Sunday, October 28, 2001,Chandigarh, India






National Capital Region--Delhi

THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

FICCI calls for pension regulator
New Delhi, October 27
With pension funds likely to become big business in India following the opening up of the financial sector, the Federation of Indian Chambers of Commerce and Industry (FICCI) has called for the need to have a pension regulator in the country.

Down trend in economy to continue: UBS chief
Chandigarh, October 27
A two-day national seminar on Analytical Overview of Indian Corporate Sector by the University Business School , Panjab University was inaugurated here today. Dr Naresh Kumar , Ranbaxy Laboratories was the chief guest on the occasion.

RBI’s thrust to boost economic growth
C
ONTENTS of business season credit policy is under scrutiny. Bankers, depositors and borrowers of sorts are looking at it from their own respective ends. RBI’s thrust seems to boost the sagging economic growth. Policy has spared about Rs 8,000 crore from the banking sector for lending.

Punjab’s first 5-star hotel at Jalandhar
Jalandhar, October 27
Forecasting the expansion of the tourism industry in Punjab in near future Mr Sukhbir Singh Badal, General Secretary of the SAD, said today he was not satisfied with the measures taken in the past to ensure all round growth of the industry in the state.

 

 

EARLIER STORIES

 

Chinese bike now available in India
New Delhi, October 27
There is excitement in the Indian two wheeler market with a ‘Made in China’ bike finally hitting the roads.

RENT CASES

Landlord-tenant relationship
Q: When on the perusal of the petition for leave to contest and the affidavits filed with it, the Controller finds that the tenant has pleaded a triable case, should he still refuse leave to contest?

TAX & YOU

VRS benefits
Q: I have taken retirement from the bank under VRS. I retired on 31-3-2001. The retirement benefits have been paid in April and May, 2001. Advise whether these benefits i.e. ex-gratia payment will be included in the financial year 2000-2001 or 2001-2002. I have heard that the Income-tax authorities are compelling the banks to include this payment in the Financial Year 2000-2001 on the plea that the request for retirement was accepted in that year.

  • Additional deduction

  • Tax liability

AVIATION NOTES

Plane crash inquiry still not complete
I
T is almost a month when Madhavrao Scindia and seven others were killed in air crash near Mainpuri (UP) on September 30. Soon after King Air C-90 aircraft, managed and controlled by Jindal Group, crashed, the government made a public announcement that, in a time-bound probe, findings would be tabled within a fortnight.


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FICCI calls for pension regulator
Tribune News Service

New Delhi, October 27
With pension funds likely to become big business in India following the opening up of the financial sector, the Federation of Indian Chambers of Commerce and Industry (FICCI) has called for the need to have a pension regulator in the country.

A ten-member special taskforce of the chamber which went into the issue of pension reforms said the regulator could be a separate Indian Pension Authority (IPA) under the aegis of Insurance Regulatory Development Authority to regulate pension business in the country.

It said a sound regulatory framework would generate confidence among individuals with respect to risk management, mis-selling and prevention of fraud. It said the regulatory body should regulate all the pensions business other than that transacted by life insurance companies.

On the issue of who should be the pension provider, the task force has suggested that the task of providing pension cover should be divided into two stages — Accumulation Stage and Pay Out Annuity Stage. It adds further that the Retirement Accumulation Business should be separated from the existing business of the promoter. The reporting and regulatory issues relating to the retirement and accumulation schemes would be governed by the IPA.

Keeping the interest of the investor in mind the report has suggested that the investor must be given a choice and flexibility in terms of selecting his fund manager as well as his annuity provider. It has suggested to keep the accumulation stage as simple and easy to comprehend for the benefit of the investor.

On the issue of an investment regime, the taskforce has recommended that four investment options must be offered to the investors. These should be 100 per cent Government securities fund, income, balanced and growth funds to ensure easy portability at the initial stage. The default investment option would be 100 per cent government securities fund.

The taskforce report states that there was a need to create consumer awareness, educate investors as well as motivate them to invest in pension products as it would be critical for the success of the pensions system.

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Down trend in economy to continue: UBS chief
Tribune News Service

Chandigarh, October 27
A two-day national seminar on Analytical Overview of Indian Corporate Sector by the University Business School , Panjab University was inaugurated here today. Dr Naresh Kumar , Ranbaxy Laboratories was the chief guest on the occasion.

Papers with indepth analysis of demand management, cost management, production management, market structure and pricing policy were presented during the first day of the seminar.

Dr Manoj K Sharma, Organising Secretary, UBS spoke about various aspects including exports, Research and Development, production etc which are relevant in today’s business environment keeping in view the prevailing recession.

