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Course of reforms
keeps bankers guessing
Interest rates of
domestic term deposits decline HPCL to monitor
tankers online |
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New Delhi, May 23 Transport sector is suffering Rs 150 crore to Rs 175 crore annual losses due to anti-transport provisions of the obsolete Carriers Act, 1865. Under the Act, the transporters may be held responsible for the damage to consignments though they are denied insurance cover by the insurance companies for transport goods.
Markets may drift
lower
Rebate allowed on
bonds, bank savings
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Course of reforms keeps bankers guessing New Delhi, May 23 The Draft (II) of the Common Minimum Programme of the United Progressive Alliance (UPA) government clearly states that public sector banks will be given full managerial autonomy. Nationalised banks, it said, will be encouraged to enter the capital market to raise resources and offer new investment avenues to retail investors. At the same time, it has promised to nurse back the rural cooperative credit system. The UPA government will ensure that the flow of rural credit is doubled in the next three years and that the coverage of small and marginal farmers by institutional lending is expanded substantially. Immediate steps will be taken to ease the burden of debt and high interest rates on farm loans, the draft CMP has said. Banking industry professionals say that while granting full managerial autonomy was a welcome step, it needs to be seen what policy direction the government issues to bring down the rate of interest on farm loans. Last year, the NDA government had brought down the rate of interest on farm loans to 9 per cent on loans not exceeding Rs 50,000 and easier norms for acquiring loans on tractors and farm equipment. The earlier government had set a target of increasing the credit flow to Rs 7,36,510 crore in the farm sector by the end of the 10th Five Year Plan in 2007. The Congress-led United Progressive Alliance (UPA) government may consider announcing measures to increase the total credit flow in the agriculture sector to about Rs 1,50,000 crore within a period of three years, if the draft CMP is any indication. Banking industry experts point out that the establishment of a lower interest rate regime for the agro and small-scale sector will critically depend to what extent the cost of funds for the funding agencies are brought down. Presently, a high proportion (nearly 55 per cent) of the annual credit flow of Rs 70,000 crore is extended by the cooperatives and another seven to eight per cent by the regional rural banks (RRBs). Banking industry officials say a lower interest rate regime for the rural sector could actually mark a return to a directed lending regime. For banks and lending agencies to reduce interest rates it is critical that the spread (the difference between lending and borrowing rates for the banks themselves) is not reduced. Moreover, some bankers say, if it priority sector lending norms are made more stringent, it could affect the capital adequacy of the public sector banks. The flip side of the argument, however, is that despite a consistently declining interest rate regime, the farming community had no access to cheaper institutional funds even though banks were allowed the flexibility to fix sub-PLR (prime lending rates) in the mid-90s. The biggest beneficiaries have been the housing and the automobile sectors.
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Interest rates of domestic term deposits decline
Mumbai, May 23 The term deposit rates of public sector banks for maturities upto one year moved down from a range of 4-6 per cent in March 2003 to 3.75-5.25 per cent by April 2004, according to Reserve Bank of India’s annual policy for FY-05. Similarly, interest rates on term deposits over one-year have declined from a range of 5.25-7 per cent to 5-5.75 per cent during the period, it said. During 2003-04, the spread between typical deposit rates of tenor of 15-29 days and over three years offered by public sector banks remained unchanged at 175 basis points. “Overall, there has been a considerable flattening of the term structure of deposit rates during the last three years”. RBI pointed out. The central bank said “despite a fall in deposit rates and lowering of the cost of funds, the range of Prime Lending Rates of public sector banks remained sticky.”
— PTI
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HPCL to monitor tankers online Chandigarh, May 23 In an exclusive interview, Executive Director (Retail Business Unit) of HPCL, Mr S.P. Chaudhry, said that all vehicles which carry fuel for the company would be equipped with this system by September 2005 and linked with the control rooms of the Regional Offices. Based on surveys carried out by us through reputed companies, quality concern has emerged as one of the key areas. To give special focus to this vital need of the customers, the company started the “Quality Assurance through quantity” scheme, under which retail automation is being done at select retail outlets. In the first phase, 40 outlets in Mumbai and Vashi were covered under the scheme. The system, which entails a cost of Rs 15 lakh per pump will facilitate online checking of petrol and diesel, he added. Mr Chaudhry said to begin with 300 outlets in the country will be covered under the retail automation scheme, of which 70 per cent will be located on the national highways. As many as 40 of these in Punjab, Chandigarh and Himachal will also have this facility. Nearly 500 pumps in the country will have automation facility by the end of this fiscal year and would entail a cost of Rs 75 crore. To provide agriculture inputs to the farmers at the petrol pumps, besides fuel, the company has set up a Kisan Vikas Kendra at one of its pumps at Dhadrian in Sangrur. Fifteen more such kendras will be set up in Punjab. Besides this, 500 odd “Hamara Pumps” will be set up within the next six months. For the benefit of transporters, the company has launched “Drive Track”, a fleet card covering 400 outlets on the Golden Quadilateral routes and seven major highways to cater to the requirements of fleet owners and large transport companies.
