PRS Capsule November 2018
- 27 Dec 2018
- 14 min read
Key Highlights of PRS
- Macroeconomic Development
- Companies (Amendment) Ordinance, 2018 Promulgated
- Comments Invited on Draft Amendments to Companies Act
- Cabinet Approves the Allied and Healthcare Professions Bill, 2018
- Cabinet Approves Mechanism for Sale of Enemy Shares
- Cabinet Approves Leasing out Six Airports through PPP
- TRAI Releases Consultation Paper on Regulation of Over-The-Top Services
- Cabinet approves Setting up of Central Tribal University in Andhra Pradesh
- Report on Standardization of Exclusions in the Health Insurance Released
- Committee of Experts Releases Report on Audit Firms and their Networks
- CCEA Approves Continuation of the Umbrella Scheme ACROSS
- President Visits Vietnam and Australia
- Vice-President Visits Zimbabwe
GDP grows at 7.1%
- The Gross Domestic Product (GDP) at constant prices grew at 7.1%.
- GDP growth across economic sectors is measured in terms of Gross Value Added (GVA).
- The GVA by all sectors such as, Agriculture, Manufacturing, Electricity, construction and services grew except for the mining and quarrying sector.
Revised GDP data for the period 2004-11 with the base year as 2011-12 released
- The Ministry of Statistics and Programme Implementation released the revised GDP data.
- The base year for national accounts was revised from 2004-05 to 2011-12.
- The methodology to calculate GDP was revised as per the recommendations of the United Nations System of National Accounts, 2008.
- As per the revised data, the share of primary (includes agriculture, mining, forestry) and secondary (includes manufacturing, construction and power generation) sectors in total GVA has increased.
- The share of tertiary sector (includes economic activities related to financial services, trade, transport, communication, and public administration) has decreased.
Industrial Production grew by 5.2%
- The Index of Industrial Production (IIP) grew by 5.2% in the second quarter (July-September) of 2018-19.
- Electricity saw the highest increase of 7.5%, followed by an increase of 5.5% in manufacturing, and 1% in mining.
Companies (Amendment) Ordinance, 2018 Promulgated
- The Companies (Amendment) Ordinance, 2018 amends several provisions in the Companies Act, 2013 relating to penalties, among others.
Key features of the Ordinance
- Re-categorisation of certain offences: The Ordinance re-categorizes 16 of compoundable offences as civil defaults and the adjudicating officers (appointed by central government) may now levy penalties on defaults. These offences include: (i) issuance of shares at a discount, and, (ii) failure to file annual return.
- Commencement of business: The Ordinance states that a company may not commence business, unless it: (i) files a declaration within 180 days of incorporation and (ii) files a verification of its registered address with the Registrar of Companies within 30 days of incorporation.
- Change in approving authority: Under the Act, change in period of financial year for a company associated with a foreign company, has to be approved by the National Company Law Tribunal.
- Compound: Under the Act, a regional director can compound (settle) offences with penalty of up to five lakh rupees. The Ordinance increases the limit to Rs 25 lakh.
Comments Invited on Draft Amendments to Companies Act
- The Ministry of Corporate Affairs issued a notice inviting comments on draft amendments to the Companies Act, 2013.
- The amendments are to strengthen the corporate governance and enforcement framework under the 2013 Act.
- Key draft amendments include:
- The remuneration of an Independent Director (ID).
- Certain classes of public companies are required to issue shares in dematerialized form only.
- Under the Act, a not-for-profit charitable company could convert itself to any other kind of company.
- Under the Act, companies having: (i) net worth of Rs 500 crore or more, or (ii) turnover of Rs 1,000 crore or more, or (iii) a net profit of five crore rupees or more, is required to spend 2% of its average net profits towards its corporate social responsibility (CSR) policy.
Cabinet Approves the Allied and Healthcare Professions Bill, 2018
- The Union Cabinet approved the Allied and Healthcare Professions Bill, 2018 to regulate and standardise the education and practice of allied and healthcare professionals.
- Allied health professionals include individuals involved with the delivery of health services, with expertise in therapeutic, diagnostic, curative and preventive interventions such as physiotherapists, nutritionists, and lab technologists.
- Currently, there is no comprehensive regulatory framework education and training of allied and healthcare professionals.
- The Bill provides for setting up of an Allied and Healthcare Council of India and State Allied and Healthcare Councils for States.
- These Councils will frame policies and standards, regulate professional conduct, registrations of professionals and lay down provisions for common entry and exit examination.
Cabinet Approves Mechanism for Sale of Enemy Shares
- The Union Cabinet approved the mechanism for sale of enemy shares, under the Enemy Property Act, 1968.
- The central government had designated some properties belonging to nationals of Pakistan and China as ‘enemy properties’ during the 1962, 1965, and 1971 conflicts.
- It vested these properties in the Custodian of Enemy Property for India (CEPI).
- The Enemy Property (Amendment and Validation) Act, 2017 authorised the sale of enemy properties by the CEPI, or any other authority or department on the directions of the central government.
- The Department of Investment and Public Asset Management, Ministry of Finance, has been authorised to sell these enemy shares.
