It seems that in Indian politics every party has only one destiny and that is to go the Congress way! We have seen this happening to the Janata Party and its innumerable offshoots. There were only two parties which had the strength and desire to be different, the leftists and the BJP. The leftists though weak in numbers have proved that they are the only disciplined party. BJP, which had both, the strength and the desire to be different is rapidly drifting to that certain destiny, to be a better copy of the Congress culture.
The latest controversy regarding Finance minister Yashwant Sinha's alleged interests in a FII has much to do with the power struggle within BJP rather than with the economy of the country. It was the same with the Sankhya Vahini project. The allegations against this project and the subsequent campaign against it had sprung from a closer home.
There could not have been a better time to attack Yashwant Sinha when he was visiting the US to market Indian economy there. While he was describing the success of reforms to the US businessman, back home charges were being leveled against him for granting so-called favors to a Foreign Funding Institution. It was also alleged that these favors were granted to help Sinha's daughter-in-law who is working as a fund manager with the said company. The next day another rumour was making rounds in the political circle. It was being told that Prime Minister Vajpayee has taken a serious note of the charges against Sinha and he was about to be dropped from the cabinet. The PMO, however clarified that Sinha himself was exploring the possibilities of filing a defamation suit against those who were leveling these charges.
So who was this? Congressmen or the Leftists?
No, the person who was providing interesting information regarding this controversy was none other than a BJP MP, Kirit Somaiyya, self-proclaimed champion of small investors. He was explaining to anybody and everybody who cared to listen that; how one company named Oppenhiemer Group (India Fund) was benefited by the concessions in capital gains tax. In the same breath it was being told that one Punita Kumar Sinha, a professional with this company is actually the daughter-in-law of Yashwant Sinha. It was left to the receiver, to draw conclusions from this information, being handed out free of cost. Then it was natural for the Congress and the Leftists , who picked up the issue readily and started demanding the resignation of the finance minister.
So what is the real story? Does Sinha have a daughter-in-law by name of Punita Kumar Sinha? Yes, he does. With doctorate in finance from the Wharton Punita Kumar Sinha is actually working with India Fund. Is this fund registered in Mauritius and has immensely benefited from the concessions in capital gain tax? The answer is yes again. The net asset value of this company rose from $300 million to $769 during 1998-99. The investment manager was paid a reward of $5.3 for this performance! The performance is for year 98-99, during which the stock markets recorded an upward trend of some 6000 points. So, there were many FIIs which registered impressive profits in this period. India fund put out its annual disclosure statement on the net. Kirit Somaiyya downloaded these statements and distributed it as an example to show how the FIIs were making money in India. If all parts put together one gathers the impression that Sinha helped the Mauritius based FII which resulted in their recording a huge profit, for which the fund manager (Punita Kumar Sinha) was paid a reward of $5.3 million!
But if one tries to examine the facts separately the picture becomes clear as also the game plan. Concession from capital gains tax to Mauritius based FIIs is not a new or recently taken decision. The decision is a part of India-Mauritius treaty. It was made clear in 1994 that FIIs coming from Mauritius would be taxed in one country only. No amendment or new concessions were accorded by Sinha. In March the income tax department found out that some companies were taking disadvantage of the double taxation treaty and it served notices to these companies for tax evasion of around Rs.8 Cr. One eminent financial newspaper presented this news as a headline story and the markets reacted to it by nose-diving southward. A government which has unnecessarily become stock market conscious, tried to shore up the market and announced that the IT people had misinterpreted the double taxation treaty, hence the notices were being withdrawn. This was a matter, which involved a paltry sum of Rs. 8Cr. However in some quarters (even within the BJP) this was interpreted as a favor to the FIIs. A whisper campaign was initiated which ultimately linked these orders of the finance ministry to India Fund and to Punit Kumar Sinha, daughter-in-law of Yashwant Sinha.
This type of politics and mud slugging at a senior party colleague is the practice, which was brought in and perfected by the Congress. Now the BJP seems to be imitating it. The party bosses should look into it carefully and should find out as who was interested in this well planned campaign against the FM. If Sinha indeed was wrong, he should be asked to explain it to the party and to the people. At the same time those who are trying to be the magnified image of their microscopic self should also be punished. This needs to be done sooner the better.