Monday, May 15, 2000,
Chandigarh, India






THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

China, EU set to sign landmark WTO deal
BEIJING, May 14 — China and the European Union are set to conclude a historic pact on Beijing’s accession to the World Trade Organisation with the arrival of EU’s top negotiator Pascal Lamy here tomorrow.

Inflation falls to 5.94 pc
NEW DELHI, May 14  — Breaking a nine-week upward rise, the inflation rate eased a bit for the week ended April 29, moving down to 5.94 per cent from 6.10 per cent a week ago.



Punjab biggest loser
NEW DELHI, May 14 — Punjab was the biggest loser in the food and cash crop production in 1998-99 with a drop in the yields of rice and cotton while Tamil Nadu emerged as the State with the highest yield in rice, oilseeds and sugarcane, a study carried out by Assocham said here.

A Chinese man makes a call on his mobile phone in Beijing on Sunday. Access to the Chinese telecom market will be a key point when EU trade negotiator Pascal Lamy goes to Beijing next week to resume talks on entry by China into the WTO, as the European interests in the mobile phone market would be the central issue.  AFP photo
A Chinese man makes a call on his mobile phone in Beijing on Sunday. Access to the Chinese telecom market will be a key point when EU trade negotiator Pascal Lamy goes to Beijing next week to resume talks on entry by China into the WTO, as the European interests in the mobile phone market would be the central issue. AFP photo

Cavorting rupee to Papa’s tunes
On the morning of Wednesday last, May 10, foreign exchange brokers switched on their computer terminals as placidly as any other day.

Japan's toy giant Takara unveils hamster-shaped robot "Cookie" which moves as a woman, attempts to catch it at a press preview in Tokyo on Sunday.
Japan's toy giant Takara unveils hamster-shaped robot "Cookie" which moves as a woman, attempts to catch it at a press preview in Tokyo on Sunday. — AFP photo
SBP to offer demat facilities at Ludhiana
AMRITSAR, May 14 — Mr M. Sita Rama Murty, Chief General Manager, State Bank of Patiala, inaugurated the computerisation of the second bank branch at Amritsar i.e. Hall Bazar (Katra Jaimal Singh), the first being Mukherji Marg yesterday.



Where’s package  for J&K units?
SRINAGAR, May 13 — Kashmir’s industry is sending a distress signal — it is terminally ill, but the Central Government’s response so far has been indifference.



EARLIER STORIES
 




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China, EU set to sign landmark WTO deal

BEIJING, May 14 (PTI) — China and the European Union are set to conclude a historic pact on Beijing’s accession to the World Trade Organisation (WTO) with the arrival of EU’s top negotiator Pascal Lamy here tomorrow.

Lamy, EU Commissioner for Trade Affairs, who will lead another crucial round of EU-China negotiations, said he hoped to conclude a deal with China on its accession to the WTO.

EU remains the main stumbling block for China’s accession to the Geneva-based WTO, which sets rules for global trade.

China’s official Xinhua news agency quoted Lamy as saying that he could not go back to the European Council or the European Parliament without any progress.

The 15-nation European bloc is asking China to open its telecommunications market. “The EU wants its stake and share in the market to increase substantially to around 50 per cent,” he said.

According to a report in the official China daily today, China is expected to conclude WTO talks with the EU on the lines of the US-China trade deal, signed in November last.

The upcoming talks in Beijing will be the fourth round this year between the EU and China. The earlier rounds were held in January and February.

EU was China’s third largest trading partner last year. Two-way trade volume hit 55.7 billion US dollars in 1999, up 14 per cent from a year ago. China was the fourth largest trading partner of the EU.




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Inflation falls to 5.94 pc

NEW DELHI, May 14 (PTI) — Breaking a nine-week upward rise, the inflation rate eased a bit for the week ended April 29, moving down to 5.94 per cent from 6.10 per cent a week ago.

The annual rate of inflation, calculated on the basis of wholesale price index (WPI), during the week fell by 0.16 percentage points to 5.94 per cent (provisional) compared to 6.10 per cent (P) a week ago and 3.55 per cent a year ago.

This is the first time the inflation rate has fallen after new WPI series with 1993-94 as base year was introduced on April 1, 2000.

The inflation rate has been witnessing a steady rise ever since it touched 3 per cent on February 5, mainly on account of increase in the administered prices in petroleum products and electricity.

