Govt may allow FDI in multi-brand retailing

NEW DELHI: The government is looking at allowing foreign direct investment (FDI) in multi-brand retailing as part of a slew of measures to make India more attractive to overseas investors. 

Senior government officials told TOI that the thinking was that a gradual opening up would be a better strategy with global chains first allowed to open stores in metros, while wholesale cash-and-carry being limited to smaller towns and cities, at least for the moment. 

The move being piloted by the Department of Industrial Policy and Promotion is at the stage of discussion with political clearance yet to be accorded to the proposal. Once there is consensus on the issue within UPA, which is unlikely until elections in five states are over, states will need to be taken on board, a senior government official said. 

The Economic Survey, which was tabled in Parliament last month, had also suggested gradual opening up of the retail sector with the initial go-ahead limited to a few cities. 

At present, the government allows 51% FDI in wholesale cash-and-carry where global players such as Wal-Mart and Carrefour are only allowed to sell to bulk customers such as hotels, canteens and even local retailers. 

Officials said the move to open multi-brand retailing is part of the plan to "send the right signals to foreign investors", some of whom have chosen to stay on the sidelines since a string of scandals hit the headlines last year. 

By allowing greater FDI in some key sectors, the government will also be able to deal with the widening current account deficit. In fact, stepping up FDI was a key issue on the table of financial sector regulators — RBI, Sebi, Insurance Regulatory & Development Authority and the Pension Fund Regulatory & Development Authority — and finance ministry officials last week. The issue was discussed at the first meeting of the sub-committee of the Financial Stability and Development Council. 

Sources said by piloting the insurance and pension bills, the government would signal that it was still serious about reforms. 

There is also a move to amend the Factories Act and raise the FDI ceiling for defence production to 74% from 26%. 

While the Department of Industrial Policy and Promotion had floated consultation papers for allowing FDI in multi-brand retail and raising the cap for defence production, the government is yet to thrash out a consensus. 

The government's appetite for reforms is being driven by dwindling FDI flows. According to latest data, inflows declined 23% to $16 billion during April-December 2010, compared to nearly $21 billion in the same year ago period. 

The government's assessment is that some of the current account deficit would be trimmed once funds to set up the Posco steel plant in Orissa, an investment of $13 billion, starts flowing in. BP's proposal to acquire stake in Reliance's oil and gas blocks and the joint venture with the Mukesh Ambani-controlled company are also going to help FDI flows with around $14 billion.

Source: http://timesofindia.indiatimes.com/business/india-business/Govt-may-allow-FDI-in-multi-brand-retailing/articleshow/7667370.cms

CPM plans privilege motion over Mamata's Rly Budget 'lies'

Ahead of the West Bengal assembly elections, railway minister Mamata Banerjeemay face a privilege motion in Parliament.

A Rajya Sabha member has accused her of misleading the House while presenting theRailway Budget for 2011- 12 .

The CPM is likely to approach Parliament's privileges committee as it claims the minister quoted " fraudulent numbers" while making claims about target achievement.

Participating in the discussions on the railway Budget in the Upper House, CPM member P. Rajeeve said Banerjee had used " fraudulent" figures in at least four instances.

He urged Prime Minister Manmohan Singh to check the claims made in the Budget and suggested that the standing committee on railways should also verify her claims.

Using the mid- term review of the finance ministry, Rajeeve, who represents Kerala in the House, countered Mamata's budgetary claim that 700 km of new lines have already been laid.

"According to the mid- term review, only 59 km of new lines had been laid till September 2010. I request the minister to table in the House the details of the new lines laid to prove how she achieved the herculean figure of 641 km of new lines in less than six months," he said.

The Left MP also challenged Mamata's claims on electrification, doubling and gauge conversion, using the finance ministry's statistics.

Rajeeve said the CPM was considering the possibility of moving a privilege motion against the minister. " Tabling such fraudulent figures is a fit case for breach of privilege. The minister has misled the country and Parliament.

We will see how a privilege motion could be moved against her," he added.

The MP also challenged the total passenger earning figures quoted in the explanatory memorandum of the railway Budget.

