We need closer security ties: Abe

‘India And Japan Have Established A Win-Win Economic Relationship’

The first Japanese PM to be chief guest at India’s Republic Day celebrations, Shinzo Abe took time off on the eve of his visit to share some thoughts on the future of India-Japan ties -

( Bilateral tensions on the Senkaku/Diaoyu islands between Japan & China ......The Senkaku Islands dispute concerns a territorial dispute over a group of uninhabited islands known as the Senkaku Islands in Japan, the Diaoyu in China, and Tiaoyutai Islands in Taiwan )

Excerpts:

Q: Japan plays an important role in the transformation of India. You have played a personal role in building the India-Japan relationship. What are the measures by which you think Japan can help in building India in the larger strategic context of Asian security, stability and prosperity?

First of all, I feel deeply honoured to be the first Japanese prime minister to be invited as the chief guest of India’s most important celebration, that of the Republic Day celebration.

    I am truly delighted that Japan and India have long developed very close and friendly relations over the years. I would like to express my heartfelt gratitude for the extremely warm welcome extended from the people and the government of India to their majesties, the Emperor and Empress of Japan, when they visited the country from the end of November until the beginning of December last year.

    I am convinced that the bilateral relationship between Japan and India is blessed with the largest potential for development of any bilateral relationship anywhere in the world. With this in mind, I would like to develop vigorously and enhance our cooperative relationship with India in a wide range of areas, including political and security fields, economic relations, and people-to-people exchange, based on “the Strategic and Global Partnership”.

    Japan’s support for India’s development has been consistent. Back in 1991, for instance, Japan provided India with an emergency balance of payment support which helped the Indian economy and its ascendancy in the global economy. Since then, Japan has been consistently supporting India, as demonstrated by the fact that India has been the largest partner of Japan’s Official Development Assistance since 2003.

    Further, the economic cooperation between Japan and India has now expanded into the private sector. Over the last decade, the trade volume between our two countries has tripled and the number of Japanese companies operating in India has quadrupled. Indeed, Japan and India have established a “win-win” economic partnership.

    India’s stable development is also beneficial for the prosperity of the Asia-Pacific region, as the country has the third largest economy in Asia and the second largest and increasing population in the world. I am determined to contribute to the development of our two nations and prosperity of the region through further strengthening the Japan-India strategic economic partnership and promoting Japanese companies’ investment into India.

    Compared to the growing political and economic ties between Japan and India, people-to-people exchange between the two countries currently leaves more room to grow. In order to keep the Japan-India relationship on a further solid and sound base with wider scope, I will make further efforts to impart energy to human exchange so that more people travel back and forth and actively interact between our two countries.

Q: You have said you want Japan to become a ‘normal’ power. What would you like India to do in the area of defence and maritime security cooperation to help Japan achieve this goal?

Today, the security environment of the Asia-Pacific region is becoming ever more severe. As the world becomes more interdependent, I believe Japan should play a more active role than before to ensure peace and stability in the region and the world, under the understanding of ‘Proactive Contributor to Peace’ based on the principle of international cooperation. I fully recognize the tremendous role India plays in this perspective, and hope that Japan and India will further strengthen the cooperation in the field of security.

    To be specific, our two governments should deepen our dialogue and share each other’s understanding on regional security, to start with. It is therefore important to further enhance bilateral dialogues such as the “2 plus 2” secretary-level dialogue, and multilateral dialogues such as the trilateral dialogue among Japan, India and the United States. In addition, we need to continue and strengthen our bilateral and multilateral joint maritime exercises. The joint exercises, conducted on a regular basis by our maritime defence forces and coast guards, embody the strong ties between Japan and India in maritime security. I expect these exercises will be further promoted and expanded.

    Japan and India are bound by the seas. As I stated during my last visit to India as prime minister in 2007, I expect both Japan and India, as maritime states, to play a vital role together for the security of sea lanes and jointly carry out their responsibility in the region.

