EDITORIAL

Bold, but…

How so may the ‘healing touch’ be derided-the other day, NC president said it was ‘rubbing salt into people’s wounds’!-it cannot be denied that the Chief Minister is reaching out to the people. By now he has covered almost all the districts of the Valley. The ones in Jammu were visited by him earlier though not as extensively, or even as bountifully, as he has lately been going around it in the Valley. There he is touching the hinter lands and holding parleys with the villagers. Pressing problems are being addressed on spot while action on developmental demands is being assured in a large-hearted manner. The people too have been coming forward with their problems and getting them solved almost instantly. Upgradation of water supply schemes and schools is.......more

Puffing up Pakistan

Whether it was the ‘successful’ visit of Deputy Prime Minister to USA that prompted the American president to invite Musharraf to Camp David or not, is hard to say. But it was soon after the conclusion of Advani visit, especially the unscheduled ‘dropping into’ his meeting of Bush that Camp David was offered to Musharraf. Seen as a rare honor, its placatory value was lost on nobody. And the process continues through the visit of the Pak President and general......more

Indian dilemma over Iraq

By Dr Bhabani Dikshit

The controversial issue of deployment of Indian troops in Iraq, which has surcharged the atmosphere of the country in recent weeks, continues to agitate most of the political parties. The issue.....more

Confusing case for cas

By P Dev Kumar

Watching television may become an entirely different experience for over six million couch potatoes in the four metropolitan cities of India after July 14 ....more

A South Asian Thaw

By Dr. Ghulam Nabi Fai

The liberation of Iraq and its sequel -- a dicey democratization enterprise -- have hidden a refreshing South Asian thaw in the historically icy relations between India and Pakistan. Disputed.. ..........more

Taxation and treaty shoppers of mauritius

By S. V. Vaidyanathan

Attribute it to the silly season or to the energy-sapping heat, but just about this time every year, one sees an involved .....more

EDITORIAL

Bold, but…

How so may the ‘healing touch’ be derided-the other day, NC president said it was ‘rubbing salt into people’s wounds’!-it cannot be denied that the Chief Minister is reaching out to the people. By now he has covered almost all the districts of the Valley. The ones in Jammu were visited by him earlier though not as extensively, or even as bountifully, as he has lately been going around it in the Valley. There he is touching the hinter lands and holding parleys with the villagers. Pressing problems are being addressed on spot while action on developmental demands is being assured in a large-hearted manner. The people too have been coming forward with their problems and getting them solved almost instantly. Upgradation of water supply schemes and schools is being sanctioned on spot and other works are being noted for action. All in all the people have appreciated the highest executive of the state appearing at their doorsteps suddenly and listening to their woes.

That is something they have not seen happening of late. Indeed, every foray of the Chief Minister begins with the telling ‘for the first time in 14 years’. It was so with the visit to the downtown Srinagar sometime ago. It was so in the case of Pulwama and Shopian villages the other day and the hinterland villages of Anantnag on his recent visit there. It also shows how pestered the people are, yet how petty their problems and pains and how easily they can be addressed. In a way the Chief Minister is acting out his part of his exhortation to the nation to visit the state, especially the valley of Kashmir, in a big way to offset the terror. The people where the CM passed by must have felt the pledge and assurance the visit is designed to connote. There certainly is not the air of inaccessibility that dismayed the people, leaving them looking to the dark forces. But the question that the aftermath of almost all of these bold visits raised was whether this actually offsets the dark forces or dilutes their sway in any material way.

