Still slipping on oil | DRSC NELP-PSC / V Ramani

It is ironic that at a time when the prime minister is talking about making India an easier place to do business, one of his ministries is moving in exactly the opposite direction. The draft revenue-sharing contract (DRSC), which seeks to replace the New Exploration Licensing Policy production-sharing contract (NELP-PSC) regime for oil and gas exploration in India with a revenue-sharing model, reveals an attitude of extreme suspicion of the private investor. It also indicates that the government has learned nothing from the fiascos in this sector over the past decade. The committee headed by Vijay Kelkar, formed to prepare a road map for enhancing domestic oil and gas production, submitted its report to the government of India in January last year. Eight months after the new government came to power at the Centre, no action has been taken on the recommendations of the committee.

There are four areas in which the DRSC has, in a sense, moved in an investor-unfriendly direction, especially compared to the NELP-PSC format. Production of oil and gas is, by its very nature, an uncertain and risk-laden process, subject to reservoir behaviour. By penalising an investor for under-production, the government fails to recognise that many factors other than a force majeure could have an impact on production. As if this were not enough, the DRSC goes on to prescribe the creation of an escrow account into which all oil/ gas revenues will flow in the first instance, ostensibly to safeguard the revenue interests of the government. Any dispute on payments between the government and the investor will choke the flow of revenue to the latter, depriving it of the financial resources to carry on production.

Moreover, such an arrangement is likely to adversely affect confidence in lending funds to the investor, given the uncertainty of future payment schedules. The revenue-sharing model is not cost sensitive: this could lead to the failure to develop marginal fields since the extraction of royalty by the government, followed by revenue shares determined prior to the assessment of post-exploration oil/ gas prospects, could make the development of such fields unviable for the investor. Finally, the DRSC has done away with the contractual stability clause in the earlier NELP-PSC that gave confidence to the investor that tax and other fiscal terms would not be altered by the government to the disadvantage of the investor during the contract period.

Apart from imposing more onerous terms, as described above, the DRSC has also failed to address some of the concerns repeatedly raised by investors in recent years, especially in the wake of the Reliance and Cairn-Vedanta controversies. No effort seems to have been made to address vexatious contract management issues that have dogged almost every production-sharing contract signed in the past. The Kelkar Committee report had suggested measures to strengthen the Directorate General of Hydrocarbons (DGH) to enable it to fulfil its regulatory functions more competently. However, the DRSC retains the control of the ministry over decision-making processes, in spite of the fact that almost no company has managed to get clearances for work programmes, gas pricing or other contractual issues in a time-bound manner from the government.

It would seem that past practices will continue — the DGH will refer every matter to the government and there will be inordinate delays in decision-making. Even a simple matter like permitting exploration activities in a producing field area to better exploit its potential has been bogged down by bureaucratic red tape in the past. The same opacity in decision-making was also evident in the lack of a clear decision by the government when the investor, having made recent discoveries (as in Cairn’s Rajasthan block), requested an extension in the contract period to fully exploit the production potential of the field. The DRSC holds out little hope that such issues will be resolved in a timely, pragmatic manner. While the government of India has announced a price for the sale of natural gas, there is still no clarity on the move towards market-determined gas prices. Uncertainty regarding how administered gas prices may be tweaked by the government in the future could well affect investor sentiment.

Ultimately, no contract can hope to substitute for a competent, strong regulatory framework. The government needs to urgently build up the capabilities of the DGH to manage exploration and production contracts and put in place processes that enable companies to focus on their primary task of looking for oil rather than complying with unnecessary procedural formalities. The government appears to be focused on short-term revenue gains rather than the primary objective of enhancing oil and gas production in India, a classic case of killing the goose that lays golden eggs.

The writer, a retired IAS officer, was director (exploration contracts), ministry of petroleum and natural gas
express@expressindia.com

- See more at: http://indianexpress.com/article/opinion/columns/still-slipping-on-oil/99/#sthash.JpyhAyQs.dpuf

salient features of SC/ST sub-plan

In spite of the Constitutional safeguards and developmental planning launched, the SCs and STs are lagging behind the general population in various socio-economic indicators. So, the
Government took a shift from trickle down approach to direct targeting approach of development by mandating a planning process for the social, economic and educational development through SC/ST sub-plan.

Salient Features- 
(i) Envisage fund allocation and channelizing the flow of outlays and benefits both in physical and financial terms 
(ii) Ensuring socio-economic development through infrastructure development, educational activities, etc
(iii) Protection of STs against exploitation through legal and administrative support

Implementation issues-
(i) Inadequate allocation of funds as per the SC and ST population in the States, 
(ii) Non-utilization of even the allocated funds, 
(iii) Diversion of SCSP and TSP funds to other sectors at the end of the annual plan, 
(iv) Implementation and administrative bottlenecks 
(v) Improper delivery mechanism at the field level.

