CHRONICLE

IAS ACADEMY

A CIVIL SERVICES CHRONICLE INITIATIVE

IMPORTANT REPORTS 2012-13

Press freedom index 2013: India slides to 140th
place

India has dropped nine places to 140 in the

list of 179 countries in the 2013 World Press
Freedom Index, which its authors, Reporters
Without Borders, said was the lowest for
the "world's biggest democracy" since 2002.

The report says that in Asia, India (140th, 9) is at its lowest since 2002 because of
increasing impunity for violence against
journalists and because Internet censorship
continues to grow," Reporters Without
Borders said.

China (173, +1), had shown no sign of

improving, as its prisons still hold many
journalists and netizens, while increasingly
unpopular Internet censorship continues to
be a major obstacle to access to information.
As last year, the list is topped by three
European countries - Finland, Netherlands
and Norway. Turkmenistan, North Korea
and Eritrea continue to be at the bottom of
the list as has been in the last three years.
The Press Freedom Index published by
Reporters Without Borders does not take
direct account of the kind of political system,
but it is clear that democracies provide better
protection for the freedom to produce and
circulate accurate news and information
than countries where human rights are
flouted, in dictatorships, news providers and
their families are exposed to ruthless
reprisals, while in democracies news
providers have to cope with the media's
economic crises and conflicts of interest.
Observing that there was a general decline
in freedom of information in South Asia,
the report said the Indian subcontinent was
the region in Asia that saw the sharpest
deterioration in the climate for
those involved in news and information in
2012.

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State of the World's Cities Report: 2012/2013

Delhi, which was not even among the

world's top ten urban sprawls by population
in 1990, is already the second largest behind
Tokyo and will continue to retain that
position till 2025. Mumbai, which was at No.
5 in 1990, has climbed to the fourth spot
and will be No. 3 in the next 13 years.

The projections made in the UN's recent

publication, State of The World's Cities 201213, suggests that the Delhi urban
agglomeration will have a population of 28.6
million by 2025, still well behind Tokyo's
37.1 million. Mumbai will, in the meantime,
have reached a population of 25.8 million.

While the report does not indicate exactly

which areas are included in these urban
agglomerations, comparison of the numbers
given for 2010 with 2011 census figures
indicates that the relevant area is Greater
Mumbai and Delhi plus Gurgaon,
Ghaziabad, Noida and Faridabad.

The fastest growing of the mega cities,

according to the report, will be Dhaka,
which was ranked No. 23 in 1990 and was
at No. 9 in 2010, is projected to be the fifth
largest urban area in the world by 2025.
Another city in India's neighbourhood,
Karachi, has also been rapidly climbing up
the rankings, from No.21 in 1990 to No.10
in 2010 and No.9 in 2025.

Kolkata, which was ranked No.7 in 1990,

has been more or less holding on to its
position, having dropped just one rank till
2010 and is projected to hold on to that
position in 2025. New York and Mexico City,
which were the two biggest urban
agglomerations two decades ago, are
projected to drop to the bottom half of the
top 10 list in a little more than a decade
from now.

For those who worry about these cities

[1]

continuing to grow to unmanageable sizes,

there is some reason for hope. Most of the
cities at the top of the list are projected to
see their growth rates dropping off. Tokyo,
for instance, will be virtually unchanged
from its current size with zero population
growth between 2020 and 2025, while Sao
Paulo, Mexico City and New York will all
see single digit percentage increases in
population between 2010 and 2025.
Delhi and Mumbai are both projected to see
populations increasing by 29% over the same
period, but even this is a significant drop
from the rates at which they have grown
since 1990. Dhaka, however, is likely to see
its population grow by 43% over the 15-year
period, a rate that will be matched by
Karachi while Lagos in Nigeria will see a
49% jump in population by 2025, if the
projections come true. There is a need to
address the ribbon development happening
around big cities in developing countries,
particularly in India. A city or urban area
has to have adequate infrastructure to make
them cities of prosperity.

For example, South Africa increased its scale

up of HIV treatment by 75% in the last two
years-ensuring 1.7 million people had access
to the lifesaving treatment-and new HIV
infections have fallen by more than 50 000
in just two years. During this period, South
Africa also increased its domestic
investments on AIDS to US$ 1.6 billion, the
highest by any low- and middle-income
country.

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decade is now being achieved in 24 months.

Declining new HIV infections in children

UNAIDS report: more than 50% drop in new

HIV infections across 25 countries

A new World AIDS Day report, by the Joint

United Nations Programme on HIV/AIDS
(UNAIDS), shows that unprecedented
acceleration in the AIDS response is
producing results for people. The report
shows that a more than 50% reduction in
the rate of new HIV infections has been
achieved across 25 low- and middle-income
countries--more than half in Africa, the
region most affected by HIV.

In some of the countries which have the

highest HIV prevalence in the world, rates
of new HIV infections have been cut
dramatically since 2001; by 73% in Malawi,
71% in Botswana, 68% in Namibia, 58% in
Zambia, 50% in Zimbabwe and 41% in South
Africa and Swaziland.

In addition to welcome results in HIV

prevention, sub-Saharan Africa has reduced
AIDS-related deaths by one third in the last
six years and increased the number of people
on antiretroviral treatment by 59% in the
last two years alone.

According to the report, the pace of progress

is quickening, and what used to take a

[2]

The report also shows that countries are

assuming shared responsibility by increasing
domestic investments. More than 81
countries increased domestic investments by
50% between 2001 and 2011. The new results
come as the AIDS response is in a 1000 day
push to reach the Millennium Development
Goals and the 2015 targets of the UN
Political Declaration on HIV/AIDS.

