The Cyprus conundrum

Business Standard

The Department of Economic Affairs' annual retreat may have managed to persuade a few celebrities such as Aamir Khan and Shekhar Kapur to attend in the past, but finance ministry officials will tell you that getting Bollywood's A-list actors is not easy. Officials say since the ministry does not pay these celebrities the fee that they would normally demand for such appearances, many celebrities decline citing prior commitments. But what is surprising for the ministry is that even a news anchor has not responded to its invitation this time. The joke doing the rounds is that an invitation from the tax department may possibly persuade some celebrities to change their minds.

Taxing invitations?

This refers to T N Ninan's column "The big one" (Weekend Ruminations, March 23). For argument's sake, even if we consider that the food security Bill is implemented in a manner that the entire government spending reaches the deserving beneficiaries, it is not a solution for eradicating poverty. The Bill is akin to treating the symptom rather than the root cause of a disease. India's poverty is primarily a result of illiteracy and lack of adequate health facilities. Although budgetary allocations towards education and health care are being increased every year, the desired results are not being achieved. This is because the allocations are either not being effectively used or are grossly inadequate or both. According to a recent report by Accountability Initiative, a wing of the Centre for Policy Research, the Sarva Shiksha Abhiyan spending was only 61 per cent in 2011-12. The government, therefore, should shift its focus to ensuring that the entire budgeted amount on education is spent

Letters: An answer to India's poverty

Political parties always put a brave face on coalition pull-outs but even by those standards, Congressmen appeared unusually upbeat after the Dravida Munnetra Kazhagam (DMK) unexpectedly pulled the rug from under the United Progressive Alliance (UPA). Since that move accounted for 18 members of Parliament, costing the ruling coalition its slender majority, the Congress, the largest party in the UPA, was expected to be shrouded in gloom. Instead, Congress ministers surprised everyone with their good cheer. When one reporter suggested that this was just false bravado, a minister replied. "In fact, we are now a much relieved lot. Earlier, we had to constantly worry about displeasing our allies. First, it used to be the Trinamool Congress and then the DMK. But now having shed their burden, what a relief!" The fact that the Bahujan Samaj Party and Samajwadi Party are likely to snap at their heels did not seem to bother him. Instead the minister added, "We'll now boldly go ahead with our ref

Happy over splitsville

Earlier this month, West Bengal Finance Minister Amit Mitra was unavailable to demystify the state Budget numbers for the media, as is customary after the speech in the Assembly. Yet he found time to brief the press about a meeting between representatives from the Kolkata film fraternity and Chief Minister Mamata Banerjee. He explained in great detail how the government was considering proposals forwarded by Goutam Ghosh and actor Prosenjit Chatterjee to make Bengal as lucrative a film shooting destination as Switzerland. The obvious question is, does Mitra have the finances to make Didi's Swiss dream a reality?

Swiss attractions

This refers to Shubhashis Gangopadhyay's article "Crimes, punishment, tragedy and farce" (March 23). The writer is correct in finding fault with those who are pleading for forgiveness for Bollywood actor Sanjay Dutt, despite the fact that his crime is connected with terrorist attacks. (However, his hesitation at mentioning Dutt's name is not clear). Those people are ignoring the agony of the victims' families (257 dead and several injured in Bombay blasts of 1993. They, too, had been waiting for long to a befitting punishment for the accused). Dutt was lucky to escape being tried under the Terrorist and Disruptive Activities (Prevention) Act and charges of criminal conspiracy. Actually, the swell of support from the film industry behind Dutt's pardon is for fiscal reasons - his under-production films cost over Rs 250 crore. Dutt's track record has little to speak for him. He was a wayward son and a drug addict and he kept dubious company, causing much pain to his noble parents. If he h

Letters: Crime and farce

Government-owned banks have seen their stressed asset portfolio almost doubling in one year till end-December 2012, with addition in fresh non-performing loans and restructured advances. The finance minister had recently asked banks to formulate a recovery strategy to lower the level of stressed assets. He had also asked banks to avoid lending to wilful defaulters and barring promoters of such companies from getting finance for floating new ventures for five years

Stressed assets of public sector banks zoom

Almost 12 years after the insurance sector in India was opened up, its real potential is yet to be tapped. With a decline in insurance penetration and new business premiums witnessed this year, sector experts say that the worst is over and the industry will only look up from now. An overview of the statistics:

Is the worst really over?

On Friday, the Financial Sector Legislative Reforms Commission (FSLRC) submitted its much-awaited report to Finance Minister P Chidambaram. The finance ministry then called reporters for a briefing by the finance minister and FSLRC members on the report. Reporters rushed to the briefing in anticipation of the "big story" of the day, only to find that the report would be made public in the "next few days". The finance minister asked everyone not to share the details of the report. In fact, he made sure that "no papers are left behind" by FSLRC members who were carrying printed copies of the report. All of which left the media wondering why the presser was called in the first place; and FSLRC members were also at a loss on how to respond to questions from the media on the report.

