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Sunday,
September 29, 2002,
Chandigarh, India  
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Govt fails
to maintain growth: Manmohan Global
growth on track, says G7 WTO poses
problems to SSI sector
SBP
honours toppers |
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In the
wonderland of investment Q: I lost my father in January 2002. Is the income from his investment received after his demise required to be included in his income?
Equities
generate better returns
Wilful
default
Purchase
of X-ray machines criticised
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Govt fails to maintain growth: Manmohan New Delhi, September 28 “The growth of 7.5 per cent, industrial growth of 12.5 per cent and 20 per cent annual growth in exports till the mid-1990s has not been maintained by the political leadership of the last five years”, Dr Manmohan Singh said while speaking at the annual session of the All-India Management Association (AIMA). He criticised the NDA Government’s tendency to take unilateral decisions without holding discussions to evolve a consensus on major issues affecting the economy. “The Prime Minister has not called a single meeting to evolve a consensus while I convinced my party to support the Insurance Bill, WTO-related legislation and the Patents Bill in the national interest”, he said. Dr Manmohan Singh also questioned the excessive dependence on the disinvestment route to put the economy back on a high growth trajectory. “I do not see any rationale behind the privatisation of Nalco which is a profit-making unit. I failed to answer the people of Orissa about the disinvestment proposal of Nalco”, he said. It was imperative to create a healthy competitive environment between the private and the public sector before the privatisation was initiated in a broad-based manner. “The political leadership has to show commitment to modernisation”, he said and contended that to make any real progress, India had to move in several directions. Dr Manmohan Singh said it was important to prevent a situation where the public sector was not demoralised. The focus should be on revitalising those enterprises which have the potential. India needs to display much greater determination, discipline and political will to emulate China’s impressive all-round economic growth over the past decade. Citing China’s impressive annual figures of 35 per cent and the savings growth rate of 34 per cent, Dr Manmohan Singh said India was lagging far behind China in economic growth. Even for attracting FDI, China with $40 billion was way ahead of India. “Our’s is a story of missed opportunities”, he said, adding that for the Chinese efficiency was a watchword for the past 15 years.
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Global growth on track,
says G7
Washington, September 28 “Economic growth in our countries is continuing, though at a more moderate pace than earlier this year,’’ Finance Ministers and central bankers from the Group of Seven industrialised nations said yesterday. “We recognise that risks remain,’’ they added in a statement issued after a meeting in Washington. The G7 includes the United States, Britain, Canada, France, Germany, Italy and Japan. The gathering took place as the International Monetary Fund and World Bank held their annual meetings and reflected a more cautious tone than following their last meeting in Halifax, Canada in June. Then, they said growth had strengthened in the G7 economies “and should continue to consolidate throughout the year.’’ But after a run of corporate scandals that hit a fever-pitch over the summer months and rocked financial markets, G7 finance officials yesterday said they were committed to structural reforms and measures to bring more openness and honesty to corporate disclosure, accounting and
auditing. Reuters
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WTO poses problems to SSI sector A
seminar on big theme of WTO regime was organised at Ludhiana which was presided over by Minister of Small Scale Industries. MP of the ruling party took every thing in his hands. WTO regime has posed very serious problems particularly to SSI sector. Policy makers and those who implement them exhorts industry to change mind set. O.K. Does somebody care to know that business is but a puppet in their hands and they have to change themselves in a big way. Essence of WTO regime is to remove trade barriers between countries; reduce price of products and ensure quality. Imports and exports challenges can only be met by adhering to these attributes. Our policy makers at Central, State and local levels are putting huge barriers between states and cities. Fourteen states have introduced entry barriers at their borders to allow entry of goods from other states. Some items have been put under levy of entry taxes. Perhaps Punjab is taking a lead by introducing Exim Form. This may mean the requirement of form for sending goods outside the state. Who needs change? Burden of taxes at all three level is growing. Certain taxes even make the running of industry impossible. Even in the import of second hand machinery. Policy changes are very frequent. This gives chances to some and denies to others. Take the case of Punjab. We see quick changes in the levy of sales tax and no protest is attended for months while business transactions take place daily. List of such happenings is quite lengthy. Who should change? Inputs to industry are being made costly. Free power or very low power tariff to agriculture and weaker sections of society put the burden on industry. Some times cartilisation is encouraged. Recently steel prices went up by 25 per cent through this means