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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

SEZs: Plan panel not against use of farm land
New Delhi, May 12
In what could intensify the controversy on SEZs, the Planning Commission today said it was not against utilisation of farm land for setting up Special economic zones (SEZs) as it would not jeopardise food security in the country. "Utilisation of about 1 per cent agricultural land for setting up industries will not jeopardise food security," a senior official of the Commission said here.

SBI profit up 75 pc
Plans foray into insurance, pension fund
Kolkata, May 12
The State Bank of India (SBI) today reported a 75 per cent rise in net profit to Rs 1,493 crore during fourth quarter of 2006-07 and said it plans to enter areas such as merchant acquisition, pension fund management and general insurance to boost income.

ONGC working on coal as alternative fuel
Dehra Dun, May 12
Like China, Oil and Natural Gas Corporation (ONGC) is working on the possibility to convert coal to petroleum and gas to bridge the growing gap between demand and supply of energy in the country.



EARLIER STORIES

 

IPTV service for BSNL users soon
Hyderabad, May 12
The users of BSNL broadband in the twin cities will soon get Internet Protocol Television (IPTV) over phone lines.

Credit cards bring good life in US, not India
New Delhi, May 12
Credit card users in India may be paying huge “extra charges” amounting to over Rs 1.6 crore a day, but those in the USA believe that using plastic advance money has a positive impact on their lives.

Aviation Notes
IGRUA expansion on cards
Pilots’ training, stowaway instances, delay and diversion of flights and development of infrastructure at several airports have all been explained in the 57-page ‘action taken’ report.

Investor Guidance
NRIs cannot invest in PO schemes
Q. Can an NRI invest in KVP, PO-M I S or other postal investments on non-repatriate basis? How do the post office track whether investment made is from NRI money or otherwise (since most of the transaction is done on cash. Even if cheque is required, it is quite easily be issued from a local account)? Although national savings website shows that NRIs are not allowed to invest in PO small savings, some agents are encouraging NRIs to deposit cash or cheque from local accounts for postal investments. Please advise.

 

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SEZs: Plan panel not against use of farm land

New Delhi, May 12
In what could intensify the controversy on SEZs, the Planning Commission today said it was not against utilisation of farm land for setting up Special economic zones (SEZs) as it would not jeopardise food security in the country.

"Utilisation of about 1 per cent agricultural land for setting up industries will not jeopardise food security," a senior official of the Commission said here.

He argued that the loss on account of utilisation of farm land for heavy industries can be easily compensated by increasing agricultural productivity.

Refusing to agree that acquisition of farm land could pose a serious risk to the country's food security, the official said, "It is an overstatement," and pointed out that the benefits of such zones would be manifold.

However, he said the present Land Acquisition Act, which was enacted about 100 years ago, has outlived its utility and should be re-enacted to meet the current needs.

The government, he added, was looking at the possibility of enacting a fresh legislation on land acquisition to facilitate setting up of industries without sacrificing the interests of the land owners.

The SEZ policy of the government has raised a huge controversy, especially after violent protests witnessed against acquisition of land by the West Bengal government at Nandigram, resulting in loss of several lives.

Montek for selective waiver of farm loans

The Planning Commission has suggested waiving farm loans on selective basis, restructuring subsidies and increasing investments in rural infrastructure to push farm growth rate to 4 per cent during the 11th Plan.

"I am not in favour of debt waiver for farmers. However, the banks can waive the loans on case-to-case basis where the farmer is not a wilful defaulter," Commission deputy chairman Montek Singh Ahluwalia today said.

Ahluwalia's statement comes ahead of the meeting of the full plan panel on May 14 to be chaired by Prime Minister Manmohan Singh. The meeting would consider various steps for accelerating farm growth, including one-time settlement of farmers's debt, according to the meeing's agenda paper.

Suggesting that agriculture loans could be waived but only selectively, Ahluwalia said across-the-board debt waivers weakens the farm credit system as past experiences suggest.

Making a case for restructuring the subsidy regime, he said the present system was not the right way to provide incentives to farmers.

"We are not seeking cut in subsidies because we cannot afford it as investment is needed in rural areas," he said, adding the same amount could be invested in rural areas to produce better results.