I expect both Japan and India, as maritime states, to play a vital role together for the security of sea lanes and jointly carry out their responsibility in the region

SHINZO ABE

Prime Minister of Japan

Jan  24-25 , 2014

Towards a Rules - Based Policy

A Reserve Bank-appointed committee headed by Deputy Governor Urjit Patel was asked to revise and strengthen the monetary policy framework in India. In its core recommendations it wants monetary policy to formally move towards using headline CPI (Consumer Price Index) as its nominal anchor. Communicating the nominal anchor without any ambiguity will be a key task. The objective is to ensure a monetary policy regime shift away from the current approach, which has multiple objectives, to one that is centred on the target CPI. However, taking into account the current macroeconomic scenario, the committee has conceded the need for flexibility in inflation-targeting to enable the central bank to deal with other objectives in the short run. The ultimate goal is to contain CPI inflation within a target band of 4 per cent plus or minus 2 per cent. A smooth two-year transition is envisaged. From the current 10 per cent levels, CPI inflation is to be brought down to 8 per cent in 12 months and to 6 per cent in 24 months. Monetary policy will henceforth be conducted by a new Monetary Policy Committee which will have the Governor as its head and three senior officers of the RBI as its members. In addition, two outside experts will be nominated. All members will vote on the policy at meetings every two months. The MPC will be accountable for any failure to achieve the inflation target.

The committee has suggested crucial changes in the operating framework and instruments in the conduct of monetary policy. Its report has generally been received well by banks and financial markets. It enables policy formulation in a phased and transparent manner using a real policy rate as reference. Over the medium term, the recommendations will help develop a term money market, reduce fluctuations in market liquidity and remove distortions in interest rates. Its unrelenting focus on inflation is justified on several counts — India has the highest rate of inflation among G-20 countries. Inflation expectations are deeply entrenched and inflation at current levels is inimical to medium-term growth and macroeconomic stability. Understandably, Finance Ministry officials are not happy with proposals that would strengthen the central bank’s case for complete autonomy in matters of monetary policy. The fact that monetary policy has very little influence over high food inflation that has pushed up the CPI, could limit the efficacy of the new approach. All these do not detract from the fact that a shift to a rules-based policy framework recommended will replace the purely discretionary approach the RBI has followed so far, and is therefore to be welcomed.

( The Hindu )

Indo - Japan for Future

Asian geopolitics will be shaped by the inexorable tightening of bonds between India and its largest source of foreign direct investment and aid, Japan. Underscoring the fast-multiplying ties between Asia’s second and third - largest economies, Prime Minister Shinzo Abe is arriving to be the guest of honour at India’s Republic Day parade, just weeks after the landmark Indian tour of Japan’s venerated Emperor Akihito and Empress Michiko. The two countries are Ramping up Defence Cooperation, as highlighted by Japanese defence minister Itsunori Onodera’s visit earlier this month.

    In modern history, Japan has had the distinction of consistently staying ahead of the rest of Asia. During the 1868-1912 Meiji era, it became the first Asian country to modernise. It was also the first Asian country to emerge as a world power, defeating Manchu-ruled China and Czarist Russia in separate wars. After its crushing defeat in World War II, Japan rose from the ashes rapidly to become Asia’s first global economic powerhouse.

    Specialising in the highest value links of global supply chains, Japan ranks among the world’s richest countries. With its Gini coefficient of 0.25, it boasts the lowest income inequality in Asia. By contrast, prosperous Singapore, with a high Gini coefficient of 0.48, ranks as one of Asia’s most-unequal societies. Japan’s per capita GDP of $37,000 means that its citizens, on purchasing power parity basis, are more than four times wealthier than the Chinese and nearly 10 times richer than Indians today.

    To be sure, Japan’s geopolitical clout has taken a beating due to its almost two decades of economic stagnation, a period in which China rose dramatically. But despite the media depicting Japan’s decline in almost funereal terms, the truth is that its real per-capita income has increased faster than the US and Britain in this century, while its unemployment rate has long remained one of the lowest among important economies. JAPAN enjoys the highest life expectancy of any large country in the world.

    Japan’s trailblazing role in modern history raises the question of whether its current challenges, including population aging and sluggish economic growth, presage a similar trend across East Asia. Similar problems are now beginning to trouble South Korea, Taiwan and Hong Kong, while China has been driven to loosen its one-child policy and unveil plans to reverse slowing economic growth.