Measures to correct the inadequacies- 
(i) Earmarking the funds according to population and developmental needs along with outcome-based budgeting
(ii) Ensuring timely release of funds and proper implementation with strict monitoring and review mechanism 
(iii) Funds should be made non-divertible and non-lapsable

Thus, not just mere fund allocation but a comprehensive legislation for SC/ST sub-plan should be brought up to plug the above lacunae along with empowering National Commission for SCs and STs as the nodal agency to look into its working and ensuring its
implementation in letter and spirit.

Secularism in India

Indian Constitution included word Socialist and Secularism after 42nd Constitutional Amendment 1976, because it was felt that India as an nation of various religions and shown positive religious tolerance. It was also to make it clear in future that no particular religion can claim more share in policy implementation or declare herself as more holier, representative than other. In last 4 decades, India has set example in front of world by it’s positive secularism where state has no religion and it promotes every religion existence and prosperity equally as envisioned by our forefathers.

But certain section of society thinks otherwise and considers Indian secularism as pseudo-secularism because:

(a.) Secularism real meaning is zero favour to anyone, While in India all religions are promted equally by government.

(b.) Minority religions are given extra advantages like Haj subsidy, subsidy for missionary buying lands and setting up schools, minority can set special guidelines for their schools and university and can deny anyone’s admission there based on religion. This is against the spirit of Secularism.

(c.) With continous polarisation of religion as political agendas also degraded the value and essence of secularism.
Hence, while constitution claims India as secular nation but as a society we have to cross the barrier of commuanlised feeling both at heart and action.

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Western secularism is negative in its application as state is totally separated from the religion. But Indian secularism is positive in its spirit as it assigns the responsibility to the State to promote and protect all religions and prohibits state to discriminate citizens on the ground of religion.

Women in Army | Empoerment

On its 66th Republic Day, during a mighty parade in the national capital, India showcased “woman power” with all-women contingents of the three Services for the first time. A day earlier, Wing Commander Pooja Thakur became the first woman to lead a ceremonial tri-service guard of honour, which the visiting U.S. President inspected. But when it comes to the overall status of women in the Indian armed forces, especially in the Army, all this represents a travesty of gender justice. Since being inducted into the Army in 1992 under the Women Special Entry Scheme (they were in even earlier in the Military Nursing Service from 1927 and in the Medical Officers Cadre from 1943), women Army officers are still denied permanent commission on a par with men: they have to be content with the short service commission. On a batch of petitions filed in 2003 by women officers demanding an end to the discriminatory practice, the Delhi High Court in March 2010 granted their just and fair claim for permanent commission — with the singeing words that it was not some “charity being sought… but enforcement of their constitutional rights”. While this prompted the Air Force and the Navy to grant women officers permanent commission, the Army took a different stand, arguing, among other things, that “the bulk of the army’s Junior Commissioned Officers and other ranks hail from rural India, who are not yet ready to accept a woman as their leader in combat situations”. In an affidavit filed before the Supreme Court in 2012 while appealing against the High Court order, the Army added: “In theory women in the army may sound good but in practical terms the arrangement has not worked well in the Indian Army and as a concept also our society is not prepared to accept women in combat role.”

As the issue remains in the Supreme Court for more than four years now, the Army needs to get real, and persuade itself to go beyond symbolic and cosmetic steps. It needs to recognise women’s capabilities — as many advanced armed forces across the world have done, even committing them to combat roles — and their right to a full-fledged career in the force, on a par with men. During the 14-year short service commission tenure they now enjoy, women officers in various corps are assigned duties similar to those of men officers without distinction, to all possible field units with men officers. If it is the Army’s claim that beyond that point in permanent commission tenure women could be exposed to hostile environments — it has cited “the unique nature of responsibility and organisational requirement that… the Army Act” necessitates — that truly smacks of gender discrimination. The time has come for the Army to end this iniquitous situation.

source: http://www.thehindu.com/opinion/editorial/going-beyond-symbolism/article6831124.ece

algorithmic trading

In algorithmic trades, the trader feeds a computer programme into the system and allows that program to put in all his trading orders and execute them too. These are very high speed transactions which help in securing a deal on the stock market within no time

There are many different types of algo programmes. Some of these programmes sclice the order into bits and spreads out the orders through the trading session so that the price is not unduly affected by the order.

Also some of these identifies anomalies between the price of an asset in different exchanges or markets and cashes in on these differences

These algos though harmless,can be used for underhand activities as well like bluff trades so that other programmmes reveal their intended trades.

