Amritsar Road Show
Nehru’s anniversary and Modi's Popularity

Nehru’s anniversary draws disparate elements
On the 125th birth anniversary of Pandit Jawaharlal Nehru, the Congress Party has organized an international symposium. Has the guest list been influenced by the current depleting fortunes of the Congress Party?
The symposium is being attended by Congress leaders, some international dignitaries besides a few Lohiates and Communists.
Dr. Ram Manohar Lohia stood for complete negation of Nehruvian politics. He rejected Panditji’s politics during his lifetime. The Left’s anger against Panditji was further fuelled by the invocation of Article 356 to dislodge the first ever democratically elected Communist Government led by Shri E.M.S. Namboodripad in Kerala. Those who rejected Panditji’s politics in his lifetime, are a part of the “show of strength” at this symposium. The symposium is being attended by some who rejected Nehruvian politics during Panditji’s lifetime and others whom Panditji may have ideologically disinherited.

Congress stunned by Modi’s popularity abroad
Shri Salman Khurshid has made a fascinating claim. He says that there were no people to meet him when he visited Myanmar and that Prime Minister Narendra Modi has been exporting groups from India to all foreign destinations wherever he visits. If UPA leaders, during their days in Government, left the expatriate Indian population underwhelmed, is it to be presumed that this should be true for others? I can understand the plight of Salman and his party colleagues particularly when Prime Minister Narendra Modi gets a larger crowd in Sydney than what Salman’s leader gets in India.

Amritsar Road Show
Confidentiality clauses and the battle for tracing black money outside India

The world is increasingly moving towards a more structured and organized struggle against illegal money parked in tax havens or even otherwise transacted at foreign soil. Originally the tax havens were completely non-cooperative. However, international pressure has compelled some of them to relax the rigidity against non-disclosure.
Almost all countries which entered into Double Taxation Avoidance Treaties or have a domestic legislation, as in the case of US, that has an extra-territorial application insist that information parted to the receiving State would be subjected to confidentiality clauses. The confidentiality clauses make it incumbent that disclosure would be made only after prosecution is filed before a charging court. Thus the issue is not whether but when disclosure can be made.The debate is not between disclosure and non-disclosure of confidential information. It is between unauthorized disclosure in violation of tax treaties and disclosure as per tax treaties. An unauthorised disclosure in violation of tax treaties entails that the disclosure is made for collateral purposes. It is usually not accompanied by any evidence or proof. But when a disclosure is made in pursuance of a charge sheet in a court of law where a criminal prosecution is filed, it would certainly be a disclosure substantiated by adequate proof and evidence.
A disclosure in violation of tax treaties helps the account holder. The reciprocating state would treat this as a violation of a tax treaty and refuse to provide any evidence in support of the unauthorized account. The holder of the unauthorised account in the absence of any proof and confirmation from the reciprocating State would get the benefit in any investigation or prosecution and then claim that “I stand vindicated”. In fact, a pre-mature disclosure would additionally alert the account holder to prepare some documentation or a sham defence. It may even enable him to destroy evidence.
India has to take a conscious call. Does it want to be a part of the global coalition which is moving in the direction of automatic sharing of information or not? Does it ensure all information is supported by substantial evidence and proof or only wishes to remain restricted to sloganeering? In the recent meeting of about 50 countries in Berlin which proposed automatic sharing of information, India could not participate since a prevalent view is that confidentiality clauses are unconstitutional in Indian law. This view requires reconsideration. An automatic exchange of information would relate both to authorized and unauthorised movement of money. Why should any information with regard to authorized movement of money be made public? Why should information even in relation to unauthorized movement of money be made public only for political or collateral purposes? Why should the account holder be alerted in advance? It should be put to an authorized use with collection of evidence and filing of prosecution.

The United States has legislated the Foreign Account Tax Compliance Act, 2010 (FATCA). The FATCA contains a confidentiality clause. It makes it mandatory for foreign financial institutions (FFIs) to register with the appropriate authority and exchange information. The foreign financial institutions are required to enter into agreement with the US Internal Revenue Service. Alternatively foreign governments can sign agreements with US government , mandatory exchange of information subject to confidentiality clause being necessary. FATCA mandates the deduction and withholding of tax equal to 30% on a US source payment to recalcitrant FIIs or FFIs in non compliant countries which do not meet with the requirements of FATCA. Such 30% withholding tax will also be imposed by other FATCA compliant countries against non compliant countries.The consequences of not signing the the agreement with US under FATCA would be disastrous.It will negate the efforts being undertaken by our government to revive the Indian economy.
The Reserve Bank of India has already informed the Government of India about the serious and adverse consequences of non-compliance of FATCA by India. Several countries have already subscribed to FATCA. An unauthorised disclosure of information is fraught with both investigation and economic consequences. They can sabotage the investigation. They can attract sanctions in the form of withholding taxes. It is obvious that in a choice between unauthorised disclosure and disclosure as per treaties, the latter is both a fair and beneficial proposition. It will help in collection of evidence and exposure of a wrong doing in accordance with law and fair procedure. A disclosure without evidence would ensure that evidence is never available.
Notwithstanding its clarity, why should someone with adequate understanding of the subject, demand a disclosure in violation of the treaty. The Congress Party’s stand is understandable. It does not want evidence to be forthcoming in support of the names available with SIT. Are some others ill informed, just indulging in bravado or are they Trojan horses? I am sure the SIT which has been entrusted by the Supreme Court with the investigation, will succeed in bringing out the truth while realising the full implications of the subject matter.
The NDA Government has had an exemplary record in this matter. The first decision of its Cabinet Meeting was to accept the Supreme Court direction in constituting the SIT. It has complied with every decision of the SIT. It made available all the names in its possession to the SIT on 27th June, 2014 itself. It will continue to support the SIT fully and unequivocally in search of truth.

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.