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No scam behind market meltdown: SEBI
Patel asks airlines to cut fares
Citi may replace Pandit
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Govt mulls fuel price cut
Aviation Notes
Investor Guidance
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No scam behind market meltdown: SEBI
New Delhi, November 22 "We have not found anything in the market that would give us suspicion that something had seriously gone wrong with the market itself," SEBI chairman C.B. Bhave said here at the HT Leadership Summit. When observed by the discussion moderator that the regulator is giving assurance that scams, which took place in bull runs in the past, are non-existent or negligible this time, Bhave said, "So far we have not seen anything." Only leveraged FIIs like hedge funds are going out of the market, he said, adding that long-term investors like pension funds and university funds are buying stocks. "Equity is going into the hands of people who have patience," he said, pointing out that many people who stayed away from the market last year have now started buying stocks. Bhave said if four FIIs sold stocks, three others bought them during the period from September 1 to November 14, 2008. He said FIIs net sold stocks worth Rs 22,000 crore, while brokers sold stocks worth Rs 700 crore on proprietary accounts in this period. On the other hand, the net buying of stocks by mutual funds was worth Rs 1,000 crore, domestic institutional investors Rs 16,000 crore, and other investors, including retail Rs 5,600 crore. The market watchdog's analysis shows that there was minimal net-selling from September 1 to November 14. Bhave said India would be among the first few countries to recover fastest from this crisis and in the meantime it should focus on institutional reforms required to handle bigger markets. Bhave said India's weight in the world would be greater after the crisis goes than what it had been before. Pointing out that smart investors are in fact picking up stocks in the current scenario, he said, "If you think Indian investors don't have money, if you think Indian investors are running away, think again. There are some smart guys sitting out there, who think that this market is giving valuations." Bhave said even among FIIs, long-term investors are buying stocks at current valuations. "Pension fund investors stayed away from the market throughout 2007 because they felt it was wrongly priced, but they are investing now," he said. However, Bhave cautioned retail investors against borrowing to invest in equity markets. He also advised them against putting money, which is to be used in an emergency situation, in the stock markets. — PTI
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Patel asks airlines to cut fares
New Delhi, November 22 Air fares in the country have almost doubled in the past one year on account of high ATF prices and low demand due to a global economic meltdown. At a session on aviation during the HT Leadership Summit, Patel told Jet Airways chairman Naresh Goyal and Kingfisher Airlines chairman Vijay Mallya that the “helping hand” given by the government to the industry to tide over the economic crisis must get reflected in lower or competitive prices. “You have been going through difficult times …Perceptionally, the government is trying to help you (aviation industry) to tide over the difficult times ...It has taken the onus to provide you with some relief. Now with fuel prices coming down you must match it with the perception that fares are coming down. Otherwise public sympathy, government sympathy will also come down,” he said. However, an embattled aviation industry, groping to stay afloat in turbulent times, ruled out any immediate reduction in air fares. Goyal said he was even willing to open books for government-appointed audit if need be, adding that any slash in airfares would only be possible after the company becomes profitable. The minister, however, ruled out the setting up of regulator to monitor and recommend fares, stating it went against the free-market principles. But there are indications that state-owned Air India may make the first move, which may force others to also follow. Patel, when questioned if he would ask Air India to cut prices, said: “We have never dictated what Air India (AI) should do in terms of pricing or routes or capacity. But AI as a responsible government carrier will also understand that if oil prices are coming down so should the fares." Patel, who ruled out any bailout package for airlines, also said the government would infuse Rs 1,200 crore into AI. Meanwhile, Patel indicated that air fares would come down by the New Year. Talking to mediapersons after addressing the summit, he said "air fares will definitely come down...Wait till New Year, just one month to go''.