Thus the earlier visit to Anantnag was washed out in a blood bath that left half a dozen people dead. After he returned from the Baramullah ‘interiors’ it was similarly inundated by the terrorists in blood and gore. His visit to Pulwama and Shopian was followed up with a bomb blast in Shopian which is still in headlines for its deathly aftermath. One would hope that the latest foray into Anantnag would be more tranquil. But one is not sure how much that fond hope is worth. While the interaction with the people is widely helpful and promising the impression that the dark clouds have been dispelled is simply not correct. Each one of the events actually underscores the high presence and penetration of the terrorist elements. Sometimes it looks fortuitous that the dignitary did not suffer being targeted. The total picture emerging is not of the terrorism vanquished or ousted or even being put on run. And that ultimately is what would describe the success or otherwise of these initiatives. That reality must not be filed out. For, we just can’t afford to un-see the situation as it is.

Puffing up Pakistan

Whether it was the ‘successful’ visit of Deputy Prime Minister to USA that prompted the American president to invite Musharraf to Camp David or not, is hard to say. But it was soon after the conclusion of Advani visit, especially the unscheduled ‘dropping into’ his meeting of Bush that Camp David was offered to Musharraf. Seen as a rare honor, its placatory value was lost on nobody. And the process continues through the visit of the Pak President and general. In fact, the President of the greatest democracy has issued a full-scale certificate in favor of the Pak General President, to the extent of extolling his personal qualities. Of course, for America Musharraf has proved more than a friend, though, as Benazir pointed out in her recent warning, it was under his headship of Pakistan that the Al Qaeda executed the WTC attack. Apparently the American leadership is not ready to see to the root of the problem of terrorism. She is also not ready to understand the analysts when they hold America itself responsible for the depredations of Taliban and Al Qaeda.

Meanwhile America has done everything it could to placate Pakistan. She has given Pakistan a needed aid package and was almost on the verge of sanctioning F-16s, too. Though the latter has been stalled by Indian efforts the signal from Washington is strong in the favor of Musharraf. With Osama still out somewhere there and the latest preoccupation of USA with Iran, the goodwill of the Pak executive is just indispensable for them. And, Pakistan under Musharraf has been widely accommodating. Pakistan has practically committed itself to sending her troops to Iraq. They have not even raised the bogeys of UNO. Though Musharraf has stipulated the acquiescence of the OIC, but with the determinative members of OIC already in the American camp that is not much of an impediment. The aid, as the Pak opposition has described it is little more than peanuts, but here is a state that is starving for every penny. And, the monies given and granted by America are the price, a cheap prize so to say, for Pakistan’s cooperation in their searches and seekings. So, America keeps pumping her hand and puffing her up with monies and legitimacy.

Indian dilemma over Iraq

By Dr Bhabani Dikshit

The controversial issue of deployment of Indian troops in Iraq, which has surcharged the atmosphere of the country in recent weeks, continues to agitate most of the political parties. The issue has far reaching political consequences. When the BJP-led NDA Government has been trying to mend fences with the US and vice versa, the complicated international scenario almost compels the Indian policy-makers to go slow in taking a hasty step like sending troops to Iraq.

On the other hand, the US faces a critical phase of consolidating its position of authority and occupation of Iraq in the aftermath of its eventual conquest that ousted Saddam Hussein's regime. There have been conflicting views with regard to the situation in Iraq at present.

There were problems and challenges in rebuilding post-war Iraq, but there was also ample evidence that conditions were improving, said US Defence Secretary Donald Rumsfeld last month. ''Each day the conditions are improving, and life is slowly beginning to return to what one might call the normal prewar standard,'' Rumsfeld told at a Pentagon news media briefing on May 20. ''There are difficulties, to be sure, but that difficulties exist should not come as a surprise to anyone. No nation (that) has made the transition from tyranny to a civil society has been immune to the difficulties and challenges of taking that path.''

