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Hold the RBI to account, do not undermine it It is welcome that the government has clarified that the draft code put out by the Financial Sector Legislative Reforms Commission is just that: a draft, and not necessarily a reflection of the government's thinking. If the draft were to become the law, the RBI will become a toothless body while core monetary policy will shift to the government. If the Urjit Patel committee's recommendation to vest policy-setting powers in all-RBI committee was a piece of central banking power grab, the present recommendation is an attempt to divest the RBI of any rate-setting power, even as it remains tasked with containing inflation. The government should rethink the code. One lesson from the 2008 financial crisis is that monetary policy in a globalising world has to shed its obsession with inflation and target multiple goals -financial stability , growth and stable prices -with multiple instruments: variable margins, quantitative limits, int

Level playing field only for overseas investors who establish a business in the country India is likely to stop treating overseas investors on a par with domestic ones until they establish a business in the country, marking a significant change in stance on comprehensive trade and investment agreements from the previous government.Such a move would be of a piece with the finance ministry--concerned that India has given too much away in such accords--gaining a role in the negotiation of investment agreements. In technical terms, the government is unlikely to allow what is known as `preestablishment national treatment' in trade and investment agreements. With the government looking to overhaul the country's strategy for trade engagement, the view is that this level playing field should be available to foreign investors only once they have a presence--`post-establishment'--not when they're still considering investment. “The thinking is that only post-establishme

Lack of visibility on rates and the political logjam make companies apprehensive Recently, an Israel- based company approached a consultancy firm to come out with a tax- efficient rollout plan for a proposed manufacturing plant in India with an estimated investment of around Rs.100 crore. The company was advised by its tax planners to hold on to its investment till the time the country rolls out the Goods and Service Tax ( GDP) regime. “ The company would have saved Rs.1015 crore through input tax credits under the GST regime,” said a tax consultant, who advised the firm, on condition of anonymity. The Israeli company decided to go by the advice of its tax experts, and go slow on its investment plans. Similarly, many companies in corporate India are getting jittery about increased working capital requirement, as they go about their initial assessment of the impact of GST regime on their businesses and finding it difficult to get a hang on their price and supply chain issues witho

In a case of bounced cheque, it is not necessary to complain specifically against the company if the managing director is the sole proprietor. It is enough if the MD alone is made the accused under the Negotiable Instruments Act, the Supreme Court stated in its judgment, Mainuddin Abdul Sattar vs Vijay Dalvi. The Bombay High Court view opposed to this was wrong and it was set aside by the apex court. In this case, real estate firm Salvi Infrastruture Ltd could not provide a flat to its customer, and the customer wanted the money back. The MD issued a cheque to discharge the liability but it was dishonoured by the bank, leading to a criminal complaint before the magistrate. He dismissed the complaint as the complaint was only against the MD and not against the firm. This view was upheld by the high court. The Supreme Court held that both the courts were wrong. There was no necessity for the payee to prove that the MD was in charge of the daily affairs of the company, by virtue of the

In the wake of a recent report by the Supreme Court- appointed special investigation team ( SIT) on black money, the Securities and Exchange Board of India ( Sebi) is likely to review the regulations governing participatory notes (P- notes), according to a person with knowledge of the matter. " Sebi will consider closer scrutiny if found to be necessary." An official request for comment, however, did not elicit a response. The SIT had asked Sebi to examine whether the transfer of P- notes would be conducive for foreign portfolio investor flows. Sebi had in the past raised concerns on the misuse of P- notes. In its report, the SIT was critical of barring entities that were using the stock exchange platform to evade taxes under the provision of long- term capital gains and suggested to Sebi to launch prosecution under the Sebi Act. Launching prosecution in these matters might not be possible quickly as the investigation in these cases is yet to be completed, said asource.

The government has categorically informed the European Union (EU) that it will not allow European multibrand retail firms to set up shop here, even as both sides decided to resume negotiations towards concluding the long- pending Bilateral Trade and Investment Agreement ( BTIA). While the negotiations for a BTIA, or a free trade agreement (FTA) as it is better known, started in 2007, it has missed two deadlines since then. The government told EU it cannot allow the entry of multibrand retail chains due to political compulsions, although this is allowed under the foreign direct investment ( FDI) policy. “We have made it clear to the EU that we will not allow foreign direct investments in multibrand retail even if there is a policy,” a top official told Business Standard. Talks are now to resume next month. This will be the first such attempt by the Narendra Modi government since it came to power in May last year. Commerce and industry minister Nirmala Sitharman and EU trade co