CORPORATE GOVERNANCE – PART 1

CORPORATE GOVERNANCE IN INDIA 

  • Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled.
  • Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include labor (employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large.

An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem. A related but separate thread of discussions focuses on the impact of a corporate governance system in economic efficiency, with a strong emphasis shareholders’ welfare. There are yet other aspects to the corporate governance subject, such as the stakeholder view and the corporate governance models around the world.

WHY CORPORATE GOVERNANCE

AT NATIONAL LEVEL :-

  • As barriers to free flow of capital fall, it becomes imperative to recognize that the quality of corporate governance is relevant to capital formation and that sound corporate governance principles is the foundation upon which the trust of investors is built.
  • Corporate governance represents the ethical the moral framework under which business decisions are taken. Thus, any investor, when making investments across the borders or even otherwise, wants to be sure that not only are the capital markets or enterprises with which they are investing are being run competently but they also have good corporate governance.
  • Consequently, lack of sound corporate governance practices in any country can badly affect the confidence of foreign investors, in turn causing damage to the amount of foreign investments flowing in.

At the company and individual level:-

  • It is self evident that sound corporate governance is essential to the well being of an individual company and its stakeholders, particularly its shareholders and creditors.
  • We need to only remind ourselves of the many companies, across the world, whose financial difficulties and, ultimate demise have been substantially attributable to weak corporate governance.

On the other hand, there are several areas of self-interest that should drive companies to embrace more effective governance. These areas are:

  1. Effective governance helps to minimize reputational risks and thus, protecting the brand;
  2. It helps to instill trust in customers and vendors;
  3. It also helps to assure effectiveness and integrity of a company’s business processes.

Factors influencing corporate governance

  1. The ownership structure 

    The structure of ownership of a company determines, to a considerable extent, how a Corporation is managed and controlled. The ownership structure can be dispersed among individual and institutional shareholders as in the US and UK or can be concentrated in the hands of a few large shareholders as in Germany and Japan. But the pattern of shareholding is not as simple as the above statement seeks to convey. The pattern varies the across the globe.Our corporate sector is characterized by the co-existence of state owned, private and multinational Enterprises. The shares of these enterprises (except those belonging to a public sector) are held by institutional as well as small investors. Specifically, the shares are held by

    (1) The term-lending institutions
    (2) Institutional investors, comprising government-owned mutual funds, Unit Trust of India and the government owned insurance corporations
    (3) Corporate bodies
    (4) Directors and their relatives and
    (5) Foreign investors. Apart from these block holdings, there is a sizable equity holding by small investors.

  2. The structure of company boards 

    Along with the structure of ownership, the structure of company boards has considerable influence on the way the companies are managed and controlled. The board of directors is responsible for establishing corporate objectives, developing broad policies and selecting top-level executives to carry out those objectives and policies. The board also requires management’s performance to ensure that the company is run well and shareholder’s interests are protected.

Company boards are permitted to vary in size, composition and structure to best serve the interests of the corporation and the shareholders. Boards can be single-tiered/two-tiered. With regard to the size of the board, opinions and practices vary. Some argue that the adequate size is to range from 9 to15. Some put the figure at 10. Yet others recommend a minimum of 5 and a maximum of 10.

  1. The financial structure 

    Along with the notion that the structure of ownership matters in corporate governance is the notion that the financial structure of the company, that is proportion between debt and equity, has implications for the quality of governance.

Recent research has shown contrary to the Modigliani-Miller hypothesis that the financial structure of the firm has no relationship to the value of a firm that the financial structure does matter; it is no secret that the lenders exercise significant influence on the way a company is managed and controlled. Banks can perform the important function of screening and monitoring companies as the (banks) are better informed than other investors. Further, banks can diminish short-term biases in managerial decision-making by favoring investments that would generate higher benefits in the long run. Banks play a more favorable role than other investors in reducing the costs of financial distress.

  1. The institutional environment 

    The legal, regulatory, and political environment within which a company operates determines in large measure the quality of corporate governance. In fact, corporate governance mechanisms are economic and legal institutions and often the outcome of political decisions. For example, the extent to which shareholders can control the management depends on their voting right as defined in the Company Law, the extent to which creditors will be able to exercise financial claims on a bankrupt unit will depend on bankruptcy laws and procedures etc.

Advertisements

14TH FINANCE COMMISSION

PHASE I – GENERAL AWARENESS

PHASE II- FINANCE AND MANAGEMENT

TOPIC- FINANCE COMMISSION

14th Finance Commission Report

 

The Fourteenth Finance Commission chaired by Dr. Y.V.Reddy, former Governor Reserve Bank of India, has submitted its recommendation to the President. The government has in principle accepted the recommendations.
There are many first-timers in the 14th FC recommendations; firstly being the significant increase in the total devolution to states from 32% to 42%.

Besides, the commission has discontinued the practice of recommending grants and has also not distinguished between plan and non-plan expenditure. These innovative recommendations have however generated their own debates. While some have called them positive, some have called them negative.

Functions of Finance Commission, as given in Article 280 of The Constitution of India –

It shall be the duty of the Commission to make recommendations to the President as to

  • the distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them under this Chapter and the allocation between the States of the respective shares of such proceeds;
  • the principles which should govern the grants in aid of the revenues of the States out of the Consolidated Fund of India;
  • any other matter referred to the Commission by the President in the interests of sound finance

 

Recommendations of 14th Finance Commission

  • Sharing of Union Taxes :The 14th FC has recommended increasing the share of tax devolution between Centre and the State, to 42 per cent of the divisible pool (Vertical Transfer).
    Criteria for Transfers between States (Horizontal Transfers) –
Criteria Weight
Population 17.5
Demographic Change 10
Income Distance 50
Area 15
Forest Cover 7.5
  • The 14th FC has not recommended sector specific grants (except few like Local Body Grant). Thus, 14TH FC has not taken into account Plan and Non Plan categories of fund transfer. Based on 13th FC recommendations, these grants in aid accounted to 7% of net transfers from Centre to State.
  • Revenue Deficit Grant:A total revenue deficit grant of Rs. 1,94,821 crore is recommended during the award period for eleven States – Andhra Pradesh, Himachal Pradesh, Jammu and Kashmir, Manipur, Mizoram, Nagaland, Tripura, Assam, Kerala, Meghalaya and West Bengal. The objective of inter-governmental transfers is to offset the fiscal disabilities arising from low revenue raising capacity and higher unit cost of providing public services.
  • Grants to Local Bodies:The total size of the grant to be Rs.2,87,436 crore for the period 2015-20, constituting an assistance of Rs. 488 per capita per annum at an aggregate level. Of this, the grant recommended to panchayats is Rs.2,00,292.20 crore and that to municipalities is Rs.87,143.80 crore. The grants are composed of two parts – a basic grant and a performance grant for duly constituted gram panchayats and municipalities.
  • Disaster Management:The 14th FC has recommended that the Union Government consider ensuring an assured source of funding for the NDRF. The financing of the NDRF has so far been almost wholly through the levy of cess on selected items

 

Other Recommendations

  • Set up an independent council to undertake assessment of fiscal policy implications of Budget proposals
  • Replace existing FRBM Act with a debt ceiling & fiscal responsibility law
  • Wind up National Investment Fund and maintain all disinvestment receipts in the consolidated fund
  • Amend electricity Act to provide for penalties for delay in payment of subsidies by state governments
  • Submission of states on minimum guaranteed devolution turned down
  • Steps for states to augment revenues, such as property tax reforms and issuance of municipal bonds suggested

RURAL LOCAL GOVERNMENT IN INDIA

PHASE II- ECONOMIC AND SOCIAL ISSUES

POLITICAL SYSTEM IN INDIA

LOCAL GOVERNMENT: RURAL

Recommendations of The Balwant Rai Mehta Committee and The Ashok Mehta Committee

The Balwant Rai Mehta Committee ( 1957) suggested ways of democratic decentralisation in a three-tier structure of panchayati raj.

