News And Views Archives

Infosys’ N.R. Murthy’s Second coming – at risk as Infosys

If one were to analyse the initial reactions to the news that NR Narayana Murthy was returning to Infosys, with son in tow, it has been sharply divided. The company’s stock price went up following the announcement, reflecting investor perceptions; and there are those who believe that the founder’s return will help the company find its bearings again. There are others who think it is not a great idea to bring back a 67-year-old to take executive leadership, and that tagging on his son as executive assistant doesn’t make it any better-surely there must be people in Infosys who can at least be competent executive assistants!

No one so far has looked at it from Mr Murthy’s perspective; he is probably committing himself to a busier schedule and a knottier set of problems than he might have wanted at this stage, risking a reputation built over a lifetime, and perhaps also disrupting whatever career plans his son might have had. On the other hand, you could argue that Mr Murthy had no choice-he created today’s situation by pushing into leadership positions people who should not have been there, he did so for the wrong reasons (the company’s founders were playing a silly and irresponsible game of round-robin!), and he watched while the company lost touch with the market and also lost key human resources.

So can he make it work a second time? Comparisons with Steve Jobs are not relevant, except to the extent that both are/were inspirational leaders. Apple is built around unique products, and Jobs was their creator, while Infosys is a service organisation. Comparisons with Sachin Tendulkar, of the kind that Mr Murthy unfortunately made, are even worse-the cricketer’s batting average today is way short of what it used to be. But it is a net positive that there is no one in the company with Mr Murthy’s external stature, so he could perhaps win over customers more effectively than others can. It helps that he is nothing if not a relentless salesman who knows how to pitch to the audience of the moment, internal as well as external, and that is a good starting point for a fresh innings.

The big risk is that an old warhorse tries the same old business tricks that he knows, but they don’t work in a changed environment. And the fact is that the business situation today is radically different from the world full of opportunities that presented itself to Infosys in the second half of the 1990s, with unique cost and other advantages for an Indian firm. New US visa regulations are being debated that could put a huge spanner in the works of India’s software service exporters. Competition has got way more difficult, some of India’s cost advantages have been neutralised, the old business models will not work today, and Infosys simply does not have the halo it once enjoyed-so that both employees and customers now look at the company differently. The further problem is that the old-new chairman may be unwilling to rock the managerial boat, and to get tough with people who have been with him for half a lifetime. Finally, India’s tech companies, for all their vaunted reputations, have not always been great at service delivery.

The lesson this whole episode drives home is that, even if you can build a successful company, it is an altogether different challenge to prevent it from becoming a shooting star. How do you keep a company successful through different business cycles, changing market realities and successive generations of technology? The answers have to go beyond the personalities of a company’s founders.

(Source: Weekend Ruminations by T.N. Ninan in Business Standard dated 08-06-2013).

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Nirav Shah

A country for scandal? – What do IPL and Ranbaxy tell us?

Pillorying the government of the day for pervasive
corruption is the easy thing to do, whereas it might just be an escapist
option. It helps those of us who are neither in politics nor in the
government to pretend that we are not tainted, and therefore have the
right to point fingers at politicians, who we assume are not. The truth,
as recent events have brought home forcefully, is that corruption has
permeated fields that have nothing to do with politics and government.

The
cricket establishment is a disgrace, and now suspected of far worse
than the misdemeanors of the Indian Olympic Association, for which that
body has suffered the deserved misfortune of being thrown out of the
international Olympic movement. If it is spot fixing in cricket, it has
been widespread doping in wrestling; problems persist in half a dozen
sports bodies, whose recognition the government has withheld. You could
argue that it is politicians who mostly run the sports bodies, except
that none of the people around Mr Kalmadi were from the world of
politics. In any case, the cricket boss is a businessman.

And
what does one make of Ranbaxy – once a poster boy for the emerging
India, but which now stands exposed for falsifying its research results,
and then selling what must presumably be described as adulterated drugs
to unsuspecting consumers, at home and abroad? The US authorities have
slapped a penalty of half a billion dollars (about Rs 2,800 crore), but
where have India’s own drug authorities been all this while? What about
the criminal liability of all those who were in the company and part of
the fraud? What is the responsibility of the company’s directors of the
time, including many well-known worthies – who, according to the
whistle-blower, chose to ignore the red flag that he waved?

The
building collapse that killed 1,100 hapless garment workers in
Bangladesh has undermined that country’s $20-billion garment export
industry, and raised systemic questions about building regulation. At
home, now that Wockhardt too has run into trouble with the US
authorities, what is the message to the world about India’s drug
industry – seen not so long ago as a global winner? When fraudulent
accounting at Satyam cast an international shadow on India’s IT services
sector, the damage was contained because the other companies in the
field were squeaky clean and Satyam itself was quickly sanitised through
changes of management and ownership. Ranbaxy casts a darker shadow,
because faking drugs is a more lethal business than faking accounts –
though bogus financials too can cause suicides, as the Saradha mess in
West Bengal shows. The older of the two billionaire brothers who sold
the company five years ago (and now run hospitals) has pleaded an angry
innocence because five years have passed since he stepped out of the
company, but the faking of research results was taking place on his
watch, and liability for that is independent of whether the Japanese who
bought the company in 2008 did proper due diligence.

No
system-wide questions are answered by doing nothing. If the canker is
widespread, there have to be systemic solutions. An obvious step is to
come down hard on anyone who is caught, as a lesson to everyone else.
System legitimacy suffers only when businessmen find ways of avoiding
being brought to justice. But perhaps the worst outcome would be to
treat this as just one more kind of reality TV, for nightly
entertainment. All troubling questions can be evaded if we just watch
Arnab Goswami shout at, hector and pillory his “guests” for an hour
every night, for thereby we’ve earned our absolution!

(Source: Weekend Ruminations by T.N. Ninan in Business Standard dated 25-05-2013)

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Nirav Shah

Registration Act- Proposal to modify law on land registration tabled in Parliament

A proposal to modify India’s land registration law
to make for clear titles and help the government to fairly compensate
owners if their land was acquired for industrialization was tabled in
the Rajya Sabha.

The amendments to the Registration Act, 1908,
mainly relate to ensuring transparency and digitization that will help
establish clear land ownership. The Registration (Amendment) Bill, 2013,
was cleared by the cabinet in June.

Land acquisition is a
complex and contentious subject in India due to the lack of
documentation and the absence of contemporary land records. This has
been causing problems for investors trying to buy land for
infrastructure projects.

The proposed amendments include
registration of documents relating to the adoption of a daughter to
ensure gender equity, opening of the miscellaneous register that
contains details of all registered documents to public scrutiny, and
promotion of electronic registration of documents.

“Documents
such as power of attorney, developers/ promoters agreements and any
other agreements relating to the sale or development of immovable
property now need to be mandatorily registered. This is being done with
the intention of minimize cases of document forgery,” the ministry said.

“A new section 18A is proposed to be inserted (into the Act) to
provide for prohibition of registration of certain types of
properties,” it said. This is to prevent unauthorized people from
obtaining false registrations.

In addition, the government has
proposed the deletion of section 28 of the 1908 law, which allows a
person with immovable property in more than one state to register
documents relating to transfer in any of these states.

Many of
the changes proposed will also help in the award of compensation to land
owners under the proposed Right to Fair Compensation and Transparency
in Land Acquisition, Resettlement and Rehabilitation Bill, 2012, which
is pending before Parliament.

(Source: Mint Newspaper dated 09-08-2013)

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Nirav Shah

Young India & polls 2014

What do Indians want and what are their concerns?

In the rare cases where such questions are asked, there are no surprises: price rise, corruption, job creation, law and order, education and health, the precise ranking varying from survey to survey.

More than 50% of India’s population is under-25 and there will be a clutch of new voters in 2014. Priorities of under-25s aren’t necessarily the same as priorities of those over 65. With gerontocracy characterising political leadership, there is a disconnect between what Young India wants and what Old India thinks Young India wants.

Old India lives in yesterday and, unfortunately, uses its prism to deliver policies for tomorrow, when Old India will no longer be around. Young India will live in tomorrow and will be hamstrung by policies Old India fashions today.

One doesn’t know whether the structural shift will lead to a shift in electoral dynamics in 2014. What one does know is that few political parties and leaders have understood that a shift is taking place. This is reflected in discourse and debates and will be reflected in manifestos and vision documents. The Bible states, “Your young men will see visions, your old men will dream dreams.”

While the old men will dream of coming back to power, it should be a function of a vision that is sold to Young India of betterment of lives and economic empowerment, not doles and handouts. It should be a vision of where we want India to be in 2025, or beyond. That differentiates 20/20 vision from myopia.

(Source: The Economic Times dated 05-08-2013)

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Nirav Shah

Govt files review petition against SC verdicts on lawmakers

The Union government decided to take up cudgels on behalf of the political class, or at least those members of it who could find themselves on the wrong side of the law, and also opposed any move to place restrictions on the freebies they can promise voters in their manifestos.

Both moves were criticized by political reform activists who see them as part of efforts by the political establishment to protect its own interests.

The government filed a review petition in the Supreme Court (SC) against verdicts of the apex court that disqualified lawmakers who were convicted by a court and barred those in prison or those who had been convicted from contesting elections.

The decision, the petition said, would jeopardize a government that has a thin majority, they said, citing the contents of the petition. Supreme Court advocate Gopal Sankaranarayanan was critical of the government’s petition. “It boggles my mind as to how governance is anyway prejudiced if a criminal politician is allowed to continue in the House, with his disqualification stayed,” he said. “A wafer-thin majority government ought not to be protected merely because its majority is maintained on the shoulders of criminals.”

