The Tribune, Chandigarh, India

	Favouritism hurting BSNL Our Roving Editor Man Mohan writes from New Delhi The Prime Minister’s Office and many in the corridors of power want to know what ails the BSNL. The government is worried about the continuous fall of the firm, once regarded as a crown jewel among public sector undertakings. Insiders claim that the BSNL is being systematically destroyed by a political-bureaucratic nexus to favour vendors and bidders. One after another, alleged scams have engulfed the BSNL into controversies. It is being alleged that the top brass at the BSNL has risked national interests by siding with Chinese vendors. The 93-million-line GSM tender awarded to a Chinese company early last year had seen all twists and turns of a cheap thriller. Starting from awarding the deal behind closed doors with a single party bid, the high drama led to disqualifying international giants on flimsy “technical grounds” to ignoring the express advisory of the Defence Ministry and RAW. Despite the Chinese company’s reported links with the Chinese army, its “tainted past” and being blacklisted in the US, the UK, Japan and Australia, the BSNL flouted all warning and signals to award the contract and had to be finally stopped only under extreme pressure from the PMO. But the Chinese company, for strange reasons, still continues to be BSNL’s “preferred vendor” for WiMAX equipment in the border states like Rajasthan and Punjab. Similarly, within weeks of allotting the 2G spectrum licence to Swan, Telecommunications Minister A. Raja had helped it have a strategic arrangement with the BSNL, literally for free. An MoU between the BSNL and Swan, called the Intra-Circle Roaming Agreement, does not indicate even a nominal sum that the BSNL is charging for sharing its infrastructure. Last year, the BSNL aggressively pursued acquisition of 46 per cent of the Zain group for $13.7 billion, together with a consortium comprising Malaysian billionaire Al Bukhary and a little-known Vivasi Telegence Limited (VTL) of India - interestingly both lacked mobile operator experience. A nine-member government joint committee set up to assess the project expressed the opinion that the proposal did not “merit consideration” as VTL was in losses and had a negative networth. Despite this, the management of both BSNL and MTNL, in defiance of joint committee’s decision, wrote a letter to the VTL group on October 3, 2009, expressing keenness to participate. And, immediately after the CBI raids in later part of 2009 to unearth the Rs 60,000 crore 2G scam, BSNL bigwigs took the hint and rushed to pull out of the deal. Industry experts allege that this was orchestrated to siphon out $10 billion from the BSNL and the MTNL (wiping out their entire reserves) to facilitate this acquisition. The BSNL’s Rs 1,000 crore rural tender for WiMAX is also mired in controversy as a firm, which was the fourth lowest bidder, has been put under the scanner of the Directorate of Revenue Intelligence for evasion of duties by its parent company while importing equipment for an earlier BSNL contract. A year ago, the government favourably allotted 3G and WiMAX spectrum ahead of private operators and still the BSNL has not captured the first mover’s advantage due to repeated cancellation of Expression of Interest to select WiMAX franchisees for its broadband project. BSNL is not only the second biggest employer after the Defence, it is also the lifeline of communications across the country. “The systematic and planned blows at the very foundation of its structure will cause serious damage to the national security and national communication infrastructure,” says a former top Telecom Ministry bureaucrat. Putting the BSNL on saline is not a solution, feel several industry experts. In their view, it needs to be cured of the malaise that is dogging it, and that requires not just getting rid of failed captains and “political allies”, but establishing a lesson for those who take the hot seat next - the term of Kuldeep Goyal, chairman-cum-managing director ends this June. Otherwise, many fear that BSNL soon in future may stop connecting India. Concluded
	Reliance media aggressive on Fame New Delhi, February 21 The Anil Ambani-led Reliance MediaWorks today made a public offer to buy an additional 52.48 per cent stake in the multiplex chain operator Fame India for about Rs 180.14 crore, countering an existing takeover bid by rival Inox Leisure. Recently, Inox Leisure had signed an agreement to acquire 43.28 per cent promoter's stake in Fame India and earlier this month made an open offer to buy another 20 per cent stake, at a price of Rs 51 per share. At present, three Anil Ambani group firms--Reliance Mediaworks, Reliance Capital Partners and Reliance Capital-- together hold about 10.26 per cent stake in Fame. In a public notice, Reliance MediaWorks said it would make an open offer to acquire 52.48 per cent in Fame India. Sources said the decision to make the open offer was made at a board-level meeting held yesterday. An ADAG spokesperson declined to comment. The open offer is made for 2.16 crore shares at a price of Rs 83.40 per piece, much higher than that offered by Inox. Interestingly, Inox's open offer for 20 per cent additional stake in Fame is priced at Rs 51 per share. Inox has 42.68 per cent shareholding in the multiplex chain operator. Once the open offer is completed, the Reliance group will have a total stake of 62.74 per cent in Fame India. Earlier this month, Reliance MediaWorks had said it would seek action against Fame for selling promoters' stake in the theatre chain to Inox at a price much lower than it had offered earlier. — PTI
