BP-RIL Deal, FDI In Retail On Agenda Today

Things are moving, not at a standstill: FM

New Delhi: Finance minister Pranab Mukherjee on Thursday sought to dispel the notion that decisionmaking in government has virtually come to a halt. 

    The veteran Congressman's comments during an interaction with the media came on the eve of two crucial decisions. The Cabinet is expected to approve BP's acquisition of 30% stake in Reliance Industries' oil and gas fields deal on Friday, paving the way for the country's largest-ever foreign direct investment. The immediate inflow of $7.2 billion (over Rs 32,000 crore) will almost match FDI inflows of $7.8 billion (over Rs 35,000 crore) between April and May 2011. If everything goes as per plan, BP could end up investing up to $20 billion (around Rs 90,000 crore) over the next few years. 
    Also on Friday, a committee of secretaries is scheduled to discuss allowing foreign retailers such as Walmart and Carrefour to set up retail stores in India. The proposal is to allow up to 51% investment in Indian ventures with stiff riders which could include a stipulated level of investment in back-end infrastructure as well as sourcing from small scale units. 
    Mukherjee, who has spent the last two days meeting mediapersons to shore up government's faltering image, was, however, tightlipped on both issues. All that he said was the government was discussing allowing FDI in multi-brand retail and indicated that the BP-Reliance deal could get the green light. But, he did point out that the government had cleared the Cairn-Vedanta deal, which had generated concern in the investor community. 
    "I want to take the opportunity to dispel some sense of despondency, some sort of cynicism that things are not moving and there is virtual standstill… No one is claiming that everything is positive. There are areas of concern, there are problems but 
at the same time, the overall economic performance is not bad," Mukherjee said during an interaction that lasted for over an hour. 
    But he sought to make a distinction between administrative and legislative decisions and blamed the absence of legal changes for holding up administrative decisions. 
    At the same time, he listed several moves initiated by the government which have removed hurdles. The list included deregulation of petrol prices and the hike in prices of kerosene, diesel and cooking gas, freeing up of coal blocks that were locked in the 'Go-No Go' dispute. The minister listed the new nutrient-based subsidy regime for fertilizers and the plan to start a pilot projects for cooking fuel as the other decisions. 
    Besides, Mukherjee said, the group of ministers on Air India had decided to meet every month to ensure that things were moving. Clearance of road projects and rules for setting up infrastructure debt funds to finance large core sector projects too appeared to be on Mukherjee's list of items with priority tag. 
PUSHING REFORMS 
Pranab Mukherjee has requested the parliamentary standing committee on finance to expedite its report on Bills pending before the panel. Here's FM's legislative schedule though it comes with the rider that the ruling party alone cannot push a Bill 
Direct Taxes Code | Govt on course to usher in new regime from next April 
Constitutional Amendment for GST | Govt plans to reintroduce Bill in winter session if standing committee submits its report during the six-week session 
Banking, Insurance & Pension Bills | Awaiting standing committee's review 
Mining Bill | To be introduced in monsoon session 
Food Security law | Bill will be introduced during monsoon session UNEARTHING HIDDEN WEALTH 'Swiss pact to help track black money' Revised Double Tax Avoidance Agreement Expected In Two Months: FM 
New Delhi: The government is hoping to track unaccounted wealth of Indians stashed in Swiss banks despite the authorities in the European country only agreeing to share prospective data under the revised Double Taxation Avoidance Agreement (DTAA). India and Switzerland had signed a revised agreement last year which will enable the government to access information on a prospective basis. The treaty has not been revised as it was pending ratification from both Houses of the Swiss Parliament. While the upper and lower Houses have approved the amendments, the over two dozen Swiss cantons too need to clear the revisions. 
    Finance Minister Pranab Mukherjee said the revised agreement was expected to be operationalised over the next couple of months and would be effective April 2011. "I am sure that the criminal investigators and the tax officials would be able to use the data available with them to construct the case," he said. 
    The government is under pressure from courts as well as political parties to launch an offensive against black money and a review of the treaties and signing tax information exchange agreements (TIEA) was part of the exercise. The government has completed negotiations on 57 DTAAs, while another 29 are under negotiations. 
    Besides, heightened surveillance, surveys and search operations undertaken by the income tax department had helped the government detect Rs 15,000 crore in hidden taxes, while another Rs 35,000 crore had been mopped up over the last few years due to improved transfer pricing norms, which had helped check instances of foreign companies under-invoicing goods to their local affiliates. 
    But the Supreme Court had recently been critical of the government's efforts and had ordered the constitution of a special investigating team, a move that has been challenged by the Centre. Though Mukherjee did not comment on the court ruling, he said that the government was simultaneously moving on its efforts. 
    To begin with three agencies have been entrusted with the task of assessing the scale of the problem. The committee headed by the Central Board of Direct Taxes chairman too is expected to submit its report over the next two-three months, finance secretary Raminder Singh Gujral said.