| Cabinet withdraws draft amendments to curtail Right to Information Act | |
BS REPORTER
New Delhi, 1 November The Union Cabinet today decided to withdraw the controversial draft amendments to the Right to Information Act. These sought to restrict disclosure of file notings to social and developmental issues. The withdrawal followed a prolonged and heated discussion, with several ministers saying they felt the economic and decision-making slowdown in India could be attributed to the Act in its current form. "The Cabinet has decided to withdraw the amendments," said a source privy to the deliberations at the meeting chaired by Prime Minister Manmohan Singh. In 2006, the Cabinet had approved amendments to the Act that would limit its scope to file notings related to public interest. This had led to outrage from social activists, who felt the purpose of the Act would be defeated if the government was made inaccessible. They added with the ministries of defence and external affairs and the covert agencies out of the purview, the legislation would be based on exclusion, instead of inclusion. But the government persisted with this and the draft amendments were brought before the Cabinet today. At the meeting, Agriculture Minister Sharad Pawar, his Nationalist Congress Party colleague and Heavy Industries Minister Praful Patel and Congress ministers such as Urban Development Minister Kamal Nath argued the Act should be revisited and diluted. "The bureaucracy has stopped working because it is too afraid to take decisions. The government is not moving. These amendments should not be withdrawn," the ministers argued. Patel said withdrawing the amendments, that is, retaining the Act in its original form, would be "succumbing to pressure", presumably of civil society activists who were bringing forth information on government decisions that had gone against public interest. These arguments were also supported by Railway Minister Pawan Kumar Bansal. "Decision-making has slowed," Bansal murmured. Pawar said, "Why should you withdraw it (the amendments)? Just let it be there." Patel, too, said the Cabinet didn't have to withdraw the amendments, even if it decided not to push these in Parliament. However, a Congress minister said in the current environment, it would be politically unwise to curtail or dilute a right that put the government's working under a magnifying glass. "People will say we are trying to evade scrutiny," the minister said. The amendments were finally withdrawn at the instance of Prime Minister Manhohan Singh. "If it won't pass (in Parliament), what is the use of keeping it alive?" he asked. In 2006, the amendments had faced stiff opposition in Parliament. Following the withdrawal, all file notings can be made public. Those related to national security, privacy and protection of commercial interest are exceptions. | | Please enter your passwords | |
VV RAVI KUMAR
In today's internet age, organisations are promoting their websites like never before. In order to reduce costs and make customers co-producers of their services, they want everyone to transact online. Whether it is cinema, airline or railway ticketing, online banking, shopping or bills, insurance premium or credit card payments, accessing mutual fund account online or just checking emails, it is compulsory to register and log in, using a user-id (identifier) and a password. This is merely an indicative list. There are more passwords for intranet, organisational websites, and so on. One can go on listing the umpteen services for which login-ids and passwords are required. What started as a trickle has now turned into a flood, so that a person is now forced to remember multiple passwords. In fact, this trend is slowly becoming a sort of a menace. In addition to the usual login password, another layer of passwords, called transaction passwords, has been added. These provide better security for your transactions. Only after entering this password are you allowed to transact online. Besides, to beef up security for the money-based transactions, OTPs (one-time passwords) have been introduced. Note that all these are in addition to the PIN (personal identification number), which you are expected to remember for making transactions at ATMs. For mobile banking, you need to set a password to access the handset menu on the mobile. Now, let's look at the list of commandments that has to be kept in mind while making online transactions. Do not share your password with anyone; do not keep your name or nickname or names of your dear ones or your phone numbers, address or important event dates like birthdays and wedding anniversaries, as passwords. Create complicated passwords that nobody can imagine. Change your passwords at least once a month. Do not write down your password anywhere, since anybody can misuse it to make unauthorised transactions. If you access your computer from a cyber cafe or any other shared computer, change your password as soon as you start operating on your secured computer. If you have more than one internet banking user-id, use a different password for each. All these steps are designed to make our online transactions secure. The problem is that with multiple bank accounts, at least two to three credit cards, three to four insurance premium payments, a few ongoing ticketing requirements for transport and cinema, and online purchasing, in addition to the regular daily checking of email accounts, how is one to remember all these passwords? The service providers simply ask customers to memorise all these passwords. There is now a genuine problem of remembering all these user-ids and passwords. "No problem," say service providers, "we have the 'Forgot your Password' option. Click on it to retrieve your password. But once you login, please change your password for your own safety." So, you are back to square one. As online transactions keep increasing by the day, you cannot escape the reality of multiple user-ids and passwords. So, you now have to live with a plethora of user-ids and passwords, and try to perfect the art of remembering these. You may try eating almonds and greens to boost your memory. Just as the "one nation, one entrance test" is being debated hotly in India, is there a possibility of one user, one password? Or, is it too risky? Is there a better solution to this problem? Let us ponder the possible solutions to tackle this ever-growing problem of memorising a large set of userids and passwords. Isign off here because I need to pay my electricity bill online. I hope I remember the password. The writer is Assistant Professor at Xavier Institute of Management and Entrepreneurship, Bangalore As online transactions become the norm, users have to master the art of remembering passwords to multiple logins Just as the "one nation, one entrance test" is being debated hotlyin India, is there a possibilityof one user, one password? Or, is it too risky? | | The government's ETF conundrum | |
The government hopes to get ~30,000 crore from disinvesting shares in public sector enterprises this financial year. This is widely considered a challenging target because of the lacklustre nature of the stock markets to begin with. That challenge may just have become tougher because of the alternate route the finance ministry has chosen: the Central Public Sector Enterprises Exchange Traded Fund (CPSE-ETF).
