29.01.2011

Politics & the Nation

• Ruing about corruption
• Take a look at this very well written article by V. Raghunathan in today’s op-ed on the subject of corruption.  Makes a good read.  

Finance & Economy

• It’s still 9-month wait for accessing Swiss a/cs
• The government had approached Switzerland in April, 2009 with a request to renegotiate the double taxation avoidance agreement, seeking access to banking information.  An agreement was inked in August last year.  But India will have to wait for another nine months before it can lay its hands on information on Indian’s holding accounts in Swiss banks.
• This is because the Swiss Parliament is expected to complete the ratification only by October after which the new protocol would come into effect.
• Unlike India, where a tax treaty can come into effect by a simple executive notification, in some countries such as Switzerland international agreements have to be ratified by their Parliament before they can come into effect.
• India has completed negotiations of ten new Tax Information Exchange Agreements with Bahamas, Bermuda, British Virgin Islands, Isle of Man, Cayman Islands, Jersey, Monaco, Saint Kitts & Nevis, Argentina and Marshall Islands out of 22 identified jurisdictions to facilitate greater exchange of information. These agreements became possible after the G-20, which took up issue of tax havens and tax evasion, threatened actions against such jurisdictions.
• The tax conundrm of foreign banks in India
• The RBI has been pressing for a wholly owned subsidiary structure for foreign banks operating in India.  This it feels provides more effective control in a banking crisis and enables the host country to act more independently as against branch operations.
• But foreign banks are wary because such a structure, they feel, is likely to attract more tax liability.  It appears that for any Capital Gains Tax arising out of transfer of property, goodwill and other assets of capital nature to its own newly incorporated subsidiary in India, the provisions of Section 47(iv) of Income Tax Act, 1961 would be applicable.
• So now the government is reported to have clarified that such conversion into wholly owned subsidiary structure will be tax neutral for foreign banks.
• Under the proposed direct taxed code, the tax treatment of branches of foreign companies will be on par with that of subsidiaries.
• There are currently 34 foreign banks operating in India as branches. Their balance sheet assets accounted for about 7.65 % of the total assets of the scheduled commercial banks as on March 31, 2010.
• Better days seen as area under wheat, pulses goes up
• The area under wheat, oil seeds and pulses increased substantially from a year ago, giving the hope that these essential items of consumption will not add to inflation pressures. The government is battling a high food inflation, triggered largely by expensive fruits and vegetable prices. The inflation in cereals and vegetables has been subdued even as overall food inflation is in excess of 15%.
• However, the increase in the wheat acreage by almost 9 lakh hectares from a year ago has triggered apprehensions among analysts that a bumber crop is likely to create a huge storage problem for the government.
• The government has estimated a 82 million tonnes of wheat production this year. Last year, wheat production was at 80.17 million tonnes.
• The acreage under oil seeds has risen 3.23 lakh hectares. However, there was a corresponding decline in area under other marginal rabi crops rice, jowar and maize were lagging behind from the year-ago period. Rice acreage was lower at 1.94 million ha as on today, against 2.18 million hectare in the same period last year.

International

• Karmapa may be Chinese agent
• You might have noted the high profile swoop down by Indian security agencies on Karmapa, the exiled Tibetan religious figurehead.  Though he is also recognized by the Dalai Lama, Indian security establishment suspects him to be a Chinese agent monitoring the activities in the Tibetan monasteries here as part of Beijing’s long-term plan to take over their control and create a alternative centre of power to the Dalai Lama.
• Police seized foreign currency valued at over Rs. 6 crore during raids in the offices of a trust backed by 17th Karmapa Ugyen Trinley Dorje.
• According to intelligence sources, the allegedly benami land deals that prompted the raids may have been struck as part of Beijing’s larger plan to acquire land for building a monastery at Dharamsala with a stature similar to the Rumtek monastery in Sikkim.
• Though the Rumtek monastery, revered by the Karma Kagyu sect, was the seat of the 16th Karmapa in exile, the security agencies have kept it out of bounds for Karmapa Trinley Dorjee on the suspicion that he may be a Chinese prop to gain control of the monasteries here and downgrade the stature of the Dalai Lama among Tibetans.
• Notwithstanding that the Karmapa has wide support among Tibetans and has been recognised by the Dalai Lama himself, the Indian agencies have been suspecting him right from the time he “walked” across the Sino-Indian border to enter Dharamsala in 1999.

• Why are there riots in Egypt?
• The people there have risen against the three decade rule of the incumbent President Hosni Mubarak.
• Tens of thousands of Egyptians took to the streets after Friday prayers in by far the biggest of four consecutive days of protests by people fed up with unemployment, poverty, corruption and the lack of freedom under Mubarak.
• Such popular unrest has not previously been seen during Mubarak’s rule of Egypt, where security services keep a tight grip on dissent.
• It was triggered by the overthrow two weeks ago of Tunisian President Zine al-Abidine Ben Al Ben Ali in a popular revolt which also inspired anti-government protests in Yemen.
• Two thirds of Egypt’s 80 million people are below the age of 30 and many have no jobs. About 40 percent of Egyptians live on less than $2 a day.
• Egypt has been under emergency rule throughout Mubarak’s term in office. The government says it is used to combat terrorism. Critics say it is used to stifle any dissent.
• Elections were due to be held in September and until now few had doubted that Mubarak would remain in control or bring in a successor in the shape of his 47-yearold son Gamal. Father and son deny that Gamal is being groomed for the job.
• The events pose a quandary for the United States, which has professed its wish for democracy to spread across the Middle East. Mubarak, however, has been a close Washington ally for many years and the recipient of huge amounts of military aid.

• After Japan, US debt faces a downgrade, says Moody’s
• Moody's Investors Service said it may need to place a “negative” outlook on the AAA rating of US debt sooner than anticipated as the country’s budget deficit widens.
• The extension of tax cuts enacted under President George W Bush, the chance that Congress won’t reduce spending and the outcome of the November elections have increased Moody’s uncertainty over the willingness and ability of the US to reduce its debt, the credit-ratings company said on Thursday.
• The warning from Moody’s came on the same day that Standard & Poor’s lowered Japan to AA- from AA, signalling that the ratings firms are stepping up pressure on the governments of the world’s biggest economies to curb their spending. The threat of a lower rating may cause international investors to avoid US assets. About 50% of the almost $9 trillion of US marketable debt is owned by investors outside the nation, according to the treasury department in Washington.
• US debt has increased from about $4.34 trillion in mid-2007 as the government increased spending to bail out the financial system and bring the economy out of recession. The budget deficit has increased to 8.8% of the economy from 1% in 2007.
• The US has the highest government debt-to-government revenue of any AAA-rated country, Moody’s said on Thursday. The ratio, at 426%, is more than double that of Germany, France and the UK and more than four times higher than Australia, Sweden and Denmark, according to Moody’s.

Language Lessons

• Maghreb: Noun
• The region of northwest Africa comprising the Atlas Mountains and the coastlands of Morocco and Algeria and Tunisia
• brogue: Noun
• A thick and heavy shoe