Nov-2011-National

NATIONAL AFFAIRS

Companies Bill
On November 24, 2011, the Union Cabinet approved the Companies Bill, 2011, which aims to update corporate laws in the country and introduce modern concepts like mandatory CSR and class action suits.

Intended to replace the existing half-a-century-old Companies Act, the Bill has undergone several modifications in view of the Rs 14,000-crore Satyam accounting fraud.

Besides strengthening the provisions to check fraud, the Bill has introduced ideas like mandatory corporate social responsibility (CSR), class action suits and a fixed term for independent directors.

Among other things, it also proposes to tighten laws for raising money from the public. The Bill also seeks to prohibit any insider trading by company directors or key managerial personnel by treating such activities as a criminal offence.

Further, it has proposed that companies should earmark two per cent of their average profits of the preceding three years for CSR activities and make a disclosure to shareholders about the policy adopted in the process.

Pension Bill gets Cabinet nod
The Union Cabinet has given its approval for the Pension Fund Regulatory and Development Authority Bill, which seeks to establish an authority that will develop, promote and regulate old-age income security. The Bill doesn't mention the extent of foreign ownership to be allowed in Indian pension funds and in a central record-keeping agency. But in August 2011, the Finance Ministry had proposed to cap foreign investment in the pension sector at 26%, a suggestion accepted by a Parliamentary panel that was examining the Bill.

Allowing 26% foreign direct investment in pension management would help the government claim its economic liberalization is proceeding. The process, begun in 1991, has dramatically changed India by allowing formerly State-owned industries to flourish in private hands. But many restrictions remain in place in key sectors, including finance where restrictions on foreign ownership remain.

India also is eager to expand pension coverage to more of its 1.2 billion citizens and to create a market for longer-term debt that pension funds often like to hold.

Benefits from FDI in Retail
While allowing FDI in retail sector, the Union government put out a strong defence of its decision to allow up to 51 per cent foreign direct investment in multi-brand retail and up to 100 per cent in single-brand retail. The move, it said, would generate about 10 million jobs over three years and help farmers get more for their produce, while dampening the prices of products.

In its defence the government has claimed that 4 million jobs will be created in areas like sorting, packaging etc; another 4-5 million jobs will be created in logistics.

India lacks cold storage chains. At present there are only 5,386 standalone cold storages and 80% of these are used only for potatoes. Around 35-40% of perishable farm produce gets rotten in post-harvesting period. With allowance of 100% FDI in cold storage chains is expected to take care of the problem.

Farmers today get only up to one-third of what consumers pay in food-grains and realise just 12-15% of what consumers pay for vegetables and fruits. With the coming of organised retail sector the farmers will get better margins, according to the government.

Gender inequality problem of India
Close on the heels of the world population crossing the 7 billion-mark, the new Human Development Report of UNDP has revealed a major reason behind India’s growing numbers. While we are worrying about high total fertility rates (TFRs) of 2.6, new data points out that our adolescent fertility rates (AFR) are even more shocking at 86.3.

Adolescent fertility rate—defined as the number of births per 1,000 women aged 15 to 19—is among the highest for India in South Asia. Only Nepal and Afghanistan have higher rates at 103.4 and 118.7.

One of the main drivers of high gender inequality in India, which has the poorest (129th) Gender Inequality Index rank in South Asia (leaving aside Afghanistan which is poorer at 141), high adolescent fertility rate reflects that our child marriage prevention laws have simply not worked and our contraception prevalence rate remains poor at 54%. Even Sri Lanka has a higher contraception prevalence rate at 68%.

On gender equality, India lags far behind China which is ranked a handsome 35 in the world (lower the rank on GII, better the state of gender equality). In China adolescent fertility rate is just 8.4, while TFR is also low at 1.6.

Even on the other two major components that drive gender equality—women’s representation in national Parliament and the participation of age 25 years plus women in economic activities—India is far behind many even in South Asia. Nepal is the best in this category with 33.2% women in Parliament, while China and Pakistan have 21.3% and 21%, respectively—much better than India’s 10.7%.

As far as people who have attained secondary education are concerned, in India the percentage is 26.6 for women as against 50.4 for men—indicating a wide gap, which is also seen in labour force participation, where women make up 32.8% workforce as against 81.1% men.

India ranked 134th on UN Human Development Index
India is ranked 134th among the 187 countries assessed for their performance in three key areas of human development—education, health and income. The UNDP Global Human Development Index (HDI) 2011 places Norway, Australia and The Netherlands on top of the charts, while Congo, Niger and Burundi fare the worst in the annual rankings.

India’s place remains unchanged because the index includes 18 new countries this time as against just 169 in 2010, when India stood at rank 119. This year, though, India is placed behind all its partners in BRICS, where Russia is the leader at number 66, followed by Brazil at 84; China at 101 and South Africa at 123.

Within the South Asian Region, too, India is not in the lead, whereas Iran, at 88th position, fares at the top. Bhutan, Pakistan, Bangladesh, Nepal and Afghanistan are placed below India in HDI rankings and values.

On Gender Inequality Index (GII), India is ranked a poor 129th in the world. It is ahead of only Afghanistan in South Asia on an indicator which measures gender parity in education, reproductive health (maternal mortality and adolescent fertility rate) and representation of women in national Parliaments and participation of women aged above 25 years in the country’s labour force.

On the inequality adjusted indices for education and health, India fares poorly in BRICS nations and South Asia’s Sri Lanka and Bangladesh. It loses substantial HDI value—28.3 per cent—when internal inequalities in health, education and income are calculated.

Roadmap to boost ties with Maldives
During his visit to Male, on November 12, 2011, viewing the Indian Ocean region as part of India's “extended neighbourhood”, Prime Minister Manmohan Singh  spelt out initiatives spanning student scholarships, banking and finance credit lines worth $100 million, infrastructure projects and security and climate change cooperation in his address to People’s Majlis, the Maldivian Parliament.

Making clear India’s interests in this strategic chain of islands straddling key shipping and trade routes, Prime Minister Singh told People’s Majlis that “The President and I have signed a historic framework agreement on cooperation for development”.

The 70-odd members of Maldivian Parliament heard Singh in pin-drop silence as he outlined a powerful vision to integrate India and Maldives politically and economically.

With China also perusing aggressive diplomacy in the island nation, India's footprint in this archipelago has vital foreign policy dimensions.