The area where perhaps most progress is

being made is in reducing new HIV
infections in children. Half of the global
reductions in new HIV infections in the last
two years have been among newborn
children. It is becoming evident that
achieving zero new HIV infections in
children is possible.

State of world population report: 2012

State of world population report for the year

2012 was released by the UN in November, 2012.
Among many other things it emphasizes on the
following issues:

The ability to decide on the number and

spacing of one's children is taken for granted
by many in the developed world and among
elites in developing countries. Yet, for a
majority of people in developing countries,
especially the poorest ones, the power and
means to determine the size of their families
are scarce or inadequate.

An estimated 222 million women lack access

to reliable, high-quality family planning
services, information and supplies, putting
them at risk of unintended pregnancy. In
developed countries too, high levels of
unintended pregnancy exist, especially
among adolescents, the poor and ethnic
minorities.

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The huge unmet need for family planning

persists, despite international agreements
and human rights treaties that promote
individuals' rights to make their own
decisions about when and how often to have
children. Today, family planning is almost
universally recognized as an intrinsic right,
affirmed and upheld by many other human
rights.

Because it is a right, voluntary family

planning should be available to all, not just
the wealthy or otherwise privileged.
Shortages of contraceptives are only one
reason why millions of people are still
unable to exercise their right to family
planning.

who had not used family planning. Another

study concluded that spacing pregnancies
by three to five years could reduce infant
death by 46 per cent in developing countries.
And a study in the United States confirms
that motherhood during adolescence lowers
a girl's chances of obtaining a high school
diploma by up to 10 per cent and reduces
annual income as a young adult by as much
as $2,400.
The State of World Population 2012, drawing
on the latest research, calls on developing and
developed countries, international organizations
and civil society to:

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Access to family planning may also be

restricted by forces including poverty,
negative social pressures, gender inequality
and discrimination. Ensuring access for all
women, men and young people requires a
multipronged effort: simultaneously
strengthening health systems, introducing
or enforcing laws that protect individuals'
rights, reducing poverty, challenging
harmful traditional practices, eliminating
child marriage, ending discrimination,
removing logistical impediments and
ensuring a broad range of supplies. Ensuring
universal access to voluntary family
planning is a matter of protecting human
rights.
But it is also a matter of economic and social
development. Studies have shown that
investing in family planning helps reduce
poverty, improve health, promote gender
equality, enable adolescents to finish their
schooling and increase labour force
participation. When a woman is able to
exercise her reproductive rights, she is more
able to benefit from her other rights, such
as the right to education.

The results are higher incomes, better health

for her and her children and greater
decision-making power for her, both in the
household and the community. When
women and men together plan their
childbearing, children benefit immediately
and in their long-term prospects.
A study in one community in Bangladesh
found that women who used family
planning earned wages that were one-third
higher than the wages of their counterparts

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Radically increase financial support and

political commitment to ensuring that rightsbased family planning is available to all who
want it, when they want it, and that services,
supplies and information are of high quality.

Promote family planning as a right, the

exercise of which enables the attainment of
a whole range of other rights.

Integrate voluntary family planning

into broader economic and social
development because family planning
enhances both.

Eliminate economic, social, logistical and

financial obstacles to voluntary family
planning so that everyone who chooses to
use it has access to it.

Reduce the number of unintended

pregnancies and abortions by increasing
availability, reliability and quality of family
planning supplies and services.

Make family planning programmes available

to the full range of users, including
adolescents, unmarried people, and all
others who need it.

Include emergency contraception in the

range of supplies available through family
planning programmes.

Engage men and boys in family planning,

for their own benefit and to support the right
of women and girls to use contraception.

Global Competitiveness Report 2012-13

The Global Competitiveness Report 2012-13,

published by the world Economic Forum
says that Switzerland tops again the overall
rankings in The Global Competitiveness Report
2012-2013.

[3]

Japan remains the second-ranked Asian

economy at 10th place, and the United States
continues the decline that began a few years
ago, falling two more positions to take 7th
place this year. Although many structural
features continue to make its economy
extremely productive, a number of
escalating and unaddressed weaknesses
have lowered the US ranking in recent years.

the past 20 years has been better than previously

believed.

given renewed efforts, it may be possible to

reach the MDG hunger target at the global
level by 2015. However, the number of people
suffering from chronic undernourish-ment
is still unacceptably high, and eradication
of hunger remains a major global challenge.

This year's report also discusses the role of

economic
growth
in
reducing
undernourishment. Sustainable agricultural
growth is often effective in reaching the poor
because most of the poor and hungry live
in rural areas and depend on agriculture for
a significant part of their livelihoods.
However, growth will not necessarily result
in better nutrition for all. Policies and
programmes that will ensure "nutritionsensitive" growth include supporting
increased dietary diversity, improving access
to safe drinking water, sanitation and health
services and educating consumers regarding
adequate nutrition and child care practices.

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Singapore too has retained its second

position, being the best performer among
the Asian economies, and Finland has
improved one rank and is now at third place
by pushing Sweden down to the fourth.
Northern and Western European countries
dominate the top 10 with Finland (3rd),
Sweden (4th), Netherlands (5th), Germany
(6th), and the United Kingdom (8th).

Germany maintains a strong position within

the Eurozone, by consolidating its position
to sixth place, while the Netherlands (5th)
improves by two positions in the rankings,
France drops three places to 21st, and Greece
continues its downward trend to 96th.
Although Europe had been recovering from
the significant difficulties brought about by
the global economic crisis, rising concerns
about the sustainability of sovereign debt in
Greece and a number of other European
countries continue to raise questions about
the viability of the euro.
The results show that while competitiveness
in advanced economies has stagnated over
the past seven years, in many emerging
markets it has improved, placing their
growth on a more stable footing and
mirroring the shift in economic activity from
advanced to emerging economies.

