Amritsar Road Show
The NDA’s approach on Black Money is doggedly persistent - Not Adventurist

I am a little surprised by some of the headlines in today’s newspapers which state that the NDA Government has done a U turn on the issue of black money stacked up in Swiss bank accounts. Nothing can be farther from the truth.
Let me begin by saying that the NDA Government WILL NOT withhold any information, including names of account holders who have stashed black money abroad, from the public; but the names will be revealed after following the due process of completing investigations and reaching conclusions about quantum of unaccounted money. After doing so, all the information including the names of account holders will become public when quoted in court proceedings arising from complaints to be filed by the Income Tax Department against tax offenders. Any premature and out of court disclosure of the names of account holders would not only vitiate the investigations but will enable such account holders to get away with their offences. It will also violate India’s Double Taxation Avoidance Agreements (DTAA) with other countries and will choke receipt of all further information from those countries.
The NDA Government took over in the last week of May, 2014. For 3 years, the UPA Government has been refusing to appoint the SIT directed by the Supreme Court. At the first very Cabinet Meeting, Shri Narendra Modi Cabinet decided to appoint the SIT. The SIT has been effectively functioning since then.
On October 15, 2014, a team of officials led by Revenue Secretary and comprising of Chairman, CBDT has signed a Joint Statement with the appropriate authorities in Switzerland with regard to investigation into black money stacked in Swiss banks. The four important aspects of that agreement are:
(i) With regard to the list available with India of account holders in the HSBC, where Indian tax authorities have conducted independent investigations, the Swiss would provide India with details upon our furnishing of adequate evidence in this regard.
(ii) Whenever India has some information/ documentary evidence, the Swiss would confirm the authenticity or otherwise of that evidence. (iii) This would be done in a time bound manner. (iv) Discussion would now start on a bilateral agreement on automatic exchange of information in the banking system. If this bilateral arrangement is arrived at, it will be an important milestone in detection of black money held by Indians in the Swiss banks.
Independent of the above, the Supreme Court of India in the “Black Money Case” had directed the Government of India to furnish the names to the petitioner which have been given by Germany to India. These names were given to the petitioner who made them public. The Germans strongly objected to this as a violation of the Double Tax Avoidance Agreement (DTAA) which was entered between Government of India and Germany on 19th June, 1995. The present NDA Government has unfortunately inherited the legacy of that DTAA. We may have negotiated a better deal. If we scrap the treaty, we get no further information. The covenant to the treaty is that the names of the account holders and information received thereunder will only be disclosed when charges are filed in court. They obviously cannot be utilized for political propaganda or for political mileage.
The choice before the NDA Government is clear; violate the Treaty and get no names in future or abide by the Treaty, collect evidence, file charges in courts and let the names become public so that the account holders can be named and shamed. One act of adventurism of violating the treaty and discussing the name could perhaps jeopardise future cooperation from the reciprocating state.

All that the Government has requested the Supreme Court is to clarify that it has not prohibited the Government of India to enter into Treaties with countries wherein a commitment may be made by the Government to maintain confidentiality of information received as per international standards. If such a commitment to maintain the confidentiality is not given we will not receive any information about Indians hiding their money in other countries including offshore financial centres and tax heavens. Thus the clarification sought from the Supreme Court is only to facilitate collection of information about illegal money stashed abroad.
Nobody has ever suggested that the names should not be made public. They should be made public in accordance with the existing due process of law. If that process is violated, you will never get to know the names in future. The NDA Government stands committed to detect the names, prosecuting the guilty and making them public. We are not going to be pushed into an act of adventurism where we violate the treaties and then plead that we are no longer able to get the cooperation of reciprocating states. Such an approach may actually help the account holders. Adventurism will be short-sighted. A mature approach will take us to the root of the matter.

