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Thursday,
December 26, 2002, Chandigarh, India  
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Arrest ‘pre-planned and premeditated’
Kelkar panel may water down reports
VRS — Where government failed
Bring rural rich in tax net: industry
Defaults, cash crunch cloud power sector |
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Textiles exports revive
JPC report hurt SEBI’s image
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Arrest ‘pre-planned and premeditated’
Chennai, December 25 Addressing a press conference here past midnight on his return from Jakarta, where he was detained for a week, he said the detention seemed to be “pre-planned and premeditated”, going by the swift events that followed immediately on his landing in Jakarta to solve a commercial dispute with the bank. Jain said he would have settled the case by paying money to the Bank Artha Graha, “which I didn’t want to do. I did not want to bend backward to settle the issue.” Describing his Jakarta visit as “adventurous safari”, he said the Polaris had offered to pay back $ 662,000 back to the bank by way of settlement, but they wanted $ 10 million as compensation. Jain, who was arrested along with Senior Vice-President Rajiv Malhotra by the Indonesian police on December 13 over the dispute with the bank, said Indian Government had given a guarantee to the Indonesian police that “We will be available to them for any investigation whenever required. We will value that guarantee if it is required.” Earlier, Jain and Malhotra, who were released on December 20, arrived at the Meenambakkam airport here late tonight. Jain described his visit to Jakarta as a journey of learning. What he learnt in the visit was among other things, how to do business with a developing country like Indonesia. “In future, whenever we want to do business with a developing country, we will be consulting the Indian embassy there before venturing into such a business proposition,” he added. Jain said a complaint had been filed by the Indonesian police against Polaris under section 372 and 378 (dishonesty and fraud). The police were also examining whether the present case was a civil or a criminal one.
PTI
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Kelkar panel may water down reports
New Delhi, December 25 The two reports, to be submitted to Finance Minister Jaswant Singh on Thursday and Friday, are likely to recommend tax deduction of upto Rs 50,000 or Rs 75,000 for mortgage interest on Housing Loans as against the present eligibility of upto Rs 1,50,000 per year, official sources said. This this middle path was being adopted keeping in mind the flak the government had received at the hands of BJP and the middle class, these sources said. The Task Force had originally suggested doing away with this exemption on housing loans in one go or in three years by reducing the exemption limit by Rs 50,000 every year. Finance Minister Jaswant Singh has already indicated that he would strive for a balanced approach while moving towards softer interest regime by providing differential rate of interest for pensioners and the retired employees and hence tax exemptions provided to senior citizens are likely to be continued. For salaried class the tax exemptions on savings is likely to be phased out keeping in mind that the exemption limit for Personal Income Tax was suggested to be raised from the present level of Rs 50,000 to Rs One Lakh per annum, the sources said. Singh had also told the recent BJP National Executive meeting that some of the thorns in the Kelkar committee recommendations would be weeded out and hence some of the suggestions of the Rajnath Committee would be incorporated. Apparently, there is a strong resentment against imposing Agriculture Tax and hence Kelkar would confine himself to the original proposal to make a beginning by taxing agriculture income of only non-agriculturists. With strong opposition from the party, Kelkar panel while suggesting adopting the big bang approach in simplification of tax rules and procedures, it is likely to recommend phased elimination of a plethora of exemptions in both direct and indirect taxes. Besides, some of the setoffs for income between Rs one lakh and Rs two lakh are expected to be retained, the sources said, adding it is very unlikely that there would be any going back on the proposal to abolish Minimum Alternate Tax for corporates. On Indirect tax, the sources said the proposal to move on to a two-tier Customs Duty of 10 per cent raw material imports and 20 per cent finished goods imports would be retained and the only difference is that it would suggest that this two tier rates should be effected in two years by bringing down the present average customs duty of 30 per cent on finished products to 25 per cent in the coming year and then 20 per cent in the subsequent year.
