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BW Businessworld

Strike At The Roots

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The government must expand its drive against black money to include measures for dealing with mechanisms that facilitate generation of black money. Take, for instance, the country’s Bilateral Investment Promotion and Protection Agreements (BIPA). Experts worry that some of these pacts may unwittingly allow for evasion of taxes. They refer to a clause in the India-UAE pact that allows unrestricted transfer of payments between the two nations. This, they believe, can easily be used for generation of unaccounted money, tax evasion, and round tripping of such funds back to India in the guise of foreign direct investment. This calls for a review of the 83 BIPAs India has signed so far. Just going after tax evaders may not be enough. Equally important is the need to plug the loopholes that allows them to evade taxes. 
— Joe C. Mathew

Fuelling A Shift
Deregulation of diesel prices may not mean more diesel cars. In fact, original equipment manufacturers are said to be rethinking their diesel play. According to industry sources, many players have begun reviewing their R&D investments in new diesel vehicles. Deregulation means that diesel prices will move up along with any rise in crude prices in future; also, there will no longer be any subsidy induced substantial difference in the prices of diesel and petrol. In fact, the massive demand for diesel cars in the past few years has largely been on account of the huge gap in the prices of the two fuels. In 2012-13, diesel cars accounted for nearly 58 per cent of car sales. In 2013-14, their share was 48 per cent. Experts see their share falling to 40 per cent in FY15. Petrol, it seems, will regain its popularity again. 
— Sachin Dave

A Tactical Mistake
State Governments seem to have taken a fancy to the retrospective levies imposed by the Supreme Court in its order against companies whose coal blocks it de-allocated, with serious implications for India Inc and the mining sector. In Jharkhand, 12 working mines have stopped operations since September after the state government banned mining in areas where leases were pending for second and subsequent renewals. This happened after companies refused to cough up large amounts sought by the government as a condition for renewing their leases. The money was sought in lieu of the iron ore mined by companies since the expiry of their leases. Earlier, Orissa had made a similar move. Such arm-twisting tactics by states will only hurt the interests of the Indian economy and impact growth. 
— Moyna
 
Using The Wrong Channels
The ‘unofficial’ ban imposed on two TV news networks, TV9 and ABN Andhra Jyothi, since June this year, as a ‘penalty’ for carrying uncharitable attacks on the state of Telangana and chief minister K. Chandrashekar Rao, has rightly come in for censure from the Telecom Dispute Settlement & Appellate Tribunal (TDSAT) and the Press Council of India. Cable networks that provide the feed to 80 per cent of the state’s viewers have been arm-twisted into pulling the plug on the two TV channels. Besides, Chandrashekar Rao publicly threatened to bury the two channels ‘six feet under’. TDSAT, after its orders to the cable networks and the state government to end the ‘ban’ were ignored, has now directed the Information & Broadcasting Ministry to cancel the licenses of the erring networks. It is indeed unfortunate that a state government, born from a people’s movement vouching to uphold the rights of the underdog, should resort to coercion and threats to beat down dissenting voices. Some of the criticism Rao has faced may not be in good taste. But there are democratic ways of countering such opposition.  
—Gurbir Singh
 
Insure Against Poor Practices
IT research and advisory Gartner Inc has estimated that Indian insurance companies will spend Rs 13,000 crore on IT products and services in 2015. Logically, a good portion of this would be invested to widen the reach of insurers into smaller cities and towns. While penetration levels of insurance companies have been high, it is ironical to note that the number of people having insurance is abysmally low. The reason for this is not simply ‘low reach’ of insurance companies but poor adoption of insurance products by people. Prohibitive premium costs (cost of insuring), rampant mis-selling by agents and tricky hidden clauses are compelling people to say a big ‘No’ to insurance products. The industry should iron out these deficiencies before reaching out to more people. Without addressing core issues, the industry will not be able to bring in more customers to its fold. 
— Shailesh Menon
 
(This story was published in BW | Businessworld Issue Dated 01-12-2014):


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