National ENTERPRENEUERSHIP POLICY.US India's natural friend, says Obama!India takes up Shahrukh case with US! Coordination between monetary, fiscal policy a challenge: RBI
India to soon return to 9 per cent growth path: PM | |||
I'm 'angry', 'humiliated': Shah Rukh Khan
Bollywood actor Shah Rukh Khan gestures during an interview with The Associated Press at his residence in Mumbai. Khan was detained for questioning at Newark international airport and grilled for two hours before being let off by US immigration authorities, a news agency report said Saturday.
Mumbai: Shah Rukh Khan Saturday termed the incident at Newark Airport in the US as "uncalled" for saying the experience made him feel "angry and humiliated".
"I was really hassled at the American Airport because of my name being Khan...The couple of hours of interrogation wanting to know if I know anyone in America while all around people were vouching for me from India and Pakistan (sic)," the Bollywood superstar said in a statement.
"Only these guys just would not let me through.
Finally they allowed me to make a call, which I did and the Indian Consulate helped me through.
Khan, who was on his way to Chicago to attend an Independence Day function was was detained at the Newark Airport and questioned for about two hours before the Indian mission intervened and secured his release.
"It was absolutely was uncalled for I think, me having just finished working there for more than a month...just a couple of weeks ago. They said I have a common name which is causing the delay...checked my bags...I felt angry and humiliated," Khan, who had just finished shooting of his latest movie "My Name is Khan", said.
Source: PTI
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 | 01.08.2009. 07:00 17.06.2009. 12:00 The Government of the Republic of Croatia has received a grant from the Global Environmental Facility Trust Fund (GEF/IBRD), for financing the implementation of the Renewable Energy Resources (RER) Project. The main aim of the Project is to support the development of economically and ecologically sustainable market of renewable energy resources. 28.04.2009. 15:00 VARAZDIN, April 28 (Hina) - Varazdin-based food maker Vindija on Tuesday put into operation a factory for the production of breaded and roasted products, an investment project worth HRK 137 million. | | 03.03.2009. 10:00 International Conference - "Product Safety is the Key for the Safe Future of our Children" 30.10.2008. 15:00 Seminar held on new public procurement system 11.09.2008. 16:30 Conference on EU programme for enterprise, innovation begins 01.09.2008. 16:35 Record interest of citizens in entrepreneurial projects 04.07.2008. 15:45 Calls for proposals for the Research in Industry Grant open | |
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Several significant initiatives have been taken in recent years by the Government in order to reverse the downward trend in agricultural production. Some of these important initiatives include:
It was launched to incentivise the States to increase the share of investment in agriculture in their State plans. It aims at achieving the 4 per cent annual growth in the agriculture sector during the Eleventh Five Year Plan period by ensuring a holistic development of agriculture and allied sectors. It is a State Plan Scheme and the eligibility for assistance under the scheme depends upon the amount provided in the State budgets for agriculture and allied sectors, over and above the baseline percentage expenditure incurred on agriculture and allied sectors. The funds under the RKVY are to be provided to the States as 100 per cent grant by the Central Government. The main objectives of the schemes are:
It is a centrally-sponsored scheme, launched with the objective of increasing the production of rice, wheat and pulses by 10, 8 and 2 million tonnes, respectively, over the benchmark levels of production, by the end of the Eleventh Five Year Plan period. The Mission aims at increasing foodgrains production of the above crops through area expansion and productivity enhancement; restoring soil fertility and productivity; creating employment opportunities; and enhancing farm level economy to restore confidence of farmers of targeted districts. It is being implemented in 305 districts of 16 States of the country. Various activities of NFSM relate to demonstration of improved production technology, distribution of quality seeds of HYVs and hybrids, popularisation of newly released varieties, support for micronutrients, and training and mass media campaign including awards for best performing districts. The identified districts are given flexibility to adopt any local area specific interventions as are included in the Strategic Research and Extension Plan (SREP) prepared for the agriculture development of the district. Government of India has approved the National Policy for Farmers, 2007 taking into account the recommendations of the National Commission on Farmers and after consulting the State Governments. The National Policy for Farmers, among other things, has provided for a holistic approach for development of the farm sector. The primary focus of this policy is on ‘farmer’ defined holistically and not merely on agriculture. In that sense, it is much more comprehensive than an Agriculture Policy. The objective is, inter alia, to improve the economic viability of farming through substantially improving net income of farmers. Needless to say, there is emphasis on increased productivity, profitability, institutional support, and improvement of land, water and support services apart from provisions of appropriate price policy, risk mitigation measures and so on. The major goals of the National Policy for Farmers are to:
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THERE can be no denial of the fact that extreme poverty and underdevelopment lie at the root of the growing Naxal menace engulfing a large part of rural India. The massive welfare allocations announced in the last budget for rural development may help to gradually curb the growth of discontentment, provided the funds reach the intended beneficiaries . On the other hand, in the urban front also the situation looks quite grim. The mass-scale hiring by the outsourcing industry in the IT and ITeS sectors has come to a grinding halt. Many young graduates who genuinely believed that a graduate level qualification (often topped up by a MBA degree), gadget-savvy attitude and manageable proficiency in English were sure-shot guarantees to high-paid jobs and flashy lifestyles are now feeling crestfallen. Disconnect between the perception and the reality is too agonising to live with. If the Naxal uprising is seen in conjunction with the growing frustration among the urban youth, the slide towards overall escalation of violence and anarchy is a sure possibility.
To tackle the growing unemployment problem in an environment where high level of uncertainties puts a big question mark over employment generation capabilities of large businesses, the government has to take a fresh look at our employment generation policies both in the rural and urban areas. Implementation of various welfare schemes has to be also seen in conjunction with the employment generation policies and the entrepreneur has to play a critical role in the whole process. Take, for example, the rural low-cost housing scheme under the Indira Awas Yojana. If entrepreneurial talents are identified to implement the scheme then not only availability of good quality low-cost housing will rise, many growth-oriented housing companies with large employment potential and innovative housing solutions will also emerge.
Our employment generation policies consist of a number of self-employment schemes which can be broadly clubbed as SME policies. These policies in essence represent a patchwork of financial measures to mitigate the disadvantages of small businesses vis--vis their large counterparts. SME policies mainly focus on creating small businesses but, not on entrepreneurs who only can create growing businesses at a time of high uncertainty, caused by rapidly changing technological and socio-political environment. World over, it is being now increasingly felt that massive allocation for self-employment schemes and creating a good climate for small business are not enough to ensure growth-oriented entrepreneurial businesses, supposed to generate more employment and provide sustainable competitive advantage. For example, as per the Small Business Survival Index South Dakota, Wyoming, Mississippi and Alabama are consistently ranked very high as most small business friendly states in the US. But, their performance is quite poor on entrepreneurship and innovation. Realising the limitations of a narrow approach towards SME development some countries in Europe and a number of individual states in the US are now shifting their focus from SME to an entrepreneurship policy (EP).
Unlike the SME policy, EP tackles a much broader range of issues and non-financial measures and tries to change the nature of underlying forces of an economy. It aims at navigating the economy from continuity to change, stability to turbulence , specialisation to diversity and homogeneity to heterogeneity by developing appropriate entrepreneurial skills. Taking into account the changing style of firms function from control to motivation and scale to flexibility, the EP can catapult the economy from a managed to an entrepreneurial mode and thus increase overall economic efficiency. Objectives of the UPA governments policies, like food guarantee or employment guarantee for all, can be met much more effectively if entrepreneurs, particularly at the grass-root level, are involved in the policy implementation process.
AS ENTREPRENEURSHIPand innovation reinforce each other, EP automatically puts innovation high on the economic and social policy agenda. As a by product, it also drives regional development and guarantees social inclusion by offering opportunities of creating ones own businesses regardless of location or social background.
EP also looks at entrepreneurship as a phenomenon governed by similar processes , be it in the rural areas or in the knowledge hub of a metropolis. It can effectively address the issues of welfare at the bottom of the pyramid by combining developmental schemes with entrepreneurial initiatives . In view of the experiences of several countries, following initiatives are needed to give our economy an entrepreneurial focus : a) integrate entrepreneurship into welfare and other social developmental efforts of the government both in the rural as well as urban sectors; b) deploy workforce and community development systems to support and promote entrepreneurship; c) use the education system for harnessing entrepreneurial talent at all levels; d) incubate entrepreneurial companies by providing incubation services through physical and virtual incubators and also through remote incubation options for rural areas; e) invest in diverse sources of risk capital for the nations entrepreneurs and growth companies through the development of a rich base of early-stage capital options; and f) focus on payback quality rather than on collateral in bank lending.
It is also necessary to evolve a mechanism to measure and monitor the progress regarding the shifting of the Indian economy to an entrepreneurial mode. The implementation of a national entrepreneurship policy cannot be left to a single ministry alone. Inter-ministerial working groups are necessary to make entrepreneurship development a priority. At local levels this must translate into cooperation and collaboration between different educational, financial and socio-cultural organisations, both from the public as well as private sectors. This is not possible without a strong political leadership at local levels who has the capability to bring together a broad spectrum of professionals and social activists. A young leadership that understands the need for an entrepreneurial economy better, is probably better suited to drive the process of entrepreneurial transformation of the nation. With so much of young blood in the government and a young prime minister-inwaiting , India probably cannot bargain for a better opportunity to launch a national entrepreneurship policy.
http://blogs.siliconindia.com/Pushprajdwivedi/A_national_entrepreneurship_policy-bid-zIN2c73u46937131.html
He was speaking at a Reserve Bank event in Hyderabad.
