Can P Chidambaram keep GDP at pace with Inflation?

October 9, 2012, 2:35 PM IST
IMF Cuts India Growth Forecast to 4.9%
In a speech last month, Prime Minister Manmohan Singh said India’s economic growth could “collapse” to about 5% per year if the country can’t break free of a “policy logjam” and make advances in everything from manufacturing output to infrastructure development to agricultural growth.
Well, by that definition, the International Monetary Fund has just said India is in the process of collapsing. The IMF’s “World Economic Outlook,” released Tuesday, forecast 4.9% gross domestic product expansion in India in 2012, a downward revision of 1.3 percentage points from the July forecast — the worst mid-year recast by the IMF for any major economy.
The report said: “India’s activity suffered from waning business confidence amid slow approvals for new projects, sluggish structural reforms, policy rate hikes designed to rein in inflation, and flagging external demand.”
The government’s outlook, not surprisingly, is more bullish. Finance Minister Palaniappan Chidambaram told reporters Monday that he expected growth to rebound from the April-June level of 5.5% in coming quarters. In an interview with The Wall Street Journal, Mr. Chidambaram said he expects that India’s moves to allow greater foreign participation in a range of sectors from retail to aviation to insurance will buoy the economy, along with coming fiscal belt-tightening measures.
Indeed, the IMF does see the recent round of reforms having some impact – but it will take some time. “Improvements in external conditions and confidence––helped by a variety of reforms announced very recently––are projected to raise real GDP growth to about 6 percent in 2013,” the IMF report said.
India’s hard times aren’t out of step with the world. The IMF’s growth forecast for advanced economies including the U.S., Germany and U.K. is 1.3% for 2012; Brazil’s forecast of 1.5% represents a one percentage point downward revision.
But sub-5% growth in India has some very perilous implications for the country. Indeed, anything below 6% growth can lead to rising unemployment in a nation where millions of young people are joining the workforce each year. The Kelkar Committee, an expert panel that recently submitted recommendations to the finance ministry on fiscal policy, said growth of 6% could translate into 2.4% employment growth, too slow to keep up with 2.5% labor force growth.
Mr. Singh in his recent remarks to a Planning Commission meeting made it clear how high the stakes are. In making a case that policymakers need to break out of their state of gridlock, he said: “If this continues for any length of time, vicious cycles begin to set in and growth could easily collapse to about 5 percent per annum, with very poor outcomes on inclusion. I urge everyone interested in the country’s future to understand fully the implications of this scenario. They will quickly come to an agreement that the people of India deserve better than this.”
Amol Sharma is an India Correspondent for The Wall Street Journal.
IMF Cuts India Growth Forecast to 4.9%
About P Chidambaram
His grand uncles and grand father were the Co-founders of Indian Overseas Bank, Indian Bank, United India Insurance and Annamalai University. He is married to Nalini Chidambaram, daughter of Justice (Retd.) Kailasam, Supreme Court, and Mrs. Soundra Kailasam, a renowned Tamil Poet and author, who is a Senior Advocate and a tax lawyer practicing in the Madras High Court and the Supreme Court, primarily in litigation related to the Central Excise department of the Government of India. He has a son, Karti P. Chidambaram, who graduated with a BBA degree from the University of Texas, and a Bachelors in Law from Cambridge University. His son is also a politician in the Congress party and consultant and CEO of many companies. Chidambaram is an atheist. Click here for more...
Tail piece: Chidambaram as FM only sees $$ in FDI's... He is Master of Mathematics, Money and Magic!