During the week under reference, the index for “All Commodities” moved up by 0.1 per cent to 151.5 (P) from 151.4 (P) in the previous week. The final rate of inflation for the week ended March 4, on the new series stood sharply higher at 5.01 per cent compared to 2.96 per cent.



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Punjab biggest loser

NEW DELHI, May 14 (PTI) — Punjab was the biggest loser in the food and cash crop production in 1998-99 with a drop in the yields of rice and cotton while Tamil Nadu emerged as the State with the highest yield in rice, oilseeds and sugarcane, a study carried out by Assocham said here.

“After occupying the top slot in 1996-97 and 1997-98, Punjab lost out to Tamil Nadu which produced 3,443 kg per hectare in 1998-99, thereby earning the number one position,” the study on the food and cash crops production trends (1996-97 to 1998-99) said.

The southern State had also emerged as the highest producer of sugarcane and oilseeds displacing Haryana and Orissa.

Punjab lost to Gujarat in cotton which was 416 kg/ha in the western State, the study said adding that the production in Gujarat was the highest in 1998-99.Top




 

Cavorting rupee to Papa’s tunes
By Anjan Roy

On the morning of Wednesday last, May 10, foreign exchange brokers switched on their computer terminals as placidly as any other day. However, by mid-morning they were gasping for breath. The rupee was being pummeled against the dollar. The day’s trading had opened at Rs 43.68 to a dollar, which was fast slipping ground. As the news spread about the rupee’s sudden collapse, industry and business was confused. The State Bank of India, which operates on the market on behalf of the Government of India, kept on buying. The day ended with rupee slipping to 44.08 to a dollar.

In mature foreign exchange markets, variation in the exchange rates happens in terms of “pips”, that is, fraction of one percentage point. In the course of a single day on May 10, the Indian rupee lost to the dollar by as much as 8 per cent. This would have meant huge losses for the importers.

The exporters would, of course, have gained. But their gain as well is not one-sided since many imported items go into export production and these would be costlier. There could be other macro-economic implications. India imports most of its petroleum products and sharp depreciation of the rupee would mean the domestic price of petrol and diesel will go up, nudging overall prices upwards.

The fall was directly because of the sudden purchase of the dollar by the SBI. Although nothing is known for certain, some market estimates put SBI purchases on that single day at about $120 million. The Indian exchange market being very thin, such purchases in one trading day can make a major impact as it had happened.

The question that cropped up was why did SBI pick up so much within such a short span of time driving the rupee down? What was the compulsion when the purchase could have been spaced out to leave the minimal impact on the market?

Various explanations have been offered. The one explanation given out that day itself was from the Finance Minister, Mr Yashwant Sinha, that the fluctuation was the result of a temporary mismatch between demand and supply. Secondly, it was believed to be a deliberate move of the Reserve Bank. Before last Wednesday, the rupee-dollar exchange rate had remained stable for a long time. The RBI wanted the rupee to slightly depreciate to maintain India’s export competitiveness.

In fact, with the rise in the level of foreign direct investments and steady interest of the foreign institutional investors (FIIs) in the Indian portfolio, the rupee can easily show signs of strengthening. Any premature rise in the external value of the rupee might shore up the country’s pride but can sorely affect the economic interests.

It appears as though the RBI, working through the SBI, might have been trying to bring about a minor correction in the exchange rate. Otherwise, it was so very easy for either SBI or the Government or the Reserve Bank to meet the “temporary mismatch between supply and demand” — as mentioned by the Finance Minister — without in anyway affecting the exchange market! That they chose to raise the sudden need for funds from the exchange market confirms the view that it was a deliberate aim to marginally readjust the exchange rate. — The writer is Adviser, Economic Affairs, FICCI. 
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SBP to offer demat facilities at Ludhiana
Tribune News Service

AMRITSAR, May 14 — Mr M. Sita Rama Murty, Chief General Manager, State Bank of Patiala, inaugurated the computerisation of the second bank branch at Amritsar i.e. Hall Bazar (Katra Jaimal Singh), the first being Mukherji Marg yesterday.

The bank has been achieving priority sector benchmarks and has formulated schemes to suit the requirements of customers. The bank issued 48,000 Kisan Credit Cards during the year 1999-2000. The bank has been rated as the best bank in the country by the Verma panel.

