Vodafone for resolving the Rs. 20,000 crore tax

The government will take a decision on withdrawal of conciliation offer to Vodafone for resolving the Rs. 20,000 crore tax dispute after a transfer pricing case concerning the U.K. telecom giant is settled.

“The Cabinet has decided to instruct the Income Tax Appellate Tribunal (ITAT) to expeditiously solve the Vodafone transfer pricing case. Once that is done, the Cabinet will review the conciliation process,” a senior Finance Ministry official said after a meeting of the Union Cabinet on Friday.

Vodafone is locked in twin tax disputes with the government. One pertains to its 2007 acquisition of Hutchison Whampoa’s stake in Hutchison Essar and the other is the transfer pricing case involving Vodafone India Services.

“The cabinet has decided not to take any hasty decision regarding review of conciliation talks with Vodafone,” the official added.

The decision regarding the Vodafone conciliation offer may have to be taken by the next government as ITAT, which will hear the transfer pricing case from March 19, will take a few months to decide on the dispute.

The Cabinet had in June 2013 approved a Finance Ministry proposal to go in for conciliation with Vodafone to resolve the capital gains tax dispute related to its acquisition of Hutchison Whampoa’s stake in Hutchison Essar.

While the basic tax demand is Rs. 7,990 crore, the outstanding dues, including a penalty of a similar amount and accrued interest, run into Rs. 20,000 crore.

Earlier this month, the Finance Ministry circulated a draft Cabinet note seeking to withdraw the conciliation talks after Vodafone demanded that the Rs. 3,700 crore transfer pricing row be clubbed with the capital gains tax case.

It followed a notice under Bilateral Investment Promotion and Protection Agreement by Vodafone International Holdings BV to the government over the tax dispute. It said the amendment to the IT Act will cause Vodafone International Holdings substantial financial loss.

Fuel price hike:Petrol costlier by 60 paise, diesel by 50 paise

Petrol price was on Friday increased by 60 paise a litre, the second increase this year, and diesel by 50 paise per litre, the 14th increase since January 2013.

The hikes, effective from Friday midnight, are excluding local sales tax or VAT and actual increase will be higher and will vary from city to city.

Petrol price, which was last increased by 91 paise on January 4, 2014 will cost Rs. 73.16 a litre in Delhi from, up 73 paise from Rs. 72.43.

In Mumbai, the fuel will cost Rs. 82.07 a litre as against Rs. 81.31 at present.

The price of diesel in Delhi will be hiked by 57 paise, including tax, to Rs. 55.48 per litre, while it will cost Rs. 63.86 a litre in Mumbai as against Rs. 63.23 at present.

Announcing the price increase, Indian Oil Corporation, the nation’s largest fuel retailer, said petrol price has been increased because international oil rates have risen and rupee depreciated against the U.S. dollar, making imports costlier.

The diesel price increase is in line with the January 2013 decision of the government to raise rates by up to 50 paise per month till such time that the entire losses on the fuel are wiped out, and prices made market determined.

IOC said even after the 14th price hike since January 2013, the oil companies are incurring Rs. 8.37 per litre loss on sale of the fuel.

Since January 2013, diesel rates have risen by a cumulative Rs. 8.33.

Besides diesel, oil firms are losing Rs. 36.34 a litre on sale of kerosene through public distribution system (PDS) and Rs. 605.50 on every 14.2-kg domestic cooking gas (LPG).

IOC said in a statement: “The price of petrol was last revised upwards by Rs. 0.75 a litre (excluding state levies) with effect from January 4, 2014.

“Since the last price change, international prices of gasoline (petrol) have increased from $116.04 per barrel to $118.10, and the rupee has also depreciated from Rs. 62.02 to a U.S. dollar to Rs. 62.12.”

The combined impact of both these factors, has warranted the increase in petrol prices by Rs. 0.60 per litre, excluding state levies.

In pursuant to the government’s order dated January 17, 2013, oil marketing companies have been authorised to increase the retail selling price of diesel (retail) within a small range every month until further orders.

“Accordingly, since then, retail diesel prices are being revised every month. In continuation of above, IOC has decided to effect the aforesaid increase in retail diesel prices,” it said.

IOC said it is likely to end the 2013-14 fiscal with an under-recovery or revenue loss of around Rs. 74,000 crore on sale of diesel, LPG and kerosene.

