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Various Problems of PPP Contracts in India

The Public Private Partnership (PPP) model in India is mostly directed towards attracting
private investment in infrastructure projects. Though India is one of the largest recipients of
private investment in infrastructure, yet due to regulatory and policy issues among others,
there have been a few hiccups in this area as well.
New challenges have cropped up in recent times. A few private companies have walked out
of big projects and some others have been demanding renegotiation or are
under arbitration. GMR and GVK that walked out of mega highway projects and Delhi Airport
Metro Express are the cases in point.
An often cited criticism is that while the government and its agencies cannot even predict
the macro-economic indicators accurately, the private sector is expected to be forecast all
the issues that may crop up in the future and take risks. It is an unfathomable task in any
case and becomes more so in the times of political indecisiveness coupled with policy
paralysis. Thus the assumption that contracts once negotiated are never to be opened for
renegotiation seems to be unfair to some. Moreover, articulation of any changes required
attracts the charge of crony-capitalism.
However, renegotiation also opens up a can of worms. It is not without reason that
renegotiation of project terms is resisted. Consider, for instance, the following:
bidders who lost out could take government bodies to court saying the incentives
arising out of renegotiation were not extended to them at the bidding stage and,
thus, they were unfairly edged out;
the sanctity of a bid-out contract is violated and may encourage many more
project developers to expect post-win renegotiation;
there is a moral hazard in that private bidders know their losses will be wiped clean
by subsequent government largesse while their profits do not have to be shared;
Distinguishing between projects that are unviable because of genuine unforeseen
developments and projects that are unviable because the bidders bid at predatory
prices or made commercial errors of judgement, are difficult to sift.
In light of these it is fairly clear that renegotiation is easier said than done. Instead, the focus
must be to define and establish legal and regulatory dispensation to address the issues
relating to renegotiation and life-cycle management of PPP infrastructure assets. The state
should urgently consider creating a credible, independent and impartial body that would be
fully empowered to give quick dispensations on renegotiation of contracts. Sensing the
mood of the industry, recently, the Prime Minister has also asked the Planning Commission
to draft a legislation that would establish an institutional mechanism to resolve disputes in
public contracts.

National Technical Research Organisation

NTRO was conceived as a Premier scientific organization, yet it continues to be more or less
in a state of limbo.
National Technical Research Organisation is premier scientific agency under the National
Security Adviser. It was set up in 2004. The National Technical Research Organisation,
originally known as the National Technical Facilities Organisation (NTFO), is highly specialized
technical intelligence gathering agency.

The agency develops technology capabilities in aviation and remote sensing, data gathering
and software development and strategic monitoring.
In what Circumstances, NTRO was conceived?
The following points provide information on the genesis of NTRO (National Technical
Research Organisation) and why it was conceived:

It was conceived in the post Kargil period.

It is in those times that a group of ministers headed by the then deputy PM L.K.
Advani decided to set up a task force on the revamp of India's intelligence
This task force was headed by G.C. Saxena, former chief of R&AW and the then
governor, Jammu and Kashmir. Findings and recommendations of the GC Saxena
task force:
The task force found huge gaps in the technical intelligence (techint)
capabilities of our agencies, both defence and civil.
There were two ways to fill this gap: the allocation of additional resources to
each of the several agencies to build their respective capabilities, or to set
up a new techint agency. It was envisaged that this agency would function
in a neutral manner, without itself acquiring the role of an intelligence
agency. The task force opted for the latter.
The seed of the National Technical Facilities Organisation (NTFO) was thus
sown, yet, it took several years to issue the classified (top secret)
notification before NTFO could be created in 2004.
It was meant to attract the best multi-discipline scientific, technical and
intelligence talent from within the country and abroad to set up world-class
SIGINT, IMINT, CyberINT and cryptography facilities based on cutting-edge
Its inputs were meant to be shared with the various intelligence agencies in
real time.
The chairman of the NTFO was given considerable discretion in the areas of
appointments and acquisitions.
To give the organisation greater freedom to fulfil its mandate, it was placed directly
under the NSA and the PMO.
At the instance of its first Chairman NTFO was renamed as NTRO.
Evaluation of the success/failures of NTRO
NTRO inherited a number of R&AW's techint assets. An unhealthy rivalry over division of
men and material between the parent body, i.e. R&AW and the newborn agency, NTRO has
unfortunately set in.
NTRO has been bogged down by serious teething troubles, with squabbles among
its hybrid cadres, brought in from the scientific (drawn mainly from the DRDO), intelligence
and defence services, accentuated by the absence of approved recruitment rules.
It has also been inundated by a spate of complaints and media leaks by disgruntled and
unscrupulous elements, who have been trying to push their personal agendas at the cost of
the organization's future. The appointment of a suitable person to the post of its chairman
has been an issue.

