Sunday, August 30, 1998
today's calendar
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B U S I N E S S | Sunday, August 30, 1998 |
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spotlight today's calendar |
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Fixing wheat MSP to be
major issue
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Industrial production growth
rate up
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Industry
flays power tariff increase Benefits
of PF schemes highlighted Ministry
for divesting DVB stakes Wonder
drug to target mid-day meals IMF
warns Russia of ‘disaster’ Markfed,
NRIs tie-up for liquor plant |
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Fixing wheat MSP to be major
issue CHANDIGARH: The fixing of a minimum support price (MSP) for the 1998-99 wheat crop is going to become a major issue between the Centre and the main wheat-producing states where BJP allies are the dominant ruling partners as in Punjab and Haryana or where the BJP itself is the ruling party as in Uttar Pradesh and Rajasthan. First indication of this was available here today with the Punjab and Haryana governments reportedly deciding to convey to the Centre that the CACP recommended MSP of Rs 490 per quintal for the next rabi season is not acceptable to them. Ministerial sources here disclosed that the Punjab Chief Minister, Mr Parkash Singh Badal, is writing to the Prime Minister demanding that the new MSP for wheat should be fixed at Rs 670 per quintal. Similarly, the Haryana Chief Minister, Mr Bansi Lal, is also reportedly conveying to the Prime Minister that the state government wanted at least Rs 615 per quintal as MSP for the next season. While the Akali Dal is the dominant ruling partner in Punjab, in Haryana, Mr Bansi Lal’s Haryana Vikas Party enjoys that status with the BJP being the junior partner in both states. The main worry of the BJP-led Central Government will be how to reconcile its economic compulsion of not allowing food subsidy to go up unduly by allowing a big increase in MSP and to check inflationary trends and demand of its allies whose main vote bank is the farmer. Punjab, followed by Haryana and Uttar Pradesh, are the main contributors of surplus wheat to the central pool. Out of around 12.6 million tonnes of wheat procured till the end of June 1998, Punjab has contributed over 6.1 million tonnes and Haryana and Uttar Pradesh over 3.1 million tonnes and 2.1 million tonnes, respectively. Rajasthan and Madhya Pradesh have procured 0.7 and 0.5 million tonnes respectively. The Centre’s dilemma over fixing new MSP will particularly deepen in view of the CACP’s opposition to adopting the practice of announcing wheat bonus without caring for the open market price trend. For instance, the government had announced Rs 455 per quintal as MSP before the start of the 1998 procurement season as was recommended by CACP. But later, the Centre succumbed to the pressure of a delegation of Chief Ministers of the wheat surplus states and announced a bonus of Rs 55 per quintal to raise the effective wheat MSP to Rs 510 per quintal. Although Punjab and Haryana Chief Ministers expressed dissatisfaction over the new effective price as they had wanted it to be Rs 600, official and trading circles considered the new price as unwarranted as the market price prevailing before the crop arrival was lower than the new MSP. In 1997 also, the government had announced a wheat bonus of Rs 60 per quintal over the CACP’s recommended price of Rs 415. But then the government had compelling reasons to take the step as the market prices were ruling very high and the government would not have been able to procure reasonable quantities of wheat without announcing bonus. Mainly because of political reasons, the government may have to announce bonus for 1999, particularly because the current year’s effective MSP is Rs 20 per quintal more than the CACP’s recommended price of Rs 490. It is not without logic that the commission has made the following observations on wheat bonus issue in its report for 1998-99 rabi price policy. It has said : “The government should make a clear announcement that any bonus in the future will be contingent on it being transparently evident that adequate procurement will not occur at the MSP fixed earlier and that it should take certain concrete decisions to make this credible. For example, the
announcement of any bonus for wheat can be delayed till
after the end of April to provide a period of price
discovery; and, if any bonus is announced, this could be
linked to a procurement target which when reached would
automatically lead to the withdrawal of the bonus.” —
IPA |
