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MODI GOVT WON’T REVEAL NAMES OF TAX EVADERS

inNEW DELHI: The Narendra Modi government made a volte face of sorts on Friday when it cited the same reasons that the previous Congress-led regime had given to keep secret the names of people who have allegedly stashed black money in overseas accounts.

 

In an application to the Supreme Court, which had directed the government to reveal those names, the government said such a step would lead to violation of the nation’s existing double-taxation-avoidance agreements with other countries.

 

Revealing the bank account details without even establishing prima facie grounds to establish any wrongdoing would also amount to an invasion of privacy, it said. One of BJP’s poll promises was to recover the black money parked in foreign banks, which some reports peg at as much as Rs 70,000 crore. The party had accused the Congress of being unwilling to bring back the money and book the tax evaders. On Friday, Attorney General Mukul Rohtagi urged the court to tweak its order to reveal the names to Ram Jethmalani, the senior lawyer and a former BJP minister who had filed a public interest litigation on the matter.

 

The Congress seized upon the opportunity, with spokesman Abhishek Singhvi saying that the development has exposed the “hypocrisy” of the Modi government. “Will the Prime Minister apologise for giving false hopes to the public,” he asked.

 

Finance minister Arun Jaitley denied the allegation that his government was reluctant to reveal the names of tax evaders. “Where is the question of propaganda? We have no problems in making the names public under the due process of law, and the treaty commitment by a previous government, whether good or bad, is process of law,” he said.

 

The government’s application said it could share information only on cases in which the government had initiated criminal prosecution and hence the cases were in the court. In such cases, the information is anyway available in public domain, it added. Rohtagi urged the court to hear the plea soon.

 

He said countries sharing such reciprocal information had objected to revealing that of to the public. “If you want to get information from other countries, we have to abide by treaties,” the AG said. This prompted Jethmalani, who is no more part of the BJP, to accuse the new government of trying to “protect the culprits”.

(Source: The Economic Times, October 18, 2014)

 

RBI MAY LOOK TO COMPANIES TO SLASH PRICES BEFORE LOWERING RATES

 

MUMBAI: At one of the customary premonetary policy meetings with industry, former Reserve Bank of India governor Duvvuri Subbarao wanted to know how many of those present would benefit from an interest rate cut. Almost all hands went up. The next question was how many would pass on the lower cost to customers. Almost no one raised their hands. Subbarao kept interest rates unchanged.

 

The voice of industry, which is always seeking a cut in the cost of funds, is getting louder again, thanks to both consumer and wholesale price readings dropping to record lows in September. It’s natural that governor Raghuram Rajan, who has made it his mission to bring inflation as measured by the consumer price index permanently under 6 per cent, will be under greater pressure to cut rates. But will he budge at the next monetary policy announcement, scheduled to be made on December 2? It seems unlikely.

Easing price pressures may be a lot more sustainable than in the past given that most commodity prices are in the grip of a bear market. Crude oil is down nearly a fourth, while iron ore and coal have nearly halved from recent peaks. Apart from bringing down inflation, this is boosting the profitability of companies. But the central bank believes companies are not doing enough to alleviate price pressure.

 

“Beyond a point, once the bottom line gets hit, the corporates also price their product in such a way that they prefer cutting down on their production rather than compromising on price,” RBI executive director Deepak Mohanty told analysts recently. “So that kind of oligopolistic behaviour also we have seen in the market.”

 

Retail inflation dropped to a low of 6.46 per cent in September, below the 8 per cent target for January 2015, and closer to January 2016’s target of 6 per cent. But the catch is that once the base effect fades, the measure is expected to rise again by early next year. In fact, the RBI model forecasts 7 per cent retail inflation by March 2016, which may be revised lower if commodity prices keep falling.

 

“The case for an RBI cut is building up, but will be stronger not just when input prices are falling, but when that is passed on to customers through final product prices,” said Hitendra Dave, managing director and head of global markets for HSBC in India. “It is not that demand can be revived just with lower rates, but also with lower prices for final products.”

