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Narendra Modi's Eleventh (11th) week in Office Analysis


Narendra Modi's Eleventh (11th) week in Office Analysis


Work done in week 11 of Modi Government.

The eleventh week of Modi government was marked with important events and decisions. While India and Nepal looked forward to strengthening ties, India stuck to its stand at the World Trade Organization (WTO), signalling its determination to stick to what it feels is right, even as the market regulator Securities and Exchange Board of India (SEBI) was given more power.

Modi’s Nepal Visit

Prime Minister Narendra Modi made a historic visit to Nepal this week, the first of an Indian PM to Nepal after 17 years. The visit that lasted for two days is said to have won millions of hearts in Nepal. What was lauded the most was the speech that Modi made at the Parliament of Nepal.  It then comes as no wonder that the Nepalese people poured out in strong numbers to wave goodbye to Modi as he made his way to the airport.

Extending Help

In his speech, Modi urged political leaders in both India and Nepal to work together for greater and stronger economic and strategic cooperation.  As a way forward, the two countries have agreed to revisit the 1950 Treaty of Peace and Friendship and other bilateral agreements.

Toward Nepal’s infrastructural needs, Modi announced a soft loan of USD 1 billion. He also promised to speed up the finalisation of Project Development Agreement and Power Trade Agreement within a span of 45 days. With a view to link Nepal better with Uttar Pradesh and Uttarakhand, a decision was taken to build bridges over Mahakali river.

Modi also offered assistance to develop Janakpur, Baraha Chhetra and Lumbini, including linking Lumbini (the birthplace of Lord Buddha) with the Buddhist circuit of India.  Nepalese students can now avail more slots to study in Indian institutions. Both the countries also agreed to close the Mutual Legal Assistance Treaty (MLAT) as early as possible.  A decision to construct a petroleum pipeline from Raxaul in Bihar to Kathmandu has also been taken.

Nepal’s Reaction

Meanwhile, Nepal said it will try to resolve all the pending boundary issues with India and strengthen ties with its neighbour. Expressing satisfaction over the meeting, Prime Minister Sushil Koirala said the talks between him and Modi were held in an atmosphere of utmost warmth and cordiality. Leaders of the ruling Nepal government as well the Opposition expressed satisfaction over the meeting with Modi. Even the Maoists hailed the meetings with Modi and said that a new chapter has begun for Nepal-India ties.

Overall Impact

While everyone has been praising the visit, a news agency in China made a comment that a USD 1 billion sanction may not be enough to thaw the cold bilateral ties between both the countries.  China had grown closer to Nepal while India and Nepal were drifting away. However, people in India feel this successful visit by Modi will definitely help build the trust between India and Nepal.  

 Mining to get a New Lease of Life

Mining is an important activity that is expected to not only enhance the availability of resources like iron ore but also generate employment. The National Democratic Alliance (NDA) government has proposed a revival plan for mining.

Seven-Point Action Plan

Mining will now be done in a legal and transparent manner and the below mentioned seven points have been taken into consideration to ensure the same.  They are:

  • Drafting of transparent rules for approving mining leases

  • Extensive use of technology

  • Mines and Minerals Development and Regulation (MMDR) Act 1957 will be strictly enforced

  • To avoid pilferage, transportation of iron ore will be tracked using radio frequency identification (RFID) and global positing system (GPS)

  • A mining tendering system will be developed for enabling concession processes

  • Model rules will be framed to stop illegal mining

  • Forest and environment clearances will be expedited

What Triggered this Action-Plan?

There have been cases of illegal mining and a high-level panel had recently indicted the governments of Goa, Odisha and Jharkhand for serious violations of rules and regulations associated with mining.

This is, indeed, a step in the right direction for the mining industry and the mining and steel companies like the Steel Authority of India, Tata Steel have welcomed the move.

Government Plans to Give more Teeth to SEBI

A bill aiming to give Securities and Exchange Board of India (SEBI) more power was tabled in the Lok Sabha this week.

What is this Bill all about?

Named The Securities Laws (Amendment) Bill, 2014, the bill enables SEBI to put a stop to individuals or companies indulging in a particular market-related activity. It will also give SEBI the power to search premises, confiscate documents in the wake of violation of any market laws, and also recover dues from defaulters. It also allows SEBI access to call data records during insider trading investigations.

Where did the Bill Stem from?

While SEBI has been long been looking at empowering itself, what triggered this Bill was the financial scam caused by the West Bengal-based Saradha Group. The company, which was into chit funds (collective investment scheme), collapsed leaving 1.7 million depositors devastated. This led to an inter-ministerial group to look into plugging the regulatory loopholes.

What happens if this Bill becomes an Act?

If the Bill becomes and Act, the investors’ interest would be protected and would lead to an orderly development of the securities market.  

Insurance Bill runs into Rough Weather

The Insurance Amendment Bill that proposes to raise the foreign direct investment cap in insurance companies from 26 to 49 percent ran into rough weather with the Opposition sticking to their stands.

What does the Bill Intend to do?

The Bill intends to boost the confidence among foreign investors and also bring in funds into the cash-starved insurance sector.

What are the Roadblocks?

The passing of the Bill in the Lok Sabha was an easy task given the fact that NDA is in majority, but the case is not the same in Rajya Sabha, where the NDA is in minority.  This Bill was initially introduced by the United Progressive Alliance (UPA) government led by Congress. However, the Congress is now of the opinion that some changes have been introduced by the present government and they are not ready to pass the Bill till it has been thoroughly vetted by a Parliamentary Committee. This may take months and would not only derail the reform movement that has been initiated by the NDA but also send wrong signals to foreign investors. Other parties are opposed to the Bill stating that 49 percent cap would allow foreign companies to gain greater control over domestic savings.

Way Forward

The government is trying to talk the Opposition into allowing the passage of the Bill. It is asking the Opposition to either pass the Bill in its current form or to suggest changes or amendments. It has already asked the Congress government to come up with their suggestions. Meanwhile, the government is also trying to mobilise the support of few parties in the opposition like the AAIDMK with regard to the Insurance Bill.               

FDI in Rail, Defence Gets a Green Signal

Meanwhile, the Union Cabinet has cleared the FDI proposals in the defence and railway sectors. In defence, the investment cap has been raised from 26 percent to 49 percent, while in the railway sector, some projects have been allowed FDI of 100 percent.

India Determined on its Stand at WTO

India stuck to its ground on the Trade Facilitation Agreement (TFA) at the World Trade Organisation (WTO), causing the talks to derail and the WTO leaders to miss the deadline of July 31 deadline to wrap up the TFA.  

What is India’s stand?

India’s stand is that it will not adopt the TFA till it is given a permanent solution regarding its stockpile of food grains – an issue that is very critical to the nation’s food security programme.  India feels this is a priority not only for India but also for other poorer countries. The TFA contains provisions that will ensure faster and efficient procedures through effective cooperation between appropriate authorities.  In 2013, WTO members had deliberated on the TFA and it was supposed to be implemented by July 31, 2014, based on the consensus of all the members.  However, with India sticking to its stand, the TFA talks failed to come to a successful close.

Way Forward

India is very clear on its stand on TFA but is ready to suggest a way to break the impasse. It will all depend on how the developed countries react to it.

WBMN09.08.2014

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Last Updated on August 9, 2014, 9:15 am