Section 8(4) of the Representation of People Act gave a window of opportunity to convicted lawmakers to appeal within three months, during which period, disqualification would not take effect. Disqualification would be on hold until the appeal was disposed of by the court. The apex court struck down this provision.

There has been strong opposition to the verdict by all political parties on the grounds that the “supremacy of the Parliament” should be maintained.

The petition asserted Parliament’s right to legislate on the disqualification of members, as the Constitution hasn’t specified the grounds. It also raised the issue of the irreversible impact of the disqualification to the extent that the reversal of a conviction wouldn’t lead to restoration of membership.

The government is also seeking a reference to a “larger constitution bench as it relates to interpretation of articles in the constitution” and that failure to do so would constitute an error.

Sankaranarayanan said the section is discriminatory.

“The simple fact is section 8 (4) discriminates between a sitting legislator and the rest of the populace, simply because one of them occupies a place of high position of power and the others don’t,” he said.

At the Election Commission-convened meeting, the political parties also opposed guidelines for manifestoes, criticizing a 5 July order of the apex court that asked the commission to come up with guidelines on freebies offered by parties in their manifestos.

All major national political parties said that there should be no such restriction.

(Source: Mint Newspaper dated 13-08-2013)

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Nirav Shah

India’s darkest hour – Companies, bankers and experts have all given up hope of an economic recovery

I recently spent a week in India meeting a wide range of economic participants – companies (both large and small), banks, industry experts and economic commentators. What is clear is that the economy is entering another down leg. The bountiful monsoon may save us to an extent, but things are getting worse in terms of industrial production and private sector capital expenditure.

Of the factors that were expected to lead to an acceleration in the rate of economic growth – falling interest rates, unclogging of the investment cycle and some pickup in exports – none seem to be playing out. In meeting after meeting, I felt that people had finally given up. All the enthusiasm generated by Finance Minister P Chidambaram in his first six months in office has dissipated. It is extraordinarily difficult to implement most of the policy.

Industrialists have absolutely no interest in making any fresh investments, and have very little confidence that projects that are currently stuck will start moving. Capital goods providers also seem to see little sign of the public sector investment stepup that the finance minister talks about. Domestic order books remain subdued. Even consumption seems vulnerable; most of the participants agreed that consumption beyond a point couldn’t keep growing independent of the broader economy.

Everyone is convinced that this growth slowdown is largely self-inflicted. We have lost the plot and cannot blame our travails on external factors. The business class has given up the hope that the country would ever get back to the high growth rates achieved in 2003-07. Most have made business plans assuming that growth will be at best six per cent over the coming few years. Cost cutting and asset rationalisation, not growth, are at the top of their agenda. The complaint that India was uncompetitive in terms of infrastructure, land, labour (adjusted for productivity) and capital remains. If this is true, how will any new manufacturing investment happen?

Most small and medium-sized entrepreneurs seem to be fed up with the daily harassment of doing business in India. Basically, when India was booming, the sheer adrenaline of growing at nine per cent was exciting enough for investors to put up with the hassles of doing business. Now at five per cent growth – and dropping – the upside of doing business here does not seem to justify the hassles. Every industrialist I met had bought property overseas in the last 18 months and was in the process of creating a parallel establishment as a hedge.

In short, the mood was deeply pessimistic. Many now fear for the country’s future. It is always darkest before the dawn, and this deep pessimism may be a contrarian indicator, but even rational and sensible people now seem to have given up. While it is truly difficult to be positive at present, one should not forget that we are a democracy with checks and balances. We have a very young and hugely aspirational population. The political system will eventually have to adapt to the needs and wishes of this huge demographic. We will have to make the systemic changes to bring growth back. It is wrong to think that we have permanently lost our way. The risk is that we could have some more pain ahead, maybe even a crisis before the required changes happen.

(Source: Extracts from an Article by Mr. Akash Prakash in Business Standard dated 30-07-2013)

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Nirav Shah

Civil Service – Why Durga’s Shakti matters for India

This is not about Durga Shakti anymore. It is about the many Durga Shaktis in the IAS and the paramount need to protect them. And this is about why Durga’s Shakti matters to not just the IAS, but also to India’s health as a democracy. It is about creating strong, upright civil servants and not civil “servants” and the need for the political executive to understand that honest, upright officers are not their personal vassals. It is about protecting and preserving the constitutional democracy of India whose lynchpin is the permanent executive working in tandem with the political executive, and where the former is not expected to be subservient to the latter, much less carry out its illegal orders.

The political executive needs to understand that every single enforcement action by any IAS officer will necessarily have a repercussion, both good and perhaps some bad, and indeed it must have a repercussion for it get to its desired objective and be effective. That must not become a convenient scapegoat for the political executive to suspend or even transfer inconvenient officers. Being a rubber stamp destroys institutions and, with them, individuals forever. The political executive must learn to have good officers around them, who may not and should not, always agree with them, which alone makes for impartial, honest advice. They need to learn to get along with those officers who know when to say “No Minister” as much as when to say “Yes Minister”.

In Durga’s specific case there is a clear violation of procedure by the government of UP. This makes for a manifestly colourable exercise of power. The UP government stands in violation of several provisions and the officers who signed the orders, without applying their mind and judgement, should have exemplary damages imposed on them by the courts.

Constitutional protection of the IAS under Article 311 is integral to our democracy and without it, India can might as well disband the IAS and bring in a USstyle spoils system instead.

What are young, conscientious IAS officers supposed to do when they witness violations of law in their jurisdiction? Wring their hands helplessly or take action? Who is causing communal tension- a senior minister sanctioning the loot of natural resources by invoking the name of God in full public view, or an officer who has stopped the encroachment of public land and upheld the spirit of the January 19, 2013 judgment of the Supreme Court?

IAS bashing is no longer the favourite avocation for India’s politicians; it is now their favourite vocation. Many in the IAS break the law, loot the exchequer, collude with a rapacious political executive and the common weal is often dammed in the process. Yet every single day, all across the country, away from the glare of the media, there are many more doing enormous good work and holding the country together in circumstances in which no corporate sector professional, or even members from the hallowed armed forces, would like to work in. They need to be treated with respect and fairness, especially by those who disagree with some decision of theirs, just as they are expected to treat others likewise.

(Source: Extracts from Article by Mr. Srivatsa Krishna in the Times of India dated 04-08-2013)

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Nirav Shah

India’s Ecosystem is Pro-Big, Anti-Small

Indices representing small and mid-cap stocks have plunged. Both small and mid-caps, on the other hand, are down about 25% each. The vertiginous drop in these indices represents the real story of Indian businesses. Sensex companies, with their deep pockets and even deeper connections to India’s political, administrative and financial elites, will weather most crises unscathed. But smaller companies, without any patrons, will come out bruised.

Decades of crony capitalism have created a deep division among India’s businesses: among those with access to the powers-that-be and those without. The former run giant businesses, relatively insulated from domestic or global turbulence. Smaller businesses, which include start-up and first-time ventures, are nimbler, more entrepreneurial and often more creative in the ways they go about things. That should have given them some advantages in a properly-functioning market. But in India, success hinges on massaging the system and clearing massive regulatory hurdles. One manufacturing project can require around 30 clearances from all levels of government. In this sort of market, smaller enterprises are punished. This is in stark contrast with the West: in Germany, the mid-cap index is up 33%, in London by 35% and in New York, small caps are up 31%.

This anti-democratic cronyism is likely to drive many small and mid-size businesses out of India. Already, sugar and farm companies in Maharashtra are planning to move parts of their businesses to Africa, where land is plentiful, local markets have demand, exports to Europe are duty-free and cronyism of the desi variety is absent. Unless India clears up the policy clutter, our nimbler companies will continue to vote with their feet.

(Source: The Economic Times dated 14-08-2013)

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Nirav Shah

A third of India’s top firms face severe debt crisis

Economic slowdown and the accompanying demand destruction have taken a heavy toll on India’s top companies. The worst-hit are those that had launched aggressive growth plans, largely funded through debt, believing the demand growth in the years to come would be robust.

Many of these firms now find themselves in a spiral of declining profitability, shrinking market capitalisation and rising liabilities. This raises a question mark over their financial viability. On this parameter, nearly a third of India’s top companies are either financially insolvent or on the verge of it. They can’t use equity markets to raise enough capital to fund these projects or lighten their debt burden. Of the 406 firms in the BSE-500 list (excluding banking and financial ones) that have declared their results so far, the market capitalisation of 143 is either below their debt or just a notch above. The sample includes companies with average market capitalisation (during July this year) of less than 1.5 times their net debt as at the end of 2012-13.

According to figures from Capitaline, at the end of March this year, these companies were sitting on a debt of Rs 13.2 lakh crore — nearly twice their average market capitalisation in July. Two years ago, however, it was the other way around. In July 2011, their market value was 40 per cent higher than their net debt. Over the past two years, their debt (adjusted for cash and other liquid investments on their books) has risen 61 per cent, while their market capitalisation has declined 40 per cent. This has shut for these companies the equity window for project funding or debt repayment.

The list includes companies like Tata Steel, Hindalco Industries, Tata Power, L&T, Jaypee Associates, Adani Power, GMR Infra, GVK Power, JSW Steel, Reliance Infra, IndianOil, HPCL, Shri Renuka Sugars, Bajaj Hindusthan and Suzlon. Their marketcap- to-debt-coverage ratio will look even worse if deferred tax liability and contingent liabilities are included. Most of these firms also have high debt-to-equity ratio (greater than 1.0), poor interest coverage ratio (less than 2.0) and falling profitability.

