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Monday,
May 14, 2001, Chandigarh, India  
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Sinha eyes FDI from Singapore
CII helplines for SMEs RBI fiat on credit card ‘IT slowdown a temporary
phase’
Haryana draws up cane development plan |
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FIIs mesmerising
bourses ‘Compete or cooperate with China’ Q: My wife and I intend to buy a piece of land for building a house thereon. Both of us will contribute money almost equally towards the cost of the piece of land. For constructing the house, we both shall raise loan from the bank. Please clarify - Exemption
certificate Retain badla for
sometime Amritsar airport
needs NSG
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Sinha eyes FDI from Singapore
New Delhi, May 13 “I am trying to acquaint foreign investors with the changes in our regulations “we have been suffering from an image problem in the past, this needs to be reversed,” Sinha told UNI. The two East Asian states are considered economic power hubs in the region and Mr Sinha hopes to use these as launch bases to promote India as a more vibrant investment destination. India is aiming at a $ 10 billion FDI inflow, five times the current annual inflow level. The two island states have significant Indian diaspora with significant interests in business, including areas like computers, financial services, construction, tea and trading. Mr Sinha feels they would respond well to his initiative, especially as they responded well to his Resurgent India bonds. “The debate here on FDI is not helping us,” the Finance Minister said. His government recently allowed up to 100 per cent FDI in certain telecom sectors, airports, drugs and pharma and up to 26 per cent in defence industries. “We have no need to be scared of FDI flows, China gets $40 billion a year, they are not scared,” he pointed out. The 5-day visit which begins today will conclude on May 17. This is Mr Sinha’s first official visit to these two trading and investment powers. Finance Ministry officials say the objective of these visits is to invite FDI and encourage joint ventures as well as broaden trade relations with these countries. Mr Sinha indicated India is now looking more towards the East for greater trade and investment flows. The Finance Minister is visiting Singapore at the invitation of the Singapore Finance Minister Dr Richard Hu with whom he is expected to have a detailed discussion not only on bilateral trade and investment matters but also on the stand Asian countries will take at the coming WTO talks. CRR cut hailed
Yashwant Sinha has welcomed the RBI’s move to cut cash reserve ratio (CRR) by 50 basis points saying this will improve the liquidity in the market. Mr Sinha said it was a “good move” but “we have to keep a watch on inflation and keep government borrowing under control”. “We have to ensure that the RBI is able to respond appropriately to these moves”, he said. Some indication of lossening of liquidity had already been given by the RBI in the Credit Policy announced on April 19 and “I think it is a follow-up step”. He had generally been in favour of bringing down interest rates. He said one of the major reasons for the Indian industry being at a disadvantage globally is the prevalence of high interest rates in the economy.
UNI
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CII helplines for SMEs Chandigarh, May 13 This was announced by the new CII (NR) Regional Director, Mr Chandrajit Banerjee, in his first interaction with the Press after taking over his new assignment in Chandigarh on May 11. He said the helplines will take care of SMEs’ problems relating to finance, technology and marketing. Asked about any follow-up on the CII’s WTO helpline announced recently, Mr Banerjee said the WTO desk in Delhi is operating at three levels: making companies WTO competitive through interaction, sector-wise study of WTO implications and networking with states to update their labour laws. Mr Banerjee, who was earlier the CII Regional Director in Chennai, sharing his IT experiences with the southern states, said state IT polices should focus on (a) developing IT software and hardware, (b) spreading IT education (c) building up IT-enabled services and (d) e-governance. Two other areas that would get special attention, of Mr Banerjee, apart from the continuation of the existing CII initiatives, are tourism and social development. The CII will market the northern states as tourist destinations, he said. “There is tremendous untapped tourism potential in these states,” Mr Banerjee said. “ The Maldives has a population of two millions, but it attracts three million tourists every year.” To meet its social commitments, the CII plans to act as a facilitator for developing villages in UP, Rajasthan and Delhi in the first phase, and Punjab and Himachal Pradesh in the second, with a focus on health, sanitation, education and water. CII has already adopted Bhoj Palasaur in Haryana. The new boss plans to increase the CII staff strength to undertake various projects in each of the northern states. The forthcoming events on the CII agenda this year are: Franchise Expo, a show on fashion, beauty and fitness (either in Delhi or Chandigarh), a retailing event and training on brand marketing.