 

Rate cuts could become a reality in March if fiscal numbers turn better and commodity prices keep sliding. But predicting lower interest rates based on just the current inflation numbers is akin to forecasting the outcome of the footballing derby between Manchester United and Chelsea by looking at past data. Statistics may show that Manchester United would be the likely winner, but the problem with that is it doesn’t factor in the absence of Alex Ferguson and the presence of Jose Mourinho at Chelsea.

 

Similarly, Rajan is in charge at the RBI, and he’s shown himself to be resolute about pursuing the goal of permanently low inflation. Meanwhile, Arun Jaitley is finance minister, not P Chidambaram, who was keen to push for lower interest rates as a means of getting growth back up to speed. Low readings for one or two months won’t be enough for Rajan to begin the long-awaited lowering cycle. Commodity prices may turn quickly if the US postpones raising interest rates due to sputtering economic growth and threats to the financial markets. So external risks remain.

 

“The medicine (higher rates) seems to be working,” the central bank governor has said, elaborating on the need for long-term remedies. “The problem is before the patient has run the full course of the medicine, you want to take the patient off the medicine and say let’s take a chance. That is always the danger in Indian policy. We have to have the discipline to stay the course.” Companies are seeking lower interest rates to boost demand. But there’s little sign that falling commodity rates are prompting them to lower product prices, choosing to cut output instead.

 

Mahindra & Mahindra Ltd. recently declared “no production days” for tractors at its Rudrapur and Jaipur plants “as part of aligning its production with sales requirements”. Many other companies have taken similar action. Industry may eventually have to pass on price cuts given that the RBI is only likely to change course when it sees a sustained downtrend. The central bank is not just looking at 8 per cent and 6 per cent inflation at two points over the next 15 months, but ultimately wants 4 per cent as recommended by the Urjit Patel panel.

(Source: The Economic Times, October 18, 2014)

 

INDIAN FIRMS LOOK TO RAISE OVER $1 BILLION IN JAPAN

 

MUMBAI: Indian companies are increasingly showing interest in fund-raising opportunities on the Tokyo Stock Exchange with as many as five of them in talks with the exchange to tap the Japanese market.

 

“Earlier, three Indian companies had registered strong interest with us. Now, there are five companies who have shown interest. Put together, they are looking to raise over a billion dollars,” said Kapil Malhotra, MD, Total Solutions, who hosted a delegation of Tokyo Stock Exchange (TSE) officials earlier this month in India.

 

During the three-day visit to India, Hidetoshi Nagaya, GM Head of Global Listings, Tokyo Stock Exchange, along with Junichiro Goto, manager of New Listings, Tokyo Stock Exchange, met a number of large and small & medium Indian companies. On October 7 and 8, several leading business houses presented their profiles to the Tokyo Stock Exchange.

 

According to Nagaya, the listing process takes at least one year in terms of equity listing. However, if companies are interested in tapping the debt markets, a bond can be floated in a month’s time. According to the presentation made by the TSE officials at an earlier press conference, as many as 12 foreign companies have listed their shares on the Tokyo Stock Exchange but none from India. However, ICICI Bank had listed its programme on TOKYO PRO-BOND Market in June, 2013.

 

Malhotra added, “This opportunity has caused great excitement in the Indian business community as it opens the door to one of the most liquid and third highest turnover stock exchanges in the world. We are positive that the TSE is opening the doors for the vibrant Indian business community to the Japanese Capital Markets. The Indian economy is definitely going through an interesting phase wherein it has completed its metamorphosis into becoming the most influential business market in the world. This is an excellent opportunity for promoting economic growth for both India and Japan.”

 

While names of the companies could not be ascertained, companies from e-commerce, real-estate and biotech space have shown interest.

(Source: The Financial Express, October 18, 2014)

 

IRDA MIGHT TIGHTEN GRIP ON GROUP HEALTH PRICING

 

MUMBAI: The Insurance Regulatory and Development Authority (Irda) might take an exception to undercutting by non-life companies in the group-health space.

