Tamil Nadu Chief Minister, Jayalalithaa faces charges of accumulation of over Rs66 crore worth of assets disproportionate to her known sources of income
The Supreme Court on Tuesday vacated the stay on trial proceedings against Tamil Nadu Chief Minister J Jayalalithaa in the disproportionate assets case against her.
A Bench of Justices Vikramajit Sen and SK Singh also dismissed Jayalalithaa’s petition for staying her trial till the lower court decides the plea of a company, alleging that some of the properties shown as part of the disproportionate assets of the Tamil Nadu chief minister, actually belonged to them.
The apex court recalled its earlier order by which the trial against her was stayed.
The disproportionate assets case was shifted to Bangalore in 2003 following a Supreme Court directive on a petition alleging that a fair trial was not possible in Chennai during her tenure as Chief Minister then.
Jayalalithaa faces charges of accumulation of over Rs66 crore worth of assets disproportionate to her known sources of income.
Besides Jayalalithaa, VK Sasikala, VN Sudhakaran and J Illavarasi are also facing trial in the case.
The Chief Minister had sought a stay on the trial till the lower court decides the plea of Lex Property Development (P) Ltd, a Chennai-based company.
The company had claimed that the properties, which have been attached by the authorities as ‘benami’ holdings of Jayalalithaa, in fact, belonged to it and said this plea be decided first before the lower court proceeds with the trial in the assets case.
The court had allowed the company, which has separately challenged the attachment of properties, to cross examine the witnesses.
Cipla bought majority stake in a new distribution company from Sri Lanka to markets its products in that country
Pharmaceutical company Cipla Ltd, on Tuesday, said it bought 60% stake in a new company in Sri Lanka for $14 million (nearly Rs85 crore) to market its products in that country.
Cipla (Mauritius) Ltd, a wholly owned subsidiary of the Indian company, signed a definitive agreement with its existing Sri Lankan distributor for acquisition of 60% stake in a new company, Cipla said in a regulatory filing. “The new company will market Cipla’s products in Sri Lanka”, it added.
“The consideration payable for the transaction is $14 million,” the filing said, adding that the proposed acquisition was subject to regulatory approvals.
As part of its global expansion, Cipla has been actively acquiring companies.
Last year, it completed the buyout of South African pharma firm Cipla Medpro for Rs2,707 crore. Cipla had also acquired Croatia-based firm Celeris, distributor of its products in that country last December.
Cipla closed Tuesday marginally down at Rs412.8 on the BSE, while the 30-share Sensex ended the day 1.3% higher at 25,521.
External commercial borrowings or foreign investments in Indian debts and equities, or remittances by NRIs can only suppress the symptoms without treating the disease
Current Account Deficit:
The Current Account Deficit (CAD) for the last three years had alarmingly increased from $48.10 billion to $88.2 Billion. Unbridled and duty free gold import at extremely high rigged international prices from 2006 to 2011 along with rising crude oil import has played havoc with CAD and resulted in steep depreciation of rupee against dollar.
Reduced gold import in last few months has temporarily decreased the CAD but it’s permanent solution is that our exports have to be equal or more than the imports and this requires govt to turn India into a world manufacturing hub for every possible item on the lines of China, to curb all non essential imports and to encourage exports by all means. External commercial borrowings or foreign investments in Indian debts and equities, or remittances by NRIs can only suppress the symptoms without treating the disease. Even a small country like Bangladesh which imports all inputs for its industries has surplus CAD.
Emphasis on oil seed production to curb import
Edible oil import during 2012-13 was a massive $11.20 billion due to stagnant domestic production of oil seeds at around 31 million tons annually. No proper incentive is given to oil seed farmers whereas minimum support price (MSP) of food grains has been increased from an average Rs430 per quintal to Rs830. An increase of 93% in just the last four years. This populist measure has burdened Food Corp of India (FCI) with massive unsold or undistributed stock of almost 59 million tons.
Curb import of steel melting scrap
Steel melting scrap import was at 8.7 million tons during 2012-13, most unnecessarily at the cost of its direct substitute, sponge iron. Most sponge iron plants in the country are closed or underutilized due to scarcity and unaffordable prices of iron ore and coal. These problems need urgent resolution to cut scrap import and save foreign exchange. Import duty on steel scrap needs to increase from 2.5% to at least 10% to restrict its import.
Control over gold import and prevent gold as means of storage of black money
The hefty gold import of $53.8 billion during 2012-13 has now sharply declined due to a 10% import duty and a depreciated Rupee, but appetite for gold remains intact. Gold holding per individual can be fixed at max one kg. And to curb black money getting invested in gold, strict KYC norms should be imposed and payment of any purchase above Rs25,000 should only be allowed through banking channels linked with a PAN card.
Foreign dividend and interest income
Such receipts of Indian companies from their investment in overseas subsidiary companies should be made permanently tax free to encourage them to bring back their foreign earnings without double taxation.
Control over import of white and electronic goods
India spent $31 billion during 2011-12, on import of consumer durables, white and electronic goods .Hence, suitabe increase of duty on them to restrict their import and encourage domestic production should be instituted. If this is not possible due to free trade pacts or World Trade Organisation (WTO) compulsions then anti-dumping duties must be applied.
