But the match is not limited between Congress and BJP as the Left,SP and TDP claim!GAAR to be deferr
But the match is not limited between Congress and BJP as the Left,SP and TDP claim!GAAR to be deferred for three years!
Palash Biswas
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This would help taxpayers plan for a change in the "anti-avoidance regime," it added.
A panel appointed by India's government recommended that the implementation of a much-debated rule introduced to fight tax evasion be deferred by three years,a move likely to cheer investors!It is match fixing as it has been. But the match is not limited between Congress and BJP as the Left,SP and TDP claim. The entire political class an even the civil society are also involved in the match.Bills being passed without debate, minutes and guillotine has to be used soon, the floor management is now not limited within the parliament. Neither it is limited to legislation only. Governance and policy making continue to push for ethnic cleansing in the exclusive dollar linked economy and the play subverts public attention with surgical precision. Forgone taxes tell the story of stimulus untold, the root behind deficit economy of black money re cyles. Now the GAAR story has become the focus of foreign capital inflow. The government today expanded the scope of the expert committee on General Anti-Avoidance Rules (GAAR) to include all non-resident tax payers, even as the Committee submitted its draft report to the Ministry. The provisions of General Anti Tax Avoidance Rules (GAAR) should be 'intelligently' applied, said the Chairman of Expert committee, Parthasarathi Shome, after submitting the draft report to Finance Ministry.The announcement to increase the scope of GAAR committee, which is headed by tax expert Parthasarthi Shome, was made after the panel in its report suggested changes in the Income Tax Act and Rules.Mind you,India's economic growth languished near its slowest in three years in the quarter that ended in June but was slightly better than expected, signalling the worst may be over for Asia's third largest economy and dashing investor hopes of an early rate cut. Fiscal deficit during April-July reached 51 per cent of the budgetary estimate of Rs 5.13 lakh crore, raising fears of the government breaching its fiscal deficit target of 5.1 per cent of GDP for the current year.The renewed concerns will discourage the Reserve Bank of India from easing monetary policy and give the rating agencies reason to carry out their threat of downgrading India's sovereign rating to junk grade.
The Reserve bank of India must go bold and big with a 100 basis-point reduction in its main policy rate to spur consumption, KV Kamath said on Wednesday. A sharp cut in the repo rate, he said, is urgently needed if the country's growth prospects are to remain unimpaired.
"I would think that we need to head towards a 100-basis point cut soon," the chairman of the country's largest private lender ICICI Bank told ET in an interview. (http://economictimes.indiatimes.com/news/economy/indicators/for-growths-sake-cut-rate-by-1-kv-kamath-chairman-icici-bank/articleshow/15972363.cms).
One of India's top businessmen has slammed the government over its economic policies, saying it is no longer possible to sell the " India story".Companies have long griped about India's byzantine rules and suffocating bureaucracy, but perceived inconsistency in government policy, stalled economic reforms and a spate of political scandals have soured the investment mood.
The government today expanded the scope of the expert committee on General Anti-Avoidance Rules (GAAR) to include all non-resident tax payers, even as the Committee submitted its draft report to the Ministry.
The announcement to increase the scope of GAAR committee, which is headed by tax expert Parthasarthi Shome, was made after the panel in its report suggested changes in the Income Tax Act and Rules.
The committee, which was set up by Prime Minister Manmohan Singh in July to address concerns of foreign and domestic investors on GAAR, suggested the government should issue a circular to clarify GAAR provisions along with illustrations.
"The draft report has recommended certain amendments in the Income-tax Act, 1961; guidelines to be prescribed under the Income-tax Rules, 1962; circular to clarify GAAR provisions along with illustrations; and other measures to improve tax administration specifically oriented towards GAAR matters", a Finance Ministry release said.
"It has now been decided to expand the scope of the terms of reference of the committee to include all non-resident tax payers instead of only FIIs," it said.
The Finance Ministry had earlier on August 6, 2012 asked the expert committee to examine the applicability of the amendment on taxation of non-resident transfer of assets where the underlying asset is in India, in the context of Foreign Institutional Investors (FIIs) operating in India purely for portfolio investment.The stakeholders, the release added, can submit their comments on the draft report by September 15.
In view of the concerns expressed by investors, the Government had already postponed implementation of GAAR by a year to April, 2013. The proposal was introduced in Budget for 2012-13 by the then Finance Minister Pranab Mukherjee.
Meanwhile, Bernanke sought to shoot down criticism of the Federal Reserve's easy-money policies and strengthen the case for new efforts by the central bank to bring down what he described as gravely high unemployment.Barack Obama also faces atough time at home as Dr Manmohan singh, the underachiever. India, best known for replicating US economic and foreign policies since the incarnation of DR. Manmohan Singh has to follow Bernanke step by step.Most amusing part of the fixed match is the third front hype afresh and Ramdev jumping to lead his yoga forces against Congress.Indian politics in recent years has been a two-horse race between the Congress party and the Bharatiya Janata Party. Now, speculation is mounting the smaller parties are planning yet another effort to form what is known in India as a “Third Front” to challenge the two main parties.Not the people, nor the country or the economy is on the agenda, it is all and all an exercise to set up and steramlining the vote bank equations ahead of 2014 general elections.More interesting it turns as India's Prime Minister Manmohan Singh said he has asked Rahul Gandhi, politician and scion of the Nehru-Gandhi dynasty, to join the Cabinet, a move aimed at lifting the sagging popularity of the ruling Congress party. Aggressive defence is not working as expected, it should be understood. The Dynasty is the last resort of survival, of course.Meanwhile,Keen to break the logjam in Parliament over the CAG report, Congress president Sonia Gandhi has reached out to Leader of Opposition Sushma Swaraj but the BJP appeared unrelenting on its stand.
Indian marxists form a queer set of hypocrite. having remained silent since Hillary`s Kolkata visit for so long, they opt for the last resort in anti imperialism to get back the lost minority vote bank.n a veiled attack on chief minister Mamata Banerjee for 'encouraging imperialism', CPI(M) veteran Buddhadeb Bhattacharjee on Saturday said it was unprecedented that the state government was eager to invite a US president next year.He made the reference to the state government's desire, expressed during US Secretary of State Hillary Clinton's visit here in May last, to invite Barack Obama to attend 'Yuva Utsav' on the occasion of the 150th birth anniversary of Swami Vivekananda here in January, 2013.
Addressing a Left Front gathering at the end of a four-km 'Anti-imperialism and Capitalism' procession in the city, the former chief minister said "it has to be perceived what is going to happen in this state in the backdrop of stepped-up US aggression in political and economic fields."
Bhattacharjee said "it is unprecedented since Independence that any US secretary of state ever visited a chief minister at Writers' Buildings."Stating that no political party or ruling party had ever invited a US president to visit the state, he exhorted the Left parties to unitedly stop US "aggressive postures" after its keenness to enter India's multi-brand retail business, besides insurance, banking and pension sectors.
The procession was organised to mark the menace of Hitler's aggressive war policy and Nazi Germany's invasion of Poland on September 1, 1939.Earlier, Leader of the Opposition Suryakanta Mishra said "it is amazing that our chief minister is vehemently opposing FDI entry in retail business, but she has no hesitation to favour American infiltration in education and health sectors."
