New Delhi, February 25
Customs duty rates may be rationalised in the Budget to improve competitiveness of domestic manufacturing and trade balance.

According to a research report by Motilal Oswal Financial Services, while apprehensions run high regarding election year bonanza, the fiscal headroom is rather limited. Besides controlling inflation, Food Security Bill and improvement of welfare delivery through direct benefit transfer are likely to play the role of election trump cards.

While tax rates are likely to remain stable, the government is likely to attempt to squeeze out extra revenue either through introduction of new taxes such as super rich tax or expansion of the service tax list. Tighter administrative effort would be supportive.

The Direct Tax Code (DTC) is likely to be implemented, clarity on GAAR and other contentious issues may be provided along with an outline for implementation of Goods and Services Tax (GST). On the expenditure front, the report expects major thrust on health, infrastructure, education and agriculture.

On the social sectors, health could see significant enhancement in budgetary allocations as also employment and education with higher allocation for National Skill Development Mission and higher exemption for expenditure on education.

The education sector is seeking sops from the Budget to expand the sector. Says Shantanu Prakash, Chairman & Managing Director, Educomp Solutions: “Companies should be given an accelerated tax break of 150% of their investment in education infrastructure which would lead to capacity creation for education. The other would be to allow companies to set up education institutions freely and simultaneously set up a regulator for quality and compliance.”

On tax revenues, the Motilal Oswal analysts say the government is likely to explore remaining avenues of taxation by removing concessions (that add up to around 7% of GDP) and tightening tax administration. On the direct taxes front, tweaking of tax slabs is expected. There could be some modification in personal tax slabs and rates (adjustment for inflation). Increase in exemption limit for investments (especially for housing loan principal and interest, and insurance premium), modification of rent allowance and modification of capital gains scheme is expected in the Budget.

Corporate tax may remain largely unchanged but may see extension of MAT to cover some excluded areas. Higher accelerated depreciation for investments in plant and machinery may be allowed to boost investments. Religare Research, in a report, says customs duty should be kept at the same level till GST is introduced as Indian industry suffers from cost disadvantages.

According to Motilal Oswal Financial Services, on excise duty, the mean rates are unlikely to be changed but expect convergence of more commodities to the mean rate in preparation for GST. There could be further increase in gold duty.

The report says on subsidy resolution, there could be some cutback on fertiliser saving and large reduction in fuel subsidy to fund the Food Security Bill. Direct Benefit Transfer (DBT) gets a push, with increased coverage for more schemes and districts.

Infrastructure could be a focus area with higher allocation to NHAI, push to the first Infrastructure Debt Fund (IDF) launched recently, re-launch of tax-saving infrastructure bonds and setting up of new PPP review and redressal board, setting up of National Environment Assessment and Monitoring Authority, Railway Tariff Board and private investment in railways and independent regulatory authority for India's roads and highways sector.

New Delhi, February 25
In an indication that the economy is showing no signs of bottoming out, the latest CII ASCON survey shows that the number of sectors reporting low growth in January-March 2013 quarter of current year has increased significantly over the corresponding period of last year, suggesting that the slowdown has taken a firm grip on the economy.

Commenting on the ASCON results, Chandrajit Banerjee, Director General, CII, said, “The continued slowdown in industrial performance during the past several quarters is becoming a cause for great concern and calls for steps to stimulate the economy. No doubt, the recent initiatives taken by the government are noteworthy but the results are not visible yet”.

According to CII, among the various measures needed to restart the investment cycle, it is critical that the government takes steps to increase the deprecation rate on plant & machinery from 15 per cent to 25 per cent for a pre-defined period of 3-5 years, encourages PSUs to utilise their cash reserves to build new capacity, exempt infrastructure and SEZ companies from MAT, fast track 50 large industrial projects, promotes low cost housing, incentivises companies to go green and maintains a status quo on customs and excise in the forthcoming Budget.

The survey, which tracks the growth of industrial sector on a quarterly basis, based on feedback received from sectoral industry associations, shows that out of 112 sectors surveyed, the percentage of sectors reporting excellent growth of more than 20 per cent and high growth of 10-20 per cent performance has come down to 2.7 per cent and 14.3 per cent respectively in the current quarter (January-March 2013).

