What an Exclusive economy branded with inclusive politics!
Europe is inflicted with recession once again and the corporate Government is all set to allow more stimulus and tax forgone for capitalists all on the name of Mango Men!The opposition is engaged to invent face saving kit as electioneering gets momentum as Rahul Gandhi is now leading from the front.Finance ministry is pressing RBI to overlook ground realities for interest cut to boost the market. While Reliance is allowed to explore D6. Auction of Two G spectrum and its failure turned to be excellent game plan to nullify the cag scam report while top three bidders have not to pay a single penny for three years. Chidamabaram is also in haste to allow banking license to Indian capitalists so that our savings should make their capital!
Indian Holocaust My Father`s Life and Time, Chapter Nine Hundred Twenty Four
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What an Exclusive economy branded with inclusive politics!
Europe is inflicted with recession once again and the corporate Government is all set to allow more stimulus and tax forgone for capitalists all on the name of Mango Men!The opposition is engaged to invent face saving kit as electioneering gets momentum as Rahul Gandhi is now leading from the front.Finance ministry is pressing RBI to overlook ground realities for interest cut to boost the market. While Reliance is allowed to explore D6. Auction of Two G spectrum and its failure turned to be excellent game plan to nullify the cag scam report while top three bidders have not to pay a single penny for three years. Chidamabaram is also in haste to allow banking license to Indian capitalists so that our savings should make their capital!With government attributing "sensationalism" over the CAG's presumptive loss figure for the "killing" of the telecom sector, Congress on Friday said all institutions should work within their jurisdiction.The Congress-led United Progressive Alliance (UPA) government on Thursday appeared to target the Comptroller and Auditor General (CAG), after this week's 2G spectrum auction fetched less than one-fourth of the target revenue.The top three bidders in the second-generation (2G) spectrum auctions that ended on Wednesday will not pay a single rupee to the government in the next three years,as the fee they paid in 2008 for their permits that were later quashed by the Supreme Court,will offset the amount they are due to pay now.Last month,the panel of ministers on spectrum had allowed mobile phone companies to offset their 2008 licence fee against their bid amounts in the current airwaves sale.The Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram also cleared the option of allowing operators to pay a third of the bid amount up front,with the remainder to be paid in 10 equal installments with interest,beginning from the fourth year of their licence period.The refund due to the top three bidders Telenor,Videocon and Idea Cellular is more than the one-third bid amount they have to shell out if they go for the staggered payment option.Officials of all the three companies confirmed they were going to opt for the deferred payment option.A telecom department official said if these three companies opted for this option,they wont need to make any payment till 2015-16.
Mind you,The CAG has asked Oil Ministry not to approve any of Reliance Industries' investment plans for the flagging KG-D6 gas field unless the company gives it unfettered access to audit its spendings. In a strongly worded letter, Comptroller and Auditor General of India (CAG) referred to media reports about the ministry giving nod to RIL's annual capex for KG-D6 that have been pending for past three years, to advise the ministry not to approve any investment except those of "emergent nature".
"It is well within the knowledge of the Ministry that any increase in capital expenditure is likely to have significant adverse impact on government's financial interests," CAG wrote to Oil Secretary on November 9. Sources, however, said contrary to reports, the ministry is yet to sign on resolutions approving capital expenditure on the KG-D6 block for 2010-11, 2011-12 and 2012-13 fiscal pending resolution of CAG audit of spending on the block. The Ministry wants RIL to give CAG "unfettered access to account books" and pending that it has not approved the firm's investment proposals including annual budget for three years.
Meanwhile,Reserve Bank governor D Subbarao today warned against "casino banking" that has over- financialised the real economy, and called for inclusive growth to quell the growing disenchantment of the public.A day after Finance Minister P Chidambaram asked the Reserve Bank to speed up the process of issuing new bank licences, Governor D Subbarao today said it would be not possible without fulfilling the enabling conditions for the same.
"We have been preparing for launching this process (of issuing new bank licences) but all the ground work, all the enabling conditions for launching this work have to be fulfilled," he told reporters on the sidelines of a function in New Delhi.
Yesterday, Chidambaram had said he had asked RBI to finalise the guidelines for new bank licences and start accepting applications for the same pending passage of the Banking Laws (Amendment) Bill.
The euro-zone economy has been in recession since the third quarter of last year, following the shortest recovery from a previous recession since records began in 1970, the Center for Economic Policy Research said Thursday.
The CEPR is a network of over 700 economists, based primarily in European universities.
