PART A: News pertaining to Planning Commission

02-07.10.2014 Compiled by:

S. Wadhawan, ALIO and Communication, IT & Information Division Mrs. Varsha Satija, SLIA Planning Commission Library

[Note : Now the Daily Digest is divided into two parts: Part A contains News

pertaining to Planning Commission and Part B contains general News and

Views]

Appointment of US-based economist Arvind Subramanian as India adviser

hits Narendra Modi hurdle

The Economic Times: 02.10.2014

Prime Minister Narendra Modi has not decided whether to appoint U.S.-based economist Arvind

Subramanian as the government's chief economic adviser, a senior government source told

Reuters, in a delay that may impact policy and budget preparations.

Subramanian, a senior fellow at the Peterson Institute for International Economics, was informally

recommended to the post by Finance Minister Arun Jaitley more than a month ago but Modi still

wants to discuss the appointment, the source said.

Jaitley was admitted to a private hospital in New Delhi on Sept. 1 for gastric bypass surgery to

treat a long-standing diabetic condition. He was re-admitted to hospital last week and has yet to be

discharged.

"It was still under consultation between the finance minister and the prime minister. Then the

finance minister got sick," the source said.

Nationalist leader Modi has unleashed a slew of measures aimed at making India a more

attractive place to do business, but has disappointed some backers who had hoped he would take

more decisive action to promote a recovery.

Other senior advisory positions remain unfilled, including in the prime minister's office, leading

some of Modi's reform-minded followers to worry about a lack of economic heavyweights in the

administration.

The post of chief economic adviser is a high-profile position that was last filled by another

internationally renowned academic long based in the United States, former International Monetary

Fund chief economist Raghuram Rajan, who is now India's central bank governor.

Traditionally, the chief adviser is responsible for producing the annual Economic Survey - a

document on the state of economy that underpins the drafting of the budget - and a mid-year

economic update that is presented to parliament.

Jaitley's first full-year budget is due in February.

The government is also discussing whether to change the remit of the economic adviser to include

wider responsibilities, another source said.

Last month, Modi closed the Planning Commission, a lingering vestige of India's early attempt

to mimic the Soviet command economy. Now the government is considering whether to make the

role of economic adviser part of an institution to replace the Planning Commission, the second

source said.

"There is a consensus that we need economic advisers in the finance ministry and the government.

The appointment of chief economic adviser is also linked to the restructured

planning commission itself that could be manned by a few advisers," the second source said. He

said a decision was imminent.

Subramanian was educated in India and Britain and went on to serve at the IMF and at the

forerunner to the World Trade Organization, before taking senior academic posts at Harvard and

Johns Hopkins universities in the United States.

2. Manthan Samvaad Sets Young and Restless Thinking

Rahul V Pisharody and Suhas Yellapantula,The New Indian Express:

03.10.2014

It was a celebration of fresh thoughts, new ideas, serious discussions, tough questions and a quest

for answers during the second edition of Manthan Samvaad which took place here on Thursday.

The day-long event featured distinguished speakers from across the country, who provided great

insight into and a fresh perspective on a wide range of topics. The guest speakers included Kalpana

Kannabiran, sociologist and director of the Council for Social development, Hyderabad; Arun

Maira, former member of the Planning Commission of India; Yogendra Yadav, member and chief

spokesperson of Aam Aadmi Party; KT Ravindran, architect; Shekhar Gupta, journalist; and

Vandana Shiva, environmental activist.

Formed in 2005, Manthan emerged as a platform for people from across the world to share their

thoughts and engage in high-quality debates: be it on the Internet or at other public meetings.

“We started Manthan because we felt that there was no free space to express ourselves and to

engage in thought-provoking conversation, along with a stimulation of thoughts and ideas,” said

MR Vikram, founding member and trustee of Manthan.

Stressing the importance of conversation and dialogue in a society, he said, “Conversation is the

most important part of democracy. We need to bring back interesting conversations, serious

discussions and stimulating thoughts.”

After drawing an overwhelming response on social media and other forums, members of Manthan

decided to take things to the next level by organising Manthan Samvaad in 2013. “As part of

Manthan Samvaad, every year on October 2, we invite distinguished speakers, who have an ability

to engage with the audience and participate in a healthy discussion. We would like to have many

more forums in different cities and would like to see more youngsters be a part of Manthan,” said

Chandana Chakrabarti, member of Manthan.

Manthan Samvaad-2014 witnessed an enthusiastic participation from different sections of people

from all age groups. “I found the discussions to be highly interesting and engaging. It’s nice to

have a platform where we can discuss social and political issues related to the country. I also liked

the fact that they invited accomplished speakers who had strong views on the subjects they spoke

on,” said Nikhil Maddirala, who works at Deloitte.

The event kicked off with a lecture on a bill of rights for women by Kalpana Kannabiran, followed

by a session on reforming our institutions by Arun Maira. Well-known politician and AAP leader

Yogendra Yadav spoke about the future of alternative politics. The afternoon session included a

lecture by Shekhar Gupta on ‘The Rise of an Impatient New India’. Renowned architect KT

Ravindran provided an insight into the future of our cities and environmental activist Vandana

Shiva reflected on the future of agriculture in the country.

Women Should Fight for Rights, says Kalpana Kannabiran

Sociologist and legal scholar Kalpana Kannabiran called upon women to protest against violence

and crime. “If a woman is molested, it is her right to go to the police and report the crime. Sadly,

a large number of crimes go unreported and it is important for women to fight for their rights and

report any atrocities or violence against them,” she said. Kalpana, who is currently director of the

Council for Social Development in Hyderabad, also laid emphasis on the seriousness of domestic

violence. “When is it bad enough for it to be termed as violence?” she asked. “The numbers of

well-educated women _ doctors, journalists, professionals of every kind _ abused in the worst

terms by their husbands who were also doctors, lawyers and teachers was astounding,” she

added. Emphasising the need for people to change their mentality, she concluded by calling for

an end to violence against women in society.

