Of the following committees, only Rakesh Mohan Committee was in place before Mukherjee resigned as the Finance Minister
After Pranab Mukherjee quit the North Block to contest the Presidential fray, the UPA government has been initiating discussions on crucial issues like fiscal consolidation, GAAR, retrospective amendments etc by setting up committees and putting their reports in public domain. Of the following committees, only Rakesh Mohan Committee was in place before Mukherjee resigned as the Finance Minister.
A three-member Vijay Kelkar committee was appointed in August to recommend to the government ways for fiscal consolidation. The committee, also comprising 13th Finance Commission member Indira Rajaraman and Sanjiv Misra, asked the government to eliminate diesel subsidies by 2013-14, LPG by 2014-15 and reducing kerosene subsidy by one-third by 2014-15. It also suggested implementing proposed food security bill in phases, raising prices of products sold through ration shops each time minimum support price is revised, stop selling sugar through public distribution system. Government distances itself from the panel's suggestions on subsidies.
The committee, which asked the government to raise Rs 30,000 from disinvestment for this fiscal, also asked tax administration to make changes to realise budgeted tax revenues for 2012-13. It pegged fiscal deficit at 6.1% of GDP, if no reforms, prescribed by it are undertaken and 5.2%, these steps are taken. Budget had estimated fiscal deficit to be 5.1% of GDP against 5.76% last fiscal.
The Parthasarathi Shome committee was originally appointed for reviweing draft proposal by the Finance Ministry on the General Anti Avoidance Rules (GAAR). Later, scope of the panel, which also has Ajay Shah and N Rangachary as members, was widened to cover impact of retrospective amendments to the Income Tax Act on foreign institutional investors (FIIs) and later to entire restrospective changes. In its draft report, Shome committee recommended introduction of GAAR by three years. The Government had already deferred it by a year, that is it should come into effect from April one, 2013-14. So, the committee recommended it to come into effect from April one, 2016-17 financial year or 2017-18 assessment year.
It also recommended doing away with short-term capital gains tax and instead raising securities transaction tax (STT), if the exchequer is impacted. It also suggested adhering to Double Taxation Avoidance Agreements (DTAAs) with countries to plug in loopholes, rather than through GAAR. The committee recently submitted its final report on GAAR and draft recommendations on retrospective amendments to the Income Tax Act. The contents have not yet been made public.
The Rakesh Mohan Committee was appointed to suggest measures on financing infrastructure projects. In meantime, Rakesh Mohan resigned from the committee, and HDFC group chairman Deepak Parekh was appointed its head. In its draft report submitted to Prime Minister Manmohan Singh, the panel recommended hike in railway passenger fares as well as electricity, natural gas and port tariffs. It also advocated bringing in overarching legislation to reform regulatory structures in infrastructure sector. It also wanted the government to remove delays in land acquisition, environmental clearances and clear the air about taxation issues like the General Anti Avoidance Rules to bring in required investment in the sector.
It favoured redefining the role of India Infrastructure Finance Corporation Ltd (IIFCL) by accompanying its direct lending operations with guarantee operations. It wanted IIFCL to lend directly to infrastructure companies in case it is lending for 20 years, otherwise rely on funding by others like commercial banks. The panel also comprises regulators like IRDA chairman J Hari Narayan, PFRDA chairman Yogesh Agarwal, bankers ICICI Bank managing director Chanda Kochar, chairman of State Bank of India, Pratip Chaudhury, corporate heads like GMR Group chairman G M Rao, GVK group MD Sanjay Reddy and others.
Prime Minister Manmohan Singh appointed the N Rangachary panel to recommend taxation of development centres and the IT sector. Basically, the Prime Minister wanted the panel to suggest measures for changes in taxation on development centres since India does not have a monopoly over these centres and faces tough competition from other nations. It was also asked to suggest on safe harbour rules, which are conditions on which the tax authorities will accept transfer price declared by an assessee without undertaking detailed scrutiny. The contents of the committee recommendations are yet to be made public. The members of the committee include Director General (Income-tax) Anita Kapur and the Director of Income-tax (Transfer Pricing), Rashmi Sahani Saxena.
Reserve Bank of India today said it there is no need to explain the monetary policy and it stands by monetary policy statement.
RBI provided a buffer to importers by doubling eligible limit for hedging to 100% of the average of past three years' import turnover