Amritsar Road Show
A Tale of Two Global Summits

Last week two State Governments – West Bengal and Gujarat, organized their respective global summits. I had an opportunity to participate in both of them.
The West Bengal Global Summit was an effort of the State Government to attract investment in the State. West Bengal was a key industrial State. Beginning with the naxalite problem towards the end of 1960s, coupled with the policies of the Left Front Government, industry moved out of the State. Kolkata remained the principal engine of development in West Bengal’s growth. The State has a successful agriculture. West Bengal has a lot of intellectual capital and in the past one decade information technology has picked up in a big way. West Bengal has to be redeveloped into an industrial center once again. My colleague Shri Nitin Gadkari, who also attended the summit, was willing to help the State in the creation of a Kolkata-Siliguri highway. If such a highway is combined with an industrial corridor, it will give a major boost to West Bengal. Creation of more townships, better infrastructure, an industrial corridor, more effective utilization of the sea resource has to be a future agenda of the State.
I was particularly enthused by the fact that groups representing a cross-section of industry, both manufacturing and service sector, attended the conference. The State would now need a consistent pro-reform and business friendly steps in order to build confidence in the mind of present and potential investors. We, in the Central Government, would be extremely keen to help West Bengal to grow. The GST implementation will increase the revenues of West Bengal. Part of the proceeds of the coal block auctions will augment State’s revenue. NITI Aayog is intended to further decentralize the various schemes in the hands of the State Government.
Gujarat Business Summit was a magnificent affair. The Mahatma Mandir at Gandhinagar is an extremely impressive convention center. This is the seventh Vibrant Gujarat show being organized since 2003. The prime Minister and other Ministers of the Union Government actively participated in this year’s Vibrant Gujarat. In fact Union Ministers have shown up for Vibrant Gujarat after ten years of absence. Prime Ministers, Ministers, policy makers from all over the world, large business groups - both domestic and international, were all present at the Vibrant Gujarat. Vibrant Gujarat has become the principal economic convention in the country.This year Vibrant Gujarat marketed India.

A few months ago, Madhya Pradesh had organized its own investors meet. News reports indicate that Maharashtra is going to organize a similar meet in near future.
My participation in the West Bengal and Gujarat meet have enthused me. The idiom, vocabulary and mind-set of the organizers was to attract investment. States in India are going to compete with each other in cornering investment. I have no doubt that the ones which consistently and uniformly pursue reforms and business friendly policies are likely to succeed.