Former Gujarat minister Maya Kodnani was sentenced to 28 years in jail on Friday for murder during one of the country's worst religious riots, when up to 2,500 people, most of them Muslim, were hunted down and hacked, beaten or burnt to death in 2002.Instead of any feel of repent or shame,the land mark decision is converted in an election equation favouring the saffron brigade as the Hindutva lobby is all in feel good mood as they believe the sacrifice by Maya would polarise Hindu vote in favour of BJP Prime minister face.
Sticking to its demand for resignation of Manmohan Singh for irregularities in coal block allocation, BJP today vowed to continue its "parliamentary tactic" of stalling proceedings and challenged the Congress to seek a fresh mandate from people.BJP leader and Rajya Sabha MP M Venkaiah Naidu said his party was not demanding the resignation of Congress-led UPA government merely on the alleged " coalgate" scam but also on a "series of scams and issues," including the 2G spectrum allocation.
CPI(M) politburo member Sitaram Yechury on Saturday said his party wanted discussion on coal block allocation in the Parliament and does not support BJP's demand of resignation of Prime Minister.
"Government must be accountable to the parliament and if Prime Minister resigns, the government will fall. If discussion begins in Parliament it would also be difficult for BJP also because they also did many wrong deeds regarding coal block allocation when NDA was in power," Yechury told reporters.
The 'coalgate' row should be used to reverse the privatisation of natural and mineral resources in India, the Communist Party of India-Marxist (CPI-M) said on Thursday.CPI-M general secretary Prakash Karat also blasted the Bharatiya Janata Party (BJP), saying it was the National Democratic Alliance (NDA) government which deregulated coal pricing and took steps to weaken the state-run Coal India Ltd (CIL).In an article in the CPI-M mouthpiece People's Democracy, Karat demanded a high level investigation to fix responsibility for the irregularities and corruption involved in the coal block policy.
As the controversy over 'Coal-gate' heats up, sources have told that the licences for more than 50 coal blocks have been reviewed, and several of these could soon be cancelled.Amidst the storm over CAG report on coal block allocation, the Prime Minister's Office (PMO) has expressed displeasure over inaction by the coal ministry in cancelling blocks where mining has not taken place and asked it to expedite the matter by September 6. The PMO communication to the coal ministry came ahead of the Inter-Ministerial Group Meeting (IMG) on Monday to take a decision on the fate of 58 coal blocks including 25 blocks allocated to private companies like Tata Power, Reliance Power and ArcelorMittal.Sources said that the PMO on August 27 conveyed to the coal ministry its concern over inaction with regard to de-allocation of blocks to which show-cause notices have been issued.The government in April had began the process of slapping notices on companies that failed to develop the 58 coal blocks within the stipulated time. Apart from Tata Power, Reliance Power and ArcelorMittal, notices were issued to firms like Hindalco, Grasim Industries, GVK Power, MMTC and others.Subsequently, in June, it had formed the IMG to review the progress of coal blocks allocated to companies for captive use. It is headed by additional secretary Zohra Chatterji and has representatives of steel, power, law, economic affairs and mines ministries, among others .
Separately, the CBI is investigating criminality in 12 firms which were given licenses under the 'fast track' category but had not yet commenced mining of the allocated coal blocks.
On the other hand, while corporate India presses for labour reforms and cites policy paralysis to accomplish reforms as the greatest hindernace in the growth story and the government does always love to talk about political compusions. We have seen intensive corporate lobying exposed in2 G spectrum scam. We also witnessed while Tata Motors was being ejected out of singur, how corporate and market forces rallied behind fire brand populist lady Ms Mamata Banerjee.In fact, production system has never been the priority of the political class. It ran blind after foreign capital inflow.Corporate India made most of it with service, construction and consumer sectors while engaged in in fight against one another. Here you are! Maruti Suzuki India posted its worst sales decline in 10 months in August, hurt by labor problems that led to a lockout at its north India factory, while other car makers posted sales growth.Domestic car sales of Maruti Suzuki India declined by 35 per cent in August, hit by a month-long lockout at its Manesar plant, but the other two main players, Hyundai and Tata Motors posted positive growth during the month amid tough market conditions.However,India's economy expanded at a slightly faster pace in April-June, but industry representatives seized on figures showing investment has slowed sharply as another sign of malaise and stepped up pressure on the government to push through reforms to spur growth. And these reforms share invoke the monopoly war all around.
AARATI KRISHNAN writes for Hindu Businessline:
Policymakers in the financial sector sure have a thing or two to learn from the Sahara group. Here they are, trying every trick in the book to make small investors take to shares and bonds and not succeeding even a bit. The Finance Ministry has offered tax breaks on equities and discounted prized public sector stock. The Reserve Bank of India (RBI) has pushed banks to serve up no-frills bank accounts. The Securities and Exchange Board of India (SEBI) tried everything from minimum public shareholding to electronic IPOs to woo small investors.
But they have ignored all this and poured money into gold and property instead. The number of demat accounts has not moved past the two-crore mark for two years now.
Meanwhile, it transpires that the Sahara group has managed to mop up nearly Rs 20,000 crore from over two crore investors with its home-spun ‘optionally fully convertible debentures’. It has been able to do this without the benefit of any expensive investment bankers, road shows or public filings. The group claims this was all due to untiring efforts of its 10-lakh strong field force. But the Supreme Court has taken a jaundiced view of the matter and asked the group to refund the entire money.
That’s an opportunity for the policymakers. Forget tax breaks and e-IPOs. Just hire Sahara’s field force and get financial inclusion going!
http://www.thehindubusinessline.com/features/investment-world/article3848295.ece?ref=wl_companies
While Times of India reports:
The Sahara Group on Friday resorted to an emotional outburst against regulators for repeatedly questioning the source of all its public deposits and investments and challenged the authorities to find any 'benami' (illegal) money with the group.
In a late evening release, several hours after the Supreme Court judgment directing the group to repay Rs 17,400 crore of investors' money along with 15% interest, Sahara sought to comfort its depositors saying there was nothing to worry about and that there wouldn't be even a day's delay in repayment. "Sahara is the most honest custodian of your money and by the grace of God, we are so healthy that there cannot be even one day delay in any payment commitment of Sahara," the release said.
It also emphasized that in the last 33 years, there hasn't been a single complaint of non-payment against the company and that it has paid around Rs 1,40,000 crore to about 12 crore investors. It may be pointed out that during 2008, the Reserve Bank of India had directed the group to close its para-banking business and repay its depositors within seven years. "The RBI in 2008 killed our financial inclusion-based RNBC (residual non-banking finance company) activities and gave us seven years' time to repay our depositors, which we cleared in just four years," it said. "The income tax department held on to our refund for decades, to the tune of around Rs 2,000 crore...but ultimately they had to pay us back the entire amount in the year 2011," it added.
The group, which supports various sports activities including the sponsorship of the Indian cricket team and is also a part-owner of a Formula One racing team-Force India-said that it was because of its "meteoric rise" that it has been at the receiving end of the authorities 'again and again'.