and user industry was put under heavy financial strain. Will products be cheaper with such abrupt changes? Credit is most import of all industrial requirements. To the surprise of many smaller units are being charged interest on bank finance 3 to 4 per cent higher than PLR; which means interest of 14-15 per cent. On the other hand bigger units are getting finance at as low an interest as 6 per cent. This means the difference in interest for bigger and smaller units is about 7 per cent. Can any body say that it is fair by any standard? This question has been put to RBI and Finance Ministry. They are as answerless as to accept this unfortunate scenario. Can smaller units face even domestic challenge; global challenge is a far cry? Prices and quality to meet the WTO thrown competition can be met by raising economy of scale and adopting better technologies. This requires enhancement of investment limit of SSI. In 1997 this limit was raised from Rs 60 lakh to Rs 3.00 crore. After a year this limit was again brought down to Rs One crore. Many SSI units were left in lurch. Will not such frequent but uncalled for changes lead to chaos? Here our industry too needs change of mind set. At local level too much financial burden is being put on industry. Civic amenities are provided free of cost to rich people with no house tax. Almost the entire revenue is realised from industry. Experts have found that on an average industry has to spend 5 per cent of its time to deal with government departments. Here in India, this average is 16 per cent or even more. It is conducive for business? To make industry competitive, policy makers and implementers need a thorough change in their outlook. Rest of the things can be taken care of by industry itself.
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SBP honours toppers Chandigarh, September 28 Mr J.R. Devgan, General Manager (Operations) and Mr S.P. Mittal, DGM were present on the occasion.
ATM at Sangrur branch
Earlier, International Cricketer S. Navjot Singh Sidhu today inaugurated ATM at State Bank of Patiala, Sangrur Main Branch and distributed 51 house loan cheques to the public at a function held at the branch. Mr N.S Deshpande, DGM, said the bank would install 150 ATMs by the end of this financial year. Mr Subhash Madan AGM, Mr K.S. Jawandha Chief Manager and Mr Parveen Sharma (Manager P&S) also spoke on the occasion.
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In the wonderland of investment Q:
I lost my father in January 2002. Is the income from his investment received after his demise required to be included in his income? Or is it to be included in that of my mother? Papa had not made a Will, and none of his children are claiming rights over any of his income/assets. However, for saving tax in her hands, can we give part of the income to a few of the members while others get nothing? What about his bank account? — Pradeep Nagarkatti,
A:
You may continue to credit the interests/dividends to the account of your late father until the investments are transferred to your mother or his children. I suggest that you file two different returns, one from the beginning of the financial year to the date of death of your father and two, from this date to the end of the year. The second return should be filed in the name of ‘Estate of Mr so and so Nagarkatti’. The advantage of doing so is obvious. You will be allowed to claim the benefit of initial threshold of Rs. 50,000 in both the returns separately and so also the deductions under Chapter-VIA. A deceased person can not claim any rebates, including that of a senior citizen. You may continue filing such returns for the estate until you make a family settlement and distribute money and the assets amongst your family members. The bank account may be closed when the estate gets completely distributed. I venture to make a suggestion, even though you have not asked for it. All of you, especially your mother should prepare a will.
Q:
Years ago, when pass books of savings bank accounts were written by hand, sometimes legibly, sometimes not, the account holder could make out where the money came from in the ‘credit’ column. But, nowadays, the computerised updating of the pass books just says, ‘by clg’ in the particulars column. The account holder finds it very difficult to reconcile the statement of account. If I put in a cheque using a paying-in slip, of course I know where the money has come from. It is in the case of cheques for the interest on fixed deposits which go directly into the account by ECS. The banks simply say, ‘by clg’ with no mention of the name of the creditor. Fortunately, the Saraswat Co-operative Bank clearly mentions the name of the bank/company sending the money. Why can other banks not follow the same procedure? I feel it should be mandatory for the banks to give these particulars clearly. — Sulbha Arun Rao
A:
I am in total agreement with you. Many nationalised banks indicate the name of the company from whom the credit/debit through ECS has been received, though not the name of the scheme. Without these details how can any account holder come to know from where the CR/DR entry has been received. All the banks must enter this information in the customer account which is so mentioned in the file received from the clearing house. Else the bank may issue a voucher giving the details. If any bank does not furnish this information to the account holder he should take up the matter with the branch manager, IBA or RBI directly. It would be better if RBI/IBA issue a circular regarding this matter and instruct the bankers that the details of debtor/creditor through ECS must be provided to corresponding the account holder in his pass-book entry.
