Current Affairs - 31 December 2015

General Affairs 

DDCA to file defamation case against Arvind Kejriwal and Kirti Azad

• DDCA today decided to file defamation case against Delhi Chief Minister Arvind Kejriwal and BJP leader Kirti Azad.

  DDCA's treasurer Ravindra Manchanda said that they will chair a meeting in this regard and decide on the future course of action.

  Vice- president of DDCA Chetan Chauhan reacted to graft allegation against DDA. He said,"If you are making allegations, you need to provide prooof. If allegations are made without any proof we will file defamation. We are taking legal opinion."
  The Arvind Kejriwal-led Delhi government had ordered a probe into the workings of Delhi and Districts Cricket Association after the BJP's suspended lawmaker Kirti Azad-led dissident faction alleged massive financial irregularities.

  The DDCA has been facing allegations of fraud and money embezzlement for quite some time now .

  Former DDCA President Arun Jaitley was also dragged into the mess by many former cricketers including Bishan Singh Bedi after which the battle turned political.

Jaitley misused power and sought closure of probe: AAP on DDCA scam

• The Aam Aadmi Party has made fresh accusations against the BJP and Arun Jaitley in a bid to counter claims made by the Finance Minister. They have also questioned the role ofAnurag Thakur as the president of Himachal Pradesh Cricket Association and said that Thakur cannot wear two hats.

  They produced two letters claiming Arun Jaitley misused his power and had written to the police seeking closure of the probe. 

  AAP leader Ashutosh claimed that they had posed five questions to Jaitley to which they have not yet received any reply. The party reiterated their resignation demands.

  The five questions are: 

  1. Being an eminent lawyer yourself, can you deny that your action amounts to directly obstructing the police investigation in an ongoing case?
  2. Mr. Jaitely, on what basis did you conclude that the complaints regarding Syndicate Bank were unsubstantiated and disclosed no offence?
  3. Given your political clout in this central government, is it fair for you to continue as a central minister, particularly when the Delhi Police directly reports to the Centre?
  4. Mr. Jaitley, What was your interest in attempting to derail the investigation and did you reveal your action in the next DDCA AGM?
  5. Mr. Jaitley, is it not a fact that you misused your position as Leader of the Opposition (LoP) of Rajya Sabha to pressurize the Delhi Police?

  Escalating their attack, Ashutosh further said that Jaitley made attempts to interfere and cover-up the graft charges, as he was well aware of the rampant corruption going on in the DDCA.

Samajwadi Party leader Totaram Yadav arrested for booth capturing in Mainpuri

• Samajwadi Party leader Totaram Yadav was today arrested by UP police in Mainpuri. 

  He was arrested by SHO (Kotwali) Manohar Singh outside a school when he came out after attending a sports week function there, which was also attended by PWD Minister Shivpal Singh Yadav and other SP leaders.

  Totaram had approached the Allahabad High Court for quashing the case registered against him but the court had dismissed his petition.

  Totaram along with his 20 aides, including the presiding officer, were booked by Mainpuri police for booth capturing in Bewar block in October. The decision to lodge the case was taken after a two-minute video went viral on WhatsApp in which he was purportedly seen capturing a booth. Totaram, had, however claimed that the case was a conspiracy against him. 

  A veteran Samajwadi Party leader and close aide of Mulayam Singh Yadav Totaram, also grabbed limelight in June when he said that "rapes happen with the mutual consent of boys and girls".

Delhi-Meerut Expressway: Akhilesh Yadav won't attend PM Modi's December 31 event in UP

• PM Narendra Modi will lay the foundation stone of ambitious Delhi-Meerut Expressway project on Thursday. Elaborate security arrangements have been made for the scheduled function.

  Besides Modi, Nitin Gadkari, Harsh Vardhan, Mahesh Sharma, V K Singh and P Radhakrishnan will also be present on the occasion. UP Chief Minister Akhilesh Yadav and Governor Ram Naik will give it a miss.

  At present, there is only one route i.e. NH-58 between Delhi and Meerut on which the traffic remains jammed at several places, thus causing a lot of inconvenience to people commuting between Delhi and Meerut.

  The construction of 46 km long, 6 lane Dasna-Meerut section of Delhi-Meerut Expressway will cost Rs 3,575 crore.

  The Prime Minister last month launched three important highway projects worth Rs 10,166 crore to decongest Delhi.

Odd-even formula: Delhi government releases parking plan

• The Department of Transport and Delhi government have issued orders prohibiting the parking of odd number non-transport four wheeled vehicles (motor cars etc.) on even dates and even number non-transport four wheeled vehicles (motor cars etc.) on odd days from January 1, 2016 to January 15, 2016.

