Govt Reform Package Initiated and Effects

Discussion in 'Politics & Society' started by Ray, Sep 22, 2012.

  1. Ray

    Ray The Chairman Defence Professionals Moderator

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    PM Manmohan Singh: This crisis was as bad as 1991 when gold was pledged

    NEW DELHI: Prime Minister Manmohan Singh on Friday justified his government's recent reform measures by invoking the 1991 crisis, stressing his credentials as the architect of economic reforms to assure people that he can pull off another turnaround if his prescriptions to revive faltering growth are followed.

    In his rare address to the nation which signaled that more steps could be in the offing, Singh said that just as the country rebounded in 1991 after forex reserves had shrunk to cover only three weeks of imports, recent measures and similar ones will put the economy back on rails. "We are at a point where we can reverse the slowdown in our growth. We need a revival in investor confidence, domestically and globally. The decisions we have taken are necessary for this purpose," the PM said.

    However, the advocacy for tough steps and reforms measures was accompanied with the insistence that the UPA, which won office twice with a commitment to protect the interests of the common man, remained "the government of the "aam aadmi".

    In fact, he suggested that the hike in diesel price was actually aimed at discouraging the rich from walking away with subsidy on a fuel which is supposedly meant for the poor. "Much of the diesel is used by big cars and SUVs owned by the rich and by factories and businesses. Should government run large fiscal deficits to subsidize them," Singh said, adding that diesel price was raised only by Rs 5, instead of Rs 17 that was needed to cut the losses.

    He also said that kerosene, which is used by the poor, was not touched.

    In the televised address, he said the action on diesel and cooking gas was necessary to ward off an economic crisis since not doing anything would have seen petroleum subsidy going over Rs 2 lakh crore. "Where would the money for this have come from? Money does not grow on trees," the PM said as he detailed the string of dire consequences -- from inflation to unemployment to loss of investors' confidence -- that would have followed inaction.

    Singh emphasized that subsidy on fuel exceeded the combined spend on health and education.

    The address was part of the government's effort to brazen out the resistance to reforms measures and came on a day of reassuring developments, with the Sensex giving a high-five to the moves with a 400-point jump and Mulayam Singh Yadav pledging his support to the government.

    "We need to do more, and we will do more," said an unfazed PM, stressing more reforms were necessary to achieve inclusive growth and repair public finances.

    Building on the same sense of urgency, the PM invoked the economic crisis of 1991 and the benefits of the hard steps that the country had then taken with him as the finance minister. "The last time we faced this problem was in 1991. Nobody was willing to lend us even small amounts of money then. We came out of that crisis by taking strong resolute steps. You can see the positive results of those steps. We are not in that situation today, but we must act before people lose confidence in our economy," he said.

    Seeking to ram home his point, he said that countries in Europe, which failed to tackle similar problems, "cannot pay their bills" and are seeking others' help. "World is not kind to those who do not tackle their own problems," he added.

    On allowing FDI in multi-brand retail, he said criticism of the decision was misplaced. "In 1991, when we opened India to foreign investment in manufacturing, many were worried. But today, Indian companies are competing effectively both at home and abroad, and they are investing around the world. More importantly, foreign companies are creating jobs for our youth -- in information technology, in steel and in the auto industry. I am sure this will happen in retail trade as well," he said.

    The address was not as bullish as the "the-only-thing-we-have-to-fear-is-fear-itself" rhetoric that former US President F D Roosevelt used to calm his jittery nation during the Great Depression of the 1930s. However, the PM balanced the "glass-is-half-empty" tone he used to seek people's support for hard measures with the assurance that he has it in him to turn things around.

    The speech was cheered by industry captains but was slammed by political opponents, with Trinamool boss Mamata Banerjee mocking the PM's professed commitment to the aam aadmi.

    Singh dipped into his accomplishment as the finance minister who put the country on the reforms trajectory. "I know what happened in 1991 and I would be falling in my duty as prime minister of his country if I did not take strong preventive action," he said

    The use of first person was significant, coming from a prime minister who has often been accused of not taking charge: clearly a pitch that the person who saved the country in 1991 will not let it down now. Citing the crisis in Eurozone, he said, "I am determined to see that India will not be pushed into that situation. But I can persuade you to understand why we had to act."