The bank’s business at the end of March, 2000, crossed Rs 16,000 crore. Mr Murty also visited “Pingalwara” and distributed clothes and sweets among the inmates.

Mr S.P. Mittal, Deputy General Manager, Jalandhar zone, said that ATM facility will be installed in Jalandhar and demat facilities provided at Ludhiana very shortly.Top


 

Where’s package  for J&K units?
From Binoo Joshi

SRINAGAR, May 13 — Kashmir’s industry is sending a distress signal — it is terminally ill, but the Central Government’s response so far has been indifference.

Entrepreneurs reel out statistics to show how grim the situation is for industry in the Kashmir Valley. Over 500 units have been declared sick and many more are on the verge of closure.

Federation of Chamber of Industries Kashmir (FCIK) President John Mohammad Kakroo lamented, “No one listens to us in Kashmir or in Delhi.”

The grouse of the Kashmir industrial entrepreneurs is on three counts. Their plight for the past 11 years has been ignored; no package of relief has been announced for them and the revival spirit is dampened by bureaucratic red tape.

One of the problems that came in the way of revival of the industrial enterprises was that most of the industrial estates are occupied by the security forces, he said.

The security forces have been occupying the industrial estates in Bandipore, Sopore, Ganderbal, Sumbal, Zakoora and Baghi Ali Mardan Khan for nearly a decade as the government does not have sufficient accommodation to house them.

The industrial entrepreneurs in Kashmir are angry with the Central Government. “Where is the much publicised and much promised northeastern type industrial package for Jammu and Kashmir. Every time we approach the Centre, this promise is dished out to us. But practically, there is nothing.” Kakroo said.

The industrialists in Kashmir also feel discriminated against by the nationalised banks. “The nationalised banks do not offer the kind of cooperation that is needed to revive the spirit of enterprise,” according to Kakroo. — IANSTop


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MARKET SCAN

by J.C. Anand

Bear grip over market tightens

THE stock market continues to drift downward despite reports that the economy is doing well and there are satisfactory first quarter results. During last fortnight, the Sensitive Index dropped by 6 per cent and Nifty was lower by 3.79 per cent. Many analysts had believed that the recovery was on its way but the way the market is behaving, it appears that it would take some more time for the market to recover.

The new economy scrips have virtually eclipsed the old economy scrips but these scrips even now appear to be over-priced in terms of their EPS and P/E ratios. Some further correction is needed before these scrips settle down on a stable base. The old economy shares are being quoted at ridiculously low market rates but there are no “takers” for them, neither the traders nor the long-term investors.

There appear to me three factors responsible for the present depressed condition of the stock market. First, the drought in almost five states of India and their impact on both economy and the market sentiment. The sentiment, at least for the present, has a greater impact on the behaviour of the market. Some reports that the monsoon this year may be deficient by 10 per cent or so have created a feeling of uncertainty among the traders and investors.

Sales by FIIs have also contributed to the decline in the market indices. In fact, the FIIs have been ‘sellers’ in all Asian markets. But this is rather a short-term transitional measure and the FIIs are bound to return to the market as investors. The slight fall in the exchange value of the Indian rupee in respect of the US dollar has also affected the market sentiment.

A sharp decline in the US stock market in the new economy shares has also affected the Indian markets but the latest reports indicate that the US market is recovering.

There is hardly any doubt that the Indian economy and industry are doing well. According to quick estimates of the Index of Industrial Production released by the Central Statistical Organisation, the financial year 1999-2000 has ended with 8 per cent growth as compared to 4 per cent during the same period last year. Another report, released by the National Council of Applied Economic Research, indicates that the business confidence Index now is the highest since December 1995. The corporate sector has also improved its efficiency by effecting economy and improvement in the management.

Hikal Chemicals and Electrosteel Castings have announced bonus issues at the ratio of one share for one held in each case. The Vardhman group has hiked dividend by 2 per cent (42 per cent in place of 40 per cent) in all three companies in the group.

What should the long-term investors do in the present situation? In the first place, it is not the time to liquidate one’s holding in respect of blue-chip scrips, even though these scrips may have dropped by more than 50 per cent in their market value. BASF, Clariant, Colour Chem, Larsen and Toubro, Grasim, TVS Electronics, Telco, etc should be retained. Vikas WSP is quoting at a very attractive low price. The same applies to Sterlite Industries as well as Global Telecom.