Arun Maira Calls for Revamp of Institutions

Former member of the Planning Commission of India, Arun Maira stressed upon the need to

reform the institutions that govern us. Arun gave an insight into the work he did at the Planning

Commission and explained why institutions need to be revamped. “The crisis of our times is the

growing distrust among citizens in the institutions that govern their lives. These include institutions

of democracy and the increased existence of capitalism. Citizens are losing faith in their leaders,”

he said. Maira, who is also former India chairman of Boston Consulting Group, felt that it was

imperative that all citizens in the country were taken care of and that people must introspect to

move forward as a democracy. “India needs to take care of all its children, including the

malnourished and under-educated. We also need new kinds of dialogue. Let us be more

argumentative and more creative and let us together try to achieve, political, social and economic

freedom for all citizens,” he said.

Yogendra Yadav Bats for Alternative Politics

One of the most awaited speakers at the Manthan Samvaad-2014 was well-known psephologist

and Aam Aadmi Party leader Yogendra Yadav who spoke on alternative politics and a need for

change in democracy. “The general perception among the country’s youth is that all politicians are

corrupt and everything that is wrong in our country is because of politics. Today, my singular

achievement and source of happiness is that everyday I meet someone young and smart who is

willing to devote himself or herself to politics,” he said. Reacting to the ‘Swachh Bharat’ campaign

launched by prime minister Narendra Modi, Yadav said, “Swachh Bharat should not just be about

cleaning dirt on the streets but instead be about cleaning the entire environment and communities.

It should also be cleaning our conscience. We can use this opportunity to turn into something

broader.”

Shekhar cautions against ‘Illiberalism’

Eminent journalist and consulting editor of the India Today group Shekhar Gupta drew the

attention of the audience to various incidents of the recent past in Indian sports. Talking about

nationalism versus patriotism, he said that nationalism was the first enemy of peace. Arguing the

changing trends in the way issues have been dealt with by the judiciary under the pressure of

changing political scenario and media dynamics in the country, and also the way the political

executive passed the judicial appointments bill, he cautioned against the rising ‘illiberalism in’

certain spectrum with no media or public outrage as against the times of Emergency. According

to him, Indian judiciary was transforming from reformative to restitutive. Taking on a question

why rising impatience among youth should be seen in the negative, Gupta said there was nothing

wrong being impatient. “Impatience should lead to reforming the process or system and not halt

or say we do not want any reform,” he said.

KT Ravindran Critical of Smart Cities Concept

KT Ravindran, former dean, School of Planning and Architecture, New Delhi, who is also on the

five-member committee set up by the Union home ministry to recommend the location of a new

capital for Andhra Pradesh headed by former Union urban development secretary K.

Sivaramakrishnan, spoke about conservation of heritage of cities in creation of modern urban

spaces. He said that while planning a new city one needs to study the history of the present moment

and only by doing so, he added, one would be able to project a future. According to him, urban

spaces were a complex organism and it would be a daunting task to develop a larger narrative. To

address migration, transportation, housing for poor, conservation of land, water, waste disposal

and balancing of environment and development while safeguarding culture and identity were

important driving forces in developing a new city. He added that good governance and public

partnership were equally necessary. He was also critical of the concept of smart cities and age of

urban designs.

Organic Farming Need of Hour: Vandana Shiva

Invoking Gandhiji on his birth anniversary on Thursday, envoronmental activist Vandana Shiva

was highly critical of genetic engineering on foods and crops. “Agriculture, which is is all about

maintaining soil, conserving water and renewing biodiversity, today has been totally transferred

into a system of promoting purchase inputs leftover from chemicals,” she stated and added that

organic farming was the solution to food and nutritional security of the country. According to her,

the nation’s greater claims of young population as an asset served no purpose as half of the children

were not receiving food. “Every forth Indian today is hungry and every second child is stunted and

wasted. Solution to malnutrition is bio-fortification,” she added. “We are made to feel culturally

we should not grow our food while fast food is everywhere. Diversity is the answer to all the food

and agrarian crisis. Independent bio-safety assessment is what Americans are doing now. Eating

good food is also our fundamental right,” she concluded.

3. Officials in a fix after withdrawal of notification regarding the constitution

of the Planning Commission

Yogima Sharma, The Economic Times: 04.10.2014

Careers of several senior bureaucrats of the Planning Commission have been in limbo since Prime

Minister Narendra Modi, in his Independence Day address, sounded the death knell for the 64-

year old institution that formulated five-year plans and influenced policy decisions during its

heyday.

The promotion of a joint advisor, who has had a record of outstanding performance throughout his

career, has got stuck at the highest level while another senior officer, who has put in 10 years in

the commission, has been waiting for her cadre to place her out. "My promotion within the

commission was cleared by the top brass here but got stuck at the Cabinet level because the

government has decided to wind up the institution itself. This is despite an outstanding

performance each year in more than two decades of service," the joint advisor told ET on condition

of anonymity.

The dismal state of affairs is evident in the corridors of Yojana Bhawan, headquarters of the

commission, where officers have neither much work nor any growth prospects in sight. "I have

been requesting my cadre to take me out of the commission, but they are waiting to see what the

new government does with the several economic service officers working here," said an advisor

in the commission

The Cabinet declared last month that the notification regarding the constitution of the Planning

Commission stands withdrawn. There are at least 200 officers, at the rank of advisors, joint

advisors and directors, in the commission out of the total staff strength of nearly 1,000. "No

ministry officials are now seeking our views on the draft Cabinet notes. It is only the final Cabinet

note that comes to us, that too very rarely, leave alone our views on policy matters," another

advisor in the commission said. According to several officers, the most disappointing thing is that

even the planning secretary Sindhushree Khullar has not even once, directly or indirectly conveyed

to them that she will stand by her team to ensure that all members are well placed.

"She is in the Prime Minister's Office several times a day, almost every day, but not even once has

she communicated with us on what lies ahead for us," said an officer, requesting not to be named.

The PMO has roped in Khullar to resolve interministerial issues of infrastructure and sanitation.

She has presented all infrastructure reviews in the past four months and played a key role in the

roll-out of the Swachh Bharat Abhiyan on Thursday.