    Indeed, the most far-reaching but least-noticed development in Asia has been Japan’s political resurgence. Japan’s political rise should not be a surprise: In contrast to India’s ignominious history of subjugation by foreign invaders for eight centuries until 1947, Japan, with its martial traditions, has historically punched above its weight – a record punctured only by its World War II defeat and occupation by the US. With Japan’s pride and assertiveness now rising, its nationalist impulse and intent to influence Asia’s power balance have become conspicuous.

    Still, Japan faces stark choices today: Grow or bust; import labour or decline irreversibly; and bolster its security or come under siege. Abe’s return to power in late 2012 marked a watershed in Japan’s determination to reinvent itself as a more competitive and secure state. It has no option but to reflate, import labour, become more competitive and rearm.

    History will repeat itself when Japan rearms – a profound development likely to gain traction in this decade. Japan can no longer rely on America’s security guarantee, given Washington’s neutrality on Asia’s territorial disputes, including over the Senkaku Islands, and its failure to come to the defence of Philippines, despite a mutual defence treaty, when China captured the Scarborough Shoal in 2012. Japan’s rearming – without abandoning the US security umbrella – will boost its GDP and yield major profits for American defence firms.

    For India, Japan is an indispensable economic partner, including as a leading source of capital and commercial technology. However, nothing has damaged corporate India’s image in the ‘Land of the Rising Sun’ more than the saga of Ranbaxy Laboratories, whose takeover by a gullible Daiichi Sankyo forced it to take a $3.9 billion write down within months.

    With the weakening yen set to spur greater Japanese capital outflows, India must seek to attract more funds from Japan so as to bridge its current-account gap. By making India the largest recipient of its overseas development assistance, Japan is playing a significant role to help improve India’s poor infrastructure.

    Japan, with shared interests and a world-class navy, is also a vital partner for India’s security, including for adding strategic bulk to its ‘Look East’ policy. Japan’s high-tech arms capability makes it an ideal partner for import-dependent India to build a domestic weapons-production base.

    Abe, as part of his Asian strategy of ‘proactive pacifism’ has pushed for close, enduring collaboration with India, traditionally respected in Japan as Tenjiku, or the heavenly country of Buddhism. If there is any potential pitfall to the India-Japan partnership, it is their messy domestic politics.

    Through deep strategic ties, Japan and India – as Asia’s natural-born allies – must lead the effort to build freedom, prosperity and stability in Asia. They have a central role to play in ensuring Asian power equilibrium and safeguarding vital sea lanes in the Indo-Pacific region, now the global trade and energy supply hub. The transformative India-Japan entente promises to positively influence Asia’s power dynamics and strategic future.

Net Neutrality

Internet is built around the idea of openness. It allows people to connect and exchange information freely, if the information or service is not illegal. Much of this is because of the idea of net neutrality. If you like the current state of the internet, you should know about net neutrality. Many web users are aware of it. But if you are not, don’t worry. We explain it here:

What is net neutrality?

    Net neutrality is an idea derived from how telephone lines have worked since the beginning of the 20th century. In case of a telephone line, you can dial any number and connect to it. It does not matter if you are calling from operator A to operator B. It doesn’t matter if you are calling a restaurant or a drug dealer. The operators neither block the access to a number nor deliberately delay connection to a particular number, unless forced by the law. Most of the countries have rules that ask telecom operators to provide an unfiltered and unrestricted phone service.

    When the internet started to take off in the 1980s and 1990s, there were no specific rules that asked internet service providers (ISPs) to follow the same principle. But, mostly because telecom operators were also ISPs, they adhered to the same principle. This principle is known as net neutrality. An ISP does not control the traffic that passes its servers. When a web user connects to a website or web service, he or she gets the same speed. Data rate for Youtube videos and Facebook photos is theoretically same. Users can access any legal website or web service without any interference from an ISP.

    Some countries have rules that enforce net neutrality but most don’t. Instead, the principle is followed because that is how it has always been. It is more of a norm than a law.

