B U S I N E S S

IMF still hopeful of 6.5 pc growth rate
New Delhi, January 8
The International Monetary Fund today said the devastating tsunami disaster was unlikely to upset India’s growth projections of 6 to 6.5 per cent in the current fiscal even though the fiscal deficit remains an area of major concern.

Andaman traders face heavy losses
Kolkata, January 8
A vast majority of over 800 traders in the Andaman and Nicobar islands have lost their entire livelihood and business worth more than Rs 300 crore after the tsunami struck their establishments and took away everything within minutes.

A view of the bamboo jetty shopping centre at Port Blair on Saturday. Business losses have been pegged at Rs 300 crore in the Andaman and Nicobar islands. — PTI photo

Ease norms for tsunami-hit, RBI tells banks
Mumbai, January 8
The Reserve Bank of India has asked banks to take “proactive steps” in providing relief to tsunami victims. In an advisory released here today, the bank has advised banks for easing of lending norms for victims of tsunami.

Malaysia keen to set up hydel project in North India
Mumbai, January 8
Malaysia plans to enter into a power purchase agreement with one of the north Indian states to set up a hydro power plant of 300 MW capacity, Dr K.S. Nijhar, member of Parliament, Malaysia, said here today.

Korea willing to boost Indian infrastructure
New Delhi, January 8
India may sign a Comprehensive Economic Partnership Agreement with Korea to boost bilateral trade. A joint study group has been constituted for this purpose, an official statement has said.

A boy rides a bike assembled by Jagdish Muddennavar, a young entrepreneur, in Hubli on Friday. Muddennavar has so far produced 200 such mini-bikes for kids using old motor cycle spares. — PTI

	India signs pacts with Iran on LNG, oilfields January 8, 2005
	White sugar to be imported if price hike continues January 7, 2005
	Sensex in free fall after global aftershocks January 6, 2005
	HPCL may set up refinery in Rajasthan January 5, 2005
	Anil Ambani quits IPCL board January 4, 2005
	Telecom revolution skips rural India January 3, 2005
	Product patent regime comes into force January 2, 2005
	Sensex breaks 6,600-mark cordon to usher in 2005 January 1, 2005
	Oil prices stain economy in 2004 December 31, 2004
	Trai issues consultation paper on satellite radio December 30, 2004

Jindal Steel to invest in Chhattisgarh
New Delhi, January 8
Jindal Steel and Power Ltd has signed a memorandum of understanding with the Chhattisgarh government for investments worth Rs 2,595 crore in Raigarh district of the state.

AVIATION NOTES

Reschedule flights to counter fog
Neither category 3-A nor 3-B of the Instruments Landing System is good enough to reduce disruptions, let alone conquer them, on certain nights of December and January at Delhi. The visibility through fog and smog together becomes so dismal that no commander, no matter how competent, is willing to operate flights and risk passengers’ lives at the Indira Gandhi International Airport.

INVESTOR GUIDANCE

Officers need to be proactive for investors’ welfare
Q. On the basis of your information given in The Tribune. I approached several Small Saving agents at local post office. They are ignorant if any bank has been authorised to accept deposits under the SCSS.

IMF still hopeful of 6.5 pc growth rate
Tribune News Service

New Delhi, January 8
The International Monetary Fund (IMF) today said the devastating tsunami disaster was unlikely to upset India’s growth projections of 6 to 6.5 per cent in the current fiscal even though the fiscal deficit remains an area of major concern.

“The growth rate of 6 to 6.5 per cent in this fiscal is a reasonable projection. Going forward things will go well”, Chief Economist of IMF Raghuram Rajan said.

He sounded optimistic about achieving the 6.5 per cent rate of growth and said the economy had the capacity to bounce back despite the tsunami disaster that had affected a large number of people in the coastal area.

At the same time, Mr Rajan underlined the need for more radical reforms and favoured the introduction of “hire and fire system” in the labour market.

The IMF Chief Economist, however, said for India to become a financial hub, it was necessary to have full capital account convertibility (CAC) and this could come about only by reducing the high levels of fiscal deficit.

“Full CAC cannot happen before the country reduces its fiscal deficit significantly and also releases public sector banks from having to finance the government debt,” he said.

India can set a target of transiting into a full capital account convertible regime from 2009 after the revenue deficit is wiped out and fiscal deficit is brought down to manageable levels as envisaged in the Fiscal Responsibility and Budget Management (FRBM) Act.

“There is a general consensus that fiscal deficit needs to be controlled. This is not only a matter of accounting but also a matter of concern. With lower deficit and full CAC the country’s financial sector could play a very important role,” he said.