Khullar did not respond to an email query sent by ET.NC Saxena, a former secretary of the

Planning Commission said that the officers, being government employees, need not worry for their

salaries even if they did not have much work in the interim period. "However, since the new

institution is likely to be thinner, they will either have to go back to their cadres or get absorbed in

other ministries," he said.

Although the government has sought suggestions of experts and public as well as the erstwhile

commission through a Cabinet note, it is yet to firm up its view on the new institution that will

replace the commission. Arun Maira, member in the previous commission said that the government

ought to act fast or else it might have to backtrack on the idea.

"The government needs to quickly define the structure of the new institution and figure out how

much of its manpower requirement could be fulfilled by the existing officials," he said. "The inertia

in the existing system is so strong that if you delay the process for long there is a possibility that

the government will have to reverse its decision or we may end up getting a diluted version of the

institution envisaged by them," Maira added, citing the example of the Independent Evaluation

Office (IEO). The IEO was set up through a Cabinet order after the approval of the National

Development Council.

However, the Modi-led NDA government, which took charge in May, closed down the IEO and

decided to strengthen the Programme Evaluation Organisation, which has existed since 1952. The

Planning Commission played a key role, most recently during the tenure of the previous UPA

government, largely because of the closeness between its then deputy chairman Montek Singh

Ahluwalia and then PM Manmohan Singh.

The institution, which determined allocation of planned funds to states, influenced policy decisions

especially with regard to infrastructure sectors. This resulted in a lot of discontent among various

ministries that often criticised the commission for its overarching role. Ahluwalia could not be

reached for comment.

4. A plan for coal

The Indian Express: 06.10.2014

There is a fascinating ongoing debate on how to price coal. But in the noise, sensible principles on

pricing non-renewable resources like coal have become casualties. India is short of metallurgical

coal but has an almost unlimited stock of power-grade coal. Oversight agencies and public sector

companies are sternly told to work out the cost of production and accordingly price the coal. There

is a comical aspect to all of this.

Is the price of coal the cost of mining it? This question was raised at the golden jubilee celebration

of the Central Bureau of Investigation during a special session on coal prices. I was asked to

participate in this session by the CBI director and, out of curiosity, accepted the invitation.

I tried to answer this question in a series of reports on coal prices in the mid-1980s, with the help

of commissioned work from some of the country’s top economists, who were young then but have

since become superstars. They had to make some reasonable assumptions, such as what the output

of coal over the next four to five years would be. There were technical issues that had to be factored

in, too, like shift lengths, gaseousness, ore strength and so on. These were measured and helped

determine the long-term marginal cost and, consequently, coal prices. It would be unwise, both

from the environmental angle and also from the point of view of inter-generational equity, to only

mine open fields of coal and leave the reserves underneath untouched.

These days, planning is out of fashion in government. But in an expert meeting called by the

Planning Commission before it was abolished, experienced hands argued that in areas like

demographics, energy, water, land and non-renewable resources, long-term considerations are

important. If for no other reason than the future welfare of our children.

I remember working out estimates and projections for what the coal sector woulould look like by

2020 at the beginning of this century. Kirit Parikh kept this work up in the Planning Commission

and updated it after correcting for slippages in the base in his fuel policy report. So, there are ways

of developing long-term coal prices. It is not impossible.

There was a time that such exercises were taken seriously by the government. I have set prices for

agricultural products in my capacity as chairman of the Agriculture Price Commission in 1982 (the

body was later renamed the Commission for Agricultural Costs and Prices) and as chairman,

Bureau of Industrial Costs and Pricing. If the courts ever wanted an explanation, they would send

somebody over and we would be very happy to spell out the details of our work. Usually, they

were of the view that if an expert panel had taken a particular position, that would not be

questioned.

Nowadays, the market dictates the terms. But can we ignore the long-term costs to society from

exploiting our natural resource endowment? Transparency is an all-time essential and facts should

always be made public. In any case, our understanding of environmental costs is also much

improved. But to ignore the basic factors at play would imperil our inheritance of natural resources

and the welfare of future generations. I hope somebody out there is listening.

5. Will we get a 'Clean India' in near future?

Shaili Chopra, Daily News and Analysis: 06.10.2014

Since the new PM Narendra Modi has come to power there is the big hope that the focus would

move from planning to execution, from talk to walk, from roughs into fairways. An example to tee

this off was the scrapping of the planning commission once considered central to UPA's economic

blueprint. Modi has since launched several campaigns all of which have India Inc taking up the

cause and driving it ahead. This includes the support for the girl child, the push for sanitation, and

now the latest since the week gone by – 'Clean India.'

I was returning on a Jet Airways flight from Delhi to Mumbai and I noted that the airline has

moved its Save The Child in-flight campaign to The Clean India campaign. The oil PSUs across

the country have put up massive posters on fuel pumps advertising the Swacch Bharat Mission.

Many companies are putting aside corporate social responsibility corpus towards this too.

Both industry bodies are participating too. The Federation of Indian Chambers of Commerce and

Industry (FICCI) started cleaning activities at its own headquarters here.

"We are happy and encouraged by the prime minister's call for a 'Clean India' by 2019. FICCI

shares his vision for 'Swachch Bharat' and agrees that the entire nation needs to come forward and

commit itself to this noble initiative," said A. Didar Singh, secretary general, FICCI. CII too has

undertaken a sanitation drive of building 10,000 toilets.

It's great to see this started off. Here's a look at what must be considered beyond a good plan.

One, implementation. Who will execute this? How will it sustain? Five people using the broom

for a photo-op isn't going to clean this country. We need checks and more checks. When Modi

arrived at a police station in Delhi to clean it, he was appalled with what he saw. That tells us that

if police stations face such dire cleanliness challenges, then there remains a big question mark on

how the rest of the country will implement Swachh Bharat.

Two, supporting infrastructure. We possibly can't find a permanent solution in septic tanks or

piling up garbage in dumps at city outskirts. Are we things of a solid clearing network? Are we

considering underground trash storage until it's moved to bio gas plants like countries like Turkey

do? Who will be watching over this implementation? While physical infrastructure is one, there is

a dearth of education with respect to hygiene and cleanliness – who is undertaking that?

