Hectic lobbying by arms producers

Sri Krishna
NEW DELHI, 16 FEB: With the defence budget for 2010-11 likely to be enhanced as indicated yesterday by the defence minister, Mr AK Antony, hectic lobbying has begun at the ongoing sixth DefExpo here by top arms producers of the world for a slice of the cake.
Russia (and the erstwhile Soviet Union) has been the biggest seller of arms to this country but it is now facing stiff competition from other nations.
A former defence ministry official observed that ever since the breakup of the Soviet Union and with Russia regularly hiking up price of defence equipment as in the case of the aircraft carrier Admiral Gorshkov, arms manufacturers have been looking at making profits and this is one of the major reasons that other competitors are stepping in.
The four-day biennial event to showcase some of the latest defence equipment by leading manufacturers does not appear to have been impacted by the economic slowdown and recession that had affected many countries as the $11 billion that India spends every year on foreign military supplies is up for grabs.
The arms makers seem to have taken the hint from the minister of state for defence, Dr Pallam Raju, who said that India was “looking for partnerships and co-development arrangements and formation of joint venture in critical technical areas and the defence expo, which is a one-stop shop, is an ideal platform for doing business in defence”.
With the weaponry in the Indian armed forces being mostly of Russian make, the Russians are indeed lobbying hard for their aircraft for the 126 multi-role medium range combat aircraft (MMRCA) that India is planning to purchase as part of its modernisation drive.
All the major bidders for the 126 MMRCA to be bought by the IAF have their stalls at the Defexpo almost cheek by jowl and have been lobbying hard for their product. “India is the number one partner for the Russian defence industry, since it is not only the volume that is exported, but also the quality of the equipment and scientific technical potential that we put in India’s industrial military complex within this cooperation,” said Mr Victor Komardin, deputy director general of Russia’s Rosoboronexport arms corporation.
One of the biggest success stories of Indo-Russian collaboration in the weapons system is the Brahmos, the only supersonic cruise missile in the world. Both countries are equal partners in this project, contributing their own areas of expertise.
“We are very strong in guidance technology and software,” said Dr Sivathanu Pillai, CEO of Brahmos Aerospace, “whereas Russia is very strong in propulsion and cruise missile technology. So having technology available in both, and respecting each other in trust, we formed a joint venture”.

Source: The Statesman, 17 February 2010

http://www.thestatesman.net/index.php?option=com_content&view=article&id=320170&catid=36

House panel slams A-I, IA merger

[This news describes how government has intentionally  made Air India, a nationalized company sick.]

NEW DELHI, 21 JAN: While recommending that the government write off losses suffered by Air India, a Parliamentary committee has asked for an inquiry into “faulty decisions” taken by the national carrier’s management, which have resulted in tremendous losses to it.
Pointing to numerous "irrational and misplaced" policy decisions, including surrender of lucrative routes to favour private players, the chairman of the 31-member committee, Mr Sitaram Yechury, said those who took these faulty decisions should be made accountable.
The panel was of the firm view that NACIL’s turnaround was “not possible by shifting the burden of the crisis on to the shoulder of the employees and blaming them for the ills of the company”.
It, therefore, has recommended that as a first step the government should write off the entire loss suffered by NACIL as the loss was due to the policy directions of the civil aviation ministry.
The only way of overcoming the problem is to change the often irrational and misplaced policy decisions of the government, the committee declared, in its report on the merger of Indian Airlines and Air India (in March 2007).
It noted that Air India dry leased four Boeing 777s for five years in 2006 whereas it was to get the delivery of its own aircraft from July 2007 onwards. “As a result, five Boeing 777s and 737s (each) were kept idle on the ground at an estimated loss of Rs 840 crore between 2007 and 2009,” it said. It recommended review of all lease agreements.
The panel found that services were being withdrawn from lucrative sectors by Air India’s holding company, National Aviation Company of India Ltd (NACIL), paving the way for introduction of services by private operators in the same sector. Expressing apprehension about a “possible nexus” operating to favour the private players, the committee has recommended a probe to analyse the withdrawal of lucrative routes both domestic and international to favour private players. It also recommended the creation of “an independent regulatory authority” to regulate the allotment of routes, bilaterals, social commitment of private players and operations on non-viable routes.
The committee said the merger between the two national carriers was taken in haste, without required homework and consultations due to which the entire process has been unduly delayed.
“In the process, it has given rise to so many problems concerning financial, administrative and operational, which could not be foreseen by the people who took this decision,” the committee said.
It also recommended that NACIL, which now runs the merged entity, should be converted into a holding company with NACIL-A and NACIL-I as “separate functional units”. ;SNS

Source: The Statesman 2 January 2010

http://www.thestatesman.net/index.php?id=317917&option=com_content&catid=35

Listed CPSEs to offload 10 pct: Chidambaram

[As part of imperialist plunder, government has decided to sale 10% shares of all public sector enterprises. However, ridiculously, finance minister said that it actually increased people's participation. We would remind finance minister that more than 70% of Indian population live a life that cannot sustain minimum calorie intake. They are not going to buy the share, even they cannot think of it.  These people, most likely  are not considered as citizen by finance minister. Red Barricade]

The government on Thursday decided that all listed central public sector enterprises (CPSEs) would increase the public holding to 10 per cent and all unlisted profitable state-owned entities should go public.

