The Hindu : Tamil Nadu News : Jayalalithaa slams Chidambaram

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Friday, May 30, 2008
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Tamil Nadu

Tamil Nadu

Jayalalithaa slams Chidambaram

Special Correspondent

For “unchecked flow of foreign funds” into the country

Jayalalithaa

CHENNAI: All India Anna Dravida Munnetra Kazhagam general secretary Jayalalithaa on Thursday came down heavily on Union Finance Minister P. Chidambaram for not taking steps to curb “unchecked flow” of foreign funds into the country in the name of globalisation.

“The unchecked entry of funds from abroad is being used by foreign-based terrorists not only to fund terrorism but also to cripple the country economically,” she said in a statement.

Terming this “economic terrorism,” Ms. Jayalalithaa said foreign investors now had a convenient way of making investments through participatory notes (P-notes) without revealing their identity. P-notes are instruments used by registered Foreign Institutional Investors (FIIs) for overseas investors who wished to invest in the Indian stock market without registering themselves with the market regulator, the Securities and Exchange Board of India (SEBI). Investments through the P-notes routes are believed to be largely responsible for the sudden and unexplained fluctuations in the stock market indices. Though SEBI has asked FIIs to disclose the identities of holders of these notes, there has been no compliance, she alleged. The AIADMK leader said as per the Indo-Mauritius double taxation avoidance treaty signed in 1983, investments through Mauritius FIIs would not come under tax bracket. After the UPA came to power, Mauritius had emerged as the largest foreign investor in India. Tax losses to India as a result of the treaty were estimated at Rs.4,000 crore.

The RBI had stated that Indian “slush funds,” were going out of the country and being ploughed back as legitimate funds via Mauritius. Despite all this, the Finance Minister had not taken any step. What prevented Mr. Chidambaram from making sure that no Indian was re-routing investments through P-notes? What steps had he taken to ensure that slush funds from India and terrorist funds from abroad were not entering the Indian market through P-notes or the Mauritius route, she asked.

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