This meant that panchayati raj should be set up at three levels. They should be furnished with sufficient powers and resources. These three tiers of panchayati raj are:

  • zila parishad at district level;
  • panchayat samiti at intermediate or block level;
  • village or gram panchayat at village level.

In this scheme, panchayat samiti was to be the most important.

These three bodies were interlinked as the lower body was represented in the higher body through its chairperson.

Panchayati raj of the Balwant Rai Mehta Committee pattern was first introduced by Rajasthan in 1959.

Later, other States also followed. Initially, both the people and the states were enthusiastic about Panchayati Raj. However panchayati raj institutions began to decline very soon owing to government indifference and political interference.

 The Ashok Mehta Committee set up by the government to review panchayati raj submitted its report in 1978.

This Committee felt that panchayati raj had inculcated political awareness among rural masses. However, it had not been successful in carrying out economic development. Unlike the Balwant Rai Mehta Committee, the Asoka Mehta Committee suggested a two tier structure of panchayati raj.

These two-tiers were to be:

  • zila parishad at district level;
  • mandal panchayat, an administrative unit between village panchayat and
  • panchayat samiti.

In the two-tier system, the main emphasis was laid on zila parishad and not on panchayat samiti as in the case of the earlier committee report.

However the recommendations of the Ashok Mehta Committee could not be implemented due to the collapse of the Janata Government in 1980.

Salient Features of 73rd Amendment

The 73rd amendment to the Constitution enacted in 1992 made statutory provisions for the establishment, empowerment and functioning of Panchayati Raj institutions. Some provisions of this amendment are binding on the States while others have been left to be decided by respective State Legislatures at their discretion. The salient features of this amendment are as follows:

 Some of the compulsory requirements of the new law are:

  • Organisation of Gram Sabhas;
  • creation of a three-tier Panchayati Raj Structure at the Zila, Block and Village levels;
  • almost all posts, at all levels to be filled by direct elections;
  • minimum age for contesting elections to the Panchayati Raj institutions be twenty one years;
  • the post of Chairman at the Zila and Block levels should be filled by indirect election;
  • there should be reservation of seats for Scheduled Castes/ Scheduled Tribes in Panchayats, in proportion to their population, and for women in Panchayats up to one-third seats;
  • State Election Commission to be set up in each State to conduct elections to Panchayati Raj institutions;
  • the tenure of Panchayati Raj institutions is five years, if dissolved earlier, fresh elections to be held within six months; and
  • a State Finance Commission is set up in each State every five years.

Some of the provisions which are not binding on the States, but only guidelines are:

  • Giving voting rights to members of the Central and State legislatures in these bodies;
  • providing reservation for backward classes; and
  • the Panchayati Raj institutions should be given financial powers in relation to taxes,
  • levy fees etc. and efforts shall be made to make Panchayats autonomous bodies.

 Composition of Panchayats

  • The Panchayati Raj system, as established in accordance with the 73rd Amendment, is a three-tier structure based on direct elections at all the three tiers : village, intermediate and district.
  • Exemption from the intermediate tier is given to the small States having less than 20 lakhs population.
  • It means that they have freedom not to have the middle level of panchayat. All members in a panchayat are directly elected.
  • However, if a State so decides, members of the State Legislature and Parliament may also be represented in district and middle level panchayats. The middle level panchayats are generally known as Panchayat Samitis.
  • Provisions have been made for the inclusion of the chairpersons of the village panchayats in the block and district level panchayats. The provision regarding reservation of seats for Scheduled Castes/Scheduled Tribes has already been mentioned earlier. However it should also be noted here that one-third of total seats are reserved for women, and one-third for women out of the Quota fixed for Scheduled Castes/Tribes.
  • Reservation is also provided for offices of Chairpersons. The reserved seats are allotted by rotation to different constituencies in a panchayat area. State Legislatures can provide for further reservation for other backward classes (OBC) in panchayats.

(i) Term

The Amendment provides for continuous existence of panchayats.

The normal term of a panchayat is five years. If a panchayat is dissolved earlier, elections are held within six months.

There is a provision for State level Election Commission, for superintendence, direction and control of preparation of electoral rolls and conduct of elections to panchayats.

 (ii) Powers and responsibilities of panchayats

State Legislatures may endow panchayats with such powers and authority as may be necessary to enable the panchayats to become institutions of self-government at grassroots level. Responsibility may be given to them to prepare plans for economic development and social justice.

Schemes of economic development and social justice with regard to 29 important matters such as agriculture, primary and secondary education, health and sanitation, drinking water, rural housing, welfare of weaker sections, social forestry and so forth may be made by them.

 

Three-tier Structure of Panchayati Raj

 (i) Panchayats at Village Level

This is the basic or grasroots level of panchayati raj.

(a) Gram Sabha

Recognition to Gram Sabha, an institution of direct democracy, is an important feature of the 73rd amendment. Gram Sabha consists of all adult residents within a village or group of villages.

Thus it is the only institution of direct democracy in the country.

Generally, two meetings of Gram Sabha are held every year. In these meetings, the Gram Sabha as the general body of the people hear annual statement of accounts, audit or administrative report of panchayats. It also recommends new development projects to be undertaken by panchayats. It also helps in identifying poor people of the village so that they may be given economic assistance.

(b) Gram Panchayat

The lower tier of the panchayati raj system in the country is the village level panchayat.

It is known in most of the States as Gram Panchayat: The members of a Gram Panchayat are directly elected by the people.

The number of members of a Gram Panchayat is fixed on the basis of village population. Hence, it differs from panchayat to panchayat. Election is held on the basis of single-member constituency. As already mentioned, one-third of the total number of seats are reserved for women; and some for Scheduled Castes and Tribes including one-third for women of Scheduled Castes and Tribes. Chairpersons of Gram Panchayats are called by different names in different States as ‘Sarpanch, Pradhan or President.

There is a Vice-Chairperson also. Both are elected by members of the panchayat. Gram Panchayats generally hold their meetings once a month. Panchayats at all levels constitute committees for transaction of their business.

 

(ii) Panchayat Samiti

The second or middle tier of the panchayati raj is Panchayat Samiti which provides a link between Gram Panchayat and a Zila Parishad.

The strength of a Panchayat Samiti also depends on the population in a samiti area. In Panchayat Samiti, some members are directly elected. Sarpanchs of gram panchayats are ex-officio members of Panchayat Samitis.

However, all the sarpanchs of Gram Panchayats are not members of Panchayat Samitis at the same time. The number varies from State to State and is rotated annually. It means

that only chairpersons of some Gram Panchayats in a Samiti area are members of Panchayat Samiti at a time.

In some panchayats, members of Legislative Assemblies and Legislative Councils as well as members of Parliament who belong to the Samiti area are co-opted as its members. Chairpersons of Panchayat Samitis are, generally elected from among the directly elected members.

 

(iii) Zila Parishad

Zila Parishad at the district level is the uppermost tier of the panchayati raj system. This institution has some directly elected members whose number differs from State to State as it is also based on population. Chairpersons of Panchayat Samitis are ex-officio members of Zila Parishads. Members of Parliament, Legislative Assemblies and Councils belonging to the districts are also nominated members of Zila Parishads.

The chairperson of a Zila Pazishad, called Adhyaksha or President, is elected from among the directly elected members. The vice-chairperson is also elected similarly. Zila parishad meetings are conducted once a month. Special meetings can also be convened to discuss special matters. Subject committees are also formed.

PARLIAMENTARY SYSTEM IN INDIA

PHASE II- ECONOMIC AND SOCIAL ISSUES

INDIAN POLITICAL SYSTEM

PARLIAMENTARY FORM OF GOVERNMENT IN INDIA

Another important feature of the Indian political system is its parliamentary form of government both at the union and state levels.