Three, taking ownership. Cleanliness is a matter of attitude and upbringing. Perhaps this is a good

time to start that along with having campaigns and drives. This can be done by corporations too in

a big way as institutional ownership is a great method of ensuring that such a plan can go viral

through employees.

It's all very well for corporations to move funds out of one public service to another. It's also very

headline-grabbing to know how much money has been pledged for toilets and cleanliness. But the

solution is being part of the problem-solving at all levels. And India Inc must now start sincerely

thinking about that given that it appears the PM is serious and any effort in this direction will not

only gain companies brownie points with the PM but also with the nation's public at large.

6. Choice of techniques

GOVIND BHATTACHARJEE, The Statesman: 06.10.2014

"An institution is the lengthened shadow of one man", Emerson had observed. Undoubtedly, the

Planning Commission was nurtured under the overstretched shadows of the socialist ideals of

Nehru. While the Modi Government's decision to consign it to the dustbin of history was most

welcome, one cannot but look without apprehension into the government's consideration to create

a replacement institution. Institutions have a life of their own, and once established, they cannot

simply be wished away. If its replacement inherits any of the weaknesses that had made the

Planning Commission such a dysfunctional but growth-obstructing institution, the substitute will

also continue to corrupt our governance system for a long time. We ought to be very careful in

resurrecting it in another form, without adequate thought and clarity about its intended role and

purpose.

With its unrestrained powers and authority, the Planning Commission was serving powerful

interests that ensured its survival for such a long time. Its abolition is no guarantee that these

interests will let go of their privileges so easily ~ they are more than likely to stage a come-back,

albeit in a different guise. This chain needs to be broken irrevocably, before history repeats itself.

History is replete with examples of new incarnations of old institutions having inherited the

character and shortcomings of those they have replaced. As a nation with an abundance of talent

and entrepreneurial capacity, we need to consider if we really need another institution in place of

the Planning Commission to guide the nation by their own ideas.

It may be interesting and instructive to draw from the experiences of other countries in this regard

~ for example, the BRICS countries India is often grouped with. In the erstwhile Soviet Union, the

State Planning Committee, known as Gosplan, was responsible for central economic planning

since its inception in 1923, till the dissolution of the Soviet Union in 1991. Gosplan was

responsible for creation and administration of a series of five-year plans governing the economy

of the USSR, much like the Planning Commission in India during 1950-2014, or the State Planning

Commission in China during 1952-1998. But after the break-up of the Soviet Union, countries that

rose from its debris have shifted determinedly from planned economies to market economies by

adopting liberalisation, privatisation and globalisation as the only way forward, and some of these

countries, like Estonia, have registered GDP growth exceeding 8 per cent, transiting into advanced

economies. Russia does not have a centralised planning system anymore; the state control that had

marked six decades of overwhelming dominance of all investment, production and consumption

decisions by the Communist Party is now a nightmare of the past. The country is grappling today

with the decrepit legacy of its earlier centralised planning system.

Like the proverbial phoenix, China has risen from the ashes of the Cultural Revolution that ended

in 1976. Chinese planning had initially followed the same Soviet model adopted by us. Till the

economic reforms began under Deng Xiao-Ping in the late 1970s, private industry was virtually

non-existent in China, and industry was dominated by state enterprises and a rigid and coercive

regulatory regime characterised by command and control. All resources ~ land, labour, raw

materials and capital ~ were provided by the State which determined the production and

distribution plans and their final output. But since the 1990s, as reforms heralding China's

movement towards a market economy took firm hold, planning became more and more indicative,

engaging only with projections, trends and bottlenecks while allowing and encouraging the private

sector to grow and compete with each other and also with State-run enterprises. As the State

gradually withdrew from control of economic activities, in 1998, the State Planning Commission

was restructured. It was merged with the Commission for Restructuring the Economic System,

established in 1982 to direct economic reforms, and renamed the State Development Planning

Commission. In 2006, it was further rechristened the National Development and Reforms

Commission (NDRC), omitting the word 'Planning'. This indicated a paradigm shift to declare that

China was no longer a centrally planned economy.

We may recollect that at the end of the Seventies, India was ahead of China in terms of socio-

economic development. The early years of the present century saw India and China being

bracketed together as 'Chindia', when our growth nearly matched China's. But courtesy the

disastrous decade of UPA rule, China today is light years ahead of us and we are unlikely to catch

up with it ever again. Nobody recalls 'Chindia' anymore, and comparison with China may be out

of place. So let's see how Brazil has fared.

Till the early 1990s, Brazil was mired in a web of crises, much like our own. About 40 per cent

of the population were poor ~ half of them sunk in absolute poverty characterised by severe

deprivation of basic human needs. With Gini coefficient measuring 0.6, it also had one of the

highest income inequalities in the world. Poverty, exclusion and backwardness made the country

a potential volcano, ready to erupt at any moment. Under its new 1988 constitution, it undertook

extensive reforms by liberalisation of trade and financial sectors, decentralisation and deregulation,

elimination of forex barriers, privatisation and enforcement of fiscal discipline. By bolstering the

market to generate income and designing innovative social sector programmes like Bolsa Familia

delivered through a system of conditional cash transfers, it had eliminated absolute poverty just

within a decade. By 2012, its per capita income rose to $ 11690 and poverty ratio shrunk to only

9 per cent of the population. Today the gap between India and Brazil is as wide as the distance that

separates them. In 2012, India's per capita annual income was only $ 1440, and even at a much

lesser poverty line drawn by our now-defunct Planning Commission, India's poor constituted 21.9

per cent of our population.

South Africa of course was a different story because of its apartheid past that ended only in 1994,

when its first democratic elections were held and the African National Congress came to power. It

started with a Development and Reforms Programme as the primary socio-economic programme,

which ultimately was transformed into the New Growth Path (GNP) under the current President

Jacob Zuma. Under GNP, a National Planning Commission (NPC) was set up in 2009 to chart out

a roadmap for development with a 20-year horizon. In 2013, it finally came up with the 'National

Developmental Plans ~ 2030'. NPC, however, is not a Government entity but a body of 26 experts

from outside, appointed by the President to advise on matters impacting long-term development.