The People's Republic of China (29th) has

lost 3 places in the ranking, but still retains
its position among the top 30. Among the
four other BRICS economies, South Africa
(52nd), Russia (67th) and India (56th) have
seen a slide while Brazil (48th) has moved
upwards by 5 places. Brazil has improved
by 10 places in the last two years.

State of Food Insecurity in the World 2012

The State of Food Insecurity in the World

2012, published by FAO, presents new estimates
of undernourishment based on a revised and
improved methodology. The new estimates
show that progress in reducing hunger during

[4]

Economic growth takes time to reach the

poor, and may not reach the poorest of the
poor. Therefore, social protection is crucial
for eliminating hunger as rapidly as possible.
Finally, rapid progress in reducing hunger
requires government action to provide key
public goods and services within a
governance system based on transparency,
participation, accountability, rule of law and
human rights.

World Report on Disability 2011

The World report on disability is the first

document to give an extensive global picture of
the situation of people with disabilities, their
needs, and the barriers they face to participating
fully in their societies. The aim of the report is
to support the implementation of the Convention
on the Rights of Persons with Disabilities
(CRPD). Published by the World Health
Organization (WHO) and the World Bank, the
Report assembles the best available scientific
information on disability. The Report is relevant
to the fields of public health, human rights and
development, and the intended audience is
policy-makers, service providers, professionals,
and advocates for people with disabilities and
their families. It was developed with the full
participation of people with disabilities and their
organizations, as well as other relevant
stakeholders.

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People with disabilities are more likely to

be unemployed than non-disabled people.
In Organization for Economic Cooperation
and
Development
countries,
the
employment rate of people with disabilities
(44%) is slightly over half that for people
without disabilities (75%).

further developed by the International Food

Policy Research Institute (IFPRI), and was first
published in 2006.

World hunger, according to the 2012 Global

Hunger Index (GHI), has declined
somewhat since 1990 but remains "serious."
The global average masks dramatic
differences among regions and countries.

Regionally, the highest GHI scores are in

South Asia and Sub-Saharan Africa. South
Asia reduced its GHI score significantly
between 1990 and 1996-mainly by reducing
the share of underweight children-but could
not maintain this rapid progress.

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More than 1 billion persons in the world

have some form of disability. This
corresponds to about 15% of the world's
population. Between 110-190 million people
have very significant difficulties in
functioning.

People with disabilities often do not receive

needed health care. Half of disabled people
cannot afford health care, compared to a
third of non-disabled people. People with
disabilities are more than twice as likely to
find health-care providers' skills inadequate;
nearly three times more likely to be denied
health care; and four times more likely to
report being treated badly than non-disabled
people.
Children with disabilities are less likely to
attend school than non-disabled children.
Education completion gaps are found across
all age groups in all settings, with the pattern
more pronounced in poorer countries. Even
in countries where most non-disabled
children go to school, many children with
disabilities do not go to school. For example
in Bolivia about 98% of non-disabled
children go to school, but under 40% of
disabled children attend school. In
Indonesia, over 80% of non-disabled
children go to school, but less than 25% of
children with disabilities go to school.

People with disabilities experience increased

dependency and restricted participation in
their societies. Even in high-income
countries, 20-40% of people with disabilities
lack the help they require to engage in
everyday activities. In the United States of
America, 70% of adults with disabilities rely
on family and friends for assistance with
daily activities

Global Hunger Index 2012

The Global Hunger Index (GHI) is a

multidimensional statistical tool used to describe
the state of countries' hunger situation. The GHI
measures progress and failures in the global fight
against hunger. The Index was adopted and

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Though Sub-Saharan Africa made less

progress than South Asia in the 1990s, it
has caught up since the turn of the
millennium, with its 2012 GHI score falling
below that of South Asia.

From the 1990 GHI to the 2012 GHI, 15

countries reduced their scores by 50 percent
or more. In terms of absolute progress,
between the 1990 GHI and the 2012 GHI,
Angola, Bangladesh, Ethiopia, Malawi,
Nicaragua, Niger, and Vietnam saw the
largest improvements in their scores.

Twenty countries still have levels of hunger

that are "extremely alarming" or "alarming."
Most of the countries with alarming GHI
scores are in Sub-Saharan Africa and South
Asia (the 2012 GHI does not, however,
reflect the recent crisis in the Horn of Africa,
which intensified in 2011, or the uncertain
food situation in the Sahel).

Two of the three countries with extremely

alarming 2012 GHI scores-Burundi and
Eritrea-are in Sub-Saharan Africa; the third
country with an extremely alarming score
is Haiti. Its GHI score fell by about one quarter from 1990 to 2001, but most of this improvement was reversed in subsequent years.

The devastating January 2010 earthquake,

although not yet fully captured by the 2012
GHI because of insufficient availability of
recent data, pushed Haiti back into the
category of "extremely alarming." In contrast
to recent years, the Democratic Republic of
Congo is not listed as "extremely alarming,"
because insufficient data are available to
calculate the country's GHI score. Current
and reliable data are urgently needed to
appraise the situation in the country.

[5]

As per the report, India instead of its fast

paced economic growth in past two decades
has lagged behind in improving its record
in Global Hunger Index chart. In the list of
79 countries in the global Hunger Index,
India was ranked 65th behind China that
was placed at 2nd place position, Pakistan
at 57th and Sri Lanka at 37th position.