Amritsar Road Show
सरकार और विपक्ष- एक विश्लेोषण

पिछला सप्तापह विभिन्न घटनाक्रमों से भरा रहा। प्रधानमंत्री तीन देशों की बेहद सफल यात्रा के बाद वापस लौटे। अंतर्राष्ट्री य जगत में भारत की प्रतिष्ठार बढ़ती हुई दिखाई दी। ब्रिसबेन में जी 20 शिखर बैठक में भारत और हमारे प्रधानमंत्री दोनों ही छाए रहे। भारत के लिए इससे बड़ी बात क्या हो सकती है कि अमरीका के राष्ट्ररपति बराक ओबामा ने गणतंत्र दिवस परेड में मुख्य् अतिथि बनने पर अपनी सहमति दे दी है।
देश में हमारे मंत्री प्रधानमंत्री और लोगों की आकांक्षाओं के अनुरुप आचरण करते हुए दिन-रात काम में लगे हुए हैं। रक्षा मंत्री श्री मनोहर पर्रिकर एनडीए के एजेंडा को आगे बढ़ाते हुए रक्षा खरीद में तेजी लाए। विद्युत मंत्री श्री पीयूष गोयल ने कोयला और बिजली क्षेत्र में विभिन्नर सुधारों के जरिये मंत्रालय को एक नई दिशा प्रदान की है जहां यूपीए की निरंकुश कोयला आवंटन नीति के कारण कोयला आवंटन और बिजली उत्पाशदन रूक गया था। वाणिज्यि मंत्री श्रीमती निर्मला सीतारमन अमरीकियों को यह समझाने में सफल रहीं कि व्या।पार सरलीकरण के बारे में बाली मंत्रिस्तररीय बैठक के मूलपाठ की कमियों को दूर किया जाए। भारत और अमरीका के बीच सहमति के परिणामस्वतरुप भारत का खाद्य सुरक्षा कार्यक्रम बाली मसौदे की कमियों से सुरक्षित हो गया है।
विपक्ष पिछले एक सप्ता ह से क्याठ कर रहा था
कांग्रेस पार्टी : कांग्रेस पार्टी ने पिछले सप्तापह तीन बयान दिए; पहला- – उन्हों ने सवाल किया कि सार्वजनिक क्षेत्र के एक बैंक ने एक विशेष व्याकवसायिक घराने को कर्ज क्योंं दिया। अगर कर्ज देने वाला कर्ज लेने वाले को ऋण देने के लिए तैयार है तो यह कब से सार्वजनिक बहस का मुद्दा बनने लगा है। यह पूरी तरह से कर्ज लेने वाले और कर्ज देने वाले के बीच संबंधों और कर्ज लेने वाले की साख पर निर्भर करता है। इससे पता लगता है कि कांग्रेस पार्टी के पास मुद्दों का अभाव है। दूसरा, महत्व पूर्ण अधिसूचना को पढ़े बिना कांग्रेस पार्टी को लगने लगा कि किसान विकास पत्र काले धन को बढ़ावा देने के लिए वरदान है। किसान विकास पत्र की अधिसूचना में स्प ष्ट तौर पर कहा गया है कि सभी किसान विकास पत्रों को खरीदते समय अपनी पहचान बताना आवश्य क है। अगर 50,000 रूपये से अधिक के किसान विकास पत्र खरीदे जाते हैं तो पैन नम्बटर भी देना होगा। किसान विकास पत्र में टैक्सप में कोई छूट नहीं होगी। पहचान बताना अनिवार्य है। तीसरा,पार्टी की चिंता है कि संसद में विधायी कामकाज को कैसे रोका जाए। कांग्रेस पार्टी ने सत्ता में रहकर राष्ट्री य अर्थव्यंवस्थाा को नुकसान पहुंचाया है और विपक्ष में रहकर भी वह उसी विध्वंासकारी दिशा की ओर बढ़ना चाहती है।
तृणमूल कांग्रेस : शारदा चिट फंड घोटाले में कुछ टीएमसी नेताओं से पूछताछ और गिरफ्तारी पर ममता दीदी की प्रतिक्रिया को देखकर मुझे निराशा हुई है। बंगाल में टीएमसी की विजय का कारण वामपंथियों का कुशासन था। वामपंथियों को बाहर करने के लिए विभिन्नय राजनैतिक ताकतें टीएमसी के साथ जुड़ गई थीं। टीएमसी से जुड़े कुछ लोग पोंजी योजनाओं से जल्दीा पैसा बनाने में लग गए। इन योजनाओं ने छोटे निवेशकों को लूटा। एक नये राजनैतिक दल के रूप में, किसी जिम्मेइदार नेता की यह नैतिक बाध्यटता हो जाती है कि वह पार्टी से ऐसे नेताओं का सफाया करे। लेकिन यह बेहद खेदजनक है कि ममता दीदी ने ऐसा करने के बजाय इन नेताओं के हितों के साथ खुद को जोड़ा है।

उनकी इसी तरह की प्रतिक्रिया वर्धवान विस्फोगट में भी देखने को मिली। राष्ट्रीभय गुप्तसचर एजेंसी (एनआईए) ने विस्फोसट में शामिल अनेक लोगों को गिरफ्तार किया। वे देश के दुश्मतन हैं। पश्चिम बंगाल पुलिस अथवा किसी अन्यि खुफिया एजेंसी के पास यह साबित करने के लिए कोई ठोस सबूत नहीं था कि विस्फोनट कराया गया था? अगर ऐसा कोई सबूत नहीं था तो दीदी ने यह आरोप क्यों लगाया कि विस्फोाट कराया गया था? इस तरह के आरोपों से वास्तहविक अपराधियों को मदद मिलती है। ऐसा बयान न तो जिम्मेयदाराना है और न ही राष्ट्रतवाद से भरा हुआ।