"The first challenge going forward is to manage the coordination between monetary and fiscal policy, not only in India but around the world," Subbarao said at a seminar, adding that the monetary policy has become the first line of defence.
"The second challenge is defining the mandate of central banks and reforming the regulatory architecture," he added.
In the midst of the crisis, central bank governors have become unlikely heroes, "some of them have rock star status", as they are seen as part of the solution, he said.
However, Subbarao added, some people are asking whether the central banks are part of the problem and say the central banks are also villains.
The questions that are now being raised include was the mandate of the central bank clearly defined, were there flaws in the accountability mechanisms, did the objective of financial stability fall through the cracks, Subbarao said.
"... you can't define it (financial stability). It's like pornography, you can't define it but when you see you know it," he said, adding that the central banks and governments have become increasingly dependent on each other.
India signed a landmark FTA with 10-member regional grouping Asean that will eliminate tariffs on around 4,000 products such as consumer electronics, pharmaceuticals, machinery, metals and readymade garments.
India's export of steel will fall by a whopping 35 per cent to 3.2 million tonnes during the current fiscal buoyed by healthy domestic demand, Centre for Monitoring Indian Economy (CMIE) said on Thursday.however, SAIL is alsoslated for SELL OFF!
India to import upto one million tonnes of edible oil in backdrop of projections that country will beat China as world's top importer this year, importing possibly as much as eight million tonnes!
Prime Minister Manmohan Singh Saturday expressed confidence that the Indian economy will rebound by the end of this year and once again
'Going back to a 9 percent growth path is our greatest challenge. For this, we will take whatever steps that are required,' the prime minister said in his Independence Day address to the nation from the majestic Red Fort.
'By the end of the year, I am confident there will be a major change. But till then, we all have to cope with the situation,' he said in his sixth straight address laying down the agenda for the United Progressive Alliance (UPA) government in the coming year.
'I appeal to business leaders to work together in this endeavour and meet their social obligations and responsibilities.'
Govt steps up efforts to tackle drought! | |||
A panoply of concerted moves to reinforce farm inputs on a war footing are also on: Diverting power to crucial farm states, sinking hundreds of new tubewells, focus on oilseed and pulses cultivation, pumping in fertiliser to boost production, easing imports of sugar, pumping some five million tonnes of grain into the market to hike supply and checking prices imminently, keeping edible oil import duties at a low, asking chief ministers to put pulses and sugar on PDS for needier consumers, and forking out a hefty diesel subsidy for pump sets.
A top bureaucrat said that it was not possible to declare a national drought as some states (Kerala, Karnataka and Gujarat) had received normal rainfall and it was up to state governments to take a call on districts being termed as drought-hit. But the Centre is all too painfully aware that a negative farm sector growth could adversely impact its upbeat overall economic growth projections and dent the sentiment in the market besides other sectors, something that the government can ill afford. Particularly, when much hangs on how much and how soon it can become the poster boy of quick, post-downturn, economic recovery for the world.
Crop failure would also immediately result in unemployment not only of farm labour but of small and medium farmers as well. “The spending plans in the budget will be further fast-tracked,” With 161 districts of the country officially under the grip of drought and with just four weeks of the monsoon season left, the government is desperately keen to kick-start mitigation measures.
The worst hit states include big producers such as Punjab, Haryana, UP, AP, West Bengal, Bihar, Jharkhand. The power ministry has been asked to provide electricity on a preferential basis while diesel subsidy is beginning to roll out already. Hopes are pinned on these two measures and an ever-depleted ground water supply to save the paddy in Punjab and Haryana which contribute 40% to the government’s buys for welfare programmes and TPDS.
In areas where irrigation networks are either absent or not adequately developed, the Centre is working with states to sink tubewells on the double so that, along with enhanced power supplies, the crop can be prevented from drying up. “These measures, worked in synchronisation, should optimise crop survival and production in the backdrop of poor monsoons,” a bureaucrat said.
The government knows only too well how crucial power is and the power of the vocal middle class in fashioning the way it blows. With that in mind, priority plans are afoot to prop up the power supply in key metros.
According to Manmohan Singh, it was because of his government's policies that the country was able to grow at 6.7 percent in the last fiscal when the world was facing one of the worst downturns in eight decades.
He said steps will be taken to ensure adequate spending on development projects to boost growth further and capital will be sought not only from domestic sources but from overseas as well.
'India can progress only when each Indian makes a contribution. Our endeavour has been to reach the fruits of development to every citizen. I know we have a long way to go.'
The prime minister said he was also aware that high commodity prices were causing hardship to citizens, especially the poor. 'We have enough food stocks. Every possible step will be taken to bring down prices,' he said.
At the same time, he appealed to all state governments to use all administrative and legislative measures at their disposal to ensure that prices of essential commodities like cereals an pulses are brought down.
"This vibrant and promising India has a natural friend in the United States," Obama said in a message personally signed by him.
"Our people are bound by common values and ideals, and Indian-Americans contribute to all aspects of American life.
"India has attained unprecedented milestones as its democracy has matured.
"Boasting a vast diversity of ethnicities and languages, India constitutes the largest democratic union the world has ever known," he said.
In an unusually long message, Obama noted that the fate of the two countries was tied by the interconnected nature of the world and a shared vision of peace, prosperity and respect for human rights.
Highly impressed by its economic growth, Obama said economically India was forging a new path. Fulfilling the promise of internationally competitive institutes of higher education, Indian professionals are leading their nation into a new phase of growth.
"From Bangalore to Boston; Indian scientists, engineers and thinkers are generating ideas and prosperity that improve and save lives across India and the globe," Obama said.
The message to the Indian government starts with a reference to the first Indian Prime Minister Jawaharlal Nehru's historic "tryst with destiny", speech.
"As Indians stood ready to claim their own fate on Aug 15, 1947, Prime Minister Nehru declared that a 'tryst with destiny', forged years ago, would finally be fulfilled," he said.
He also mentioned the 1857 war of independence, the freedom movement under Mahatma Gandhi and the country's all-round development after independence, be it economy, science or polity.
The president said, "Indian politics have given voice to women and countless minorities, and have demonstrated that Indians stand unifies in their commitment to human dignity."
Obama said he was also impressed by the country's entertainment industry as its members were marking their presence globally.
"Bollywood and Hollywood, Indians contribute to films that captivate audiences in every corner of the world," he said, adding that millions were being lifted out of poverty and were carrying the hope for a bright future as the Indian economy continued along a promising road.
"Marking Indian Independence Day, the United States and its people celebrate the realisation of the vision of Prime Minister Nehru described and the bright future it continues to portend for the people of India," Obama said.
US crude oil futures fell $3.01, or 4.27 per cent, to settle at $67.51 a barrel while London Brent crude fell $1.07 to settle at $72.41. The losses, the biggest since July 29, came after the Reuters/University of Michigan Survey of Consumers showed consumer confidence in early August dropped to the lowest level since March.
Stocks on Wall Street tumbled on the news as investors worried sluggish consumer activity would prolong the economic recession.
"Crude futures are down, following a slide in the stock market and after the Reuters/University of Michigan survey showed consumer confidence down earlier this month," said Tom Pawlicki, analyst at MF Global Research in Chicago. Oil prices remain more than double their winter lows below $33 in December, with most of the support for commodities markets so far this year finding root in economic optimism.
Data on Thursday showed Germany and France had posted second quarter growth, ending their recessions in April-June, which was earlier than expected.
Some of the market's attention has also been on the weather in the Atlantic Ocean, which could soon see its first named storm of the hurricane season.
Tropical storms and hurricanes can disrupt operations at offshore platforms and coastal refineries but many forecasts are for a mild hurricane season this year.
Four wise men- three ex-Governors and one serving Governor of the Reserve Bank of India- came together on Friday to brain-storm on the
They agreed on many prescriptions and disagreed on some though the disagreements were more in terms of nuances.
At RBI's Platinum Jubilee Celebrations, M Narasimham, C Rangarajan and Y V Reddy, all former Governors and the serving governor D Subbarao saw excess liquidity, over-leveraging and poor regulation as the root cause of the global financial crisis.
While Reddy talked about present and past legacy of excess liquidity, others felt that past-legacy posed less of a problem.
The panelists broadly concurred that India should not rush to capital account convertibility, meaning freedom to convert local financial assets into foreign financial assets and vice-versa at market determined rates of exchange.
Reddy was more conservative as he questioned the merits of capital account convertibility. Others were of the view that the macro economic situation, costs and benefits needed to be weighed before transition. "Capital account convertibility is more of a process. We need to go forward, but slowly", said Subba Rao.
The panelists echoed similar view on the creation of international financial centres, saying the timing was not right yet.
The RBI governor listed out four challenges for the central – solving the tension between fiscal and monetary policies, defining the mandate of central banks and reforming the regulatory architecture, getting the right balance between regulation and liberalisation and conducting monetary policy in a globalised world.