It is perhaps too early to assess its impact and efficacy.

A central overarching body is thus not a necessary prerequisite for development. The 73rd

Amendment to our Constitution provides for planning at the grassroots level of villages, and

consolidation of these plans all the way up. This way a realistic plan can be made by considering

the local needs and addressing the implementation bottlenecks, since people actually responsible

for implementation will be involved in this bottoms-up planning process. Planning must be a

responsibility of states, which cannot be relegated to technocrats and experts on any pretext. It

should be the priority and responsibility of the elected representatives who should drive the process

through consensus and involvement of all stakeholders including experts. The process of

consensus-based planning will ensure efficiency of the plan, and involvement of elected

representatives will strengthen the accountability mechanism. If a think-tank is imposed upon the

nation, the weight of the tank may sometimes become an obstruction and a weariness, leading

again to inertia and what can perhaps be called fossilism. We need not cling to the old ways after

life has completely departed out of them.

The writer is a senior civil servant.

7. Parekh Panel Lowers Infra Investment Target by 40%

The Economic Times: 07.10.2014

India not in a position to meet the 12th Plan target as private investments have slowed down

New Delhi: India is set to miss its ambitious infrastructure investment target of $1 trillion for the

12th Five-Year Plan (2012-17) after dismal performance in the first two years, a high-level

committee on financing of infrastructure has said. The committee chaired by Deepak Parekh, set

up by the previous UPA government, has scaled down the infrastructure investment projections

for the 12th plan by nearly 40% to .` 30.90 lakh crore from .` 51.46 lakh crore it projected in an

interim report in 2012. “The committee noted that the anticipated investment in infrastructure

during 2012-13 has reached a level lower than 2008-09 while the pace of investment has not picked

up even during 2013-14 and several bottlenecks and barriers have continued to persist,” the panel

said in its report sent to the Prime Minister’s Office. “In view of the above, it is unlikely that the

12th plan projections made earlier would materialise,” it added. Yogima.Sharma

@timesgroup.com The scaling down of infrastructure investment targets has come on the back of

severe decline in projected private sector investment due to virtual collapse of public-private

partnership projects in the country. According to the report, the share of private investment is now

projected at 39.19% of the total investment during 2012-17, down from 48% envisaged earlier.

During the 11th Plan period, share of private money in total infrastructure investments was

36.87%. The Planning Commission under the UPA government in 2012 had projected an

infrastructure investment target of .` 55.74 lakh crore, or $1 trillion, during the 12th plan period,

after the Parekh panel had recommended it to be .` 51.46 lakh crore. And the National

Development Council had approved the plan panel’s target. The revised investment projection of.

` 30.9 lakh crore is only about 10% higher than. ` 27.3 lakh crore investments made in

infrastructure sectors in the country during the 11th Plan period. Total infrastructure investments

in 2012-13 at. ` 4,93,725 crore was only 66% of the earlier estimated .` 7,47,976 crore, according

to the Parekh panel report. Investments in 2013-14 are estimated at. ` 5, 40,170 crore, 62.8 % of

the original target of. ` 8,60,067 crore. Vinayak Chatterjee, co-founder, chairman and managing

director at infrastructure services firm Feedback Infra Pvt Ltd, blamed distorted policies of the

previous government for poor private investment flow into the sector. “The country already had a

backlog of 50 years of poor infrastructure. With this kind of startling bad performance, which

happened due to backlog of distorted policies in the last three years of the UPA government, people

are now saddled with excess capacity and bad loans,” he said. Chatterjee said the Narendra Modi

government needs to massively step up public expenditure by diverting a part of the previous

government’s welfare schemes to infrastructure development.

8. Nehru anniv: Cong says its grand plans forced PM to change tune

The Times of India: 07.10.2014

New Delhi: Top global names may descend in New Delhi to commemorate the birth anniversary

of Jawaharlal Nehru, a reason that Congress believes forced Narendra Modi to acknowledge the

first prime minister at an election rally ion Haryana after months of confrontation with the rival

camp.

Congress is learnt to have finalized the programme for an international conference with invites to

political leaders and intellectuals across continents.

It is likely to be the on the lines of the international meet the party organized on Gandhi as part of

programmes on the 75th anniversary of the Dandi March.

A galaxy of foreign and Indian names in India would throw the spotlight on Nehru just when the

Congress icon is under attack from BJP after Narendra Modi’s ascent to power. The saffron

strongman has chosen to train his guns at Nehru, starting with positing him against Sardar Patel

and then making a symbolic assault on him by disbanding the Planning Commission as a

‘Nehruvian legacy’. Congress has spent the four months of Modi regime questioning him on his

hostility for Nehru.

Given the backdrop, it was surprising that PM Modi on Monday mentioned Nehru by his popular

appellation “Chacha” at a rally in Haryana and announced a special cleanliness drive on November

14.

“The PM seems to have come to know about our plan and that is the reason why he is talking about

Nehru. We are not dependent on government to celebrate our icon,” a senior Congress leader said.

If Nehru is the toast of a conference in the national capital, it would take the clash between Modi

and Congress over him to a higher pitch.

Congress chief Sonia Gandhi in September formed aparty panel for implementation of Nehru

anniversary programmes- a step, sources said, was necessitated by indications that the Centre was

cold to moving on the UPA’s decision that government would hold year-long events in celebration.