    Speaking in the same vein, Singh said, "I will do everything necessary to put our country back on the path of high and inclusive growth. But I need your support. Please don't be misled by those who want to confuse you by spreading fear and false information. The same tactics were adopted in 1991. They did not succeed then. They will not succeed now. I have full faith in the wisdom of the people of India."

    As he appealed for people's cooperation, he promised to keep his part of the grand bargain. "As prime minister of this great country, I appeal to each one of you to strengthen my hands so that we can take our country forward and build a better and prosperous future for ourselves and for the generations to come," he said.

    Full text of Prime Minister Manmohan Singh's address to the nation - The Times of India

    PM Manmohan Singh: This crisis was as bad as 1991 when gold was pledged - The Times of India
     
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  3. Ray

    Ray The Chairman Defence Professionals Moderator

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  4. Ray

    Ray The Chairman Defence Professionals Moderator

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    Tax breaks for first-time investors in shares, mutual funds

    NEW DELHI: The government on Friday allowed first-time investors in top shares, equity mutual funds and exchange traded funds to avail of tax breaks in a move aimed at encouraging individuals to move from gold and real estate to financial assets and also expand the investor base.

    In the last budget, the government had announced the sops for investment in stocks but while notifying the rules, had extended the benefit to mutual funds and ETFs.

    The announcement may please the middle-class, which is now increasingly looking at new investment options. Besides, it may offset the negative perception generated by the sharp increase in diesel price and the cap on subsidized cooking gas cylinders.



    "It will act as an alternative financial instrument and encourage more people to invest in this instrument rather than gold, which is a dead instrument," finance minister P Chidambaram told reporters.

    The flip side is that you can only claim the benefit once. "It's a one-time deduction," a partner at consulting firm Ernst & Young said.

    So, from Monday, those who have a PAN and a demat account with no trades so far will be able to avail of the benefit provided that their taxable income is up to Rs 10 lakh. In addition, the maximum permitted investment is Rs 50,000 a year, and a 50% deduction available under the Income Tax Act will translate into a net gain of Rs 25,000 for someone who makes full use of the Rajiv Gandhi Equity Savings Scheme.

    There are, however, a few riders. One, the investment has to be in the top 100 stocks on the Bombay Stock Exchange or the National Stock Exchange. In addition, it could be in one of the top public sector companies - Maharatnas, Navratnas and Miniratnas which are not part of the BSE 100 or CNX 100. Even PSUs with a turnover of under Rs 4,000 crore that are getting listed would be eligible, a move aimed at generating more interest in disinvestment. In case of mutual funds and ETFs, the investment pattern of the scheme has to be in these stocks.

    Two, there is a three-year lock-in for those availing of the tax breaks. In fact, investors would not even be allowed to trade in the first year and in the remaining two years have to maintain the level of investment.

    The announcement went down well with market players. "This is an excellent initiative by the government to encourage small investors to participate in the capital markets. The penetration of investment in equities is very low in India, this initiative will help overcome this," said Sanjiv Shah, co-CEO at Goldman Sachs Asset Management (India).

    Tax breaks for first-time investors in shares, mutual funds - The Economic Times
     
  5. Ray

    Ray The Chairman Defence Professionals Moderator

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    FDI in multi-brand retail: Policy details

    New Delhi, September 15, 2012: After several rounds of debates and discussions, the Indian government has announced a slew of economic reforms across sectors that will have far reaching impact over a long run.

    The government has cleared the most awaited reforms allowing up to 51 per cent in Foreign Direct Investment (FDI) in multi-brand retail, paving way for the international multi-brand retailers interested to set up shop in India.

    Indian retailers have welcomed the move saying that the policy is expected to give a push to the sectoral growth and the overall growth of the economy.

    Here is the full text of the government notification that allowed 51 per cent FDI in multi brand retail:

    The Cabinet has approved the proposal of the Department of Industrial Policy & Promotion for permitting FDI in multi-brand retail trading, subject to specified conditions.