But Rangarajan saw price stability as the primary objective of the central bank. "Hard inflation targeting specifying a rate may not be acceptable in an economy like ours where supply side constraints are apparent. However, soft inflation targeting that refers to maintaining a degree of price stability should be the dominant objective of monetary policy", he said.
Subba Rao was of the view that a minimalist focus on inflation targeting would not deliver macro-economic or financial stability. Over-regulation could thwart financial innovation and suppress growth stimulus. A judgement should be therefore be made between the costs and benefits of regulation, he said.
Narasimham made out a case for a coordination panel between regulators with the RBI at the helm to guide regulation and prevent regulatory arbitrage.
The panelists also voiced concerns on the timing and mode of an exit policy by the central bank as and when the crisis is over to mop up excess liquidity. Dr Shankar Acharya, former chief economic advisor, moderated the session.
The day was incident-free in Jammu and Kashmir and the North East despite boycott calls given by insurgent outfits.
Speaking after unfurling the tricolour in Guwahati, Assam Chief Minister Tarun Gogoi warned of strong action against insurgents and asked them to come to the negotiating table.
"We urge every extremist outfit to abjure violence and come to the negotiation table," he said in the backdrop of a general strike called by ULFA.
Normal life came to a standstill in Manipur due to a 24-hour strike called by a major insurgent outfit Manipur People's Liberation Front (MPLF) which, like ULFA, has been boycotting Independence Day every year. Manipur Chief Minister O Ibobi Singh said "violence will not bring any solution".
A boycott call given by a rebel group Hynniewtrep National Liberation Council failed to dampen the celebration in Meghalaya where Chief Minister D D Lapang condemned people taking law into their hands.
Tripura Chief Minister Manik Sarkar asked insurgents to return to the mainstream and his Mizoram counterpart Lal Thanhawla said his government will not allow militants to terrorise people.
Gujarat Chief Minister Narendra Modi said his government would launch a mission for uplift of women in the state and announce an agro-business policy with emphasis on connecting farms with markets.
Tamil Nadu and Karnataka chief ministers announced increase in monthly pension to freedom fighters by Rs.1,000.
Sikkim Chief Minister Pawan Kumar Chamling announced schemes for health and social welfare.
Amid tight security in view of Maoists' call for observing 'Black Day' in parts of Orissa, Independence Day was celebrated with enthusiasm with government promising an exploitation-free society and asking ultras to shun violence.
Unfurling the tricolour at a function in Bhubaneswar, Chief Minister Naveen Patnaik termed Maoists as enemies of the society.
The ultras put up posters against the celebrations in remote areas of Kalimela, Motu, MV-88 and Chitrakonda of Malkangiri district. Black flags were also seen at a few places in the district.
In President-ruled Jharkhand, which has been witnessing Maoist violence, Governor K Sankaranarayan said Naxalites would be welcomed with open arms if they shunned violence.
Amid claims that some starvation deaths have occurred in calamity-hit Bihar, Chief Minister Nitish Kumar said none would be allowed to die of hunger as the state had enough resources to tackle the situation.
Celebrations held in different parts of world
A feeling of patriotism overwhelmed the Indians in different parts of the world, as they celebrated country''''s 63rd Independence Day away from their motherland on Saturday.
Traditional cultural programmes were also organised on this special occasion besides hoisting of the tricolour -- the Indian national flag.
In Pakistan's capital Islamabad, the Indian High Commissioner, Sharat Sabharwal, hoisted the tricolour and read out the President of India's address to the nation at an official function in the mission. On this joyous occasion, the families of the High Commission staff sung patriotic songs and exchange greetings.
Security within the Diplomatic Enclave in the heart of Islamabad had been beefed up, as Pakistan marked its Independence Day on Friday. All vehicles entering the enclave had to undergo a thorough check.
In Sri Lankan capital Colombo, High Commissioner Alok Prasad unfurled the tricolour amidst a march past by Border Security Force (BSF) soldiers as the Sri Lankan navy band gave a performance.
Traditional songs and dance marked this event, which was attended by over 400 people at the India House.
In Abu Dhabi, the Independence Day celebrations were led by Indian Ambassador to the United Arab Emirates (UAE), Talmiz Ahmad, at a function attended by Rajya Sabha MP Mani Shankar Aiyer, as the Chief guest.
In Dubai, India's Consul General Venu Rajamony hoisted the tricolour at the Indian High School. This ceremony was followed by an hour-long cultural programme in which children of various Indian schools participated.
In Kuwait, Indian Ambassador Ajai Malhotra hoisted the national flag and read out the message of the President. The flag hoisting ceremony was followed by a reception which was attended by thousands of Indians in the country.
"India's foreign policy has a special focus on the Gulf region, with which we have had long-standing interaction and friendship. It is also one of our most important trading partners, an important source of energy for us, and home to over four and a half million Indians," Malhotra had earlier said.
Saudi King Abdullah, Crown Prince Sultan Bin Abdul Aziz, Deputy Prime Minister, Minister of Defence and Aviation and Inspector General, also sent congratulatory messages to President Pratibha Patil on the occasion.
On behalf of the government and people of Saudi Arabia, the King and the Crown Prince expressed best wishes for prosperity and advancement of the Indian people.
"We have had a very good discussion on setting a road map for disinvestment in Coal India," Coal India Chairman P S Bhattacharyya told PTI.
Bhattacharya met the disinvestment secretary, Sunil Mitra, on Wednesday to finalise the "5-10 per cent" equity dilution in Coal India.
The company has already received the coal ministry's nod to reduce the face value of its shares to Rs 10 from Rs 1,000 at present.
"The coal ministry has given us its approval to lower the face value of our shares from Rs 1,000 a share at present to Rs 10 per share," Bhattacharya said.
The navratna firm's equity base thus would be expanded to 631.6 crore shares from the current 6.316 crore shares. The company has a paid up equity capital of about Rs 6,300 crore.
The government should provide more clarity on the recently introduced Limited Liability Partnerships, especially on taxation, so that
The Limited Liability Partnerships (LLPs) is a hybrid of partnership firms and companies. It is a separate legal entity and the partners have the advantage of being liable to the extent of their shareholding in the entity.
"Since LLP will become a very popular vehicle of carrying out various business activities in the country, all aspects of taxation measures dealing with either incorporation or conversion of existing entities into LLP's needs to be addressed fully by the Finance Ministry," Assocham said.
The chamber said, "absence of certain taxation provisions will only delay the formation and conversion of LLPs and thus growth of business activities."
It is not clear if lakhs of partnership firms after converting into LLPs would be allowed to carry forward their minimum alternate tax refund and other liquidation benefits, Assocham said, addding the Finance Act, 2009-10, is yet to correct certain anomalies as regards the LLPs.
India's foreign exchange reserves fell for the week ended August 7 to $271.239 billion compared to $271.641 billion in the year-ago period.
Reserves had risen by $3.930 billion for the week ended July 31, compared to $267.711 billion in the previous week.
Foreign currency assets, during the week, fell to $260.219 billion, against $260.631 billion in the previous week, RBI said in its weekly report.
Foreign currency assets expressed in US dollar terms include the effect of appreciation or depreciation of non-US currencies (such as Euro, Sterling, Yen) held in reserves, RBI said.
The country's gold reserves and special drawing rights (SDR), during the week, stood unchanged at $9.671 billion and $1-million respectively, the central bank said.
India's reserve position in the International Monetary Fund (IMF) marginally rose to $1.348 billion compared to $1.338 billion in the previous week, RBI said.
Interest rates likely to come down further 15 Aug 2009, 1520 hrs IST, Prabhakar Sinha, TNN | |||
not pick up pace. Most of the banks and FIs, including SBI, PNB, IDBI Bank and LIC Housing Finance have cut interest rates on housing and other retail loans, including auto loans recently.
However, banks have not cut their prime lending rates (PLR) aggressively so far. They have reduced the rates on new loans as a special offer for the coming festive season . If the economic recovery gets hit due to weak rains and global slowdown, banks will slash their PLR also soon, which will benefit the existing borrowers.
At present, banks are sitting on huge surplus cash, which they park with RBI at rate lower than the cost of fund. On August 14, banks have parked Rs 1,46,470 crore surplus money with RBI at 3.25% under Liquidity Adjustment Facility (LAF). The average cost of fund of banks is around 6.5%.
In the first four months of 2009-10 , while the deposits of banks have gone up by 63% to Rs 2,35,281 crore from Rs 1,44,373 crore in the same period last year, the credit offtake has almost halved to Rs 31,483 crore from Rs 62,290 crore. This has created surplus liquidity in the system.
To cope with this, banks have already cut interest rates on term deposits of various maturities by around 2.5 to 3 percentage points since January this year. But, they could not cut lending rates by similar amount because of high cost of the old deposits.
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According to a banker, cutting PLR at this stage is not possible as it will affect earnings from loans, while cost of deposits has not come down yet. Since a substantial amount of high-cost term deposits will mature by October , interest rates can be readjusted at a lower level then, a senior SBI official said, which can reduce the overall cost of funds for banks. At that time PLR will be reduced. However , the scenario may change if inflation rises by October due to drought. If RBI resorts to a tighter monetary policy, interest rates will face an upward pressure.
