2015

Mar

ch

PUNE BRANCH OF WICASA OF ICAI

The Institute of Chartered Accountants of India(Setup by Act of Parliament)

APRIL 2015 - E NEWSLETTER

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Hello Friends..

Glad to get connected with all of you through this e-newsletter. First of all I am thankful to my managing committee colleagues for giving me this important position of WICASA Chairman because of which I am getting opportunity to get connected with my so many future professional colleagues. After taking the charge as WICASA Chairman, the very first task we did was that of a Green initiative. Thanks to CA. Pankaj Mandhane for giving us opportunity to participate in the green initiative movement of Sus- Pashan residents. A group of socially aware citizens have taken this initiative of converting a big hill into a beautiful green place. I appeal all student friends to be in touch with our WICASA team and let’s participate actively in such Green/ Clean Initiatives. I know, you all are very much aware of our Social Responsibilities and will definitely come up and devote your couple of hours at least on monthly basis to make our mother earth better place to live. Friends, as per Board of Studies guidelines we have scheduled WICASA elections of Pune Branch on 26th April, 2015(Sunday). Hope you will take active and responsible participation in the said elections. I am fortunate to have very dynamic WICASA team mates to work with. Earlier as a Secretary of Pune Branch of WIRC of ICAI and now as a Chairman of Pune-WICASA , it has always given

me immense pleasure and valuable experience in working with highly competent team of Pune -WICASA which includes Dhara, Apurva, Karan, Akshay who are really superb personalities and are going to be responsible citizen and hopefully leaders of our Nation. I wish to share with this team that whether you officially hold any position in Pune– WICASA or not, you will always be important and inseparable part of our team. On behalf of Pune-WICASA, I am giving my Best Wishes to all those student friends who are appearing for exams. Believe in yourselves firmly and the best is yours (with full faith that you will give your cent percent in preparations). Please do participate in practice exams/ tests which will help you in big way.

With Warm Regards to All…

Chairman’s Communication

ICAI BHAWAN, Plot No. 8, Parshwanath Nagar, Munjeri, Opp. Kale Hospital, Bibwewadi, Pune - 411037. | Tel: 020 24212251 / 52 | Web: www.puneicai.org | email: wicasa@puneicai.org

CA. Anand JakhotiyaChairman

Ms. Dhara Parmar Vice- Chairperson

Mr. Apurv GujrathiSecretary

Mr. Karan Bharuka Treasurer

CA. Radhesham Agrawal Ex-Officio

Mr. Akshay PanditMember

Mr. Chaitanya Limkar Member

Mr. Raviraj DhengleMember

Pune Branch of WICASA

Managing Committee Members

CA. Anand JakhotiyaChairman Pune Branch Of WICASA of ICAI

Negative attitude is like a punctured tyre, you cannot reach anywhere until you change it. So always think positive and be positive.

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It is said, Three things in life once gone, never come back- Time, Spoken Word and Opportunity; Three things in life that should never be lost- Peace, Hope & Honesty; Three things in life that are most valuable- Health, Love and Family; Three things in life that make a person- Hard Work, Sincerity and Commitment; Three things in life that can ruin a person- Ego, Pride and Anger; Three things in life once lost hard to build- Image, Respect and Trust.The programs in March-2015 providing important inputs to the students included the topics like, How to Face IPCC Exam, How to Face Final Exam, Career Opportunities after CA, Service Tax, and annual program of Gajare Memorial Motivational Speech and Felicitations of the meritorious and successful students of the preceding years examinations.Forthcoming Events of Pune WICASA are, Industrial Visit at John Dere, Seminar on “Depreciation - Schedule II” and “CARO 2015” - Decoding the new regulations.The provisions governing charge of depreciation in the erstwhile Schedule XIV to the Companies Act, 1956 have been replaced with Schedule II to the Companies Act 2013 (New Act). The new Act seeks to consolidate and amend the law relating to the companies taking into consideration best global practices and emerging Indian perspectives. The new Act emphasises on the concept of useful life of assets by providing indicative life and residual value for assets in Schedule II.Accordingly, to facilitate the students of Chartered Accountancy Course understand the requirements for implementation of Schedule II and CARO – 2015.Further, Ministry of Corporate Affairs (MCA) on 10 April 2015 issued the Companies (Auditor’s Report) Order, 2015 (CARO – 2015) prescribing certain reporting requirements for auditors of certain class of companies. Being an auditor, it is imperative for students and members to get acquainted with the applicability of CARO – 2015 and its reporting requirements.Pune WICASA will have a new elected committee in the forthcoming Extra Ordinary General Meeting

