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GM bondholders clear bankruptcy plan
A car is seen in front of the General Motors Corp world headquarters in Detroit.New York, May 31
Bondholders of General Motors have agreed to exchange their debt for an ownership stake as high as 25 per cent in the struggling US automaker, media report says.

A car is seen in front of the General Motors Corp world headquarters in Detroit. — Reuters

India Inc sees better future in six months
New Delhi, May 31
India Inc has regained the much-needed business confidence with majority of 300 companies stating, in an industry survey, that they see better economic outlook in the next six months.



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TERCENTENARY CELEBRATIONS


RBI launches summer placement scheme
Chandigarh, May 31
The Reserve Bank of India (RBI) is finally letting go of its “reserve” image. The apex regulatory bank is opening its doors to public and allowing them a sneak peek at its functioning.

PSU banks outperform pvt ones
Ludhiana, May 31
Though private banks claim to be offering lucrative packages but as far as rural segment is concerned, nationalised banks have been able to establish themselves fully in villages by providing loans/packages for agricultural/allied sector. The data indicates that their performance is much ahead than their set targets.

PNB to hire 1,000 this fiscal
New Delhi, May 31
In the midst of large-scale layoffs within and outside India due to economic slowdown, the country's second-largest public sector lender, Punjab National Bank, plans to hire 1,000 persons in the current fiscal, but none would be at entry level.

Aviation Notes
Private carriers curtail operations
Praful Patel’s eventful innings remain uninterrupted. His vast experience and knowledge should help him bring much-needed reforms and refreshing changes in three vital units - Air India (National Aviation Company) Directorate-General of Civil Aviation (DGCA) and the Airports Authority of India (AAI).

Tax Advice
Interest income on gifted amount taxable in the hands of donor
Q. Suppose Mr X gifts Rs 1 lakh to his wife Mrs X and accepts a thanks letter from her. Later Mrs X invested that money in banks FDR and started earning interest. Please advise in whose hands this interest income will be taxable? I understand that gift of any amount to one's relatives (as defined under the IT Act) is exempt in the hands of the recipient. — Hardeep Saini






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GM bondholders clear bankruptcy plan

New York, May 31
Bondholders of General Motors have agreed to exchange their debt for an ownership stake as high as 25 per cent in the struggling US automaker, media report says.

"General Motors' bondholders finished voting Saturday on the company's plan to exchange their debt for an ownership stake as high as 25 per cent in GM, the final obstacle to an orderly bankruptcy for the ailing carmaker," the New York Times reported.

Bondholders would initially get a 10 per cent stake, along with warrants for 15 per cent.

Citing people familiar with the matter, the newspaper said "bondholders with slightly more than 50 per cent of GM's $27.2 billion in bond debt agreed to support the plan." GM had offered the bondholders the opportunity to take a larger stake in the company after they had overwhelmingly rejected a previous exchange offer.

Having at least half of them agree to support the swap would allow GM to file for bankruptcy protection tomorrow and expect an easier restructuring, the report said.

Under the restructuring plan, the United Automobile Workers union, through its retiree health care fund, would receive a 17.5 per cent stake in the new GM and warrants to buy an additional 2.5 per cent.

After the restructuring, the federal government could own as much as 70 per cent of the company.

The Treasury Department which has lent GM about $20 billion since December, required the company to make deals with the union and bondholders to cut debt and expenses by June 1, the report said.

GM is expected to make its bankruptcy filing tomorrow, a plan which would provide billions of dollars more in federal funds to the ailing auto maker. Its rival Chrysler filed for Chapter 11 protection there on April 30. — PTI 

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India Inc sees better future in six months

New Delhi, May 31
India Inc has regained the much-needed business confidence with majority of 300 companies stating, in an industry survey, that they see better economic outlook in the next six months.

As many as 57 per cent of the companies measured on the quarterly Business Confidence Index (BCI) of Ficci, indicated that they expect the overall economic condition to be 'moderately to substantially' better in the next six months.