Amritsar Road Show
My comments on the third Bi-Monthly Monetary Policy Statement of the RBI

In its credit policy announcement today the RBI kept the policy rate unchanged, as expected by markets. It has, however, reduced the SLR by 50 basis points giving banks greater leeway to lend. As the economy picks up and demand grows this will allow an increase in bank credit. Recent data on inflation shows that inflation is moderating. On its part, the government remains committed to the path of fiscal consolidation and reviving the investment cycle that will help bring down inflation and pick up growth. Governor, RBI has already stated that RBI will not hold interest rates high any longer than is necessary and if disinflation proceeds as warranted, there will eventually be room to cut rates. Going forward, the RBI should examine the liquidity situation, inflation and growth in setting policy rates.

Amritsar Road Show
Remembering Emergency

26th June, 2014 marks the 39th Anniversary of the Emergency. The Emergency whose oppressive phase lasted 19 months (excluding two months of the election) is perhaps the worst post independence chapter of the Indian democracy. Most Indians today were not even born when the country had to suffer this monstrosity. I wish to recall some of my personal memories on the Emergency.
Smt. Indira Gandhi had won her 1971 election from Rai Bareilly against the Socialist Leader Raj Narain. Raj Narain had filed an election petition in the Allahabad High Court challenging the validity of Mrs. Gandhi’s election. His lawyer in the Allahabad High Court was Shanti Bhushan. The trial was well publicized in the Indian newspapers and attracted a lot of national curiosity. On June 12, 1975, Justice Jagmohan Lal Sinha of the Allahabad High Court quashed the election of Mrs. Indira Gandhi as being influenced by corrupt practices. The Prime Minister ceased to be the Member of Parliament. She was also disqualified for a period of 6 years from contesting any further election.
Mrs. Gandhi preferred a Special Leave Petition before the Supreme Court. Nani Palkhivala appeared for her. The Judge in the Supreme Court Justice Krishna Iyer gave a partial stay. She could attend the House and speak as a Prime Minister but was not allowed to vote. Meanwhile the national agitation spurred by the mis-governance and corruption led by Shri Jaiprakash Narain had captured the popular mood. A two day conference of leaders of non-Congress political parties was held at the Gandhi Peace Foundation in Delhi. On the evening of 25th June, 1975 a massive rally was organized at Ramlila Maidan which was addressed by JP and several other leaders. After attending the rally I came back home late in the evening. I was at that time a second year student of the law faculty pursuing my studies. I was the President of the Delhi University Students’ Union and convener of JP’s Committee for Youth and Students Organisations.
At about 2 AM past midnight, I received a midnight knock at my residence. The police had come to arrest me. My father, a lawyer by profession got into an argument outside the gate of my house asking them at least to inform him as to the nature of offence I had committed. The police had simple instructions to arrest me - they did not know under which provision and for which offence. While this argument was on, I escaped from the backdoor and went to the friend’s house in the neighbourhood.
I telephoned my colleagues and collected the details of what was happening. In the morning, there were no newspapers. Electricity of the entire press at Bahadurshah Zafar Marg had been disconnected. News started trickling in that the entire political leadership of the opposition including Jai Prakash Narain. Morarji Desai, Choudhury Charan Singh, Atal Behari Vajpayee, L.K. Advani had been arrested. The police station in Timarpur nearby Delhi University was the centre of this activity. All the detained leaders had been taken there and transferred to specific jails in Haryana and Delhi. Along with my co-ABVP workers I reached Delhi University Campus by about 10.00 AM to organize a protest. This was the only protest against the Emergency which took place that day in the whole country. An effigy was burned by us in protest. The news of the protest attracted a large number of policemen in the Delhi University campus. I requested my colleagues to quietly disappear since I had been surrounded by the police. I courted arrest. I was also taken to the Timarpur Police Station where I was handed over a detention order under the Maintenance of Internal Security Act (MISA). I was taken to the Tihar jail in Delhi where all the political detainees were also kept. I stayed there for eight days before being transferred to the Ambala Jail in Haryana. After about three months, I was re-transferred back to Delhi where I remained till the end of January 1977 for a period over 19 months. I had been detained 19 months in prison under preventive detention. Needless to say I was deprived of my right to continue my education at Delhi.
The declaration of emergency under Article 352 of the Constitution was accompanied by a Notification under Article 359 wherein fundamental rights under Articles 14, 19, 21 and 22 were suspended. All the newspapers were subjected to pre-censorship. A representative of the Censoring Authority sat in the office of every newspaper and news agency. No news critical of the Government could be published. Fundamental rights were suspended. The right to oppose the Government was taken away. No protests were allowed anywhere in the country. The Supreme Court in perhaps the worst amongst the post independence judgments, in the habeas corpus case, ruled that even though political detainees have been illegally detained, they have no right to approach the court and seek the relief. The Government took the position that even if a detainee was physically killed, he could not approach the court. A submissive Supreme Court agreed with this observation. Most of the Members of the Parliament were detained. Any Parliamentary proceeding where Government was criticized could not be published in newspapers.
The Prime Minister Indira Gandhi proclaimed that an era of discipline had started. She announced a 20 Point Economic Programme comprising of ideas which were most retrograde. Loyal to the 20 Point Programme of the dictator, the Congress President Dev Kant Baruah proclaimed “Indira is India and India is Indira.” Mrs. Gandhi’s younger son Sanjay was introduced as a youth icon of India. Proclaiming loyalty to the 20 Point Programme, film actors and musicians were asked to perform for the Congress Party at its programmes. The dissenters were punished. Kishore Kumar’s songs were banned on the All India Radio. Dev Anand’s films were not telecast in Doordarshan. The entire police administration of the country had become an instrument of sycophancy. False FIRs were filed and lakhs of political workers were arrested.
The Representation of Peoples’ Act was amended retrospectively to legitimize and validate the invalid election of Indira Gandhi. The Constitution was amended to make the election of Prime Minister as non-justiciable. The proclamation of emergency was made non-justiciable. Some dissenters in the Congress Party led by Chandra Sekhar were also detained. Governments of Opposition Parties in states like Gujarat, Tamil Nadu were dismissed and the President’s rule imposed. The High Courts in the country showed some courage in giving relief to the detainees. But the extremely pliable Supreme Court overturned each and every favourable order of the High Court.
The Emergency displayed the weakness of the Indian Constitutional order. The press could be silenced. The judiciary could be made pliable. Large number of opposition parties including the Left either supported the emergency or only put up a soft opposition against it. For us in prison, it was not clear as to how long we will be in detention.