9. FUELLING ‘MAKE IN INDIA’

Biswajit Dhar & KS Chalapati Rao, The Financial Express: 07.10.2014 ZoomBookmarkSharePrintListenTranslate

Domestic funding will play a crucial role. Foreign investment can, at best, complement the govt’s

efforts

The government can work at improving the tax-to-GDP ratio to garner resources for the initiative. At the

same time, the

outflow of capital to tax havens needs to be arrested

Domestic funding will play a crucial role. Foreign investment can, at best, complement the govt’s

efforts Last month, Prime Minister Modi launched his most ambitious project, “Make in India”. This

initiative is the latest and the most expansive of the attempts that successive governments have made

to revive the country’s manufacturing sector over the past decade. In 2006, the National Manufacturing

Competitiveness Council (NMCC) had formulated the National Manufacturing Strategy, which underlined

the need to increase manufacturing growth to double digits that would enable the share of

manufacturing in the country’s GDP to reach 23% by 2015. The UPA II government made further

pronouncements for reviving the manufacturing sector through its National Manufacturing Policy in

2011. This time, the target was to increase the share of manufacturing from 16% at the beginning of

the current decade to 25% at the end of the decade. Around the same time, the Planning Commission

unveiled its National Manufacturing Plan, as a part of the 12th Five Year Plan, that spoke of increasing

the share of manufacturing from 16% to 25% by 2025. As against the earlier projections, the Make in

India initiative has set its sights to increase the share of manufacturing to 25% by 2022, a task which

would require stupendous effort, now that the share of manufacturing has slid to 12% of GDP. According

to this new initiative, the increase in manufacturing output will result in the creation of 100 million new

jobs.

Although the Make in India initiative has identified a slew of areas which it would cover, there are

a few that would need to be prioritised. These are infrastructure, clusters of small and medium

enterprises (SMEs), skill formation and innovation. These have been the major choke-points that have

seriously affected the performance of the country’s manufacturing sector over the past couple of decades

in particular, and would therefore need to be addressed immediately if the declining trend in the share

of manufacturing in GDP is to be arrested. While it designs programmes to get these choke-points out

of the way, the government must also be prepared to play the role of the prime mover, for these are

areas which are typically characterised by “market failures”.

Creating the infrastructure for the manufacturing sector to take-off would, no doubt, pose the

biggest challenge, both in terms of the financial resources that would be required and also the

institutional arrangements necessary for ensuring that the identified projects deliver in the shortest

possible time. Over the past few years, several estimates have indicated that India’s infrastructural

deficit would require in excess of $1 trillion over a five-year period. These estimates imply that India

would have to increase its gross fixed capital formation by at least 50% to meet the infrastructure

needs. It may be mentioned here that the past estimates may understate the resource requirements of

manufacturing sector revival envisaged in the Make in India initiative since this initiative includes

development of at least five smart cities and several industrial corridors modelled on the Delhi-Mumbai

Industriduction and marketing centres. SME clusters have, thus, enhanced the global competitiveness

of the SMEs, generated and spread innovations, and distributed broad-based benefits. It must, however,

be pointed out that the state played a major role in enabling the SMEs overcome many of the

disadvantages that these enterprises generally face; from raising resources to finding the proper

marketing channels to maximise their returns.

Key to the all-round improvement of manufacturing capacities is the infusion of state-of-the-art

technologies. Strengthening the technological sinews of the manufacturing sector has at least two

immediate imperatives. First, the manufacturing sector needs to improve its competitiveness in order

to meaningfully participate in the economic integration processes to which India has committed itself.

The economic integration agreements that India had for malised during the past decade have secured

very few benefits, owing largely from the inability of the manufacturing sector to improve its presence

in the markets of the partner countries. India is currently engaged in an East Asian economic integration

process through the Regional Compreal Corridor.

The clusters of SMEs have to be the backbone of the manufacturing sector revival for two reasons.

First, these are the only enterprises that can provide the impetus for employment generation. Secondly,

almost all the sectors that are identified as the thrust areas by the government rely heavily on the SMEs

and, therefore, the future of these sectors depends entirely upon the performance of these enterprises.

Furthermore, clusters have a long history of successes, beginning with Europe and then in Japan and

Korea. But nowhere has this form of organisation seen as much of success as it has in China, where

Deng Xiaoping’s policy of promoting SME clusters formed the basis of the emergence of this country as

the “factory of the world”. Typically, these clusters are made up of professional towns and villages that

function as production hubs, with one or more towns specialising in the production of one product. This

model has seen the development of large-scale specialised prohensive Economic Partnership (RCEP),

and therefore improving the competitiveness of the manufacturing sector has become extremely urgent.

The second imperative is to meet the challenge of climate change. Although India has decided to

meet the challenge of climate change without being subjected to binding international commitments for

reducing its carbon footprint, it would nonetheless have to find expedient ways of reducing the emissions

of greenhouse gases.

Access to technologies that meet India’s immediate needs has been a formidable barrier. India has

insisted in several forums on the importance of technology transfer, but little of substance has happened

since the market for technology is tightly controlled by the owners of patented technologies. There

seems to be no other option left but to focus on the domestic ingenuities for developing the technologies

that the Indian industry needs. For this to happen, the government would have to put an innovation

strategy as the centre-piece of the Make in India initiative. This model lies at the heart of the

phenomenal success of Japan and Korea, and more recently, China. Interestingly, while laying down the

“Make it in America” strategy for the revival of the manufacturing sector in the United States, President

Obama had given a key role to the innovation policy.

Where does the Make in India initiative get its investible funds from? This question has been left

unanswered during the unveiling of the initiative, except for the fact that foreign direct investment (FDI)

has received critical mention. But it should be fairly obvious that the success of the Make in India

initiative would depend on the ability of the government to mobilise resources for funding this ambitious

project. Foreign investment can at best complement the efforts that the government makes, a strategy

that China followed with unquestioned success. President Obama has underlined his ambition of

transforming the United States into a manufacturing hub by investing billions of Federal dollars, besides

insisting that the American firms should “discourage outsourcing, and encourage insourcing”.

Garnering resources should not be an overtly daunting task for a government that is intending to

transform the country’s manufacturing sector. There are several important sources that the government

can tap into, including improving the tax to GDP ratio, which has mostly remained in single digit, through

better compliance and preventing leakages. At the same time, sustained efforts must be made to ensure

that outflow of capital can be arrested, which have fuelled tax havens like Mauritius.