Prof K K Mangla, Chairman UBS while addressing the session expressed concern over down trend in the economy, which might continue in the coming few years as well, said he. He said the lowering of growth rate by RBI from 6.5 per cent to 5.2 per cent and reports released by IMF and other organisations paint a dismal picture of the economy. “Analysis and revamping of the socio- economic policies is the need of the hour”, he said.

Paper presentations on economic and SWOT analysis of companies including HMT, Escorts, PTL, Eicher, MUL, Bajaj Auto, LIC , BPL, Asian Paints, SBI, Tata Tea, Nestle, Dabur and various other major companies were given by the UBS students

Four technical sessions which were held today were presided over by Mr C N Dhar, Executive Director HMT, Mr Arun Chetak, VP, CDIL and Prof P S Raikhy.

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RBI’s thrust to boost economic growth
P.D. Sharma

CONTENTS of business season credit policy is under scrutiny. Bankers, depositors and borrowers of sorts are looking at it from their own respective ends. RBI’s thrust seems to boost the sagging economic growth. Policy has spared about Rs 8,000 crore from the banking sector for lending. Bank deposit rate has been reduced by 0.5 per cent in expectation of similar reduction in lending rates. RBI is patting itself on these scores as these measures shall boost economy. Will this translate into reality?

In theory these measures look very promising. In practice things change vastly. SSI sector is very vital for the economy and social structure due to its potential for higher employment. Punjab’s economy is heavily dependent on SSI sector and peace in the state in a way is also linked with well being of industry.

Banks are very rigid in lending to SSI sectors. Borrower is confronted with plethora of conditions. No money can be lent without collateral security. Some banks are even asking for collateral which should be double of the loan amount. Is growth possible with this attitude in place? When industry grows collateral does not grow in proportion? So claim of extra money released through banking system may mainly go to government securities and bigger companies.

Level of NPA is made the excuse for this situation. Of the total NPA’s of worth over Rs 60,000 crore share of SSI units is hardly 10-15 per cent. Number of defaulters may be very high due to obvious reasons. Then frauds and defaults by big sharks is well within the public knowledge. With this situation on the ground why SSI units are being made the scapegoats?

Under finance and untimely credit is the main reason for sickness in SSI units. Credit policy has relaxed the extent of cash credit component of working capital for loans above Rs 10 crore. This component can exceed 20 per cent. Many units in the SSI sector are not even getting 20 per cent working capital. Banks may lend beyond 20 per cent in selective few cases but that cannot be taken as general trend.

On interest rate also SSI sector is discriminated. RBI has allowed the banks to charge upto 4 per cent over PLR from SSI units. This is apparently based on higher risk perception. Banks are charging this higher interest on the basis of working parameters. Parameters for SSI units are so harsh and illogical that even good units cannot meet them. If share of SSI units on gross NPA level is less than 15 per cent where is the risk perception to justify higher rate. Yes; this higher rate is a sure recipe to increase SSI’s hare in NPA.

RBI was expected to reduce the increase over PLR from 4 to 2 per cent. This can be done in review also. When banks reduce lending rate they tend to increase service charges. List of service charges and the level of charges amply endorses this observation.

Our exports are sagging. Against the targeted level of 12 per cent growth hardly 2 per cent is achievable. Here again SSI’s share is around 40 per cent. If gap between theory and practice continues to widen our economy may see the worse.

As per RBI guidelines any account which remains even slightly irregular for 180 days in a year the account has to be treated as NPA. Earlier the condition for this was continuous irregularity for 180 days. The guidelines also direct the banks to declare any account NPA if renewal of the limits is not sanctioned with six months after the due date. Both these conditions cannot be fulfilled by most of the SSI units and the application of these guidelines spell doom for the SSI units.

In nutshell credit policy may get more discredit than credit if ground realities are ignored.

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Punjab’s first 5-star hotel at Jalandhar
Tribune News Service

Jalandhar, October 27
Forecasting the expansion of the tourism industry in Punjab in near future Mr Sukhbir Singh Badal, General Secretary of the SAD, said today he was not satisfied with the measures taken in the past to ensure all round growth of the industry in the state.

Addressing a press conference after inaugurating Windsor-Radisson, Punjab’s first five-star hotel, here today, Mr Sukhbir Badal said though there was great tourism potential in the country, yet this sector was being neglected.

“Some countries like Thailand and Maldives are thriving just on the tourism industry. On the other hand, it is not the case here, though we have best of mountains of the world in our country and we are very rich from history point of view, but this was not being tapped.

He admitted that Punjab lagged behind as far as development of tourism and conservation of historical places was concerned. “See, the historical Kapurthala palace which is the only building outside France with rich and pure use of French architecture and so are the other places. Punjab can be a hub for tourists for its location. What the state government could do is to create a secure and friendly atmosphere to the foreign tourists,” said Mr Sukhbir.