PTI
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VRS — Where government failed THE second bout of voluntary retirement scheme (VRS) in the nationalised banks is in the offing. The much debated scheme of VRS was first introduced effectively in early 2001 and almost the whole year all the public sector banks (excepting Corporation Bank which did not feel its need) kept grappling with its
repercussions and ramifications. While launching the VRS banks managements were sceptic of its success in view of adament attitude of the banks’ workmen and officers’ unions towards its acceptance by the employees. Contrary to expectations of both the parties i.e. banks’ managements and employees’ unions (officers included), however, the VRS got a sizeable response. As per data collected by the All India Banks’ officers confederation nearly 14 per cent of the total strength of officers in the public sector banks opted for the VRS. The number of such optees in absolute terms was around 60,000 in case of officers and 62,000 in case of workmen. Since some of the banks did not entertain all the applications, as such the position indicated by the banks revealed ‘that around 50,000 officers and 50,000 workmen got eased out through the VRS route. It is not that there was no resistance to the VRS from the banks’ staff. The employees unions (workmen and officers) which are known to be among the strongest unions in the trade union circles, took up cudgles with the banks’ managements on the VRS issue. the United forum of bank employees unions which commands the support of 13.5 lakh workmen and officers, vigorously
campaigned for enlightening the employees about the ill effects and pit falls in the VRS. The unions allege that the VRS has been brought in at the dictates of world bank, International Monetary Fund and World Trade organisation. They lament that down sizing the workforce in the banks is an attempt to increase the per employee business benchmark which the international agencies want to reach to the international standard, even though artificially. The ultimate motive, the unions allege, is to hand over the nationalised banks to the private sector for which a bill in the Parliament has already been introduced. The down sizing now (euphemistically called as right sizing), the workforce through VRS is a dubious attempt to take away the trade union rights, the Banks unions suspect. Interestingly, the officers unions points out that apart from the monetary loss to a retiree under VRS should not lose sight of the loss of social status, feeling older before time, deprivation of welfare schemes, medical assistance when in the advancing age one needs more and various loans facilities etc. The employment opportunities vis-a-vis tumult of job seekers in the market, the chances of getting a job that too similar to bank’s job which some optees of the VRS presumed, will not be available. In the face of falling rates of interest on investments, the income of investment of terminal benefits will be much less. And similar many more disadvantages. The banks’ managements must have felt, that had the unions not cautioned the employees assiduously through circulars and personal meetings and ran a campaign against the VRS, the number of optees for the VRS would have been much more. In order to counter the unions and induce the employees for accepting the VRS, the All India Officers Confederation says, the Govt. the IBA and The Banks’ Chiefs preemptively embarked upon steps such as:- (i) Print media Blitz was made right from the year 2000 through press interviews and talks etc. (ii) A high voltage publicity was given to the possibility of the roll back of retirement age for officers and transferability and redeployment of workmen staff. (iii) A hysteria of accountability was created through vigilance machinery in different banks. (iv) An artificial distinction of strong and weak banks was created. Employees and officers of so called weak banks were badly treated in terms of remuneration and other facilities. (v) Recapitalisation of weak banks was kept hanging on some or the other grounds. (vi) Uncertainty for future and a sense of instability were created in the minds of officers and workmen through possibility of bank mergers and closures. (vii) Instead of taking strong measures for recovery of loans, bad health of the banks was publicised too much for creating psychological fear. (viii) Introduction of bank privatisation Bill in the Parliament in the winter session of 2000. With all this, a climate for introduction of VRS was subtly created. Emboldened by the response to the VRS introduced at the first instance, the banks may go in a big way and bring the VRS in a more subtle but attractive form in order to shed, which they deem extra flab and bulkage in banks’ staff. The issue of yet another VRS infact had been brewing since the end of first VRS launch which brought an exit of 14 per cent of the staff reportedly against the original target of 25 per cent. The same target of 25 per cent may be revised now in view of the speed and size with which the mechanisation of banks’ transactions is being done which may result in sizeable redundandancy of staff. The cash payments through ATMS, fund transfer gadgets and computerisation of accounts have all given a message that there is no room for pen pushers in the banks in times to come. Ironically, it also has feebled the power of the unions. About 25000 employees were relieved under VRS till end of march 2001 and 8000 employees in addition thereto were to retire till the end of year 2001 which should have brought the staff strength down to 2 lacs from 2.33 lakh. In the next 5 to 8 years the SBI will face further erosion in staff strength due to retirements on an average of 5000 men per year. There will thus be huge imbalance in many of the branches. While reduction in staff will have good impact on profitability but it will adversely affect the managing of rural and semi urban branches which contribute 70 per cent of bank’s total deposits. Interestingly, the VRS was not the brain wave of the public sector banks as would appear. The banks are of course the pioneers in its launching and execution. Infact the Govt. of India, Ministry of Finance is the propounder of VRS. A skillful device to cut the bureaucratic flab the ‘Scheme’ has been awaiting execution with the Govt. of India since 1996. The aim was to trim the 35 lacs odd number of employees by at lest 10% and bring down the whopping amount of the Rs 32000 crore annual wage bill. But the Govt. has not yet even declared the size of its surplus staff. The recommendations of the Expenditure Reforms Committee of 2000 and 2001 have also been languishing in this context. Till 1989 there was a provision for compulsory retirement of Govt. staff but it is dumped under the carpet somewhere as if it was never there. The framing of scheme after scheme will not bring results but their execution will. Where is the political will to implement the retirement scheme? Paradoxically, if a compulsory retirement scheme could not be implemented who will accept and implement the voluntary retirement scheme. Is it that by getting the VRS implemented in public sector banks, the Govt. wanted to test the waters? If the Government is not able to cleanse its own house how come that it wants to see others houses clean. The banks unions point to the old adage, “the charity should begin at home”. Let us wait when and who dares to touch the hornets’ nest. The political and economical situation as obtaining in the country, there is remote possibility of carrying out any cuts in the Govt. staff on roll. However, let us watch out.
