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| Monday, January 8, 2001, Chandigarh, India   
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Sinha rules out cut in income tax rate US rate cut: what will all that mean? How ‘green’ is flyash blended cement?
‘Nice’ is not all that nice |
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| E-mail key reason for use of the web LONDON: Capitalism is an energetic beast, but an uncommonly obtuse one. It can take an awfully long time to get an idea into its thick head — especially if it has to displace another one. That is one of the reasons why the business world finds cyberspace such a puzzling place.
Will the rally sustain?
Q: Kindly reply the following queries as earliest. 1. I have been in medical profession doing own clinic since 1993. I have already maintained my accounts but still have not filed any return. In September 1999, I was allotted PAN. Kindly clear is it necessary now to file return as the amount is not taxable.
Chaos at IGIA due to fog
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| Sinha rules out cut in income tax rate NEW DELHI, Jan 7 — Lashing out at “prophets of doom”, Finance Minister Yashwant Sinha says his fourth Budget will have measures to spur demand and investment but virtually dismisses demands for cuts in corporate and personal income tax rates. He also does not accept that there is overall slowdown of the economy or any derailing of the economic reform process and in fact intends to pursue higher growth rate in the next year. He is not daunted by prophets of doom and is optimistic of ending the year with a creditable 6.5 per cent growth and containing the fiscal deficit at budgeted level. In a wide-ranging hour-long interview to PTI, Sinha disclosed that the Budget will outline a medium-term strategy to spur growth, push up investment in infrastructure, agriculture and downsizing government. “When I say the Budget will be growth-oriented, this is precisely what I have in mind that we must have a kind of regime that will spur demand and investment,” he said. Sinha said the measures will have to be both sectoral and overall as the basic problem was to spur growth to promote investment in the Indian economy. “Some sectors have special problems. Some of them have been taken care of and others will be taken care of as we go ahead with the preparation of the Budget because we are too close to the Budget now.” Looking from the global context, Sinha said the performance of the economy has been creditable with 6.8 per cent growth rate in 1998-99 — not a growth rate anyone should be ashamed of. It was followed by 6.4 per cent in 1999-2000. Noting that the petroleum prices started going up right from May, he said the economic slowdown started and if the whole situation was taken, it was the manufacturing sector which was not doing well. “Actually it is a 1 to 1.5 per cent fall in the growth rate. In manufacturing, what is particularly not doing well is the sector of capital goods. It is this one segment which is responsible for the slowdown and some people try to give this a colour of crisis,” he said. “Therefore, given the very difficult situation I would personally think any growth rate above 6 per cent this year should be considered satisfactory and creditable,” he said. Atal Behari Vajpayee has given a target of 9 per cent annual growth for this decade. “We have not yet gone into the arithmetic of it but the idea is we will have to put forth a policy framework for a higher growth in the medium term.” Maintaining that the second phase of reforms was more difficult than the first because they involved legislation in almost all cases. He said “those who are impatient that we are not moving forward fast enough must realise this.” “I will only counsel those who are getting impatient. Perhaps though a little difficult there is nothing about reforms programme that I think we have to be apologetic about,” he said, adding that “the performance of the Vajpayee government on reforms is a record and creditable.” “We are trying to do reforms of the economy in a highly active, vibrant and almost often contentious democracy,” he said, regretting some people were using it as a political instrument to “denigrate” the government. Virtually ruling out the possibility of a cut in direct tax rates. Sinha said the government would consider various means to plug sources of revenue loss. Also “we are considering various ways and means to expand the tax base. An expanded base would definitely allow us some elbow room to consider further rationalising the provisions of personal income tax.” On Corporate Tax, Sinha said an effective tax rate was much lower as there were several exemptions and reliefs granted to the industry under various heads. — PTI |