Doing Business 2013: Doing Business in a More

Transparent World
Tenth in a series of annual reports comparing
business regulation in 185 economies, Doing
Business 2013 measures regulations affecting 11
areas of everyday business activity:

Starting a business

Dealing with construction permits

The World Development Report (WDR) is

an annual report published since 1978 by the
World Bank. Each WDR provides in-depth
analysis of a specific aspect of economic
development.

Getting electricity

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World Development Report 2013: Jobs

The World Development Report 2013

concentrates on Jobs. Jobs statistical tables
provide national level data on a broad range
of issues related to labor force participation,
employment structure, wage inequality,
skills and productivity, youth idleness and
unemployment, social cohesion, migration,
and core labor conventions.

The World Development Report 2013 Survey

on Good Jobs was conducted in 4 countries
(China, Columbia, Egypt, and Sierra Leone).

The survey gathers data on perceptions of

jobs and how they vary with wealth, gender,
income, labor status, sector of employment,
experience and education level, constraints
to accessing good jobs within the local
context, barriers to labor market entry
(which includes wage employment and selfemployment in non-farm and farm activities)
and potential solutions for these barriers
(causes of joblessness/unemployment).

[6]

It also gathers data on the valuation of the

trade-off of various job characteristics (e.g.,
stability of income versus level of income,
social insurance versus level of income) and
how individuals view good jobs at a more
aggregate level (the role of jobs in the
community, society).
The WDR2013 Occupational Wages around
the World database contains occupation
wage data for 161 occupations in 171
countries from 1983 to 2008. The occupation
wage data are derived from the ILO October
Inquiry database by calibrating the data into
normalized wage rate for each occupation.
The normalized wages refer to average
hourly or monthly wage rates for adult
works.

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across borders

Enforcing contracts

Closing a business

Employing workers

The report updates all indicators as of June

1, 2012, ranks economies on their overall "ease
of doing business", and analyzes reforms to
business regulation - identifying which
economies are strengthening their business
environment the most.
Some important findings of the report are as
follows:

Poland was the global top improver in the

past year. It enhanced the ease of doing
business through four institutional or
regulatory reforms, making it easier to
register property, pay taxes, enforce
contracts, and resolve insolvency.

Besides Poland, nine other economies are

recognized as having the most improved
ease of doing business across several areas
of regulation as measured by the report: Sri
Lanka, Ukraine, Uzbekistan, Burundi, Costa
Rica, Mongolia, Greece, Serbia, and
Kazakhstan.

Worldwide, 108 economies implemented 201

regulatory reforms in 2011/12 making it
easier to do business as measured by Doing
Business. Reform efforts globally have
focused on making it easier to start a new
business, increasing the efficiency of tax
administration and facilitating trade across
international borders.

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India ranks 132 in the index while China is

at 91st rank. Sri Lanka (81), Pakistan (107),
Nepal (109), Bangladesh (129) have
performed better as compared to India in
the report.

Humanitarian Action for Children: 2013 Report

The Humanitarian Action for Children
report, previously known as Humanitarian
Action Report is an annual publication by
UNICEF which details the situation for children
and women affected by emergencies around the
globe. Each edition gives an overview of the
emergencies and crises in regions and countries
in that year, funding requirements for the current
year, stories of individual experiences, a review
of emergency funding in the previous year as
well as PDF versions of the Report, multimedia
content and more.

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Singapore topped the global ranking on the

ease of doing business for the seventh
consecutive year, followed by Hong Kong
SAR, China; New Zealand; the United States;
and Denmark. Georgia was a new entrant
to the top 10.

The State of the World's Children 2012: Children

in an Urban World

The State of the World's Children report 2012

has been published by UNICEF, and its theme
is children in an urban world.

The reports highlights that, the experience

of childhood is increasingly urban. Over half
the world's people -including more than a
billion children - now live in cities and
towns. While cities have long been
associated with employment, development
and economic growth, hundreds of millions
of children in the world's urban areas are
growing up amid scarcity and deprivation.

The State of the World's Children 2012

presents the hardships these children face
as violations of their rights as well as
impediments to fulfilling the Millennium
Development Goals.

The report examines major phenomena

shaping the lives of children in urban
settings, including migration, economic
shocks and acute disaster risk. Progress is
possible. The State of the World's Children
2012 provides examples of efforts to improve
the urban realities that children confront and
identifies broad policy actions that should
be included in any strategy to reach
excluded children and foster equity in urban
settings riven by disparity.

Every year, the world's urban population

increases by about 60 million. By 2050, 7 in 10
people will live in cities and towns. Most urban
growth is taking place in Asia and Africa.

Migration from the countryside has long

driven urban expansion and remains a major
factor in some regions. But the last
comprehensive estimate, made in 1998,
suggests that children born into existing
urban populations account for around 60 per
cent of urban growth.

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UNICEF's Humanitarian Action for Children

2013 highlights the humanitarian situation
faced by millions of children and women
and the support required to help their families, communities and national institutions
meet their basic needs, promote their wellbeing and provide them with protection.

UNICEF is appealing for almost US$1.4

billion to assist millions of children, women
and men by providing them with nutritional
support, health care, water, sanitation,
learning spaces and materials, protection
services, shelter and information.

This support is not only to provide lifesaving

emergency interventions, but also to
strengthen national preparedness systems
and build resilience at community, sub
regional and national levels, so that
avoidable illnesses and deaths are prevented
and those affected are able to recover.

In partnership with national governments,

civil society organizations and other United
Nations agencies, UNICEF works in some
of the most challenging environments in the
world to deliver results for millions of
children and women threatened by natural
disasters or complex emergencies. Despite
challenges and constraints, sustained
advocacy,
political
and
financial
commitment, and collaboration in 2012
resulted in achievements that need to be
built upon and continued into 2013.