The group has also been in the news recently for buying out two iconic hotels, one each in London and New York.
"For the past seven-eight years, we have faced the onslaught of various authorities since they concluded whimsically...that the deposits and investments we have received from the public are fictitious and bogus as they feel the money with us is ill-gotten from politicians, etc", the statement said in an oblique reference to the SC judgment asking Sebi to probe the source of funds. "The fact is that there is not a single benami money and this statement is Sahara's challenge to all authorities of our country".
Emphasizing the fact that it has never done anything against the law, it said that the authorities have convinced the courts of its wrong doing by creating a negative perception of the group and that it would never blame the courts for it. Highlighting the fact that all their investors are genuine, the statement added: "Each and every rupee we have accepted in last 33 years is always against receipt from the company and with an application form duly signed by its depositors and investors".
http://timesofindia.indiatimes.com/business/india-business/Sahara-Group-lashes-out-at-regulators/articleshow/16104776.cms?
Unlisted conglomerate Sahara, one of India's biggest groups and a household name through its cricket sponsorship, must refund 174 billion rupees raised by "dubious" means from 22 million small investors, India's top court has ruled.
Friday's judgment underscored an increasing assertiveness by India's judiciary and regulators as businesses and financial markets expand at a fast pace in Asia's third-largest economy.
K.S. Radhakrishnan, one of the two judges ruling on the case, said in his order that the ruling demonstrated the need to treat economic offences "with an iron hand".
The sting in the judgment's tail was that Sahara must also pay investors - mostly from smaller towns and rural areas where banking penetration is low - interest at 15 percent from the day money was paid in.
The group, which has interests ranging from financial services and housing to media and sports, said late on Friday it had complied with rules for such fund-raising, and assured investors that it was "healthy" enough to honour its payment obligations in time.
"It needs to be realized that GAAR (General Anti Avoidance Rules) is an extremely advanced instrument of tax administration—one of deterrence, rather than for revenue generation—for which intensive training of tax officers, who would specialize in the finer aspects of international taxation, is needed," the panel said while submitting a draft report on the rule.
Investors saw the proposed rules as desperate means by a cash-strapped government to raise funds to rein in its yawning budget deficit. Many of them said that the anti-avoidance rules, which give authorities powers to scrutinize any deal that they feel has been structured to evade taxes, would give unbridled power to tax authorities and that all deals could be viewed with suspicion. Some feared it would be used to target transactions routed through jurisdictions such as Mauritius, with which India has a double-tax-avoidance treaty.The sharp criticism forced the government to defer implementation of GAAR by a year to April 1, 2013. The expert panel suggested GAAR be implemented from 2016-2017.
"GAAR has been received poorly in India due to the somewhat more stringent versions put out by government," as well as the perceived lack of adequate consultation with stakeholders, the panel said in its report.
The committee headed by Parthasarathi Shome, the chief of a government body on international economic relations, said that the government should announce the implementation date immediately to remove uncertainty from the minds of stakeholders.The committee, which was set up by Prime Minister Manmohan Singh in July to address concerns of foreign and domestic investors on GAAR, suggested the government should issue a circular to clarify GAAR provisions along with illustrations.The so-called GAAR provisions and a retrospective tax amendment were proposed by the government in March and since then have hurt investor sentiment and been met by strong criticism in India and overseas.
The panel has sought comments from various sections of the government and the general public by Sept. 15, before it submits its final recommendations by Sept. 30.
"The draft report has recommended certain amendments in the Income-tax Act, 1961; guidelines to be prescribed under the Income-tax Rules, 1962; circular to clarify GAAR provisions along with illustrations; and other measures to improve tax administration specifically oriented towards GAAR matters", a Finance Ministry release said.
"It has now been decided to expand the scope of the terms of reference of the committee to include all non-resident tax payers instead of only FIIs," it said.
The Finance Ministry had earlier on August 6, 2012 asked the expert committee to examine the applicability of the amendment on taxation of non-resident transfer of assets where the underlying asset is in India, in the context of Foreign Institutional Investors (FIIs) operating in India purely for portfolio investment.The stakeholders, the release added, can submit their comments on the draft report by September 15.
In view of the concerns expressed by investors, the Government had already postponed implementation of GAAR by a year to April, 2013. The proposal was introduced in Budget for 2012-13 by the then Finance Minister Pranab Mukherjee.
Industry and experts today said the draft guidelines on General Anti-Avoidance Rules (GAAR) are encouraging and progressive.
"The Report of Expert Committee on GAAR is most encouraging. CII has been advocating a postponement in the introduction of GAAR," CII Director General Chandrajit Banerjee said while commenting on the draft proposals.
He said the report is especially laudable since ambiguity in the earlier guidelines in terms of use of words such as "commercial substance" have been addressed by providing a clear definition.
Ernst & Young Tax Partner Pranav Sayta said the suggestion to defer implementation the anti-tax avoidance provision by three years among other suggestions could go a long way in reviving investors sentiment.
The GAAR panel under tax expert Parthasarathi Shome, constituted by Prime Minister Manmohan Singh in July, has submitted a detailed draft guidelines to address the concerns on the issue. Earlier, a Finance Ministry panel had also given recommendations.
"Certain features such as recommendation to abolish capital gain on listed securities are very well thought off," PwC India's Rahul Garg commented.
Another leading chamber Ficci hoped the draft would lead to bold policy decisions aimed at restoring confidence and reviving growth.
"Ficci is happy that a pragmatic and practical view has been taken in recommending a deferral in the implementation of GAAR at a time when business sentiment desperately needs a boost," chamber's president RV Kanoria said.
The panel has sought public comments on the draft guidelines till September 15 and after that the guidelines are expected to be finalised.
Government's total receipts in the first four months added up to Rs 1.73 lakh crore, only 17.7 per cent of the budget amount, data released on Friday showed, while its expenditure climbed to Rs 4.37 lakh crore, 29.3 per cent of the budgeted amount.
This shows the slowing growth is taking its toll on revenues while government was unable to rein in its expenditure.
"The fiscal deficit number is concerning and if you extrapolate this, the number by the end of this year is bound to go haywire. The government is very likely to exhaust its budgeted fiscal deficit and will lap up more resources than expected. More G-secs will put pressure on yield," said Sunil Sinha, senior economist, CRISIL.
The credit rating agency expects deficit to come in at 6.2 per cent of GDP.
Finance minister P Chidambaram has promised to set out a fiscal consolidation plan and has tasked a team of experts led by Vijay Kelkar to suggest a road map.
The government is keen to avoid a situation like last year when it reported a fiscal deficit of 5.9 per cent of GDP against the budgeted figure of 4.7 per cent. During the same period last year the fiscal deficit was 55.4 per cent of the budgeted amount, suggesting that the breach could be significant this year as well if corrective measures are not taken. The budget has assumed Rs 30,000 crore from disinvestment but nothing has been raised yet.
It may also not get the Rs 40,000 crore from spectrum sale may sale if deferred payment option is given to telecom companies.
Non-plan expenditure was 33.3 per cent of the budgeted but plan expenditure was only 21.9 per cent in first four months, indicating some tightening of discretionary spending.