	e-money transfer to be faster, costlier Mumbai, February 21 Online transfer of funds from bank accounts may soon become faster, but this can lead to higher charges for customers, as banks may have to pay the Reserve Bank a fee for this service from April 1. The National Electronic Fund Transfer (NEFT), which allows bank customers to transfer funds electronically, has been a highly successful service ever since it was launched in late 2005. In a circular to the chiefs of all member-banks providing the NEFT service, the RBI has asked the banks to take necessary measures to "strengthen the NEFT system in terms of availability, convenience, efficiency and speed" from March 1. — PTI
	Glaxo diabetes drug risky for heart: Report New York, February 21 An American Senate committee has said GlaxoSmithKline's diabetes drug Avandia poses increased risks of heart attacks, a conclusion which has been rejected by the pharma major. The report which is based on a two-year inquiry of Avandia (Rosiglitazone), also pointed out that GSK is aware about the possible cardiac risks associated with the diabetes drug. GSK Pharma sells two diabetes medicines--Windamet and Windia--in India. Both drugs have Rosiglitazone as one of their active ingredients, according to GSK India website. Company officials could not be contacted to know whether the Senate committee report would have any adverse impact on the two drugs sold here. "The totality of evidence suggests that GSK was aware of the possible cardiac risks associated with Avandia years before such evidence became public. "Based on this knowledge, GSK had a duty to sufficiently warn patients and the FDA (Food and Drug Administration) of its concerns in a timely manner," said the report released by senators -- Max Baucus and Chuck Grassley -- on Saturday. Baucus is the chairman of the committee on finance and Grassley is a ranking member. Rejecting the report, GSK said it drew conclusions on the safety of Avandia that were based on analyses that are not consistent with the rigorous scientific evidence supporting the safety of the drug. — PTI
	Tax sops, interest-free loans exporters’ demand Ruchika M. Khanna Tribune News Service Chandigarh, February 21 With exports in most sectors on the downslide, exporters in the region are looking forward to a budget that bails them out of the present crisis. Bogged down by rupee volatility, slowdown in demand in the USA and Europe and threat of incentives being withdrawn, the exporters are keeping their fingers crossed, hoping that the incentives are not withdrawn. They say that the biggest crisis that they faced today was the fluctuation in the currency market. With the appreciation of the rupee (against dollar) by almost 10 per cent in the past less than two months, the exporters feel that the withdrawal of the incentives would be a retrograde step for their growth. S C Ralhan, regional chairman of the Enginnering Export Promotion Council, said the only growth in exports had been in the gem and jewellery and the iron ore business. “There has been a negative growth of 40 per cent in exports from the manufacturing sector. If the stimulus package is taken back, it can adversely affect the small upward momentum taken by exports,” he rued. Agreeing with him, Gaurav Sud, a leather exporter from Jalandhar, too, said the stimulus package should not be withdrawn as it would hit the exporters hard. “Though the stimulus package, which mainly gave relief in interest and cut in excise duty, was not of much help, at least it ensured that the exporters remained afloat in times of global recession. With the rupee volatility eating into our profit margins, coupled with a slow demand, we hope the Finance Minister will announce better incentives in duty drawback and import licences, besides reducing import duty on chemicals. The government must come to our aid and give us financial support and enhance the quantum of stimulus package,” he said. Avinash Gupta, an auto component exporter from Ludhiana, said at this juncture, the Finance Minister should consider giving complete Income Tax relief on profits earned through exports under section 80 HHC of the Income Tax Act. A K Kohli, senior vice-president of the Punjab Chamber of Small Exporters, too, felt that export from labour intensive units like engineering sector should be given more impetus. “There is need for technical upgradation to increase productivity and become competitive with China, by reducing the manufacturing cost and increasing the production. So the government must provide interest-free loan for technical upgradation for small exporters,” he suggested.
