The Ministry of Communications and Information Technology released three draft policies on telecommunications, information technology and electronics. The Ministry has invited comments on the draft policies, which may be sent to epolicy2011@mit.gov.in. These policies have the common goal of increasing revenues and increasing global market share. However, the policies may be incompatible with the Direct Taxes Code Bill, 2010 (DTC) and India’s international obligations under the General Agreement on Tariff and Trade (GATT). Below we discuss these policies within the scope of the GATT and the DTC. The draft National Information Technology Policy, 2011 aims to formulate a fiscal structure to attract investment in the IT industry in tier II and III cities. It also seeks to prepare SMEs for a competitive environment by providing fiscal benefits. Similarly, the draft National Electronics Policy provides for fiscal incentives in manufacturing on account of infrastructure gaps relating to power, transportation etc. and to mitigate the relatively high cost of finance. The draft policy also provides preferential market access for domestically manufactured or designed electronic products including mobile devices and SIM cards. The draft National Telecom Policy seeks to provide fiscal incentives required by indigenous manufacturers of telecom products and R&D institutions. The theme of the DTC was to remove distortions arising from incentives. The detailed note annexed to the Bill states that “tax incentives are inefficient, distorting, iniquitous, impose greater compliance burden on the tax payer and on the administration, result in loss of revenue, create special interest groups, add to the complexity of the tax laws, and encourage tax avoidance and rent seeking behaviour.” It further notes that the Parliamentary Standing Committee on finance had recommended removal of exemptions other than in exceptional cases. As per the Department of Revenue, tax holidays should only be given in businesses with extremely high risks, lumpy investments and lengthy gestation periods. The DTC also removes location-based incentives as these “lead to diversion of resources to areas where there is no comparative advantage”. These also lead to tax evasion and avoidance, and huge administrative costs. The proposals to provide fiscal incentives in all three draft policies contradict the direction of the direct tax reforms. Article 3 of GATT provides that foreign products should be accorded the same treatment accorded to similar domestic products in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution and use. The provisions in the draft electronics policy to secure preferential market access to products manufactured in India may contravene this Article. In granting such fiscal and trade incentives, the policies may be contrary to the approach adopted in the DTC and India’s obligations under the GATT. These draft policies will have to be reconciled with tax reforms and trade obligations.
On November 28, 2012, the Comptroller and Auditor General submitted its report on the implementation of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). According to the report most of the projects initiated under JNNURM have not been completed. For instance with respect to urban infrastructure projects, only 231 projects out of the 1298 sanctioned projects have been completed. Similarly, with respect to housing projects, only 22 of the 1517 projects have been completed. Some of the other key recommendations of the report are:
The need and objectives of JNNURM According to the 2011 census India’s urban population has increased from 286 million in 2001 to 377 million in 2011 . With the increase in urban population, there is a requirement to improve the urban infrastructure and improve the service delivery mechanisms. With these specific objectives in mind, the central government launched the Jawaharlal Nehru National Urban Renewal Mission 2005-2006. The aim of the Mission is to encourage reforms and fast track planned development of identified cities (such as cities with a population of more than 1 million as per the 2001 census). JNNURM has two main components namely : (i) Urban Infrastructure and Governance and (ii) Urban Infrastructure Development for Small and Medium Towns. The duration of JNNURM was from 2005-06 to 2011-12. However, as the projects have not been completed the Government has extended its duration until March 2014. Funds for JNNURM The funds for JNNURM are provided through the Additional Central Assistance. This implies that the funds are provided as grants to the states directly from the centre. In the 2012 Union Budget, the central government has allocated Rs 12,522 crore for JNNURM. This represents around 10 % of the total central assistance through the different schemes to states and union territories in 2012-13. As on June 30 2012, 554 projects at a total cost of Rs 62,253 crore have been sanctioned under the Urban Infrastructure and Governance sub-mission of JNNURM. The table below shows the status of the sanctioned JNNURM projects in the different states. State wise status of the projects under JNNURM (as on August 6, 2012)
| Name of State | Total Allocation (Rs Lakh) | Number of sanctioned projects | Completed Projects |
| Andhra Pradesh | 2,11,845 | 52 | 18 |
| Arunachal Pradesh | 10,740 | 3 | NA |
| Assam | 27,320 | 2 | NA |
| Bihar | 59,241 | 8 | NA |
| Chandigarh | 27,087 | 3 | NA |
| Chattisgarh | 24,803 | 1 | NA |
| Delhi | 2,82,318 | 23 | 4 |
| Goa | 12,094 | 2 | NA |
| Gujarat | 2,57,881 | 72 | 40 |
| Haryana | 32,332 | 4 | NA |
| Himachal Pradesh | 13,066 | 5 | NA |
| Jammu & Kashmir | 48,836 | 5 | NA |
| Jharkhand | 94,120 | 5 | NA |
| Karnataka | 1,52,459 | 47 | 22 |
| Kerala | 67,476 | 11 | NA |
| Madhya Pradesh | 1,32,850 | 23 | 7 |
| Maharashtra | 5,50,555 | 80 | 21 |
| Manipur | 15,287 | 3 | NA |
| Meghalaya | 15,668 | 2 | NA |
| Mizoram | 14,822 | 4 | NA |
| Nagaland | 11,628 | 3 | NA |
| Orissa | 32,235 | 5 | NA |
| Punjab | 70,775 | 6 | 1 |
| Puducherry | 20,680 | 2 | NA |
| Rajasthan | 74,869 | 13 | 2 |
| Sikkim | 10,613 | 2 | NA |
| Tamil Nadu | 2,25,066 | 48 | 12 |
| Tripura | 14,018 | 2 | NA |
| Uttar Pradesh | 2,76,941 | 33 | 4 |
| Uttarakhand | 40,534 | 14 | NA |
| West Bengal | 3,21,840 | 69 | 15 |
Source: Jawaharlal Nehru National Urban Renewal Mission; PRS.
