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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Room for further cut in interest rates: PM
Prime Minister Manmohan Singh speaks at a meeting with industry leaders in New Delhi on Saturday. New Delhi, March 28
Before heading for the G20 summit in London, Prime Minister Manmohan Singh today met industry leaders to review the current economic situation.
Prime Minister Manmohan Singh speaks at a meeting with industry leaders in New Delhi on Saturday. Tata Group chairman Ratan Tata and Bharti Enterprises chairman Sunil Bharti Mittal are also seen in the picture. — PTI photo

More stimulus needed: Montek
New Delhi, March 28
The Indian economy needs more stimulus in the next fiscal to counter the impact of global economic slowdown, Planning Commission Deputy Chairman Montek Singh Ahluwalia said today.

Four PSU banks to cut lending rates
New Delhi, March 28
Home, auto and other loans from four public sector banks are set to become cheaper as they announced a cut in benchmark lending rates by 25-50 basis points effective April 1.





EARLIER STORIES



Rajus’ bail pleas rejected
Hyderabad, March 28
A special CBI court here today dismissed the bail application of disgraced Satyam Computer founder B Ramalinga Raju and two others.

Meltdown: EoUs venturing into domestic market
Chandigarh, March 28
The growth in the Indian economy, even in the wake of global recession, has now forced many export-oriented units (EoUs) in the region to look at the domestic market for maintaining their growth momentum.

Aviation Notes
‘Restart’ Safdarjung flying club
At least six senior commanders of different airlines and some DGCA officials and analysts are of the firm view that the Safdarjung airport, in the heart of city (Delhi) should be utilised for operations by small aircraft and helicopter units instead of keeping it closed.

Investor Guidance
Senior citizens entitled to rebate up to Rs 20,000 on mediclaim
Q: I request you to clarify a point on deductions with respect to mediclaim insurance. I am a senior citizen and so is my wife.

 





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Room for further cut in interest rates: PM
Bhagyashree Pande
Tribune News Service

New Delhi, March 28
Before heading for the G20 summit in London, Prime Minister Manmohan Singh today met industry leaders to review the current economic situation.

The G20 summit, to be held on April 2, will be attended by 20 most influential world leaders to discuss ways to tackle the global economic crisis.

Tata group chief Ratan Tata, Aditya Birla group chairman Kumar Mangalam Birla, ICICI Bank managing director and CEO K V Kamath, Essar Group's Shashi Ruia and Assocham president Sajjan Jindal were among those present.

Other prominent businessmen present in the interaction included R P Goenka of the Goenka group, Adi Godrej of the Godrej group, Sunil Kant Munjal of Hero group, Baba Kalyani of Bharat Forge and CII chief Mentor Tarun Das.

Planning Commission Deputy Chairman Montek Singh Ahluwalia and Cabinet Secretary K M Chandrasekhar also attended the meeting.

PTI adds: With inflation touching near zero level, Prime Minister Manmohan Singh said there was scope for further cuts in interest rates and assured the industry that credit needs would be met to enable the economy tackle the global financial crisis.

"With ample liquidity and low inflation, there is scope perhaps for a further moderation in interest rates. Domestic credit flow for productive needs has to be definitely maintained at reasonable cost," Singh said.

RBI Governor D Subbarao, who was also present in the meeting, had almost disappointed the industry at the CII Annual Session on Thursday when he stated that further stimulus package would have a cost in the form of more borrowing requirements of the government.

Taking stock of the economy post stimulus packages, the Prime Minister said: "There are signs of improvement in sectors like steel and cement. The rural demands for goods and services appears quite robust and the outlook in the agriculture sector gives room for optimism."

He said public sector banks disbursed more credit in the current fiscal than in 2007-08 but the lending by private sector and foreign banks was reduced to one-third to one-fourth of that a year ago.

The Prime Minister said while India was "decidedly better placed" than most countries in the world, there was uncertainty on developments abroad.

Commenting on the impact of downturn on employment, he said: "We must meet the challenge of job losses caused by the slowdown."

The Prime Minister also sought views of the corporate honchos on India's stand at the G20 Summit.

The Prime Minister said the world looks at India "with respect and hope: respect for our calibrated reforms which has resulted in growth with justice and hope that India would be an engine of growth for the world economy".

The corporate heads said India must express its strong opposition to global protectionism. The issue of dumping by China into the Indian markets was also raised at the meeting.

