New Delhi, April 29
Finance Minister Pranab Mukherjee today announced changes in tax proposals that will benefit coffee growers, new hospitals and construction sector while making it clear that service tax on domestic travellers would be Rs 100 per domestic journey and a maximum of Rs 500 for international travel.

Mukherjee announced these concessions that would cost the exchequer Rs 300-400 crore a year but did not touch the demand for rolling back the hike in petroleum and fertiliser prices on which the entire opposition walked out before Lok Sabha passed the Finance Bill, 2010.

Explaining the reasons for his inability to concede the opposition's demand, he said the financial position was such that oil marketing companies faced an under recovery of Rs 85,000 crore this year apart from heavy outgo on account of subsidies, interest and other payments.

On account of the new coffee-debt relief package, the outgo from government kitty will be Rs 241.33 crore, but benefit to farmers will be worth Rs 362.82 crore.
The government has also provided tax relief to the construction sector by levying the newly imposed service tax only on 25 per cent of the total value of the property, including land, compared to 33 per cent proposed in the Budget.

Mukherjee also exempted from service tax low-cost housing for the urban poor under the Jawahar Lal Nehru National Urban Renewal Mission (JNNURM) and under Rajiv Awas Yojna.

To augment supply of steel in the growing economy, the government announced cut in customs duty on stainless steel scrap from five per cent to 2.5 per cent and increase in export duty on iron ore lumps to 15 per cent from 10 per cent Referring to the imposition of service tax on domestic and international air passengers, he said he has received a number of representations expressing concerns that this levy would affect the aviation sector and make air travel prohibitive.

"I would like to clarify that it would not be so. The effective rates of levy, when they come into effect, would be a maximum of Rs 100 per travel for domestic journey in any class and a maximum of Rs 500 per travel for international journey for economy class.

"Further domestic travel to and from the North Eastern sector would be exempt even from this moderate tax," he said.

He also reduced customs duty on 11 drugs, including those for treatment of AIDS and cancer, exempted components for manufacture of optical discs from such levy and reduced the counter veiling duty on waste paper to 4 percent.

The Finance Minister, however, justified the hike in excise and customs duties on crude oil and some petroleum products because of the prevailing global situation and said he had taken a "correct" stand by not touching retail prices.

"Instead of duties, I could have taken the administered price mechanism route. But I did not do so because to me it would not have been correct," the minister said in his final reply to the debate on the Finance Bill for the current fiscal in the Lok Sabha.

He said it was because of hiking the duties that the state governments would get a 32 per cent share of the measure, amounting to Rs 26,000 crore, based on the formulae for sharing of central revenues.

Mukherjee said he had decided to lower excise duty on hand-made cheroots priced up to Rs 3 per stick to 10 per cent following demands from members and the industry. He announced a similar concession for scented supari (betel nuts).

Pune, April 29
If chairman of the ICICI Bank and a top financial wizard of the country is to be believed, inflation should start coming down in the next six to nine months to somewhere between six and eight per cent.

Talking to newsmen at Ambi valley here, he says that inflation that has been at peak now has started receding.

Kamath was here to speak on technology disruptions in banking. Refusing to comment on any change in interest rates, he said Indian banking has not followed traditional growth paradigm and has jumped a few places.

"Technology has impacted the banking sector in a big way. In 2000 when the concept of Automated Teller Machines (ATM) was introduced, it had run into serious problems because of connectivity. Even when the ATMs were provided hot lines from telephone exchanges, they could not work effectively.”

From three per cent ATM coverage, it has now consolidated at 42 per cent.

"I personally feel that ATM role may stabilise at this level or may even come down slightly after the mobile telephony becomes an effective instrument in banking. If you can use your handset for making payments, why should you go to an ATM to withdraw and keep cash with you to make payments.

"I expect both Internet and mobile banking or m-Banking to be in the 40 per cent category in another five to 10 years.

"It is the best way to banking the unbanked. Creating infrastructure or providing a bank branch or an ATM in a rural area is not only costly but also difficult in some remote and backward areas. Appointment of banking correspondents and use of m-Banking would be handy to bring the remaining 600 million Indians under the banking cover,” he said.

New Delhi, April 29
Food inflation eased by over one percentage point to a month's low of 16.61 per cent for the week ended April 17, as pressure on prices declined with the arrival of rabi crops in the markets.

However, the fall in food inflation does not call for any celebration as the price pressure will remain till June with inflation spreading to manufactured items, economists warn.

Besides rabi crops, the government is pinning its hopes on reports of normal monsoon for further decline in food prices.

Reports of normal monsoon this year has also calmed aggressive speculative activities, analysts said.

Over the week, inflation declined from 17.65 per cent as prices of masur, jowar, fruits and vegetables fell by 2 per cent and that of wheat by 1 per cent. However, moong, urad and fish-inland became costlier.

"Fall in food inflation is on expected lines. The supply situation is easing. The government, too, has indicated of a declining food inflation...Both with the arrival of rabi and on expectation of good monsoon. We see food prices to moderate considerably," said Abheek Barua, chief economist, HDFC Bank.

On an annual basis, potatoes saw a significant fall of 28 per cent in prices on glut in supplies in various parts of the country and onions became cheaper by 10 per cent.

However, pulses remained expensive by about 30 per cent, milk by 22 per cent and fruits by about 10 per cent over the last year. — PTI

New Delhi, April 29
Prime Minister Manmohan Singh today constituted an Empowered Group of Ministers to decide on freeing petrol and diesel prices from government control and a decision is likely after Parliament session ends on May 7.

