New Delhi: What Prime Minister and Finance Minister Manmohan Singh may have forgotten to consider while constituting the new panel that will redraft the General Anti-Avoidance Rules (GAAR) is a potential conflict of interest.

“Most of the members in the new panel happen to be economists trained abroad. They have worked in multinationals or have been close to either the Prime Minister himself, or Home Minister P Chidambaram or the Deputy Chairman Planning Commission Montek Singh Ahluwalia, who are all known to look kindly upon industry. It happens; the government of the day chooses people who it can repose its faith and trust on, but the panel looks ‘tailor-made’ to appease the industry,” a senior political leader said requesting anonymity.

“The idea to have a new panel amplifies the fact that either the government is planning to dilute GAAR or put it in cold storage to make India more investment-friendly,” the leader added.

The four-member panel is chaired by Parthasarathi Shome, director and chief executive of ICRIER, the Delhi-based think-tank that’s headed by Isher Judge Ahluwalia, Montek’s wife. In an earlier stint with the government, Shome served as advisor to then finance minister Chidambaram and was also a member of the Prime Minister’s Trade and Economic Relations Committee apart from several other government committees.

Insiders say in UPA’s first stint, the industry-friendly Shome was in touching distance of becoming finance minister. Now it seems he is again close to it.

Another panel member is N Rangachary, considered “very close to some senior political leaders”. The founding chairman of the Hyderabad-based Insurance and Regulatory Development Authority (IRDA), he is a man of impeccable repute. After his superannuation in 1996, Rangachary (who is believed to be very close to former Andhra Pradesh chief minister Chandrababu Naidu) was named financial advisor to the Andhra government.

The “conflict of interest” in Rangachary’s selection is linked to the fact that he used to be on the board of Analjit Singh’s Max India Limited. He resigned from that position in 2010. But the fact that Analjit

Singh was appointed non-executive chairman of Vodafone India in February cannot be ignored. In June, Singh met Ahluwalia amid reports that Vodafone and the government might settle the tax case out of court.

Considering Rangachary’s old association with Analjit Singh, one wonders if he has been placed on the board to help water down key provisions relating to GAAR when the final guidelines are approved and notified. Observers feel the end objective seems to be to save the government from any more embarrassment like the Vodafone tax dispute.

It doesn’t end there. The third member of the panel is Ajay Shah, a PhD in Economics from southern California. A professor of another Delhi-based think-tank, the National Institute for Public Finance and Policy, Shah has also been a consultant with the US-based Rand Corporation and has served in the capacity of consultant in the Department of Economic Affairs, Ministry of Finance.

It’s only the fourth panel member who is completely homespun. In a panel replete with foreign trained economists, Sunil Gupta, joint secretary, tax policy and legislation, appears to be the lone ranger.

While the panel on the face of it seems to have a diverse representation with people drawn from almost the same academic and professional background, tax experts still believe the proof of the pudding will be visible when the actual guidelines are finalised and subsequently notified.

As a tax expert puts it, “In case the panel is able to address the concerns of the investors, especially the Foreign Institutional Investors (FII) effectively, India will be able to project itself as an investor-friendly destination once again.”