(IGP) GS Paper 1 - Economic & Social Development - "Economic Updates"

Subject - Economic and Social Development
Chapter - Economy Updates

Measures taken by the Indian Government to tackle Black Money

The Government has taken following step to deal with problem of Black Money under a five pronged strategy in 2009-11:

1. Creating an appropriate legislative framework.

• Started renegotiation with 75 countries (initially we started with 65 existing DTAA countries in August, 2009 and this number has now increased to 75 as on date) to broaden the Scope of Article concerning Exchange of Information to allow for Exchange of Banking Information and negotiation of DTAA and Tax Information Exchange Agreement (TIEA) with new countries.
• Proposed GAAR in DTC( General Anti-Avoidance Rules say that for the investors, a tax treaty would not have preferential status over the Indian domestic law when, the GAAR provisions are invoked. The GAAR provisions are discretionary, have far reaching implications and give the Indian Tax Authorities very broad powers).

2. Setting up institution to deal with illicit funds:

• 8 more Income Tax Overseas Units are being set up (In addition to existing two overseas units).
• Computerized Exchange of Information unit (EOI Unit) is set up.
• Directorate of criminal investigations is notified and is being set up.

3. Developing systems for implementation: New policy for deployment of manpower to Directorate of Transfer Pricing and International Taxation is implemented.

4. Imparting skills to the manpower for effective action: 51 officers were imparted specialized training abroad in field of International Taxation and Transfer Pricing in F.Y. 2010-11.

5. Joining the Global crusade against Black Money:

• Issues of tax evasion and Exchange of Information have been incorporated in G 20 communiqué due to effort India in the recent ministerial meetings in Korea and France.
• India is playing a key role in Global Forum on Transfer Pricing and Exchange of Information for tax purpose as Vice Chairman of Peer Review Group.
• Joined FATF, Task Force on financial integrity and Economic Development and Eurasian Group.

Supreme Court Special Investigation Team on Black Money

The Supreme Court of India on 5 July 2011 appointed SIT (Special Investigation Team), a committee of two of its retired judges to follow the trail of black money stashed in foreign banks. It also asked the government to reveal the names of those who have accounts in foreign banks and against whom inquiries have been started. SIT Comprised Justice Jeevan Reddy and Justice MB Shah.

Tax Information Exchange Agreement (TIE)

• The purpose of this Agreement is to promote international co-operation in tax matters through exchange of information. It was developed by the OECD Working Group.
• The lack of effective exchange of information is one of the key reasons for harmful tax practices. The TIE agreements are a legal instrument that could be used to establish effective exchange of information.
• Under the terms of the agreement, both nations are now required to exchange information when requested to help fight tax crime.
• Pilot projects for such direct such transfers will begin in seven places — Tamil Nadu, Assam, Maharashtra, Haryana, Delhi, Rajasthan and Orissa — from October, according to the schedule suggested by the Unique Identification Authority of India.

RBI’s new Norms for licences of new banks in the Private sector

The Reserve Bank of India released draft guidelines for licensing of new banks in the private sector. The Reserve Bank has sought views by the end of October 2011

Key features of the draft guidelines are:

• Eligible promoters: Entities in the domestic private sector having at least 10 years standing will be eligible. Those with significant (10 per cent or more) income or assets from real estate Construction and / or broking activities will not be eligible.
• Corporate structure: New banks will be set up only through a wholly owned Non-Operative Holding Company (NOHC) - -to be registered with the Reserve Bank as a non-banking finance company (NBFC) which will hold the bank as well as all the other financial companies in the promoter group.
• Minimum capital requirement: Minimum capital requirement will be Rs 500 crore. NOHC shall hold minimum 40 per cent of the paid-up capital of the bank for a period of five years from the date of licensing of the bank.
• Foreign shareholding will be limited by 49 per cent cap for the first 5 years.
• Corporate governance: At least 50 per cent of the directors of the NOHC should be independent directors.

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Holding company

• A holding company is a company or firm that owns other companies’ outstanding stock. It usually refers to a company which does not produce goods or services itself. Its purpose is to own shares of other companies. Examples are Sail, Tata Sons etc.
• A panel headed by RBI deputy governor Shyamala Gopinath suggested that the holding company norm should be pursued as a preferred model for the financial sector in India.

Shyamala Gopinath Committee’s recommendations

Committee on Small Savings headed by former RBI Deputy Governor Shyamala Gopinath on 7 June 2011 suggested raising interest rates on Post Office savings bank deposits to 4 per cent. The committee recommended linking returns on other small savings schemes with interest rates on government securities, It went on to suggest that Kisan Vikas Patra (KVP) be withdrawn and the annual investment limit for the popular Public Provident Fund (PPF) he raised to Rs. 1 lakh from Rs.70000 at present.

Chawla committee on Natural Resources

• The Committee on Allocation of Natural Resources (CANR) under the chairmanship of Shri Ashok Chawla submitted its report in May, 2011.
• The committee was appointed in January following a decision by the group of ministers on corruption.
• The committee looked at possible reforms in the allocation process for eight natural resources: coal, minerals, spectrum, petroleum, natural gas, land, water and forests.