There are two forms of government: presidential and parliamentary. In presidential system, the three organs of government are independent of one another.

There is absence of close relationship between the executive and the legislature. The United States of America has a presidential form of government. But, in a parliamentary form of government, there is a very close relationship between the executive and the legislature. United Kingdom has a parliamentary form of government.

In fact, the Constitution makers of India adopted the British model, as the system of government that operated in India before 1947 was to a great extent quite similar to the British parliamentary government. In India, we have parliamentary form of government both at the central and state level.

The Indian system reflects all the main features of a parliamentary government:

  • close relationship between the legislature and the executive,
  • responsibility of the executive to the legislature,
  • the executive having a Head of the State as the nominal executive, and a Council of Ministers headed by the Prime Minister as the real executive.

Close Relationship between the Legislature and the Executive:

In India, there is a close relationship between the executive, i.e. the Council of Ministers with the Prime Minister at the head and the legislature, i.e. the Parliament. Only the leader of the majority party or co/alition of parties can be appointed as the Prime Minister. All the members of the Council of Ministers must be the Members of Parliament.

It is only on the advice of the Council of Ministers that the President can summon and prorogue the sessions of both Houses of Parliament and even dissolve the Lok Sabha. All the elected Members of the Parliament participate in the election of the President and he/she can be removed from office only when an impeachment motion against him/her is passed by both the Houses of  Parliament.

 Responsibility of the Executive to the Legislature:

 The Council of Ministers is collectively responsible to Lok Sabha.

It means that the responsibility of every Minister is the responsibility of the entire Council of Ministers. It is responsible to Rajya Sabha also.

In fact, both the Houses have powers to control the Council of Ministers. They do it by asking questions and supplementary questions on the policies, programmes and functioning of the government. They debate on the proposals of the government and also subject its functioning to intensive criticism.

They can move adjournment motion and calling attention notices. No bill tabled by the Council of Ministers can become law unless it is approved by the Parliament. The annual budget also is to be passed by the Parliament. In real terms, the tenure of the Council of Ministers depends on the Lok Sabha. The Council of Ministers has to resign if it looses the confidence of Lok Sabha, which means the support of the majority in that House. The Council of Ministers can  also be removed from office by the Lok Sabha through a vote of no-confidence.

Nominal and Real Executive:

There are two parts of the executive in India, nominal executive and real executive. The President who is the Head of the State is the nominal and formal executive. Theoretically, all the executive powers are vested by the Constitution in the President of India. But, in practice these are not exercised by him/her. These are actually used by the Prime Minister and the  Council of Ministers. The Council of Ministers with the Prime Minister at the head is the real executive. The President can not act without the advice of the Council of Ministers.

Prime Minister as the real executive:

It is the Prime Minister who is the pivot of the parliamentary executive. All the members of the Council of Ministers are appointed by the President on the recommendations of the Prime Minister. The allocation of portfolios among the Ministers is the prerogative of the Prime Minister.

He/She presides over the meetings of the Cabinet and is the only link between the Council of Ministers and the President. Any Minister can be removed from office if the Prime Minister decides. When the Prime Minister resigns, the entire Council of Ministers has to go. The parliamentary system in India has been functioning quite satisfactorily. The parliamentary governments in States also are structured on the pattern of the Central government. The executive consists of the Governor and the Council of Ministers with Chief Minister at the head.

Whereas, the Governor functions as the Head of the State, the Chief Minister and the Council of Ministers act as the real executive. State legislatures are bicameral (State Assembly and Legislative Council) in only a few States; in most of the States these are unicameral (Legislative Assembly).

 

POVERTY CONCEPTS

PHASE I- GENERAL AWARENESS

PHASE II- ECONOMIC AND SOCIAL ISSUES

TOPIC- POVERTY ALLEVIATION

images

How is the poverty line measured?

Two Measures of the BPL Population

  • The official poverty line is determined by the Planning Commission, on the basis of data provided by the National Sample Survey Organisation (NSSO).
  • NSSO data is based on a survey of consumer expenditure which takes place every five years.
  • In addition to Planning Commission efforts to determine the poverty line, the Ministry of Rural Development has conducted a BPL Census in 1992, 1997, 2002, and 2011 to identify poor households.
  • The BPL Census is used to target families for assistance through various schemes of the central government.
  • The 2011 BPL Census was conducted along with a caste census, and is dubbed the Socio-Economic & Caste Census (SECC) 2011.

Planning Commission Methodology

  • Rural and urban poverty lines were first defined in 1973-74 in terms of Per Capita Total Expenditure (PCTE).
  • Consumption is measured in terms of a collection of goods and services known as reference Poverty Line Baskets (PLB).
  • These PLB were determined separately for urban and rural areas and based on a per-day calorie intake of 2400 (rural) and 2100 (urban), each containing items such as food, clothing, fuel, rent, conveyance and entertainment, among others.
  • The official poverty lineis the national average expenditure per person incurred to obtain the goods in the PLB.
  • Since 1973-74, prices for goods in the PLB have been periodically adjusted over time and across states to deduce the official poverty line.

Uniform Reference Period (URP) vs Mixed Reference Period (MRP)

  • Until 1993-94, consumption information collected by the NSSO was based on the Uniform Reference Period (URP), which measured consumption across a 30-day recall period. That is, survey respondents were asked about their consumption  in the previous 30 days.
  • From 1999-2000 onwards, the NSSO switched to a method known as the Mixed Reference Period (MRP). The MRP measures consumption of five low-frequency items (clothing, footwear, durables, education and institutional health expenditure) over the previous year, and all other items over the previous 30 days.
  • That is to say, for the five items, survey respondents are asked about consumption in the previous one year. For the remaining items, they are asked about consumption in the previous 30 days.

Tendulkar Committee Report

  • In 2009, the Tendulkar Committee Reportsuggested several changes to the way poverty is measured.
  • First, it recommended a shift away from basing the PLB in caloric intake and towards target nutritional outcomes instead.
  • Second, it recommended that a uniform PLB be used for both rural and urban areas.
  • In addition, it recommended a change in the way prices are adjusted, and called for an explicit provision in the PLB to account for private expenditure in health and education.
  • For these reasons, the Tendulkar estimate of poverty for the years 1993-94 and 2004-05 is higher than the official estimate, regardless of whether one looks at URP or MRP figures.
  • For example, while the official 1993-94 All-India poverty figure is 36% (URP), applying the Tendulkar methodology yields a rate of 45.3%. Similarly, the official 2004-05 poverty rate is 21.8% (MRP) or 27.5% (URP), while applying the the Tendulkar methodology brings the number to 37.2%.History of poverty estimation in India

    Pre independence poverty estimates:

    • One of the earliest estimations of poverty was done by Dadabhai Naoroji in his book, ‘Poverty and the Un-British Rule in India’.
    • He formulated a poverty lineranging from Rs 16 to Rs 35 per capita per year, based on 1867-68 prices.
    • The poverty line proposed by him was based on the cost of a subsistence diet consisting of ‘rice or flour, dhal, mutton, vegetables, ghee, vegetable oil and salt’.
    • Next, in 1938, the National Planning Committee (NPC) estimated a poverty lineranging from Rs 15 to Rs 20 per capita per month.
    • Like the earlier method, the NPC also formulated its poverty line based on ‘a minimum standard of living perspective in which nutritional requirements are implicit’.
    • In 1944, the authors of the ‘Bombay Plan’ (Thakurdas et al 1944) suggested a poverty lineof Rs 75 per capita per year.

    Post independence poverty estimates:

    • In 1962, the Planning Commission constituted a working groupto estimate poverty nationally, and it formulated separate poverty lines for rural and urban areas – of Rs 20 and Rs 25 per capita per year respectively.
    • VM Dandekar and N Rath made the first systematic assessment of poverty in India in 1971, based on National Sample Survey (NSS) data from 1960-61.
    • They argued that the poverty line must be derived from the expenditure that was adequate to provide 2250 calories per day in both rural and urban areas.
    • This generated debate on minimum calorie consumption norms while estimating poverty and variations in these norms based on age and sex.

