Citizens' Issues
Writ petition filed in gift scam against ministry of external affairs

“Apart from corruption, the nation’s prestige is stake. It is an embarrassment to give sub-standard gifts to our foreign guests. That, too, it is bought at highly inflated prices,” Dr Nutan Thakur, who filed a writ petition in the Allahabad HC commented

A Lucknow-based social activist, Dr Nutan Thakur, has filed a writ petition in the Allahabad High Court (HC) requesting the court to direct the ministry of external affairs (MEA) to conduct an enquiry into the sub-standard gifts purchased by its protocol division meant for the foreign dignitaries in the last five years, from 2007 to 2011.

Currently the ministry is conducting an enquiry against the sub-standard quality gifts which were purchased for foreign dignitaries at hugely inflated price by its protocol division.

Dr Thakur, who is associated with the National RTI (Right to Information) Forum, acting on news report about the gift scam and its enquiry, which is going on a slow pace, filed a writ petition with the Lucknow bench of Allahabad HC. She told Moneylife that, “Apart from corruption, the nation’s prestige is stake. It is an embarrassment to give sub-standard gifts to our foreign guests. That, too, it is bought at highly inflated prices.”

The Protocol Division, under the ministry is responsible for procuring gifts for the president, vice-president, the prime minister and the MEA, which are to be given to foreign dignitaries, both inside and outside the country.

The issue came to lime light when external affairs minister SM Krishna visited Malaysia in May 2011. On his return, it was noticed that sub-standard and poor quality gifts had been procured by the Protocol Division at an inflated rate. Subsequently, an enquiry by the vigilance wing of the MEA was ordered.

According to Hindustan Times, which first reported about the scam, an ebony photo frame with silver lining worth Rs5,787 (plus value-added tax) was bought for Rs14,000 for the trip. A silver plate with (just about 60% purity) worth Rs22,755 was bought for Rs40,000. Both the articles were bought from the Pragjyotika, Assam Emporium.

It further says that the officials in the Protocol Division were acting to circumvent Mr Krishna’s January 2011 order stating that the gifts should be sourced through state emporiums/public sector units to curb private vendors and for promoting indigenous arts of different states. However, the vendors, who were hand-in-glove with some officials of MEA, manipulated the system and became suppliers.

In her writ petition, Dr Thakur has requested that that the Prime Minister’s Office should be directed to supervise the enquiry and the action taken, the inquiry to conclude it within a fixed period of three months and a proper policy to be formulated to avoid such incident in future.

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RBI allows foreign individuals to directly invest in equities

On 1st January the government had announced that soon QFIs will be allowed to directly invest in the Indian equity market to widen the non-resident investor base in stock markets as well as to expand the set of non-resident portfolio investors

Mumbai: The Reserve Bank of India (RBI) on Friday allowed foreign individual investors, pension funds and trusts as qualified foreign investors (QFIs) to directly invest in equities of up to 5% of the paid up capital of the listed company, reports PTI.

On 1st January the government had announced that soon QFIs will be allowed to directly invest in the Indian equity market to widen the non-resident investor base in stock markets as well as to expand the set of non-resident portfolio investors.

A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs do not include FIIs/sub accounts.

“QFIs shall be permitted to invest through the Securities and Exchange Board of India (SEBI) registered Depository Participants (DPs) only in equity shares of listed Indian companies... as well as in equity shares of Indian companies which are offered to public...” the RBI said in guidelines enabling QFIs investments in Indian companies.

They would also be permitted to acquire equity shares by way of rights shares, bonus shares or equity shares.

The RBI said the DP will purchase equity at the instruction of the respective QFIs within five working days failing which the funds would be immediately repatriated back to the QFI’s designated overseas bank account.

However, “only QFIs from jurisdictions which are FATF compliant and with which SEBI has signed MoUs under the IOSCO framework will be eligible to invest in equity shares under this scheme,” the RBI added.

Besides, the DPs will ensure KYC (know-your-customer) norms of such investors.

The move comes against the backdrop of significant foreign capital outflows from the domestic equity market in recent times, which has resulted in rupee volatility.

As per the guidelines, the individual and aggregate investment limits for QFIs would be 5% and 10% respectively of the paid up capital of an Indian company.

These limits would be over and above the FII and NRI investment ceilings prescribed under the Portfolio Investment Scheme for foreign investment in India, RBI added.

Further, the central bank modified the time period for which funds can be kept in the single rupee pool bank account of the DP under the scheme for investment by QFIs in units of domestic mutual funds to five working days.

In August last year, the government allowed foreign investors to directly invest up to $13 billion in equity and debt schemes of mutual funds.

Amid severe volatility in the capital market last year, FIIs outflows amounted to over Rs2,700 crore. The situation had an impact on the rupee, which fell to an all-time low of to Rs54.30 on 15th December.

The fluctuation in the domestic currency has put pressure on policymakers.

 

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RBI notifies change in single-brand retail FDI policy

 

Removal of the investment cap is likely to help global fashion brands, especially from Italy and France, to strengthen their interest in the growing Indian market

Mumbai: The Reserve Bank of India (RBI) on Friday operationalised the change in foreign direct investment (FDI) policy by removing restrictions on foreign investment limit in single-brand retail.

“...it has now been decided that FDI up to 100% would be permitted in single brand product trading under the government route...” the RBI said in a circular.

The Department of Industrial Policy and Promotion (DIPP) had earlier increased the FDI limit in single-brand retail from 51% to 100%.

“Necessary amendments to Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000...are being notified separately,” RBI added.

Removal of the investment cap is likely to help global fashion brands, especially from Italy and France, to strengthen their interest in the growing Indian market.

The government had said the move was aimed at enhancing competitiveness of Indian enterprises through access to global design, technologies and management practices.

Though 51% FDI in single brand was allowed in February 2006, not much investment has come in the sector.

During last three-and-a-half years, FDI worth only Rs196 crore was received in the sector.

 

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