The Ficci survey of the fourth quarter of fiscal 2008-09 is in sharp contrast with findings of the BCI of the previous quarter when only nine per cent firms had seen a bright outlook.

"The economy has bottomed out as was also indicated in the last survey and is clearly in the recovery mode," Ficci said.

The Gross Domestic Production (GDP) recorded in the last fiscal was 6.7 per cent, which was better-than-expected.

Improvement in business confidence comes amidst the new UPA Government working on a 100-day programme for putting the economy back on the fast track.

The BCI for the fourth quarter of fiscal 2008-09 was up to 64.1 from 44 in the last quarter.

About 47 per cent of the respondents said that their current firm performance has improved vis-à-vis last six months, representing a jump of 26 per cent from 21 per cent in the last survey.

The percentage of companies which saw a deterioration in their performance over the last six months has declined significantly to 18 per cent from 55 per cent in the last survey, the Ficci-BCI survey said.

The chamber has surveyed companies in various sectors including textiles, cement, steel, leather, chemicals and fertilisers, FMCG, banking and autos.

However, the companies feel that there are hindrances in their growth including weak demand, high cost of credit, although the credit problem has come down in the current survey.

The steps taken by the RBI and the government over the past two quarters have been instrumental in giving a boost to demand but there is still scope for further announcements to bring the economy back in full swing, the survey said.

Further, the respondents indicated that they would want to see a decline in interest rate by about 3-4 per cent.

"There is an immediate need to bring down the interest rate in line with the decline in the repo rate," the survey said. — PTI 

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RBI launches summer placement scheme
Ruchika M. Khanna
Tribune News Service

Chandigarh, May 31
The Reserve Bank of India (RBI) is finally letting go of its “reserve” image. The apex regulatory bank is opening its doors to public and allowing them a sneak peek at its functioning.

As part of this initiative, the RBI has initiated a summer placement scheme, a young scholar’s programme, and started organising exhibitions within the premises of its regional offices. The regulatory bank is also reaching out to school children by organising essay competitions and spreading financial literacy through a series of comic books.

Though the RBI cannot open its doors completely because of safety concerns, they are making efforts to reach out to the public. According to J Saddakaddulla, regional director, RBI, Chandigarh, the idea was to rope in the youth to spread the message of financial literacy. “Thus, for the first time the Young Scholars’ Award scheme has been introduced by the Central bank for the undergraduate students at the regional RBI offices. The students have been chosen from colleges in the region, so that they are exposed to actual banking and financial environment,” he said.

Reaching out to the young, the RBI has come up with a series of comic books being distributed free of cost in schools across the region. “We want to catch the attention of the young children so that they know about currency, currency management as also get basic financial information,” Saddakaddulla said.

He also said they had now set up the first-ever permanent financial exhibition at the RBI regional office here. “This is a part of our financial literacy drive. We will be entertaining conducted tours of schools and colleges, though the exhibition will not be open to public because of security reasons,” he said.

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PSU banks outperform pvt ones
Shivani Bhakoo
Tribune News Service

Ludhiana, May 31
Though private banks claim to be offering lucrative packages but as far as rural segment is concerned, nationalised banks have been able to establish themselves fully in villages by providing loans/packages for agricultural/allied sector. The data indicates that their performance is much ahead than their set targets.

Six nationalised banks, including Punjab and Sind Bank, Punjab National Bank, State Bank of Patiala, Bank of India, UCO Bank and Central Bank of India, have been able to reach the rural masses throughout Punjab.

According to Jeet Singh, manager, Punjab and Sind (Lead) Bank, as per RBI guidelines, the target of banks in agricultural sector for 2009-09 was Rs 2,121 crore whereas performance has been about Rs 2,206 crore in Ludhiana district alone. “State Bank of India has taken the maximum lead in reaching rural segment.

They were given the target of Rs 30 crore but have achieved much more to the tune of Rs 82 crore in the agricultural sector. The trend is similar in other districts of state,” he said.

Ashok Handa, manager bank (loans), Jalandhar, confirmed that the nationalised banks had established a good rapport among rural segment. He said maximum agricultural loans were being provided through these banks.

