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ADB pegs India’s GDP growth at 6.1 pc
Other Asian countries woo Indian tourists
Andhra seeks patent for handloom sarees and fabrics
Avoid India for joint ventures, McKinsey warns MNCs
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Graphic: Feature film
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Correction on bourses
Gratuity up to Rs 3.5 lakh not taxable
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ADB pegs India’s GDP growth at 6.1 pc
New Delhi, March 20 “In 2005-06, GDP growth is likely to decline to 6.1 per cent mainly on account of an expected cyclical decline in the growth of industry and services to 5.2 per cent and 7.3 per cent respectively,” ADB said in its latest Economic Bulletin. The lower growth projection from ADB is in contrast to Finance Ministry’s expectation of 7 to 8 per cent growth in the coming years. For 2004-05, the Central Statistical Organisation (CSO) has projected 6.9 per cent growth over 8.5 per cent in 2003-04. The growth projection is based on the assumption of 4.4 per cent growth in farm sector. “Despite an expected downturn in industrial business cycle, industry is projected to grow at 6.7 per cent. Services sector growth is projected at 7.7 per cent,” ADB said. While projecting a lower growth, ADB forecast lower 3 per cent inflation during the next fiscal compared to 4.2 per cent in 2004-05 and 6 per cent in 2003-04. However, ADB said: “Downside risks that could undermine the growth and inflation projections include a weak monsoon, a sharp increase in oil prices, inadequate fiscal consolidation and hardening of domestic interest rates following tightening of money supply growth.” “The expected increase in US Fed rate could lead to a decline in capital account surplus,” it said. ADB also warned that growth in investment especially in infrastructure holds the key to sustaining high growth over the long run. While investment has grown to 26.5 per cent of GDP till 2003-04 from 26.3 per cent in 2002-03, ADB said “current rate of infrastructure investment is 3.5 per cent of GDP is way below the required rate of 8 per cent estimated by an expert group on commercialisation of infrastructure projects chaired by Rakesh Mohan.” “The current rates of both private and public infrastructure investments have been well below target. The key problem in attracting adequate private capital in infrastructure is lack of appropriate risk allocation between creditors and investors,” it said. In this context, ADB said “development of a domestic market for long term securities is therefore critical for infrastructure financing.” The main constraining factor for stepping public investment in infrastructure is the large consolidated fiscal deficit of centre and states, ADB said.
— PTI
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Other Asian countries woo Indian tourists
Chandigarh, March 20 The upgradation of Amritsar airport to an international one and the low airfares offered by various airlines following the opening of the aviation sector to private carriers has made the Tourism Departments of Malaysia, Dubai and Singapore take notice of the potential of trade from the region. On Friday, Air Sahara announced an introductory offer of Rs 10,000 fare for a round trip to South East Asia. When a North Indian thinks of travel or tourism, Europe and America figures at the top of his list. “But now they are increasingly being attracted to other destinations for a fun-filled holiday that promises them entertainment, adventure and a slice of cultural heritage at affordable rates,” says Mr Carl Vaz, Country Manager, Dubai Tourism and Commerce Marketing Department. He said the flow of Indian tourist traffic to Dubai in 2004 was 3.5 lakh, a jump of 8 per cent over the previous year. Of this, the number of Punjabis was nearly 18,000. In town for the fifth consecutive year at the ongoing Travel Mart, he said the Dubai Shopping Festival was no more the top draw of a traveller. A traveller now seeks adventure sports, fine dining, heritage and general fun on the beach. World-class golf courses are proving to be magnetic. A major project of the government is the billion-dollar land reclamation in the shape of palm trees, which promised an impetus to the potential tourist. Dispelling a notion, he informed: “Oil contributes only 8 per cent to Dubai GDP while tourism constitutes 18.2 per cent directly and 29.8 per cent indirectly.” Similarly, Malaysia, with its 10 per cent Indian ethnic population and now Narain Karthikeyan being the star attraction at the Formula 1 contest, has realised the importance of the volume of tourism that can be generated from India. Mr Bhupesh Kumar, Manager Marketing, Tourism Malaysia, says they are concentrating on the niche areas like education tourism, golf, festivals and MICE (Marketing, interactions, conferences and events). “The Indian film industry awards hosted recently were a big success,” he informs. The graph is shooting up, with the outbound Indian tourist traffic to Malaysia increasing from 46,000 in 1999 to 2 lakh in 2004.
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Andhra seeks patent for handloom sarees and fabrics
Hyderabad, March 20 The government has applied for patent under the Geographical Indication Protection (GIP) category of the IPR for Gadwal silk and cotton saris, Venkatagiri and Narayanpet saris and the Uppada and Jamdhani fabrics, which are among the most sought-after fabrics across the globe. “We want to repeat the success story of the Pochampally weaver. What we are seeking is patent rights for our unique brand of handloom sarees and dress materials in the name of their geographical location. This is to prevent handloom saris from being copied by powerloom mills and sold at cheaper rates,” the state Rural Development Minister D. Srinivas said. Pochampally has the distinction of being the first traditional Indian craft to receive the status of geographical branding. Once these sarees are granted patent rights, they cannot be manufactured anywhere else and any violator will face action under patent laws. The patent for Pochampally has come as a respite to weavers who are now in the grip of crisis as their traditional designs are being copied by big power-mills who sell at much cheaper rates. The grant of patent rights for Pochampally design will alone benefit over one lakh weavers in the backward Telangana region. Pochampally, a small town in Nalgonda district dominated by weavers, is known internationally for its unique tie-and-dye Ikkat design sarees and dress material, often referred as the pride of Indian handloom sarees. Located close to the capital city, Pochampally is probably one of the most flourishing centres of modern handloom industry in the country, producing ikkat saris on a large scale. Of late, there is a falling demand for this traditional fabric. “Apart from handlooms, we are also making efforts to get patent rights for Kondapalli wooden toys which are admired all over the world for their exquisite craftsmanship,” Mr Srinivas said. Kondapalli, a small village on the outskirts of Vijayawada, is well-known for toys made of soft wood.
