Mumbai, July 30
The Sensex today zoomed over 300 points to one-week high of 17,143.68 on intense buying in power, capital goods and banks ahead of RBI's first quarter policy review tomorrow, amid strong global cues.

The BSE benchmark index shot up to 17,143.68, up by 304.49 points, or 1.81 per cent, the biggest single-day rise in over a month. Sensex had last touched level on July 20.

Investor wealth rose by Rs 1 lakh crore to Rs 60.45 lakh crore with over 1,600 stocks closing higher, while 1,143 scrips ending lower. Buying was so strong that all 13 sectoral indices closed with sharp gains.

Sensex's gains were largely driven by ICICI Bank, Infosys and L&T. SBI topped the buying list rising 4.63 per cent today, followed by Tata Motors and Tata Power that rose 4.1 per cent each.

ICICI Bank, Bhel, L&T, GAIL and Sterlite rose in the 3-3.9 per cent range. ITC and Reliance gained over 1 per cent each supporting the mood. In the 30-share index, 27 scrips rose.

Marketmen said after opening 80 points higher tracking positive cues from Asian markets, Sensex kept on rising higher as sentiment firmed up on hopes that RBI may announce some measures at its policy meeting tomorrow.

"RBI may respond by releasing more liquidity by CRR or 0.25 per cent cut but hopes are very low," said Raamdeo Agrawal, Joint MD, Motilal Oswal.

The sentiment was also helped by speculation that European Union policy makers will take action to ease the region's debt crisis.

Domestic investors were also enthused by reports that the government has prepared contingency plans for 320 districts where monsoon rains have been poor, amidst fears of a 20 per cent shortfall in rains in August-September.

Traders said FIIs, who have pumped in over Rs 8,400 crore in July so far, also bought shares today in large and mid-cap stocks.

The 50-share NSE index Nifty rose by 99.95 points, or 1.96 per cent to 5,199.80, after touching day's high of 5,206.60. — PTI

Chandigarh, July 30
Industrial production in Punjab has come to a grinding halt. With the Punjab State Power Corporation Limited (PSPCL) imposing a three-day compulsory off on general industry, and a four-day power cut on the steel industry, the industrial production in the state is expected to come down by 65-70 per cent.

Industrialists said though the reason for power cuts on the industry was poor monsoon, leading to increase in demand for power in the agriculture sector, the government should have made timely provision for dealing with the situation, either by having short-term power purchase agreements (buying power on the power exchanges) or through exchange of power with power-surplus states in the peak season.

Talking to The Tribune, KK Garg, president, All-India Induction Furnace Association, said the four-day cut on steel industry would spell death knell for the recession-hit industry, as it is a highly power- intensive industry.

“With a power cut for four days, the industrial production will reduce by almost 70 per cent. The open access policy has become non-viable, after the PSERC increased the wheeling charges by Re 1 per unit in May earlier this year. The cost of captive power generation has gone up drastically because of high diesel prices. The steel industry has no choice but to brave the cuts, and work only for three days, of which half a day is required to heat up a furnace alone. This means that production can be done on only two and half days in a week,” he lamented.

Punjab has over 200 steel furnaces and 400 steel rolling mills. RS Sachdeva, co-chairman, Punjab Committee of PHD Chamber, said if the power situation continued, most of the steel units would be forced to shut shop, as there had been no value addition in either steel furnaces or rolling mills. “The only ray of hope for the steel industry is if the export is allowed to Pakistan from Punjab, which would improve the economies of scale for the steel units,” he said.

Industrialists said they were already feeling the heat because of power cuts and labour was sitting idle in most steel units. Amarjit Goyal, CMD, Modern Steels, said. “The Centre should come to the aid of Punjab and allocate more power to the state from the Central pool.” 

New Delhi, July 30
In a bid to provide clarity on taxation issues and promote India as a software destination, Prime Minister Manmohan Singh today set up a panel to review taxation treatment of the IT sectors and development centres for R&D.

The committee headed by former Central Board of Direct Taxes (CBDT) chairman N Rangachary, will be in addition to the one set up to review the General Anti-Avoidance Rules (GAAR) provisions to address the concerns of foreign investors.

With the setting up of these two panels, the Prime Minister, who is also holding the charge of the Finance Ministry, is trying to restore investor confidence in crucial sectors and boost foreign inflows and investments which may have been disrupted due to uncertainty over tax treatment.

In a related move, the Prime Minister today expanded the terms of reference of the GAAR committee by referring the issues relating to taxation of FIIs and portfolio investors to it with a view to provide greater clarity to them.

On the formation of a panel for the IT sector, a statement by the Prime Minister’s Office (PMO) said, “It was felt that there is still a need to address some other issues relating to the taxation of the IT Sector such as the approach to taxation of Development Centres, tax treatment of 'onsite services' of domestic software firms, and also the issue of finalising the safe harbour provisions announced in Budget 2010".

Safe Harbour principles are international disclosure practices to check litigations in transfer pricing — an accounting mechanism undertaken by MNCs to reduce tax liabilities.

The statement said many MNCs carry out activities pertaining to R&D through captive entities in India called as development centres. This is a highly competitive field with other countries wanting to grab a share of the pie and there was a need for clarity on their taxation, the statement said.

Mumbai, July 30
The RBI today hinted at holding on to its elevated rates in the quarterly monetary policy review tomorrow, saying there are increased risks on inflation scenario and lack of action on the fiscal front.

"Monetary policy space needs to be created through fiscal adjustment and structural measures to improve supply conditions ..." the Reserve Bank said in its report on Macroeconomic and Monetary Developments, released on the eve of the policy announcement.

The Indian Administrative Service (IAS) lobby has once again done it. It is not only powerful but clever and visionary also for its officers to retain control on ‘prime and lucrative’ positions in the government.

It first deputes an officer for a year or two to the International Civil Aviation Organisation (ICAO) and, then at the appropriate time, installs him as chief of the Directorate-General of Civil Aviation (DGCA).

This ploy, albeit shrewd and successful, has been in operation for sometime. The last full-time incumbent, Naseem Zaidi, for example, became the DGCA via ICAO. Now, as he retires this month, he will be provided another plum position. He, in fact, was to head the Civil Aviation Authority (CAA) but that project has been scuttled by influential section in the government.

For years, there has been turbulence in the DGCA. It will continue to happen no matter how competent and dispassionate may be the officer. Flying is as technical, if not more, as medical and engineering sectors. The head of such an organisation must, necessarily, be a ‘techno’ and not a bureaucrat. If the government continues to dither on this vital issue, there will be confusion and chaos in the DGCA, which not only needs an independent officer but one who is well-versed with technicalities.

A deputation in the ICAO for about a year cannot translate a full-time bureaucrat into a ‘technical expert’. The credibility of the institution like DGCA is currently very low and it needs to be improved so that there is some system and discipline in the country’s aviation regulator.

It is fine that the Minister of State for Civil Aviation is bringing about changes both in ministry and the DGCA. According to analysts, this move is being seen as politician’s move to ‘form his own team’. The minister is indeed entitled to have his own team, but members of the chosen unit must be thorough in their knowledge and functioning as safety of passengers is at stake.