According to the agenda paper, subsidies on fertiliser, power and irrigation led to degradation of natural resources and even a miniscule reduction in farm subsidies could finance relatively large agriculture projects. — PTI

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SBI profit up 75 pc
Plans foray into insurance, pension fund

Kolkata, May 12
The State Bank of India (SBI) today reported a 75 per cent rise in net profit to Rs 1,493 crore during fourth quarter of 2006-07 and said it plans to enter areas such as merchant acquisition, pension fund management and general insurance to boost income.

Announcing the results, SBI chairman O P Bhatt said during current year the bank had decided to focus on emerging opportunities and it would start services such as merchant acquisition, private equity, infrastructure fund, pension funds management, general insurance, financial planning and wealth management as part of its future growth strategy.

While net profit during January-March 2007 rose by 75 per cent from Rs 853.29 crore in the same period last year, total income grew by 29 per cent to Rs 14,435 crore. The board also recommended a dividend of Rs 14 per share.

During the year ended March 31, the SBI posted a net profit of Rs 4,541.31 crore and the total income grew to Rs 45,260.28 crore.

The marginal rise in full-year net profit was due to additional provisions for taxes and loan losses, Bhatt said.

The bank’s deposits touched Rs 4,00,000 crore and advances crossed Rs 3,00,000 crore. Gross NPA (non-performing assets) decreased from 3.61 per cent to 2.92 per cent and net NPA to 1.56 per cent.

Operating profit rose by more than 21 per cent to Rs 10,000 crore while interest on loans grew by 40 per cent to Rs 24,839 crore as it increased lending to consumers in the booming economy.

Bhatt also said the bank, which had been witnessing a drop in market share in deposits and advances for long, was now in the verge of reversing this trend.

During the current financial year, the bank would have to raise between Rs 14,000-15,000 crore through debt and equity. He said SBI was awaiting the passage of the SBI Amendment Act. The entire money would be raised by December this year. — PTI

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ONGC working on coal as alternative fuel
Raju William
Tribune News Service

Dehra Dun, May 12
Like China, Oil and Natural Gas Corporation (ONGC) is working on the possibility to convert coal to petroleum and gas to bridge the growing gap between demand and supply of energy in the country.

The scientists of the Keshav Dev Malviya Institute of Petroleum Exploration (KDMIPE), the research organisation involved in providing geo-scientific back up to exploration schemes of the ONGC, have started work for making optimum use of coal as a user friendly energy source in the liquid or gaseous form with a larger purpose of finding alternative sources of energy.

“Our research organisation has taken up a pilot project on the lines of China to convert coal into petroleum, especially in view of large coal reserves in the country. We are also trying to explore the possibility of converting coal into gas,” said Jokhan Ram, executive director of KDMIPE. Notably, China is already making efforts to commercialise the conversion of coal into petroleum.

Even as the KDMIPE is involved in the task of providing scientific inputs for exploration of hydrocarbons, its scientists are also working to develop wind energy as an alternate source on the west coast of the country. “The ongoing research projects related to alternative sources of energy are part of our larger focus on energy security of the country,” he added.

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IPTV service for BSNL users soon

Hyderabad, May 12
The users of BSNL broadband in the twin cities will soon get Internet Protocol Television (IPTV) over phone lines.

The new services are slated to commence on May 17, the World Telephone Day.

"Using Asynchronomous Digital Subscriber Line (ADSL) — two plus technology, we are planning to provide IPTV facility by connecting the broadband network to the content server," said an official of BSNL.

Apart from the bouquet of TV channels, the other video content will be provided through outsourcing and it would be delivered through content delivery network centre of the service providers through video on demand (VOD) facility, he explained.

The main server of the triple-player services would be in Bangalore, the first city in south India to have multi-player services through broadband connection.

The core routers in Hyderabad would facilitate the service, he said, adding the signals will reach the D-slams in the exchange through the fiber cable. From the D-slams, the signals will reach the consumer through two pairs of copper cables. The splitter at the consumer end will divide the signals into three parts. — PTI

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Credit cards bring good life in US, not India

New Delhi, May 12
Credit card users in India may be paying huge “extra charges” amounting to over Rs 1.6 crore a day, but those in the USA believe that using plastic advance money has a positive impact on their lives.

According to a survey by Washington-based Financial Services Forum, 72 per cent of the respondents across the USA are satisfied with services offered by card issuers, 73 per cent said their credit card company treats them fairly and as many as 62 per cent believed that using a credit card has a positive impact on their lives.