    The proposal had earlier been approved by the Cabinet in its meeting on 24.11.2011. However, implementation of the proposal had been deferred, for evolving a broader consensus on the subject.

    In pursuance of the aforestated decision of the Cabinet on 7.12.2011, discussions have been held with State Governments, representatives of consumer associations/organizations, micro & small industry associations, farmers’ associations and representatives of food processing industry and industry associations. The Chief Ministers of Delhi, Assam, Maharashtra, Andhra Pradesh, Rajasthan, Uttarakhand, Haryana and Governments of the State of Manipur and the Union Territory of Daman & Diu and Dadra and Nagar Haveli, have expressed support for the policy in writing. The Chief Minister of Jammu & Kashmir, through his press statements, has publicly endorsed the policy and asked for its implementation. The State Governments of Bihar, Karnataka, Kerala, Madhya Pradesh, Tripura and Odisha have expressed reservations.

    During the consultations with the stakeholders, views for and against FDI in multi-brand retail trading were expressed. On balance, however, the discussions generally indicated support for the policy, subject to the introduction of adequate safeguards.

    Accordingly, the following proposals have been approved:

    Retail sales outlets may be set up in those States which have agreed or agree in future to allow FDI in MBRT under this policy. The establishment of the retail sales outlets will be in compliance of applicable State laws/ regulations, such as the Shops and Establishments Act etc.
    Retail sales outlets may be set up only in cities with a population of more than 10 lakh as per 2011 Census and may also cover an area of 10 kms around the municipal/urban agglomeration limits of such cities; retail locations will be restricted to conforming areas as per the Master/Zonal Plans of the concerned cities and provision will be made for requisite facilities such as transport connectivity and parking; In States/ Union Territories not having cities with population of more than 10 lakh as per 2011 Census, retail sales outlets may be set up in the cities of their choice, preferably the largest city and may also cover an area of 10 kms around the municipal/urban agglomeration limits of such cities. The locations of such outlets will be restricted to conforming areas, as per the Master/Zonal Plans of the concerned cities and provision will be made for requisite facilities such as transport connectivity and parking.
    At least 50% of total FDI brought in shall be invested in 'backend infrastructure' within three years of the induction of FDI, where ‘back-end infrastructure’ will include capital expenditure on all activities, excluding that on front-end units; for instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of backend infrastructure.
    A high-level group under the Minister of Consumer Affairs may be constituted to examine various issues concerning internal trade and make recommendations for internal trade reforms.
    Other conditions/safeguards, approved by the Cabinet on 24.11.2012, would remain unchanged. The suspension of Government’s decision taken in the Cabinet meeting on 24.11.2011 to permit FDI up to 51% in MBRT, therefore, stands removed.

    The respective State Governments administer the Shops & Establishment Act within their territorial jurisdiction. “Trade & Commerce within the State” is a subject allocated to the State Governments, under the Constitution of India. State Governments are also responsible for aspects ancillary to MBRT, such as zoning regulations, warehousing requirements, access, traffic, parking and other logistics. As such, the policy provides that it would be the prerogative of the State Governments to decide whether and where a multi-brand retailer, with FDI, is permitted to establish its sales outlets within the State. Therefore, implementation of the policy is not a mandatory requirement for all States.

    Retail sales outlets may be set up only in cities with a population of more than 10 lakh as per 2011 Census (including an area of 10 kms around the municipal/urban agglomeration limits of such cities). On the other hand, States/ Union Terrritories, which do not have any city with a population exceeding 10 lakhs, but are desirous of implementing the policy, would have the flexibility to do so.

    Thus, the revised condition gives primacy to the decision of the States in this regard, recognizing that the FDI policy constitutes, at best, an enabling framework for the purpose.

    Adequate safeguards have been built into the policy, some of which have been further strengthened.

    A three year timeframe has been fixed for setting up the back-end infrastructure, which includes capital expenditure on all activities, excluding that on front-end units; for instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house, agriculture market produce infrastructure etc. Expenditure on land cost and rentals, if any, will not be counted for purposes of backend infrastructure. This condition will bind the foreign investors to invest in critical back-end infrastructure, which is a felt need across the country. It would also make the foreign investors accountable for proper implementation of the condition.

