Sunday, February 28, 1999
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B U S I N E S S | Sunday, February 28, 1999 |
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Budget falls short of
expectations: industry |
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Ducks insurance sector
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It won’t revive economy CHANDIGARH, Feb 27 — Most of the representatives of various state wings of the PHD Chamber of Commerce and Industries as well as those representing industrial associations, chartered accountants, income tax consultants and banking industry today described the Union Budget proposals as “disappointing, disheartening and diplomatic.” Tax gifts
to facilitate corporate marriages Small
units get credit boost Body
to speed up FDI flows Red
carpet to NRI investment Spinning
mills fit for modernisation fund |
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Budget falls short of
expectations: industry NEW DELHI, Feb 27 — Captains of industry today expressed disappointment at the Budget proposals saying that if fell short of the “tremendous expectations of the industry”. “I am extremely disappointed at the budget. I had expected much more”,the president of FICCI, Mr Sudhir Jalan said. The shortcomings of the Budget appears to have negated the major benefits that would accrue from the measures announced in the housing sector, gold bond scheme, the capital market, Mr Jalan said. There appears to be no effort at reviving the downslide in the industry by higher augmenting the spending on infrastructure. “Except for small sops on housing, no efforts seems to be made for demand stimulation through higher spending in infrastructure”,Mr Jalan said adding that the budget gives no indication at reducing the interest rate or the exchange rate. Regarding the restructuring of excise slabs, Mr Jalan said that “ reclassification is a good thing, but the third slab of 24 per cent has de facto become three slabs which is not a welcome step”. Chairman of Duncans Limited , Mr G P Goenka said that except for a certain sectors, there is a possibility of the industry going into a tailspin. The reduction in import duty is going to hurt all industries across the board. Regarding capital markets, Mr Goenka said that no measures were announced to boost B1 and B2 shares which have been languishing in the market and it appears they would continue to be rudderless. The President of ASSOCHAM, Mr K P Singh said that the Finance Minister has not really taken the bull by the horns but opted out for measures that will be politically acceptable in the current environment. The President of PHDCCI, Mr Ashok Khanna expressed disappointment over lack of adequate measures to kickstart the economy . The root cause of the slowdown has been established as depressed demand in the economy. To this extent, the budget failed to announce demand stimulating strategy, Mr Khanna said. The President of CII, Mr Rajesh Shah welcomed the special focus on housing and said that packages such as raising tax reduction on interest on house loans for self occupied houses for Rs 30,000 to Rs 75,000, increased depreciation allowed for businesses building houses for employees etc would spur demand for a whole host of downstream industries. Secretary General of
FICCI, Dr Amit Mitra said that the 10 per cent surcharge
of individuals and corporates will reflect itself in the
capital market, household saving and profitability of
corporates. |
Keep gold in bank, sleep peacefully NEW DELHI, Feb 27 (PTI) — A new gold deposit scheme was today announced to mobilise idle gold from households and various charitable and religious institutions in the country. Presenting the 1999-2000 general Budget in Lok Sabha today, Finance Minister Yashwant Sinha said under the scheme, selected banks will be permitted to accept gold deposits and issue interest bearing certificates or bonds which on maturity can be reclaimed in gold. This scheme would free depositors from the problem of storage, movement and security for the gold in their possession and also provide them a regular source of income, Sinha said. The country would benefit by re-cycling the idle gold which would reduce dependence on imported gold, he said. To encourage this process, the Finance Minister announced exemption of interest on the gold deposit bonds from income tax and the value of assets deposited in the scheme from wealth tax. Also any capital gains made on these bonds through trading or at redemption will be exempt from capital gains tax, he said adding this scheme which is to be implemented by RBI will not enjoy amnesty. The budgetary explanatory note said the government proposed to exclude the gold deposits bonds issued under the gold deposit scheme, 1999, from the definition of capital assets so as to exempt the capital gains arising from their transfer or redemption. Subsequently, the respective clause in the Income Tax Act would be amended to provide that interest on gold deposit bonds was not included in computing total income. The wealth tax would also be amended to clarify that jewellery was not included in the bonds. The amendment would take
