Many units shut in border belt AMRITSAR, Oct 11 — Thousands of small-scale industrial units, especially in the border belt have either closed down or on the verge of closure due to the aftermath of decade-long militancy. Insurgency, non-payment of subsidies and increase in rates of raw material in the market are the main reasons for the scenario.

Stock brokers in Mumbai take orders as the Sensex continued to rise on Monday. — PTI

CAs discuss revised tax audit format
CHANDIGARH, Oct 11 — A seminar organised by the Chandigarh branch of the ICAI here yesterday highlighted features of the revised tax audit format and the changed role of chartered accountants in view of the new format.

Crompton loss mounts
Crompton Greaves on Monday reported a whopping increase in net losses to Rs 22.6 crore for the second quarter ending September 30, against a net profit of Rs 7.2 crore for the same period last year.

Dundee Bond Fund unveiled
NEW DELHI, Oct 11 — Dundee Mutual Funds today launched Dundee Bond Fund, an open-ended fixed income fund with two schemes — Dundee PSU Bond Fund and Dundee Corporate Bond Fund.

‘States need greater financial freedom’
NEW DELHI, Oct 11 — To ensure a balanced economic growth and help States generate their own revenue, experts have favoured greater financial freedom by reinventing a rationalised mode of fund disbursement.

PSU disinvestment to start this month

NEW DELHI, Oct 11 (PTI) — Faced with a fragile fiscal situation, the Government will hasten the Rs 10,000 crore disinvestment programme geared to start within two weeks though the core group of secretaries is mulling on a downward revision of the target.“We will try to push the disinvestment process to achieve the target but a clear picture will emerge only when the new Government assesses the situation after assuming office,’’ official sources told PTI.

Finance Minister Yashwant Sinha has already said fulfilling the disinvestment target is top on the economic agenda of the new Government with the core group of secretaries already working on the modalities, notwithstanding the election process in the last few weeks.

Confessing that the disinvestment process has been delayed slightly partly due to elections, Sinha said it needed to be expedited, more so due to the impending Y2K problem that will necessitate suspension of electronic dealing towards December-end.

A section in the core group of Secretaries is of the view that the disinvestment target might have to be lowered by about Rs 4,000 crore in the wake of paucity of time.

But some officials pointed out that disinvestment process starts only around October every year and hence there may be no case for pruning the target.

Although revenue collections are buoyant, there are other pressures and in such a scenario if the disinvestment target is lowered, the Government will have to contemplate unpleasant measures.

This included cutting subsidies on LPG and kerosene which might not be immediately possible because of a steep 40 per cent hike in diesel prices recently.

The Cabinet has already cleared divesting of government equity in eight public sector undertakings, including, Madras Fertilisers and India Tourism Development Corporation.

The other PSUs include cash-rich Indian Oil Corporation, Gas Authority of India, Videsh Sanchar Nigam and Mahanagar Telephone Nigam, some of which are expected to tap overseas capital markets as well.

Crompton loss mounts

Crompton Greaves on Monday reported a whopping increase in net losses to Rs 22.6 crore for the second quarter ending September 30, against a net profit of Rs 7.2 crore for the same period last year.

VSNL eyes Nasdaq listing: VSNL is considering prospects of getting itself listed either on Nasdaq or New York Stock Exchange (NYSE).

Modalities of the listing have to be decided first, said Chief General Manager (Finance) Arun Gupta, adding that it had the option of going in for a conversion of its existing GDRs into American Depository Receipts (ADRs) or coming out with a fresh issue of ADRs.

Snowcem plans expansion: Snowcem India Limited has initiated steps for setting up subsidiaries in Vietnam, Nepal and Bangladesh shortly for expansion of its exterior paints business outside the country.

Record turnover by BALCO: State-owned Bharat Aluminium Company (BALCO) recorded an all-time high turnover of Rs 870.96 crore during 1998-99 as compared to Rs 848.51 crore during the previous year. The profit before tax of BALCO stood at Rs 134.77 crore during 1998-99 as against Rs 134.79 crore in 1997-98. The company paid a dividend of Rs 23 crore to the Government of India.

TCS software solution: Tata Consultancy Services (TCS) launched an integrated software development solution, mastercraft, on Monday.

BIFR rejects Atash case: BIFR has dismissed the case of Atash Industries as non-maintainable concluding that the company has “mala fide intentions” in seeking sick industrial status.

BIFR said the “sickness had been manipulated by falsification of accounts and adopting practices of deception which indicated that it was not a case of bona fide industrial sickness...”

Cement Corporation: BIFR has allowed sick public sector unit Cement Corporation of India to withdraw Rs 48.24 crore from its escrow account to meet its financial obligations.

BIFR has directed Cement Corporation to release Rs 22 crore to FIs, Rs 4.45 crore towards bank irregularities and keep Rs 20.82 crore and the interest of Rs 10.24 crore.

