News Wrap


There have been major reforms in business in India, since May 2014, ever since the Bharatiya Janata Party (BJP) led NDA government came to power. However, certain measures are attempted to being introduced, which will make it easier to do business in the country. The Insurance Laws (Amendment) Bill, 2008 proposes to increase the foreign investment limit, in the insurance sector to 49%, from the existing cap of 26%. The proposed higher limit will be composite investment cap that will include both foreign direct investment and portfolio investment. The joint venture will have to be owned and controlled by the Indian promoter.

The Factories (Amendment) Bill, 2014 and the Apprentices (Amendment) Bill, 2014 seek to amend laws that came into force in 1948 and 1961, respectively. They have flexibility in hiring and working hours. Just 7% of India’s labour force is in the organized sector. Amendments to the Factories Act focus on five proposed changes, viz improving workers’ safety, increasing the provision for over time, increasing the penalty for violations of the Act, relaxing the norms for women to work night shifts in some industry segments, and reducing the number of days an employee to work before becoming eligible for benefits such as paid leave.

India’s cabinet has cleared a proposal to allow 100% Foreign Direct Investment (FDI) in railway infrastructure, barring operations. Foreign firms would be allowed to create the railways network, and supplying trains for the bullet trains routes. The proposal will provide additional resources for the cash strapped railways that needs Rs 182 trillion to fund ongoing railway projects, Rs 5.6 trillion for modernization, and Rs 1 trillion for implementing safety measures. The foreign investment in creating rail infrastructure could potentially contribute an additional 1.5% to 2% to GDP (Gross Domestic Product). The railways have an operating ratio of 93.5%, which is a ratio of operating expenses as a percentage of revenue. The railways surplus over expenses fell to just Rs 602 crore in 2013-14 fiscal. Indian Railways is far from achieving the target of generating Rs 1 trillion in the 12th Five Year Plan, through Public-Private-Partnership for rail infrastructure projects.

The government’s move to allow 49% Foreign Direct Investment (FDI) in defence sector, from the current 26%, ensures the control of joint ventures remains in Indian hands. Expansion of the manufacturing eco system could boost manufacturing and jobs. The defence sector has strong inter-sectorial linkages with industries such as automotive, textiles, precision machine, heavy engineering, light engineering, medical equipment, earth moving, plastics, automotive components, machine tools, electronics, communication, power generation, ceramics and rubber. India’s cumulative defence budget (including both capital and revenue expenditure) has grown 32% during the fiscal years 2010-11 (Rs 1.55 lac crore) to 2013-14 (Rs 2.04 lac crore). The country ranks among the top ten countries in the world in terms of military expenditure. Nearly 70% of the defence requirements are met through imports, with only 30% being catered through domestic production.

The project monitoring group, under the cabinet secretariat has been instructed to follow up on time lines, set for provision of government clearances, to push timely decision making. The widened role of the Project Monitoring Group (PMG) is aimed to speed up and ease project approvals. The PMG is examining 28 projects, involving a total investment of Rs 20,830 crore, where either the earlier deadlines were never met, or additional issues had surfaced. The government has approved amendments to the constitutional provisions of the National Judicial Appointments Commission. The Judicial Amendments Bill proposes that no single member of the commission will be allowed a veto vote. Dissent will need the support of at least two members.

Dearth of Jobs in J and K
Jammu and Kashmir has an unemployment rate of 4.9%, more than twice that in neighbouring Punjab and Himachal Pradesh. Chronic unemployment in urban areas of J and K is 7.8% and 20% among females. Army recruitment from the border districts of J and K, slowed after militancy took hold in the 1990s. Former surrogate soldiers, used in the fight against militancy, are now part of the Territorial Army. Recruits from the younger generation are part of the J and K Light Infantry (JAKLI) Regiment. Apart from JKLI, people from the state are well represented in the Leh Scouts and the Dogra Regiment. In the para military forces, more than 5000 people were recruited in the last decade from J and K. The Border Security Force and the Central Reserve Police Force have also recruited some of those they used in Kashmir’s counter-insurgency operations.

Some of the recruits in the para military forces are serving in the left extremist Naxal hit belts in Central India, and even in the North-East. Unemployment is a real motivator. Those involved in militancy, protests or stone pelting are indexed, and cannot get passports, and government jobs. Even then J and K state police recruited 1837 youths at the end of the 2010 unrest, including 1114 from Srinagar City, many of whom were rock hurlers.

Ebola in West Africa
The virulent ebola outbreak in West Africa since March 2014, extending over Nigeria, Guinea, Sierra Leone and Liberia has infected hundreds of victims, who are shut away alone to die. The virus has claimed at least 2000 lives, and kills up to 90% of those infected. The epidemic shows no signs of slowing down despite heroic efforts by both Doctors without Borders (Medicine Sans Frontiers/MSF), and the World Health Organization. Ebola causes severe fever, headaches, sore throat and weakness, followed by diarrhoea, vomiting, stomach pain, and internal and external bleeding. The virus is transmitted by direct contact with bodily fluids, such as blood, urine or saliva. Though nobody is sure, it is thought to have been transmitted to humans by fruit bats, the bodily fluids of animals and infected bush meat. Victims’ bodies are so highly infectious that they need to be sealed immediately in bags, and buried in pits disinfected with chlorine. It is almost impossible to trace those who have come into contact with the disease, owing to the scale of the present outbreak.

Vol. 47, No. 15, Oct 19 - 25, 2014