Tatra Spectra: ESM scumbags need to be rested

18 Apr 2012 04:04:09 PM IST
Tatra truck deal case: CBI raids two places in Noida
NEW DELHI: The Central Bureau of Investigation (CBI) Wednesday conducted search operations at the homes of two former army officers in Delhi and Noida and recovered key documents related to its probe into alleged irregularities in the procurement of Tatra trucks, sources said.
CBI sources said searches were also being conducted at the residence of an official of the Britain-based Vectra group that supplies the all-terrain heavy duty Tatra trucks to the Indian Army through defence public sector undertaking Bharat Earth Movers Ltd. (BEML).
The sources said raids were conducted at the homes of Brig (retd) P.C. Das in Delhi and Col (retd) Anil Datta in Noida. Searches were also conducted at the home of Vectra employee Anil Mansaramani.
The sources said three teams of CBI sleuths conducted the searches that began early Wednesday morning. Some crucial documents expected to help in investigating the scam-tainted truck deal have been found, the sources claimed.
The CBI search operations come a day after the agency questioned three people, including former BEML director V. Mohan, the company's present chief V.R.S. Natarajan and Vectra group chief Ravinder Rishi, in connection with alleged lapses in the supply of Tatra trucks.
Tatra is a Czech manufacturer and owned by Britain's Vectra that supplies truck parts to BEML.
BEML assembles the trucks and sells them off to the army. Some 7,000 Tatra trucks have been bought by the army since 1986.
Army chief Gen V.K. Singh blew the lid off the alleged scam after he alleged in March that he'd been offered a Rs.14 crore bribe to clear a deal for supplying sub-standard Tatra trucks.
The army in a March 5 press release took the names of Tatra and BEML, alleging that Lt Gen (retd) Tejinder Singh had offered a bribe on behalf of Tatra and Vectra.
The agency was probing why BEML decided to procure Tatra parts from Tatra Sipox (Britain), a private company, from 1997 when it was doing so through Omnipol (a state-owned unit in Czech Republic) since 1986.
The sources said CBI was trying to find out why BEML officials signed an agreement with Tatra Sipox (Britain) in a hurried manner June 14, 1997 in Bangalore, three days after they had a meeting with the firm and its associate companies' officials in Slovakia.
One more company, Venus Projects Ltd., in which Rishi allegedly has some stakes, was under the CBI scanner as he allegedly used it for purchasing spare parts for Tatra trucks, they said.
Tatra deal: CBI raids ex-Army officers' houses
The CBI team raided the residence of Anil Mansharamani, A-23, Sector 36 a businessman and also searched the house of Mr. O.P. Dutta a resident of C-75, Sector 30 whom the CBI suspect to be involved in the multi crore rupees deal.
Tatra a multi crore scam
Comment: CBI should make less noise and arrest the culprits before evidence vanishes... once the ExServicemen turns approver the main criminal mastermind can be nailed.

Tatra Deal: GSQR tweaked to suit scamsters?

CBI also looking into ‘non-indigenisation’ .
Tuesday, 10 April 2012 13:14 Rakesh K Singh | New Delhi
The CBI that is probing the deal between UK-based Tatra Sipox and BEML for supply of Tatra trucks to the Army is also investigating the reasons for the failure on the part of defence PSU for non- indigenisation of the component manufacturing for the all-terrain vehicles.
According to the original agreement between BEML and Omnipol, Czechoslovakia for manufacture of the all-terrain vehicles inked in March 1987, a maximum of 80 per cent of indigenisation of the component manufacturing was to be achieved by 1991-92.

