InTouch_May 2011

Volume 25 – No.2 – May 2011

The Right to Information Act 2005 (RTI) is an Act of the Parliament of India. It is the implementation of freedom of information legislation in India on a national level "to provide for setting out the practical regime of right to information for citizens..." Pg. 9 »

Will Right to Education become a Reality?

In This Issue President’s Message Chamber’s Activities – 4 Press Meet 4 Video Discussion - The Miracle Man 4 FFT on “Will Right to Education become a Reality”?

General Committee Expert Committees Spotlight – RIGHT TO INFORMATION Policy Watch

Though education as a fundamental right has been included in our Constitution nearly a decade ago, still the statistics reveal that around 92 lakhs of children in the school going age are not part of our education system. The Government, a year back in April 2010, brought out a new law called Right to.... Pg. 3 »

Trade Fairs & Exhibitions Economic Review

Others – RBI- Annual Review of Monetary Policy - Its impact New EU visa code

PRESIDENT'S MESSAGE off dock container freight stations where connectivity already exists for processing cargo through customs.

Dear Members India’s foreign trade has witnessed a dramatic increase over the past decade and our exports are currently estimated at 250 billion US Dollars. The Ministry of Commerce has set an ambitious target of doubling this by the year 2015.

The Ministry of Commerce has also been advocating a greater thrust on export of value added items, to increase our share in world trade from the current 2%. Value added products present a huge opportunity for air borne trade out of India. Interestingly, Mumbai, Delhi and Chennai between them, handle more than 60% of the India’s airborne exports. However, these airports are woefully inadequate in infrastructure and are unable to keep pace with the ever growing demands of the trade.

Creation of world class cargo handling facilities across Indian airports should become a high priority initiative of the Government of India. However, this is a long term process, and the Chamber would like to advocate certain immediate measures which would not only help reduce transaction costs but also improve efficiency at Indian airports. Chennai has the unique advantage of more than 30

A few Container Freight Stations can be declared as Air freight stations which would offer a parallel and complementary facility to complete customs documentation and examination of export cargo and also import cargoes in a seamless fashion, bypassing the various delays that haunt the trade currently. This does not require any fresh capital to be invested or additional deployment of customs personnel. However, the Government needs to rationalise the charges to be levied since currently, the airport administration is extremely reluctant to forego their revenues when cargo is shifted out of their premises.

Containerisation has emerged as the mainstay of foreign trade world wide. India has also adapted itself and the benefit of door to door movement – from factory gate to suppliers’ warehouses – has become a reality with the advent of containers.

In Chennai, the volumes have risen from 3 lakh containers annually, 10 years ago, to 1.3 million containers, today. Sadly however, the entire movement of containers is dependant on a single road to access and exit the port. This has brought with it untold misery to the trade both due to delays and various social issues that have cropped up on account of non-existent infrastructure.

effective. Hence much of the advantage gained by containerisation has been taken away by lack of adequate infrastructure. This is a serious impediment to our export push and if not tackled on a war footing, could have grave consequences in the years to come.

Across India, road connectivity from the production centres to the gateways is also grossly inadequate and needs to be attended to on a priority basis if our export competitiveness is to be sustained. While the golden quadrilateral and north-south and east-west corridors have made a difference, much remains to be done in this sector. While the potential exists for Indian exports to scale up to 500 billion dollars in the next 2 years, inadequate infrastructure and delayed execution of various projects are major impediments.

The Chamber hopes that the Government will accord top priority to the speedy completion of pending projects and thus enable trade and industry to become globally competitive.

With best wishes,

T T Srinivasaraghavan President

The EMRIP project is 10 years behind schedule and it is far from clear when this project would ultimately be completed. The evacuation by rail from Chennai port has not been cost 1

CHAMBER’S ACTIVITIES

11th May 2011

Press Meet to highlight the woes of exim trade in view of failure of EDI version 1.5 The export-import community has been facing enormous problems due to the non-functioning and persistent problems of the new centralised Customs Electronic Data Interchange (EDI) version 1.5. This had hindered the clearance of goods and added to this, demurrage was being levied on the trade for no fault of theirs.

The Chamber therefore took the lead in convening a Press Meet to inform the press first hand about the difficulties faced by the trade.

The Chamber had also invited representatives of the Chennai Custom House Agents’ Association, National Association of Container Freight Stations, Air Cargo Agents Association of India and Chennai and Ennore Port Steamer Agents’ Association.

Mr J Krishnan, Chairman of the Chamber’s Expert Committee on Logistics, welcomed the representatives of the press. Referring to the nonfunctioning of the EDI, he said it is not a fair system and it has major lacunae.

There are fundamental flaws in the software that has to be addressed first.

For the last few months, most of the cargo flights from Chennai are going with 50 per cent of its capacity while it delayed the booking and departure of vessels.

Mr G Raghu Sankar, member of the Expert Committee on Logistics of the Chamber said that EDI was

first introduced in 1991 and it has taken 20 years to upgrade the same to version 1.5 for which Rs 600 crores has been allocated by the Government.

This covers Customs, Excise and Service Tax. He expressed that after the implementation of new version through a centralized server, all the problems had to be addressed to those sitting in New Delhi. Noting that the Airports Authority of India in Chennai earned 35 per cent of revenue through air cargo, he said it did not invest even one-fifth of it in Chennai for development, though there was 80 per cent growth in volume in the last few years.

The trade was frustrated at the inordinate delay in clearance of goods both at the airport and seaport for the last few months. The trade had expressed dismay over the nonrectification of glitches in the EDI 1.5 version.

Chennai airport has seen unprecedented growth, thanks to the electronics industry. Millions and millions of rupees worth of cargo is being sent by air for which the airport is not fully geared. The growth is not in proportionate to the growth of the trade. There is acute shortage of manpower, space constraints etc. He said the Airport Regulatory Authority should be accountable for their performance.

Coming to the seaport, he said five years from now we will be handling double the quantity of goods.

Whenever there is a congestion, there is a surcharge. Connectivity is a great problem.

clearance was not possible. He said the importers and exporters are the ultimate sufferers. There are millions and millions of rupees spent on demurrage and cancellation of orders.

Mr P S Krishnan, President, Chennai Custom House Agents’ Association, said three touch screens deployed at the Chennai Customs House were not functioning .

Mr V Upendran, President, National Association of Container Fright Stations, said they were unable to take print outs of Bills of Entry and thereby goods could not be cleared on time.

Mr G.Viswanathan, past Chairman of Chennai & Ennore Port Steamer Agents’ Association felt that the Department should have version 1 parallely run until the flaws in version 1.5 were rectified. He said no trial has been done for the new software.

The representatives of the Associations felt that instead of bringing down cost, the new centralised customs electronic data interchange version 1.5 was adding to their expenditure by way of demurrage charge due to delay in clearance of cargo and extended stay of vessel at the port. They said due to persistent problems, they were filing the import manifest manually and it costs Rs 300 to Rs 500 extra per container.

They requested the representatives of the press to give wide publicity to the deliberations of the meeting so that at least the powers that be would realize the urgency of the situation and resolve the problems at the earliest.

Even at the DGFT level electronic 2

CHAMBER’S ACTIVITIES

25th May 2011

MCCI & MMA Video discussion – “The Miracle Man”: The MCCI and Madras Management Association (MMA) jointly organised this video discussion. The video was

about a businessman – Mr Moris Goodman – who had met with a plane accident and how he recovered based on his self motivation and will power.

The theme – whatever the mind can conceive and believe, we can achieve it!

The session was handled by Mr Murali, the Trainer and Psychological

Counsellor who gave some lessons and practical sessions on yoga, breathing exercise, etc.

The programme held in the Conference Room of the Chamber was attended by about 30 representatives of member companies who greatly benefitted from Mr Murali’s expertise.

28th May 2011

FFT on “Will Right to Education become a Reality?”

Though education as a fundamental right has been included in our Constitution nearly a decade ago, still the statistics reveal that around 92 lakhs of children in the school going age are not part of our education system. The Government, a year back in April 2010, brought out a new law called Right to Education which aims to provide free and compulsory education to all children in the age group of 6-14 years. As a part of this law, there are obligations for the State Governments and local bodies to ensure that every child gets educated in the neighbourhood. The Act mandates that even the private educational institutions have to reserve 25% seats for children of weaker sections in their respective neighbourhoods. Though the objective of the Act no doubt is

laudable, some of the stakeholders feel that there is lack of clarity and clear directions for implementation.

It is understood that some of the States including Tamilnadu have not come out with clear directions in this regard. This automatically necessitated more discussion on the subject.

Hence the Chamber selected the topic – Will Right to Education become a Reality - for its May programme. We had the privilege and the participation of the following speakers: Dr Vasanthi Devi Former Vice-Chancellor, Manonmanian Sundaranar University Ms Aruna Rathnam Education specialist, UNICEF Field Office for Kerala & Tamilnadu

Dr C Satish, Senior Principal RMK Group of Schools; and Mr David A Brock Vice-Consul US Consulate General, Chennai.

