11.11.2010

Politics & the Nation

• Congress gets tough, shows door to Chavan, Kalmadi
• Mr Chavan, who became the chief minister of Maharashtra soon after the 26/11 Mumbai terror assault, was ousted from his post an
• hour after US President Barack Obama left the country’s shores after a three-day visit, and an hour before the commencement of the winter session of Parliament.
• In another delayed action, the Congress leadership attempted to remove some of the corruption stain off its sleeve by removing Suresh Kalmadi from the post of Congress Parliamentary Party secretary.
• The Pune MP, who is the chairman of the Commonwealth Games Organising Committee, had earned widespread opprobrium for himself, and his party, for the large-scale irregularities in awarding various contracts relating to the sporting event. As charges started swirling around him, Mr Kalmadi tried to brazen it out by assuming a defiant stance.
• Telecom Minister Raja in trouble
• The country’s chief auditor (CAG) has formally indicted communications minister A Raja for causing a loss of up to 177,000 crore to the government by selling airwaves, a scarce national resource, at a fraction of their original value, disregarding the advice of several government departments, a development that provides fresh ammunition to Opposition parties who have been baying for his blood since 2008.
• The Comptroller and Auditor General of India (CAG), in its report submitted to the government on Wednesday after an 18-month probe, added that the telecom minister had caused losses between 90,000 crore and 140,000 crore by awarding scarce airwaves to new entrants in 2008 using a faulty and outdated policy.
• Pan-India licences and airwaves were sold to nine companies, including Swan (now Etisalat), Datacom (Videocon), Unitech, Sistema-Shyam and Loop, for a mere 1,651 crore each, a price fixed in 2001, when the mobile subscriber base was 45 million and industry valuations were poor. Along with these nine companies, Reliance Communications and Tata Teleservices were also given dual licences at the 2001 price, enabling them to offer services on both GSM and CDMA technology platforms.
• The report also points out that licences given to five companies—Essar Groupowned Loop Telecom, realty firm Unitech, which in turn ceded majority control to Norway’s Telenor, Datacom (Videocon), Swan (Etisalat DB) and S Tel—were illegal as these companies did not fulfil the eligibility criteria for obtaining telecom licences while adding that the communications ministry failed to reject their applications, further embarrassing the government, which has been battling allegations of a cover-up in investigating the allocation of mobile permits awarded in 2008.
• The CAG report adds that Mr Raja’s ministry doled out extra airwaves to existing telcos such as Bharti Airtel, Vodafone Essar, BSNL among others, beyond what they were entitled to, causing an additional loss of nearly Rs 37,000 crore to the exchequer.
• Prithviraj Chavan is the new CM of Maharashtra
• This is a very well written report about the news.  Worth a read.  He seems to be having all the requisite qualifications to handle the portfolio.  Let’s wish him all the best.
• Will Justice Sen be the first judge to be impeached?
• Look at this news report.  He is accused of having misappropriated funds while discharging his duties as a court appointed receiver and misrepresenting facts before the court.

