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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

India for building strategic oil reserves
Beijing, December 16
India today proposed building of strategic storage of oil by Asian countries as a cushion against supply disruptions even as energy ministers from five major oil consumers called for global energy markets that are "open, transparent, efficient and competitive".

India needs $60 b for urban housing, says Montek
New Delhi, December 16
The country needs $60 billion to build housing facilities in urban areas to accommodate the needs of those people moving to cities to be part of the economic growth ride.

IPOs’ grading likely to be mandatory
Kolkata, December 16
Market regulator SEBI is likely to make grading mandatory for initial public offers (IPOs), SEBI Chairman M Damodaran said here today.

Ensure adequate farm credit: Panel
New Delhi, December 16
Expressing concern over the apparent tendency of the banks to make deposits to the Rural Infrastructure Development Fund (RIDF) to compensate the shortfalls in meeting agricultural lending targets, the Parliamentary Standing Committee on Finance has asked the government to ensure that banks did not deviate from the mandated level of disbursement of credit to the agricultural sector.

Gold, silver tumble
New Delhi, December 16
Gold plunged further on the bullion market today following reduced off take at the end of marriage season amid reports of weakening global trend, and suffered a loss of Rs 140 at Rs 9050 per 10 gram.


Bollywood actress Karishma Kapoor waves at her fans after signing as brand ambassador of Khaitan Electricals in Kolkata on Saturday.
Bollywood actress Karishma Kapoor waves at her fans after signing as brand ambassador of Khaitan Electricals in Kolkata on Saturday. — PTI

EARLIER STORIES

 

Aviation Notes
Clouds over AI-Indian merger

Will V. Thulasidas continue as Chairman and Managing Director of Air-India or return to government to head as Secretary of any ministry? This is a question that is being discussed in aviation circles as only 13 days remain for his tenure in AI to end on December 31, 2006.

Investor Guidance
No rebate on interest of car loan

Q: I have recently taken a car loan and am paying EMIs to the finance company for the same. I would like to know if there are any tax exemptions available on the interest payment on such car loans?

 

 

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India for building strategic oil reserves

Beijing, December 16
India today proposed building of strategic storage of oil by Asian countries as a cushion against supply disruptions even as energy ministers from five major oil consumers called for global energy markets that are "open, transparent, efficient and competitive".

In a joint statement released at the end of the first-ever meeting of energy ministers from India, China, the United States, Japan and South Korea, which consume 45.2 per cent of the global oil production, all sides agreed to enhance cooperation in diversifying energy mix so as to make wider use of clean and alternative energy.

The energy ministers, including Petroleum and Natural Gas Minister Murli Deora, called on all countries to build energy markets that are open, transparent, efficient and competitive.

They vowed to strengthen cooperation on strategic oil reserves and encourage collaboration of business sectors of the five countries.

The five countries agreed to work together on energy conservation and efficiency, increased transparency of data.

They urged the international community to deal with energy emergencies through strategic oil reserves.

At the meeting, the five ministers had an in-depth exchange of views here today, aimed at boosting energy efficiency and security.

"This meeting aims at safeguarding the stable and sustainable development of the global energy industry and building a new concept of energy security featuring mutual benefit and diversified development," the host and Chairman of the National Development and Reform Commission (NDRC) Ma Kai said.

In his key note address, Mr Deora proposed building of strategic storage of oil by Asian countries and suggested a three-tier cooperation mechanism to ensure a sustainable global hydrocarbon economy.

"I am of the opinion that developing Asian countries should seriously consider building strategic storage of oil," he said.

"The high oil prices currently prevailing make oil inventory-carrying costs prohibitive, particularly for developing countries," he said in his keynote address on 'Major challenges and priorities of international cooperation'.

India has plans to construct tankage with a capacity to store 15 million metric tonnes (MMT) of oil in the long term, with 5 MMT of storage capacity expected in the first phase, he said.

Earlier, Chinese Premier Wen Jiabao met with the four visiting energy ministers before the meeting and assured them China would cooperate with other countries to safeguard international energy security. — PTI

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India needs $60 b for urban housing, says Montek
Tribune News Service

New Delhi, December 16
The country needs $60 billion to build housing facilities in urban areas to accommodate the needs of those people moving to cities to be part of the economic growth ride.