    Alagh Committee (1979):

    • In 1979, a task forceconstituted by the Planning Commission for the purpose of poverty estimation, chaired by YK Alagh, constructed a poverty line for rural and urban areas on the basis of nutritional requirements.
    • Table 3 shows the nutritional requirements and related consumption expenditure based on 1973-74 price levels recommended by the task force.  Poverty estimates for subsequent years were to be calculated by adjusting the price level for inflation.

    Table 3: Minimum calorie consumption and per capita consumption expenditure as per the 1979 Planning Commission task force on poverty estimation

    Area Calories Minimum consumption expenditure (Rs per capita per month)
    Rural 2400 49.1
    Urban 2100 56.7

    Source:  Report of the Expert Group on Estimation of Proportion and Number of Poor, 1993, Perspective Planning Division, Planning Commission

    Lakdawala Committee (1993):

    • In 1993, an expert groupconstituted to review methodology for poverty estimation, chaired by DT Lakdawala, made the following suggestions:
    • (i) consumption expenditure should be calculated based on calorie consumption as earlier; (ii) state specific poverty lines should be constructed and these should be updated using the Consumer Price Index of Industrial Workers (CPI-IW) in urban areas and Consumer Price Index of Agricultural Labour (CPI-AL) in rural areas; and (iii) discontinuation of ‘scaling’ of poverty estimates based on National Accounts Statistics.  This assumes that the basket of goods and services used to calculate CPI-IW and CPI-AL reflect the consumption patterns of the poor.

    Tendulkar Committee (2009):

    • In 2005, another expert groupto review methodology for poverty estimation, chaired by Suresh Tendulkar, was constituted by the Planning Commission to address the following three shortcomings of the previous methods:
    • (i) consumption patterns were linked to the 1973-74 poverty line baskets (PLBs) of goods and services, whereas there were significant changes in the consumption patterns of the poor since that time, which were not reflected in the poverty estimates; (ii) there were issues with the adjustment of prices for inflation, both spatially (across regions) and temporally (across time); and (iii) earlier poverty lines assumed that health and education would be provided by the State and formulated poverty lines accordingly.
    • It recommended four major changes: (i) a shift away from calorie consumption based poverty estimation; (ii) a uniform poverty line basket (PLB) across rural and urban India; (iii) a change in the price adjustment procedure to correct spatial and temporal issues with price adjustment; and (iv) incorporation of private expenditure on health and education while estimating poverty.   The Committee recommended using Mixed Reference Period (MRP) based estimates, as opposed to Uniform Reference Period (URP) based estimates that were used in earlier methods for estimating poverty.

    It based its calculations on the consumption of the following items: cereal, pulses, milk, edible oil, non-vegetarian items, vegetables, fresh fruits, dry fruits, sugar, salt & spices, other food, intoxicants, fuel, clothing, footwear, education, medical (non-institutional and institutional), entertainment, personal & toilet goods, other goods, other services and durables.

    The Committee computed new poverty lines for rural and urban areas of each state.  To do this, it used data on value and quantity consumed of the items mentioned above by the population that was classified as poor by the previous urban poverty line.  It concluded that the all India poverty line was Rs 446.68 per capita per month in rural areas and Rs 578.80 per capita per month in urban areas in 2004-05.  The following table outlines the manner in which the percentage of population below the poverty line changed after the application of the Tendulkar Committee’s methodology.

    Table 4: Percentage of population below poverty line calculated by the Lakdawala Committee and the Tendulkar Committee for the year 2004-05

    Committee Rural Urban Total
    Lakdawala Committee 28.3 25.7 27.5
    Tendulkar Committee 41.8 27.5 37.2

    Source: Report of the Expert Group on Estimation of Proportion and Number of Poor, 1993, Perspective Planning Division, Planning Commission; Report of the Expert Group to Review the Methodology for Estimation of  Poverty, 2009, Planning Commission

    The Committee also recommended a new method of updating poverty lines, adjusting for changes in prices and patterns of consumption, using the consumption basket of people close to the poverty line.  Thus, the estimates released in 2009-10 and 2011-12 use this method instead of using indices derived from the CPI-AL for rural areas and CPI-IW for urban areas as was done earlier.  Table 5 outlines the poverty lines computed using the Tendulkar Committee methodology for the years 2004-05, 2009-10 and 2011-12.

    Table 5: National poverty lines (in Rs per capita per month) for the years 2004-05, 2009-10 and 2011-12

    Year Rural Urban
    2004-05 446.7 578.8
    2009-10 672.8 859.6
    2011-12 816.0 1000.0

    Source: Report of the Expert Group to Review the Methodology for Estimation of Poverty (2009) Planning Commission; Poverty Estimates 2009-10 and Poverty Estimates 2011-12, Planning Commission

    Rangarajan Committee:

    • In 2012, the Planning Commission constituted a new expert panelon poverty estimation, chaired by C Rangarajan with the following key objectives: (i) to provide an alternate method to estimate poverty levels and examine whether poverty lines should be fixed solely in terms of a consumption basket or if other criteria are also relevant; (ii) to examine divergence between the consumption estimates based on the NSSO methodology and those emerging from the National Accounts aggregates; (iii) to review international poverty estimation methods and indicate whether based on these, a particular method for empirical poverty estimation can be developed in India, and (iv) to recommend how these estimates of poverty can be linked to eligibility and entitlements under the various schemes of the Government of India.

    It not only takes normative levels for adequate nourishment, clothing, house rent, conveyance and education, but also considers behaviourally-determined levels of other non-food expenses.

    The committee has estimated that almost 30 per cent of us were poor in 2011-12.It uses separate data sets for rural and urban parts.

    The panel computed the average requirements of calories, proteins and fats on the norms set by the Indian Council for Medical Research in 2010. These are differentiated by age, gender and activity for all-India rural and urban regions.

    Accordingly, the energy requirement as calculated by Rangarajan is 2,155 kcal per person per day in rural areas and 2,090 kcal per person per day in urban areas. This is significantly lower than the 2,400 kcal in rural areas and slightly less than 2,100 kcal in urban areas used by the earlier Lakdawala panel. The reason given is that the age profile and working conditions have changed with time.

    The protein and fat requirements have been estimated on the same lines. These are 48g and 28g per capita per day, respectively, in rural India and 50g and 26g per capita per day in urban areas.

    Levels
    The average monthly per capita consumption expenditure on food in these fractile classes is Rs 554 in rural areas and Rs 656 in urban areas, according to the NSSO report.

    The non-food component of the poverty line basket has both a normative component and one given by the observed consumption pattern of households in the fractile group in which the food component is located.

    The normative component relates to private consumption expenditure on education, clothing, shelter (rent) and mobility (conveyance). Since it is difficult to set minimum norms for these essential non-food items, the panel recommended that observed expenditures on these items by households located in the median fractile (45-50 percentile) be treated as the normative minimum private consumption expenditure on these items.

    This works out to be Rs 141 per capita per month in rural areas and Rs 407 in urban areas, according to the NSSO report referred to.

    For all other non-food goods and services, the observed expenditure of that fractile class which meets the nutrient norms (the 25-30 percentile in rural India and 15-20 percentile in urban India) is taken to define the poverty line in respect of these items. This works out to Rs 277 per capita per month in rural areas and Rs 344 in urban areas, on the basis of the NSSO survey of 2011-12.

    The new poverty line, thus, translates to a monthly per capita consumption expenditure of Rs 972 in rural areas and Rs 1,407 in urban areas in 2011-12. Or, Rs 32 in rural areas and Rs 47 in urban areas on a per capita daily basis. However, Rangarajan says the best way is to take it on a monthly household consumption basis. Taking a household as five members, this would mean Rs 4,860 in rural India and Rs 7,035 in urban parts.

