ED to begin action against Ramdev's 34 companies
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Appu Esthose Suresh : New Delhi, Mon Sep 24 2012, 02:58 hrs
In further trouble for yoga guru and anti-corruption campaigner Baba Ramdev, the Enforcement Directorate (ED) has decided to proceed against his close aide Acharya Balkrishna and 34 companies he heads under the Prevention of Money Laundering Act (PMLA).
Last month, the ED had issued showcause notices to Ramdev, Balkrishna, his trusts Patanjali Ayurved Ltd and Divya Yog Mandir and his Jharkhand Mega Foods for alleged foreign exchange violations.
According to ED documents accessed by The Indian Express, there is fresh evidence to show remittance of forex worth Rs 27.5 crore by the two trusts run by the yoga guru in violation of RBI norms.
Patanjali Ayurved has reportedly made investments abroad worth Rs 4.35 crore while Vedic Broadcasting Ltd has remittance of Rs 4.4 crore towards "professional fee". Approximately Rs 2.5 crore has allegedly been invested by Patanjali in two companies — Herboved Inc in USA and Patanjali Malagasy Sarl in Madagascar. The ED suspects these to be companies owned by Ramdev's trusts.
Despite repeated efforts, Ramdev's spokesperson was not available for comments.
"Once the CBI files the case of forgery (by Acharya Balkrishna) in the passport case, we will register a case under the money laundering Act," said a senior ED official.
All the 34 companies associated with the yoga guru and his three trusts are headed by Balkrishna.
The ED suspects that Patanjali Ayurved Ltd and Vedic Broadcasting Ltd exported goods at high over-invoiced rates to various foreign companies and its own joint ventures and wholly-owned subsidiaries.
D to begin action against Ramdev's 34 companies
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Appu Esthose Suresh : New Delhi, Mon Sep 24 2012, 02:58 hrs
ED investigations also point out that the FDI received by the Jharkhand Mega Food Park from Dubai-based GenX Venture Capital and Lunar General Trading and Liberia-based Micky Shipping Ltd is in violation of the RBI guidelines.
The ED says the RBI was not told about the investments and suspects it could be a pretext of bringing unaccounted money from abroad.
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Why the judicial process gets delayed | ||
R N Bhaskar | ||
Of all the privileges that the powerful can gain access to in India, the most potent is their ability to postpone cases. At the investigative side, it allows for destruction or "creation" of evidence, while at the judicial level, it allows the powerful to get away with a crime, sapping the weak of their ability to fight corruption. The ability of the powerful to manage the investigative and the judicial processes makes them more tyrannical and the poor that much more miserable. It hurts the poor and scares away businesses. Since the risks now for doing business in India has become greater, it drives up prices, to manage such related costs. On January 12, 2012, a Supreme Court bench admitted that people's faith in the judiciary was decreasing at an alarming rate, posing a grave threat to constitutional and democratic governance of the country. It wanted to seek answers from the government on amicus curiae's suggestion that access to justice must be made a constitutional right and consequently the executive must provide necessary infrastructure to ensure that every citizen enjoyed this right. It also wanted the central government to detail the work being done by the National Mission for Justice Delivery and Legal Reforms (announced by the government in June 2011 claiming to operationalise a number of plans to ensure expeditious and quality justice. The Centre said it was committed to spending Rs 5,510 crore in the next five years for the Mission). No clear timeline commitments are forthcoming as yet. Meantime, the numbers reinforce a frightening picture. According to 2010 Indian government data, about 300,000 of the total 430,000 prisoners in India were undertrials who are unconvicted defendants in criminal cases. In 2007, that number was only 250,727, which would suggest that the number has grown by 50,000 people in just over two years, said Jayanth Krishnan, professor at Indiana University Maurer School of Law, and Raj Kumar, dean at O P Jindal Global Law School, in their paper 'Delay in Process, Denial of Justice: The Jurisprudence and Empirics of Speedy Trials in Comparative Perspective,' published in the Georgetown Journal of International Law in 2011. The increasing number of undertrials has led to overcrowding of prisons. By 2007, all the prisons in India accounted for 35% overcrowding as they had 376,396 undetrials against the sanctioned capacity of 277,304 (Prison Statistics India 2007, National Crimes Record Bureau). And this does not include the vast numbers in police lockups outside judicial custody. Sadly, except for a few high profile cases of the last few years, most undertrials are poor and powerless. Kumar and Krishnan said, "The problem of delays by lawyers underscores the need for reforms in legal education as well as raising the quality of legal profession. The data released by the SC demonstrates that delays are indeed a reality and their causes are multifold, but a good part of the burden needs to be taken by the lawyers." The other major reason why cases get delayed is shortage of judges. The sanctioned strength is woefully less. And even of these reduced numbers, many vacancies remain unfilled. Vandana Kumar from department of law, Punjab University, said, "The institution of cases in courts far exceeds their disposal. The average disposal per judge comes to 2,370 cases in high courts, 1,346 in subordinate courts calculated on the basis of disposals and judge strength in December 2010. There is a requirement of about 1,539 high court judges and 18,479 subordinate judges