A three-judge bench of the Supreme Court ruled on Friday on what has been one of the most watched and fiercely fought tax disputes in recent memory. It ended in victory for the giant mobile phone provider Vodafone, which the Court judged would not have to pay Rs11,000 crore in tax following its 2007 purchase of a 67 per cent stake in Hutchison Essar from the Hong Kong-based Hutchison Whampoa. This reversed the ruling of the Bombay High Court, which held in 2010 that tax was payable on the deal. The income-tax department will now have to return the funds the company paid over following that judgment &mdash; Rs 2,500 crore, along with interest charges of 4 per cent per annum. The numbers involved certainly catch and hold the attention.

Looking forward on tax

Business Standard

Farmers in Punjab, Uttar Pradesh and West Bengal, hurt by crashing prices, have taken to dumping their potatoes on the roads. This dramatic but little-watched series of events should be a warning: what hurts growers in the short run winds up hurting consumers in the longer run, as the iron laws of supply and demand act to discourage production. The price crash the farmers were protesting is not limited to potatoes; it cuts across commodities, affecting almost all those crops whose prices are not supported through government procurement. The exceptions, therefore, are wheat and rice. Vegetables like onions, tomato, ginger, and garlic have become significantly cheaper, as have plantation products &mdash; notably pepper &mdash; and fibres like cotton and silk. Costs, too have gone up, driven by higher labour and input costs.

Tears over spilt onions

In the end, Salman Rushdie could not even speak over video-link from London to the crowds that had assembled to hear him at the Jaipur Literature Festival. The festival&rsquo;s organisers, visibly overwrought, said the Rajasthan police &mdash; while supportive &mdash; had warned that angry protestors were marching towards the festival, and in some cases were already inside. Rushdie had already been warned not to come to Jaipur, following threats to his life issued allegedly by militant groups.

Intolerant India

Communications and IT Minister Kapil Sibal is not just a feisty debater on TV and in Parliament. He proved a redoubtable opponent for media photographers and camera crew who were rowdily jostling for space before the chiefs of telecom companies arrived to meet him at his official Kushak Road residence to discuss industry-related issues. Since some of the chiefs in question were prominent domestic industrialists like Sunil Bharti Mittal and Anil Ambani, the competition to get the best photo was understandably fierce and many lensmen barged into the courtyard for better vantage points. The security and office staff proved unequal to the task of dissuading them &mdash; but not Sibal. Before anyone could set foot inside the house, it was the minister who unexpectedly emerged and fiercely hustled everyone outside the gate before walking back in to await his guests.

Strong man minister

Under the present dispensation, the Reserve Bank of India (RBI) releases its macroeconomic document at 5 p m, one day before the announcement of the policy review and after the markets are closed. The policy announcement takes place at 11 a m the next day but the markets open an hour earlier. One observes frantic activities and contradictory movements in the values of shares and securities depending on the interpretation of the market functionaries on RBI&rsquo;s macro document aided by expert analysis on television channels. As a result, fortunes are made or lost depending on the final outcome.

Letters: Time for change?

Sunita Narain&rsquo;s column &ldquo;Why excreta matters&rdquo; (Down to earth, January 23) was well-researched and timely. We urgently need to manage waste disposal in cities to save the remaining living rivers of India. Thank you, Ms Narain for bringing the word &ldquo;hydrocide&rdquo; to our attention.

Letters: Rising river woes

The edit &ldquo;Passing the buck on policy&rdquo; (January 25) made a cautious assessment of the current state of affairs, especially in the backdrop of the third quarter review of the monetary policy. Today, we are in an extremely difficult and complex situation and it is true that moderating growth rate has thrown up even greater challenges than inflation. The Reserve Bank of India (RBI) seems to be signalling that monetary policy actions alone cannot achieve the desired outcomes and that the Centre, on its part, must come up with credible policy initiatives and ensure fiscal consolidation. The cut in the cash reserve ratio by 50 basis points is an intelligent move to infuse liquidity into the system. It will enable banks to operate comfortably and will take care of the growth aspect without diluting key policy rates and letting inflation get out of control.

Letters: The right move

It is troubling that from talks of double-digit growth, we have, now, lowered our expectations to seven per cent. This, despite the fact that we have some of the best minds in economics running the country. Considering the present economic situation and the decline in industrial output, the Reserve Bank of India has indeed made the right move by cutting the cash reserve ratio by 50 basis points and keeping repo and reverse repo rates unchanged for the time being. The move will provide some relief to India Inc that has been under immense pressure owing to the rising cost of funds. Ultimately, the central bank has to maintain a balance between growth and controlling inflation and it has made an effort to do so.

Letters: ...and why it was needed

The taxman is hardly a friendly figure anywhere in the world but in India at least one wing of the tax department is trying to build a kinder, gentler image. Not only did the Central Board of Excise and Customs send out text messages wishing &ldquo;the nation&rdquo; a Happy Republic Day, it also reminded recipients that January 26 is International Customs Day and told them to look out for the first ever Indian Customs tableau at the Republic Day parade. We assume the said tableau is not of one its dreaded search and seizure operations. According to the press release, the tableau &ldquo;presents the myriad facets of the working of Indian Customs and the proactive role it plays in facilitating trans-border movement of persons &amp; goods, while exercising eternal vigilance&rdquo;.

