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WB offers $ 500 m aid for e-gov scheme
Elusive bank credit leaves farm sector parched
Tata AIG plans to come out with
PNB issue price fixed at Rs 390
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Stick to staggered long-term investment approach TAX
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Interest on PPF not taxable |
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WB offers $ 500 m aid for e-gov scheme
New Delhi, March 13 “It would have the potential for dramatic scaling-up the bank’s impact in India to help improve the quality of life of all citizens,” said Joint Secretary, IT Ministry, R Chandrashekhar. Mr Chandrashekhar said the NEGP would enable convenient and transparent access to the government and private services while providing equitable opportunities to all. It can be used as effective tool to drive administrative reforms within the government and “can change the perception of people about the government.” “NEGP is an extremely ambitious programme of the government aimed at improving the quality, accessibility and effectiveness of government services to citizens and businesses with the help of information technology,” Mr Chandrashekar added. Further, the project will help in the road deployment and scale-up of select “mission mode projects” (MMPs) with significant citizen interface. It would create a national IT backbone for fast, reliable and efficient connectivity, data storage and access. There also would be an integrated service centres for delivery of citizen services. The project will also create web portals for 24 X 7 access to government information and services. The NEGP also envisages significant investments in areas as government process re-engineering, capacity building, training, assessment and awareness. The plan consists of 10 functional components and 25 Mission Mode Projects (MMP’s) to be executed over a four-year period. An apex committee under the Cabinet Secretary is already in place for providing the strategic direction and management oversight. “A formal structure to support the apex committee is currently under formulation,” Mr Chandrashekhar said. In January this year the World Bank approved the project concept and gave the green signal to proceed, which finally led to the $ 500 million financing over the next four years. “There would be a potential for follow-up with additional financing provided the need, absorptive capacity and rapid disbursement of initial financing are demonstrated,” Mark Dutz, Senior Economist, Finance and Private Sector Development, South Asian region said. The World Bank has shown keen interest to fund a significant part of the cost of the NEGP as the design of the programme is in line with the bank’s country assistance for poverty reduction and equity based financing, Mr Dutz said. In India, the World Bank is having discussions with the Centre for providing financial assistance to the Rs 25,000 crore National e-Governance Action Plan (NEGAP). The plan aims at inter-linking all states and Union Territories through the Information Technology (IT) network. The scheme would cover 10 main areas, including land records, property registration, transport and revenue collection amongst others. Presently, the World Bank is discussing the matter with the Finance Ministry for extending loan assistance for implementing e-governance programmes.
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Elusive bank credit leaves farm sector parched
New Delhi, March 13 Despite the announcement of the UPA government to double bank credit to agriculture sector in the next three years, a large section of farmers will continue to depend on the moneylenders, commission agents and other sources to meet their credit needs. At the current pace, public sector banks may take another decade to reach the farmers. “The government is committed to bring about 50 lakh farmers into institutional credit net. We are likely to achieve 30 per cent growth in institutional credit, over Rs 1 lakh crore this year, “Finance Minister P. Chidambaram told the Lok Sabha last week. However, he also admitted that as against a mandatory limit of 18 per cent, the public sector banks could lend only 15.4 per cent of their total credit to the primary sector during 2003-04. In fact, with the fall in share of banks in total deposits, credit to the farming sector has proportionately come down in recent years. “Since people are diverting their savings from banks to insurance, primary market, mutual fund and other institutions, the agriculture sector is getting less and less credit out of total national savings,” said a financial analyst. Mr P. Chengal Reddy, Chairman, Federation of Farmers Association (IFIA), an apex organisation of farmers unions, said, “Hundreds of farmers have committed suicide over the past few years due to economic distress and their inability to repay loans taken from the moneylenders at 24-36 per cent interest rate. Due to lack of adequate efforts on the part of successive governments, farmers, particularly small and marginal farmers are alienating from the administration.” He said, “ scale of finance is fixed unilaterally by financial institutions without taking into consideration the actual needs of the farmers. Farmers should be given loans at 6 per cent interest rate as against 9-12 per cent curently charged.” A study “ Rural Indebtedness in Punjab” undertaken by Prof H.S. Shergill, Panjab University, has estimated that about 40 per cent of the farmers’ credit needs in Punjab, with a vast network of institutional credit, are met by moneylenders, who are charging higher interest rate. In fact, different studies of the RBI and Nabard admit that one of the causes of over 10,000 suicides by farmers across the country in past few years, was lack of access to timely and adequate loans from the banks at a reasonable interest rate. The IFIA has lamented that government was not providing adequate protection to the agriculture from cheap imports. For instance, said Mr Reddy government imposed mere 10 per cent customs duty on cotton in 2004-05 as against 150 per cent allowed under the WTO agreement. Referring to investment required in agriculture sector, Planning Commission has identified over 400 ongoing irrigation projects pending since 20-25 years that would require an investment of Rs 70,000- 80,000 crore. Interestingly, when pressed by several members to reduce interest rates for agriculture sector, Finance Minister merely said, “ I cannot give any directions to the autonomous commercial banks to lower interest rate. Rather the state government should take steps to lower interest rates of the cooperative banks by improving their efficiency.”