The Income Tax Separtment has a new weapon in its arsenal to identify evaders — the database of the Credit Information Bureau of India.
Set up by the State Bank of India along with several other banks and non-banking finance companies, the credit information bureau maintains records of individual payments pertaining to loans and credits.
The IT department will now use the bureau’s extensive database for high value recoveries from tax evaders. The credit information bureau will help the IT department recover a part of the Rs 478,863 crore tax that various entities owe the Department. The funds are locked up in disputes and litigations.
The Central Board of Direct Taxes, in its internal document called Central Action Plan for fiscal 2012-13, has reiterated the importance of the credit information bureau in the recovery process and has said it is one of the means to enforce recovery from defaulters.
CIBIL’s database contains PAN-wise records of loans taken by entities from banks and financial institutions. CIBIL also assigns credit scores to borrowers depending on factors like repayment pattern, defaults and loans availed by them.
Using the CIBIL database would help the IT department to move effectively given the extensive details of loans and credit taken by different entities. Since the CIBIL database also contains information about the credit rating of such entities, this would also help in ascertaining the financial capability of the PAN holders against whom the tax demand has been raised by the Department.
The BSE benchmark Sensex snapped its four-week gaining streak and tumbled by 354 points to end at one month low of 17,429.56 due to fall in metal, realty, capital goods, auto and banking counters on the back of weak global cues.
The market continued to feel the heat of over week-long logjam in Parliament over the CAG report on coal block allocations, raising fears of delay in further reform process. Statement on interest rates given by Reserve Bank Governor D Subbarao in US also affected the market sentiment.
He said, "The battle against inflation has not ended yet... it is still much above RBI's comfort level of 5-6 per cent and to control it we need to keep interest rates high, but to support growth we need to keep interest rates low."
The 30-share index on Monday touched a high of 17,820.07, but then declined for the most of the week and touched a low of 17,337.61 before ending the week at 17,429.56, showing a net loss of 353.65, or 1.99 per cent.
The index had gained 944.02 points, or 5.61 per cent, during the last four weeks.
The NSE 50-share Nifty also dropped by 128.20 points, or 2.38 per cent, to end at 5,258.50. It had gained 286.85 points, or 5.62 per cent, in the last four weeks.
The global markets were also under selling pressure for most of the week ahead of the much-awaited speech from US Federal Reserve Chairman Ben Bernanke on August 31 at an annual gathering of Central bankers in Jackson Hole town in Wyoming as investors waited for the outcome of the summit.
Infosys co-founder and chairman emeritus N.R. Narayana Murthy has criticized the government’s slow decision making, saying the country’s progress has been hit by bureaucracy.
"I keep meeting corporate leaders globally. Earlier, if China was mentioned three times, India was mentioned once. Now, if China is mentioned 30 times, India is not even mentioned. That tells the story. We have cut our own legs off by our inaction and our policies,” he said in an interview with NDTV Profit on Thursday.
Mr. Murthy said quick decision-making is the need of the hour and “has nothing to do with Parliament, opposition, coalition or the global downturn”.
The Infosys co-founder referred to the problems of the IT sector, saying suggestions he had made to the government over a year ago had seen little action.
“I gave a list of suggestions to Pranab Mukherjee (the then finance minister) 14 months ago, met the Prime Minister twice, but nothing happened,” he said, adding, “(I) can’t understand when an IT industry contributes 25 per cent to exports, how its problems are not seen as urgent or how its problems are not solved by 5 pm this evening.”
The Prime Minister should urge bureaucrats and ministers to take quick decisions, "and there is a need to act like P.V. Narasimha Rao did in 1991" (when he took over as the country’s prime minister).
Mr. Murthy, who knows Mr Singh personally and has vouched for his honesty, said he is in the current situation because of “a set of circumstances”.
“I sympathize with him… that does not mean progress cannot take place with legislation,” he said.
On software exports, he said the government should ensure growth is not curtailed by unnecessary tax clauses.
“While we sympathize with the UPA government on issues that have immobilized it because of what has happened in Parliament, there are many areas that depend purely on how quickly bureaucrats can take decisions. The PM has appointed another committee. I don’t think you need more committees. While I have tremendous respect for Mr. Singh, we must create an urgency in our bureaucratic decision-making.”
http://profit.ndtv.com/news/corporates/article-china-30-india-0-thanks-to-bureaucracy-narayana-murthy-310096?pfrom=home-topstory
Stating that rising prices should have been controlled faster, RBI Deputy Governor K C Chakrabarty today said interest rate will be reduced as and when inflation comes down.
"As and when inflation rate comes down, interest rates will come down...." he said on the sidelines of an event.
"Our policy rate was 3.5 per cent in 2008. Then inflation went up to 10 per cent, we should have controlled inflation faster," he said while delivering a lecture on 'Indian Economy: Today and Tomorrow' organised by the Gujarat Chamber of Commerce and Industry (GCCI).
He said inflation in manufacturing and services sector can be reduced by lowering the cost of production services with the use of technology.
Inflation in July moderated to 6.87 per cent, helped by decline in vegetable prices, even as food inflation stayed in double digits and manufactured items remained under price pressure.
Though the inflation has moderated in July, from 7.25 per cent in June, it remains much above the 5-6 per cent comfort level of the Reserve Bank.
On the high current account deficit (CAD), he said it is mainly because of high oil and gold imports.
In a lighter vein he said, "Ahmedabad is notorious for gold .. Do not use gold for the next five years ... I think the problem shall be solved."
"People should start travelling on bicycle and save fuel," he said.
In its balance of payment statement in June, the Reserve Bank in July had said that India's CAD widened to the highest ever level to 4.5 per cent of GDP at USD 21.7 billion in January-March period of 2011-12 due to higher imports of oil and gold.
Chakrabarty also said a growth of at least 9-10 per cent shall be required over the next 20 years.
"We need to grow at least by 9-10 per cent for next 20 years if the society has to survive and this burden has to be shouldered by you all," he said.
On the global economic situation, he said, "This is a crisis, absolutely no doubt, it comes once in a lifetime... I can say we shall not be alive when this type of crisis comes next...."
Drawing attention to countries like Greece which are in midst of sovereign debt crisis, he said they have to work hard and as well as sacrifice. "The envoy of Portugal told me his salary has gone down by 20 per cent year-on-year, but how many of you had to do this here," he wondered.
Across the globe food prices are going to go up and they may not be able solve the true inflation for a pretty long time, he said.
To a particular query, Chakrabarty said the issue on payments from Iran was a political issue. "You should contact the Prime Minister or Finance Ministry on this count," he said.
AHMEDABAD: Stating that rising prices should have been controlled faster, RBI Deputy Governor K C Chakrabarty today said interest rate will be reduced as and when inflation comes down.
"As and when inflation rate comes down, interest rates will come down...." he said on the sidelines of an event here.
"Our policy rate was 3.5 per cent in 2008. Then inflation went up to 10 per cent, we should have controlled inflation faster," he said while delivering a lecture on 'Indian Economy: Today and Tomorrow' organised by the Gujarat Chamber of Commerce and Industry (GCCI).