How did net neutrality shape the internet?

    Net neutrality has shaped the internet in two fundamental ways. One, web users are free to connect to whatever website or service they want. ISPs do not bother with what kind of content is flowing from their servers. This has allowed the internet to grow into a truly global network and has allowed people to freely express themselves. For example, you can criticize your ISP on a blog post and the ISP will not restrict access to that post for its other subscribers even though the post may harm its business.

    But, more importantly, net neutrality has enabled a level playing field on the internet. To start a website, you don’t need a lot of money or connections. Just host your website and you are good to go. If your service is good, it will find favour with web users. Unlike cable TV, where you have to forge alliances with cable connection providers to make sure that your channel reaches viewers, on the internet you don’t have to talk to ISPs to put your website online. This has led to the creation of Google, Facebook, Twitter and countless other services.

    All of these services had very humble beginnings. They started as basic websites with modest resources. But they succeeded because net neutrality allowed web users to access these websites in an easy and unhindered way.

What will happen if there is no net neutrality?

    If there is no net neutrality, ISPs will have the power (and inclination) to shape internet traffic so that they can derive extra benefit from it. For example, several ISPs believe that they should be allowed to charge companies for services like YouTube and Netflix because these services consume more bandwidth compared to a normal website. Basically, these ISPs want a share in the money that YouTube or Netflix make.

    Without net neutrality, the internet as we know it will not exist. Instead of free access, there could be “package plans” for consumers. For example, if you pay Rs 500, you will only be able to access websites based in India. To access international websites, you may have to pay more. Or maybe there can be different connection speeds for different types of content, depending on how much you are paying for the service and what “add-on package” you have bought.

    Lack of net neutrality will also spell doom for innovation on the web. It is possible that ISPs will charge web companies to enable faster access to their websites. Those who don’t pay may see their websites opening slowly. This means bigger companies like Google will be able to pay more to make access to Youtube or Google+ faster for web users but a startup that wants to create a different and better video hosting site may not be able to do that.

    Instead of an open and free internet, without net neutrality we are likely to get a web that has silos in it and to enter each silo, you will have to pay some “tax” to ISPs.

What is the state of net neutrality in India?

    Legally, the concept of net neutrality doesn’t exist in India. Sunil Abraham, director of Centre for Internet and Society in Bangalore, says that Trai, which regulates the telecom industry, has tried to come up with some rules regarding net neutrality several times. For example it invited comments on the concept of net neutrality from industry bodies and stakeholders in 2006. But no formal rules have been formed to uphold and enforce net neutrality.

    However, despite the lack of formal rules, ISPs in India mostly adhere to the principal of net neutrality. There have been some incidents where Indian ISPs have ignored net neutrality, but these are few and far between.

Will the concept of net neutrality survive?

    Net neutrality is sort of a gentlemen’s agreement. It has survived so far because few people realized the potential of internet when it took off around 30 years ago. But now, when the internet is an integral part of the society and incredibly important, ISPs across the world are trying to get the power to shape and control the traffic. But there are ways to keep net neutrality alive.

    Consumers should demand that ISPs continue their handsoff approach from internet traffic. If consumers see a violation of net neutrality, they ought to take a proactive approach and register their displeasure with the ISP. They should also reward ISPs that uphold net neutrality.

    At the same time, as Abraham says, Trai needs to come out with a set of clear and precise rules that protect net neutrality.

    “We have started seeing ISPs trying to take control of the traffic that flows from their servers but Trai can regulate them. It can keep the internet open and consumer-friendly by forming rules that protect net neutrality. These are early days, so it is easy to do. If ISPs manage to change the system, it may be too late,” he says.