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Transporters rue the Carriers Act barrier New Delhi, May 23 Mr O.P. Agarwal, chairman, All India Transporters’ Welfare Association, a body representing over 60 per cent of the truck operators in the country, says: “Truck operators have to pay about Rs 150 crore annually to the insurance companies for out-of-court settlements or court cases, as these companies would file cases against us for damage to the consignments due to accidents, theft or riots. This is despite the fact they do not provide us any insurance cover for the transported goods.” The transport industry has called upon the new government to take up the issue on priority as it was affecting the interest of over 27 lakh truckers in the country. Truck operators say though the railways and shipping sectors have been exempted from the Carrier Act, yet successive governments have failed, either to scrap or amend the Carriers Act. Mr Ramesh Agarwal, a trucker says: “Is it justified that by charging a freight of Rs 2,000 to Rs 2,500, say for Delhi-Chandigarh route for the transport of a consignment of Rs 20 lakh worth medicines, I may be asked to pay up to Rs 10 lakh to the insurance company, in case of an accident? How can we be held responsible for no fault of ours?” Lamenting over the plight of the industry, Mr Agarwal disclosed that insurance companies had stopped issuing marine insurance policies to truck operators nearly 20 years ago to cover consignments, but they were forced to pay insurance claims, as under the 138 years’ old Carriers Act, they could be held responsible for the damage to the consignments of the party. Industry experts say, though truck operators had gone on a long strike on this and other issues in 1997, yet despite agreement with them, previous government did not bother to amend the Act or to find out some amicable solution. The association claims the annual business in the transport sector is around Rs 1,66,000 crore, and is growing at 5-7 per cent rate annually. Mr R.D. Bansal, president of the association, maintained the public sector insurance companies, which employed a number of legal practitioners on their panel, file 5,000 to 7,000 cases annually against them across the country. Small operators with one or two trucks, are forced to pay 50 to 60 per cent of the insurance claims to the companies in out-of-court settlements. Otherwise, they are forced to fight long legal battles with them in different parts of the country. He urged the Ministry of Transport and the new government to find out a solution to satisfy the transport industry, which was the second largest employer in the country after agriculture sector and was employing over one crore persons.
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by Lalit Batra Markets may drift lower Phew! Last week was a historic one in the capital market. The Sensex as well as Nifty were locked at the 10 per cent and 15 per cent lower circuit (787 points) on last Monday. This was the single largest fall in the history of the capital market. The Credit policy coupled with Sonia Gandhi’s decision to refuse the Prime Minister’s post made the markets bounce back but they continued their southward movement. The Sensex lost 108.30 points last week to settle at 4,961.57. The S&P CNX Nifty shed 1.4 per cent at 1,560.20. Massive selling by hedge funds and unwinding of positions by FIIs seemed to be the key reason for the “Black Monday”. But SEBI numbers painted a different picture. While data of Hedge funds activity is not available, FIIS, were net sellers merely to the tune of Rs 64 crore. The primary culprits causing the fall are not yet known. Though SEBI has initiated an enquiry into this, the report is still awaited. It is largely believed that the sell off in the Indian markets was due to the
political uncertainty but a look at other Asian markets suggests that otherwise. Markets across Asia had tumbled in the region of about 9 per cent to 10 per cent during
last couple of weeks before some stability set in. The fall is widely believed to because of increasing oil prices and a possible increase in the interest rates. Markets are keenly awaiting the common minimum programme
(CMP) of the Congress-led coalition government to get a clue as to the kind of policies that the new government will pursue. Though we believe that the markets would drift lower for the time being, with Bouts of intra day volatility, investors should invest in fundamentally strong companies with long-term perspective.