“The movement of prices in international oil market and Rupee-U.S. dollar exchange rate is being closely monitored and developing trends of the market will be reflected in future price changes,” it added.

The revised prices of petrol and diesel in four metros:

Price revision chart

Petrol

City	Current price	Revised	Increase
Delhi	72.43	73.16	0.73
Kolkata	80.20	80.96	0.76
Mumbai	81.31	82.07	0.76
Chennai	75.71	76.48	0.77

Diesel

City	Current price	Revised	Increase
Delhi	54.91	55.48	0.57
Kolkata	59.50	60.09	0.59
Mumbai	63.23	63.86	0.63
Chennai	58.56	59.17 0.61

(All rates in Rs/litre)

Indian economy grows 4.7% in third quarter

The Indian economy grew 4.7 per cent in the third quarter of this financial year mainly due to improved performance in the agriculture and services sectors.

The country’s gross domestic product (GDP) had expanded 4.8 per cent in the July-September quarter and 4.4 per cent in April-June.

Growth in the first nine months (April-December) was 4.6 per cent compared with 4.5 per cent in the same period a year ago.

The economy had expanded 4.4 per cent in the third quarter of 2012-13, according to official data released here today by the Central Statistics Office (CSO).

Given the performance in the first nine months and GDP growth of 4.9 per cent projected by the CSO in its advance estimates for this financial year, the economy must expand 5.7 per cent in the fourth quarter ending March.

Farm sector output expanded 3.6 per cent in October-December compared with 0.8 per cent in the corresponding period of the previous financial year. The sector grew 3.6 per cent in April-December.

The manufacturing sector declined 1.9 per cent in the third quarter as against a growth of 2.5 per cent a year ago.

The output of the sector contracted 0.7 per cent in the first nine months.

Growth in electricity, gas and water supply was 5 per cent compared with 2.6 per cent a year earlier and it touched 5.5 per cent in the April-December period.

The construction sector expanded 0.6 per cent as against 1 per cent in the year-ago period. During April-December, the sector grew 2.5 per cent.

Growth in the trade, hotels, transport and communications segment slowed to 4.3 per cent in the third quarter from 5.9 per cent in the same period last year. In the first nine months, it grew 4.1 per cent.

The services sector, including financing, insurance and real estate, expanded 12.5 per cent in the October-December quarter as against 10.2 per cent a year earlier. The segment grew 10.5 per cent in April-December compared with 10.8 per cent in the same period a year ago.

Mining and quarrying contracted 1.6 per cent as against a decline of 2 per cent in the same period of the previous financial year. During April-December, the sector’s output contracted 1.6 per cent compared to a 1.1 per cent dip in production in the same period a year ago.

The community, social and personal services segment grew 7 per cent as compared to 4 per cent earlier. During the nine-month period, the segment grew 6.7 per cent.

Gross Fixed Capital Formation, an indicator of fresh investments, at constant (2004-05) prices remained flat at Rs 5 lakh crore in the third quarter compared with the same period of the previous financial year.

UK not to engage with Modi

A meeting organised on Wednesday by the U.K. based groups Awaz and the Monitoring Committee resolved to put pressure on the British government not to engage with Bharatiya Janata Party’s prime ministerial candidate Narendra Modi until justice is done for victims of human rights violations during the 2002 Gujarat riots.

The event was hosted by Labour Party MP for Hayes and Harlington John McDonnell and supported by party MP for Islington North Jeremy Corbyn at the House of Commons.

The meeting resolved that it would seek an Early Day Motion to the House of Commons and take a delegation of MPs to the Foreign and Commonwealth Office asking that there should be no official engagement with Mr. Modi until he has been held legally accountable for his responsibility in the 2002 violence. The meeting also heard that action is underway for an international tribunal on genocide in Gujarat.

The speakers at the meeting included Suresh Grover of the Monitoring Group; Pragna Patel from the women’s group Southall Black Sisters; Chetan Bhatt, director, Centre for the Study of Human Rights at the London School of Economics; and Professor Gautam Appa, professor emeritus from the LSE.

Yusuf Dawood and Imran Dawood, U.K. citizens of Gujarati origin whose close relatives were killed in Gujarat in 2002 were also present.

The sharp polarisation of political opinion within U.K.-based Indian community was on display at the meeting. A group of supporters of Mr. Modi engaged in arguments with the speakers and then staged a noisy walkout towards the end of the meeting, demanding proof of the allegations made against Mr. Modi.

