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stock.N CABINET DECISIONS N Signing of tax pact with US under FATCA gets nod Revenue Service (IRS) of the US for this purpose. Compliance Act (FATCA) will mutual funds and insurance or enable exchange of information annuity schemes with a cash on cases of tax avoidance value above $50. Prime Minister Narendra Modi had strongly supported automatic exchange of information during the G20 leaders summit on November 16. The deadline had clients who could be subject to been extended twice because a American tax laws. number of regulatory concerns Indian institutions had to had surfaced in between. sign up with the Internal The Securities and BS REPORTER New Delhi. the decision will enable India to get information from the US and from other jurisdictions with which India has similar agreements.under the Foreign tutions such as ing to impose Account Tax bank.Compliance Act will mutual fund. about their clients The idea is to capto the US government. through overseas entities. which include penalties imposed on financial institutions under FATCA. 2014. and stated this would be instrumental in getting information about unaccounted money hoarded abroad and enable its eventual repatriation. in Brisbane. 17 March T Exchange Board of India had reportedly raised questions over issues. It was also decided to join the multilateral competent authority agreement on automatic exchange of information. brokerage or higher withhold. . They had to obtain a Global Intermediary he Cabinet on Tuesday Identification Number before approved the signing of January 1.000. According to sources. 52 countries have signed the agreement on automatic exchange of information.avoidance through ing tax on all payvide information overseas entities ments from the US. between India The agreement Financial instiand the US seek. 2015. securities. FATThe US has given India CA is a US legislation to ensure time till September 30 to put in foreign financial institutions place a framework to track provide information about these assets. about the assets that Indians hold abroad. which ing tax on Indian enable exchange of do not sign up with companies on information on IRS will face a 30 their US income. cases of tax per cent withholdif they do not pro. and have to an inter-governmental report the assets of such clients agreement to the IRS. So far. ture the details of US taxpayers’ The agreement under the unreported foreign financial Foreign Account Tax accounts.

on the other hand. social and even political sphere at times. the columnist presented at the University of Leeds in the UK last year . Hollywood still manages to get half of the Chinese box office. The banning of 28 cuss words. Whether it is Bobby from the early seventies to Jaane Bhi Do Yaaro in the mid-eighties to the more recent Lage Raho Munna Bhai or 3 Idiots and Kai Po Che. the ones Indians make for themselves and in their cultural context. which had no access to institutional financing or state support. however. Dhobi Ghat (2011) had dhobis or washermen in Mumbai up in arms. the new CBFC chief who took over in January. no one. Largely. of the use of words such as “Bombay” and “lesbian”. In India. dreams. China which allows the import of only 34 for- eign films a year. India is a free. Indian films are getting better at telling Indian stories in a language and context that Indians want to hear them in. the CBFC takes away from the wonderful ability of the Indian industry to connect with its audience. Indian cinema has soft power. Many films are being are being personally cleared by him. The moral policing of the CBFC could end up destroying this symbol of India’s soft power MEDIA SCOPE VANITA KOHLI-KHANDEKAR D oes Indian cinema have soft power? And is the new chief of the Central Board of Film Certification (CBFC) messing with that? Here are some facts before we answer these questions. Many of the country’s biggest creative names in advertising – Prasoon Joshi. Paresh Mokashi’s critically acclaimed Elizabeth Ekadashi (Marathi. are among some of the changes that Pahlaj Nihalani. Mediterranean markets and even large chunks of Europe. the films act as a powerful magnet. The only other country that stands up with a robust. There are too many people wanting to take on that mantle. Indians voted for Indian films with their wallets when they were relatively poor and now when they are relatively well-off. More than three-fourths of the music sold in India