(EGM) on 26th April, 2015. All the necessary information is available at the Branch Website in Notice Board Section.As you are aware, the Advanced ITT course is applicable for those students, who have registered for their Practical Training on or after 1st Feb, 2013. It will cover topics such as Advance features of MS Excel & MS Access, ERP using Tally 9, Computer Assisted Audit Techniques, Core Banking Solution & Office Automation and IT Security in CA’s office.

The next examination is due in the month of May, 2015. I wish to extend my best wishes to all the students for their respective examinations. You need to work on your strengths and work upon your weakness. As Swami Vivekanand said, ‘We must overcome difficulty by constant practice. We must learn that nothing can happen to us unless we make ourselves susceptible to it.”“Always look to the bright side, Always keep moving with the tide. From facing challenges never hide, over Stumbling Blocks you must ride.”

Ms. Dhara Parmar

Vice - Chairperson Pune Branch Of WICASA of ICAI

Vice - Chairperson’s Communication

You have to grow from the inside out. No one can teach you, no one can make you spiri-tual. There is no other teacher but your own soul.

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Photo Gallery

The cost of discipline is always less than the price of regret, so self-discipline is the biggest investment for success in life.

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Who needs a Chartered Accountant?Big business houses?? People with millions to invest or manage??Small neighborhood retailers??Manufacturers, Solution providers, Service providers, Government??Yes, they all need CAs!The multi-faceted knowledge which a CA enjoys through unique academic programme, blended with practical training is what the business and industry need today with the advent of liberalization, privatization and globalization of the Indian economy.

Today one of the National challenges is: “How do we get maximum economic benefit for the given investment??” I believe this is our core competence. The CAs have such an integrated knowledge and experience that they can even provide the leadership to certain industries and establishments. In fiscal matters one cannot ignore the role of a Chartered Accountant.

The CA of today not only quenches the thirst of the very rich by acting as a score keeper of pecuniary transactions, controller of finance, counselor for business decisions, supervisor of legal compliance, negotiator with contractors but also helps an ordinary person in keeping his business on track and aid him in taking major financial decisions.

CAs are not merely chief accountants today, they are the occupants of the board room!

The time has gone when a CA used to sit as a chief accountant only-today my CA sits in the board room as ‘strategic partners’ and ‘business solution providers’.

It is a thing of the past, when the job of a CA was just to make the simplest receipts and payment account and tabulate the profits of the company by drafting its’ balance sheet.

The Chartered Accountant’s help and advice were sought by the management for improvement in profit and profitability of the business, for appropriate investment decision, in restructuring of the business and generally

in many other important areas of business.The CA of today undertakes responsibilities ranging from:-

CAs are not merely ‘’post-mortem officers’’!

CAs are not mere checkers, compliers or statistical helpers who just pin-point the right and the wrong and put red marks in the books of accounts. They don’t desert their client as helpless after overburdening him with the realization of the mistakes committed by him. Instead they help him sail through the storm of financial crisis by:-

1) Carrying out feasibility study2) Raising financial resources,3) Organizational development4) Compliance with regulatory framework,5) Capital structure and planning6) Installation of accounting, budgetary control, information system apart from7) Giving advice on complex issues such as joint ventures, foreign collaborations, product pricing, modernization, diversification, mergers, amalgamations, acquisitions, restructuring etc.

Anger is the only evil which makes love invisible for a minute and love is the only worthy fact which is visible even after anger.