place from April 1, 2000 and apply for assessment year
2000-1 and subsequent years, it said. |
It won’t revive economy CHANDIGARH, Feb 27 — Most of the representatives of various state wings of the PHD Chamber of Commerce and Industries as well as those representing industrial associations, chartered accountants, income tax consultants and banking industry today described the Union Budget proposals as “disappointing, disheartening and diplomatic.” Mr Amarjit Singh Goyal, Chairman of the Punjab Committee of the PHDCCI, said it was quite disappointing to find that the Finance Minister instead of bringing down had increased the excise duty on steel in spite of the fact that the industry was in the grip of severe recession. Hailing Mr Sinha’s effort to revamp the agricultural sector by proposing an increase of cold store capacity by 12 lakh tonnes and creating 100 clusters of rural industry, he said the domestic industry would be severely affected by allowing imports in the affected sectors without any increased or without duty. Mr Vikram Sahgal, Chairman of the Chandigarh Committee of the PHDCCI, said the industry which was looking for some kind of cut in indirect taxes had been disappointed. The Economic Survey, he pointed out, had emphasised the need for reviving the industry and giving it a kick-start. It had emphasised the need for bringing down the fiscal deficit. With these proposals, the industry could not be revived, he added. Mr R.S. Sachdeva, President of the Mohali Industries Association, said the new year would certainly be a tough year for the entire industry. The new measures would create more problems for industry rather than facilitate its growth. With increase in excise duty and additional mobilisation of resources, the Central and State Governments should be able to spare a handsome amount for the growth of infrastructure. Mr Ranvir Uppal, President of the Chandigarh Industries Association, said the small industry would be hit by the new proposals. There was no silver lining in the Budget for the small scale industry’s revival. The hike in postal rates was totally unwarranted. Mr Jagjit Singh, President of the Income Tax Bar Association, said unfortunately this was the first Budget which did not have any concession for the general tax payer. The common tax payer always looked forward to the Union Finance Minister for some kind of relief. Mrs Neena Singh, Vice- President of The Times Bank, said the debt recovery tribunal should have been given more teeth. Nothing had been done to improve the position on the NPAs’ issue. Dr Kanti Wani. President, Landau Foods Group, USA, said some emphasis should have been placed on tackling of pollution which was a major issue in this country. Mr D.P. Khandelia, President of the Chandigarh Oil Millers Association, said the oil industry was disappointed as the import duty on edible oils had not been increased. The Indian oil industry, he felt , could not compete with the landed cost of imported edible oils. Mr Avnish Sharma,
Secretary of the Chartered Accountants’ Association,
said the Budget was diplomatic in the sense that excise
duty had been increased under the garb of re
rationalisation and simplification of taxes. |
Ducks insurance sector CHANDIGARH, Feb 27 — A cross section of industry today welcomed the Union Budget’s emphasis on agriculture, rural development, housing, information technology, the gold bond scheme and rationalisation of tax structure, while the Finance Minister’s resort to committees to settle issues and minuscule government downsizing attracted criticism. At an interaction organised by the CII, Mr I.S.Paul, Chairman, CII Chandigarh Council, said facilitation of mergers and acquisitions, fillip to the capital markets and introduction of gold deposit bonds will save foreign exchange for a country that spent $ 6 billion on importing gold this year. Rationalisation of excise status from 11 to 3, boost to the housing sector and further incentives to the IT industry by reducing the import duty rates on CD Roms, optical fiber etc were positive measures. Mr Paul said the Budget is silent as to where from the much-needed investment would come to fuel growth when the Government’s interest payments alone in 1999-2000 would exceed Rs 75,000 crore with capital investment being lower than Rs 70,000 crore. Capt Alok Sharma, MD, Forge (India) said the Budget addressed R&D, but not to the desired level. Reduced tariff rates of CE are welcome. Taxes should not have been raised. Education and training are not suitably addressed. Mr S.K. Bijlani, President, Magnus Engineers, said Sinha has ducked the issues relating to the “second phase” of reforms, e.g. financial and insurance sector reforms. PSU disinvestment does not provide impetus to exports. Mr Satish Malhotra, MD, Horological Components, said there is no thrust on simplification of procedures for the SSI sector. Whatever is said in a Budget is not practised in the field. Mr Ashok Dass Gupta, GM, Dabur