It was the pressure of the international opinion which had started building up that Indira Gandhi began to rethink. She miscalculated and decided to hold elections. Towards the end of January 1977, the emergency was relaxed and the most political detainees were released from jail. The election saw a massive anger against the emergency .The Congress Party was trounced in the election in most parts of India. Both Mrs. Indira Gandhi and her son Sanjay were defeated in their constituencies of Rai Bareilly and Amethi.
For many like me who underwent emergency experience in Delhi and successfully fought against it, this became a turning point in our lives. The emergency was perhaps the best political education of my life. It taught me that some compromises were just not possible.

Amritsar Road Show
The Truth of Railway Fare Hike

The Indian Railways for the last few years have been running at a loss. The only way that Railways can survive is when users pay for the facilities that they avail. The passenger services have been subsidized by the freight traffic. In recent years even freight fares have come under pressure.
On 5th February,2014 when the UPA was in power, it was the Railway Board which proposed a 5% increase in the freight rates and a 10% increase in the passenger fares. The proposal was to rationalize the freight rates with effect from 1st April,2014 and the passenger fares with effect from 1st May,2014. Even as the Interim Budget of the Railways was yet to come, the date 1st May,2014 was chosen hoping that the General Elections would be over by that day. The Railways had proposed that this increase would give the Railways an additional revenue of Rs.7900 crores. Armed with this decision, the then Railway Minister Shri Mallikarjuna Kharge met the then Prime Minister Shri Manmohan Singh on 11th February,2014. The then Prime Minister approved the hike and suggested that both freight and passenger fare should be implemented with effect from 1st May,2014 itself.
The Railway Board accordingly notified this increase on 16th May,2014 when the Election results were being declared. This decision gave effect to what the Railway Board, the Rail Minister and the then Prime Minister had concurred. The Railway Minister developed cold feet and in the evening of 16th May,2014, even after the UPA had been defeated in the Elections, he countermanded the order of the Railway Board so that theoretically the decision taken by him and the then Prime Minister is implemented by the Railway Minister of the NDA Government.