to clear the backlog." Since filling the vacancies is a prerogative of the court, the blame must be put on the judicial system, the non-availability of infrastructure. More courtrooms, more funds for the salary account, funds for technology upgradation and better working conditions have to be sanctioned by the legislature and implemented by the executive. The Commonwealth Human Rights Initiative (CHRI) makes other recommendations: l Create a statutorily-based committee devoted solely to monitoring detainees' rights. l Have judges travel to the jails and adjudicate proceedings within the confines of the undertrials' cells. Such 'jail-adalats' have been instituted in various parts of the country, and there are some reports on their performance. l Increase the number of judges in the criminal courts to reduce overburdened, delay-ridden dockets; l Enhance the technological and infrastructural facilities of the courts themselves to make the courtroom process more efficient; l Promote greater integrity by the police while encouraging the police to accelerate the investigation process, so that cases do not languish and collection of evidence is not neglected; l Maintain the continuity of criminal cases from one judge to another when the presiding judge is transferred mid-case (as is common in this civil service-based judicial system) to a different court; l Discontinue the frequent judicial practice of granting unnecessary adjournments; Expand the bail opportunities for defendants charged with less serious crimes; Segregate undertrial prisoners from those who have already been co victed. But till the vacancies are filled up, new posts created and filled, a system to weed out the corrupt and the inept, and the post of judges made more attractive, the dispensation of justice will be largely for the powerful and the influential. r_bhaskar@dnaindia.net |
Published Date: Sep 24, 2012
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Retail FDI note raises more questions than it answers | ||||
Vivek Kaul | ||||
The government's media release announcing up to 51% foreign direct investment (FDI) in multi-brand retail raises several interesting points as well as questions. One of the major points is that organised retail outlets may be set up only in cities with a population of more than 10 lakh as per 2011 census. There are 45 cities in India that meet this requirement. Currently eight states, the national capital territory of Delhi and the union territories of Daman, Diu and Dadra and Nagar Haveli have agreed to allow FDI in multi-brand retail. But as per the 2011 census, only 20 of the 45 cities are in states that have agreed to FDI in muti-brand retail. Interestingly, the census has two classifications. One, "cities" having population of one lakh and above. Two, "urban agglomerations/cities" having population of one lakh and above. As per the former definition, India has 45 cities which have a population of 10 lakh or more. As per the latter definition, India has 53 urban agglomerations/cities with a population of 10 lakh or more. For the sake of this analysis, "cities" has been used because the government's press note uses the word "cities" very clearly and not "cities/urban agglomerations". But even if one works with the assumption of 53 cities, the analysis that follows doesn't change much. Nevertheless, the government needs to clear this confusion. Maharashtra leads the pack with 10 cities out of the 20 which qualify for big retail. These are Aurangabad, Kalyan-Dombivili, Navi Mumbai, Mumbai, Pimpri-Chinchwad, Pune, Nagpur, Nashik, Thane and Vasai-Virar. In Andhra Pradesh, three cities meet the criteria: Hyderabad, Vijayawada and Vishakapatnam. Three cities in Rajasthan also do: Kota, Jaipur and Jodhpur. Srinagar in Jammu & Kashmir, Faridabad in Haryana (and not the fancied Gurgaon which has a population of 8,76,824 as per the 2011 census), New Delhi and Chandigarh are the four other cities that make the list. Chandigarh is the capital of Haryana which has agreed to allow FDI in big retail. But it is also the capital of Punjab, which hasn't. Interestingly, 50% of the cities eligible for big retail are in one state, Maharashtra. It also means that there are no cities in Assam, Manipur and the union territories of Daman, Diu and Dadra and Nagar Haveli which meet the criteria. To get around this, the government note allows companies to set up retail outlets in cities of their choice, preferably the largest, in states and union territories not having cities with population of more than 10 lakh as per 2011 census. But the most interesting part of the note is that most of the policies elucidated in the note are only enabling in nature. Hence, governments in states and union territories are free to make their own policies. This means that it is very well possible that states might allow big retail to set shop in places with a population of less than ten lakh. What stops the state of Haryana from allowing big retail presence in the city of Gurgaon? Or Maharashtra allowing big retail in Mira Road-Bhayander which has a population of 8,14,655 as per the 2011 census? The same can be said about Secunderabad, which is Hyderabad's twin city, and Jammu which is the second largest city in Jammu & Kashmir. Another point in the note is that at least 50% of total FDI brought in shall be invested in 'back-end infrastructure' within three years of the first tranche of FDI. The note doesn't specify whether this investment is to be limited in states that have allowed big retail. So the conclusion is that this investment can be made all across India. But here is where practical problems might crop up. A company like Wal-Mart may set up back-end infrastructure in a state like Himachal Pradesh to source apples. But as we know, Himachal Pradesh isn't on the list of states that have allowed FDI in big retail. So we will end up with a situation where