NOVEMBER 18, 2014

By Naresh Minocha, Our Consulting Editor

"LOOK at the positives," a friend of mine in the BJP advised me. The advice came against the backdrop of this column's criticism over the Modi Government's delay in clearing UPA-spun web of regulatory hurdles in the path of economic growth and mass employment. Appreciating his advice, I told him that the Government is hardly sharing developmental news with the media.

And now the social media-savvy Government has given the biggest proof of its reluctance to disseminate positives to the public through the conventional media. Neither Prime Minister nor the Finance Minister tweeted the disclosure of 8-page 'India Employment Plan 2014' (IEP) and 35-page 'Comprehensive Growth Strategy: India' (CGS) at the G20 Leaders Summit in Brisbane.

The websites of respective administrative ministries and Press Information Bureau (PIB) have not yet uploaded these documents. These ought to be communicated effectively to millions of voters waiting for the dream jobs. Communication is important to reduce the prospects of analysts highlighting elements missing from the two documents. They delineate NDA Government agenda for inclusive and fast development. Entrepreneurs, workers, stock market and all other stakeholders have a right to know what the Government is doing to galvanize the economy.

In its eagerness to publicize Mr. Modi's interventions/speeches at the Summit and his pictures at different events, the Government also overlooked the need for sharing certain other vital G20 disclosures with the Indian public.

It, for instance, has not uploaded on its websites its anti-corruption measures disclosed as a 32-page reply to Accountability Report Questionnaire 2014. The questions were put by G20 Anti-corruption Working Group to all G20 members.

CGS contains a very few new initiatives and reiterates already disclosed ones, most of which figured in the Budget speech for 2014-15. IEP, on the other hand, is wanting in concrete initiatives. It appears as a shallow and half-hearted exercise when compared with the employment plan of certain other G20 countries such as Australia, New Zealand and Canada.

IEP says: "Employment generation is India's biggest challenge today. Despite an average economic growth of 8% in the last decade, the rate of employment growth was less than 1%. The participation rate too has declined despite additions to the young work age population."

It adds: "Employment Generation is our topmost priority. Government of India conceives quality employment as an important tool to promote faster, inclusive and sustainable growth. The policy response for employment generation comprises of a multi-pronged approach which includes public employment generation programmes as well as wider participation of private sector in employment generation."

The realty check gives a different and disappointing picture. IEP is completely silent about the plight of millions of workers including experts who are outsourced from manpower supplying companies. Outsourcing is the dominant channel for employment by the Centre, the States and their appendages. This can be confirmed by looking at countless tenders documents that seek supply of manpower for one year or so. The majority of emerging work-force of the country appears to be on contract if we factor in outsourcing by the private sector.

While outsourcing of low-skilled or unskilled manpower might be justified on grounds of expenditure savings, the annual outsourcing of secretarial staff even in sensitive Government offices is unjustified.

The least that is expected from Modi Government is announcement of regulations designed to improve the working conditions and remuneration of outsourced workers. Even one-line statement of intent on this count would have helped serve its resolve for "quality employment."

IEP's silence on mining and agro-forestry as big avenues of mass employment is equally deafening. Mining is also the key for revival of the manufacturing sector including power generation and for improving the economy's global competitiveness.

Compare IEP's mining sector black-out with articulation of mining by other G20 members as a pivot for jobs creation and economic growth.

Australia's Employment Plan, for instance, says: "Both the Carbon Tax and the Minerals Resource Rent Tax have been abolished, and a new Exploration Development Incentive will encourage resource exploration and support mining investment. This tax break will allow investors to deduct the expense of mining exploration from their taxable income, providing an incentive to undertake marginal exploration activity and boosting future investment in the resources sector in Australia."

Similarly, New Zealand's Employment Plan talks of "creating new economic opportunities through the development of natural resources." It has listed natural resources as one of the six key ingredients of business growth.

Turn now to Canada's Employment Plan. It says: "Exports of Canada's natural resources, developed in a responsible and sustainable manner, will support jobs and growth in Canada and abroad."

Mexico's Employment Plan has also underscored the importance of developing natural resources. Its "National Program to Democratize Productivity" focuses on efficient allocation of factors of production including "promoting an efficient use of natural resources."

To be fair to NDA, one must note that mining does find mention in CGS. It says that the mining and quarrying sector witnessed continuous decline in GDP share for several years. "This sector recorded negative growth (-1.4%) in 2013-14."

CGS says: "The current impasse in mining sector, including, iron ore mining, will be resolved expeditiously. Changes, if necessary, in the MMDR (Mines and Mineral Development and Regulation) Act, 1957 would be introduced to facilitate this."

Does it mean Supreme Court would withdraw its slew of orders on mining restrictions/ban in different parts of the country? Has it made submissions to the Court on this issue?

How can impasse end without ironing out the multiple legal hurdles created by the UPA to discourage mining of natural resources? Has the Government put in place a mechanism to deal with NGOs who instigate tribals to oppose mining projects and whose voice is the deciding factor?

As regards the intent to amend mining law, does it mean NDA has jettisoned MMDR Bill, 2011. The UPA did not introduce this radical bill in Parliament after its clearance by the Parliamentary Standing Committee in May 2013.

Ironically, the Government had denied in Lok Sabha on 21st July 2014 that it was contemplating to introduce certain regulatory reforms in mining sector.

Apart from mining, there are several issues mentioned in CGS that require clarity or elaboration.

Take the case of taxation. CGS says that the Government will initiate administrative and legislative changes for reduced taxation litigation.

It explains: "High level committee will be set up to interact with trade and industry on regular basis to ascertain areas requiring clarity in tax laws. Resident tax payers will be enabled to obtain on advance ruling in respect of their income-tax liability above a defined threshold. Authority for Advance Rulings will be strengthened by constituting additional benches and scope of Income-tax Settlement Commission will be enlarged so that taxpayers may approach the Commission for settlement of dispute."

CGS is however, silent over the wealth of recommendations made by Tax Administration Reform Commission (TARC) in its two reports. The proposed introduction of General Anti Avoidance Rules (GAAR), Direct Tax Code (DTC) law and Goods and Service Tax (GST) also finds no mention in CGS.

Clarity on these reforms including their timelines would have given credibility to CGS' claim that the Government would ensure "predictable and stable tax regime."

The economy also expects some elaboration on policy intentions. One of such intent reads as: "The government will put in place, in consultation of Central Bank, monetary policy framework to meet the challenge of an increasingly complex economy." Another says: "new urea policy would also be formulated."

CGS is thus loaded with intents contained in the budget speech that was delivered on 10th July 2014. It is now mid-November, the public expects some follow-up action on the budgetary initiatives.