is from films. to hold on to its own against Hollywood films speaks volumes about its soft power. prolific and financially healthy one. By putting restrictions on what film-makers can or cannot do. The list is endless. especially in countries with cultural affinity — in West Asia. And outside India. R Balki. Sure. Hollywood’s share of boxoffice revenues has remained between 5-8 per cent for more than a decade. goes beyond its 10. Indian advertisements are dominated by film stars. problems and miseries of Indians. for instance – double as film-makers. not the CBFC. has made. This explains why every one of the major global studios is producing local films in India. so ‘Billu Barber’ became Billu (2009). The CBFC’s job is to ‘certify’ films as fit for viewing by the audience.> Is the censor board going overboard? The Indian film industry has survived more than a hundred years of state neglect and is now a global force.000-crore Indian film industry is a creatively vibrant. liberal market for the creation and exhibition of films. It is not a censor board or the guardian of India’s morality. ‘The Soft Power of Indian Cinema’. Barbers thought the term ‘barber’ was derogatory. Twitter: @vanitakohlik Large parts of this column are extracted from a paper. southeast Asia. locally plugged industry is South Korea. The ~14. dominate the cultural. the CBFC or the ministry. lyricists or scriptwriters. know what Indians like and don’t like. say reports. should be allowed to mess with that. For a 100-year-plus industry. a delegation led by Mahesh Bhatt and others from the film industry appealed to the Minister of State for Information and Broadcasting about the difficulties of working with an increasing number of restrictions on what films can or cannot do. And they touch every aspect of the lives. And even if it did not have soft power. 2014) got slammed for using a British Queen’s name along with an auspicious day in the Hindu calendar. our film-makers. This is the biggest mark of its soft power. Going by media reports earlier this week. there are good films and bad films but let the audience decide that. The influence of Indian cinema. Almost all the programming on radio is film music. say. It has no quotas or restrictions like. Some of the longest-running chief ministers have been popular stars. They are a good if not very lucrative export to have.000-odd cinema screens. To answer the questions that were posed in the beginning then — yes. Films. With such a small quota. More than 16 per cent of all TV viewing comes from films. whether they are Indian or American.

Neither bond nor equity markets will be happy with that. because the margin for error is very small. The ends justified the means. That said. planned capex could become the first casualty. the current account deficit ballooned. Now it must walk the walk. And monies must be found soon for the National Investment and Infrastructure Fund. now. So. revenue assumptions are far more realistic this year. JP Morgan . From that standpoint. A back-loaded ad hoc programme is unlike to escape the fate of previous years. pro-active and aggressive execution has the potential to both reduce the deficit and boost public investment. the Budget promises to arm the infrastructure fund with ~20.7 last year. It’s important. and aggregate demand reduced enough.15 per cent of GDP. and is budgeted at 1 this year. Over the last three Budgets. unlike the “stability” Budgets of the last three years. these institutional advancements lay the groundwork for a modern emerging market. By no means impossible.000 crore a year. the current account has collapsed and the rupee is under appreciating pressures even as other emerging market currencies are under pressure. In fact. And the consequences of that fiscal expansion were for all to see — inflation surged. And the allocation is. and India came perilously close to a sovereign ratings downgrade in the fall of 2012.17 per cent of gross domestic product (GDP) over what was achieved last year. proactive disinvestment plan needs to start early in the year and be appropriately staggered. After making the one-off adjustments. absolutely. Over the last three years. It has talked the talk. The author is chief India economist. The allocation of nondefense capital expenditure has been increased by just 0. less than last year’s Budget as a percent of GDP.2 per cent of GDP each. the chances of any private capex appear dim. India is now considered the epitome