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The Direct Taxes Code Bill was introduced in Parliament by the UPA government and was referred to the Standing Committee of Finance, which I chaired. We worked hard and, after consulting the major stakeholders, submitted our report in March 2012, well before the presentation of the Budget. But the UPA government did not bring it back to Parliament. I was hoping that the new NDA government would apply its mind and bring the Bill back to Parliament. I was disappointed, therefore, when the Finance Minister declared in his very first Budget speech that he had no wish to do so since many of the recommendations of the Standing Committee were already incorporated in the Finance Bill. This is simply not correct. The Committee had recommended, for instance, that the exemption limit should be raised to `3 lakh; that the slabs should be linked to the rate of inflation, which should be automatically revised each year. It had recommended that incentives/ exemptions for both individuals and businesses should be made investment linked. It had also said that accountability of officials should be clearly fixed and unwarranted actions and orders on their part must lead to disciplinary proceedings. These issues are still pending.
On the indirect taxes side, the GST is the logical culmination of the reforms that have taken place in the past. The introduction of CENVAT was a big reform, so was the levy of service tax for the fast-growing service economy of the country. Similarly, the replacement of State Sales Tax by VAT was a huge step forward. As the Standing Committee on Finance had observed in its 73rd report of August 2013 on GST, "by replacing a large number of taxes levied by both the Centre and the states, the GST would integrate the tax base and allow seamless flow of input tax credit across the value chain of goods and services. This would eliminate multiplicity of taxes, cascading of taxes and result in overall simplification of the indirect taxation regime. As the credit chain will function only if all the transactions are recorded, GST would lead to improved disclosure of economic transactions, which may have a positive impact on direct taxes collections also". Most importantly, it would weave India into one common market. Thus, GST is an extremely essential indirect taxes reform and it is a pity that it is still held up in Parliament.

The S&P BSE Sensex settled 45 points higher after rising as much as 99.65 points in trade on Tuesday, while broader CNX Nifty ended slightly above its key support level of 7,900.

Domestic markets traded in range as investors booked profits made in the previous session while participation remained weak, weighed by year-end holidays and the derivatives contracts expiry later this week.

The 30-share index ended the day at 26,079.48, up 45.35 points, while broad-based 50-share index quoted 7,928.95, up 3.80 points at close.

Volumes are expected to be thin this week with a majority of foreign institutional investors on holiday.

Meanwhile, weak crude oil prices and caution ahead of the futures and options contracts expiry on Thursday also muted sentiment.

"It all depends on further movements in oil and metal prices. If they stabilise, it will be a boost. If they fall, then there can be some correction," said G Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.

Bajaj Auto was the best performing stock on both benchmark indices and ended the day 2 per cent higher.

Shares of NTPC gained over 3 per cent after the company announced building of a township near its super thermal power project in Nabinagar. The thermal power project is a joint venture between NTPC and Bihar State Power Generation Company.

Among Asian markets, China's Shanghai Composite closed 0.85 per cent higher, while Hong Kong's Hang Seng index gained 0.36 per cent. Japan's Nikkei added 0.58 per cent.

Overnight, US stocks recovered to close marginally in the red after a weak opening, as traders booked profits after strong gains posted last week. Trading volumes however remained low led by the year end holiday season.

Lowdown on markets today

2:20 pm
Sensex at 26,074, up 40 points

Nifty at 7,928, up 2 points

12:47 pm

Sensex at 26,001.15, down 32.98 points

Nifty at 7,905.45, down 19.70 points

11:00 am

Sensex at 26,084 , up 50 points

Nifty at 7,932, up 7 points 

9:24 am

Sensex at 26,110.31, up 76.18 points

Nifty at 7,935.40, up 10.25 points

Bullish on a series of reforms unveiled in the year passing-by, the government expects FDI inflows to rise by 40-45 per cent in the New Year while further steps could be on anvil to attract foreign capital.

As per the latest available figure for 2015, FDI inflows during January-September period has increased by 18 per cent to $26.51 billion.

In the entire 2014, India had received FDI worth $28.78 billion as compared to $22 billion in 2013.

"FDI will grow by 40-45 per cent in 2016 despite the global slowdown. The government has taken vast number of policy measures this year," Secretary in the Department of Industrial Policy and Promotion (DIPP) Amitabh Kant told PTI.

The sectors that have attracted maximum FDI this year include services, computer hardware and software, telecom, automobile and trading.

Singapore is the top source for FDI coming into India, followed by Mauritius, UK, Japan, the Netherlands and the US.