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RBI fiat on credit card Mumbai, May 13 The directive comes after the central bank undertook a special study on the credit card business of certain banks in India. "Banks are advised to become members of one or more Credit Information Bureaus in order to maintain the selectivity of customers in their credit card business," the circular said. Currently foreign banks like Citibank and
HSBC, leaders in the credit card business in India, do share information in an informal way.
Reuters
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‘IT slowdown a temporary
phase’ Shimla, May 13 “Things will start looking up towards the end of this year and the demand for IT professionals, which has declined by about 30 per cent over the past six months, will surge by 100 per cent by 2003,” Mr
Bhumitra, who was in the town along with other NRI’s alumini of the Bishop Cotton School to play a goodwill cricket match with the present school team, told The Tribune during an interview. Citing reasons, he said, the fall of portals forced many companies to lay off professionals leading to a sharp decline in their wages from over one lakh to $ 80,000 per annum. More companies could now afford to switch over to e-business, which also helped in downsizing the overall set up. Moreover, the new Bush Government also planned to go for e-governance in a big way to cut down the establishment costs. All this would only lead to an increase in the demand for IT professionals, he explained. As the business and administration enters the electronic age, trained IT personnel will gradually push the unskilled manpower out of job. Thus notwithstanding the current slowdown, the IT industry and professional had a bright future, he said confidently. Even now things were not all that bad. His recruitment company which had branches at New York, Los Angeles, Washington DC and Brussels, was doing quite well. It was in the process of recruiting programmers for
proxinus, the national carrier for telecom service in Belgium and the well known Sony
corporation. Mr Bhumitra, who left the country 23 years ago, is keen to set up a big data centre with satellite IT hubs in Himachal
Pradesh. The project, which was likely to cost $ 1.5 million, would enable IT professionals to develop new applications and solutions. He also sees a future in data warehousing and data mining, though unlike the USA, the companies in India did not appreciate, value and use data for business promotion so far. Referring to the future of cellular phones, he said these would be soon replaced by the handheld PDA’s (personal digital assistants) which combined the mobile phone with the computer. It could transfer voice, video and data and one could perform all the functions of a desk top on it while on the move. His companies, Arjay
Telecommunications and American connections with a turn over $ 150 million, were second only to Wireless Retail, which had a turnover of $ 200
million. Mr Bhumitra has committed to donate Rs 30 lakh to his old Bishop Cotton School for providing scholarships to under privileged students and creating facilities for IT education. |
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Haryana draws up cane development plan New Delhi, May 13 The area under early and high sugar improved cane varieties would be enhanced from 58 per cent to 72 per cent in 2001-2002, a note issued here today said. It said the state government had decided to introduce tissue culture technology, integrated pest management, including biological control of pyrilla, ratoon management, judicious use of fertilisers, besides educating and motivating farmers to make optimum use of irrigation water. Sugarfed had been fixed to cultivate sugarcane over 1.70 lakh hectares so as to get 4.10 crore quintal cane for crushing with average sugar recovery of 10.20 per cent. All 10 cooperative sugar mills had shown encouraging performance during the current crushing season. Although three cooperative sugar mills of Bhuna, Kaithal and Jind had already concluded their crushing season, the remaining seven cooperative sugar mills were still in operation. The Rohtak cooperative sugar mill was leading in the recovery of sugar which touched a high of 10.23 per cent. This was 1.78 units more as compared to the last year’s figures. The capacity utilisation of the Rohtak sugar mill had also improved from 102 per cent during 1999-2000 to 108 per cent in 2000-2001. The Meham sugar mill had achieved sugar recovery of 9.97 per cent as against 8.53 per cent during last year. The recovery of Bhuna sugar mill was 8.78 per cent as against 7.91 per cent during last season.
