News Wrap


The first schedule to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 has since January 2015 caused a surge in land compensation cost for highway upgradation and airport expansion projects. This has slowed the pace of infrastructure project execution. In view of the high payout for acquiring land, in the airports sector, state governments are now increasingly reluctant to part with land, and give it to the Airport Authority of India for expanding terminals and bays, at airports. Land cost in the highways sector was 10% of the total project cost about a decade ago. It is now more than 100% of the civil cost, in number of sections. According to government data, in two years, land acquisition costs for highway development, measured in terms of compensation paid for every hectare of land acquired, has increased from Rs 0.9 crore in FY 2014 to Rs 2.05 crore in FY 2016. The sharpest rise in land prices has occurred in Maharashtra, Punjab and Haryana. Apart from an increase in land prices, a dozen states levy a percentage of compensation, as administrative charges for acquisition of land for national highways. Cumulatively for 22 major states, the compensation paid for land acquisition projects has increased from Rs 9,027 crore in FY 2015 to over Rs 19,600 crore in FY 2017. All states are levying administrative cost or charges for acquisition for the NHAI project.

Banks and Indian Finance
The Indian government has majority stakes in 21 lending banks, with the opportunity to tap them when money is needed. While Indian lenders withstood the financial melt-down of 2007-08, they ill-advisedly backed lots of infrastructure projects, that faced difficulties in bureaucracy. With bad loans piling up, state-owned lenders, which account for around two-thirds of the sector, now have ‘stressed’ loans of 10.5 trillion rupees, about a fifth of their account books. The banks have been reluctant to acknowledge that money they have lent is unlikely to be repaid, as that would trigger a loss, which in turn depletes the money shareholders invest, that is a bank’s equity. The state-owned banks already have equity levels close to regulatory minimum, and do not have the capacity to extend new loans. With bank growth in slump, India’s GDP has declined to 5.7%, from 7% in 2016. Under a new plan, the ailing banks from 24 October 2017, will lend the government 1.35 trillion rupees ($21 billion), about a third of their combined market value. The union government is reinvesting this money in banks shares, thus ensuring they no longer need a bail out. The round about method of recapitalisation of the banking system has led to state owned banks’ share prices, soaring by well over 25%. The banks are being encouraged to use a new bankruptcy code to deal with indebted borrowers. Banks will have to raise 589 billion rupees themselves, perhaps by selling non-core assets, and receive a further 180 billion rupees from government coffers, left over from previous schemes. The money that the government will have to borrow, roughly 1% of GDP, will not be reflected in the deficit of the union finance ministry.

Presumption of Innocence
India’s Supreme Court bench of Justices Rohinton Nariman and Sanjay Kaul recently struck a firm blow in favour of personal freedom against the financial / economic police, regardless of the political complexion of the government in power. The apex court bench declared that the constitution was violated by Section 45(1) of the Prevention of Money Laundering Act (2002), which was against the judicial basic of a person being presumed innocent until proven guilty, and reversed the norm of grant of bail being the rule rather than expectation. The provisions of Section 45 have been struck down, as they violated both Article 14 (Right to Equality) and Article 21 (Right to Life and Liberty) of the constitution.

Trade Unions in Cambodia
Cambodia’s autocratic government is squeezing workers, ahead of a general election in 2018. The annual revenues ($5 billion) in Cambodia’s apparel industry is far less than those of Bangladesh and Vietnam. The country has a population of 16 million. The apparel industry employs around 700,000 people, and accounts for four-fifths of exports. The government kept monthly wages at $45, between 2007 and 2014. After angry textile workers took to the streets, monthly wages rose to $153 since then. In January 2018, the monthly wages increased to $170, but with rising living costs, labour groups calculate it should have been $224. The government fears losing apparel-makers to even cheaper destinations like Myanmar or Ethiopia. Prime minister Hun Sen, in power since 1985, has decided to squash dissent pre-emptively, by driving through new repressive laws, to stifle independent labour movement. Registering unions has become harder, and only those approved by the government, can represent their members, in the most important disputes. Labour cases would be handled by newly created labour courts, rather than special councils, as happened earlier. Unions and activists prefer councillors, even though government appointees as judges and prosecutors are regarded as less independent and more arbitrary.

Century After Balfour Declaration
The 67-word Balfour Declaration of October 1917 was vague, and offered a Jewish ‘homeland’, and not a state. On 02 November 2017, Benjamin Netanyahu, Israel’s prime minister attended a dinner to celebrate the documents’s centenary. Theresa May, the British prime minister was also present. In Jerusalem, the Knesset held a special session. The British Museum lent Israel the original letter to put on display. During the First World War, the Jews made up less than 10% of the population in Palestine. They lacked the resources or the strength to establish a state. By 1939, the Jewish community had organised itself, forming militias. When the UN voted in 1947 to partition Palestine, the Jews already had the trappings of their state. An ascendant Israeli right wants more settlements in the lands that Israel occupied in 1967, more restrictions on left-wing NGOs, more efforts to limit ‘liberal’ institutions like the courts and the media. The Islamist party Hamas that took control of Gaza in 2007, has started handling control over the territory’s border crossings, to the Palestinian authority, as part of reconciliation.

Vol. 50, No.31, Feb 4 - 10, 2017