In a bid to streamline the FDI structure, the government this year introduced a composite foreign investment cap by clubbing all forms of overseas investments to define sectoral limits. It has also relaxed e-commerce norms for foreign companies having manufacturing facilities in India.

Kant said that the steps announced to improve ease of doing business would help India in becoming the most easiest place for investors.

He said that the government is planning to put 98 per cent of sectors, which are open to foreign investments, under the automatic route so that businessmen won't need to visit the Finance Ministry or 'Udyog Bhavan' for any approval.

India's ranking in the World Bank's report on ease of doing business improved to 130th position this year from 142nd last year out of 189 countries. The Prime Minister has set a target to bring this rank to top-50.

For the first time, states have also been ranked in terms of ease of doing business. Gujarat topped the World Bank-compiled ranking of Indian states for bringing in reforms to improve 'ease of doing business'.

Foreign Direct Investment is important for the country as it needs around $1 trillion worth investments between 2012-13 and 2016-17, the 12th Five Year Plan period, to fund infrastructure growth covering sectors such as ports, airports and highways.

Experts said there are huge expectations for a significant jump in FDI flows in 2016, but a lot would depend on the 'Make in India' programme.

"FDI should improve next year but much will depend on the performance of 'Make in India' programme in terms of more reform measures and steps to further improve ease of doing business in the country," said Krishan Malhotra of corporate law firm Shardul Amarchand and Mangaldas.

As part of the reform measures, the government has hiked foreign investment caps, opened new sectors and relaxed norms for several segments.

It permitted portfolio investors to buy up to 74 per cent in local private banks, with full fungibility, while palm, coffee and rubber plantations have been opened up for the first time.

FDI norms have also been eased in real estate, defence, civil aviation and news broadcasting sectors.

Sourcing rules for single brand retailers, particularly for high-tech, have been eased by allowing them to sell online without specific permissions. But there is no change in 51 per cent limit for multi-brand retailers like Wal-Mart.

To improve investment climate, the DIPP has taken a series of steps that include having a time line for clearance of applications, de-licensing the manufacturing of many defence products and introduction of e-Biz project for single window clearance.

It was a towering feat for the telecom industry in 2015 to cross 100-crore subscriber mark, but the call drop menace spoiled the party and the operators are now pulling up their socks to face greater competition with the imminent entry of Reliance Jio in 2016.

It took a rap on the knuckles by the government for the mobile operators to beef up their network performance, which still remains far from the optimal levels with dropped calls still remaining a problem in many areas.

The government is however are hopeful that the problem of call drops will become a thing of past in the new year with the operators putting up more towers, while more spectrum could also be made available to them at the earliest.

The government will try to auction spectrum as soon as possible depending upon Trai's recommendations, Telecom Minister Ravi Shankar Prasad told PTI.

He, however, added that the scarcity of airwaves is not an issue as spectrum sharing and trading guidelines are already in place that can be used by operators to augment their services. The New Year can also bring in many more new services for the customers at affordable rates. With the government framing a new policy for additional features on mobile phones, customers will be able to communicate in their local languages and access services like e-payment through their phones.

PM has said governance must be available on the mobile phone so we are going to have a good initiative to encourage mobile phone operators by a suitable policy framework to have further features like e-payment, governance issues etc on mobile phones, Prasad said.

For the industry, 2016 can be a 'make or break year' where resolution of issues around call drops, net neutrality debate and availability of spectrum will be critical. Still, consumers can expect to save on mobile bills with availability of public wifi and pressure on internet rates due to expected entry of pan-India 4G player Reliance Jio. Also, most of the incumbent players including Bharti Airtel, Vodafone and Idea Cellular have already their launched the 4G services.

Though data usage of consumers is likely to see a significant increase, the spending may not be in proportion to the usage with availability of public wifi. The pricing would be under pressure and 2016 could see intense completion on the price front, both for data and voice.

Intense completion may give rise to innovative tariff plans including bundling offers, etc, Deloitte Haskins & Sells LLP Partner Hemant Joshi said. The trend is expected to put pressure on financial health of telecom operators as the government has been talking tough on issues like quality of service and call drops and wants the companies to enhance their investment on infrastructure. Bharti Airtel announced an investment to the tune of Rs 60,000 crore in networks over a period of next three years.

Reliance Mutual Fund has hiked stake in Tatas-run Indian Hotels to nearly 8 per cent, making the hospitality sector another key area with significant investments by the two Ambani groups.