According to UNICEF, the past year saw

the combined and cumulative effects of
armed conflict, civil and political unrest,
erratic and severe weather patterns, seismic
activity, disease outbreaks and the global
economic crisis lead to the death, illness,
deprivation, displacement and distress of a

[7]

significant number of children, women and

men across the globe.
The same factors caused the destruction or
further degradation of homes, hospitals,
schools, roads and other public and social
infrastructure, services and networks,
preventing millions of children from
receiving treatment for illness, drinking safe
water, going to school or even playing.

In order to prevent, address or overcome

some of the consequences of these
natural and man-made disasters in 2012,
UNICEF
initially
appealed
for
US$1,284,358,000.

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1. Protection
and
facilitation
of
shareholders' rights
2. Equitable treatment of all shareholders
3. Draft policy/procedure to facilitate
shareholders to obtain effective
redress
4. Recognized rights of stakeholders in
corporate governance
5. Timely and accurate disclosure of all
material information
6. Diversity of thought, experience,
knowledge, understanding, perspective,
gender and age in the Board
7. Induction / on - boarding program in
companies
8. Lead independent director
9. Direct conversations between the
independent directors
10. Explicitly record dissenting opinions
11. Continuing Board training and education
12. Board evaluation framework
13. Effective whistle - blower mechanism
14. Strategic guidance by board
15. Corporate culture and the values
16. Boards ability to 'step back' to assist
executive management
17. Rightly encouraging positive thinking
but not over - optimism
18. Balance performance with compliance
19. Right mix of skill at top management
20. Place relevant information immediately/
periodically before Board
21. Operational
Transparency
to
stakeholders
22. Plan for orderly succession for
appointments
23. Risk / crisis Management Plan
24. Due and reasonable care, skill and
diligence by directors
25. Incentive based on remuneration
based on long term interest of the
company
26. Facilities for independent directors

During the course of the year, as new crises

occurred
and
ongoing
situations
deteriorated or improved, the overall
requirements were revised, and by the end
of October had increased by 14 per cent to
US$1,472,172,823. As of 31 October,
US$664,475,807, or 45 per cent of the
required funds, had been mobilized. In
addition, UNICEF received US$19,573,247
from the Central Emergency Response
Fund (CERF) and other funding sources to
address the unforeseen needs for countries
that were not part of the Humanitarian
Action for Children 2012, appeal, bringing
the total of funding mobilized to
US$684,049,044

Committee for Corporate Governance

Ministry of Corporate Affairs in March 2012

set up a committee under the leadership of Adi
Godrej; chairman Godrej Group to bring out a
formal policy document that will initiate
enlisting of diverse elements of corporate
governance under a single national corporate
governance policy.

[8]

The members of the committee included

Kiran Mazumdar Shaw, CMD of Biocon Ltd;
former ONGC chairman RS Sharma; former
ICAI chairman G Ramaswamy; CMD L&T
Finance Holdings YM Deosthalee; S
Balasubramanian, ex-chairman company
law board; former SAIL chairman SK
Roongta; Zia Mody of AZB and partners,
and representatives from the institute of
company secretaries and cost and works
accountants.
The Committee
principles:

specified

following

Panel to Update Priority Sector Lending Norms

RBI had, on April 25th 2011, formed a
committee to re-examine the existing
classification and suggest revised guidelines for
priority sector lending.

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The committee was headed by Union Bank

of India CMD, MV Nair. While Nupur Mitra,
ED, Indian Overseas Bank, Rajiv Sabharwal,
ED, ICICI Bank and V. Ramakrishna Rao,
ED, NABARD were amongst the other nine
members in the committee.

The committee, in July 2012, proposed that

the target (priority sector) for foreign banks
be increased to 40 per cent of net bank credit
from the current level of 32 per cent with
sub-targets of 15 per cent for exports and 15
per cent for the MSE sector, within which 7
per cent may be earmarked for micro
enterprises.

The limit under the priority sector for loans

for studies in India may be increased to Rs.15
lakh and Rs.25 lakh in case of studies abroad,
from the existing limit of Rs.10 lakh and
Rs.20 lakh, respectively.

The committee recommended allowing nontradable priority sector lending certificates

on a pilot basis with domestic scheduled
commercial banks, foreign banks and
regional rural banks as market players.

Malegam Committee on Microfinance

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The target of domestic scheduled

commercial banks for lending to the priority
sector may be retained at 40 per cent of net
bank credit. The committee suggested that
the sector 'agriculture and allied activities'
may be a composite sector within the priority
sector, by doing away with the distinction
between direct and indirect agriculture.
However, the targets for agriculture and
allied activities would be at 18 per cent.

A sub-target for small and marginal farmers

within agriculture and allied activities is
recommended, equivalent to 9 per cent,
which would be achieved in stages by
2015-16.

The MSE sector may continue to be under

the priority sector. Within the MSE sector, a
sub-target for micro enterprises is
recommended, equivalent to 7 per cent,
which would also be achieved in stages by
2013-14.
The loans to housing and education may
continue to be under the priority sector.
Loans for construction or purchase of one
dwelling unit per individual up to Rs.25
lakh; loans up to Rs.2 lakh in rural and semi
urban areas and up to Rs.5 lakh in other
centres for repair of damaged dwelling
units may be granted under the priority
sector.
To encourage construction of dwelling units
for economically weaker sections and low
income groups, housing loans granted to
these individuals may be included in the
weaker sections category.

All loans to women under the priority

sector may also be counted under loans to
weaker sections.