Its Euro Area Business Cycle Dating Committee provides judgments on the currency area's entry into and emergence from recession that is independent of policy makers in much the same way as does the National Bureau of Economic Research's Business Cycle Dating Committee in the U.S.
Figures released by the European Union's official statistics agency Eurostat Thursday showed the combined gross domestic product of the 17 countries that share the euro fell for the second straight quarter. One common definition of recession is two successive quarters of contraction.
However, the CEPR uses a broader definition, as does the NBER, placing more weight on developments in the jobs market. In the euro zone, unemployment has been on the rise since the second half of last year.
"The labour market may not have fully recovered from the previous recession, and this may have caused employment to turn down so quickly," the CEPR said.
Ten quarters of growth separated the end of the recession that followed the financial crisis in April 2009 and the start of the new recession that has accompanied the euro zone's fiscal and banking crisis, according to the CEPR.
The CEPR noted that while the euro zone as a whole has been in recession for a year, many of its members have not.
"France is muddling through, Spain and Portugal display very low levels of both employment and GDP, while the opposite is true for Germany, Austria and Estonia," it said. "Countries such as Finland display low levels of GDP but not employment."
Ahead of the Winter Session, Finance Minister P Chidambaram on Friday said the government is reaching out to political parties to seek their support for passage of important economic bills.On the other hand, The government has approved Reliance Industries' plan to start drilling for developing a new area in KG-D6, the first major decision after Veerappa Moily took charge at the oil ministry late last month.
"The Parliament session has a very heavy legislative agenda. We are reaching out to the various political parties to carry through these agenda in the four weeks that we have for the session", he said addressing a press conference here.
The important economic agenda for the Winter Session of Parliament beginning on November 22 includes amendment to the Insurance Bill to raise FDI cap from 26 to 49 per cent, Banking Regulation Amendment Bill and Direct Taxes Code.
Prime Minister Manmohan Singh, Chidambaram said, had already met supporting parties and would be meeting more allies.
"We sincerely hope that the forthcoming session will be a productive one and many bills will be passed... My suggestion is that not one issue should be blown out of proportion. There are many very important issues that concern the welfare of people and future of country," he added.
The Opposition parties are proposing to corner the government on the issue of opening of multi-brand retail to foreign investors. The government allowed FDI in multi-brand retail through an executive order.
Noting that economy was "challenged", the Minister said the government would be taking steps to revive growth, which slipped to nine-year low of 6.5 per cent in 2012-13.
"... we are taking number of steps to revive economic growth. Only this morning you have read that Eurozone is formally in recession. We are nowhere near that situation," he added.
"A growth process that increases inequity lacks durability, and indeed even legitimacy, eventually threatening the economic and social stability. Evidence in support of this is overwhelming--the `Occupy Movement' of the past year being just the latest manifestation of the discontent associated with inequitable growth," Subbarao said at a seminar.
The government plans to put on auction the circles that went without bids in the just concluded sale of 2G mobile phone spectrum, by March 31, Telecom Minister Kapil Sibal said today.
The "intent" is to have the auction of spectrum in four circles, including Delhi and Mumbai, before the end of the fiscal, Sibal told a news conference here.
Finance Minister P Chidambaram said the government "was not celebrating" the flopping of the auction and will continue to move forward.
An Empowered Group of Ministers (EGoM) "will be meeting soon" to decide on the next course of action, he said.
The auction, which lasted just two days, got total bids worth Rs 9,407.64 crore, just one-third of the minimum Rs 28,000 crore the government was expecting. The auction was a far cry from the 35-day bidding for the 3G spectrum in 2010 that got Rs 67,719 crore.
Sibal said besides Rs 9,407.64 crore from the auction, the government will also get Rs 7,936 crore by way of one-time fee to be levied on existing telecom operators holding spectrum more than a prescribed limit.
"There will be substantial net gain," Chidambaram said.
Inaugurating two-day international conference on 'Leveraging cooperative advantage', organised by the RBI-run College of Agricultural Banking as a part of International Year of Cooperatives of the UN in Pune, Subbarao said, "The recent financial crisis has taught us some very important lessons.
"The general disenchantment with 'casino banking' in certain developed economies underscored the dangers of over-financialisation of the real economy," Subbarao said.
Casino banking is the practice whereby a commercial bank engages in unduly speculative or risky financial activities with the aim of achieving high profits.
Stating that cooperatives have a very meaningful role to play in today's complex, globalising world, he said over the past 60 years, the world has seen several episodes of economic growth in many countries and "one clear lesson is that growth is sustainable only if it is inclusive".
