"The market is sending strong signals that the fiscal situation is a matter of concern...We should all not rush to fiscal (stimuli) exit at the same time so as not to undermine the recovery...," he said at the G20 Finance Ministers meet here.

India had unveiled a number of fiscal and monetary sops to insulate the domestic industry in the wake of the 2008 global financial crisis, but rolled back some of them such as excise duty cuts after the economy posted healthy growth.

The economy expanded by 7.4 per cent in 2009-10 from 6.7 per cent in 2008-09, the year that bore the brunt of the global crisis. India's fiscal deficit is pegged at a high 5.5 per cent of GDP this fiscal, but the government hopes to reduce it to 4.5 per cent in 2011-12 and 4.1 per cent in 2012-13.

High fiscal deficit makes borrowings costlier for the industry and in turn impact their investments - key to economic growth - at a time when public spending itself is strained because of poor government finances.

"Those countries that have market compulsions may need to start the consolidation now. Others can stagger in fiscal consolidation. It is critical, however, to clearly lay down credible and transparent fiscal consolidation paths," Mukherjee said at the meeting called to discuss the global financial crisis and ways to regulate financial institutions.

The RBI, too, has signalled exit from monetary stimulus and has raised key policy rates twice this year to put the lid on inflation.

Mukherjee also warned the countries that they should exit from stimulus before the markets started forcing them on account of deterioration in fiscal conditions.

"And, we need to act before the market forces us to do so. I may point out that fiscal deterioration is a natural corollary of deep and protracted recessions and downturns as governments try to stimulate the economy back to their true potential," he said.

This entails ceding some control to markets that have to fund the high deficits. Fiscal consolidation is a natural corollary of the recovery process, as countries can only grow their way out of high levels of public debt, he said.

Mukherjee said monetary policy instrument was not very effective on account of continuing instability in financial markets and underlined the need of structural reforms to raise global economic growth, which is facing a fresh threat from rising debt of some countries in Europe.

He said reforms must be seen as creating jobs for wider acceptability since much of the revival in the economies around the world has been jobless. — PTI

The Director-General of Civil Aviation’s (DGCA) latest letter to airlines and pilots on landing procedures is considered as ‘most untimely’ and ‘in utter violation of accident-probe mechanism’ by analysts.

It subtly reveals that the Mangalore air crash occurred last month owing to ‘delayed touch-down’ and thereby ‘unstable landing’, while the findings of the department team’s probe are yet to be officially made public. Would the heavens have fallen if the letter was withheld for a few days and released to the press only after the report becomes public?

What the letter has stressed is nothing new, it is pre-requisite. The trainee-pilots are impressed upon time and again by instructors from the first day to the final parting of their training.

The civil aviation history screams that modern jets manufactured by Airbus Industry and Boeing are safer than stay in ‘secured’ homes. More than 90 per cent fatal accidents take place only because of ‘human fallibility’ and not because of ‘mechanical failure’.

The four-engine planes can be placed on ‘auto flying mode’. The pilot needs skill and professional ability only during the moments of landing and taking-off. Here, the commander must pay attention to the ‘guidance’ of the co-pilot. It is believed that the foreign pilot in the Mangalore crash ignored the valued suggestion of the Mangalore-based Capt Ahluwalia for going around much before ground touch took place.

Soon after this ghastly tragedy, another crash (IX 212 Air India Express Dubai-Pune flight) was averted more by providence than by the team of the pilots. The emergency surfaced when the plane hit an air pocket and the commander was in the washroom. The co-pilot was alone in the cockpit. According to reports, only two minutes stood between another tragedy and Air India’s falling image.

The modern aircraft are fully equipped to provide ‘weather conditions’. How did commander leave the cockpit a minute before the aircraft plunging into the air pocket?

Did the DGCA seek his explanation? Did it record co-pilot’s version in this regard? Did it seek observations of cabin crew?

Maybe, this is the reason for DGCA to issue a directive that a flight attendant should be summoned in the cockpit prior to one of the two pilots leaving the ‘room’.

The key to reduce incidents and accidents is to ensure ‘total discipline and commitment’ in twin communities of pilots and air traffic controllers (ATCs). If pilots are arrogant, no less pampered are the ATCs, who bring into play their set of rules in their functioning.

At two busy international airports of Delhi and Mumbai, for example, some of the ATCs are known to shuffle levels of heights of the approaching planes. The aircraft placed at higher levels are directed down, while lower levels planes are pushed higher.

According to reports, some of them are guilty of indulging in this foul operation because of fringe benefits. The authorities are said to be aware of this malpractice, but no action has been taken as the ATCs enjoy political backing. Here, Air India receives a stepmotherly treatment from the ATCs as the national airline pilots cannot offer any fringe benefit to them.

Q: PSU employees are entitled for maximum 300 earned leave/half pay leave encashment on retirement and Rs 3 lakh is exempted from income tax. My query is as under:

1. 260 days earned leave encashment: Rs 250,000

2. 50 days half pay leave encashment: Rs 60,000

Total No. of days = 310 days

Total amount: Rs 3,10,000

Please confirm the amount on which there will be tax liability and whether

a) there will be income tax exemption for Rs 3 lakh and income tax will be paid on balance amount of Rs 10,000 and amount received on encashment of half pay leave will also be exempted from income tax. or b) Exemption is limited only for earned leave encashment in case of FCI employees.

— M. L. Gupta

A: Under Sec 10(10AA), cash equivalent of leave salary payable to a government employee in respect of leave to his credit at the time of his retirement on superannuation or otherwise, is free from tax. For other employees, this exemption is subject to the least of -

a) 10 months average salary (calculated on the basis of the salary during 10 months preceding the employees’ retirement on superannuation or otherwise).

b) Earned leave standing to the credit of the employee. Earned leave cannot exceed 30 days for every year of actual service rendered for the employer from whose service he has retired.

c) The amount of leave encashment actually received.

d) Rs 3 lakh. (Notification SO 588(E) dt 31.5.02 w.e.f. 1.4.98).

Chennai, June 5
Buoyed by the Tamil film industry's ban on Hindi films associated with stars and technicians attending the International Indian Film Academy awards festival at Colombo, Tamil outfits have come out with an appeal to boycott products of Airtel, which had joined hands with the "rascist Lankan government" for commercial gains.

A joint statement issued by several Tamil outfits on Thursday said Ficci chairman Rajan Bharti Mittal had ignored the protests and boycott of Tamils and went ahead with facilitating business ventures of Indian corporates in Sri Lanka. Airtel has acquired 12 lakh connections in Sri Lanka due to its proximity to Rajapakse, they said and pointed out that it had 1.25 crore connections in Tamil Nadu. Since Airtel was doing business with an "anti-Tamil government", people of Tamil Nadu should boycott Airtel services, they said.

The outfits said the European Union had already withdrawn its GSP (General System of Preferences) concession to Sri Lankan products and added that United Nations secretary-general Ban Ki Moon had decided to go ahead with the constitution of an expert committee to look into the war crimes and human rights abuses committed by the Sri Lankan military during the war with the LTTE. At this juncture, Ficci had decided to organise the IIFA festival at Colombo, where business agreements would also be signed by Indian corporates to start business ventures in the island.

However, major parties in the Sri Lankan Tamils Protection Movement like the PMK, Vaiko's MDMK, CPI and BJP have not expressed their support for this decision so far. Co-ordinator of the movement P Nedumaran who initiated the IIFA boycott call, which found support from Tamil film industry, has not endorsed the decision to boycott Airtel products till now. But, influential non-political movements like the Periyar Dravidar Kazhagam and Tamil National Liberation Movement have made the call.