NHB-RESIDEX

PHASE I- GENERAL AWARENESS

PHASE II- FINANCE AND MANAGEMENT

TOPIC- FINANCIAL INSTITUTIONS- NHB

NHB Residex

About Residex
A need was felt for setting up of a mechanism, which could track the movement of prices in the residential housing segment.

Regular monitoring of the house prices can be useful inputs for the different interest groups.

NHB launched RESIDEX for tracking prices of residential properties in India, in July 2007.

 

NHB RESIDEX: Salient Features

  • Pilot study covered 5 cities viz. Delhi, Mumbai, Kolkata, Bangalore and Bhopal representing the various regions of the country.
  • 2001 was taken as the base year for the study to be comparable with the WPI and CPI.  Year to year price movement during the period 2001-2005 has been captured in the study, and subsequently updated for two more years i.e. up to 2007.
  • Thereafter, NHB RESIDEX was expanded to cover ten more cities, viz, Ahmedabad, Faridabad, Chennai, Kochi, Hyderabad, Jaipur, Patna, Lucknow, Pune and Surat.
  • At the time of last updation and expansion of coverage of NHB RESIDEX to 10 more cities, the base year has been shifted from 2001 to 2007.
  • From quarter January-March, 2012, NHB RESIDEX has been further expanded to cover 5 more cities viz Bhubneshwar, Guwahati, Ludhiana, Vijayawada & Indore.
  • The Index for Delhi has been expanded to cover Gurgaon, Noida, Greater Noida and Ghaziabad thereby expanding its coverage to National Capital Region (NCR). Thus, from April-June, 2012 onwards the Index of Delhi would cover National Capital Region (NCR).
  • Further, NHB RESIDEX has been expanded to include six (6) new cities namely Chandigarh, Coimbatore, Dehradun, Meerut, Nagpur and Raipur from the quarter January-March, 2013 thereby taking the total of number of cities covered to 26.
  • The proposal is to expand NHB RESIDEX to 63 cities which are covered under the Jawahar Lal Nehru National Urban Renewal Mission to make it a truly national index.
  • Prices have been studied for various administrative zones/property tax zones constituting each city.
  • The index has been constructed using the weighted average methodology with Price Relative Method (Modified Laspeyre’s approach).
  • Primary data on housing prices is being collected from real estate agents by commissioning the services of private consultancy/research organisatons of national repute; in addition data on housing prices is also being collected from the housing finance companies and bank, which is based on housing loans contracted by these institutions.

PHASE I- GENERAL AWARENESS

PHASE II- ECONOMIC AND SOCIAL ISSUES

TOPIC- PRIVATIZATION AND GLOBALIZATION

FDI LIMITS IN VARIOUS SECTORS IN INDIA

India has already marked its presence as one of the fastest growing economies of the world. It has been ranked among the top 3 attractive destinations for inbound investments. Since 1991, the regulatory environment in terms of foreign investment has been consistently eased to make it investor-friendly.

RECENT POLICY MEASURES

  • 100% FDI allowed in medical devices
  • FDI cap increased in insurance & sub-activities from 26% to 49%
  • 100% FDI allowed in the telecom sector.
  • 100% FDI in single-brand retail.
  • FDI in commodity exchanges, stock exchanges & depositories, power exchanges, petroleum refining by PSUs, courier services under the government route has now been brought under the automatic route.
  • Removal of restriction in tea plantation sector.
  • FDI limit raised to 74% in credit information & 100% in asset reconstruction companies.
  • FDI limit of 26% in defence sector raised to 49% under Government approval route. Foreign Portfolio Investment up to 24% permitted under automatic route. FDI beyond 49% is also allowed on a case to case basis with the approval of Cabinet Committee on Security.
  • Construction, operation and maintenance of specified activities of Railway sector opened to 100% foreign direct investment under automatic route.

 foreign-direct-investment-in-india-1-728

SECTORS WITH RESTRICTIONS

SECTORS WHERE FOREIGN DIRECT INVESTMENT IS PROHIBITED :

  • Lottery Business including Government /private lottery, online lotteries, etc.
  • Gambling and Betting including casinos etc.
  • Chit funds
  • Nidhi company-(borrowing from members and lending to members only).
  • Trading in Transferable Development Rights (TDRs)
  • Real Estate Business (other than construction development) or Construction of Farm Houses
  • Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
  • Activities / sectors not open to private sector investment e.g. Atomic Energy and Railway Transport (other than construction, operation and maintenance of (i) Suburban corridor projects through PPP, (ii) High speed train projects, (iii) Dedicated freight lines, (iv) Rolling stock including train sets, and locomotives/coaches manufacturing and maintenance facilities, (v) Railway Electrification, (vi) Signaling systems, (vii) Freight terminals, (viii) Passenger terminals, (ix) Infrastructure in industrial park pertaining to railway line/sidings including electrified railway lines and connectivities to main railway line and (x) Mass Rapid Transport Systems.)
  • Services like legal, book keeping, accounting & auditing.

SECTORS WITH CAPS

  • Petroleum Refining by PSU (49%).
  • Teleports (setting up of up-linking HUBs/Teleports),Direct to Home (DTH), Cable Networks (Multi-system operators (MSOs) operating at national, state or district level and undertaking upgradation of networks towards digitalization and addressability), Mobile TV and Headend-in-the-Sky Broadcasting Service (HITS) – (74%).
  • Cable Networks (49%).
  • Broadcasting content services- FM Radio (26%), uplinking of news and current affairs TV channels (26%).
  • Print Media dealing with news and current affairs (26%).
  • Air transport services- scheduled air transport (49%), non-scheduled air transport (74%).
  • Ground handling services – Civil Aviation (74%).
  • Satellites- establishment and operation (74%).
  • Private security agencies (49%).
  • Private Sector Banking- Except branches or wholly owned subsidiaries (74%).
  • Public Sector Banking (20%).
  • Commodity exchanges (49%).
  • Credit information companies (74%).
  • Infrastructure companies in securities market (49%).
  • Insurance and sub-activities (49%).
  • Power exchanges (49%).
  • Defence (49% above 49% to CCS).

SECTORS REQUIRING CENTRAL GOVERNMENT APPROVAL

  • Tea sector, including plantations – 100%.
  • Mining and mineral separation of titanium-bearing minerals and ores, its value addition and integrated activities -100%.
  • FDI in enterprise manufacturing items reserved for small scale sector – 100%.
  • Defence – up to 49% under FIPB/CCEA approval, beyond – 49% under CCS approval (on a case-to-case basis, wherever it is likely to result in access to modern and state-of-the-art technology in the country).
  • Teleports (setting up of up-linking HUBs/Teleports), Direct to Home (DTH), Cable Networks (Multi-system operators operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability), Mobile TV and Headend-in-the Sky Broadcasting Service(HITS) – beyond 49% and up to 74%.
  • Broadcasting Content Services: uplinking of news and current affairs channels – 26%, uplinking of non-news and current affairs TV channels – 100%.
  • Publishing/printing of scientific and technical magazines/specialty journals/periodicals – 100%.
  • Print media: publishing of newspaper and periodicals dealing with news and current affairs- 26%, Publication of Indian editions of foreign magazines dealing with news and current affairs- 26%.
  • Terrestrial Broadcasting FM (FM Radio) – 26%.
  • Publication of facsimile edition of foreign newspaper – 100%.
  • Airports – brownfield – beyond 74%.
  • Non-scheduled air transport service – beyond 49% and up to 74%.
  • Ground-handling services – beyond 49% and up to 74%.
  • Satellites – 74%.
  • Private securities agencies – 49%.
  • Telecom-beyond 49%.
  • Single brand retail – beyond 49%.
  • Asset reconstruction company – beyond 49% and up to 100%
  • Banking private sector (other than WOS/Branches) – beyond 49% and up to 74%, public sector – 20%.
  • Pharmaceuticals – brownfield – 100%.