(Source: The Business Standard dated 12-08-2013)

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Nirav Shah

USA — Disciplinary proceedings against Auditors to be made public.

A bipartisan pair of influential senators introduced legislation that would make disciplinary hearings against auditing firms public.

The bill would change a provision of the Sarbanes- Oxley Act that requires the Public Company Accounting Oversight Board to keep disciplinary proceedings against auditing firms confidential. The proposed legislation, sponsored by Senators Jack Reed and Chuck Grassley is called the PCAOB Enforcement Transparency Act of 2011.

The current chairman of the PCAOB, also has called for making the disciplinary proceedings public, arguing that “secrecy has a variety of unfortunate consequences” and this “state of affairs is not good for investors, for the auditing profession, or for the public at large.”

The PCAOB is responsible for ensuring that auditors of public companies meet the highest standards of quality, independence, and ethics,” Reed said in a statement. “Reliable financial reporting is vital to the health of our economy and we must take the legislative steps necessary to enhance transparency in the PCAOB’s enforcement process. Currently, Congress, investors, and others are being denied critical information about an auditor’s disciplinary process. Investors and companies alike should be aware when the auditors and accountants they rely on have been charged or sanctioned for violating professional auditing standards.”

Lack of transparency surrounding disciplinary proceedings under current law can provide unscrupulous firms with an incentive to litigate cases in order to continue to shield conduct from the public.

One accounting firm that was the subject of a disciplinary proceeding issued no fewer than 29 additional audit reports on public companies during the course of the proceedings, they noted. Because of the confidential nature of the proceedings, those public companies and their investors were completely unaware there was a potential auditing problem with this accounting firm. Before the firm was expelled from public company auditing, it issued those audit reports, knowing all the while that it was subject to disciplinary proceedings, but investors were denied this information.

“Sunshine is the best disinfectant,” Grassley said. “This legislation levels the playing field between auditors reviewed by the SEC and auditors reviewed by the PCAOB. Currently, PCAOB proceedings are secret while SEC proceedings are not. The secrecy provides incentives to bad actors to extend the proceedings as long as possible, so they can continue to do business without notice to businesses about potential problems with a particular auditor. This bill ends the secrecy and brings the kind of transparency that adds accountability to agency proceedings.”

They argued that the PCAOB’s closed proceedings run counter to the public enforcement proceedings of other regulators. Not only the SEC, but also the Labour Department, the Federal Deposit Insurance Corporation, the U.S. Commodity Futures Trading Commission, and other government agencies use public proceedings, as does the self-regulating Financial Industry Regulatory Authority. Nearly all administrative proceedings brought by the SEC against public companies, brokers, dealers, investment advisers and others are open, public proceedings.

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Nirav Shah

Supreme Court : Lending firms must follow norms before ‘re-possession’.

The Supreme Court last week cautioned hire purchase firms not to take goods forcibly but follow the norms set by the Reserve Bank of India. In the judgment, Citicorp Maruti Finance Ltd. v. S. Vijayalaxmi, it emphasised that “in case of mortgaged goods subject to hire purchase agreements, the recovery process has to be in accordance with law.” The Court noted that the recovery process referred to in the agreements also contemplated such recovery to be effected in due process of law and not by use of force. “Till such time as the ownership is not transferred to the purchaser, the hirer normally continues to be the owner of the goods, but that does not entitle him on the strength of the agreement to take back possession of the vehicle by use of force. The guidelines which had been laid down by the Reserve Bank of India support and make a virtue of such conduct. If any action is taken for recovery in violation of such guidelines or the principles as laid down by this Court, such an action cannot but be struck down.”

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Nirav Shah

It’s disruption, not dissent: Deepak Parekh

HDFC chairman Deepak Parekh and MP Ashok Ganguly issued a statement urging corporate India to throw its weight behind the government on the retail FDI issue. “We felt very strongly about this because we had raised the issue of policy inaction and now that they are trying to do something, there is so much opposition. What is happening today is disruption, not dissent,” said Parekh. He added that industry was unanimously in support of FDI in retail and so were Indian farmers.

“Nowhere in the world is there a four-times difference between what the farmer gets and what the retailer pays,” he said. According to the two leaders, opposition to FDI is coming from vested interests to the detriment of the majority. It points out that indigenous retail outlets — the kirana stores — suffer more because of political bandhs than because of competition. “FDI in retail has not been a sudden decision taken by the government. On the contrary, the idea has been toyed with for over 14 years. Detailed discussions with various stakeholders have been held, experts consulted and studies commissioned based on international experiences of organised retailing.”

“What is intriguing and bewildering is that the false alarm of FDI is continuing to be used after so many years, as a bogey in modern times against foreigners and foreign investment,” it said. The statement comes at a time when filibustering over the bill to allow FDI in retail has derailed the Parliament functioning. “There are 32 bills in this winter session of the Parliament for consideration and passing, many of which are of far greater consequence and importance for the country than FDI in retail. The protests on FDI in retail are misconceived and unfortunate, but hope to salvage this situation should not be lost,” the statement said.

The authors have pointed out that earlier this year many concerned with the country’s economic prospects had asked the government to stem the slowdown, increase investments and bring in new reforms. “No one objected till then. But when the government began to act, what have we, but chaos and adjournments over a decision to allow foreign direct investment in retail,” the statement said.

The group of 14 which had come together on issues relating to the economy included Wipro’s Azim Premji, ICICI’s N. Vaghul, industrialists Keshub Mahindra, Jamshyd Godrej and Anu Aga, former RBI governors M. Narasimham and Bimal Jalan (now a Rajya Sabha member), Justices B. N. Srikrishna and Sam Variava, architect of key Sebi and RBI regulations Yezdi Malegam, member of the PM’s Economic Advisory Council A. Vaidyanathan, and banker-turned-social worker Nachiket Mor.

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Nirav Shah

Reebok working on $ 1 shoe

After low-cost airlines and vehicles, it’s now time for low-cost footwear. Sportswear maker Reebok is working on a project that could lead to the introduction of a shoe that is priced at $1, or around Rs.50. Reebok International, which is in the process of rolling out the project, said it will soon test the technical feasibility of ‘producing a durable, functional and affordable shoe’ before launching it in India.

In 2008, Herbert Hainer, CEO Adidas Group, which consists of the brand Reebok, had begun discussions with Grameen Bank founder Muhammad Yunus. This was followed by the development, marketing and distribution of low-cost footwear in Bangladesh in the form of a social business, which the Adidas Group expressed interest in.

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Nirav Shah

8 Indians in world’s top thinkers list

India’s intellectual potential just got a branding shot in the arm when eight Indians made it to Thinkers 50 — a bi-annual global ranking of 50 most influential thinkers.

At number three is Vijay Govindarajan, professor of international business at Tuck School of Business at Dartmouth College in New Hampshire in the US, while Nitin Nohria, dean of Harvard Business School came in at number 13 on the list, compiled by consultancy Crainer Dearlove promoted by Stuart Crainer and Des Dearlove.

Govindarajan, author of The Other Side of Innovation that focusses on how to turn an innovative idea into a successful commercial business, moved up from 24th position in the 2009 list and 23rd position in the 2007 list.

In 2008, on a sabbatical from his university, he joined General Electric (GE) for 24 months as its first Professor in Residence and Chief Innovation Consultant. Govindarajan also created ripples in the world of innovation when he posed a global challenge of how to build a $300 house.

“The Thinkers 50 ranking has kept pace with ideas that are shaping the daily agenda of global businesses and managers, and the ranking is a guide to which thinkers are in, and who have been consigned to business history,” According to the Thinkers 50 website, to arrive at the list of the final 50, panelists rely on criteria such as “originality of ideas, practicality of ideas, presentation style, written communication, loyalty of followers, business sense, international outlook, rigour of research, impact of ideas and the elusive guru factor.”

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Nirav Shah

New Quit India Movement? — India’s billionaires talk of getting out.

The government may have saved its political skin by putting FDI in retail on hold, but it has added to the sense of gloom that’s engulfing India Inc. For the past several weeks, there’s been a depressing drumbeat of stories of Indian businessmen choosing the relatively low growth, high-stability option of investing abroad over the uncertainty of launching new ventures at home.

Says the India-head of a fabled global investment bank, “For me, there’s no slowdown. My plate’s full with mandates from Indian companies looking at acquisitions abroad”.

But it’s not just about the flight of investments anymore. Several Indian billionaires say they are frustrated enough to want to shift base overseas and run their increasingly transnational business empires from cities like London and Singapore. “I’m sick and tired of what’s happening here. I don’t want to live in this country anymore,” said one of India’s biggest barons.

The reasons are mainly twofold: the policy paralysis brought on by a politically weak and scam-struck government, compounded by obstructionist competitive politics; and the climate of fear that has spread because of the raids on and arrests of businessmen. They have a third, more specific grouse (not that it’s new): the time and hassle it takes to get environmental clearance and acquire land.

Bulge-bracket businessmen — from industries as diverse as telecom and textiles, aviation and steel, real estate and minerals — are talking ‘Quit India’, but obviously not in public. They may be exaggerating their angst, but for the first time since the dawn of liberalisation 20 years ago, the India story seems to be dimming compared to the welcoming lights of foreign shores. As RPG Enterprises chairman Harsh Goenka quips, “We are looking for the red carpet, not for red tape.”