of macroeconomic stability — inflation has fallen rapidly. So. There are no fires to be put out. The Budget’s primary objective. Too weak for comfort. If implemented. whether it succeeds will come down squarely to execution this year? But why is execution unduly important this year? First. The Budget is clearly well intentioned.4 per cent of GDP) on capex and the National Investment and Infrastructure Fund levering up. line-item execution becomes critical. Asset sales must be embraced and not shied away from. tax buoyancy. But. however. states spending some part of their net transfers from the Centre (0. though there is no explicit allocation exists just as yet. the government has essentially delivered an asset swap – something we have long advocated. Instead.9 per cent of GDP without any increase in capex. But the macro environment is now very different. which is unprecedented. States must be prodded to spend and save their transfers wisely and in equal measure. If oil prices were to rise or growth. A formal monetary policy framework. will the gamble succeed? In my view. But growth remains very weak. it would have been nice if revenues were realistically budgeted and/or capital expenditures were preserved. overly ambitious revenue projections – which would rarely materialise – have meant that capex expenditures have been the first casualty to meet fiscal targets.65 per cent of GDP. this is a “growth” Budget after many TIME TO DELIVER The Budget is clearly well intentioned. subsidy slippages anywhere must be met by savings elsewhere. less than 80 per cent of the capex allocation has been met in the last three years. The deficit was allowed to balloon during and immediately after the Lehman crisis. That is the criterion on which the Budget will largely be judged. with a commitment to a monetary policy committee. A systematic. therefore. however. And all engines would need to fire simultaneously. By increasing asset sales and capex expenditures by about 0. Public investment must endeavour to fill the slack. execution becomes the key. a public-works dispute resolution mechanism. were expectations met? On institutional reform. So. the Budget envisions other engines firing: public sector enterprises investing in public infrastructure to the tune of 0. let’s recognise the changed macroeconomic backdrop. does not materialise or disinvestment falls short. With this kind of debt overhang. on average. a world-standard bankruptcy law. But it would require an appreciable growth lift. For that. The primary goal. Budgets were largely judged by whether the attempted fiscal consolidation was aggressive enough. in fact. fiscal policy has simply been firefighting. What happens on the revenue side. therefore. the success of the Budget will be judged by how much of a public investment thrust it ultimately delivers. a public investment boost is certainly intended. There was a universal anticipation that it would signal the government’s economic vision for its first term. therefore. is to boost public investment in a bid to catalyse private investment. But at the heart of the Budget was a gamble – a relaxation of the fiscal deficit to create space for more public investment and transfers to the states – the latter in line with the Fourteenth Finance Commission. This is very desirable. is equally critical.India’s Budget: Why execution is so important this year Whether the Budget’s public investment thrust will pay off will depend crucially on line-item execution SAJJID Z CHINOY I t’s hard to remember a Budget that was met with as much expectation as the 2015 rendition was. Conversely. On the asset sale front – the government has been much more bold—targeting 0. So. The case for the former is clear. But these were second-order issues. All told. Of course. What mattered was whether the deficit target was hit. Private investment remains in a slump and balance sheets – particularly in the infrastructure sector – remain overextended. therefore. and. PHOTO: REUTERS Now it must walk the walk years. It has talked the talk. And here. of the last few Budgets was to slash the deficit — in a bid to reduce aggregate demand and thereby external and internal imbalances. But they are not a slam dunk. to recognise that the Budget’s capex thrust is very diffuse. But it is largely off the Centre’s balance sheet. And we could end up in no-man’s-land — a deficit of 3. given that fiscal targets were relaxed in the process. tax buoyancy last year printed at 0.

