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Congress, Left differ on economic issues
PNB net up
31.6 pc
Cut
bank rate, CRR by 1 pc, chamber to RBI |
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by A.N. Shanbhag Educational institutions: registration must for tax exemption
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Congress, Left differ on economic issues New Delhi, May 15 There has been sharp differences between the Congress and the Left on disinvestment and several other issues. Experts point out that there are a number of issues on which differences can come to the fore in the coming weeks. Some of the issues on which the Congress and Left had taken different stands are summarised below:
Petro products
This can turn out to be the biggest conflict area politically. Retail prices of transport fuels ( diesel and petrol) have not been revised since December 31, 2003, perhaps in view of the ensuing elections. The erstwhile NDA government had decided to execute a fortnightly revision of prices ever since the Administered Pricing Mechanism (APM) was dismantled. The global prices of crude oil have since increased manifold and is at present hovering around the $ 40 per barrel mark. India imports about 70 per cent of its crude oil requirements and the new government can only delay the inevitable, but surely cannot avoid increasing the prices. Experts familiar with oil pricing point out that a dollar’s rise in oil price will inflate the oil import bill by about Rs 400 crore. Interestingly, the decision to dismantle the APM was taken during the I.K. Gujral-led United Front Government, of which the CPI was a part and CPM was supporting it from outside.
User charges
Levy of user charges ( toll taxes) on national express highways is another conflict area. The Left has been opposing imposition of such taxes on user. The project was conceptualised during the Congress regime led by P V Narasimha Rao.
Disinvestment
This can be the most contentious issue. Incidentally, the erstwhile UF government had set up the Disinvestment Commission to identify sick PSUs which could be disinvested. At present, however, the CPI has demand scrapping of the entire privatisation programme and also said that the new government should not have any portfolio called Disinvestment Ministry. It remains to be seen what stand the Congress takes while drafting the proposed common minimum programme. However, former Finance Minister Manmohan Singh was forced to make a public statement yesterday in the wake of the tough stance taken by the CPI and the subsequent crash in stock markets.
Subsidies
Dr Manmohan Singh’s stand on subsidies is well known. As an economist he has always advocated a phased reduction of the subsidy to strengthen the macro-economic fundamentals, the Left may put pressure on the government to give more concessions to the farmers and the small scale industry. The new government’s stand on urea pricing will be of critical importance, if it is to fulfil the promises made to the rural economy and yet not compromising on the expenditure-revenue mismatch in the macro picture. The Left has demanded revival of the old structure of public distribution system (PDS). This could, however, further strain the food subsidy bill, which has already reached enormous proportions.
FDI in insurance
Another critical area of concern, the Left has aired its opposition to the proposal to allow foreign direct investment in retail trading. The NDA government did consider opening up the sector to foreign investors to the extent of 74 per cent. Global trends suggest the retail sector as the next booming sector and the domestic industry has consistently demanded the inflow of foreign investment here. The retail sector is projected to generate more employment opportunity than any other sector. The Congress has focused its campaign promising the youth to generate in excess of one crore additional jobs per year, even when the opportunities in the government and PSUs are shrinking. The retail sector may hold the key to this promise. The Left has also called for a review of the policy of allowing private sector players’ entry in the insurance sector.
WTO
It could be another potential area of conflict in the globalised context between the Congress and the Left. More subsidies to farmers could mean that India loses some of its negotiating strength in the world forum.
