No proposal to ban P-Notes

P-Notes, or offshore derivative instruments, are mostly used by overseas HNIs, hedge funds and other foreign institutions to invest in Indian markets


The government said that it does not propose to ban Participatory Notes (P-Notes), as part of its policy to check inflow of black money.
“There is no proposal at present to remove participatory notes in order to check the generation and laundering of black money,” Minister of State for Finance Jayant Sinha said in a written reply in the Lok Sabha.
P-Notes, or offshore derivative instruments, are mostly used by overseas HNIs, hedge funds and other foreign institutions. This is done when they invest in Indian markets through registered foreign institutional investors (FIIs). It saves on time and costs which are associated with direct registrations.
In a separate reply, Sinha said the total net investments in equity and debt made by FIIs and Foreign Portfolio Investor (FPI) in India between April-November stood at over Rs1.84 lakh crore.
The total investment by FIIs and FPIs in 2013-14 was Rs51,649 crore.
The FPI regime has classified foreign investors into three groups based on their risk profile. This will eventually replace existing categories such as FIIs, their sub-accounts and qualified foreign investors.


Beware of fake pay and park rackets

A Pay and park racket involving railway officials exposed using RTI and Public Grievances


When journalist Anand Mishra of the Asian Age exposed the illegal car parking operator Rajaram Bhaiyalal Jayaswal, many were shocked to find that he was charged with milder sections of the RPF Act.


“In the fiscal year 2012-13, Central Railways (CR) earned Rs3.22 crore while in 2013-14, it earned Rs3.86 crore in lieu of giving its land to private contractors to run a pay-and-park facility,” Mishra had reported.


Mr Purohit who is an active volunteer of Moneylife Foundation's Samir Zaveri Railway Helpline, was quoted as saying that, “It was shocking to find out that the railway police officials at LTT took this scam so casually and imposed very lenient sections. Seeing that the approach of the officers was casual, I finally approached the railway court and now I believe the GRP will investigate the matter seriously.”


Instead of charging the accused under sections 420 (cheating),403 (misappropriation),405 (criminal breach of trust), 465 (forgery),468 (forgery for purpose of cheating),471 (using genuine forged document) and 474 (fraudulent collection), the operator was merely charged with section 144 (Prohibition on hawking) and 145B of Indian railway Act by the RPF officials.


The Railway Protection Force (RPF) is tasked with protecting railway property and prohibiting any trespassing. Shielding the offender is a breach of the code of behaviour under section 11 of the RFP Act. This behaviour of the officials raises various doubts and hints at a possible nexus between RPF and the pay-and-park operators.


The Government Railway Police (GRP) was ordered “to investigate the scam to conduct inquiry and take departmental action against Railway Protection Force (RPF) Personnel for misconduct” by the Bombay High Court on 26 September 2014.


Mr Purohit said, “Public Grievance and RTI works in redressing corrupt and illegal practices in Public Domain. But it takes efforts to bring public grievances to its logical conclusion.” says Mr Purohit.


Would Modi agree with Rajan’s interpretation of Make in India?

At the Bharat Ram Memorial Lecture in the Capital, Dr Raghuram Rajan proposed a vision of 'Make in India' that may be quite opposite to that of PM Modi's


Dr Raghuram Rajan, the governor of Reserve Bank of India said in his speech in New Delhi today that while Make in India is a laudable step, it should also be followed up with 'Make for India'. Interestingly, a few months ago, Prime Minister Narendra Modi launched the Make in India campaign with a lot of fanfare, under which 25 chosen sectors will be champions of India’s export-led growth. Clearly, Dr Rajan was talking about boosting and developing the domestic demand and market, instead of focusing on an export-led growth model which seems to be the basis for Make in India. 
Dr Rajan gave a comprehensive view of where the world economy finds itself today, almost giving the history of the economic scenarios since the great depression. His thrust was that the industrial world seems to be stagnating with little in the way of real recovery. “Growing leverage of all kinds, whether on banks, corporates, households, or governments, led to the financial crisis of 2008-11. Some of the private debt has morphed into government liabilities, but the overall level of debt in industrial countries as a fraction of GDP is still growing,” he said.
“If secular stagnation persists, industrial countries will have to figure out how to restructure their promises, whether debt, social security, or low taxes, and how to distribute the burden. After filing for bankruptcy, the city of Detroit in the United States has already had to make tough choices, between servicing its pensioners or its debt, keeping its museums open or its police force intact. More such difficult decisions will have to be made.”
In this backdrop, an export-led growth model for emerging economies becomes untenable, because the exports have no market to be consumed by, unlike the scenario in the post-60's era and the later Chinese boom.
“Even as China developed on the back of its exports to industrial countries, other emerging markets flourished as they exported to China. Emerging markets now have to rely once again on domestic demand, always a difficult task because of the temptation to overstimulate,” he said. He also warned that when stimuli are tightened, they will lead to shocks in emerging markets as the invested capital returns to industrial nations.
Stressing on a strong infrastructure focus, "There is a danger when we discuss 'Make in India' of assuming it means a focus on manufacturing, an attempt to follow the export-led growth path that China followed. I don’t think such a specific focus is intended." He added that, “If external demand growth is likely to be muted, we have to produce for the internal market. This means we have to work on creating the strongest sustainable unified market we can, which requires a reduction in the transactions costs of buying and selling throughout the country.”
On the matter of inflation, he said, “Going forward, we will discuss an appropriate timeline with the government in which the economy should move to the centre of the medium term inflation band of 2-6%.”
With this perspective of Dr Rajan, a seeming divergence in views on how the economy could grow, has appeared. Whether a trained economist’s view will turn out to be more prescient than that of a shrewd and successful politicians remains to be seen. Dr Rajan has also persistently refused to cut interest rates despite being exhorted by the finance minister. 


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