One of the direct marketing agent of ICICI Bank, on condition of anonymity, said: “Agricultural loan comes under high risk category. The only hypothecation of recovery is the land and the process of recovery can

be tedious and lengthy. Due to poor and erratic recovery rate in agricultural section, we try not to waste too much efforts on them.”

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PNB to hire 1,000 this fiscal

New Delhi, May 31
In the midst of large-scale layoffs within and outside India due to economic slowdown, the country's second-largest public sector lender, Punjab National Bank, plans to hire 1,000 persons in the current fiscal, but none would be at entry level.

"We will certainly do lateral recruitment at various levels ... 1,000 persons would be recruited (this fiscal)," PNB's executive director Nagesh Pydah said at the sidelines of a conference here.

Besides, the bank also plans to expand its branch network by 10 per cent in 2009-10, Pydah said. It has 4,600 branches across the country.

However, he said there would be no recruitment at the entry level as the bank has sufficient staff at that level.

The bank's employee strength currently stands at about 58,000 people.

Incidentally, the bank has also initiated the process to recruit 738 employees, include management trainee, clerks, security officers and specialised professionals with law, finance and economics background. — PTI 

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Aviation Notes
Private carriers curtail operations
by K.R. Wadhwaney

Praful Patel’s eventful innings remain uninterrupted. His vast experience and knowledge should help him bring much-needed reforms and refreshing changes in three vital units - Air India (National Aviation Company) Directorate-General of Civil Aviation (DGCA) and the Airports Authority of India (AAI).

The merged entities (Air India and Indian Airlines) have failed to blend. Overhead expenses have increased. The staff, particularly of Indian Airlines, continues to be ill at ease for shuffling between Delhi and Mumbai and maintaining two establishments.

Air India's acquisition of aircraft and losses have left no option except to secure loan from the government. Maybe the government will bail it out. But will this solve the problem?

The private airlines are also bleeding. Some known private carriers have reduced staff, decreased salaries and perks and also curtailed operations on certain routes. The overall situation is dicey.

In such a vex scenario, it will not be judicious to allow foreign carriers to buy into “desi” ones. The move may be as problematic as the merger of the two national carriers.

Maybe the idea of foreign airlines picking up stakes in the domestic airlines is deferred until airlines stabilise.

The health of the DGCA is far from robust. Surprisingly, for security concerns it has asked airlines’ financial health. What has finances to do with security of passengers on flights? As DGCA’s record in investigations of accidents is feeble, many commanders have asked for another unit to investigate.

The AAI is in a state of instability. Many court cases have been filed over transfers and on "forced" voluntary retirement. If the situation is not brought under control, there may be another round of strike by the agitated staffers.

The discrimination against passengers continues. Air France has again been blamed for racial abuse.

The passengers have complained that Indians were treated harshly while European and American passengers were provided royal treatment. This is second incident during the past one month.

Some of the passengers who were badly treated at Paris on May 12 are filing court case for damages.

The Civil Aviation Ministry and the directorate should step in. They should warn the foreign carriers not to indulge in racial abuses. Air France has been a known violator in this regard.

At least one-third flights on domestic sectors have been inordinately delayed owing to several reasons. Some blame airlines, others blame security. The fact is there is no coordination among agencies at airports, particularly at busy international airports like Delhi and Mumbai.

Analysts feel that several unforeseen problems at busy international airports will be sorted out if authorities appoint a troubleshooter at every international airport to oversee and coordinate functioning of the agencies.

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Tax Advice
Interest income on gifted amount taxable in the hands of donor
by S.C. Vasudeva

Q. Suppose Mr X gifts Rs 1 lakh to his wife Mrs X and accepts a thanks letter from her. Later Mrs X invested that money in banks FDR and started earning interest. Please advise in whose hands this interest income will be taxable? I understand that gift of any amount to one's relatives (as defined under the IT Act) is exempt in the hands of the recipient. — Hardeep Saini

A. The interest income in such a case would be taxable in the hands of Mr X in view of the provisions of Section 64 of the Income-tax Act, 1961 (the Act). According to the provisions of the said section, in computing the total income of an individual shall be included all such income as arises directly or indirectly to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with an agreement to live apart.