India, said large equity to foreign investment in pharma industry would diminish indigenous production/ marketing. Dr M.J. Zarabi, Chairman, Semiconductor Complex, said while the emphasis on software is quite in order, due care is required not to ignore hardware. Mr D.C. Mehandru, Director (Finance), Telephone Cables, said bold decisions were required having regard to the current situation of the economy. Prof Amit Kapoor said higher taxes are a positive step and proceeds are expected to be used in infrastructure development. Mr Balraj Singh Hora from Fujitsu India Telecom said telecom, power and ports have not been given enough focus. In a statement the CII claimed that many of its recommendations like uniformity of tax treatment in terms of capital gains tax for resident assessees and non-resident assessees, exemption of dividend tax for buyback of shares, uniformity of guidelines for mutual funds, development of debt market, abolition of stamp duty for debt instruments as well as measures initiated to widen the tax base by bringing more assesses into the tax net have been accepted. Among others, the CII
Budget meet was attended by Mr Ram K Gupta, Chairman,
State Bank of Patiala; Mr Sachit Jain, Executive
Director, Vardhman group; Mr Sean Dexter, Managing
Director, Spice Telecom Ltd, and Mr Krishan Goyal,
Manging Director, Modern Steels Ltd. |
Tax gifts to facilitate corporate marriages NEW DELHI, Feb 27 (PTI) — The government will soon announce important tax initiatives to facilitate corporate mergers and amalgamations in the face of new emerging global challenges. Presenting the Budget Finance Minister Yashwant Sinha said a committee would be set up to propose modern competition law suitable to the country. The government has also decided to set up two high-level committees to review the present drug policy, he said, adding that it would reduce rigours of price control when they become counter productive and also identify required support to Indian pharmaceutical companies to take up domestic research. To promote foreign direct investment in the sector, the government has decided to permit upto 74 per cent equity under automatic route. Technological upgradation funds, which will become operational from April, will provide a substantial interest incentive of 5 per cent on loans availed by textile units from financial institutions and banks. It will cover weaving, knitting, processing and finishing units, garment manufacturing, cotton ginning and pressing and jute industry, which employ 3.8 crore workers, he said. The technological upgradation fund will include the spinning industry also. A new integrated handloom promotion scheme “deen dayal hathkargha protshahan yojana” will be introduced soon to encourage processing facilities, new design inputs to weavers and opening new avenues for marketing of handloom fabrics. The Budget also proposed funds to examine techno-economic feasibility of “sethusamudran project” which will provide a shorter sea route between eastern and western ports of the country. To improve delivery system for credit to small scale industry units, the government proposes to raise limit for composite loans by (SIDBI) and commercial banks from the current Rs 2 lakh to Rs 5 lakh. The Budget also proposes to increase the working capital limit to Rs 5 crore for SSIs, Mr Sinha said, adding that credit flow to these units would be eased. To increase outreach of banks to the tiny sector, the lending by banks to non-banking finance companies or other financial intermediaries for purpose of on-lending to tiny sector is being made a priority, he said. A new credit insurance
scheme will also be launched soon, he added. |
Cheers to Budget - sensex zooms up 165 pts MUMBAI, Feb 27 (PTI) — Equities rallied sharply lifting the sensex by over 165 points on the opening day of the new account on the stock market today in the wake of hectic buying support from operators as also foreign institutional investors (FIIs), prompted by political stability and growth-oriented Budget proposals. Riding high on the BJP’s triumph with the smooth passage of the statutory resolution ratifying imposition of President’s rule in Bihar in the Lok Sabha yesterday, the market responded strongly to the Budget that took a giant leap for continuing reforms and encouraging investments in the infrastructure sector. Operators also discounted an across-the-board 10 per cent surcharge on corporate tax that would affect marginally the multinationals and entered into large commitments in response not only to some incentives but also absence of several negative proposals expected by players earlier. The proposals that were expected to have positive impact on the market were encouragement to infrastructure and telecom sectors, higher outlays on agriculture, incentives on housing sector and construction industry, gradual devaluation of rupee, export tax concession to entertainment industry and exemption from income tax to UTI and mutual fund dividend. The market also welcomed the excise duty restructure while the reduction in