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Is Government failing Markets

The SEBI website explains Participatory Notes (PNs) as financial instruments, which are issued by FIIs to foreign investors who want an exposure to the Indian stock markets but do not wish to get registered with SEBI. The recent volatility witnessed in our stock markets has brought the role of these PNs into sharp focus. It is estimated that the share of PNs as a percentage of total foreign institutional investment was down to 30% by end June - a 10% fall since the high of 40% recorded last year. What compounds the issue is that our regulations seem to implicitly ensure a certain amount of secrecy for the PNs. Thus, the ultimate beneficiaries of PNs remain virtually unknown. Usually it has been the practice to route these PNs through Mauritius to benefit from the Indo-Mauritius tax-treaty and thus avoid capital gains tax. Naturally, twin concerns arise from such transactions - whether the ultimate beneficiaries of PNs are resident Indians who are misusing tax breaks associated with foreign investments and secondly whether PNs are linked to narco-terrorism.
The global trade as well as global financial architecture is extremely skewed. The US literally consumes while the rest of the world produces. Simply put while countries Viz., China, Japan, the South East Asian countries, Latin American countries as well as India are producing and exporting to America, America is singularly consuming their exports. Consequently, while the exporting countries are accumulating dollars, the US is accumulating the corresponding debt. It is not merely that the US citizens are on a consumption binge; the US government too is living way beyond its means. All these mean that the US is running trade deficit as well as budgetary deficits. And in true American style they are gargantuan.

How about a Minister of thought

Keith Joseph was a minister in the cabinet of Mrs. Margaret Thatcher. He is credited to be the ideologue who guided her in unshackling the British Economy during the 80’s. It is his ideas that transformed Britain from being the sick old lady of the 80’s into an economic super power that she is now. Ranganathan alias Ranga is India’s answer to Keith Joseph. Recently he was voted as the best FM that India never had. A brilliant economist, Ranga was a visionary who foresaw India’s rise as an economic super power – provided it unshackles itself from the mindless bureaucratic and governmental intervention. Unfortunately, for the nation, Ranga was like the Macintosh machines – far ahead of his times and hence a failure.
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