“CA: A Business Solution Provider”

Name: Bosky ShahRegistration no.: WRO 0388676

1. Initial discussion on the type of entity to set up.

2. Preparation of the business plan.

3. Assistance with capital rising

4. Treasury and credit control.

6. Tax advice and compliance.

5. Payroll management and processing.

7. Account processing and management reporting.

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CA help you steer through the financial maze and reach the desired line!

The Royal Highness, Prince Charles, in his speech to the international federation of accountants, has rightly referred the accountants as ‘’the engine room of the corporate world and of the government’’. CAs help you steer through the financial maze by acting in the following ‘AVATARS’:-

1. CA as the King of the Language of Business by default!

The rigorous training which a CA has underwent and the robust education system he has qualified enable a CA to possess the numerical ability and business acumen through which he can predict the trend of the business.Chartered Accountants as Finance professionals can really add value in the transition period as well as during the new system implementation phase enabling companies to meet stringent reporting timeline.A CA performs the following functions:-1) They operate, interpret, supervise and organize the books of accounts of the business.2) They act as the ‘’means of communication’’ of the language of accountancy by efficiently solving the queries put up by clients, while preparing their books of accounts.3) Chartered accountants are best known as strategy setters. With experience in different fields, different work cultures they can provide a best strategy and solution for all business needs.

2. CA as an Auditor and Investigator:-

Sri Ramakrishna says, “No thief can enter the house

when the master is awake’’, a metaphor, according to which no fraudulent activities and mistakes can be there in the accounts of the companies once they are attested by a CA who presents a ‘true and fair view’ on them.

The auditor is always alert and performs the following functions:-1) He gives an independent assurance of the true and fair view of the financial statements.2) Power of attestation:-a CA attests the financial statements by applying the generally accepted auditing procedures and techniques.3) Investigates-an auditor ensures complete disclosure of the actual position of the business and investigates its financial reports.4) Acts as a mouthpiece to announce the performance of the company by preparing the auditor’s report.

3. CA as a Financial Manager:-

That is not what a CA means when he talks about cash flow projections.On the basis of the management accounting system of the business, a CA answers questions like:-1) When you should arrange short term investments to deal with a cash inflow surplus?2) When are the expenditures too high?3) How much capital investment your business needs?

A CA renders the following services as a financial manager:-

1) He helps in taking important decisions such as mergers, acquisitions, company planning and long term financial projections.2) He controls the funds and assets of the company.3) He prepares and interprets the financial or management report.4.) A chartered accountant can assist an entity in choosing better debt equity ratio by analysing the requirements and applying his experience and various theories.

Races are not won by accelerating in top gear, but they are won by changing the gears at the right time.

Can you foretell the financial position of the company or be assured that your business is still on course or what should be the strategy that your business needs to adopt??No, you can’t.A CA, surly can.

Let’s face it, too many cash flow projections are put together only for the bank managers and tell the story that ‘you want to tell!’

The very motto of our insttute-ICAI “ ya yeshu supthesu jagar-athi’’ which means that ‘This is He that is awake in those who sleep’ comes into play when a chartered accountant acts as an auditor of the business.

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4. CA as Business Process Reengineers:-

Integrity, intelligence, good judgments, a strong analytical predisposition and determination make the CAs of today- business process reengineers.

CAs takes major decisions concerning cost analysis, analysis of new contracts, efficient control over the expenses and the structure of the organization.

Assistance in determining the appropriate selling prices is given to the management by CAs. They help the business in maximizing its profit by reducing manufacturing or service cost. CAs lead and guides the company into prosperity and economic growth

5. CA as a Tax Guru:-

Paying of taxes always gives everybody a headache. A CA can act as balm by:-1) Decoding and simplifying the complicated tax laws so that the client can abide by them2) Rendering expert advice on saving of tax to its clients.3) Preparing of returns for tax purposes.4) Representing the assessee before the income tax authorityYou only fill one tax return each year, whereas, a CA fills in dozens of them. So, you can surly benefit from his professional expertise and experience!Who knows??