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FIIs mesmerising
bourses Little drops of water, little grains of sand, make the mighty ocean and the pleasant land. The same is true of the stock market. In the ear of liberalisation, growth of industrial activity is not possible unless there is a greater access to capital markets and the equity cult is made to spread among wider cross sections of society. It is only the small investors who form the major chunk in any issue. It is also the small investor who is doomed and becomes a victim of frequent battering of stock market which is really under the grip of FIIs and scams instead of being on fundamentals. The sensex tries to move out of the bear grip and reaches close to crucial resistance levels. The momentum of charts also indicate that it has some steam left in it. But alas! the hammering continues in one way or the other and it is the FIIs who continue to take advantage of the imbroglio and have done aggressive buying in the Indian Stock market to the tune of $ 13.82b since 1992-93 including $ 2b from January April 2001. All this is hot money. The outcome of all this is that out of over 7,000 companies whose shares are listed on the BSE and the NSE only about 1000 scrips are traded at regular intervals with only 500 under active category. The trend has resulted in FIIs holding already crossing 24 per cent in some blue chip companies and their stake is likely to reach the bench mark of 49 per cent. In order to check this, SEBI is recommending rolling settlement w.e.f July 2, 2001 in place of present badla. However, short selling (selling of shares without holding it) will be allowed with deferred products like ALBL (Automated Lending and Borrowing Mechanism) of NSE, BLESs (Borrowing and Lending of Securities Scheme) of BSE, MCFS (Modified Carry Forward System), CNS (Continuous Net Settlement) and CFRS (Carry Forward in Rolling Settlement) ceasing to function from that date. In the new system the outstanding positions which have not been squared off at the end of the trading day would have to be compulsorily settled by giving or taking deliveries five days later on the T-5 basis which means more or less, cash transactions. However, speculative mode of trading is proposed to be provided in the form of ‘futures’ and ‘options’ in some select scrips only which at present is available in the form of Index trading. The new system is expected to bring in more openness, transparency, less vulnerable to manipulation &
unpredictable violent fluctuations in the market notwithstanding the very negative initial response with falling volumes failing which can bourses recover from the close shave of
FIIs/scams? |
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‘Compete or cooperate with China’ Ludhiana, May 13 It was revealed by Mr Satish Dhanda, Vice-Chairman, Engineering Export Promotion Council of India, who returned from the 12-day tour of China yesterday. However, India will have to have some cooperation with China to expand its exports by using the Chinese components in bicycle manufacture . Mr Dhanda said here today that there were two options for India while dealing with China. One is to compete and the other is to have cooperation. Apparently leaving aside bicycle, India cannot compete in any other item. The industry is left with one option to cooperate with China by using some Chinese components and make them saleable in the USA and Europe. Mr Dhanda said a delegation of the EEPC met Mr S.S. Ranjan, Joint Secretary in the Ministry of Finance in Delhi yesterday and stressed upon him for a change in the policy. Mr Ranjan has assured the delegations that necessary changes would be made before May 31. India needs manufacturing of hi-tech bicycles, including mountain bicycle. Initial import was necessary and the components would have to be imported from China. Meanwhile a bicycle fair was held at Shanghai from May 6 to 9 in which as many as 52 manufacturers of bicycles and bicycles parts from Ludhiana participated. One delegation was led by Mr D.S. Chawla, president, United Cycle and Parts Manufacturers Association. Mr Satish Dhanda was the first Indian to inaugurate the Chinese cycle fair. The total production of bicycles in China is 55 million out of which 33 million bicycles were exported. Seventy per cent was exported to the USA. At present the Chinese bicycle industry can be divided into three segments. First, Taiwanies companies having production facility in
China. The second segment is near Shanghai which is predominantly the joint venture area, including the USA. The third segment is located near Beijing where all are local companies catering to the domestic production. Regarding the possibility of cooperation between Indian and Chinese manufacturers, Mr Dhanda said they discussed it with Mr Wang Feng He, Director Chairman, Bicycle Association, China. They discussed the possibility of signing an MoU for exchange of technology and cooperation through the visit of entrepreneurs and exchange of engineers. India had exported bicycles and bicycle parts worth Rs 700 crore during 2000-2001 against the export of Rs 500 crore during 1999-2000. There was 40 per cent growth which was the highest in the bicycle industry. This shows India is capable of competing with China in the wake for the WTO when China will adopt the WTO next year. Major markets are African countries and China is the main competitor. India had definite edge over China in marketing technique. The main drawback of China is the lack of knowledge of English. They were acquiring the services of 60,000 English teachers from all over the world. |