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Nirav Shah

Certainty of justice can deter rapists more than the severity of punishment

The three-member committee, led by former Chief Justice J S Verma, that is to suggest amendments on laws dealing with sexual assault, must listen to and take on board suggestions from women’s and civil society groups too, not just from political parties. The shock and anger about the gang rape in New Delhi, and the victim’s death, must not translate into a misplaced overemphasis on harshness of laws. Rather, as the measure to institute fast-track courts to death with rapes and crimes against women highlights, the stress should be on enforcing the swiftness and inevitability of justice.

It is a moot point whether the severity of punishment has, and can, act as a deterrent against any crime if that punishment is deferred indefinitely. And given the debacles, stigma and inherent biases victims of rapes face in India, it is necessary to first ensure things like unfailing registration of complaints, and then a speedy investigation and conviction of the perpetrators. The abysmally low conviction rate on rapes is testimony to the fact that these drawbacks in the justice delivery system are most responsible for many perpetrators walking away scot free â€” even as most rape cases are never even reported because of stigma, pressures and plain coercion. The certainty of the law catching up, and swiftly, is what can deter such crimes more than the spectre of being hanged to death, for example.

While being commensurate with the severity of a crime, the law also needs to encompass all forms of molestation and sexual assault against women. The law, the justice delivery mechanisms, must be geared to protect, encourage and aid the victim in seeking and getting that justice, not further traumatise her, as is the case now. Care must also be taken that rape laws aren’t misused by, for example, parents who seek to control and punish their offspring for relationships they don’t approve of. In the broader perspective, rape is a crime of patriarchy; eliminating the various forms of the latter will be a wider, perhaps slower process. But the law can make a beginning; and its framing, now, must be a genuinely consultative process.

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Nirav Shah

Asking for trouble – Bank licences to industrial houses are a serious error

India has not issued a new bank licence since 2004. There is a persuasive case to be made that India’s banking sector needs to be more open; but aspects of the recent decision to award more licences are, none the less, disquieting. Well-informed voices from across the spectrum of opinion have, in the past few days, been raised against the proposal to allow large business conglomerates to set up banks if they have a “successful track record” – judged, presumably, by the licensing authority – and a minimum capital of Rs 500 crore. The head of the Prime Minister’s Economic Advisory Council, C Rangarajan, has urged the Reserve Bank of India ( RBI) to start by issuing licences to “non-corporate businesses” first, and to look elsewhere only if there are no such qualified applicants.

The left-leaning Columbia University economics professor and Nobel laureate Joseph Stiglitz said in an interview that it would be “very risky” to allow companies to own banks. It was not allowed in the US, he added, and correctly so; the conflicts of interest that it would open up were “sufficiently great” and regulators would “not be able to circumscribe them easily — or at all”. And the right-leaning economist Percy Mistry has also said allowing industrial houses to run banks would leave “massive scope for malfeasance”. Japan, he pointed out, is one country where banks and industries are enmeshed with each other, and it is still to emerge from a twodecade- old financial crisis.

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Nirav Shah

Crackdown on Shell Firms, Benami Directors – Onus for verification to be on CAs

In a massive clean-up exercise to address the ageold problem of shell companies and directors with questionable credentials, the ministry of corporate affairs (MCA) has tightened the rules governing the registration of addresses and appointment of directors. The exercise has been set off through a series of notifications amending key rules.

The ministry has amended Form 18, the standard filing for details of the registered office or any change in it. Under the new form, the onus will be on the chartered accountant (CA), cost accountant or company secretary (CS) to physically verify the filing and check the existence of a firm.

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Nirav Shah

Harvard and the Kumbh Mela

An estimated 10 million people bathed in the Ganga on Monday, the first day of the ongoing Maha Kumbh Mela at Allahabad. It is billed as the biggest single religious gathering in the world.

Behind the massive show of religious devotion is a quiet secular machine that services the millions who pour into Allahabad for the Kumbh Melas. The details are mind boggling. The crowd on the main days is large enough to be visible from space satellites. Some 25,000 tonnes of foodgrains are sent to feed the pilgrims. About 700,000 tents are erected to house the visitors. Pipes have to be laid so that clean drinking water is available. A temporary super-specialty hospital has been built for anybody who falls seriously sick. Thirty-one police stations and 41 police check-posts have come up to maintain law and order. Massive television screens flash information about missing people. Thirty-six fire stations will get into the act in case there is a conflagration.

The entire effort is so unique that it has attracted the attention of Harvard University. Six of its departments are collaborating to understand the Kumbh Mela phenomenon: the Faculty of Arts and Sciences, Harvard Divinity School, Harvard Graduate School of Design, Harvard Business School, Harvard Medical School and the Harvard School of Public Health.

The South Asia Institute at Harvard notes on its website: “A temporary city is created every 12 years in Allahabad to house the Kumbh Mela’s many pilgrims. This city is laid out on a grid, constructed and deconstructed within a matter of weeks; within the grid, multiple aspects of contemporary urbanism come to fruition, including spatial zoning, an electricity grid, food and water distribution, physical infrastructure construction, mass vaccinations, public gathering spaces, and night-time social events.”

The megacity that magically pops up at Allahabad during the Kumbh Mela is as large as New York, London and Paris combined. The sheer scale of the effort shows that the Indian state machinery, usually a creaking mess, can be galvanized into action when there is the will to do something.

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Nirav Shah

Unlocking India’s potential – We can transform the country, eradicating poverty and unemployment, if we make the right moves

The United States of the early to mid-1900s has some striking parallels with the India of today. It was around this time that America began its journey towards becoming the world’s largest economy.

The biggest factors that propelled the growth and transformation of the US were technology, natural resources, manufacturing and private enterprise; a few men who dreamt big helped create the modern America.

All the five men were also great philanthropists who donated most of their wealth for the larger benefit of society. These were used to set up large universities, hospitals, museums, art and culture centres, libraries and charities. The universities also contributed as powerful research centres and acted as think tanks in areas of technology, material and space research, liberal arts and political science. Moreover, they helped develop political, business and other leaders. These created large employment opportunities and also spawned entrepreneurship.

America’s growth journey has some lessons for India. Both are large vibrant democracies with abundant natural resources. While America benefited from a large flow of immigrants in search of the American dream, India has a large population in the working age group. More importantly, like the US, India has people with entrepreneurial spirit who can visualise a new India and unleash its potential.

Five drivers – private enterprise, exploration of natural resources, development of manufacturing, tourism and simplification of regulatory and approval processes can be key to developing India as an all-round superpower.

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Nirav Shah

Indian franchisees pay too much royalty to their foreign HQs

The annual royalty that McDonald’s Indian franchisee will pay to the US-headquartered fast-food company is all set to go up from three per cent of net sales now to eight per cent by 2020. Ever since the government liberalised the royalty rules in 2010, there has been a sharp increase in payouts to foreign collaborators. An analysis by this newspaper of 75 companies listed on the Bombay Stock Exchange shows that royalty payments more than trebled between 2007-08 and 2011-12, though sales grew 80 per cent and net profit a little over 30 %. Proxy advisory firm Institutional Investors Advisory Services says that while the money remitted by the top three royalty-paying companies – Maruti Suzuki, ABB and Nestle India – jumped over three times from Rs 784 crore in 2007-08 to Rs 2,495 crore in 2011-12, their collective revenue increased only 1.8 times. It said four companies had paid no dividends in the last five years, though they had paid Rs 385 crore in royalty to their overseas partners. And, in one case, the Indian company had to fork out royalty to its Japanese promoter, though it had reported a loss for the year. Recently, ACC-Ambuja Cements had to cut the royalty payment to parent Holcim from two per cent of net sales to one per cent after the independent directors on the company’s board objected to the high payout.

There are at least three issues here. One, high royalty is iniquitous to minority shareholders. It is like a super dividend to the foreign shareholder. It reduces the net profit, and therefore causes the valuation of the Indian venture to fall. Also, since royalty is a commercial arrangement, minority shareholders have no say in it. They are seldom told the reason why it has been changed. Shareholder activists have, therefore, started demanding that royalty payments ought to be decided in the annual general meeting of shareholders, and any change must be cleared by 75 % of the shareholders. Two, the negotiations for royalty are often between the foreign promoter and the managers it has put in place. These managers have no incentive to drive a hard bargain; if they do, they could simply lose their jobs. It is, in that sense, a negotiation between non-equals. That’s perhaps the reason why multinational corporations have been able to extract favourable royalty terms from their Indian ventures. Three, royalty makes the government lose out on tax revenue.

The government ought to see the overall impact of its liberalised royalty regime, and then take corrective action. Royalty is paid for the use of the foreign partner’s technology, trademark or brand name. The government must scrutinise how real the technology transfer is and if the brand name of the foreign partner is indeed helping the Indian company charge a premium in the marketplace. Royalty has been a bone of contention between Indian business leaders and their overseas partners for a while. Several collaborations have fallen apart because of squabbles over royalty.

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Nirav Shah

Taxation, not litigation – Penalise tax dept for orders struck down by courts.