Keeping in view the changing internal political developments in Iraq, a draft resolution was tabled on May 9 at the UN Security Council by the US, the UK, and Spain seeking for lifting of the UN economic sanctions on Iraq and supporting the country's recovery and reconstruction. The Security Council resolution 1483 was approved by 14 of the 15 Security Council members on May 22. Briefly, the resolution lifts the burden of sanctions onthe Iraqi people, encourages the international community to assist in helping the Iraqi people build a better future for their country, establishes the positions of a UN Special Representative who will play a vital role in all aspects of Iraq's reconstruction, winds down the Oil-For-Food programme (OFF) over a six-month period- while providing for the continued delivery of priority civilian goods approved and funded under OFF to meet the immediate needs of the Iraqi people, supports the Iraqis in charting their own political and economic future, reaffirms the Coalition's commitment to work with the UN and an Iraqi Interim Administration to transition authority to an internationally recognized, representative government of Iraq as efficiently and effectively as possible.

In its bid to stabilize Iraq, the US policy-makers have been making allout efforts to engage Indian troops there and for that they have been conducting hectic diplomatic parleys with their Indian counterparts including persuading the top leaders of the country. The recent visit of a team of US civilian and military officials led by Peter Rodman, Assistant Secretary of Defence for International Security, to the Capital was intended to explain the US point of view in seeking the services of Indian troops in Iraq.

The diplomatic parleys held between the Pentagon team led by Rodman with the officials of our own country revolved around issues concerning Indian apprehension of complexities involving sending of our troops to Iraq and the mechanism of operation. Our government officials reportedly sought clarifications on (a) the development of a responsible Iraqi interim administration, (b) the future political scenario in Iraq, (c) humanitarian relief and (d) reconstruction acitivities. The team also met the National Security Adviser Brajesh Mishra and Foreign Secretary Kanwal Sibal after the delegation-level talks. Sources said the US team explained to them the current political, economic and security situations in Iraq and the pivotal role India could play in contributing to the security and stability of the war-ravaged Iraq.

The US endeavours to win over Indian authorities to their side were in the backdrop of the Security Council resolution 1483 that invited countries to support 'stabilization' efforts in Iraq by working under the command and control of the occupying authority, in the US and the UK.

Perceiving hostile public opinion, the Indian authorities sought to buy time and wait for sometime, while gauging the mood of people and the opposition parties, before hastily committing to send troops. The government also realized the need to consult Iran. Egypt, Jordan and other neighbouring countries around Iraq with shom India has friendly relationship. The main opposition, the Congress sought a consensus among the political parties while taking a sensitive decision of sending troops to Iraq.

The Indian dilemma over the vexed controversy raises many questions like what would be the reaction of Iraqi people to India's involvement as an American ally? What would be the operational framework? How much time it would take? Whether the Indian troops are ready to get bogged down in a difficult Iraq climate even to the extent of losing their lives on a chaotic hostile political atmosphere ? Who would command and control the troops and under which flag? What would be the reactions of other Muslim countries and what would be the fallout of such a decision on our own country's political events and that too before the ensuing assembly polls. The prime element would be also who would bear the huge costs of such a military operation. Are we prepared to bear the military expenditure for the so-called 'peace-keeping' in Iraq ?

Besides, our national interest and prestige would be also at stake. The sending of troops may also go contrary to our adopted resolution in Parliament. When we condemned US action against Iraq, will it be proper now to send there troops as an ally just to please the US. Whatever the piecemeal gains we may derive from US like diplomatic victory over Pakistan or procuring some petty contracts and sub-contracts jeopardising our long-cherished national economic interests ?

It would be proper on the part of the government to make a realistic assessment of the 'risks' and 'rewards' involved, while taking a decision of joining the military operations to 'stabilise' Iraq.

While the Pentagon team visited India, the diplomatic parleys of Russian Foreign Minister Igor Ivanov in the capital created a flutter as it almost coincided with the US efforts and neutralised its bid to have a sweep over the issue. No doubt New Delhi is eying to be a serious ally of the US in its war against terrorism, but at the same time it also wants to continue and expand its traditional strategic ties with Moscow that it at any cost cannot afford to ignore.