“When you have sent your tax return-you will be getting your tax returned!’’

6. CA- Leaders of the Business Society:-

CA is considered to be the most sought after professional with substantial responsibilities. Even the government and society repose a lot of trust and confidence in this profession.

A CA acts as the leader of the business society in the following manner:-1) By acting as an upper-level executive.2) Planning, coordinating and assessing all activities in accounting, auditing, and financial control and budgeting.3) He participates in devising the financial and administration policies of the company.4) He may bag in eminent positions such as that of a vice-president, finance controller or treasurer and even the president.

7. CA – the Jack of all trades:-

They have a great deal of knowledge in every sphere of business activity and can be rightly addressed as the ’jack of all trades’ by acting in the following manner:-1) Legal advisor- the advice of CAs are frequently sought in connection with matters such as formation, financial structure and liquidation of limited companies.2) Executors and trustees- CAs are often appointed as executors under a will or trust in order to carry on administration of the estate or settlement.3) Directorship- Many members of the institute who hold senior positions in the industry are also directors of their companies.4) Share-value evaluator- CAs undertakes the evaluation of shares of public and private companies at the time of amalgamation and re-organization.

Luxury and lies have huge maintenance costs. Truth and simplicity are self-maintained without any cost. Honesty does not always pays, but dishonesty always costs. Lies have speed,

but truth has stamina.

Finally, of course a CA can help you with tax planning and tax returns. Why is such an important role of a CA being covered at such a later stage?? Because, it is the first one that most people think of and I wanted to show you all other things that a CA could do for you first.

CAs not only possesses business acumen and numerical ability but his independence of thought, objectivity and integrity make him-the leaders of the business society.

CAs are considered to be general practitioners of the financial world. A CA can be the captain of industries, big economist, legal advisor, there is no field, which is not open to an intelligent accountant and auditor.

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The ultimate measure of a man is not where he stands in moment of comfort, but where he stands at times of challenge and controversy.

5) Arbitrator- CAs act as an arbitrator for settling disputes especially those related to insolvency works such as preparation of the statement of affairs and the duties of a trustee in bankruptcy or under a deed of arrangement. 8. All around development of the business:-A CA helps you in the all-around development of your business from the making of a ‘scratch’ to the setting up of a ‘benchmark’. He acts as a guiding light in all the stages of the business-from its very inception to its expansion and till the time it is winded-up i.e. at its termination.

9. Continuous knowledge upgradation:-CAs keeps a close eye on all the essentials of their client and offer pro-active advice for all their business problems.

They not only provide you with business solutions under one roof but also regularly and timely upgrade knowledge and awareness.

10. Indian CAs are surveying all over the globe:-

CAs have come a long way- with a few hundred members in 1949 to more than 1, 70,000 members and about 7,66,000 students now. Such a massive increment truly indicates the progress achieved by CAs during the last 62 years.

CA-the need of the hour, even when it comes to your personal affairs!!

But it is a good idea to check up on the financial consequences. It might be a good time for your parents to make gifts that are free of inheritance tax. An hour with a chartered accountant before you say ‘I do’ might even help you pay for the honeymoon!An hour with the chartered accountant can be a solution to many of your business problems!

Conclusion:• There is tremendous scope for the Accounting Profession in India to grow, expand and excel. Business now a day expects Chartered Accountants to be a part of decision making proc ess instead of merely providing inputs for decision making. • The people’s perception of chartered accountants has undergone a sea change, from the traditional core areas of assurance to the modern avatar of a ‘complete business solution provider’.• The financial expertise as well as the business knowledge makes a CA the business leader and a complete business solution provider of today.

When you get married, you may not think about inviting along a chartered accountant to the wedding!

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Smile increases value of face, anger spoils beauty of soul, faith is force of life, confidence is companion of success, so keep smiling.