The major recommendations of the Committee are:

urgent need to have a comprehensive national legislation on water. This can be either done through bringing water under the Concurrent List and then framing the appropriate legislation; or, by obtaining consensus from a majority of the States that such a “framework law” is necessary and desirable as a Union enactment. The national legislation should clarify a common position on a number of issues : water as a common property resource; principles of allocations and pricing and so on etc.

India and EU : Interim Settlement on Generic Drugs

India and the European Union finalised an interim settlement to make sure that Made in India Consignments of generic medicines will not be detained while transiting through Europe. India had moved the WTO after consignments of generic medicines shipped to Latin America were seized by European customs authorities on charges of intellectual property rights violations. About 1 7 detentions took place between October-December 2008 at Amsterdam. As per the bilateral understanding between India and EU. EU would not only stop such detentions but also amend its regulation under which its member countries acted like this.

Land Acquisitions, Rehabilitation & Resettlement Bill, 2011

The Land Acquisition, Rehabilitation and Resettlement Bill, 2011

The Land Acquisition, Rehabilitation and Resettlement Bill, 2011 was introduced in Lok Sabha. Salient features are:

• The Bill proposes a unified legislation for acquisition of land and adequate rehabilitation and replaces the Land Acquisition Act, 1894.

• Land Acquisition refers to the forcible acquisition of land from an unwilling seller and is distinct from a land purchase from a willing seller.

• The provisions of this Bill shall not apply to 16 existing legislations that provide for land acquisition. These include The Atomic Energy Act, 1962, The National Highways Act, 1956, SEZ Act, 2005, Land Acquisition (Mines) Act, 1885, The Railways Act, 1989.

• The Bill proposes that private companies shall provide for rehabilitation and resettlement if they acquire land equal to or more than 100 acres in rural areas and 50 acres in urban areas.

• Compensation is four times market value in rural area and 2 times in urban areas

Saakshar Bharat

• It is a centrally sponsored scheme of Department of School Education and Literacy (DSEL), was launched by the Prime Minister on the International Literacy Day, September 8, 2009.

• Saakshar Bharat Programme (SBP) aims to further promote and strengthen Adult education. It aims at covering those who missed the Opportunity of formal education earlier and now feel a need for learning of any type, including basic literacy, basic education (equivalency to formal education), vocational education (skill development), physical and emotional development, practical arts, applied science, sports and recreation.

• By 2012, the Saakshar Bharat Programme will cover 70 million non-literate adults (60 million of them, women) in - 15 plus age group in 365 low female literacy districts. This would redress the gender, social and regional disparities in literacy.

• The Programmes main focus group would be Women and adolescents from Socio- economically disadvantaged sections like the SCs, STs, Minorities and other disadvantaged sections in rural areas of low female districts.

Intellectual Property Rights

The term Intellectual Property (IP) means creations of mind or the intellect. It needs to be protected as it has commercial applications. For example, a drug discovered, a poem written or a computer language etc. It could be in the form of Patents, Trademarks, Geographical Indications; Industrial Designs, Layout- Designs (Topographies) of Integrated Circuits, Plant Variety Protection and Copyright. The major features that distinguish it from other forms are their intangibility and non-exhaustion by consumption. IP is the foundation of knowledge-based economy. It pervades all sectors of economy and is increasingly becoming important for ensuring competitiveness of the enterprises. It brings revenues to the company and also makes its market standing much more credible which means that it can raise money from the market when it wants.

Copyright

Copyright is a legal term describing the economic rights given to creators of literary and artistic works, including the right to reproduce the work, to make copies, and to perform or display the work publicly. Copyrights offer essentially the only protection for music, films, novels, poems, architecture, and other works of cultural value. As artists and creators have developed new forms of expression, these categories have expanded to include them. Computer programs and sound recordings are flow protected.

WTO and Importance of IP

• Intellectual property rights were first included in the Uruguay Round negotiations of the General Agreement on Tariffs and Trade (GATT), 1986-1993, with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). TRIPS require signatories to make it easier for their citizens and others to obtain and enforce IP rights, although it does not deal with domain names as such.
• TRIPS member countries are aware that cost-effective means to secure, transfer, and enforce IP rights boost cultural development and standards of living, as well as promote public health and safety.

International Organisations & Treaties

A UN agency, namely, World Intellectual Property Organization (WIPO) based in Geneva administers treaties in the field of intellectual property. India is a member of WIPO. Department of Industrial Policy & Promotion is the nodal Department in the Government of India for all matters concerning WIPO. India is also member of 2 major treaties: Paris Convention for the Protection of Industrial Property (relating to patents, trademarks, designs, etc.) of 1883 and the Berne Convention for the Protection of Literary and Artistic Works (relating to copyright) of 1886.

Patent Cooperation Treaty (PCT)

The Patent Cooperation Treaty (PCT) is an international patent law treaty, concluded in 1970. It provides a unified procedure for filing patent applications to protect inventions in each of its Contracting States.

Copyright Amendment Bill 2011

The proposed amendment to the Copyright Act would mandate film producers sharing 50 per cent of music royalties with lyricists and composers. It would facilitate joint ownership of the copyright for both the producer and the director. Until now, the producers were the sole owners of the copyright.

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