Tax reform need not focus merely on tax slabs and the nature of the laws governing taxation. It can, indeed it must, also look at the decision-making processes and the incentives governing those in charge of tax assessment. One good indication of the maladministration at work in this branch of the government is the overall number of tax orders that are eventually taken to be adjudicated to the tax appellate tribunals, and thenceforth to the high courts and the Supreme Court. Sukumar Mukhopadhyay, writing in his column in this newspaper earlier in the week, has quoted numbers that the minister of state for finance told Parliament in a written reply to a question. Over the past four years, the revenue department’s success rate at the tribunal level varied between 10 and 20 per cent. In other words, over 80 per cent of the revenue department’s claims were thrown out by the tribunal. The tax officials did a little better at the high court level, winning around 30 per cent of the time; but at the Supreme Court, they did much worse, losing about 90 per cent of their cases. (emphasis supplied)

These numbers make clear that India’s tax administration is frequently pressing taxpayers to pay money that is not required under law, and which will not stand up to judicial scrutiny or review. Yet recovery norms are being tightened, often forcing taxpayers to pay arbitrarily demanded amounts in a month, even while a stay application is being disposed of in the courts. This penalises taxpayers for legal delays, allowing the government to take their money and sit on it even when it is unjustified in law — and given the dilatory nature of legal proceedings, for many it will seem like it has vanished forever. More, appeal is nearautomatic even if the government loses at one level; taxpayers are forced to fight cases all the way up the judicial ladder. And once they win their case, companies litigating for indirect taxes frequently discover that the government refuses to refund the money anyway, claiming it would unjustly enrich the companies’ coffers, when the company was merely indirectly collecting taxes from consumers of their products for the government.

Reform of this dysfunctional process is overdue. The judiciary, of course, must move to speed up tax cases and the tax department should initiate efforts to bring down the number of legally untenable orders its appellate officers are handing out. This can, perhaps, happen through direct penalties being levied on officers who hand out a disproportionate number of subsequently overturned orders. But, as importantly, the tradition of automatic appeal and confiscation of money in the interim needs to end — which will in and of itself alter the incentives for the revenue department. There are many ways to do this. One possibility is that, if the tax department wishes to appeal once it has lost at a particular judicial level, it should pay a punitive interest rate on the money it holds.

The government has discovered that broadening the tax net is not easy. The reason that there continues to be widespread evasion and distrust is rooted in the unreformed and red-tapist nature of the tax administration. The time has come to change that, and ensuring that delayed justice does not incentivise arbitrary confiscation is a good place to start.

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Nirav Shah

An Analysis of Poverty

Scarcity is not just a physical constraint. It is also a mindset. When scarcity captures our attention, it changes how we think — whether it is at the level of milliseconds, hours, or days and weeks. By staying top of mind, it affects what we notice, how we weigh our choices, how we deliberate and, ultimately, what we decide and how we behave…

Because we are preoccupied by scarcity, because our minds constantly return to it, we have less mind to give to the rest of life. This is more than a metaphor. We can directly measure mental capacity or, as we call it, bandwidth…

We can measure executive control, a key resource that affects how impulsively we behave. And we find that scarcity reduces all these components of bandwidth — it makes us less insightful, less forward-thinking, less controlled. And the effects are large. Being poor, for example, reduces a person’s cognitive capacity more than going one full night without sleep. It is not that the poor have less bandwidth as individuals. Rather, it is that the experience of poverty reduces anyone’s bandwidth.

When we think of the poor, we naturally think of a shortage of money. When we think of the busy, or the lonely, we think of a shortage of time, or of friends. But our results suggest that scarcity of all varieties also leads to a shortage of bandwidth. And because bandwidth affects all aspects of behaviour, this shortage has consequences.

(Source: Extracts from “Scarcity: Why Having too Little Means so Much” by Sendhil Mullainathan in the Economic Times dated 06.11.2013)

Nirav Shah

Fictione Legis

‘Fictio’ in old Roman Law was a term of pleading and signified a false averment on the part of the plaintiff which the defendant was not allowed to traverse e.g. an averment that the plaintiff was a Roman citizen, when he was a foreigner, if the object was to give jurisdiction over him [Maine’s Anc. Law Ch. II]. The term, meaning ‘fiction’, therefore, came to be used for those things that have no real essence in their own body but are so accepted in law for a special purpose. In the words of Viscount Dunedin in CfT v. Bombay Trust Corporation, AIR 1930 PC 54, “Where a person is deemed to be something, the only meaning possible is that whereas he is not in reality that something, the Act of Parliament requires him to be treated as if he were”.

2. Fictions in law are created for definite purposes to result in a situation which would not otherwise have resulted and to treat an imaginary state of affairs as real. It is introduced for necessity, generally to avoid inequity caused by mischief made possible under general provisions and concepts of law. In tax laws the object is mainly ‘to prevent mischief arising out of circumvention of normal legal provisions resulting in tax avoidance while remaining within the confines of the law, as also to remove unintended consequences. The introduction of legal fictions thus introduces equity in legislation which is expressed in the maxim, “In fictione legis acquitas exist it” i.e. the legal fiction is consistent with equity. Beyond the purpose for which they are created legal fictions must injure no one as expressed in the maxim ‘fictio legis neminem ladit’.

3. The English law has always abounded in fictions, so are taxation laws in India. The unrestricted operation of treating the imaginary as real has the potentiality of upsetting the whole scheme of legislation and the basic fundamentals of law causing injury to untargeted subjects and areas and thus violating equity. Courts have, therefore, in keeping with the maxim, been cautioning against extending them beyond their legitimate field. The Apex court has repeatedly observed that legal fictions are created only for a definite purpose. They are limited to the purposes for which they are created and should not be extended beyond their legitimate field. [CfT v. Elphinstone Spg. & Wvg. Mills Co. Ltd., 40 ITR 124].

4. In CfT v. Amarchand N. Shroff, 48 ITR 59, the court was to interpret the fiction contained in S. 24B(1) of 1922 Act making a legal representative an assessee in respect of the income which the deceased would have earned had he not died. Attempt was made to extend the fiction to post-death income as well. The court disapproved extending the fiction, the legitimates purpose of which was to tax income earned upto the year in which death took place. As a result, the 1961 Act made a specific provision in S. 168 to cover income upto the date of complete distribution of assets.

5. Commenting on Rule 8 of the Income-tax Rules which apportions the business income of the growers and manufacturers of tea, between agricultural and business income in the context of deduction u/s.80 HHC, the Calcutta High Court in Warren Tea Ltd v. UOf, 236 ITR 492 held that the applicability of the fiction is limited to computation of taxable income from business by apportioning the total business income computed after all deductions and, accordingly, held that since the stage of grant of deduction u/s.80HHC would be at the time before applying Rule 8 and not after apportionment is made, the Rule cannot be extended to computation of deduction u/s.80HHC. On that basis it struck down the CBDT Circular No. 600 dated May 23, 1991.

6. Fictions are suppositions and, unless it is clearly and expressly provided, it is not permissible to impose a supposition on a supposition of law. In Executors and Trustees of Sir Cawasji Jehangir v. CFT, 35 ITR 537, the Bombay High Court was to consider the scope of the jictio juris’ in S. 23A of the 1922 Act under which the undistributed income of the company, as computed in accordance with that provision, was deemed to have been distributed as dividend amongst the shareholders and included in their total income as such. The issue arose that if such income of the company constituted partly of capital gains, should the dividend which is deemed as distributed also be apportioned between capital gains and dividend in the hands of the shareholder. While accepting that full effect has to ‘fictio juris’ the court ruled out sub-joining or tacking a fiction upon fiction and observed that there is nothing even remotely suggesting the assessee to identify himself with the company or to assert an equivalence between his income and the income of the company. The argument, if accepted, would amount to imposing supposition upon the supposition of law.

7. Within its legitimate area of application, the fictione legis has to have its full effect. The question of chargeability of interest u/s.234B and u/s.234C came for consideration before the Gauhati High Court in Assam Bengal Carriers Ltd v. CIT, 239 ITR 862. Brushing aside all the arguments based on the impracticability of estimation of income before the book profit is arrived at, the Court directed full effect to be given to the fiction contained in the provision with its obvious fall out. Observing that, where fall out of the fiction leads to an obvious inference, there can be no half way house, the court held S. 234B & S. 234C applicable even in case where income is determined u/s.115JB. They quoted with approval the following observations of Lord Asquith in East End Dwellings Co. Ltd v. Finsbury Borough Council, (1951) 2 All ER 587 (HL) which was also relied upon by the Bombay High Court in the case of Executors and Trustees of Sir Cawasji Jehangir (supra).

“If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real, the conse-quences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it”.

The Supreme Court, however, in CIT v. Kwality Biscuits Ltd., 284 ITR 434 disapproved the judgment of the Gauhati High Court on a different ground of the impracticability of arriving at the total income before arriving at the ‘book profit’.

8. In a recent judgement delivered by the Special Bench of the Ahmedabad Tribunal in Assistant Commissioner of Income-tax v. Goldmine Shares and Finance P. Ldt 302 ITR (AT) 208, the Tribunal considered the fiction contained in S. 80IA(5) which bids one to treat the eligible business as the only source of income of an undertaking. Applying the observations of Lord Asquith (supra), the Tribunal took note of the consequences and incidents flowing from it and held that the profit from the eligible business for the purpose of deduction u/s.80IA has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years.

