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Manmohan had planned to scrap Mauritius treaty

BS Economy Bureau in New Delhi

Former Finance Minister Manmohan Singh said he had planned to scrap the double taxation avoidance treaty with Mauritius in 1995 because it was working to the disadvantage of India, but the Centre developed cold feet on it later.

Appearing before the joint parliamentary committee on stock scam, Singh, said he had appointed a joint working group to review the treaty.

Replying to members' queries on the issue, External Affairs Minister Yashwant Sinha said it was found difficult to abrogate the Bill considering the sensitivity of the Mauritius government on the issue.

He said he had therefore agreed with the island nation's finance minister this year to discuss only the functioning of the treaty instead of altering it.

However, Opposition members were not satisfied and asked Sinha to clarify the extent to which the stock scam of 2001 was the result of the treaty.

The chairman of the committee SPM Tripathi told reporters, Sinha was also grilled by the members that despite being a member of the former JPC and the finance minister for a long spell, how he could not stem the market volatility and the consequent loss for common investors.

The minister, who held the charge of the finance ministry between March 1997 to June 2002 was also asked about his ministry's role on the US-64 issue.

In response Sinha said while the JPC might suggest more autonomy to the regulatory bodies it was a dichotomy that the finance minister should still have to answer Parliament on their behalf.

Defending his position, he said the finance ministry had distanced itself from the regulatory bodies like Sebi and RBI and even from UTI's day-to-day functioning.

In this he was supported by Manmohan Singh who appeared before the committee earlier in the day.

Speaking about decision by UTI to stop sale and repurchase of US-64 in 2 July, 2001, Sinha said he could have stepped in had there been an intimation by the UTI management earlier.

But UTI chairman PS Subramanyam, in his letter of May 18, 2001 to the ministry gave no such indication. He said by the time he was given the warning letter of 30 June on the morning of 2 July, it was too late.

He however defended the role of his ministry officials generally, saying that they had not failed in their duty.

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