Update on India’s States: December 10, 2015

This week: the draft model Goods and Services Tax law is a compromise that could help move the tax over the finish line; President Mukherjee signs Gujarat’s controversial labor law reforms; Maharashtra firms can now self-certify on pollution controls; Maharashtra approves law allowing women to work at night; Delhi switches to alternate-day driving; Telangana is building industrial parks for Chinese businesses; West Bengal is developing India’s largest coal mine.

Center-State relations

The government is circulating a draft of the model goods & services tax (GST) law that sets specific rates for the GST, gives the proposed GST Council power to make all decisions related to the tax, and prevents states and the Center from unilaterally exempting any good or service from the levy. These clauses partly address the opposition Congress Party’s key objections to the law, increasing the likelihood that it will support the GST Amendment in Parliament. Source: Economic Times

One of India’s riches temples, the Sri Venkateswara Swamy Temple in Andhra Pradesh, is considering depositing its supply of more than six tons of gold with the government as part of Prime Minister Narendra Modi’s plan to recycle tons of idle gold and cut economy-hurting imports. Gold accounted for 28 percent of India’s trade deficit in 2014. Source: Economic Times

Union transportation minister Nitin Gadkari announced that the central government will conduct road development works worth $7.7 billion in Andhra Pradesh, including a ring road around the state’s new capital city, Amaravati. The National Highways Authority of India will develop at least a 1,200-mile road network in the state. Source: Economic Times

In a bid to reduce the capital’s notorious levels of air pollution, the Delhi government announced driving restrictions to take effect beginning January 1. Next year, odd-numbered cars will only be allowed on the roads on Monday, Wednesday, and Friday, while even-numbered vehicles will only run on Tuesday, Thursday, and Saturday. Source: Financial Express

The Delhi assembly has raised the salaries of members of the Delhi Legislative Assembly by a whopping 400 percent. Aside from the basic monthly salary, the government has also granted a significant hike in allowances. The move makes Delhi’s legislators the highest-paid in India. Source: Financial Express

Privately-run power distribution companies (discoms) in Delhi have told the state government that they could bring down the power tariff by as much as one cent per unit if they are allowed to participate in the federal government’s new scheme to reduce the load of public discom debt. The Delhi discoms are urging the state government to back their debt with tax-free bonds, reducing their borrowing costs. Source: Financial Express

The Delhi Jan Lokpal Bill, 2015, establishing a powerful state anti-corruption office, was passed by the Delhi assembly on December 4. Source: Indian Express


The Bharatiya Janata Party (BJP) suffered a setback in Gujarat’s local elections but retained its long-standing predominance in urban politics. The BJP held on to all six city governments and three-quarters of municipalities, but the Congress Party gained significant ground in the rural areas and now controls two-thirds of district councils and 55 percent of town councils. Congress performed particularly well in districts that are home to high numbers of members of the Patel caste, which has been agitating for a larger share of state benefits. Source: Indian Express

President Pranab Mukherjee has approved Gujarat’s controversial labor reforms bill. The bill proposes a total of 14 amendments to existing state labor laws, including the creation of an arbitration mechanism that can keep industrial disputes out of court. It also allows the state government to forbid strikes by public utility workers for a period of six months to a year and requires employers with more than 20 employees to pay salaries through direct deposit. Source: Times of India


Two and a half years after the Supreme Court directed that state governments re-auction ‘C’ category iron ore mining leases, the Karnataka government is preparing for the auction of 11 such leases, accounting for 140 million tons of iron ore reserves. The electronic auction will take place in February 2016. Source: Financial Express


A new ranking of state economies found that Maharashtra has by far the largest economy of any state in India. Maharashtra’s economy grew 11.69 percent in FY15 to reach $312 billion. Source: Financial Express

Industries in Maharashtra can now self-certify that they have the required pollution control systems in place, a required step in receiving consent to operate from the state Pollution Control Board. Source: Times of India

Maharashtra’s legislature passed the Maharashtra Factories Amendment Act, allowing women to legally work night shifts for the first time. Source: FICCI


Rajasthan has signed a deal to transfer state-owned land to the publicly-owned Saurya Urja Company of Rajasthan Ltd, which is building multiple solar power parks with a total capacity of 300 MW. Source: Economic Times

Representatives of the United States Trade and Development Agency (USTDA) visited Ajmer to launch USTDA’s participation in developing Ajmer as a Smart City. USTDA will present its proposal for development within three months. Source: Times of India


Nearly 300 people have died in Tamil Nadu after crippling rainfall over a period of several days flooded Chennai. The rains grounded flights, caused the cancellation of most trains, and inflicted a city-wide blackout. Source: Reuters

Chennai Port is considering plans to relax the current limit on how long traders can keep cargo on the port’s premises. According to Chennai Port Trust Chairman M A Bhaskarachar, the move is a response to the economic downturn and slowdown in China. Source: Financial Express

The Telangana government plans to set up integrated industrial parks for Chinese small and medium enterprises, starting with one near Hyderabad that will be built in collaboration with China’s Hunan Province. Chief Minister K Chandrasekhar Rao led a delegation to China in September to demonstrate Telangana’s interest in investment. Source: The Hindu

The state government will soon issue letters of intent to developers who have qualified to install solar power plants in Telangana. The letters were delayed by more than a month while the Telangana government sought options for lowering the solar tariff to the levels reached in more recent auctions. Source: Financial Express


Campaigning for the 2017 legislative elections is likely to begin early this year, with both the ruling Samajwadi Party and the opposition Bahujan Samaj Party set to launch their campaigns by January 2016. Both sides are promising to run on a platform of more effective and inclusive development. Source: Economic Times


Chief Minister Mamata Banerjee announced the creation of a special purpose entity, Bengal Birbhum Coalfields Ltd, to develop India’s largest coal mine in the state. The Deocha-Pachami coal block in Birbhum district has a reserve of 2,102 million tons of coal, which will supply power plants in West Bengal and other states. Source: Economic Times


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