Amritsar Road Show
Government and the opposition – A case study

The last week was a full eventful week. The Prime Minister returned after a highly successful visit of three nations. India’s status in the Comity of Nations appears to have been enhanced. Both India and our Prime Minister were at the centre stage in the G20- meet at Brisbane. What better recognition should there be of India’s enhanced stature than President Obama agreeing to be the Chief Guest of India at our Republic Day Parade.
At home, our Ministers were working overtime to live up to the expectations of the Prime Minister and the people. The Raksha Mantri Shri Manohar Parikar took the NDA’s agenda forward of expediting defence procurement. The Power Minister Shri Piyush Goel, through various Coal and Power sector reforms has given a new direction to the Ministry where coal allocation and power generation stagnated, as a result of the despotic coal allocation policy under the UPA. The Commerce Minister Smt. Nirmala Sitharaman succeeded in persuading the Americans to correct the imperfection in the Bali Text on trade facilitations. India’s Food Security Programme has been protected from the imperfection of the Bali Draft as a result of the Indo-US arrangement.
What was the Opposition doing during the last one week
Congress Party:The Congress Party made three statements during the last week; firstly – they questioned why a public sector bank given credit to a particular business house. Since when has the issue of a creditor‘s willingness to given debt to a borrower, become an issue of public debate. It entirely depends upon the debtor-creditor relationship and the credit worthiness of the debtor. This showed a paucity of issues with the Congress Party; secondly, without reading relevant notifications, the Congress Party felt that Kisan Vikas Patra (KVP) will be a boon for a black money. The notification of the Kisan Vikas Patra clearly shows the identity disclosure at the time of purchase of all Kisan Vikas Patras is necessary. If the KVP is purchased for more than Rs.50,000/-, PAN number has also to be given. There is no tax immunity in the matter of KVP purchase. Identity disclosures are necessary. It appears that the Congress Party had given reaction without reading the Notification. Thirdly, the Party was concerned how to block official business and legislation in Parliament. The Congress Party had damaged the national economy while in power and wants to pursue the same destructive direction while in opposition.
Trinamool Congress: I was deeply disappointed with Mamta Didi’s reaction to the interrogation and arrest of some of TMC leaders in the Sharada Chit Fund Scam. The TMC’s victory in Bengal was a reaction to the non-governance by the Left. Various political forces joined the TMC to get the left out. Some individuals connected with the TMC have been involved in making easy money from the Ponzi schemes. The schemes have looted small investors. As a new political Party, it was incumbent on any responsible leader to purge the Party of such leaders. It is regrettable that Mamta Didi instead of doing that has chosen identify herself with the cause of these leaders.

Similar is her reaction to the Burdwan blast. The National Intelligence Agency (NIA) has arrested several people who have engineered the blast. They are enemies of the State. The West Bengal Police or the other intelligence agencies have no substantive material to establish that the blast was stage-managed? If there is no such material, why has Didi chosen to allege that the blast was stage managed? Such allegations clearly help the actual culprits. This is neither responsible nor Nationalistic.

Amritsar Road Show
Nehru’s anniversary and Modi's Popularity

Nehru’s anniversary draws disparate elements
On the 125th birth anniversary of Pandit Jawaharlal Nehru, the Congress Party has organized an international symposium. Has the guest list been influenced by the current depleting fortunes of the Congress Party?
The symposium is being attended by Congress leaders, some international dignitaries besides a few Lohiates and Communists.
Dr. Ram Manohar Lohia stood for complete negation of Nehruvian politics. He rejected Panditji’s politics during his lifetime. The Left’s anger against Panditji was further fuelled by the invocation of Article 356 to dislodge the first ever democratically elected Communist Government led by Shri E.M.S. Namboodripad in Kerala. Those who rejected Panditji’s politics in his lifetime, are a part of the “show of strength” at this symposium. The symposium is being attended by some who rejected Nehruvian politics during Panditji’s lifetime and others whom Panditji may have ideologically disinherited.

Congress stunned by Modi’s popularity abroad
Shri Salman Khurshid has made a fascinating claim. He says that there were no people to meet him when he visited Myanmar and that Prime Minister Narendra Modi has been exporting groups from India to all foreign destinations wherever he visits. If UPA leaders, during their days in Government, left the expatriate Indian population underwhelmed, is it to be presumed that this should be true for others? I can understand the plight of Salman and his party colleagues particularly when Prime Minister Narendra Modi gets a larger crowd in Sydney than what Salman’s leader gets in India.

