GST ONLY AFTER ELECTIONS

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GST rollout only after next govt comes to power, says PM

SHYAMALMAJUMDAR
Tokyo, 28 May
The past six months might have seen a series of positive developments around the Goods and Services Tax ( GST), but its implementation will happen only after a new government comes to power after the elections in April next year.
Prime Minister Manmohan Singh said here today that there were difficulties in getting states to surrender their power to tax, and for GST to happen, a Constitutional amendment was required. " We will have elections in April 2014… I think there will be a strong effort by whichever government is in power that time to move towards the GST". The implementation was inevitable as there was a general agreement among professionals and all shades of opinion agreed that India needed GST to help its growth story, he added.
Singh was replying to a question on whether he could give a timeline to the implementation of GST at a luncheon organised by The Japan Business Federation, commonly referred to as Keidanren, and the IndoJapan Business Leaders Forum.
GST, a tax reform that seeks to create one common market for all goods and services in India, has been long delayed due to differences between the Centre and states over its design and issue of central sales tax compensation. Singhs statement is a tacit acknowledgement of the fact that such an amendment looked difficult in a deeply divided Parliament.
The Prime Minister, however, was in a relaxed mood throughout and even cracked jokes while replying to questions from the audience comprising some of the biggest names in Japan and India Inc. When a Sumitomo Mitsui Banking Corporation executive wanted to know some specific details on relaxation of priority sector lending norms, Singh advised the gentleman to address the question to the finance ministry and the Reserve Bank of India. " I am sure you know about the saying that the higher you go, the lesser you know," he said. The applause simply refused to die down.
In response to another question, Singh said he was repeatedly told that Japanese companies ranked India the most promising long- term destination.
Yet, he, found out India accounted for only four per cent of total Japanese outward investment flow into Asia.
When someone wanted to know the reasons for the inordinate delay in clearing bottlenecks in India, Singh said its better to take a considered view as "sometimes the best can be the enemy of the good". The audience was amused, though it didn't look too impressed this time. Singh assured Japanese banks that their proposal for more freedom on opening of branches would be considered as he personally believed they added net value to the country. On the demand to relax priority sector lending norms, Singh, however, took a tough stand. Pointing out that some specific cases could be considered as he wanted more Japanese banks to come into India, he said foreign banks should also learn to adjust to the environment in the countries they operate in order to gain more acceptability.
Singh reiterated his vision that the Indian economy would soon bounce back to eight per cent annual growth, creating enormous opportunities for Japanese business. On the basis for his confidence, Singh said " a capital output ratio of 4: 1, a savings rate of over 30 per cent and an investment rate of 35 per cent will easily yield a growth rate of about eight per cent." Singh said India has targeted an investment of around $ 1 trillion in infrastructure over the 12thPlan period with half of it coming from the private sector and public- private partnership. He hoped Japanese business will pick up a large share of the investment opportunities. For this, he was willing to consider innovative solutions.
He was however non- committal on Japan's offer for financial and technical support for a detailed project report for the Mumbai- Ahmedabad high speed railway route.
Later, speaking at a meeting of the Japan- India Association in the evening, Singh mentioned his Japanese counterpart Shinzo Abe's speech in the Indian Parliament in 2007, when he spoke of the " confluence of the two seas" — the Pacific and the Indian oceans — which has defined the new framework for the bilateral relationship.
Singh suggested three areas of cooperation — strengthening regional forums that will help develop habits of consultation and cooperation; promotion of wider and deeper economic integration; and focus on maritime security across the linked regions of the Indian and Pacific oceans.
"Our relationship with Japan has been at the heart of our Look East Policy. Japan inspired Asias surge to prosperity and it remains integral to Asia's future. The world has a huge stake in Japan's success," the Prime Minister said.
Another neighbour of India would be listening to at least this part quite keenly.
Singh says India accounts for just 4% of total Japanese investment in Asia
PM Manmohan Singh ( left) with his Japanese counterpart Shinzo
Abe, at Abe's official residence in Tokyo on Tuesday PHOTO: REUTERS
PADMA AWARD IN TOKYO
Hotel Oreku in Tokyo was the venue of an unusual ceremony on Tuesday: Prime Minister Manmohan Singh conferred the Padma Shri award on Noburu Karashima, an eminent Japanese scholar, for his contribution in literature and education.
Karashima, who had spent several years as a research scholar and is an acknowledged authority on medieval South Indian inscriptions, could not be present for the award ceremony in New Delhi last month for health reasons. As the PM and the amiable professor bowed to each other, there was a standing ovation from the 1,000- plus crowd
RICH HOUSE
Its not the Japanese economy alone that is feeling good about Abenomics. The elected representatives are feeling good, too. According to a weekly survey, the assets of the Lower House lawmakers have grown for the first time since 1993. Since the previous survey in 2010, the average value of assets held by the 184 lawmakers has nearly doubled to ¥ 22.9 million
LOW STOCK
The Nikkei has been down over the past few days after a stupendous rise ever since Abenomics came into being. But it seems the average Japanese couldnt care less. Shares represent only seven per cent of household financial assets, compared with more than one quarter in the US. Four- fifths of Japanese households have never owned a security and 88 per cent have never invested in a mutual fund, according to the Japan Securities Dealers Association. Indians are in good company JAPAN DIARY
Ingenuity in meeting public holding norm

