Equitable Equity: India Introduces Securities Transaction Tax

By Kavaljit Singh | Commentary | July 16, 2004

On July 8, 2004, India’s Finance Minister, P. Chidambaram, presented Finance Bill (Bill No. 22, 2004) in Parliament in which he proposed the introduction of Securities Transaction Tax (STT) in the Indian financial markets. Under the proposal, every transaction in securities in a recognized stock exchange in India would attract a turnover tax of 0.15 per cent. Transactions in stock and index options and futures would also be subject to transaction tax. Whereas transactions carried out on the Negotiated Dealing System (a screen-based system for trading in government securities and bonds) operated by the central bank, Reserve Bank of India, have been…

How to Lose Millions in Speculative Currency Trading

By Kavaljit Singh | Commentary | April 14, 2004

Australia’s largest bank, National Australia Bank (NAB), lost hundreds of millions of dollars in speculative currency trading. The scandal broke out in January 2004 when a fellow trader working in the Melbourne office of the bank exposed unauthorized foreign currency derivatives trading. Initial reports had indicated that the total loss could be as high as A$600 million but Australian Prudential Regulation Authority (APRA), country’s banking regulatory body, found that the currency trading scandal has cost the bank A$360 million. In its detailed report on the scandal released on March 24, 2004, APRA found that the board of the National Australia Bank had been lax in regulation and…

Parmalat’s Fall: Europe’s Enron?

By Kavaljit Singh | Commentary | February 7, 2004

In December 2003, Italian food and dairy giant, Parmalat, went bust. The dramatic fall of family-owned Parmalat was triggered when Bank of America claimed that a document showing 4 billion Euro in company’s Cayman Islands bank account is forged. Just a couple of months ago, Parmalat’s bosses had claimed a cash balance of 4.2 billion Euro but on December 19, 2003, they admitted a 4 billion Euro hole in company’s finances. Given the complex way of financial wizardry employed by Parmalat’s bosses coupled with off-balance sheet financial transactions (such as derivatives) and funds stashed away in offshore subsidiaries in Cayman Islands, there is no…

Cancun Conundrum

By Kavaljit Singh | Commentary | September 24, 2003

The Fifth Ministerial Conference of World Trade Organization (WTO) held in Cancun during September 10-14, 2003, failed to arrive at any agreement on several contentious issues. Since Cancun Conference was expected to provide a further push to the Doha Round, both the proponents and critics were apprehensive about its outcome. To many critics, Cancun Conference was destined to be a failure as the mandated deadlines (for agreement on the modalities on agriculture, special and differential treatment, implementation issues, and TRIPs and public health), agreed upon at the Fourth Ministerial Conference at Doha in 2001, were missed. But the way Ministerial Conference collapsed at Cancun has surprised everyone. As anticipated, the trade talks did…

Keep Investment Pacts off Cancun’s Agenda

By Kavaljit Singh | Op-Ed, Financial Times | July 7, 2003

If the European Union, Japan and Canada have their way, negotiations for a multilateral investment agreement will begin at the World Trade Organisation meeting in Cancun in September. But many developing countries are doing everything they can to ensure they do not. They are right to do so: an MIA has the potential to cause them serious economic damage.

There is no conclusive evidence that investment agreements lead to increased foreign investment. Since the 1980s, developing countries have signed numerous bilateral investment agreements, yet they receive less than one-third of the world’s total foreign direct investment flows. Africa, consisting of 53 countries, receives less than 2 per cent of the total FDI flows to…