By withdrawing the countermanding order, the present Railway Minister, D.S. Sadananda Gowda has taken a challenging decision. The choice before Shri Gowda was whether to allow the Railways to bleed and eventually walk into a debt trap by following the policy of the UPA Government or implement the decision which the UPA Government had taken to increase the fares for both passenger and freight but did not have the courage to implement . A loss making railway will provide below-par services. It will eventually not even have the resources to pay its’ bill. India must decide whether it wants a world class Railway or a ramshackled one. The Railway minister has taken a difficult but a correct decision.

Amritsar Road Show
The Vodafone Case

I have been receiving queries whether I would not be dealing with the issues relating to the Vodafone case from various Media organizations.

I stopped practicing as a lawyer with effect from 2nd June, 2009. Prior to that, I had been consulted in the matter by the company on various taxation issues. I therefore considered it appropriate not to deal with the matter as a Minister. Matters concerned with the Vodafone case would be dealt with by the Secretary (Revenue) and the Minister of State (Finance).

Amritsar Road Show
Inflation Concerns

The year on year WPI inflation for the month of March has moved upto 6.01% as compared to 4.58% in the corresponding period last year. The increase is primarily on account of higher inflation in food articles, fuel and power costs. The Government is seized of the matter and is committed to ease supply side constraints. The rise in prices of food articles can also be attributed to withholding of stocks on account of apprehension of a weak monsoon. The State Government should take effective steps to ensure that speculative hoarding is discouraged. The Government is committed to take measures which will positively impact the GDP and result in higher growth than expected. I am hopeful that the inflation which is moving upwards now would eventually come down.

The Government is watching the movement of rupee closely. The slight instability of rupee is essentially because of Iraq oil shocks and global fear of oil price rise.

Amritsar Road Show
A note on brief talking points made by Shri Arun Jaitley, Union Minister for Finance, Corporate Affairs, and Defence while intervening in the debate on the motion for thanks for the President.

The President's Address to Parliament is a directional roadmap of the NDA Government. It is not an agenda for one year, but a futuristic vision for India. The elections are over. Post elections, we have to embark on the task of nation building. We in the Government are required to display modesty. My friends in the Opposition must demonstrate the graciousness of a loser.