import tariffs resulted in a moderate setback to big Indian corporates including Tisco, Hindalco and IPCL. The BSE sensitive index opened firm at 3301.13 but later tumbled to the intra-day low of 3215.69 when the proposal of 10 per cent surcharge on corporate tax was announced at around midsession. However, it rebounded to touch strong resistance level of 3400 before closing at 3399.63 as against yesterday’s close of 3233.86, netting a big jump of 165.77 points. The BSE-100 index spurted by 71.86 points to 1506.95 from previous close of 1435.09. Thirtythree specified scrips, particularly software, pharma and some Indian majors hit the upper circuit breaker after exhausting the daily limit. Even over 160 counters from B1 and B2 also hit the upper price band at the close. Dealers were very optimistic about the future course of the trend and said “the rally will be long enough to take the sensex to the level of 3700 or 3800”, but did not rule out small resistance at some intervals. The BSE-200 and the Dollex were quoted substantially up at 347.69 and 136.24 compared with previous close of 332.36 and 130.23 respectively. The total volume of business was remarkably high at Rs 2039.96 crore compared to yesterday’s turnover of Rs 1216.20. ITC led the rally with the
highest turnover of Rs 263.74 crore followed by Pentafour
Software (Rs 254.99 crore), RIL (Rs 196.51 crore), Satyam
Computer (Rs 162.65 crore) and Tata Tea (Rs 146.32
crore). |
Small units get credit boost NEW DELHI, Feb 27 (PTI) — The government today announced a package to boost small scale industry (SSI) emphasising on initiatives to improve availability of credit to the sector. Presenting the Budget for 1999-2000, Finance Minister Yashwant Sinha said, the composite loan limit to the SSI sector would be raised to Rs 5 lakh from the current Rs 2 lakh and a new credit insurance scheme would be launched to facilitate better flow of funds. Banks lending to non-banking finance corporations for the purpose of on-lending to the tiny sector is also being included in the priority sector for bank lending, Sinha said. The budget has posed to extend specific excise duty concession available to some segments of the small scale sector to units producing cotton yarn. It also doubled turnover under the eligibility criteria for cosmetics, refrigeration and air conditioning equipment from Rs 50 lakh to Rs 100 lakh, while doubling the duty free exemption slab from Rs 15 lakh to Rs 30 lakh. As a measure of further simplification of administrative procedures the SSI units will be permitted to pay excise duty on a monthly basis with effect from June this year, Sinha said. This is expected to
improve the liquidity position of the manufacturing units
in the SSI sector, he said. |
Body to speed up FDI flows NEW DELHI, Feb 27 (PTI) — A foreign investment implementation authorities (FIIA) has been proposed to be set up within the Industry Ministry to ensure that Foreign Direct Investment (FDI) approvals are quickly translated into investment flows and projects. Mr Sinha said FIIA would include representatives of State Governments. Stating that the body was being set up following complaints about slow implementation of FDI approvals, he said that to make FDI flows hassle-free, the government had decided to make an expand list of automatic approvals covering important industrial and service sectors. The expanded list will be announced separately by the Industry Ministry, he said, adding wherever Foreign Investment Promotion Board (FIPB) approval is required, the decision will be taken within 30 days. To strengthen non-resident Indians’ participation in the country’s development, some more initiatives have been proposed, he said. Facility for automatic
approval for investment upto 100 per cent by NRIs and
overseas corporate bodies (OCBs) will be extended for all
items, except those attracting notified FDI equity caps
or compulsory licensing or public reservation under
industrial policy or reserved for small scale sector. |
Red carpet to NRI investment NEW DELHI, Feb 27 (PTI) — As part of efforts to attract greater non-resident Indian participation in the country’s economy, the government today announced extension of the facility of automatic approval for investment upto 100 per cent by NRI and overseas corporate bodies. The facility will be available for all items except those which attract notified foreign direct investment equity caps, or compulsory licensing or public sector reservation under the industrial policy or are reserved for the small scale sector. Presenting the 1999-2000 Union Budget, Finance Minister Yashwant Sinha said that since the country’s major stock exchanges had screen-based automated trading in securities, it was now technically possible for them to open trading terminals abroad, which would facilitate the participation of NRIs in Indian capital markets. Mr Sinha said he had asked the SEBI to work out modalities for the purpose. The existing RBI approval
mechanism for NRI investment in Indian mutual funds would
be simplified to a post-factor reporting mechanism, he