The drought can create human suffering, but only if the government’s planned relief measures fail miserably. But overall growth is likely to remain robust. Apart from the much commented fact that the economy has sharply diversified beyond agriculture—to the extent that agriculture accounts for just a shade over 40% of rural income now, compared to over half in early 2000s, the last time the country faced a drought of similar intensity—this paper’s analysis of drought-hit districts and the prognosis by a few independent forecasters like Morgan Stanley and S&P offer hope that economic growth this year will remain robust, and at worst, the impact would be marginal, giving credence to the theory that growth is now fairly decoupled from agriculture, all other things remaining the same.
A quick number crunching by Indicus Analytics for ET on the 167-odd drought declared districts spread across seven states reveal that if you add all income from agriculture across these districts, it amounts to less than 3% of the country’s GDP, down from 4% in early 2000s.
Should the sentiment of palpable economic recovery across real and financial markets really be held hostage to a piece of the pie with a share of under three percentage points?
More importantly, agriculture accounts for under a fourth of all economic activity even in these districts—like Uttar Pradesh’s Hathrus & Banda, Bihar’s Buxar and Assam’s Lakhimpur—pointing to the limited damage that a severe agrarian crisis can inflict even on its ground zero districts.
And we have not even started counting the mitigating factors like the revival of global capital inflows into the country that will spur investment-led growth, which had slowed in the wake of the global economic crisis last year or the many billions the government will pour into villages in cash and kind to keep hunger at bay and demand up. The government has at its disposal over 50 million tonnes of food stocks, a quarter of India’s annual consumption, to more than make up for any shortfall in crop output this year.
"The Indian Institute of Technologies (IITs) are our only brand to have gained global recognition. Tatas may have brought the Jaguar... but for us, IITs are the only brand which has gained worldwide recognition", he said.
"I hope that in future, Indian products would be widely accepted throughout the world," he said, after inaugurating facilities for students of Great Lake Institute of Management at Manamai village, about 63 km from here yesterday.
He stressed the need to take steps to provide jobs in the manufacturing sector, where there are many opportunities. "We not only need to grow, but also be able to compete with other developing countries".
Bajaj expressed concern over the low per capita income in India, which stands at USD 1,000 compared to U.S.A., where it is USD 4,000 and said poverty should be eradicated and the minimum needs of an individual taken care of.
Later, Rahul Bajaj and his brother Mathur Bajaj, Vice Chairman of the company formally inaugurated an amphitheatre, a cafeteria and a student activity centre.
The $12.5-billion giant has identified electronic engineering clusters in Coimbatore, Nashik, Gurgaon, Pune and Chandigarh to set up sales and support offices where it can partner small electronic design and production firms right from the chip design stage.
TI had identified India as a business opportunity for its low-cost chips three years ago by setting up a marketing arm for the local unit. That metro-led strategy has now found a hinterland push, with India witnessing strong and quick penetration of medical electronics, mobile usage, cable television and alternative energy systems into semi-urban areas. Semiconductor firms usually partner with resellers or system integrators as part of their marketing foray.
TI India’s managing director Biswadip Mitra told ET that the firm took the decision to move into tier-II cities over the past 15 months and has already opened 14 offices across 12 cities — more than half in secondary cities.
Mr Mitra said the company “believes there are 2,000-plus small and medium-sized firms involved in electronics design and manufacturing that widely use analog chips and embedded processing, which are TI’s forte. Many of them are pure design houses while others are involved in designing and manufacturing.”
This strategy finds global resonance with TI CEO Richard Templeton saying “there’s little doubt that the biggest geographic drivers of future growth will be emerging economies, such as China, India, Eastern Europe and Southeast Asia. We have rapidly expanded our sales teams in these regions.” Mr Mitra, however, didn’t spell out specific numbers saying the firm would outrun the industry growth rate.
An ISA-Frost & Sullivan report said the total semiconductor market in India is expected to grow to $3.24 billion in 2010 from $2.53 billion in 2008, a CAGR of 13.1%. To boot, the local market’s CAGR would be 6.4 times the global market CAGR till 2010. The growth rate is sharper in TI’s stronghold, analog power and analog-mixed signal markets for which are likely to grow at compounded rates of 16.6% and 24.8% till 2010, respectively.
Being closer to the customer and able to provide quick support are a compelling reason for the secondary and tertiary market foray, Mr Mitra said. TI’s customers in these tier two cities would typically be in industrial electronics (UPS, inverters), medical electronics (ultrasound scanners and X-ray machines), consumer electronics and telecommunications.
TI said small businesses offer “significant potential” and shouldn’t be ignored by the semiconductor industry. “Some of the designs done here are shipped abroad for manufacturing. Plus, more engineers are now involved in electronic design either working in design companies or as entrepreneurs,” Mr Mitra said.
| 10 lucrative sectors in this expensive & volatile market | |||
Sanjeev Sinha, ECONOMICTIMES.COM |
The latest grey market rates for the NHPC issue are of little cheer to these HNIs, whose borrowing cost works out to Rs 9.80. According to grey market operators, the NHPC issue is quoting at a premium of Rs 6.75-7. Though not 100% reliable, this rate is a fair indication of the premium on listing day, irrespective of the issue price.
Brokers tracking the grey market say the rate fluctuates in line with the sentiment in the secondary market. But with key indices struggling to break their recent highs, not many expect this premium to rise sharply by the day of listing. The non-institutional portion of the NHPC book was subscribed 57 times. Most of the bids came in at the upper end of the Rs 30-36 price band. This means that if an investor subscribes for 57 shares, he is likely to be allotted one share.
Unlike most institutional and retail investors, who are prepared to take a longer-term view on a stock, majority of HNIs subscribe to an initial public offer for listing day gains. Unless the stock lists at a significant premium to the issue price, these players prefer to book profits in the first hour of listing, as they have to pay interest for every additional day they stay invested. The interest rate for IPO financing is usually 11.5%-13% per annum.
If an HNI had applied for 10 lakh shares of NHPC at Rs 36 apiece, the interest charge on Rs 3.6 crore for a fortnight at 11.5% works out to Rs 1,72, 500. Since the issue has been subscribed 57 times, an HNI will be alloted only 17,543 shares instead of the 10 lakh shares he had bid for. “Demand for the stock on listing day will depend on the market sentiment then,” says a grey market broker.
“If the outlook is positive, these HNIs may take a gamble, and hold on to their positions. If not, there could be heavy selling in the first hour (of listing) as they (HNIs) try to cut their losses,” he said.
A national entrepreneurship policy 15 Aug 2009, 0257 hrs IST, Abhijit Bhattacharya, | ||||||||
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There can be no denial of the fact that extreme poverty and underdevelopment lie at the root of the growing Naxal menace engulfing a large part of rural India. The massive welfare allocations announced in the last budget for rural development may help to gradually curb the growth of discontentment, provided the funds reach the intended beneficiaries. On the other hand, in the urban front also the situation looks quite grim. The mass-scale hiring by the outsourcing industry in the IT and ITeS sectors has come to a grinding halt. Many young graduates who genuinely believed that a graduate level qualification (often topped up by a MBA degree), gadget-savvy attitude and manageable proficiency in English were sure-shot guarantees to high-paid jobs and flashy lifestyles are now feeling crestfallen. Disconnect between the perception and the reality is too agonising to live with. If the Naxal uprising is seen in conjunction with the growing frustration among the urban youth, the slide towards overall escalation of violence and anarchy is a sure possibility. To tackle the growing unemployment problem in an environment where high level of uncertainties puts a big question mark over employment generation capabilities of large businesses, the government has to take a fresh look at our employment generation policies both in the rural and urban areas. Implementation of various welfare schemes has to be also seen in conjunction with the employment generation policies and the entrepreneur has to play a critical role in the whole process. Take, for example, the rural low-cost housing scheme under the Indira Awas Yojana. If entrepreneurial talents are identified to implement the scheme then not only availability of good quality low-cost housing will rise, many growth-oriented housing companies with large employment potential and innovative housing solutions will also emerge. Our employment generation policies consist of a number of self-employment schemes which can be broadly clubbed as SME policies. These policies in essence represent a patchwork of financial measures to mitigate the disadvantages of small businesses vis-Ã -vis their large counterparts. SME policies mainly focus on creating small businesses but, not on entrepreneurs who only can create growing businesses at a time of high uncertainty, caused by rapidly changing technological and socio-political environment. World over, it is being now increasingly felt that massive allocation for self-employment schemes and creating a good climate for small business are not enough to ensure growth-oriented entrepreneurial businesses, supposed to generate more employment and provide sustainable competitive advantage. For example, as per the Small Business Survival Index South Dakota, Wyoming, Mississippi and Alabama are consistently ranked very high as most small business friendly states in the US. But, their performance is quite poor on entrepreneurship and innovation. Realising the limitations of a narrow approach towards SME development some countries in Europe and a number of individual states in the US are now shifting their focus from SME to an entrepreneurship policy (EP). Unlike the SME policy, EP tackles a much broader range of issues and non-financial measures and tries to change the nature of underlying forces of an economy. It aims at navigating the economy from continuity to change, stability to turbulence, specialisation to diversity and homogeneity to heterogeneity by developing appropriate entrepreneurial skills. Taking into account the changing style of firms’ function from control to motivation and scale to flexibility, the EP can catapult the economy from a managed to an entrepreneurial mode and thus increase overall economic efficiency. Objectives of the UPA government’s policies, like food guarantee or employment guarantee for all, can be met much more effectively if entrepreneurs, particularly at the grass-root level, are involved in the policy implementation process. Direct taxes code: An idea whose time has come 14 Aug 2009, 0415 hrs IST, Sudhir Kapadia, The freshly unveiled direct taxes code (DTC) is an idea which was overdue and whose time has perhaps never been more appropriate. There seem to be Taking a leaf out of the Chinese tax code, the DTC pegs the corporate tax rate to 25% which is clearly a very attractive rate compared to prevailing rate elsewhere. This, of course, comes with the removal of profit-linked incentives. We now have investment-linked incentives in specific sectors (infrastructure, power, exploration and production of mineral oil, etc) to incentivise capital formation and to remove the incentive to shift profits from “taxable units” to “exempt units”. We also now have capital assets deployed in the businesses (e.g., plant and machinery) to be treated as business assets and any profits arising on sale of these assets to be treated as normal business income and not as capital gains. In practical terms, a company will now be subject to the same uniform rate of 25% tax on gains from transfer of such business capital assets as against the current rate of 20% for long-term capital gains on transfer of all capital assets. The downside in these provisions is the fact that a loss arising on such a business transfer will not be allowed to be written off in one year but will be amortised like depreciation over a period of time. This provision seems to be inconsistent with the treatment of gains as business income in the year when the gains arise. However, there is a significant dampener to this feel-good story in the form of the new basis of levy of minimum alternate tax (MAT). The MAT will now be levied at 2% of the value of gross assets in the case of all companies except in the case of banking companies (tax at 0.25% for banking companies). This shift in the MAT base from book profits to gross assets is sought to be justified on the grounds of encouraging “optimal utilisation of the assets and thereby increased efficiency”. This measure, however, seems to run counter to the objective of encouraging capital investment for productive growth. For e.g., in the case of an infrastructure company where the pay back on the investments is longer, on the one hand we have the investment-linked capital allowance reducing taxable profits significantly, on the other hand is the imposition of MAT calculated at the same base of capital investments.