  The odd numbered non-transport four wheeled vehicles would be allowed to park only on odd dates and the even numbered non-transport four wheeled vehicles would be allowed to park on even dates only.  

  With a view to implement the aforementioned, it has been advised that entry and/or exit of vehicles to all parking lots, either for use of general public or for staff, may be prohibited based on the restrictions imposed for the period from January 1, 2016 to January 15, 2016.  

  A notification to this has been sent to DDA, NDMC, North MCD, South MCD, East MCD, PWD, DMRC, CEO Delhi Cantonment, Divisional Commissioner, Special Commissioner Traffic, Special Commissioner (Enforcement) Transport Department, Special Commissioner (Planning) Transport Department and Joint Commissioner (Operations) Transport Department.

  The odd-even scheme, set to roll out from January 1 for 15 days, has been proposed to curb pollution in the national capital. Under the plan, four-wheelers with odd registration numbers would ply on odd dates and those with even numbers would run on even dates. There will be no curbs on Sundays. The scheme will be effective from 8 am to 8 pm.

  Violators of the scheme would attract a penalty of Rs 2,000.

  Women drivers, CNG-certified vehicles, two-wheelers and those carrying the differently-abled are among the 25 categories which will be exempted from the scheme.

Business Affairs 

Derivatives expiry weighs heavy, Sensex down 119 pts at close

• Unwinding of long positions ahead of the derivatives expiry, coupled with profit bookings, subdued Indian equity markets on Wednesday.

  This led to a barometer index of the Indian equity markets to close deep in the red. It ended lower by 119.45 points.

  Initially, both the bellwether indices of the equity markets opened on a flat note in sync with their Asian peers.

  Nevertheless, expectations that Nifty will breach the 8,000-level mark and a positive close of the US markets on Tuesday due to healthy consumer confidence data pushed up prices.

  However, markets soon ceded their gains, as lack of investors' participation coupled with unwinding of long positions ahead of the futures and options (F&O) expiry depressed sentiments and prompted some investors to book profits at higher levels.

  Latest data with the stock exchanges showed that the volumes in cash markets across key bellwether indices eased to Rs.17,000 crore on Tuesday.

  Besides, investors were seen cautious regarding the upcoming third-quarter earnings season which starts from January 14.

  The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended the day's trade lower by 119.45 points, or 0.46 per cent.

  Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) closed in the red. It ended lower by 32.70 points, or 0.41 per cent, at 7,896.25 points.

  The Sensex touched a high of 26,130.20 points and a low of 25,939.25 points during the intra-day trade.

IPOs in 2016 look rosy on profit growth, reforms

• Indian IPOs are set to raise more than $5 billion in 2016, a six-year high, as corporate profit growth and a pickup in the economy drive investor demand for equities and lure firms such as Vodafone's local unit to list.

  India has been a bright spot in an otherwise dull Asian initial public offering (IPO) market in 2015, with companies in the country raising a combined $2.1 billion, a seven-fold jump over the previous year. In contrast, sums raised by bigger markets such as Hong Kong and Australia, have fallen.

  Investment bankers, who forecast the IPO proceeds topping $5 billion in 2016, say besides the Vodafone unit listing, there will be several financial and technology sector companies going public next year.

  "There is a healthy pipeline of deals waiting to hit the market over the next 12 to 18 months and an equally strong investor interest to buy into these deals," said Sunil Sanghai, head of banking at HSBC in India, adding companies would need equity capital as new projects take off.

  Volatile markets and slowing economic growth had dampened IPO launches in India in the past few years, and led to sluggish revenue growth and rising debt at companies in Asia's third-largest economy.

  But Prime Minister Narendra Modi's push to cut bureaucratic red tape to improve ease of doing business, bolster the country's manufacturing sector and attract more foreign capital is now set to give a boost to the IPO momentum.

  And corporate earnings growth is set to quicken.

  Country's listed large and mid-cap companies are expected to post an average net income growth of 21.6 per cent in the next fiscal year beginning in April, up from 9.2 per cent in this fiscal, according to Thomson Reuters Starmine data.
  
  Top Deals

  In what could be 2016's top India listing, Vodafone is expected to float its India unit to raise more than $2 billion, according to several bankers, in the biggest private-sector debut since utility Reliance Power raised $2.9 billion in 2008.

  A Vodafone spokesman in London said the mobile operator was "positively inclined" towards an IPO and that preparations had started, but a final decision on the offering would depend on factors including market and industry dynamics in India.