While the proportion of sectors reporting negative growth has remained relatively unchanged at 18.3 per cent, the number of sectors reporting low growth has increased to 65.2 per cent in the current quarter from 52.2 per cent in the same quarter in the previous year.

A disaggregated analysis reveals that a majority of sectors in the producer goods segment (basic, intermediate, and capital goods sectors) are reported to fall in low growth bracket during January-March 2013. The same is the case with the consumer durables industry where a large number of units have also reported low growth outlook. The sluggish performance of both producer as well as consumer goods indicate subdued demand conditions in the economy which going forward does not bode well for revival of growth in the coming quarters as well, the CII release said.

In the consumer durables segment, items like passenger cars, two-wheelers, refrigerators, washing machines, air conditioners, TV, tyres are among the prominent sectors expecting low to negative growth performance in the current quarter.

Mumbai, February 25
The rupee today gained 31 paise to close at over one-week high of 53.86 on sustained dollar selling by exporters and recovery in euro in overseas market.

Forex dealers said persistent capital inflows and bearish dollar overseas also boosted the rupee sentiment here.

The local unit resumed lower at 54.22 a dollar from last weekend's close of 54.17 and immediately touched a low of 54.25 at the Interbank Foreign Exchange (Forex) market.

Later, it rebounded following dollar selling by exporters and some banks to a end at the day's high of 53.86, a rise of 31 paise, or 0.57 per cent. On Friday, it had gained by 30 paise, or 0.55 per cent.

"The reason behind the gains was the recovery in the euro and weakness in the dollar index. Today's gains in rupee were on the back of speculation that the monetary stimulus measures by the developed nations will continue to pour flows in to the emerging nations," said Abhishek Goenka, founder and CEO, India Forex Advisors.

Foreign institutional investors pumped in USD 45.81 million (Rs 246.71 crore) into local equities, according to the provisional BSE data.

The BSE benchmark Sensex today closed higher by 14.68 points, or 0.08 per cent, at 19,331.69.

The dollar index was down by 0.31 per cent against a basket of six major global currencies.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "The rise in the rupee during the day was largely on the back of continued Dollar selling from exporters and robust FII inflows. However with Dollar weakening across the board, the rupee managed to settle the day near its session high." — PTI

New Delhi, February 25
In a move that almost marks the end of flight for the Vijay Mallya-owned Kingfisher Airlines, the government today withdrew all domestic and international flying slots allocated to the defunct airlines with immediate effect.

The Airports Authority of India has been directed to make domestic slots available to other carriers as per their demand, officials said, adding that the various international routes would also be offered to rival airlines. This decision is expected to make available 25,000 additional seats for passengers and also keep airfares under control.

The move comes close on heels of a move by the consortium of bankers to start recalling their loans to the airline, whose scheduled operator permit was cancelled in December. The defunct airline has not operated a single flight since October 2012.

Before it went down, Kingfisher was allowed international rights to eight countries — Bangladesh (14 services per week), Hong Kong (14 services per week), Nepal (7 services per week), Singapore (7 services per week), Sri Lanka (14 services per week + 21 services per week from unlimited 18 destinations), Thailand (21 services per week), UAE (21 services per week) and UK (7 services per week each from Mumbai, Delhi and Bangalore). These traffic rights were allocated to Kingfisher Airlines between the years 2008 and 2011.

The officials said the rights have been withdrawn from Kingfisher Airlines on account of non-utilisation by the airlines, adding that Civil Aviation Minister Ajit Singh has decided to make them available to other carriers for use. “This would give additional availability of approximately 25,000 seats per week for use by other Indian carriers to these eight countries, some of which are much in demand by these carriers,” they added.

It was following a strike by its pilots and engineers over non-payment of salaries for several months that completely grounded its fleet that the Directorate General of Civil Aviation (DGCA) temporarily suspended its flying licence in October. A week before the SOP expired on December 31, the airline submitted an interim revival plan to the aviation regulator to resume limited operations.