Indian Electrical Equipment Industry Mission Plan 2022

The ‘Indian Electrical Equipment Industry Mission Plan 2022’ acknowledges that the coal pithead thermal power projects located in remote areas, hydro power plants located at far flung hilly areas and nuclear power plants located near the sea coast, face very serious problems because of the lack of infrastructure facilities in these areas. This leads to considerable delay in completion of these mega projects. Manufacturers of heavy electrical equipment face serious problems in transporting heavy and Oversized Dimension Consignments (ODC) of more than 98 MT on the state roads and bridges due to non-availability of bridges and roads equipped to carry such heavy weight ODC. There is not much problem in transporting the OD consignments on the national and state highways, but most of the other state and district roads and bridges approaching the project sites are not suitable for transporting heavy consignments. At certain project sites, particularly in case of hydro projects and coal pithead power plants, even motor able roads are not available. For most of the time, transporters are required to strengthen the bridges and roads in order to transport such heavy consignments to the site. This causes delays in movement of items like TG stators, rotor, boiler drums, gas turbines, power transformers, etc., to project sites, affecting commissioning schedules and hence, increasing the cost charged on the manufacturers and power plant developers.

The ‘Indian Electrical Equipment Industry Mission Plan 2022’ says that the national and state highways generally do not create any handicap but the state and district roads leading to the identified projects need to be widened or constructed and bridges need to be strengthened. If these roads and bridges are constructed by the developer, then it takes longer since there are multiple procedures that need to be completed (IPP i.e. Independent Power Producer has to conduct survey of the route, carry out geological surveys, get alignment approved, acquire land and then construct the road. If the road passes through a forest, then forest clearance has to be obtained.) These procedures can easily take more than one year for a small stretch of road, resulting in project delays.

The ‘Indian Electrical Equipment Industry Mission Plan 2022’, which was recently launched by Minister of Heavy Industries & Public Enterprises, Shri Praful Patel, has pointed out that most of the hydro projects are identified by the Central Electricity Authority (CEA) before being advertised for bidding, though total capacity, as well as unit size of individual projects, may vary at detailed project report / CEA concurrence stage. Since the capacity of such projects and the unit sizes are generally known, CEA may develop a mechanism so that data regarding ODC can be collected by the concerned State Government. Based on the same, the size of road and types of bridges can be decided and the concerned State Government can approach the Central Government, if needed, for funding of the construction of the desired roads and bridges after consulting the Ministry of Road Transport & Highways. The ‘Mission Plan 2022’ recommends that States should be provided funds for construction of these roads and bridges before the bid process is initiated. This will enable the developers to move the construction machinery faster and the construction will start immediately. The cost of such project-specific roads and the overhead costs can be recovered from the IPP by the State Government. If this is indicated in the bid, then IPPs will take this cost into consideration for the bidding. The cost of such roads is not going to be high but this initiative can save almost one to two years of the project schedule and in turn, benefit the states too.

 The Mission Plan seeks to steer, coordinate and synergise the efforts of all stakeholders to accelerate and sustain the growth of the domestic electrical equipment industry. It identifies five key areas for action: (i) Industry competitiveness; (ii) Upgrading technology; (iii) Skill development; (iv) Promotion of exports; and (v) Conversion of latent demand.

Detailed recommendations have been formulated for strategic and policy interventions in these five critical areas that need to be addressed by the industry, with support from the government.

Further,  the Mission Plan envisages to make India the country of choice for the production of electrical equipment and reach an output of US $100 billion by balancing imports and exports. It has been evolved by the Department of Heavy industry through an elaborate exercise involving all stakeholders and with the support of the Indian Electrical and Electronics Manufacturers’ Association (IEEMA).

To carry forward the recommendations arising out of the Mission Plan, Inter-Ministerial Groups, comprising of representatives of the Department of Heavy Industry and other concerned Ministries / Departments, IEEMA, industry and other stakeholders will be constituted for monitoring the implementation of the recommendations and for periodic follow-up of its status.

To enhance industry competitiveness, the Mission Plan calls for providing a level playing field in the country to domestic electrical equipment manufacturers vis-à-vis foreign manufacturers, replacing the L1 criteria of procurement by power utilities in India with two part bidding, augmenting domestic testing facilities to cover the type testing of all equipment, mandating type testing of imported small equipment in Indian labs, supporting SMEs in technology up gradation and testing, standardization of product ratings and specifications of electrical equipment, providing funds at globally competitive rates of interest to domestic manufacturers, establishing clusters of electrical and component manufacturers and providing them funds for technology up gradation.