But at the same time, the investors should wait for making new investments for some time as the market is expected to drop further down this fortnight. But when a long-term investor picks up a new scrip, he should keep two things in mind: it must be a blue chip well-managed company and a scrip towards which the market is friendly. 

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TAX & YOU

by R.N. Lakhotia

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Q: After reading your one of columns I did not allow the rebate of Income Tax on House Building Advance taken by employees from the organisation on the plot/land registered in the name of his/her spouse u/s 88 amounting to Rs 10000 being myself is DDO. And now one of the employees of same case has forwarded a representation to my higher office complaining that our higher office is giving the said rebate and I am not. Please let me know the deeper points why he/she is not eligible for Income Tax rebate u/s 88 and of interest accrued on the HBA taken on the plots registered in his/her spouse name so that they can understand the point as they are pleading that “when the loan is granted then they are eligible for tax rebate also”.

S.S. Sharma, 
Chandigarh

Ans: Generally speaking, the benefit of tax rebate u/s 88 etc. for house building advance will be eligible only when the house property is in the name of the employee himself. The tax rebate will not be permissible when the house or the land is registered in the name of the spouse. However, if a situation arises when the land etc is registered in the name of spouse but the fact remains that the investment of the said land as also the re-payment of the housing loan etc have all been contributed by the assesse himself i.e. the spouse did not have sufficient funds for contribution for purchase of the land or payment of the instalment, then it will be presumed that the spouse is the Benamidar of the assesse in which case the tax rebate u/s 88 would be permissible even in a situation where the land is owned by the spouse. Please remember that no rebate u/s 88 would be permissible in respect of the property held in the name of any person other than the tax payer.

Q: I have a handicapped daughter. The rebate for income-tax purposes under 80 DD has been enhanced from Rs 25,000 to Rs 40,000. I want to ask you whether the rebate of Rs 40,000 can be given by the DDO or it cab be claimed afterward through Income Tax return.

Mohan Lal, 
Patiala

Ans: The DDO is competent to grant you deduction u/s 80 DD for tax deduction in respect of your handicapped daughter. As per CBDT Circular No. 781 dated 5.11.1999 the DDO can grant this deduction based on the Certificate of Government Hospital. The DDO need not insist on the vouchers.

Q: I am government servant and my wife is unemployed. My total income in a year (1999-2000) is approximately 2.5 lakh. Please clarify the following points:

(a) In which all schemes of UTI, PPF, ICICI, LIC and others, I can invest to save on income tax?

(b) I have a minor child, can I invest on his/her name to save on tax?

(c) Can I gift some money out of my salary to my wife/child to save on tax.

Randhir Singh,
Gurdaspur.

Ans: On the facts stated by you, PPF, LIC and the investments in ICICI qualify for tax rebate for the purposes of section 88. As regards UTI you should before making the investment verify whether a particular scheme of UTI is eligible for tax rebate u/s 88. If you make investment in the name of your minor child or you wife, you would still be able to enjoy the benefit of tax rebate in case the investment is made in the name of minor child or wife in other investment modes the benefit of tax rebate u/s 88 will not be permissible to you.

Q: I am working as an officer in nationalised Bank. I had availed leave encashment of one month during the financial year 1999-2000.

You are requested to clarify whether said income is to be included in total income and pay income tax accordingly or not. In case income-tax is to be paid and then get refund from income tax authorities after filing income tax return.

Suhinder Pal Singh,
 Ropar.

Ans: The leave encashment money will become fully taxable in income-tax while you are in service.

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INVESTOR FORUM

Reliance Cap

I hold 100 shares of Reliance Capital with Folio No. 077826360 and certificate No 000213457. Despite many reminders to the Company I have not received the sticker.

Avtar Singh
SAS Nagar

DCM Fin

I deposited a sum of Rs 50,000 on 9.1.1997 with DCM Financial Service vide receipt No 60942 for a period of one year. Although the period of my fixed deposit has already matured on 9.1.1998 but I have not received the payment so far.

Dr Jagdish Jaggi
Chandigarh

II

I am holder of five debentures with Folio No DF 402914, certificate No. 22929 of DCM Financial series. These debentures were due for repayment on 5.9.98. Till to date I have not received the payment.