  HDFC Life, in which British insurer Standard Life owns a stake, is expected to raise more than $300 million via an IPO next year, bankers said, making it the first insurer to list on the Indian bourses.

  Other possible listings include a roughly $150 million IPO by private-equity backed Ujjivan Financial Services, which makes small loans to businesses and farmers, and IT services firm L&T Infotech's about $300 million floatation, they said.

  A spokesman for L&T Infotech parent Larsen & Toubro said the unit had filed the prospectus for an IPO, but declined to comment further. HDFC Life and Ujjivan did not respond to a Reuters request for comment.

  BSE index is down 5.3 per cent so far this year, but Deutsche Bank in a report this month said the index should rise more than 11 percent to touch 29,000 by end-2016 helped by a jump in corporate earnings.

  The IPO momentum, however, could stall if the government fails to implement key reforms, including a new law to harmonise all state taxes to give a fillip to economic growth, some bankers said.

  "There are some concerns about delay in pushing through reforms, which if not addressed would have an impact on the corporate as well as investor sentiment, which would in turn have an impact on demand for Indian papers," said the equity capital market banker at a US bank.

I-T dept publishes names of 18 defaulters owing over Rs 1,100 cr

• The Income Tax department on Wednesday published a fresh list of 18 tax defaulters, including gold and diamond traders, who owe taxes of over Rs 1,100 crore to the government for the past many assessment years but have either gone untraceable or have inadequate assets to pay.

  The list has been compiled by the department and issued by the Finance Ministry in leading national newspapers carrying names of the defaulting individuals or entities, their last known addresses, PAN numbers, amount of arrears, last known source of income and the assessment years for which they have not paid their due taxes.

  A whopping Rs 779.04 crore default of income/corporate tax has been reflected in the name of one Mumbai-based Uday M Acharya (late) and his legal heirs Amul Acharya and Bhavana Acharya.

  A number of defaulters whose names have been put in the public domain on Wednesday, under the 'naming and shaming' policy adopted by the taxman early this year, have their last source of income shown from the trade of jewellery, diamonds and gold.

  The total tax default by these 18 defaulters under the personal Income Tax and Corporate Tax category is Rs 1,152.52 crore. This is the third list put in public domain by the I-T department, a senior official said.

  The department, in the notice, has asked these defaulters to pay their tax arrears immediately and at the same time asked public to inform it if they have any knowledge of these people.

  Others figuring in the latest list include Ahmedabad based Jag Heet Exporters Pvt Ltd (Rs 18.45 crore), Jashubhai Jewellers (Rs 32.13 crore), Kalyan Jewels Pvt Ltd (Rs 16.77 crore), Liverpool Retail India Limited (Rs 32.16 crore), Dharnendra Overseas Ltd (Rs 19.87 crore) and Praful M Akhani (Rs 29.11 crore). Hyderabad based Nexxoft Infotel Ltd owes Rs 68.21 crore in default while Bhopal-based Great Metals Products Pvt Ltd owe Rs 13.01 to the IT department in arrears and as unpaid taxes, the notice said.

  The public notice mentions that a number of these assesses are either not traceable or have inadequate or no assets for recovery. The department, early this year, had issued two similar notices containing the names of 49 such defaulters with a tax liability of over Rs 2,000 crore. The department has also mentioned, against the name of each defaulter, the regional I-T authority to whom any information can be given by the public about these defaulters. 

Essar Oil completes largest delisting in India's corporate history

• Essar Oil on Wednesday announced completion of the company's delisting from local stock exchanges after a payout of Rs 3,745 crore to shareholders, the largest in India's corporate history.

  Oil Bidco (Mauritius) Ltd, promoter of Essar Oil (EOL), is pleased to announce the successful completion of EOL's delisting offer process, which has emerged as the largest privatisation bid in the history of corporate India, valuing EOL at Rs 38,000 crore of market capitalisation, the company said in a statement.

  Of the 14.25 crore shares held by public shareholders, the promoters have acquired 10.1 crore shares through an offer made to shareholders, as against the requirement of 9.26 crore shares for delisting.

  The shareholders tendered their shares between December 15 and 21 through the reverse book building window made available to them under the delisting regulations.

  While the floor price for the delisting was set at Rs 146.05 per share, Oil Bidco (Mauritius) has agreed to pay Rs 262.80 per share, which is a premium of 80 per cent.

  The Rs 3,745 crore that will be paid to shareholders makes this the largest payout to privatise a publicly-listed company in India, the statement said.

  The shareholders who have not tendered their shares in the delisting offer can offer their shares to the promoters at the delisting price for a period of one year from the date of delisting.