CII president Venu Srinivasan said while certain sectors of the economy were starting to show some signs of recovery, areas like manufacturing and small and medium enterprises "were in great pain".

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More stimulus needed: Montek

New Delhi, March 28
The Indian economy needs more stimulus in the next fiscal to counter the impact of global economic slowdown, Planning Commission Deputy Chairman Montek Singh Ahluwalia said today.

"We need a little more stimulus in 2009-10. But there are certain issues which have to be taken up," Ahluwalia said on the sidelines of a function here.

About the GDP growth projection by the Planning Commission, Ahluwalia said
multiple models have been used to derive the figures and have been suggested to
the Prime Minister.

"We have sent a note to the Prime Minister. Planning Commission dosen't have any projection. What we said to the Prime Minister — we used multiple models to know what is likely to be growth rate next year," he said.

"There is certain base level of growth which we thought was around 9 per cent. Then you knock off from the growth the affects of shock. Then we add to it the affect of the positive stimuli. So there are different numbers depending on the affects of shock and stimulus measures," he added.

Earlier, Ahluwalia projected a growth rate slightly less than 7 per cent in the current fiscal and the next fiscal.

"We are likely to get a growth rate less than 7 per cent... between 6.5 and 6.7 per cent in 2008-09," Ahluwalia had said.

On market borrowings impacting the interest rate, Ahluwalia said, "If you borrow it can only raise the interest rate for any given level of monetisation. Markets borrowings are not zero anyway." Market borrowings, he said, "has always been market borrowings and there will be market borrowings." — PTI

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Four PSU banks to cut lending rates

New Delhi, March 28
Home, auto and other loans from four public sector banks are set to become cheaper as they announced a cut in benchmark lending rates by 25-50 basis points effective April 1.

The decision by Allahabad Bank, United Bank of India, Oriental Bank of Commerce and Punjab & Sind Bank came on a day when the government complained that banks were not responding adequately to easing of monetary policy by RBI.

Earlier in the day, Cabinet Secretary K M Chandrasekhar said at a CII function, "There has been certain stickiness of interest rates, banks have not shown response as we would have liked, particularly private sector banks."

There was no announcement from private sector banks today on slashing interest rates. While OBC and Punjab and Sind Bank announced reduction in prime lending rates by 50 basis points each, Allahabad Bank and United Bank will reduce them by 25 basis points each. — PTI

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Rajus’ bail pleas rejected

Hyderabad, March 28
A special CBI court here today dismissed the bail application of disgraced Satyam Computer founder B Ramalinga Raju and two others.

The Additional Chief Metropolitan Magistrate rejected the bail applications of the trio, who are in judicial remand till April 2 in connection with the multi-crore accounting fraud case in the IT company.

The court also rejected the bail pleas of Raju's brother Rama Raju, who was formerly managing director with Satyam, and V Srinivas, company's former CFO.

In a related development, the CBI made a plea before the court seeking permission to obtain signatures and hand writings of the five accused — two Raju brothers, V Srivivas and S Goapalakrishnan and T Srinivas, the two sacked auditors of Pricewaterhouse, which audited the Sataym's account books.

CBI said it wanted to tally hand writings on forged documents recovered by the agency during probe. The matter is likely to come up for hearing on Monday. — PTI

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Meltdown: EoUs venturing into domestic market
Ruchika M. Khanna
Tribune News Service

Chandigarh, March 28
The growth in the Indian economy, even in the wake of global recession, has now forced many export-oriented units (EoUs) in the region to look at the domestic market for maintaining their growth momentum.

With the Indian economy still growing at 7 per cent, these EoUs are entering the Indian market to offset the losses incurred as a result of poor demand of their products in the US and Europe.

A number of EoUs in leather, engineering goods and apparels, having realised the potential of the Indian growth story are now venturing into the domestic market.

Though many of these units claim that they have done well in exports during this fiscal, they are skeptical of relying completely on exports.

“Export orders are now difficult to come by, and the high volatility in dollar prices is making exports unviable,” say most exporters in the region.

Talking to TNS here today, Sanjiv Gupta, director, Oscar Leathers, a 100 per cent EoU, said they have decided to start their retail operations in India.

The company, which supplies shoes to leading European fashion houses like Zara, Farrutx and Country Road, will now be retailing their footwear in India.