	Zain, Airtel to ink letter of intent this week Girja Shankar Kaura Tribune News Service New Delhi, February 21 Kuwait’s biggest phone company, Zain, and Bharti Airtel are expected to sign a letter of intent by the end of this week on the sale of most of Zain’s African assets to India’s largest telecom operator. Reports said the letter would include the official offer and the schedule of payment. The letter of intent will have a clause whereby Bharti will be required to pay $10 billion once the due diligence process is complete. Bharti has been in exclusive talks since February 15 and until March 25 to buy Zain's African business, excluding Morocco and Sudan. It is Bharti’s third attempt at gaining a foothold in a continent that offers a last opportunity for major subscriber growth. Zain and Bharti said on February 15, they entered into exclusive talks under which the Indian company would buy the African assets for $10.7 billion. Bharti chairman Sunil Mittal later said his company did not need any regulatory approvals from the country to acquire it and expressed the hope that the deal would be concluded by the end of April. "The deal is on fast track. My guess is that we should be able to close the deal by the end of April", Mittal told a news channel. He also said Bharti was not seeking any government approval as it was not required in this case. "We are only seeking blessings, no regulatory approval is needed for the deal in India. This is a much cleaner deal than MTN.. no dual listings; it has no complications as was in case of the MTN," Mittal said. Mittal said the funding plans were being worked out by his treasury team, and StanChart will be the banker while there would be many regional bankers as well from West Asia. He termed the deal as a much better one than what was on offer in the deal with MTN and pointed out that SingTel, the 32 per cent partner in Airtel, was in full support of the deal. Meanwhile, the Zain group has said its decision to sell its African assets is a strategic move and not due to financial pressures.
	Tax Advice Amount received from son not taxable by SC Vasudeva Q. I am a retired government employee and more than 70 years of ages. My son, who is employed in Mumbai, regularly sends me about Rs 1 lakh per year, which is sufficient for me to meet my expenses as I am staying in my own house at Panipat. I also have some income from interest and pension. Is the yearly amount of Rs.1 lakh received from my son subject to tax? Sumit A. Rs 1 lakh received by you from your son towards meeting your household expenses will be treated as a gift to you. The amount of gift received from your son is not taxable under the provisions of the Income-tax Act 1961 (the Act). Further there are no gift tax implications as at present no gift tax is leviable in India. Car loan Q. I am a senior citizen and have purchased a car by taking finance from Canara Bank. The EMI for the loan taken from the bank is Rs.6000 per month. Is it possible for me to claim a deduction in respect of the principal and the interest paid towards the repayment of the loan? — Anil Kumar A. You have not indicated the source of your income. As you are a senior citizen, I presume that your income comprise pension and interest. In such a case no deduction is allowable from the total income in respect of instalment paid towards the repayment of loan borrowed for purchasing a car and payment of interest in respect of such loan. Gift of shares Q. I have transferred some shares to my wife without any consideration. I have executed a gift deed in respect of gift of the shares. Is there any tax leviable on such transfer of shares? As and when the shares are sold, who will be liable to pay the capital gains tax if the shares are sold at a profit. — Raj Kumar A. The gift of shares to your wife is not taxable under the provisions of the Act. However, in accordance with the provisions of the Act, the transfer of a capital asset without any consideration to a wife will be ignored and the capital gain arising on the sale of shares computed according to the provisions of the Act shall be chargeable to tax in your hands. LIC premium Q. I have taxable salaried income. My father had taken some LIC policies and was paying premiums from his income. Now, he is a senior citizen. For the past three years, he has no income at all and hence I am paying his policies premium. Am I eligible for any deductions in my Income Tax returns? Under which sections & how much? — A.K. Mishra A. The deduction allowable under section 80C of the Income-Tax Act 1961 (the Act) is for the amount paid to effect or to keep in force insurance on the life of the assessee himself, his wife or husband and any child of such an assessee. It may thus not be possible for you to claim the deduction from your taxable income for the amount paid towards the insurance policy of your father.