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Industrial production growth rate up NEW DELHI, Aug 29 — The growth rate of overall industrial production has increased by 5.4 per cent during April to June this year, says the monthly economic report released by the Ministry of Finance. The growth rate during the corresponding period of the previous year was 3.7, the report states. While growth rate of manufacturing sector increased to 5.5 per cent, growth rate of electricity generation increased to 10.2 per cent . However, growth of mining and quarrying declined to 0.3 per cent during April to to June 1997. Production of basic goods increased by 3.9 per cent against an increase of 6.8 per cent , capital goods increased by 11 per cent and intermediate goods increased by 7.0 per cent , against an increase of 7.3 per cent. Consumer goods increased by 4.1 per cent against a decline of 1.8 per cent, consumer durables increased by 5.9 per cent and consumer non-durable goods increased by 3.7 per cent during this period the report states. Core infrastructure industries displayed mixed performance compared to 1997. Compared to April - June 1998, average growth rate was 4 per cent as compared to 5.4 per cent during the corresponding period of the previous year. During the current financial year so far ( March 31 to July 17, 1998) monetary expansion (M3) was lower at 4.1 per cent as compared to 4.4 per cent in the corresponding period of previous fiscal year. Among its components, currency with public showed a growth of 6.9 per cent than that of 8.3 per cent in the corresponding period of last year. On the sources side, net bank credit to government showed a higher growth of 11.1 per cent during the current financial year.RBI’s net credit to central government showed a higher increase of 14 per cent during the current financial year as against a rise of 2.5 per cent in 1997-98.Bank credit to the commercial sector , however, showed a negligible growth during the current financial year. Exports in dollar terms during April to June , 1998 declined by 7.9 per cent as compared to a decline of 0.9 per cent during the same period of the previous year. Imports
increased by 3.7 per cent (as against 4.2 per cent last
year). Imports of POL declined by 35.9 per cent while
non-POL imports increased by 14.7 per cent in the same
period. |
ISE begins trial runs NEW DELHI, Aug 29 — Ludhiana is among the 15 regional stock exchanges of the Inter-Connected Stock Exchange of India Ltd (ISE), which carried out trial runs today by executing orders across the participating exchanges through its central trading system at Navi Mumbai. ISE proposes to inter-connect 15 regional stock exchanges in the country. These include Ludhiana, Jaipur, Bangalore, Bhubaneswar, Chennai, Cochin, Coimbatore, Guwahati, Hyderabad, Jaipur, Madhya Pradesh (Indore), Magadh (Patna), Mangalore, Saurashtra, Uttar Pradesh (Kanpur) and Vadodara stock exchange. The ISE project was
initiated in 1996 and in-principle approval was accorded
by Sebi in October 1997. The online trading solution of
ISE has been provided by Indigo Technologies and HCL
Comnet has provided the communication solution. |
Industry flays power tariff
increase FARIDABAD, Aug 29 — Goods manufactured by industrial units in Faridabad have become uncompetitive in the national market due to steep hike in power tariff, announced by the Haryana State Electricity Board. A spokesman of four industrial organisations, namely, the Faridabad Industries Association, the Faridabad Small Industries Association, the Manufacturers Association and the Chamber of Commerce and Industries told TNS that the 62 paise per unit increase in the tariff would kill the entire industry. Many furnace units in the Faridabad belt have closed down due to enormous losses. Some large industries like Gedore Tools, East India Cotton Mills, Hitkari Potteries etc. have reportedly become sick and are on the BIFR list. The spokesman expressed fear that if power rates were not reduced immediately all existing industries would become sick. He demanded the tariff to be on a par with the neighbouring states. He asserted that some of the large industries like Whirlpool, Escorts, Eicher and Goodyear had opted for other states for expansion due to frequent increase in power rates. The spokesman warned that the monopolistic attitude of the board was not favourable to industry and it had become clear that Haryana was becoming the last priority for investors. A day might come soon when there would be no takers for power at the rate of Rs 4 per unit, he added. Meanwhile, industrialists
have set up an all-Haryana action committee to decide the
next course of action. At the recent meeting of the
committee held here recently, members threatened to shift
their units to other states if the power rates were not
reduced. |