This would also enable India to reap the benefits of the global financial market, as India is located strategically between New York and Tokyo - two major international financial centres.

He also said the proposed Employment Guarantee Scheme would have budgetary effect, as it would involve an increase in expenditure, although it may also lead to reduction in expenditure in other schemes.

Andaman traders face heavy losses

Kolkata, January 8
A vast majority of over 800 traders in the Andaman and Nicobar islands have lost their entire livelihood and business worth more than Rs 300 crore after the tsunami struck their establishments and took away everything within minutes.

Tsunami had not only destroyed their entire livelihood but also taken the archipelago back by about 10 years in terms of growth, laments Andaman Chamber of Commerce (ACC) president Mohamed H Jadwed.

Talking to UNI, Mr Jadwed, the proprietor of Jadwed Trading Company, said almost the entire distributive trade in south Nicobar islands had been destroyed delivering a massive blow in terms of volume of money.

Stating that export of dried coconut and related products were the main source of income for the affected traders, he avers with the total demolition of the jetties, godowns, roads and other infrastructutral facilities on the coastline it would take a very long time to build the whole process.

Prior to tsunami, the average monthly export of coconut products to the mainland was to the tune of about Rs 7.5 million per month, Mr Jadwed says and underscores the need for the government to come up with a comprehensive rehabilitation package to save the industry as well as to enable the affected traders to resume their livelihood once again.

“We are planning to meet the Prime Minister, Dr Manmohan Singh, and submit him a memorandum outlining our plea,” he says.

Moreover, he adds, a large section of Port Blair-based businessmen, who had huge trading interests in South and Little Nicobar island through franchisee had also suffered losses of about Rs 15 to 20 crore since the traders based in Car Nicobar, Hud Bay, Campbell Bay, Teresa and the Nandkouri group of islands had lost everything and were not in a position to pay back their dues.

This has also created an unprecedented shortage of cash flows to run the day-to-day business, the ACC president said.

Also stating that the tourism was the hardest hit, Mr Jadwed says since the tsunami had sparked off global panic and fear psychosis among the general public, no tourist inflow to these emerald island was expected for another three to four years from now.

The tourism sector alone had suffered a loss of Rs 10 crore this year and is expected that the annual loss this year could be in the range of Rs 30 crore, Mr Jadwed observes. — UNI

Ease norms for tsunami-hit, RBI tells banks
Tribune News Service

Mumbai, January 8
The Reserve Bank of India (RBI) has asked banks to take “proactive steps” in providing relief to tsunami victims. In an advisory released here today, the bank has advised banks for easing of lending norms for victims of tsunami.

In an advisory, the RBI asked banks to identify victims of last month’s tsunami and provide them necessary relief.

The banks have also been advised to take help of NGOs in identifying needy borrowers.

The institutions have also been asked to increase the limit of consumption loan up to Rs.5,000 without any collateral. “The limit may be enhanced to Rs.10,000 at the discretion of the branch manager, depending on the repaying capacity of the borrower,” said the RBI.

The RBI has advised banks to provide education loans to the affected people to enable them to purchase things like books and clothes for children studying in educational institutions.

As regards the financing of defaulting fishermen and other types of borrowers, banks have been asked to frame a scheme on the lines of the one for financing “farmers in arrears” as announced by the Finance Minister on June 18, 2004.

Malaysia keen to set up hydel project in North India

Mumbai, January 8
Malaysia plans to enter into a power purchase agreement (PPA) with one of the north Indian states to set up a hydro power plant of 300 MW capacity, Dr K.S. Nijhar, member of Parliament, Malaysia, said here today.

After participating in a panel discussion at the third Pravasi Bharatiya Divas conference, Dr K.S. Nijhar, who is also the chairman, Cisco group of companies, said here today that at present Malaysia had plans to set up a power project in North India, preferably in Himachal Pradesh or Uttaranchal.

Dr Nijhar said that he had a series of meetings with the chief ministers of northern states on the proposed power project. However, these states should ensure a good revenue stream to the proposed power project.

Dr Nijhar said that Malaysia planned to invest $ 600 million in the power projects in India. — UNI

Korea willing to boost Indian infrastructure
Tribune News Service

New Delhi, January 8
India may sign a Comprehensive Economic Partnership Agreement (Cepa) with Korea to boost bilateral trade. A joint study group has been constituted for this purpose, an official statement has said.

This was informed by Mr Kamal Nath, Union Minister of Commerce and Industry, when the Korean Vice Minister for Commerce and Industry, Mr Hwuan Eik Cho, called on him recently.