Elder Ambani sibling Mukesh-led Reliance Industries group is already a major investor in EIH Ltd, the main listed entity from Oberoi group that runs a chain of luxury hotels.

While RIL group firm Reliance Industrial Investments And Holdings Ltd owns a 18.53 per cent stake in EIH Ltd, a small 2.12 per cent stake is also held in the company as a financial investment by Reliance Mutual Fund, which is part of younger Ambani sibling Anil-led Reliance Group.

Expanding its exposure to the hospitality sector, Reliance MF has now increased stake in Indian Hotels Company to 8 per cent through multiple share purchases over the recent months, sources close to the fund house said.

As per the latest available shareholding pattern of Indian Hotels on the BSE website, Reliance MF held 5.42 per cent stake in the company through two separate funds as on September 30, 2015. The total stake of the fund house has now reached near 8 per cent which is a financial investment made by a mutual fund, sources added.

Other major investors in the company include LIC, Franklin Templeton, as also multiple insurers such as General Insurance Corporation of India, New India Assurance and ICICI Prudential Life Insurance.

LIC, New India Assurance and General Insurance Corporation Of India also figure among the major shareholders in EIH Ltd, where Reliance Industries group had acquired stake a few years ago as a 'white knight' or a 'friendly investor' to the promoters to thwart a takeover bid from rival ITC Ltd.

ITC continues to hold 14.98 per cent stake in EIH Ltd.

Lately, the two Reliance groups have been bolstering their positions in their respective businesses. Some of the common sectors where both the groups have significant exposure include telecom, media and defence.

The launch of Reliance Jio by RIL group this weekend saw a family reunion of sorts for the two billionaire brothers as the event was also attended by Anil Ambani, his wife Tina Ambani and sons Anmol and Anshul.

In 2003, Mukesh Ambani had launched Reliance's CDMA mobile business, but that business went to Anil after family split and is now known as Reliance Communications.

The two brothers have already come together for sharing of mobile airwaves or spectrum as well as infrastructure like mobile towers and masts.

Jio has also partnered Reliance Communications, India's fourth-biggest mobile phone carrier, for sharing of mobile masts and leasing of optic fibre network.

The partnership brought together the once-feuding Ambani brothers who had gone separate ways a few years after death of their father Dhirubhai Ambani in 2002. The erstwhile Reliance empire was split between the two in 2005.

In their telecom partnership, Anil's Reliance Communications will access 4G mobile networks of Jio, which, in turn, can use the former's 2G and 3G networks when needed.

Reliance Communications will also enter into a pact with Jio for trading and sharing of 4G mobile radiowaves.

When it comes to inflation, the year 2015 has shown that the macroeconomic data points may not always show the real picture and the cases in point relate to quite a few kitchen staples such as potato, onions and pulses.

For records, the Consumer Price Inflation has remained well under control hovering in the range of 3.66-5.4 per cent so far in 2014, while the industry chambers and some other experts are hopeful that it would keep below 6 per cent mark in the New Year - a target set by the Reserve Bank.

However, the consumers saw an altogether different story in 2016 when they went to the shops to purchase some staple grocery and vegetable items for a good part of the year.

While onion prices again brought tears to the eyes of consumers, prices of tur dal touched record high levels above Rs 200 a kilogram.

Another dataset, the Wholesale Price Index (WPI) based inflation in fact stayed in the negative zone for the entire year, meaning the wholesale prices actually fell and there was no inflation at all.

While it entered the negative zone in November 2014, the WPI inflation stood at (-)3.8 per cent in October 2015.

On the future datapoints, the industry chambers expect the prices to stabilise in the New Year although WPI may come back to the positive territory.

"During 2016, prices are likely to stabilise as industries continue to operate below full capacity. With industrial prices no longer falling, WPI inflation is likely to rise to positive territory while CPI inflation will likely remain in a band of 5-5.5 per cent, CII Director General Chandrajit Banerjee said.

"RBI's target of 6 per cent by January 2016 will be easily met. In fact, inflation is likely to moderate from current levels as measures are taken to moderate the prices of pulses which had shot up on account of deficient rains", he added.

International crude oil prices, which plunged to historic lows on a supply glut during the year, helped India reduce its oil imports bill and consequently commodities' transport cost.

RBI has however cautioned that while oil prices, barring geopolitical shocks, are expected to remain benign for a few more quarters, the uptick of CPI inflation excluding food and fuel for two months in succession warrants vigilance.