In a just concluded meeting of the Trade Policy Forum, United States Trade Representative (USTR) Mic-hael Froman, emphatically rejected India’s request for signing a Social Security Agreement (SSA), nick named totalisation pact. The US argued that, “India did not meet the legislative requirement of minimum social security net (SSN) for 50 per cent of its population.” When Commerce Minister Nirmala Sitharaman drew his attention to the Atal Pension Yojna, Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana in addition to Employees Provident Fund Organisation, the US official’s reaction was that being “non-mandatory”, those schemes did not qualify for social security. The USTR opined that he is open to discussing new social security schemes that India may...
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Category: Savings & Investment
Continue rate cut
ECONOMIC GROWTH : Having made a good head start (though belated), the RBI must not stop as there is potential for another 50-75 basis points reduction Prior to the fourth bi-monthly monetary policy review on September 29, RBI Governor Raghuram Rajan had come under unprecedented pressure to cut the policy repo rate [interest rate at which the apex bank lends money to commercial banks] to help government’s efforts in giving a fillip to the economy and putting it on a higher growth trajectory. Almost all stakeholders – industry and commerce, investors, experts/ economists – were unanimous in demanding a cut. While refraining from taking any position [lest this be misconstrued as interference in RBI’s autonomy], the government had nonetheless given...
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Rajan ‘finally’ joins growth band wagon
Prior to the 4th bi-monthly monetary policy review on September 29, 2015, RBI governor, Raghuram Rajan had come under unprecedented pressure to cut the policy repo rate [interest rate at which the apex bank lends money to commercial banks] to help government’s efforts in giving a fillip to the economy and putting it on a higher growth trajectory. Almost all stakeholders viz., industry and commerce, investors, experts/economists were unanimous in demanding a cut. While, refraining from taking any position [lest this be misconstrued as interference in RBI’s autonomy], the government had nonetheless given a ‘subtle’ signal that this brooks no further delay. This was evident when finance minister, Arun Jaitely recently said “common sense requires a rate cut”. That the...
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MUDRA Yojna – boost to ‘inclusive’ growth
About 16 months ago, people of India gave a massive mandate to prime minister N Modi on two major planks viz., (i) eliminating the scourge of corruption and (ii) fulfilling the aspirations of a mammoth 800 million people below 35 years. From the day one of taking charge, he has been working relentlessly to deliver on both the promises. For the first, he is cleaning up the governance systems whereas for second, he has fired all cylinders to propel “inclusive” development. The flagship “Make in India” mission started by Modi last year seeks to transform India in to a manufacturing hub of the world and increase the share of manufacturing in GDP [gross domestic product] from present around15% to 25%...
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Don’t override judicial process
Any apprehension that judicial process would take time is ill-founded. The matter is slated for hearing by the SC this month itself. While, presenting the budget for 2015-16, Union Finance Minister Arun Jaitley had announced the government’s decision not to levy minimum alternate tax [MAT] on capital gains made by foreign portfolio investors [FPIs] from investment in securities from April 1, 2015. In his speech, he had proposed to rationalise MAT provisions for FPIs whereby profits corresponding to their income from capital gains on transactions in securities, which are taxed at a lower rate, would not be subject to MAT. Since the exemption was intended to be applicable only prospectively from financial year 2015-16, the income tax department served show -cause...
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Unshackle PSBs via shedding majority control
For generations, public sector banks [PSBs] have been used by the political establishment with impunity to appease their constituencies viz., waiving farm loans especially at the time of elections; salvaging state electricity boards [SEBs] who are made to supply power at throw away tariffs or even free in some states; granting loans to favoured industrial houses without carrying out due diligence and allowing wilful default by certain borrowers [involving quid pro quo] which are clear acts of corruption. All such exogenous imposed actions in total disregard of financial prudence have led to proliferating non-performing assets [NPAs] – a sophisticated nomenclature for bad loans or in simple terms, money lent which cannot be recovered. Together with restructured assets [these are also...
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Stepping on economic independence – Modi’s report card
Commentators across a wide spectrum have felt that prime minister N Modi speech on the 69th Independence Day was stereotyped, lacking in new ideas and did not cover a number of important issues such as foreign relations, relation with neighbouring countries [especially Pakistan], terrorism, internal governance, cooperative federalism, conduct of business in parliament and so on. Some have gone that far to say that the entire 85 minutes address was an extrapolation of his “Mann Ki Baat” [a few have branded this as an exercise in self-adulation]. These are perceptions of all those who for decades have got used to stereotyped addresses from prime ministers who technically though represent the people of India but in their dispositions behave like aliens,...
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PM Jan Dhan Yojna – panacea to end farmer suicide
Close to seven decades since independence, Indian society continues to suffer from the stigma that ‘farmers feed the whole country but are unable to feed themselves’. The proof of pudding is in eating as thousands of them are forced to commit suicide every year. During the last one-and-a-half decade or so, about 300,000 farmers have committed suicide and the numbers continues to increase unabated. Invariably, analysts attribute this to their inability to generate adequate income [on an average, a farmer earns just about Rs 5000-6000 per month from cultivating land] because of generally low crop yield on one hand and un-remunerative price for agricultural produce on the other. When, viewed in the backdrop of government giving huge subsidies on inputs...
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Indian economy on ‘fast track’ – jobs will follow
In an open letter addressed to Prime Minister, Mr P Chidambaram, former finance minister in the erstwhile UPA government has taken pot shots at Modiji for his ‘alleged’ failure to create jobs. He laments that during 2014-15, jobs were generated at a measly rate of 100,000 per quarter which works out to 400,000 in the whole year. Mr Chidambaram’s observation is reminiscent of a phrase coined by ex-Prime Minister, Dr Manmohan Singh “money does not grow on tree”. Dr Singh was alluding to efforts-led creation of wealth even as right under his nose, people witnessed a contrasting spectre of huge amount of national wealth being plundered and given to close contacts/favourites of political bosses in the grand old party. However,...
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Invoking bilateral investment treaty on tax claims – an act of brinkmanship
In recent times, multinational companies have taken increasing recourse to international arbitration under Bilateral Investment Promotion and Protection Agreement (BIPA) to resolve the income tax (IT) department claim on them arising from application of the 2012 retrospective legislation. Spate of international arbitration Thus, the British telecom major Vodafone had invoked the India-Netherlands BIPA seeking international arbitration in its long-drawn Rs 20,000 crores tax dispute with the tax department following cancellation of its conciliation talks with the Government of India (GOI). Similarly, the Finnish mobile handset maker Nokia resorted to the treaty to resolve the tax department claim of over Rs 21,000 crores tax liability, both in the form of existing and anticipated liability, for seven years commencing 2006-07. More recently,...
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