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by R. N. Lakhotia Q:
My wife and I intend to buy a piece of land for building a house thereon. Both of us will contribute money almost equally towards the cost of the piece of land. For constructing the house, we both shall raise loan from the bank. Please clarify - (1) What and how we shall get the benefit of rebate of the amount of repayment towards principal of loan and (2) What and how we shall get the benefit of deduction of interest on loan from our salaries. Kindly do state relevant Income-Tax Act sections and rules. — Ashok Kumar, Ambala City Ans: The benefit of tax rebate u/s 88 in respect of repayment of the loan will be permissible to you and to your wife. However, please ensure that the investments are made separately out of your funds as well as out of fund belonging to your wife. Likewise the benefit of interest on loan will also be permissible to both of you. Q:
I am an engineer working as a Gazetted Officer in Punjab Government. My brother and other relatives are in foreign countries. They often gift me money in form of bank drafts from their respective countries. This year my brother plans to give me Rs 1,00,000/-. Please tell me whether my this foreign exchange is taxable, if yes how much? Shall it be added to my annual income for tax calculation. —
A. S. Ghorta, Urban Estate, Batala Ans: The gift received by you from your brother amounting to Rs 1 lakh is not liable to be taxed as income. This is a gift and there is no gift tax w.e.f. October 1, 1998. Q:
Whether the interest paid on borrowed capital for purchase of residential plot (house not yet built and hence no income from this property) can be offset against rental income from another house, under the head “Income from House Property”. — P. Lal, Sector 7-A, Chandigarh Ans: Interest paid on borrowed funds for purchase of a residential plot cannot be set-off against income from another house under the head “income from house property”. However, once the house is constructed it would be eligible for tax deduction. Q:
Whether Family Planning Allowance granted to government servant is exempted under Section 10 of Income Tax or otherwise. The tax is exempted in Kalyani’s Income Tax made easy for salaries Estt. Year 2000-2001. (2) Whether House Rent allowance is also exempted when the government servant is residing in his ancestral house. — Subhash C. Malhotra, Mandi (HP) Ans: The family allowance granted to government servants will be fully taxable under the income tax law. It is not exempted. Similarly, house rent allowance granted to government servant who is residing in his own house will be fully taxable. |
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by A. K. Sachdeva Exemption certificate Q: We are engaged in the business of manufacture and sale of plywood and plyboard being a dealer registered under the Haryana General Sales Tax Act, 1973 and the Central Sales Tax Act, 1956. Our unit is also holding exemption certificate under section 13-B of the Haryana Sales Tax Act, 1973 read with rule 28-B of the Haryana General Sales Tax Rules, 1975. An application seeking renewal of exemption certificate was submitted in the office of the Deputy Excise and Taxation Commissioner last year alongwith requisite documents and security in the prescribed manners. Disposal of the renewal of exemption certificate is still awaited despite a period of nearly one year has passed. We are given to understand that there is some limitation prescribed in law for renewal of the exemption certificate. K.
K. Sharma, Sonepat. Ans: Sub-rule (9) of rule 28-B of the Haryana General Sales Tax Rules, 1975 provides that the Deputy Excise and Taxation Commissioner on being satisfied that the applicant is a bona fide industrial unit and has not misused the exemption certificate shall renew the exemption certificate within thirty days of the making of the application for renewal. It is further stated in these rules that in the event of non-disposal of the renewal application within the stipulated period of thirty days the certificate of exemption shall remain valid until the renewal is refused or the certificate otherwise expires. Under these circumstances, inaction on the part of the Deputy Excise and Taxation Commissioner over the issue of renewal of the exemption certificate is absolutely contrary to the statutory rules. However, it will be open to the unit holding exemption certificate to continue to avail of the benefit of exemption certificate. It is advisable that this matter should be brought to the notice of the Excise and Taxation Commissioner, Haryana, Chandigarh inviting his attention towards the slackness of the sales tax authorities. Q: We want to know if the assessing authority finalising the assessment on regular basis after examination of the account books under the Haryana General Sales Tax Act, 1973 is competent to re-open the assessment at the instance of the audit party. In fact a notice has been issued proposing reassessment on the basis of the objection raised by the audit party to the effect that there has been under-assessment in respect of 1998-99 assessment
year. Kindly advise. R. K. Purohit, Faridabad Ans: Under the provisions of Section 31 of the Haryana General Sales Tax Act, 1973 a completed assessment can be re-opened by way of reassessment only if the assessing authority discovers in consequence of definite information which has come into his possession that the turnover of the business of a dealer has been under assessed or has escaped assessment in any year. Audit objection raised by the audit party does not constitute “definite information”.