FDI: INTRODUCTIONFDI is a controlling ownership in a business enterprise in one country by an entity based in another country. Foreign direct investment includes “mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra company loans”. In a narrow sense, foreign direct investment refers just to building new facilities. FDI usually involves participation in management, joint-venture, transfer of technology and expertise. It is usually preferred over other forms of external finance because they are non-debt creating, non-volatile and their returns depend on the performance of the projects financed by the investors .FDI is one example of international factor movements.ORIGIN OF FDI IN INDIA

The Origin of FDI in India dates back in the year 1991 which was introduced by then Finance Minister Dr Manmohan Singh. The reforms and policies on FDI have trickled down to various sectors. When initial reforms took place in 1991, Manufacturing Industry was one of the first sectors to benefit from the reforms as it resulted in changing the overall system. Firstly the new policy of July 1991 sought substantially to deregulate industry so as to promote the growth of a more efficient and competitive industrial economy. Gradually it flourished into other sectors like Infrastructure, Real Estate, Mining, Telecommunications etc.

RECENT DEVELOPMENTS TOWARDS FDI IN INDIA.As the third-largest economy in the world in PPP terms, India has attracted foreign direct investment. During the year 2011, FDI inflow into India stood at $36.5 billion, 51.1% higher than 2010 figure of $24.15 billion. India has strengths in telecommunication, information technology and other significant areas such as auto components, chemicals, apparels, pharmaceuticals, and jewellery. India has a large pool of skilled managerial and technical expertise. India liberalised its FDI policy in 2005, allowing up to a 100% FDI stake in ventures. Industrial policy reforms have substantially reduced industrial licensing requirements, removed restrictions on expansion and facilitated easy access to foreign technology and foreign direct investment (FDI). The upward moving growth curve of the real-estate sector owes some credit to a booming economy and liberalised FDI regime. In March 2005, the government amended the rules to allow

100% FDI in the construction sector, including built-up infrastructure and construction development projects comprising housing, commercial premises, hospitals, educational institutions, recreational facilities, and city- and regional-level infrastructure. Over 2012-14, India extended these reforms to defense, telecom, oil, retail, aviation, railways and a number of other sectors.

NEED OF FDI IN RAILWAYS.Railways is one of the highest employment sectors in India consisting of about 13 lakhs employees. It is also one of the major means of transport for passenger and freight in India and covers a track route of around 65,436 kms in India. Indian railways carries 20 million passengers and 2.8 million tons of freight every day in a network spanning 115,000km. Indian Railways is cash strapped and reported a loss of 30,000 crores in the passenger segment for the year ending March 2014 & an overall loss of nearly 900 crore per month. The loss per passengerKM increased to 23 paise by the end of March 2014. The government’s move to allow foreign investment in creating rail infrastructure was based on its belief that the department’s current model is “unsustainable” and leaves “little” for “modernization”, and its hope that such modernization could “be a significant engine of inclusive growth and development for the country and can potentially contribute an additional 1.5 -2% to GDP (gross domestic product). The railways reported an operating ratio of 93.5% in the last fiscal. Over 70 train accidents took place in the last decade claiming over 1175 lives and lack of technological upgradation has been one of the prime concerns. The cost of modernization of railways is estimated to be Rs 5 lakh Crores. The government is unable to provide the required budgetary support through its Plan fund allocations.FDI POLICY TOWARDS RAILWAYSAs per new FDI policy for railways,

1) 17 key areas of Indian Railways where 100% FDI will be allowed are:-a) Installation and maintenance of Bio-toilets in passenger coachesb) Technological solutions for manned and unmanned level crossings (Construction and maintenance of ROB/RUB /Limited Height Subway)c) Technological solutions to improve safety and reduce accidents (Installation and maintenance of Asset failure

“FDI IN RAILWAYS”Name: Nupura NagarkarRegistration no.: WRO0366329

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There is nothing called darkness. It is just absence of light. Similarly, there is nothing called a problem. It is just absence of an idea to find an appropri-

ate solution.

