assets - Deprived if the household does not own more than one of radio, TV, telephone, bike or motorbike.

   
   

   A person is considered poor if they are deprived in at least 30% of the weighted indicators. The intensity of poverty denoted the proportion of indicators in which they are deprived.

Panel for postponement of GAAR by 3 years

The expert committee on General Anti Avoidance Rules (GAAR) on September 1 recommended postponement of the controversial tax provision by three years and abolition of capital gains tax on transfer of securities.

As a step towards reassuring global investors, the Committee in its draft report, suggested that GAAR provisions should not be invoked to examine the genuineness of the residency of entities in Mauritius.

Mauritius is the most preferred route for foreign investments because of the liberal taxation regime in the island country. India has a double taxation avoidance treaty with Mauritius.

The Committee, headed by Parthasarathi Shome, has recommended that GARR be applicable only if the monetary threshold of tax benefit is Rs 3 crore and more.

The draft report, which was submitted to the Finance Ministry, has also sought comments from the stake holders by September 15. The Shome Committee was set up by Prime Minister Manmohan Singh to address the concerns of foreign investors.

Meanwhile, the Finance Ministry has also expanded the scope of the terms of reference of the committee to include all non-resident tax payers instead of only FIIs.

The draft report of the Shome committee said: ”...GAAR should be deferred for 3 years. But the year, 2016-17, should be announced now. In effect, therefore, GAAR would apply from assessment year 2017-18. Pre-announcement is a common practice internationally, in today’s global environment of freely flowing capital”.

In view of wide-spread concerns by foreign investors, the government had earlier postponed implementation of GAAR, which was introduced by the then Finance Minister Pranab Mukherjee in his Budget for 2012-13 to check tax evasion.