“There is a shortage of 25 million houses in the urban areas and in order to fill this gap, there is a need of $60 billion,” Planning Commission Deputy Chairman Montek Singh Ahluwalia said, while addressing the concluding session of the Asia-Pacific Ministerial Conference on Housing and Human Settlements here.

This urgent demand to meet the housing problem comes amidst concern expressed by the United Nations that rapid growth of slums in towns and cities was a breeding ground for terrorism and dreaded diseases like AIDS.

Ms Anna Tibaijuka, head of the UN housing agency Habitat, said urban poverty was a severe, pervasive and largely unacknowledged feature of modern life, which threatened everyone.

“In this global village, someone else’s poverty very soon becomes one’s own problem: of lack of markets for one’s products, illegal immigration, pollution, AIDS and other diseases, insecurity, crime, fanaticism and terrorism,” the UN official said.

Mr Ahluwalia said not many efforts had been made in providing services in the past 50 years to enable the nation to cope up with growing urbanisation.

The Deputy Chairman made it clear that huge investment required to ensure infrastructure in the rural areas could not be met by the Centre alone and as such there was an express need to secure funds from the states.

He said it needed a holistic planned urban development involving not only the government but also private sector and other agencies.

“However, a faster growth rate would mean that pressure would be there on the system to provide a more inclusive growth,” he said.

According to data compiled by the Ministry of Housing and Urban Poverty Alleviation, the country would face a shortage of 26.53 million dwelling units during the 11th Plan period, while in the next year the shortage has been estimated at 24.71 million.

The Delhi Declaration adopted at the end of the conference recognised the need for the provision of increased resources for affordable housing, and housing related infrastructure, prioritising slum prevention and slum upgrading. 

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IPOs’ grading likely to be mandatory

Kolkata, December 16
Market regulator SEBI is likely to make grading mandatory for initial public offers (IPOs), SEBI Chairman M Damodaran said here today.

Speaking at a workshop on capital market organised by SEBI, Mr Damodaran said the primary market advisory committee, headed by Mr Deepak Parekh, would soon give recommendations on these lines.

He said SEBI would take a final decision after the panel submitted its report. Grading would be in the range from one to five, and would be done by the credit rating agencies.

Mr Damodaran said the expenses for the exercise would either be borne by the SEBI or the stock exchanges and not by the company coming out with IPO.

He said the basic idea for making grading mandatory was to help investors in getting information about the quality of the IPO. At present, grading of IPOs is not mandatory.

Referring to Indian Depository Receipts (IDRs), Mr Damodaran said SEBI recently had a meeting with the Ministry of Company Affairs (MCA) to iron out differences and to look into the problems faced by companies trying to issue this instrument.

While MCA had announced regulations regarding IDRs way back in 2004, there had been no response from the companies.

He said certain internal amendments to the regulations were being made. He hoped that after the changes, the year 2007 might witness companies issuing IDRs.

The minimum size of an IDR should be of Rs 50 crore, and the minimum size of an application had been fixed at Rs 2 lakh. IDRs would have to be issued to qualified institutional buyers (QIBs) only.

Mr Damodaran said SEBI was also in the process of forming a unique identification number for investors for which an implementation committee had been formed.

From January 1, SEBI would introduce a common platform for e-filing and corporate bond reporting. This platform would be hosted by the Bombay Stock Exchange. Trading over Rs 1 lakh would have to be reported, he said. — PTI

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Ensure adequate farm credit: Panel
Tribune News Service

New Delhi, December 16
Expressing concern over the apparent tendency of the banks to make deposits to the Rural Infrastructure Development Fund (RIDF) to compensate the shortfalls in meeting agricultural lending targets, the Parliamentary Standing Committee on Finance has asked the government to ensure that banks did not deviate from the mandated level of disbursement of credit to the agricultural sector.

With specific reference to the agricultural credit extended by private sector banks, the committee, headed by BJP leader and former union minister B.C. Khanduri, has noted that the quantum of such credit had declined from 14.2 per cent in 2003-04 to 12.1 per cent in 2004-05.