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Markfed to market brown onions Addhi Khuhi (Jalandhar) May 15 Addressing the brown onion growers and farmers of the area, Mr. S.S. Channy, Managing Director of the Punjab Markfed, said here today that though export quality onion had to be of a specific size of 50 to 70 mm, the Punjab Markfed would market over and under-size brown onions grown by the farmers of the state. He said for farming of export quality of brown onion, which has high demand in Europe and particularly in Germany, the Punjab Markfed has signed agreements with about 150 farmers of the state. In order to give boost to diversification of crops, which was the top priority of the state government, Mark-Hort Potatoes India, a subsidiary of the Punjab Markfed, had already undertaken contract farming for brown onions and contracts for its export had been signed with two German companies and subsequently seed had been imported. He said in comparison to average per acre yield of 70-80 quintals of ordinary onions, yield of brown onions was recorded to be between 120 and 150 quintals and had even touched the mark of 200 quintals at some places of Punjab. He said since farming of brown onions was a relatively new activity in the state, the Punjab Markfed has arranged technical support from the National Horticulture Research Development Foundation (NHRDF), Punjab Agriculture University, Ludhiana, and the Department of Horticulture, Punjab. He said export order to the tune of two lakh MTs was likely to be bagged from Germany. Mr. Harminder Singh Jassi, Chairman, Punjab Markfed, said the replacement of the wheat paddy crop cycle would be easy now as the Johl Committee Report on diversification had also been accepted by the Government of India. He stressed that farmers should ensure timely sowing of brown onion as the demand of this particular onion in Germany was between January and May and apart from this, harvesting of onion during February and March was ideal from climatic angle. Mr. Girdhar Gopal of Dheeraj Farms, Laseriwal village, who had sown five acres of brown onions this year, was encouraged by the returns and he would sow about 100 acres of brown onions during next year. Punjab Ministers Mohinder Singh Kaypee and Amarjit Samra also interacted with farmers on this occasion.
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PNB net up 31.6 pc New Delhi, May 15 Operating Profit of the bank has reached Rs 3,120.86 crore -- an increase of 34.7 per cent from Rs 2317.29 crore, Bank CMD S.S. Kohli said at a meeting of the bank's board which approved the financial results. The bank's capital and reserves increased to Rs 5,012 crore compared to Rs 4033 crore last year, registering a growth of 24.3 per cent. Mr Kohli said that the bank has proposed a total dividend payment of 40 per cent. He said that the banks new branch in Kabul in Afghanistan is expected to be operational by next month and this will followed by two more overseas branches — one each in China and Dubai. Capital to Risk Asset Ratio (CRAR) was placed at 13.10 per cent, higher than the previous 12.02 per cent. Total deposits of the bank at the end of March 2004 amounted to Rs 87,916 crore as compared to Rs 75,813 crore — an increase of 16 per cent.
Chambal Fertilisers
Chambal Fertilisers & Chemicals Ltd posted a higher net profit of Rs 124.99 crore for the FY-04 as against Rs 89.37 crore for 2002-03. The board has recommended a 16 per cent dividend for year ended March 2004. The total income for the year ended March 31, 2004 rose to Rs 2,244.72 crore from Rs 1,971.08 crore in 2002-03, it added.
— PTI
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Cut bank rate, CRR by 1 pc, chamber to RBI
New Delhi, May 15 "The RBI may bring down the bank rate and the cash reserve ratio (CRR) by 1 per cent each. There is a need to bring down the PLR by reducing high transaction costs in the banking system," the chamber said in a memorandum to the banking regulator. It said the interest rate structure in the country was still higher compared to that in the international markets, thus affecting the competitiveness of the Indian industry.
— PTI
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Novartis to pay 200 pc dividend
Mumbai, May 15 The Board of Novartis India has recommended a dividend of 200 per cent (Rs 10 per equity share of Rs 5
each) for the year ended March 31, 2004. — UNI
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If
air-India is all set to operate “no frill” airline on certain routes, some other carriers are seriously contemplating to opt for small aircraft to increase regional connectivity with major cities like Delhi, Mumbai, Chennai and Kolkata. Officials of two small aircraft manufacturers have had detailed discussion with bigwigs of the domestic carriers to impress upon them the advantages that will result from such operations. “Apart from connecting secondary cities with major cities, these operations entail low costs and, thereby, increased revenue”, emphasise manufacturers. “Small aircraft and big profits” is the slogan of these manufacturers, who believe that India is best suited to operate such flights to even neighbouring countries like Sri Lanka Nepal, Bangladesh, the Maldives, Pakistan and Bhutan. Much depends upon what are the guidelines in the much-delayed new civil aviation policy, which is expected to become public this month. According to experts, the new