Benefits of PF schemes highlighted CHANDIGARH, Aug 29 — Mr M.L. Meena, Regional Provident Fund Commissioner-I Punjab and Chandigarh, and other senior provident fund officials interacted with members of the industry at a session organised by the CII (northern region) today. Mr Meena spoke about various employees provident fund and pension schemes and the main benefits that accrue from these schemes. He said the main objective of these schemes was to provide social security to workers and their families. Mr Meena, who addressed Enforcement Officers of the Punjab region yesterday, laid emphasis on timely submission of PF returns and deposit of dues of the employers. He emphasised the need to
take action under Section 14 of the EPF Act and under
Section 406/409 of the IPC against the defaulting
establishments. He also asked the Enforcement Officers to
take action under Section 110Cr PC against habitual
offenders. |
Ministry for divesting DVB stakes NEW DELHI, August 29 — The Union Power Ministry has suggested divesting of stakes of the Delhi Vidyut Board in six distribution circles to the private sector. In a note sent to the Delhi Government, the ministry has also suggested a revamp plan for the DVB which includes separating its functions. With the DVB’s annual losses touching Rs 1000 crore, the high power tariffs of Rs 3.02 per unit and erratic supply, the ministry says that the Delhi Government will have to adopt this measure, failing which, it warns, there may be widespread violence during the summer of 1999. The ministry has asked the Delhi Government to initiate structural changes as the DVB on its own will not allow any change. The Delhi Government has been asked by the ministry to clear an Ordinance structured on the same lines as the Orissa and the Haryana model after which the Presidential assent can be given, senior officials in the Delhi Government said. The proposal prepared and sent at the behest of the Power Minister, Mr P.R. Kumaramangalam, to the Chief Secretary and Principal Secretary of the Delhi Government and to the Prime Minister’s Office earlier this month, recommends unbundling the existing board into generation, transmission and six distribution circles. Apart from corporatising generation and transmission, each of the circles would not only be corporatised but also divested. The ministry argues that direct negotiations will be faster than an open tender. It argues that, with Delhi’s power situation rapidly deteriorating, the privatisation process needs to be completed by the summer of 1999. It suggests that negotiations should only be held with Indian companies, without citing reasons for excluding foreign firms. For the transfer of assets, the ministry has recommended that either SBI’s merchant banking division or any other Indian financial institution could evaluate the capital structure of the circle which, it holds, “shall” be accepted by the distribution companies. The employees of the DVB
will directly become employees of one of the eight
corporations under the Statutory Transfer Scheme, the
note adds. |
Amritsar set to regain business
status AMRITSAR, Aug 29 — Amritsar, the historic city of the Golden Temple, is poised to regain its pre-partitioned glory as the biggest centre of business and trade in North India. Amritsar has been a big centre of trade and business since it came into being. Guru Ram Das, the founder of the city, persuaded people belonging to all professions and trades to settle here. Maharaja Ranjit Singh, who made Amritsar his summer capital, also persuaded big merchants and traders from Rajasthan and Gujarat to settle here. One of the important factors in enhancing Amritsar’s status as a centre of trade and commerce has been the upgradation of Raja Sansi Airport as an international airport with the introduction of a direct weekly flight to Sharjah in December last year. The flight became so popular that its frequency was doubled within a few months. Indirect flights were also introduced to certain European countries in June. The visit of Queen Elizabeth-II in October last enhanced the importance of this holy city and brought it on the international map of tourism. The city is already well connected through rail network and many prestigious trains, including the Shatabadi Express and the Swarna Shatabadi Express, are running between Amritsar and Delhi and almost all important cities of the country including, Mumbai, Howrah, Puri, Pune, Nanded, Jaipur etc. The frequency of the twice-a-week Attari-Lahore Samjhauta Express is likely to be increased to six times a week in the coming months. The four laning of the
Jalandhar-Amritsar-Wagah GT Road is to be taken up
shortly, which is likely to increase the commercial
status of the city. |
Wonder drug to target mid-day