It was however rejected by the DGCA, which sought more information on funding and payment of dues. The regulator decided not to allow the airline to fly till it fulfilled mandatory conditions like payment of dues to its employees and various service providers like airport operators.

The AAI too recently made it clear that it would not allow Kingfisher to fly unless all the dues were cleared.

Kingfisher has almost Rs 8,000 crore debt, with employee salary arrears running into months. There are a number of legal cases pending against the company and Mallya for tax evasion, non-payment of salary to employees and dues to stakeholders.

New Delhi, February 25
On a day when the process for submitting applications to participate in the auction for acquiring fresh Spectrum in 1,800 MHz and 800 MHz bands came to an end, it has emerged that Russian conglomerate of Sistema Shyam Tele Services (SSTL) has emerged as the only company that has applied to bid for the 800 MHZ band, used by telecom operators on the CDMA (Code Division Multiple Access) platform.

In a scenario reminiscent of the previous round of auction held in November last, when initially there were only two bidders in race for the 800 MHz CDMA band, who later withdrew citing high base price to start the auction, the Russian conglomerate is now the only telecom operator in race for the airwaves in this band.

It, earlier in the day, confirmed that it has submitted its application for participating in the upcoming auction of 800 MHz band spectrum in March.

“Sistema Shyam TeleServices is committed to its operations in India. The company today submitted its application to participate in the 800 Mhz Spectrum auctions in March 2013. Post-auctions, with the operational footprint clearly defined, the plan is to focus on SSTL’s data centric-voice enabled strategy in select circles and build an even stronger MTS brand in India,” the company said in a statement.

SSTL, which has lost permits in 21 telecom zones, has stopped operations in 10 telecom zones. It is assumed that it will bid for the remaining 11 telecom zones to buy airwaves in order to continue operations.

The Department of Telecommunications (DoT) is expected to conduct the auction for 800 MHz immediately after the auction of GSM bands - 1,800 MHz and 900 MHz, which will start from March 11.

The scenario in the CDMA segment has remained unchanged despite the government approving a 50 per cent cut in the auction reserve price for CDMA spectrum.

Earlier, the Empowered Group of Ministers (EGoM) had recommended 30-50 per cent cut in the reserve price for CDMA airwaves in the 800 Mhz band. The Cabinet decision came after the government failed to receive any bid for this Spectrum band in the auction held in November.

In this current round of auction, the government has decided to sell airwaves in Delhi, Mumbai, Karnataka and Rajasthan for 1,800 MHz band, and pan India for the 800 MHz band.

The government had also planned to conduct auction of 900 MHz spectrum simultaneously with the 1800 MHz band. But it will not be able to finalise the auction for the 900 MHz band as some of the incumbent operators have moved to the Delhi High Court after they failed to get a response from the DoT on their plea for renewal of licences in the 900 MHz spectrum band which they had bought in November 1994.

The government has informed the Delhi High Court that it will take a final call on the renewal of 900 MHz Spectrum in two weeks.

The government had planned to auction airwaves in Delhi, Mumbai and Kolkata for 900 MHz band.

New Delhi, February 25
Retirement fund body EPFO today decided to pay 8.5 per cent interest rate to its over five crore subscribers on their PF deposits for 2012-13, higher than 8.25 per cent provided in the previous fiscal.

The decision was taken at the meeting of the Central Board of Trustees (CBT), the highest decision-making body of the Employees' Provident Fund Organisation (EPFO). The meeting was chaired by the Labour Minister.

"A decision has been taken to pay 8.5 per cent interest on PF deposits, but we have expressed our reservations as we wanted higher interest rate," said DL Sachdev, secretary, All India Trade Union Congress (AITUC), after the CBT meeting.

Earlier, a note prepared by EPFO for consideration of the February 15 meeting of the Finance and Investment Committee (FIC) had said, "8.5 per cent rate of interest for the year 2012-13 is feasible."

According to the EPFO's estimates, payment of 8.6 per cent interest rate would result in a deficit of Rs 240.49 crore whereas 8.5 per cent interest rate on PF deposits for current fiscal would leave a surplus of Rs 4.13 crore. — PTI