said. |
Spinning mills fit for modernisation fund NEW DELHI, Feb 27 (PTI) — Bowing to pressure from spinning mills, the government today said stand-alone spinning sector would be eligible for the Rs 25,000 crore textile upgradation fund (TUF) scheme that becomes operational from April 1. Presenting the 1999-2000 Budget in the Lok Sabha, Finance Minister Yashwant Sinha said the fund will provide substantial interest incentive of 5 per cent on loans availed by textile units from financial institutions and banks for the next five years. “While we devote our attention to the new sunrise industries, we have not neglected established industries like textiles, which employs 380 lakh workers and accounts for about 20 per cent of our manufacturing value-added,” he said. Sinha also announced the
introduction of a new integrated handloom promotion
scheme — Deen Dayal Hathkargha Protshahan Yojana to
encourage processing facilities, new design inputs to
weavers and opening up of new avenues for marketing of
handloom fabrics. |
Job plan for urban poor CHANDIGARH, Feb 27 — Urban poverty in Punjab is more dominant than poverty in rural areas of Punjab. A special programme to provide gainful employment to the underemployed and unemployed urban poor through encouraging the setting up of self employment ventures or provision of wage employment is being implemented under the direction of the Government of India. This programme relies on the creation of suitable community structure, namely, neighbourhood Groups, neighbourhood commit-tees and community development societies, observed Mr J.P. Gupta, former Chairman, Punjab Finance Commission, while inaugurating two-day interactive colloquium for the Executive Officers of Municipal Councils of Punjab. Poverty line for the urban poor has been redefined by the Government. It is now Rs 300.91 per capita per month on 1996-97 price. This programme aims to give assistance to individual urban poor beneficiaries for the setting up of gainful self-employment ventures. It also helps urban poor women to set up gainful employment ventures under the scheme for Development of Women and Children in Urban Areas (DWCUA). The scheme aims to train the identified beneficiaries for upgradation and acquisition of vocational skills. The target groups are urban poor living below poverty line women beneficiaries should not be less than 30 per cent, SC & STs must be benefited to the extent of proportion of their local population. This covers the entire
state of Punjab and is to be implemented by the Executive
Officers of urban local bodies as ‘urban poverty
alleviation programme’ included in the 12th Schedule
of the 74th Amendment of the Constitution. |
Sops for storages to wipe onion tears NEW DELHI, Feb 27 (PTI) — The government today attempted to elude yet another “onion trap” by announcing plans to create additional 4.5 lakh tonnes of storage capacity for this poor man’s staple diet. Amidst laughter from Opposition benches, Finance Minister Yashwant Sinha announced in his Budget speech that the government would provide assistance for building additional capacity for storing onions. The government also proposed to introduce a new credit-linked capital subsidy scheme for the construction of cold storages and godowns to overcome loss due to lack of post-harvest storage and market infrastructure. The scheme, to be implemented by the agriculture ministry with help of NABARD, would help create additional cold storage capacity of 12 lakh tonnes. It would rehabilitate eight lakh tonnes of existing units over the next few years, he said. Besides, the government also decided to give tax holidays benefits to entrepreneurs setting up cold storage in an industrially-backward state or district. If these storages begin
operation before March 31, 2000, a further 25 per cent
deduction of profits of such business for tax
consideration would be allowed for the next five years. |
CMA programme CHANDIGARH, Feb 27 —
The Chandigarh Management Association (CMA) organised a
one-day executive development programme on value
management and cost leadership at CII convention centre
here today. Participants from PTL, Ranbaxy, Gurdaspur
Coop. Sugar Mills, JCT, CEDT and PEC attended. Faculty
included Prof R. Prakash, Prof R.N. Nauhria both from PEC
and Mr Narinder Singh, the Executive Director, Max-GB,
Prof Nauhria, coordinated the programme. |
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| Gold improves NEW DELHI, Feb 27 (PT) — Silver prices shot up further on the bullion market on persistent hectic buying by stockists and local parties to close with gains. Standard gold was also slightly better on local buying against shortage of stocks. Standard gold and ornaments improved by Rs 5 each at Rs 4420 and Rs 4270 per 10 grams respectively. Sovereign was quoted unchanged at Rs 3800 per piece of 8 grams. The quotations: Silver .999 (ready) 8425, delivery 8350, coins buyer 10,600 and seller 10,800. Standard gold 4420, ornaments 4270 and sovereign 3800. Commodities |
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