| US rate cut: what will all that mean? LONDON, 7 Jan — US interest rates may have fallen, but there is no guarantee that the Federal Reserve will be able to prevent a hard landing for the US economy. We are now seeing signs of distress that may reduce the effectiveness of interest-rate cuts. Banks are less prepared to lend. In parts of the corporate bond market, liquidity has dried up. The collapse in the Nasdaq implies a significant deterioration in the cost and availability of funds going into the `new economy’. On top of all this, there’s been a substantial decline in household wealth. That’s an event that has occurred only ahead of major recessions. What does all this mean? Our distress signals effectively imply blockages within the system, which prevent interest-rate cuts from performing their usual magic. As a result, even with lower rates, the US economy may still end up in recession. So how will the rest of the world react? There is some good news. Over the past 35 years, US recessions have come and gone, but they have never been associated with a truly global recession. When some countries are doing badly, there are always one or two that are doing a lot better. The oil shocks, for example, may have been terrible news for the western industrialised world but, for Opec, they represented a sudden surge in spending power. Rather than worrying about the global economy as a whole, it may be more useful to work out who suffers most from an American hard landing. How can we do this? The easiest approach is to focus on the share of a country’s GDP being exported to the USA. On that basis, Canada and Mexico face the biggest risks, whereas the central European countries and - more surprisingly - Brazil and Argentina are among the least exposed. The UK and Europe also appear to have only modest vulnerability. But this approach, has limited usefulness. There are a number of other important factors to consider. Falling global demand will hit countries that produce raw materials but benefit those which import raw materials - as commodity prices fall. Those countries that have built up large investments in the USA in recent years will find themselves having to pay a significant price in terms of lower investment income from America. Countries that have pegged their currencies against the dollar may benefit from general dollar depreciation, an inevitable consequence of a US hard landing. Those that haven’t - including the UK and Europe - may find themselves on the wrong end of a competitive adjustment. Meanwhile, the fall in the value of global technology shares may create problems which spread beyond America’s shores. Our estimates, for example, suggest that Japan’s apparent recovery in the first half of 2000 was being fuelled by a heavy dose of technology mania. With the bubble now having burst, the danger is of a renewed collapse in Japanese capital spending, sending the economy into a tailspin once again. — The Observer |
| How ‘green’ is flyash blended cement? BLENDED cement is considered to be eco-friendly, as it not only helps in the utilisation of industrial waste products which had been the cause of environmental pollution but also helps in conservation of valuable resources and energy. So the “flyash blended cement” known as PPC (Portland Puzzolana Cement) has been given a “green” label. This label may appear to be a misnomer as consumers call it “kala cement” while buying it. Production and use of blended cement in the country has shown an upward trend and a 37 per cent rise in sale of this category of cement has been reported during April-June 2000, while the share of PPC in the total cement production has risen from 19 per cent in 1992-93 to 27 per cent during the current financial year. Flyash blended cement has many other merits such as low heat of hydration, hence smaller shrinkage and freedom from cracks. It has greater resistance to corrosive waters and hostile environment. It provides a higher degree of ‘workability’, and smaller permeability of concrete and these factors render the structures built using this cement more durable. However the rate of strength gain of PPC concretes is rather slow in the initial phase and it requires extended ‘curing’. These two aspects make PPC less popular with consumers. But the long term gain of strength is equal to or more than that of OPC concretes. Flyash is a cheap raw material or waste product of the thermal power plants (TPPs) and at many locations, the flyash for use in PPC is expected to be taken from the source on “as is where is basis”. Steps are yet to be taken for ‘standardising’ the quality of the flyash and issue of ‘third party certification’ is not there yet. Flyash used in PPC usually of low-calcium type, which has no cementitious property but its puzzolanic nature is made use of. The flyash when in finely derived form and in presence of moisture, results in a chemical reaction with calcium hydroxide being released by OPC on hydration and compounds possessing cementitious properties are produced. This reaction takes place at room temperature. But in recent years “high calcium flyash” is being marketed by many countries which in addition to puzzolanic property, has got considerable “cementitious capability”. Such type of flyash is obtained by burning lignite coal or sub-bituminus coals. Flyash may need to be ‘processed’ before being added to the cement and the first step involved is ‘aeration’ and is followed by ‘homogenization’. Also the flyash particles coarser than 45 microns are separated out. Decontrol of the cement market has resulted in competitive environment of ‘free market’ and the acceptance of PPC by consumers received a setback, resulting in downslide in production of PPC. At the same time, consumers were enticed with attractive slogans of high grade cement in the market. NCB started monitoring closely the quality of PPC produced and took samples at regular intervals and published test results. The date for the period 1993-94 to 1997-98 showed that 70 per cent of the tested samples had strength comparable to Grade 43 OPC