The Tribune, Chandigarh, India

	PM’s panel for capping margins of MFIs Hyderabad, December 19 After suggesting that MFIs should change their 'flawed' business model, C Rangarajan, Chairman of the Prime Minister's Economic Advisory Council, today said the MFIs' interest rate margins should be capped. "I suppose one approach is to fix the margins of MFIs so that the margin they enjoy is not really too high. The margin should be adequate to cover the transaction cost and the risk element", he told mediapersons on the sidelines of the foundation day fete of skill-development firm, TalentSprint. While refusing to specify the figure for such a cap, he said "that (number) depends on the rate at which they borrow and the rate at which they lend," Rangarajan said. Further, to a query on the interest range suggested by the Andhra Pradesh Government in its report to Malegam Committee - appointed by the Reserve Bank of India to study the microfinance sector-, he said the report needs to be examined by the committee. Earlier, he had asserted that the business model adopted by MFIs that are facing rough weather in Andhra Pradesh, should undergo a change. "The whole idea of encouraging microfinance is to encourage credit for income generating activities," Rangarajan had said. "One of the problems that have surfaced recently is that they (MFIs) have been indulging in multiple lending and large parts of the loans are given for consumption purposes. This is the model that will lend them in troubles," he had said. On the issue of a need for a separate regulator for MFIs, Rangarajan said the report of the Malegam committee needs to be taken into consideration before a decision is taken in this regard. "We need to wait for the report. The Non-Banking Finance Companies (NBFCs) are theoretically under the regulation of RBI. So far, they looked at the liability side of the NBFCs. Now they should look at the assets side also and think what kind of regulation can be thought out," Rangarajan said. On inflation issue, he said that by the end of December it (inflation) could come down to 6.5 per cent and will further come down to 5.5 per cent by March 2011. — PTI
	Govt raises `40k cr via disinvestment in 2010 New Delhi, December 19 Having begun 2010 with a wide gap between its income and expenditure, the government diluted its stake in nine state-owned companies, including Coal India, to raise Rs 40,000 crore that helped cut borrowings. The amount is the most raised in a year since the government began the programme of diluting minority stake or privatising vast swathes of public sector companies in 1991-92. The year started with the follow-on public offer (FPO) of NTPC, in which the government diluted its 5 per cent stake and mopped up Rs 8,480 crore. This was followed by the FPO of Rural Electrification Corporation in the month of March. The government offloaded 5 per cent of its stake in the company and raised Rs 882 crore, while REC issued fresh equity of 15 per cent. In the same month, the government diluted 8.38 per cent of its stake in NMDC through FPO and mopped up Rs 9,930 crore. The fiscal year 2010-11 started with the initial public offer of Satluj Jal Vidyut Nigam (SJVN) in the month of May. While the revenue mop up figure of Rs 40,000 crore is for the 12 months ending December 31, the government has targeted raising Rs 40,000 crore through disinvestment in the financial year 2010-11 running from April-March. In his Budget for 2010-11, Finance Minister Pranab Mukherjee projected a fiscal deficit of 5.5 per cent for the 2010-11 fiscal, down from 6.8 per cent for the previous fiscal. In January 2010, the Centre's overall expenditure stood at over Rs 7.83 lakh crore, while receipts were way below at around Rs 4.34 lakh crore, leading to a deficit of nearly Rs 3.5 lakh crore. The stake dilution was part of concerted efforts to raise funds to boost government finances. As planned, the government diluted 10 per cent of its stake in SJVN and mopped up Rs 1,062 crore. SJVN was followed by the follow-on public offer of Engineers India, where the response was even better. The FPO of Engineers India was subscribed 13.10 times and the government kitty increased by Rs 960 crore by offloading 10 per cent in the company. With a gap of nearly two months came the country's largest IPO - that of Coal India. And since then the disinvestment programme has only gathered momentum. Coal India IPO opened on October 18 and closed on October 13 and the response was overwhelming with the retail segment subscribed 2.21 times and institutional quota around 25 times. The company, in which the government diluted 10 per cent stake, gave Rs 15,199 crore to the exchequer. It was listed on November 4. Three companies —Power Grid, Manganese Ore India Limited (MOIL) and Shipping Corporation -- that followed Coal India IPO were also lapped up by investors. — PTI