  "We are happy that we have been able to reward our public and institutional shareholders for the faith they reposed in us over the years. I want to...thank investors, stock exchanges and regulators for their support in this journey," said Shashi Ruia, Founder Chairman, Essar.

  The Essar Oil stock has seen sustained and significant growth since its IPO in 1995. While the companys market capitalisation stood at just Rs 2,000 crore in 1995, today it is over Rs 38,000 crore at the delisting price.

  This has been made possible through strategic investments in the business since commencement of commercial operations at the Vadinar refinery, Gujarat in May 2008, especially in expanding and upgrading refining capacity - from 9 million tonnes to 20 million tonnes, and complexity - from 6.1 to 11.8.

  Over the years, Essar Group, through privatisation of its corporate entities Essar Oil, Essar Ports, Essar Steel and India Securities, has made a payout of over Rs 7,200 crore to investors, thus providing substantial returns.

  With this transaction, Essar ranks among one of the world's largest privately held conglomerates with large-scale, world-class operations across the globe, spanning oil refining and marketing, power, steel, ports, shipping, EPC and BPO. Essar businesses have revenues of over $35 billion and employ more than 60,000 people.

  The group's flagship Essar Oil operates the 20 million tonnes (MT) Vadinar refinery. Essar Power has a generation capacity of 6,700MW. Essar Steel has a capacity of 14 MT. Essar Ports operates terminal services with aggregate capacity of 120 MT. Essar Projects is a leading EPC contractor.

Economy: Bring Clarity in Taxation

• ABOUT: It would be a travesty if India's economic growth were to be a prisoner of an antiquated tax regime, multiple and over-lapping tax structures and corrupt compliance officials. Can the economic interests of the Centre, the states and local bodies ever align to agree on a simple, transparent and a just taxation formula? Or, will that remain a Utopian thought? Former Union Finance Minister Yashwant Sinha puts together his thoughts on how India must handle its tax reforms challenge.

  ---

  Man created the State to govern society. The State levied taxes to run the government. Over a period of time, taxation was used to achieve other socio-economic and political objectives. The nature of taxation changed and it became more and more complex. Now we are struggling to make it simpler. Collecting taxes is also always a struggle because most people are reluctant to pay taxes or come within the tax net. Tax avoidance and tax evasion pose a continuous challenge for any tax administration.

  Since there are many kinds of taxes in India - levied by the government, the state governments and the local bodies - taxation reform has been a continuous exercise. Starting with the Taxation Enquiry Commission in the early 50s to the Subramanian committee on Goods and Services Tax (GST) of 2015, the shelf is full of learned reports on what should be done to reform taxation in India. They have also reflected from time to time the social philosophy of the government of the day. During the socialistic era, we believed that the State should collect high taxes from the rich in order to spend it on the welfare of the poor. With liberalisation came moderation in taxes and a great deal of simplification, but the philosophy of taxation has not yet been clearly defined and there is no national consensus on this issue. As a result, every finance minister has used the annual Budget to make changes in the tax system according to his whims and fancies. This has made taxation in India extremely complex.

  When I was the Finance Minister, I followed a simple principle on the direct taxes side, which was that all incomes must be taxed. On the indirect taxes side, the principle I followed was that if profit was the motive for an economic activity, then that profit must be taxed. Obviously, while the principles I followed were simple, their implementation was complex. What was the definition of "income"? How did one deal with specific exemptions that served a desirable economic activity or a national socio-economic goal? What should be the threshold after which tax would be levied? How many slabs should there be and what should be the rate of tax for each slab? The advent of modern technology in business and the globalisation of business posed their own challenges. One faced similar challenges on the indirect taxation side, including import tariffs. Tax administration posed its own challenges. There was always a conflict between voluntary compliance and coercion. Tax rates, the behaviour of tax officers, the system of assessment and appeal, discretionary powers of tax officials, the cost of collection and personnel management were issues that could not be swept under the carpet. Ultimately, the best tax system is always in danger of degenerating into a tool for harassment of the tax payer if the people implementing it are not informed with best intentions. In spite of all the improvements and reforms that have taken place in the Indian taxation system, the situation even today is chaotic, to say the least. It is out of this chaos that the concept of a new Direct Taxes Code, to replace the Income Tax Act of 1961, and the idea of a GST have emerged, and the future of taxation of India lies in the successful passage of the related legislations and their effective implementation. Once these two are put in place, all the excitement relating to Part B of the Finance Minister's Budget speech would become a thing of the past, and durability and predictability of the tax system will automatically be put in place.

  

  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.
  