Your understanding that gift of any amount to a relative, as defined in Section 56 of the Act is exempt in the hand of the recipient is absolutely correct. The provisions explained hereinabove do not question the ownership of the gifted amount. However, by fiction of law, as provided in Section 64 of the Act, the income accruing on the gifted amount is deemed to be the income of the donor. 

Long-term capital loss

Q. Can I carry forward the long-term capital loss (which I have suffered in the stock market) while filing the Income-tax return and carry forward the same in accordance with the provisions of the Act? — Kartar Singh

A. Presently, the long-term capital gain arising on the sale of shares which have been sold through stock market operation is exempt from tax. The long-term capital loss from the same source, therefore, cannot be set off against the long-term capital gain arising on such transaction. It may also not be possible to carry forward the same in view of the fact that such capital gain is not chargeable to tax.

Relief on arrears

Q. I am a widow pensioner of the Punjab Government. I have received pension arrears amounting to Rs 1,50,000 which would increase my total pension beyond the taxable limit. Am I entitled to claim any relief for the arrears on tax? — Nirbhay Kaur

A. You can seek a relief under Section 89 of the Act by filing Form 10E with the DDO who is authorised to make you the payment. The provisions of the above
section now provide that the employer can give due relief if the particulars required in the aforesaid form are filed with the employer or the concerned disbursing authority.

Trust registration

Q. I have started a charitable trust formed for the purpose of helping poor students as also providing educational facilities to the children of the families living below poverty line. Is it essential for us to get any registration done under the Income-tax Act? — R.S. Punoo

A. It would be essential for the society to get it registered under Section 12A of the Act so as to get the status of charitable institution under the provisions of the Act. On the basis of such registration you would be able to get the benefit of the exemption of income if the income arising to Trust is applied in the manner provided in Section 11 of the Act.

Gift to mother

Q. I would like to gift a sum of Rs 2 lakh to my mother. Kindly let me know the procedure to be followed for making such a gift. — Hardeep Singh

A. The gift made to your mother would not be taxable. It would be advisable to make the gift by a cheque which should be deposited in her account. There is no need for making any kind of formal gift deed or registering the same. A simple letter from you to your mother indicating that you are giving the amount of gift to her out of natural love and affection would be sufficient. You should, however, obtain an acceptance letter to such a gift and keep it on record. 

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BRIEFLY

Jet fuel prices up
New Delhi:
Jet fuel or ATF prices continued to rise with state-run oil firms on Sunday hiking the rates marginally by Rs 108 per kilolitre. IndianOil, Bharat Petroleum and Hindustan Petroleum raised the aviation turbine fuel (ATF) price by an average of Rs 108 per kilolitre (kl) effective midnight tonight. The jet fuel rate will go up by Rs 104 per kilolitre in Delhi to Rs 32,303, an IOC official said.— PTI

Shoppers Stop toopen 4 stores
Mumbai:
Lifestyle retailer Shoppers Stop will invest about Rs 40 crore in the current fiscal to roll out 3-4 stores in the country even as it grapples with negative sales margins and shuts unviable stores in other verticals. "We have just opened our 27th store in Hyderabad and we plan to open 3-4-stores this fiscal at an investment of Rs 10-crore each," Shoppers Stop's managing director B S Nagesh said. — PTI

Dixon, Bharti Wal-Mart tie up
New Delhi:
Dixon Technologies, which manufactures and markets electronic products under the brand 'Weston', has said it has tied up with Bharti Wal-Mart to sell its products through the retail major's first cash-and-carry store in the country at Amritsar. "As per the tie-up Dixon range of products, including colour TVs and DVD players will be sold though Bharati Wal-Mart's cash-and-carry store," Dixon Technologies managing director Sunil Vachani said. — PTI

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