Mr. Hwuan Eik Cho expressed the intention of his country to participate in the infrastructure development in India.

Jindal Steel to invest in Chhattisgarh

New Delhi, January 8
Jindal Steel and Power Ltd (JSPL) has signed a memorandum of understanding (MoU) with the Chhattisgarh government for investments worth Rs 2,595 crore in Raigarh district of the state.

Investments will be made to set up clean-type coke oven, sinter plant, blast furnace, steel melting shop, plate mill, rolling mill for manufacturing rebar, TMT and wire road, a power plant and other utilities and associated facilities at Raigarh in Chhattisgarh, the company said in a statement here today.

The MoU was signed yesterday in the presence of senior state government officials.

“Under the MoU, the government of Chhattisgarh will, among other things, provide all necessary help in seeking clearances, approvals, permissions from state/central government departments/agencies for implementation of these projects,” the statement added. — UNI

AVIATION NOTES

by K.R. Wadhwaney

Reschedule flights to counter fog

Neither category 3-A nor 3-B of the Instruments Landing System (ILS) is good enough to reduce disruptions, let alone conquer them, on certain nights of December and January at Delhi. The visibility through fog and smog together becomes so dismal that no commander, no matter how competent, is willing to operate flights and risk passengers’ lives at the Indira Gandhi International Airport (IGIA).

The ILS category 3-A has already become totally ineffective and category 3-B, if and when installed, will become equally useless as several commanders of proven ability and skill have gone on record saying that ‘operations in poor, almost zero visibility, is nothing short of committing suicide’.

Huge funds of tax payers’ money will go down the drain in installing the ILS category 3-B. There are several pitfalls which render the overall picture very gloomy. The majority of pilots, Indian and foreigners, are not technically qualified to operate flights in murky visibility and airlines are unwilling to send them for training owing to mammoth expenses.

The disruptions or diversion of flights bring misery and harassment to passengers. Their trips get ruined and there are numerous instances when the baggage is either lost or mis-carried.

What is the solution? The experienced commanders and officials are of the firm view that the airports Authority of India (AAI) and airlines, national and foreign, should reschedule their flights during these two months.

A few nights in late December and early January were no short of hell for incoming and outgoing passengers. The flights were delayed by six to 10 hours. The worse was that the authorities could not provide tea, coffee or snacks even on payment. The authorities ran short of chairs and sofas and passengers, including ladies and children, were made to sit on the floor. The flight display boards failed to provide correct information and phones of airlines and AAI were not responding at all.

Several non-resident Indians (NRIs), who started their journey from Los Angeles, had different woes to narrate on their arrival at the IGIA in early January. The passengers arriving by Lufthansa flight were made to cool their heels at Frankfurt for many hours. They were not only deprived of information regarding departure time, but the authorities even refused to serve them tea and snacks. “It is not Lufthansa’s fault if visibility is poor at Delhi”, said a senior official to passengers.

There was a time when Lufthansa was much sought after carrier. Its officials in India and abroad cared for passengers and even Indian bureaucrats and business icons preferred German airline to Air-India.

Air Sahara

Regardless of balance sheet, Air Sahara is all set to fly to Bangkok, Kuala Lumpur, Singapore, Hong Kong and also to London in next three months.

In sharp contrast to Air-India, Air Sahara is said to have obtained a suitable slot at the Heathrow Airport (London). How is that private carrier has managed a slot, which Air-India finds it difficult to manage.

Tourism has shown signs of improvement if figures released for Kashmir are to be believed. There is a possibility of international fares going up, but people are willing to visit India, particularly Goa and southern areas.

INVESTOR GUIDANCE

by A.N. Shanbhag

Officers need to be proactive for investors’ welfare

Q. On the basis of your information given in The Tribune. I approached several Small Saving agents at local post office. They are ignorant if any bank has been authorised to accept deposits under the SCSS.

I also approached the PNB Civil Lines Jalandhar branch, which is collecting PPF, income tax, sales tax, excise, customs duty, professional tax on behalf of the Government. But they are ignorant about the scheme. They had enquiries from several senior citizens in this regard, but their bank is not having any information. Please inform if any notification has been issued and which banks are authorised. Further whom should I contact for correct information.

— N. R. Chhura, Jalandhar

A The 1st notification which announced the Senior Citizens Savings Scheme Rules, 2004 coming into force on the 2nd day of August, 2004, defined ‘Deposit Office’ to mean ‘any post office in India doing savings bank work and authorised by Director-General Posts, to open an account under these rules.

