Sunday, June 13, 1999
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B U S I N E S S | Sunday, June 13, 1999 |
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Kargil conflict, poll to
take toll on economy |
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 The new mobile Pioneer robot, sponsored by the US Department of Energy and NASA, demonstrates its technical abilities during its presentation in front of the Chernobyl Nuclear Power plant in Ukraine. — AP/PTI
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PNB exercise to cut NPAs
to 6 per cent Auto industry seeks freedom on
technology Compaq, Canon enter into
partnership Notification on share values Restart quality centre: industry No total solution to Y2K: experts Hike in furnace oil price hits
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Kargil
conflict, poll to take toll on economy NEW DELHI, June 12— The Kargil operations and the conduct of mid-term polls is likely to result in an upward inflation rate and increased fiscal deficit. The unexpected twin developments threatens to pull the economy towards red and could result in adverse assessments by international lenders and rating agencies, according to a quick analysis carried out by the Assocham. According to the Assocham President, Mr K.P.Singh, the impending financial disequilibrium would, therefore, need to be stabilised “sooner than later.” As these permit the Government to raise the level of spending, high fiscal deficit could raise the level of demand, investment, income and employment in the typical Keynesian way. Although, the overall magnitude of the expansionary effect of fiscal deficit would depend on a number of other associated factors like capacity utilisation levels, capital-output ratio, leads and lags in the system, there usually is some additional growth effect on the economy. More importantly, Mr Singh said the magnitude and duration of such growth effect would critically depend on the extent to which the Government employs these additional funds towards financing and “crowding-in” investment activities. On the other hand, if much of the Government spending flows towards the consumption growth, as seen to be the case in India, it may spiral inflation, instead of spurring growth. In the recent period, the monetary authorities have attempted to bring down the interest rates. The reductions in bank rate and repo rate announced on March one, 1999 are the latest efforts. In this context it needs to be stressed that while the interest rate structure prevalent in the Indian system needs to be undoubtedly brought down, it cannot be achieved in an artificial manner as has been the experience in the recent period. To achieve this objective on a durable basis, the Government must bring down its fiscal deficit and market borrowings. Mr Singh said that while the interest rate cut ahead of a massive Government borrowing programme of Rs 80,000 crore or more are understandable, it may create a situation of speculation-driven volatility in the money and currency markets as has been witnessed in the past couple of years forcing the Government to raise interest rate to stabilise the exchange rate. Such a situation may eventually be more harmful for the industry than the benefits provided by one per cent reduction in interest rates, he added. Further artificial lowering of interest rates may cause moral hazard by funding otherwise uneconomical projects especially in a recessionary situation. In the long run, this may lead to more sickness in the industry. Already, many sectors are burdened with excess capacities and the industry is suffering from lack of demand. It is evident that expansionary fiscal policy is fraught with numerous risks without much promise of sustainable high growth. However, having erected a structure of high deficits, inflation and interest rates over the years, not to talk of vested interests, Mr Singh said, it was not an easy task to roll back the ballooning deficit. Thus managing fiscal deficit in the Indian situation would call for a graduation strategy whereby, in the first stage, growth in revenue expenditure, particularly, the interest payments and subsidies etc. would have to be curtailed while stepping up the capital expenditure to accelerate growth. An ideal situation would be a positive intervention by the Government in a major infrastructure initiative so as to crowd in private investment. In the second stage,
over the medium run, the Government should implement a
scheme to reduce administrative expenditure by severely
downsizing bureaucracy. At this stage, it could begin
withdrawing from most production activities including the
infrastructure where the markets are now developed and
private investment is forthcoming. |
SBI to provide 150 crore for