Amritsar Road Show
Confidentiality clauses and the battle for tracing black money outside India

The world is increasingly moving towards a more structured and organized struggle against illegal money parked in tax havens or even otherwise transacted at foreign soil. Originally the tax havens were completely non-cooperative. However, international pressure has compelled some of them to relax the rigidity against non-disclosure.
Almost all countries which entered into Double Taxation Avoidance Treaties or have a domestic legislation, as in the case of US, that has an extra-territorial application insist that information parted to the receiving State would be subjected to confidentiality clauses. The confidentiality clauses make it incumbent that disclosure would be made only after prosecution is filed before a charging court. Thus the issue is not whether but when disclosure can be made.The debate is not between disclosure and non-disclosure of confidential information. It is between unauthorized disclosure in violation of tax treaties and disclosure as per tax treaties. An unauthorised disclosure in violation of tax treaties entails that the disclosure is made for collateral purposes. It is usually not accompanied by any evidence or proof. But when a disclosure is made in pursuance of a charge sheet in a court of law where a criminal prosecution is filed, it would certainly be a disclosure substantiated by adequate proof and evidence.
A disclosure in violation of tax treaties helps the account holder. The reciprocating state would treat this as a violation of a tax treaty and refuse to provide any evidence in support of the unauthorized account. The holder of the unauthorised account in the absence of any proof and confirmation from the reciprocating State would get the benefit in any investigation or prosecution and then claim that “I stand vindicated”. In fact, a pre-mature disclosure would additionally alert the account holder to prepare some documentation or a sham defence. It may even enable him to destroy evidence.
India has to take a conscious call. Does it want to be a part of the global coalition which is moving in the direction of automatic sharing of information or not? Does it ensure all information is supported by substantial evidence and proof or only wishes to remain restricted to sloganeering? In the recent meeting of about 50 countries in Berlin which proposed automatic sharing of information, India could not participate since a prevalent view is that confidentiality clauses are unconstitutional in Indian law. This view requires reconsideration. An automatic exchange of information would relate both to authorized and unauthorised movement of money. Why should any information with regard to authorized movement of money be made public? Why should information even in relation to unauthorized movement of money be made public only for political or collateral purposes? Why should the account holder be alerted in advance? It should be put to an authorized use with collection of evidence and filing of prosecution.

The United States has legislated the Foreign Account Tax Compliance Act, 2010 (FATCA). The FATCA contains a confidentiality clause. It makes it mandatory for foreign financial institutions (FFIs) to register with the appropriate authority and exchange information. The foreign financial institutions are required to enter into agreement with the US Internal Revenue Service. Alternatively foreign governments can sign agreements with US government , mandatory exchange of information subject to confidentiality clause being necessary. FATCA mandates the deduction and withholding of tax equal to 30% on a US source payment to recalcitrant FIIs or FFIs in non compliant countries which do not meet with the requirements of FATCA. Such 30% withholding tax will also be imposed by other FATCA compliant countries against non compliant countries.The consequences of not signing the the agreement with US under FATCA would be disastrous.It will negate the efforts being undertaken by our government to revive the Indian economy.
The Reserve Bank of India has already informed the Government of India about the serious and adverse consequences of non-compliance of FATCA by India. Several countries have already subscribed to FATCA. An unauthorised disclosure of information is fraught with both investigation and economic consequences. They can sabotage the investigation. They can attract sanctions in the form of withholding taxes. It is obvious that in a choice between unauthorised disclosure and disclosure as per treaties, the latter is both a fair and beneficial proposition. It will help in collection of evidence and exposure of a wrong doing in accordance with law and fair procedure. A disclosure without evidence would ensure that evidence is never available.
Notwithstanding its clarity, why should someone with adequate understanding of the subject, demand a disclosure in violation of the treaty. The Congress Party’s stand is understandable. It does not want evidence to be forthcoming in support of the names available with SIT. Are some others ill informed, just indulging in bravado or are they Trojan horses? I am sure the SIT which has been entrusted by the Supreme Court with the investigation, will succeed in bringing out the truth while realising the full implications of the subject matter.
The NDA Government has had an exemplary record in this matter. The first decision of its Cabinet Meeting was to accept the Supreme Court direction in constituting the SIT. It has complied with every decision of the SIT. It made available all the names in its possession to the SIT on 27th June, 2014 itself. It will continue to support the SIT fully and unequivocally in search of truth.