Ever since 1991, the issue of exchange rate management has become important. Countries like India still manage their exchange rate even though for The idea is mainly to keep export pricing “competitive”. But here two issues are important to keep in mind. First, what is the equilibrium exchange rate? Has the RBI “aimed” correctly at this rate? Second, the trading activity is largely done by private traders who are also the principal demanders of foreign exchange. The sole exception to the latter issue is oil where government purchases dominate. Has the RBI kept this in mind and not distort incentives? On the first issue there exist fairly complicated models which attempt to “predict” what the equilibrium exchange rate is (“Exchange Rates, Trade Balance and Unemployment: A Producer Theory Approach”, S K Das and Pant. S K Das, Journal of Asian Economics, V8, 1997). However, a simpler (though heuristic) procedure is to take off from standard trade theory. Here there is no money exchange rate as the argument is that the only purpose of exports is to import. In other words, through exports a country (its traders) reveals its demand for imports. Since exports merely constitute a demand for imports, in equilibrium planned imports must equal planned exports. The argument is that exports are a “sacrifice” by a country in giving up what it is efficient in producing to import what it cannot produce efficiently at home. To take the argument to its logical extreme, if a country only exported a lot and imported little this might make for good nationalism (a large trade surplus) but would constitute bad economics. We now know that this “mercantilism” has little support today in conventional economics. More intuitively, it makes little sense to work hard to produce a whole lot of goods and services and only improve through exports the well being of consumers in other countries without getting a reasonable amount of imports in exchange. This argument is not just a theoretical curiosity as this is precisely how most Asian economies (China, in particular) have behaved by running huge trade surpluses to finance the large US trade deficits — exporting large amounts to the US while getting little in return. It is not surprising, then, that the US till today remains the country where standards of living have improved the fastest. http://economictimes.indiatimes.com/Opinion/A-national-entrepreneurship-policy/articleshow/4895583.cms | ||||||||
Savings schemes get code cramps | |
| SRIKUMAR BONDYOPADHYAY | |
Calcutta, Aug. 14: The traditional tax cover on savings has been blown to bits. People who have parked their money in national savings certificates, five-year post office term deposits, senior citizen savings schemes and equity-linked savings schemes (ELSS) of mutual funds will find to their horror that the new draft tax code proposes to bust the tax shelter they have used all these years. This is because the tax breaks for savings — at present available under section 80C of the income tax act — will henceforth be restricted to instruments floated by a new category of “permitted savings intermediaries”. The code defines the entities that come under this new rubric — approved provident funds, approved superannuation funds, life insurers and the New Pension Trust System. If the tax code is implemented in the form that it has been placed before the public for comment, a number of tax-saving schemes, including ELSS of mutual funds and NSC, will cease to exist. “I don’t know whether the omission of ELSS and post office schemes is deliberate or an accident. If it is deliberate, it means the government wants to provide tax breaks only on investments that are really long term, more than 10 years,” said Dhirendra Kumar, CEO of Value Research. “It means the death of tax-saving mutual fund schemes and closure of fixed income investment avenues such as NSC,” he added. The total asset under management of ELSS stood at Rs 19,809 crore at the end of July. The amount outstanding in NSC account was Rs 57,388 crore at the end of March 2008. Kumar expected the mutual fund industry to lobby hard for the continuation of tax benefits on ELSS. “Otherwise, they will be at a disadvantage vis-Ã -vis life insurers selling unit-linked insurance plans. Mutual funds are also not allowed to sell the New Pension Scheme now. But I hope, post implementation of the direct tax code, mutual funds will design and sell longer-term products such as pension plans,” he said. Biman Chakraborty, eastern region head of Bajaj Capital, however, argued that small savings schemes were intentionally excluded from tax benefits under the new direct tax code. “The interest on small savings is administered and paid by the central government, while it has to share 80 per cent of the net collection under these schemes with states,” Chakraborty said. The government had started reducing the interest rate on small savings schemes since 2003 and capping investments by individuals since May 2005. It subsequently reduced the bonus payable on schemes such as the Post Office Monthly Income Scheme. States borrowing from the National Small Savings Fund (NSSF), where the net collections from all small savings schemes are kept, pay an interest rate of 9.5 per cent which is a few percentage points higher than the interest they pay while borrowing from markets through bonds. The new direct tax code not only reduces the number of tax saving options but also prohibits switching or rollover of investment from one scheme to another with the same or different “permitted savings intermediary” within one financial year. For example, you cannot invest the amount received under a money back life insurance policy in a provident fund account in the same financial year and claim tax benefits for the rollover. |
State misses patta deadline |
| SANTOSH K. KIRO |
Ranchi, Aug. 14: The governor’s pledge to award land rights to 8,826 forest dwellers on Independence Day will be honoured only partially tomorrow, courtesy the tardy progress made by deputy commissioners (DCs) in verifying pattas (land deeds). About 800 tribal and non-tribal forest dwellers — barely 10 per cent of the set target — will be issued land documents, a freedom they had long been fighting for. West Singhbhum will have the largest number of proud landowners. Deputy commissioner Sunil Kumar will distribute 157 land deeds among claimants. Seraikela-Kharsawan and Hazaribagh will follow close with 143 and 134 landowners, respectively. In stark contrast, the districts of Ranchi, Koderma, Khunti, Jamtara and Garhwa will have none. Reason: officials there are still “processing documents”. In mid-July, state chief secretary A.K. Basu had issued strict orders to deputy commissioners of all districts to speed up the process of verifying applications under the Scheduled Tribe and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act and prepare land documents in their names. After Governor K. Sankaranarayanan assumed office, he ordered DCs to complete the task of issuing pattas to 8,826 applicants, who had filed petitions within July 30, by August 15. The land documents, according to the order, were to be distributed among all the beneficiaries during I-Day functions at various district headquarters. But that seems unlikely to happen. In Ranchi, no land document will be distributed tomorrow because “not a single application” has reached the level of deputy commissioner “for consideration”. “The documents are under process at sub-divisional offices,” said a district official, not willing to be named. Busy with I-Day preparations, Deputy commissioner K.K. Soan was not available for comments. Jamtara DC Kripanand Jha pleaded helplessness. “Since none of the applications came to me through proper channel, I had to send them back to gram sabhas for verification. But we will expedite the process and meet the October-end deadline given by the state for applications filed after July 30,” he said. In Koderma, DC Kanaiya Pandey had his excuse, too. “Most claimants in my district are non-tribal forest dwellers. Under the law, they have to prove that they were in possession of land for three generations. This task is difficult and it takes time to identify a genuine beneficiary,” he said. Pandey added that some 100 applications had come up for consideration at the gram panchayat level, but the petitioners had not been able to prove their claims. Good news came only from Sunil Kumar. “We have made elaborate arrangements to distribute pattas among 157 beneficiaries at the I-Day function,” he said. Figures from seven other districts — Chatra, Palamau, Latehar, Godda, Deoghar, Dhanbad and East Singhbhum — were not available because their DCs are accompanying the central team that is here to assess crop loss and decide on a relief package in the wake of a statewide drought. |
RBI ill at ease with borrowings | ||
| OUR SPECIAL CORRESPONDENT & AGENCIES | ||
