21.01.2011

Politics & the Nation

• MNP is here finally
• Mobile number portability is here finally.  Look at how you can change your mobile operator without losing your number.
• An interesting graphic on rising oil prices
• Take a look at it here.

Finance & Economy

• Secret overseas account holders take refuge in discretionary trust structures to escape tax authorities
• As time runs out for Swiss bank and other secret offshore accounts of resident Indians, some of them are hiding behind trust structures to escape tax authorities.
• At least three individuals who were ordered to pay tax against money lying in Liechtenstein’s LGT Bank have told the tax department that their names figure as beneficiaries of a trust that has an account with the bank. The persons said they were neither aware how the trust was formed nor have they received any money from the trust.
• Many residents who stashed money in big as well as boutique Swiss banks like Julius Baer may have parked the money in the names of discretionary trusts.  In discretionary trusts, the proportion of money to be shared with the beneficiaries are left to the discretion of the trustees and not spelt out in the trust deed.
• Will account holders have the last laugh?
• It depends on how complex the structures are. In the case of trusts, they will take refuge as beneficiaries with no knowledge about the trusts
• Is forming trust the preferred route to park money abroad?
• In several cases it is. There are also those who open direct accounts with numbered codes. Till a few years ago, this was considered invincible
• What are account holders doing?
• Many of them are believed to be moving funds from Swiss banks to Dubai. Once the money is with a UAE bank, it can be invested in even FDI-compliant projects in India
• Some views on containing price spiral in vegetables
• The vegetable price sprial is largely artificial, and if the government does not take steps to reform marketing and modernise logistics for perishable farm produce, the problem won’t go away, says Saumitra Chaudhuri, Member of the Planning Commission.
• Some excerpts from his op-ed in today's ET are worth our attention:
• The Agricultural Produce and Market Committee (APMC) Acts of the state governments have conferred a monopoly on the APMC mandi to execute trades in farm produce, including perishable horticultural products such as fruit and vegetables. The intention, no doubt, was to provide the farmer with the certainty of a marketplace and assurance of payment. However, the suspicion that the system has been hijacked by traditional middlemen has if anything been amply borne out by this recent experience with brinjal, tomatoes and cauliflower. In theory, it is supposed to be the farmer alone who can offer his/her produce at these mandis. In practice, this function is discharged by primary aggregators whose conflation with the farmer only holds true in the sartorial type-associations in the mind of the urbanite Indian. The mark-up between the mandi price and the retail price in the same city is scandalously high, testifying to the further layers of transactions and transaction costs that are involved. Between the price that the retail consumer pays and what the farmer actually receives is a big chasm. Of what utility is a regulation that ends up fleecing the customer and short-changing the farmer?
• There is a tendency to conflate the issue of corporate retail chains entering the horticultural space with that of foreign investment in these chains. This has contributed to muddying the water. There is a clear imperative to take the necessary steps to have perishable farm produce deleted from the list of items covered by the APMC Act (easier than trying to amend the Act) and create a regulatory framework for the entry of retail chains into perishable farm produce with a direct interface with the farmer. Whether to permit FDI into this business is a second and separate decision, as also is in what form to this.  If we do not take the necessary steps to modernise logistics for perishable farm produce, we will remain for ever hostage to the problems we have faced this winter.
• No change likely in FSDC role
• The government is unlikely to make changes in the mandate of the recently set up Financial Stability and Development Council, despite lingering concern among regulators that the interregulatory mechanism will encroach on their autonomy.
• The FSDC will meet for the second time today to take stock of the economy.
• CAG pegs tax loss of 53K cr on non-resident transactions
• The government has forgone almost Rs 53,400 crore in taxes that it could have mopped up from transactions involving foreign residents over five years, an analysis by the Comptroller and Auditor General has said.
• Only Rs 121 crore was collected from non-resident taxpayers, said the report of the CAG, out of a potential amount of Rs 53,503 crore.
• Such payments included profits remitted by foreign institutional investors and royalty payments by Indian branch offices of foreign companies. The tax on such transfers, called tax deducted at source, or TDS, is supposed to be deducted in India before the money is sent abroad.

Language Lessons

• metronome: Noun
• Clicking pendulum indicates the exact tempo of a piece of music
• conflate: Verb
• Add together different elements

• skunkworks
• The term is widely used in business, engineering, and technical fields to describe a group within an organization given a high degree of autonomy and unhampered by bureaucracy, tasked with working on advanced or secret projects.