India’s sovereign taxation rights on capital gains cannot be held hostage to its bilateral investment treaties with other countries The Permanent Court of Arbitration (PCA) tribunal in The Hague has rejected the back tax demands of Indian tax authorities in both, the Cairn and Vodafone cases. These back taxes relate to capital gains made on transactions in 2006-2007. According to the PCA, the demands have been rejected on two counts. First, they violate India’s obligations under Bilateral Investment Treaties. Second, they are based on a retrospective amendment to a tax law passed in 2012. Both the arguments are untenable. As regards the first, tax is levied on the earnings of the companies from their operations in India. The Government has done nothing...
More Comments are closed
Articles
Many a slip…
It is natural to expect an economic rebound in FY 2021-22. But it is vital to take a pragmatic view based on an objective assessment of how the situation unfolds on ground zero The green shoots seen in October, in particular the rise in the Index of Industrial Production (IIP) by 3.6 per cent, have prompted agencies to revise their growth assessment for the current financial year (FY) from the minus 9.5-10.5 per cent projected earlier to minus 7.5-8.5 per cent, now. For the FY 2021-22, when the impact of the virus is expected to subside to a large extent due to the availability of the vaccine, it is only natural to expect an economic rebound. However, it is necessary...
More Comments are closed
No power in these reforms
Just as the UDAY scheme was meant to extinguish the liabilities of discoms, the proposed electricity distribution reform programme, too, seeks to give them the money on a platter The Government is expected to announce a Rs 3,00,000 crore electricity distribution reform programme to reduce losses and improve the efficiency of power distribution companies or discoms. Christened ‘Reforms-Linked, Result-Based Scheme for Distribution’, the move is aimed at helping discoms trim their electricity losses to 12-15 per cent from the present level and gradually narrow the deficit between the cost of electricity and the price at which it is supplied, to ‘zero’ by March 2025. This is quite similar to the Ujwal Discom Assurance Yojana (UDAY) launched in 2015, wherein the...
More Comments are closed
Don’t squeeze PSUs
The Govt should collect money from all those who owe it instead of squeezing CPSEs for bridging fiscal gaps. This is neither healthy for the economy nor good for the enterprises The Department of Investment and Public Asset Management (Dipam) has come out with a circular requiring Central Public Sector Enterprises (CPSEs) to pay interim dividend every quarter or half-yearly, depending on whether it is a relatively higher dividend (100 per cent or Rs 10 on a share of Rs 10) or less. Even those which can’t pay the prescribed “minimum” must give an interim dividend. Further, at least 90 per cent of the projected annual dividend should be paid as interim. Even as the bureaucrats justify this in terms...
More Comments are closed
Farm Laws: Centre must not yield to ‘mandatory MSP’
Mandatory MSP and Levies on non-APMC markets will be an assault on the reforms the Union government has ushered in with the new farm laws Currently, under the APMC system, a farmer has to pay three levies on the produce she brings to the mandi, notified by the state government under its APMC Act. —————————————————————— To address the concerns of agitating farmers over the three farm bills enacted in September, the Union minister for agriculture & farmers welfare, NS Tomar, has agreed to consider (i) strengthening the APMC (Agricultural Produce Market Committee) by imposing levies at ‘uniform’ rate on purchase at APMC and non-APMC platforms—latter now permitted under the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; and...
More Comments are closed
Checks and balances
Crony capitalism has also happened in public sector banks. There is a dire need to strengthen regulatory oversight to guard against irregularities in running all banks The recommendation of an Internal Working Group (IWG) set up by the Reserve Bank of India (RBI) to allow industrial houses to own banks — if they meet the criterion — has invited strident criticism from experts, including the former RBI Governor Raghuram Rajan. Asking how a borrower could also be a lender, they have debunked the idea, stating that this would lead to misdirected lending, mostly to entities belonging to the industrial house that owns the bank. This apprehension is valid but the misuse of public money can happen in any bank, irrespective of the...
More Comments are closed
Plug the leaks
The Government should stop selling food at a subsidised price through the PDS. Instead, it should limit its role to crediting subsidy directly to the accounts of beneficiaries Since 2014, the Narendra Modi Government has weeded out close to 44 million bogus ration cards by using the Information Technology (IT) infrastructure viz. digitisation, seeding of Aadhaar on ration cards, electronic point of sale machines at retail shops and so on. However, this addresses only a small aspect of the problem and that, too, is unlikely to be rooted out completely with the use of technology alone. Besides, large-scale diversion and black marketing of grain, inclusion of the privileged among beneficiaries, a ballooning subsidy bill and so on will persist so long as...
More Comments are closed
Fertiliser DBT an illusion
Despite tall claims made by the UPA and the NDA dispensations since 2012, a gradual transition to direct cash or benefit transfer of subsidy to the farmers has not been done The additional provision of Rs 65,000 crore towards fertiliser subsidy (over and above the Rs 71,000 crore allocated in the Budget for 2020-21), that was announced by the Finance Minister under “Stimulus- III” on November 12, will help in clearing all pending dues to the industry. This has led the latter to believe that this is a precursor to a gradual transition to direct cash or benefit transfer (DBT) of subsidy to the farmers. This is illusory, as despite tall claims made by the UPA and the NDA dispensations...
More Comments are closed
Nix priority sector lending
The policy — a legacy of the socialist era — has led to blatant misuse and misappropriation of funds and is far from helping those for whom it is intended On September 4, the Reserve Bank of India (RBI) introduced changes in the norms for priority sector lending (PSL) with the stated objective of “enabling better credit penetration to credit-deficient areas, increase in lending to small and marginal farmers and boosting credit to renewable energy and health infrastructure.” Under PSL, the RBI mandates a certain percentage of a bank’s lendable resources to specified areas. The policy — a legacy of the socialist era — has led to blatant misuse and misappropriation of funds and is far from helping the most vulnerable groups...
More Comments are closed
Food for thought
The co-existence of APMC and non-APMC markets giving competition to each other is the best foot forward for ensuring a fair deal to farmers The enactment of the three farm laws by the Central Government has triggered agitations by farmers’ organisations and a spate of counters, specially from non-NDA ruled States. Their main worry is that growers won’t get the Minimum Support Price (MSP) on sales made outside the Agricultural Produce Market Committee (APMC) mandis (markets). All this, when it is well-known that under the APMC, agriculturists are already getting a raw deal. The constitutional validity of the farm laws has been challenged in the Supreme Court, too, with the Chhattisgarh Government arguing that these have in effect repealed the...
More Comments are closed