- Proceeds from the sale are to be deposited as disinvestment proceeds in the government account.
Cabinet Approves Leasing out Six Airports through PPP
- The Union Cabinet gave approval for leasing out six airports for operation, management and development under public private partnership (PPP) through a Public Private Partnership Appraisal Committee (PPPAC).
- The airports are Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru currently operated by Airports Authority of India.
- Currently, five airports are being managed under the PPP model these are Delhi, Mumbai, Bangalore, Hyderabad, and Cochin.
- The Union Cabinet also approved the constitution of an empowered group of secretaries to decide on any issue falling beyond the scope of PPPAC.
TRAI Releases Consultation Paper on Regulation of Over-The-Top Services
- The Telecom Regulatory Authority of India (TRAI) invited public feedback on a consultation paper on the regulatory framework for over-the-top (OTT) communication service providers.
- These are providers that offer information and communication technology services, but neither operate networks nor lease network capacity from a network provider.
- OTT service providers rely on the internet to provide services.
Key observations made by TRAI
- Economic aspects: The OTT services and data traffic could also lead to growth in business for Telecom Service Providers (TSP).
- Current regulatory framework: TRAI observed that while OTT entities may provide the same services as TSPs, they are not bound by any regulatory obligations to address consumer concerns.
- Data protection: OTT services store, and transfer data of citizens and companies across different countries. TRAI noted that this creates ambiguity regarding data protection norms.
- Changes in regulation: TRAI suggested various alternative approaches for the regulation of OTT services and TSPs such as, relaxing the regulatory regime, issues to be resolved through market forces etc.
Cabinet approves Setting up of Central Tribal University in Andhra Pradesh
- The Union Cabinet approved an amendment to the Central Universities Act, 2009 for setting up of Central Tribal University in Andhra Pradesh.
- The Central Tribal University will be set up in the Vizianagaram district of Andhra Pradesh.
Report on Standardization of Exclusions in the Health Insurance Released
- The Insurance Regulatory and Development Authority of India (IRDAI) had constituted a Working Group on ‘Standardization of Health Insurance Contracts’ in July 2018.
- The Group was tasked with reviewing existing exclusions (conditions or claims not covered by a policy) in health insurance contracts and presenting recommendations that lead to their standardization.
- Key observations and recommendations:
- Reduction in the number of exclusions, the group stated that denying coverage for diseases, contracted after an individual has been insured, defeats the purpose of health insurance and leads to a loss of confidence in the healthcare sector.
- To reduce this it recommended inclusion of all health conditions contracted after policy inception which are not covered or listed as permanent exclusions.
- It suggested that the list of exclusions to be reviewed regularly and the list of permanent exclusions allowed at the time of underwriting be reviewed on a yearly basis by a committee set up by IRDA.
- A Health Technology Assessment Committee to be formed to examine and approve the inclusion of advancements in medical technology and treatments.
Committee of Experts Releases Report on Audit Firms and their Networks
- The Committee of Experts, Chaired by Mr. Anurag Agarwal submitted its report on audit firms and their networks to the Ministry of Corporate Affairs.
Key recommendations include:
- Audit Structures in India: The Committee observed that there are three types of structures.
- Domestic networks of firms set up by Chartered Accountants (CA) registered with the Institute of Chartered Accountants of India.
- International networks where domestic CA firms tie up with entities outside India.
- International networks where domestic CA firms tie up with Indian member firms of an international entity.
- Oversight of audit profession:
- The Committee noted that the National Financial Reporting Authority (NFRA) must be empowered to publish their audit.
- It noted that loss of reputation, from an adverse report, can be an effective deterrent for audit firms to build better internal checks and balances.
- Legal regime of liability:
- On network liability, it recommended that NFRA should be empowered by law to impose monetary penalties on international networks in case of an audit failure or fraud.
- Providing non-audit services: It recommended permitting firms to provide non-audit services to an auditee company.
CCEA Approves Continuation of the Umbrella Scheme ACROSS
- The umbrella scheme Atmosphere and Climate Research-Modelling Observing Systems and Services (ACROSS) consists of nine sub-schemes which address different aspects of weather and climate services, including cyclone warnings, storm surges, heat waves, and thunderstorms.
- The scheme aims to improve weather and climate forecasts through sustained observations, research and development, and adoption of effective dissemination and communication strategies.
President Visits Vietnam and Australia
- The President Mr. Ram Nath Kovind visited Vietnam and Australia. Nine agreements were signed with the two countries.
- India and Vietnam signed four agreements related to cooperation in the field of communications and Confederation of Indian Industry and the Vietnam Chamber of Commerce and Industry.
- India and Australia signed five agreements in various sectors including: (i) cooperation in the area of disability, (ii) facilitating bilateral investment, (iii) collaboration in science and innovation, as well as (iv) cooperation in agricultural research and innovation.
Vice-President Visits Zimbabwe
- The Vice-President Mr. Venkaiah Naidu visited Zimbabwe and signed six agreements for cooperation in various areas including: (i) arts, culture, and heritage, (ii) medicine and homeopathy, and (iii) geology, mining, and mineral resources.