detection systems (Track/ OHE/ Rolling Stock/Signaling etc.)d) High Speed Train Projects: Projects involving those trains which will run above 250 Km/hr speed; and will have no connection or link with any existing railway line or route. The designer will have complete freedom to exercise his creativity and ideas; Government will also chip in with resources and money.e) Mechanized laundry (land will be leased by Ministry of Railways at Re 1 / annum)f) Producing non-conventional energy from sources such as solar, tidal, wind etc with open market tender being offered.g) Rolling stock procurementh) Commissioning of standalone passenger corridors (branch lines, hill railways etc). (renovation of these lines, optimizing them for better commercial usage)i) Testing facilities and world class laboratories for experimenting new technologyj) Setting up Railway Technical Training Institutesk) Construction of world class passenger terminals and renovation/maintenance of existing stationsl) Creation of Freight terminals/ Logistics Parks in strategically important locationsm) Signalling system – Construction of new facilities to develop advanced systems and renovating/maintaining existing systemsn) Railway Electrificationo) Rolling stock including train sets and locomotives or coach manufacturing and maintenance facilities.p) Dedicated freight lines on a Joint Venture and/or PPP model, with clear revenue sharing guidelines (Private Trains on certain lines will also be allowed from now on..)q) Suburban corridor projects through PPP: All new suburban corridor projects are permissible when launched through PPP route by Ministry of railways . The developer can construct, maintain and operate the corridor within the concession period.

2) Key Projects include-Mumbai Ahmedabad high speed corridor,Mumbai CST Panvel suburban corridor,Coach manufacturing at Kanchrapana in West Bengal.

The whole plan was proposed to be initiated using PPP model.

PPP MODELA public–private partnership (PPP) is a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. PPP involves a contract between a public sector authority and a private

party, in which the private party provides a public service or a project and assumes substantial financial, technical and operational risk in the project. In PPP capital investment is made by the private sector on the basis of a contract with government to provide agreed services and the cost of providing the service is borne wholly or in part by the government. In projects that are aimed at creating public goods like in the infrastructure sector, the government may provide a capital subsidy in the form of a one-time grant, so as to make it more attractive to the private investors. In some other cases, the government may support the project by providing revenue subsidies, including tax breaks or by removing guaranteed annual revenues for a fixed time period. PPPs are claimed to enable the public sector to harness the expertise and efficiencies that the private sector can bring to the delivery of certain facilities and services traditionally procured and delivered by the public sector. PPP is structured so that the public sector body seeking to make a capital investment does not incur any borrowing.The Government of India defines a P3 as “a partnership between a public sector entity (sponsoring authority) and a private sector entity (a legal entity in which 51% or more of equity is with the private partner/s) for the creation and/or management of infrastructure for public purpose for a specified period of time (concession period) on commercial terms and in which the private partner has been procured through a transparent and open procurement system.”

EXAMPLE OF PPP MODEL IN RAILWAYS- BRITISH RAIL Between 1994 and 1997, British Rail was privatized. Ownership of the track and infrastructure passed to Railtrack , passenger operations were franchised to about 25 individual private sector operators and the freight services sold outright to about 5 different companies. The most obvious success of the railway has been passenger growth and freight growth. For 25 years, from 1970 to 1995, people in Britain travelled more and more but they had turned to the car and there was no rail growth. However, the trend has been reversed and Railways have posted a growth of over 50% in the last 10 years in total traffic. The investment which has pleased passengers most in the last ten years is in new trains. About half the national fleet is now new. Out of a total of about 10,700 passenger vehicles in the fleet, 4,800 are new at a cost of €7 billion – almost all funded by the Rolling Stock Leasing Companies (ROSCOs), which have been a reliable source of capital for the industry. Stations, though often a low priority for railway investment, have seen investments about €1.5 billion.

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About 60 entirely new stations have been opened. Some of these are “parkway” stations, with the big car park, situated just outside town. The industry is running nearly 25% more passenger traffic with only about 4% more rolling stock and nearly 50% more freight traffic than ten years ago over exactly the same network. The system is able to achieve 90 % punctuality levels now; though these had dipped to as low as 85 % in 2002. The privatization of Railways in Britain is a success story.