He said inf
Palash Biswas
Mobile: 919903717833
Skype ID: palash.biswas44
Email: palashbiswaskl@gmail.com
This would help taxpayers plan for a change in the "anti-avoidance regime," it added.
A panel appointed by India's government recommended that the implementation of a much-debated rule introduced to fight tax evasion be deferred by three years,a move likely to cheer investors!It is match fixing as it has been. But the match is not limited between Congress and BJP as the Left,SP and TDP claim. The entire political class an even the civil society are also involved in the match.Bills being passed without debate, minutes and guillotine has to be used soon, the floor management is now not limited within the parliament. Neither it is limited to legislation only. Governance and policy making continue to push for ethnic cleansing in the exclusive dollar linked economy and the play subverts public attention with surgical precision. Forgone taxes tell the story of stimulus untold, the root behind deficit economy of black money re cyles. Now the GAAR story has become the focus of foreign capital inflow. The government today expanded the scope of the expert committee on General Anti-Avoidance Rules (GAAR) to include all non-resident tax payers, even as the Committee submitted its draft report to the Ministry. The provisions of General Anti Tax Avoidance Rules (GAAR) should be 'intelligently' applied, said the Chairman of Expert committee, Parthasarathi Shome, after submitting the draft report to Finance Ministry.The announcement to increase the scope of GAAR committee, which is headed by tax expert Parthasarthi Shome, was made after the panel in its report suggested changes in the Income Tax Act and Rules.Mind you,India's economic growth languished near its slowest in three years in the quarter that ended in June but was slightly better than expected, signalling the worst may be over for Asia's third largest economy and dashing investor hopes of an early rate cut. Fiscal deficit during April-July reached 51 per cent of the budgetary estimate of Rs 5.13 lakh crore, raising fears of the government breaching its fiscal deficit target of 5.1 per cent of GDP for the current year.The renewed concerns will discourage the Reserve Bank of India from easing monetary policy and give the rating agencies reason to carry out their threat of downgrading India's sovereign rating to junk grade.
The Reserve bank of India must go bold and big with a 100 basis-point reduction in its main policy rate to spur consumption, KV Kamath said on Wednesday. A sharp cut in the repo rate, he said, is urgently needed if the country's growth prospects are to remain unimpaired.
"I would think that we need to head towards a 100-basis point cut soon," the chairman of the country's largest private lender ICICI Bank told ET in an interview. (http://economictimes.indiatimes.com/news/economy/indicators/for-growths-sake-cut-rate-by-1-kv-kamath-chairman-icici-bank/articleshow/15972363.cms).
One of India's top businessmen has slammed the government over its economic policies, saying it is no longer possible to sell the " India story".Companies have long griped about India's byzantine rules and suffocating bureaucracy, but perceived inconsistency in government policy, stalled economic reforms and a spate of political scandals have soured the investment mood.
The government today expanded the scope of the expert committee on General Anti-Avoidance Rules (GAAR) to include all non-resident tax payers, even as the Committee submitted its draft report to the Ministry.
The announcement to increase the scope of GAAR committee, which is headed by tax expert Parthasarthi Shome, was made after the panel in its report suggested changes in the Income Tax Act and Rules.
The committee, which was set up by Prime Minister Manmohan Singh in July to address concerns of foreign and domestic investors on GAAR, suggested the government should issue a circular to clarify GAAR provisions along with illustrations.
"The draft report has recommended certain amendments in the Income-tax Act, 1961; guidelines to be prescribed under the Income-tax Rules, 1962; circular to clarify GAAR provisions along with illustrations; and other measures to improve tax administration specifically oriented towards GAAR matters", a Finance Ministry release said.
"It has now been decided to expand the scope of the terms of reference of the committee to include all non-resident tax payers instead of only FIIs," it said.
The Finance Ministry had earlier on August 6, 2012 asked the expert committee to examine the applicability of the amendment on taxation of non-resident transfer of assets where the underlying asset is in India, in the context of Foreign Institutional Investors (FIIs) operating in India purely for portfolio investment.The stakeholders, the release added, can submit their comments on the draft report by September 15.
In view of the concerns expressed by investors, the Government had already postponed implementation of GAAR by a year to April, 2013. The proposal was introduced in Budget for 2012-13 by the then Finance Minister Pranab Mukherjee.
Meanwhile, Bernanke sought to shoot down criticism of the Federal Reserve's easy-money policies and strengthen the case for new efforts by the central bank to bring down what he described as gravely high unemployment.Barack Obama also faces atough time at home as Dr Manmohan singh, the underachiever. India, best known for replicating US economic and foreign policies since the incarnation of DR. Manmohan Singh has to follow Bernanke step by step.Most amusing part of the fixed match is the third front hype afresh and Ramdev jumping to lead his yoga forces against Congress.Indian politics in recent years has been a two-horse race between the Congress party and the Bharatiya Janata Party. Now, speculation is mounting the smaller parties are planning yet another effort to form what is known in India as a “Third Front” to challenge the two main parties.Not the people, nor the country or the economy is on the agenda, it is all and all an exercise to set up and steramlining the vote bank equations ahead of 2014 general elections.More interesting it turns as India's Prime Minister Manmohan Singh said he has asked Rahul Gandhi, politician and scion of the Nehru-Gandhi dynasty, to join the Cabinet, a move aimed at lifting the sagging popularity of the ruling Congress party. Aggressive defence is not working as expected, it should be understood. The Dynasty is the last resort of survival, of course.Meanwhile,Keen to break the logjam in Parliament over the CAG report, Congress president Sonia Gandhi has reached out to Leader of Opposition Sushma Swaraj but the BJP appeared unrelenting on its stand.
Indian marxists form a queer set of hypocrite. having remained silent since Hillary`s Kolkata visit for so long, they opt for the last resort in anti imperialism to get back the lost minority vote bank.n a veiled attack on chief minister Mamata Banerjee for 'encouraging imperialism', CPI(M) veteran Buddhadeb Bhattacharjee on Saturday said it was unprecedented that the state government was eager to invite a US president next year.He made the reference to the state government's desire, expressed during US Secretary of State Hillary Clinton's visit here in May last, to invite Barack Obama to attend 'Yuva Utsav' on the occasion of the 150th birth anniversary of Swami Vivekananda here in January, 2013.
Addressing a Left Front gathering at the end of a four-km 'Anti-imperialism and Capitalism' procession in the city, the former chief minister said "it has to be perceived what is going to happen in this state in the backdrop of stepped-up US aggression in political and economic fields."
Bhattacharjee said "it is unprecedented since Independence that any US secretary of state ever visited a chief minister at Writers' Buildings."Stating that no political party or ruling party had ever invited a US president to visit the state, he exhorted the Left parties to unitedly stop US "aggressive postures" after its keenness to enter India's multi-brand retail business, besides insurance, banking and pension sectors.
The procession was organised to mark the menace of Hitler's aggressive war policy and Nazi Germany's invasion of Poland on September 1, 1939.Earlier, Leader of the Opposition Suryakanta Mishra said "it is amazing that our chief minister is vehemently opposing FDI entry in retail business, but she has no hesitation to favour American infiltration in education and health sectors."