civil aviation policy should provide complete and decisive openness of skies, as is the case in several other countries. If the skies become totally open, then operators are free “to link fares with demand”. The idea of “higher the demand, the higher the fare and vice versa” will be successful only when airline bosses are scrupulous in their dealings. The bottomline, however, is that the airline is free to determine its fares provided market is not caught in acts of corruption and nepotism. When small airlines like Air Arabia occupy part of Indian skies, there is possibility of Air-India and Indian Airlines getting adversely affected. This is because the Gulf sector has been a traditional cash cow. Of late, the emphasis seems to be on budget airlines. Maybe, this is the reason why Air-India is keen on operating no frill airline. Whatever the scenario prevailing in Indian skies, Indian Airlines has been flying high. It has begun the new financial year on a happy note carrying more passengers in April than before. As competition on national and international routes has become razor-sharp, the airlines have been offering customers additional quantum of gifts in the form of free or discounted hotel stay. |
by A.N. Shanbhag Educational institutions:
registration must for Q: In a case where an
Educational Institution registered u/s.10(23C)(vi) of the Income Tax Act
(as per item (5) in the table in your article), provides a contribution
to a Trust/Society which is a new Education Society registered with the
Registrar of Societies and who have applied (i) with the Director of
Exemptions for registration u/s.80G(5)(vi) of the Income Tax Act and is
expected to get the exemption shortly and (ii) u/s.12A(a) of the Income
Tax Act with the Chief Commissioner of Income Tax for registration
thereof. This Educational Society has already commenced work of putting
up a renowned educational institution namely a public school which shall
be commencing its educational activities from the year 2005-06 school
session. The queries are - (a) Whether the contribution made out of
the current year's receipt of income by the first registered Society to
the other Educational Society shall be treated as application of income
u/s.10(23C) proviso 11 (earlier 10th proviso deleted from 01.04.2002)?
and (b) If it is treated as application, then whether the contribution
made before the receipt of grant of registration u/s.80G(5) or 12A can
be treated as application of income or the contribution made only after
receipt of grant of registration / exemption can be treated as such? Ans: For claiming that the donation to the
new education society, it is absolutely necessary that the grant of
registration u/s 12A is obtained by the new society before accepting the
donation. Registration u/s 80G(5) is not important for the purpose of
the donor society to claim it as application of income. Standard
deductions Q: I have some doubts regarding the present rules on
Standard Deduction and Deduction u/s 88 of I.T.Act. 1.In the Union
Budget 2003-04, Standard deduction at 40 per cent of salary or Rs.
30,000, whichever is less, has been allowed for persons having 'salary
income (before allowing deduction u/s 16)' upto Rs. 5 lakh. Am I right
in interpreting that income from other heads, viz., house property,
interest on securities have no relevance here. 2. Whereas, for
deduction u/s 88, the criteria is 'gross total income' before giving
effect to deductions under Chap VIA. Here, i) will salary income
be computed after deduction u/s 16? Can the professional tax also be
deducted? ii) For a self occupied property, can the loss on account of
interest on borrowed capital be deducted? iii) Capital gains, if any,
during the year are to included on gross basis or setting of previous
year's accumulated loss can be done? iv) 'Other income' has to be taken
on a gross basis or deduction u/s 80L can be allowed? v) Can the gross
total income be reduced by pension contribution u/s 80CCC, to bring it
down under Rs. 5 lakh? — Goutam Chatterjee Ans: 1. Yes, you
are right. The standard deduction is related with the income from salary
only. An employee with a salary of Rs. 5 lakh or less (before standard
deduction and deduction for professional tax) is entitled to a standard
deduction of 40 per cent of the salary or Rs. 30,000, whichever is less.
Salary over Rs. 5 lakhs attracts a deduction of Rs. 20,000. Sec. 80B
defines "gross total income" to mean the total income computed
in accordance with the provisions of this Act, before making any
deduction under Chapter VIA. It is clear that the gross total income is
computed after deducting standard deduction, professional tax, interest
on borrowed capital either on self-occupied property or otherwise, etc.,
but not deduction u/s 80L or 80CCC or et al. It includes capital gains
less accumulated loss. Demat charges Q: Let me know whether
demat charges;- maintaining, transfer, settlement etc. can be adjusted
against LTCG and or STCG in a F.Y. whether all the charges paid in a F.Y.
can be adjusted against all the ltcgand or stcg, or only the scrips
sold. — Sani Ans: The charges for converting the scrips
from physical to demat mode can be added to the cost of acquisition of
individual scrips. The same tenet may be applied to the DP fees for
holding the scrips in the demat mode. The exercise will be complicated
but worthy of undertaking it. |
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