Thus NTRO continues to be more or less in a state of limbo, performing far below its

Trends in India Japan Relations

August 13, 2014 1 Comment
Year 2012 marked the 60th anniversary of the establishment of diplomatic relations between
India and Japan. Certain economic and geopolitical circumstances make India and Japan
global partners.
Economic Circumstances:
India is an attractive market for Japanese business and industry. This is more so
because Japan's own domestic market is expected to shrink drastically in the
coming decades due to a rapidly ageing society.
In recent times Japan-China relations have been deteriorating due to territorial
disputes. Thus Japan is trying to find a large and growing market comparable to
China. India can fill this void.
Moreover, many Japanese companies that have invested in China are looking for
another country as well to invest in, in addition to China. This has been mainly
because of the so-called "China risk". It is now considered a realistic threat given
China's government-supported demonstrations targeted against Japanese
businesses during the height of the East China Sea islands dispute last year.
India is a growing market, which makes it attractive to Japanese investors. Indeed,
Japan's economic relations with India are now quite deep, as Japan's share of
exports as well as investments to India in total, has maintained an upward trend.
Japan's positive approach towards India is also beneficial for India. India is the
largest recipient of Japanese official development assistance, and Japan is the
third-largest investor in India.
Japanese foreign direct investment can be utilised effectively for infrastructure
development in India, including train systems and power generation, in order to
swiftly tackle congested traffic and shortage of electricity in urban areas.
Geopolitical Circumstances
Given their shared concerns about China, it makes sense for India and Japan to
draw closer. India also has serious territorial disputes with China, and it is not at all
a bad idea for India to establish close ties with Japan, which has similar concerns.
From a geopolitical perspective, securing sea lanes in the Indian Ocean is critical
for Japan, since natural resources, including oil and gas, are shipped through it to
Japan. India can prove to be an asset in this regard.
As a neighbouring big country in Asia that shares the values of democracy, human
rights and the rule of law, India is a key partner for Japan in terms of national
security and peace, and the stability of the region.
The domestic and regional political and economic environment is conducive for a
deepening of the Japan-India bilateral relationship, and for the two countries to
cooperate closely on security. Cooperation between them can influence the future
direction of not only Asia, but also the international community.
In view of the changed political conditions in Japan in the recent past amongst other
changes, it is now considered one of the best times for Japan and India to deepen their
relationship. Both need to re-confirm their commitment towards remaining important and

amicable partners through deeper exchange and cooperation in all areas, while continuing
to enhance their ties, encouraging harmonious relations and improving mutual

Algorithm Trading
August 13, 2014 No comments
Algorithm Trading, also called Automated Trading, Black-Box Trading or Algo-Trading is the
use of electronic platforms for entering trading orders. It is driven by algorithms which use
vast volumes of data that modern trading operations generate and evaluate it in ways and
at speeds that humans cannot. It focuses on speed and gains leverage by cutting out the
human factor from decision-making. The algorithms used execute pre-programmed trading
instructions whose variables may include timing, price or quantity of the order. It is used
widely by investment banks, pension funds and mutual funds.
The advantages of Algorithm Trading include:

It gives better market insights and generates additional profits

They can be programmed to have better sense than some human traders
It minimizes emotions throughout the trading process and thus makes it easier to
stick to the plan
It helps preserve discipline even in volatile markets
It improves order entry speed

The disadvantages of Algorithm trading are as follows:

Humans cannot evaluate a breaking story or cancel trades as fast as Algorithm

Trading. This gives credence to the idea that markets are no longer for mere
mortals, but only for specialists who can access heavy-duty computing and bulk
Computers may relinquish and regain positions several times per second, creating
"hot potato" volumes in trading.
Its mechanics are poorly understood since algo traders are generally tight-lipped
about technicals.
Trading machines usually react to uncertainty conservatively, dropping their
positions and exiting the market. The exit of machines in a flock can exacerbate
the negative human sentiment prevailing in markets.
First-come-first-served trading disproportionately advantages firms that invest in
faster computers and thicker data pipes, encouraging a digital arms race. Further,
firms that are physically located closer to markets also have a slight edge in the
transmission time of orders.
It has been criticized as systems that look great on paper, but perform terribly in
live markets.
It requires monitoring and cannot be left on its own.