Although the department of disinvestment has gone ahead and appointed ICICI Securities as advisors to the process, the CPSE-ETF has very few takers. It has its catalyst in a recommendation by a committee on fiscal consolidation set up under former Finance Commission Chairman Vijay Kelkar. The committee's report had suggested there are around 50 governmentowned companies (all listed) that could be bundled into an ETF. This would help retail investors, who cannot afford to use their meagre resources, to acquire a diversified portfolio. How? That's because an ETF is a security comprising stocks from various companies bundled into a hybrid share, a bit like a mutual fund. So, each ETF could comprise stocks from bluechip public sector companies like ONGC (Oil and Natural Gas Corporation), Bhel (Bharat Heavy Electricals), NTPC, and so on. The report also says there is an upside in that the costs of distribution and processing of ETFs would be much lower and the reach wider. Investors, thus, could benefit from these savings in the form of lower processing costs. Market experts, however, think ETF is just a new way of packaging the sale of government stakes in CPSEs and is unlikely to find buyers, unless the product is attractive. In fact, the department of disinvestment does not appear to be entirely convinced of the efficacy of the ETF route either. Documents inviting bids for selecting the advisor has categorically mentioned that the government may decide not to introduce the product at all. So, why is the government going down this road? Part of the reason has to do with the fact that the government is yet to open its account on disinvestment this year and the sluggish market is forcing it to consider various ways to attract investor interest. It has also been encouraged by the performance of ETFs on the Indian markets, since the introduction in 2001 of the Nifty BeES, a mutual fund that tracks the S&P CNX Nifty Index. According to a finance ministry study, ETFs have grown substantially in India since then. At present, there are 33 ETFs in the market with assets under management (AUM) of close to ~11,500 crore held by 620,000 investors. The finance ministry study also points out that globally, ETFs have been growing at a rapid pace with an annual growth rate of over 34 per cent in the last decade, with an AUM of $1.5 trillion at present. By 2015, this number is expected to be between $3.1 trillion and $4.7 trillion in 2015. Perhaps the government has been encouraged in its efforts by the performance of the first disinvestment programme when an average of eight per cent of the shareholding in 30 CPSEs was sold. The attempt here was not quite the same as launching an ETF, but close to it in that shares were offered in bundles classified as "very good", "good" and "average". These were offered exclusively to financial institutions, mutual funds and banks. Against a modest target of ~2,500 crore, the government managed to get ~3,037.7 crore over two auctions. It was no secret that the success was mostly on account of the buyers being governmentowned institutions like Life Insurance Corporation, General Insurance Corporation and Unit Trust of India. Since then, and as the market for disinvestment was widened, the government has consistently under-performed targets that grew progressively ambitious ( see chart ). The crux of the problem with ETFs is the age-old one of governance, which has plagued the disinvestment programme right from the start. "It can't work. Whatever you do in terms of packaging, only good products sell. There is conflict of interest. The government wants to sell the asset and also to keep control. This makes CPSE stocks unattractive," Dhirendra Kumar, CEO of Value Research, points out. Certainly, recent government decisions on major listed stocks, Coal India and the three oil-marketing companies (IndianOil, Hindustan Petroleum and Bharat Petroleum), are unlikely to boost investor confidence. In Coal India's case, the government rolled back an important price rise. Then, it directed Coal India to sign stringent penalty-linked supply agreements with power producers, a move that has attracted legal challenge from a US-based minority investor, The Children's Investment Fund. As for the oil marketers, their fortunes are entirely linked to government-administered pricing, a political decision that mostly lags global oil pricing and piles on their underrecoveries. So, any adverse reaction to an event associated with a major company within the basket or concerning the sector can jeopardise the short-term trading of ETFs. A major price dip in the stocks of big CPSEs from say, the oil or mining businesses could trigger the sale of the entire CPSE-ETF. With the overall perception about CPSEs in India already low, ETFs created with their participation may prove to be another trap for the small investors. Given these inherent constraints, Prithvi Haldea, chairman and managing director of Prime Database, suggests that a better idea for the government would be to stick to the conventional mode of divesting CPSE stakes directly through the