Mr K.B. Kachru, the Vice-President of the Radisson-Windsor said his company had great plans for Punjab in the future. Mr Gautam Kapoor, the Managing Director of the hotel and a Jalandhar based leading industrialist, said it was his dream to give some good thing to Punjab and it was fulfilled in the shape of the hotel. The hotel, according to him, had 64 world standard luxurious rooms and other facilities to accommodate 1000 guests. “We have maintained world standards in every department of the hotel,” said Mr Kapoor.

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Chinese bike now available in India
Tribune News Service

New Delhi, October 27
There is excitement in the Indian two wheeler market with a ‘Made in China’ bike finally hitting the roads.

The arrival of the Chinese bike marks months of speculation on the impact such imports would have on the domestic market. The bikes available in two avataars — the 100 cc Cosmo Blaster and the 60 cc multi utility Cosmo Gazzab — hopes to sell on the basis of its cheaper price tag.

As against the tag of Rs 40,000 plus for more advanced and snazzy bikes of companies Hero Honda, Yamaha, Bajaj and TVS, the Chinese bikes are available in the Rs 25,000-30,000 range.

The bike is being marketed in India by Monto Motors Ltd, which has tied up with a leading Chinese manufacturer to import the bikes.

According to a company spokesman, depending on the success of the present models, the company may go in for higher capacity bikes.
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SBI rural mela

Chandigarh, October 27
For better interaction with villagers, the State Bank of India’s Agriculture Development Branch, Bhirdana, Bhuna and Fatehabad branches have recently organised a multi-purpose rural mela at Bhirdana. The mela was presided over by Mr C.R. Rana, ADC, Fatehabad. Mr SK Mishra, Deputy General Manager of the bank’s Zonal Office (Haryana), was the chief guest.

Loan amounting to Rs 53.29 lakh was granted to 81 persons, Rs 11.75 lakh to farmers under the bank’s kisan credit card scheme and Rs 10.85 lakh was given to unemployed youths under the Prime Minister Rojgar Yojna. TNS
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RENT CASES

Landlord-tenant relationship
by Praful R. Desai

Q: When on the perusal of the petition for leave to contest and the affidavits filed with it, the Controller finds that the tenant has pleaded a triable case, should he still refuse leave to contest?

Ans: In Manoj Kumar v Bihari Lal (dead) by L.R.s (2001 (2) RCJ 105 (SC) the S.C. expressed the view thus:

In the instant case, the Rent Controller proceeded on the assumption that the appellant had not denied the relationship of landlord and tenant and in fact had admitted all the ingredients for establishing a case U/s. 14 (1) (e) of the Delhi Rent Act.

The impression was totally erroneous, in the opinion of the SC based on a mis-reading and mis-construction of the petition filed by the appellant seeking leave to contest.

On perusal of the petition, it is clear to the SC that what the appellant had pleaded was that there was no relationship of landlord and tenant between the parties inasmuch as he had been put in possession of the premises on the basis of the agreement to sell the property to him and not as a tenant.

Unfortunately, said the SC, the Additional Rent Controller failed to read the petition and the affidavit correctly which resulted in the mis-conceived idea about the case of the appellant. This mis-conception vitiated the entire order.

It is unfortunate that the HC failed to notice this manifiest error in the order of the Additional Rent Controller and disposed of the revision petition by merely granting leave to the appellant to approach the civil court for appropriate interim order in the suits filed by him.

The SC was constrained to observe that the manner of disposal of the case by the HC was rather superficial. The order of the Additional Rent Controller which is manifestly erroneous should not have been allowed to stand.

On consideration of the entire matter, the SC had no hesitation to hold that the order passed by the Rent Controller as confirmed by the HC is unsustainable and hence has to be vacated. The appeal that way was allowed.

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TAX & YOU

VRS benefits
R.N. Lakhotia

Q: I have taken retirement from the bank under VRS. I retired on 31-3-2001. The retirement benefits have been paid in April and May, 2001. Advise whether these benefits i.e. ex-gratia payment will be included in the financial year 2000-2001 or 2001-2002. I have heard that the Income-tax authorities are compelling the banks to include this payment in the Financial Year 2000-2001 on the plea that the request for retirement was accepted in that year.

— R.K. Gupta, Patiala

Ans. On the facts stated by you, your retirement benefits will be taxable during the financial year 2000-2001. This is based on the concept of salary income as per Section 15 of the Income-tax Act, 1961 whereby salary amount is taxable when due, whether paid or not.