Though it is a sophisticated method of trading, yet it is not infallible. Failures are possible in
this system too.

The next 40 years of development will be substantially different from the past 40 years
August 13, 2014 1 Comment
It has been postulated by many that the development process that India is likely to
experience in the future would be very different from what it has been during the last few
decades, in the post independence period. Though inter-regional differences with respect to
the level of development exist, yet it has been argued that our country as a whole is on the
cusp of change. This argument is usually based on the following premises:

Though agriculture contributes least to the GDP even now, yet more than half of
the country's population is in one way or the other employed in the primary sector.
In the coming years, a shift in this regard is likely to be experienced.
Further a shift in the nature of agricultural produce from cereals to non-cereal and
commercial crop production is expected in the times to come.
Since the level of urbanization has been increasing, the pressure on urban
infrastructure, viz. clean water, housing, sanitation etc. is likely to be more than
rural infrastructure in the future.
The Right to Education is likely to reduce the deficit in primary education, if
implemented well. Thus more focus is likely to be on higher education in the future.
Since lifestyle habits of Indians have been changing, there have been increasing
instances of lifestyle diseases. As sanitation and food security situation improves,
the instances of communicable diseases may come down. With focus on women
and child health, the percentages of maternal and infant mortality are likely to
decrease. Thus new diseases arising due to the urban lifestyles and old age
problem may be the focus areas in the future.
Focus on skill acquisition as an alternative to dole outs for removing poverty may
gain more support in the future, as the national discourse changes and there is
more acceptance of a liberalized economy as opposed to a centralized, socialistic,
planned economy.
Alternative sources of energy are likely to get more attention as opposed to
imported fossil fuels.
There may also be a change in our external sector as the importance of Asian
countries for trade grows while that of OECD and Russia decline.

These changes are likely to be experienced in the next 40 years, thus changing our
development process.

Islamic Banking
August 13, 2014 1 Comment
Islamic banking is banking or banking activity that is consistent with the principles of sharia
and its practical application through the development of Islamic economics. As such, a more
correct term for "Islamic banking" is "Sharia Compliant finance".
Sharia prohibits the fixed or floating payment or acceptance of specific interest of fee for
loan of money.

It is different from regular banking in that it prohibits earning of interest (or riba)
through the business of lending.
It also prohibits direct or indirect association with businesses involving alcohol,
pork products, firearms and tobacco.
It also does not allow speculation, betting and gambling.

Islamic banking is following five ways:

Mudarabah, a profit-sharing agreement,

Wadiah, a safe keeping arrangement,
Musharakah, or a joint venture for a specific business,
Murabahah, cost plus arrangement where goods are
determined margin of profit, Ijirah, a leasing arrangement.
Why Islamic Banking is Not Permitted in India?




According to the RBI, Islamic banking is not consistent with current banking laws in India.
Islamic banking which does not allow charging interest or taking of interest is inconsistent
with our existing laws, Charging of interest is necessary to conduct banking operation in
India because banks have to borrow on which it has to pay interest rate. So government
which has to determine whether they want to permit Islamic Banking and if so they have to
enact a law that is consistent with Islamic Banking".

Key Judgements & Contribution of Justice JS Verma

August 13, 2014 1 Comment


Sarojini Ramaswamy vs Union of India,1992

Nilabati Behra vs state of Orissa, 1993:
S.R. Bommai vs Union of India, 1994
Vishaka & Ors vs State Of Rajasthan & Ors on 13 August, 1997
Further notes:
Late Justice Jagadish Sharan Verma hailed from an Advocate Family. After a successful career
as an advocate and lower judge, he became the acting Chief Justice of the Madhya Pradesh
High Court in October 1985, and became its permanent Chief Justice in June 1986.
He later served three years as Chief Justice in the Rajasthan High Court. At 56, he joined the
Supreme Court as a Judge in June 1989. He was the 27th Chief Justice of India from March
25, 1997 to January 18, 1998. Thereafter he was the chairman of National Human Rights
Commission from 1999 to 2003. He was known for judicial innovation through landmark
judgments, which made him "the face of judicial activism" in India. In the aftermath of the
gang rape in Delhi, Justice Verma was appointed Chairperson of a three member commission
tasked with reforming and invigorating anti-rape law. The formation of the panel as a whole
eventually led to the Criminal Law (Amendment Act), 2013. Verma died from multiple organ
failure on 22 April 2013 at the age of 80.

