The Tribune, Chandigarh, India

	Inflationary pressures easing, says RBI Bangalore, August 28 Reserve Bank of India Governor D Subbarao yesterday said the country's economic growth is getting broad-based and inflationary pressures are easing. "There is evidence that growth is getting more broad-based. Inflationary pressures, too, are easing because of improved supply position as also the impact of monetary tightening effected by the Reserve Bank," he said while delivering a lecture here. "Going forward, the Reserve Bank will calibrate policy action to the evolving growth inflation dynamics," Subbarao said. "Given the uncertainty in the world and the lags in monetary transmission, it is not possible to offer more precise guidance. All I can say is that our guide post is festina lente-as the Romans used to say-make haste slowly". Subbarao, who was speaking on "Economic Crisis and Crisis in Economics: Some Reflections", said the Reserve Bank has to balance between the objectives of growth, price stability and financial stability. "Determining this prioritisation is the judgement call of the RBI. People who apprehend that monetary tightening will hurt growth must remember that even if there is some sacrifice of output in the near-term, we are better off curbing inflation since inflation can be inimical to sustainable and equitable growth in the medium term", he added. — PTI
	FM confident of over 8.5% growth New Delhi: Finance Minister Pranab Mukherjee on Saturday exuded confidence that the economy would grow by more than 8.5 per cent this fiscal, despite partial rollback of stimulus measures. Addressing heads of Indian Missions here, he said the economy is likely to continue the high growth trajectory in the coming years as well. Mukherjee said fundamentals of the Indian economy are strong and explained to the heads of Indian Missions how India coped with economic challenges. Indian economic growth slowed down to 6.7 per cent during 2008-09 from nine per cent in the previous three years after the deepening global financial crisis hit the economy.
	Aviation Notes Ahmedabad airport on foreign airlines’ radar by KR Wadhwaney The congestion at the two international airports in Delhi and Mumbai will continue as the passenger traffic on national and international routes rises. The relief in immediate future appears hazy as construction of new airports at Noida and Navi Mumbai has been besieged with unending problems. The politicians, suffering from their personal egos and false notion of prestige, are standing in different corridors. Amidst this complicated situation, some foreign airlines are studying the feasibility of starting international operations to Ahmedabad instead of touching Mumbai. The idea has been well received in civil aviation sector which believes that some congestion can be reduced at Mumbai’s over-busy airport by diverting some flights to Ahmedabad. This refreshing thinking has arisen only after Ahmedabad has acquired a remodelled passenger terminal at the Sardat Vallabhbai Patel airport, which, according to aviation authorities, has been functioning superbly. The new terminal building, constructed by the Airports Authority of India (AAI), is ultra-modern. It has already secured acclaim from foreign engineers and architects. The movement of passengers within terminal are hazard-free and visitors have also facilities to meet in-coming and outgoing passengers. Constructed at a cost of more than Rs 300 crore, it has been modelled on the lines of the Singapore’s Changi airport. The terminal, spread over 41,000 square metres, is geared to handle more than 25 international flights and 80-100 domestic flights a day, as of now. There is enough scope for expansion as the traffic grows. There are aero-bridges, spacious check-in counters and sophisticated conveyor belts for passengers to collect their baggage. What is satisfying to passengers, as also visitors, is that there is tunnel which connects old terminal building with the new one. This is the airport for future, according to aviation analysts. The AAI’s performance in constructing a new terminal at Ahmedabad has been more than satisfactory. It has competent officials who are capable of delivering if there is no pin-pricking from politicians. The feeling is that the output of the AAI will be much better than that of private operators if they are provided with the same autonomy as private companies have been bestowed. The fact is that the private operators talk more and charge more fees than deliver service to the passengers. Why are private operators at several airports like Delhi, Mumbai, Bangalore and Hyderabad allowed to charge users’ fee? How long will passengers pay this levy? No one seems to know about it. Constructing new terminals is one thing but providing facilities to passengers, visitors and airline officials is entirely different. The mindset of the politicians has to change.
	Investor Guidance One-house norm not must for exemption u/s 54 by AN Shanbhag Q: 1) I have two houses in my name. I want to sell one of them & invest the long-term capital gains in another new house. Is this admissible in spite of the fact that I owned two houses to begin with? I think I read somewhere that tax deduction is not available if taxpayer owns more than one house. If this is so, can I sell both houses and purchase one new house to avoid/ reduce long-term capital gains tax? 2) Will the tax position change if the house which is not being sold, is given on rent and thus not self-occupied property? — Chainani A: 1) The requirement of the individual not owning more than one house is mandatory for long-term capital gains (LTCG) earned by selling assets other than a residential house and claiming exemption u/s 54F. You plan to sell your residential house and are claiming the exemption u/s 54 under which you can hold any number of houses. You have to purchase a new house within 1 year before or within 2 years after the date of sale. Alternatively, you have to construct the new house within 3 years after the date of sale. The money not utilised before last date for filing the return or the actual date of filing the return has to be deposited in CGAS account in a bank. 2) The tax position does not change if the unsold house is rented out. ELSS scheme Q: 1. I have invested in a tax-saving mutual fund (ELSS) under the dividend reinvestment option. This investment comes with a 3 yrs lock-in period. Can I withdraw the total units (i.e. Original units + Units obtained on dividend reinvested every year) after 3 years i.e. from the date of purchase to 3 years? OR Do I need to wait 3 years from the time every dividend has been reinvested for selling the reinvested units? Following example can better explain. 100 units purchased on 01-Apr-2007 Dividend reinvestment units assigned during the years are as follows: 1 Year: 10, 2 Year:10, 3 Year:10. Now, total units are 130 after the end of three years of original investment i.e. 2010. Can I withdraw total units in year 2010 or am I only eligible to sell 100 units? And if I can sell only the original 100 units, for the remaining 30 units do I need to wait till the lock-in period of further three years? — Chandra Sekhar A: Every dividend reinvested takes on the colour and character of a fresh investment in the ELSS fund and hence is locked for three years. So you can withdraw only 100 units at the end of year three. The 10 units representing dividend reinvested in the first year can be withdrawn in the fourth year, the next 10 units can be withdrawn in the fifth year and so on. Here it must be pointed out that in the meanwhile, were you to receive any further units on account of dividend on the balance units being reinvested, those units would also be locked in for a further three years from issue. This creates an infinite cycle and hence it is advisable not to make any ELSS investment under the Dividend Reinvestment option. No tax on gift from relative Q: My father-in-law, who is a senior citizen, plans to sell off his house and distribute the sale proceeds equally amongst his wife and four children. He will be getting about Rs 40 lakh. My queries are: Whether he has to pay any capital gains tax or any income tax? What is the tax liability on his children if they get part of the sale proceeds? How best to invest the amount to get a steady monthly income, if he keeps the amount with himself? — B. N. Ramesh A: Yes, your father-in-law will have to pay long-term capital gains tax on this sale. After he sells the property and provides for the tax thereon, he may distribute the net proceeds among his wife and children - this would be a gift from him to them and as per Sec. 56 of the Income Tax Act, there is no gift tax on a gift made by a relative. Regarding how best to invest the amount, I would suggest a mix of Senior Citizen Saving Scheme and good MIP schemes of mutual funds. SCSS yields 9% p.a. whereas a good MIP scheme with a strong track record is expected to yield around 10-12% pa. over 3-5 years. The authors may be contacted at wonderlandconsultants@yahoo.com