No story

It is well known that, unlike many other ministers, Finance Minister P Chidambaram is always on time for meetings and conferences. Now, it seems the finance minister is trying to beat his own record. A recent press conference after a meeting with bankers was advanced by half an hour. It was later discovered that this was on account of his having to take an emergency flight to Chennai to try and mollify Dravida Munnetra Kazhagam chief M Karunanidhi who was threatening to pull out of the government (and finally did so). A few days later, another conference by the finance minister started 15 minutes ahead of schedule, but this time there was no ostensible reason for this early start. Either way, reporters decided not to take chances and arrived early for the next press conference - sensibly, it turned out, because Chidambaram arrived early again, though just by a minute this time.

Early warnings

Planning Commission Deputy Chairman Montek Singh Ahluwalia has always been adept at countering controversial questions from journalists with long spiels of non-speak. Now, he is becoming expert at the one-line put-downs, too. After an hour-long meeting of a ministerial panel on coal  recently, reporters surrounded panel members, including Ahluwalia. A TV reporter bluntly asked him what had transpired at the closed-door meeting. Ahluwalia replied with a huge smile, "I know that even you are losing your confidence in getting an answer from me." Next, a reporter from a foreign newswire launched into a sophisticated and carefully crafted query. To him, too, Ahluwalia provided a smart non-answer: "It's late in the evening, young man. Maybe it is time for you to go and enjoy a drink or two."

Lines of control

This refers to Subir Gokarn's column "Capital flow conundrums" (Muddy Waters, March 25). The article was excellent and comprehensive; however, there was one important omission. The author did not mention the role of an international credit line as a safeguard against sudden outflow of capital from an economy. Such a credit line is an option - not an obligation - to borrow internationally in the event of a crisis when the usual credit market tends to dry up. It avoids the need to keep large, costly foreign exchange reserves, and reduces the need for capital controls. In recent years, the US has had swap credit lines with a number of countries. There is the Chiang-Mai Initiative in East Asia and the Latin American Reserve Fund in Latin America. There is now an arrangement among the BRIC (Brazil, Russia, India and China) countries. India has a small credit line from the Bank of Japan. The International Monetary Fund (IMF) has extended credit lines to Columbia, Mexico and Poland. Though al

Letters: India's need for a credit line

This refers to the Lunch with BS with Surjit Bhalla, "The Angry Optimist" (March 22). The economist says, in his view, the potential gross domestic product (GDP) growth rate of India is eight per cent-plus - with 4.8 percentage points coming from capital stock. In my view, he relies disproportionately on capital stock in his assessment of growth. A move towards eight per cent will only be possible over the next few years, if it culminates from a ramp up in all the main determinants of growth. There are multiple possible paths to eight per cent growth over the next few years. Some of these could be "extreme", depending heavily on one particular input at a time. And this is the kind that Bhalla suggests - GDP growth depending heavily (about 60 per cent) upon capital stock. However, this level of ramp up in capital stock may be more than the economy can handle in a matter of a few years. In our detailed analysis of the Planning Commission's eight per cent growth target for the next five y

Letters: Focusing on capital stock

If Tendulkar does not go on his own, he should be pushed

Time to go

Every Monday, Business Standard analyses one family's finances and suggests a suitable way forward

Case study

Business Standard brings to you a snapshot of average current rates and unit sizes in localities that offer property in the price range of Rs 1 crore to Rs 1.5 crore. If you are looking at buying real estate and your budget falls within this range, an idea about prevailing rates would come in handy

Realty check

How have commodities fared over the past financial year? Gold, in particular, has been much studied of late. It has been held responsible for India's problematic current account deficit. As Table 1 shows, gold prices steadily increased for the first half of the financial year but are showing unmistakable signs of coming off their historic bull run in the time since then. The effect on the fiscal deficit depends on whether lower prices stimulate enough buying by Indians to offset the lower cost.The question of the oil bill has also bothered policy makers. After a swift decline in the first quarter of the current financial year, the oil price made up the difference, as Table 2 shows, pushed partly by worries about war in West Asia. Since then, oil prices have remained largely static, though there are recent signs of a decline. In Table 3, it can be seen that natural gas, however, has shown an increase through 2012-13, and absent a sudden supply boost from stalled oil field production, is

StatsGuru-25-March-2013

A price index for agri commodities: A Business Standard and Indicus Analytics initiative

Indicus price monitor

A lighter moment in Google Executive Chairman Eric Schmidt's charm offensive last week was at the National Association of Software and Services Companies (Nasscom) do with Indian start-ups. Everything was fine till Nasscom President Som Mittal announced the entry of Schmidt into the hall, pointing to a door just beside the stage, and the 250 to 300 people in the audience broke into thunderous applause. There was one snag: Schmidt was nowhere to be seen. A wisecrack in the audience suggested: "Google him." Schmidt finally made an entry after a longish five-minute wait, through a smaller backstage door, looking a bit ruffled. "I have never had an entry quite like that," Schmidt was heard muttering on stage.

A Google entry

Is it important to disclose exempted income when filing returns?It helps to disclose exempted income like dividend received on mutual funds, long-term capital gain on securities and interest from PPF at the time of filing returns. While nothing happens if you don't do so and the income continues to remain exempt, this helps in accurate computation of returns. Income tax return forms have a column for this, making it importantWhat other details should be included ?Interest earned on savings bank accounts is often omitted by many but that is a taxable component and should be disclosed. Bank account details like correct account number and MICR code should be given, so as to receive refunds without any hassles. In case of an error, you will have to give a cancelled cheque, showing correct particulars

Tipping point

Core FSLRC recommendations are in line with global thinking

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