agriculture sector CHANDIGARH, June 12 — The State Bank of India, Chandigarh Circle has set a target of Rs 650 crore for disbursement to various sectors for overall economic development in the States of Punjab, Haryana, HP J&K and UT of Chandigarh. Out of this Rs 150 crore has been earmarked for agriculture sector during the current financial year said Mr R.C. Agrawala, General Manager, SBI, Chandigarh Circle while addressing a seminar on ‘Agriculture Banking’ here today. Mr Agrawala said that out of total advances of Rs 5,441 crore as on March 31, 1999, Rs 892 crore have been financed to agriculture sector which comes to 16.39 per cent of total advances. The bank has financed 9687 tractors and proposes to double this during April ‘99 to March 2000. He said the total deposits of the circle have crossed a level of Rs 10,000 crore and the share of agriculture sector comes to Rs 1,346 crore. During the current financial year the bank has set a target of Rs 2,120 crore of deposits, out of which Rs 220 crore have been budgeted for agricultural sector. Mr Agrawala said that in
order to facilitate the farmers, SBI has introduced
‘Kisan Mitra Jama Yojna’, a farmer friendly
deposit scheme. It will provide the farmers to earn term
deposit interest rate with the special flexibility to
withdraw money in parts while balance will continue to
earn interest. |
PNB exercise to cut NPAs to 6 per cent NEW DELHI, June 12 (PTI) — Public sector, Punjab National Bank (PNB) has undertaken a major drive to reduce its non-performing assets (NPAs) to 6 per cent by the end of current fiscal by revamping its loan recovery policy. “We had NPAs of Rs 1,526 crore (ie 9.57 per cent of net credit) upto March 1998 and we aim to reduce the same to a level of 6 per cent by March 2000,” PNB’s Chairman and Managing Director Rashid Jilani told PTI in an interview. He said the bank was revamping its recovery process and had decided to delegate more powers to its branch managers and concentrate on recovery of blocked funds. The bank held a meeting last week where its regional managers discussed strategies for reducing the overall NPA level. It was decided to lay a greater emphasis on small borrowers who constitute about 45 per cent of the total NPAs. “Bank has also instructed its managers to remain in regular touch with clients with smaller limits of upto Rs 10 lakh to ensure timely recovery,” he said. The bank allowed its managers to bargain for recovering the locked funds. For the financial year
ended March 1999, the bank is expected to show NPAs of
above 8 per cent. |
Auto industry seeks freedom on technology NEW DELHI, June 12 (UNI) — Indian automobile manufacturers today sought freedom from the government for selecting technology options for meeting the various emission norms being specified. “The government must only specify the norms and leave the technology option to be chosen to the industry. It should not be forced onto us,” Mr Venu Srinivasan, newly-appointed President of the Society of Indian Automobile Manufacturers (SAIM) told newspersons here. “The government had recently imposed on us that all cars being produced should sport a catalytic converter. What does the government intend to impose, emission levels, or catalytic converters?” Highlighting the need for an integrated approach towards reducing vehicular emission in India, Mr Srinivasan said, vehicular pollution is caused on account of deficiencies in several systems. This includes fuel quality, traffic management, inspection and certification of in-use vehicles, vehicles maintenance and vehicular, technology. “Norms have been laid down and followed for vehicular technology since 1991. Vehicular pollution batement, however, requires a multidisciplinary approach.” SIAM Vice-President R. “Seshasayee said the Indian automobile industry had consistently made considerable investments to improve technology. This is reflected by the fact that the industry has complied with notified emission standards and is moving swiftly to aligning with international norms. It may not be out of place to mention, he added, that ultra low sulphur diesel of 0.05 per cent sulphur content and 0.05 per cent sulphur in petrol must be made available all over the country at the earliest to achieve full benefit of all measures undertaken. “Unfortunately,t his alone will not be enough to reduce the emission level substantially. Mr Srinivasan added, “this is because, post sale of a vehicle,users and enforcement mechanisms also need to ensure that the vehicle remains roadworthy. Unless there is check on fuel quality, spare markets, implementation of inspection and certification systems and efficient traffic management systems, and the consumers on their part ensure that they are regular in maintaining and servicing their vehicle from a nominated service centre, the emission levels in Delhi will not reduce substantially.” SIAM, he said, on its part has initiated its strategy for clean air and safe motoring and has allocated substantial funds for several projects in the areas of emission, road safety, traffic management, inspection and certification of in-use vehicles and automotive research. Some of these initiatives included setting up of Society for Automotive Fitness and Environment (SAFE) for the development of inspection and certification systems. The association has also pledged Rs 1 crore to support a fuel test laboratories being set up by the Ministry of Petroleum and Natural Gas to monitor fuel quality at the retail end. Vehicle manufacturers