On the question of the prospect of India's sending troops to Iraq, Ivanov recently said that India had the ''sovereign right'' to take its own decision, but underlined that Russia was not sending troops to the Persian Gulf. Whether India listens to Washington or Moscow, ultimately the views of the leaders of mainstream political parties and the people in general are paramount. Our national interest should be kept above all other considerations on this serious question. We have already paid a heavy price for sending our army to Sri Lanka in the past and that too on invitation from a legitimate Government.- CNF

Confusing case for cas

By P Dev Kumar

Watching television may become an entirely different experience for over six million couch potatoes in the four metropolitan cities of India after July 14 when the Government enforces the Conditional Access System (CAS) and has a police man in the form of Broadcast Regulatory Authority in place.

Shastri Bhavan, the home to the Information & Broadcasting ministry, has become so obsessed with system a hostage to its own rhetoric...?) that it has decided to CAS the rest of India too, mercifully from a later date.

''CAS means you pay for what you watch and not what is thrust on you by your cable operator,'' says the government. But this allegedly consumer friendly measure has already generated a lot of misgivings in the public mind. A good section of the public feels that contrary to the government's tall claims, the experience with CAS may be anything but happy.

From available indications it is clear that the Government is developing cold feet over the introduction of CAS following criticism by the Congress and other Opposition parties. But brave faces continue to stare. That is a different matter.

When he heard that Delhi's Chief Minister, Sheila Dixit, had written to the Prime Minister seeking postponement of CAS, BJP's M L Khurana made an astonishing declaration that she wrote that only because she had somehow come to know that Atal Bihari Vajpayee was also opposed to the July 14 deadline for CAS. But to his dismay, Khurana found himself holding the CAS baby when neither Vajpayee supported him nor anyone else in the Government.

If the Government had been honest about serving the interests of TV viewers, it would have found no difficulty in ensuring that the cable operators provided a satisfactory service at nominal rates, without the help of Set Top Boxes (STBs).

The operators are said to be duping the broadcasters, especially the pay channel ones, by underplaying their number of viewers/customers. The STB will eliminate that malpractice. But why disturb or burden the viewer in that dispute? It is also said that under the existing system, the TV broadcaster suffers revenues loss on account of manipulations by cable operators. Is it fair to correct this situation at the cost of paying viewers? And what is the guarantee that malpractices will not resurface under the CAS regime ? Indians ingenuity at this game is legendary.

The government claims to be unhappy that viewers are forced to pay for channels they don't want to see. That is true. But as far as one knows all over the world, the TV viewer receives a large number of TV signals and it is understood that they will see only some of them. If, for example, one gets 80 channels (free to air as well as paid ones, as the I&B Minister is promising) in Delhi, it can be no body's case that all the channels will be viewed by all the couch potatoes all the time. Certainly, channel surfing will continue as some channels are of no interest. This is happening surfing will continue as some channels are of no interest. This is happening even now. No role for STB in making this choice; all that is needed is that the quality of signals should be uniformly good.

But now viewers will be forced to buy a set-top box (STB) under the mandated CAS to view pay channel programmes. Nobody knows if STBs will ensure better reception. But that is secondary when considering that it will be one STB for one TV set. If a household has two TV sets, it will be necessary to buy two STBs if pay channels are to be watched on both the sets. Also, a shift in house will require hiring or buying another STB. The cost of one STB will be anywhere between Rs 2000 and Rs 5000, depending upon whether one goes in for an analogue (cheaper) or (expensive but mult-utility) digital version.

But the prospect of an entirely unnecessary financial burden is not the only cause for worry among the viewers. By Government's own admission there are hardly any stocks of STBs in the country. They are to be imported from China. Now, even those who are anxious to see the return of ''Hindi-Chini bhai bhai'' days will admit that Chinese electronic goods are not among the best in the world, though they may be cheap. The Chinese electronic goods have ''flooded'' India but they have not made a mark for quality. At least a section of quality conscious TV viewers will be upset at being forced to pay for a poor quality product that he or she did not want in the first place.

