The new tax returns forms, running into 10 pages (and nine more of explanatory notes), make a travesty of the word Saral.
Gautam Chikermane
Mr Yashwant Sinha
Finance Minister
Ministry of Finance
North Block
New Delhi - 110001
Dear Mr Minister,
Thank you for convincing me that I’m no common man: I’m one of only 20 million taxpayers in this country, which makes me a very rare specimen of our species indeed. Someone the government ought to treat with samman–to borrow one of the many meaningless words in the dense tax lexicon –for thanklessly financing its profligacy. A man who, even as he bears the weight of the economy and pays for the sins of tax evaders, is at the rock bottom of the pecking order of political attention. Way below the various vote banks, money banks and muscle banks.
The list of injustices done to tax-paying citizens is long and unending, but the latest crude and insensitive joke is Saral ITS-2 and Saral ITS-3, a particularly warped variant of the form released in July 1999. These are forms individuals have to fill while filing their tax returns. A sample of disclosures we’re expected to make:
Column in Outlook Money
Sunday, June 30, 2002
Saturday, June 15, 2002
More than meets the eye
Even before the dust has settled on the Enron-Andersen fiasco, we have the accounting misdeeds of WorldCom, Merck and Xerox in line. Can this happen in India? The idea is not as far-fetched as it might first seem. Readers are invited to write in with their views on the issue.
Gautam Chikermane
THE REVERBERATIONS of the accounting misdeeds of US companies have reached Indian shores. Even before the dust has settled on the Enron-Andersen fiasco, a series of new financial earthquakes, with their epicentres in the US, have begun to wreak havoc on international investors–WorldCom, which overstated profits to the tune of $4 billion; Merck, which did not account for $12 billion worth of sales; and Xerox, which claims it bribed Indian officials to get government contracts. The sheer scale of daring makes the Harshad Mehtas, the C.R. Bhansalis and the Ketan Parekhs look like petty pickpockets. Scams involving banks, stocks and allied regulators, RBI and Sebi seem like a waste of time, when so much more can be done by simply cooking the books.
Can this happen in India? Well, the idea is not as far-fetched as it might first seem. There are two institutions that participate in the publishing of balance sheets–the company’s management and its auditors. Once the balance sheet has been signed by the management, it is presented to all shareholders, and regulators like the Department of Company Affairs or Sebi (Securities and Exchange Board of India). The corruption of numbers, therefore, can be done by two sets of people–the management and the auditors. That is bad enough; what makes it worse is the ignorance of the regulators and the investors.
Opinion in Outlook Money
Gautam Chikermane
THE REVERBERATIONS of the accounting misdeeds of US companies have reached Indian shores. Even before the dust has settled on the Enron-Andersen fiasco, a series of new financial earthquakes, with their epicentres in the US, have begun to wreak havoc on international investors–WorldCom, which overstated profits to the tune of $4 billion; Merck, which did not account for $12 billion worth of sales; and Xerox, which claims it bribed Indian officials to get government contracts. The sheer scale of daring makes the Harshad Mehtas, the C.R. Bhansalis and the Ketan Parekhs look like petty pickpockets. Scams involving banks, stocks and allied regulators, RBI and Sebi seem like a waste of time, when so much more can be done by simply cooking the books.
Can this happen in India? Well, the idea is not as far-fetched as it might first seem. There are two institutions that participate in the publishing of balance sheets–the company’s management and its auditors. Once the balance sheet has been signed by the management, it is presented to all shareholders, and regulators like the Department of Company Affairs or Sebi (Securities and Exchange Board of India). The corruption of numbers, therefore, can be done by two sets of people–the management and the auditors. That is bad enough; what makes it worse is the ignorance of the regulators and the investors.
Opinion in Outlook Money
Money, sex and kids
By making money-talk taboo at home, we slow down our kids' progress towards financial literacy.
Gautam Chikermane
YOU MUST be out of your bloody mind. That’s the most perverted thing I’ve ever heard. Why do you want to corrupt the minds of these kids?" The shock was genuine, so was the anger. Not surprising when someone tells you that he wants to teach your children about money. "Money? For God’s sake, money is at the root of all evil... children must be kept away from it." But the same parents who so vociferously condemn this "misdirected enterprise" (to educate children about money) spend thousands of rupees– often dollars too–on them, and not just on necessities like their education, but on excesses like cellphones and ludicrously large libraries of video games. In their own lives, they certainly desire it. Lust for it. Worship it. Even fear it–perhaps because they don’t much understand it. Is that what explains this schizophrenic ambivalence about money: lust for it when you are an adult and do your damnedest to guard children from its "corrupting influence"?