"On page 15 of the explanatory memorandum, it is stated that both the revised estimates for traffic receipts and the Budget figures are Rs 26,126.47 crore. I want to congratulate the railway minister for her ability to predict accurately the volume of passengers who use the Indian railways and their travel plans so as to determine the exact amount that could be incurred under that head of accounts," he said.

Rajeeve said the minister told Parliament that the loading target was decreased by 20 million tonnes. " It is admirable that the minister was still able to ensure that receipts of Rs 62,489.33 crore could be achieved under goods earnings, which was the exact figure budgeted for 2010- 11, as is indicated in the explanatory memorandum under the revised estimates for traffic receipts," he said.

The target set in the previous Budget for installing optic fibre structures was not yet accomplished, he added.

Source:-http://indiatoday.intoday.in/site/Story/131414/top-stories/cpm-counters-mamatas-railway-budget-lies.html

Govt unveils “tool box” to counter black money

New Delhi: Unveiling the "toolbox" of counter measures to check black money, the government Tuesday has said the payments made to entities located in countries and tax jurisdictions which refuse to share tax-related information will attract a TDS(Tax Deduction at Source) of 30 percent or more.

"...any payment made to a person located in the notified jurisdictional area shall be liable to deduction of tax at the higher of the rates specified...or at a rate of 30 percent", says the 'toolbox' of counter measures which will be incorporated in the Income Tax Act.

The G20 leaders at Seoul summit last year had asked each country to develop a toolbox of counter measures against non-cooperative jurisdictions.

Under proposed provisions, the government will notify the countries and jurisdictions which are reluctant to share banking information and other details with it.

The provisions, proposed by Finance Minister Pranab Mukherjee in the Budget for 2011-12, are in line with the commitments made by India at G-20 meetings that it would come out with its own 'toolbox' of countermeasures to deal with tax havens.

These measures are aimed at discouraging transactions by "a resident assessee with persons located in any country or jurisdiction which does not effectively exchange information with India," said the Memorandum explaining the provisions of the Finance Bill 2011.

It further said that the persons dealing with entities in notified jurisdictions will not be entitled for any tax benefit unless they authorise the Central Board of Direct Taxes (CBDT) to seek financial information from the overseas bodies.

Moreover, the Memorandum added, the funds received from overseas entities would be treated as his income for purpose of taxation unless he is "satisfactorily" able to show the source of money.

Also such dealings will be treated as international transactions and all parties in the deal will be scrutinised under the transfer pricing regulations.

The amendments, according to the Memorandum, will come into effect from June 1, 2011.

These provisions, Mukherjee had said in his Budget speech, would "strengthen our system of collection of information from foreign tax jurisdictions...(and) discourage transactions with entities located in non-cooperative jurisdictions as may be notified by the government".

Source:-http://biz.zeenews.com/news/news_content.aspx?newsid=21584

Budget 2011 by Pranab Mukherjee (Finance Minister)

INDIA BUDGET 2011

Source: http://www.docstoc.com/docs/document-preview.aspx?doc_id=72560394

Pranab offers little on inflation & corruption in Budget

Finance minister Pranab Mukherjee seemed determined to please all constituencies with his Budget speech on Monday, but if first impressions are anything to go by he was at best only partially successful. Significantly, on the two issues agitating most people today – inflation and corruption – he had little concrete to offer. ( Read: Pranab puts his money where his heart is ) ( Read: Bond is back, and the name's infrastructure ) 

India's middle class has over the last few years got used to the idea that finance ministers must hand out tax sops on Budget day and they weren't entirely disappointed, with hikes in exemption limits that could save individual taxpayers anywhere between Rs 1,030 and Rs 26,780. Senior citizens were the biggest gainers with those over 80 getting the largest tax savings. ( Read: Returns - File I-T? Forget it ) ( Read: Times guide to corporate tax ) ( Read: Times guide to indirect tax ) ( Read: Men get a small raise ) ( Read: Times guide to personal tax ) 

Business got an unexpected gift with the rollback of the stimulus package introduced during the global financial crisis being put on hold and the surcharge on domestic firms being pared. 