Urban areas in India deplete life by three years on average. this will not help unless tax offi. there was no explanation why he did not pre. We owe this to ourselves. Sixth. The crux here would be to encourage and ensure voluntary compliance by not going after roving enquiries and thereby turning good taxpayers into non-filers. for it represents factors quite ers to be reassured.25% in consonance with GST dynamism was a daring step in the right direction. FM’s pre-announcement of government’s ation of indirect transfers will be addressed by CBDT through a clarificatory circular. greater tax revenue will get rightfully captured in the exchequer and the administration would be more easily able to become customer friendly in its operations. not only did uncertainty prevail for bined rest-of-the-world. While Switzerland has an announcement effect. This topic is worth revisiting at some point by tax experts. If these matters domestic and foreign investment away remain inadequately addressed.2015-16: a Union Budget with sense and sensibility ILLUSTRATION BY BINAY SINHA The real challenge is delivery R eams have been written on the Union Budget scribe primary legislation for it especially since such extolling its proposals or damning them. If it can. As a circular can only address indirect transfers excluthe discussion approaches an asymptotic ter. These examples anchored on easing business and investment. seventh. The first objective of enhancing ease of doing is risk. yet there is blindness in favour of pushing the concept of the small car hub. To elaborate. will be implemented in 2015-16 was salutary investment. a mere postponement there is no White Paper on GST structure leave alone would be ineffective in removing uncertainty that would deeper technical aspects that will undoubtedly affect taxpayers and fundamentally alter their interface with be caused by GAAR’s application. the Budget has no doubt attempted to structure up for discussion with stakeholders and to address uncertainty. the 2012 committee on taxathe debate that ensued soon after its tion of indirect transfers had cautioned presentation in Parliament. The Budget announcements to curb black money are the strongest ever made by any Indian government. However. However. should government reject wealth taxation completely. It would 2009-12 converted the investment environment quite not be surprising if the Indian total surpasses a comuncertain. It is to be seen how far government is able or willing to move on this. This could have been explained through some justification in the government’s view of a super rich tax that includes non-individuals. the abolition of the wealth tax that hardly yields revenue was a good idea but. Otherwise. . against (1) treaty override since India The primary concern prior to the still is a capital importing country. in as poor a country as India. There has to be wider unilateral use of carbon tax in India without looking over our shoulders to see what other countries are doing. I find that something needs to be said in ret.Bill was salutary but details are awaited. That the government bit the bullet to reveal its intentions and promises is a sign of apparent sincerity. rospect that balances the thrust of Further. Ninth. duction in 2016. and Budget was how to address the (2) taxing indirect transfers between extremely negative aspects of taxation companies registered and trading on for business decisions that had driven the stock exchange. certainly. a from Indian shores. Governments application.ation in a wider context. Yet only the latter would remove uncertainty comprehensively. First. it has postponed GAAR for desist from introducing GST just on the basis of centreanother two years and has indicated its prospective state discussions at government level. An investor has a perception of business. looking at the mass of tax disputes. but it was extended into the past through var. it also made sense to extend the fiscal deficit target by one year for absolutely nothing was to be gained by strict adherence to a paper target when revival of the economy is of the direst importance. the income tax department has so modern principles. intention to reduce the headline corporate tax rate to However. Even Yashwant Sinha expressed disappointment at this. its Budget did leave behind a veil over feasibility and a challenge of delivery. Fifth. Worse. That is welcome. The investor has a hard though elaboration would have been useful for taxpaytime assessing uncertainty.sively rather than remove or restrict retrospective taxmination.tend to discuss GST proposals in great detail with taxcers are given intensive training as to how to use the payers and the Indian government should follow those instrument. FM’s mention that recomrisk preferer. the risk he faces as a risk averter or a PARTHASARATHI SHOME Third. Fourth. a move from the current far ignored the thirty plus examples provided by the 2012 indirect tax structure would make sense only if GST is GAAR committee for the use of GAAR. FM’s statement that the DTC was being dropped altogether on grounds that most DTC proposals had already been incorporated in the Income Tax Act reflected an erroneous view of the tax administration that the remaining tough nuts to crack could be safely set aside from the ITA. Tenth. contrary to modwhere he should ideally