SAMIE MODAK
Mumbai, 28 May
Ideas have not been a constraint for the many Indian companies looking to comply with next week's deadline for the minimum public shareholder norms. While the bulk have taken the conventionally popular offer- for- sale ( OFS) route to pare promoter holding below 75 per cent, some have taken atypical routes.
These include winding up of depository receipt programmes, free bonus shares to minority shareholders and moving excess promoter holding to a philanthropic trust. OFS apart, the Securities and Exchange Board of India ( Sebi) has prescribed other means such as an Institutional Placement Programme ( IPP), a rights offering and bonus issues for companies. The regulator has also said it would, on a case- bycase basis, consider any other route requested by firms. Some of these did not want to sell stake to investors due to unfavourable market conditions.
For instance, Tata Communications, earlier this month, decided to terminate its American Depository Receipt ( ADR) programme and delist from the NYSE to meet the public shareholding norm. Currently, the promoter holding is 80.15 per cent, as its ADRs, which amount to nearly five per cent of the shares, are not considered public holding. After the NYSE delisting, the promoter holding will come down to 76.15 per cent. Managing Director Vinod Kumar, in a results' conference call today, said the promoters would take more steps to bring their holding down to 75 per cent.
Earlier this month, Sebi had approved a unique proposal, of transferring promoter holding to a philanthropic trust by the Azim Premji- led Wipro to achieve the public shareholding requirement. The information technology company had taken the approval to transfer promoter holding in excess of 75 per cent in Wipro to an 'Irrevocable Independent Trust', to carry out philanthropy. Certain companies, Gammon Infrastructure being one, issued bonus shares to only non- promoter shareholders to bring down promoter stake to below 75 per cent. Some foreign owner- backed companies such as Gillette India and Gokaldas Exports were seen to classify some promoters as non- promoters to achieve 25 per cent public shareholding. However, this method didn't go down well with Sebi.
People close to the development said in the run up to the expiry of the deadline, the regulator had been flooded with various ' strange' requests from companies and their lawyers. While some sought relaxation on the share- sale norms, others wanted permission for an ' out of the box' idea, said a source.
One such representation made to Sebi was to allow an extension, especially to multinational companies, citing the country's current account deficit (CAD) problem. The logic being, foreign promoters would repatriate the capital raised by conducting stake sales to their home country, thus straining the country's CAD.
In recent weeks, about a dozen companies have lowered their promoter shareholding and another half a dozen have lined up share sales. Still, at least 40 private companies have promoter holding in excess of 75 per cent and about a dozen public sector companies have government ownership of over 90 per cent. The deadline for private companies to meet the minimum public shareholding expires on Monday. PSUs have time till August to have at least 10 per cent public shareholding. THE ROAD LESS TRAVELLED
Some firms have taken innovative routes to meet public shareholding
Tata Communications: Delisting from NYSE, terminating ADRs Wipro: Scheme of demerger & transfer of shares to trust Gammon Infra, Westlife Development & Pentokey Organy: Issue of bonus shares to public shareholders
Gillette India and Gokaldas Exports: Declassification of promoters as public shareholders
MOHANTY
India Inc petitions Sebi with ideas as deadline nears, quite a few of these being unconventional
Sebi promises speedier actions with greater powers

PRESS TRUST OF INDIA
Mumbai, 28 May
Pitching for a major overhaul of the powers it has got to deal with market manipulators, the Securities and Exchange Board of India ( Sebi) says there is an urgent need to carry out these changes to ensure speedier probes and fast- track prosecution of culprits. The capital markets watchdog has asked the government to empower it to carry out search and seizure operations, to attach properties and to seek information and records for all relevant entities.
Besides, Sebi has also asked the government to streamline the procedures involved in enforcing its existing powers.
"At times, it has been difficult for us in many cases to move forward in the absence of these powers. Also, there are long procedures involved in executing many powers that we already have and we want those processes to be streamlined," Sebi Chairman U K Sinha said.
"The expectation is that once we get these powers, we would be able to move really fast on the investigations we undertake, and on the actions we need to take against the culprits and in bringing to book all the manipulators and others defrauding the investors," Sinha said.