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New York, November 22 Replacing Pandit — an enthusiastic defender of the company's existing mix of businesses — is one of the options being considered by Citi executives, along side selling all or part of the company, a public endorsement from the government or a new financial lifeline to stabilise the banking behemoth, after its shares took a sharp plunge this week. In a series of tense meetings and telephone calls, the executives weighed several options, including whether to replace Citigroup's chief executive Vikram S Pandit or to sell all or part of the company, the New York Times reported. The paper reported that the company's executives on Friday entered into talks with federal officials about how to stabilise the struggling financial giant. The report came amidst some analysts saying that infusion of $50 to 100 billion might be needed to bail out the bank. The course of action, however, remained uncertain on Friday night, the people involved in talks were quoted as saying, and other options may yet emerge. But after a year of gaping losses and an accelerating decline in share price, Citigroup, which has $2 trillion in assets and operations in scores of countries, is running out of time, analysts were quoted by The New York Times as saying.— PTI
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Govt mulls fuel price cut
New Delhi, November 22 However, the issue being pondered is whether it would be right to announce the cut right now as this will violate the Election Commission’s model code of conduct. The proposal includes slashing petrol prices by Rs 2, diesel by Rs 1 and LPG cylinder prices by Rs 50. There could also be an increase in excise duties, though the exact figure of the increase is not known but it is reasoned that the revenue of the government from direct taxes are likely to suffer a shortfall and so a hike in excise duties will help meet that shortfall. The government had raised fuel prices on June 4, in the wake of the high international crude oil prices that had touched to $147 per barrel. But, today the crude oil prices have sunk to a level of $48 per barrel and hence the government is mulling the price cut. The loss to the oil companies is estimated at Rs 1,22,710 crore in the current fiscal. The companies have turned positive on petrol and diesel sales and are earning around Rs 10 on petrol sales , and Rs 0.95 on sale of diesel, but on kerosene they are losing Rs 22 per litre and on LPG Rs 340 per cylinder. |
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Aviation Notes The age-old Thomas Cook's concept of providing commission to travel agents to promote flying is on the high road to extinction. Majority of international airlines in several developed countries have already discontinued giving commission to agents as they want to build their financial bellies. The change in foreign countries has been accepted. In our country, two main actors, airlines and agents, are on different wavelengths leaving passengers to face the music of uncertainty and hardships. As the situation is very murky, some established airlines have struck a deal with some sharp agents, who will not only get ‘reduced transaction fee’ but will also receive some 'incentive commission'. The already dirty market has become dirtier. The 2,000-member Travel Agents Association of India (TAAI), in its marathon seven-hour meeting, decided to strike a system that will be beneficial to all three players —agents, airlines and passengers. Some problems have been addressed, but many thorny issues stay unsettled because both airlines and agents have different viewpoints. The agent-members of different sizes, shapes and integrity scream that the system will not work. "Here rules, norms and directives are only for a few principled people who, in the bargain, suffer", said three senior members. Many agents are of the firm belief that the time is not yet ripe in this country for airlines to sustain and throb without the active participation of agents. They are of the view that the commission structure should continue. "Maybe, it is reduced from five to three per cent", some suggested. "The system in existence for decades cannot be abolished with one stroke; it should be phased out", was the general feeling. The agents' bid to seek redress through court or by resorting to strike are not feasible. It is an empty threat. The agents are free not to patronise airlines, but they cannot coerce them in giving commission. It is their product; they are free to promote it the way they want. The agents may have enjoyed the 'monopolistic status' for decades but they don't have a licence or freedom to indulge in arm-twisting strategy. At least 25 per cent of agents are doing everything except promoting sales cleanly. There are some who are indulging in human trafficking, some are adhering to several other unethical practices to swindle gullible passengers. This sordid scenario is flourishing because politicians, bureaucrats and influential people are subtly helping them. It is certain that quantum of transaction fee will reduce but market remains unstable. This is because both airlines and agents do not have 'knowledgeable and acceptable leaders' who can help bring discipline in the corridors of 'fare structure'. It is a case of too many cooks spoiling the brath. The 'cook' initiated the commission concept, the airlines and agents are fighting the battle of attrition. What is surprising is that the powers that-be in the aviation sector are doing precious little to reduce corruption that has plagued the market.