The inclusive growth process is the one wherein "the poor contribute to growth and the poor benefit from growth", he said. "Cooperatives can become an effective instrument for inclusive growth and a powerful platform for enfranchising the less privileged," he said.
Noting that recent financial crisis saw many large commercial banks go belly-up, he said the cooperative business has been more resilient as its source of stability is the inclusiveness embedded in its very structure, which ensures that they aren't enterprises run for short-term profits, but are a business model for long-term sustainability and inclusive growth.
The experience of the 2008 global credit crisis has in fact generated serious thinking about cooperatives as a bulwark for financial stability as they do only basic banking and do not indulge in investment banking or trading, thus are not dependent on bulk or wholesale markets for funding, he said.
Noting that globally the cooperative movement covers over a billion people, he pointed out that India, China and the US have the largest number cooperative memberships, while Germany, France, the Netherlands and Italy lead in the number of cooperative banks.
With around 6 lakh cooperatives, India has the largest cooperative movement in the world.
Economic Times reports:
The government has approved Reliance Industries' plan to start drilling for developing a new area in KG-D6, the first major decision after Veerappa Moily took charge at the oil ministry late last month.
The decision is seen as a shot in the arm for exploration companies, particularly Reliance IndustriesBSE -1.18 % that has waited for three years to develop new fields in the D6 block, where output from the existing D1 and D3 fields has fallen drastically.
The fall in output and adverse comments from CAG on the way the field was administered prompted the government to penalise RIL, souring the relationship between the company and the ministry and leading to long delays in approvals.
The permission to drill in the proven D19 gas field was taken this month by the technical arm of the oil ministry, the Directorate General of Hydrocarbons (DGH), and immediately communicated to the company. The satellite fields of the block can produce 10 million standard cubic metres per day of gas. The block's output has fallen to 25 mmscmd from a peak of 60 mmscmd.
"The contractor can start work immediately after the management committee of the D6 block approves the proposal to drill the development well," a government official said, requesting anonymity.
Drilling to Start Immediately
Reliance has informed the oil ministry that it would start drilling immediately, the official said. The oil ministry, DGH and RILBSE -1.18 % did not respond to ET's email queries.
Drilling the development well in D-19 is part of the $1.5-billion optimum field development plan (FDP) for four satellite fields that was approved in January this year. After the FDP is approved, the company needs permission again to drill each well at a specified location. The other three fields are D2, D6 and D22. According to the plan, RIL has to drill a total of eight development wells in these satellite fields. Gas from the new fields is expected to flow in the middle of 2016.
In view of the sharp decline in output from the block compared with what was envisaged, the DGH has cautioned RIL to keep a close watch on the new field. It has asked the company to monitor water and gas ratio closely and adopt suitable measures in case the reservoir behaves unexpectedly. The DGH has also directed RIL to convene a meeting of the block's Management Committee (MC), the apexBSE 0.00 % decision-making body that approved budget and work plans of oil or gas fields auctioned to private energy firms under the New Exploration Licensing Policy (Nelp), officials said.
Officials say after the DGH nod, MC approval is merely a formality as members have independently endorsed the proposal. MC is chaired by Director-General of Hydrocarbons RajivNayanChoubey while Joint Secretary-Exploration GiridharArmane is its deputy chairman. RIL, which operates the block, is its secretary and partners BP and Niko are the other members. The operating committee comprising consortium partners RIL, BP and Niko have already passed the proposal.Initially, RIL had proposed an integrated development plan for nine satellite gas fields, which was rejected in 2009 because some of the discoveries could not be economically developed. The company again put up a proposal to develop four satellite fields in December 2009, which was cleared by the oil ministry-led MC on January 3, 2012. Now, the company has to obtain MC approval for every individual well it would drill to produce gas.
We would like to strongly recommend that pending complete submission of all supporting records by the operator relating to expenditure for previous years upto 2011-12 and comprehensive and detailed scrutiny thereof to verify that the government's financial interests have not been adversely affected in any, the Ministry may examine all relevant issues closely and carefully before considering the desirability of any future approvals of capital expenditure through the annual work programme and budget, development plans or otherwise, except those of an emergent nature," CAG wrote.
CAG in its previous letter on October 26 had stated that it not contemplating doing a performance audit of the operator (RIL) but shall not be subjected to RIL's conditions of not placing the report in the Parliament and maintaining confidentiality of the information. "We would like to state that our audit cannot be restricted to only to the accounting records and books of the operator or to the documents and information provided at the discretion of the audited entity.
