Here is the digest of important newspaper articles and quiz!
Proposal for divestment: NITI Aayog
The Cabinet Committee on Economic Affairs had in February, 2016 directed the Aayog to identify PSUs that the Department could take up for strategic disinvestment and also suggest norms for doing so. In the past strategic disinvestment would start with the recommendation of the Disinvestment Commission. In a major departure, in the approved process the NITI Aayog would perform the role of erstwhile Disinvestment Commission. In fact, the role of NITI Aayog is larger as it would also identify CPSEs for strategic disinvestment and suggest methods for valuation of the CPSE apart from advising the Government on mode and percentage of shares to be sold in a CPSE.
Accordingly Niti Aayog has submitted two sets of recommendations to the Centre for strategic disinvestment of State-owned companies.
The first set is a list of of recommendations on each of the sick and loss-making government-owned companies. There are about 74 such companies in all. Of these, for about 25 companies in which revival plans were attempted but had failed, it has suggested closure, after which their assets, especially land holdings, could be disposed off and employees be offered voluntary retirement. In the remaining cases, either mergers with other public sector units or strategic disinvestment is recommended. In some companies, the Aayog preferred to let revival plans run their course, before taking a call on their future.
The second set of suggestions from the Aayog, the source said, is a separate list of 15 PSUs in which it has recommended strategic disinvestment on priority. This list has been submitted to the Department of Investment and Public Asset management in the Finance Ministry.
Facts for Prelims
What is Department of investment and Public Asset Management (DIPAM)? – The Department of Disinvestment was set up as a separate Department on 10th December, 1999 and was later renamed as Ministry of Disinvestment from 6th September, 2001.
From 27 May 2004, the Department of Disinvestment was one of the Departments under the Ministry of Finance.
The Department of Disinvestment has been renamed as Department of investment and Public Asset Management (DIPAM) from 14th April, 2016.
Draft National Solar Wind Hybrid Policy
The Draft National Solar Wind Hybrid Policy has been launched with the aim to promote a large grid connected wind-solar PV system for optimal and efficient utilisation of transmission infrastructure and land.
The goal of the policy is to reach wind-solar hybrid capacity of 10 GW by 2022, adding that the “policy aims to encourage new technologies, methods and way-outs involving combined operation of wind and solar PV plants.
Studies have revealed that solar and winds are almost complementary to each other and hybdridation of two technologies would help in minimising the variability apart from optimally utilising the infrastructure, including land and transmission system.
Superimposition of wind and solar resource maps show that there are large areas where both wind and solar have high to moderate potential. The existing wind farms have scope of adding solar PV capacity and similarly there may be wind potential in the vicinity of existing solar PV plant.
Under the category of wind-solar hybrid power plants, wind and solar PV systems will be configured to operate at the same point of grid connection.
What is the benefit of the hybrid capacity? – Given that critical infrastructure such as land and evacuation network for wind or solar project accounts for about 10-12 per cent of overall project cost, hybrid projects would benefit from a reduction in capital cost to some extent due to common infrastructure and land use in place, he said.
Further, the variability in generation profile is likely to be reduced to some extent by the hybridisation of wind and solar projects at same site, given that generation from both the sources.
However the project economics for such projects (whether for new or hybridisation of existing wind & solar plants) would be critically dependent upon the tariff level which may be either feed-in tariff based or competitively bid based, as is proposed in the policy.
The draft policy is not clear about the financial incentives for hybrid systems and merely refers to the existing incentives for solar and wind projects.
Source: TheHindu, Business Standard, Economic Times
Parliamentary Secretary and separation of powers
The issue of appointment of Parliamentary secretaries appointed by the Delhi government has brought the debate of separation of powers to the forefront. The idea is that no particular organ of state namely Legilature, Executive, Judiciary should have a concentration of powers. Different institutions act as a check on the actions of others.
In particular, Parliament and State legislatures have the important duty of monitoring the actions of the government and holding it to account. The Supreme Court of India has recognised separation of powers as part of the basic structure of the Constitution, and can therefore strike down even amendments to the Constitution that infringe upon this principle.
What is office of profit? – The concept of office of profit finds place in Articles 102 and 191 of the Constitution, which state that an MP or MLA will be disqualified if he or she occupies such an office. The idea is that every legislator should be able to carry out legislative duties without any obligation to the government of the day. As Ministers have to be members of the legislature, they are exempt from this disqualification. The Constitution also recognises that there may be other cases where exceptions may be required and allows Parliament and State legislatures to make exemptions by passing a law.
What are the conditions for office of profit? – A person is considered to hold an office of profit if four conditions are met: (a) he holds an office, (b) the office is one of profit, that is, it carries some benefits, (c) the office is under the control of the Central or the State government (d) the office is not that of a Minister or exempted by an Act of Parliament or State legislature.
What is the limitation on the size of council of minister? – The 91st amendment to the Constitution recognised the problem of the government trying to win over legislators by giving them ministerial berths. It limited the number of ministers, including the Chief Minister, to 15 per cent of the strength of the Lok Sabha or State Legislative Assemblies. For Delhi, Article 239AA of the Constitution limits the number to 10 per cent of the strength of the Legislative Assembly (which is seven persons).
The appointment of 21 parliamentary secretaries raises the strength to 40% of the strength of the legislative assembly. The question is whether this action is changing the nature of the Legislative Assembly.