9. Fictions are generally by way of deeming provisions where imaginary or unreal state of affairs is deemed to exist in the presence of certain facts. Income-tax Act abounds in deemed provisions in which, all are not restricted to imaginary state only. Deemed provisions are sometimes used to give an artificial construction to a word or phrase that would otherwise not prevail. A clear example is to be found in the provisions of S. 2(22)(e) of the Act deeming advances to specified persons as dividend to shareholders. The Act defines ‘Income’ in an inclusive manner including receipts of the nature which would not otherwise be taken as such. They are also used to put beyond doubt a particular construction that might otherwise be capable of different interpretation. One may refer to the provisions of S. 9 which deems certain income as accruing or arising in India to keep them outside the pale of uncertainly. We have fiction in S. 45(3) and S. 45(4) to avoid unintended situation legalised by courts decisions and S. 115 JB to partly neutralise the impact of various tax incentives and thus introduce horizontal equity. All these provisions involve some digression from the normal provisions and the concepts in tax law. The peculiar sense in which the provision is employed has to be judged in the light of the scheme of the section and the context in which deeming is made.

10. Fictions in law, therefore, give completeness to the scheme of law and the intention of the legislature.

Nirav Shah

The Professional

Title:   The Professional
Author:   Subroto Bagchi, Gardener and Vice-Chairperson, MindTree Limited
Price:   Rs.399
Publisher: Penguin (Portfolio)
Author’s official website : http://www.mindtree.com/subrotobagchi

The Satyam episode led to some uncomfortable situations for us CA-professionals. The general public did tend to paint us all with the same brush. It may have led to some uncomfortable encounters at networking events when people came up to us during the tea-break and questioned us about ‘our profession’. Hopefully we will never have to face such a scenario again.

This incident brought to the forefront the moot question. Does having a professional qualification (say: the much coveted CA tag), make one a professional?

The answer is no. Anyone can with the right amount of hard work (and luck, as most of us CAs would like to add) can acquire a professional degree. However, it is the ability to stay true to ourselves and our vocation that makes us a true professional.

Subroto Bagchi, Gardener and Vice-Chairperson to the Board, MindTree Limited in his latest book ‘The Professional’ answers this important question: What does it take to be considered a true professional in any field?

‘The Professional’ comprises of seven distinct parts and the author does tell us to read each part sequentially in the order it is presented in the book, so as to get the maximum benefit from it. Each part comprises of short narratives drawn from real-life – both positive and negative examples – covering various professions and work-life scenarios. These narratives comprise situations which you and I have encountered/witnessed or are most likely to encounter or witness as we move up in our professional careers.

Part 1, explains the concept of integrity and how and why it is the key stone of professionalism, In fact, during the c.ourse of writing this book, Subroto Bagchi reached out to a group of people whom he admired for their professionalism and asked them to share the qualities of a professional. Integrity was a quality that topped. Little wonder then, that integrity is also the key stone of this book.

In Part 2, we move on to read about self-awareness and learn some valuable lessons, which include the power to say NO, which can be daunting when we have not yet risen in our career and the need to be generous, gracious and courteous to others when we are at the pinnacle of our professional career. Part 3 deals with basic qualities that make one a well rounded professional. Subroto Bagchi calls the first three parts, the foundational pillars.

As people become more experienced they have to deal with a larger volume of work, responsibilities and complexity. Yes, Part 4 and 5 provide us tools to cope with this. Integrity also makes good business sense and Subroto Bagchi describes this with ample illustrations, those of his own and those which he witnessed. The Abilene Paradox, where people agree to do strange things, when they suppress their own voice and simply go along with what everyone else is saying has been well described in the back drop of the Satyam episode. Yes, the voice of dissent plays a very important role and this is not the same as unconstructive criticism or plain whining.

All of us increasingly have to operate in global market-place. Part 6 guides us on how best to do so. Based on his experiences, Subroto Bagchi touches upon important facets of : Inclusion and Gender, Cross Cultural Sensitivity, Governance, Intellectual Property and Sustainability. Towards the end of the book is a chapter titled ‘The Unprofessional,’ with a list of ten markers of unprofessional conduct, such as: Missing a deadline, Non-escalation of issues on time, Non-disclosure, Not respecting privacy of information, Not respecting ‘need to know’, Plagiarism, Passing on the blame, Overstating qualifica-tions and experience, Mindless job-hopping and Unsuitable appearance.

There is no beginning or end in being a professional it is a life-long learning curve. Yet, this book provides a handy, well illustrated, tool-kit to be a better professional. Ultimately Professionalism boils down to individual choice, and indeed it is for you and me to continue on the path towards becoming a better professional.

A paragraph in the book aptly states this: ‘A doctor becomes part of an insurance fraud. A policeman colludes with a criminal. A lawyer bribes a judge. In each instance, the professional breach is justified as the price to be paid to be part of a system. The truth is, it is an individual choice”.

Subroto Bagchi in his book adds : ” … Society on the while may not always put a premium on the practice of professional values and hence most people do not incorporate it into their lives. But practising professional values is about who you are and what you want to be known as – a professional or merely professionally qualified. And, in the end, even the most corrupt society hails the ones that choose to be different.”

This itself, gives me hope. Amen.

Subroto Bagchi speaks to BCAS members:

No one can become a professional just by acquiring a so-called professional degree or diploma. Some practising individuals who have a professional education behind them and a few years of experience, think that they are professionals. Neither qualification nor just the skill makes you worthy of being called ‘a professional’. In reality, it requires much more than that. That capacity, to build a professional reputation, which only a few can, comes from building ‘affective regard’ for your profession, it comes from conscious practice of unique tenets of a profession, it is about sustained self-regulation.

In the end, professionalism is about personal choices we must make, prices we have to be willing to pay and sometimes, choosing the right over the convenient is a difficult thing, even a risky thing. But it is that quality which separates the legends from the ordinary mortals.

Integrity is one of the key attributes of a good professional. It is here that organisations such as the Bombay Chartered Accountants Society (BCAS) have a huge role to play. Integrity can be taught. It is because the idea is based on the principles of natural justice. It is our natural state. Most people, most of the times are reasonable, they want to live in harmony and that means they have a natural affinity for fairness. When people are given an understanding of the concept of integrity and the power of self-regulation, most people can lead a life without contradictions. I have also seen people change for the better when they are given the right environment and the knowledge. The seeds of integrity can be sown in the minds of young CA students and CAs through collective efforts, such as by the BCAS.

Nirav Shah

44TH RESIDENTIAL REFRESHER COURSE (RRC) OF BOMBAY CHARTERED ACCOUNTANTS’ SOCIETY (BCAS)

44th RRC of BCAS was held at Matheran during 22nd to 25th January 2011 at Hotel Usha Askots and Hotel Byke.

Participants reached Matheran by lunch time on 22nd January 2011, after having fun of travelling through mountains upto Dasturi and then walking through enjoyable & cool forest. Some of them took narrow-gauge train to reach Matheran avoiding the walk.

DAY 1: INAUGURAL SESSION

Mr. Mayur Nayak President of the Society welcomed the members. He explained the need to think in different way in the present situation and for that purpose chartered accountants need to know importance of Group Leading and Group Discussion. He mentioned how this is helpful in career path. For the benefit of the outstation members attending the RRC, he narrated Society’s activities which are conducted through out the year.

Mr. Uday Sathaye Chairman of the Seminar Committee in his opening remarks, highlighted other activities of the Seminar Committee which are gaining popularity and success like study tours in the form of interactive meetings with Industry in various parts of the Country. He mentioned about the subjects chosen for the RRC and thanked all the Paper Writers for giving justice to the subjects. He reitirated the need of having many Group Leaders and not only listeners.

RRC was inaugurated by Mr. K. C. Narang, Past President of the Society, by lighting of the traditional lamp. He expressed his views in regard to various issues which have arisen on account of the current trend of giving importance to material aspects of life. He felt that even though change is an accepted part of life, departure from certain age old principles is unnecessary. In his opinion, while one should welcome good things from the Western part of the world, one should not follow them blindly without considering the Indian Ethos.

In the inaugural session Mr. Mukund Chitale, Past President of ICAI was felicitated for his appointment as the Chairman of National Advisory Committee on Accounting Standards (NACAS). It is indeed a great acheivement and honour.

Mr. Pradip Thanawala Vice President of the Society proposed Vote of Thanks.After the inaugural session Mr. Sourabh Soparkar, advocate in his presentation covered various issues relating to Mergers, Demergers and Acquisitions. His clinical analysis on the controversies in relation to business restructuring was unique. He also dealt with some aspects of individual taxation with respect to agricultural land. His presentation was very well received by the participants.

This session was chaired by Mr. Kishor Karia, Past President of the Society.

The day ended with tasty dinner.

Day : 2

After the breakfast, participants discussed the paper written by Mr. K.C. Devdas, chartered accountant on Recent Judgments in Direct Taxes. The Group Discussion was followed by a presentation paper.

Mr. Mukund Chitale Past President of ICAI presented his views on Opportunities and Concerns in Bank Audit. He explained about the wide range of opportunities available to the Chartered Accountants in the Banking Industry. He pointed out that the regulators, the stake holders and general public expect level of comfort and for that purpose they look at audit reports. He explained how risk factors should be considered while carrying out various assignments. His command over the subject and presentation skills made the session very lively.This session was chaired by Mr. Uday Sathaye, Past President of the Society.

Thereafter the Mr. K. C. Devdas, chartered accountant analyzed the implications and rationale of various Tribunal, High Court, and Supreme Court Judgments. He explained that every decision of the judgment forum is with respect to a set of facts and it is important for readers to appreciate these facts before using the judgment for any purpose. He also felt that retrospective amendments, to unsettle the settled position of law, should be avoided as it causes hardship to innocent tax payers.

This session was chaired by Mr. Anil Sathe, Past President of the Society.

In the evening participants enjoyed an entertainment program before the dinner.