Opinion in Outlook Money
Gautam Chikermane
YOU MUST be out of your bloody mind. That’s the most perverted thing I’ve ever heard. Why do you want to corrupt the minds of these kids?" The shock was genuine, so was the anger. Not surprising when someone tells you that he wants to teach your children about money. "Money? For God’s sake, money is at the root of all evil... children must be kept away from it." But the same parents who so vociferously condemn this "misdirected enterprise" (to educate children about money) spend thousands of rupees– often dollars too–on them, and not just on necessities like their education, but on excesses like cellphones and ludicrously large libraries of video games. In their own lives, they certainly desire it. Lust for it. Worship it. Even fear it–perhaps because they don’t much understand it. Is that what explains this schizophrenic ambivalence about money: lust for it when you are an adult and do your damnedest to guard children from its "corrupting influence"?
Opinion in Outlook Money
Thursday, May 30, 2002
A date with death
If it's not going with me when I say my final farewell to the world, what's the big deal with wealth creation?
Gautam Chikermane
THE NURSE walks in. Pricks my vein with efficient ease. Pain. But I don’t have the energy to protest. Slowly, life starts flowing from the bottle, drop by drop, into my veins. As I stare at the white ceiling above, with no distractions other than the thought of a near-death experience barely an hour ago, I wonder what the whole business of life is about. That’s when I notice him, hovering immensely near the ceiling. Mighty, majestic, mysterious. "Who are you?" I ask. "The God of Death," he answers simply. As clinically detached from his answer as the doctor seemed from his patient when he introduced himself. The blood that has begun to course my veins again is suddenly turning cold. "What do you want?" I mutter, almost knowing–and dreading–the answer. "I’ve come to take you," the voice rumbles. Chilled by the certainty in his voice, I mumble: "But I’m not ready yet... is there any way I can get some more time...?" "Yes..." followed by a pregnant silence. What’s the ‘but’? I wonder. What is he not telling me? I am frantic, and in that fleeting moment, I wonder if I’d sell my soul to the devil if that was the price for staying on. And, then, "Answer these two questions."
* What do you leave behind when you die?
* What do you carry with you after death?
This couldn’t be happening, but it is. He couldn’t be there, but he certainly is. With no way out, and apparently nothing to lose, I decide to give it a go.
Opinion in Outlook Money
Gautam Chikermane
THE NURSE walks in. Pricks my vein with efficient ease. Pain. But I don’t have the energy to protest. Slowly, life starts flowing from the bottle, drop by drop, into my veins. As I stare at the white ceiling above, with no distractions other than the thought of a near-death experience barely an hour ago, I wonder what the whole business of life is about. That’s when I notice him, hovering immensely near the ceiling. Mighty, majestic, mysterious. "Who are you?" I ask. "The God of Death," he answers simply. As clinically detached from his answer as the doctor seemed from his patient when he introduced himself. The blood that has begun to course my veins again is suddenly turning cold. "What do you want?" I mutter, almost knowing–and dreading–the answer. "I’ve come to take you," the voice rumbles. Chilled by the certainty in his voice, I mumble: "But I’m not ready yet... is there any way I can get some more time...?" "Yes..." followed by a pregnant silence. What’s the ‘but’? I wonder. What is he not telling me? I am frantic, and in that fleeting moment, I wonder if I’d sell my soul to the devil if that was the price for staying on. And, then, "Answer these two questions."
* What do you leave behind when you die?
* What do you carry with you after death?
This couldn’t be happening, but it is. He couldn’t be there, but he certainly is. With no way out, and apparently nothing to lose, I decide to give it a go.
Opinion in Outlook Money
Wednesday, May 15, 2002
A case for regulating real estate
The real estate market has to change from one that runs on 'trust' to one that runs via trustworthy institutions.
Gautam Chikermane
FOR MOST of us middle-class citizens of this country, the biggest asset we have is a house–four-and-some walls which become a place where we not only invest our hearts and minds and emotions and aspirations, but most of our money as well. I’d imagine that 70-85 per cent of our total wealth is invested in a house. The rest is largely confined to safe government-backed schemes and insurance, and a tiny fraction is either wasting away in savings bank accounts, earning a pathetic 4 per cent, or circulating among shares, mutual funds and other financial instruments. Unfortunately, the real estate sector, which houses most of the middle-class wealth, is the least regulated of all these markets. Witness the contradiction: our most valuable asset is the least governed and the least valuable asset the most regulated.