are also making efforts to strengthen their service
networks to provide genuine spares and establish such
outlets having trained technicians and adequate equipment
within reasonable reach of the user. |
Compaq,
Canon enter into partnership NEW DELHI, June 12 — Computer major, Compaq, and world leader in imaging solution, Canon, have entered into a strategic business partnership. As part of this tie-up, Canon’s printers would now be available through Compaq’s distribution channel across India. As strategic business partners, Compaq and canon would work together to offer one-stop solutions to personal computer buyers and thereby increase the peripheral market in Indian through joint promotional activities. The partnership is the
first such alliance between two global leaders in India
and would allow canon access to Compaq’s established
retail distribution channel which covers 35 cities across
India. The scope of the alliance would extend beyond the
retail segment and would also include Compaq’s
channel aimed at the enterprise segment. |
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MUMBAI, June 12 (PTI) — SEBI today issued a notification imparting flexibility to companies to fix any denomination of its equity shares, which are presently limited to Rs 10 or Rs 100. The notification, which comes into force with immediate effect, said companies shall have the freedom to issue shares in any denomination to be determined by them in accordance with Section 13(4) of the Companies Act, 1956, after making amends to memorandum and articles of association, when required. However, companies should ensure that shares are not issued in denomination of less than a rupee or decimal of a rupee, SEBI said in a statement. Pursuant to the decision of the SEBI to the effect, all the earlier circulars issued by the Centre pertaining to the subject stand modified, it added. Existing companies also could change the denomination by splitting or consolidating shares according to rules, it said adding that at any given time there should be only one denomination of shares of a company. But, only companies whose shares are dematerialised would be eligible to alter the denomination, the statement added. Stock exchanges should make necessary changes in their existing trading and settlement software, and reflect the denomination value of shares as fixed by the company to enable investors to take informed investment decisions, it said. The companies desirous
of availing the facility should adhere to disclosure and
accounting norms as may be specified from time to time. |
Restart
quality centre: industry CHANDIGARH, June 12 — Several industry associations of Ambala have urged the Chief Minister, Mr Bansi Lal, to accept the long-standing demand of the Ambala industry to restart the Quality Marketing Centre. In a statement issued here the Senior Vice-President of the Haryana Chamber of Commerce and Industry, Mr N.C. Jain, said the demand was made at a meeting of representatives of the various industry associations, including the chamber, the Ambala Scientific Instruments Manufacturers Association and the Ambala Traders Federation. He said the Centre was handed over to the Instrument Design Development and Facility Centre (IDDC) about 20 years ago with a view that the IDDC would provide active help to the Ambala industry in the development of new instruments and in improving their existing products. Mr Jain alleged that
engineers of the IDDC never visited any industry. A lot
of testing instruments were lying idle. |
No total solution to Y2K: experts MUMBAI, Jun 12 (PTI) — No software package or enterprise solution can guarantee total shielding from the thousand tricky ways of the year 2000 bug, as Y2K readiness in itself is a continuous process rather than a one-time achievement, say experts. “One can only be more or less prepared for the Y2K problem. No solution in itself can ensure that an organisation would be 100 per cent Y2K proof as year 2000 dawns, because of the complexity of the problem,” Gautam Mitra of Siemens Information Systems said here at a seminar on Y2K management. “It is not enough that different automation systems in an organisation are individually Y2K compliant. But even their compatibility, when they are networked, has to be Y2K ready,” said I.T. Secure Software Managing Director Peter Theobald. “Similarly when two organisations interact, even if they are Y2K compliant in their own rights, new problems may crop up during the interface. These will have to be tackled on an entirely new footing,” he said. “Thus Y2K readiness is a continuous process that runs parallel to and grows with the main business of the company,” he added. “The problem solving part lies in anticipating as many difficulties as possible which the Y2K changeover can create in an organisation, and being prepared with the per-emptive solutions for each of them,” Mitra said. “This part done, what one can do is to wait and see. When year 2000 is actually here, one may face several problems that had escaped notice earlier. These will have to be tackled then onwards,” he said. The senior Manager with Ernst and Young, Haridas Raigaga, said an organisation which is Y2K compliant internally also can get affected when dealing with non-compliant suppliers and customers. “In today’s interconnected environment, an enterprise depends on a host of other enterprises for products and services. Hence not only internal compliance but achieving external preparedness is also essential,” he said. On the problems faced in business accounting, Raigaga said “some firms tackle their business accounting problems by postponing or preponing their accounting years as well some critical operations.” Theobald said “ the