For technology up gradation, the Mission Plan recommends a coordinated and collaborative effort by industries and utilities. For any R&D project, the user organization or main beneficiary should be supported by the government for leading the research in a planned and committed manner. It also recommends public-private partnership (PPP) for fast development of new technology / systems.

Mahatma Gandhi Pravasi Suraksha Yojana (MGPSY)

An estimated 5 million Indian Nationals with ECR (Emigration Check Required) passports are working on temporary employment/contract visas in the Gulf Countries.

It is observed that a majority of the earnings periodically remitted by overseas Indian workers to their families in India are rarely accumulated as savings and often cause only a temporary improvement in the consumption expenditure of their families. As a result majority of overseas Indian workers face the risk of poverty when they return to India and when they are too old to work. Overseas Indian workers are largely excluded from formal social security benefits available to residents of ECR countries.

Overseas Indian workers are largely excluded from formal social security benefits available to residents of ECR countries.

MGPSY

Thus, to provide them social security, the Ministry has launched Mahatma Gandhi Pravasi Suraksha Yojana(MGPSY) in May 2012. The objective of MGPSY is to encourage and enable overseas Indian workers having Emigration Check Required (ECR) passports going to ECR countries, to

(a) save for their return and resettlement and

(b) save for their pension.

They are also provided Life Insurance cover against natural death, during the period of coverage, without any additional payment by them.

Overseas Indian workers with ECR passports and aged between 18 and 50 years on an employment/contract visa are eligible to join the scheme.

The Ministry also contributes, for a period of five years, or till the return of workers to India, whichever is earlier, as under:

a) Rs.1,000 per subscriber who saves between Rs.1,000 and Rs.12,000 per annum in their National Pension Scheme(NPS) -Lite account;

b) An additional contribution of Rs.1,000 per annum for overseas Indian women workers who save between Rs.1,000 and Rs.12,000 per annum in National Pension Scheme(NPS)-Lite account;

c) An annual contribution of Rs. 900 per annum per subscriber who saves at least Rs. 4000 per annum towards Return and Resettlement fund;

d) Rs.100/- for life insurance cover of Rs.30,000 per year against natural death and Rs.75,000 against death by accident through the Janshree Bima Yojana of Life Insurance Corporation of India (LIC).

There is an integrated enrollment process for the subscribers who will be issued a unique MGPSY account number upon enrolment. On their return to India, the subscriber can withdraw the Return and Resettlement savings as a lump sum.

However, the subscriber would be able to continue savings for their old age in the NPS-Lite in line with the Swavalamban Scheme. Alternatively subscriber can withdraw pension corpus as per the guidelines prescribed by the Pension Fund Regulatory Development Authority (PFRDA).

What is ECR:

As per the Emigration Act, 1983, Emigration Check Required (ECR) categories of Indian passport holders, require to obtain “Emigration Clearance” from the office of Protector of Emigrants (POE), Ministry of Overseas Indian Affairs for going to following 18 countries.

United Arab Emirates (UAE), The Kingdom of Saudi Arabia (KSA), Qatar, Oman, Kuwait, Bahrain, Malaysia, Libya, Jordan, Yemen, Sudan, Brunei, Afghanistan, Indonesia, Syria, Lebanon, Thailand, Iraq (emigration banned).

However , the Ministry of Overseas Indian Affairs (Emigration Policy Division) have allowed ECR passport holders traveling abroad for purposes others than employment to leave the country on production of valid passport, valid visa and return ticket at the immigration counters at international airports in India w.e.f. 1st October 2007.

Companies Bill

The much-awaited Companies Bill has been introduced in the Rajya Sabha. It has already been passed by the Lok Sabha in December 2012, replacing 56-year-old Companies Act, 1956. The Bill seeks to consolidate and amend the law relating to the companies and intends to improve corporate governance and to further strengthen regulations for corporates.

