The Kelkar Committee - roadmap for fiscal consolidation

 the Kelkar Committee published a roadmap for fiscal consolidation.

• The report stresses the need and urgency to address India's fiscal deficit.
• A high fiscal deficit – the excess of government expenditure over receipts – can be problematic for many reasons.
• The fiscal deficit is financed by government borrowing;
•  increased borrowing can crowd out funds available for private investment. 
• High government spending can also lead to a rise in price levels. 
• Last year (2011-12), the central government posted a fiscal deficit of 5.8% (of GDP), significantly higher than the targeted 4.6%.  This is in stark contrast to five years ago in 2007-08, when after embarking on a path of fiscal consolidation the government's fiscal deficit had shrunk to a 30 year low of 2.5%.
• With growth slowing this year, the committee expects tax receipts to fall short of expectations significantly and expenditure to overshoot budget estimates, leaving the economy on the edge of a "fiscal precipice".
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Committee recommendations – expenditure

• To tackle the deficit on the expenditure side, the committee wants to ease the subsidy burden.
• The committee also recommends phasing out the subsidy on diesel and LPG by 2014-15. 
• For the fertiliser subsidy, the committee recommends implementing the Department of Fertilisers proposal of a 10% price increase on urea.

Committee recommendations – receipts

• Rising subsidies have not been matched by a significant increase in receipts through taxation: gross tax revenue as a percentage of GDP has remained around 10% of GDP 
• TThe committee seeks to improve collections in both direct and indirect taxes via better tax administration
• The committee feels that the pending Direct Tax Code Bill would result in significant losses and should be reviewed. 
• To boost income from indirect taxes – the tax on goods and services – the committee wants the proposed Goods and Service Tax regime to be implemented as soon as possible.
• Increasing disinvestment, the process of selling government stake in public enterprises, is another proposal to boost receipts.
• The committee believes introducing new channels  for disinvestment would ensure that disinvestment receipts would meet this year's target of Rs 30,000 crore.

Taken together, these policy changes, the committee believe would significantly improve India's fiscal health and boost growth. 

• .new channels
•  'call option model
•  This is a mechanism allowing  the government to offer for sale multiple securities over a period of time till disinvestment targets are achieved.  Investors would have the option to purchase securities at the cost of a premium. 
• 'exchange traded funds
•  which would comprise all listed securities of Central Public Sector Enterprises and would provide investors with the benefits of diversification, low cost access and flexibility

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Are we closer to a law on privacy?

• Group of Experts on Privacy, Chaired by Mr. A. P. Shah, submitted its Report to the Planning Commission.
•   The Expert Group was appointed to set out the principles that Indian privacy law should abide by
• India does not have a law that specifies safeguards to privacy.
• recent government initiatives, such as the UID, involve collection of personal information and storage in electronic form.  The absence of a law on privacy increases the risk to infringement of the fundamental right.
• Recommendations of the Expert Group on Privacy
• the new legislation on privacy should ensure that safeguards are technology neutral.  This means that the enactment should provide protections that are applicable to information, regardless of the manner in which it is stored: digital or physical form.
• should protect all types of privacy, such as bodily privacy (DNA and physical privacy); privacy against surveillance (unauthorised interception, audio and video surveillance); and data protection.
• The safeguards under the Bill should apply to both government and private sector entities.
• There should be an office of a 'Privacy Commissioner' at both the central and regional level.
• There should be Self-Regulating Organisations set up by the industry.
• The legislation should ensure that entities that collect and process data would be accountable for these processes and the use to which the data is put.
• the Supreme Court has held privacy to be a fundamental right, it is restricted to certain aspects of a person's life.
• hese aspects include the privacy of one's home, family, marriage, motherhood, procreation and child-rearing. 
• Risks to privacy
• Government departments collect data under various legislations.  For instance, under the Passport Act, 1967 and the Motor Vehicles Act, 1988 persons have to give details of their address, date of birth etc.  These enactments do not provide safeguards against access and use of the information by third parties. 
• recent government initiatives may increase the risk to infringement of privacy as personal information, previously only available in physical form, will now be available electronically. 
• Initiatives such as the National e-Governance Plan, introduced in 2006 and Aadhaar would require maintenance of information in electronic form. 
• Under the initiative, biometric details of the beneficiaries, such as retina scan and fingerprints, are collected and stored by the government.

Will the changes to the Contract Labour Act benefit workers?

Quotes:

the PRS Blog » Will the changes to the Contract Labour Act benefit workers?

• A change in the Contract Labour (Regulation and Abolition) Act, 1970 may be in the pipeline. 
• The proposal is to bring parity between permanent and contractual workers in wages and other benefits.
• The Contract Labour Act, 1970 regulates the employment of contract labour in establishments which employ 20 or more workmen.
• It excludes any establishment whose work is intermittent or casual in nature. 
• The appropriate government may require establishments to provide canteens, rest rooms and first aid facilities to contract labourers.
• The contractor shall be responsible for payment of wages to each worker employed by him.
• According to the Report of the National Commission on Enterprises in the Unorganised Sector (NCEUS), more than 90% of the workforce is part of the unorganised sector. 
• Contract labour is found in certain activities in the unorganized sector such as in
• stone quarrying, beedi rolling, rice shelling and brick kiln. 
• The Commission recommended some measures to protect the workers in the unorganized sector such as
• ensuring minimum conditions of work, minimum level of social security and improved credit flow to the non-agricultural sector.
• The Report of the Working Group on "Labour Laws and other Regulations" for the 12th Five Year Plan, also proposed that the 1970 Act should be amended.
•  The amendment should ensure that in case of contract labour performing work similar to that performed by permanent workers, they should be entitled to the same wage rates, holidays, hours of work and social security provisions.
• whenever a contract worker is engaged through a contractor, the contract agreement between the employer and the contractor should clearly indicate the wages and other benefits to be paid by the contractor.
• broad reforms in India's labour laws to allow for more flexibility in the labour market