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Tata AIG plans to come out with customised products
Ludhiana, March 13 With this aim, the company is spending a major amount on its human resources development, revealed Mr Leslie William Forrest, Director, Tata AIG Life Insurance Company. Mr Forrest, who was here to launch the first Tata AIG office in Punjab, while talking to The Tribune, said: "Our emphasis is on delivering customised products to every segment of customer, including rural and urban. This necessitates extensive training which we are very particular about." He said the company, unlike most other companies, has not outsourced training for its agents. "We have a large pool of trained staff that conducts training and orientation programmes." Tata AIG is currently the third largest private player in India and is a joint venture formed by Tata Group and the American International Group (AIG), which is world's leading insurance and financial services organisation with operations in over 130 countries. Talking about Indian customers, Mr Forrest said the perspective towards insurance as a product was undergoing a change and they had started looking at insurance as an attractive investment option as well. "Earlier, tax saving was the topmost priority when it came to buying an insurance product. But today, with the number and types of plans having increased manifold, people are considering insurance as an attractive investment product," he said . Mr Forrest said the company had already exceeded the 14 per cent target set by the Insurance Regulatory Development Authority (IRDA) for rural insurance. He said Tata AIG was the only insurance company to receive grant of £90,000 from DFID Foundation, UK, due to its commitment towards the rural areas. Mr Forrest revealed that the company had already entered into bancassurance agreement with five banks and was considering more options in this direction.
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PNB issue price fixed at Rs 390
New Delhi, March 13 Since 99.34 per cent of the total bid was received for a price of Rs 390 a share, the final price has been fixed at Rs 390. PNB had set the price band at Rs 350-390 for its public offer. PNB got bids worth over Rs 48,000 crore of which it would retain up to Rs 3,120 crore. The subscription from Qualified Institutional Investors (QIBs) was oversubscribed by 26.91 times. Bids from retail investors were oversubscribed by 11.68 times, a statement today said. Minimum 35 per cent of the net offering of 6.4 crore shares was reserved for retail individual investors. QIBs were allowed to bid for 50 per cent of the net offering whereas minimum 15 per cent was reserved for non-institutional bidders. The follow-on public issue has been aimed at augmenting the capital base of the bank and as preparatory to the implementation of the Basel II Accord.
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by S.C. Vasudeva
Interest on PPF not taxable
Q. I want to know whether the interest on PPF account has become taxable after this year Budget?
— Mahesh Sharma A. The interest earned on the amount invested in the PPF account is exempt under Section 10 (25) of the Act. There is no amendment proposed in the Finance Bill tabled in the Parliament on February 28, 2005 by the Hon’ble Finance Minister. Therefore as of now the interest on PPF would not be taxable.
Section 88
Q. My total salary for the financial year 2004-05 will be Rs 1,82,000. Is the following procedure correct for calculating income tax if investment of Rs 10,000 is made in pension plan (Rebate under Section 80 CCC) and Rs 70,000 in other schemes? Total Income: Rs 1,82,000 Pension Plan:Rs 10,000 S.D.: Rs 30,000 Taxable Income: Rs 1,42,000 Tax payable up to Rs 50,000: Nil Rs 10,000: Rs 1,000 Rs 82,000: Rs 16,400 Total tax payable:Rs 17,400 My query is whether the rebate on savings of Rs 70,000 will be Rs 14,000 (20 per cent) or Rs 10,500 (15 per cent). — Saurabh Sharma A. As per the provisions of Section 88 of the Income Tax Act (the Act), in case of an individual or a HUF whose gross total income before giving effect to deductions under Chapter VI-A is more than Rs 1,50,000 but does not exceed Rs 5,00,000, 15 per cent of the aggregate of the sums specified in the said section shall be allowed as a rebate from the tax payable. In your case since the gross total income i.e. income before allowing deduction u/s 80 CCC works out to Rs 1,52,000 you shall be entitled to a rebate of Rs. 10,500, that is 15 per cent on the amount of investment made by you.
MEP units
Q. Please refer to your observations on Mr Om Prakash’s query regarding “IT Return” published in The Tribune dated August 9, 2004. Factually, all master equity plan units 1995-96-97 were converted to new scheme UTI-MEPUS by the Unit Trust of India on March 31, 2003 (face value of Rs. 10 each) in lieu of total wealth calculated on the basis of NAV of MEP units on that date which was below Rs 10. This conversion was naturally treated as transaction resulting into long term capital loss. If the new units viz., MEPUS units were offered for repurchase in September 2003 there was short-term capital gain (NAV being higher than Rs. 10). Please elucidate whether this short-term capital gain can be set off against the long-term capital loss sustained on March 31, 2003, as a result of conversion from MEP units to MEPUS units. — O.P. Chandan A.
The loss on conversion of MEPUS on March 31, 2003, being a long-term capital loss will be allowed to be carried forward for a period of eight years. Such a loss on account of an amendment w.e.f. 1.4.2003 (i.e. applicable to assessment year 2003-04) can be set off against a long-term capital gain only. Short-term capital gain on the repurchase of MEPUS in September 2003 would thus not be adjustable against the long-term loss in view of the amendment in section 74 of the Act w.e.f. April 1, 2003
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Ludhiana, March 13