Eveready Industries: Eveready Industries has entered the rechargeable battery segment in collaboration with GPI International of Hong Kong.

— Agencies

Paddy purchases hit by financial crisis
From A. S. Prashar
Tribune News Service

LUDHIANA, Oct 11 — In a worrisome development, private rice millers of Punjab are showing increasing reluctance to make big purchases of paddy this year because of the empty coffers of the state government, which may prevent it from making prompt payments for the levy rice surrendered by them.

Private rice millers have traditionally been big players in the paddy markets of the state. Last year, private millers purchased in excess of 35 lakh metric tonnes of paddy. This year, they were expected to corner up to 40 lakh tonnes. But this has not happened. Official figures available here today showed that the private millers have so far purchased only 17.25 lakh MTs against 20.45 lakh during the same period last year.

The millers purchased only 16,233 MTs on Saturday as against 1.14 lakh MT’s purchased by them on the same day last year. This despite the fact that the quality of paddy brought to the mandis by farmers this year is much better than what it was last year.

This will force government agencies to invest even more in paddy purchases this year. Since the state is passing through an unprecedented financial crisis, it is not clear from where they will get the money for the purchases.

Under the existing levy system, millers have to surrender 75% of the rice milled by them to the government. In a recent modification announced by the Centre millers have now been given the option of surrendering 100% of the rice milled by them. The payment for the levy rice made by the Centre which is routed through the Punjab government. Since the Punjab government is hard pressed money, it is widely apprehended that the state government may divert the payments received from the Centre for other purposes, leaving the millers high and dry.

A miller at the Khanna grain market said: Given the present situation in which the government is finding it difficult to pay even the salaries to its own staff, it is doubtful if it will pass on to us the payments it will receive from the Centre for the levy rice. Why should we block our money for months? High rate of interest will make such a venture a losing proposition”.

Meanwhile, after the initial hiccups, paddy procurement operations are proceeding smoothly all over Punjab.

According to official information available here today, 64.72 lakh tonnes paddy has been procured in the various mandis of the state so far. As against this, only 39.56 lakh tonnes of paddy was procured during the same period last year. Of the paddy procured so far, the FCI has procured 13.04 lakh tonnes while the state government agencies including the Food and Civil Supplies Department, Markfed, Punsup, PSWC and PAIC have together purchased 34.43 lakh tonnes.

CAs discuss revised tax audit format
Tribune News Service

CHANDIGARH, Oct 11 — A seminar organised by the Chandigarh branch of the ICAI here yesterday highlighted features of the revised tax audit format and the changed role of chartered accountants in view of the new format.

Mr Amarjeet Chopra FCA, said CAs would virtually assume the role of assessing officers. Mr G.S., Pannu, FCA, advised the members to be cautious since the Income Tax Department had placed greater reliance on CAs reports.

The speakers explained the provisions of Section 145-A of the Income Tax Act.

Mr Vijay Jahlani stressed the need for more infrastructural facilities at the branch. The seminar was attended by more than 150 CAs.

Many units shut in border belt
Tribune News Service

AMRITSAR, Oct 11 — Thousands of small-scale industrial units, especially in the border belt have either closed down or on the verge of closure due to the aftermath of decade-long militancy. Insurgency in Jammu and Kashmir, non-payment of subsidies and increase in rates of raw material and financial crunch in the market are the main reasons for the present scenario.

As many as 42 out of 52 roller flour mills have already been closed down while the remaining running at less than 20 per cent capacity. In border belt, almost entire processing industry has been wiped out. More than 60 per cent carpet and textile units have been closed down. As many as 30 out of total 41 rice mills in Amritsar alone have been closed down. Hundreds of industrial units in the border belt are sick.

In view of the alleged indifferent attitude of the State and Central Government, the different associations of industrialists and Beopar Mandals have announced that they would give a call for a State-wide agitation if the Government failed to take corrective measures to revive the industry in the border State.

Various associations alleged that the banks had initiated legal action against the ‘defaulters’ in gross violation of the guidelines of RBI.

To add fuel to the fire the Central Government has come out with the Debt Recovery Tribunal Act (DRT Act) which was to be applicable for the entire country but surprisingly and knowingly has not extended to the Sates of UP, Bihar, Orissa, Tamil Nadu, Kerala, Madhya Pradesh and North Eastern States. The representatives of various industries associations and Beopar Mandal described the Act as draconian and ‘anti-industrialist’.

Why export fruits and vegetables?

NEW DELHI, Oct 11 (PTI) — The Law Commission has recommended a ban on the export of vegetables, fruits and meat (excluding beef) to check skyrocketing prices and domestic supply shortages.

The Law Commission’s 159th report said that “in view of acute scarcity and skyrocketing prices of vegetables, meat and fruit all over the country, it would be appropriate that the Government issues a notification prohibiting their export altogether.”