Finance & Economy

• Government considers reducing litigation
• The government said that its tax authorities will not take legal recourse in cases where the disputed amount is below a certain threshold, as it looks to reduce unproductive litigation.  The new rules are in sync with a national litigation policy that seeks to make the government an efficient and responsible litigant.
• The purpose of the policy is to ensure that valuable time of the courts is not spent in resolving pending cases and to bring down the average pendency time in the courts.
• The Central Board Of Excise and Customs (CBEC), the apex indirect taxes body, has directed its officials that an appeal will not be filed in the appellate tribunal if the amount involved, including fine and penalty, is 1 lakh and less. Similarly, appeals will not be filed in high courts if the disputed amount is 2 lakh and less.
• An amount of over 47,000 crore, more than the government’s disinvestment target for the current fiscal, is locked up in indirect taxes arrears.
• In the case of direct taxes, more than 75,000 crore—an amount close to a fifth of the government’s annual collections—is blocked in courts.
• At the end of March 2009 there were 14,707 excise cases pending adjudication and another 37,368 of confirmed demands pending recovery.
• Arrears of 15,897 crore were locked up in various courts and tribunals at the end of December 2009. Another 13,573 crore was blocked in BIFR and debt recovery tribunals.
• The new policy also lays down that no appeal shall be filed where the assessee has acted in accordance with the long-standing practice. However, adverse judgements would have to be contested irrespective of the amount involved in cases where the constitutional validity of the provisions of an Act or rule is under challenge or where a notification/instruction/order/circular has been held illegal.
• Tax authorities will also file appeals in cases where the department has accepted an audit objection in a case.
• Tatas offer to fit safety add-ons for Nano
• The maker of the world’s cheapest car announced a number of steps to enhance its safety after a series of fire incidents while insisting that the move did not amount to a recall. Tata Motors said it would upgrade the exhaust and electrical systems for all the 70,000 Nanos, currently on road.
• The initiative comes amid reports about fire incidents involving Nano cars from across the country.
• Asserting that these checks do not constitute a ‘recall’, Tata Motors on Wednesday insisted that the modifications were intended to make the small car more robust. The statement from Tata Motors, while insisting that the car was safe, said Nano owners could get them upgraded, if they so desired.
• RECALLS of locally-manufactured vehicles are almost unheard of in India. Unlike the developed markets of Europe and the US where engineering defects often lead to mass recalls, no legal protection is provided for Indian customers in the Central Motor Vehicle Rules.
• Despite the sterling performance of its other businesses, adverse perceptions about the car’s safety has hit the company’s production plans. According to a number of officials at vendors supplying components for the Nano, Tata Motors had planned to raise production to over 500 cars per day from the second-half of the current fiscal. But lack of demand and high inventories at dealerships restricted the production to a mere 100 cars per day.
• On gold standard as a solution for the current global mess
• This is an excellent ET in the Classroom column that discusses the issue.  A MUST read.
• SCOPE
• It stands for the “standing conference of public sector enterprises”.  It is the apex body of central public sector enterprises.
• On granting the navaratna status
• The government gives autonomy to PSUs upon meeting certain conditions, which were laid out in 1997. The department of public enterprises, the nodal agency for all PSUs, is responsible for granting the coveted status.
• As of now there are over 15 companies in the navratna category and over 49 companies in the miniratna -I category. Only four companies have got the highest maharatna status, which allows them to make large investments and even acquire assets overseas.
• Under the current rules a PSU is eligible for miniratna status if it has made profits in three preceding years and, has posted a pre-tax profit of . 30 crore or more in at least one of the three years. Such a company can graduate to the navratna status if awarded excellent or very good rating in the memorandum with the department. The . 30 crore threshold was substantial in 1997, but may be disproportionately low in context of the freedom available to them.
• A navratna company enjoys the power to make an equity investment in a project, a joint venture or wholly owned subsidiary, involving an outlay of 15% of its net worth subject to a maximum of Rs 1,000 crore in a single project. The overall ceiling on such investment in all projects put together is 30% of the networth of the company.
• An excellent article on the fallacies about MFIs
• This is an excellent op-ed from one of our favourite authors -- TT Rammohan.  So far we have been fed on the virtues of MFIs.  That they promote financial inclusion in a big way and that they undercut the moneylender for good.  But take a look at this incisive article and we will realize that all is not well with the MFIs’ way of doing things.

International

• Five-point agenda set for G20 meet
• In the formal agenda of the Seoul G20 are five issues: the framework of balanced and sustainable growth, reform of the international financial institutions and financial regulatory reform.   The Koreans have taken the initiative to add two more items to the agenda, development and trade and a financial safety net for developing countries. Together, the theme of the conference would be ‘sustainable growth beyond the crisis.’
• An interesting expansion of the G20:
• Korea, which is hosting such a major international gathering for the first time, has sought to broadbase the conference further, by inviting Ethiopia, Vietnam and Spain in addition to the official members of the G20, to additionally represent their geographies at the meet.