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In the wake of the Andhra Pradesh micro

finance crisis in 2010, concerns were expressed
by various stakeholders and the need was felt
for more rigorous regulation of non-banking
financial companies (NBFCs) functioning as
micro finance institutions (MFIs). As indicated
in the Second Quarter Review of November 2010,
a Sub-Committee of the Central Board of the
Reserve Bank (Chairman: Shri Y. H. Malegam)
was constituted to study issues and concerns in
the MFI sector.
The Committee submitted its report in
January 2011, which was placed in public
domain. The Committee, inter alia,
recommended:
(i) Creation of a separate category of NBFCMFIs;

(ii) A margin cap and an interest rate cap on

individual loans;

(iii) Transparency in interest charges;

(iv) Lending by not more than two MFIs to

individual borrowers;
(v) Creation of one or more credit
information bureaus;

(vi) Establishment of a proper system of

grievance redressal procedure by MFIs;

(vii) Creation of one or more "social capital

funds"; and

(viii) Continuation of categorisation of bank

loans to MFIs, complying with the
regulation laid down for NBFC-MFIs,
under the priority sector.

The recommendations of the Committee

were discussed with all stakeholders, including
the Government of India, select State Governments, major NBFCs working as MFIs, industry
associations of MFIs working in the country,

[9]

other smaller MFIs, and major banks. In the light

of the feedback received, it has been decided:
To accept the broad framework of
regulations recommended by the
Committee;

The bank loans to all MFIs, including NBFCs

working as MFIs on or after April 1, 2011,
will be eligible for classification as priority
sector loans under respective category of
indirect finance only if the prescribed
percentage of their total assets are in the
nature of "qualifying assets" and they adhere
to the "pricing of interest" guidelines to be
issued in this regard;

Report of the Task Force on Micro, Small and

Medium Enterprises:

The role of micro, small and medium

enterprises (MSMEs) in the economic and
social development of the country is well
established. The MSME sector is a nursery
of entrepreneurship, often driven by
individual creativity and innovation.

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Minister for Micro, Small and Medium

Enterprises, Shri Dinsha Patel, Secretary
(MSME), Shri Dinesh Rai, Member Planning
Commission, Shri Arun Maira as well as
members of the Task Force

A "qualifying asset'' is required to satisfy

the criteria of (i) loan disbursed by an MFI
to a borrower with a rural household annual
income not exceeding Rs. 60,000 or urban
and semi-urban household income not
exceeding Rs.1,20,000; (ii) loan amount not
to exceed Rs. 35,000 in the first cycle and
Rs. 50,000 in subsequent cycles; (iii) total
indebtedness of the borrower not to exceed
Rs. 50,000; (iv) tenure of loan not to be less
than 24 months for loan amount in excess
of Rs.15,000 without prepayment penalty;
(iv) loan to be extended without collateral;
(v) aggregate amount of loan, given for
income generation, not to be less than 75
per cent of the total loans given by the MFIs;
and (vi) loan to be repayable by weekly,
fortnightly or monthly instalments at the
choice of the borrower;

The banks should ensure a margin cap of 12

per cent and an interest rate cap of 26 per
cent for their lending to be eligible to be
classified as priority sector loans;

The loans by MFIs can also be extended to

individuals outside the self-help group
(SHG)/joint liability group (JLG)
mechanism; and

The bank loans to other NBFCs would not

be reckoned as priority sector loans with
effect from April 1, 2011.

This sector contributes 8 per cent of the

country's GDP, 45 per cent of the
manufactured output and 40 per cent of its
exports. The MSMEs provide employment
to about 60 million persons through 26
million enterprises.

The labour to capital ratio in MSMEs and

the overall growth in the MSME sector is
much higher than in the large industries.
The geographic distribution of the MSMEs
is also more even. Thus, MSMEs are
important for the national objectives of
growth with equity and inclusion.

The MSME sector in India is highly

heterogeneous in terms of the size of the
enterprises, variety of products and services
produced and the levels of technology
employed.

While one end of the MSME spectrum

contains highly innovative and high growth
enterprises, more than 94 per cent of MSMEs
are unregistered, with a large number established in the informal or unorganized sector.

Besides the growth potential of the sector

and its critical role in the manufacturing and
value chains, the heterogeneity and the
unorganised nature of the Indian MSMEs
are important aspects that need to befactored
into policy making and programme
implementation.

Report of the Task Force on MSME

Major issues concerning the MSME sector

The report of the Task Force on MSME

provides a roadmap for the development and
promotion of the Micro, Small and Medium
Enterprises (MSMEs). The Report was presented
to the Prime Minister by its Chairman, Shri
T.K.A.Nair. Present on the occasion were the

Although Indian MSMEs are a diverse and

heterogeneous group, they face some common
problems, which are briefly indicated below:

[10]

Lack of availability of adequate and timely

credit;

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High cost of credit;

Collateral requirements;

Limited access to equity capital;

previous Committees, Working Groups and

Study Groups, which are relevant in the current
context, have been taken into consideration by
the Task Force and its sub-groups.

Problems in supply to government

departments and agencies;

Summary of Recommendations
The following measures are suggested to
provide relief and stability to MSMEs, especially
in the aftermath of the recent economic
downturn.

Procurement of raw materials at a

competitive cost;

Problems of storage, designing, packaging

and product display;

Lack of access to global markets;

A. Measures that need immediate action

Inadequate infrastructure facilities, including

power, water, roads, etc.;

Low technology levels and lack of access to

modern technology;

The government should extend, for a further

period of one year, beyond March 31, 2010,
the components of the 'stimulus package'
which are specific to MSMEs.

Lack
of
skilled
manpower
for
manufacturing, services, marketing, etc.;

Multiplicity of labour laws and complicated

procedures associated with compliance of
such laws;

The government should ensure strict

adherence to the stipulated targets by the
commercial banks for the micro enterprises
(viz. 20% year-on-year growth for micro and
small enterprises lending with 60%
apportionment for micro sector).