	Global economy in better shape New Delhi, December 19 As 2010 draws to a close, the health of the global financial system appears to have improved, with the economic clout of emerging nations on the rise even as developed countries continue to grapple with debt woes. Ushering in the New Year, the global economy seems to be in the middle of the worlds of austerity and stimulus. In signs of improvement, the world economy is estimated to have expanded by around 5 per cent this year, in sharp contrast to the lower output witnessed in 2009. On either side of the Atlantic, the efforts to contain fiscal deficit and bolster economic growth have been in different trajectories. While crisis-hit Europe is clamouring for severe tightening measures, the United States continues to print more dollars. "Uncertainty and struggling to regain itself in the aftermath of the global economic slowdown has been the hallmark of most economies during 2010," global consultancy firm Deloitte India's Principal Economist Shanto Ghosh said. In the wake of the ravaging crisis, power has shifted from the once-unshakable developed world to rapidly growing nations such as India and China. In a testimony to their rising economic clout, India and China are all set to get more voting power at the International Monetary Fund (IMF). The G-20 grouping has emerged as the most influential voice, with increased focus on nations such as India and China, whose consuming power is leading the global recovery. Meanwhile, the word 'stimulus' continues to remain the buzzword for the world's largest economy, the US. Apart from continuing with a near-zero interest rate regime for three years, the US is now exploring newer ways to boost the still-sluggish recovery. Federal Reserve Chief Ben Bernanke has hinted at further quantitative easing measures, after unveiling a plan to buy $600 billion-worth of government securities. What is more, President Barack Obama has announced fresh tax cuts and earlier this year, initiated steps to discourage outsourcing. The justification for these steps, and more, lies in numbers. The US economy, which expanded by 2.5 per cent in the September quarter, is threatened by a high jobless rate. The jobless rate in the US stood at 9.8 per cent in November. With Uncle Sam pumping in more dollars to rejuvenate the over $14 trillion economy and create more jobs, the spillovers are nightmarish. The cheap dollar has fuelled excessive fund flows into emerging nations, including India and China, which in turn has stoked concerns of overheating and asset bubbles.— PTI
	Tax Advice No rebate on tuition fee of brother by SC Vasudeva Q. I am working in BSNL. I am paying tuition fees for my younger brother. My brother is dependent on me. Shall I claim for income tax exemption? If yes, under which section. Please give me details. — Jitendra Maurya A. Section 80C of the Income-tax Act, 1961, provides that a deduction within an overall limit of Rs 1 lakh shall be allowed for amount paid by an individual assessee as a tuition fee for any of his two children. The aforesaid section does not permit the deduction for the tuition fee paid by an individual for the education of his dependent brother. You would therefore not be able to claim such deduction. TDS adjustment Q. My son is a Guest Faculty Professor for few MBA institutions. He follows the mercantile system of accounting. For the Guest Faculty lectures delivered by him during the month of March 2010, one of the Institutes paid by cheque dated 09.04.2010 for Rs 90,000 after deducting TDS. The institute is showing this payment as well as the TDS in the financial year 2009-10. The TDS was paid into the Government account on 20.05.2010. As mercantile system of accounting is being followed by my son can he show the above incomes in the financial year 2009-10? Can he adjust the TDS deducted by the Institutes in the tax to be paid for the financial year 2009-10 although the TDS were deposited by the institutes in the Government account only in the financial year 2010-11? — H.P.S. Iyer A. In case your son is following the mercantile basis of accounting, the Guest Faculty fee will have to be accounted in the year in which it became due to be received by your son. Accordingly, fee due from both the Institutes will have to be included in the return for the assessment year 2010-11 (financial year 2009-10). The amount of tax deducted by institutions though deposited in the succeeding year, will be allowed to be adjusted in the year in which the income in respect of which tax has been deducted is assessable in accordance with the method of accounting followed by an assessee. Your son should, in my opinion be able to get the adjustment for the TDS in the assessment year 2010-11 in view of the aforesaid provisions of the Act. Tax liability Q. I have been regularly reading your tax advice column, mostly on The Tribune Internet version and decided to consult you with my questions. I left India in July 1979 on a foreign assignment. I have just retired from the United Nations Civil Service (UN-ICS) and