Prior to the launch of most revolutionary reform post-independence viz. Goods and Services Tax [GST] on July 1, 2017, finance minister, Arun Jaitely had alluded to the GST Council – all powerful body mandated to decide on tax rates, inclusions/exclusions, exemptions etc – taking up for consideration inclusion of natural gas within the ambit of GST. The idea was to do it in the 18th meeting just before the launch but it appears to have been deferred. Keeping in mind Jaitely’s assurance that Council is open to making changes to accommodate genuine concerns, hopefully, this should happen sooner than later. It is important to understand as to why it must happen without slightest of delay. But, first, a few words...
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Category: Governance reforms
3 years of Modi rule – too early to look for jobs
On completion of three years in office, even as Team Modi gears itself to celebrate with focus on disseminating to public at large its achievements, opposition parties [mainly Congress] have projected a counter narrative purportedly to show it in poor light. Picking on BJP’s promise of creating 10 million jobs every year, they point towards a few hundred thousand jobs generated during the last 3 years to proclaim that the performance of this government is dismal. Coming from a party whose own record on all crucial economic parameters [including jobs] was abysmal, such criticism is laughable. During a decade [2004-2014] of UPA rule led by Congress, employment increased by a meager 15 million which is one-fourth of an increase of...
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Minority shareholders short-changed by Tata
The National Company Law Tribunal (NCLT) has turned down a request from the Shapoorji Pallonji Group [SPG] vide heir two investment outfits viz. Sterling Investment Corporation and Cyrus Investments to initiate action against Tata Sons for ‘oppression of minority interest and mismanagement’. It was done on the ground that the group does not have minimum shareholding of 10% needed to make such an appeal. SPG holds 18.4% shares of Tata Sons which is significantly higher than the 10% threshold. But, its holding plummets to a mere 2.17% once preference shares are also included in computation. Preference shares by nature are entitled to special privileges in regard to dividend payment vis-à-vis equity shares but these carry much lower voting rights or...
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Aadhaar use for nation building – vetoed by judiciary
Vide the Finance Bill for 2017-18, the union government amended the Income Tax Act [1961] by inserting Section 139AA to make seeding of PAN number with Aadhaar mandatory. Henceforth, for financial year 2016-17 [assessment year 2017-18] onwards, it won’t be possible to file IT return using PAN not authenticated with Aadhaar. Further, no fresh PAN will be issued unless the applicant submits his/her Aadhaar number. The validity of the above amendment has been challenged in the Supreme Court [SC] who has questioned government’s decision to make Aadhaar card mandatory in view of its earlier order to make it ‘optional’. At the outset, it is important to ask as to why the government was forced to take such a decision. It...
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Strategic sale of PSUs – to forego, a tactical blunder
In several areas, Modi – government has continued with the policies and programs of the erstwhile UPA – dispensation and has unquestionably bettered upon in implementation and deliverable; for instance, Mahatma Gandhi National Rural Employment Generation Program [MGNREGP] and disbursement of LPG [liquefied petroleum gas] subsidy. Yet, there is one area where the former continues with latter’s legacy with no better outcomes. This has to do with “strategic” disinvestment of Union government’s shares in public sector undertakings [PSUs]. It may be recalled that in its previous incarnation under Vajpayee, the BJP-led NDA dispensation [1998-2004] had vigorously pursued strategic disinvestment, some of high profile cases being Modern Food Limited [MFL], Hindustan Zinc Limited [HZL], Bharat Aluminium Company [BALCO] etc. The UPA...
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FDI in retail – a flawed idea
In the Union Budget for 2016-17, the Finance Minister had announced 100% foreign direct investment (FDI) in retail food. This was subject to the retailer selling only food procured from farmers in India and processed locally. However, guidelines in this regard are yet to be notified. Meanwhile, the Government is reportedly considering a proposal to allow 100% FDI in all goods “manufactured domestically”. The policy will be applicable to both offline (brick-and-mortar retailers) and online (e-commerce companies). The idea is flawed. At the outset, a few words on the existing policy dispensation on the FDI in retail. For this purpose, retail is classified in two broad categories, viz, single-brand retail (SBR) and multi-brand retail (MBR). In the SBR, 100% FDI...
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BS IV fuel norms – don’t fall prey to auto lobby
The Society of Indian Automobile Manufacturers [SIAM] has raised a hue and cry over a staggering 880,000 Bharat Stage [BS] III vehicles [including four wheeler and two wheeler] with automobile dealers facing the prospect of being scrapped as BS IV fuel norms take effect from April 1, 2017 all over the country. The cacophony of all powerful SIAM – an association of vehicle and engine manufacturers – seems to be working as a 2-judges bench of the Supreme Court [SC] which heard a plea of a clutch of automobile manufacturers on March 25, 2017 directed the Centre to come with options to mitigate the crisis. The apex court even discussed various options taking on board the possibility of allowing registration...
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POPULIST MEASURES CAN DERAIL GROWTH
In the just-concluded Assembly election in Uttar Pradesh, Prime Minister Narendra Modi promised to waive loans for all small and marginal farmers and to extend fresh credit at zero interest rate. He also vowed to clear all outstanding arrears of sugarcane farmers and ensure that they get paid on the 14th day from the date of delivering cane. His party was also not averse to offering other freebies viz reducing electricity tariff, smart phone/lap top etc, to match the offer by its opponents. Modi is known for his unique philosophy of shunning doles and instead, empowering the poor. Towards this end, the Prime Minister has taken several measures for the financial inclusion of the farmers (eg the opening of 270...
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FDI in retail for ‘local goods only’ – a flawed idea
In the budget for 2016-17, finance minister, Arun Jaitely had announced 100% foreign direct investment [FDI] in food retail. However, this is subject to the condition that the retailer will sell only food procured from farmers in India and processed locally. Even as the guidelines in this regard are yet to be notified, meanwhile as per reports, the government is considering a proposal to allow 100% FDI in all goods ‘manufactured domestically’. The policy will be applicable to both offline [brick-and-mortar retailers] and online [e-commerce companies]. The idea is seriously flawed. To put things in perspective, let us capture the broad contours of existing policy dispensation in regard to FDI in retail. For this purpose, retail is classified in two...
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Demonetization – myths versus reality
In the aftermath of demonetization announced by prime minister, Modi on November 8, 2016, the air resonates with a tsunami of charges/allegations regarding its alleged ill-effects. It is time to assess the credibility of these charges. The government has plundered resources of poor The resources with the poor include (i) money held by him/her in cash [notes of various denominations] or (ii) savings in bank/post office if he/she has an account. As regards (i), he got 50 days time to exchange cash held in 1000/500 denominations for new notes at banks and another 3 months at RBI. As for (ii), this money is owned by him/her and shall remain so; all that the government did was to put restriction on...
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