Amritsar Road Show
The NDA’s approach on Black Money is doggedly persistent - Not Adventurist

I am a little surprised by some of the headlines in today’s newspapers which state that the NDA Government has done a U turn on the issue of black money stacked up in Swiss bank accounts. Nothing can be farther from the truth.
Let me begin by saying that the NDA Government WILL NOT withhold any information, including names of account holders who have stashed black money abroad, from the public; but the names will be revealed after following the due process of completing investigations and reaching conclusions about quantum of unaccounted money. After doing so, all the information including the names of account holders will become public when quoted in court proceedings arising from complaints to be filed by the Income Tax Department against tax offenders. Any premature and out of court disclosure of the names of account holders would not only vitiate the investigations but will enable such account holders to get away with their offences. It will also violate India’s Double Taxation Avoidance Agreements (DTAA) with other countries and will choke receipt of all further information from those countries.
The NDA Government took over in the last week of May, 2014. For 3 years, the UPA Government has been refusing to appoint the SIT directed by the Supreme Court. At the first very Cabinet Meeting, Shri Narendra Modi Cabinet decided to appoint the SIT. The SIT has been effectively functioning since then.
On October 15, 2014, a team of officials led by Revenue Secretary and comprising of Chairman, CBDT has signed a Joint Statement with the appropriate authorities in Switzerland with regard to investigation into black money stacked in Swiss banks. The four important aspects of that agreement are:
(i) With regard to the list available with India of account holders in the HSBC, where Indian tax authorities have conducted independent investigations, the Swiss would provide India with details upon our furnishing of adequate evidence in this regard.
(ii) Whenever India has some information/ documentary evidence, the Swiss would confirm the authenticity or otherwise of that evidence. (iii) This would be done in a time bound manner. (iv) Discussion would now start on a bilateral agreement on automatic exchange of information in the banking system. If this bilateral arrangement is arrived at, it will be an important milestone in detection of black money held by Indians in the Swiss banks.
Independent of the above, the Supreme Court of India in the “Black Money Case” had directed the Government of India to furnish the names to the petitioner which have been given by Germany to India. These names were given to the petitioner who made them public. The Germans strongly objected to this as a violation of the Double Tax Avoidance Agreement (DTAA) which was entered between Government of India and Germany on 19th June, 1995. The present NDA Government has unfortunately inherited the legacy of that DTAA. We may have negotiated a better deal. If we scrap the treaty, we get no further information. The covenant to the treaty is that the names of the account holders and information received thereunder will only be disclosed when charges are filed in court. They obviously cannot be utilized for political propaganda or for political mileage.
The choice before the NDA Government is clear; violate the Treaty and get no names in future or abide by the Treaty, collect evidence, file charges in courts and let the names become public so that the account holders can be named and shamed. One act of adventurism of violating the treaty and discussing the name could perhaps jeopardise future cooperation from the reciprocating state.

All that the Government has requested the Supreme Court is to clarify that it has not prohibited the Government of India to enter into Treaties with countries wherein a commitment may be made by the Government to maintain confidentiality of information received as per international standards. If such a commitment to maintain the confidentiality is not given we will not receive any information about Indians hiding their money in other countries including offshore financial centres and tax heavens. Thus the clarification sought from the Supreme Court is only to facilitate collection of information about illegal money stashed abroad.
Nobody has ever suggested that the names should not be made public. They should be made public in accordance with the existing due process of law. If that process is violated, you will never get to know the names in future. The NDA Government stands committed to detect the names, prosecuting the guilty and making them public. We are not going to be pushed into an act of adventurism where we violate the treaties and then plead that we are no longer able to get the cooperation of reciprocating states. Such an approach may actually help the account holders. Adventurism will be short-sighted. A mature approach will take us to the root of the matter.

Amritsar Road Show
My comments on the third Bi-Monthly Monetary Policy Statement of the RBI

In its credit policy announcement today the RBI kept the policy rate unchanged, as expected by markets. It has, however, reduced the SLR by 50 basis points giving banks greater leeway to lend. As the economy picks up and demand grows this will allow an increase in bank credit. Recent data on inflation shows that inflation is moderating. On its part, the government remains committed to the path of fiscal consolidation and reviving the investment cycle that will help bring down inflation and pick up growth. Governor, RBI has already stated that RBI will not hold interest rates high any longer than is necessary and if disinflation proceeds as warranted, there will eventually be room to cut rates. Going forward, the RBI should examine the liquidity situation, inflation and growth in setting policy rates.