Indian Buraeucracts To Get Fat Checques But ……
Indian economy has been one of the fastest growing economies in the world for last one decade or so. Its Gross Domestic Product (GDP) has been growing consistently over 7 percent. The India Central Government has finally decided to reward its 3.5 million strong civil servants by way of its Sixth Pay Commission recommending and increase of 30-40 percent salary hike.
But initial reactions to the recommendations are that of disappointment because in the words of Justice B.N. Srikrishna, chairman of the commission,
” I told the finance minister that my recommendations will displease everybody…… ”
But nobody – neither political parties nor employees’ unions have commented so far on the 658 page report.
It seems that the biggest beneficiaries will be those in the higher echelon of the bureaucratic hierarchy. The contentious issue about the report is that – it recommended pay hike but at the same time it wants the government to trim its workforce. It also recommended downsizing the service tiers from 35 at present to 20 tiers. It also recommends for introducing 5 pay bands to cover all ranks.
The civil servants are to get rank pay along with basic salary. For example, the highest ranked officer in India, the Cabinet Secretary will get a consolidated monthly salary of Rs. 90,000 besides allowances and perks. But still it is far too low than those CEOs in private companies. What is attractive though is the position, security and other related benefits that come along with a government official.
PS: I’ll follow-up this post with Salary hike in PVT. sector within next few days and make a comparison.
Free Trade Agreement Between EU And India Might Miss Deadline
The European Union (EU) and Indian government have been trying to come to a Free Trade Agreement for quite sometime now and it was to get formalized by the end of this year 2008. But what has been coming out of it has become a big frustrating experience for the Union Government.
The main contentious issues are still to be addressed properly and not only that, instead of problems being solved, they are mounting by the day. The negative list, non-tarrif barriers and other differences remain though time is running out. India wants its service industry to get more ground in the EU and the EU wants its products to have easy access to the vast Indian market.
A ministerial meeting is scheduled to be held next month between the two parties in order to sort out differences and exchange negative lists. But negative lists of both sides are growing by the day as more and more products and even allied industries are seeking protection in the negative lists. The EU has already handed over its negative list that might affect India’’s export of goods primarily based on petrochemical products, not to mention textiles, cosmetics, glassware, fertilizers and pharmaceuticals. Originally, India and the EU were supposed to keep 90 percent of the products under the agreement. But it seems that the figure will decrease to a great extent. The finalization of India’s negative list is still going on as more Indian companies or products are lobbying to get into the negative list to protect their business. It should be mentioned that, goods falling under the negative list would cost more due to high tarrifs.
According to a study by FICCI (Federation Of Indian Chambers Of Commerce and Industry), the Indo-EU trade could reach $572 billions by 2015 if the agreement is properly and timely implemented. Naturally, Kamal Nath, the Indian Commerce Minister is very disappointed with the slow pace of talks.
On the other hand, some experts feel that India should forget these kind of agreements and look for more pacts which would be integrated with India’s reform policies and thuse bore more fruits.
Credit Policy of RBI Retains Key Rates
The third quarter review of Indian Monetary policy released by the Reserve Bank of India recently revealed that RBI has decided to retain the key rates in a bid to maintain financial and price stability. Keeping in view of the domestic and international financial conditions, the RBI has decided to leave unchanged all key rates, including repo (7.75 percent), reverse repo (6 percent) and Cash Reserve Ration or CRR (7.5 percent). The stance of the policy is to contain inflation close to five percent while conditioning expectations I the range of 4 to 4.5 percent. The Gross Domestic Product (GDP) projection for the year 2007-08 also remains same at 8.5 percent. The flexibility to conduct overnight or longer term repo including the right to accept or reject tenders under the liquidity adjustment facility (LAF) wholly or partially is retained. The major highlights of the monetary policy include emphasis on credit for employment intensive sectors, reasonably positive prospects for industrial sector, favorable prospects for services etc
Tax Holiday For Industrial Park Developers
The Indian Finance Ministry has recently announced a ten year tax holiday for developers f industrial parks set up during April 1, 2006 to March 9, 2009. The incentive is primarily aimed at providing a boost to India’s industrial infrastructure. The Industrial Development Scheme 2008 notified by the Central Board of Direct Taxes (CBDT) held that the industrial park developers would be eligible for 100 percent tax deduction which would be provided for ten out of fifteen consecutive assessment years after the commencement of operation of such units. Under the scheme, an industrial park should have at least 30 units. To avail of the tax benefit, the industrial park would have to be owned by a single undertaking. The area allocated or to be allocated to industrial units would have to be at least 90 percent of the allocated area. Ministry sources clarified that such industrial parks developed operated or maintained during 2006-07 would have 2007-08 as tax assessment year.