stock market and ensure interventions in their management to a bare minimum, so that investors are genuinely attracted to those stocks. "Why go for different methods. If you price it right, people will come," he points out, adding, "Give it to retail investors at a discount. Market exists all the time if the offering is good. There have been IPOs [initial public offerings] in the past that have seen very good response from retail investors." If the government decides to go ahead with the proposal, an asset management company (AMC) will need to be created that will, in turn, develop an ETF based on a specified basket of securities. It is not clear, though, whether the government will create a new AMC or hire private AMCs. In fact, a proposal to turn the department of disinvestment into a holding company that will manage the government's assets in CPSEs was discussed last year, but was not passed by Cabinet. Either way, with more than half the financial year over, the government has little time to tap the market for revenue that it badly needs to bridge a ballooning fiscal deficit. Plans to route its disinvestment programme through an exchange traded fund is widely considered a bad idea THE BEAT SANTOSH TIWARI LAGGING INDICATORS Receipts from disinvestments have mostlylagged targets (1991-92 to till date) Budgettarget Actual receipts (~ crore) 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 #*Equity of six companies sold by auction method but proceeds received in 1994-95; ** No target fixed; # Till October 2012 Source: Department of Disinvestment 2,500 3,038 2,500 1,913 3,500 * 4,000 4,843 7,000 168 5,000 380 4,800 910 5,000 5,371 10,000 1,860 10,000 1,871 12,000 5,658 12,000 3,348 14,500 15,547 4,000 2,765 ** 1,570 ** -** 4,181 ** -** 23,553 40,000 22,144 40,000 13,894 30,000 125 ~1,13,139 crore Total receipts 1991-92 to 2012-13 #Perhaps the government has been encouraged in its efforts bythe performance of the first disinvestment programme when an average of eight per cent of the shareholding in 30 CPSEs was sold | | | | | | | Rigged IPOs: Firms floutSebi directive | |
NSUNDARESHASUBRAMANIAN & SAMIE MODAK
New Delhi/Mumbai, 1 November About 11 months after the Securities and Exchange Board of India (Sebi) barred some companies from raising capital, owing to irregularities in the end-use of proceeds of initial public offerings (IPOs), most of these have not deposited the money in interest-bearing escrow accounts, according to officials privy to the development. The money is with the companies and Sebi hasn't been able to ensure these companies to remit this in escrow accounts, as directed by its interim order in December 2011. Hearing appeals by these companies, the Securities Appellate Tribunal (SAT) has directed Sebi to expedite the process and pass a final order by November 30. "One company has deposited a portion. Most others have simply not complied with the order. Sebi is figuring how to get them to deposit the money," said an official. An investment banker privy to the development said, "A couple of them have either got relief in this regard from SAT or the high court. Some companies are in correspondence with the regulator." He added since the regulator had been "kept in the loop", this would not amount to non-compliance. "It is not that anybody has not complied. The penalty for non-compliance is up to ~1 crore per day. The regulator has been kept in the loop," he said. However, the regulator, in its final order passed against PG Electroplast (one of the seven companies pulled up), observed the company did not comply with the direction to deposit the money in an escrow account. One of the major irregularities detected was money was siphoned through inter-corporate deposits (ICD). In many cases, Sebi found the status of clients and vendors of the company and the flow of funds between the company and these clients and vendors were abnormal. These funds were, in turn, used to boost the stock prices on listing. In Taksheel Solutions, Sebi found "a part of the proceeds of the issue have been siphoned off in a circuitous route to certain entities and operators, which were the top net buyers on stock exchanges on the listing day." Similarly, in the case of Brooks Labs, "Some of the funds received in the IPO have also observed to have been transferred through layers to Overall Financial, which traded in the scrip and made losses. Thus, prima facie, it indicates an exit has been given to motivated bidders," the Sebi order said. Sebi has asked most of these firms to call back the ICDs placed with related firms and deposit those in escrow accounts. While Taksheel was asked to call back ~23 crore and place the proceeds in an interestbearing escrow account, Brooks Labs was asked to call back the ICDs advanced by it to Suryamukhi Projects and Neo Power Universal FZ LLC. Sebi also asked RDB Rasayan to call back ~31.60 crore from RDBRIL. Bharatiya Global was asked to call back the ICDs of ~12.5 crore invested with Nihita Financials, Sanjukta Vanijya and Darshan Tradelink, along with all amounts transferred / paid from IPO proceeds to its directors, or the relatives of its directors, and other related parties. Concerned about a large number of people and entities evading payment of penalties imposed on them, Sebi has asked the government to amend the regulations to provide it stronger recovery powers. Recently, Sebi Chairman U K Sinha told PTI, "We need the support of the government on this…Methods provided in the Sebi Act for recovery (of penalties imposed by us) is different from what is there in, for example, the CCI Act and the Income Tax Act." He added, "Our provisions for recovery are less effective and, therefore, somebody can choose to ignore these. The actual actions against them can take years." 