Mr. Modi has considerable cross-party political support in Britain. Even within the Labour Friends of India there have been attempts to get the government to revoke the earlier restrictions that had been placed upon his visiting the U.K.

In fact, this meeting was initially to have been hosted by Virendra Sharma, Labour MP for Ealing and Southall. However, he pulled out of his sponsorship a day before the meeting. While Mr. Sharma said it was because he did not want to associate with the “anti-Hindu” agenda of the meeting, the organisers said that it was because of pressure from his pro-Modi constituency.

Messages of support were read out from the artist and sculptor, Sir Anish Kapoor, Baroness Helena Kennedy, a distinguished barrister and human rights campaigner and Mike Wood, MP for Batley and Spen.

Mr. Kapoor said: “I am deeply grateful you are doing this. We are in a moment of great danger and your call to our sense of justice is much needed.”

Uganda :Aid cuts over anti-gay law

Uganda’s government has been hit with substantial aid cuts after the president enacted a severe anti-gay measure over which some Western governments had warned of consequences.

At least three European countries are withdrawing millions in direct support to Uganda’s government, which depends on donors for about 20 percent of its budget.

The Dutch government said in a statement on Thursday that it is suspending aid to Uganda’s government but will continue supporting non-governmental groups, joining the governments of Norway and Denmark in taking such action. Norway is withdrawing at least $8 million but will increase its support to human rights and democracy defenders, while Denmark is restructuring aid programs worth $8.64 million away from the Ugandan government and over to private actors and civic groups.

Jim Mugunga, a spokesman for Uganda’s Finance Ministry, said the government is waiting for official communication of the aid cuts.

Washington has also signalled it could cut aid to Uganda over an anti-gay measure the White House described as “abhorrent.”

U.S. Secretary of State John Kerry on Wednesday compared the law to oppressive government crackdowns on German Jews in the 1930s and black South Africans during apartheid, saying he was going to direct American ambassadors to look at “how we deal with this human rights challenge on a global basis.”

Ugandan officials have been reacting with scorn, saying that Western governments can keep their money.

Uganda’s president on Wednesday told African leaders attending a summit in the Congolese capital of Kinshasa that although the matter of gay rights is “dear” to the West, “even the homosexuals need electricity.”

President Yoweri Museveni enacted the bill on Monday, drawing widespread condemnation from the United Nations, rights watchdog groups, as well as some of the East African country’s development partners. In signing the bill, Mr. Museveni said he wanted to deter Western groups from promoting homosexuality in Africa. The anti-gay law is widely popular in Uganda, and some analysts believe Mr. Museveni’s enactment of the bill boosts his popularity ahead of presidential elections in 2016.

Ofwono Opondo, a spokesman for Uganda’s government, said on Thursday that the aid cuts show Ugandans “that the world does not owe them a living.”

“It’s actually a trap for dependence,” he said, talking about donor support. “It’s actually good that they removed the aid, so that we can live within the means we have.”

Uganda’s new anti-gay law calls for life imprisonment for those convicted of engaging in gay sex. It also creates the offenses of “conspiracy to commit homosexuality” and “aiding and abetting homosexuality,” both of which are punishable by seven years behind bars. Those convicted of “promoting homosexuality” face similar punishment.

Ukraine Interior Minister: Russian military blocking Sevastopol airport

Simferopol airport operations reported normal after armed men, wearing similar gear to a group of 100 gunmen who stormed the Crimean parliament and raised the Russian flag, entered the building

Russian military were blocking an airport in the Black Sea port of Sevastopol in Crimea, near the Russian naval base, while unidentified men were patrolling another airport serving the regional capital Simferopol, Ukraine’s new Interior Minister Arsen Avakov said on Friday.

Mr. Avakov wrote in a Facebook post that the Belbek international airport in Sevastopol was blocked by military units of the Russian navy. “I can only describe this as a military invasion and occupation,” he said.

The Russian foreign ministry refused to comment while a spokesman for the Russian defence ministry was not available for comment.

Early on Friday, around 50 armed men in military uniform arrived in three trucks without licence plates and surrounded the domestic flights terminal at the airport of Simferopol, the regional capital of Crimea, before moving on to other parts of the site, Interfax-Ukraine news agency cited witnesses as saying.