 

Speaking at a summit organised by the National Insurance Academy, M Ramaprasad, member (non-life), Irda, said the regulator will look into the group-health space, which constitutes 55 per cent of the health segment; retail health makes up the rest.

 

Claims in group health are much higher than in the retail side of the business, he said, adding the high claims, 100 per cent at one point, was a matter of concern.

 

Experts said unhealthy competition is eroding the group-health space. The regulator is looking into this matter and will look at having higher capital requirements or solvency rates for those insurance companies that quote unviable prices.

 

To retain corporate accounts, certain non-life sector insurers are offering high discounts. Industry players say there is not just transfer of accounts from private to public, but also from one private non-life insurer to another. Industry experts said it was not sensible to offer discounts to large profitable firms, as such companies were capable of purchasing insurance without a subsidy.

 

Health insurance, which has an almost 23 per cent market share in the general insurance space, has seen the incurred claims ratio touch 96.43 per cent in FY13, against 94 per cent in FY12. While for public sector general insurers, the incurred claims are still less than 100 per cent, private sector general insurers have seen it cross 100 per cent. This means that the claims incurred are more than the premiums paid for such private general insurers.

 

On the health insurance space, as there is differences in pricing for similar kind of treatments in hospitals, Irda and its bodies are looking into having standardised protocols and standard costing mechanisms.

 

Ramaprasad said a geo-code system is being envisaged to map hospitals across India. This data will be used to monitor hospitals for any fraud, claims processing and other treatment-related standardisation.

 

Irda has undertaken a project through the Insurance Information Bureau of India to have a health directory where detailed information about the various medical procedures and cost in hospitals would be provided.

(Source: Business Standard, October 18, 2014)

 

SAURABH CHANDRA, PK SINHA IN RACE FOR CABINET SECRETARY

NAVED MASOOD, MADHAV LAL, ALOK RAWAT, TOO, ON THE LIST

 

NEW DELHI: The choice for the topmost civil servant’s post in the country might have narrowed to two, though about five names are still on the shortlist for Cabinet secretary, according to sources. In the current season of massive bureaucratic reshuffles, this one appointment is being keenly watched.

 

Saurabh Chandra, a 1978-batch IAS from the Uttar Pradesh cadre, who’s currently the petroleum secretary, is one of the two with good chances for elevation, as current Cabinet Secretary

 

Ajit Seth’s term ends on December 12, sources said. Seth got a six-month extension on June 13. Chandra has done three successful stints in Varanasi, from where Prime Minister Narendra Modi contested the general elections. He has worked in chemicals and fertilisers, finance and commerce and industry ministries at the Centre, besides petroleum.

 

P K Sinha, again an Uttar Pradesh cadre IAS, is believed to be the other civil servant in the race for the top post. While power secretary Sinha, a 1977 batch IAS, is a year senior to Chandra in the bureaucratic hierarchy, he’s younger than the petroleum secretary by three months.

 

The other three in the shortlist under consideration are Corporate Affairs Secretary Naved Masood, Micro, Small and Medium Enterprises (MSME) Secretary Madhav Lal and  Administrative Reforms Secretary in the department of personnel and training (DoPT) Alok Rawat. All three are 1977-batch IAS officers. Rawat was shifted from the ministry of water resources to DoPT earlier this week. Chandra is in fact the junior-most in the civil services hierarchy among the five believed to be in the race for the top bureaucratic post.

 

When asked to comment on the likely contenders, Jagdish Thakkar, public relations officer (PRO) at the Prime Minister’s Office (PMO), told Business Standard, “I do not speculate on future appointments.’’

 

Even as bureaucratic circles are confidently throwing up names in the race for the top slot, a civil servant familiar with the working of Prime Minister Modi said seniority was something not overlooked by him when he was chief minister of Gujarat. If that’s the case, Sinha might stand a better chance than Chandra, in case those two are indeed the top contenders, he said.

 

Another source said there’s a possibility of appointing Sinha as the Central Vigilance Commissioner (CVC) as well, which might then make way for Chandra as Cabinet secretary. But, Modi is known for springing surprises, the source added.

(Source: Business Standard, October 18, 2014)

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