Salent features of the Bill are:

a) The concept of One Person Company has been introduced.

b) Number of permissible members in a private company has been raised to 200 from 50

c) Provisions for offer or invitation for subscription of securities on private placement basis have been revised to ensure more transparency and accountability.

d) Every company shall have a Board of Directors with a minimum number of three directors in the case of a public company, two directors in the case of a private company, and one director in the case of a One Person Company; and a maximum of fifteen directors.

e) At least 1 woman director to be part on the board.

f) Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.

g) Every listed public company shall have at least one-third of the total number of directors as independent directors and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies.

h) A person can hold directorship of up to 20 companies, of which not more than 10 can be public companies.

i) An independent director shall not be entitled to any remuneration, other than sitting fee, reimbursement of expenses for participation in Board meeting and profit related commission as approved by the members.

j) The Board of Directors is required to constitute an Audit Committee (Clause 177), Nomination and Remuneration Committee [Clause 178 (a)] and Stakeholders Relationship Committee [Clause 178 (5)]. These committees shall have Independent Directors/non-executive directors to bring more independence in the functioning of the Board and for protection of interests of minority shareholders.

k) Every company having net worth of Rs.500 crore or more, or turnover of Rs.1000 crore or more or a net profit of Rs.5 crore or more during any financial year is required to constitute a Corporate Social Responsibility Committee. The Corporate Social Responsibility Committee will formulate a Corporate Social Responsibility Policy.

Such a company is required to spend at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. If the company fails to spend such amount the Board shall give in its report the reasons for the same making it a binding obligation on the Board.

Raghuram Rajan-headed Panel

Raghuram Rajan-headed panel set up by the government to identify criteria to determine a state's relative backwardness came out with its report. It created a new index, and ranked Indian states on it, with 0 being 'not backward at all' and 1 being 'most backward'. For the purposes of distributing Central funds, the committee recommended that states scoring more than 0.6 be declared as 'least developed', those scoring between 0.4 and 0.6 as 'less developed' and the seven states less than that as 'relatively developed'.

To create the index, the panel selected 10 sub-indicators that covered a range of development outcomes and weighted them equally.

Income

Although there's been a growing discussion (led by the Human Development Index) on moving away from purely income-based indicators as a measure of development, income is still an important measure of well-being (and, as we discuss in our last but one graph, with good reason).

Choosing Monthly Per Capita Expenditure (MPCE) derived from National Sample Surveys as the sub-indicator to measure income is not uncontroversial. There's a fair bit of back-and-forth in the report over whether GDP per capita or MPCE better reflects economic well-being. The report finally settles on the latter, and argues that choosing the former would not have made much difference either.

Education

For education, the panel looked at a weighted average of attendance ratios and schools per capita. To keep things simple, we looked only at Primary schools per capita for this infographic. It's not clear that this is a good sub-indicator, as the scattered results show.

Health

For health, the panel looked at one sub-indicator - the Infant Mortality Rate (number of deaths of children under the age of 1 per 1,000 live births) - which experts say indicates not just child health and nutrition, but also other factors like sanitation, disease environment, and access to health facilities.

Household amenities

The fourth sub-indicator the panel looked at is a weighted average of a bunch of Census indicators that show access to basic household facilities.

Poverty

For 'poverty', the panel looked at the recent numbers put out by the Planning Commission, applying the Tendulkar Committee formula to 2011-12 consumption data.

Female literacy rate

Female literacy, which, as a recent report showed, has a direct correlation with a host of other development outcomes including child mortality, was the sixth sub-indicator the panel looked at.

Scheduled castes and tribes

To take into account the state's depth of historical deprivation, the next sub-indicator looks at the state's proportion of scheduled caste and scheduled tribe citizens.

Rate of urbanisation

Next, the panel looked at the proportion of the state that is urbanised, which is an interesting sub-indicator with Himachal Pradesh being one of the notable exceptions; among India's least urbanised states, it is one of its more developed ones.

Financial inclusion

For financial inclusion, the panel looked at the proportion of households who told Census officials that they used banking services.

Connectivity

And finally, for physical connectivity, the panel looked at both road and rail route lengths. We've looked at just road length here because of some data issues with rail length.

So there you have it, the ten sub-indicators that the Rajan panel used, for some insight into how Bihar and Odisha became India's least developed states and Goa and Kerala the most developed.