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by J. C. Anand Retain badla for sometime Today, SEBI is likely to take a crucial decision whether the traditional badla system should go or be retained at least temporarily for sometime. In its last meeting, SEBI had deferred this decision to its next meeting which was fixed on May 14. Indications are that the badla system will be abolished. At least this is the impression conveyed by the Finance Minister in his exclusive interview to the Zee News last week. He fully supported SEBI’s proposals for scrapping the present badla system of forward trading and substituting it with the new system of “futures and options” in more liquid scrips which are at present in the forward trading list on the BSE and NSE. He also said the small investors should recognise that an investor has an even chance of making money or of losing it in stock market investments. In some respects, SEBI’s proposed changes which are expected to come into operation on July 2, should be welcomed. The present system has some major loopholes. The two major stock exchanges, BSE and NSE, have different settlement days: Tuesday for NSE and Friday for BSE. This loophole enables a trader to keep his position in forward trading for any length of time. With the new settlement day fixed on Friday (T-5) for all stock exchanges, this loophole will be plugged. The second loophole is even more dangerous. There is an unofficial badla system operating outside the stock exchanges in addition to the official badla system operating through the operational machinery of stock exchanges. The unofficial badla system is generally operated by some top brokers from Kolkata. A large number of transactions take place among brokers without reference to the stock exchange. The rate of interest on badla funds has in the past been as high as 60 per cent of funds lent for speculation. It is this racket which has often led to unbridled speculation with sharp sudden and unexpected ups and downs in the market. It is to the great discredit of SEBI and the stock exchange officials said recently this unofficial badla system has gone on undetected. The proposed changes are expected to remove this loophole for when there is no badla system, the unofficial badla system cannot operate. It is, however, quite possible to retain the official badla system for some time and destroy the malfunctioning unofficial badla system. The proposed system of forward trading based on “future and options” may be good after it has operated for some years but its immediate impact on the stock market is likely to be disastrous. It will dry up liquidity and cut down trading volumes in a big way. This will affect the stock market by keeping out both the investors and the traders and have a depressing impact. The forward trading in “futures and options” in the form of Index trading has failed to whip up business during last 11 months of its operation. The new system may be a better system but its timing is inappropriate. At present, the economy as well as the stock market are in a bad shape. There is a distinct slowdown in industry. The Finance Minister has admitted (in his recent interview to Business Line) that there has been a setback in agriculture and this is telling on the demand for consumer and industrial goods in the rural areas. The removal of quantum restrictions on imports, the shortfall in the collection of direct taxes, a steep fall in the index of industrial production and a decline in exports do not augur well for the stock market. The market Indices are sure to look down in the coming months. Would it not be wise for SEBI to let the official badla system be retained at least for a year or so along with the new proposed system of trading? The decision to put all forward list scrips in the rolling mode of trading also needs to be deferred. The past experience shows that any scrip put on the rolling mode rolls into a pool of stagnant backwater. As The Tribune has editorially commented recently, there is no incongruity in letting the new system operate without scrapping the traditional badla system for some time. The official badla system can be admitted into and adjusted to some parts of the new operation machinery of the stock exchanges. The small investor should keep away from the market for some time and book profit wherever possible. |
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by K. R. Wadhwaney Amritsar airport needs NSG Mr Ram Kohli is the first Indian elected Secretary/treasurer of the Pacific Asia Travel Association (PATA), a vibrant body in the region. Founded in 1951, PATA’s public and private membership comprises 100 organisations and thousands of individuals in 80 plus PATA chapter worldwide. The Chairman and Managing Director of Creative Travel, Mr Ram Kohli says he will endeavour to achieve PATA’s mission of enhancing the growth, value and quality of tourists visiting the country. The founder President of the Indian Association of Tour Operators, Kohli has been involved with several national, international bodies connected with tourism and civil aviation. Unconcerned Raja Sansi International Airport (Amritsar), for example, continues to be lacking in security. Situated around difficult and hostile border, the Indian Airlines IC-814 flight was parked here for about an hour before being hijacked to Kandahar. Had there been adequate anti-hijack arrangements at the airport, the passengers and crew could not have undergone all the sufferings. One passenger on board the flight was killed. For some unknown reasons, the National Security Guard (NSG) has declined to post trained anti-hijack commandos at the Amritsar airport. Why? What are the NSG’s compulsions? According to analysts, the airport continues to be vulnerable for any untoward incident taking place. What is the cause for concern is that Amritsar is currently a destination for some international flights. This indifference is all the more alarming as Minister of State for Civil Aviation Chaman Lal Gupta on July 2, 2000 had cetegorically stated that the NSG’s squad would be stationed at the Amritsar airport. In the tug-of-war between politicians and bureaucrats. Innocent passengers have to undergo sufferings in emergencies. Air India Two A-310 have been obtained on dry lease for three years. The fleet strength will then be 27 with 12 Airbus A-310 aircraft.
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