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Avoid India for joint ventures, McKinsey warns MNCs
New Delhi, March 20 Of the 25 major joint ventures established from 1993 to 2003 in India, only three survive, research firm McKinsey pointed out in the study. Most JVs floundered because the local partner could not invest enough resources to enlarge the business as quickly as the multinational had hoped. As a result, most of the MNCs that initially entered the market through JVs have exited them and pursued independent operations, McKinsey quarterly said in its report on ‘’A Passage to India’’. MNCs entering new markets have traditionally struck up joint ventures with local partners for a variety of reasons. These include their ability to influence public policy, to bring into the venture existing products as well as marketing and sales capabilities and to comply with regulatory requirements when foreign participation was restricted to less than 50 per cent of a business, it said. ‘’While joint ventures are still crucial to gain access to privileged assets in some industries like metals, mining, oil and gas, our research shows that, where possible, multinationals are better off going it alone,’’ the study added. Multinationals, such as Hyundai and LG Electronics, that have achieved real success in India have bypassed joint ventures entirely and newcomers are increasingly entering the market on their own, it said.
— UNI
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by S.C. Vasudeva
Gratuity up to Rs 3.5 lakh not taxable
Q. Whether gratuity paid to an officer retired on 31st December 1996 after serving 23 years and 10 months in a public sector bank is taxable? The amount of gratuity is well below the ceiling of Rs 3.5 lakh.
The bank has deducted tax under Section 10(10)(iii). The bank’s data of gratuity is enclosed. Kindly advise? — H.S. Gujral A. Section 10(10) of the Income Tax Act 1961 provides exemption limits in respect of gratuity for different categories of employees. These are: a) Death-cum-retirement gratuity received by an employee under the revised Pension Rules of the Central Government or as the case may be the Central Civil Services (Pension) Rules 1972 or similar scheme applicable to the members of civil services of the Union or holders of the posts connected with defence or of civil posts under Union or to the members of the All-India Civil Services or to the members of the civil services of a state or holders of civil posts under a state or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applicable to members of defence services. The entire amount of gratuity in respect of such employees is exempted from tax under Section 10(10)(i) of the Act. b) Gratuity received under the Payment of Gratuity Act 1972 to the extent it does not exceed an amount calculated in accordance with the provision of sub-Section (2) and (3) of Section 4 of the Act. Such an amount is also exempt in its entirety under Section 10(10)(ii) of the Act. c) Gratuity received by an employee or by his widow, children or dependent on his death to the extent it does not exceed one-half months’ salary for each year of completed service calculated on the basis of average salary for 10 months immediately preceding the month in which the retirement takes place subject to a limit of Rs 3.50 lakh. The amount of gratuity is exempted under Section 10(10)(iii) of the Act to the extent of limit stated herein above. The calculation sheet sent by you does not indicate whether you are covered under (b) or (c) above. You may please get the relevant computations from your office and verify whether the calculations have been done in accordance with item (b) or (c) above so as to arrive at the figure of exempted amount of gratuity.
PPF scheme
Q. I have some queries. Kindly advise. i) That I have my PPF account in SBI Patiala. It is going to mature in April 2005. ii) That I will get the whole amount on maturity or can it be extended for 5 years or more. iii (a) That the 50 pc or 60 pc out of the total amount (till maturity) can be withdrawn and account can be extended for 5 years or more. OR (b) 50 to 60 per cent amount of the preceding two years is drawn and then it can be extended. iv) Can this account go as such without extension and will it enjoy interest? —Rajinder Kumar Gupta A. The points given by you are as per the provisions of the PPF Scheme. No question has been raised by you in this regard. Presumably you are interested to know whether the amount lying in PPF or withdrawn as per the scheme, would become taxable in future in view of the Finance Minister’s speech given in Parliament at the time of presentation of the budget. The answer is, therefore, based on the said presumption. The revenue officials during the course of discussions on the Finance Bill 2005, have categorically stated that the taxability of any saving scheme to be covered under the EET (Exempt-Exempt-Taxed) method would have a prospective implication. Accordingly, amount lying in the PPF account withdrawn as per the scheme would not be subject to tax under the present scheme of things.
Section 80-DD
Q . I was having a physically challenged daughter since 1983 but she died in January 2005. I was availing rebate in income tax under Section 80-DD regularly. Now please advise can I avail the full rebate as per the rules under Section 80-DD for the year 2004-05 as she died during January 2005 i.e. before the close of the financial year? — J. Kumar A The provision of section 80-DD of the Act (amended w.e.f. 1.4.2004) provide for the deduction of Rs 50,000 (Rs 75,000 in case of severe disability) from the gross total income of an assessee (an individual or HUF) resident of India who during the previous year incurred any expenditure for medical treatment (including nursing) training and rehabilitation of a dependent, being a person with disability. The section, as it stands, does not provide for any proportionate allowance/ disallowance in case of death of such a dependent during the year. The conditions prescribed in the Section as well as in the Income tax Rules 1962 also do not contain any such condition. In my opinion, therefore, you should be entitled to a deduction, provided you fulfil, the conditions as to incurrence of expenditure, submission of necessary certificate along with the return etc., prescribed in Section 80-DD of the Act.
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Tourists from Punjab and Chandigarh are a priority for Asian countries. Tourism Malaysia will hold a golf tournament for Chandigarh ladies in a couple of months. It also plans to start a flight from Amritsar to facilitate travellers from North India.
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