Absence of a suitable mechanism which

enables the quick revival of viable sick
enterprises and allows unviable entities to
close down speedily; and

Issues relating to taxation, both direct and

indirect, and procedures thereof.

A separate fund may be created with SIDBI,

using the shortfalls, if any, against the MSE
credit targets set for the commercial banks.
This fund named 'Special Fund for Micro
Enterprises' should be utilized exclusively
for lending to the micro enterprises.

A Public Procurement Policy for MSMEs as

envisaged in the Micro, Small and Medium
Enterprises Development Act, 2006 may be
introduced at the earliest. The policy may
set a goal for government departments and
PSUs to reach, over a stipulated period, a
target of at least 20% of their annual volume
of purchases from micro and small
enterprises (MSEs), and mandate them to
report their achievements in this regard in
the annual reports.

The Offset policy of the government,

particularly in the defence and aviation
sectors, should give priority to MSMEs. A
permanent guidance mechanism under the
Raksha Utpadan Rajya Mantri (RURM) with
Secretaries of Defence Production, MSME
and Civil Aviation and CEOs of Defence
PSUs should be considered for this purpose.

The government should earmark additional

public spending to the tune of Rs.5,000 5,500 crore over the next 3-5 years to
specifically target deficiencies in the existing
infrastructure and institutional set up.

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The Task Force classified the common

issues into 6 major thematic areas and
constituted separate Sub-Groups for detailed
examination.
These thematic areas covered

Credit,

Marketing,

Labour,

Rehabilitation and exit policy,

Infrastructure, technology
development and

Taxation.

and

skill

A separate Sub-Group was also constituted

to look into the development of MSMEs in the
North-East and Jammu & Kashmir. Each of the
Sub-Groups examined the specific issues over a
series of meetings, and after detailed
deliberations with all the stakeholders, including
MSME Associations, submitted their reports to
the Task Force. The recommendations of the

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[11]

The government should take steps to create

an overall enabling environment using
appropriate legal and fiscal instruments, to
incentivize the transition of MSMEs from
the unorganized to the organized sector as
well as for their corporatization as entities.
It should also encourage higher investments
for innovative and knowledge based
ventures as well as for research and
development through greater partnership
between the industry and academic
institutions.

unorganized sector. Suitable incentives,

including tax concessions, should be
extended to MFIs to encourage them to work
as business correspondents and business
facilitators for banks to service micro
enterprises.

The District Industries Centres (DICs)

should be strengthened with provision of
modern IT-enabled communication facilities
and re-training of human resources available
with these institutions.

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The ongoing exercise to introduce a new

Direct Tax Code and GST should specifically
seek to achieve these policy objectives
through appropriate provisions for graded
corporate tax structure, tax pass through for
angel and venture capital funds and
incentives for R&D.

As the DICs form the bedrock of MSME

promotion, they should be urgently
strengthened, revitalized and transformed
to play a more active role in advocacy and
capacity building for potential and existing
entrepreneurs. Wherever viable, active
involvement of the private sector for
revamping the DIC network should be
considered. Such re-engineering of the DICs
may be supported by the Central
Government.

States should be supported by the Central

Government to set up Rehabilitation Funds
and operationalise appropriate schemes for
the rehabilitation of units temporarily
rendered sick due to circumstances beyond
their control. It is recommended that the
state governments may establish a
mechanism at the district level, in the DICs,
to reexamine the viability of sick units in
coordination with the banks and implement
rehabilitation packages in a time bound
manner.

The government should infuse industrial

estates which are currently in a state of
decay and neglect, with fresh capital and
upgrade them to 'Industrial Townships'. The
latter concept has constitutional recognition.
This will permit effective municipal
administration and a single-stop mechanism
for theprovision of municipal services.

New clusters for MSEs should be created to

meet the requirements of planned
development and growth, consistent with
the policy of progressively organizing the
MSEs. Development of new infrastructure
for the MSME sector should be substantially
augmented with the government stepping
in with viability gap funding to encourage
private sector participation.

B. Medium Term Institutional Measures

The overall approach suggested above

should be accompanied by institutional changes
and detailing of programmes, to be achieved
within a year or so. These include:

Government should set up an independent

body at the national level for the promotion
and development of MSMEs. This body may
provide financial and managerial support
for setting up of industrial estates/common
facilities in partnership with the private
sector, administer schemes for the unorganized sector, promote technology development
(including clean technologies), provide
marketing support and coordinate &
disseminate information relevant to MSMEs.

A Standing Review Committee under

Member (Planning Commission) should be
set up to monitor flow of credit to MSME
sector and its apportionment to the more
vulnerable sections like micro enterprises
and the unorganized sector.

Government should encourage Micro

Finance Institutions (MFIs) to form self-help
groups and finance micro enterprises in
unbanked/identified excluded rural/
semiurban areas at reasonable rates.

[12]

Banks may also be encouraged to formulate

schemes for refinancing loans taken by the
MSEs from non-institutional sources/
moneylenders. Financial outreach is likely
to prove an effective means to formalize the

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The concept of business incubators in

educational institutions of repute should be
encouraged by setting aside Rs.1000 crore
within the overall package set out in legal
and regulatory structures and provisions.

The Sam Pitroda Committee Report on

Railways

The Sam Pitroda Committee, which was

tasked to recommend ways and means to
modernize the Indian Railways has
suggested a total funding of Rs5,60,396
crores in the next five years and has
advocated a 'mission mode' approach for
focus areas.