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Investor Guidance Q: I have a PPF account opened on behalf of HUF. I have extended the account for 5 years by submitting a request in FY 07-08. I have been told that as per new law HUF cannot open a PPF account or invest in NSC for claiming deduction u/s 80C any more. Only existing PPF account can be continued till maturity (at end of 15 years). Since the PPF A/c of my HUF is already extended where four extended year are balance, can I continue to contribute to the PPF account and claim benefit. If not, can I withdraw the PPF amount? ii) Which is the best avenue wherein HUF can invest to claim benefit u/s 80C? — K.V. Pandit A: You can keep on contributing to the PPF account of your HUF account and avail of the tax benefits but at the end of the extended period, you will have to close the account. It cannot be extended any further, neither can a fresh account be opened for HUF. Avenues under sec. 80C that HUFs are still eligible for are ELSS and ULIP under sec. 80C. Gift to father Q: I had invested in 5-year post office RD which has got matured and I got it in cash in my native place. Since I am not intending to go there immediately, I gave it to my father and asked him to open an FD for one year in his name. 1) Since the money has not remitted into my bank account this year, should I be paying tax on this income this financial year? 2) Next year when I get the money from my father on maturity of FD, how will I show it in my return? Will it be better to show it as gift or as something else? My father is retired and does not come in the tax bracket — Bindu M B A: Whether you get the maturity in cash or by cheque, it is your income and tax is payable by you. It is your call if you wish to do so or not. You have since given the money to your father for opening an FD in his name and this will be tantamount to your gifting him the money. Later, when he gives you back the proceeds, he will be gifting the funds back to you. Such gifts between immediate family members are tax-free. However, the income from the FD will be added to your father's income. After adding, if he continues to be below the taxable limit, he need not file a return. Revised return Q: Please advise me on the below. 1) I had invested in a cumulative bank deposit and it is maturing in this calendar year. I failed to show it in my IT return and now how do I account for it? 2) If I have to file a revised return, will I have to revise it for past 5 years? 3) If my father gifts me some money, am I liable to pay any tax on it? if yes, at what rate? 4) I have booked a flat under construction in 2006 and expecting possession in this financial year. Can I claim tax rebate on this house, though I don't plan to shift to this house for another 2-3 years, nor do I plan to let it out. 5) Alternately if I sell this house after possession can I get any capital gain benefit? — P.R. Goel A: You may submit the entire interest received over five years for tax in the return for this year. There is no requirement for filing revised return. There would be no tax incidence either on you or on your father on the gift that he gives you. The tax rebate on housing finance is not connected with whether you occupy it or not. However, the interest is deductible only from the year in which you take possession. Interest paid for the past years is deductible in five equal installments beginning from the year in which you take possession. If you sell the house after three years of having taken possession, you will be liable for long-term capital gains tax. Else, the tax will be short-term in nature. NRE accounts Q: My son and daughter-in-law have become US citizens last year. I have a few queries regarding their financial dealings in India: 1) Both are having normal savings accounts here in a couple of banks. 2) Both are also having their NRI accounts here in Mumbai. 3) Both are having PAN and we are filing their IT return regularly in Mumbai. 4) Both are having their demat accounts for shares. Now what should be done about all the above facts as per our present laws? — Nayan Gada A: When a person becomes an NRI, he has to get all his resident savings accounts redesignated as NRO. NRIs are not allowed to hold and operate normal resident savings accounts. For repatriation purposes, fresh NRE accounts may be opened. They are free to give you a mandate to operate such accounts since they are not physically present in India. Their IT return has to be filed in the normal course, however, in the status of NRI. Also, for stock market transactions, PINS permission would be needed. Under this, a fresh NRE and NRO account meant exclusively for trading would need to be opened. The existing shares may be transferred to the NRO non-PINS demat account. The authors may be contacted at wonderlandconsultants@yahoo.com
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JamshedpuR New
Delhi Chandigarh Tata Indicom offer: Tata Indicom has announced ‘Sachet’ — a special tariff voucher for pre-paid mobile customers of Punjab. Sachet vouchers are available in three variants with a validity of one day each. Power sachet priced at Rs 4 reduces local call rates, whereas STD Plus sachet priced at Rs 6 and ILD sachet priced at Rs 7 reduces national and international call rates respectively. — TNS
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New York, November 22