Day 3:

After the breakfast, some of the participants discussed the paper written by Mr. Sunil Gabhawalla, chartered accountant on Case Studies in Service Tax and others discussed paper written by chartered accountant Mrs. Geeta Jani ,on Case Studies in International Taxation. For the first time two papers were discussed simultaneously considering the era of specialisation and requirement of focused study. After the Group Discussion, both the Paper Writers dealt with their respective subjects simultaneously at different locations.

Mrs. Geeta Jani dealt with various cases on International Taxation which are of relevance to participants in their day to day practice. She also dwelt upon the possible scenario, once the Direct Taxes Code became a law. She also discussed possible impact of Controlled Finance Corporations (CFC) Regulations, a concept which is new India.

This session was chaired by Mr. Rajesh Kothari, Past President of the Society.

Mr. Sunil Gabhawala dealt with Case Studies in Service Tax making his presentation very interesting and satisfied the participants by resolving issues raised during the Group Discussion. Service Tax today is gaining importance with more services being added to the Service Tax net. Issues raised by him are of significance to all. His depth of knowledge in Service Tax and masterly analysis was indeed a treat for the participants.This session was chaired by Mr. Govind Goyal, Past President of the Society.

Thereafter Mr. Khurshed Pastakia, chartered accountant presented paper on IFRS – Recent Developments. He informed the participants about the impact of IFRS on

Indian Economy. He was of the view that though there would be a number of issues in implementation of certain standards, given the fact that India is committed for convergence of IFRS, these should be overcome by continuous dialogue between the Industry, the Profession and the Regulators.

This session was chaired by Mr. Ashok Dhere, Past President of the Society.

In the evening an unique and innovative programme — RRC Nostalgia was held for the first time in the history of RRC. In this program views of three Past Presidents of the Society, were presented namely Mr. Pradyumnabhai Shah, Mr. Hemendra Shah and Mr. C. C. Dalal, as recorded through video. They had attended the First RRC of the Society at Matheran. Other Past Presidents present at the 44th RRC also presented their views and shared some memories of RRCs in the past. Almost all Past Presidents were of

the opinion that Group Discussion with active participation by all participants is the foundation of RRC. This is the Motto of RRC right from the beginning which should not be forgotten in the current times of presentation of papers on screen. This message is very important for the mutual benefit of all professionals irrespective of their age. Few participants from the audience added glory to the programme by sharing their thoughts.

This programme was ably anchored by Mr. Ameet Patel, Past President of the Society.

The day ended with Gala Dinner and Musical Evening.

Day 4:

After the breakfast the participants discussed the paper written by Mr. Pradip Kapasi, chartered accountant on Capital Gains – Some Current Issues. The Group Discussion was followed by his presentation on the subject. He dealt with some burning issues affecting the general tax paying assesses. He analysed in great detail vigours of section 50C of the Income-tax Act. He explained various precautions that are necessary to be taken to mitigate the problems caused by the deeming fictions contained in section 45 (2), 45 (3) and 45 (4). His command over the topic and flawless analysis resulted in participants giving him a very patient hearing.

This session was chaired by Mr. Pradeep Shah, Past President of the Society.

In concluding session Mr. Uday Sathaye, Chairman Seminar Committee took an overview of the RRC and recognised the contribution made by everybody in general and Mr. Nayan Parikh, Past President of the Society in particular for his innovative idea of design of Paper Book which was appreciated by all the participants. Mr. Mayur Nayak, President of the Society thanked everybody for making the RRC memorable in the history of Society. Participants departed after lunch to their respective destinations with a commitment to meet again next year at 45th RRC.

Nirav Shah

RBI governor issues warning on loan waivers

Reserve Bank of India governor Raghuram Rajan has cautioned finance secretaries of state governments against debt waiver schemes as banks are already starved of capital. the warning came during a conference of the state finance secretaries.

In the meeting, Rajan said that the debt waiver schemes announced by state governments have an adverse impact on the financial health of banks. He added that the banking sector’s capital needs have gone up due to enhanced prudential requirements and rise in bad loans due to the slowdown in the economy.

The RBI governor highlighted the challenges faced by the country last year in tackling the serious issues relating to current account deficit (CAD), growth slowdown, fiscal consolidation and inflation management and steps taken to restore confidence in the macro economy of the country.

He referred to the decline in financial savings and consequential challenges to debt management when growth and private sector credit would pick up.

Earlier, RBI deputy governor harun Khan focused on channelising financial savings with the formal financial system — like bank deposits, equity, fixed income securities and insurance products — for efficient financial intermediation. he stressed that more concerted and coordinated measures would be needed by the state government along with the national regulators to prevent flow of peoples’ savings into unauthorized, illegal and unviable schemes by dubious entities.

Besides Rajan, SEBI Chairman U. K. Sinha also addressed the conference. Sinha said that recent changes in the SEBI Act enable it to control unauthorised deposit schemes. he sought cooperation of the state governments in this initiative by conducting concerted investor awareness programmes and imparting training to the officials. He suggested that States should enact depositors’ investor protection act and strengthen the enforcement mechanism. he further sought co-operation of the State Governments in curbing “dabba trading.”

(Source: Times of India dated 26-08-2014)

Nirav Shah

Arvind Kejriwal, A Messiah Against Crony Capitalists.

“Society does not go down because of the activities of the criminals but because of the inactivities of the good people”- Swami Vivekananda

In a country which was used to the traditional parties coming back to power again and again with no intention to change the status quo, Aam Aadmi Party’ s (AAP) ascent to power in Delhi was a breathe of fresh air.

This is almost the first time in the history of this country an infant political party formed with the sole aim of providing clean and honest governance had captured the imagination of the people in such a short time. They ran an honest and clean campaign with full disclosure of their funding, which is, quite alien to the current political system in the country. They got enough seats but still not enough to form the government on their own.

The Congress party gave its support, without even it being sought for, as the mandate of the people became very clear. The main agenda of AAP was to bring in the Jan Lokpal Bill and the Swaraj Bill which is core to its agenda of clean and honest governance while empowering the citizens.

One needs to understand that AAP is not a traditional political party. AAP from day one made its intentions very clear that it is not going to play by the status-quo and would resort to unconventional means, if required, to achieve its goals. They were fearless to take on any system or individuals to prove their point. Some call it anarchy while many call it revolution.

There are divergent views on the constitutional powers of the Delhi assembly to pass Jan Lokpal bill without the consent of the Central Government. Without getting into the merits of such arguments, they are two things, which I think are important.

First, what is the use of the power if you can’t bring the change you want to bring in? AAP’s core agenda is to pass the Jan Lokpal Bill and Swaraj Bill in the Delhi Assembly. If the existing system does not allow them to pass such laws, for whatever reasons, without falling into the trap of the traditional status quoits compromises which the system demands, what is the use of such power?

Second, with the dependency on Congress and BJP being very high to pass the bill, waiting for some more time is not going to help. If both Congress and BJP wanted a strong Lokpal Bill as requested by Anna and his team including Arvind Kejriwal, they could have passed astrong Lokpal Bill in the Parliament itself. The diluted Lokpal Bill passed in the Parliament is a testimony to their intentions. Going to courts is not an option as the timelines are long.

One can hate him, ignore him or term him as an anarchist. But, majority will see him as a crusader who had questioned the current system and asked the most difficult questions which the mainstream parties are scared to ask. He will be seen as a messiah who had sacrificed the power just to fight against the crony capitalism and corruption in this country. His focus on providing clean governance where honest enterprises can do business and flourish, will resonate well with majority of the corporate that are honest.

By resigning, Arvind Kejriwal had clearly made Corruption, Clean governance and Crony capitalism (three “C”s) as the main issues for the 2014 parliamentary elections. It will clearly resonate well with larger sections of the electorate who are honest. I strongly believe that it is very important for the idea of AAP to succeed, as its failure will only take the Crony capitalism and Corruption to disproportionate levels.

(Source: Extract from an article by V. Balakrishnan in The Economic Times of India, dated 17-02-2014)

Nirav Shah

47th Residential Refresher Course (RRC) of Bombay Chartered Accountants Society (BCAS)

47th RRC of BCAS was held at Hotel Dreamland, Mahabaleshwar from 9th January to 12th January, 2014. The total number of participants enrolled for the RRC was 203.

Most of the RRC Participants reached Mahabaleshwar by lunch time on 9th January 2014. Around 50 of them used the travel arrangements made by BCAS from Mumbai to Mahabaleshwar. This time the Seminar Committee made special arrangements to welcome all the participants with a personalised pen and a gift hamper which was well appreciated.

DAY 1:

The RRC began with the Group Discussion on the paper written by CA Vishal Gada on Case Studies in Taxation.

In the Inaugural function which was held in the evening, CA Naushad Panjwani, President of the Society welcomed the members and gave an overview of the activities which are conducted by the Society.

CA Rajesh Shah, Chairman of Seminar Committee gave a bird’s eye view of the selection of the subjects for the RRC, the entire process of arrangements for organising the RRC and thanked all the managing committee and seminar committee members for their support and the paper writers and brain trustees for sparing their time and sharing their knowledge with the participants.

The RRC was inaugurated by the Chief Guest CA V. C. Darak, by lighting the traditional lamp. Vice President CA Nitin Singhala introduced the Chief Guest of the RRC. CA V C Darak, in his address, spoke about the values and principles in our professional life.

CA Narayan Pasari, Convenor of the Seminar Committee proposed a hearty Vote of Thanks to the Chief Guest.

