Titbits:The Mauritius-India Investment Route; MTPA-Greater accountability required; Moody's Investors Service upgrade !!!

The current visit of the Mauritian minister of foreign affairs to Delhi will set the stage for resuming talks on the Indian tax treaty in August.  Our negotiating position has been considerably weakened by the introduction of the General Anti-Avoidance Rules (GAAR) in the Indian budget earlier this year, and the draft GAAR guidelines issued last week have confirmed our worst fears of potential override of tax treaty provisions.

Titbits: The sliding rupee; A faltering tourism sector; Service to Mauritius and the Capacity Building programs .

The sliding rupee

It is now clear that the rupee is finally depreciating. During the last week, the US dollar weakened somewhat against the euro following the Spanish bank bailout and the Greek elections, but the US dollar has continued to strengthen vis à vis the rupee. Since the position of the Governor of the Bank of Mauritius (BOM) on preserving the rupee's value is well known, the possibility that the decision to depreciate has been forced upon the Bank by the appointees of the Ministry of Finance on the Monetary Policy Committee (MPC) cannot be ruled out.

Titbits: Opportunities missed; The monetary policy pause ; Innovation-led growth; Capital inflows.

From austerity to lower trend growth: Opportunities missed

 In the heat of debate that has followed the Central Bank Governor’s announcement of bold measures to correct the misalignment of the rupee, some of the arguments put forward by the Governor seemed to have been sidelined.  He has put the spotlight back on the lingering policy paralysis and structural constraints that are taking the rupee to lower levels. 

Titbits: Export competitiveness;The NSTC- Whose turf?; The Project Management and Delivery Unit ; Improving education outcomes; Reactivating the Indian Ocean Rim Association for Regional Cooperation

Export competitiveness

Competitiveness is an imperative, not an option in today’s global economy. For analyzing the competitiveness of the manufacturing sector, we have to examine the changes in Unit Labour Cost (ULC), that is, not only labour productivity growth but also the growth in the average compensation of employees. ULC measures the remuneration of labour per unit of output. 

Titbits:The National Strategic Transformation Commission; The Cost of Lower Public Debt to GDP Ratio; Managing Capital Inflows;Labour Market Reforms; MK rescued again and again!

The National Strategic Transformation Commission

After some six years of bumping into systemic dead ends, the Government Programme 2012-2015 took the bull by the horns by coming to the rescue of the economic management of the country. We have so far been having recourse to stopgap solutions and focussed mostly on short-term traditional macro-stabilization policies. But that is not enough for establishing a solid base for sustained economic growth and get the economy going again at full blast.

Titbits:India-Mauritius Tax Treaty; New Reforms Strategy in the Civil Service; Capital inflows and appreciation of the rupee; A University for the Mediocre

India-Mauritius Tax Treaty

The radical taxation proposals contained in the recent Indian budget have raised considerable alarm about the ability of Mauritius to maintain its pre-eminent role as an offshore location for investments into India. In response, the Mauritian Government has adopted a wait and see attitude, probably on the premise that the Indian Government will backtrack on the proposed tax changes in the presentation of the Finance Bill in the Indian Parliament during the last week of April, under the mounting weight of harsh international criticism of the retroactive nature of the tax amendments and of the sweeping taxation powers accruing under the tax avoidance rules.

Titbits: Offshore Financial Services - Time for a New Strategy?; Whatever happened to the Central Bank’s independence?; Mexa clamours for a Ministry of Planning; Overvaluation of the rupee.

Offshore Financial Services - Time for a New Strategy?(Published in L'Express)

Last week's tax proposals in India's 2012 Budget appear to be a definite game changer for the development of our offshore financial services. While investors from Mauritius will continue to be entitled to the benefits afforded by the provisions of the India-Mauritius Double Taxation Avoidance Agreement, especially to avoid taxation on capital gains incurred in India, the practical availability of such benefits will henceforth be subject to a host of bureaucratic impediments that go with the introduction of comprehensive General Anti Avoidance Rules (GAAR) in Indian Income tax legislation as from April 2013.