SECTORS UNDER AUTOMATIC ROUTE

All the items other than above are under the automatic route.

VARIOUS GOVERNMENT SCHEMES AND PROGRAMMES FOR EDUCATION IN INDIA

PHASE I- GENERAL AWARENESS

PHASE II- ECONOMIC AND SOCIAL ISSUES

TOPIC- SOCIAL SECTORS IN INDIA, EDUCATION

Sakshar Bharat

  • Saakshar Bharat has been formulated in 2009 with the objective of achieving 80% literacy level by 2012 at national level, by focusing on adult women literacy seeking – to reduce the gap between male and female literacy to not more than 10 percentage points.
  • The mission has four broader objectives, namely
  1. imparting functional literacy and numeracy to non-literates;
  2. acquiring equivalency to formal educational system;
  3. imparting relevant skill development programme; and
  4. Promote a leaning society by providing opportunities for continuing education.
  • The principal target of the mission is to impart functional literacy to 70 million non-literate adults in the age group of 15 years and beyond.
  • The mission will cover 14 million SCs, 8 million STs, 12 million minorities & 36 million others. The overall coverage of women will be 60 million.
  • Eligibility criteria for coverage under Saakshar Bharat. –

A district, including a new district carved out of an erstwhile district that had adult female literacy rate of 50 per cent or below, as per 2001 census, is eligible for coverage under the Saakshar Bharat programme.

In addition, all left wing extremism-affected districts, irrespective of their literacy rate, are also eligible for coverage under the programme.

 ELEMENTARY EDUCATION

  • Article 21-A/ Right to Education Act, 2009
  • Background –

The Constitution (Eighty-sixth Amendment) Act, 2002 inserted Article 21-A in the Constitution of India to provide free and compulsory education of all children in the age group of six to fourteen years as a Fundamental Right in such a manner as the State may, by law, determine.

  • Article 21-A and the RTE Act came into effect on 1 April 2010.
  • The RTE Act provides for the:

Right of children to free and compulsory education till completion of elementary education in a neighbourhood school.

  • It clarifies that ‘compulsory education’ means obligation of the appropriate government to provide free elementary education and ensure compulsory admission, attendance and completion of elementary education to every child in the six to fourteen age group. ‘Free’ means that no child shall be liable to pay any kind of fee or charges or expenses which may prevent him or her from pursuing and completing elementary education.
  • It makes provisions for a non-admitted child to be admitted to an age appropriate class.
  • It specifies the duties and responsibilities of appropriate Governments, local authority and parents

in providing free and compulsory education, and sharing of financial and other responsibilities between the Central and State Governments.

  • It lays down the norms and standards relating inter alia to Pupil Teacher Ratios (PTRs), buildings and infrastructure, school-working days, teacher-working hours.
  • It provides for rational deployment of teachers by ensuring that the specified pupil teacher ratio is maintained for each school, rather than just as an average for the State or District or Block, thus ensuring that there is no urban-rural imbalance in teacher postings. 

Mid-Day Meal Scheme (Nutrition based Education Program to Ensure more Presence)

  • The MDMS is the world’s largest school meal programme and reaches an estimated 12 crore children across 12 lakh schools in India.
  • The MDMS emerged out of the National Programme of Nutritional Support to Primary Education (NP -NSPE), a centrally sponsored scheme formulated in 1995 to improve enrollment, attendance and retention by providing free food grains to government run primary schools. In 2002, the      Supreme Court directed the government to provide cooked mid day meals (as opposed to providing            dry rations) in all government and government aided primary schools.
  • Calorie norms for the meals have been regularly revised starting from 300 calories in 2004, when the scheme was relaunched as the Mid Day Meal Scheme. At present the MDMS provides children in       government aided schools and education centres a cooked meal for a minimum of 200 days. Table 1       outlines the prescribed nutritional content of the meals.

 Objectives:

  • The key objectives of the MDMS are to address the issues of hunger and education in schools
  • by serving hot cooked meals; improve the nutritional status of children and improve enrollment, attendance and retention rates in schools and other education centres.

 Finances:

  • The cost of the MDMS is shared between the central and state governments. The central government provides free food grains to the states. The cost of cooking, infrastructure development, transportation of food grains and payment of honorarium to cooks and helpers is shared by the centre with the state governments.
  • The central government provides a greater share of funds. The contribution of state governments differs from state to state.

Monitoring and Evaluation:

  • There are some interstate variations in the monitoring and evaluation mechanisms of the MDMS. A National Steering cum Monitoring Committee and a Programme Approval Board have been established at the national level, to monitor the programme, conduct impact assessments, coordinate between state governments and provide policy advice to central and state governments. Review Missions consisting of representatives from central and state governments and non governmental agencies have been established.
  • In addition, independent monitoring institutions such as state universities and research institutions monitor the implementation of the scheme.
  • At the state level, a three tier monitoring mechanism exists in the form of state, district and block level steering cum monitoring committees. Gram panchayats and municipalities are responsible for day to day supervision and may assign the supervision of the programme at the school level to the Village Education Committee, School Management and Development Committee or Parent Teacher Association

 

GENDER ISSUES- PART 1

PHASE II- ECONOMIC AND SOCIAL ISSUES

TOPIC- GENDER ISSUES

Key Data

  • According to the 2011 census, women account for 586.47 million in absolute numbers and represent 46 per cent of the total population of the country.
  • While there has been an appreciable gain in the overall sex ratio of 7 points from 933 in 2001 to 940 in 2011, the decline in child sex ratio (0–6 years) by 13 points from 927 in 2001 to 914 in 2011 is a matter of grave concern.
  • There has been an increase in literacy amongst women from 53.67 per cent (Census 2001) to 65.46 per cent (Census 2011). The challenge however remains in bridging the gender gap which stands at 16.68 per cent.
  • From 1993–94 to 2009–10 women’s participation in the labour force has decreased substantially from 36.8 per cent to 26.1 per cent in rural areas and from 17 per cent to 13.8 per cent in urban areas as indicated by NSSO data.
  • Violence against the women has increased. Data from National Crime Records Bureau (NCRB) shows that the total number of crimes against women increased by 29.6 per cent between 2006 and 2010.
  • The 2005–06 National Family Health Survey (NFHS-3) also reported that one-third of women aged 15 to 49 had experienced physical violence, and approximately one in 10 had been a victim of sexual violence. Early marriage makes women more vulnerable to domestic violence.
  • According to the NFHS 3 data, the median age of marriage for women in the 20–49 years age group ranges between 16.5 years to 18.3 years.
  • India’s Gender Inequality Index value of 0.617 in 2011 placing the country at 129 among 149 countries globally is reflective of the high gender inequality that is prevalent.

Barriers to Women’s development.

  • The Barriers to women’s development include the deep-rooted ideologies of gender bias and discrimination like the confinement of women to the private domestic realm, restrictions on their mobility, poor access to health services, nutrition, education and employment, and exclusion from the public and political sphere continue to daunt women across the country.
  • The lower attainments of women in key human development indicators are indicative of the sharp disparities in opportunities available to women and men.

The Key Elements for Gender Equity and Women’s Empowerment

Key elements for Gender Equity and Women’s empowerment include the following:

  1. Economic Empowerment
  2. Social and Physical Infrastructure
  3. Enabling Legislations
  4. Women’s Participation in Governance
  5. Inclusiveness of all categories of vulnerable women
  6. Engendering National Policies/Programmes
  7. Mainstreaming gender through Gender Budgeting

 Economic Empowerment of Women

  • Review and strengthen the implementation of the Equal Remuneration Act and the Maternity Benefits Act.
  • To pass the legislation from the Protection of Women from Sexual Harassment at Work Place Bill.
  • Providing a 33% reservation to women in the skill development programmes of National Skills Development Council.
  • Modify the insurance and retirement policies and make them suitable for women headed families and single women.