After the inaugural session, CA Amarjit Chopra, Past President of ICAI gave his presentation on “Companies Act, 2013 – Challenges in Accounting and Auditing” in his own humorous style covering all the issues related to the topic including some very serious and harsh provisions of the Act. He was concerned about the impact of some stray incidences like “Satyam” on the important enactments like the Companies Act, 2013. His underlying message to be vigilant while performing any professional duty was well received by all the participants.

This session was ably chaired by CA Uday Sathaye, Past President of the Society. The Vote of Thanks was proposed by CA K. K. Jhunjhunwala, a managing committee member .

The day ended with a sumptuous dinner in the huge dining hall of the Hotel.

DAY 2:

After breakfast, the participants discussed the paper written by Adv. K. Vaitheeswaran on Issues in Service Tax.

The Group Discussion on Service Tax paper was followed by an excellent presentation by CA Vishal Gada who dealt with his paper on Case Studies in Taxation, with great depth explaining relevant provisions of the Act also taking support from various cross references and the case laws on the issues. He also suggested to the participants not to rely too much on the decisions of lower courts unless they are strong on the technical aspects of an issue. He covered all the issues raised by the group leaders in his presentation cohesively and made the session very lively.

This session was ably chaired by CA Dr. Rakesh Gupta, an Ex-ITAT member, a participant from Delhi, who also raised few fundamental questions to the paper writer CA Vishal Gada, which were addressed by him during his presentation. CA Mulesh Savla, member Seminar Committee proposed the Vote of Thanks to the Paper Writer as well as the Chairman of the Session.

Thereafter, CA Ameet Patel, Past President of the BCAS made a thought-provoking presentation on “i for Technology”, a subject which is very close to his heart. He informed all the participants on various tools and apps which can be effectively used by a professional to improve efficiency and effectiveness of his work. He also suggested the use of services offered by various servers on the cloud. His masterly analysis of the subject made participants aware of the latest technological tools available to the professionals.

This session was chaired by CA Rajesh Muni, Past President of the Society. CA Bharat Oza, a Managing Committee member proposed the Vote of Thanks to the Paper Writer and the Chairman.

In the afternoon, all the participants got together for a group photograph.

The evening was free to the participants for some outings, refreshment and study for the subsequent papers. Some of the participants enjoyed playing cricket in the Hotel campus.

The day ended with a hot soup in the chilling atmosphere and a sumptuous dinner.

Unfortunately, a sad incident happened at night on the second day. One of our very senior members and a regular participant of the BCAS RRCs, CA Vinod S. Kothari expired due to severe heart attack. The committee members, along with a few other participants tried their level best to give him immediate medical assistance. However, he could not recover from the fatal heart attack.

DAY 3:

After breakfast, the participants discussed the paper written by CA Karishma R. Phaterphaker on “Domestic Transfer Pricing – Law, Issues & Documentation”.

Before the Brain Trust Session, all the participants prayed for the eternal peace for the departed soul of CA V. S. Kothari by observing silence for two minutes. The Brain Trust Session was conducted with CA Pinakin D. Desai and CA Dilip V. Lakhani as the Trustees for Income Tax and CA Sunil Gabhawalla as the Trustee for Service Tax. The participants had the benefit of the expert views of CA Pinakin D. Desai on several contentious issues of Direct Tax after a long time and CA Dilip Lakhani also analysed all the issues allotted to him in great detail. CA Sunil Gabhawalla excelled in his analysis of the issues raised in Service Tax area. Their command over the subject coupled with their crisp and flawless analysis was of great benefit to all the participants.

This session was ably chaired by CA Anil J. Sathe, Past President of the Society and CA Raman Jokhakar, Jt. Secretary proposed a very well deserved Vote of Thanks to all the Brain Trustees.

The Entertainment Programme to be held in the evening was cancelled and the Presentation of the discussion paper by Adv. K. Vaitheeswaran was taken up in the evening session. Adv. K. Vaitheeswaran dealt with all the case studies of his paper in a very lucid and humorous way. He gave different dimensions to the controversial issues. With the increasing importance of the Service Tax practice, his guidance on the issues will go a long way and help participants in their day to day practice.

This session was chaired by CA Pranay Marfatia, Past President of the Society. CA Saurabh Shah, Seminar Committee Member, proposed the Vote of Thanks.

The day ended with tempting dinner followed by a variety of desserts.

DAY 4:

After breakfast, CA Karishma Phatarphekar and her colleague CA Jigna Talati dealt with their paper on Domestic Transfer Pricing – Law, Issues & Documentation. Both of them made their presentation very interesting and satisfied the participants by resolving issues raised during the Group Discussions. There were challenges on the issues as the Domestic Transfer Pricing Law is still evolving and a lot more is required to be clarified from practical view point. Issues raised in their paper were of great significance to all.

The session was chaired by CA Nitin Shingala, vice president of the Society and the Vote of thanks was proposed by CA Ravi Shah.

In the concluding session, CA Nayan C. Parikh, Past President of the BCAS and a senior member of the Seminar Committee took an overview of the 47th RRC and recognised the contribution made by everybody expressing his gratitude for the efforts put in by them. He specially thanked the President for his whole hearted support and lead in organising the Residential Refresher Course. One of the participants CA Keyur R. Thakkar presented a very nice poem composed by him covering each and every event of the RRC. CA Naushad Panjwani, President of the Society, thanked everybody for making the RRC memorable. Participants departed after lunch to their respective destinations by cherishing the memories of 47th RRC and with a promise to meet again next year at the 48th RRC.

Nirav Shah

RBI Governors: The Czars of Monetary Policy

Author: GOKUL RATHI – Chartered Accountant

Reviewer: RIDDHI LALAN – Chartered Accountant

RBI plays a significant role in the country’s economic development and financial system. In addition to its crucial role in the country’s monetary policy, RBI regulates the banking sector and manages foreign exchange reserves. “RBI Governor” is the person who helms this all-important and formidable institution, burdened with onerous responsibilities.

In the 86 years of its existence, RBI has been led by 25 eminent scholars, each influencing the economic and monetary policy with a distinct style. For a long time, the Governors have contributed tirelessly behind the scenes and only recently, have stepped into the spotlight. “RBI Governors: The Czars of Monetary Policy” highlights the importance of these eminent men and their contribution to moulding the country’s financial system.

CA Gokul Rathi has been closely associated with the banking sector as an auditor, consultant and board member. Based on his observation of the banking sector during the last three decades, Mr. Rathi, a Chartered Accountant, has conducted elaborate research while penning down this book on men whose signatures appear on the country’s currency. Gokul traces back the origin of this book to 2007-08 when he was impressed with the deft handling of the Indian economy before the global financial crisis by Dr Y. V. Reddy.

The book introduces the 25 Governors that have led this powerful institution and their academic and professional background. Without presenting an analysis, Gokul sets forth an account of the events that occurred during the tenure of each Governor in terms of the key decisions taken and their impact, their achievements and disappointments. It reflects on the country’s banking and financial journey through important phases and events – nationalisation of the banks, priority sector lending, foreign exchange regulations, liberalisation, banking sector reforms and demonetisation, and changing political scenarios – from a different perspective.

The book expounds on the Governors’ role in managing the balance of payments, assuring price stability in the country, promoting rural banking, encouraging foreign investment and various other schemes and reforms. Gokul narrates instances highlighting the crucial role that the Governors have played in navigating the county’s economy through choppy waters on the route to development. Steering the economy through foreign exchange crisis, stock market and financial scams, inflation, unorganised banking sector and global financial crisis, the growth story modelled by each Governor makes for an engaging read. The context in which crucial decisions that forever changed the course of the country’s financial policy were made has been appropriately emphasised.

The book also throws light on the relationship and exchanges between the RBI and the Government (i.e., the Governor and the Ministry of Finance) and its impact on the institution’s autonomy. The manner in which each Governor balanced the equation with the Government, handled the times of political uncertainty and its impact on the autonomy and powers of RBI make for an interesting read. While some have clashed with the political leadership at various times, others have maintained diplomacy and cordially managed it. However, true to his word, Gokul does not venture into an analysis but only mentions instances of differences and, therefore, refrains from any bias.

Gokul has sourced the historical facts and accounts from the official History of the Reserve Bank of India, Vols. 1 – 4 (1970 to 2013), as well as memoirs and autobiographies of the former Governors. The lucid language in which an account of the RBI Governors is presented makes it easy to read and comprehend even for persons with limited financial knowledge. The anecdotes and trivia on the history of RBI and the Governors at the end of some chapters make the book more engaging.

This book is of value for anyone who wishes to understand the history of the banking sector and the financial journey of the country at an introductory level as well as to students of economics. Gokul has done justice in coherently cataloguing the events that occurred during the tenure of each Governor. Sources cited for the information contained in the book act as a guide to anyone who wishes to delve into the subject more deeply. While the professional achievements are briefly mentioned, a more detailed account of each Governor’s personal life could have added inspirational value to the book for me. Nevertheless, numerous interesting facts and stories about RBI and Governors have been brought to light in the book. Gokul’s endeavour to succinctly place before the public, the contributions of the Governors pivotal role in the country’s economic journey is truly commendable.

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44TH RESIDENTIAL REFRESHER COURSE (RRC) OF BOMBAY CHARTERED ACCOUNTANTS’ SOCIETY (BCAS)

RBI governor issues warning on loan waivers

Arvind Kejriwal, A Messiah Against Crony Capitalists.

47th Residential Refresher Course (RRC) of Bombay Chartered Accountants Society (BCAS)

RBI Governors: The Czars of Monetary Policy