If our stock broker cheats us of Rs 1,000, we can report him to Sebi (Securities and Exchange Board of India) or to the stock exchange–and expect to get justice. But if a property dealer charges us a Rs 50,000 commission (2 per cent) on the sale of a Rs 25 lakh apartment, and the property turns out to be disputed, there is nothing we can really do by way of seeking redress. Of course, we continue paying our monthly instalments to the housing finance company. If the property dealer charges us one month’s commission (at an exorbitant 8.3 per cent, unheard of in any rational market) on an apartment we want to rent out for a year, and the tenant turns out to be a rogue, the dealer is simply not accountable. We can do nothing, get nothing, hope for nothing. Why? Simply because there is nobody to go to, no regulator to file a complaint with, no self-regulated organisation to report this mishap. Yes, we can appeal to the courts–and pray that at least our grandchildren get justice.
Column in Outlook Money
Gautam Chikermane
FOR MOST of us middle-class citizens of this country, the biggest asset we have is a house–four-and-some walls which become a place where we not only invest our hearts and minds and emotions and aspirations, but most of our money as well. I’d imagine that 70-85 per cent of our total wealth is invested in a house. The rest is largely confined to safe government-backed schemes and insurance, and a tiny fraction is either wasting away in savings bank accounts, earning a pathetic 4 per cent, or circulating among shares, mutual funds and other financial instruments. Unfortunately, the real estate sector, which houses most of the middle-class wealth, is the least regulated of all these markets. Witness the contradiction: our most valuable asset is the least governed and the least valuable asset the most regulated.
If our stock broker cheats us of Rs 1,000, we can report him to Sebi (Securities and Exchange Board of India) or to the stock exchange–and expect to get justice. But if a property dealer charges us a Rs 50,000 commission (2 per cent) on the sale of a Rs 25 lakh apartment, and the property turns out to be disputed, there is nothing we can really do by way of seeking redress. Of course, we continue paying our monthly instalments to the housing finance company. If the property dealer charges us one month’s commission (at an exorbitant 8.3 per cent, unheard of in any rational market) on an apartment we want to rent out for a year, and the tenant turns out to be a rogue, the dealer is simply not accountable. We can do nothing, get nothing, hope for nothing. Why? Simply because there is nobody to go to, no regulator to file a complaint with, no self-regulated organisation to report this mishap. Yes, we can appeal to the courts–and pray that at least our grandchildren get justice.
Column in Outlook Money
Tuesday, April 30, 2002
Don't kill your child's instinct to succeet
By giving our children everything they desire without any effort, we could be killing their instinct to succeed tomorrow.
Gautam Chikermane
THE FIVE children–two girls and three boys, age three to six–frolicked in the small, plastic pool. It was a delight to see them fight the early-summer heat by splashing water on one another, turning into mermaids, crocodiles and fish, as the colours of Holi turned the pool from yellow to red to green. It was also an experience that offered insights into the process of wealth creation. Four of the children were from well-off, even wealthy, homes. The fifth one–let’s call him Hari–was the son of a government clerk. What his family spent in a year would be about one to two months’ expenses of the others’. Hari did not have expensive toys like the other children did; he had never seen a home pool. The other children were completely unaware of the economic divide between him and them, and although Hari was conscious of the divide, the child in him rejected these artificial layers of separation that build walls between adults.
The quintet moved on, from the pool to the cycles to the lunch table to the mom-and-pop games. In all the activities, there was only one leader: Hari. He only had to see a toy being used once and he’d master it. He was the organiser of all kinds of games: making a ‘house’ with dining chairs for walls and bedsheets for a roof, teaching them to pedal more efficiently, hold their breaths underwater and blow bubbles, and generally creating magic out of the ordinary. Hari, I felt, characterised the spirit of enterprise: he had nothing, not even a knowledge of how the remote-controlled jeeps and the other gadgets worked. But he created conditions under which the other children became his followers, chanting "Hari bhaiya, Hari bhaiya", doing what he told them to and having a great time. If he keeps at it, he could end up very wealthy.
Column in Outlook Money
Gautam Chikermane
THE FIVE children–two girls and three boys, age three to six–frolicked in the small, plastic pool. It was a delight to see them fight the early-summer heat by splashing water on one another, turning into mermaids, crocodiles and fish, as the colours of Holi turned the pool from yellow to red to green. It was also an experience that offered insights into the process of wealth creation. Four of the children were from well-off, even wealthy, homes. The fifth one–let’s call him Hari–was the son of a government clerk. What his family spent in a year would be about one to two months’ expenses of the others’. Hari did not have expensive toys like the other children did; he had never seen a home pool. The other children were completely unaware of the economic divide between him and them, and although Hari was conscious of the divide, the child in him rejected these artificial layers of separation that build walls between adults.