Mr T.Shivaraman, Vice-President of the Chamber welcomed the gathering and said how the Chamber has so far been able to put forth important subjects for discussion under the Food for Thought series. He said the Right to Education Act needs to be seriously implemented so that our children who are the future of this country get at least some amount of basic education.

The speakers expressed skepticism over the implementation of this Act in the chaotic situation prevailing in the country. The programme brought out the salient features of the Act, the laudable objectives and also the serious concerns about implementation.

Dr Vasanthi Devi, former ViceChancellor of Manonmanian Sundaranar University felt that the

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CHAMBER’S ACTIVITIES

biggest failure of India was its inability to provide good quality education to its children. Though this was the only directive principle which had a time frame of 10 years, India had failed miserably. She said India hosted half the illiterates in the world and 75 per cent of the bonded labourers. Though the Kothari Commission desired in 1964-65 that six per cent of the GDP should be earmarked for education, it had not crossed even four per cent.

Citing an Annual Assessment Report she said that 47 per cent of those studying in 5th standard in the country could not read the First Standard text book in their language properly. India had built up the most exclusionary system of education in the world where one got the institution according to one’s paying capacity. It is hierarchical and fragmenting school system she said.

The State-funded public school system had collapsed because the elite and the middle classes had pulled their children out of these schools. She advocated public funded system in which every child would be provided equal and quality education.

Ms Aruna Rathnam, Education Specialist, UNICEF Field Office for Kerala and Tamilnadu explained the features of the Right to Education Act. She said they were progressive on paper and child-friendly. She welcomed its participatory learning approach. At the same time, she wondered how 25 per cent of the seats were going to be reserved in private schools for children from weaker sections. There was no provision for pre-primary education.

How are we going to define quality and who will lead and keep raising the bar?

She asked.

She apprehended problems of infrastructure, invisible costs to the parents and wondered whether the private sector would help provide social justice.

(2) providing information to families to help them evaluate and improve their children’s schools and to educators to help them improve their students’ learning

Dr C Satish, Senior Principal, RMK Group of Schools while welcoming the new law, apprehended that the pace in which it was expected to be implemented would derail the entire process. Any reform should be well thought out and implemented slowly and steadily he said.

(3) Implementing college and careerstudy standards and developing improved assessments aligned with those standards; and

Pointing out a number of lacunae, he wondered how this was going to be implemented in right earnest with 42 Boards and two national-level boards functioning in the country.

He said there is a requirement of 14 lakh teachers and 50 percent of the teachers in eight States are not fully qualified.

Mr David Brock, Vice-Consul, American Consulate, Chennai referred to President Barack Obama’s dream that every child in America should have a world class education. America was once the best educated nation in the world. Reforming the schools to deliver a world class education is a shared responsibility he said the task cannot be shouldered by the teachers and the principals alone.

He said significant reforms have already been made in response to the American Recovery and Reinvestment Act of 2009 around four areas namely : (1) improving teacher and principal effectiveness to ensure that every classroom has a great teacher and every school has a great leader

(4) Improving student learning and achievement in America’s lowestperforming schools by providing intensive support and effective intervention.

Dr Nirmala Prasad, Principal, MOP Vaishnav College also expressed her views on the subject.

The programme was well attended and the Q&A session brought forth varied views on the topic.

FORTHCOMING PROGRAMMES 29th June Video discussion on Middle Manager as Innovator.

6 p.m. - MCCI Conference Room 1st July Seminar on Securing U. S. Green Card 3.30 p.m. - Hotel Savera (in association with FM Advisory Services Pvt. Ltd. 4

GENERAL COMMITTEE

14th May 2011 The Committee considered the following:-

Draft Audited Accounts of MCCI – 2010-11 The President sought members’ views on the draft accounts.

Dr R Mahadevan suggested that a separate fund be created for the 175th year since some of the activities contemplated, would continue even after the 175th year. It was clarified that the same is being maintained already and was shown under Schedule 1B. The Committee felt that in view of refurbished premises, insurance cover should be suitably enhanced.

The Committee approved the accounts. subject to a clarification to be sought from Mr K Vaitheeswaran on service tax.

MCCI – Skill Development Initiative The Secretary General reported that she along with the representative of Avalon Consulting had held preliminary discussions with several companies and that the responses were mostly encouraging.. A basic project report with estimated cost and financial projections was tabled.

She said a core Committee was in place now and the broad terms for the core committee would be drafted and a meeting will be called soon.

Avalon have almost completed their task. She also said that she along with the representative of Avalon had been to NTTF, Bangalore and met the CEO and COO and also saw their

facility. They, however, expressed their reservations about going in for the NCVT accreditation as this could impose certain unnecessary preconditions. They were ready to collaborate with the Chamber and identify 2-3 courses, and offered to help for the soft launch as well.

to the notice of the Committee the problems being faced at the Customs due to migration to new software version1.5. The migration was done about 18 months ago and the problems still continue.

Regarding the soft launch, the Secretary General said this could be done from rented premises. For this purpose, the premises have been identified and negotiations are in progress.

He said there is no connectivity between customs and banks. It takes more than 15-20 days to make an amendment in the entry. Everywhere there are penal charges levied on exporter and importer for no fault of theirs.

Regarding equipment, many of the companies who were met are willing to donate some machines which are old but in good working order. There is encouraging response from all round.

To give a comprehensive picture to the press, the Chamber organised a press meet on 11th May 2011 to which the following four Associations were invited.

The President desired that a detailed project report be finalised by next week end, for presentation to prospective partners and sponsors.

Chennai Custom House Agents’ Association

It was suggested that the Chamber could follow the example of MMA and approach the Konrad Adenauer Stiftung (KAS) for grants to support our various initiatives.

Air Cargo Agents’ Association of India

Study of the Port Sector in Tamilnadu: Members were informed that the scope of the study has been expanded. Earlier it was to cover only Chennai but now other major ports have also been included so that best practices can be used. MCG will commence the work from June 2011.

The study will be completed before 15th August 2011 and will be released at a suitable Conference related to Logistics before 15th September.

While on this, Mr J Krishnan brought

National Association of Container Freight Stations Chennai & Ennore Port Steamer Agents’ Association This is a Rs 800 crore project covering Customs, Central Excise and Service Tax. The Central server is in Delhi and the system is full of glitches.

On the export front, duty drawback is not released and central excise credit is getting delayed. So also the DEPB. He said ours is the only Chamber which has been voicing its concern.

Though this is a major problem, there is not much of awareness.

There was good coverage in the press.

He said we need to keep the pressure since it is an universal problem.

Mr J Krishnan also said that the 5

GENERAL COMMITTEE

Chennai High Court has placed a ban on handling coal and iron ore at the Chennai Port due to environmental issues and has suggested that the handling of both these items, be shifted to Ennore Port.

The coal that is being handled by Chennai Port is mostly for the use of TNEB and it will not be viable for them if it is to be cleared from Ennore Port.

He said the Chamber needs to keep a watch on this issue. The President apprising the members said the port came into existence because of the Chamber and desired that we continue to play an active role in bringing such issues to the fore.

Formation of New State Government – wish list from MCCI A day before the announcement of the results, the Chamber was asked by the Press as to what would be our wish list for the new Government. The Chamber had already sought the views of members and based on the suggestions received, a list was prepared and sent to the press. Briefly, the suggestions related to: 4 Corruption free and transparent

governance system

4 Promote Brand Tamilnadu

4 Port connectivity especially

the EMRIP project which needs to be actively facilitated by the Government

4 Develop airport cargo

processing facilities

4 Decongestion of Chennai which

needs urgent attention

4 Water – measures to recharge

ground water

4 Land –develop a policy and

procedure for land acquisition for industries without injuring the interests of agriculture 4 SMEs – develop a series of clusters 4 Education – attract world class

institutions and develop centres of excellence

4 Health and sanitation and

affordable housing to receive special attention

4 Implementation of GST at

the earliest

Members suggested that the Chamber should seek an appointment with the Chief Minister and hand over our wish list and also convey the Chamber’s congratulations on her resounding victory.

The President informed the members of the programmes organised by the Chamber as follows:

leveraging on the high standards achieved by the industry in various sectors

a) Seminar on Core Sector Development in South India on 23rd April 2011:

4 Improve power generation,

b) MCCI-MMA Video Discussion – Deming’s Roadmap for Change –

distribution and electricity sector reforms.

4 Road infrastructure

Commitment to Quality held on 27th April 2011.

c) Press Conference on issues related to Sea Customs – 11th May 2011

Assocham Managing Committee Meeting – 9th May 2011 Mr.N.Srinivasan and the Secretary General attended the Assocham Managing Committee meeting on 9th May at Mumbai.