These efforts would be better served if India plays an effective role in the efforts being made by

the G-20 to address base erosion and profit shifting (BEPS). Since the St. Petersburg Summit in 2013,

the G-20 members are engaged in discussions to ensure that inter national and domestic tax rules do

not allow foreign fir ms to reduce overall taxes by artificially shifting profits to low-tax jurisdictions.

Successfully addressing BEPS will not only help the gover nment to resolve tax disputes with foreign fir

ms, but also meet the election commitment of bringing back illegal funds stashed abroad. Dhar is

Professor, Centre for Economic Studies and Planning, JNU and Rao is

Professor, Institute for Studies in Industrial Development, New Delhi

PART B

NEWS AND VIEWS

Monday, 7th October 2014

Communication, IT & Information Division Phone # 2525

Polity : Congress goes to poll panel over Modi Radio address

Economy : RBI may need to raise rates to contain Inflation: IMF paper

Planning : CBEC to port regulators: Need faster Customs clearances

Editorial : Don’t rush in when Angels seek counsel

The Economic Times oate: 1 ltol th

Page No. ;6sd,;wJ

Don't Rush inWhenAngels Seek CounselFor debate on revamping monetary policy

T'lte gov€rnment ls r€Dorbedly moving to olethaul tbecomtry's monetsly pollcy ftame$ort. It must achle!€clarity on what the poltcy goal would he, wto wollld setthe policy and in what Ilanner and how mac$DrudeE'tial concerns wolrld be incorporeted into the exerclseWhen the linancla.l crlsts of 3txj8 hit the c,orl4 Ealrytbin8i carDe cralhing down, amohg them the notlon tbatan inllatioD-tarSetlng, autonomouB cenbal batlk rcpreseirts the gold stardard of eflective monetary poucy AB

the Urjtt Patel corulittee r€port noted, "There ls a con'sensus gatheriDg internationely that mouetary policyshould move away from its narlolg focus @ hllation tcwards a Eultiple t rSet.multlple lnstruDent approach{rithout stlerving ftom a commitnent b prtce slabilityolcr the mealiu.rll term. "

Having notod theconsensu3, the trDort alSerted a case

of lndien exceptionaltsm. It called not oily for iDlladon'targeting but also for instituthg tbe conaurner Flce ln_

dcx as the tar8et to be coDuolLd, nev_

er mlnd tbat 570^ of il comprtses foodard ffrDltwhose priccs are largely tm_

mure to policy rate tweak6. Ltr hblcterim budSet 2014, P ChtdambaEmwsnted moneta.ry poucy to ad&€€sboth growth and Lnll,atlon. The Finan'cial S€ctor Lglslathc Reforms Com'

Diasion (!SLRC) tlought the gorErnrnent should deter'mine the objectiv€ of monelary policy 8nd that a seven'

member colnmitlee should declde on changes in the policy variable to achielD that goa.l, throueh transparent vollng.'Ihis i6 eminenuy d€stable.

McEconcr€tely frnanclalstab ttywhichisadetermi'nant of macroeconomic atabltt]l shouldfr8rrIeas enob_jectilc. Ihe ISLRC leales hcorporation of this macr+prudential objectbe to the govemmDnt- The evampedBritish model of deatlng an erpUcit dacmprualenti.alr€gulator wlthln t]re ceDtla.l bank js wortb cfiElderlnS.Ctoirly a debate oD formulating monetary polta, wtthrnaholistic frame\lork of flnancistr€8!lation i3 deskable,befol,Jushlng in to forrn a system thet prol€s lnadequa'te to lhe challenges of the dav

E1ts{,v

The Indian Express

SH RLI:TI SRIVASTAT'{t tcw Oeurr, tX.rosiR 6-

MID incrcasing

rariD thc WTo

Datc:''Page No.

cuslums clearincf irAnlu*20tI

'o remow coDstr;is

for inrernoriuoal trade. Enr-lier thc ,mpon aEd €xpocargo, deliv.r.d ar a uheeher ct.arance Iacitiricswere unavailable, had ro w,ittill rhe facititics op€ncd tomwe on lo tft.ir desriratioir.

To ..movc rhe pitinS upot car8d. thc ficasure er.arnounced on a pilor bariiat D€thi. Bansrto,e, Ctrco-trai, and Muobar errDofl.ard C[cnn.'. Koli.r,Kandla ad J Np4 Murbai;

7Jroh,"\T

I Upgrade facilities and increase manpower says customs board

CBEO to poil resuhffiG; i6dri" ftster customs clearances

r r Jd! fao I rariofl alrr.cmed t.rhc cenrrJi borrd of erciseand curloB (CBEC) hasisked regutarory apcncic!handtirg ctGarrncei ro uo-Brade theirfacitnics aod i;.crcase their mntrpower atranoll3 porr. to facilirlr€round-rtre-.loclclcsran cs.

India bylt lo ratify thcag.e€ment,a ley arcao, in-r c rc.sr for daetop.d EtioDrtlar would rcducc lradserioll cost and rmoolhcr thcm0vcmco! of clrgo acros,lhcSlobe.

All \yTo incmberu ar.simpi'fyne or havc atreidv\impltficd &eir cunom, pro_c.durcs in view of rhc rm_pcndingagrc?o€nt.

ln a meelirg chaired byr€v.nu. secrerrry Shrk-rilant! Das last moDih.Jtencieu itrctudinr food!J rc b , nd srandarJ;u rho.ilyot lndia (FSSAI). otarlprotecrioo. quarannne odstoragc departmcnL. arimit't

uarantine depanmenr and

! allwTo n€mb.E aE srmPlit.rn9 ornavearroadystmptfi !d |€i,ostonE pD.edrl?3 in vielr ofth€

I Agenci€r indudno rr5At seEarled 10 -ben.hmaditfieir

infi"-nrudr,reandm.np eircouipdiol 24X7 oper.rroo5at porB!n or.Lrlo bnng dowi rhe &re liir-

toeiph!24{7 ponop.Euonrannounced two yeaB ba(l orh€r.s.n.bha,rbenroudhdine d;"ijiiJii,i",i"il*.",p",t

t A boadl|as atted th.m roarles! tki, dw.I rm;. the votum h6Fat.t ""a'""po*",,"q,i,ud ;ii;;;,H:,:ffi ff

":,Hffi.dru8: cootrollcr of Indi,amorg orhers, $er€ asked to"bcncltmart rI€ir inf .asrruc_turc arId manpowcr reouireilfor l4X7 op.ratioff at purr\u order to brim rlown th.