meals NEW DELHI, Aug 29 — A wonder drug containing all the nutrients, proteins and vitamins needed for a child’s development could soon form part of the mid-day meals given in schools. Obtained from the fresh water algae, spirulina, the drug’s capabilities have been ascertained by a multi-disciplinary research team consisting of scientists from molecular biology and genetic engineering. The National Research Development Corporation feels the drug could form an important component in the mid-day meals served in the schools throughout the country. The National Institute of Nutrition carried out trials on 30,000 children in Pudukottai in Tamil Nadu and found that two tablets a day helped in their overall growth and development. Armed with
the success of the trial, the NRDC, which has licensed
the technology to a private firm, New Ambadi Estates for
commercial production and has appointed VIP Pharma for
distributing the product in Northern India, hopes to
target the 84 lakh children in the country who benefit
from the mid-day meal scheme. |
IMF warns Russia of ‘disaster’ WASHINGTON, Aug 29 (AFP) — The International Monetary Fund (IMF) has warned Russia it faces “disaster” if it rolls back reforms and urged acting Prime Minister Viktor Chernomyrdin to opt decisively for strengthening free-market policies. IMF Managing Director Michel Camdessus told reporters here yesterday that he gave a warning to Chernomyrdin at their meeting in Crimea on Wednesday that there will be no financial aid to Russia if it abandons a strict monetary policy. Dubbing that approach the “populist scenario”, Camdessus said printing money and restoring state controls over prices, trade and foreign exchange would “lead to the old-command methods, hyperinflation and dire social consequences.” “I told him unambiguously that this would lead to disaster,” Camdessus said adding, “I had to leave him without any illusion that such kinds of policies would benefit from support of the international community at large and from this institution in particular.” The IMF and other lenders pieced together a $ 22 billion aid package for Russia in July, the second tranche of which is due to be released by September 15. But the aid package failed to stave off a financial crisis, partly triggered by the economic problems in Asia and weak oil prices. Camdessus indicated that
the release of the second tranche of $ 4.8 billion may be
delayed pending the government’s action plan to stem
the crisis but he did not rule out its disbursement. |
Markfed, NRIs tie-up for liquor
plant CHANDIGARH, Aug 29 — The Markfed, two NRI groups and the Nabha exports will tie up to install an agro-surplus based liquor plant in Punjab. Mr Darshan Singh Alhoran, Managing Director of the Nabha exports said that the Vodka type liquor would be prepared mainly for export purpose, from rice potato and wheat which were available in plenty in the state. He said the Markfed had a liquor plant licence which was lying unutilised for the past five years. It had also about 25 acres of land for this purpose near Batala. Mr Darshan Singh said NRI groups led by Mr Karnail Singh of Bulk Foods and Spices (Canada) and Mr J.S. Sandhar and Mr Satnam Singh of Euro Wines (U.K.), the Nabha exports and Mr Jagdish Singh Walia, Chairman of the Markfed, have held preliminary discussion for deciding the equity share and signing the memorandum. He said both NRI groups have invited Marked Chairman, Mr Walia and Punjab Cooperation Minister, Mr Ranjit Singh Brahampura and some other senior officials of Markfed to Canada and UK to personally inspecting their marketing network in those countries before signing the MoU. The NRI groups and Mr
Darshan Singh Alhoran also held a meeting with the Union
Industries Minister, Mr Sukhbir Singh Badal for probing
other areas for installing industrial units. Mr Badal has
called them to Delhi on September 8 for further
discussion. |
Digital Equip ACC Bata India Thirumalai Chem |
HOW does the devaluation of the Russian rouble affect the Indian market was the question on the lips of most traders who were wrong-footed by this sudden development. The fact is in a weak market, it requires little to trigger a slide in stock prices. Of course, this development has adversely affected Indian pharma majors like Ranbaxy and Dr Reddy’s Labs which have a fair exposure to the Russian market. But, the hidden danger lies in the pressure it will exert on China to devalue yuan, which in turn will make the devaluation of the Indian rupee more or less inevitable. Now, does this make an investment in software stocks even more attractive? Notwithstanding the euphoria surrounding this much-touted sector, investors need to address themselves to the question whether or not the share prices of these companies are already overheated, and how much further their prices can appreciate. Although information