"Our audit would extend to verification whether the costs depicted are correctly determined and in particular costs incurred for procurement of goods and services are determined through a transparent and competitive process so as to protect Government's revenue interests, especially as such costs are recovered from profit petroleum," CAG had written. KG-D6 output has fallen to 25.11 million cubic metres per day (mmcmd) after hitting a peak of about 63 mmcmd in August 2010. While RIL blames geological complexities for the fall, the drop in production adversely affects government's profit take from the block.
Claiming that the national exchequer had suffered a loss of Rs 1.76 lakh crore due to the 2008 government allocation process, the CAG had sparked a probe into the allegedly massive corruption scandal masterminded by former telecoms minister A Raja.
However the figure, based on the 2010 3G spectrum auction had been disputed by several corners, including government ministers who trashed the figures despite persistent attacks by the opposition on the matter.
Following a landmark Supreme Court judgement earlier this year that quashed 122 licenses issued under the 2008 sale, the government was asked to auction the airwaves again.
However, the Indian government fetched just Rs 9,407 crore, a fraction of the Rs 40,000 crore it had hoped, as the auction for the second-generation GSM spectrum ended on Wednesday.
Speaking to reporters in Delhi, Information & Broadcasting Minister and Congress spokesperson Manish Tewari on Thursday lashed out at the CAG, as he said, "Mr CA & G where is the 1.76,000 crore loss?"
"The opposition made this its holy grail for the last two years...it should apologize now," he said.
The government also demanded a comprehensive overhaul of how the CAG calculates presumptive loss figures when a resource is not auctioned off, but sold in any other manner.
Responding to the government's taunt, the main oppositon Bharatiya Janata Party (BJP) said that government was looking for opportunity to target the CAG.
"We will not allow this at all," party spokesperson Mukhtar Abbas Naqvi said.
Government plans to unveil final GAAR rules in next 7-10 days
The government is planning to announce the finalised amendments to the controversial rules on tax evasion for foreign investors in the next 7-10 days, Finance Minister P. Chidambaram said on Friday, without specifying the details of what will be announced.
The final shape of the general anti-avoidance rules (GAAR) is widely expected to be based on the draft report submitted by the Shome committee, which was set up following the outcry created by the regulations targeting companies and investors routing money through tax havens.
The Shome committee report proposed to delay the implementation of GAAR by three years, which helped soothe investor concerns about the measures.
Restoring the confidence of investors overseas is crucial at a time when India needs foreign flows to bridge its current account deficit, and support the rupee and stock markets.
"A decision has been taken on GAAR. The draft has been sent to the prime minister. Hopefully, the decision will be made public in next 7-10 days," Finance Minister Chidambaram said on the sidelines of a news conference.
The final amendments to GAAR would come weeks after they were initially expected given perceptions of a lack of consensus among various government agencies, including tax authorities.
The government has previously clarified sections of the GAAR rules, which as originally unveiled in March had raised complaints among foreign investors about the vague wording and lack of clarity.
The GAAR proposal aims to target tax evaders, partly by stopping Indian companies and investors from "round-tripping", or routing investments through Mauritius and other tax havens.
Set up an authority for fast approval of patents: Assocham
Government should set up a National Intellectual Property Right Strategy Authority in order to expedite clearances of patent applications, industry body Assocham has said.
The chamber said it has recommended to the Department of Industrial Policy and Promotion to set up the authority in view of changing trade environment driven by global competition, innovation risks and rapid changes in technology.
The proposed authority should aim at aligning towards achieving a target of 50,000 patent applications filed in India by 2015 and 1,50,000 in 2020, it said.
Similar targets should also be set up for filing of design and trade mark applications, it added.
The intellectual property offices include patent, trademarks, designs and geographical indications.
According to the government estimates, about 42,000 patent applications were filed in 2011.
Assocham said the proposed authority should be functionally autonomous and financially independent. It should be made responsible and accountable to look into several existing policies, statutes and regulations.
"A review of such policies, statutes and regulations should be undertaken with a view to align them with the stated objectives of the National Intellectual Property Right (IPR) strategy and to provide equal opportunities to all the players irrespective of their nationality," Assocham President Rajkumar Dhoot said.
Formulation, adoption and wide dissemination of objectives should be encouraged in all ministries, departments and bodies of the central and state government, business and cooperative sectors, he added.
Further, the chamber said that tax incentives should be extended to IPR procurement expenses as well.
Also, it said, the process for granting or registration of all types of IPRs including trademarks, design and patent should be made time-bound and efficient. This could be done by streamlining the procedure by which an application for IPR is processed.