Former Gujarat minister Maya Kodnani was sentenced to 28 years in jail on Friday for murder during one of the country's worst religious riots, when up to 2,500 people, most of them Muslim, were hunted down and hacked, beaten or burnt to death in 2002.Instead of any feel of repent or shame,the land mark decision is converted in an election equation favouring the saffron brigade as the Hindutva lobby is all in feel good mood as they believe the sacrifice by Maya would polarise Hindu vote in favour of BJP Prime minister face.
Sticking to its demand for resignation of Manmohan Singh for irregularities in coal block allocation, BJP today vowed to continue its "parliamentary tactic" of stalling proceedings and challenged the Congress to seek a fresh mandate from people.BJP leader and Rajya Sabha MP M Venkaiah Naidu said his party was not demanding the resignation of Congress-led UPA government merely on the alleged " coalgate" scam but also on a "series of scams and issues," including the 2G spectrum allocation.
CPI(M) politburo member Sitaram Yechury on Saturday said his party wanted discussion on coal block allocation in the Parliament and does not support BJP's demand of resignation of Prime Minister.
"Government must be accountable to the parliament and if Prime Minister resigns, the government will fall. If discussion begins in Parliament it would also be difficult for BJP also because they also did many wrong deeds regarding coal block allocation when NDA was in power," Yechury told reporters.
The 'coalgate' row should be used to reverse the privatisation of natural and mineral resources in India, the Communist Party of India-Marxist (CPI-M) said on Thursday.CPI-M general secretary Prakash Karat also blasted the Bharatiya Janata Party (BJP), saying it was the National Democratic Alliance (NDA) government which deregulated coal pricing and took steps to weaken the state-run Coal India Ltd (CIL).In an article in the CPI-M mouthpiece People's Democracy, Karat demanded a high level investigation to fix responsibility for the irregularities and corruption involved in the coal block policy.
As the controversy over 'Coal-gate' heats up, sources have told that the licences for more than 50 coal blocks have been reviewed, and several of these could soon be cancelled.Amidst the storm over CAG report on coal block allocation, the Prime Minister's Office (PMO) has expressed displeasure over inaction by the coal ministry in cancelling blocks where mining has not taken place and asked it to expedite the matter by September 6. The PMO communication to the coal ministry came ahead of the Inter-Ministerial Group Meeting (IMG) on Monday to take a decision on the fate of 58 coal blocks including 25 blocks allocated to private companies like Tata Power, Reliance Power and ArcelorMittal.Sources said that the PMO on August 27 conveyed to the coal ministry its concern over inaction with regard to de-allocation of blocks to which show-cause notices have been issued.The government in April had began the process of slapping notices on companies that failed to develop the 58 coal blocks within the stipulated time. Apart from Tata Power, Reliance Power and ArcelorMittal, notices were issued to firms like Hindalco, Grasim Industries, GVK Power, MMTC and others.Subsequently, in June, it had formed the IMG to review the progress of coal blocks allocated to companies for captive use. It is headed by additional secretary Zohra Chatterji and has representatives of steel, power, law, economic affairs and mines ministries, among others .
Separately, the CBI is investigating criminality in 12 firms which were given licenses under the 'fast track' category but had not yet commenced mining of the allocated coal blocks.
On the other hand, while corporate India presses for labour reforms and cites policy paralysis to accomplish reforms as the greatest hindernace in the growth story and the government does always love to talk about political compusions. We have seen intensive corporate lobying exposed in2 G spectrum scam. We also witnessed while Tata Motors was being ejected out of singur, how corporate and market forces rallied behind fire brand populist lady Ms Mamata Banerjee.In fact, production system has never been the priority of the political class. It ran blind after foreign capital inflow.Corporate India made most of it with service, construction and consumer sectors while engaged in in fight against one another. Here you are! Maruti Suzuki India posted its worst sales decline in 10 months in August, hurt by labor problems that led to a lockout at its north India factory, while other car makers posted sales growth.Domestic car sales of Maruti Suzuki India declined by 35 per cent in August, hit by a month-long lockout at its Manesar plant, but the other two main players, Hyundai and Tata Motors posted positive growth during the month amid tough market conditions.However,India's economy expanded at a slightly faster pace in April-June, but industry representatives seized on figures showing investment has slowed sharply as another sign of malaise and stepped up pressure on the government to push through reforms to spur growth. And these reforms share invoke the monopoly war all around.
AARATI KRISHNAN writes for Hindu Businessline:
Policymakers in the financial sector sure have a thing or two to learn from the Sahara group. Here they are, trying every trick in the book to make small investors take to shares and bonds and not succeeding even a bit. The Finance Ministry has offered tax breaks on equities and discounted prized public sector stock. The Reserve Bank of India (RBI) has pushed banks to serve up no-frills bank accounts. The Securities and Exchange Board of India (SEBI) tried everything from minimum public shareholding to electronic IPOs to woo small investors.
But they have ignored all this and poured money into gold and property instead. The number of demat accounts has not moved past the two-crore mark for two years now.
Meanwhile, it transpires that the Sahara group has managed to mop up nearly Rs 20,000 crore from over two crore investors with its home-spun ‘optionally fully convertible debentures’. It has been able to do this without the benefit of any expensive investment bankers, road shows or public filings. The group claims this was all due to untiring efforts of its 10-lakh strong field force. But the Supreme Court has taken a jaundiced view of the matter and asked the group to refund the entire money.
That’s an opportunity for the policymakers. Forget tax breaks and e-IPOs. Just hire Sahara’s field force and get financial inclusion going!
http://www.thehindubusinessline.com/features/investment-world/article3848295.ece?ref=wl_companies
While Times of India reports:
The Sahara Group on Friday resorted to an emotional outburst against regulators for repeatedly questioning the source of all its public deposits and investments and challenged the authorities to find any 'benami' (illegal) money with the group.
In a late evening release, several hours after the Supreme Court judgment directing the group to repay Rs 17,400 crore of investors' money along with 15% interest, Sahara sought to comfort its depositors saying there was nothing to worry about and that there wouldn't be even a day's delay in repayment. "Sahara is the most honest custodian of your money and by the grace of God, we are so healthy that there cannot be even one day delay in any payment commitment of Sahara," the release said.
It also emphasized that in the last 33 years, there hasn't been a single complaint of non-payment against the company and that it has paid around Rs 1,40,000 crore to about 12 crore investors. It may be pointed out that during 2008, the Reserve Bank of India had directed the group to close its para-banking business and repay its depositors within seven years. "The RBI in 2008 killed our financial inclusion-based RNBC (residual non-banking finance company) activities and gave us seven years' time to repay our depositors, which we cleared in just four years," it said. "The income tax department held on to our refund for decades, to the tune of around Rs 2,000 crore...but ultimately they had to pay us back the entire amount in the year 2011," it added.
The group, which supports various sports activities including the sponsorship of the Indian cricket team and is also a part-owner of a Formula One racing team-Force India-said that it was because of its "meteoric rise" that it has been at the receiving end of the authorities 'again and again'.
