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Subsidies fuel govt expenses, says Assocham
UP Cong wants Dadri power project scrapped
States asked to cut T&D losses to 15 pc
CSN may make Corus offer today
TCS plans facility in Morocco
India, UAE to set up trade policy forum
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Tax
Advice
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Subsidies fuel govt expenses, says Assocham
New Delhi, December 10 A whopping Rs 209,000 crore has been spent by the Central Government on subsidies in the last five years. The government spent Rs 46,874 crore in fiscal 2005-06 on subsidies and this has been rising at an average rate of 13 per cent, an Assocham Eco Pulse Study on ‘Public expenditure for the last five years’, said. Average share of subsidies in total expenditure has been more than 9 per cent, with food subsidy (5 per cent) accounting for the largest share, Assocham said in a release. Government expenditure on food subsidy has been escalating by 15 per cent every year. The rate of increase in subsidies slowed down subsequently and the last fiscal witnessed a 7 per cent hike. The average share of petroleum subsidy in the total subsidy bill of the government stands at 9 per cent, it said. The four largest components of public expenditure are interest payments, defence, subsidies and pension, accounting for 60 per cent of the Centre’s total expenditure. Interest payments form the single largest component at around 33 per cent, followed by defence at 15 per cent, it added. These heads have seen an average increase ranging between 5 per cent and 13 per cent, in the last five years. In case of defence services, the rise is around 11 per cent. An average of one-third of the total expenditure is spent on interest payments, which have been increasing at 5 per cent in last five years, the Assocham study said. “As India has kept an impressive growth rate trajectory, it is time that fiscal consolidation is given utmost importance so that the benefits of the vibrant economy are sustained,” Assocham president Anil Agarwal said. The study has shown that the government has spent a huge amount of Rs 302,000 crore in the past five years on the India’s defence services, which includes expenditure on the Army, Navy, Air Force and Ordnance factories. Share of defence expenditure in the total expenditure has been increasing on an average rate of 2.3 per cent, it said. The study also adds, “The government should bring down the growth of wasteful expenditure and restructure the allocation of funds to ensure that the sectors like agriculture, rural development, medical and healthcare, roads and bridges get a larger share in the government budgetary allocations,” it suggests. The next largest component of the subsidies is the indigenous fertilisers, constituting 22 per cent of the total amount. In terms of GDP percentage it increased from 2.69 per cent in 2003-04 to 3.16 and 3.14 per cent in the subsequent years. Interest payments of the government have risen by average 5.5 per cent in tune with the average fiscal deficit of 4.9 per cent in last five years. The government has paid Rs 6,01,924 crore in meeting its debt servicing obligations, although its share in total expenditure has shown a sign of downward movement. The budgeted amount for the current year is Rs 20,232 crore, up by 10 per cent. This figure is expected to soar further with the implementation of Sixth Pay Commission.
— PTI, UNI |
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UP Cong wants Dadri power project scrapped
Lucknow, December 10 Briefing the media UP Congress Committee President Salman Khursheed termed the agreement as the state government’s “'surrender” before the Anil Ambani-led Reliance group. Mr Khursheed said the government had given all benefits to REL in terms of constructing the entire infrastructures for the project at public cost. He demanded either a drastic modification of the terms and conditions of the project or scrapping it altogether. Under the agreement, Reliance is to be given 2,500 acres of land at a ridiculous rate of Rs 100 per acre on a lease of 99 years. Strangely, the state government has given Reliance the authority to either gift the land to anyone or use it for any other purpose, revealed Mr Khursheed. Another startling revelation made by the UPCC President was regarding the watering down of the time frame in which the Dadri project was to become