The quintet moved on, from the pool to the cycles to the lunch table to the mom-and-pop games. In all the activities, there was only one leader: Hari. He only had to see a toy being used once and he’d master it. He was the organiser of all kinds of games: making a ‘house’ with dining chairs for walls and bedsheets for a roof, teaching them to pedal more efficiently, hold their breaths underwater and blow bubbles, and generally creating magic out of the ordinary. Hari, I felt, characterised the spirit of enterprise: he had nothing, not even a knowledge of how the remote-controlled jeeps and the other gadgets worked. But he created conditions under which the other children became his followers, chanting "Hari bhaiya, Hari bhaiya", doing what he told them to and having a great time. If he keeps at it, he could end up very wealthy.
Column in Outlook Money
Monday, April 15, 2002
'We are watchdogs, not bloodhounds': ICAI president
Pointing out fraud is for the regulators. Our job is to give them the information. What they do with it is their business.
Gautam Chikermane
When Ashok Chandak took charge as president of the Institute of Chartered Accountants of India (ICAI) on 5 February 2002, his role, it seemed, was cut out. A month into being in office (on March 8), against the backdrop of the dubious role of Andersen, the Enron auditors, in the US energy giant’s debacle, he passed his first resolution, which stated that an accounting firm cannot charge a company higher fees for consulting than for auditing its accounts. As head of the first accountants body to do so in the world, Chandak has caught the post-Enron-and-the-resultant-clean-up bus running. In an interview with Gautam Chikermane, Chandak touches upon the various aspects of regulating accountants. Scalded by criticism of the ICAI’s regulatory role (See 'Make accountants accountable'), Chandak began the interview on the front foot. Excerpts:
Do you think the accounting profession is accountable?
In the past 50 years, we have had the best self-regulatory mechanism–1,650 cases have been sent to the high court, an equal number would have been punished by the institute. The total number of cases considered: more than 10,000. Now, you tell me how many have been found guilty in other self-regulated organisations. I would say that we have the best record of regulation in the country. Besides, you should not look at statistics alone. You should consider the quality of regulation.
Why then are aspersions being cast on the profession today? Why is it felt that accountants are not accountable?
You say that auditors don’t do their jobs. Fine. Can you give me just 10 audit reports where the various regulators who get these reports (Registrar of Companies, Income Tax authorities, banks, RBI, Sebi or the stock exchanges) have taken action on the basis of the auditor’s qualifications? You won’t be able to do that because nobody takes these reports seriously. We are not regulators–and we don’t want to be regulators.
Interview in Outlook Money
Gautam Chikermane
When Ashok Chandak took charge as president of the Institute of Chartered Accountants of India (ICAI) on 5 February 2002, his role, it seemed, was cut out. A month into being in office (on March 8), against the backdrop of the dubious role of Andersen, the Enron auditors, in the US energy giant’s debacle, he passed his first resolution, which stated that an accounting firm cannot charge a company higher fees for consulting than for auditing its accounts. As head of the first accountants body to do so in the world, Chandak has caught the post-Enron-and-the-resultant-clean-up bus running. In an interview with Gautam Chikermane, Chandak touches upon the various aspects of regulating accountants. Scalded by criticism of the ICAI’s regulatory role (See 'Make accountants accountable'), Chandak began the interview on the front foot. Excerpts:
Do you think the accounting profession is accountable?
In the past 50 years, we have had the best self-regulatory mechanism–1,650 cases have been sent to the high court, an equal number would have been punished by the institute. The total number of cases considered: more than 10,000. Now, you tell me how many have been found guilty in other self-regulated organisations. I would say that we have the best record of regulation in the country. Besides, you should not look at statistics alone. You should consider the quality of regulation.
Why then are aspersions being cast on the profession today? Why is it felt that accountants are not accountable?
You say that auditors don’t do their jobs. Fine. Can you give me just 10 audit reports where the various regulators who get these reports (Registrar of Companies, Income Tax authorities, banks, RBI, Sebi or the stock exchanges) have taken action on the basis of the auditor’s qualifications? You won’t be able to do that because nobody takes these reports seriously. We are not regulators–and we don’t want to be regulators.
Interview in Outlook Money
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