cement, and 15 per cent samples gave performance matching OPC Grade 53 cement. After 1990 the share of PPC production (with flyash addition alone) rose to the level of 19 per cent and remained steady at that level in the subsequent years, though the production rose to 20 million tonnes in 1999 from the figure of 7.45 million tonnes for 1989-90. Increased customer awareness and expectation forced many producers of cement to adopt various technological options for enhancing the performance characteristics of PPC which resulted in the increased acceptability of PPC i.e. as one capable of providing more durable concrete structures and protecting the reinforcement from corrosion. Though the amount of flyash additional permitted was as high 35 per cent but the industry controls the addition to 10 per cent in view of the absence of strict control over the quality flyash made available. |
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‘Nice’ is not all that nice NEW DELHI, Jan 7: The next time somebody says you are a “nice” person, look it up. The original meaning of the word was “foolish and stupid”, not “pleasant and agreeable” as it is today, says the new version of the Oxford English Dictionary (OED), considered as the “treasure house of the English language”. In fact, the word, the meaning of which has changed over a millennium, had also meant “ignorant” until 1603 when it came to mean “fine and cultured”. Learning the transformation of the English language is becoming a “nice” experience, thanks to the new online edition of the 23-volume, 21,730-page OED. A click of the mouse lets you know that you could be afflicted with 150 types of mania, including “bibliomania”, which means “a rage of collecting and possessing books”. “The online OED gives you unprecedented access to the English language,” says John Simpson, Chief Editor of the third edition of the OED, who introduced it to India the British Council here over the weekend. Nearly two-and-a-half centuries after Dr Samuel Johnson wrote the first dictionary, the online version of the OED, that was first formed in 1857 from index cards clumsily arranged in the pigeon holes of the Philiological Society of London, is revolutionising the knowledge of the “lingua franca” of the world. A number of Indian authors, including Amit Chaudhury, Vikram Seth, Amitav Ghosh and Shashi Throor, have also made the OED that is at present undergoing a huge revision programme costing $ 55 million. The online OED, available on www.oed.com, covers words from across the English-speaking world, from North America to India to Australia to the Caribbean. The OED is also trying to be politically correct without losing the originality of the entries. “We are trying to be sensitive without being ridiculously correct,” says Simpson. So, the OED will retain the term “nigger” though it finds it offensive. About 300 specialist subject researchers are working with 80 OED staff in the USA and the UK and thousands of volunteers to bring out the third edition in 2010. But the online service will have 3,000 new entries every quarter under the $ 55 million revision programme. — UNI E-mail key reason for use of the web LONDON: Capitalism is an energetic beast, but an uncommonly obtuse one. It can take an awfully long time to get an idea into its thick head — especially if it has to displace another one. That is one of the reasons why the business world finds cyberspace such a puzzling place. Business folks see the net as essentially just an exciting new way of doing business. But that is perhaps the least interesting or important thing about the network, which is first and foremost a medium used by hundreds of millions of people to communicate with one another. Although the bit-traffic associated with browsing web pages accounts for the vast majority of the trillions of bytes shipped daily across the world, most people’s active engagement with the net is accounted for by sending and receiving email messages. Because these tend to be short, they don’t show up in the data-traffic charts but still represent the most significant use of the net for ordinary users. Online shopping is nowhere by comparison. You’d never guess that from reading the financial press, however, which is obsessed with online economic transactions to the exclusion of almost everything else. But most of the data we have on internet use bears it out. The regular and intensive polling conducted by the Pew Foundation for its project on `The internet and American Life’, for example, shows that whereas 47 per cent of US users send and receive email every day, only a miserly 4 or 5 per cent regularly engage in online banking or shopping. The Pew researchers have just released the results of their survey of online behaviour over the holiday period. The findings are instructive. ‘While most analysts and commentators anxiously charted the daily ups and downs of the online retail sector during this season,’ they report, ‘the bigger story about the internet during the holidays was a social one. People used e-mail to make their holiday plans; they sent online holiday greetings to loved ones and friends; they used the internet to get ideas on how to celebrate the season; and they sought religious material online.’ Well, well. The report goes on to hammer home the message. While 24 per cent of US Internet users bought gifts online this Christmas, a whopping 53 per cent (that’s more than 51 million people) sent emails to relatives and friends to discuss the holidays or to make plans. Thirty-two per cent (more than 30 million) sent e-greeting cards to loved ones and friends; 24 per cent (more than 22 million) went to the web to get information on crafts and recipes, and to get other ideas for holiday celebrations, while 14 per cent researched religious information and traditions online. The Pew survey has some interesting ethnic dimensions. The figures suggest, for example, that Hispanics sent far more e-greeting cards than other racial groups. And that African-Americans were much more likely than whites to seek religious information on the web - as were parents with children aged under 18. ‘Clearly,’ conclude the Pew researchers, ‘the online population sees the internet more as a tool for information gathering and communications than for commercial transactions. Our previous studies have shown that the most powerful impacts of the internet in users’ lives fall much more into this social realm than the commercial realm. Substantial majorities of online Americans have told us that the internet improves their connection to family and friends, helps them pursue their hobbies, and helps them learn new things and get answers to questions.’ Quite so. This is the underlying reality about the net which explains why those who see it purely as a commercial medium are always likely to get it wrong. Long may they continue to do so. — By arrangement with The Observer |
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Will the rally sustain? The technology stock were the market favourites last week. All top software scrips made an impressive gains. Infosys, NIIT, Satyam and Wipro led the market to gain 210.63 points (5.30 per cent) on the sensex. A major issue is whether this rally in the technology stock will be sustained? Even if the present trend continues this week, one thing is certain that these scrips will not be able to recapture even 50 per cent of the price range attained by them a few months back, when Satyam was quoting around Rs 6100 for its Rs 10 face value scrip and Infosys had crossed the level of Rs 18000 for its Rs 10 face value share. The present rally in technological scrips had been triggered off by a cut in interest rates by Federal Reserve in the USA. This was done by the Federal Reserve to check industrial slump in the USA. This was welcomed not only by Nasdaq (which posted a 325 points gain in a single trading session) but also by the Indian stock markets and elsewhere in Asia and Latin America. As is a normal practice, this overreaction is subsiding and Nasdaq has already shed some of its gains. There may also be profit-taking in technology scrips in the Indian stock markets. In spite of the fact that FIIs had made large purchases last week, there is bound to be profit-taking this week, for the bulk of these shares had been picked up by traders rather than by long-term investors. The mutual funds which are burdened with ICE scrips bought at their top price levels are now anxious to cut down their losses to meet the redemption demands. It is interesting to note that those mutual funds which had invested large funds in the ICE stock in 1998-99, when these scrips were quoting at very low and reasonable prices are still in a comfortable position and the NAV of their schemes are still quite high. But those mutual funds which woke up to the prospects of the ICE share rather late and made huge investments when these scrips were quoting at fabulous prices find themselves in a soup. In this context, it may not be improper to mention that the NAV of the UGS-64 which has about 18 per cent of the technology stock in the portfolio has come down by about 16 per cent to Rs 12.50 per unit. In case, the NAV of the UGS-64 does not improve during the next six months, it may be difficult for the UTI to maintain the last year’s dividend. We may hope for the best but be prepared for the worst. Last week’s widespread rains in the northern region have improved the prospects of having good Rabi crops. This would go a long way in improving the economy. The third quarter results, if satisfactory, would also contribute to sustaining this rally. In case, these results are less than satisfactory, the market indices are bound to nosedive. Another positive factory is the possibility that President Bush would cut down tax rates in the USA, and this would help the US economy to revive and have a ripple effect on a global basis on the economies and stock markets of the Asian countries too. |
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Q: Kindly reply the following queries as earliest. 1. I have been in medical profession doing own clinic since 1993. I have already maintained my accounts but still have not filed any return. In September 1999, I was allotted PAN. Kindly clear is it necessary now to file return as the amount is not taxable. 2. I have sold my old scooter worth Rs 13,000 and purchased second hand bike worth Rs 30,000. In my accounts I have not shown any depreciation regarding scooter’s actual cost Rs 23,000 in 1994. Kindly explain how I will adjust the difference. 