Through my columns, I protested in view of the inconvenience that the senior citizens would have to suffer at the hands of the rent seeking post office officials.

The 2nd notification, dt 13.10.04 clarified several issues.

The 3rd notification dt 27.10.04 amended the scheme extensively. One of the important amendment was addition to the definition ‘Deposit Office’ of an office or branch of a banking company, or any other company or institution, authorised by the Central Government to receive subscriptions under the Public Provident Fund Scheme.’

Hope this serves your purpose. I have received several complaints from my readers with similar grievances.

All that I have to say is that if the office-bearers of our ‘National Savings Organisation’ were proactive with the welfare of investors in their schemes, India would have witnessed strong economic prosperity decades ago.

Some great visionary had created the basic concept of Small Savings. He knew that small contributions from large number of persons have a greater impact on the economics of the nation than large contributions from a few.

His vision is turning into a nightmare because of the lethargy of the management team of NSO in taking any corrective action for reasons best known to themselves.

Fortunately, the lawmakers in the ministry of finance also are aware of the goings on and are not averse to providing alternative routes to bypass the problem.

This is the main reason why the definition of ‘Deposit Office’ was changed and also the main reason for it not being accepted by those who matter.

I request you to bring this lacuna to the attention of PNB chairman. I have full respect for his professionalism and am sure that he will act promptly to set the matter right even though it is the duty of the office-bearers of the NSO to do so.

Section 56

Q: According to the amended Section 56, any money received without consideration exceeding Rs 25,000 is taxable.

1) Is Rs 25,000 the threshold limit?

2) Can a gift of Rs 30,000 received without consideration from a relative of an Hindu Undivided Family (HUF) is taxable as the term relative defined in this Section doesn’t include a member of an HUF? However, the text of this Section specifies that any money received by an individual or an HUF in excess of Rs 25,000 is taxable.

— Sudin Sabnis

A Both your queries are extremely good. Firstly, let me quote the law as it stands. The law states, “Where any sum of money exceeding Rs 25,000 is received without consideration by an individual or an HUF from any person on or after 1st day of September 2004, the whole of such sum.

“Provided that this clause shall not apply to any sum of money received

a) from any relative; or

b) on the occasion of the marriage of the individual; or

c) under a will or by way of inheritance; or in contemplation of death of the payer.”

There are two opinions as far as the limit of Rs 25,000 is concerned. One school of thought states the obvious, that any amount over and above Rs 25,000 would be taxable.

However, another opinion is that since the words are “the whole of such sum”, if the amount is over Rs 25,000, the entire amount would be taxable. For example, if an individual receives say, Rs 40,000 from a non-relative, as per the first opinion, only Rs 15,000 will be taxable. And as per the second, the entire Rs 40,000 will be taxable. A clarification from the CBDT is urgently required.

2. Yes, an HUF cannot have a relative. Neither can an HUF get married. So for an HUF, only the rest of the two conditions i.e., under a will or in contemplation of death have to be applied.

BRIEFLY

Forex reserves
Mumbai, January 8
The foreign exchange (Forex) reserves rose further by $ 163 million to a historic high of $ 131.178 billion during the week ended December 31, driven by robust foreign fund inflows, appreciation of non-US currencies and jump in gold prices in international markets. The Reserve Bank of India’s (RBI)’s latest weekly statistics report showed that the surge in foreign currency assets by $ 115 million to $ 125.164 billion during the week, contributed major share of the growth in Forex reserves. — UNI

NFL
New Delhi, January 8
National Fertilisers Ltd (NFL), has standardised techniques for the production of neem oil coated urea at their Panipat and Bathinda plants and its agronomical efficiencies have been established at farmers’ fields. NFL has been permitted to manufacture and conduct commercial trials of the neem coated urea for a period of two years with effect from May 12, 2003, by the Department of Agriculture and Cooperation, a release said. — TNS

HDFC Bank
New Delhi January 8
HDFC Bank Ltd today said it had recorded a 31.12 per cent year-on-year increase in net profit to Rs 170.93 crore in the third quarter ended December 31, 2004. The total income also increased by 25.18 per cent to Rs 979.55 crore in the quarter ended December 31, 2004 from Rs 782.48 crore in Q3 of 2003, it added. — PTI

Markfed
Chandigarh, January 8
Markfed yesterday launched Pacci Ghani Mustard Oil. Being manufactured at its Vanaspati Plant, Khanna, the oil will be available in the packing of 1 litre and will be priced at Rs 45 plus taxes. The product will also be available in 1/2 litre, 2 ltr, 5 ltr and 15 ltr packing. — TNS