Biocon Biocon is India’s largest biotech company with a presence in bio-pharmaceuticals, enzymes, customs research and clinical research. Promoted by Kiran Mazumdar who is a first generation entrepreneur with over 25 years of experience in biotechnology. Biocon has reported phenomenal growth in revenues and profit since 1999. Biopharmaceuticals and enzymes together constitute about 90 per cent of the group revenues. Biopharmaceuticals has been and will continue be the mainstay of Biocon as it promise. exciting growth opportunities. Biocon is one of the most integrated plays in the pharma industry, with a presence in three key segments — contract manufacturing, custom research (through
Syngene) and clinical trials (through Clinigene). Biocon is set to emerge as a dominant supplier of bulk statins and this is already evident in the two launches thus far
(lovastatin in the USA and simvastatin in the EU). Statins are the largest drug class in the world; with global sales of $ 20 billion. Patents on two key statins
(simvastatin and pravastatin with global sales of $ 11 billion) have started expiring and would be key drivers of Biocon’s medium-term earnings. The company has declared a net profit of Rs 138.9 crore for the year ended March 2004 on sales of Rs 502 crore. This translates into a earning of Rs 13.86 per share and a discounting of 37 at the current market price of Rs 520. The current discounting looks a little stretched when compared with its peers, therefore investors with a two years perspective can add the scrip to their folio on declines. |
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by S.C. Vasudeva Rebate allowed on bonds, bank savings
Q. I am a retired government employee. My pension for financial year 2003-04 is Rs 88,000 without standard deduction. I earned: 1. Rs 14000 as an interest from N.K. Jewellers, Chandigarh 2. Rs 990 from saving bank account 3. Rs 4896 from Tax saving bonds of ICICI and IDBI Am I eligible for a rebate of Rs 12,000 under Section 80-L — N.K. Bedi
Ans: You are not entitled for a deduction u/s 80-L in respect of interest earned from N.K. Jewellers, Chandigarh amounting to Rs 14,000. However you would be entitled to a deduction in respect of interest earned in Savings Bank Account as well as in respect of interest on tax saving bonds of ICICI and IDBI. Tuition fee Q. My son paid tuition fee of Rs 35,000 per year for four years from 2000 to 2003 (total Rs 35,000x4= Rs 1,40,000) for Engineering Degree, but I could not claim rebate under chapter VIII of Income Tax Act. What is the procedure of claiming refund and how much rebate I can claim by submitting what documents? — B.S. Patharia
Ans: Your query is being answered on the presumption that the amount paid by your son has actually been paid by you out of your taxable income. Clause (xivb) of Section 88(2) was introduced by Finance Act 2003, w.e.f. April 1, 2003. As a result of which, the payment made towards tuition fee prior to April 1, 2003 is not eligible for rebate under Section 88 of the Income-tax Act 1961. Further, the maximum qualifying amount that is allowable for rebate under this particular sub-clause is restricted to Rs 12,000 per annum. You can thus claim a rebate for financial year ending March 31, 2003 in respect of Rs 12,000 if the said amount has been paid by you. The documents to be submitted by you alongwith your return should be the bill/invoice/letter of the institute wherein the amount of fee is mentioned and the receipt obtained by you for payment of the fees to that institution.
House rent Q. I am a government employee and drawing Rs 435 as HRA in my monthly salary. I am living on rent at Phagwara at Rs 1600 per month. Please tell me how much amount will be deducted from my salary on producing rent receipt to the office. Whether full HRA will be deducted or a part of it?
— Baldev Singh
Ans: As per Rule 2A of the Income Tax Rules, 1962 read with Section 10(13A) of the Income Tax Act, 1961, the amount eligible for deduction is lower of the following three amounts: (a) Actual HRA received (b) The amount by which the expenditure actually incurred by the assessee in respect of rent of residential accommodation exceeds one-tenth of the salary due to the assessee for the relevant period. (c) Two-fifth of the amount of salary due to the assessee in respect of relevant period. Since you have not specified your total salary, I am unable to give you the exact amount of deduction that you will be entitled to. However, based on the above provisions, you may compute the deduction by substitution the salary amount in the above. Further, salary for this purpose includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.
Renovation Q.
I had built a house in 1986 at the cost of Rs. 2 lakh, the amount intimated to Income tax authorities through regular return filed by me. Later in 1997, I got wall tiles work done (not completed earlier) at a cost of Rs. 30,000. Now in 2003, the rear lawn floor made of bricks, has been replaced by pucca karezi (marble pieces) floor at a cost of Rs. 25,000/- alongwith fixing of grills door in veranda costing Rs. 10,000. Kindly enlighten on the following points keeping in view the fact that I intend to sell my house. 1. Whether the expenditure incurred in 1997 and 2003 would be taken into account while calculating the long-term capital gains tax? And if so how? 2. My son is building a house and If I extend loan to him, then can I save capital gains tax? And if so what formalities are required to be fulfilled. 3. Also please intimate the cost inflation index for 1986, 1997, 2003 and 2004. — Dr Prem Singh Dahiya
Ans: The answer to the queries raised by you is as under; (a) Yes, the expenditure incurred by you in 1997 and 2003 towards the jobs mentioned in your question, would be taken into account while calculating the long term capital gains tax. The said expenditure shall be treated as ‘cost of improvement’ and shall be indexed as per the notified cost inflation index. (b) The amount of loan given by you to your son, will not entitle you for any deduction from the capital gains tax. (c) The cost inflation index is as follows for the undermentioned financial years. 1985-86 133 1986-87 140 1996-97 305 1997-98 331 2002-03 447 2003-04 463 2004-05 Not notified |
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