Effects of algo trades on stock markets :
1. Market volatility : increase in thr unhedgable risk and thus a decrease in risk-adjusted returns
Ex: Flash Crash of 2010,USA
Knight capital case,2012
2. Increase in liquidity
3. These trades have an unfair advantage because they put in the trade before other investors become aware of it. Thus adversely affecting other investors .
4. Some of them also bombard the stock exchanges with multiple orders thus swamping the system

On the indian NSE these trades account for about 45% of the equity derivative market. Regulators worldwide are finding means to regulate these trades. However, they are hard to regulate as these trades have grown so big in number that they cannot be banned without causing serious harm to market’s liquidity and price discovery process.

Supreme court of India

Supreme court of India is the "guardian of the Constitution". 
Under, Article 32 it acts as protector of Fundamental Rights of every Indian citizen. Article 131 gives exclusive jurisdiction to solve disputes between states and centre or between states on all matters. Article 137 provides powers to review its own judgements. SC also has advisory jurisdiction under 143 on matter of constitution and law to President of India.

If constitution repeals “Article 132-134” (Appellate jurisdiction), then only above mentioned constitutional load will remain on Supreme Court.

Indian constitution attempts to provide a panacea for the many political, economic and social ills the country had been plagued with. Supreme Court of India in its constitutional field has yet to register 500 cases a year.

So, if Appellate jurisdiction repealed India will not need 26 judges of SC to deal with just 500 cases a year. Size of SC will reduce drastically.

Though, SC is working slow, appellate jurisdiction is vital for public remedies because most cases are registered under Article 226 and not under Article 32 for constitutional remedy.

Pending cases (Backlog) remedies for Courts :

-establish lok-adalats frequently (thrice a year)

-Establish E-Courts for specific jurisdictions (small cases)

-Denounce “pleas for leave” which seems farce and unethical (save courts time)

-Stop bureaucratization of criminal justice system (police reforms)

-Stop inclusion of faulty PILs

Up the endless judicial ladder /M J Antony

The Supreme Court was meant to be a constitutional court by the founding fathers. However, only 7 per cent of its judgments deal with constitutional issues, according to a recent study. Most of the 50,000 and more cases pending in the court are appeals from the high courts or appellate tribunals. They might have trundled from the subordinate courts to the apex court, spending years and bundles of money. Even after the Supreme Court delivers its judgment, there are two more stages to challenge its final word. They are review petitions and 'curative petitions'.

Though the last two kinds of petitions are meant to correct obvious errors that escaped the attention of the judges (like typing mistakes or wrong figures) these are increasingly used as stratagems to reargue decided cases. It would seem that the judges are so careless in writing judgments that they should pass two more tests set by the bar. These two post-decision petitions have begun to choke the court. In an average week, over 30 pages of the list of cases contain review petitions and curative petitions. They are heard in chambers of the judges during lunch time, and mostly crunched within minutes. Hardly any of them succeeds in opening up the cases again. However, lawyers advise clients who still have money left after losing all the way to file review petitions, and as a last resort, curative petitions.

Earlier this month, a number of firms moved the Supreme Court challenging a proviso introduced in 1996 in the Supreme Court Rule that obligated judges who once dismissed the case to re-examine it in open court. The court rejected the demand outright (Sesa Sterlite vs Supreme Court). This was a welcome decision as open court hearing means more adjournments, affidavits, counter affidavits, rejoinders and compilations. That process would have bloated not only the files but also the lawyers. Thus, the review petitions will continue to be massacred in lunch time.

The Supreme Court, in one of its weak moments in 2003, aspired to deliver absolute justice and opened up yet another path to rehear decided cases. It allowed the disappointed litigants to return to it even after losing the review petition. This is by way of a 'curative petition', devised by the court in its judgment, Rupa Hurra vs Ashok Hurra. A curative petition must be accompanied by a recommendation of a "senior" advocate stating that the case requires re-examination as there was violation of the principles of natural justice in the earlier decisions. The curative petition has to be first circulated to a bench of three senior-most judges. They will decide by a majority that the case should be re-examined. Only then will the case be heard by the judges who heard the case originally. Such strict conditions were imposed to prevent a floodgate of curative petitions.

The court has since regretted its decision to set a revolving door to failed litigants. In its judgment inSumer vs State of UP, the court said that "the apprehension of the bench which delivered the Hurra judgment that the remedy provided may not open the floodgates for filing a second review petition has come true as is evident from the filing of large numbers of petitions. It was expected that thecurative petitions will be filed in exceptional and in the rarest of rare cases, but in practice, it has just been opposite."

