The Tribune, Chandigarh, India

	Monetary policy review today RBI cites difficulties in reducing interest rate Says high inflation, widening current account deficit to blame Mumbai, January 28 The RBI today spoke of difficulties in effecting an interest rate cut as it kept its option open in its quarterly monetary policy tomorrow citing high inflation and widening current account deficit as big constraints inhibiting it. "Given the preponderance of non-monetary factors behind the current slowdown in an environment where risks from high inflation, current account and fiscal deficits still remain, the scope for supportive monetary policy action is constrained", the RBI said in its report on Macroeconomic and Monetary Developments issued on the eve of policy. The central bank, however, appeared to keep its options open when it said that when the government's recent economic reforms measures "show up fully and definitely" it would be possible for the monetary policy to increasingly focus on revival of growth. The RBI's pre-policy review statements comes in the midst of long-standing expectations from the government and the industry of an interest rate cut to boost sagging growth. Lowers growth forecast Meanwhile, professional forecasters sponsored by the RBI has lowered the growth projection for the current fiscal to 5.5 per cent from 5.6 per cent projected earlier. They have also cut the growth forecast for the next financial year to 6.5 per cent from 6.6 per cent. As regards inflation, RBI said it was likely to moderate below its projection of 7.5 per cent by March-end. However, it added, "suppressed inflation continues to pose a significant risk to the inflation in 2013-14. As some of the risks materialises, inflation path may turn stick." Referring to recent reforms initiatives, it said, "(they) have reduced immediate risks, but there is a long road ahead to bring about a sustainable turnaround for the Indian economy. Business sentiments remain weak despite reform initiatives and consumer confidence is edging down." Calls for reforms The RBI on Monday said recent reforms have reduced the immediate risks for the economy but emphasised on the need for more measures to restore investor confidence. Flagging concerns about fiscal and external imbalances in the economy, the apex bank said more reforms are required, especially in road and power sectors, to remove the investment bottlenecks. "The fresh round of reforms that were initiated in September 2012, after a hiatus, has reduced the immediate risks facing the Indian economy...On the whole it appears that the reform measures taken so far have not decisively lifted business sentiments and further action may be needed to restore confidence," RBI said in its third quarter review of Macroeconomic and Monetary Development. The monetary policy, RBI said, could focus more on boosting growth after the reform actions get executed. "While government has embarked on a fiscal adjustment path, staying on this course over the medium-term is necessary for providing sufficient space for monetary policy to stimulate growth," RBI said. — PTI
	Reliance Industries hits overseas debt markets again Launches over $500-million bond issue Mumbai, January 28 Reliance Industries, which is sitting on over Rs 75,000 crore in surplus cash, today launched an issue of bonds in Hong Kong and Singapore markets to raise a minimum $500 million (around Rs 2,700 crore), company sources said. This is the fifth time that the Mukesh Ambani-led company is raising long-term debt this fiscal. So far, it has raised $4 billion from overseas in the current financial year. "The company is planning to raise at least $500 million by issuing perpetual bonds. The issue hit the markets today and the final amount will depend on the investor appetite. The initial pricing is 6 per cent over the US treasury," an RIL official who did not wish to be named said. Perpetual bonds are those with no maturity date, therefore, it may be treated as equity, not as debt. Perpetual bonds pay coupons forever and the issuer does not have to redeem them. Their cash flows are, therefore, those of perpetuity. However, he expressed hope that the final pricing will be much below the guidance because of the strong fundamentals of the company. — PTI To raise Rs 2,700 cr Perpetual bonds are bonds with no maturity date. The issuer does not have to redeem them This is the fifth time RIL is raising long-term debt this fiscal The company has raised $4 billion from overseas in the current financial year so far The issue hit the markets on Monday and the final amount will depend on the investor appetite
	Labour trouble brews in Jet Airways Mumbai, January 28 As its promoters finalise a stake sale deal with Gulf carrier Etihad, labour unrest seems to be brewing in Jet Airways with its engineers wearing black bands to protest an alleged move to freeze salary hikes and the pilots deciding to meet on the same issue shortly. A section of Jet technicians started a 'symbolic' protest by wearing black bands last Friday to protest the "management's proposed move to freeze wage hike over the next 2-3 years", sources said. "Though we have signed the salary contract, the final date of payment has not been committed by the management. We have called a meeting of pilots in Delhi on February 1 to discuss the issue," a source said, adding this would be followed up by one in Mumbai a few days later. A Jet Airways spokesperson said the airline "has always adopted a conciliatory open door policy with all its staff, including its technicians. "In addition, a management team is in constant dialogue and discussions with the technicians, in explaining to them the commercial and other challenges given the present economic state of the global aviation industry at large and the airline in particular. This is expected to address the issues under discussion, but would also help resolve all future issues through this mechanism." The spokesperson said "as a socially conscious corporate, the airline is aware of all its obligations. Jet Airways has always made salary disbursals as per a pre-determined schedule of dates, which are internally communicated to the staff. — PTI