Hyderabad, Aug. 14: Reserve Bank governor D. Subbarao today said making monetary policy independent of fiscal policy was an important reform measure for the country. “Co-ordination between monetary and fiscal policies has become a challenge,” he said. The government’s huge borrowing programme is coming in the way of the monetary policy objective of a lower interest rate regime, he said. “The Reserve Bank cut its policy rates several times since October hoping interest rates will come down, but the borrowing programme has militated against it,” Subbarao said at a function here. He said the prevailing drought situation was a major cause for concern as there could be an upward pressure on inflation. However, the situation was not grave enough for the central bank to introduce steps to contain inflation. “I am unable to say how the drought situation will translate into a crisis and what action will have to be taken at what point of time.” In the July review of its monetary policy, the central bank had revised its inflation forecast to around 5 per cent by the end of March 2010 from 4 per cent projected earlier. Fake note battle The country will soon get a new facility to make paper used in currency notes. “The Government of India and the RBI have resolved to set up a modern facility to produce paper for currency notes in the country. Though there is a facility right now at Hoshangabad in Madhya Pradesh, it is an old one. The new facility was intended to check fake currency notes,” Subbarao said. He also refuted reports that fake notes of a value of Rs 1.65 lakh crore are in circulation in the country. |
Land ghost visits Mamata |
| OUR SPECIAL CORRESPONDENT |
Calcutta, Aug. 14: The government that Mamata Banerjee fought against successfully to stop land acquisition will take over farming plots for her railway ministry. The Buddhadeb Bhattacharjee government has decided to take over 320 acres of farmland and hand them over to the railway ministry for laying tracks in North and South 24-Parganas, Bankura, Burdwan, Murshidabad and Cooch Behar. Mamata’s Trinamul Congress, which scored unprecedented electoral success by opposing every project where farmland acquisition is involved, is calling this move “justified” since it is “for the greater good of the people”. Land reforms minister Abdur Rezzak Mollah said today that administrative approval to acquire the land was given between May 16 and August 13. “It’s true that agricultural land will have to be acquired and given to the railway ministry. But the fact is that the projects will benefit our state,” he said. That is the argument the Left Front government had offered while taking over farmland for the Tata car project in Singur. The law under which the acquisition was done provides for government takeover in the “public interest”. Trinamul resisted, succeeding in driving out the Nano project. It was not just Singur and Nandigram that Mamata fought against. Her party has opposed land acquisition for a power project, national highway and power transmission poles. A CPM state committee member said: “The Trinamul chief has emerged successful in her political battle with her land movement ever since the Singur controversy erupted. Now she is the one who is taking agricultural land without even thinking of them (farmers), but we know land is needed for railway lines.” Trinamul leader Partha Chatterjee argued that the railway projects had been conceived during the previous government’s tenure. “Land to be acquired here will be narrow stretches and displacement wouldn’t be much. Besides, the land is being acquired for the greater good of the people,” he added. It has to be assumed then that Trinamul does not consider acquiring land for electricity transmission poles in Rajarhat, which it has opposed, an exercise “for the greater good of the people”. Neither would land for widening of National Highway 34 in North 24-Parganas qualify. Nor for constructing a public sector power plant at Katwa in Burdwan. Pranab Mukherjee, the Congress leader who is now Mamata’s poll ally, had shown the foresight of an experienced politician when he had criticised the Trinamul leader during her land agitation. He had said: “Those opposing projects meant for a public purpose will find after coming to power that it had been suicidal on their part to do so.” |
Karat says yes and no to Amartya | |||
| OUR SPECIAL CORRESPONDENT | |||
New Delhi, Aug. 14: In his “fraternal” argument with Amartya Sen, Prakash Karat both agrees and disagrees with the economist. The CPM general secretary agrees with Sen that the Left Front government in Bengal needs to do more for primary education, literacy and health. But he disagrees with Sen’s criticism that the Left had neglected the issues of hunger, malnutrition and illiteracy and focused on the nuclear deal which, according to Sen, is “not a central issue for social justice in India”. “This is simply not true,” Karat says in an article, “A Fraternal Argument with Dr Sen”, in the latest issue of party mouthpiece People’s Democracy, citing an interview with Sen carried by The Telegraph on June 22. “He was right in pointing out that the Left Front government of West Bengal needs to do more in the spheres of primary education, literacy and health,” Karat says. “At the national level, he would be right to say that the Left needs to do much more to bring the issues of hunger, malnutrition, illiteracy and deprivation to the forefront.” But, Karat writes, the Left’s opposition to the nuclear deal did not mean it had focused exclusively on ties with the US. He says that throughout the period the Left supported the previous UPA government, it had raised vital issues of welfare and social justice. “A look at the record would confirm that the Left consistently took up the issues of food security and the public distribution system, the rural employment guarantee scheme, the impact of WTO (World Trade Organisation) rules on agriculture and farmers, land rights for tribal people, the need for greater allocations for health and education in Union budgets, and the whole gamut of neo-liberal policies that adversely affected the well-being of the Indian people,” he writes. Karat says “the two major pieces of legislation adopted during this period”, the rural job guarantee act and the law on forest dwellers’ rights, “bear the hallmarks of the intervention by the Left” in their texts. “If the allocations for health and education in Union budgets showed an increase in this period, some credit should also be given to the Left for bringing this demand into the limelight.” Karat argues that the Left was not influenced by any “gut anti-Americanism or any exaggerated fear of the power of the US” but a “recognition that the neo-liberal policies pursued by the Indian ruling classes get their greatest sustenance from the strategic link with the US”. “This link not only affects foreign policy but the domestic economic agenda as well. The struggle for a better life for the people and fight against imperialist domination… have to go together.” Karat believes that Sen “shares the common social-democratic assumption that imperialism is a thing of the past” and that “imperialist-driven globalisation with its twin instruments of neo-liberal policies and military interventions are not germane to the central issues of social justice”. “Fortunately, the Left in India has not, so far, delinked its fight for social justice and against social and economic exploitation from the fight against the predatory neo-liberal policies perpetuated by imperialism,” Karat writes. “The inability to recognise this role of the Left leads Dr Sen virtually to recommend that the Left play a subsidiary role, one of supporting the Congress, or at best to act as a sort of Left wing of the Congress party.” |
Bruised BJP under siege - Vasundhara defies leadership with parade of MLAs in Delhi | ||
| SANJAY K. JHA | ||
New Delhi, Aug. 14: Vasundhara Raje Scindia, leader of the Opposition in the Rajasthan Assembly, looks set to become the first victim of the intensifying power struggle in the Sangh parivar which, at a higher level, has pitted L.K. Advani against RSS boss Mohan Bhagwat. Scindia brought drama to her defiance today, parading 62 MLAs before party president Rajnath Singh, but top party sources said her move had only served to strengthen the case against her. The party cannot afford to promote the “culture of blackmail”, the sources added, indicating it was only a matter of time before the high-profile former Rajasthan chief minister was forced to step down. The RSS and many state unit chiefs, they said, had been “disenchanted with Vasundhara’s reaction which oozed arrogance and defiance”. Although the party refused to formally respond to Vasundhara’s act of sending 62 MLAs to Delhi to argue her case, the dominant view was that she would be ousted come what may. There is also no plan to accommodate her at the central level, as the RSS is said to be extremely annoyed with her. Sources said the party president believed yielding to such pressure tactics in one state would open the floodgates and controlling factionalism would become impossible. The unfolding showdown over Vasundhara Raje could, however, just be the first act of an internal crisis that is beginning to unfold. Despite Advani’s rebuttal of speculation that he had been asked to step down as leader of the Opposition in the Lok Sabha and choose a successor before the end of the year, Sangh sources affirm that RSS bosses are bent on a leadership change. Advani has been given enough time and opportunity, one of them said, unwilling to be quoted. “He had a full term as shadow Prime Minister despite having to quit the party presidentship over his Jinnah remarks, the RSS and the Sangh fully backed his prime ministerial ambitions during the election campaign, now it is time for him to make way,” he said.
