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My Notes - 24 Nov 2015 24-11-2015

My Notes – Dr.Rambabu


24 November 2015



The Indian story in word and deed

  • India is also projected as a favorable destination for investments. India’s act east to increase investments from east Asia and south East Asia did not really show its results on the ground. So, taking forward the reforms and enactment of laws relating to GST are very crucial.
  • On the other side, Trans pacific partnership in which India is not a partner is diverting the attention of these countries away from India. Added to this, OECD has revised its global GDP outlook and warned the world for a dramatic global trade slowdown. So, India also need to focus on investments and consumption with in the nation.


Change in valley - Mk Narayan

  • Recently Prime Minister Modi offered a package of Rs80, 000cr to Kashmir. It is continuation of series of financial packages given to Kashmir from the days of UPA. It shows the attitude of Indian government to solve the alienation of the Kashmir through huge funds in the name of development.
  • It is creating an illusion and it is masking the growing radicalization of the youth happening in the country. Islamic State and its Salafist ideology is penetrating in the valley and Kashmir squarely falls in to its idea of Islamic state of Khorasan.


Notice of Assam rifles to the news papers in Nagaland

  • Editors of these newspapers were told that if they continue to publish the views of banned, terrorist elements such as NSCN(Khaplang) faction, they have to face the arrest and  prosecution under UAPA - 1967.
  • It reflects the problems faced by media in conflict zones with security agencies and extremist outfits. State is armed with law to force various types of censorship and militant groups use all forms of intimidation to publish their views. In this context, UAPA specifically has provisions to make press accountable in the interests of sovereignty and security of the nation. Added to this, government advts are used as tools to financially weaken the newspapers that are not falling in line.
  • These need to be seen as great hindrances to the freedom of press.

Food security act

  • States are not very active in taking forward the food security act 2013
  • Pre conditions to improve the PDS such as requirement of digitalizing, displaying list of beneficiaries, computerization of the targeted PDS, setting up of vigilance committees, door delivery of food grains, constitution of grievance redressal cells , building modern storage facilities etc are not fulfilled by many states.


Climate change
Global warming is believed to be the result of carbon emissions accumulated over 150 years. Mostly the industrial world was responsible for this. From 1990 onwards, china and India also become leading emitters of GHGs.

Polluter pays - common but differentiated responsibilities and respective capabilities

The UNFCCC , an outcome of Rio earth summit, first acknowledges the problem of climate change. Here, world was divided in to annex 1 and non annex countries. The 37 annex 1 countries has to take the emission cuts and the same do not apply for Non annex countries. Non annex countries were expected to take adaptation measures and shall move to a low carbon growth trajectory.

Kyoto protocol asked annex I countries to collectively reduce their GHG emissions by at least 5% below their 1990 levels by 2012. Countries were assigned individual goals to achieve this overall goal.

Later at Bali conference in 2007, it was unanimously agreed that annex 1 countries shall not only undertake emission cuts, but also provide finance and technology to the developing world. It was comprehensive and supposed to be finalized at Copenhagen.

In the meanwhile china became largest emitter of GHGs surpassing USA. Developed countries also want to bring in developing countries such as china, India, mexico, Brazil etc. in to the emission cut framework.


Durban conference - 2013 -Intended nationally determined contributions - Every country shall take demonstrable action, quantum and extent will be determined by the country itself. The implicit understanding is that developed countries would necessarily undertake emission cuts. But, the quantum of cuts will be self-determined.


Differences with kyoto protocol


Emission cuts - Kyoto

Durban INDC


Globally determined - all Annex 1 countries shall collectively reduce

GHG emissions by at least 5% below their 1990 levels by 2012.


Intended nationally determined contributions


Countries were given individual targets to meet above goal.

No defined targets for any country


Getting the climate story right

Date - June 12, 2015

  1. In the upcoming climate change talks, India shall reinforce its developmental needs along with pledging to bend the emission curve downwards.
  2. The issues related to climate change are mitigation, adaptation, technology transfer, finances
  3. In mitigation - after Kyoto protocol, global nations did not reach any binding agreements and finally self-determination of national contributions became an approach.
  4. Already, EU announced its intentions to reduce GHG emissions by 40% on 1990 levels by 2030.
  5. US is promising a 26-28% reductions on 2005 levels by 2025.
  6. China is not yet came on its contributions.
  7. In this context, India historically did not contribute to climate change and it shall have the right to use the available carbon space for its developmental needs, The percapita emission are 1/3 of global average and 1/6 th of emerging economies too. In this context, how India has to submit its list of contributions is a major challenge.
  8. At Copenhagen, India already made a commitment to reduce carbon intensity by 20-25% below 2005 levels by 2020. It can be raised to another 15% by 2030.
  9. Further, India should amplify its co benefit approach. That is, pursuing actions that achieve sustainable development while contributing to mitigation.
  10. Development of sector by sector specific assessment of co benefits.