  More importantly, the whole issue of GAAR (General Anti Avoidance Rules) appears to have been indefinitely postponed. The Committee had recommended its introduction with some safeguards. Its postponement serves no purpose, except deferring the doomsday. GAAR is prevalent in many countries and, therefore, there is no reason why it should not be introduced in India as part of the Direct Taxes Code.

  The Finance Minister has announced that he will gradually reduce corporate tax from the present 30 per cent to 25 per cent and, at the same time, do away with various exemptions. I wish him luck. During one of my Budget exercises, I remember reviewing each and every exemption with a view to putting an end to as many as possible. I could only abolish a few because all the others served some socio-economic objective. It is also accepted wisdom that corporate tax rate should match the highest slab of personal income tax, which stays at 30 per cent. The above are only few issues on which decisions are pending. The Direct Taxes Code could put an end to all the uncertainties and give the country a new, clean start in a finally reformed taxation system.

  

  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.
  

  On the Customs side, a lot of reform has already taken place and we are close to ASEAN rates. It is another matter that vested interests still try to put pressure to tweak rates. This should be avoided at all costs. Similarly, discretionary exemptions should be done away with. A major challenge remains, however, as far as customs procedures are concerned. Further simplification of these procedures will lead to smoother movement of goods and services across borders. I am totally against the Finance Minister reading out a 'dhobi' list, in his Budget speech, of items on which either CENVAT or customs duty has been reduced or raised. I am also against the secrecy surrounding the taxation proposals in the Budget. The introduction of the Direct Taxes Code and the GST would largely eliminate the need for Part B of the Budget speech and the introduction of a bulky Finance Bill year after year. If, still, some urgent changes become necessary, they could be made at any time during the year without waiting for the Budget. Proposals for changes especially on the indirect taxes side should first be introduced in Parliament only as proposals. They should be thoroughly discussed with all stakeholders and implemented only after revised proposals, if any, have been considered and approved by Parliament.

  We have finally arrived, through a long and tortuous process, at the end of our search as far as taxation reforms are concerned. Let the year 2016 go down in history as the year in which we reached our destination. 

General Awareness

Happy New Year 2016

• • Happy New Year is the colloquial term given to the forcefulness of expression of romance and indulgence. This is the celebration of happy ending of one year and welcome party for fresh start of New Year. It would not be wrong to say that New Year’s Day is probably the most globally celebrated day since most of the nations follow the Gregorian calendar officially.

    

    Image Courtesy: www.happyholidays2016.com

    As per Gregorian calendar the New Year’s Day was dedicated to Janus, the god of gates, doors and beginnings by the Romans. The first month of the year, January is named after him. Later on, this date was celebrated to mark the Feast of the Circumcision of Christ which took place at the eighth day of Christ’s life. Jesus Christ was born on 25th December.

    New Year day is celebrated on different dates across the globe

    • The New Year celebrated in Ethiopia is called Enkutatash. It is celebrated on 11th September.
    • The New Year is celebrated in Cambodia on April 13 or April 14 which is known as Chaul Chnam Thmey.
    • Chinese New Year is celebrated between 20th January 20 and 20th February.
    • Japanese New Year is celebrated on 1st January.
    • Koreans also celebrate solar New Year's Day on January 1 each year which is known as Seollal, following the Gregorian calendar.
    • Thai New Year is celebrated on 13th April or 14th April which is called Songkran in Thai language. People splash water on one another, considered a blessing.
    • Hijri New Year in the Islamic culture is also known as Islamic New Year. It marks the beginning of a new Islamic calendar year. The first day of the year is observed on the first day of Muharram, the first month in the Islamic calendar.
    • The Jewish New Year is celebrated by Jews in Israel and throughout the world. This is known as Rosh Hashanah. It always falls during September or October.
    • Nepal Sambat is the Nepalese New Year celebration. It coincides with the Diwali festival.

    India: Land of diversity also observes New Year on different dates

    • Christians in India celebrate 1st January as the New Year according to the Gregorian calendar.
    • The Marwari New Year and Gujrati New Year celebrations coincide with Diwali festival.
    • In northern and central India, the Vikram Samvat calendar is followed. According to that the New Year day falls on the first day of the Chaitra Month, also known as Chaitra Shukla Pratipada or Gudi Padwa.
    • Malayalam New Year is celebrated either on the first day of the month of Medam in mid-April which is known as Vishu.
    • The Sikh New Year is celebrated as per the Nanakshahi calendar. New Year's Day falls annually on what is March 14 in the Gregorian Western calendar.
    • Tamil New Year is celebrated on 13th April or 14th April, known asPuthandu.
    • Telugu New Year, known as Ugadi and Kannada New Year known asYugadi is celebrated in March month.