What do the results indicate?
It is after 30 years that a single party in Parliament has got majority of its own. The results have demonstrated that unlike previous elections, this election is not about the arithmetic of alliances. This was more about the changing chemistry on the ground. Traditional vote banks have been smashed. Those who governed badly and thought caste would save them, have been trounced. Those who indulged in political opportunism such as switching alliances have been badly wounded. Those who indulge in corruption and use their political weight to subvert investigation have been defeated. Those parties which relied on dynasties have suffered set back, and those who thought that minorities are not equal citizens but merely a vote bank and relied on consolidation have been disappointed.
This election has seen an expression of hope in the NDA, BJP and Shri Narendra Modi. After three decades, large crowds were there to express solidarity with the leader they had hoped to see guiding their destiny. If this election is an expression of anti-incumbency against the Government, it was simultaneously an expression of hope in Shri Modi and the BJP.
Where do we stand today?
We stand today in a challenging situation. The UPA inherited a 8.57% growth rate. It is leaving behind a growth rate of sub 5% for two consecutive years. The fiscal deficit is abnormally high at 4.5%. Inflation in April is at a high of 8.9%. Tax buoyancy has suffered. Tax GDP ratio is at 10.1% as against budgeted 10.8%. We have seen a decade of jobless growth. The credibility of the Indian economy has been hurt. Investors had stopped looking at us. Investments cycles both domestic and international have been broken. If there has been no investment, there will be no jobs, no revenue, no infrastructure.
The only silver lining now is that the current account deficit has improved. The election results have made a political statement and the global and domestic investment into India is looking up. The investors are once again showing interest in India.
Why did this happen?
This happened because of certain reasons. We must learn the lessons so that these lapses are not repeated again. You cannot run the Government where Prime Minister does not have last have last word. Prime Minister must be having an authority to overrule others. You cannot build structures of men with obsolete ideologies situated outside the Government who dominate Government policies. Massive corruption such as 2G spectrum, coal allocation and CWG destroyed investors faith in India. Lack of stable tax policy dissuaded investors away from India. It became a defining moment against us. When investigation agencies were misused against the opposition, an environment of political confrontation was created, the possibility of arriving at a political consensus was impossible.
The lessons from not nipping corruption at the right time.
When 2G spectrum allocations were taking place and the leadership of the Government received numerous complaints about dubious nature of allocations, the Prime Minister did not step in. When coal blocks were being allocated on the basis of nepotism, the Prime Minister did not step in. |The same was the story with regard to the Commonwealth Games and Cash for Votes. The integrity of the Government became questionable. Its credibility was doubted.
The Government delayed the formation of Lok Pal. It then brought in a weak Bill which would lead to a Government controlled Lok Pal. It thereafter, framed rules to subvert the process. The lessons from the above for the present and all future Governments is that when you discover corruption, it has to be nipped in the bud. If you cover up, you lose credibility. A Government which loses credibility is unable to perform.
Our challenge today is that the first right of resources belongs to the poor. We have to revive India's economy. We have to restore investment cycle. We have to give particular emphasis to low cost manufacture. India missed the first industrial revolution. It missed the bus for manufacturing decades ago. It is on the verge of missing the revolution on becoming a hub for low cost manufacturing. This is the last opportunity and we cannot afford to spoil it. We have to spend a large part of Natural resources on both social and physical infrastructure. We have to unleash the potential of Indian entrepreneurial spirits. We have to concentrate on highways, ports and airports and Social Sector infrastructure. We have to deal with the coal block mess and increase power generation in the country. We have to concentrate on skill development, affordable housing, urbanization and quality higher education.
We want to develop an India which is self-reliant. The Indian society has to be non-discriminatory and compassionate. Our resources have to be spent on the neglected areas of North-east and Tribal belts. National security always remains a top priority for the NDA Government. We want States to be our partners in growth. We will not discriminate against any State on the basis of political complexion.
Our Policies with regard to our neighbors will be dictated by security considerations. Policy with regard to rest of the world will be influenced both by national priorities, traditional relations and economic realities.

Amritsar Road Show
My speech at the Pre-Budget Meeting with States and UT Finance Ministers

My dear Chief Ministers, Deputy Chief Minister, Finance Ministers from States and UTs, Esteemed Colleague Minister of State for Finance Ms Nirmala Sitharaman, senior officials from Centre and State Governments.
It is a matter of great pleasure that today we have got this opportunity to get together and hold extensive consultations regarding the Main Budget 2014-15. It is the policy of this Government that “Team India” shall not be limited to the Government sitting in Delhi but will also include States as equal partners in the growth of this great Nation. Discussions held today will be of immense help to the Government in giving contours to the Budget proposals to be presented before the Parliament.