Assocham was interested in holding joint programmes with MCCI at Chennai. There is also acceptance from Assocham of the involvement and contribution from MCCI as a Promoter Chamber. During the discussion on Skill Development and Fighting corruption, MCCI made a point about its efforts already pursued in these areas.

Members were also informed of the following forthcoming programmes.

Course on Logistics: Dr Nirmala Prasad has evinced interest in the course for the students of MOP Vaishnav College. It is proposed to start this course at their college premises from July onwards.

Seminar on IT in association with TCS – June 2011: TCS had approached the Chamber for a joint Seminar and they had discussions with MCCI to take this programme forward.

Mr Vittal Raj said the programme will contain case studies indicating how people can be benefited and how confidence can be built. It is about giving confidence to SMEs to use IT. Since IOB too was interested in a

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GENERAL COMMITTEE

programme about SME financing, the Committee suggested that the Chamber may organise this as a full day event and a joint program – while TCS can cover its subjects in the forenoon, the afternoon session can be for IOB wherein they could cover about funding for SMEs, etc. Mr Srinivasan of United India Insurance said that we could also include insurance in the overall coverage of the programme.

Proposed Joint Seminar with Italian Consulate, Mumbai – 16th June: Italian Consulate, Mumbai has approached the Chamber for a joint Seminar which will be held at Taj Connemara.(This was held on 16th June.)

Proposed Round Table Jointly with British Dy. High Commission on Fiscal Instruments for Low Carbon Investment – 17th June.

The Secretary General said that few experts on Climate Change from UK are coming to Chennai and the British Dy. High Commission would like to organise a round table meeting jointly with MCCI on 17th June.

Members felt that this is a very important subject and would create lot of interest.

New Membership: The Committee admitted the following companies as members: Indian Overseas Bank Origin ITFS Pvt.Ltd.

Greta Investments Pvt.Ltd. Portman India Pvt.Ltd. J Cynergy Dental & Medical Monarch Scientific Works Ankeena Networks Pvt Ltd.

General Committee 18th May 2011 A special meeting of the committee was called to consider expansion of the General Committee as approved at the AGM last year and finalise the nominations to the General Committee for 2011-12.

Keeping in view the need to bring in good talent and persons who could contribute to the deliberations of the Committee, the President proposed that the Chamber should send out a fresh notice to all the members immediately giving the facts as stated above and asking them to send their nominations within a week. Such of those members who had already sent in their names could ignore the communication. At the last AGM held in July 2010, a resolution was passed increasing the strength of the Committee to 20 including the President and Vice-President.

He requested the views of other members on this. Members felt that since the membership is expanding, the Committee should also expand and the Chamber should have more members to shoulder the responsibility.

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7

EXPERT COMMITTEES 20th May 2011

IT/ITES

31st May 2011

Indirect Taxes & VAT

The Committee was informed that Tata Consultancy Services had approached the Chamber to conduct a joint programme particularly for SMEs and this was agreed to. It is proposed to organise this during the second week of July. The primary objective of this event is to spread the message amongst SMEs about how IT application could improve their efficiency and performance. A structure of the programme has been sent to TCS for their approval. Broadly the structure covers ERP for Small business, cost concern for SMEs, case studies, information security, etc.

Mr. P R Sudhakar, Chairman of VAT Committee informed the members that the Ministry of Finance has sought to initiate a debate on the issue of evolving a negative list for tax on services.

The Committee also suggested that the Chamber may approach Ramco, Google, etc. as alternate supporters for this programme, if TCS is unable to hold this joint programme.

The negative list would mean, barring the services listed there, everything could be taxed. The positive list, on the other hand, will list out services that are to be taxed. A debate on the issue was started by the Finance Ministry, whether a positive list or a negative list would be better for India. If we have a positive list, we are sure that we are going to be taxed.

The Secretary General gave a demo of the revamped website to be launched in about a week’s time. This new website is very user friendly and contains lot of information for the benefit of members.

Since corporate executives find it difficult to attend Expert committee meetings physically, due to exigencies of work, the Chairman suggested alternate methods of holding meetings through video conferencing, webinars etc. These type of meetings could be easily done at a reasonable cost.

He suggested that the Chamber could try one or two meetings through this method.

Mr. K.Vaitheeswaran, Chairman of the Indirect Taxes Committee felt that the Chamber should not react on this issue since suggesting a negative list for so many items or services would lead to consequences. So far no clear term has been defined for “service” and the Government is trying to bring in every service into the tax net without identifying proper mechanism.

Defence Services, Public services, municipal services, technical services, charitable activities, basic and elementary education, police services, agricultural services, trusts, road services (passengers travelling by auto) etc. have been identified under the negative list.

Countries like UK, New Zealand, Singapore etc., have a negative list which has only few items. A negative list would work for India, if the country was ready to tax everything, barring a small list of services.

The objective of this scheme is to tax services based on a small negative list, so that many untapped sectors would be able to be brought into the tax net.

Unlike Goods, in services there is no classification and the Government will have to come up with a definition for “service”. The issue of a negative list would also affect the States in the GST regime. The Government started taxing 4 services in 1998 and today about 125 services are in the tax net.

The Committee felt that there is no need to send any representation on this issue since ultimately it is the Government which will decide on this matter.

Mrs K Saraswathi, Secretary General of the Chamber was invited

by Indian Institute of Materials Management to be a speaker at their monthly meeting held in May 2011.

She made a presentation on "The Current Industrial Scenario – Competition vs Competitiveness” which was well received.

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SPOT LIGHT- RIGHT TO INFORMATION

Be Informed of the Right to Information Act The Right to Information Act 2005 (RTI) is an Act of the Parliament of India. It is the implementation of freedom of information legislation in India on a national level "to provide for setting out the practical regime of right to information for citizens."

The Act applies to all States and Union Territories of India, except the State of Jammu and Kashmir which is covered under a State-level law. Under the provisions of the Act, any citizen (excluding the citizens within J&K) may request information from a "public authority" (a body of Government or "instrumentality of State") which is required to reply expeditiously or within thirty days.

The Act also requires every public authority to computerize their records for wide dissemination and to proactively publish certain categories of information so that the citizens need minimum recourse to request for information formally. This law was passed by Parliament on 15 June 2005 and came fully into force on 13 October 2005. Information disclosure in India was hitherto restricted by the Official Secrets Act 1923 and various other special laws, which the new RTI Act now relaxes.

State Level Laws The RTI Laws were first successfully enacted by the state governments of — Tamil Nadu (1997), Goa (1997), Rajasthan (2000), Karnataka (2000), Delhi (2001), Maharashtra (2002), Assam (2002), Madhya Pradesh (2003), and Jammu and Kashmir (2004). The Maharashtra and Delhi State level enactments are considered to have been the most widely used.

The Delhi RTI Act is still in force.

Jammu & Kashmir, has its own Right to Information Act of 2009, the successor to the repealed J&K Right to Information Act, 2004 and its 2008 amendment.

Scope The Act covers the whole of India except Jammu and Kashmir, where J&K Right to Information Act is in force. It is applicable to all constitutional authorities, including the executive, legislature and judiciary; any institution or body established or constituted by an Act of Parliament or a State legislature. It is also defined

in the Act that bodies or authorities established or constituted by order or notification of appropriate government including bodies "owned, controlled or substantially financed" by government, or non-Government organizations "substantially financed, directly or indirectly by funds" provided by the government are also covered in it.

Private bodies Private bodies are not within the Act's ambit directly. However, information that can be accessed under any other law in force by a public authority can also be requested. In a landmark decision of 30-Nov-2006 ('Sarbajit Roy versus DERC') the Central Information Commission also reaffirmed that privatised public utility companies continue to be within the RTI Act- their privatisation notwithstanding.

Right to Information The Act specifies that citizens have a right to: 4 request any information

(as defined).

4 obtain copies of documents.

4 inspect documents, works and records.

4 take certified samples of materials of work.

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SPOT LIGHT- RIGHT TO INFORMATION Process Under the Act, all authorities covered must appoint their Public Information Officer (PIO). Any person may submit a request to the PIO for information in writing. It is the PIO's obligation to provide information to citizens of India who request information under the Act. If the request pertains to another public authority (in whole or part) it is the PIO's responsibility to transfer/forward the concerned portions of the request to a PIO of the other within 5 days.

In addition, every public authority is required to designate Assistant Public Information Officers (APIOs) to receive RTI requests and appeals for forwarding to the PIOs of their public authority. The applicant is not required to disclose any information or reasons other than his name and contact particulars to seek the information.

The Act specifies time limits for replying to the request.

4 If the request has been made to

the PIO, the reply is to be given within 30 days of receipt.

4 If the request has been made to

an APIO, the reply is to be given within 35 days of receipt.