Q:
Is plot purchased for residential purpose a part of housing property? I have purchased a Residential plot in Full developed colony by taking loan from ICICI Home Finance. Is the amount paid towards principal eligible for rebate u/s 88(2)(XV) or 88(5)? Is the interest paid towards home loan (purchase of above said plot) covered under loss from house property and eligible for rebate U/s 24. — Dr. Harvinder Singh,
A:
Both the concessions, rebate on repayment of capital and deduction of interest are allowed only when the income from house property becomes chargeable to tax. In other words, the construction should be complete, the flat should be ready for occupation and the municipal annual value is known. The interest for the years prior to the year in which the property was completed, shall be deducted in equal installments for the year during which it was completed and each of the 4 immediately succeeding years. Unfortunately, there is no corresponding provision in the case of tax rebate for repayments of capital during the period, prior to completion of construction. This is possibly an oversight of the lawmakers.
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by Ashok Kumar Equities generate better returns A year has passed and the wheel has turned a full circle. This week, I reproduce below, excerpts from the diary I wrote exactly a year ago. Ironically, after a very turbulent year, the prevalent market dynamics remain almost identical to that a year ago. The stock markets have been gripped by uncertainty. Confidence has been shattered. Historically, the Indian markets have always over-reacted to any negative development, and the knee-jerk response to the terrorist attacks in the US was no exception. Investors have fled to safety — to gold and bonds. But then, big disasters are usually golden opportunities to buy stocks cheap. Anybody who bought shares during the 1971 liberation of Bangladesh, the Gulf War or even the Kargil war made a small fortune not too long thereafter. Besides, if you’ve been reading newspapers, you won’t be surprised to hear that the Indian Economy hasn’t been in good health for quite some time now. With evidence growing that more sectors are wilting under pressure of slipping demand, many investors are beginning to worry over where to park their funds. It is at these times that you should understand how to manage your equities, and the risks and rewards of investing in equity. My good friend, Clifton D’Silva, NSE Member and Director, Altina Securities classifies investment choices into two broad categories: Appreciating assets and non-appreciating assets. Appreciating assets can further be classified into the following: Equities, bullion and real estate non-appreciating assets are classified as fixed Income Securities, which could take the form of fixed deposits with companies or banks, debentures/bonds, etc. As time elapses, purchasing power decreases due to inflation and therefore over a period of time, there is erosion in the value of fixed income investments. The fixed coupon rate at times is even lower than the rate of inflation. Thus, fixed income investments, despite the fact they provide fixed income do not take care of inflation. In case of appreciating assets, bullion i.e. gold and silver, in recent times, have not been generating returns to take care of inflation. Also, gold and silver are always subject to theft and need to be protected by depositing them in a locker, which has a cost, and they do not generate returns in the form of dividends or interest. Then, the other appreciating asset, property has given excellent returns in the past but in recent times it has given negative returns. There are legal aspects involved in the purchase of property which is time consuming and entry and exit is not easy. Also, investment in property is not within the reach of everybody. On the other hand equities as a mode of investment are the most attractive form of investment if the selection and timing is right. Investment in equities can be as small as Rs 500 and entry and exit is instant. Besides, equities offer tax benefits in the form of lower capital gain if held for a year or more. Equities have always generated better returns compared to any asset class over longer periods of time. Therefore, if the selection and timing is right, it would be the most prudent decision to invest in equities today because stocks are priced at fairly attractive valuations.