The EGoM will be headed by Finance Minister Pranab Mukherjee and its decisions would not be required to be approved by the Cabinet, official sources said.

"We expect a decision (on fuel prices) to be taken in the next 10-12 days," a senior official said.

Freeing petrol and diesel prices from government control is being considered after revenue losses of state retailers in 2010-11 was projected to climb to over Rs 85,000 crore.

Mukherjee while replying to the debate on Finance Bill in the Lok Sabha today said retailers IOC, BPCL and HPCL are projected to lose over Rs 85,000 crore in revenues on selling petrol, diesel, domestic LPG and kerosene below cost.

Sources said one of the options being considered is freeing auto fuel prices, while revenue loss on domestic LPG and kerosene could be made up by upstream firms like ONGC.

Decontrolling auto fuel prices would mean a hike of Rs 6.68 per litre in the rates for petrol sold in Delhi and a Rs 5.81 per litre increase in diesel rates.

Sources said the EGoM may decide if the hike necessary to take domestic retail prices to international parity should be implemented in one or more instalments.

The Petroleum Ministry is keen that petrol and diesel prices are freed and wants a moderate hike in the price of LPG, which is being sold at a loss of Rs 265.27 per 14.2-kg cylinder. On PDS kerosene, oil firms lose Rs 18.42 per litre.

Sources said the three retailers lost Rs 47,960 crore on selling fuel below cost in the 2009-10 fiscal. — PTI

New Delhi, April 29
As the 16th day of auction for the third generation (3G) services spectrum assured the government a minimum of Rs 36,000 crore, Telecom Minister A Raja today informed Parliament that the bidding process may be completed in next "one or two" days. The statement from the minister assumes importance as the pattern for the auction ending Wednesday reflected that the bidding has entered the final phase, with most of the circles, including Delhi and Mumbai, seeing either no or negative demand.

The bidding has already crossed over two and half times the base price on the 16th day of the auction and it is expected to settle around Rs 9,000 crore for a pan-India licence, ensuring a minimum of Rs 45,000 crore in the government coffers from the 3G auction alone. The auction for the broadband which would follow soon is expected to give government another at least Rs 10,000 crore, raking in a total of around Rs 55,000 crore.

Nine mobile operators, including Bharti Airtel, Reliance Communications and Vodafone, are participating in the auction, which started on April 9. It, however, could not be ascertained who are in the final round of bids being conducted online.

The auction, which saw its 16th day yesterday, had bid for all-India 3G telephony touching Rs 8,914 crore, which assures the government of over Rs 36,000 crore in revenue.

According to information on the DoT’s website, aggregate demand for Delhi, Mumbai and Maharashtra circles were two against three slots of spectrum on the block, meaning, thereby the price may not go up further.

As per the rules of auction, any operator can come back and bid for the above mentioned circles even if they have quit at some stage during the process. Among individual circles, Mumbai’s last bid stood at Rs 1,397.13 crore, while that of Delhi was Rs 1,363 crore against the reserve price of Rs 320 crore for both service areas.

The government had estimated a revenue of Rs 35,000 crore from the sale of spectrum for both 3G as well as Broadband Wireless Access (BWA), for which the auction would begin two days after the 3G auction is through.

Telecom Minister A Raja had said earlier that government’s revenues may touch Rs 50,000-55,000 crore from auction of spectrum for both 3G and BWA.

New Delhi, April 29
IT company Patni Computer Systems today reported a jump of over two-fold in consolidated net income at $33.3 million for the first quarter ended March 31, over the same period last year.

BRIEFLY

Toyota suspends booking of Fortuner
New Delhi: Japanese auto giant Toyota on Thursday said it has suspended bookings for its sports utility vehicle Fortuner till July in India in order to clear backlog of bookings. The move comes at a time when the company's Indian subsidiary Toyota Kirloskar Motor is undertaking an exercise to change faulty brake kits of the vehicle following complaints from 220 customers.— PTI

Tata, Actis to float JV
New Delhi: Tata Group-promoted TRIL Roads on Thursday said it has entered into an agreement with private equity firm Actis to float a $200-million (Rs 890 crore) joint venture which will invest in road and highways projects. TRIL Roads Pvt Ltd, a wholly owned subsidiary of Tata Realty And Infrastructure, would invest $122.5 million, while Actis would contribute $77.5 million, it said. — PTI

S Tel milestone
New Delhi: Mobile service provider S Tel on Thursday said it has added over one million subscribers within 90 days of the launch of its services in the country. S Tel, a joint venture between Chennai-based Siva Group and Bahrain Telecommunications, started its services in December 2009. At present, it operates in three telecom circles of Bihar, Orissa and Himachal Pradesh.— PTI

Tata Housing plan
New Delhi: Tata Housing on Wednesday said it was planning to launch about 10 new residential projects in both affordable and luxury segments in 2010-11, with an investment of about Rs 1,200 crore along with its partners. The company will roll out the projects in different cities like Chennai, Pune, Mumbai, Kolkata, Ahmedabad and Bangalore.— PTI

NTPC, CIL form JV
Mumbai: Power major NTPC on Wednesday said it has formed a joint venture with state-run Coal India Ltd that will focus on acquisition of coal blocks in India and abroad. The joint venture will be known as 'CIL NTPC Urja Pvt Ltd' and the two companies "shall contribute equally in the equity share capital of the company", it said. — PTI