‘Dearth of diligence’ perception

Good evening !!

Perusal of published limited review opinions or disclaimer opinions by chartered accountants – on public capital deploying corporations / financial institutions of India or perusal of fiscal outlook reports of global investment banking research arms – regarding public capital deploying corporations / financial institutions of India – have only exacerbated the ‘dearth of diligence’ benchmark perception – and both aforesaid opinions attribute grave skepticism, cynicism as well as despondency – towards the whole prevalent scenario of prudence systems, diligence systems as well as internal control systems – in context of whole financial institutions sector deploying public corpus in India.

Off late, colossal public corpus valuation, consequently public capital valuation, is being impaired owing to statutory provisioning, NPA & norms – mandated by RBI / SEBI or mandated under statutory financial reporting standards.

Hence, consequently, skepticism is bound to accrue, as a corollary, towards dearth of vigilant internal control systems, obsolete diligence and prudence exercise systems – prevailing across financial institutional framework across Indian financial institutions & corporations.

Rather exacerbating & perplexing part seems to be – non existent suo-motu vigilant review – even by, so perceived, vigilant watchdog comptroller auditor general of India – despite such colossal impairment and dilution to public capital base.

In context of aforesaid prevalent cynical scenario, time seems propitious for RBI / SEBI / Chartered Accountants research bodies – to pronounce & stipulate the threshold benchmarks – for mandatory adherence – in exercise of prudence diligence benchmarks – especially in context of public capital deployment.

Fiscal Statutory oblivion

Good evening !!

Subsequent to enduring a perpetual fiscal & statutory oblivion as well as procrastination, eventually, accoutred in a fiscal-statutory attire, the absolute foreign direct investment route, via equity stake in subsidiary corporations or as upfront investment route , in, lets be oblique, ‘THE VULNERABLE’ sector’s supply-chain infrastructure, has been acceded to, today !!

The vulnerable, though crucial to economy, sector has been incurring fiscal reform oblivion perpetually !! Apparently the hitherto endured oblivion would be ‘sunk cost’ in contemporary terminology ūüôā

Though, acceding to the pivotal significance of the sector, in context of perishing, supply chain infrastructure & industry panel recommendations, the said investment route has been statutorily effectuated, however, it ought have been incorporated in the fiscal system long back.

Optimism pervades – in context of its ameliorating and conducive repercussions – towards THE VULNERABLE SECTOR, as well as investment inflows.

However, optimism being usurped & eclipsed by caveats !!

Of late, multiple federal statutes have been incorporating plethora of impediments to the supply chain sector – exacerbating the already ambiguous legal scenario regarding the sector !

These manufactured impediments – reflected via manifestation in plethora of additional fiscal levies – invoking federal powers under Constitution of India’s ‘State List’ based statutes – consequently amounting to a travesty of principle of uniform union/federal levy, – & consequently – travesty of the perpetual consent building endeavors – in context of the gigantic rebellious fiscal reform gst !

As a corollary to aforesaid, the obvious solitary discernible would be – a grave skepticism regarding direct route investments incoming to our shores !!

Any jurisdiction’s fiscal legal ambiguity, dearth of proactive vigilance towards seemingly irreconcilable federal union statutory frameworks – is bound to culminate towards dwindling direct investment , forex flows !!

Good day !

Stake sagacity vs diligence systems – by ankit bhatia

Good evening, erudite¬†strata of esteemed alumni & intrigued perusers of ‘The Column’ !

Well .. my ingrained scribbler endured a fiscal jolt Рattributable to Рperusal of the recent rebellious equity stake fiscal foray Рcomprising public capital deployment !

Have been vehemently deprecatory of – any dearth of paramount assiduousness & adherence to supreme diligence benchmarks – in context of fiscal or social sagacity of deployment of public capital – whether attributable to equity stake forays or in context of investments in commercial operations.


Onus of compliance – with paramount diligence and prudence benchmarks – in context of preserving valuation of public capital, its impairment, or social aspect of investment – including manifestation via provisions in the Companies Act – is upon the investing public entities as well as the incorporated regulatory diligent systems – alike of Comptroller Auditor General – under Companies Act – to ensure fiscal or social sagacity & social context of investments – entailing deployment of public capital.


Well .. on a lighter note .. lets be oblique in this context .. lets refrain from explicit addressing .. oblique narration .. aforesaid concern is the manifestation – as a consequence of a public Insurance corporation’s equity stake foray towards a predominant FMCG (tobacco product indulgence)¬†manufacturer.


Aforesaid equity stake foray – has been contentious on financial diligence aspect as well as social aspect !!

Any prudent equity stake foray would have prudently abstained from deploying, especially of public capital, in a foray – whose predominant venture’s ‘going concern’ financial benchmark postulation – itself is speculative, or market valuations, perpetually, could be discerned as – anything but stable.