big retail is present in a state at the back-end but at the same time it's not allowed to set up a front-end retail store. That would not be an ideal situation. Another major problem can crop up because of the decision being left to the states. The states that have agreed to big retail are all Congress-ruled (except Kerala which is ruled by the Congress-led United Democratic Front but hasn't said yes to big retail). Now what happens if the Congress party loses the next election in these states? Can the party or the front which comes to power reverse the earlier decision? The note also points out that the government will have the first right to procurement of agricultural products. What is implied by this? At the same time, the note points out that at least 30% of the value of procurement of manufactured/processed products purchased, shall be sourced from Indian 'small industries' which have a total investment in plant and machinery not exceeding $1 million. This will be a huge problem for big retail companies which play on economies of scale. But the note is silent on international procurement of goods and products by these companies. This means that companies which invest in big retail can source their products internationally. Hence, a Wal-Mart can source products for the Indian market from China. "More than 70% of the goods sold in Wal-Mart stores around the world are made in China," point out Garry Gereffi and Ryan Ong in a case study titled Wal-Mart in China which was published in the Harvard Asia Pacific Review. Sourcing from China has been the backbone of Wal-Mart's everyday low-pricing strategy. The state governments that allow FDI in big retail can change any of the policies mentioned above and frame their own policies because these policies are only enabling in nature. The only part that they cannot change is retail trading by means of e-commerce.
Published Date: Sep 24, 2012 Copyright restricted. For reprint rights click here |
Published Date: Sep 24, 2012
Copyright restricted. For reprint rights click here
Rajiv equity scheme very short on clarity | ||
Sachin P Mampatta l MUMBAI | ||
The government may hope that the Rajiv Gandhi Equity Savings Scheme (RGESS) could theorectically funnel `1.53 lakh crore into the stock market, but its notification last Friday does not quite back such hopes. Instead, the notification raises more questions than it answers. The scheme offers a tax-break to certain "first-time investors" in the equity market. People whose annual incomes are up to `10 lakh can now invest up to `50,000 in blue chips and stocks of public sector companies either directly or through mutual funds, and claim 50% of their investment as a deductible amount from their tax liability. Finance ministry estimates till March 31 suggest that some 3.06 crore tax-payers could be eligible for the scheme. While 2.88 crore of them fall in the lowest 10% tax bracket,17.88 lakh people fall in the higher 20% tax bracket. Theoretically, if the estimated 3.06 crore tax-payers invest the maximum permissible `50,000 each, a potential `1.53 lakh crore could flow into the stock market. For their efforts, they could collectively save `8,100 crore in taxes. But then, that is how far the theory would go. The definition of "first-time investors" remains ambiguous: so, no one knows if all the estimated 3.06 tax-payers would be eligible for the tax-break. The scheme is said to be open to only new retail investors "identified on the basis of their PAN" (or permanent account number issued by the income tax department). This includes those who have "opened a demat account but have not made any transaction in equity and/or in derivatives" yet. What about mutual fund investors who have made their investments without the use of a demat account? Technically, they are not new to the capital markets, and many may have sizable investments. The notification is silent on this apsect. In 2009, a number of mutual funds launched schemes focused on stocks of state-owned companies, following the government announcement about disinvestment. Since they invest in "public sector undertakings which are Navratnas, Maharatnas and Miniratnas", would they qualify automatically for the RGESS, given that retail investors subscribe to such funds? No one seems to know for sure. Such funds also have some debt exposure. In some cases, they can invest 35% of their corpus in debt and money market securities. Would this need to be in government paper or debt issued by government companies? Can they invest in debt at all (since the purpose of the RGESS seems to be to encourage equity exposure)? Again, answers remain elusive. Even outside the universe of public sector undertakings or PSUs, there are at least 47 funds that use the BSE 100 or CNX 100 as the benchmark index. They seem to fit the criterion that investors, to be eligible for the RGESS, should put their money in "stocks listed under the BSE 100 or CNX 100", though they may also have some exposure outside the benchmark stocks. So, can these funds lay claim for a tax-break? Well, goes without saying – there are no answers. To be sure, there are some more questions: will the government come out with a list to suggest which of these and the PSU funds are eligible? Or, does it expect the industry to launch a new series of RGESS-compliant funds? Should such funds be closed-ended or open-ended? DNA Money spoke to mutual fund industry officials for some clarity. Alas! They, too, were awaiting direction from the government and the market regulator Sebi. "We are not aware of the details, the operational issues still need to be worked out. I suppose Sebi would initiate talks to iron things out," said one senior industry expert. The market regulator is set to issue the relevant circulars to make the scheme effective in the next two weeks. sachin_m@dnaindia.net |
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