Justice J S Verma was one of the first Judges to order the release of Maintenance of Internal
Security Act (MISA) detainees during the Emergency. He headed the Commission of Inquiry
set up to determine the nature of the security lapses that led to Rajiv Gandhi's assassination
in 1991. He concluded that the Intelligence Bureau had information of a possible
assassination attempt, but failed to share it with the Tamil Nadu police. The Verma
Commission report was submitted in June 1992.
Key Judgements which made him the face of Judicial Activism in India
Sarojini Ramaswamy vs Union of India,1992

In response to the plea made by the wife of Justice V. Ramaswamy, a motion for whose
impeachment had been moved in Parliament, the Supreme Court held that even if the
President removed a Supreme Court justice under Article 124(4), the concerned judge was
entitled to a judicial review.
Article 124(4) is related to removal of the Judges. It says "A Judge of the Supreme Court shall
not be removed from his office except by an order of the President passed after an address
by each House of Parliament supported by a majority of the total membership of that House
and by a majority of not less than two-thirds of the members of that House present and
voting has been presented to the President in the same session for such removal on the
ground of proved misbehaviour or incapacity."
The Sarojini Ramaswamy case brought the order of the President under Article 124(4) under
Judicial Review.
Nilabati Behra vs state of Orissa, 1993:

Justice JS Verma turned the letter of Nilabati Behra about the death of her 22-year-old son in
custody into a writ petition. His judgement Awarded ` 1.5 lakh as compensation to Nilabati
In his judgement Justice Verma observed: "The right of compensation is some palliative for
the unlawful acts of instrumentalities which act in the name of public interests and which
present for their protection the powers of the state as a shield."
Nilabati Behra vs State of Orissa, 1993 is considered to be one of the two major decisions
on custodial deaths, other being D K Basu v. State of West Bengal.

S.R. Bommai vs Union of India, 1994

A nine-judge bench set aside the Presidential proclamation under Section 356(1) relating to
Karnataka (April 21, 1989). The court held that the President could dissolve a state assembly
only after parliamentary approval.
He could suspend the assembly, subject to approval by Parliament, within two months. Even
so, the proclamations were subject to judicial review.

The SR Bommai case reiterated the stand of the Court that Preamble indicates the basic
structure of the Constitution of India. The judgement noted that.
The Preamble indicates the basic Structure of the Constitution.
A Proclamation under Article 356(1) is open to judicial review on the ground of violating the
basic structure of the Constitution.
It follows that a proclamation under Article 356(1), which violates any of the basic features,
as summarized in the Preamble of the Constitution is liable to be struck down as
A further extension of this innovation is that a political party, which appeals to religion in its
election manifesto, acts in violation of the basic structure, and the President may impose
President's Rule on a report of the Governor that a party has issued such a manifesto.
Vishaka & Ors vs State Of Rajasthan & Ors on 13 August, 1997

Justice Verma will be best remembered for his pioneering judgment in the Visakha case,
which resulted in a series of guidelines to prevent sexual harassment of women at
workplace, to be mandatorily followed till Parliament enacted the Criminal Law Amendment
Act 2013.


Justice Verma is also known for his active role, when he was the CJI, in the enunciation of
Restatement of Values of Judicial Life, a set of principles or guidelines, to informally govern
the conduct of judges of higher judiciary. He was also a great votary of declaration of assets
by judges.
The jurisprudence of Justice Verma is under attack by his critics for imagining a role for the
judiciary which was perhaps not envisaged by our founders, and which it cannot possibly
perform. But his answer during his lifetime was that judicial activism, in the context of
executive and legislative inaction, was justified.