be in a position to judge if a ernising tax administrations. The second is uncertainty. or should it redesign it at a very small rate on a wide base as proposed in DTC2013? This matter should be seriously reconsidered. or to stay away from the Reform Commission (TARC) that has just completed its work. Second. Eighth. Finance Minister announced that the tax. the bulk of the problem resides in India. the super rich tax does impact corporations as well so that in the current year. Tax laws between practice it. India simply does not potential investment is worth it or not. this is not enough. Second. following the announcement of GST introious retrospective amendments. Reflecting his perception mendations of the Tax Administration of risk in an investment. Yet so far should be vitalised. it is time now to put any proposed To begin. Indeed. Pandora’s Box of issues will jump out to businesses face two obstacles when scuttle government's stated economic making a business decision. After all. the small attempt by government to address environmental degradation by doubling the clean energy cess on coal from ~100 to ~200 per metric tonne was welcome though. primarily infrastructure where the widest gap exists. Further. they will be hit with a higher tax rate. FM should retract from this position not necessarily through another statement but through re-examination of DTC2013 and incorporating the many reform features that remain to be included in ITA. Third. However. First. TARC emphasised the importance beyond his conceptualisation in the environment from of assigning accountability since. tax revenue has suffered due to the underground economy. some of which catapulted India to a global high as a poor place to invest. FM’s mention of a Disputes the future. I would like to emphasise three salient features that added sense and sensibility to the Budget. he decides to invest by taking risk insurance.central and state tax administrations. it made sense to focus tax incentives on investment. there was a touch of sensibility by focusing expenditure subsidies on the absolute poor while cutting back on the ones fraught with leakage as field reports continue to reveal.

In fact. been a normal practice the world over. Maharashtra has extended an existing slaughter ban to cover bulls and bullocks as well through the Maharashtra Animal Preservation (amendment) Bill. too. cow meat is available in the guise of buffalo meat which is not a banned item. Indeed. that applied to the whole erstwhile state of Punjab. of which Haryana was a part. That also explains why. unlike cattle. Culling of under-performing animals has. That explains why India has the world’s best breeds of buffaloes. buffaloes are seldom seen wandering around as stray animals. vast parts of this country. Further. In many other towns. 1955. During droughts. Also at stake is ordinary Indians’ access to relatively cheaper meat – remember. a highly emotive. bullocks. eat beef – and the livelihood of lakhs of people engaged in beef production and trade. most Indian states have some kind of antislaughter regulations in place. cows are usually the first animals to be discarded by the affected population. In Haryana also. They are unlikely to make conditions for cattle any more humane. India wouldn’t have had to rely on exotic bulls or semen to upgrade its local cow breeds through crossbreeding — a key strategy that paved the way for the white revolution. Thus. on city streets. Kolkata and Chennai where legal and illegal animal slaughter houses exist in large numbers. Aged and unproductive cattle are usually abandoned by their owners or get picked up by the cattle traders for illegal butchering — or roam about. the ground reality is that beef is available – openly or clandestinely – in cities like Mumbai. the new-found enthusiasm about curbing cow slaughter is unlikely to serve any gainful purpose. they hurt India’s thriving animal husbandry sector which has made India the world’s largest milk producer and the second largest beef exporter. heifers and calves) had already been proscribed under the Punjab Prohibition of Cow Slaughter Act. Passed by the previous BJP-Shiv Sena government. . The new law has extended the ban even to the sale of canned beef – which was permitted earlier – and made its violation a non-bailable offence. barring placating religious sentiments. However. slaughtering of cattle (including bulls. it has finally received the President’s formal assent. Animal husbandry experts feel that the existence of large population of stray. uncared for. indeed. but for the religious taboo attached to cow slaughter. when fodder turns scarce. regardless of these provisions. dry or low-yielding cattle is an avoidable drain on the country’s fodder resources. including many Hindus. issue that had long remained muted has needlessly been raked up again. albeit contentious.The state of cows W Slaughter bans do not help protect cattle ith Maharashtra and Haryana taking fresh legislative initiatives to ban cow slaughter and beef consumption. The translocation of older and non-productive cattle to Kerala or other destinations for slaughtering is also fairly common. This is part of the process of genetic improvement through selection which has been used with great advantage in India as well in the case of buffaloes and other milch animals. oxen.