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Hazy allegations

Ashok Dasgupta

COME end-May and early June each year, and the blistering sun scorches one and all in the capital to the core. And as if the killing heat is not bad enough, there's always a haze of dust hanging in the air like a pall of gloom that makes matters wors e.

This year has been no different. Except that, apart from the climatic heat and dust, there have been two other blistering issues which have scorched the headlines without relent and generated a lot of heat and haze.

With the onset of monsoon in the next few weeks, the summer heat and the haze will certainly die down. But that is unlikely to either cool frayed tempers or clear the haze of allegations against a select few.

Yes, you guessed right. The first blistering issue is the charge of match-fixing levelled against some of cricketer stalwarts by none other than one of their veteran ex-colleagues. The hazy issue has been getting murkier and murkier with fresh skeletons seemingly coming out of the cupboard each day. The CBI is to give its last word on it.

The other, and the more damaging one at that, is the haze of aspersions that has been cast on the Finance Minister, Mr. Yashwant Sinha, over the issue of Mauritius-based FIIs taking refuge under the tax avoidance treaty and thus evading payment of capit al gains tax. The `supposed' loss to the Indian exchequer has been pegged at Rs. 3,000 crores by Mr. Sinha's detractors.

Worse still, a direct charge of nepotism has also been levelled against Mr. Sinha in that he has `indirectly assisted' his daughter-in-law in raking in millions in business for India Fund Inc and for which her employer-FII awarded her $5.3 millions.

Now, that's serious and, not surprisingly, Mr. Sinha clarified -- on the eve of his departure to the US -- that the charges levelled against him were baseless and motivated and that `certain' people had started a vilification campaign against him.

What else could he do? For one, he could have kept quiet and ignored the charges. But such are the days of disbelief or gullibility -- whichever way you look at it -- that silence is also interpreted as acquiescence. So, to nip it in the bud, he chose to refute the charges. Even the PMO's camp at Manali put in a word in Mr. Sinha's favour to kill the controversy.

Mr. Sinha, on his part, had even threatened to file a defamation suit and now that he has returned from the US, his `detractors' are perhaps waiting to see whether he keeps his word. Till now, he hasn't. On final count, it is entirely up to the Finance M inister to clear up the haze. What step he takes next is to be seen.

Looking at the issue dispassionately, it's true that scores of FIIs have taken refuge under the Mauritius tax haven for investments in India.

It's again true that the stock markets plummeted when the authorities chose to slap tax dues on some of the FIIs. Also, is it not true that the tax avoidance treaty with Mauritius was entered into with that country much before the FIIs made investments i n India?

In effect, the FIIs investing in India have only utilised the Mauritius route to save on capital gains tax. And India Fund Inc only happens to be one of them in which, as a matter of coincidence, Mr. Sinha's daughter-in-law happens to be an executive. On the flip side, wouldn't Mr. Sinha have been blamed for the fall in the bourses if the FIIs had withdrawn their investments?

Perhaps. The dagger of criticism is always sharp on both edges.