Amid a furore over huge loan defaults by beleaguered businessman Vijay Mallya, industry body CII today said wilful defaulters “need to be brought to the book” and unpaid loans must be recovered.
Asked about the approach government needs to adopt to tackle wilful defaulters like Mallya, new CII President Naushad Forbes said: “Wilful defaulters need to be brought to the book using the laws of the land and we need to use our legal process as a way of recovering what can be recovered”.
Vijay Mallya, promoter of long-grounded Kingfisher Airlines, had left India on March 2, presumably for London, days before the Supreme Court heard a plea of clutch of state-owned banks seeking recovery from his group firms.
Mallya and Kingfisher Airlines owed Rs 7,800 crore to a consortium of 17 lenders led by State Bank, which had an exposure of over Rs 1,600 crore to the now defunct airline.
“Going bust is not a crime. But there are aspects to going bust that might be a crime and that is what the legal process is supposed to answer”.
The comment by the industry body comes against the backdrop of government’s stern warning to ‘wilful defaulters’ like Mallya to settle their dues honourably with the banks or else be ready to face “coercive action” by lenders and investigative agencies.
The new CII President suggested formation of a National Asset Management Company to deal with the issue of rising non-performing assets (NPAs).
Asked whether corporates need to make disclosures in a better manner in the wake of the Panama Papers, Forbes said: “First of all you need to look at the list that has appeared in a newspaper, how much of that is legal and how much is illegal, no one knows. I think once one has gone through that process then we will be clear what needs to be done. ‘
“If the remittances were illegal then regardless of what norms you have nothing will happen… Should there be greater transparency in disclosures, I think that already exists”.
Panama Papers have disclosed a list of nearly 500 Indians including celebrities and industrialists who have allegedly stashed money in offshore entities in Panama, considered to be a tax haven.
On Government’s move to impose a minimum import price on steel, the CII President said: “If you look at the measures on steel, if we see them as short-term measures to prevent a flood of imports as a result of a global supply glut, then it is okay. But if you see it as something that is going to be around in the long term it is improper for the economy because it is feeding higher costs for all the using sectors”.
Government in February imposed a minimum import price (MIP) on 173 steel products ranging between USD 341 to USD 752 per tonne.
The minimum price will remain in place for six months only. However, it will not apply on imports under the advance authorisation scheme and high-grade pipes used in the petroleum and natural gas industry.
On whether the reimposition of 1 per cent excise duty on gold and diamond jewellery which has met with opposition will help curb black money generation, Forbes said: “All sectors have to be brought into the net. Now the moment you start doing this for any sector which was previously untaxed it is going to be objected to because all of a sudden you need to comply with taxation regime.
“The opportunities for will it curb black money .. I think the more we can move towards an economy that relies less on cash or surrogates to cash like gold the more productive the economy is”.
Finance Minister Arun Jaitley in the Budget for 2016-17 had proposed 1 per cent excise duty on jewellery without input credit or 12.5 per cent with input tax credit on jewellery excluding silver other than studded with diamonds and some other precious stones.
The Central Board of Excise and Customs had said the jewellery sector contributes to generation of black money and needs to be brought under the tax ambit.