Even in context of global¬†corporations – statutory auditors of corporations –¬†stipulate towards due depletion &¬†reflection in valuations & financial reporting – in context of existence of any legal / global / industry indications – which could reasonably testify¬†towards culmination towards – impairing long term business valuations or cash flows or skepticism towards perpetual ‘Going Concern’ financial benchmark postulation.

IN contrast, corporation’s internal auditors would explore¬†a step further – by being officially deprecatory of any investments made – sans display of stern benchmarks – in context of stern diligence – to incorporating into investment decisions – via – extrapolating industry / statutory / global environment – in context of returns or valuations or even ‘going concern’ postulations – in context of equity stake forays!

Any assiduous foray, even in context of a private equity stake foray by any corporation, as aforesaid, would have exhibited much more stern & superior benchmarks of diligence, then, ought not – the aforesaid minimum principles – be extrapolated – especially – in context of deployment of public capital?


Dismay attribution is especially towards – synonymous to acquiescence – conduct by even public diligence review systems – manifested via – omission of any public reservations or critique – in context of aforesaid equity foray !!

Repudiation of fiscal panels ‚Äď by ankit bhatia

Bonjour !!

Yet another ‚Äėgood evening‚Äô to¬†fellow esteemed, relentlessly intrigued intellectual strata & alumni ‚Äď who are perpetually soliciting & craving for intellectual stimulation & seeking excursions into the profound zones of fiscal or legal horizons¬†!


Invariably, I have¬†perceived the esteemed ‚Äėmember¬†columns‚Äô as conferment of a perpetual privilege, upon the columnist, to co-embark on an intellectually stimulating journey ‚Äď & intrigue esteemed fellow intellectual strata, induce deliberation and pondering over policy framework developments, to proliferate macro and micro fiscal developments, perturbations, & for self-enlightenment, soliciting rebuttals¬†from my esteemed fellow strata ‚Äď which is consequently induced by perpetual craving for intellectually stimulating excursions¬†!

Eureka! Eureka !!

Its rather ubiquitous nowadays ‚Äď while perusing member columns ‚Äď to discover even ‚Äėphilosophical‚Äô member columns too ‚Äď in startling contrast to erstwhile pervasive exclusivity of fiscal or legal columnsūüėČ


Well .. despondency could be the apt solitary ‚Äď to encapsulate ‚Äď what the overall prominent fiscal advisory factions, expert panels, industry bodies ‚Äď have been pervaded with ‚Äď in context of consistent fiscal policy framework recommendations¬†‚Äď attributable to conferment or otherwise ‚Äď of fiscal immunity upon certain sectors of the economy !

Indian fiscal formulation framework‚Äôs relentless & perpetual pursuit ‚Äď in adherence to flawed, misconceived postulations ‚Äď regarding certain specific sectors (whether political strategy or inadvertent) ‚Äď has, invariably, been grossly perplexing and grossly defiant ‚Äď in reference to¬†fiscal jurisprudence principles !!

Instance of an¬†entrenched, though misplaced & flawed, fiscal postulation ‚Äď across policy formulation systems ‚Äď enshrined ‚Äď commencing ‚Äď within the holy¬†statutory¬†framework itself ‚Äď via ‚Äď Finance Act / legal framework itself[commencing via Section 10(1) read with Section 2(1A)], & subsequently proliferated and descended via subsidiary fiscal legislations ‚Äď bestowing absolute immunity & vulnerable status ‚Äď in unequivocal terms, and a sort of economic disdain attitude ‚Äď towards economic potentiality across cosmic agri sector ‚Äď in reference to¬†fiscal jurisprudence principles framework ‚Äďtantamount to nothing but a fallacious, naive & regressive view ‚Äď especially in deficit ridden economies!


Such flawed, misplaced postulations have persisted ‚Äď usurping and repudiating¬†multiple panel representations, multiple expert advisory committee opinions ‚Äď having subscribed to the contrary view ‚Äď disapproving conferment of fiscal immunity to cosmic agri sector!

Subsequent to the aforesaid scope, now, the misconceived immunity seems even further dispersed ‚Äď whereby said immunity being bestowed ‚Äď in context of other fiscal-legal framework too.

Relevant extracts of pertinent statutory circular extending the scope of immunity :

It has come to the notice of the Board that certain field formations have taken a view that ..only the activity in so far it relates to actual testing has been exempted in the Negative List..

