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India not out of woods totally, FM on food inflation fall

“In the last 20-22 months food inflation has been obstinate. Food inflation reached as high as 22% in February 2010. From December onwards the pressure has started moderating but I would have to say that we have not come out of the woods totally,” Mr Mukherjee said in an interview to a popular Hindi business TV channel

New Delhi: Finance minister Pranab Mukherjee says though food inflation has moderated the country is not out of the “woods totally”, asserting inflationary pressures must be brought down to a tolerable and acceptable level before Indian economy can revert to high growth, reports PTI.

“In the last 20-22 months food inflation has been obstinate. Food inflation reached as high as 22% in February 2010. From December onwards the pressure has started moderating but I would have to say that we have not come out of the woods totally,” Mr Mukherjee said in an interview to a popular Hindi business TV channel on Sunday.

“It (inflation) must be brought to tolerable and acceptable level. It is a difficult job, but that is the job of the finance minister and the government of India today,” he said.

According to Mr Mukherjee, high inflationary pressure is affecting India’s growth rate, which is expected to be only 7% this year.

“In the first two quarters our gross domestic product (GDP) growth was 7.3%. I do not think that in the remaining quarters there would be any substantial improvement. Perhaps we may have to settle down with GDP growth of 7%,” he said.

On the outlook for the near future, he said: “Given the Eurozone problems, the overall scenario is not very encouraging... If a credible package for the Eurozone is worked out and if the US economy stabilises, then in the next couple of years we must be able to come back on the path of high growth trajectory.”

“This year will be difficult and the first few months of the next year will be equally be difficult,” he added.

On the Supreme Court’s ruling to set aside the Bombay High Court judgment asking UK’s Vodafone to pay income tax of Rs11,000 crore, Mr Mukherjee said: “We are examining what the government can do to protect the interest of revenue department as well as confidence of foreign investors. An appropriate decision will be taken by the government.”

On the clean chit given by a trial court to home minister P Chidambaram on his alleged role in the second generation (2G) spectrum scam, he said: “I have already welcomed the judgment of the trial court... Now Sri Swamy should be satisfied with it... At least one problem has been resolved.”

Citing lack of political consensus on various issues such as the Lokpal bill and Foreign Direct Investment (FDI) in multi-brand retail, Mr Mukherjee said the BJP was acting like an obstructionist.

“The BJP and other political parties should not play the role of obstructionists, they should play the role of constructive opposition,” he said.

Even in the case of FDI in multi-brand retail which could have been down through an executive order without Parliamentary approval, opposition parties played the role of an obstructionist, he added.

On the issue of lack of consensus within the government in the context of opposition by Trinamool Congress to some policies, he said even prime minister Manmohan Singh is making an effort to resolve those problems.

“There are problems which have to be resolved. I am addressing the issues of coal leakages and environment. The prime minister is also having meetings...Efforts are being made to resolve inter-ministerial problems,” he said

Commenting on infrastructural growth in the country, Mr Mukherjee said it can only be done with active participation from private parties.

“In infrastructure growth is taking place. But the growth is very high. In the 11th Plan we have invested $560 billion in infrastructure and the requirement in the 12th Plan is $1 trillion, of which 30%-35% will have to come from the private sector... I met business people in Chicago and invited them to come and invest in India and many of them have expressed keen interest,” he added.

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MCA unlikely to heed calls for mandatory CSR in Cos Bill

Some members of the parliamentary standing committee that scanned the Companies Bill, 2011, have been seeking mandatory CSR activities under the Bill but the ministry of corporate affairs is unlikely to yield to pressure to make 2% CSR spending mandatory for corporates under the new Bill

New Delhi: The ministry of corporate affairs (MCA) is unlikely to yield to pressure from some political parties to make 2% corporate social responsibility (CSR) spending mandatory for corporates under the new Companies Bill, which is currently being scrutinised by a parliamentary committee, reports PTI.

The MCA is expected to communicate its stand to the Parliamentary Standing Committee on Finance in a meeting next week, sources said.

Official sources told PTI that the MCA will also retain some key clauses related to issues like disclosures for private placement of shares and a fixed five-year term for statutory auditors.

According to sources, some members of the parliamentary standing committee that scanned the Companies Bill, 2011, have been seeking mandatory CSR activities under the Bill.

At present, the clause suggests that large companies would have to earmark 2% of their three-year average profit on CSR activities. Although failure to comply by the norm would not attract penal provisions, companies will have to mention in their annual reports the reason behind the non-compliance.

This, the standing committee had earlier said, was “check enough on compliance”, but now some MPs have been pressing for CSR to be made completely mandatory and for penal actions in case of non-compliance, a source said.

Another clause that has attracted the ire of the committee was that of disclosures to be made in case of private placement of shares. This particular clause was added after the committee had already given its report.

Under the clause, the time limit for completing private placement of shares was fixed at 60 days. It also mandated a company to disclose the names and details of people if shares were allotted to more than 49 persons.

In a crucial meeting held on 24th January, the standing committee also asked the MCA to explain why rotation of statutory auditors has been fixed at five years instead of maintaining the existing provision under which companies renew contracts with their external auditors every year.

“We feel that auditors may come under pressure of getting their contracts renewed and so compromise with the company management. Our intention is purely to avoid occurrence of a fraud,” another source said.

The Companies Bill was sent back to the MCA by opposition parties led by the BJP as about two dozen changes were made to the Bill after it was last scanned by the Committee.

The new Companies Bill, which would replace the existing half-a-century-old Act, seeks tighter corporate governance norms and greater disclosure by companies.

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