1.Union and the States must complement each other in managing the economy and the fiscal policy. This is the essence of cooperative federalism. It has been noted that while the growth of the country has crawled at sub 5% in the recent years there have been States registering much robust growth. This is clearly a case of sum being less than its parts and needs to be addressed through our concerted efforts. Mandate of 2014, clearly spells out that economic growth cannot be compromised at any cost and is sine quo non to reap the benefits of the demographic dividend. We owe it to our youth and underprivileged that we partner in this process of growth and its equitable redistribution.
2.Recently released data by Central Statistical Organization shows that Mining and quarrying sectors have gained a negative growth trend. The manufacturing sector has had an abysmal performance last year. The investment cycle has been disturbed. The negative sentiment has affected trade, hotels and transportation sectors which are posed for a slower growth compared to last year. Inflation continues to be rising with April figure at 8.9%
3.The slow-down in economic growth coupled with high inflationary pressure poses a challenge to the macroeconomic environment. Tax collections are only at 10.0% of the GDP compared to the initial budget estimates of 10.9%. India can ill afford this trend and I believe that deliberation held today will be the first of the series of such deliberations and we will together steer the economy in the mutually agreed direction.
4.My Government is committed to evolving a model of National Development which is driven by the States and we intend to extend necessary flexibility to States in achieving this. I urge the States to be fiscally responsible with this greater devolution of power. Intergenerational equity must be kept in view while deciding today’s spending. I appreciate the fact that most of States have been conforming to the FRBM targets. We must carry this forward.
5.As part of this economic integration, Goods and Services Taxes (GST) is one pending issue, on which now consensus needs to be built and implementation done at an early date. Implementation of GST has the potential to significantly improve the growth story. Many of you would recall that a decision to implement GST was taken in 2007-08 and an empowered committee was formed for building consensus on this issue. I have been informed that on many issues convergence of views has happened and there are some vexatious issues which only need resolution. I wish and hope that these will be sorted out sooner than later.
6.With a view to grant greater autonomy to States in scheme implementation it was decided that funds for Centrally Sponsored Schemes will be routed through the State Governments. “Flexifunds” as part of this decision also exist to tailor the scheme implementation to meet the local requirements. I urge all of you to use this forum for making suggestions for improving implementation of various welfare programmes of the Government.
7.Long inflationary trends have adversely impacted the food and nutritional security of the common man. We are committed to breaking this vicious cycle of high inflation and high interest rates. While, we look forward to your support in tackling temporary fluctuation in prices, we also would like to evolve a mechanism which addresses the structural issues that create supply bottlenecks. We need to look at the Essential Commodities act and put in place strict measures and special courts to stop hoarding and black marketing. The need for a Single Agriculture Market and real time information dissemination on prices to farmers and consumers are areas which need to be addressed. You will appreciate that these goals cannot be achieved without active cooperation of States. I urge you to address the areas of agriculture extension, public investment in agriculture including irrigation and agriculture marketing which fall under your purview. We will be there to support you.
8.While there is a National Food Security Act, the need of the hour is to implement the law in a cost effective and efficient manner for ensuring real “Food Security”. PDS as a vehicle to shield the poor from price rise has to be significantly improved. Some of the States have done extremely well in improving the delivery under PDS. We all can learn from them. We are committed to reviewing the successful PDS models and incorporate the best practices to revise the existing PDS, for benefitting the common man. Restructuring FCI for greater efficiency in delivering food grains is also on the agenda. Decentralized procurement of food grains provides an alternative and more effective model for food grain administration. I have been informed that only some States have adopted decentralized procurement but many have not. I seek your views on this matter.
9.We believe that growth can be revived through increased investment in the areas of Infrastructure. We have to think big and build an infrastructure which can cater to a growing population in coming years. Growth of infrastructure will also pull out sectors such as cement, steel and power etc from the current downturn and will lead to massive job creation. You will appreciate that this cannot be achieved alone by the Central Government without partnering with the States. Similar approach is also required to modernize our Industries. We should no longer remain a market for global industry rather we should become a global manufacturing hub.
10.We have now reached a stage where demographic dividend will be bereft of any meaning unless we improve access and quality of education and health services for teeming masses. Programmes like SSA, NRHM and PMGSY have improved access to these services, quality has however been questioned by many. We believe that not only access but there has to be a quantum jump in the quality of education and health services at affordable costs. I seek your support in achieving the objective of, quality education for all and assurance of health care for all.
11.I would like to stop here and invite you to share your suggestions for Budget 2014-15. I keenly look forward to your active participation in today’s deliberations.