  1. 2.         The matter has been examined. In this regard, Negative list entry under Clause (d) of section 66D of the Finance Act, 1994 is reproduced as under :

‚Äú(d) services relating to agriculture or agricultural produce by way of‚ÄĒ(i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing;‚Äú2.1¬†¬†¬†¬†¬†¬† Term ‚Äėagriculture ‚Äė has been defined under section 65B clause (3) as under..2.2¬†¬†¬†¬†¬†¬† Term ‚Äėagriculture produce ‚Äė has been defined under section 65B clause (5)..2.3¬†¬†¬†¬†¬†..All services relating to agriculture by way of agriculture operations directly relating to production of agriculture produce including testing is covered. Testing and certification can be done as per the Act and rules made there under in this regard.¬†..¬†Therefore, all processes are¬† a part of the composite process and cannot be separated from testing.2.4¬†¬†¬†¬†¬†¬† ‚ÄúAgricultural operations‚ÄĚ have not been defined in the Chapter V of the Finance Act, 1994 and an inclusive and indicative list of such operations has been given. Thus it has been defined as ‚ÄúAgricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing‚ÄĚ. The exemption is thus not limited to the¬† specified operations....4. ¬†¬†¬†¬†¬†¬†¬† In view of the above, it is clarified that all testing and ancillary activities ..¬†are covered within the meaning of ‚Äėtesting‚Äô as mentioned in sub-clause (i) of clause (d) of section 66D ..¬†Therefore, such services are not liable ..under section 66B ..¬† ¬† ¬†¬†

Another pertinent extract seeking rebuttal of aforesaid flawed postulations & reiterating the rational assertion by multiple fiscal committees ‚Äď regarding fiscal framework:

What isn‚Äôt quite as well known is that of more than 400,000 ..claiming exemption ‚Ästthe biggest were seed giant Kxx Seeds ‚Äď it claimed Rs 186.63 crore (Rs 1.87 billion) exemption ..¬†and multinational Mxx India, which claimed Rs 94.40 crore (Rs 944 million) as exemption..

More pertinent extracts ‚Äď attributable to Industry panel recommendations :

Dhoot said .. additional revenue of Rs 20,000 crore every year.For 2011-12 fiscal, the government had estimated a deficit of Rs 4.12 lakh crore, or 4.6 per cent of GDP.However, the fiscal deficit is expected to exceed the target due to rise in subsidies and lower revenue growth.According to the (CGA) data, the government’s fiscal deficit went up to Rs 3.53 lakh crore or 85.6 per cent of the Budget estimates at the end of November 2011 as the growth of non-tax revenue slowed down.The Finance Minister had said that India’s subsidy billis likely to increase by about Rs 1 lakh crore, over and above the outlay of Rs 1.34 lakh crore estimated in the Budget for 2010-11, mainly on account of higher outlays for oil, food and fertilisers.

However, despite all the aforesaid facts, panel reports extracts, jurisprudence and panel or industry panel recommendations, the policy formulation systems, though fiscally or rationally inconceivable, have been persisting in adherence to repudiation – towards the industry bodies, expert panels recommendations – all of which unanimously & vehemently recommend – being averse to – conferment of absolute immunity on the sector !!


Such flawed adherence & consequent repudiation, consequently, seem to pervade the industry and expert factions ‚Äď with a sense of despondency ‚Äď towards fiscal rationale, economic repercussions of flawed policies, consequent enhanced fiscal encumbrances, consequent impediments in industry growth or impact on disposable resources of specific markets and so on.

Let optimism prevail ..

The stipulated foray – by ankit bhatia

Reform ! Reform !!


Would¬†it tantamount to being aberrant or its a rather dispersed phenomena¬†– that¬†the protagonist fiscal scribblers, especially when unveiling anticipated fiscal policy reforms, seem a delight, and seeking perpetual perusal – subsequently ¬†ūüėČ

Yup! Today scribblers sought perpetual perusal !!

Though, hitherto, entrenched postulations, among perusers of prominent fiscal editions, attributing to scribbler’s pessimism inducing content, have been adverse and pessimism inducing, though, thats not in the affirmative for today !!

Well  ..  though, perpetually, direct investment route (whether via subsidiary corporate relationship or mergers, buyouts, demerger etc)  & its statutory enactment was discernible among pro reform fiscal factions, & though, procrastination seem to be a norm in regulatory framework, however, optimism had prevailed and has eventuated towards aforesaid policy Рclad in a statutory profile!

Reflected via DIPP statutory unveiling, India’s fiscal contemplation, of granting absolute direct investment in virtual sector, sans inventory based model, has eventuated in a statutory clad profile.

Though, in current structure, apparently a twin faced offensive !!


Hitherto prevalent optimistic conjectures, pertaining to China’s mammoth Alibaba’s cosmic investment foray into Indian territory, consequently, would attain cessation !! Absolutely dismayed at this !!


Though, the regressive stipulation in the aforesaid notification – attributable to exclusion of ‘inventory model’ from the investment route (whether via subsidiary corporate / merger / buyouts) – is synonymous to institutionalizing¬†impediments – and in defiance of – free market principles – wherein consumers are being mandatorily restrained from access to efficient competitive pricing, and there seems institutional veil – to assist incompetent sectoral extortion from vulnerable consumers !!