	New exchange MCX-SX to go live on February 11 Shiv Kumar Tribune News Service Mumbai, January 28 MCX-SX, India's newest stock exchange, will go live on February 11. The exchange, which got the green signal to begin trading in equities and equity derivatives last year after a protracted battle with the Securities Exchange Board of India, will be inaugurated by Finance Minister P Chidambaram on February 9. The new exchange will compete with the Bombay Stock Exchange and the National Stock Exchange. “Inauguration of MCX-SX equity segment will be a significant milestone not only for MCX-SX but the entire nation. Our exchange adds a new dimension to the exchange evolution by embedding growth and inclusion that are so critical for a country like India,” Jignesh Shah, vice-chairman of MCX-SX, said. “We will continue with our efforts to ensure equitable and inclusive growth of Indian capital market. In line with the regulator’s vision, our focus will be to increase the depth of markets, introduce new segments and strengthen participation of investors from across the country,” Joseph Massey, MD & CEO, MCX-SX added. MCX-SX was granted the status of a “recognised stock exchange” by the Ministry of Corporate Affairs (MCA), Government of India, on December 21, 2012. It received “commencement certificate” from market regulator SEBI for trading in new segments such as equity, futures and options on equity, interest rate derivatives and wholesale debt market on December 19, 2012. The newest exchange has already received 700 applications for new membership even before it went live, the statement added.
	Boeing 787 probe shifts to monitoring system maker Tokyo, January 28 The joint US and Japanese investigation into the Boeing 787's battery problems has shifted from the battery-maker to the manufacturer of a monitoring system. Japan transport ministry official Shigeru Takano today said the probe into battery-maker GS Yuasa was over for now as no evidence was found it was the source of the problems. Ministry officials said they would inspect Kanto Aircraft Instrument Co today as part of the ongoing investigation. It makes a system that monitors voltage, charging and temperature of the lithium-ion batteries. All 50 of the Boeing 787s in use around the world are grounded after one of the jets operated by All Nippon Airways made an emergency landing in Japan earlier this month when its main battery overheated. Earlier in January, a battery in a Japan Airlines 787 caught fire while parked at Boston's Logan International Airport. GS Yuasa shares jumped on the news it is no longer being investigated, gaining nearly 5 per cent in Tokyo trading. The issue had plunged 12 per cent after the battery problems surfaced in Japan. Ministry officials stopped short of saying that Kanto's monitoring system was under any special scrutiny, saying it was part of an ongoing investigation. "We are looking into affiliated parts makers," Takano said. "We are looking into possibilities." Kyoto-based GS Yuasa declined to comment, noting that the investigation was still underway. — AP
	Govt to review delays in Posco’s $12 bn project Tribune News Service New Delhi, January 28 The government will review the delays in South Korean steel giant Posco’s $12 billion project in Odisha, the biggest FDI proposal into India. The project, which was announced in 2005, has been stuck due to several problems, including land acquisition and regulatory issues. The issue was discussed in a meeting between Commerce and Industry Minister Anand Sharma and visiting South Korean Minister of Knowledge Economy Sukwoo Hong at the Partnership Summit in Agra today. According to a statement, South Korea raised the issue of delays in Posco project clearance. "We have been concerned about the delays and will be conducting a review. Prime Minister (Manmohan Singh) himself has been monitoring this project," Anand Sharma said. The South Korean side emphasised the importance of the project for enhancing economic ties between the two countries. In June, 2005, Posco had announced to set up a 12 million tonnes per annum (MTPA) steel plant in Odisha's Jagatsingpur. However, land for the project has not yet been fully acquired due to opposition from the local people. Sharma also said officials from UAE airline group, Etihad will be meeting him in the next couple of days. Though the agenda was not spelled out, the meeting is linked to the proposed move by Etihad to acquire equity in Jet Airways. Recently, the government had announced FDI through foreign carriers in civil aviation and this will be the first such proposal. During his meeting with Sheikha Lubna Bint Khalid Al Qasimi, Minister of Foreign Trade, UAE, Sharma informed that new opportunities had been created by the recent policy reforms in India and invited the UAE to invest in various areas, specially in the infrastructure sector. The total trade with the UAE accounts for $73.81 billion, with the UAE being India’s top global partner, accounting for 9.02% of India’s trade with the world. The Commerce Minister also launched an eBiz portal, which is India’s Government-to-Business (G2B) portal developed by Infosys in a Public-Private Partnership (PPP) Model.