Whether such an Assembly will still be able to exercise its oversight role over the government. An argument has been made that these parliamentary secretaries will be able to aid the government in being more responsive to citizens’ needs. That argument, however, misses the point of separation of powers. The role of legislators is not to help the government do its job better, but to ensure that it functions in a proper manner. That is, the legislator exercises the role of a watchdog over the government on behalf of citizens and not as an agent of the government.
What are other amendments that have eroded the oversight power of legislature? – The anti-defection law and MPLADS/MLALADS (local area development schemes), also weaken the separation of the legislative arm from the executive. The anti-defection law was enacted in 1985 through the 52nd amendment to the Constitution. This requires all legislators to abide by the party diktat on every vote in the legislature.
In 1993, the Central government started MPLADS, through which legislators can earmark a certain amount of public funds for projects in their constituency. The concept has been adopted by many states as MLALADS. The argument was that elected MPs and MLAs know the needs of their electorate well and can be effective in allocation of resources. This again subverts the role of legislators. Their role is to allocate the entire Central and State budgets, and to monitor the spending. They are expected to use their knowledge of ground-level issues in this allocation, and see that the funds are spent properly. By providing each of them a specific amount to spend on projects, their oversight role is weakened.
Source: TheHindu Editorial
Widening of Tax net
At the Rajasva Gyan Sangam of tax administrators Prime Minister Narendra Modi has given a target to tax officials for widening India’s tax net to at least 10 crore taxpayers. Mr. Modi stressed that facilitation should be the core of the tax ecosystem and the fear of the law rather than the law enforcer should be the maxim on which tax administrators should work
India-Bangladesh Waterway Transit
The India-Bangladesh waterways transit, carrying goods from Kolkata, was inaugurated in Dhaka.
The vessel carrying Indian goods consigned for Tripura marked the official transit to India’s north-east via the inland waterways of Bangladesh. India will be investing in creating infrastructure (Port, Road and Rail) in Ashuganj and Akhaura, Bangladesh, to facilitate the smooth movement of goods.
The opening is part of the Indo-Bangladesh Protocol on Inland Water Transit and Trade signed by the Prime Ministers of the two nations in 2015. The transit would reduce the transportation cost substantially to carry goods from rest of India to country’s north-east as the distance reduces from about 1,700 km via Siliguri in north Bengal to about 500 km via Bangladesh.
What is the Indo-Bangladesh Protocol on Inland Water Transit and Trade? – India and Bangladesh have a Bilateral Protocol on Inland Water Transit and Trade (PIWTT) for operation of inland vessels on the river protocol routes between river ports of Haldia, Kolkata, Pandu, Karimganj and Silghat in India and Narayanganj, Khulna, Mongla, Sirajganj and Ashuganj in Bangladesh. This protocol between the two countries has facilitated the movement of EXIM trade as well as cargo bound for the North Eastern states of India.
What are the Advantages of the Agreement?
1) The opening of coastal shipping between India and Bangladesh would enable the movement of cargo to the North East through coastal shipping upto Chittagong and thereafter by road/inland waterways.
2) The deep draft ports on the eastern coast of India can be ‘hub ports’ for the onward transportation of cargo to Bangladesh via the coastal mode through RSV category of vessels.
3) The Indian ports will attract enhanced cargo and also the overall transportation cost to Bangladesh will get reduced.
4) The Indian ports serving as trans- shipment ports for Bangladesh cargo will derive benefits by way of enhanced throughput as a result of Indo-Bangladesh coastal trade.
Source: TheHindu, PIB
Hybrid Model for airport fee
As per the civil aviation policy, hybrid model has been proposed to be implemented for future tariffs at all airports. This could result in raising airport charges for airlines instead of bringing them down as per the policy’s stated objective.
The higher costs could kick in soon at 13 major airports including Chennai and Kolkata. The hybrid-till model, under which 30 per cent of airport operator’s non-aeronautical revenues would be used to subsidise airport costs, is in contrast with stance taken by the Airports Economic Regulatory Authority (AERA), a tariff regulator set up by an Act of Parliament in 2009 for major airports across the country. AERA has adopted the single-till model for determining aeronautical tariffs that can be set by airports, wherein passengers and airlines are charged less.
At present, private airports in Delhi and Mumbai operate under the hybrid-till model sharing 30 per cent of its non-aeronautical revenues to subsidise aeronautical costs. Now, major Airports Authority of India (AAI) airports will also have to follow the hybrid-till model when their tariffs are to be determined by the regulator.
What is the single till and hybrid model? – In the single-till model, both aeronautical and non-aeronautical charges are taken into account to calculate the airport charges. In the double-till model, aeronautical charges are calculated on the basis of revenues from aeronautical and non-aeronautical charges on the basis of collections from non-aeronautical.
In the Hybrid model, the charges are calculated by taking all the aeronautical and 30 per cent of the non-aeronautical revenue into account. Charges at the Delhi and Mumbai airports are calculated on the basis of hybrid model. Delhi and Mumbai airports were bid out to private parties on the condition that they will follow hybrid model.
What is the benefit of hybrid till model? – Airlines prefer a single-till model as it reduces their charges and passenger fees. The move to switch to hybrid-till may revive private developer interest in running airports as the model increases their revenue.
However there is criticism that AERA (Airports Economic Regulatory Authority of India) is who should determine what sort of till should be used. Putting it into law and regulation through the civil aviation policy is the wrong approach.
Source: TheHindu, Business Standard
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