Amar Rani Sood
Ambala City

Punwire

I have a fixed deposit receipt for three years for Rs 16000 with Punwire vide FDR No 5078 on 22.8.98. The company paid quarterly interest up to February 1999 i.e for two quarters only and repeated reminders to them in this regard proved to be of no avail. Till date I have not heard anything from them.

Kusum Lata
Chandigarh

Geometric Soft

I applied 50 shares of Geometric Software Solutions Co Ltd vide application No 9847595 tendered this application to HDFC Bank Ltd Ludhiana along with Cheque No 711011 dated 31/1/2000 drawn on SBI Brahmpuri Branch, Ludhiana. I have neither received the allotment nor refund so far.

Uma Gupta
Ludhiana

US-64

In spite of my various reminders and taking up the matter through Branch Manager, Unit Trust of India, Chandigarh to the Unit Trust of India, Jaipur and RIC, New Delhi till today, I have not received the dividend for the year 1996 against my US-64 Certificate No. 40348811371116.

Inder Pal Minhas
Kharar 

ULIP

I am ULIP member with Certificate No. 960411221205 and paid three annual instalments of Rs 6000 annual through bank drafts. The acknowledgement of the second instalment was not received by me. I have written many letters and got no response. That in 1999 I applied for premature payment of the certificate in April 1999 (which is permissible under the scheme after three years). But I got a Cheque No. 433592 for 7894/70 dt. 11/5/99 as the proceeds of only one instalment advising me the balance two instalments are not received by them till date and asked me sena the details of remittances if already paid. I submitted the particulars of drafts with the draft issuance certificates got them the respective banks which was acknowledged by the office on 31.5.99. Till to date I have not received any response.

Rajesh K Juneja
Ludhiana
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CORPORATE NEWS

NIIT TVE to set up IT firm

NEW DELHI, May 14 (PTI) — NIIT TVE, a joint venture between NIIT and Chinese major TVE International, has announced the setting up of a wholly-owned foreign enterprise ‘NIIT China’ to boost software development capabilities in China.

The key thrust of the NIIT China’s strategy is to provide customers in government and private sector opportunities in the new economy for which NIIT is setting up its e-commerce and knowledge management practice, a company statement said here today.

“NIIT China will strive for a leadership position in e-commerce and knowledge management in China by leveraging the technical strength of NIIT and marketing presence of our joint venture partner TVE International,” NIIT Chairman Rajendra S. Pawar said.

Besides offering IT education and training services to individuals and organisations, NIIT will also set up corporate virtual universities — an all encompassing learning framework, it said.

Panacea sets $ 10 m for JVs

NEW DELHI, May 14 (PTI) — Panacea Biotec has chalked out a major overseas expansion plan and earmarked $ 10 million for forging joint ventures in Europe, the CIS and Africa.

“We are in advanced stage of discussions with some companies in Europe, Africa and a CIS for setting up manufacturing and marketing facilities,” Ravinder Jain, Managing Director, Panacea Biotec told PTI.

The company was looking at companies having a portfolio of biotechnology driven pharmaceutical products and it hoped to complete its overseas expansion plan by year end.

Panacea Biotec recently formed a joint venture company Panheber Biotec with Cuba-based Heber Biotec SA to enter the bulk market for vaccines.

The company will focus on production of erythroprotein and recombinant DNA technology-based vaccine for Hepatitis B.

PAL to delist shares from NSE

NEW DELHI, May 14 (UNI) — In a bid to cut costs, Premier Automobiles Limited (PAL) is planning to get its shares delisted from the National Stock Exchange of India Limited (NSE), and Pune Stock Exchange Limited (PSE), besides trimming the number of Directors on the Board from 12 to eight. Its equity shares would, however, continue to be traded at the Bombay Stock Exchange (BSE), company sources told UNI here.

Though the company would be seeking its shareholders’ nod on Tuesday for going ahead with the delisting, it is yet to finalise a time frame for carrying out the same. PAL would be shortly approaching the SEBI for final approval.

Vysya Bank, Satyam to sign MoU

BANGALORE, May 14 (PTI) — Vysya Bank will strike a strategic alliance with Satyam Infoway Limited for using the latter’s e-commerce infrastructure relating to B2B and B2C applications, among others. Under the MoU, to be inked here tomorrow, Satyam will develop an interactive website for the bank, a bank release said. The bank’s Chairman K.R. Ramamoorthy and Managing Director of Satyam, B. Ramaraju, will be present at the signing ceremony.
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