“Such a prohibition will ensure availability of these products at reasonable rates, which alone will enable the poorer sections of the society to purchase and consume them” an official release said here today.

Dundee Bond Fund unveiled
Tribune News Service

NEW DELHI, Oct 11 — Dundee Mutual Funds (DMF) today launched Dundee Bond Fund, an open-ended fixed income fund with two schemes — Dundee PSU Bond Fund and Dundee Corporate Bond Fund.

The initial offer opened today and will close earliest on October 18 and latest on November 25.

DMF President Sunil Joseph said that Dundee PSU Bond Fund is the first income fund investing only in debt securities of public sector undertakings and public financial institutions. The fund aims to provide investors long-term returns consistent with prudent risk.

Dundee Corporate Bond Fund seeks to maximise investor returns through investment in a diversified basket of public and private sector debt securities and money market instruments.

The fund has no entry load during the initial offer period with the asset management company absorbing all initial issue expenses. Units are to be issues during the IPO period at the par value of Rs 10 each. The minimum investment amount is Rs 5,000 and in multiples of Rs 500 thereafter.

The two funds offer investors a choice of two plans, including an appreciation plan and a dividend plan with monthly, quarterly, semi-annual and annual dividend options.

Under Section 10 (33) of the Income Tax Act, 1961, dividend income in the hands of the investor tax free.

Dundee Mutual Funds are managed by Dundee Investment Management and Research Private Limited, the Asset Management Company, with Dundee Trust Private Limited as Trustee.

‘States need greater financial freedom’
From P.S. Annapurna

NEW DELHI, Oct 11 — To ensure a balanced economic growth and help States generate their own revenue, experts have favoured greater financial freedom by reinventing a rationalised mode of fund disbursement.

“Barring one or two States, almost all of them along with the Centre are having huge fiscal and revenue deficits, which can only be reduced by redeployment of public finance between the Centre and the States and rationalising expenditure, says the chairman of 11th Finance Commission, Prof A.M. Khusro.

In the present set up, the producing States appropriate all the resources leaving none for the consuming ones. Besides richer States also have a greater clout at the Centre, says Dr Parthasarathi Shome, of Indian Council for Research in International Economic Relations (ICRIER).

A federal fiscal structure and simplified redistribution can help bridge the gap between producing and consuming states, says Shome.

For this he suggests a different mode of taxation to reduce the increasing tax burden on States and make it more effective at the same time.

A Value Added Tax (VAT) on the lines of Latin American countries of Argentina and Brazil will help reduce the resource gap and also the cascading effect of taxes, he says.

He, however, wonders whether India can consider VAT currently with the Centre taxing income from manufacturing and the States taxing from sales. But it may be possible by so redesigning the tax structure that all other taxes that push up the price of final product are merged with an integrated VAT.

In a federal set up VAT is best administered by the Central Government and the arrangement could be that the proceeds of VAT would be levied by the Centre and collected by the States.

In addition the States could impose a retail sales tax falling mostly in their respective residences, says the Chelliah Committee report on tax reforms.

If the States are given relative freedom to generate their own resources, the dependence on Central grant-in-aid will be reduced to a great extent, says Shome.

Maharashtra was the first state to introduce VAT in 1996, but it could not bring stipulated revenue to the State, says Saumitra Chaudhury, economic advisor to Investment Information and Credit Rating Agency (ICRA), citing lack of administrative machinery and inefficient calculation as possible reasons.

But not only do taxes (direct or indirect) contribute to the revenue of the states, the major proceeds come from the financial devolution by the Centre, which was recently flayed by the States for being a hindrance in their financial autonomy.

The states have also objected to a May 26 Central directive that from July 1, 1999, the release of plan-expenditure would be at the discretion of the Planning Commission.

The 10th Finance Commission had suggested an automatic devolution of Central indirect taxes at a uniform 29 per cent from a single divisible pool to avoid any confusion regarding redeployment.

But in the last few years, most of the States have misused the Central allocation by mostly appropriating in their revenue expenditures, according to Chaudhury.

“Autonomy should also match with a corresponding sense of responsibility and the number of States which have misused the Central fund is certainly more than the few who have used,” he says.

While favouring alternative forms of tax structure, he says even the existing ones are equally effective and the only need at present is to enhance the modes of collection.

Taking all into account, the Centre’s move to put plan-expenditure in close scrutiny may make sense in correcting States’ fiscal indiscipline, but a reduced dependence is sine qua non for a balanced growth, an all-pervasive development and a judicious redistribution, he says. — PTI

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CII competition
CHANDIGARH, Oct 11 (TNS) — The CII will host the 12th regional workskills competition on October 12, 13 at Advanced Training Institute, Ludhiana, and Industrial Training Institute, Chandigarh. Around 70 participants from BHEL, Daewoo, Escorts, LML, Hero Honda, Maruti Udyog, Nestle India Ltd, Telco and Ranbaxy will compete in seven trades.