04.03.2011

Politics & the Nation

• Supreme Court strikes down Thomas' appointment as CVC
• In a development that could further deplete the desperately needed political capital of the UPA government, the Supreme Court on Thursday quashed the appointment of PJ Thomas as central vigilance commissioner for his involvement in the palmolein import case.
• The Court observed that the selectin committee failed to take into account the institutional integrity of the country's top anticorruption watchdog.
• Thomas may consider filing a review petition in the Supreme Court against the judgement. His counsel, Wills Mathews, said Thomas would go through the judgement and consider “whether to resign or to file a review petition”.

• Rajat Gupta to be out of EMRI?
• Former McKinsey director Rajat Gupta may be asked to leave the board of a Hyderabadbased charity organisation run by the GVK Group after the US SEC slapped insider trading charges against him two days ago.
• Emergency Management Research Institute (EMRI) is a non-profit organisation founded by Ramalinga Raju, the promoter of Satyam Computer Services. It was taken over by the GVK Group in 2009 after Raju was jailed for allegedly inflating Satyam’s accounts. It operates 108 free ambulance services in Andhra Pradesh and 10 other states.
• Gupta, who was appointed to the EMRI board when Raju was at the helm, is facing insider trading charges for allegedly helping a hedge fund make illegal gains on Goldman Sachs shares.
• According to US SEC charges, Gupta leaked secret details to Galleon Group hedge fund manager Raj Rajaratnam about Warren Buffett's plan to invest $5 billion in the Wall Street bank at the height of the financial crisis.
• Gupta is also the chairman of the executive board of the Indian School of Business. The school on Thursday said he would continue to be the chairman.

• Phone tapping must be okayed by senior officials
• A panel headed by Cabinet Secretary KM Chandrasekhar has recommended that phone tapping requests by the Enforcement Directorate and Directorate for Revenue Intelligence should be vetted by senior officials before they land at the Union Home Secretary’s desk for authorisation. The panel — set up to review the entire gamut of issue relating to lawful interception by investigative agencies — has also suggested that the Central Board of Direct Taxes be taken off the list of notified government agencies that can carry out tapping.
• The argument given was that mere tax evasion does not endanger national security and thus is not a justification enough to violate privacy of an individual.  CBDT was notified as one of the agencies that can carry out lawful interception only in 2006.
• Though the panel wants Enforcement Directorate and DRI to continue using phone tapping as a tool of investigation into money laundering, hawala and other financial frauds, it has called for a higher level of scrutiny of interception requests before they are forwarded to the Home Secretary for authorisation.
• As of now, an investigating officer can directly approach the Home Ministry for sanctioning a tapping request.Once the panel’s recommendation is accepted, the same request will have to be routed through a senior officer, who will subject it to scrutiny before forwarding the same to the Home Secretary.
• The recommendations for excluding CBDT from requesting phone taps and subjecting similar requests by Enforcement Directorateand DRI to higher scrutiny follow an assurance given by Prime Minister Manmohan Singh that phone tapping laws would be made more stringent.
• The phone tapping issue had taken centrestage in the wake of leaking of tapped conversations between corporate lobbyist Niira Radia and her industrialist clients and senior journalists. Not only did the leaks outrage the corporate world and invite adverse reactions from Opposition parties, but Tata Group Chairman Ratan preme Court alleging violation of his right to privacy through leakage of his tapped conversations with Niira Radia.

Finance & Economy

• GST set to miss next year deadline
• The Union cabinet is expected to take up the Constitutional Amendment Bill on the Goods and Services Tax (GST) in its meeting next week, although doubts persist that the comprehensive reform of India’s indirect tax regime will keep its roll out timeline of April 1, 2012.
• In his Budget speech, finance minister Pranab Mukherjee had said that the government would introduce the GST Bill in the ongoing session of Parliament.
• The government has been trying to introduce the legislation for the past four years but has been unsuccessful so far as many states, particularly those governed by the main opposition Bharatiya Janata Party, have opposed it. These states fear a dent in their financial autonomy if GST is implemented. The centre has already made several concessions, including dropping union finance minsiter’s veto, to get states to agree to the proposal.
• The centre was keen to roll out both Direct Taxes Code and GST together from April 1, 2012 but the long process involved may make the task difficult.
• The introduction of GST needs an amendment to the constitution to empower the centre to tax retail trade, give states governments the power to tax services and for setting up a council for resolving disputes.
• At present, the centre can tax services and goods only at the factory gate. States can tax goods only at the retail level and do not have the power to tax services.
• The bill, once introduced, will be referred to the parliament’s standing committee, which is expected to give its report only by the winter session.
• The government can present the bill for voting in Parliament earliest in the next Budget Session after which it would have to be ratified by at least 50% of state legislatures. After ratification of the constitutional amendment bill, the centre and state assemblies also have to pass the GST legislation and notify rules.

• States to stay out of Debt Management Office ambit
• The government has agreed to keep states out of the purview of the proposed debt management office until concerns over a possible erosion of their fiscal autonomy are addressed.
• Some states, such as Kerala, have expressed apprehension over the role of the independent office that is being set up to enforce fiscal responsibilities among states and the central government.
• This means the Reserve Bank of India will continue to monitor existing debt and fresh borrowings by the states while it will pass on the responsibility of conducting the Centre’s borrowings to the independent office.
• The finance ministry had proposed setting up of the debt management agency in its 2007-08 Budget. The aim was to remove the conflict of interest inherent in RBI’s role as the setter of interest rates and the banker to the government.  For instance, in the current scenario of high inflation, RBI has to lift rates but that is in conflict with its role as banker to the government where it is required to lower the interest burden of borrowings.
• The government could introduce the bill seeking to establish the Public Debt Management Agency in the ongoing Budget session of Parliament.
• The agency will be an autonomous body under the administrative control of the finance ministry. The central bank will be on the management committee of the agency.
• A middle office is already working in the finance ministry that prepares the borrowings calendar of the centre.
• The centre’s debt is pegged at 45.3% of gross domestic product (GDP) at the end of 2010-11. The government aims to bring this down to 41.5% by the end of 2013-14. For now, the 21 public debt offices of RBI will continue to function. At present, the government’s existing stock of debt and fresh borrowings are managed by the central bank.

Language lessons

• peroration: Noun
• A flowery and highly rhetorical oration; (rhetoric) the concluding section of an oration
• eg: If the ‘jasmine revolutions’ have left many a nation heady with freedom, the irrepressible perorations of the unrepentant leader of the Libyan Arab Jamahirya seems to have had a strange knock-on effect on several western personalities.
• eclectic: Adjective
• Selecting what seems best of various styles or ideas
• epiphany: Noun
• A moment of sudden understanding or revelation; A divine manifestation
• eg: My second epiphany came in the fall and winter of 2008, when it became clear that ...