STB is not such a terribly sophisticate technology that India cannot make them. Indeed, there are entrepreneurs who say that they will not only manufacture them for the domestic need but also make them of better quality. But the Indian entrepreneurs cannot produe them out of their hats in a jiffy. The government is hell bent on meeting the July 14 deadline for introducing CAS. So no Indian STBs, only imported---Chinese--ones.

It is hard to understand the urgency shown by the Government in enforcing CAS in the country and, thereby, push imported STBs down the throat of TV viewers. This Government's fancy for ''roll back'' policies has become well-known. But still the speed with which the Finance Minister lowered the customs duty on STBs and the extent of its drop--- bring the overall impact down to something like 5 percent from 52 percent----looks incredible.

It will appear that for the Government STBs have become number one priority items. But will such consideration be shown to other--and more pressing--- causes? There is reason to suspect that the STB ''deal'' is tailor made to benefit the importers of STBs. But who are they ? Is it too much to speculate that the mass import of STBs will bring in hefty cuts for some ''influential'' people who may be behind the importers?

If the introduction of CAS is meant to ''discipline'' the cable operators that could be done with the Government has under the present set of rules. The cable TV business has thrieved over the last 12 years---without fear of any Government action for bad services to customers. Even the Government could not get the operators to follow the rule on compulsory transmission of Doordarshan channels. Why ?

Every operator in the country supplies TV signals to viewers with the help of overhead cables strung across electricity and/or telephone poles and trees. Rules do not allow that. But the Government keeps its eyes shut over this violation. Never have authorities even vaguely threatened any cable operator, accused of bad service or overcharging customers, with action for violating this rule.

At a time when monopolies, especially in the public sector, are being wound up, it is strange that the Government has winked at cable operators' monopoly all across the country. At least in Delhi, TV viewers have no choice but to stick to one operator in their district. A rival who wants to set up business and inject some competition has little chance of gaining access into viewers' homes. On the other hand, the powerful ''monopolist'' of the area is quite likely to have the rival harmed physically, right under the eyes of the protectors of law and order.

The cable industry seems to have a lobby that protects it from action from the Government while allowing it to fleece the customers. Though some districts in Delhi may have made their own arrangements for viewing cable TV, most household depend on the sole operator in their area. Now this monopolist operator is set to enrich his coffers a great deal with the introduction of CAS------and assured government apathy. Many of them are reportedly preparing various packages for the customers, outlining offers of STBs on ''nominal'' hire and ''attractive'' bouquets of satellite TV programmes.

Cynical though it may sound, it can be said straightaway that these offers will work to the disadvantage of the customer/viewer. The ''fairness'' of the hire charges being announced for STBs and serving free-to-air ''bouquets'' can be questioned because the ''flowers'' to be included in the ''bouquets'' will remain a secret till the end. Experience suggests that these ''bouquets'' will be so constituted that each customer has to buy at least two or three of them. And top it all with payment for paid channels as well as STBs. The total monthly bill will in no case be less than what one pays now---unless one decides to stick to just one or two free-to-air ''bouquets''. But before viewers actually see and select their ''bouquets'' there will be only ''brickbats'' for the Government. Syndicate Features

A South Asian Thaw

By Dr. Ghulam Nabi Fai

The liberation of Iraq and its sequel -- a dicey democratization enterprise -- have hidden a refreshing South Asian thaw in the historically icy relations between India and Pakistan. Disputed Kashmir has been the source of mutual frostiness for more than a half-century. But a quiver of confidence building measures boldly undertaken by Indian Prime Minister A.B. Vajpayee and Pakistani President Gen. Pervez Musharraf provide guarded optimism for progress on Kashmir.