The Department of Defence Production had paid `5.49 crore as technical documentation fee to the collaborator Omnipol and made an additional investment of `29.45 crore between 1986-87 and 1990-91 for creation of necessary infrastructure for production of targeted 250 Tatra trucks per annum from 1988-89 onwards.
“These targets, in respect of production as well as indigenisation were, however, never achieved,” said a 2000 CAG report on the performance of the defence PSU.
The report, gathered by the CBI during the ongoing probe of the Tatra trucks deal between intermediary firm Tatra Sipox and BEML inked in 1997 in contravention of the defence procurement rules, further said, “the indigenisation programme was virtually abandoned after 1991-92 when the order level dropped drastically from an average of 146 during the preceding three years to just 2 and indigenisation attained was 50.65 per cent.”
The CAG has also pointed out that BEML also accumulated as many as 748 non-moving inventory and 182 slow-moving inventory. The auditor had also slammed the defence PSU for not making significant profit from the investments made in the creation of facilities for Tatra trucks as BEML could mange a return of 8.28 per cent against the estimated return of 17.7 per cent by 1990-91 (year of stabilisation of the truck production).
The Central auditor had also pointed out that the Tatra trucks supplied to Army were virtually cross-subsidised by the Bharat Dynamics Ltd and Vehicle Research and Development Establishment.
While the FIR registered against Vectra chief Ravi Rishi, UK-based Vectra group and BEML has mentioned the year 1997 after which the supply of the trucks is being probed but sources said the agency is mulling over to enlarge the ambit of the probe.
CBI also looking into ‘non-indigenisation’

BEML Officials Quizzed
The CBI on Monday examined three senior officials of finance and vigilance wings of BEML regarding the alleged irregularities in the deal for supply of Tatra trucks. Agency sources did not name the officials but said they were asked questions about different aspects of the deal between BEML and the UK-based firm. The sleuths asked from the officials the reasons for entering into an agreement with Tatra Sipox UK which was not the original manufacturer in 1997 and the renewal of the contract for supply of the trucks in 2003. The CBI is also probing if the General Staff Qualitative Requirement for procurement of the vehicles was formulated to suit the intermediary firm.
BEML Officials Quizzed
Comment: The former Army Chiefs are also culpable for tweaking the GSQR to suit the Tatra Scamsters. Their role needs to be investigated and exposed.

Indian Black Money and Swiss Terror

Black money: Swiss Embassy contradicts CBI chief, calls his statement 'uncorroborated'
Press Trust of India, Updated: February 16, 2012 17:53 IST
New Delhi: Three days after the Central Bureau of Investigation (CBI) said that Indians are the largest depositors in Swiss banks, Switzerland today contradicted that stand, calling it "uncorroborated".
CBI Director Ambar Pratap Singh had, on Monday, said that Indians had stashed away an estimated 500 billion dollars in black money in foreign banks. The maximum outflow of illegal funds was to tax havens such as Mauritius, Switzerland, Lichtenstein and British Virgin Islands, he had said.
But the Swiss Embassy today, in an unusual step, issued a statement saying, "It wishes to make a clarification in view of unsubstantiated media reports that have been recently published about Switzerland and Swiss Banks."
But, the release, which did not mention the CBI chief's statement, said that Switzerland is not a tax haven.
"There have been several speculations about the amount of wealth held by Indians in Swiss Banks... Such estimates and statistics lack of evidence and are uncorroborated," the statement said.
While there have been various estimates of Indian black money stashed abroad, the statement by the CBI Director was significant in that, for the first time someone in authority in the country had come out with an estimate.
original NDTV News

Tax Exemption Limit to go up to Rs 2 Lakhs

Outlook India New Delhi | Aug 26, 2010
In a move that could leave more money in the hands of people, the Government today proposed to raise exemption limit on income tax from the present Rs 1.6 lakh to Rs 2 lakh.

The Cabinet approved the much-awaited Direct Taxes Code (DTC) Bill, which is likely to be tabled in Parliament during the ongoing Monsoon session and thereafter it may be referred to a select committee of members of both houses of Parliament.

The bill also seeks to remove surcharge and cesses on corporate tax, which could provide relief to business houses.

When asked what will be the limit of exemptions for income tax, Finance Minister Pranab Mukherjee told reporters after the Cabinet meeting that it is proposed to be raised to Rs 2 lakh from the current Rs 1.6 lakh.

"The whole objective is that a plethora of exemptions will be limited. (Income) tax slabs will be three. Rate of taxes will be taken in the schedule so that they need not be changed every year," he said.

On the corporate tax, he said it is sought to be retained at the present level of 30 per cent, but there will not be any surcharge or cesses on it.