ADVANTAGES OF FDI IN RAILWAYS

Corruption under controlPrivatisation in railways is a necessity now as it will help control corruption in the sector which will eventually increase productivity and thus improve the profits. This can also ensure control the price hike and keeping the rail fares under check.

Better infrastructureThe upcoming budget suggests that there would be better infrastructure in form of bio-toilets, safety, punctuality, speed, cleaner and hygienic stations etc.

Win-win situationFDI will be beneficial for both the private as well as government sector. Government will be able to give state of art facilities to the people with the help of private players who in turn will have a profitable business opportunity.

CHALLENGES FACED FOR FDI IN RAILWAYS - Government needs to learn from its past mistakes in implementing PPP model in Indian Railways. The government opened up the rail freight transport sector to private companies in 2006. Fifteen companies signed agreements to run container trains to transport freight. “It was expected that opening the segment of container train operation to private players will increase the share of rail in total container traffic operation to a target 50% from the current 25-30%,” said a report published in 2013. But that did not materialize, as roughly half of the contracted companies have not even begun to operate.- PPP’s track record with Indian Railways has so far been dismal, though the ever-optimistic Planning Commission continues to provide for substantial outlays under this head in the railway’s Five-Year Plans.- A principal cause of failure of the PPP model in the railways has been its failure to nurture the joint partnership the way it should have. Primarily, it is the complex regulatory framework that has deterred private players from joining hands with the railways. Borne out of past experience they also fear they will

not be allowed a level playing field, and the conditions governing the partnership shall remain heavily biased in favour of the railways.

- Government needs to handle the internal resistance from labour unions for FDI in railways.

CONCLUSIONSEnsuring privatization will prove to be a boon for the Railways as the government is unable to finance the large investment required for the modernization of railways .FDI will be the best option. If handled judiciously it can help in improving the condition of one of the largest railway networks.Mumbai CST Panvel suburban corridor,Coach manufacturing at Kanchrapana in West Bengal.

The whole plan was proposed to be initiated using PPP model.

PPP MODELA public–private partnership (PPP) is a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. PPP involves a contract between a public sector authority and a private party, in which the private party provides a public service or a project and assumes substantial financial, technical and operational risk in the project. In PPP capital investment is made by the private sector on the basis of a contract with government to provide agreed services and the cost of providing the service is borne wholly or in part by the government. In projects that are aimed at creating public goods like in the infrastructure sector, the government may provide a capital subsidy in the form of a one-time grant, so as to make it more attractive to the private investors. In some other cases, the government may support the project by providing revenue subsidies, including tax breaks or by removing guaranteed annual revenues for a fixed time period. PPPs are claimed to enable the public sector to harness the expertise and efficiencies that the private sector can bring to the delivery of certain facilities and services traditionally procured and delivered by the public sector. PPP is structured so that the public sector body seeking to make a capital investment does not incur any borrowing.The Government of India defines a P3 as “a partnership between a public sector entity (sponsoring authority) and a private sector entity (a legal entity in which 51% or more of equity is with the private partner/s) for the creation and/or management of infrastructure for public purpose for a specified period of time (concession period) on commercial terms and in which the private

Anyone can count number of seeds in an apple. But no one can count number of apples in a seed. Future is unseen. Always hope for the best.

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partner has been procured through a transparent and open procurement system.”

EXAMPLE OF PPP MODEL IN RAILWAYS- BRITISH RAIL Between 1994 and 1997, British Rail was privatized. Ownership of the track and infrastructure passed to Railtrack , passenger operations were franchised to about 25 individual private sector operators and the freight services sold outright to about 5 different companies. The most obvious success of the railway has been passenger growth and freight growth. For 25 years, from 1970 to 1995, people in Britain travelled more and more but they had turned to the car and there was no rail growth. However, the trend has been reversed and Railways have posted a growth of over 50% in the last 10 years in total traffic. The investment which has pleased passengers most in the last ten years is in new trains. About half the national fleet is now new. Out of a total of about 10,700 passenger vehicles in the fleet, 4,800 are new at a cost of €7 billion – almost all funded by the Rolling Stock Leasing Companies (ROSCOs), which have been a reliable source of capital for the industry. Stations, though often a low priority for railway investment, have seen investments about €1.5 billion. About 60 entirely new stations have been opened. Some of these are “parkway” stations, with the big car park, situated just outside town. The industry is running nearly 25% more passenger traffic with only about 4% more rolling stock and nearly 50% more freight traffic than ten years ago over exactly the same network. The system is able to achieve 90 % punctuality levels now; though these had dipped to as low as 85 % in 2002. The privatization of Railways in Britain is a success story.