Progress is urgent not only for South Asia but for the United States and the international community generally. India and Pakistan sport nuclear capabilities. Neither is a signatory to the Nuclear Non-Proliferation Treaty. A dangerous missile race engages both countries. Kashmir could light a nuclear fuse. The two South Asian rivals have warred twice over Kashmir; the disputed territory is divided by a Cease-fire Line (CFL) heavily defended on both sides; incidents of militant violence chronically erupt because the political status of Kashmir remains indeterminate. In other words, terrorism and nuclear proliferation — both at the apex of America’s national security agenda — are implicated in the Kashmir dispute.

Moreover, a peaceful resolution of the conflict there could set a model for other comparable conflicts that bedevil the world, e.g, Chechnya or Kosovo. Elements of a final settlement that could be placed on the negotiating table might include international guarantees and institutional protections for racial, religious, or ethnic minorities.

What gives rise to hope after years of barren despair is the following. On May 2, 2003, the Indian Prime Minister announced the appointment of a high commissioner to Pakistan in a first step toward normalizing relations between the two countries. Diplomatic ties were broken after an attack on the Indian Parliament in December 2001. Pakistan will reciprocate India’s high commissioner gesture.

Both nations have agreed to the restoration of civil aviation commerce. Mr. Vaypayee and his Pakistani counterpart, Prime Minister Mir Zafarullah Khan Jamali, have concurred on the utility of discussing a thickening of economic cooperation, cultural exchanges, people-to-people contacts and sporting links.

Pakistan has announced its intention of releasing all Indian fishermen detained in jails: 22 Sikh youths; and 14 crew members of a cargo ship who are in captivity. Pakistan has also unilaterally lowered barriers to Indian imports.

The major sticking point in arranging a summit featuring Kashmir on the agenda has been terrorism. India insists that Pakistan either sponsors or condones terrorist training camps and infiltration across the CFL by Islamic militants. Pakistan is equally insistent that it has closed both the camps and infiltration at great political risk. United States Deputy Secretary of State Richard L. Armitage declared after a meeting with President Musharraf that, "The infiltration across, cross-border violence and the lethality are down from this time last year."

Although India remained skeptical, the CFL, where both sides routinely swap artillery fire, has calmed in recent days.

But all parties are mistaking the side show of infiltration for the center stage of Kashmir’s destiny in accord with the wishes of its people. An ending of infiltration can be but the first, not the last chapter of Kashmir’s tragedy.

The Kashmiri people welcome the budding courtship between India and Pakistan. Irrespective of international law or moral justice, Kashmir will remain bitterly divided and oppressed until amity between the South Asian powers blossoms and dispels mutual suspicions over secret and nefarious agendas. What is good for harmony in the region is good for Kashmir.

Both nations should be energized to negotiate a Kashmir solution with genuine representatives of the Kashmiri people by recognizing eternal political truths. People who are denied self-government, freedom of speech, and freedom to petition for redress of grievances invariably turn to extremism. Moderation and customary methods of democratic protest are sidelined. The most unmerciful and scheming prosper. The most charitable and inclusive die. Ruination stalks the landscape. Tear-stained gravesites are all that unify.

Militancy has taken root in Kashmir because alternate outlets for political self-expression have been blocked. Both India and Pakistan are imperiled in different ways by that worrisome development. Neither should be complacent with the status quo. Both should throw their weight and influence behind Kashmiri leaders who have renounced violence as a legitimate self-determination tactic. Kashmiris who celebrate inclusiveness, equality, and peaceful methods of political change should be their poster children. Then the dawn of a new day in South Asia would be at hand.

(Author is US-based Executive Director, Kashmiri American Council)

Taxation and treaty shoppers of mauritius

By S. V. Vaidyanathan

Attribute it to the silly season or to the energy-sapping heat, but just about this time every year, one sees an involved debate on the need to close the Mauritius route to the foreign institutional investors.

The argument normally goes that the FIIs are getting away with murder, as they neither pay taxes in India or Mauritius, where they claim domicile status.

That offends the fair-minded Indian who pays over 30 per cent in direct taxes and much more in an indirect form. It offends politicians because the self-righteous logic goes, "Hey! Here are these ‘clever’ foreigners fleecing poor countries, while the poverty-stricken toil their guts out to make a place for themselves in the sun."