The committee, in its 45th report tabled in the Lok Sabha, expressed dissatisfaction over the reply of the Ministry of Finance on the failure of the private sector banks in adhering to the target of ensuring 18 per cent of the net credit flow to the agricultural sector.

“While the stipulations provide for ensuring 18 per cent of the net credit extended by the banks to the agricultural sector, the quantum of credit extended by private sector bank stood at 12.1 per cent in 2004-05,” it said, adding, “The committee, therefore, emphasise on the need to initiation of appropriate remedial measures for ensuring that the lending targets to the priority sector, with the agriculture sector in particular, are strictly adhered to by the banks”.

The committee said the issue of concern was that the net accruals to the RIDF on account of the deposits made by scheduled commercial banks had been witnessing a steady increase.

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Gold, silver tumble

New Delhi, December 16
Gold plunged further on the bullion market today following reduced off take at the end of marriage season amid reports of weakening global trend, and suffered a loss of Rs 140 at Rs 9050 per 10 gram.

Silver weekly-based delivery also nosedived Rs 790 at Rs 20,200 per kg on frantic selling by speculator, while silver ready gained Rs 50 at Rs 20,000 per kg. — PTI

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Aviation Notes
Clouds over AI-Indian merger
by K.R. Wadhwaney

Will V. Thulasidas continue as Chairman and Managing Director of Air-India or return to government to head as Secretary of any ministry? This is a question that is being discussed in aviation circles as only 13 days remain for his tenure in AI to end on December 31, 2006.

Backed by a lobby, Mr Thulasidas himself is keen on continuing in A-I. He is reported to have said that his continuation will help facilitate the merger of two national carriers. Another faction, equally powerful, wants that he should step down from A-I and return to the government. The Prime Minister’s Office (PMO) decision is awaited in the matter.

Irrespective of the merger assertion of the Civil Aviation Minister Praful Patel, there are many a slip between a lip and a cup. Politicians, who matter in government, are, however, divided on the vex matter of merger of A-I and Indian. It is now learnt that two national carriers will retain their independent identity. If this happens, what kind of merger will it be?

Air-India, has taken effective measures to prevent fog from disrupting its schedule of flights. “We have rearranged our flights in such a way that they land and take off outside the dense fog timings”, said a senior official, adding: “so far we have been successful, but there is no guarantee because sudden deterioration in density of fog can disrupt a light or two during these painful 45 days”.

The overall situation at the Indira Gandhi International Airport (IGIA) is pathetic. Despite assurances by the Delhi International Airport authorities, a private enterprise, chaotic situation in terminal buildings has caused anguish to passengers. There are instances when passengers of bunched flights are unable to secure meals and snacks even after waiting for hours.

The Directorate-General of Civil Aviation (DGCA) has issued another stern warning to airlines and airport to give information to passengers on time. Many private airlines do not pay any heed to such directives and innocent passengers have to face suffer.

Most of the regular flyers are unanimous is saying that it is a lame excuse to say that many pilots are not trained to fly under the category III of the Instruments Landing System (ILS). “The fact of the matter is all authorities tend to stay in slumber for 10 months and wake up only when dense fog has already descended at Delhi and neighbouring areas”, lamented flyers.

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Investor Guidance
No rebate on interest of car loan
by A.N. Shanbhag

Q: I have recently taken a car loan and am paying EMIs to the finance company for the same. I would like to know if there are any tax exemptions available on the interest payment on such car loans?

— Amit Khanna

A: Only businessmen or professionals can claim deduction for interest on car loans against their business income. That too, if the car is used for business purposes. For other individuals there are no tax concessions on this interest or capital repayment. It is only housing finance that is connected with tax concessions and therefore, one should take a loan for purchasing a house even if there are enough funds on hand to buy the house directly.

Transfer of shares

Q: I seek your guidance on the following:

My late wife (lost her in 2000) and myself as joint holders were allotted shares in Infosys public issue in 1993. She had willed on plain paper the shares be equally transferred to our two daughters in case of her death. As at the time of her death both my daughters were minors, I as joint holder got the shares transferred in my name with younger daughter as a nominee. Elder daughter is already a major and younger will be major in June 2007.