    The decision would benefit stakeholders across the entire span of the supply chain. Farmers stand to benefit from the significant reduction in post-harvest losses, expected to result from the strengthening of the backend infrastructure and enable the farmers to obtain a remunerative price for their produce. Small manufacturers will benefit from the conditionality requiring at least 30% procurement from Indian small industries, as this would enable them to get integrated with global retail chains. This, in turn, will enhance their capacity to export products from India. As far as small retailers are concerned, it is evident that organized retail already co-exists with small traders and the unorganized retail sector. Studies indicate that there has been a strong competitive response from the traditional retailers to these organized retailers, through improved business practices and technological upgradation. Global experience also indicates that organized and unorganized retail co-exist and grow. The young people joining the workforce will benefit from the creation of employment opportunities. Consumers stand to gain the most, firstly, from the lowering of prices that would result from supply chain efficiencies and secondly, through improvement in product quality, which would come about as a combined result of technological upgradation; efficient grading, sorting and packaging; testing and quality control and product standardization.

    Implementation of the policy will facilitate greater FDI inflows, additional and quality employment, global best practices and benefit consumers and farmers in the long run, in terms of quality, price, greater supply chain efficiencies in the agricultural sector and development of critical backend infrastructure.

    The high-level group, to be constituted under the Minister of Consumer Affairs, is expected to look into various aspects relating to internal trade, to make recommendations on internal trade reforms to the Government, whenever required. This is in response to a demand articulated by traders’ associations during the course of consultations. Reforms in internal trade will ensure distributional efficiencies and also that the benefits from trade are available to all sections of society.

    FDI in multi-brand retail: Policy details


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    Someone may cross link this with the FDI in Retail - Discussion Thread.

    Thanks.
     
  6. Blackwater

    Blackwater Veteran Member Veteran Member

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    He is the only man who seriously thinks for India only becoz he is not politicians



    [​IMG]


    :thumb::thumb::thumb:
     
  7. Ray

    Ray The Chairman Defence Professionals Moderator

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    Mediclaim to cost 15% more a year as PSU cos lift 6-yr freeze

    TIMES NEWS NETWORK

    New Delhi: Public sector insurers are on course to increase medical insurance premium,with Oriental Insurance saying it will end the six-year freeze and raise annual costs by around 15% in the wake of higher costs.

    Other state-run companies,which sell health insurance under the Mediclaim brand,are expected to follow suit,especially after the government prodded them to ensure they run profitable businesses.The four companies New India Assurance,National and United India apart from Oriental Insurance have 60% market share.New India had launched a new policy a few years ago.

    There has been no revision (in premium) for five-six years and we will soon file the new products (with the rates) with the regulator, Oriental Insurance chairman and managing director A K Saxena said at a press conference to announce the companys results.He indicated the average increase for individuals would be to the tune of 15%,while for group insurance,the hike could be steeper.

    Executives with public sector companies said the premium was fixed over five years ago based on the costs prevailing at that time.Medical costs have just shot up,we need to adjust to the new reality since we are losing money, said a company executive.

    Sources said on an average,public sector companies were paying over Rs 100 as claims and other charges for every Rs 100 they collected as premium.In case of senior citizens,the outgo was as high as Rs 150,while for the younger population it was around Rs 125,an executive said.The government wants companies to ensure that the outgo is Rs 95 at the most.

    COSTLIER COVER

    Average increase for personal health cover likely to be 15%,hike for group insurance to be higher

    The 4 state-run firms,New India Assurance,National and United India and Oriental Insurance,have 60% market share

    Oriental also working on no-frills health cover with ailment spending cap,on the lines of Rashtriya Swastha Bima Yojana

    http://mobiletoi.timesofindia.com/m...olkata&edname=&articleid=Ar00302&publabel=TOI
     
  8. Blackwater

    Blackwater Veteran Member Veteran Member

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    medical insurance premium in Holland also increased every year,
     

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