Foreign investors have been given greater access to India's capital markets. Reformers were given enough reason to believe that the process initiated 20 years ago has not been abandoned and would be carried forward, even if there were more promises of action in the future than actual changes introduced. ( Read: FIIs in no hurry to gatecrash D-Street ) 

There were promises too for the aam admi – who was referred to only once in the speech – but a closer look at outlays on social sector programmes suggests that the rhetoric hasn't really been followed up with the moolah needed to make it come true. ( Read: Tax trimmer ) ( Read: Seniors ki jawani ) 

The mood of the markets reflected the uncertain nature of the response to the Budget. Up almost 600 points at one stage, the sensex, probably on closer scrutiny of the fine print, ended the day barely 122 points up over the weekend close. ( Read: Main course for mkts: Stake sale ) ( Read: Raging bulls couldn't keep it up ) 

The speech had a whole section dedicated to black money. While there were few details in the speech, a reading of the Finance Bill suggests that some steps are being taken, particularly to check the flow of funds from countries with opaque disclosure norms. ( Read: The war's just begun, time for a blackout ) 

The middle class has reason to have mixed feelings about this Budget. While the tax sops will clearly be welcomed, their impact could be more than wiped out by the extension of service tax to cover healthcare and diagnostic facilities not covered so far and to a host of other services. ( Read: Rising healthcare costs enough to make you sick ) (Read: Check in, cheque out for hotel stay, happy hour ) ( Read: Pain in the neck for fliers as airlines hit fare pocket ) ( Read: Easy to cook, but hard to digest ) 

Similarly, at first glance, the fact that a one percentage point subsidy on home loan interest rates will now be available on loans up to Rs 15 lakh for houses costing up to Rs 25 lakh rather than on loans up to Rs 10 lakh for houses costing up to Rs 20 lakh may seem like very good news. But how many people who can put down Rs 10 lakh from their pocket would buy a house worth Rs 25 lakh or less? ( Read: Aam admi gets to hit home run ) 

Some sections of industry too might wonder whether extending the coverage of the minimum alternate tax (MAT) to units in special economic zones and a marginal hike in the MAT rate does not offset the gains from a lower surcharge. ( Read: Pranab SEZ special status won't MATter anymore ) ( Read: Holiday over as IT gets unwelcome MAT) 

Perhaps the only category to have unambiguously gained is the foreign investor. FIIs have been allowed to invest up to $40 billion in corporate bonds against the $20 billion available to them earlier. That's because they can now put in up to $25 billion cumulatively in long-term bonds of infrastructure companies against the $5 billion they were earlier permitted. ( Read: Rupee warms up to foreign hug ) 

Further, individual foreign investors can now invest directly in Indian mutual funds rather than having to route their money through FIIs. ( Read: Debt funds hit by DDT spray ) 

Reformers might be unsure whether they should celebrate or moan at the fact that parts of the Budget speech read more like the annual Economic Survey the ministry brings out. ( Read: No 'wow' factor here, but reform rollout is key ) 

On the plus side for them, it's after many years that the Budget speech has given assurances of bold reform – the subsidy regime, at least in kerosene, fertilizers and cooking gas, will be replaced by a mechanism of direct cash transfers to the intended beneficiaries, the FM promised. 

He also talked of new banking licences being issued to the private sector and discussion being underway to "further liberalize the FDI (foreign direct investment) policy". On the flip side, none of this is to happen immediately. ( Read: New bank swipes only for a few ) 

Disinvestment of public sector shares, Mukherjee said, would remain on course, but was quick to add that the government would retain both a majority stake and management control. 

Similarly, tackling inflation is clearly something the FM views as a long-term programme to be dealt with by developing warehousing facilities, cold chains and the like. From a purely budgeting point of view, the FM can claim that he has done a remarkable job by reining in the fiscal deficit to a projected 4.6% of GDP for the 

next year, but the numbers show that the achievement banks on unrealistic expenditure projections.( Read: Can farm growth take wind out of inflation? )

Read more: Pranab offers little on inflation & corruption in Budget - The Times of India http://timesofindia.indiatimes.com/home/union-budget-2011/Pranab-offers-little-on-inflation-corruption-in-Budget/articleshow/7598001.cms#ixzz1FJrTFImc