The forum comprises of CEOs of 20 leading banks such as Citigroup, HSBC, Deutsche Bank, UBS and GE Commercial Finance.

The survey comes within a week of another study conducted by the Credit Card Holders’ Association of India. According to the survey, credit card holders in India have been ripped of Rs 6,000 crore as “extra charges” by the banks in a span of 10 years.

The charges imposed on credit card users in India, who pay the highest rates of interest in the world, come in the form of penalty for late payments and exceeding the limit as well as fees for services like cash advance, cash withdrawal and cheque pick-up, besides service tax.

DGIR, the investigative arm of the MRTPC, has recommended action against Citigroup and HSBC for making false promises to credit card customers and violating the RBI norms. It had found that both the banks were delaying delivery of bills and realisation of cheques toward payment just to charge increased interest rate, late fee and fine.

The Indian rights group is also planning to move the Supreme Court asking banks to pay back the extra money.

According to the group, average annual interest rate on rolled over amount in the USA is 14 per cent while in India it is about 36 per cent.

Moreover, if a consumer does not like terms or conditions of their credit card in the USA, they are able to obtain better rates and terms from another issuer. However, when it comes to understanding fine prints of card agreements, satisfaction level failed to get a clear majority even in there. — PTI

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Aviation Notes
IGRUA expansion on cards
by K.R. Wadhwaney

Pilots’ training, stowaway instances, delay and diversion of flights and development of infrastructure at several airports have all been explained in the 57-page ‘action taken’ report.

Indira Gandhi Rashtriya Uran Academy (IGRUA) at Rae Bareli, initiated by the then Prime Minister Rajiv Gandhi, plans to expand from its capacity from 40 to 100 cadets. The civil aviation ministry has taken measures for augmentation. Management partner, who possesses expertise in pilot training, is likely to be appointed shortly.

IGRUA is one of the sought-after training centres. But, its progress is not up to the mark because there have, thus far, been a lot of indiscipline and red-tapism.

Induction of 10 more basic trainer aircraft and one twin engine aircraft will not serve the desired purpose until chief of the institution is impartial and dispassionate. Selection and training of pilots should be based on aptitude and competence and not on influence.

Incidence of a domestic passenger boarding Air Arabia flight from Jaipur to Sharjah without a ticket shocked all in consultative committee meeting of the Members of Parliament. Authorities conceded the blunder and accepted that it took place on account of gross negligence of staff of Indian Airlines. The passenger was holding domestic boarding card but an official let him board the Air Arabia flight. The official has been removed from flight handling duties. But many feel that the action taken is not enough.

The mistake occurred mainly because security hold-in area is common for both national and international passengers. Why should passengers be allowed to ‘inter-mix’? Also, there is only one boarding gate.

Imagine, these kinds of sub-standard facilities existing at an airport like Jaipur at a time when India is embarking upon handling A-380 super-jumbo, which can handle up to 855 passengers!

The authorities say that segregation will come about only when new international terminal would start functioning. In other words, stowaway will continue to take place in the existing terminal building.

The authorities announced that second phase of Amritsar airport has been planned and the work will be completed before March 31, 2008.

On the issue of land for Chandigarh airport, the state government has been asked to provide it free to the Airports Authority of India (AAI) so that a new civil air terminal complex may be developed without any further delay. However, until this land becomes available, the AAI is constructing a small complex to meet immediate needs of passengers.

According to the reports, steps are being initiated to upgrade lights on subsidiary runway 09/27 at Indira Gandhi International Airport. Rules of International Civil Aviation Organisation have been adhered to while upgrading the lighting system.

According to aviation analysts, meeting between the government and parliamentarians has been a success as many thorny issues have been sorted out.

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Investor Guidance
NRIs cannot invest in PO schemes
by A.N. Shanbhag

Q. Can an NRI invest in KVP, PO-M I S or other postal investments on non-repatriate basis? How do the post office track whether investment made is from NRI money or otherwise (since most of the transaction is done on cash. Even if cheque is required, it is quite easily be issued from a local account)? Although national savings website shows that NRIs are not allowed to invest in PO small savings, some agents are encouraging NRIs to deposit cash or cheque from local accounts for postal investments. Please advise.