"All profitable listed CPSEs should need the mandatory listing of 10 per cent public ownership," Home Minister P Chidambaram told reporters after the meeting of Cabinet Committee of Economic Affairs here.

The government has also decided that all unlisted CPSEs which have made profit in the past 3 years and have a positive net worth should get listed on stock exchanges, he said, adding that CPSEs would enter the market at "appropriate" time.

The decision will have a bearing on mineral major NMDC and MMTC as the public shareholding in these companies is 1.62 per cent and 0.67 per cent respectively.

As per SEBI regulation, listed companies are required to divest a minimum of 10 per cent of the equity to the public.

The Minister further said the proceeds of the disinvestment would straight away go to meeting the capital expenditure of the government's social sector programmes, without being routed through National Investment Fund (NIF).

In pursuance of its disinvestment programme, the government had offloaded its stake in Oil India Ltd and NHPC in the current fiscal. It has also unveiled plans to reduce its shareholding in NTPC, Sutluj Jal Vidyut Nigam and Rural Electrification Corporation.

During the current fiscal, the government raised Rs 2,013 crore by offloading stake in the hydro-power major NHPC and Rs 2,247 crore from stake sale in OIL.

As per the disinvestment policy of the UPA, the government is committed to offloading equity in public sector undertakings while retaining 51 per cent stake.

"The public sector undertakings are the wealth of the nation, and part of this wealth should rest in the hands of people. While retaining at least 51 per cent government equity in our enterprises, I propose to encourage people's participation in our disinvestment programme," Finance Minister Pranab Mukherjee had said in his Budget speech in July.

Telecom Scandal

[Following is the one of two editorials of the Statesman, 29 October 2009 which describes a scandal involving central minister that resulted revenue loss of something between Rs 60,000 and 100,000 crore.  And that minister is still in his chair.

To add stress few sentences were made bold by this blog.]

After the CBI raids on the headquarters of the department of telecommunications in New Delhi, headed by A Raja of the DMK, his continuance in the Cabinet of Dr. Manmohan Singh has become untenable. Probity in public life demands that he resign pending completion of the inquiry. As long as he is at the helm of affairs in the telecommunications department, the CBI will be inhibited from a free and open inquiry. If he is found innocent, he can always be re-inducted into the Cabinet with the same portfolio and free of any taint. 
Raja was the kingpin in the award of 2G spectrum licences in January last year at a price of Rs. 1,651 crores, fixed in July 2001, for a pan-India licence. The price then was arrived at through an open, multi-stage, transparent auction/bidding process. The telecom regulator, TRAI, recommended a similar exercise before the allocation of 2G spectrum. Raja ignored it. The scandalous events that took place when licences were being issued and spectrum allocated for 2G services, the way cut-off dates were changed and that too with retrospective effect, the scuffles that took place at Sanchar Bhavan, made headlines in the media at the time.
The real value of the spectrum can be gauged from the profit made by two of the lucky ones, Swan Telecom and Unitech Wireless, favoured by Raja on first-come-first-served basis. Swan let UAE-based Etisalat acquire 45 per cent share in the company for $900 million, valuing the company at $2 billion, not because of its intrinsic worth but because of the spectrum it acquired, a scarce national resource. Similarly, Unitech let Telenor of Norway acquire 67.25 per cent share in the company, valuing it at Rs.9,100 crores.
There are three elements that are important in the spectrum issue. The first: what basis should award of licences and spectrum be decided on, auction or some other criteria? Second, if a non-auction route is chosen, what should the value of licence and spectrum be? Third, if the licence and the spectrum are given below market rates, how can the country guard against their re-sale by profiteers? Prima facie, Raja wantonly misused his position. He disregarded TRAI guidelines and a letter from the then finance secretary, D Subbarao, now Governor of the Reserve Bank of India, asking him not to implement his plan. As long as DS Mathur was DoT secretary, he refused to sign licences in a way that would cause the exchequer revenue loss. Mathur retired on 31 December 2007, other inconvenient officials were transferred out of the ministry, and the scheme was implemented without let or hindrance after Siddharth Behura took over as secretary in January 2008. Raja’s action has led to the loss of between Rs. 60,000 crore and Rs.100,000 crore to the government. Raja’s defence that he was only following Trai’s recommendation of not auctioning 2G spectrum does not hold water. The government’s telecom policy and TRAI wanted market forces to determine the fee for spectrum. If only he had followed that, the government would have realised its true value. The DMK, no doubt, will resist any move to drop Raja from the Cabinet, even temporarily, to allow the CBI to proceed with the investigation unhampered. It would be wrong for the government to shield Raja especially when auction of 3G spectrum is in the offing. The Central Vigilance Commission has decided to initiate action against top DoT officials, including Behura. Sparing Raja and punishing his underlings would be a travesty of justice.