The group has also been in the news recently for buying out two iconic hotels, one each in London and New York.
"For the past seven-eight years, we have faced the onslaught of various authorities since they concluded whimsically...that the deposits and investments we have received from the public are fictitious and bogus as they feel the money with us is ill-gotten from politicians, etc", the statement said in an oblique reference to the SC judgment asking Sebi to probe the source of funds. "The fact is that there is not a single benami money and this statement is Sahara's challenge to all authorities of our country".
Emphasizing the fact that it has never done anything against the law, it said that the authorities have convinced the courts of its wrong doing by creating a negative perception of the group and that it would never blame the courts for it. Highlighting the fact that all their investors are genuine, the statement added: "Each and every rupee we have accepted in last 33 years is always against receipt from the company and with an application form duly signed by its depositors and investors".
http://timesofindia.indiatimes.com/business/india-business/Sahara-Group-lashes-out-at-regulators/articleshow/16104776.cms?
Unlisted conglomerate Sahara, one of India's biggest groups and a household name through its cricket sponsorship, must refund 174 billion rupees raised by "dubious" means from 22 million small investors, India's top court has ruled.
Friday's judgment underscored an increasing assertiveness by India's judiciary and regulators as businesses and financial markets expand at a fast pace in Asia's third-largest economy.
K.S. Radhakrishnan, one of the two judges ruling on the case, said in his order that the ruling demonstrated the need to treat economic offences "with an iron hand".
The sting in the judgment's tail was that Sahara must also pay investors - mostly from smaller towns and rural areas where banking penetration is low - interest at 15 percent from the day money was paid in.
The group, which has interests ranging from financial services and housing to media and sports, said late on Friday it had complied with rules for such fund-raising, and assured investors that it was "healthy" enough to honour its payment obligations in time.
"It needs to be realized that GAAR (General Anti Avoidance Rules) is an extremely advanced instrument of tax administration—one of deterrence, rather than for revenue generation—for which intensive training of tax officers, who would specialize in the finer aspects of international taxation, is needed," the panel said while submitting a draft report on the rule.
Investors saw the proposed rules as desperate means by a cash-strapped government to raise funds to rein in its yawning budget deficit. Many of them said that the anti-avoidance rules, which give authorities powers to scrutinize any deal that they feel has been structured to evade taxes, would give unbridled power to tax authorities and that all deals could be viewed with suspicion. Some feared it would be used to target transactions routed through jurisdictions such as Mauritius, with which India has a double-tax-avoidance treaty.The sharp criticism forced the government to defer implementation of GAAR by a year to April 1, 2013. The expert panel suggested GAAR be implemented from 2016-2017.
"GAAR has been received poorly in India due to the somewhat more stringent versions put out by government," as well as the perceived lack of adequate consultation with stakeholders, the panel said in its report.
The committee headed by Parthasarathi Shome, the chief of a government body on international economic relations, said that the government should announce the implementation date immediately to remove uncertainty from the minds of stakeholders.The committee, which was set up by Prime Minister Manmohan Singh in July to address concerns of foreign and domestic investors on GAAR, suggested the government should issue a circular to clarify GAAR provisions along with illustrations.The so-called GAAR provisions and a retrospective tax amendment were proposed by the government in March and since then have hurt investor sentiment and been met by strong criticism in India and overseas.
The panel has sought comments from various sections of the government and the general public by Sept. 15, before it submits its final recommendations by Sept. 30.
"The draft report has recommended certain amendments in the Income-tax Act, 1961; guidelines to be prescribed under the Income-tax Rules, 1962; circular to clarify GAAR provisions along with illustrations; and other measures to improve tax administration specifically oriented towards GAAR matters", a Finance Ministry release said.
"It has now been decided to expand the scope of the terms of reference of the committee to include all non-resident tax payers instead of only FIIs," it said.
The Finance Ministry had earlier on August 6, 2012 asked the expert committee to examine the applicability of the amendment on taxation of non-resident transfer of assets where the underlying asset is in India, in the context of Foreign Institutional Investors (FIIs) operating in India purely for portfolio investment.The stakeholders, the release added, can submit their comments on the draft report by September 15.
In view of the concerns expressed by investors, the Government had already postponed implementation of GAAR by a year to April, 2013. The proposal was introduced in Budget for 2012-13 by the then Finance Minister Pranab Mukherjee.
Industry and experts today said the draft guidelines on General Anti-Avoidance Rules (GAAR) are encouraging and progressive.
"The Report of Expert Committee on GAAR is most encouraging. CII has been advocating a postponement in the introduction of GAAR," CII Director General Chandrajit Banerjee said while commenting on the draft proposals.
He said the report is especially laudable since ambiguity in the earlier guidelines in terms of use of words such as "commercial substance" have been addressed by providing a clear definition.
Ernst & Young Tax Partner Pranav Sayta said the suggestion to defer implementation the anti-tax avoidance provision by three years among other suggestions could go a long way in reviving investors sentiment.
The GAAR panel under tax expert Parthasarathi Shome, constituted by Prime Minister Manmohan Singh in July, has submitted a detailed draft guidelines to address the concerns on the issue. Earlier, a Finance Ministry panel had also given recommendations.
"Certain features such as recommendation to abolish capital gain on listed securities are very well thought off," PwC India's Rahul Garg commented.
Another leading chamber Ficci hoped the draft would lead to bold policy decisions aimed at restoring confidence and reviving growth.
"Ficci is happy that a pragmatic and practical view has been taken in recommending a deferral in the implementation of GAAR at a time when business sentiment desperately needs a boost," chamber's president RV Kanoria said.
The panel has sought public comments on the draft guidelines till September 15 and after that the guidelines are expected to be finalised.
Government's total receipts in the first four months added up to Rs 1.73 lakh crore, only 17.7 per cent of the budget amount, data released on Friday showed, while its expenditure climbed to Rs 4.37 lakh crore, 29.3 per cent of the budgeted amount.
This shows the slowing growth is taking its toll on revenues while government was unable to rein in its expenditure.
"The fiscal deficit number is concerning and if you extrapolate this, the number by the end of this year is bound to go haywire. The government is very likely to exhaust its budgeted fiscal deficit and will lap up more resources than expected. More G-secs will put pressure on yield," said Sunil Sinha, senior economist, CRISIL.
The credit rating agency expects deficit to come in at 6.2 per cent of GDP.
Finance minister P Chidambaram has promised to set out a fiscal consolidation plan and has tasked a team of experts led by Vijay Kelkar to suggest a road map.
The government is keen to avoid a situation like last year when it reported a fiscal deficit of 5.9 per cent of GDP against the budgeted figure of 4.7 per cent. During the same period last year the fiscal deficit was 55.4 per cent of the budgeted amount, suggesting that the breach could be significant this year as well if corrective measures are not taken. The budget has assumed Rs 30,000 crore from disinvestment but nothing has been raised yet.
It may also not get the Rs 40,000 crore from spectrum sale may sale if deferred payment option is given to telecom companies.
Non-plan expenditure was 33.3 per cent of the budgeted but plan expenditure was only 21.9 per cent in first four months, indicating some tightening of discretionary spending.