technology is undoubtedly a qualitatively superior industry, investors would also do well to note the prevalent dismal share prices of previously fancied sectors like aquaculture. Meanwhile, the Sebi has once again held out a “Caveat Emptor” or “let the buyer beware” sign for investors who are lured by high-risk plantation schemes. Contradicting the trickily worded advertisements put out in the media, Sebi has clarified that, to date, no plantation company has been given any registration from it as the regulations for plantation companies are yet to be notified. Moreover, audit of many of these entities have revealed an unsatisfactory state of financial health. It has also ruled that no plantation company can raise any funds without obtaining a rating from one of the four accredited rating agencies. It is worth noting here that all plantation companies rated thus far have been found to be below investment grade, which impels that there is a very high risk perception for the investors contemplating investment in these schemes. In a move that most sceptics have dismissed as having come too late and aimed primarily at pre-empting any predatory takeover bid, the Tata group holding company Tata Sons has decided to further consolidate its grip over the Rs 40,000 crore group. Tata Sons has hiked stakes in key group companies like Tata Power and Tata Tea. In case of Tata Power, it has just kept within the 2 per cent takeover code trigger. Tata Sons has hiked its holding in Tata Power from around 6 per cent to around 8 per cent and in Tata Tea from 8.6 per cent to 9.3 per cent. This is the second year running that Tata Sons is hiking its stake in Tata Tea. Last year, it increased its holdings at a substantial cost from 7.8 to 8.6 per cent. The holding company has also marginally increased its stake in companies like Tata Steel, Telco, Tata Chemicals and Indian Hotels. In case of Tata Chemicals, its stake went up from 8.18 per cent to 8.40 per cent. Notably, this year there seems to be hardly any increase in cross-holdings across Tata companies. Perhaps this is on account of the delicate cash positions of flagship companies Tata Steel and Telco. The markets
continue to remain weak, with their being no abatement in
the political crisis as also the currency crisis in the
Asian region. The Indian rupee too has weakened making
the FIIs jittery all over again and prompting them to
unload their holdings. With the sensex showing no signs
of bottoming out as yet, investment in value stocks alone
be considered, once again at successive price declines. |
When once termination was held to be unjustified, is workman entitled to reinstatement with full back wages? Ans: In Patiala Co-op. Bank Ltd. V. Mehar Chand (1998-I. LIJ. 1142) P&H, High Court observed thus: The present Appeal was preferred by the Patiala Central Co-op. Bank Ltd., against an award of the Labour Court by which it held termination of the services of its workman, working as a gunman, was not justified, and which award was confirmed by a Single Judge granting further relief of reinstatement with full back wages to the workman. The appellate court dismissed the L.P. Appeal. It observed when once the termination was held to be unjustified the necessary corollary was that the workman was entitled to be reinstated with full back wages, especially as no material was placed to show that the workman was gainfully employed when he was out of service. Admittedly, the Labour Court recorded a finding on the basis of the material on record that the order of termination of the services of the workman was not justified and was not in order. That is a finding of fact based on evidence. The learned Single Judge did not find any evidence to come to a different conclusion. There was no challenge to the said finding recorded by the Labour Court. When the Labour Court gave a specific finding that the termination of the workman was not justified and that finding was confirmed by the learned Single Judge, the H.C. in this appeal did not see any reason to disturb the said finding. Appellant-bank tried to argue that the workman was gainfully employed when he was out of service, but no evidence has been let in by the appellant either before the Labour Court or before the Single Judge. In fact, this court too adjourned the matter to enable the appellant to place on record any material to show that the workman was gainfully employed when he was out of service. However no such material came forth. In the circumstances, the
H.C. held that the appeal deserves to be dismissed. |