'The cusrorD! _deDarl-

mcot clEar only atcr r;eiv-r08 clEarancc ccrtiticatesIrom other rcEulatorv aretr-cics. Ho*cvei, dcsoite"rtre2ar7 port opcr.ri;ns an-nounced lwo ,cars back_ulher ag.nci(s hav. b.enfound I.ckinx. this teads 1l,coqe(ion ar thcsea andejrPorls. The board has ask.,1ihem ro asses rheir ds.I

. Ar rh.rr rim(. oLher gov-rimf. rhc qrume hJndled ernnent alcncies strch ri.,n! manpnwc, requircJ t0 con(ertrcLt port aurhorjty.\pu(u ut r\ cLr.rom\ cle.rr- d,ug(,nrroiter, FSSAT andrncc,L d.!(rrment souce p.ivnt. p tiye^ tike fl,srodi'"''::'.:'!::: ! Y:" "n... u.1u-' 1,.u." ur.,u,

,.., r.nL. surc. {urd lhrt in a brnf.s.rcwere.sked ;"}n-

ro_r or.asc!. ckrramer ro, chronrse\rilh theextcndedprooucrs arc pcrdrng sincr work hours.

:,i1"'.!ii"i:ilI'ffi ,.#li[{;i;,::,1:r?,",".d ! u,pr1,lrare p d- and rrme. rledeDanncnt is

if ,irl', "l[,:]l]i :r,t l;i ;1?,lJt,ff#r.{*r.{n on J ir.( r(,r (om. dt L.nrryan.tshipp:rrbrl.Ihi!

-";:. ,,,.. .. rrsndrurc\ hared on ejrt.-.....11:,' ,,t rr h.,o /n tronic darr inrerchan8ea,,,rnc-., r . , u r J - I h . . c I

^L t ,EDl).therourlcsard.

The Indian ExpressPage No. !

h a ornplainl to ChicfEl..tion CorDDi$sioner V S

Sampall, lhe partv allucdlha( ds per guidcliner issucdbv ftc EC in rhe pa{. anv

saysthat ihepmgramme was

Congress goes topoll panel over

OCIOBER d

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ity"ina t iahn! violatio. -ot camr,.igier and irs "ontlthe modcl code of condncl. lir(e ro I the tusembly ele.

lions in Maharashtra and

The complaint tnrther

Date: I le\r

THE CongElr or Mondayapproached-the EleclionComnission demstuling ac-lion !g!inst hime MinrsrerNarEndra Modilot his recent

in consultation with tic.AICC leg.l departhetrt

scctctary K C Millal, whl'lodgcd thc complaint, saidModi r Mann Ki Raat prcgranmc hmadcast on Oclot er 3 wa "pan Df $rc cle.ri,ncampaiSn speciall.v phnncdand designcd" to tunher thciolerests ofihe BJP.

The Congri:ss ha\ argucdthar Modi is lh. BIP'( $ff

Modiradio address

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I Retail inflation may shoot upto 8% by March 2015

RBI may push ratecut till fiscal-end on

'base etfecf woes.t\It.s{sr cPr rNtLATlOil : MOMENTUM AND M5TtFTEcr

NEWDELHI, (X:TOBER6

Fr*lE ..srn! othc8d-'l ii." m"t &'

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abandon its rnti-irrlatio;ary

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Hindustan Times

FinMin refuses toslash excise drtyon branded diesellr|p"Ti!!r RtiMII{ HAS SAIDTHAT

THE HIGH PRICE OF

BRANDEI) DIESEL IS NOT

ONLY DUE IO EXCISE

DUTY BUTATSO DUE IO

[Ew osrl: fir inaD.e ltrhlfihr! hEned dan tbe lelllcunminift's Flro€at b Edue UE.r.t* duty on bmded dle3el,dtlclr ls.lrncilt a lisecoettierthmunhuiledct!m.l illel.

Al pre*nt, mrDd die6el (lnDelhi) is beins sold al {58.97 alltru. Sal6 of brlld€d di*l @alm6t nil d@ to lhe !.i(c d]l&r.e e. Ot oynpaniBlhmu$ u€FrEleu Dini.try hrd 6ou.4hta [{ucti@ incrcisduty ro r.ror dowo the Dri.€ rlirerclc..

BEnitedfiFls(rEtDlahddies6l)e rcgd.rtuel' mixed $ilhddhlr/e6ln dihrio lslr€e th!!e.6rl,la@ of l,lhlclt

In order 10 luah lh! !al€. o{

up inAnglal ht has her turneddown by thc tDaucE nintsiry inrrs septmb€r I r l6dei" ]*aleda pet\ileum miisry ofll.lal.

Ti'. offi.tal added that thefin.n.. hlnls4 ls of the viqthai the reqtr.rl for .eductionD mi* dsty on hEnded die'el rDnnol b. a.Fd.d l. as thenign drllereoce in lhe prie isroi orly du€ lo €xcis firty butother faciom Buc[ a! hr8h baeic!rie, d€€lels lnr.f8ln €tc, A,rconUrlalo tiettnso ni}

Lreded lErtuL tuEe nrnrisrd

s.s leJl btoucb€d .s tha€rnns l,lassub6idille

'The prorGalioon tlB tre.duty orr",Tdeddieel{*ta}en

' :i",ililH'i ii.iiifiilT,,illlorv ru.2s pe! Ulr! l,o tbe prie

, alttfercne wbile utber t&lorsitu cohrlbdrrns rs mu(h as:44 82 a litre. Any rductioD inexciee duty at lhis slaae eoulitnot hm sunifi$t imlact on

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