operational. While Reliance, under the agreement, has committed to starting the project in seven years it had virtually no meaning, as there was no penalty even if the project was delayed. As per the agreement 40 per cent of the power generated was to go the state at a rate of Rs 1.25 per unit at the generational point. It also promises that if needed the UP Government will acquire other buildings or land for the project. The agreement also states that Reliance would give training to the state power employees. The Congress leader maintained that while his party was for development and setting up of new power projects, it was opposing the Dadri project for its “anti-people” stance. The Congress now joins the anti-Dadri protest initiated by former Prime Minister V.P. Singh. Demanding fair compensation for farmers losing valuable agricultural land Mr
V.P. Singh has maintained that the 2500 acres being acquired by the Reliance group is far in excess of the requirements. UP Health Minister Ahmad Hasan charged the Congress with attempting to derail the Samajwadi Party’s development agenda. ''The UPA Government at the Centre was creating hurdles at every step be it the acquisition of land or the supply of gas for the Dadri project”, he alleged. |
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States asked to cut T&D losses to 15 pc
New Delhi, December 10 The approach paper, which has been approved by the National Development Council, to the 11th Plan has asked states to give highest priority to reduce the T&D losses. Cutting down losses was critical as otherwise the country would neither be able to finance capacity expansion nor attract private investments, the paper said. The T&D losses are pegged at less than 10 per cent in better-managed power systems in developed countries. In the NDC meeting, Prime Minister Manmohan Singh had expressed concern over the persisting problems in the power sector and specifically singled out high T&D losses. "This is an area entirely in the hands of the state governments," he said. Lamenting power shortages in most parts of the country, he said shortfalls had not been alleviated to the desired extent and financial viability of this sector as a whole continued to be fragile. Planning Commission Deputy Chairman Montek Singh Ahluwalia admitted that capacity addition during the 10th Plan would not exceed 30,000 MW compared to a target of 41,000 MW. The target capacity addition for the 11th Plan should be 60-70,000 MW, which calls for an investment of around Rs 5,00,000 crore, including investment in transmission and distribution. — PTI
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CSN may make Corus offer today
London, December 10 Directors of Corus, which includes former British Steel and employs 23,000 in Britain, are expected to meet today to review the CSN, The Sunday Times claimed. There was no official word from Corus. Corus has already recommended an earlier offer from Tata Steel, India's biggest private steelmaker, but is likely to withdraw its support in favour of a higher bid from CSN, the report said. The Brazilians have said their offer is likely to be pitched at 475 pence a share, a level that values Corus at £5.1 billion once debt is included. Tata's bid is 455 pence a share. "The CSN bid may be announced as early as tomorrow if negotiations proceed well over the weekend," the report said. But it is unlikely to go ahead without the support of Corus's pension trustees. The size of the pension schemes- they have liabilities of £13 billion, and 167,000 members - means the trustees have the power to scupper the deal by refusing to recommend it to the UK pensions regulator.
— PTI |
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TCS plans facility in Morocco
Rabat (Morocco), December 10 Tata Consultancy Services, India's largest software firm, has signed an agreement for setting up a facility that could employ 27,000 persons by next year while M&M has also shown interest in foraying into the country. "India Inc is keen to explore business opportunities in Morocco and share its expertise in sectors like information technology," Minister of State for Industry Ashwani Kumar said at the Fundamentals of Investment Conference here. Morocco is seeking investment from across the world while banking on its French-speaking population, following the precedent of what a large-pool of English speaking and low-cost human capital did for the Indian economy.