2G auction: Where are those Rs 1.76 lakh crore? Kapil Sibal asks
Attributing "sensationalism" over the CAG's presumptive loss figure of Rs 1.76 lakh crore for the "killing" of the telecom sector, government today said it plans to auction by March-end the circles that were not taken in the flopped sale of mobile phone spectrum this week.
It also rejected Opposition allegations that government was celebrating the failure of the auction and said notwithstanding the poor response, it will garner the estimated Rs 40,000 crore from spectrum sales.
An Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram will meet soon to decide on price and date for auction of spectrum in circles like Delhi and Mumbai, Telecom Minister Kapil Sibal told a news conference here.
The government, which had set a reserve price of Rs 14,000 crore for pan-India spectrum on the basis of CAG's assumption of Rs 1.76 lakh crore loss caused to the exchequer in the previous sale in 2008, managed a meagre Rs 9,407.64 crore in the auction that lasted barely two days.
"The telecom story is no longer a story that we can talk about to the rest of the world. People ask me the question, what happened? And quite frankly, I have no answers.
"All I can say that certain events took place and there was a level of sensationalism that took over and the government was, in a sense, limited in its policy prescriptions and had to move forward in a certain way which ultimately has resulted in what we have seen couple of days ago," he said.
Sibal said the government got more than Rs 1 lakh crore from the auction of 3G spectrum, which was used by CAG to base its presumptive loss. "But the customer got nothing" as there was no roll-out of 3G services.
"Where are those Rs 1.76 lakh crore?" he asked in an apparent reference to the CAG estimate and the money garnered in the auction that concluded on Wednesday.
Finance Minister P Chidambaram, responding to questions on the net gains made by government, said, "I think you are all jumping to numbers. I thought we started by saying let's stop myth making first. I think you are making or building more myths now."
16 Nov, 2012, 09.41PM IST, Ashwin Mohan,ET Now
CBDT bats for penalty waiver in retro tax cases; boost for Vodafone?
In the first indication of a softening of stance from revenue authorities on the controversial retrospective tax laws introduced in budget 2012, the country's apexBSE 0.00 % tax body, the Central Board of Direct Taxes or CBDT has recommended waiver of penalties in cases where tax laws are applied retrospectively, two government officials familiar with the development told ET NOW.
"An internal committee has finalized its report on the Shome Panel's recommendations on retrospective tax laws. It has favoured waiver of penalties in "appropriate cases" but has opposed waiver of the interest component. The report will be soon submitted to the Finance Ministry," said one of the two individuals cited above.
On October 8th 2012, the government appointed Parthasarathi Shome panel had recommended that in cases where retrospective tax laws are applied, adequate safeguards are needed in the form of interest and penalty waiver on the tax demands raised.
"In all cases where demand of tax is raised on account of retrospective amendment relating to indirect transfer...no interest...should be charged in respect of that demand so that there is no undue hardship caused to the tax payer," the panel said.
"Initially, the committee was in favour of rejecting both interest and penalty waivers, but a later a middle ground was reached. The interest component cannot be separated from the tax demand and thus cannot be waived off ," said a senior government official.
Tax experts feel if the CBDT's report is accepted and implemented by the Finance Ministry, then British telecom giant Vodafone's total tax bill in India will be reduced by nearly Rs 8000 crore rupees ie the penalty sought by the income tax department for failure to withhold tax on the 2007 acquisition of Hutchinson's mobile assets in India.
In October 2010, the tax department had slapped a Rs 11,218 crore tax notice ( including principal plus interest) on Vodafone. This lead to a protracted legal battle which ultimately ended with the Supreme Court ruling that the income tax department had no jurisdiction to tax the deal.
Budget 2012 sought to overturn the apex court order by retrospectively amending the tax laws on indirect transfer of assets.
PM hosts dinner for allies, invites Opposition on Saturday
In a big political event in the national capital, Prime Minister Manmohan Singh is hosting a dinner for the allies of the United Progressive Alliance (UPA). The move is an effort by the Prime Minister to ensure support for the government's foreign direct investment (FDI) in retail move in the Winter Session of Parliament.
The Prime Minister is holding dinner diplomacy to ensure a smooth session as he is entertaining the UPA allies at dinner on Friday while he has also invited top Bharatiya Janata Party (BJP) brass for dinner on Saturday night.
Singh has already hosted key allies, Samajwadi Party (SP) chief Mulayam Singh and Bahujan Samaj Party (BSP) supremo Mayawati last weekend.
Now the effort is to garner support from other allies for crucial bills like FDI in retail. And for the dinner of Saturday, the Prime Minister has also invited Opposition leaders Sushma Swaraj, Arun Jaitley and LK Advani for dinner.