3. The interest of P.O. 5 year R.D. A/c is entered at last. Kindly clear whether it should be added yearly or at end. — Dr Rajesh Kumar, Moga. Ans: In case your net taxable income is below the exemption limit, you need not file your income tax return specially when you are not stationed in town in which it is compulsory to file income tax return on fulfilling certain economic indicators. However, please continue to maintain your accounts regularly. The scooter purchased in 1994 on which you have not claimed any depreciation has already been sold by you. The question of claiming any depreciation on the same does not arise now. However, you may claim depreciation on the bike purchased by you. The interest from recurring deposit account should be shown on year to year basis. Q: I purchased the IDBI Infrastructure (Tax Saving) Bond for Rs 10,000/- to save income tax U/S 88 on March 7, 2000, deemed date of bond allotment as March 27, 2000. The IDBI issued to me an interest cheque for Rs 23 but deducted Rs 5 as income distribution tax @ 22 per cent and has issued form 16-A for the same. My banker SBI further deducted Rs 6 as bank charges and now I am left with Rs 12 only. Sir, hence arrange to reply (i) What is income distribution tax @ 22 per cent and where it is applicable? (ii) Are the charges deducted by the bank are correct? (iii) Is the interest income from the IDBI above bond taxable for the financial year 2000-2001. — S.L. Arora, Hoshiarpur, Ans: The IDBI is required to pay income distribution tax. Normally they should pay the tax and should distribute only the net amount. However, when they have deducted TDS you can claim the benefit of TDS while submitting your tax return. Likewise, the bank commission can also be deducted by you. The interest income from the IDBI bond is taxable but the same is eligible for tax deduction U/S 80L within the overall limit of Rs 12,000. Q: My father invested Rs 10,000 in NSC in October ’92 giving my name as second applicant, payable to either or survivor, and died in February 94. My father’s income was below taxable limit. He, therefore, never filed income tax return. I am, however, regular assessee. On my father’s death, I did not get the certificate transferred in my name and encashed it only on maturity in October 98. Please inform whether I am liable to pay any income tax on the interest accrued on this NSC after the death of my father keeping in view the fact that I became the owner of my father’s funds only when I got the certificate encashed, prior to that it remained with the post office. — Paramjit Singh, Ludhiana Ans: The interest income accruing on NSC after the death of your father is liable to be included in your tax return. This income is accrued after you have received the NSC certificate and has no connection with the date of maturity. In case you have not shown income year after year, then you may show income at the time of maturity. Apparently you should not face any problem because the amount is small and the yearly interest income would also be eligible for tax deduction U/S 80L of the Income Tax Act. |
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Chaos at IGIA due to fog THE claims by the Airports Authority of India (AAI) and the Directorate-General of Civil Aviation (DGCA) came to naught as several flights were disrupted by fog at IGIA last week. The similar chaotic conditions will continue to prevail at the Delhi airport as much-publicised instruments landing system-category-III will remain unoperational throughout this foggy season because of several reasons. As the Rs 47-crore highly sophisticated ILS-category-III was unoperational, the experienced pilots could not risk landing. Both international and domestic flights had to be diverted to the nearby airports or delayed for inordinate hours. It was a nightmare for passengers. The baggage lay strewn all over end, as apprehended, many passengers were unable to secure snacks and meals even against payment although they were holding airlines’ complimentary coupons. Another serious problem that confronts the authorities is that only handful of pilots have been able to obtain highly sophisticated training for landing under ILS-category-III in England. The certificate, valid for six months, stipulates that the pilot has to land in poor visibility at least once. If he does not, he is required to undergo training again. The situation obtaining at the Bombay airport is still worse where a Rs 50-crore tower is lying unutilised as it is very close to runway 1432. When the conditions are not exactly conducive, the pilots refuse point blank to land on this runway 1432. They all land at runway 0927. For quite sometime, there was a strong demand for demolishing this “tower” which, according to pilots, was good for nothing. But one in the powers that-be in the Aviation Ministry, the DGCA and the AAI was willing to undertake the responsibility. Only about a fortnight ago, DGCA H.S. Khola had stated that all international airlines were free to operate additional flights to accommodate passengers. Surprisingly, there has been no announcement by any foreign carrier that it will operate an additional flight to carry over-flow of passengers. If there are no additional flights, it will be yet another round of ‘hell’ for returning passengers at Delhi and Mumbai. |
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Inflation up FIIs buyers NFL CMD |
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NEW DELHI, Jan 7 — Lashing out at “prophets of doom”, Finance Minister Yashwant Sinha says his fourth Budget will have measures to spur demand and investment but virtually dismisses demands for cuts in corporate and personal income tax rates. 