	ONGC gets nod for $5 bn Kashagan stake buy New Delhi, January 28 ONGC Videsh Ltd, which trumped a strong bid by arch-rival China National Petroleum Corp to bag a stake in Kazakhstan's giant Kashagan oilfield, has cleared the first hurdle when it secured approval of all the partners in the project for its $5 billion acquisition. In its biggest acquisition till date, OVL, the overseas arm of Oil & Natural Gas Corp, in November agreed to pay US energy giant ConocoPhillips about $5 billion for the 8.4 per cent stake in Kashagan, the biggest oilfield discovery in over four decades. The deal is subject to the approval of governments of Kazakhstan and India and also to other partners in the Caspian Sea field waiving their right of first refusal (ROFR). "None of the partners in the project chose to exercise their pre-emption rights at the end of the deadline late last week," an official said here. Italy's Eni, ExxonMobil of the US, Royal Dutch Shell, France's Total and Kazakhstan's Kazmunaigas (KMG) hold 16.81 per cent stake each in the field, while Japan's Inpex the remaining 7.56 per cent. All the six partners had 60 days’ time from the date of announcement of the acquisition on November 24 to decide on exercising their right of first refusal on ConocoPhillips' stake. — PTI
	Rupee loses 23 paise Mumbai, January 28 The rupee dropped by 23 paise to settle at one-week low of 53.91 against the Greenback on heavy dollar demand from importers amid some hesitancy in local stocks. Firm dollar overseas also weighed on the rupee, while continued foreign funds inflow in equities restricted the fall to some extent, a forex dealer said. The rupee commenced weak at 53.85 a dollar from last Thursday's close of 53.68 at the Forex market and moved erratically in a narrow range between 53.75 and 53.95 before concluding at 53.91, showing a fall of 23 paise or 0.43 per cent. — PTI
	Tax Advice Honorarium to govt employee taxable By S.C. Vasudeva Q. Is honorarium paid to a government employee taxable or not? — VK Mahajan A. An honorarium received by a government employee is taxable as there is no provision in the Income Tax Act, 1961 (The Act) that exempts such honorarium from tax liability. Q. I am a Punjab Government employee. Under the Contributory Provident Fund scheme, 10% of my salary (basic+DA) is deducted. The same amount is contributed by the government and invested in various pension funds through NSDC. According to my DDO, from the year 2012-13, the amount contributed by the government should also be added to salary for calculating income tax. Is it justified to make the contribution by government as a taxable income while the money is in government’s hands and invested by it. If not, what steps can be taken? — Amarjeet Singh A. There is no amendment to the Income Tax Act, 1961 (The Act) which provides that the employer’s contribution to the extent of 10% of salary (basic+ DA) would be taxable from the assessment year 2012-13. It seems your DDO has been wrongly informed about the taxability of such a contribution. It may be added that the contribution in excess of 12% of the salary is taxable. Q. In reply to a query by Naveen, who is doing his last year in Doctor of Medicine, you have said his stipend of Rs 12,000 p.m. would not be taxable as his income would be below Rs 2,00,000 (published in The Tribune dated December 3, 2012). Is the scholarship, irrespective of amount, received by a student to meet the cost of education, not exempt under Section 10(16) of the Income Tax Act? Please clarify if stipend and scholarship are synonymous. — BR Preenja A. Stipend and scholarship are not synonymous. Stipend is paid during apprenticeship to all workers/employees. It is a form of salary given to a worker/employee by virtue of employer-employee relationship. As against this, scholarship is paid normally to a meritorious or deserving student to meet the cost of education. In case of scholarship, the relationship of employer-employee does not exist.
	Corporate results JSW Steel profit dips 19% New Delhi, January 28 Hit by rupee volatility and costlier raw materials, JSW Steel's net profit declined by 19 per cent to Rs 137 crore in the October-December quarter. The dip is notwithstanding higher sales and revenue over the same quarter last fiscal, in which the company had reported a net profit of Rs 168 crore, JSW Steel said. The net sales increased by 5 per cent to Rs 8,275 crore during the October-December quarter, over Rs 7,860 crore in the same period last year, it said. Adani Power’s loss widens Adani Power reported a higher consolidated net loss of Rs 619 crore for the third quarter ended December 2012, mainly due to higher imported coal prices. The private power producer had a consolidated net loss of Rs 356.3 crore in the 2011 December quarter. However, the company's consolidated total income in the December 2012 quarter rose to Rs 1,884 crore from Rs 1,079 crore in the year-ago period. Reliance Infra Reliance Infrastructure today posted a whopping over 78 per cent jump in net profit at Rs 728 crore for the third quarter ended December 31, 2012. Total operating income of the company stood at Rs 5,296 crore against Rs 6,160 crore in the year-ago period, Reliance Infrastructure said. — PTI