Rationalization of centrally sponsored schemes

August 13, 2014 No comments
The number of centrally sponsored schemes has been trimmed by 2013 from 173 to 170.
The humongous number of these schemes has many raised eyebrows in recent times. The
umber has proliferated at a rapid pace in the past five years. While in 2007-08 they
numbered 99, in 2011-12 their number proliferated to 147. Another 26 scheme that qualify
for central assistance took this number to 173.
In light of issues like federalism and politicization of schemes, it would make sense to trim
and rationalize these schemes. A much smaller number can serve the purpose just as well if
the following points are taken into account:

The schemes should be intelligently designed and restructured to better align

scheme objectives and outcomes.
A move to give states greater flexibility in administering the schemes should begin.
Focus on appropriate targeting of funds, as well as restricting the center's
overreach in taking political ownership of implementation in a way that inhibits the
necessary partnership that big development schemes require.
Schemes with small outlays should be implemented by states or merged with other
New Centrally sponsored schemes should be limited to flagship programmes for
major development needs.
Each new scheme needs to be appraised on its specific merits.
Need to discourage politicization regarding implementation of Central schemes.
Shifting the focus to how effectively a programme is being implemented and

If these and other steps are undertaken, it would not be difficult to reduce the number of
schemes as well as restructure them for better outcomes.
Last Updated: August 13, 2014

National Policy for Children, 2013

August 13, 2014 1 Comment
The National Policy for Children, 2013 aims to protect and encourage the rights of the
children to survival, health, nutrition, education, development, protection and participation.
The policy, as notified, is a paradigm shift from the more common patronizing approach to
children with disabilities seen in the mainstream. Further it has incorporated major inputs of
various organizations regarding the needs of children with disabilities.
The salient features of the children's policy include the following:

It focuses on the prevention of disabilities. Since it has been estimated that a large
percentage of disabilities in India are preventable, so it is expected that with early
interventions, further disabilities could be treated and managed, after which
rehabilitation and social support measures need to be provided.
It recognizes that, at times, children with disabilities are not given access to
education and may be in need of additional care and protection. They are included
in a larger group of vulnerable children who need to be tracked and have access to
their right to education.
It highlights the need for schools to be inclusive and for the availability of trained
teachers and special educators, appropriate pedagogy and education material,
barrier-free access for mobility, functional toilets and co-curricular activities
towards the development of a child's fullest potential and autonomy, as well as
dignity and self-worth.
It specifically states that the views of children with disabilities must be promoted
and strengthened within the family, community, schools and institutions, different
levels of governance, as well as in judicial and administrative proceedings
concerning them.

It is the first policy document in India that specifically highlights "disability" as a

ground for discrimination that must be countered.

Though some suggestions of the civil society did not make it to the final draft, still, these
provisions are a good reflection of the United Nations Convention on the Rights of Persons
with Disabilities, which emphasizes the rights of children with disabilities to express their
views freely on all matters affecting them, on an equal basis with other children.
Though it is yet to be seen how this translates into real practice, still it gives the hope that
children in our country can look forward to a future without discrimination.

National Cyber Security Policy

August 13, 2014 No comments
In 2013, Ministry of Communication and Information Technology of the Government of India
had released the National Cyber Security Policy to protect information, such as personal
information, financial/banking information, sovereign data etc.
The policy has proposed to set up different bodies to deal with various levels of threat, along
with a national nodal agency, to coordinate all matters related to cyber security. The
government has also proposed to set up a National Critical Information Protection Centre
(NCIIPC), which will act as a 24*7 centre to ward off cyber security threats in strategic areas
such as air control, nuclear and space. It will function under the National Technical Research
Organization, a technical intelligence gathering agency controlled directly by the National
Security Adviser in the Prime Minister's Office. The existing agency, Computer Emergency
Response Team (CERT) will handle all public and private infrastructures.
As part of the policy, the government has proposed to create a workforce of around 500,000
trained in cyber security. It also proposes to provide fiscal benefits to businesses to adopt
best security practices.
The salient features of the policy cover the following aspects:

A vision and mission statement aimed at building a secure and resilient cyber
space for citizens, businesses and the Government.
Enabling goals aimed at reducing national vulnerability to cyber attacks,
preventing cyber attacks and cyber crimes, minimizing response and recover time
and effective cyber crime investigation and prosecution.
Focused action at the level of Government, public-private partnership
arrangements, cyber security related technology actions, protection of critical
information infrastructure and national alerts and advice mechanism, awareness &
capacity building and promoting information sharing and cooperation.
Enhancing cooperation and coordination between all the stakeholderentities within
the country.
Objectives and strategies in support of the National cyber security vision and
Framework and initiatives that can be pursued at the Govt. level, sectoral levels as
well as in public private partnership mode.

Facilitating monitoring key trends at the national level such as trends in cyber security
compliance, cyber attacks, cyber crime and cyber infrastructure growth.