4 If the PIO transfers the request

to another public authority (better concerned with the information requested), the time allowed to reply is 30 days but computed from the day after it is received by the PIO of the transferee authority.

4 Information concerning

corruption and Human Rights violations by scheduled Security agencies (those listed in the

Second Schedule to the Act) is to be provided within 45 days but with the prior approval of the Central Information Commission.

4 However, if life or liberty of any

person is involved, the PIO is expected to reply within 48 hours.

Since the information is to be paid for, the reply of the PIO is necessarily limited to either denying the request (in whole or part) and/or providing a computation of "further fees". The time between the reply of the PIO and the time taken to deposit the further fees for information is excluded from the time allowed.

If information is not provided within this period, it is treated as deemed refusal. Refusal with or without reasons may be ground for appeal or complaint.

Further, information not provided in the times prescribed is to be provided free of charge.

For Central Departments as of 2006, there is a fee of Rs. 10 for filing the request, Rs. 2 per page of information and Rs. 5 for each hour of inspection after the first hour. If the applicant is a Below Poverty Card holder, then no fee shall apply. Such BPL Card holders have to provide a copy of their BPL card along with their application to the Public Authority. State Governments and High Courts fix their own rules.

Partial disclosure The Act allows those part(s) of the record which are not exempt from disclosure and which can reasonably be severed from parts containing exempt information to be provided.

Exclusions Central Intelligence and Security agencies specified in the Second Schedule like IB, RAW, Central Bureau of Investigation (CBI), Directorate of Revenue Intelligence, Central Economic Intelligence Bureau, Directorate of Enforcement, Narcotics Control Bureau, Aviation Research Centre, Special Frontier Force, BSF, CRPF, ITBP, CISF, NSG, Assam Rifles, Special Service Bureau, Special Branch (CID), Andaman and Nicobar, The Crime Branch-CID-CB, Dadra and Nagar Haveli and Special Branch, Lakshadweep Police. Agencies specified by the State Governments through a Notification will also be excluded. The exclusion, however, is not absolute and these organizations have an obligation to provide information pertaining to allegations of corruption and human rights violations. Further, information relating to allegations of human rights violation could be given but only with the approval of the Central or State Information Commission.

Information Exclusions The following is exempt from disclosure [S.8)] 4 Information, disclosure of

which would prejudicially affect the sovereignty and integrity of India, the security, "strategic, scientific or economic" interests of the State, relation with foreign State or lead to incitement of an offence;

4 Information which has been

expressly forbidden to be published by any court of law or tribunal or the disclosure 10

SPOT LIGHT- RIGHT TO INFORMATION

of which may constitute contempt of court;

4 Information, the disclosure of

which would cause a breach of privilege of Parliament or the State Legislature;

4 Information including

commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information; 4

4

4

4

of deliberations of the Council of Ministers, Secretaries and other officers;

4 Information which relates to

disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual (but it is also provided that the information which cannot be denied to the Parliament or a State Legislature shall not be denied by this exemption);

personal information the

4 Promote timely dissemination of

accurate information to the public.

respective official language.

4 Publish names, designation postal

addresses and contact details of PIOs and other information such as notices regarding fees to be paid, remedies available in law if request is rejected etc.

Power to make rules 4 The Central Government, State

exemptions listed above,

a public authority may allow

access to information, if public interest in disclosure outweighs the

harm to the protected interests.

4 Notwithstanding any of the

(NB: This provision is qualified by Information available to a the proviso to sub-section 11(1) person in his fiduciary of the Act which exempts relationship, unless the competent disclosure of "trade or authority is satisfied that the larger commercial secrets protected by public interest warrants the law" under this clause disclosure of such information; when read along with 8(1)(d)) Information received in Role of the Government: confidence from foreign Section 26 of the Act enjoins the Government; Central Government, as also the State Information, the disclosure of Governments of the Union of India which would endanger the (excluding J&K), to initiate necessary life or physical safety of any steps to: person or identify the source of 4 Develop educational programs for information or assistance given in confidence for law enforcement the public especially disadvantaged communities on RTI. or security purposes; 4 Encourage Public Authorities to Information which would participate in the development impede the process of and organization of such investigation or apprehension programs. or prosecution of offenders;

4 Cabinet papers including records

Governments and the Competent Authorities as defined in S.2(e) are vested with powers to make rules to carry out the provisions of the Right to Information Act, 2005. (S.27 & S.28)

Effects In the first year of National RTI, 42,876 (not yet official) applications for information were filed to Central (i.e. Federal) public authorities.

Of these 878 were disputed at the final appellate stage - the Central Information Commission at New Delhi. A few of these decisions have thereafter been mired in further legal controversy in the various High Courts of India. The first stay order against a final appellate decision of the Central Information Commission was granted on 3.May.2006 by the High Court of Delhi in WP(C)6833-35/2006 cited as "NDPL & Ors. versus Central Information Commission & Ors".

The Government of India's purported intention in 2006 to amend the RTI Act was postponed after public disquiet, but has been revived again in 2009 by the DoPT.

4 Train officers and develop

training materials.

4 Compile and disseminate a User

Guide for the public in the

11

SPOT LIGHT- RIGHT TO INFORMATION

RIGHT TO INFORMATION – A TOOL OR NOT? Madhri Guruswamy, Senior Associate, Fox Mandal & Associates With the country facing anticorruption movements demanding the adoption of Jan Lokpal Bill, one of the legislation that sought to thwart corruption and promote transparency and accountability in the administration was the Right to Information Act, 2005 (“RTI”), which came into force on October 12, 2005. RTI mandates timely response to citizen’s requests to secure access to information under the control of public authorities by designated officers within a prescribed time limit.

The Department of Personnel and Training, Ministry of Personnel, Public Grievances and Pensions has initiated a RTI portal gateway to the citizens for quick search of information on the details of first Appellate Authorities, Public Information Officers (“PIO”) etc. amongst others, besides access to RTI related information/disclosures published on the web by various Public Authorities under the Government of India as well as the State Governments.

RTI has been in force in the country for more than half a decade and there have been numerous cases determined under the RTI by the Courts and the Chief Information Commissioner(“CIC”). Few notable cases are provided below: 4 The Delhi High Court held that

even the office of the Chief Justice of India comes under the scope and ambit of RTI when deciding on an appeal regarding supply of information concerning declaration of personal assets by the Judges

of the Supreme Court. [Secretary General, Supreme Court of India V. Subhash Chandra Agarwal LPA No.501/2009: Delhi HC].

4 In the case of Dr Ajai Kumar

Jain, Dr. Jain applied to the Passport Officer, designated as Information Officer claiming disclosure of information, relating to a passport application made by him in December, 2006 as well as the application of his wife. The applicant’s grievance at that stage was that even though he applied for passport for more than eight months, and though the Passport Office’s website indicated (in March, 2007) that police report was mentioned as “OK”, yet in July, 2007, different information was posted asking for two specimen signatures on blank piece of paper. The CIC imposed compensation of Rs 5,000/- to the Petitioner. The Delhi High Court enhanced the compensation to the second respondent to the extent of Rs.55,000/- for wrongful delay [U.O.I Vs Central Information Commission &Others: W.P. (C) 6661/2008: Del HC].

4 The appellant has asked the

following points regarding admission to MBA-Full time course (200810) of Faculty of Management Studies, University of Delhi under RTI Act: What are a) Written exam marks, b) Group Discussion marks, c) Extempore marks and d) Personal Interview marks achieved by each of the candidates, who

faced GD-PI after clearing the written test? The PIO had replied that "the information asked by the applicant is not made available to the candidates and disclosure of the same to the appellant can be objected to by the candidates concerned. It was held that under RTI a candidate is allowed to know his/her marks in Group Discussion and Personal Interview. The CIC held that with the aid of RTI, a candidate is allowed to know his/ her marks in group discussions and personal interviews. [Mr. Nitesh Duhan v. Prof. J.K. Mitra: CIC/ SG/A/2009/000867/3599: Appeal No. CIC/SG/A/2009/000867].

4 The Applicant, an informer of the

department, filed RTI application seeking inspection & copies of all records available with the income tax department including assessment orders of Escorts Ltd, Dr. Naresh Trehan and connected parties. The application was rejected by the PIO on the ground that there was no overriding public interest in disclosing the information relating to third parties and the disclosure would lead to an invasion of privacy of the assessees. On appeal by the applicant, the CIC allowing the appeal held that:(i) Under Section 3 of the RTI Act, information as defined under section 2(f) which is not exempt from disclosure under section 8(1) or 9 and is held by a public authority has to be disclosed. As the information 12

SPOT LIGHT- RIGHT TO INFORMATION sought is information as defined under section 2(f) and is held by the Income Tax department which is a Public authority, and the question was limited only to the applicability of exemption clauses [Rakesh Kumar Gupta V. Income Tax Appellate Tribunal (ITAT): CIC/ AT/A/2006/00586].