“Though we have managed to attain 50 per cent year-on-year growth, the current downturn has made us think that we cannot completely rely on exports. With the Indian economy showing signs of growth, despite a slowdown, we have decided to open at least 20 company-owned stores in North India in the coming fiscal,” he said.

Ludhiana-based Venus Garments, which, too, is an EoU supplying to big retail giants like Wal-Mart, Gap Inc, Tom Tailor, The Children’s Place, Sam’s Club, and Suburbia, is now expanding its operations in the domestic market because of the recession in the USA and Europe.

The company has launched 52 stores across Punjab, Haryana, Uttar Pradesh, Delhi, Chandigarh and J&K during the past five months.

The domestic brand, “UV & W”, and “Venus Garments” markets garments for men, women and children.

“With EoUs — be it in textiles, handtools or automobile sector — working at just 40 per cent of its capacity because of slowdown in orders from abroad, it makes more business sense to tap the domestic market. By starting their domestic operations, most EoUs are trying to offset their losses.

With economic indications not being too good for exports in the coming fiscal,
most handtool, forging and automobile manufacturers in Punjab realise that time
is ripe to tap the domestic market, and thus they are getting aggressive with
their domestic marketing strategies” said S C Ralhan, regional chairman of
Engineering Export Promotion Council.

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Aviation Notes
‘Restart’ Safdarjung flying club
by K.R. Wadhwaney

At least six senior commanders of different airlines and some DGCA officials and analysts are of the firm view that the Safdarjung airport, in the heart of city (Delhi) should be utilised for operations by small aircraft and helicopter units instead of keeping it closed.

The airport is situated at a prime aviation location where restart of flying club will provide the much needed boost to the pilot training instead of their going to the US and other countries for obtaining commercial licences.

The airport, in use for several years, was abruptly closed as Prime Minister’s residence falls in close proximity. This was labelled as a ‘security risk’.

If political party’s ‘prince’ can be provided permission to use ‘chopper’ from the Safdarjung airport, why can’t others be allowed to utilise the airport, which, if done, will help reduce a considerable congestion at the over-busy Indira Gandhi International Airport (IGIA).

Several proposals from cultural centre to parking bay for the 2010 Commonwealth Games at Safdarjung airport are pending with the government. But, the aviation faithfuls feel that the flying club is the need of the hour.

They say that the VVIP helicopter and mini operations should be encouraged from this airport, which is ideally located.

“The aviation sector is one area which is not getting the government’s support”, they lament. Many no-frills airlines and even scheduled carriers are passing through turbulent weather.

Most of them have accumulated heavy losses. The traffic is not picking up. The passengers have returned to train services which, according to them are cheaper, better and more reliable than stiff-necked airlines.

They offload passengers and club their operations without caring for passengers, who have to encounter inconvenience and suffer humiliation at terminal buildings.

Despite several problems facing the industry, GoAir, an enterprising Mumbai-based airline, has announced operations of flights to Amritsar and Chandigarh from Delhi, Mumbai and Bangalore.

According to airline officials, two new A-320 aircraft will be used on these routes. “The fares will be competitive”, officials announced, adding: “We are optimistic that we will generate sufficient traffic on these sectors because there is demand for it”

As one bank has agreed to advance $1 billion to the National Aviation Company (NAC), Air India will have an addition of aircraft in its fleet.

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Investor Guidance
Senior citizens entitled to rebate up to
Rs 20,000 on mediclaim
by A.N. Shanbhag

Q: I request you to clarify a point on deductions with respect to mediclaim insurance. I am a senior citizen and so is my wife.

I have bought mediclaim for my two children, a daughter (unmarried) and a son. My daughter’s premium is Rs 3,992 and son’s premium is Rs 2,992 totalling to Rs 6,924.

I have also bought mediclaim for self at Rs 11,744 and for wife at Rs 10,400 totalling to Rs 21,789.

My question is how much deduction can I claim on account of mediclaim? Is it Rs 15,000 or Rs 35,000?

My parents are not alive. Both daughter and son are unemployed and unmarried.
— K S Radhakrishnan

A: Mediclaim deduction is Rs 20,000 for a senior citizen in respect of premiums paid for self, spouse and children.

Additional deduction is available in respect of mediclaim premium paid for parents. However, the same is not applicable in your case.

Therefore, based on the data provided, you can claim a total mediclaim deduction
of Rs 20,000.

Gift to mother

Q: I would like to gift Rs 1 lakh to my mother. Kindly let me know the procedure to be followed to avail the income tax benefit for me.