There is a strong current of opinion among jurists that the Supreme Court should take up only constitutional questions. However, Article 136 of the Constitution allows appeals in the garb of "special leave petitions". The constitution makers would not have imagined that this provision would open the doors to gamblers in justice. Long ago, former Attorney General M C Setalvad told the bench when asked the difference between wager and lottery, "what happens in this court every morning from 10.30 am to about 11.30 am is a lottery." The difference, perhaps, is that you can lose lottery only once. But in the courts, you can try and try again while moving up the judicial ladder.

source: http://www.business-standard.com/article/opinion/m-j-antony-up-the-endless-judicial-ladder-115012701340_1.html

state’s limited revenue sources proved as a hindrance to the development

The state’s limited revenue sources proved as a hindrance to the development of effective federalism in the country and this needs to change. Substantiate. 

India is a "Union of states" with federalism as the most basic aspect of country's stable polity. However, resource wise the union government has far greater edge than the states.

1. All major taxes like income tax, wealth tax etc. are with Center.

2. Taxes governed by state are inelastic in nature and insufficient too.

3. States have complained that despite growth, the taxes received by states have not increased proportionately.

4. There is wide inter state disparity and politicization of in allotment of discretionary GRANTS by centre.

5.A rise in centrally sponsored schemes increases the administrative burden without rise in revenue.

6.States have no share in income from sale of spectrum etc.

7. Local government too are eating away state's resources.

For mitigating above grievances

1.Integration of market through GST is must which will have increased investment through FDI and Pvt. sector.

2. Rationalization the formula of tax distribution through transparency in functioning of finance commission and de-politicization of appointment.

3. Introduction of fixed percentage of flexi funds as per needs of state.

4. Centre should emphasize less on centrally sponsored schemes.

Fiscal federalism requires a broad framework of equity and justice. This should be followed through the lens of cooperative federalism to achieve growth and inclusive growth.

The Right of Persons with Disabilities Bill, 2014

The Rights of Persons with Disabilities Bill, 2014 was introduced in the Rajya Sabha on February 7, 2013 by the Minister of Social Justice and Empowerment, Mr. Mallikarjun Kharge.  The Bill repeals the Persons with Disabilities (Equal Opportunities Protection of Rights and Full Participation) Act, 1995. Definition of disability: Disability is defined to include 19 conditions such as: autism; low vision and blindness; cerebral palsy; deaf blindness; haemophilia; hearing impairment; leprosy; intellectual disability; mental illness; muscular dystrophy; multiple sclerosis; learning disability; speech and language disability; sickle cell disease; thalassemia; chronic neurological conditions; and multiple disability.  Persons with benchmark disabilities are defined as those with at least 40 per cent of any of the above specified disabilities.   Rights of persons with disabilities: The Bill states that persons with disabilities shall have the right to equality and shall not be discriminated against on grounds of their disability.  Rights of disabled persons include protection from inhuman treatment and equal protection and safety in situations of risk, armed conflict, humanitarian emergencies and natural disasters. All existing public buildings shall be made accessible for disabled persons within five years of the regulations being formulated by the National Commission for Persons with Disabilities.  No establishment will be granted permission to build any structure, issued a completion certification or allowed to occupy a building, if the building does not adhere to the regulations formulated by the Commission. Education, skill development and employment:  The Bill provides for the access to inclusive education, vocational training and self-employment of disabled persons. All government institutions of higher education and those getting aid from the government are required to reserve at least five percent of seats for persons with benchmark disabilities. The central and state governments have to identify posts in establishments under them to be reserved for persons with benchmark disabilities.  At least five percent of the vacancies are to be filled by persons or class of persons with at least 40 percent of any of the disabilities.  Of this, one per cent shall be reserved for persons with (i) blindness and low vision; (ii) hearing and speech impairment; (iii) locomotor disability; (iv) autism, intellectual disability and mental illness; and (v) multiple disabilities.  The Bill provides that the reservation has to be computed on the basis of total number of vacancies in the strength of a cadre.  The government may exempt any establishment from this provision.  Legal Capacity: Disabled persons have the right, equally with others, to own and inherit movable and immovable property, as well as control their financial affairs.  Guardianship: The Bill provides that if a district court finds that a mentally ill person is not capable of taking care of himself or of taking legally binding decisions, it may order guardianship to the person.  The nature of such guardianship is also specified. National and State Commissions for persons with disabilities: The central and state governments are required to establish a National and State Commissions for Persons with Disabilities, respectively.  The Commissions will be composed of experts and be required to (i) identify any laws, policies or programmes that are inconsistent with the Act; (ii) inquire into matters relating to deprivation of rights and safeguards available to disabled persons, (iv) monitor implementation of the Act and utilisation of funds disbursed by governments for the benefit of disabled persons. Central and state advisory boards: The central government and state governments shall constitute Central and State Advisory Boards on Disability.  The boards shall advise governments on policies and programmes on disability and review the activities of organisations dealing with disabled persons.