An Associated Press photographer saw military men armed with assault rifles on Friday morning patrolling the airport. The men, who were wearing uniforms without any insignia, refused to talk to journalists, and it was not immediately clear who they were.

The men wore similar gear to a group of 100 gunmen who stormed the Crimean parliament on Thursday and raised the Russian flag over the building, the report said.

The armed men since left the building, according to broadcaster Russia Today.

The airport appeared to be operating normally, with flights landing and taking off, RIA-Novosti news agency quoted a worker at the airport as saying. The airport’s website showed flights arriving and departing on schedule.

On Thursday, masked gunmen with rocket-propelled grenades and sniper rifles seized the parliament and government offices in Simferopol and raised the Russian flag over the parliament building.

The events in the Crimea region have heightened tensions with neighbouring Russia. It scrambled fighter jets on Thursday to patrol borders in the first stirrings of a potentially dangerous confrontation reminiscent of Cold War brinksmanship.

Russia also has granted shelter to Ukraine’s fugitive president, Viktor Yanukovych, after recent deadly protests in Kiev swept in a new government.

Mr. Yanukovych has a news conference scheduled Friday in Russia’s south near the Ukrainian border. He has not been seen publicly since Saturday, and he declared on Thursday in a statement that he remains Ukraine’s legitimate president.

Ukraine’s parliament on Thursday elected a new government led by a pro-Western technocrat who promptly pledged to prevent any national break-up.

Moscow has been sending mixed signals about Ukraine but pledged to respect its territorial integrity. Ukraine’s population is divided in loyalties between Russia and the West. Crimea, which was seized by Russian forces in the 18th century under Catherine the Great, was once the crown jewel in Russian and then Soviet empires.

It only became part of Ukraine in 1954 when Soviet leader Nikita Khrushchev transferred jurisdiction from Russia, a move that was a mere formality until the 1991 Soviet collapse meant Crimea landed in an independent Ukraine.

In a bid to shore up Ukraine’s fledgling administration, the International Monetary Fund has said it is “ready to respond” to Ukraine’s bid for financial assistance. The European Union is also considering emergency loans for a country that is the chief conduit of Russian natural gas to Western Europe.

Ukraine’s finance ministry has said it needs $35 billion over the next two years to avoid default.

U.S. Sherry Rehman: perfect storm for Pakistan predicted

Pointing to international and regional conflict trends in the vicinity, former ambassador to the U.S. Sherry Rehman predicted a perfect storm in the context of the coalition forces leaving Afghanistan and the elections there, even as Pakistan has to brace for fresh challenges this brings.

Speaking on Transition 2014 — Conflict and Regional Futures organized by the Jinnah Institute on Thursday, Ms. Rehman said a consensus on key policy issues was crucial and shifting the regional game with India in terms of peace and trade instead of conflict and crisis management was one of them. The other was moving away from seeking strategic depth or avoiding power brokering in Afghanistan by seeking no favourites.

The Bilateral Security Agreement could be signed post elections and the foggy timeline had added fresh uncertainty, she said. There was much to worry for Pakistan as there would be multiple transitions and most of it up in the air. The west was looking to cut its losses and it was less and less interested in preserving the fragile gains in Afghanistan, she said. Afghan stability remains a crucial stake and as it stand the news looks bad, and the USA's own intelligence predicts a sub optimal future for Pakistan.

She said Pakistan asked been asked to brace for a fresh influx of refugees. In addition the flow of drugs and guns could add to the disruption. Pakistan has hard choices to make, existential choices, and it was vital to curb terrorism. By offering talks to the Taliban this has already been compromised and the security policy is still a work in progress. There has to be clarity across the political horizon, she said.

Senior journalist Zahid Hussain said there was complete indecisiveness in the government over handling terrorism and the peace talks have not gone anywhere. The problem he said is that extremism had created huge problems for the state and while the government can still talk it cannot evade its responsibility. The government has shown weakness by agreeing to talk and the Taliban took advantage of that. The kind of action the government is taking now in the form of air strikes could be harmful if it's not part of a clear strategy, he said, adding that there was no clear counter terrorism policy. The counter terror narrative was given to clerics and religious parties, he said.

Ms. Khawar Mumtaz, chairperson of the National Commission on the Status of Women said women could end by being marginalized in conflict if they did not have a voice or adequate support structures. In Swat women who were displaced faced sexual violence and had no systems to address their needs and problems. The issue has to be looked in terms of a rights perspective, she pointed out.