It is no secret that Rajnath Singh himself is not backing Advani’s claim to another five-year term as shadow Prime Minister; on the contrary, the BJP president may be secretly pleased at his current discomfiture, courtesy the RSS. For the time, though, Advani has been able to lobby support among several top second-rung leaders including his Lok Sabha deputy, Sushma Swaraj, and the leader of the Opposition in the Rajya Sabha, Arun Jaitley. Currently, the row over Vasundhara holds centre stage in the party, giving breathing room to Advani. Rajnath Singh met the Rajasthan MLAs who had come to protest at his residence this morning, but expressed annoyance. “They should not have come in a group. Two or three could have come,” he said, adding bluntly that “change in responsibility is a natural process in any political party.... Policy decisions are taken by the central leadership.” What further disheartened the MLAs was Advani’s refusal to entertain them. The MLAs staged a sit-in for some time at his residence after Advani refused to meet them. Advani and Rajnath had agreed in principle on a change of guard in Rajasthan. That the RSS is in tune with this appears to have sealed Vasundhara’s fate. Vasundhara’s supporters submitted a memorandum to Rajnath and Advani, explaining that the party’s position under her leadership was better than ever before and she was the only leader with a mass base. |
Basu home turns guesthouse - Former chief minister’s son puts Hindustan Park property to use | |||
| BARUN GHOSH | |||
Calcutta, Aug. 14: In Rajasthan, sons and grandsons of maharajas have turned their ancestral houses into hotels, offering guests a mix of luxury and history. In Bengal, the son of a communist chief minister has followed in their footsteps, turning the famous father’s house into a guesthouse. Thanks to his son Chandan’s business acumen, you can now stay at Jyoti Basu’s house at Hindustan Park for between Rs 2,500 and Rs 3,000 a night. Basu lived in this house, gifted by his father Dr Nishikanta Basu to his wife Kamal (according to the authorised biography of Jyoti Basu by Surabhi Bandopadhyay), through the years he grew as a Marxist leader to become Bengal’s longest-serving chief minister. Chandan Basu said: “This is my personal guesthouse to provide accommodation to my acquaintances free of cost.” A four-page brochure (see picture) printed apparently to promote the property suggests the rooms are available on rent. The literature says: “In a city where putting up is a challenge, indeed, we present to you a trendy guesthouse at our city’s heart.” Basu Jr has every right to do what he wishes with the property because it’s ancestral. His wife, Rakhi, had opened a school there. Rakhi said: “We started the Montessori for small children but we had to close it down in 2005-06 because of some problems. The house has now been renovated totally to give it a new look.” A deluxe AC room with breakfast costs Rs 3,000 a night and a standard AC room, also with breakfast, Rs 2,500. The guesthouse now is spread across the first two floors and the other two are expected to open shortly. The lift that had stirred a heated controversy when it was installed in the house at a cost of Rs 6 lakh to the government during the time Basu was chief minister is no longer there. A modern elevator has been installed in its place. An employee said: “Boro saheb (Basu) came here with our saheb in the middle of June when the guesthouse was opened.” This is the first instance of a former Bengal chief minister’s house being put to such use. Bidhan Chandra Ray, who was chief minister from 1948 to 1962, had a house on Subodh Mullick Square, which now hosts a polyclinic. Prafulla Chandra Sen and Ajoy Mukherjee had no property in Calcutta. Siddhartha Shankar Ray does have a house but he lives there himself. The current chief minister, Buddhadeb Bhattacharjee, occupies a government flat at Palm Avenue. Basu’s confidential assistant Joykrishna Ghosh recounted that it was from the Hindustan Park house that the CPM veteran started for Raj Bhavan to be sworn in as chief minister for the first time in June 1977. Since 1987, Basu has been living in a government building in Salt Lake, called Indira Bhavan as it was built for Indira Gandhi before the AICC session in Calcutta in the early 1970s. Somnath Chatterjee, the former Speaker who is a long-time associate of Basu, has fond memories of 55B Hindustan Park. “I had been to the house any number of times,” Chatterjee said. Congress leader Subrata Mukherjee’s recollection is of a different nature. “The Assembly marshal had physically lifted me out of the House late at night when I had protested the installation of a lift at Basu’s Hindustan Park residence,” Mukherjee said. |
Rebel camp destroyed in Dalma encounter |
| OUR CORRESPONDENT |
Jamshedpur, Aug. 14: On the eve of Independence Day, a transit camp of the CPI(Maoist) was destroyed by security personnel in a two-hour encounter at Lotekocha jungle in the foothills of Dalma, 30km from here, at Patamda this evening. State police, CRPF and Jharkhand Jaguar men conducted the joint operation that began around 6.30pm. No casualty has been reported on either side. Sources said rebel injury figures could be ascertained only after daybreak. Superintendent of police, East Singhbhum, Naveen Kumar Singh said that they had information about the transit camp at Lotekocha. “About 25 Naxalites, including some new recruits, were lodged at the camp since the past three days. As the security team made its way to the spot, the rebels sensed trouble and started firing from their automatic guns,” the SP said. In retaliation, the security personnel fired a dozen mortars, besides more than 100 rounds of bullets. Four grenades were also lobbed. “They were on a hill and, therefore, at an advantageous position. Our men retaliated by firing mortars and lobbing grenades. The rebels took a pause and then retreated firing indiscriminately,” Singh said. Since it was already dark, the police and paramilitary forces could not give a chase. The SP, however, hailed the operation as a big success for security forces in the wake of a rebel threat to mar I-Day celebrations across the state. |
State misses patta deadline |
| SANTOSH K. KIRO |
Ranchi, Aug. 14: The governor’s pledge to award land rights to 8,826 forest dwellers on Independence Day will be honoured only partially tomorrow, courtesy the tardy progress made by deputy commissioners (DCs) in verifying pattas (land deeds). About 800 tribal and non-tribal forest dwellers — barely 10 per cent of the set target — will be issued land documents, a freedom they had long been fighting for. West Singhbhum will have the largest number of proud landowners. Deputy commissioner Sunil Kumar will distribute 157 land deeds among claimants. Seraikela-Kharsawan and Hazaribagh will follow close with 143 and 134 landowners, respectively. In stark contrast, the districts of Ranchi, Koderma, Khunti, Jamtara and Garhwa will have none. Reason: officials there are still “processing documents”. In mid-July, state chief secretary A.K. Basu had issued strict orders to deputy commissioners of all districts to speed up the process of verifying applications under the Scheduled Tribe and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act and prepare land documents in their names. After Governor K. Sankaranarayanan assumed office, he ordered DCs to complete the task of issuing pattas to 8,826 applicants, who had filed petitions within July 30, by August 15. The land documents, according to the order, were to be distributed among all the beneficiaries during I-Day functions at various district headquarters. But that seems unlikely to happen. In Ranchi, no land document will be distributed tomorrow because “not a single application” has reached the level of deputy commissioner “for consideration”. “The documents are under process at sub-divisional offices,” said a district official, not willing to be named. Busy with I-Day preparations, Deputy commissioner K.K. Soan was not available for comments. Jamtara DC Kripanand Jha pleaded helplessness. “Since none of the applications came to me through proper channel, I had to send them back to gram sabhas for verification. But we will expedite the process and meet the October-end deadline given by the state for applications filed after July 30,” he said. In Koderma, DC Kanaiya Pandey had his excuse, too. “Most claimants in my district are non-tribal forest dwellers. Under the law, they have to prove that they were in possession of land for three generations. This task is difficult and it takes time to identify a genuine beneficiary,” he said. Pandey added that some 100 applications had come up for consideration at the gram panchayat level, but the petitioners had not been able to prove their claims. Good news came only from Sunil Kumar. “We have made elaborate arrangements to distribute pattas among 157 beneficiaries at the I-Day function,” he said. Figures from seven other districts — Chatra, Palamau, Latehar, Godda, Deoghar, Dhanbad and East Singhbhum — were not available because their DCs are accompanying the central team that is here to assess crop loss and decide on a relief package in the wake of a statewide drought. |
THE ABSENT CELEBRANT - How did Gandhi spend August 15, 1947? | ||
| - Ramachandra Guha | ||
It is well known that when India became free on the August 15, 1947, Mahatma Gandhi declined to join the festivities in New Delhi. While his follower, Jawaharlal Nehru, spoke in the Council Hall about India’s tryst with destiny, and the crowds danced on the streets outside, Gandhi was in Calcutta, seeking to restore peace between Hindus and Muslims. His refusal to join his colleagues in New Delhi has been interpreted by some commentators as a sign that he was in mourning. This interpretation is not entirely tenable. While Gandhi was distressed by the religious rioting that accompanied Independence and Partition, he did not gainsay the value and achievement of political freedom. But he remained concerned with what his fellow Indians would make of their hard-won, and somewhat belated, swaraj. The Collected Works of Mahatma Gandhi has seven entries dated August 15, 1947. The first is a letter written to his Quaker friend, Agatha Harrison, in London. Gandhi says here that “my way of celebrating great events, such as today’s, is to thank God for it and, therefore, to pray”. Agatha Harrison had apparently asked whether he followed the debates in the British parliament on the Indian Independence bill. Gandhi said he did not get time to read newspapers; in any case, he commented, “What does it matter, who talks in my favour or against me, if I myself am sound at bottom?” Item four describes a visit to Gandhi’s temporary home in Beliaghata of the new governor of West Bengal, C. Rajagopalachari. When the governor congratulated him on the “miracle he had wrought” (namely, the cessation of violence in the city), Gandhi answered “that he could not be satisfied until Hindus and Muslims felt safe in one another’s company and returned to their own homes to live as before. Without that change of heart, there was likelihood of future deterioration in spite of the present enthusiasm”. The fifth entry for the day relates to a visit by some communist activists. Gandhi told them that “political workers, whether Communist or Socialist, must forget today all differences and help to consolidate the freedom which had been attained. Should we allow it to break into pieces?” Soon after the communists, a group of students came to the Haidari Mansion in Beliaghata to seek Gandhi’s advice. The Mahatma told them that “students ought to think and think well. They should do no wrong. It was wrong to molest an Indian