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Bring rural rich in tax net: industry New Delhi, December 25 In order to widen the tax base, it is essential to bring the rural rich in the tax net and tap commercial activities under agriculture like horticulture, sericulture, floriculture, orchards, sandal wood exports , plantation of teak etc. which generate substantial income, said FICCI in its pre-budget memorandum to the government. The memorandum states that in certain cases including hotels and restaurants, nursing homes and hospitals, chemists, packed food and chemical units, where it is mendatory to obtain licences from Health and Safety Departments, Municipal Authorities, Electricity Department etc, no such licences should be issued without the proof of having applied for Permanent Account Number (in the first year of the business) and having filed the return of income in the subsequent years. Production of the Income Tax Clearance Certificate may be insisted upon at the time of renewal of licence, industry experts suggested. Pointing out that the one by six criteria, which has resulted into increasing the number of assessees, has not been able to generate the revenue therefrom. The Federation has recommended that a certain monetary limit can be fixed in regard to the value or rent paid by those who are required to file returns on the basis of condition relating to immovable property. Likewise, money value can be made a basis in regard to motor vehicles. “For instance, many persons still own cars, whose values have come down drastically and would be even lower than the cost of a new bike today. Ownership of such cars cannot be an indication of the potentiality of a person to be a tax payer”, the memorandum pointed out, adding that fixing of limits would avoid unnecessary paper work and wastage of time of both the department and tax payers. The government may also consider opening up of mobile income tax return collection centres in various cities, as is the practice in most of the developed countries. The Federation also emphasised on strengthening of infrastructure in the Tax Department at both the Central and State levels and developing a tax friendly atmosphere.
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Defaults, cash crunch cloud power sector
New Delhi, December 25 Stung by controversies, the crucial infrastructure sector received a setback on the reforms front with the unceremonious removal of Suresh Prabhu as Power Minister due to NDA ally Shiv Sena’s informal pressures, and a solution continuing to elude the controversial Dabhol Power Project in Maharashtra, closed for nearly 20 months. The sector, requiring an astronomical Rs 800,000 crore investment in the next ten years for attaining the goal of electricity for all by 2012, even failed to attract investors, forcing policy planners to depend more on central PSUs like NTPC, which unfortunately are struggling for what they called “fair tariff structure” for generation of investible funds. The intervention by Prime Minister Atal Behari Vajpayee for clearance of a staggering Rs 40,000 crore dues owed to power and coal PSUs by SEBs, almost a year back, is yet to produce results despite decisions at relevant fora and passage of a bill in Parliament. Deputy Chairman of the Planning Commission K.C. Pant warned that lack of financial discipline and absence of appropriate user charges in power sector could shortcircuit the ambitious annual 8 per cent growth target for the Tenth Plan while decrying instances of reversal of tariff hike by some state governments. Having failed to add even 50 per cent of the capacity addition target of 37,000 MW in the Ninth Five Year Plan, the Ministry of Power set an ambitious target of adding at least 41,000 MW in the 10th Plan with Prabhu emphasising on strict monitoring of each and every project.
PTI
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Textiles exports revive
New Delhi, December 25 The pick-up in textile exports was particularly commendable after 11 per cent decline in 2001-02. According to ministry officials the sector is likely to clock $ 13 billion exports during 2002-03 compared to $ 12 billion the previous year. However, the renewed buoyancy is not enough to reach the export target of $15 billion with the industry facing rough weather domestically and revival of large number of NTC mills kicking off, but at a very slow pace. Farmers also faced the brunt of the industry’s problem in not being able to get remunerative prices for cotton even as imports of good quality cotton dipped indicating slackness in industrial demand. Industry also reacted sharply to the government unveiling a three year roadmap to dilute the Jute packaging act amidst fears that dilution of the hank yarn obligation was also on the anvil. Though these fears proved unfounded, the mistrust generated had a direct bearing on investments in the sector. Reasons coming in the way of improved export performance included reduced global demand triggered by slowdown in economies of major trading partners like US, increasing polarisation of world trade, preferential trading blocks and stiff competition from low cost suppliers like Bangladesh and China. Indian textile exports faced a number of anti-dumping and non-tariff barriers from importing countries with exports of cotton bed linen and polyster staple fibre to EU and polyster texturised filament yarn to Turkey subjected to anti-dumping duties. Changes introduced by US in its ‘rules of origin’ criterion also affected our exports to third countries like Sri Lanka and members of the EU.
PTI
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JPC report hurt SEBI’s image
Mumbai, December 25 Though the market regulator has succeeded in encouraging retail investors to some extent with greater transparency and major initiatives in the capital market this year, it still has a long way to go as borne out by the Parliamentary probe. The JPC report held SEBI responsible along with other regulators including RBI and the Department of Company Affairs
(DCA) for failure in preventing the multi-crore-rupee securities scam. The JPC report, tabled in Parliament on December 18, called for a critical examination of the role of the then SEBI Executive Directors-in-Charge of the secondary market. After successfully implementing the ‘T+3’, the regulator also took steps towards the ‘T+1’ settlement, with the intention of starting the shortest-ever settlement, in the year ahead.
UNI
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