 Empowerment of Women in Agriculture

  • Kisan Credit Cards should be issued to women farmers, with joint pattas as collateral.
  • Facilitate women’s access to credit
  • To ensure that SHGs are classified under priority sector and given loans at concessional rates.
  • Women must also be included in land and water management, pani panchayats, preservation of soil fertility and nutrition management, sustainable use of soil etc. etc.
  • To enhance women’s land access from all three sources (direct government transfers, purchase or lease from the market and inheritance) a range of initiatives are needed, including joint land titles in all government land transfers, credit support to poor women to purchase or lease land from the market, increase in legal awareness and legal support for women’s inheritance rights, supportive government schemes and recording of women’s inheritance shares etc.
  • In irrigation projects, any new land arrangements (that is compensatory land given to displaced persons) must be in the joint names of the man and the woman, or exclusively in the name of the woman where she is the main economic provider.

Empowerment of Women in Manufacturing

  • This includes the efforts on skill development of women belonging to marginalized sections.
  • More focus should be on women in traditional industries like leather, handlooms, handicrafts and sericulture.

 Empowerment of Women in Unorganized sector

  • Women in the unorganized sector require social security addressing issues of leave, wages, work conditions, pension, housing, childcare, health benefits, maternity benefits, safety and occupational health, and a complaints committee for sexual harassment.
  • Labour protection to these sectors should be increased.

 Changes needed in Social and Physical Infrastructure

  • This includes the better coverage and implementation of the programmes related to women’s health such as Janani Suraksha Yojana and IGMSY. The education sector needs better conditions to be created for women teachers under the programmes such as Sarva Shiksha Abhiyan.
  • Lack of sanitation, especially toilets, in rural areas is a major weakness in our system and one that impacts most adversely on women. Apart from the effective Total Sanitation Campaign, there should be toilets with water in all schools and anganwadi centres and the active involvement of women in determining the location of sanitation facilities.
  • There are women-specific transport needs. Dedicated exclusive services such as ladies special buses and trains are also necessary in our social circumstances. Women’s needs require better route planning. The provision of special buses, increased services for women travelling during off-peak hours or services on less-travelled routes all need more attention.

 Enabling legislations

The 12th plan document discusses a review and more teeth for the following legislations

  • Pre-Conception and Pre-Natal Diagnostic Techniques Act (PC-PNDT Act)
  • Maternity Benefit Act
  • Equal Remuneration Act, 1976
  • Protection of Women from Domestic Violence Act (PWDVA)

Pre-Conception and Pre-Natal Diagnostic Techniques Act

  • The ultrasound techniques gained widespread popularity in India in 1990s.
  • In our country, there has been a tendency to produce children until a male heir is born. The mis-use of ultrasound for prenatal sex determination has given rise to a ` 1000 Crore Industry.
  • The technique has also promoted the social discrimination against women.

 The Dwindling Sex Ratio

  • As per the Census 2011, India had 109.4 male children per 100 Female children in the age group of 0-6 years. The ratio is significantly higher in states such as Punjab and Haryana (126.1 and 122.0 in 2001).
  • The latest census in 2011 shows that the child sex ratio has dropped to 914 females against 1000 male—the lowest since independence. Also, there is ample evidence to suggest that this practice of sex determination and female foeticide has grown among the upper and middle class of the society and has moved to cities and towns.
  • An estimated 15 million girls were wiped out—simply not born—in India over the last decade due to sex selection and female foeticide. And not surprisingly, India ranks 113th out of 135 countries in the World Economic Forum’s Global Gender Gap Index for 2011.

The PNDT Act 1994

  • Pre-Natal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994 (PNDT) was passed in 1994 to stop female foeticides and arrest the declining sex ratio in the country.
  • This act banned the use of sex selection techniques before or after conception. However, this was not followed up by effective implementation, mainly because it did not specify the techniques of sex selection and did not bring all techniques within its ambit. Then, the nee for smaller families – led to even more intensified misuse of such technologies, cutting across barriers of caste, class, religion and geography to ensure that at least one child, if not more, is a son.
  • With the advent of new sophisticated pre-conception sex selection technologies like sperm separation, the girl child’s elimination started becoming more subtle, refined and probably also more socially acceptable.
  • With these happenings, a PIL was filed in the Supreme Court and the honourable Supreme Court directed the Government to provide the act more teeth by covering new preconception sex selection techniques (also known as sex pre-selection techniques). Thus the PNDT act was amended and thus the Pre-Conception and Pre-Natal Diagnostic Techniques (Prohibition of Sex Selection) Act 2003 came into existence.
  • With the enactment of this act, the use of prenatal diagnostic technique for sex selective abortion was made an offensive crime.

 Salient Provisions PCPNDT Act 2003

  • The act not only prohibits determination and disclosure of the sex of the foetus but also bans advertisements related to preconception and pre-natal determination of sex.
  • All the technologies of sex determination, including the new chromosome separation technique have come under the ambit of the Act.
  • It regulates the use of pre-natal diagnostic techniques such as ultrasound and amniocentesis. They sonographers are allowed only to use ultrasound for the following diagnostics:
  • Genetic abnormalities
  • Metabolic disorders
  • Chromosomal abnormalities
  • Certain congenital malformations
  • Haemoglobinopathies
  • Sex linked disorders.
  • The Act has also made mandatory in all ultrasonography units, the prominent display of a signboard that clearly indicates that detection/revelation of the sex of the foetus is illegal.
  • Further, all ultrasound scanning machines have to be registered and the manufacturers are required to furnish information about the clinics and practitioners to whom the ultrasound machinery has been sold.
  • The act empowered the appropriate authorities with the power of civil court for search, seizure and sealing the machines and equipments of the violators.
  • The act mentions that no person, including the one who is conducting the procedure as per the law, will communicate the sex of the foetus to the pregnant woman or her relatives by words, signs or any other method.
  • Any person who puts an advertisement for pre-natal and pre-conception sex determination facilities in the form of a notice, circular, label, wrapper or any document, or advertises through interior or other media in electronic or print form or engages in any visibl representation made by means of hoarding, wall painting, signal, light, sound, smoke or gas, can be imprisoned for up to three years and fined ` 10,000.
  • The PCPNDT act mandates compulsory registration of all diagnostic laboratories, all genetic counselling centres, genetic laboratories, genetic clinics and ultrasound clinics.

The Issues and Proposed amendment to the PCPNDT Act

  • The PCPNDT act has not made much headway. The results are disappointing.
  • The ineffective implementation of this Act has led to minimum number of convictions and dented the fight against female foeticide.
  • Other technologies are threatening to allow much earlier sex determination including a noninvasive blood test. Then, the problem has its deep-seated roots in society.

THE KYOTO PROTOCOL

PHASE I- GENERAL AWARENESS

PHASE II- ECONOMIC AND SOCIAL ISSUES

TOPIC- SUSTAINABLE DEVELOPMENT AND ENVIRONMENTAL ISSUES

KYOTO PROTOCOL

  • The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change, which commits its Parties by setting internationally binding emission reduction targets.
  • Recognizing that developed countries are principally responsible for the current high levels of GHG emissions in the atmosphere as a result of more than 150 years of industrial activity, the Protocol places a heavier burden on developed nations under the principle of “common but differentiated responsibilities.”
  • The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005.
  • The detailed rules for the implementation of the Protocol were adopted at COP 7 in Marrakesh, Morocco, in 2001, and are referred to as the “Marrakesh Accords.”
  • Its first commitment period started in 2008 and ended in 2012.