— Surindar

A. This is on account of systemic inefficiencies. As per law, NRIs are not allowed to invest in postal schemes. However, if one invests cash, it is difficult to find out. Secondly, NRIs are not allowed to have local accounts. They should convert the same to NRO accounts. However, several NRIs do not do this and continue to operate local accounts. The long and short of the matter is that if being an NRI you do invest in postal instruments, you are breaking the law. If it comes to the notice of authorities, you will also be liable to prosecution.

TDS on salary

Q. I have a house in Mumbai and recently bought a second one in Pune, which I have given out on rent. Both houses have been bought through housing finance. My CA tells me that though for the first house interest deduction is limited to Rs 1,50,000, interest payable on the second house is fully deductible. However, payroll department of my company has given me credit only for Rs 1,50,000 for TDS on salary. According to them interest payable on the second house cannot be taken into consideration for TDS purposes on salary. Please advise.

— Bhowmik

A. As your CA has correctly pointed out, in case more than one house property is owned by an assessee, entire interest on outstanding loan is tax deductible regardless of whether the same is given out on rent or not.

In this regard, a circular no 11/2006 [F.No.275/192/2006-IT(B)] dated November 16, 2006 of the central board of direct taxes, dealing with deduction of tax at source from salaries under Section 192 of the Act, clearly indicates that benefit by lower TDS on account of interest deduction on housing loan is available only in respect of a self-occupied residential house.

Consequently, no benefit of a lower tax deduction at source will be available to the assessee employee in respect of his or her second house, irrespective of the amount of interest paid and whether the property is given out on rent or not. So, payroll department of your company has advised you correctly.

However, tax deduction available in respect of the interest payable for the second house property may be claimed by the assessee employee through his or her tax return.

Rebate on interest

Q. I would like to know whether the interest accrued (but not paid) on a cumulative bank FD covered by Section 80C is eligible for benefit of deduction under the section, as is the case for NSC-VIII.

— Jagdish

A. While going through the POSB rules, we chanced upon a provision in respect of NSCs : “Interest so accrued at the end of each year up to the end of fifth year shall be deemed to have been re-invested on behalf of the holder....”

We felt that this deemed re-investment should also attract tax rebate under Section 80C (old one). We wrote an open letter to Janardhan Poojari (The Indian Express, dated August 7, 1983) seeking clarification on this matter, including others. In response, the department of economic affairs via CBDT gave the following clarifications:

“The amount of interest re-invested satisfies the test of having been paid out of income chargeable to tax to get the NSCs and so it is entitled to deduction under Section 80C.”

It is not necessary for the post office to issue certificates regarding the amount of interest accruing annually on NSC-VI (now, NSC-VIII) since the rates are specified in the aforesaid rules.”

Subsequently, we found out that the department does not accept any claims for deduction under Section 80C against such re-invested interest.

Incidentally, in case of NHB scheme for housing loans, Rule 3(iv) stipulates:

“Savings will earn interest at the rate of 0 per cent per year, which will be added to the account annually (in the month of March) and treated as re-investment in the account.” Rules state that the interest is re-invested. Their scheme does not have any term and can be withdrawn at any time after a lock-in period of five years.

The department used to allow deduction under Section 80C for interest of last year during the year of closure since the scheme had no fixed term.

In view of this, accrued interest on any cumulative bank FD, notified under the scheme will not be allowed as a deduction in absence of a notification from the authorities and in absence of a specific bank FD rule.

Yes, it is illogical to deny the benefit. The investor could opt for regular interest, collect it and re-invest in a new FD to get the benefit, but cannot get it re-invested at source.

The authors may be contacted at wonderlandconsultants@yahoo.com

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BRIEFLY

RCom cuts tariff to US, Canada
Mumbai, May 12
Reliance Communications Ltd (RCom) today announced its plans to slash international calling rates to the USA and Canada on its global call card. Reliance subscribers will be able to call the USA and Canada at domestic call rates. By using new Reliance global card of Rs 1,900, subscribers can make calls at Rs 1.99 per minute. 

Autoline Inds
New Delhi, May 12
Autoline Industries Ltd has acquired a 51 per cent stake in US-based Detroit Engineered Products (DEP) global operations for $7.65 million in a combination of cash and equity. The acquisition also includes Nuvent Technologies, a wholly-owned subsidiary of DEP located in Chennai. The merger will help Autoline utilise DEP’s advanced engineering services capabilities for expanding their engineering, design and testing division. 

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