The government should request and direct big Indian industrialists to set up large manufacturing bases of these consumer durables in all parts of the country along with chains of ancillary industries by providing adequate incentives including vat exemptions etc.
Foreign companies dumping white goods in India should also be forced to set up manufacturing bases in India with use of 100% indigenous components over three to four years. The free trade agreements signed with 10 East Asian countries has only helped those countries in dumping their goods in India with no real benefits to India or to Indian companies. After the green and white revolutions we need an electronic and white goods revolution in India.
Foreign direct investment-FDI
All sectors in India including education and defence production (except retailing of food grain, vegetables, fruits, spices and edible oil etc but bulk selling and multi-brand) should be thrown open for investment by foreign companies, this should be done under the automatic approval route with the rider that they have to operate by floating a subsidiary company in India and the said company must list on Indian bourses within a maximum period of three to four years by diluting at least 25% of their equity to Indian investors.
Such foreign investors should be provided all clearances, consents / registrations/ help under a single window system by Foreign Investment Promotion Board within the shortest possible time. The second rider should be that at least 90% of their staff should be Indians and they should indigenise their products within four to five years.
Restrictions on foreign education
Government must liberally allow and encourage top 200 foreign universities to set up permanent campuses in the country, so that Indian students need not go abroad for study. Why is this step being delayed?
The government’s revenue deficit for 2013-14 estimated at Rs3.70 lakh crore would have been higher by another Rs1.15 lakh crore representing subsidies payable for this year but rolled over to next year. The fresh borrowings for the year of Rs5.25 lakh crore and interest payment at Rs3.80 lakh crore meant that 72% of fresh borrowings have been utilized to service government debt. The government’s debt trap is due to massive uncontrolled revenue expenditure year after year, and the same for 2013-14 amounted to Rs13.99 lakh crore being spent on salaries, pensions, interest payments and various subsidies while the planned expenditure was reduced to only Rs5.55 lakh crore which includes amount spent on various government schemes, many of which are unproductive. Deficit financing is a booster for the economy if it is within limits and used for productive purposes.
• Total control and restriction on wasteful and unnecessary government revenue expenditures with no fresh recruitment, unless unnecessary government departments both at centre and states are disbanded.
• It is impossible for the government to control, manage, monitor or perform social audit of now reduced and restructured 66 Centrally sponsored schemes (The earlier number was 147), leading to wide scale leakages in the distribution chain due to rampant corruption and a weak delivery system. Hence ,the same need to be further reduced and consolidated into fewer, effective, essential and productive schemes like mid day meal scheme for school children.
• National Rural Employment Guarantee Act (NREGA) Scheme is not creating permanent productive assets in rural areas, as it has no provision for inputs like cement, sand, bricks and bitumen. Hence, it needs to be suitably reviewed, modified and be applicable to only 200 most backward districts instead of all 640 districts of the country, with provisions of necessary inputs so that funds are productively utilized in creating productive employment, leading to creation of permanent assets in rural areas.
• The urea/ fertiliser subsidy was Rs65,974 crore during 2012-13, this must be restricted to only poor and marginal farmers with no subsidy to rich farmers owning five acres or more of cultivable land. Better still, would be to abolish it as ground realities reveal that subsidized fertiliser is either cornered by rich farmers or sold in the black market by the dealer. Domestic production of fertilizer should be increased on a war footing by fresh capacity addition.
• New food security scheme: The current Food Security Act is populist scheme provides that for 5kg of rice or wheat per person per month at Rs3 and Rs2 per kg. This is just equal to the storage, transport and distribution cost, meaning virtually free food grain to 70% of the population by cutting the quantity currently available to BPL card holders .This scheme is unviable and needs to be re-looked. The impending launch of this scheme in Karnataka is already facing many market related obstacles.
• So, only provisions of free safe water to all citizens, and food subsidy which should also include sugar, pulses and edible oil to 20% most economically weaker citizens, should be made.
• Tax on agricultural income:
A good chunk of farmers in many states are more prosperous than say an income tax payee employed in Delhi or Mumbai .There is no logic in not taxing rich farmers. Strong political willpower is required to tax agricultural income; once introduced it will be accepted after initial protests. The total number of individual income tax payers in India as on 31 March 2012 was only 3.5 crore, meaning only 2.7% of the total population pays income tax as against 46% in USA .
• Consider imposing 10% withholding tax (Final Tax with no further tax or formalities or enquiries or penalties) on interest income on bank deposits, NSC, PF, KVP, post office schemes and other similar savings instruments of individuals, to bring in one single stroke a wide section of people under the tax net. Exempt senior citizens above the age of 65 years.
• Another voluntary disclosure scheme: Introduce once again, and for the last time a voluntary disclosure scheme for tax evaders. The unused black money lying in homes and in bank lockers is serving no purpose. Strictest penalties should follow on those not availing this last opportunity.
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(Kolkata-based Dalbir Chhibbar practised as a CA till 1990 and later started his own buinsess)