Thursday 22 February 2018

India Inc Moving Towards Better Corporate Governance

The Indian economy is likely to become the fastest growing major economy in the world in 2018 and the interest that Indian businesses is generating among foreign investors shows no signs of abating. However, while willing to commit growth capital to Indian businesses, a key measure of performance that global investors are factoring in is the standard of corporate governance.

According to the annual Indian Corporate Governance Scorecard by the International Finance Corporation, BSE, and Institutional Investor Advisory Services, corporate governance standards of Indian Inc has improved in 2017. The Corporate Governance Scorecard for 2017 showed that companies (of S&P CNX BSE-100) aim to increase transparency and provide confidence to investors globally.

With over 5,000 listed companies and more than 50 companies in the global Fortune 2000, India represents a vibrant mix of small and large companies that access capital from domestic and international investors to fund their growth. Many of these companies are amongst the largest employers.

Moreover, a large number of small investors in India rely on corporate India’s good performance so that the returns they obtain on their investments can ensure their financial security. Beyond doubt, corporate India represents a key engine that powers nation building; and nation building requires sound principles of governance, whether it is a country or a company. As corporate India’s health is critical for India’s future, sound corporate governance needs to be the key enabler to manifest this reality.

The study suggests that more than 90 per cent of the Sensex 30 companies have provided adequate disclosures and inducted more women directors.

The 2017 Scorecard highlights several areas of improvement for Indian companies including better clarity on effectiveness of policies, improvement in board effectiveness and enforcement of shareholder rights.

The number of Sensex 30 companies giving detailed minutes of the annual general meetings, disclosures on succession planning and facilitating shareholder participation doubled in the last one year, the study revealed further.

The BSE 100 companies have improved on information standards with scores ranging between 85 and 50.

Increasing investor scrutiny and significant steps being taken by various regulatory bodies such as the Reserve Bank of India, and Securities and Exchange Board of India (Sebi), and increased vigilance by minority and institutional shareholders demonstrate the changing governance standards in India.

Good corporate governance helps companies operate more efficiently, improve access to capital, mitigate risk, and safeguard against mismanagement. It makes companies more accountable and transparent to investors and gives them the tools to respond to stakeholder concerns.

Corporate governance also contributes to development. Increased access to capital encourages new investments, boosts economic growth, and provides employment opportunities.


 Latin Manharlal Group

Monday 5 February 2018

Union Budget 2018: Pro-Poor, Pro-Farmer


With national polls looming next year, Finance Minister Arun Jaitley has rolled out a budget designed to help distressed farmers and rural areas while boosting growth, jobs and private investment.

This year budget was a mix bag of both expectations and a few surprises. Since, last couple of years India has seen momentous changes on the economic and fiscal front be it the demonetization or the long awaited GST reform and given that it was the last full-fledged budget for the government, it was expected to throw some surprises.

In the last Union Budget before the general elections, the central government decided to focus on something that’s never got its due in the past: Healthcare. Many developed countries provide free healthcare to their citizens. India lagged them. This year’s Budget gave a big boost to the healthcare and focused at addressing the anxiety and trauma of people who cannot afford expensive medical services.

The government announced steps to address healthcare holistically, in primary, secondary and tertiary care system covering both prevention and health promotion. It announced National Health Protection Scheme, the world’s largest government funded healthcare programme that will provide up to Rs. 5 lakh per family per year for secondary and tertiary care hospitalisation. The Budget also allocated additional Rs. 600 crore to provide nutritional support to all TB patients at the rate of Rs 500 per month for the duration of their treatment.


In this budget, India’s farmers and villagers, as well as companies with exposure to agriculture, emerge as the biggest winners. This budget has promised to raise the minimum price offered to farmers for crops, while investing heavily in agricultural markets across India. It also delivers more money for rural areas, including irrigation projects and aquaculture projects, and directs state governments to purchase extra solar power generated by farmers using solar-powered pumps.
Under housing for all, the government has announced the construction of one crore houses in rural areas under the Prime Minister Awas Yojna Rural. In urban areas the assistance has been sanctioned to construct 37 lakh houses. The government will also establish a dedicated Affordable Housing Fund (AHF).

For senior citizens, the government announced enhanced exemption on various counts. The increase from Rs. 10,000 to Rs. 50,000 on interest earned on deposits with banks and post offices, fixed deposits and recurring deposits. TDS will not apply on such income under Section 194A. The deduction limit for health insurance premium and/or medical expenditure was raised from Rs. 30,000 to Rs. 50,000, under section 80D. Under Section 80DDB, the deduction limit for certain critical illness medical expenses for senior citizen (Rs. 60,000) and very senior citizens (Rs. 80,000) has been raised to Rs. 1 lakh. Four – the limits for the PM Vaya Vandana Yojana, that provides a pension plan with guaranteed returns of 8 per cent, have been doubled to Rs. 15 lakh.


However, the government announced no change in the personal tax slabs saying that the government had made many positive changes in the personal income-tax rate applicable to individuals in the last three years. In a major move to provide relief to salaried taxpayers, the government allowed a standard deduction of Rs. 40,000 in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses.

Budget 2018 has proposed to hike the cess on income tax from 3 per cent to 4 per cent thereby increasing the tax payable by all categories of tax payers. Due to this change, the tax liability for highest tax bracket (assuming Rs 15 lakh income) goes up by Rs 2,625. For middle income tax payers (between Rs 5 lakh and Rs 10 lakh) the tax liability increases by Rs 1,125 and for lowest tax brackets (Rs 2.5 lakhs to Rs 5 lakhs) by Rs 125.

Finance minister Arun Jaitley introduced the much talked about long term capital gains tax (LTCG) on sale of listed securities on gains of over Rs1 lakh. Jaitley, introduced a long-term capital gains tax of 10 percent if the gains exceed Rs 100,000 without allowing the benefit of indexation. However, all gains till 31st January 2018 will be grandfathered and short term capital gains remains unchanged at 15 percent. However, any gains in excess of Rs 20 earned after 31st Jan 2018 will be taxed at 10 percent if this share is sold after 31st July 2018


According to the Economists, Union Budget 2018 has focussed on agriculture and rural economy, health, infra, senior citizens and aims to work towards improving living standard in India.

Image Courtesy: Google
Latin Manharlal Group