Additional deduction

Q: Under Section 80-L of Income Tax, additional deduction of Rs 3000 is allowed on interest on Central and State government securities. Kindly enlist the Central and State Government securities on which the additional deduction of Rs 3000 is allowed.

— Anil Kumar Aggarwal, Chandigarh

Ans: As per section 80L the sum of Rs 3,000 is allowed by way of additional deduction in respect of income from Central and State Government securities. There is no composite list of these securities. However, you can enquire from the RBI and the Public Relations Officer of the Income-tax Deptt. about the latest details of securities for the above purpose.

Tax liability

Q: (i) I have completed 64th year of age on 2-2-2001 and entered in 65th year. Please advise if I am a Senior Citizen for the financial year 2001-2002. If so what would be Tax Rebate.

(ii) What is the tax liability for others as per new budget for the year 2001-2002.

— S.S. Soni, Jalandhar

Ans: For the financial year 2001-2002, you would be senior citizen because you will complete 65 years of age on 2nd February, 2002. The tax rebate of Rs. 15,000 will be deducted from the tax payable by you in respect of the income for the whole year.

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AVIATION NOTES

Plane crash inquiry still not complete
K.R. Wadhwaney

IT is almost a month when Madhavrao Scindia and seven others were killed in air crash near Mainpuri (UP) on September 30. Soon after King Air C-90 aircraft, managed and controlled by Jindal Group, crashed, the government made a public announcement that, in a time-bound probe, findings would be tabled within a fortnight.

Sadly, not much headway has been made in the probe thus far. A sub-committee has, however, been formed and two-member team of pilots has visited Indore, Bhopal and Patna to study/examine training facilities. What is the point in examining facilities at these centres when pilot and co-pilot of the crashed aircraft were graduates of the Indira Gandhi Uran Academy (UP)?

Amidst this vex situation, the Civil Aviation Department has now (October 25) issued a notification asking for information. The notification, issued by the Member-Secretary P.Shaw, says: “Any person having direct or relevant knowledge or information about the said accident or the causes of circumstances leading to the accident, may do so in writing within 15 days”.

It appears that it will take long time before the inquiry is completed. According to experienced pilots, the health of general aviation is very poor and, if stringent measures are not taken immediately, there may be more accidents and incidents. They are also of firm belief that the real causes of the tragic accident will be known only when officials inquiring are not connected, in any way, with the Directorate-General of Civil Aviation (DGCA).

Nothing is yet known about hijacking drama. The inquiry is on but efforts are being made to hush up the incident. The entire crew of CD-7444, comprising commander, co-pilot and four air hostesses stand grounded. Why have hostesses been grounded? What is there fault in the drama? Had they not been on board, there would have been far more panic among innocent passengers, who were taken for a ride for no fault of theirs.

The committee has not yet been able to pin-point whether Capt Ashwini Behl over-reacted or he acted in the interest of the passengers and safety of the aircraft. Like King Air Inquiry, it will take a long time before findings are made public.

As airline industry stays in turmoil following September 11 terrorist attacks in the USA, Air India’s senior officials have announced 15 per cent voluntary cut in their salary. The saving of about Rs 40 lakh from 150 odd officials/officers is quite substantial. In sharp contrast, another national carrier has provided 18 Esteem cars to senior officers.

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BIZ BRIEFS

LG Electronics
Chandigarh, October 27
LG Electronics India has outdone the Indian consumer electronics and home appliances industry again. The Indian subsidiary has recorded a cumulative turnover of Rs 5000 crore in India in a period of four and a half years, ever since its inception in May 1997. The company has outlined a budget of Rs 25 crore towards media spends, gifts and prizes for the month long campaign. TNS

Aurobindo Pharma
New Delhi, October 27
Aurobindo Pharma Limited has introduced two more molecules Efavirenz ( Viranz) and Nelfinavir (Nelvex) for the treatment of AIDS. The drugs have been introduced by Imunus, the anti-retroviral division of Aurobindo Pharma. TNS

SBI branch
Chandigarh, October 27
The State Bank of India, Chandigarh circle, today computerised its 219th branch at Samundra in Hoshiarpur district, Mr C.L. Sethi, DGM, Punjab Chandigarh, said while inaugurating the bank that it would work up to 4 p.m. on weekdays and 1 p.m. on Saturdays. TNS

Tarang & Monex
New Delhi, October 27
Computing solutions provider, Tarang and Monex, has introduced Monex Aggregation, which will allow Monex customers to get a consolidated view of their portfolio. Tarang provides computing solutions to enterprises, financial services and technology companies. TNS

SBI Life
Chennai, October 27
SBI Life, the life insurance arm of State Bank of India, today announced the launch of its latest product, ‘Scholar’, aimed at helping parents and guardians to finance their children’s education. PTI

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