What is RTI? RTI stands for "Right to Information".

Right to Information is a fundamental right that every citizen has! Basically, the RTI gives you all the information that you want about the Government and what they are doing with your tax money!

certain subjects. These include information received in confidence from foreign governments, information prejudicial to security, strategic, scientific or economic interests of the country, breach of privilege of legislatures, etc.

It is pertinent to note that the Courts and the Chief Information Commissioner have been liberal in interpreting the provisions of RTI Act. The Allahabad High Court in the case of Public Information Officer Vs. State Information Commission, U.P. and others: Writ Petition No. 3262 (MB) of 2008 has held that there is no requirement for a citizen to give reasons as to why he seeks the information and his background is no reason for information to be denied to him under the RTI Act and the Public Information Officer cannot take a plea that it is a third party information without first referring it to third party.

You have the right to ask the Government why the roads outside your house are not fixed, why have you not received your “ration card” as yet, why is there so much garbage in your area that is not picked up etc.

But, do not worry about this!

If RTI is a “fundamental” right, then why do we need an “Act”?

Where do I submit the application for information?

The awareness of the provisions of RTI amongst the citizens is extensive and many have reaped the benefits of this Act. However, one has to note that the RTI Act did not accomplish one of its main purpose viz., to check corruption amongst the officers since RTI was sought to bring in accountability and has now led to mass anti-corruption movements and hunger strikes.

Who will give me information I am looking for?

Liberty without learning is always in peril; learning without liberty is always in vain.

John F. Kennedy

Simply because if you go into a Government office and demand why your work has not been done, they will not entertain you or might even throw you out. If it’s a law, then it becomes harder to do this. If they do not give you the information you want, they will have broken a law and can be punished for it!

One or more officers in every Government Department have been made "Public Information Officers" (PIO). If you want some information, you need to file an application with the PIO. The PIO’s are responsible for collecting information wanted by you and providing that information to you.

Also, several officers have been appointed as Assistant Public Information Officers (APIOs).

Their job is only to accept applications from the public and forward it to the right PIO. Can the PIO refuse to give me information?

A PIO can refuse information on

For an average citizen like you and me, the information we are looking for does not come under these categories.

So the PIO cannot refuse to give us information.

You can do that with the PIO or with APIO of the Government department you are questioning.

In the case of all Central Government Departments, certain "post offices" have been designated as APIOs. This means that you can go to any of these post offices and submit your “fee” and “application” at the RTI counter in these post offices.

They will issue you a receipt and acknowledgement and it is then the responsibility of that post office to deliver it to the right PIO. Is there any fee?

How do I deposit that?

Yes, there is an “application fee”. For Central Government Departments, it is Rs.10. However, different States have different fees.

For getting information, you have to pay Rs.2 per page of information provided for Central Government Departments. It is different for different States. Similarly, there is a fee for inspection of documents. There is no fee for first hour of inspection, 13

SPOT LIGHT- RIGHT TO INFORMATION but after that, you have to pay Rs.5 for every hour or inspection. This is according to Central Rules.

For each State, you need to see respective State rules.

4 In person by paying cash

the PIO, you must receive information within 30 days.

4 Demand Draft

You can deposit fee in cash or through a DD or bankers cheque or postal order. You can then deposit your application either by post or by hand.

4 Money orders (only in some States)

In case you have filed your application with Assistant PIO then information has to be made available within 35 days.

What should I do if the PIO does not accept my application?

You can send it by post. Once you send it along with the fee, your job is done.

You should also make a formal complaint to the respective “Information Commission”. The Information Commissioner has the power to impose a penalty of Rs.25,000 on the concerned PIO officer who refused to accept your application.

But it is most likely that the PIO will accept your application.

Is there an "application form" to be filled?

For Central Government Departments, there is no form. You should apply on a plain sheet of paper like an ordinary application. However, many States and some Ministries and departments have prescribed formats. You should apply in these formats. Please read rules of your respective State.

How can I apply for information?

Draft your application on a normal sheet of paper and submit it by post or in person to the Public Information Officer (PIO). [Remember to keep a copy of the application for your personal reference.]

How can I send my application fee?

Every State has a different mode of payment for application fee. Generally, you can deposit your application fee via:

(remember to take your receipt) 4 Indian Postal Order 4 Affixing Court fee Stamp

Do I have to give reasons why I want a particular information?

4 Banker’s cheque

Absolutely not! You are not required to give any reasons or additional information other than your contact details (i.e., Name, Address, and Phone No.)

(only in some States)

Some State Governments have some "head of account". You are required to deposit fee in that account. For that, you can either go to any branch of SBI and deposit cash in that account and attach deposit receipt with your RTI application. Or you can also send a postal order or a DD drawn in favor of that account along with your RTI application. Please see respective State rules.

What if the PIO is not available?

In case the PIO is not available you can submit your application with the Assistant PIO or any other officer designated to accept the RTI applications.

Where can I find the concerned PIO? A list of PIOs/APIOs for all Central and State departments/Ministries is available online at www.rti.gov.in What if I cannot locate my PIO or APIO? In case you have problems locating your PIO/APIO you can address your RTI application to the “PIO C/o Head of Department” and send it to the concerned department with the requisite application fee. The Head of Department will have to forward your application to the concerned PIO. Is there a time limit to receiving information?

Yes. If you file your application with

Can the PIO refuse to accept my RTI application?

No. The PIO cannot refuse to accept your application for information under "any circumstances". Even if the information does not pertain to his/ her department/jurisdiction, she/he has to accept it. If the application does not pertain to that PIO, he would have to transfer it to the right PIO within 5 days.

How does this law help me in getting my work done?

Let us take the case of Ram. He was not being given his ration card. But when he applied under RTI, he was given a card within a week. What did Ram ask? He asked the following questions: I filed an application for a duplicate ration card on 27th January 2004.

Please tell me the daily progress made on my application so far. i.e. when did my application reach which officer, for how long did it stay with that officer and what did he/she do during that period?

4 According to the rules, my card

should have been made available in 10 days. However, it is more than three months now. Please give the names 14

SPOT LIGHT- RIGHT TO INFORMATION and designations of the officials who were supposed to take action on my application and who have not done so?

of guilt on paper”. Which in a legal term for saying that they are going to be “booted”.

4 What action would be taken against

The next question is: Please provide the names and designations of the officers who were supposed to take action on my application and who had not done.

these officials for not doing their work and for causing harassment to the public? By when would that action be taken?

4 By when would I get my card now?

In normal circumstances, such an application would be thrown in a dustbin. But this law says that the PIO has to reply in 30 days. If they don’t do that, their salary could be deducted.

The problem is that it is not easy to answer these questions.

The first question is: Please provide the daily progress made on my application There is no progress made. But the government officials cannot write in that they have not acted for so many months. Else that would be “admission

If the government provides names and designations of the officials, their responsibility gets fixed. Any officer is most scared of fixing of responsibility against him in this manner.

So, the moment one files such an application, his/her pending work is done.

What should I do after getting information?

It depends on why you asked for that information and what type of information is it. Often a lot of things start falling in place just by asking for information. For instance, you would

get your passport or a ration card just by asking for the status of your application. In many cases, roads got repaired as soon as the "money spent" on repairs was asked. So, seeking information and questioning the government is an important step, which in itself is complete in many cases.

But suppose you expose some corruption or wrongdoing using RTI. Then, you can complain to vigilance agencies, CBI or even file an FIR. But one thing is certain. Seeking information like this and exposing the corruption does improve the future.

The officials get a clear message that the people of that area have become alert and any wrongdoings in future would not remain hidden as they were in the past. So, their risks of getting caught increase. ( Source : India howto.com)

R & J Trainers & ODI Consultants The organisation undertakes selective Consultancy Services in several areas of Management.

The Faculty includes IIT Graduates and IIT Professor besides other Professionals

Training includes manufacturing areas such as Reliability Centred Management, Quality Management, Supply Chain Management, Cost Control and Production Management.

Value Addition Areas such as Value Engineering Management, Delphi Techniques, After Sales Service, Hazard Analysis, Human Factor Engineering.

People Skills areas such as Attitude, Performance Appraisal Systems, Competency Mapping, and Decision Making.

For details please visit: www.randj.in | Mail to: contact@randj.in Enquiries: Lt Col MJ Reddy (Retd), Mobile: 97908 49715

15

POLICY WATCH

India Blocks EU proposal on allowing duty-free entry to Pakistan textiles India blocked a $900 million European Union proposal at the World Trade Organisation to give duty free access to the textile exports from Pakistan.

The firm opposition to the proposal, pitched as a relief package for the devastating floods in Pakistan should dispel concerns in India that the government may take a soft stand on the issue after the breakthrough in Secretary level talks.