The Income Tax Separtment has a new weapon in its arsenal to identify evaders — the database of the Credit Information Bureau of India.
Set up by the State Bank of India along with several other banks and non-banking finance companies, the credit information bureau maintains records of individual payments pertaining to loans and credits.
The IT department will now use the bureau’s extensive database for high value recoveries from tax evaders. The credit information bureau will help the IT department recover a part of the Rs 478,863 crore tax that various entities owe the Department. The funds are locked up in disputes and litigations.
The Central Board of Direct Taxes, in its internal document called Central Action Plan for fiscal 2012-13, has reiterated the importance of the credit information bureau in the recovery process and has said it is one of the means to enforce recovery from defaulters.
CIBIL’s database contains PAN-wise records of loans taken by entities from banks and financial institutions. CIBIL also assigns credit scores to borrowers depending on factors like repayment pattern, defaults and loans availed by them.
Using the CIBIL database would help the IT department to move effectively given the extensive details of loans and credit taken by different entities. Since the CIBIL database also contains information about the credit rating of such entities, this would also help in ascertaining the financial capability of the PAN holders against whom the tax demand has been raised by the Department.
The BSE benchmark Sensex snapped its four-week gaining streak and tumbled by 354 points to end at one month low of 17,429.56 due to fall in metal, realty, capital goods, auto and banking counters on the back of weak global cues.
The market continued to feel the heat of over week-long logjam in Parliament over the CAG report on coal block allocations, raising fears of delay in further reform process. Statement on interest rates given by Reserve Bank Governor D Subbarao in US also affected the market sentiment.
He said, "The battle against inflation has not ended yet... it is still much above RBI's comfort level of 5-6 per cent and to control it we need to keep interest rates high, but to support growth we need to keep interest rates low."
The 30-share index on Monday touched a high of 17,820.07, but then declined for the most of the week and touched a low of 17,337.61 before ending the week at 17,429.56, showing a net loss of 353.65, or 1.99 per cent.
The index had gained 944.02 points, or 5.61 per cent, during the last four weeks.
The NSE 50-share Nifty also dropped by 128.20 points, or 2.38 per cent, to end at 5,258.50. It had gained 286.85 points, or 5.62 per cent, in the last four weeks.
The global markets were also under selling pressure for most of the week ahead of the much-awaited speech from US Federal Reserve Chairman Ben Bernanke on August 31 at an annual gathering of Central bankers in Jackson Hole town in Wyoming as investors waited for the outcome of the summit.
Infosys co-founder and chairman emeritus N.R. Narayana Murthy has criticized the government’s slow decision making, saying the country’s progress has been hit by bureaucracy.
"I keep meeting corporate leaders globally. Earlier, if China was mentioned three times, India was mentioned once. Now, if China is mentioned 30 times, India is not even mentioned. That tells the story. We have cut our own legs off by our inaction and our policies,” he said in an interview with NDTV Profit on Thursday.
Mr. Murthy said quick decision-making is the need of the hour and “has nothing to do with Parliament, opposition, coalition or the global downturn”.
The Infosys co-founder referred to the problems of the IT sector, saying suggestions he had made to the government over a year ago had seen little action.
“I gave a list of suggestions to Pranab Mukherjee (the then finance minister) 14 months ago, met the Prime Minister twice, but nothing happened,” he said, adding, “(I) can’t understand when an IT industry contributes 25 per cent to exports, how its problems are not seen as urgent or how its problems are not solved by 5 pm this evening.”
The Prime Minister should urge bureaucrats and ministers to take quick decisions, "and there is a need to act like P.V. Narasimha Rao did in 1991" (when he took over as the country’s prime minister).
Mr. Murthy, who knows Mr Singh personally and has vouched for his honesty, said he is in the current situation because of “a set of circumstances”.
“I sympathize with him… that does not mean progress cannot take place with legislation,” he said.
On software exports, he said the government should ensure growth is not curtailed by unnecessary tax clauses.
“While we sympathize with the UPA government on issues that have immobilized it because of what has happened in Parliament, there are many areas that depend purely on how quickly bureaucrats can take decisions. The PM has appointed another committee. I don’t think you need more committees. While I have tremendous respect for Mr. Singh, we must create an urgency in our bureaucratic decision-making.”
http://profit.ndtv.com/news/corporates/article-china-30-india-0-thanks-to-bureaucracy-narayana-murthy-310096?pfrom=home-topstory
Stating that rising prices should have been controlled faster, RBI Deputy Governor K C Chakrabarty today said interest rate will be reduced as and when inflation comes down.
"As and when inflation rate comes down, interest rates will come down...." he said on the sidelines of an event.
"Our policy rate was 3.5 per cent in 2008. Then inflation went up to 10 per cent, we should have controlled inflation faster," he said while delivering a lecture on 'Indian Economy: Today and Tomorrow' organised by the Gujarat Chamber of Commerce and Industry (GCCI).
He said inflation in manufacturing and services sector can be reduced by lowering the cost of production services with the use of technology.
Inflation in July moderated to 6.87 per cent, helped by decline in vegetable prices, even as food inflation stayed in double digits and manufactured items remained under price pressure.
Though the inflation has moderated in July, from 7.25 per cent in June, it remains much above the 5-6 per cent comfort level of the Reserve Bank.
On the high current account deficit (CAD), he said it is mainly because of high oil and gold imports.
In a lighter vein he said, "Ahmedabad is notorious for gold .. Do not use gold for the next five years ... I think the problem shall be solved."
"People should start travelling on bicycle and save fuel," he said.
In its balance of payment statement in June, the Reserve Bank in July had said that India's CAD widened to the highest ever level to 4.5 per cent of GDP at USD 21.7 billion in January-March period of 2011-12 due to higher imports of oil and gold.
Chakrabarty also said a growth of at least 9-10 per cent shall be required over the next 20 years.
"We need to grow at least by 9-10 per cent for next 20 years if the society has to survive and this burden has to be shouldered by you all," he said.
On the global economic situation, he said, "This is a crisis, absolutely no doubt, it comes once in a lifetime... I can say we shall not be alive when this type of crisis comes next...."
Drawing attention to countries like Greece which are in midst of sovereign debt crisis, he said they have to work hard and as well as sacrifice. "The envoy of Portugal told me his salary has gone down by 20 per cent year-on-year, but how many of you had to do this here," he wondered.
Across the globe food prices are going to go up and they may not be able solve the true inflation for a pretty long time, he said.
To a particular query, Chakrabarty said the issue on payments from Iran was a political issue. "You should contact the Prime Minister or Finance Ministry on this count," he said.
AHMEDABAD: Stating that rising prices should have been controlled faster, RBI Deputy Governor K C Chakrabarty today said interest rate will be reduced as and when inflation comes down.
"As and when inflation rate comes down, interest rates will come down...." he said on the sidelines of an event here.
"Our policy rate was 3.5 per cent in 2008. Then inflation went up to 10 per cent, we should have controlled inflation faster," he said while delivering a lecture on 'Indian Economy: Today and Tomorrow' organised by the Gujarat Chamber of Commerce and Industry (GCCI).
He said inf
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