Is The Vodafone Judgement A Signal India Is Ready To Play Ball?

While India’s underbelly, its cricket pride, is being battered around the world, it looks like its judiciary thinks it is time to play ball. The Supreme Court has ruled that the $2.2 billion claim of the Indian tax department on Vodafone for the purchase of shares from Hutchinson is illegal. It has taken the judges of the Supreme Court to see that India needs to play fair to claim its position among the G20.

No doubt, the remaining ‘five star’ communists of India and its available polit buro in Delhi, will see this as an overture by Indian judiciary, even a gross capitulation, to the American Imperialism. However its cautious secretary, Prakash Karat is likely to stay clear of any comments against the judgement as it can be construed as contempt of court in India for which he can be locked up in the infamous Tihar Jail which already holds a number of Indian politicians.

The credibility of India, as a democratic  nation ripe and mature for free market and holding out huge potential for growth, which attracted massive inflow of western capital in recent years, was going for a toss, abetted by all kinds of obstructionist and partisan politics as well as sporadic vigilante activism.

In fact one of the Supreme Court judges who qualified the tax as “Capital Punishment”, an act against capitalism. The demand for $2.2 billion in capital gains tax "would amount to imposing capital punishment for capital investment since it lacks authority of law...," K.S. Radhakrishnan, one of the three judges ruling on the case, said in his order.

It looks like, fortunately for India, its judiciary, the only democratic institution with power to arbitrate on contentious political issues, has come to realise that it is time for India to behave like a true G20 nation to lay its claim to a seat.

Despite the moral aspect of the case, arising out of the fact that the case related to taxing a deal between two foreign multinationals which operated and generated the capital gain over operations in the Indian soil, and previous judgement by the lower courts and by itself against Vodafone, the Supreme Court has chosen to arrest the damage to the reputation of India as a safe destination for foreign capital. 

Can this be taken as a sign that doing business in India is entirely safe for foreign companies? The truth is that India, which has only seen a series of set backs to its growth in the past year and faced with huge budget deficit, has no choice but to aggressively attract foreign capital.

For the political movements which prefer to drive looking in  the rear mirror, like that of Prakash Karat, it is time to stop over and consult their road maps like the political redefining of ideology he has recently published.

For the Indian leadership which in fact realised that this is only way out, from the days when India went nearly bankrupt from its socialist agenda of four decades, in the late nineties, it is a matter of continuing the reforms it has initiated and taking the fast lane to progress.

Article first published in TECHNORATI as http://technorati.com/business/article/is-the-vodafone-judgement-a-signal/

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