Friendly taxman

Indian diplomats over the last month have demonstrated that they have a good grasp of the Palmerstonian adage that nations never have permanent allies, only permanent interests. By stating unequivocally that the country will heed only United Nations-mandated sanctions on Iran rather than those imposed by a single country or regional grouping, India has sent out a strong signal that it is unwilling to sacrifice its energy security on the altar of global power politics. The routing of payments via a Turkish bank (an option that may no longer be available) had already indicated as much. Now, there are signs of other creative solutions from the negotiating team that has just returned from Teheran: reports suggest that the Iranian central bank could open an account with one of the public sector banks that does not have dealings with the US to settle some of their payments in rupees.

Stand and deliver 

In its third quarter review of monetary policy, released on Tuesday, the Reserve Bank of India kept the policy rate &mdash; the repo rate for banks &mdash; constant at 8.5 per cent, while cutting the cash reserve ratio (CRR) by 50 basis points, from 6.0 per cent to 5.5 per cent of their net demand and time liabilities. The RBI has argued that the latter action can be taken to ease liquidity without diluting its current policy stance.

Passing the buck on policy

Managing inflation has been a key priority for the Reserve Bank of India (RBI) and accordingly, policy rates were raised 13 times since March 2010. This helped keep the financial system in a cash-deficit mode and make the repo rate effective. We have seen a dip in food inflation, but manufacturing inflation continues to be stubborn. At the same time, we have witnessed concern over an economic slowdown and there was a waning of confidence in economic growth.

'Setting the ball rolling': Pawan Goenka

As was largely expected, the Reserve Bank of India (RBI) made no changes in the policy rate in its latest monetary policy review, but clearly outlined its strategy for managing the competing objectives of containing inflation, while infusing the growth momentum back into the economy. The central bank indicated it expected to lower policy rates, with growth concerns increasingly taking centre stage in its assessment of risks.

'A step forward': Stuart Davis 

No other chief minister has managed as much press coverage as the West Bengal Chief Minister Mamata Banerjee since she took up the job. But of late most of the news channels have been giving Didi the cold shoulder, forcing her to devise a new way to reach her supporters. Thus, Banerjee is all set to make her own CD and she has mandated all her panchayat workers to play the CDs in every village to prove which media is more powerful.

Message in the CD

Here&rsquo;s a novel view of the virtues of the iPad from Anand Mahindra. &ldquo;Collateral benefit of the ipad. husband and wife no longer block each others faces while reading newspapers,&rdquo; he tweeted a few days ago.

iCanseeyou

The Amri hospital fire tragedy and the subsequent jailing of the directors from both Emami and Shrachi groups have forced some &ldquo;parivartan&rdquo; in thinking among West Bengal&rsquo;s business community. A prominent Kolkata-based industrialist recently said he was looking to quit all boards of which he is a member &mdash; including those of his own company. He also joked that many companies are mulling the appointment of a &ldquo;jail director&rdquo;, who will be part of the board and justify his salary by serving jail time in case anything was to go wrong.

Wanted: Executive director, jail

I recently received my Aadhar card by post and was impressed by the 12-digit unique number given to me. However, when I examined the card carefully, I was somewhat disappointed. The card says it is a proof of identity and not of citizenship. Though this is understandable, there are some deficiencies in the card. First, it does not have my date of birth but only the year of birth. Thus, it will not serve as proof of my date of birth, which could have easily been added since I had mentioned it in the enrolment form. So for this purpose, I would have to continue to rely on my passport.

Letters: What's so unique?

This refers to the edit &ldquo;Looking forward on tax&rdquo; (January 24). Some years ago, the Supreme Court ruling on the ITC case required the government to refund Rs 400 crore. At that time, however, irrespective of the Supreme Court judgment, the prevailing view was that the ITC had created a structure of cigarette pricing to avoid tax and even though there was a loophole, it was the ITC that was in the wrong. And, thus, the tax refund claim was not insisted upon by the ITC.

Letters: The colour of tax

As the Reserve Bank of India (RBI) continues to balance growth and inflation in this volatile environment globally, Governor Subbarao should be commended for shifting in favour of growth as inflation has been contained in the last quarter. On our part, we expect inflation to come off to 7 per cent levels in the March quarter from 7.5 per cent in December. We welcome the timely CRR cut and RBI guidance to tilt in favour of growth given the contained inflation.

'Shift in favour of growth': Kaku Nakhate

Recognising the pressures created by the structural liquidity deficit and the increasing downside risks to growth, the Reserve Bank of India (RBI) slashed the cash reserve ratio (CRR) from six per cent to 5.5 per cent in the third-quarter monetary policy review to boost the confidence of market participants.

'Focus on liquidity & growth': MD Mallya

The policy is unworkable given global retail dynamics but SMEs need access to markets and opportunities too.

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