As was hitherto postulated, even if Alibaba’s Indian foray – rendered¬†subsequent culmination towards ‘dumping’, self-introspecting view would have been inevitable – towards reflection of our prevailing inefficient, incompetent markets, and consequent directed policy framework.


Towards deterioration, consequent adverse global perception would be detrimental to any anticipated investments, and a perilous characterization as being hostile jurisdiction –¬†averse¬†to¬†free commerce, and rather, defiant custodian of inefficient domestic enterprise.


However, on the other positive shore, bureaucracy has relented to prominent fiscal faction view, and has paved the path for absolute fdi in non-inventory model.

This would most certainly emerge as a protagonist reform towards accomplishment of fundamental objectives of a typical developing economy Рof Рequitable wealth distribution, conducive to ameliorating resource deprived vulnerable jurisdictions Рindulging in crucial value addition processes, access to global markets, exports, trade deficits, consequent foreign exchange, etc.


The caveat, as before, would be eradicating systemic impediments Рlike federal law impediments Рdespite constitutional amendments.

Consolidation veil

Well ¬†.. ¬†today’s substantial estate of prominent fiscal, economic scribblers – comprise of -optimistic scribbles on fiscal policy initiatives on ‘Consolidation of PSBs’ !

Ought we utter .. obliquely  ..  ancillary clause here .. the impairment .. the NPAs  .. erosion of public capital base.

Though, factions subscribed to the notion Рthat the aforesaid era had dissipated !! However, .. seems  .. *rebuttal*

Corporate restructuring, in context of private corporations, it has been a rather entrenched perception – especially with legal luminaries –¬†that¬†spin-offs, demergers, buyouts, restructuring – are undertaken – primarily – with fiscal legal objectives – of mobilizing Chapter VI accruals, attributable to vulnerable target’s fiscal encumbrances, i.e., inclined towards fiscal planning, rather than – as a management strategy !

Infact, have witnessed restructuring transactions – being consummated – solely with aforesaid fiscal planning objectives.

And for the factions, sans the aforesaid entrenched perceptions, especially for inefficient segment in public sector, ‘Consolidation’, strategically, could be discerned – striving for – either synonymous to – harnessing synergies or as manifestation of a ‘scapegoat’ status – upon resourceful efficient or¬†productive organisations – for enduring and underwriting vulnerable strata of the species¬†!!

Hitherto, especially in strata of inefficient public sector, my aforesaid perception has persisted to prevail – attributing – ‘consolidation’ – to rather being – a veil – which is conducive to betrayal of accountability, ‘profit centre’ based rational & professional organisation structures, being implemented ensuring accountability and being manifestation of professional corporate governance¬†– &¬†rather offending and outraging the contemporary rational concepts of transparency and performance management – enshrined in¬†contemporary literature on financial management research!

Self sustenance ought be the underlying principle! Evaluation of any commercial institution ought be on ‘profit centre’, ‘marginal fiscal contribution’ based organisational structures ONLY !

Fiscal Lethargy

The perpetually resonating dismay and pessimism, prevailing across premier domestic & global fiscal factions – prompting me to be rather oblique in addressing and designating the crucial anti climax reform, and, consequently, refer to ‘It’ as – aggrandized protagonist reform of the era!

Well .. that’s in optimism of – ameliorating – not to aggravate the pessimism !

And .. well .. that aggravated pessimism is not mere conjectural or unwarranted in any sense .. I concede ..

Since pre fiscal period, pessimism has prevailed, and especially aggravated, subsequent to perpetually prevailing ambiguity – even pertaining to fundamental aspects of the legislation – and inactivity even subsequent to cessation of fiscal legislating season.

Fiscal redundancy would be an apt pronouncement – rather than reform – for the prevailing – pessimism prompting – scenario attributable to the protagonist reform of the era!

That gravity has been accentuated – attribute it to this – all prominent fiscal factions have been rather employing unequivocal tones to convey their dismay associated with the prevalent scenario, and consequently impeding funds flow!

Undeterred by all this, even now, legal ambiguity prevails – towards – even minuscule issues alike of – whether protagonist reform would simultaneously and independently coexist with plethora of existing cosmic fiscal structure or the plethora would culminate into this solitary one.

Not apprised of even a solitary concrete bluemap or whitepaper – attributing to Constitutional amendments or warranting federal law amendments or even drafts – associated with the underlying issue.

Or regarding any expression of stipulations or exclusions or inclusions. Blueprints or whitepapers on what would be exclusions or inclusions etc !

Such grave fiscal lethargy would certainly not be positively discernible by global investment enthusiasts – especially in light of perpetual litigation and consequent ambiguity – prevailing – in respect of retrospective amendments!