Source: The Statesman, 29 October 2009

http://www.thestatesman.net/page.news.php?clid=3&theme=&usrsess=1&id=273256

Top 100 tax defaulters

Press Trust of India
NEW DELHI, 5 AUG: The country's largest state-owned bank State Bank of India (SBI), automobile giant Tata Motors and oil major Indian Oil Corporation, besides Sahara India and its promoter Mr Subroto Roy figure in the list of top 100 tax defaulters in the country.

Disclosing the list of defaulters in the Rajya Sabha on Tuesday, the minister of state for finance, Mr SS Palanimanickam said in a written reply that the top 100 tax defaulters owe to the exchequer Rs 1.41 lakh crore ~ more than three times the amount the government spends on National Rural Employment Guarantee Act (NREGA) scheme annually to provide employment to Below Poverty Line families.

The Centre is taking various steps to recover the outstanding dues, the minister said, adding that the government has requested the adjudicating authorities such as ITAT and Settlement Commission "to dispose of high demand cases expeditiously."

As per the list, disgraced stud farm owner Mr Hassan Ali Khan tops the list of tax defaulters with an outstanding arrears of more than Rs 50,000 crore. The list of tax defaulters also includes stock broker late Harshad Mehta and his associates and other brokers such as Mr AD Narrotam and Mr Hiten Dalal.

While the SBI owes Rs 333.6 crore in taxes, Tata Motors and Indian Oil Corporation have to pay Rs 206.5 crore and Rs 210.3 crore to the treasury, respectively. As regards Sahara, many of its group companies figure in the list of defaulters, while its promoter Mr Roy owes Rs 230 crore to the exchequer.

Among leading public sector undertakings, BSNL has a tax due of about Rs 2,417 crore, while NTPC faces a demand for Rs 622 crore. VSNL Ltd (now Tata Communications Ltd) has a tax due of about Rs 505.5 crore.

Among Sahara group companies, Sahara India and Sahara Airlines (now Jetlite) figure among the tax defaulters apart from Sahara India Financial Corporation Ltd.

Besides, corporates which owe taxes to the government are Coca Cola India (Rs 600 crore), Baron International (Rs 589 crore), Oracle Corporation (Rs 558 crore), Rolex Holding Ltd (Rs 558 crore), Aaditya Luxury Hotels (Rs 564 crore) and Reliance Energy (Rs 176 crore). Nokia, Daewoo Motors, Bunge India Ltd, Tata Industries, Satyam Computers and IBM Pvt Ltd are other companies which have been named on the list.

The minister said that these tax demands also include those which are difficult to recover for various reasons such as demands notified under Special Court, inadequate assets and companies under litigation.

However, the special measures being adopted by the government to expedite recovery of tax default include monitoring of the recovery of amount in large cases by a Task Force. "Invariably arrears demand above Rs 25 crore is monitored by CBDT and between Rs 10 crore and Rs 25 crore by CCIT/DIT (Recovery)," the minister said.

Gold mining to attract huge FDI

Press Trust of India

MUMBAI, March 23: India is expected to attract foreign direct investment of Rs 1,00,000 crore per annum in mining exploration of gold and diamond in the country, a top minister has said. The new mining policy National Mineral Policy 2008 is expected to go through in Parliament session next month, Union minister of state for mines Mr Subbarami Reddy said. Nearly 14 companies from Australia, Canada and South Africa had shown keen interest in bringing their technical expertise required for identifying the potential of a mining block, Mr Reddy said, adding that the government officials would be visiting these countries to explore the possibilities of more investment.

Under the new policy, entrepreneurs who invest heavy risk capital will automatically get the mining lease. This will enable and protect their capital because to achieve the exploration of minerals we need heavy money.

The policy was approved by the Union Cabinet last week after a delay of nearly two years, and aims to attract FDI to the tune of $250 million annually in the mining sector in the next five years.

India has a mineral area of 18.5 lakh sq km, but lacks the technology and capital to exploit them. But once the new policy comes into effect, global entrepreneurs would flock India with technology and capital, Mr. Reddy said.

India produces 89 minerals, out of which 11 are metallic and 52 non-metallic. The country is estimated to have 2.92 billion ton of bauxite, or 10 per cent of the world's reserves, and 276 billion ton of coal. It also has 14,000 ton of gold reserves, but the country only produces three ton of total annual demand of 800 ton. The demand for gold in India is expected to go up to 1,200 ton per annum, Mr Reddy said.

An amendment to make the required changes in the existing Mining Act will be introduced in the ongoing session of Parliament. The new policy will shorten the time it takes for new mining leases to be granted by state and federal governments to about six months to a year. At the moment it is often a long and tortuous process.

Under the new guidelines, foreign and domestic firms should find it easier to invest in the exploration and mining of gold, diamonds and metals like copper and zinc, and prospecting companies will automatically obtain a mining licence.

On the royalty issue, the minister said that after the policy announcement, states would get more royalty, which would be decided on the basis of the selling price as against the present tonnage basis.

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