Pakistan talks of most favoured nation status for India to spur trade: The 5th round of India-Pakistan talks on Commercial and Economic Cooperation was held in Islamabad on 27-28th April when both sides agreed that increase in trade and economic engagement would help not only in the mutual quest for national development but also contribute to building trust between the two countries. The discussions were guided by the mutual desire to realise the full potential of bilateral trade. To facilitate this objective, they agreed to make efforts to create an enabling environment for trade on both sides. The two sides also agreed to encourage greater engagement between the private sectors of the two countries.

Commerce Ministry to push for benefits to exporters: The Commerce Ministry will push for stepping up benefits for exporters under different market linked schemes in lieu of the popular DEPB which is scheduled to end on 30th June.

India, Africa trade to touch $ 70 bn by 2015: Trade between India and Africa will touch $ 70 billion by 2015 even as the South Asian economic giant has become a leading investor in the continent with an investment of $ 33 bn till date.

India will continue to make efforts to expand trade with Africa with special focus on including steps like duty free tariff preference scheme for certain countries in Africa to enable easier imports from them.

India, Malaysia to expedite deals for improving economic ties India and Malaysia have agreed to expedite talks on finalizing a double taxation avoidance agreement, and also hoped for early completion of the India-ASEAN Free Trade Agreement in Services and Investment, Indian External Affairs Minister S. M. Krishna has said. ‘We have had an in-depth exchange of views on how we can make early progress on issues such as a revised Double Taxation Avoidance Agreement

and a MoU on Customs Cooperation, as well as operationalization of the Joint Working Group on CounterTerrorism,’ Krishna told reporters after meeting with his counterpart, Anifah Aman at the fifth India-Malaysia Joint Commission Meeting in Kuala Lumpur on 2nd May, 2011.

Singapore offers to be regional springboard for Indian SMEs Singapore aims to woo medium and small-size Indian companies seeking to expand into Asia-Pacific markets to set up shop in the City State as a regional base of operations said the Senior Minister of Trade and Industry.

Mr S Iswaran .

"We already have large companies from India coming to Singapore and using the island State for regional business.

The next step really is how this can cascade down to the larger pool of mid-size companies," the Minister said. Having met domestic demand, the mid-size Indian companies were looking beyond their borders, especially for opportunities in the Asia-Pacific, he said after launching Tata Communications' international headquarters in Singapore.

"Singapore can be a good springboard for these mid-size companies into the region as the City State has Free Trade Agreements (FTAs) with regional markets," said Iswaran. Singapore companies also have traditional links with regional businesses.

"As such, the mid-size Indian companies can partner Singapore companies or just use the links to other countries," he said. Iswaran 16

POLICY WATCH

also underlined the synergy between technology-savvy Indian companies in the pharmaceuticals and IT space and Singapore's emphasis on attracting knowledge-based companies.

"Singapore's emphasis is on knowledgebased activity and the kind of resources we are committing towards such sectors are opportunities for the Indian mid-size companies to come here and collaborate with our research institutes in the universities," he said.

He also stressed on Singapore's continuous efforts to attract knowledge-based companies and to be one of the most preferred options for Indian companies to set up a base of operations. Iswaran also assured that Singapore would provide a conducive environment with minimum hassle and a barrier-free working place.

There are more than 4,000 Indian enterprises in Singapore. "Of these, a growing number have leveraged on Singapore as their regional and international headquarters to coordinate their overseas operations," he said.

Bilateral business between Singapore and India expanded to 30 billion Singapore dollars last year, especially following the easing of taxes under the Comprehensive Economic Cooperation Agreement. Indian commerce and trade observers see the number of Indian companies increasing to 6,000 over the next two to three years.

The time is always right to do what is right.

- Martin Luther King Jr.

Annual Review of Monetary Policy – Its Impact The Governor, RBI, Mr D Subbarao on 3rd May 2011 in the annual monetary policy review, announced increased repo rate of 7.2 5 and reversed repo rate of 6.25%. Higher repo increases the banks’ costs of borrowing from RBI and higher reserve repo gives incentive to banks to park money with RBI. In this way, RBI absorbs cash from banking system, but home loans including corporate loans become costlier. RBI is maneuvering to sustain growth and rise in inflation with unprecedented toughness.

A major reform measure of RBI is a move to a regime where the repo rate will drive as the single policy rate.

It will ensure that banking system will always operate in a cash deficit mode, force banks to focus on deposit mobilisation to improve liquidity which will give better returns to customers and monitoring monetary measures far easier. Reverse repo rate will continue to operate at a fixed one percentage point below the repo rate and will no longer be on independent rate.

Under the monetary policy, a special facility to help banks get more cash when they are squeezed for liquid funds, easing a pressure point for the banks that borrow from each other in times of crunch in the interbank funds market, is called the call money market.

Banks will be able to borrow from RBI through Marginal Standing Facility to bridge overnight liquidity gap at one percentage point above the repo rate.

RBI has also raised savings bank interest rate to 4 per cent keeping in view the growing disparity between the savings deposit rate and term deposit rate. A broadening of priority sector bank loans to include micro finance institution and increase in savings bank interest rate give the policy review the appearance of a mini reform package.

New Members: The MCCI extends a warm welcome to its following new members: Indian Overseas Bank Business: Banking Origin ITFS Pvt. Ltd. Business: IT Hardware & Software sales, Rental/leasing solutions, IT managed services, Data Centre & hosting Greta Investments Pvt. Ltd. Business :NBFC Portman India Pvt. Ltd. Business :Port Development & Management Consultancy J Cynergy Dental & Medical Business: Import/Export of dental products Monarch Scientific Works Business: Manufacturers of Lab equipment Ankeena Networks Pvt. Ltd. Business: Software services 17

Trade Fairs & Exhibitions: NATIONAL: Bangalore Sept 9-11, 2011

Sept. 9-11, 2011

INTERNATIONAL: Singapore Nov.22-25, 2011

Thailand Aug 31-Sept 3, Japan Sept 16-21,2011 Nov 16-18,2011 Great Britain Sept 27-29,2011 Mexico Oct 4-7,2011 Malaysia Nov 9-12, 2011 France Sept 20-11,2011 Spain Sept 22-29, 2011 China Nov. 1-5,2011 Nov.1-5,2011 Turkey Oct 13-16,2011

Agri Tech India 2011 - South India’s largest exhibition on Agriculture, Farm machinery, Equipment, Dairy & Agri Processing Technology Grain Tech India 2011 – International Exhibition on Grains, cereals, spices, oil seeds, products and technologies

CIA 2011 – Controls, Instrumentation & Automation, Laboratory & Analytica Exhibition and Conference Pack Print International - Packaging & Printing 2011 IGAS2011 Printing & Graphic Arts Show INCHEM TOKYO - Chemical & Process Engineering Interplast – Plastics & Rubber Plast Imagen - Plastics M-Plas – Plastics & Rubber Premier Vision – World’s Premier Fabric show ITMA 2011 - Textile Machinery Industrial Automation Show Energy Show – Energy Infrastructure & Service, Power Generation ALUEXPO – Aluminium Industry

3 months Extension for DEPB Scheme The Government of India has extended the period of DEPB Scheme by 3 months.

Thus, it will be available upto 30th September 2011 instead of 30th June 2011.

The Ministry of Finance has constituted an internal committee on duty drawback rates.

The Government has advised the exporters to shift to duty draw back from 1st October 2011.

The new EU visa Code has come into force from 5th April, 2011 The Ministry of External Affairs, Govt. of India has informed that the following new EU visa code has come into effect from 5th April, 2011.

“In relation to the travel documents, some new requirements have been established. It may kindly be noted that the validity of passports shall extend at least three months after the intended date of departure from the territory of the member States. The passports shall contain at least two blank pages and they shall have been issued within the previous ten years”.

18

ECONOMIC REVIEW

ECONOMIC REVIEW (As on June 12, 2011)

Section ECONOMY 4India's Industrial output growth slows down to 6.3% in April 4Gross Direct Tax collection rises by 37.4%, Net direct tax collection down 47.9% in Apr-May, 2011 4Food inflation rises to 9.01% for week ended May 28, 2011 416 FDI proposals worth Rs. 923.55 crore approved REPORT 4Global growth disparities, inflation risk: World Bank 4World food prices 'to stay high': FAO INTERNATIONAL 4U.S. Exports increased in April to historic high of $175.6 Billion 4Brazil raises interest rates 4th straight time to 11.75%, hints more to come 4UK manufacturing output drops sharply in April 2011

ECONOMY

India's Industrial output growth slows down to 6.3% in April India's industrial output, as measured

by Index of Industrial Production (IIP) rose 6.3 percent from a year earlier, according to official figures released by Central Statistical Organization (CSO). The IIP registered a 6.3 per cent growth in April as against 13.1 per cent recorded in the same month in the previous year, according to the new series with base year 2004-05. The data was the first of a new series with a different base year of 2004-05 having new components and weightings.