Doha Amendment:

  • In Doha, Qatar, on 8 December 2012, the “Doha Amendment to the Kyoto Protocol” was adopted.
  • The amendment includes:
  • New commitments for Annex I Parties to the Kyoto Protocol who agreed to take on commitments in a second commitment period from 1 January 2013 to 31 December 2020;
  • A revised list of greenhouse gases (GHG) to be reported on by Parties in the second commitment period; and
  • Amendments to several articles of the Kyoto Protocol which specifically referenced issues pertaining to the first commitment period and which needed to be updated for the second commitment period.
  • During the first commitment period, 37 industrialized countries and the European Community committed to reduce GHG emissions to an average of five percent against 1990 levels.
  • During the second commitment period, Parties committed to reduce GHG emissions by at least 18 percent below 1990 levels in the eight-year period from 2013 to 2020; however, the composition of Parties in the second commitment period is different from the first.

Kyoto Mechanism:

  • Under the Protocol, countries must meet their targets primarily through national measures.
  • However, the Protocol also offers them an additional means to meet their targets by way of three market -based mechanisms.
  • The Kyoto mechanisms are:
  1. International Emissions Trading
  2. Clean Development Mechanism (CDM)
  3. Joint implementation (JI)

Adaptation

  • The Kyoto Protocol, like the Convention, is also designed to assist countries in adapting to the adverse effects of climate change.
  • It facilitates the development and deployment of technologies that can help increase resilience to the impacts of climate change.
  • The Adaptation Fund was established to finance adaptation projects and programmes in developing countries that are Parties to the Kyoto Protocol.
  • In the first commitment period, the Fund was financed mainly with a share of proceeds from CDM project activities.
  • In Doha, in 2012, it was decided that for the second commitment period, international emissions trading and joint implementation would also provide the Adaptation Fund with a 2 percent share of proceeds.

Negotiations timeline

  • 1979 — The first World Climate Conference takes place.
  • 1988 — The Intergovernmental Panel on Climate Change (IPCC) is set up. .
  • 1990 — The IPCC and the second World Climate Conference call for a global treaty on climate change. The United Nations General Assembly negotiations on a framework convention begin.
  • 1991 — First meeting of the Intergovernmental Negotiating Committee takes place.
  • 1992 —At the Earth Summit in Rio, the UNFCCC is opened for signature along with its sister Rio Conventions, the UN Convention on Biological Diversityand the UN Convention to Combat Desertification.
  • 1994 — The UNFCCC enters into force.
  • 1995 — The first Conference of the Parties (COP 1) takes place in Berlin.
  • 1996 — The UNFCCC Secretariatis set up to support action under the Convention.
  • 1997 — The Kyoto Protocolis formally adopted in December at COP3.
  • 2001 — The Marrakesh Accordsare adopted at COP7, detailing the rules for implementation of the Kyoto Protocol, setting up new funding and planning instruments for adaptation, and establishing a technology transfer framework.
  • 2005 — Entry into force of the Kyoto Protocol. The first Meeting of the Parties to the Kyoto Protocol (MOP 1) takes place in Montreal. In accordance with Kyoto Protocol requirements, Parties launched negotiations on the next phase of the KP under the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP). What was to become the Nairobi Work Programme on Adaptation(it would receive its name in 2006, one year later) is accepted and agreed on.
  • 2007 — The IPCC’s Fourth Assessment Report is released. Climate science entered into popular consciousness. At COP13, Parties agreed on the Bali Road Map, which charted the way towards a post-2012 outcome in two work streams: the AWG-KP, and another under the Convention, known as the Ad-Hoc Working Group on Long-Term Cooperative Action Under the Convention. 
  • 2009 — Copenhagen Accord drafted at COP15 in Copenhagen. Countries later submitted emissions reductions pledges or mitigation action pledges, all non-binding.
  • 2010 — Cancun Agreementsdrafted and largely accepted by the COP, at COP16. Through the Agreements, countries made their emission reduction pledges official, in what was the largest collective effort the world has ever seen to reduce emissions in a mutually accountable way.
  • 2011 — The Durban Platformfor Enhanced Action drafted and accepted by the COP, at COP17. In Durban, governments clearly recognized the need to draw up the blueprint for a fresh universal, legal agreement to deal with climate change beyond 2020, where all will play their part to the best of their ability and all will be able to reap the benefits of success together.
  • 2012 – TheDoha Amendment to the Kyoto Protocol is adopted by the CMP at CMP8. The amendment includes: new commitments for Annex I Parties to the Kyoto Protocol who agreed to take on commitments in a second commitment period from 1 January 2013 to 31 December 2020; a revised list of greenhouse gases to be reported on by Parties in the second commitment period; and amendments to several articles of the Kyoto Protocol pertaining to the first commitment period and which needed to be updated for the second commitment period.
  • 2013 – Key decisions adopted at COP19/CMP9 include decisions on further advancing the Durban Platform, the Green Climate Fund and Long-Term Finance, the Warsaw Framework for REDD Plus and the Warsaw International Mechanism for Loss and Damage. More on the Warsaw Outcomes.
  • 2014 – COP20 was held in December in Lima, Peru

The 20th Climate Change Conference (COP20) concluded in Peru on 14 December. More than 190 countries, despite the complexity of negotiations, reached what has been labeled a watered-down agreement to combat climate change in the sense that the global agreement was not blocked, and that a door has been left open to continue working on the unfinished issues.

Following are the five key issues from the Lima Call for Climate Action, worth to be followed during 2015 Road to Paris:

  1. For the first time, an agreement was reached in which all countries will specify their objectives, if they are ready, and they will submit their CO2 emissions information by March 2015 (Intended Nationally Determined Contributions).
  2. A controversial issue which affected negotiations between developed and developing countries was the Common But Differentiated Responsibilities (CBDR). COP20 was unable to define how the emissions reductions would be distributed among the countries. This issue will be addressed at COP21 in Paris.
  3. The agreement reached is in line with the work that began at COP17 in Durban. The focus in Lima was more global and did not address individual countries’ development. Unlike the Kyoto Protocol, which involved developed countries only, this is an inclusive agreement that applies to all countries.
  4. Funding for the Green Climate Fund slightly exceeded the target, reaching 10.2 billion dollars. The fund will enable developing countries to apply a range of technologies to combat climate change. There are also plans to roll out a Private Sector Facility in 2015 to ensure that private sector entities can be accredited and access the fund.
  5. The implementation of a new framework for Measurement, Reporting and Verification. The first Multilateral Assessment was held in Lima, providing greater transparency for actions by developed countries, as they can compare their degree of compliance with the emission reduction goals.

Not much progress was achieved in the main line of negotiations; discussions continue to be hampered by issues of fairness, and the main text, which was promising at first, was devalued by the time an agreement was reached. There are issues pending resolution, but a global agreement was reached for the first time.

  India’s Intended Nationally Determined Contribution: At a Glance 

·         India has submitted its Intended Nationally Determined Contribution (INDC) to the United Nations Framework Convention on Climate Change. Some of the salient points of the INDC are:

·         To put forward and further propagate a healthy and sustainable way of living based on traditions and values of conservation and moderation.

·         To adopt a climate-friendly and a cleaner path than the one followed hitherto by others at corresponding level of economic development.

·         To reduce the emissions intensity of its GDP by 33 to 35 per cent by 2030 from 2005 level.

·         To achieve about 40 per cent cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030, with the help of transfer of technology and low cost international finance, including from Green Climate Fund.

·         To create an additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover by 2030.

·         To better adapt to climate change by enhancing investments in development programmes in sectors vulnerable to climate change, particularly agriculture, water resources, Himalayan region, coastal regions, health and disaster management.

·         To mobilize domestic and new and additional funds from developed countries to implement the above mitigation and adaptation actions in view of the resource required and the resource gap.

·         To build capacities, create domestic framework and international architecture for quick diffusion of cutting edge climate technology in India and for joint collaborative R&D for such future technologies.

  • 2015 – COP21 or CMP11 will be held in Paris, France in December.