11 months on, Sebi yet to ensure these companies remit the money in escrow accounts The Securities Appellate Tribunal has directed Sebi to expedite the process and pass a final orderby November30 Defyingordodging? |Severe price fluctuations seen in small IPOs in 2011 |Sebi banned seven companies that had raised about ~454 crore |Companies were found using IPO proceeds to rig prices through inter corporate loans |Sebi directed them to plough back these loans and deposit these in escrow accounts |Most of them have not deposited the funds till date Issue Size Issue price Currentprice Companyname (~cr) (~) (~) Bharatiya Global 55.10 82.00 6.31 Brooks Laboratories 63.00 100.00 17.30 Onelife Capital 36.85 110.00 759.65 PG Electroplast 120.65 210.00 249.75 RDB Rasayans 35.55 79.00 13.35 Taksheel Solutions 82.50 150.00 11.15 Tijaria Polypipes 60.00 60.00 7.23 Data Compiled by Bs Research Bureau IN SEBI'S NET Lastyear, Sebi had banned promoters and over 100 entities involved in these seven IPOs for irregularities | | Painful paperworkforholders of foreign assets | |
While declaring that reporting of foreign assets will be made more stringent, former finance minister, Pranab Mukherjee, had categorically said the idea was not to make life difficult for individuals.
But, it may turn out just that way. The new form, ITR 234, requires individuals, joint holders, nominees and signatory authorities (including trustees) to provide reams of information. The worst part, the tax department can go back and seek this information for the past16 years, even from professionals on deputation who may have maintained small sums such as $100 (~5,200) in bank accounts, say experts. A tax official with Deloitte says: "Many may be holding small amounts due to their foreign deputation. They might not have closed the accounts and may not even remember now. How fair is it to term them offenders?" The government wants details such as the time since when a person has been holding an asset, what has been the peak balance or investment made in the past few years and so on. In all probability the person may not be using this account frequently. In that case, are these details really needed? It may have made sense to check if a person has been known to be earning much more than he has been reporting. If you are a joint holder of any asset abroad, you will have to give the same details separately. It is worse for a person who is or was anominee to somebody else's assets. For example, if your father has assets abroad and you are the nominee, there are chances you wouldn't be aware about this until there is a will in place. Is it fair then to pull you up for it? No, it isn't, say tax experts. Even if you were a nominee and the asset had been sold off, you could be penalised if this had happened anytime in the past 16 years. Unfortunately, those with signing powers could also be meted out a similar treatment. In the last two instances, how do you even know how much was held in an account that you did not even hold. A PricewaterhouseCoopers official had earlier told Business Standard there was no country code notified if one had shifted from a country to another in the last 16 years. "So, even if you moved the assets to India, the tax authorities could come checking on you," he said. "Those who are signing authorities for assets held abroad are the most unhappy. And, in many cases, these are the elderly who have signing powers for their children's assets. They don't own the assets but will need to declare the details. Importantly, as a partner in a partnership, you cannot disclose holding details of the firm. What about those?" the PricewaterhouseCoopers official asks. In case of expats deputed in India, their spouses will also need to file tax returns, even if they do not earn in India. Hence, the government could do away with penalising regular taxpayers until they earned large salary or had more than one source of income. It would make more sense to put a threshold amount of foreign income and keep a check on high net worth individuals and ultra high net worth individuals who have a higher chance of owning huge assets abroad. NEHAPANDEYDEORAS Even joint owners and trustees have to maintain records for past 16 years >YOUR MONEY Govt wants details like the time since when a person has been holding an asset and the peakbalance or investment in the past fewyears | | | | | |
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