I wish to transfer the shares, which have multiplied, equally to both.

Kindly suggest income tax-friendly way out. Does her WILL help at this late stage!

Will this transfer have to go through a broker?

— Vinod Kumar Chugh

A: The gift or bequeathment through will gives the same results. You may go through the transaction without a broker, thereby saving the brokerage cost, but the demat charges will be slightly higher.

Sec. 47 (iii) states that any transfer of a capital asset under a gift or will or an irrevocable trust is not to be treated as a transfer. Consequently, no capital gains arise and, therefore, there is no tax.

As and when the donee sells the property —

Explanation ‘iii’ to Sec. 48, defines ‘indexed cost of acquisition to mean an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later’.

This means that in the case of an inherited or gifted property, the cost of acquisition is the cost to the original holder (or FMV as on 1.4.81) but the date of acquisition for indexing should be taken as the date of the inheritance or the gift. However, the character of long or short-term depends upon the date of acquisition of the original holder. In case this original holder has also acquired the property by way of gift or inheritance then it will be the date of very first holder who purchased or constructed the property.

This may end up in some strange results. For instance, the shares are sold during the same year of its acquisition, the difference between the sale price and the cost at which your wife acquired the original shares will be treated as long-term capital gains.

Deductions on stamp duty

Q: Does payment of stamp duty and registration fees entail any tax deduction?

— Ashwathama

A: Any payment made by an individual or HUF towards cost of purchase or construction of a residential house, (not necessarily self-occupied) qualifies for the deduction u/s 80C subject to the overall monetary limit of Rs 1 lakh. This includes stamp duty, registration fee and other expenses incurred on transfer.

This expense need not flow from borrowed funds. These expenses shall not include:

i) admission fee, cost of share or initial deposit;

ii) cost of any addition, alteration, renovation or repairs carried out after the issue of the completion certificate or the house is occupied by the assessee or it has been let out and

iii) expenditure where a deduction is separately allowable u/s 24.

Professional tax

Q: I have heard of a tax known as professional tax. Are all income earners liable to pay this tax or is there a category that is exempted?

— D. Gupta

A: The following categories of persons are exempt for paying professional tax:

1. Senior citizens.

2. Members of armed forces, reserve and auxiliary services, defence ordnance factories, etc.

3. Badli workers in textile industries.

4. Persons suffering from permanent physical disability, including blindness.

5. Parents or guardians of any person suffering from mental retardation or a physically disabled person.

6. Women exclusively engaged as agents under the Mahila Pradhan Kshetriya Bachat Yojana of Directorate of Small Savings (This covers only the Post Office 5-yr RDs and not PPF, NSC, TDs, MIS etc.).

The authors may be contacted at wonderlandconsultants@yahoo.com

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BRIEFLY

SBI acquires Indonesian bank
Mumbai, December 16
The State Bank of India (SBI) has completed the buyout of PT Bank IndoMonex of Indonesia, paying $5 million to acquire to 76 per cent stake. "We paid $5 million to complete the transaction," the SBI Managing Director, Mr T.S. Bhattacharya, said here. The Indonesian bank has eight branches. — PTI

Cairn fixes IPO price at Rs 160
New Delhi, December 16
Cairn India Ltd today fixed the price of its initial public offer at Rs 160 a share, the lower end of its price band, taking the total issue proceeds to Rs 5,259 crore. The IPO price was decided at a meeting of the company’s Board of Directors this evening. The shares would be allotted to the investors by December 29, industry sources said. The IPO had closed yesterday with bid for 1.14 times of the total issue size to the public of 32.87 crore equity shares. — PTI

Infosys BPO unit in Rajasthan
Jaipur, December 16
Infosys BPO has announced investment plans of Rs 150 crore to develop a 3,000 to 5,000 employee facility at Mahindra's SEZ in Rajasthan. The facility is expected to come up in the next 3 years as per the MoUs signed with the state government, Chairman T.V. Mohandas Pai said here. — PTI

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