The committee, its report to railway minister

and it has recommended levying a modernisation surcharge on passengers and divestments of railway PSUs to generate funds.

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Government should consider earmarking

funds to the tune of Rs. 1500 crore, within
the enhanced investment package to support
clean technology initiatives of different
Ministries involved with MSME growth,
particularly in the context of the National
Action Plan for Climate Change (NAPCC).

The legal and regulatory structures and

provisions affecting the MSME sector that should
be taken up in the medium term (1-3 years) are
as follows.

Government should expedite the

establishment of a SME Exchange which is
already under consideration.

Workable legal options should be developed

for the securitization of trade credit
receivables and for the promotion of
factoring services.

Wide publicity should be given to new

formats like Limited Liability Partnerships
and Single Person Companies, which
provide MSMEs with an interim solution in
the move from the informal to the formal
economy.

The insolvency legislation should be

comprehensively reviewed in recognition of
the reality of the global market where
enterprises continuously get created and
destroyed.

Labour laws should be simplified, especially

those applicable to enterprises in the MSME
sector, since the transaction costs for
complying
with
these
laws
is
disproportionately high for these units.

While some steps have been taken by the

Labour Ministry in this regard, it recommend
that a single and comprehensive legislation for
MSEs with 40 workers may be worked out. At
the same time, keeping in view the large size of
the unorganized sector within MSMEs, the
labour related issues for this sector should be
focused more on welfare rather than legislation
by, inter alia, use of the recently promulgated
Unorganised Workers Social Security Act,
2008.

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The committee has recommended that

Rs2,50,000 crores be raised from gross
budgetary support, Rs2,01,805 crores from
internal generation, Rs1,01,000 crores from
leasing/borrowings, Rs2,29,024 crores from
public-private partnership,

Rs24,000 crores from dividend rebate and

Rs16,842 crores from Road Safety Fund.

Tracks and bridges, signalling, rolling stock,

stations and terminals, land, dedicated
freight corridors, high speed trains, review
of existing and proposed projects, ICT,
indigenous development, safety, funding,
human resource and organisation are the 15
focus areas for which theimplementation of
'mission mode' approach has been favoured
by the committee.

Shome
Committee
recommends
postponement of GAAR application

for

The committee, appointed by Prime Minister

Manmohan Singh in July when he was holding
the finance portfolio, on the crucial General Anti
Avoidance Rules proposed in the Budget 201213, in its draft report to the finance ministry
recommended a series of steps which are
expected to allay investor concerns.
The Shome Committee recommeded

Retrospective application of tax should occur

in exceptional or rarest of rare cases and
with particular objectives

It should not be done to expand the tax base,

nor done without stakeholder consultations

The retrospective amendments in finance act

2012 - relating to indirect transfers, are not
clarificatory and instead an effort to widen
the tax base

[13]

These amendments should be applied

prospectively after introducing clear
definitions

If the government must impose them

retrospectively then they should apply only
to the seller and not to the buyer & no
interest should be charged nor penalty
levied

The panel sought amendments to Section

100 of the Indian Penal Code dealing with
the right of private defence, which extends
to causing death.

The committee rejected the suggestion of

chemical castration of rapists as it considered
handing down such a punishment would
violate human rights and that mutilation of
the body is not permitted under the
Constitution.

The committee has also touched upon

marital rape and safety of women in conflict
zones suggesting a review of the Armed
Forces Special Protection Act (AFSPA) that
can be used by the forces for exploiting
women in areas of conflict.

According to the report the judiciary has

the primary responsibility of ensuring
fundamental rights through constitutional
remedies. The CJI can take suo motu
cognizance; social activists should assist the
court. The Chief Justice of the high court of
every state should device appropriate
machinery for administration and
supervision of these juvenile homes in
consultation with experts in the field.

All marriages in the country -- irrespective

of the personal laws under which such
marriages are solemnised -- should
mandatorily be registered in the presence
of a magistrate and the magistrate will
ensure that the marriage has been
solemnised without any demand for dowry
having been made and that the marriage
has taken place with the full and free consent
of both partners.

Medical examination of victims of sexual

assault which were prepared on the basis of
the best practices advised by global experts
in the field of gynaecology and psychology.

Trafficking of minor children must be made

a serious offence. Trafficking must be
punished with rigorous imprisonment for a
term which shall not be less than seven
years, but which may also extend to 10 years.

There is also a suggestion to bar elected

representatives from holding office or for
candidates to file nomination for election if
a court has taken cognizance of the chargesheet filed by the investigating agency.

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The
committee
has
also
made
recommendations on what types of indirect
transfers should be taxed, whether
retrospectively or prospectively; for instance

Only those transactions where at least 50%

of the underlying assets are in India should
be considered

Only capital gains attributable to the India

assets should be taxed

Transactions involving the transfer of less

than 26% voting power should not be
considered

Foreign companies listed on a recognised

stock exchange and whose shares are
frequently traded should be exempt

FII and some types of private equity

transactions should be exempt

And treaty exemptions should be respected

Justice Verma Committee report on reform in

anti-rape laws

The Justice J S Verma committee which was

set up to suggest ways to make rape laws
stronger in the country (after the gruesome gang
rape of a trainee physiotherapist in Delhi
submitted its report recently. Some of the key
recommendations of the report are as follows:

New offences have been created and stiffer

punishment has been suggested. The new
offences include disrobing a woman,
voyeurism, stalking and trafficking.

It has recommended enhancing the duration

of punishment to up to 20 years in jail for
rape leading to death or the victim being
reduced to a vegetative state and life for
gang rape. In case of gang rape leading to
death, the person should be imprisoned for
life. The present law provides for
imprisonment to rapists ranging from seven
years to life.

[14]

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