Y2K management is a matter of self-assessment and
self-certification by an organisation.” |
Hike in
furnace oil price hits units THE Punjab Government in its Budget had proposed sales tax on first stage for auto parts and some other items. Due to opposition to this proposal the government kept the decision in abeyance. Shockingly the government started enforcement of the tax in a most secretive way without making any public announcement and consultations with all concerned. The Punjab Government has been crying hoarse that its growth in tax revenue has been only around 5 per cent whereas it has been about 15 per cent in Haryana. Facts are different. Haryana has recorded the lowest growth in its revenue at 1.75 per cent during the last 32 years. Its last year’s growth in sales tax was only 3.23 per cent with central sales tax showing a negative growth of 1.59 per cent. The annual growth rate of tax receipts in the preceding four years to 1994-95 was 17 per cent, and 14.3 per cent. Recession is cited as the main reason. Haryana is better placed than Punjab due to concentration of large units of repute. Prices of furnace oil have shot up about 35 per cent with one tanker costing Rs 82,259 against its earlier March price of Rs 62,260. Industry using this fuel is reeling under crisis due to this unaffordable price. The government under the pretext of market related economy is distorting the facts. Other fuels are being treated differently. CIF price for furnace oil is quoted at $ 94 over a MT which comes out to be just Rs 4,000 a MT. Price of Rs 82,000 can not be justified. The industrial economy of Punjab is shaken with this unreasonable price. Amidst declining efficiency at operating levels commercial decisions concerning consumer are attaining rationality hitherto missing. In response to issues raised by the apex chamber the PSEB is rationalising penalty pattern for the violation of peak load hour restrictions. Earlier the system was irrational and harsh when rates multiplied for successive violations almost for the same reasons. Penalty is proposed to be linear without multiplication with relaxation. When implemented it will give great relief to the consumers. Pending cases in disputes are likely to be decided in the light of the new policy. Under board’ circular No. 44/95 consumers are suffering financial losses and issue will be resolved shortly although it has been lying unattended for two years even after promise. Consumers who got new connection or extension under self finance scheme by paying 25 per cent of normal service charges were later asked to pay remaining 75 per cent. The amount thus charged shall be refunded. At the national level Punjab has shown gesture of meaningful economic reform by signing MoU to reduce subsidies by 15 per cent on politically sensitive items like power and water. Savage expenditure cut is also covered under MoU. Punjab’s sale tax is only 40 per cent of its total revenue against the national average of 60 per cent. Revenue shall be raised through other means, including sale of government land. Punjab is one among five states to sign such MoU; others are Mizoram; Himachal Pradesh; Rajasthan and Nagaland. A happier sign for
Punjab is that it owes the minimum amount after Himachal
Pradesh to the NTPC and the P.G.C. Amount due to these
agencies for different states are: Uttar Pradesh (Rs
2,215.9 crore); Bihar (Rs 771.6 crore); Haryana (Rs 251.6
crore); Delhi (Rs 1,903.9 crore) and Punjab (Rs 33.9
crore). Punjab should get this feat translated into
additional assistance from the Centre. Political clout
with Centre should be used for the economic benefit of
the state. |