relocated myself to India. Although, I have been away for many years but have been periodically visiting India almost every year. I had obtained a Tax Clearance Certificate before leaving India in 1979 as it was necessary at that time. I am receiving my UN pension now. May be you are aware of the fact that according to Govt. of India circular number 293 dated 10th February 1981 under Section 15 of the Income Tax Act salary and emoluments plus pension paid by the UN to its officials have been exempted from taxation. Over the years I have been regularly transferring funds to our joint NRE account with my wife. Currently I am using these funds to construct my house. My questions to you are: (a) What is the allowed mandatory grace period for me to file my tax return as an Indian resident? (b) When can I apply for PAN card? (c) My wife who is a Canadian citizen and also holder of PIO card issued by the Indian Govt. can she maintain the current NRE account as a primary holder? (d) Can I be secondary partner to that account?? (e) OR.....do we need to convert this NRE account to ordinary savings account and when? — K.S. Sahota A. (a) There is no question of any mandatory grace period for filing in Income-tax return in case of non-resident. Even a non-resident, in case he has an income arising in India, is liable to file an Income-tax return in case his total income exceeds the minimum taxable limit. Therefore, in case you have an income arising in India apart from your non-taxable pension, you are required to file your Income-tax return. The due date in your case would be 31st July depending upon the income arising for a financial year i.e. April to March. For example, your tax return for the financial year 2009-10 was required to be filed by 31st July, 2010. (b) You should apply for a Permanent Account Number immediately. This is on account of the reason that the tax deductible at source would be deducted at a flat rate of 20% as against the applicable rate, in case such Permanent Account Number is not furnished by you to the person required to deduct tax at source. (c ) An NRE account can be maintained by a person who is a person resident outside India. The term “person resident outside India” is a defined term in Foreign Exchange Management Act, 1999. A person resident outside India means who is not resident in India. A person resident in India means, a person residing in India for more than 182 days during the course of the preceding financial year but does not include- (A) a person who has gone out of India or who stays outside India, in either case - (a) for or on taking up employment outside India, or (b) for carrying on outside India a business or vocation outside India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period; (B) a person who has come to or stays in India, in either case, otherwise than -(a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; The definition reproduced hereinabove is as applicable to an individual. (d) On the basis of facts given in the query, you would not be considered a person resident outside India as you have come back to stay in India for an uncertain period. In view thereof, you should get all your bank accounts designated as ordinary savings or time deposit accounts as the case may be.
	Moser Baer plans capex of $600 m Mumbai, December 19 Solar energy major Moser Baer has planned investment of $500-600 million over the next three to four years for expanding its manufacturing capacity of crystalline cells and crystalline silicon modules in India, said a senior company official. "Considering the huge potential in the solar power sector, both in the global as well as Indian markets, we have planned a capex of $500-600 million over the next three to four years for expanding our manufacturing capacity of crystalline cells and crystalline modules," Moser Baer India's Group CFO Yogesh Mathur told PTI here. The company plans to raise the funds through a combination of debt, equity and internal accruals. At present, the production capacity of the company includes 90 MW of crystalline cells, 100 MW crystalline modules and 50 MW of thin films. With the launch of the National Solar Mission (NMS), the Indian solar photovoltaic (PV) market is poised to grow to 700 MW in the next fiscal as against the 150 MW capacity in FY 11, he said. — PTI
	Karbonn unveils new handsets New Delhi, December 19 To cash on the growing mobile phone market, home-grown Karbonn Mobiles today launched 10 new devices in the price range of Rs 1,500-Rs 5,000 and said it plans to launch 3G smartphones on the Android platform shortly. "This latest range from Karbonn Mobiles underlines our commitment of driving affordability, coupled with great features in the Indian handset market," Karbonn Mobiles Executive Director Shashin Devsare said here. The new range from Karbonn consists of a variety of touch, QWERTY, multimedia and music phones across various price-points, Karbonn Mobiles said in a statement. — PTI