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CAG: ‘presumptive loss' globally accepted norm in audit process
- On his third and final appearance before the Joint Parliamentary Committee, looking into the 2G spectrum issue, Comptroller and Auditor-General of India Vinod Rai on Tuesday defended the various mechanisms and theories followed in reaching the “presumptive loss” incurred by the exchequer as the government failed to adopt a market-linked mechanism while giving away telecom licences in 2008.
- Though agreeing with the JPC members' objections that the “presumptive loss” mechanism was neither mentioned in any legislation nor a practice to calculate loss in any government department, Mr. Rai said it was a globally accepted norm in an audit process to reach a loss figure.
- The government auditor calculated the presumptive loss figures, ranging between Rs.57,000 crore and Rs.1.76-lakh crore, by using his “generic sense,” JPC Chairman P.C. Chacko said briefing journalists.
- Mr. Rai told the members that the term “presumptive” is used to indicate that there is a legal presumption that the taxpayers' income is no less than the amount resulting from an application of the indirect method….it refers to a number of procedures under which the basis itself is not measured but is inferred from simple indicators which are more easily measured.
- Congress MP Manish Tewari objected to the CAG's “presumptive loss” figures, saying these were legally untenable and totally inappropriate. Moreover, he said, calculating loss was not the CAG's mandate, and the “presumptive loss” mechanism did not find any mention in the IT Act, as had been pointed out by the Central Board of Direct Taxes.
Banks asked to look for new credit delivery tools
- The Reserve Bank of India (RBI) on Tuesday asked banks to equip themselves to deal with emerging challenges and be prepared to cash in on the opportunities unleashed by higher growth in dealing with the needs of small and medium enterprises.
- It also said that to serve new rural credit needs, innovative channels for credit delivery will have to be found.
- Another issue faced is that the MSE borrowers, especially new generation entrepreneurs, do not have collaterals to offer to avail of bank finance.The ability of MSMEs (especially those involving innovations and new technologies) to access alternative sources of capital like angel funds/risk capital needs to be enhanced considerably. For this purpose, removing fiscal/regulatory impediments to use such funds by the MSMEs should be considered on priority
- Growing incidence of sickness in the sector is another area of concern.An exit route for non-viable units was necessary to manage sickness
- Business failure in India is viewed as a stigma, which adversely impacts individual creativity and development. The existing legislations may have to be toned up so as to provide for efficient liquidation of non-viable businesses.
Rangarajan spots sampling errors in IIP data
- Dr. Rangarajan said, “We have asked the Department of Industrial Policy and Promotion in the Ministry of Industries to take another look at the data for October on capital goods output.”
- “Sampling problems in the IIP,” he said, were noticeable in some other sectors such as pharmaceuticals.
- He said although foreign direct investment in the current year had increased one-and-a-half times over last year, the deficit had widened to 3.7 per cent of gross domestic product in the first half of 2011-12.
- Observing that the sovereign debt crisis had increased the risk perception of investors, he said, “We need to make foreign (capital) flows more hospitable in the country.