— PTI |
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India, UAE to set up trade policy forum
New Delhi, December 10 "UAE investors would find attractive industrial partners in India to set up mutually advantageous industry complexes in the Gulf and India and serve all markets," the statement quoted Commerce and Industry Minister Kamal Nath as saying. This decision was taken at Mr Nath's meeting with UAE Minister of Economy Sheikha Lubna Al Qassimi during his recent visit to Dubai for the India Arab World Business Summit. — PTI
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Tax Advice by S.C. Vasudeva Q. I would like to get information in regard to the following queries. 1. Interest earned from savings bank A/c in a Post Office is exempt from Income-tax. Is interest from savings bank A/c in a bank is also exempt from Income-tax? 2. Is amount up to Rs 1 lakh deposited in Senior Citizens 5-year Deposit Scheme exempted from taxable Income under Section 80C? — G.R. Kalra, Chandigarh A. 1. Interest earned on saving bank account with post office as well as with bank is taxable. 2. The amount of Rs 1 lakh deposited in Senior Citizens 5 — year Deposit Scheme is not considered as an allowable deduction under Section 80C of the Income-tax Act 1961 (the Act). Extension of PPF account
Q. I am giving below my query: 1. The PPF account of my HUF has completed 15 years in June, 2005; therefore it is due for closing or extension on 31.03.2006 at end of the financial year. 2. Understand that now, the government has ordered that extension of PPF accounts of HUFs is not allowed 3. PPF rules state that: “Subscribers can retain the balance in the account after 15 years without making any subscription and can do so without sending any intimation to that effect. They are allowed to make one withdrawal up to 100pc of the balance to their credit in a year in installments not exceeding one in a year till the entire balance is withdrawn”. 4. My query is: Can I retain the balance in the PPF account of HUF after 31.03.2006 so that it continues to earn 8pc interest and make withdrawals in installments not exceeding one in a year till the entire balance is withdrawn. — Prem Kumar A. Paragraph 3 of the Public Provident Fund Scheme 1968 (The Scheme) has been amended w.e.f. 13.05.2005 so as to prohibit the opening of a Public Provident Fund account by and HUF. However, sub-paragraph 3A of paragraph 9, which deals with the withdrawal from fund, permits a subscriber to extend the period of 15 years by another period of 5 years, subject to the conditions laid down in the said sub-paragraph. The said sub-paragraph provides that a subscriber may on the expiry of 15 years from the end of the year in which the initial subscription was made but before the expiry of one year thereafter, exercise option with the accounts office in Form H or as near thereto as payable, that he would continue to subscribe for a further block period of 5 years subject to the limits of subscription specified in paragraph 3 i.e. any amount not less than Rs 500/ and not more than Rs 70,000/ in a year. In view thereof, the scheme does not seem to prohibit the
extension of an existing account of an HUF for another 5 years. However, it will be better that you bring this position to the notice of the deposit office and seek their suggestion in this regard. Tax liability
Q. Kindly advise me, how much will be my tax liabilities - Detail of Income is: Pension: 79,892 Interest on Bank FDRs: 1,74,609 Property Rent: 30,400 Property Tax: 1,401 My date of birth is 04.01.1923 Financial year: 2005-06 TDS deducted by Bank: 14,126 — Madan Singh Dewan, Gobind Nagar A. On the basis of figures given by you, your total income works out at Rs 2,74,800/ on which a tax of Rs 20,849/ including education cess @ 2pc works out as payable. Since the tax at source amounting to Rs 14,126 has already been deducted a net amount of Rs 6,723/ is payable by you. This is apart from any liability of interest under Section 234B and 234C of the Act on account non-payment of advance tax. PPF account
Q. I have a PPF account in my name and a PPF account in my wife’s name at one bank branch for the last 7 years which were opened on one date. We both file our separate income tax return and have PAN cards. Income for both is from interest from separate bank FD’s, G.O.I. tax-free relief bonds, P.O. M.I.S. and P.O. Senior Citizen Saving Scheme. We have joint bank saving account in which all income is deposited (collected). From the joint saving bank account we deposit each Rs75,000/ to my P.P.F. account and another Rs 75,000/ for my wife P.P.F. account. Kindly inform, is it correct, what I am doing as above? If it is wrong, then how, and under what rules. My question is in reference to your reply to Mr Baljit Singh’s query in The Tribune dated 27.03.2006 regarding account, that one can open only one PPF account which can be in your name, your wife’s name, or children or H.U.F. — Daya Singh, Hoshiarpur A. Opening of one joint account is not a mistake in case you are able to identify your income as well as your wife’s income separately from the deposits made in the joint account. I would, however, advise that you should open two joint bank accounts one with your name as first holder and the other with your wife as the first holder of account. The amount of income earned by you should be deposited in your account and your wife’s income should be deposited in her account, thus providing the necessary identification. The reply to Mr Baljit Singh was in response to a query where a P.P.F. Account had been opened in wife’s name but the contributions were being made by the husband. The authorities have, therefore, notified that in such cases only one account can be opened. In case you and your wife are having separate incomes, the opening of two account is not prohibited. |
UTI to co-sponsor KBC-III Fortis plan Kingfisher |
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