According to new series the IIP growth for March 2011 stands at 8.8 per cent year-over-year and the overall growth

for the fiscal year2011 (April-March) at 8.2 per cent.

On the other hand, as per the old series (base year 1993-94), the poor performance of the manufacturing and mining sectors pulled down the industrial output growth to 4.4 per cent as compared to 16.6 per cent in April last year. The growth figure for the month of April was also lower than an upwardly revised 7.8 percent growth in previous month. Finance Minister Mr. Pranab Mukherjee said, "The IIP growth figures are disturbing. [We] need to wait for longer term IIP growth to see the trend."

As per the new series, manufacturing growth in April stood at 6.9 per cent as against 14.4 per cent in April, 2010, while mining and electricity production growth was up by 2.2 per cent and 6.4 per cent as compared to 9.2 per cent

and 6.5 per cent respectively during the same period of the previous year. Both the old and new data series showed a slowdown in manufacturing, which contributes about 80 percent to overall industrial output.

As per the use-based classification of industries, low off take of capital goods was another area of concern, whose production growth was just 2.5 per cent in April, 2011 compared to 64.1 per cent in April last year. Similarly, consumer goods also saw the growth rate slowed down to 5.9 per cent in April from 11.9 per cent in the same month last year, as per old series.

On the other hand, as per the new series, Capital goods registered a growth of 14.5 per cent as against 35.5 per cent in April 2010. High inflation and rising interest rates also weighed on consumer goods production.

Overall consumer goods were up by 2.9 per cent in April compared to 13.8 per cent last year. Growth in production of consumer durable goods including cars slumped to 3.8 percent from almost 14 percent a month earlier as higher credit costs and fuel prices crimped demand.

The base year of IIP has been revised from 1993-04 to 200405. A representative item basket has been selected for the new 19

ECONOMIC REVIEW series of IIP. The new IIP basket contains 399 item groups as against 283 item groups in the old series. The new series also has a wider basket of goods with the manufactured items covered in the index going up from 281 to 410. The total number of individual items under the series has gone up to 682 from 538 earlier.

Production trends for 100 new items, including ice cream, fruit juice and mobile phones, has been included for measuring the pace of industrial production in the new index series. The new items in the IIP would include computer stationery, newspapers, chemicals such as ammonia and ammonia sulphate, electrical products such as solar power systems, gems and jewellery and molasses.

On the other hand, obsolete articles such as typewriters, loud speakers and VCRs have been taken off to make the series representative of the presentday industrial production and demand scenario.

Further, the weighing diagram has undergone change due to base revision. A new weighing diagram which better reflects the present structure and composition of the industry has been derived for the new series. In the new series, the respective weights of Mining, Manufacturing and Electricity sectors has been changed to 141.57 (104.73 in old series), 755.27 (793.58) and 103.16 (101.69).

Gross Direct Tax collection rises by 37.4%, Net direct tax collection down 47.9% in Apr-May, 2011 Gross direct tax collections during the first two months of the current financial year (April & May 2011) are up by 37.34 percent at Rs. 50,405 crore as against Rs. 36,702 crore in the same period during the last fiscal. Net direct tax collections were, however, down by 47.93 per cent, mainly on account of an increase of 216.74 percent in tax refunds by the Income Tax department, the Finance Ministry said in a statement.

The net direct tax collection was Rs. 12,954 crore as against Rs 24,878 crore in the April—May period of 2010—11. More than 40 lakh refunds have been issued in the current fiscal. The tax refund stood at Rs. 37,451 crore as against Rs. 11,824 crore during the same period last year. Last fiscal, a record 85 lakh refunds had been issued by the Income Tax department even while it met the revised estimates target of Rs. 4,46,000 crore.

The budget estimates for direct tax collections are fixed at Rs.5,32,651 crore for the current fiscal i.e. 2011-12.

Food inflation rises to 9.01% for week ended May 28, 2011 India's food inflation rate based on the Wholesale Price Index (WPI) stood at 9.01 per cent for

the week ended May 28, 2011 as compared to 20.62 per cent during the corresponding period of 2010. Food inflation for the previous reported week was recorded at 8.06 per cent on a year-on-year basis. The increase was mainly on account of higher prices of Tea, Pork and Maize.

Among the major groups, the index for ‘Primary Articles’ rose by 0.5 percent as compared to the previous week. Annual rate of inflation for this group was 11.52 per cent, up from last week's level of 10.87 per cent. It was 20.25 per cent for the corresponding week of the previous year.

The index for 'Food Articles' sub-group also increased by 0.6 per cent, due to higher prices of tea (19%), pork and maize (4%each), jowar (3%), fish-inland (2%). However, the prices of ragi and arhar (2%each), and condiments & spices, bajra and masur (1%each) declined.

The index for ‘Non-Food Articles’ sub-group also rose by 0.4 per cent owing to higher prices of flower (13%), linseed, rape & mustard seed and groundnut seed (2%each).

However, the prices of raw silk (9%), gingelly seed (5%), sunflower (3%), and copra (2%) declined.

On the other hand, index for another major category ‘fuel, power, light & lubricants’ remained unchanged at its previous week level. Also, the annual rate of inflation under this category for the week ended 20

ECONOMIC REVIEW May 28 stood at previous week level of 12.54 per cent.

Agenda on the request of the applicants.

16 FDI Proposals worth Rs. 923.55 Crore Approved

The proposal, which was recommended to the Cabinet Committee of Economic Affairs (CCEA), was of Cals Refineries Ltd (Delhi and Haryana) to issue equity shares in the form of GDRs against supply of refinery equipments. The proposal is likely to bring in FDI worth Rs 1,425 crore.

Based on the recommendations of Foreign Investment Promotion Board (FIPB) in its meeting held on May 20, 2011, the Central Government has approved 16 Proposals of Foreign Direct Investment (FDI) amounting to Rs. 923.55 crore approximately.

A total of 38 FDI proposals were taken up by the Foreign Investment Promotion Board (FIPB), but the Board deferred a decision on 14 applications, rejected 7 and recommended 1 for the CCEA, the Finance Ministry said in a statement.

The Board gave its approval to Soma Tollways Pvt Ltd (Andhra Pradesh) for induction of foreign equity in an investing company. The proposal is likely to bring in FDI worth Rs 500 crore. L&T Finance Holdings Ltd's application for permission for pre-IPO placement of equity shares with eligible non-resident investors was also approved by the FIPB among the others. The firm aims at FDI worth Rs 400 crore.

The proposals which were rejected include those of Reynders Label Printing India (Delhi and Haryana), Anuradha Holdings (Bangalore) and AOS Holding India SAS (France).

On the other hand, the PTC India Financial Services (Delhi, Haryana) and Tata Steel Ltd were withdrawn from the FIPB

REPORTS

Global growth disparities, inflation risk: World Bank World Bank has warned of global growth disparities and inflationary pressures to build up throughout this year and in the years to come. In its updated Global Economic Prospects report, while the World Bank has revised up its growth forecast for the developing world, it highlighted the risks of costlier food and fuel, possible further price spikes in oil and nagging post-crisis problems in advanced economies. Global growth could be hit by rising oil and food prices, the bank added.

The World Bank has revised up its forecast for growth in developing countries to 6.3 percent in 2011 versus 6.0 in a January report, and to 6.2 percent from 6.1 percent for 2012. The pace of growth in the world's developing countries should average 6.3 percent over the next three years through to 2013, which is down from 7.3 percent in 2010. It said it expected the global economy

to grow by 3.2% this year, with growth picking up to 3.6% in 2012.What the bank called "high income" countries would see growth slow to 2.2% this year from 2.7% in 2010, before rising to 2.7% again in 2012.

The majority of developing economies have, or are close to, full capacity activity levels while advanced economies still struggle with the effects of the global financial crisis, the World Bank said. Low and middle-income countries were responsible for 46 percent of global growth in 2010, the report noted.

"Developing countries are at a point where they have put the crisis-fighting stage behind them and they now need to be reorienting themselves towards establishing conditions that are going to allow them to have strong growth in the years to come," said World Bank economist Andrew Burns.

Developing countries need to hone in on difficult domestic policies that will ensure lasting, strong economic growth, he said. Countries may need to tighten both monetary and fiscal policy more quickly to curb inflationary pressures, Burns added.

Rising commodity prices have pushed headline inflation rates higher, which are close to, or have breached the upper limits of central banks' targeted bands in many countries, the report said. Food inflation exceeded 9 percent by February 2011 in developing countries, it added.

21

ECONOMIC REVIEW "Headline inflation (consumer price inflation) suggests that inflation will accelerate further in most developing regions," the World Bank said, noting that the biggest rise will be in South Asia, Africa and the Middle East.

