EDITORIAL
Bold,
but
How so may the
healing touch be derided-the other day, NC
president said it was rubbing salt into
peoples 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
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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
peoples 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 cant 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 Pakistans
cooperation in their searches and seekings. So, America
keeps pumping her hand and puffing her up with monies and
legitimacy.
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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
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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
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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 Americas 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 Indias 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 Kashmirs destiny in
accord with the wishes of its people. An ending
of infiltration can be but the first, not the
last chapter of Kashmirs 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 societys 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
countrys 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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