According to sources, the DTC bill is likely to be tabled in Parliament on Monday. Thereafter, it will be referred to the select committee, they added.

When asked what the new income tax slabs would be, Mukherjee said, "that will be discussed in Parliament."

Sources, however, said income between Rs 2-5 lakh is likely to attract a rate of 10 per cent, 20 per cent for Rs 5 -10 lakh bracket and 30 per cent above Rs 10 lakh.

For senior citizens and females, the tax slabs are likely to be relaxed further, they added

When contacted, senior officials in the Finance Ministry declined to comment on the slabs.

At present, income between Rs 1.65 lakh and Rs 5 lakh attracts 10 per cent tax, while the rate is 20 per cent for the Rs 5-8 lakh bracket and 30 per cent for income above Rs 8 lakh.

The first draft of the bill had suggested 10 per cent tax on income between Rs 1.60 lakh and Rs 10 lakh, 20 per cent on income between Rs 10 and Rs 25 lakh and 30 per cent beyond that.

However, finance ministry officials had later said those slabs were just illustrative.

The Bill, approved by Cabinet today, also seeks to impose minimum alternate tax (MAT) at 20 per cent of the book profit, compared to 18 per cent at present.

The first draft had proposed to impose MAT on assets, which drew strong criticism from the industry. The MAT on book profit has been maintained in the revised draft as well.

The first draft had also proposed to tax long-term savings like provident funds at the time of withdrawal. However, the revised draft exempted them, after the first draft drew flak.

"Concerns were expressed for shifting from EEE (exempt, exempt, exempt) to EET (exempt, exempt, tax)," the Finance Minister said.

This would also address the issue of taxing surplus funds of charitable institutions, he added.

When enacted, the DTC will replace the archaic Income Tax Act and simplify the direct tax regime in the country.

Finance Ministry officials exuded confidence that the Bill will come into force by the deadline of April 1, 2011.

The code aims at reducing tax rates, but expanding the tax base by minimising exemptions.

"DTC will help in streamlining various tax exemptions, deductions and thereby bring in moderate tax rates. DTC would address most of the issues raised by corporate India, like, not imposing tax on gross assets, clarifying EEE, introducing graded deduction for capital gains among others," Ernst & Young Tax Market Leader Sudhir Kapadia said.
Tax Exemption Limit to go up to Rs 2 Lakhs

Slush money, laundering and corruption: Can we win over Naxals and Maoists?

Report: Slush money trail links BCCI-IPL teams
29 Apr 2010, 1141 hrs IST
According to reports, a maze of dubious transactions across tax havens links the BCCI to IPL league franchisees.

Media reports say that Swiss accounts have now emerged in the IPl probe and that overseas links have surface to IPL's dirty money. Reports state that the BCCI as well as IPL franchisees may have links to the dirty money laundering in the scam.

The Board of Control for Cricket in India's media cell chief is refusing to answer any questions in this regard.

Times of India reports:
The Board of Control for Cricket in India (BCCI) was put on notice two weeks ago, after a controversy over money laundering and funding sources hit cricket and the games' administrative body in India.

Tax authorities sent out summons asking BCCI to disclose the balance-sheet of its arm, the Indian Premier League (IPL), ownership and shareholding of franchisees since inception and their contracts with IPL. After searches and surveys, taxmen are now sifting through a mine of information, hoping to track the money trail.

Their task is daunting, given the complex shareholding structures of some of the IPL franchisees that have registered their companies in off-shore tax havens. Private companies that own IPL teams are not obliged to make public disclosures of their shareholding.

However, if the BCCI does not come clean on ownership of the franchisees, tax authorities can lift the corporate veil and source information from countries where these companies are registered. The holding company of one franchisee, for instance, is registered in Mauritius.
Read more:
Report: Slush money trail links BCCI-IPL teams
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MCI is one of the most corrupt institutions in India