Of course, nobody goes deep into the issue that neither are all Indians poor, nor do all pay taxes. Also, very few concede that tax planning by those who pay taxes is as meticulous as their foreign counterparts.

Such selective logic helps build self-righteous indignation to a feverish pitch. The pitch would have been a little muted, had the actual beneficiary of the tax planning measures been a Mauritian, or a Mauritian company. As the popular adage goes, nobody resents the poor. But it is another matter when it comes to equals, and more than equals.

The main problem with the Mauritius route is that everyone knows that "treaty shoppers" in question are rich American transnational investors, often viewed with distaste as the birds of prey, constantly scouring the earth for attractive pickings.

Hence, everyone is up in arms against this mercenary investor clan. They also condemn countries that position themselves as tax havens. Yet, nobody bothers to look at issues in terms of competition.

If today, Indians are convinced- and they are to a large extent- that competition is good for them because it has widened consumer choices and enhanced incomes, then why is tax harmonisation, which curbs competition, desirable?

There are no takers for this argument, though there are many who will propound at length the benefits of globalisation and enhancement of global wealth by maximising synergies across markets.

Yet, let us look at the whole issue at a very fundamental level. If it is in society’s interest for a country endowed with natural resources to export ore to those with knowledge and capital to convert it into steel, in third countries that offer labour advantage, only to sell it in yet another set of countries- then why does this not hold true for capital? Experience has shown that competition pushes down costs, and impediments to it push up prices. This is equally true of tax competition, where capital moves from high tax islands to low tax havens, resulting in the creation of wealth for the community as a whole.

The answer, of course, is that while free movement of capital is convenient for countries that have abundance of capital, tax competition is inconvenient.

It can suck out investments and saving from countries that have capital but impose higher tax rates and divert it to those which do not lure capital through lower rates.

Interestingly, countries that have capital and impose high tax rates are those, whose government are inefficient and/or carry the burden of a huge welfare bill. These countries do not want to cut their welfare spend and/or reform their governments.

They also do not want to make the sacrifices involved to foot their ambitious welfare spending through alternative means, such as through non-tax revenues or innovative funding mechanism. The net result is that they prefer to keep their tax rates high, and force others to follow suit.

To force others, one needs to be powerful. It is interesting that today, one finds that European countries at the helm of those that lead the assault on the tax havens. Using the offices of the OECD, the EU and the UN, they have been able to convince the US of the need for tax harmonisation, though the US itself qualifies for the status of a tax haven when compared to Europe- its taxes rates are far lower. This is, perhaps, one reason why it is the largest recipient of Foreign Direct Investment (FDI).

The pro-tax harmonisation group does not highlight the fact that the European experience shows that it only raises the tax rates for everyone concerned rather that depressing them across the board.

They also do not mention that their position is actually anti-globalisation, though they are very quick to espouse the cause of migration, which is nothing but the luring of brainpower from countries endowed with intellectual abilities with "friendly" migration policies.

It is time that countries such as India woke up to the reality instead of blindly kow-towing the powerful. Its competitive neighbours are already forcing tax rationalisation on India, and it may be in the country’s interest to follow Mauritius’ example. This path is not easy.

It will undoubtedly put an immense pressure on the government, whose combined fiscal deficit is now some 11 per cent of the GDP. Yet, look at the benefits. Tax competition will lure away capital from not only the neighbouring countries but also from the capital rich ones.

That capital will create additional income for the Government- at least an incorporation fee, as in the case of Mauritius for permitting foreign companies to set up mailbox addresses on its soil- or result in investments, which in turn will generate jobs, revenue and new opportunities. But the only issue is: Can India follow the path shown by countries such as Mauritius, or merely wallow in resentment against a country half the size of its largest State for having stolen its thunder? INAV

 



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