PM identifies 5 key areas to revive economic growth
Prime Minister Dr. Manmohan Singh has once again sought to allay concerns over India's economic prospects by identifying a few top priorities for his Government to try and restore investor sentiment even as the global economy remains under pressure. Controlling the fiscal deficit, achieving clarity on tax matters, reviving the mutual funds & insurance industries, clearing a backlog of foreign investment proposals and boosting infrastructure will be the main focus areas in the short term, Dr. Singh told a national daily. "The India Growth Story is intact. We will continue to work, as we have been doing for eight years, to keep the story going," he told the newspaper in an interview. The Prime Minister said that he wanted to show that his Government would be fair to all the investors, and that he was also keen to cut red tape. "We will work towards improving the response time of Government to business proposals, cut down infructuous procedures and make India a more business-friendly place," Dr. Singh said.
There will be no arbitrariness in tax matters, he said. "We want the world to know that India treats everyone fairly and reasonably and there will be no arbitrariness in tax matters," he told the national daily in the interview. The Prime Minister's reassurance comes amid a raging controversy over the proposal to amend the Income Tax Act to re-open tax demands with retrospective effect from companies like Vodafone over acquisition of companies having operations in India but registered abroad. The proposed Income Tax amendment along with GAAR (General Anti-Avoidance Rules) have prompted FIIs to stay away from Indian markets over the past 2-3 months, sending the Rupee hurtling down to all-time low late last month.
"It is necessary that we change the discourse from a critique of an open economy to a critique of what is needed to make an open economy work better for the welfare of the people," the Prime Minister said. He also called for a "political consensus" on some policies, acknowledging that there are genuine differences of opinion over reforms in India's political class. "In a democracy, consensus building is the key to long-term economic success and we are steadily moving ahead in doing that," he said. The Prime Minister said his officials were working on a set of measures to rein in the fiscal deficit. Dr. Singh said that absence of investment avenues has prompted the Indian people to park their saving in gold.
"We need to open new doors so that savings can be recycled into productive investments that create jobs and growth, not into gold," Dr. Singh said. The Prime Minister denied there has been an explosion in corruption under his regime. "Just as the pessimism over the economy is more in the markets and less on the ground, even in the case of corruption, I do not think there has been any explosion in corruption under my watch," Dr. Singh said. Singh also expressed concerns that the fruits of economic growth were not getting distributed equally among all the members of the society. "We have lifted millions out of poverty. But I worry that the fruits of an open economy will be increasingly captured by fewer people. I worry that a large segment of our population will be left out of the benefits of economic growth. We need to correct that fast," he said.
Sub-par monsoon to hit pulses, paddy unaffected: Pawar
Below-average southwest monsoon in June in key growing areas could affect pulses output in 2012-13 kharif season but rice production is unlikely to be affected, Agriculture Minister Sharad Pawar said on Friday. India received 30% less rains than normal since the beginning of the monsoon season on June 1. The June-September rains were 49% below average in the week through July 4, widening the 18% shortfall in the previous week. The agriculture sector accounts for ~15% of the nearly US$2 trillion Indian economy, Asia's third-biggest. Monsoon rains revived over cane, oilseeds and cotton areas of India's western region, officials at the India Meteorological Department (IMD) said. There had been increased rainfall over states such as Maharashtra, Gujarat and Madhya Pradesh in the past 24 hours, S.C. Bhan, a director at the IMD, was quoted as saying. The rains would now move to the northwestern region, Bhan said. Southwest monsoon rainfall should improve next week, Pawar said on Tuesday.
Meanwhile, New Delhi experienced pre-monsoon showers on Friday with the IMD forecasting more rains later in the day. "The pre-monsoon showers have started in Delhi, but actual monsoon rains are expected to begin only by the weekend," an official at the India Meteorological Department (IMD) said. Monsoon generally reaches Delhi by June 29 every year. On Thursday, the monsoon currents advanced into some parts of Gujarat, remaining parts of Madhya Pradesh, most parts of Uttar Pradesh, Uttarakhand and Himachal Pradesh, Jammu & Kashmir and some parts of east Rajasthan. The northern limit of monsoon was passing through Jamnagar, Ahmedabad, Kota, Dholpur, Bareilly, Dehradun, Shimla and Jammu on Thursday evening. The IMD predicted that the conditions are favourable for further advancement of monsoon in remaining parts of UP, Gujarat, Himachal Pradesh, Uttarakhand and some parts of Haryana, Delhi, Punjab and Rajasthan during the next 2-3 days.
Govt prepared to meet any eventuality on monsoon: Pawar
Sharad Pawar quits EGoM on Telecom
Mauritius denies offering islands to India for retaining DTAT
Mauritius has denied a newspaper report that it offered India two islands to continue with the 1983 double-taxation avoidance treaty (DTAT). "Newspaper report of offer of two islands to India as part of a trade and investment deal is false and malicious," Mauritius Foreign Minister Arvin Boolell said in New Delhi on Friday. It was up to India to use the islands to its advantage, Boolell was quoted as saying by a national daily today. India could use North and South Agalega Islands for setting up hotels and resorts, besides utilising them for trade, marine studies, or for building a strategic presence in the Indian Ocean, the newspaper reported. Agalega Islands is closer to India than Mauritius. The news comes amid dwindling investments into India via Mauritius following New Delhi's proposal to introduce GAAR (General Anti-Avoidance Rules). GAAR aims at plugging loopholes in the India-Mauritius double-taxation avoidance treaty by making disclosure of the source of funds mandatory. Mauritius has said earlier that GAAR was creating a lot of uncertainty among investors from that nation. India believes a host of companies located outside Mauritius re-route money from the island nation to avail of the DTAA benefits, according to reports. Boolell said that the island nation was open to amendments in the double-taxation avoidance treaty with India, but he denied that there was any misuse of the accord.
Meanwhile, India on Thursday assured Mauritius that the island nation’s concerns would be addressed while revising the tax treaty between the two nations. This followed visiting Mauritius Foreign Affairs and International Trade Minister Arvin Boolell saying that commercial viability of the treaty with India must be protected. Boolell on Thursday met Indian Foreign Minister S.M. Krishna and Prime Minister Dr. Manmohan Singh. He is believed to have raised Mauritius' concerns on India's proposal to alter the basic tenets of the DTAA. Mauritius has said it will cooperate with India to revise the DTAA to prevent its misuse by companies that do not have a genuine base in that country. "When our prime minister came to Delhi, we submitted a series of proposals. These are being addressed. The Indian side has told us it would do nothing to harm the economic interests of Mauritius," said Boolell yesterday. He added that Mauritius wanted to maintain the sanctity of the treaty’s Article 13, which dealt with the issue of capital gains taxation. "We need to ensure what is being done would serve the interests of both countries," Boolell said. Currently, India’s Circular 789 states if companies from Mauritius show tax residency certificates, they would not be taxed in India. However, India plans to implement GAAR from April 2013, and this could override DTAAs. But if the Circular 789 is retained, it would not be possible to bring foreign institutional investors (FIIs) from Mauritius under GAAR. An India-Mauritius joint working group would meet on August 22-24 to hold negotiations on revising the DTAA.
CBDT issues notification on e-filing of I-Tax returns
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