The World Bank report warned that political turmoil and unrest in the Middle East and North Africa could derail global growth if oil prices rose sharply, which would reduce economic output by around 0.5 percentage points. The World Bank said a large and sustained drop in global oil supply due to the turmoil in the Middle East could push global oil prices as high as $200 a barrel.

The bank said higher global oil prices were a major factor behind the rise in world food prices, just three years after the last food price crisis in 2008.

More expensive oil feeds into food prices through the rise in fertilizer prices, transport costs to ferry food to markets, and through increased use of corn for biofuel production.

World food prices 'to stay high': FAO High and volatile agricultural commodity prices are likely to prevail for the rest of this year and into the next despite record food production, according to the latest analysis published on June 7 in FAO's biannual ‘Food Outlook’. The FAO (Food and Agriculture Organization) report cites a sharp rundown on inventories and only modest

overall production increases for the majority of crops as reasons for continuing strong prices.

The organization also said that the next few months will be critical in determining how major crops will fare this year.

Although prospects are encouraging in some countries such as the Russian Federation and Ukraine, the weather conditions, featuring too little and in some cases too much rain, could hamper maize and wheat yields in Europe and North America. "The general situation for agricultural crops and food commodities is tight with world prices at stubbornly high levels, posing a threat to many low income food deficit countries," according to David Hallam, Director of FAO's Markets and Trade Division.

The FAO said that higher food prices could mean poor countries will see food import costs rise by up to 30%.That would mean them spending 18% of their total import bills on food this year, compared with the world average of 7%.

The global food import bill is expected to reach a new record of $1.29 trillion in 2011 – almost 21 percent more than in 2010.

Global food prices, which earlier this year soared to levels seen in the 2007-08 food crisis, dropped a modest one percent in May. The FAO Food Price Index averaged 232 points in May from a revised estimate of 235 points in April but was still 37 percent above May 2010

levels. Declines in international prices of cereals and sugar were responsible for the slight decrease in the May index, more than offsetting increases in meat and dairy prices.

Current prospects for cereals in 2011 point to a record harvest of 2,315 million tonnes — a 3.5 percent increase over 2010, which marked a one percent drop over 2009. Global wheat output is expected to be 3.2 percent up from last year's reduced crop, mostly reflecting improved yields in the Russian Federation. World production of coarse grains is set to climb 3.9 percent, exceeding the record set in 2008. Most of the increase is expected from the Russian Federation and the other members of the Commonwealth of Independent States. But the FAO said that rising demand will absorb most of the higher output.

Although preliminary, world paddy production prospects are for a record harvest of 463.8 million tonnes - a two percent increase over last year on expectations of improved weather conditions. World cereals stocks at the close of the crop seasons in 2012 are put at 494 million tons, up only two percent from sharply reduced opening levels. Demand for cereals has also been increasing so that the 2011 crop, even at record levels, is expected to barely meet consumption, providing support to prices.

But the Russian Federation's announcement that it will remove its cereals export ban 22

ECONOMIC REVIEW from July 2011 could help relieve some of that pressure.

In the oilseeds market, supplies in 2011-12 may not be sufficient to meet growing oil and meal demand, implying further reductions in global inventories. By contrast, the global supply and demand balance for sugar points to some improvements, supported by large anticipated production in 2010-11, which is likely to surpass consumption for the first time since 2007-08.

Regarding meat, high feed prices, disease outbreaks and depleted animal inventories were forecast to limit the expansion of global meat production to 294 million tons in 2011 — only one percent more than 2010. The international meat price index hit a new record at 183 points in May 2011 and a combination of strong import demand and limited export availability pointed to a further firming of prices in the next few months. Following two consecutive years of low prices, fish markets have rebounded this year. Production in 2011 is heading to a record but prices are likely to be supported by strong demand from the developing countries.

INTERNATIONAL

U.S. Exports Increased in April to Historic High of $175.6 Billion Exports of US goods and services rose to a record $175.6

billion in April, helping to shrink its trade deficit by 6.7%, according to data released by the Bureau of Economic Analysis (BEA) of the U.S. Commerce Department. The Commerce Department report said that exports of goods increased $2.0 billion to $126.4 billion and services increased $0.2 billion to $49.1 billion, while total imports were $219.2 billion, resulting in a trade deficit of $43.7 billion in April, the lowest since December. The deficit in March was also revised down to $46.8 billion from $48.2 billion.

A fall in imports also helped narrow this gap. Exports rose 1.3%, while imports dipped 0.4% in April. However, the trade gap so far this year is still 10% higher than last year. The department said the Marchto-April increase in exports of goods reflected greater sales of industrial supplies and materials, capital goods and consumer goods. The decline in imports was caused, in part, by a decrease in automotive parts, vehicles and industrial supplies and materials, the department said. In recent months, a weaker dollar has also made goods from the United States less expensive overseas, while exports have also climbed in price as demand rose in developing countries.

The data was the first to reflect the impact of the supply chain disruptions from the natural disasters in Japan, as well as the impact of commodity prices in April. The trade deficit with Japan shrunk to $3.5 billion

in April from $6 billion in the previous month as the Imports from Japan dropped by $3 billion. The data also showed that the United States trade deficit with China continued to widen, to $21.6 billion in April from $18 billion in March, but still below January’s $23 billion.

The trade deficit with China was $273 billion in 2010.

Brazil raises interest rates 4th straight time to 11.75%, hints more to come Brazil's central bank has raised its key interest (‘SELIC’) rate to 11.75% in a bid to contain persistent inflation, and indicated more rate increases could be on the way soon. The increase, from 11.25%, is the second half-point increase since the start of the year and also it put the base rate at the highest in the G20 group of developed and emerging economies. The increase was expected as the Inflation in one of the world's fastest-growing economies was 5.91% last year and is forecast to remain above 5% in 2011, well above the government target of 4.5%.

The rate rise came on the same day as news of a modest rebound in Brazilian industrial production, which increased by 0.2% in January from the previous month. This was far better than the consensus forecast of a 0.7% decline and came after a 0.8% month-onmonth decline in December.

In a statement that was nearly identical to that of its April rate hike, the bank said it had 23

ECONOMIC REVIEW weighed risks to inflation and the still uncertain signs as to what extent Brazil's economic boom is slowing. The bank said that, as a result, it believed that the "most adequate strategy" to bring inflation back down to the center of its target range next year was tight monetary policy "for a sufficiently prolonged period."

Central Bank President Alexandre Tombini has said the bank's policymakers are committed to ending the year with inflation as close as possible to the government target of 4.5 percent, plus or minus two percentage points. Brazil's new president, Dilma Rousseff, a trained economist herself, vowed on Tuesday she would not let inflation run out of control.

She has ordered $30 billion cut downs to public spending. The country has traumatic memories of hyperinflation in the 1980s and 1990s that at one point reached 2,000 percent a year.

Brazil's government said it expects the economy to cool to a more-manageable 4.5%5% this year, after shooting up an estimated 7.5% last year that strained its saturated infrastructure beyond capacity.

Strong inflation puts Brazil among a group of powerhouse emerging markets, such as China and India that are raising interest rates to try to control the price pressures that come with brisk growth.

Although the rate rise may help to curb inflation, it risks sucking in foreign money, increasing upward pressure on the already

overvalued Brazilian real.

Brazil's manufacturing sector, is complaining loudly about the successive rate hikes, which are pushing up the value of the real, making exports less competitive, and increasing their costs.

On the other hand, the economists believe that "the rise of the interest rate in relation to other countries in the world attracts capital that won't go to direct investment but rather to fixed-income funds with big returns, and the stock market, and that will have short-term effects on the exchange rate�.

UK manufacturing output drops sharply in April 2011 UK Manufacturing output dropped at its fastest pace for almost two and a half years in April, official figures show, raising fears that Britain’s fragile economic recovery is petering out. Analysts had expected to see a slowdown during the month, as the production affected due to the royal wedding bank holiday and the knock-on effects of industrial shut-downs in Japan, the Office for National Statistics highlighted these factors.

Manufacturing output fell by 1.5% between March and April, the Office for National Statistics (ONS) said. But the 1.5% decline in manufacturing output over the month was much worse than City forecasts. The ONS compared the month with June 2002, the month of the Queen's Golden Jubilee, when manufacturing

fell 5.4%. Manufacturing output was up 1.3% in April last year.

The ONS said April 2011 was an "unusual" month for a number of reasons, namely the special bank holiday created for the royal wedding, the royal wedding itself and the effects of the Japanese tsunami. It said it had also heard from a number of car manufacturers who said that "the after-effects of the tsunami in Japan reduced production levels in April 2011, due to a lack of parts".

The ONS also said that the warm weather had an impact on the energy sector. April 2011 was the warmest April on record, and reduced demand led to electricity supply output falling 4.3% from March and gas supply output falling 11.2% on the month. The wider index of production, which includes sectors such as mining and energy supply, fell 1.7% on the month and 1.2% on the year. ( Source : Assocham)

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