An analysis

  1. Job markets are competitive and need parity - The private sector salaries are sky rocketing and maintaining parity is a necessity to attract best people in to services.
  2. Pay scales at the low levels are very high - It is true, but, the Government want to have low disparities in its ranks on salary figures. The ratio of minimum to maximum pay shall be in acceptable band. Sixth pay commission has recommended for a ratio 1:12.  The Government shall act as a model employer.
  3. It is burdensome to Government - In the first year of announcement, it may appear high. But, slowly economy absorbs the shock.  For example, the pay, allowances and pensions in central Government climbed from 1.9% of GDP in 01-02 to 2.3% in 09-10 after 6th pay commission recommendations. Slowly, it has come down to 1.8% of GDP. On the other side, the environment in the state is not very encouraging. 14 th finance commission estimated that, the share of pay, allowances, pensions in revenue expenditure of the state vary between 29% to 79%. In Centre it is just 13%. So, the commission recommends consultation with the states in drawing up the policy on Government wages.
  4. Downsizing - Government is increasing salaries without downsizing - actually, what is required in the Government is right sizing rather than downsizing. It mean, it shall recruit more teachers, doctors, engineers than the general administrators.
  5. Contrary to private sector, Public sector is increasing salaries without productivity- Thomas piketty , in his book capital in 21st century has clearly said, increase in salary in relation to productivity in private sector is a myth.  Performance linked incentives are turned down in companies like google, Accenture etc. The reason is it is acting counter to team spirit.
  6. The Government has to conduct audit on parameters such as cost effectiveness, timeliness, customer satisfaction to improve overall performance.

7th pay commission recommendations

  • 7th pay commission recommends for a revised pay matrix with a fitment factor of 2.57. It mean that, an employee’s salary will be 2.57 times of his basic pay and grade pay recommended by 6th pay commission.
  • Issues - pay commisison recommendations when taken forward led to the rise in retail inflation. On the good side, it will fuel the demand and consumption leading to higher growth rates.
  • Government has a fiscal deficit target of 3.5% for 2016-17 and an increased expenditure of 1.2lakh crore can divert the expenditure priorities of the Government away from infrastructure.
  • The impact of recommendations on the states will also be significant as many state governments implement the central pay commission recommendations.

On personnel front, it recommended for

  • Removal of financial edge for Indian administrative services vis-a-vis other all India services.

(The Edge: An edge is presently accorded to the Indian Administrative Service (IAS) and the Indian Foreign Service (IFS) at three promotion stages from Senior Time Scale (STS), to the Junior Administrative Grade (JAG) and the NFSG. It is to be extended to the Indian Police Service (IPS) and Indian Forest Service (IFoS).)


  • Abolition of the two year edge for Nonfunctional upgrade and empanelment in central staffing scheme for IAS.

(All India Service officers and Central Services Group A officers who have completed 17 years of service should be eligible for empanelment under the Central Staffing Scheme and there should not be “two year edge”, vis-à-vis the IAS.)


  • Raising retirement age for to a uniform 60 years for all personnel in Indian coast Guard and central armed police forces.


An analysis - Need for pay hike in India

  1. Setting pay in the government is in reference to the norms laid down by Indian labour conference in 1957.  According to it, the minimum wage should cover the basic needs of worker and his family with two kids. Over it 25% more to provide for skill factor. Others such as education, recreation, medical expenses, and festivities are over and above. Based on above 7th Pay commission has arrived at a basic pay of 18000rs for a government employee.
  2. It is well established factor that low salaries and poor amenities are one of the reasons for higher levels of corruption in, frequent revision of salaries to Government employees is necessary. The real impact of rise in salaries is not more than .4% of GDP.  Over a period of time, as size of Indian economy increases its impact is bound to decrease further.
  3. Pay, allowances and pensions as a proportion of GDP is actually decreasing in India due to downsizing.
  4. SPC reports the core of central government employees after excluding departmental undertakings comes to 4.18 lakh. If compared to USA where 668 employees exist for a lakh of population, India has only 139.










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