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by Praful R. Desai Wilful default Q: Whether wilful default in payment of rent and bona fide requirement proved? Ans: A.P., H.C. was dealing with this point in Rajendrapal Sachdeva (Tenant) v N. Avtaram [2002 (1) RCJ. 285]. Appellate Authority had recorded convincing reasons as to why Exs. B. 1 to B. 3 cannot be believed and also had recorded a finding that the above exhibits were fabricated by the tenant to substantiate his false claim that the rent is Rs 800 p.m. only. As against the evidence of RW 1, the clear evidence of PW 1, is available where there is specific denial of receipt of any rents and also receipt of advance amount. The alleged broker who had arranged the transaction had not been examined by the tenant and no further material was placed to substantiate his stand that he had not committed default in payment of rents. Evidently, only on the direction of the Court, the deposit was made and this aspect also shows that the tenant was not inclined to follow the procedure U/s. 8 of the A.P. Rent Act and the conduct of the tenant and the series of events go to slow that the appellate authority on appreciation of evidence had arrived at the correct conclusion on the aspect of wilful default and while exercising revisional jurisdiction, these findings of the Appellate Authority cannot be said to be perverse and there is no illegality in the approach of the Appellate Authority. The technical and pedantic approach that the landlady had only specified the personal requirement of the landlady and not the personal requirement of her daughter, in the facts and circumstances of the case, may not be the correct and proper approach while deciding a matter of this nature. Always, the Court has to look into all the facts and circumstances and the complete material available on record while arriving at a conclusion whether the ground of bona fide personal requirement was made out or not. On the strength of overwhelming evidence available on record the appellate authority had arrived at a conclusion that the landlady requires the premises for personal occupation and this finding recorded by the Appellate Authority, on appreciation of evidence, does not warrant any interference while exercising revisional jurisdiction U/s. 22 of the Act. The revision in that way was dismissed by the H.C. |
sti
Bounce back The buzz on the street is that the one-time market, a FMCG major is on a roll finally. It seems that it has now completed its restructuring and its results are beginning to show. The numbers for the just completed quarter it seems will be a clear indicator of the better times that lie ahead.
IPO blues The unimpressive listing price of a recently listed PSU bank and its slide downwards thereafter must surely have dampened the spirits of the management of two other similar banks which are in the IPO mode. Chances are that the premium tag, if at all one was planned might have to be dropped.
IT revival? The grapevine has it that the IT sector which has borne the brunt of the global recession may soon bounce back on the back of orders from the land of the Great Wall as well as domestic demand. Will happy days be back again?
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by K. R. Wadhwaney Purchase of X-ray machines criticised The Airports Authority of India (AAI), of late, has been in news — more often for negative reasons than for any positive achievements. This is sad for an apex body, which controls, manages and administers national and international airports countrywide. What is cause for concern is that whatever AAI does, it raises a controversy. Even in buying Rs 50 crore X-ray machines for installation at different airports, it has raised a controversy because it is alleged to have “flouted” global tendering norms. The norms for buying any equipment — in this case 220 colour X-ray Baggage Inspection Systems (XBIS) — are laid down and the AAI is obliged to adhere to them. But the powers that-be chose one manufacturer causing displeasure to other prospective bidders. The AII authorities refute these allegations emphasising that the firm or firms rejected on account of technical reasons are kicking up non-existent controversy. As if this public outcry is not bad enough for the image of the AAI, three cargo agents have been arrested at the Indira Gandhi International Airport (IGIA) for huge pilferage amounting to several lakhs of rupees. The agents, contracted by the AAI, are provided access to sensitive areas. According to investigations, agents cannot indulge in unethical dealings without the connivance of the AII personnel. For years, AAI’s cargo unit has caused problems to the authorities. The officials, who are in charge of the cargo complex at the IGIA, have been guilty in making a sizable money through draw-backs. The Government loses money while individuals fill their pockets. On the cargo complex, there are several weak zones. They cause security problems to the authorities. Following recent terrorist attack in Gujarat, the security at the IGIA has indeed been tightened. But the deployment of the Central Industrial Security Force (CISF) at the IGIA has been needlessly delayed. The CISF is fully competent and equipped to look after security aspect within and outside the perimeter of the IGIA. The AAI has enough funds in its kitty to pay these jawans who deserve what they are demanding. According to aviation experts, no demand by the CISF is too high. It is the only competent unit, which can cater to the needs of the security at the IGIA, where touts and unscrupulous persons are playing havoc with innocent international passengers.
Better meals International airlines and carriers flying on domestic sectors have made special efforts to improve in-flight services, particularly meals/snacks to make flying for passengers enjoyable. Different cuisines are being provided to passengers even in economy class. What is cause for satisfaction is that all carriers on domestic sectors have considerably improved their meals and snacks services. The survey shows that complaints in this regard have greatly reduced. |
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