1. Whether I have to make any kind of deed on any bond paper? If yes, of which
value?

2. Whether the same is to be registered. If so, what will be the stamp duty to be
paid?

3. At present my mother is a housewife without any independent income.

4. Whether my mother should hold a separate SB account on her name?

At present she is holding a joint account along with my father as first person and account can be operated by anyone or survivor.
— Usha Reddy

A: Any transfer to the account with your father’s first name would be treated as a gift from you to him.

If your intention is to gift the funds to your mother, it would be best if she opens a fresh account with her name as the first name.

This account can also be jointly held with your father’s name as the second holder. The gift to your mother would be tax-free without any limit. There is no need of making any kind of formal gift deed or registering the same.

A simple letter from you to your mother indicating that you are giving her the
gift out of your natural love and affection for her and an acceptance letter from
her would suffice.

Tax on share trading

Q: I want to know how to calculate income tax on share trading as there is a lot of confusion about it.

If a person does transactions of more than Rs 40 lakh then his profit will be taxed at the rate of 30% and not 15% as is claimed by the government for short-term capital gain in share trading.

2. Secondly, if I incur loss in intra-day trades will I be able to carry forward that loss for next 7 years.

Is it possible according to our current IT laws that all losses incurred in share trading be carried forward?
— Ram Kumar

A: Intra-day trading activity in shares is speculative in nature and attracts tax
of 30.9%. Even in normal cases, there has been a long-standing difference of
opinion between the investors in shares and the Tax Department on whether
the income arising from the sale of shares can be classified as capital gains or
as business income, especially where the number of trades are large or the size
of the trades were high. 

rading without delivery of the shares will be treated as speculative unless it is business of the assessee.

2. U/s 73 loss from speculative business can be set off only against income from speculative business.

In these cases, the net loss can be carried forward for setoff against the profits and gains only from the respective business and the carry forward is allowed for only 4 years and not 8 years.

Deduction u/s 80DD

Q: My wife is physically challenged with 45% disability. She is employed in a PSU
bank. However, her annual income is approximately Rs 90,000 meaning she is not
in tax bracket.

I am employed in a PSU organisation and in 30% tax bracket. I am also physically challenged with severe disability. I am claiming deduction under Section 80U.

Now I also want to claim deduction u/s 80DD, as my wife is not in tax bracket and she will be not claiming benefit u/s 80U. Am I correct in doing so?
— Raja Mahendra

A: Yes, you can claim the deduction u/s 80DD for your wife’s disability. A resident individual or an HUF having a dependent relative/member suffering from a permanent physical disability (including blindness) or mental retardation is entitled to a deduction for medical treatment, training or rehabilitation of the dependant.

The disability is classified into two parts as defined under the Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1996.

Disability over 40% is non-severe and that over 80% is severe. The deduction allowed will be Rs 50,000 for non-severe and Rs 75,000 for severe disability.

The authors may be contacted at wonderlandconsultants@yahoo.com.

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BRIEFLY

Oil prices slide
London:
Oil prices fell sharply on Saturday on profit-taking after an overnight rally driven by sharp gains on Wall Street, traders said. New York's main contract, light sweet crude for May delivery, dropped $2.50 to $51.84 a barrel. Brent North Sea crude for May shed $2.03 to $51.43. — AFP

Gold declines
New Delhi:
Snapping last two days rising streak, gold prices fell by Rs 50 to Rs 15,300 per 10 gram in the national capital on Saturday on emergence of selling by stockists sparked by weakening trend in overseas market. Silver, which surged by Rs 300 on Friday, declined by Rs 110 to Rs 22,090 per kg on Saturday. — PTI

Lupin buyout
Mumbai:
Pharma company Lupin on Saturday said it has acquired 51 per cent stake in Philippines-based Multicare Pharmaceuticals for an undisclosed sum. "This is a very positive step ahead for Lupin to establish its stronghold as a top league generics company in the promising market of Philippines in the ASEAN region," Lupin MD Kamal Sharma said. — PTI

UBI, Tata Motors in pact
Kolkata:
United Bank of India (UBI) on Saturday signed an agreement with Tata
Motors for financing the Rs-1 lakh Nano car. A statement by UBI said that the bank
would provide 100 per cent finance on booking amount and 90 per cent on on-road
price. Loan would be available through its 1,450 branches across the country, it
said. — PTI

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