• PAGE ONE
• INDEX
• HOME

Sinha decries `smear bid by vested interests'

Our Bureau

NEW DELHI, May 28

THE pressures being mounted against the BJP-led Government for the economic policies pursued by it and manifest partly in the allegations against the Finance Minister on the issue of tax treatment to Mauritius-based foreign institutional investors (FIIs) has forced Mr. Yashwant Sinha to go public to hit out against his detractors.

He has also promised a fight to the finish against ``those who are trying to destabilise me and do not find me convenient in the Finance Ministry.''

For the first time, Mr. Sinha called the media to deny reports that a ruling of the Central Board of Direct Taxes (CBDT) in April on the Indo-Mauritian double taxation avoidance agreement was given primarily to benefit an India-dedicated offshore fund ma naged by the Finance Minister's daughter-in-law, Mrs. Puneeta Kumar Sinha.

What prompted the Finance Minister to defend himself on the eve of his departure to the US for an India road show was the efforts of some people to ``diminish me in the eyes of the Prime Minister and thereby create a situation where I could be either shi fted out or dropped from the Ministry.''

Besides the emotional hurt, what appears to have provoked him to hit out against his detractors were rumours here last week of his being eased out of North Block. However, he declined to identify whether it was his own partymen, outfits affiliated to the Sangh Parivar or powerful corporate houses who were behind the smear campaign.

``I am trying to do my job as professionally as possible and with as much integrity as I am capable of. I will try to get to the bottom of this vilification campaign,'' he said.

The better part of Mr. Sinha's briefing was reserved for stating that the CBDT's clarification on April 13 was not issued just to benefit one offshore fund, managed by his daughter-in-law.

The CBDT circular -- which was a reiteration of a similar one issued in 1994 -- had made it clear that FIIs based in Mauritius would not be liable to capital gains tax in India if they furnished a certificate of residence from the Mauritian a uthorities.

Besides, the Finance Minister of Mauritius had written to Mr. Sinha, cautioning him against any action which would impact on fund flow to that country. Mr. Sinha said that the Government had to be sensitive to the fact that the portfolio flows to India w ere over $11 billions.

Mrs. Puneeta Kumar Sinha is an Executive Director of the Canadian Imperial Bank of Commerce (CIBC) and senior portfolio manager of CIBC Oppenheimer which through its subsidiary, Advantage Advisers, Inc is the fund manager for India Fund Inc.

This Mauritius-based offshore Fund had invested over $600 millions in the Indian stock markets and between December 1998 and December 1999 and had logged a growth of 162.26 per cent in its net asset value (NAV), way ahead of several other funds including UTI's India Growth Fund (109.41 per cent), Jardine Fleming India (144.38 per cent) and Morgan Stanley Asset Management Company (145.49 per cent). The imputation being that the India Fund Inc had benefited thanks to the family connection.

Mr. Sinha said that this insinuation was not correct. The gains should be viewed in the background of the rise in the domestic stock markets by over 70 per cent during this period during which all funds performed well. The impression which was being soug ht to be created that his daughter-in law was rewarded with $5.3 millions by the Fund was also unfounded, he said. This amount was given to the investment managers of the Fund -- Advantage Advisers.

The Finance Minister said that he had reasons to believe that a concerted campaign had been mounted by some vested interests who are out to ruin the Indian economy. ``This has to be nipped in the bud,'' he asserted.