ADVANTAGES OF FDI IN RAILWAYS

Corruption under controlPrivatisation in railways is a necessity now as it will help control corruption in the sector which will eventually increase productivity and thus improve the profits. This can also ensure control the price hike and keeping the rail fares under check.

Better infrastructureThe upcoming budget suggests that there would be better infrastructure in form of bio-toilets, safety, punctuality, speed, cleaner and hygienic stations etc.

Win-win situationFDI will be beneficial for both the private as well as government sector. Government will be able to give state of art facilities to the people with the help

of private players who in turn will have a profitable business opportunity.

CHALLENGES FACED FOR FDI IN RAILWAYS - Government needs to learn from its past mistakes in implementing PPP model in Indian Railways. The government opened up the rail freight transport sector to private companies in 2006. Fifteen companies signed agreements to run container trains to transport freight. “It was expected that opening the segment of container train operation to private players will increase the share of rail in total container traffic operation to a target 50% from the current 25-30%,” said a report published in 2013. But that did not materialize, as roughly half of the contracted companies have not even begun to operate.- PPP’s track record with Indian Railways has so far been dismal, though the ever-optimistic Planning Commission continues to provide for substantial outlays under this head in the railway’s Five-Year Plans.- A principal cause of failure of the PPP model in the railways has been its failure to nurture the joint partnership the way it should have. Primarily, it is the complex regulatory framework that has deterred private players from joining hands with the railways. Borne out of past experience they also fear they will not be allowed a level playing field, and the conditions governing the partnership shall remain heavily biased in favour of the railways.

- Government needs to handle the internal resistance from labour unions for FDI in railways.

CONCLUSIONSEnsuring privatization will prove to be a boon for the Railways as the government is unable to finance the large investment required for the modernization of railways .FDI will be the best option. If handled judiciously it can help in improving the condition of one of the largest railway networks.

Weak people believe in revenge, strong people believe in forgiving and intel-ligent people believe in ignoring. Do not waste your time with explanations.

People only hear what they want to hear.

12

FUN ZO EN

The true strength of a person is judged by not how well he prepares for everything to go right, but how he stands up and moves on after everything has gone wrong.

1. In India largest share of revenue comes from?? a. Direct taxesb. Excise Dutiesc. Sales Taxd. None of these

2. Which of the following is not a method of estimating National Income? a. Value – added methodb. Income Methodc. Export-Import Methodd. Expenditure Method

3. In India , the public sector is most dominant in?a. Steel productionb. Organised term lending financial institutionsc. Transportd. Commercial Banking

4. Name the navigational satellite successfully launched by ISRO recently?

5. Who won the fbb Femina Miss India 2015 title?

6. Name the section of Information Technology Act, 2000 which has been declared by the Supreme Court as unconstitutional?

7. Reserve bank of India reduced Repo rate by?

8. World’s largest and tallest Indian flag was unfurled in?

9. Who sworn-in as the Chief Minister of jammu & Kashmir?

10. Name the captain of Australian cricket team who retired from ODI cricket after winning the ICC Cricket World cup?

11. Recommendation of the 14th Finance Commission was accepted by the Union Government recently. Who is the chairman of 14th Finance Commision?

12. 10th Aero India show was held at?

13. Who was appointed as the Director General of Council of Scientific & Industrial Research?

14. Name the legendary cartoonist, the creator of “Common Man” who died recently?

15. What is the name of the mobile phone-based application launched by Delhi Poilice to ensure safety of women in Delhi?

One word puzzles