Q: I own a small house at a plot of 120 sq. yds. privately un-systematically built and also have a telephone. I am serving in private limited company where my salary account is being assessed and rendered to Income Tax yearly and is touching the limit but not filing Income Tax returns. I have four grown up and married children who are independently living and they do not have any residential house or plot. Under the circumstances, is it obligatory for me to file Income Tax return. — Mohan Singh, New Delhi A: On the facts stated by you it is your obligation to file Income Tax return even if Nil tax is payable. Whether your house has been unsystematically built or not has no relevance with the filing of the return. What is required for the purposes of Section 139(1) is that you must use residential property of minimum 600 sq. ft. In your case you are having a house built on 120 sq. yds. which means surely the total constructed area of the house will be more than 600 sq. ft. Besides, you are also having a telephone. Hence, on these facts you should file your Income Tax return. Q: May I request you to answer the following queries which will help many NRIs who have returned after foreign assignments or who are likely to return in the near future. How long is the status of ‘Resident but not ordinarily resident’ valid for such assessee? What are the additional exemptions, if any, available to such assessees? UTI has mentioned on the reverse of their dividend letters that units purchased with foreign funds or from NRE accounts are exempted completely from Income Tax. In this regard can be resident also purchase such units with funds received from abroad? — S.N. Bhalla, Patiala A: The status of resident but not ordinarily resident will be valid for 9 years. The most important exemption which is available to the person who maintains the status of resident but not ordinarily resident is that the income of such a person derived from outside India continues to be exempted till he retains this status. A resident cannot purchase the units which are demarcated for NRI. For further details, please contact the Exchange Control Department, Reserve Bank of India. Q: My daughter is mentally retarded please intimate the rebate in income-tax at present. I have received medical certificate from the Civil Surgeon, Faridabad. — G.S. Bawa, Faridabad A: In respect of your mentally retarded daughter you are entitled to a deduction in respect of medical treatment, etc. as per section 80DD of the Income Tax Act, 1961. The maximum amount of this deduction is Rs 15,000. Q: I am
an authorised agent for National Savings Organisation
(Postal), Unit Trust of India and LIC of India. — R.S. Ubhi, Hajipur A: From your income arising out of commission agency you can deduct all legitimate expenses which are required to be incurred by you for earning the said commission. However, please maintain proper evidence for incurring the expenses. In case the full evidence in respect of incurring of the expenditure is not available with you, then you can claim deduction in respect of commission income if less than Rs 60,000 for the year at the rate of 50 per cent of the first year commission and at the rate of 15 per cent of the renewal commission where the separate figures for first year and renewal commission are available, where the separate figures as above are not available the deduction would be at the rate of 331/3 per cent of the gross commission. However, the ad hoc deduction is subject to a ceiling of Rs 20,000. Q: I am a pensioner aged 72 years. I shall be obliged if I am advised on the following item: Quantum of “Tax Rebate” entitlement to Senior citizens for the financial year 1997-98 (assessment year 1998-99) clarifying whether the Tax Rebate is applicable to gross income or only on taxable gross income (after deduction of standard deduction of Rs 15000 and/or any other deductions). My gross income from pension and bank/firms fixed deposits will be around Rs 1,25,000 during the financial year 1997-98. — S.S. Sarwal, Chandigarh A: The tax rebate available to a senior citizen is from the tax payable on his total taxable income. Hence, to arrive at the tax rebate, one has to first determine the net taxable income and not the gross taxable income. The net taxable income is arrived at after deducting the standard deduction of Rs 15,000 (maximum allowed is Rs 20,000) from the pension amount received. Likewise, the deduction u/s 80L in respect of income from bank fixed deposit etc. is also to be deducted from the gross total income on the facts stated by you. You will not be liable to any income-tax because after deducting the standard deduction from pension income and the deduction u/s 80L your net taxable income will be less than Rs 1.00 lakh. The tax rebate is
permissible to the maximum extent of Rs 10,000 to the
senior citizen. Thus it implies that if your net taxable
income is upto Rs 1.00 lakh, there is no liability to
Income Tax. |
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