Q: Where amendment of plaint is sought for after a lapse of 25 years. Can such an application be refused? Ans: Calcutta H.C. in Mohan Chand Dey v Kanai Lal Mullic (1999 (1) R.C.J. 88) had this to say: In view of the decision of the SC in AIR 1969 SC 1267 that the Court should be liberal in allowing an amendment of plaint, the HC felt that it can be refused only in the event the Court finds the same to be mala fide or not in the interest of justice. The HC observed that it is further well-known that a Court can and should allow an application for amendment of plaint keeping in view the subsequent events. The HC took the view that in view of the fact that more than 25 years have passed since institution of the suit, interest of justice would be subserved if such an application is allowed. Furthermore, if such an amendment is permitted, the defendant would not be prejudiced in any manner whatsoever in view of the fact that it would be open to the present plaintiffs to file a fresh suit for eviction taking the self-same grounds. In that view of the matter, the HC allowed the application for amendment of the plaint and held that appellants shall file an amendment plaint within one week from date before this court. Keeping in view the aforesaid fact, the HC took the view that the following additional issues should be considered, namely: (1) Whether in view of the subsequent events, the substituted plaintiffs have bona fide and reasonable requirements of the suit premises for their own use and occupation or for their family? (2) Whether the plaintiffs are in possession of reasonable suitable accommodation? Consequently, the HC
remitted the suit back to the trial court for adduction
of evidence on the aforesaid issues upon giving an
opportunity to the defendants to file additional written
statement. |
Q: Refer to the question of Mr G.P. Singh published in “The Tribune” dated 7.2.99. Please clarify whether the deduction of interest paid on the loan taken against the FDR/NSC from the gross total interest income arising from FDR/NSC is only for the loan taken for House building purpose or for any other purpose. I mean whether this deduction is linked with purpose of loan or not. — Harcharan Singh Chohal, Barnala (Pb.) Ans: The deduction in respect of interest on loan from the amount of income coming from fixed deposit received or NSC is linked with the income arising from the loan so invested. If the loan amount is utilised for personal expenses and household expenses the deduction will not be permissible in respect of payment of interest. Q: “Whether drawing and disbursing officer is competent or not for allowing deduction of interest on borrowed capital under Section 24 of Income Tax Act in case of self occupied house of a salaried Government employee”. — Jagminder Aggarwal, Hisar. Ans: The drawing and disbursing officer is definitely competent enough for allowing deduction at source in respect of interest on borrowed capital for house property as per Section 24 of the Income-tax Act in respect of self-occupied house property of a salaried Government employee. This deduction can also be available in respect of loan for even a rented house property for claiming deduction in respect of interest on loan from the employer. Please submit Form No. 12C to the employer. Q: I am a senior citizen (over 65 yrs) NRI, receiving my retirement pension through a bank in India. The pension amounts to a total of Rs 51,000 per year. My total income is below rupees one lakh. But the bank where I get my pension in a saving account deducts income tax on the interest accruing thereon. Please let me know its reason and relevant rules. — Pritam Singh, Canada Ans: On the facts stated by you there is no liability to Income-tax on the pension amount received by you specially because being a senior citizen you are also eligible for tax rebate u/s 88B of the Income-tax Act, 1961 to the tune of Rs 10,000. Moreover your income namely the pension income and other incomes taken together is much below Rs 1 lakh. Therefore no Income-tax is payable by you. Now when the bank is going to deduct tax at source on the interest accruing in your saving bank Account, you should submit Form No. 15H to the bank. Merely by submitting this form signed by you no tax will be deducted at source. Q: I will be filing my income-tax returns first time in my life for the year 1998-99. My income is as followed: Salary: 84000 (Gross) P.A. Pension: 748x12= 8976/- P.A. (I am an ex-serviceman) Kindly let me know: How much my income is taxable? and What are the options of investment for making Tax-liability minimum? — P. Singh, Phagwara. Ans:
For the Financial Year 1998-99 relevant to the Assessment
Year 1999-2000 your total income for Income-tax purposes
would be Rs 84,000 being salary income and to this will
be added the pension amount of Rs 8,976. Thereby the
total income would be Rs 92,976. From this amount you
will be eligible to get a standard deduction which is
available to the salaried employee to the tune of Rs
25,000. Thus the total taxable income would be Rs 67,976.
If you have made any investment or saving which are
eligible for tax rebate u/s 88 you will be eligible for
tax rebate on the same. In case no investment have been
made by you then on total net taxable income of Rs 67,976
the tax payable by you would come to Rs 2,596. |
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| Gold firm NEW DELHI, June 12 (PTI) — In restricted deals, both the precious metals, silver and gold, remained firm on the bullion market today on local buying support and closed with moderate gains. The quotations: silver .999 (ready) 7670, delivery 7670, coins buyer 10,300 and seller 10,500. Standard gold 4065, ornaments 3915 and sovereign 3600. Nominated M & M
project Wipro |
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