citizen merely because he professed a different religion. Students should do everything to build up a new State of India which would be everybody’s pride”. The last item in the Collected Works for this day pertains to a speech made at a public meeting at the Rash Bagan Maidan in Beliaghata. As reported in his own journal, Harijan, Gandhi began by congratulating Hindus and Muslims for “meeting together in perfect friendliness”. He hoped that this “was not a momentary impulse”. From the theme of communal amity he went on to speak of the responsibilities of ordinary citizens. Earlier in the day, when the new Indian governor had taken over from his British predecessor, a crowd had invaded Government House, tramped over the lawn and flower beds, marched into the building and generally made a nuisance of themselves. Hearing of this, Gandhi said “he would be glad if it meant only a token of people’s power. But he would be sick and sorry if the people thought that they could do what they liked with the Government and other property. That would be criminal lawlessness. He hoped, therefore, that they had of their own accord vacated the Governor’s palace as readily as they had occupied it. He would warn the people that now that they were free, they would use the freedom with wise restraint...” In this narration, I have skipped one item, number three, in part because I think it the most important, and hence best dealt with last. This pertained to a visit to the Mahatma by the ministers of the new government of West Bengal. What Gandhi said to them is summarized in the Collected Works. But there is a slightly longer, and somewhat more vivid, account in Manu Gandhi’s book The Miracle of Calcutta. This informs us that when the Bengal ministers sought his blessings, Gandhi told them, “Today, you have worn on your heads a crown of thorns. The seat of power is a nasty thing. You have to remain ever wakeful on that seat. You have to be more truthful, more non-violent, more humble and more forbearing. You had been put to test during the British regime. But in a way it was no test at all. But now there will be no end to your being tested. Do not fall a prey to the lure of wealth. May God help you! You are there to serve the villages and the poor.” His words made sense then, and they make sense now. At a time when many — most? — ministers in state and Central governments are consumed by arrogance and self-love, they need to be reminded that, as elected representatives of the people, they should be motivated rather by truth, humility and service. In a deeply divided polity, the political parties must recognize that in times of crisis, they should set aside their differences and work together for social peace. When populist notions of democracy stress exclusively on rights and encourage a cavalier attitude to State property, it is well to be told that citizens also have responsibilities. Finally, in 2009 as in 1947, a special role devolves on students, who, with their lives in front of them, can do more than the middle-aged or elderly in building an India worthy of the nation’s founders and of their ideals. Gandhi’s words and warnings have a strikingly contemporary ring. Since they were uttered in Calcutta, those who live in that city, and in the state of which it is part, may read into them a special meaning. In the recent past, West Bengal has been peculiarly prone to political partisanship, State apathy and populist violence. However, these tendencies are manifest, in lesser or greater degree, in other states as well. Wherever we are this August 15, we would do well to remember, and take heed of, what a very wise Indian said and did on this day 62 years ago. |
What are your views about India, especially after the recent election victory of the Congress-led alliance?
I am very bullish on India. The government has a mandate to move more quickly to put in place reforms it talked about, stronger than before. India is focusing more on the agricultural sector. The government is moving in the direction of the smaller holder, and on infrastructure, that will benefit the countryside and have an incredible impact.
Coming to the India infra story. Do you think investors are going to make money playing the infra field in India and China?
Yes, we have holdings in some related companies in the coal sector. Companies, which supply coal to energy producers, are quite interesting. And demand for energy is growing in China, along with its GDP growth of 8%.
What is your view about the swine flu virus? Does it bother you?
No. Because trends show that the virus has petered out. Healthcare officials are very aware of the risk. They are taking concerted actions on a global basis. And development of vaccines and cures has accelerated. So, there is an opportunity to have a solution. A cure for this virus, and the death rate when compared with automobile accidents or other causes of death, are very low. So, it has to be put into perspective. It is frightening, but it has been blown out of proportion.
The Indian government is worried about drought. This is a risk to aggregate demand, to pricing — a risk already for a much stretched fiscal balance. Is the Indian drought bothering you?
Yes, we have to watch it carefully. But the Indian economy is not as reliant on the monsoon as 5-10 years ago. Hopefully, the government will start taking measures for water conservation. It is a global challenge now, and water is a scarce resource, globally. We have to take steps. Israel knows how to conserve water and we have to look at that. The Indian government should look at Israel’s efforts seriously.
What is your view about the Chinese economy? China may be entering into a mini-bubble kind of space. Is that a view that you want to share?
China is cognisant of the dangers and the government has told banks to start pulling back. The government wants the economy to grow, but not for banks to lend as fast as they are lending. Bank lending has doubled, tripled in a short period. The government is aware. I don’t think that a bubble will form.
Is there a risk of severe monetary tightening in China? Has this been weighing on investors’ minds?
No, I don’t think so, and that’s true globally. Countries pump money into the economy because inflation is down. In fact, Malaysia has deflation, and governments are feeling very comfortable about pumping in money. They are not afraid of inflation. I am not saying that they should not be afraid in one or two years time, but that we can think about later.
In general, what do you think of commodities — energy, metal, agriculture etc?
We have two main themes — consumers and commodities. And we are bullish on commodities. We know they will fluctuate dramatically. But the trend is clearly upwards, because commodities are denominated in US dollars and the greenback will not get stronger any time soon. In fact, it is getting weaker against most currencies. Added to that is the demand that will continue to move upwards. So, we want to be exposed to commodities.
What is your view on valuations in BRIC markets?
It varies tremendously. India is more expensive than China and Brazil. But both markets are moving up. Russia is inexpensive now, and we are increasing our holdings in Russian companies.
You said you also like consumer stocks. Why are you so optimistic on them?
There are more consumers in India and China, now. The numbers are impressive — per capita income is low, but rising; birth rates are coming down; economic growth is surging. So, we are optimistic about consumers and we would like to get exposure.
Finally, what are you buying?
All stocks that are cheap and undervalued, which have good exposure to raw materials and consumer products.
SIDO was established in 1954 on the basis of the recommendations of the Ford Foundation. Over the years, it has seen its role evolve into an agency for advocacy, hand holding and facilitation for the small industries sector. It has over 60 offices and 21 autonomous bodies under its management. These autonomous bodies include Tool Rooms, Training Institutions and Project-cum-Process Development Centres. SIDO provides a wide spectrum of services to the small industries sector. These include facilities for testing, toolmenting, training for entrepreneurship development, preparation of project and product profiles, technical and managerial consultancy, assistance for exports, pollution and energy audits etc. SIDO provides economic information services and advises Government in policy formulation for the promotion and development of SSIs.
Consequent to the increased globalization of the Indian economy, small industries are required to face new challenges. SIDO has recognised the changed environment and is currently focusing on providing support in the fields of credit, marketing, technology and infrastructure to SSIs. Global trends and national developments have accentuated SIDO’s role as a catalyst of growth of small enterprises in the country.
http://www.laghu-udyog.com
http://www.smallindustryindia.com
The National Small Industries Corporation Limited ( NSIC )
The National Small Industries Corporation Ltd., an ISO 9001:2000 Company, was established in 1955 by the Government of India with a view to promote, aid and foster the growth of Small Industries in the country. NSIC continues to remain at the forefront of industrial development throughout the country, with it's various programs and projects, to assist the small scale sector in the country.The Corporation provides integrated Technology, Marketing and Financial support to Small Scale Sector.
National Institute for Small Industry Extension Training ( NISIET )
The nisiet, since its inception in 1960 by the Government of India, has taken gigantic strides to become the premier institution for the promotion, development and modernization of the SME sector. An autonomous arm of the Ministry of Small Scale Industries ( SSI ), the Institute strives to achieve its avowed objectives through a gamut of operations ranging from training, consultancy, research and education, to extension and information services.
The Indian Institute of Entrepreneurship (IIE)
The Indian Institute of Entrepreneurship (IIE) was established in 1993 by the Ministry of Industry, Government of India with its Headquarter at Guwahati to undertake training, research and consultancy activities in the field of small industry and entrepreneurship. The Institute was registered under the Societies Registration Act XXI of 1860. It started its activities from April 1994. Besides the Government of India, North Eastern Council, Small Industries Development Bank of India and the Government of Arunachal Pradesh are its sponsors.
Small Industries Development Bank of India (SIDBI)
Small Industries Development Bank of India (SIDBI) was established in April 1990 under an Act of Indian Parliament as the principal financial institution for Promotion, Financing , Development of industry in the small scale sector and Co-ordinating the functions of other institutions engaged in similar activities.
Since its inception, SIDBI has been assisting the entire spectrum of SSI Sector including the tiny, village and cottage industries through suitable schemes tailored to meet the requirement of setting up of new projects, expansion, diversification, modernisation and rehabilitation of existing units.
The Khadi and Village Industries Commission (KVIC)
The Khadi and Village Industries Commission (KVIC) is a statutory body created by an Act of Parliament (No.61 of 1956 and as amended by Act No. 12 of 1987). Established in April 1957, it took over the work of the former All India Khadi and Village Industries Board.The broad objectives that the KVIC has set before it are :
The social objective of providing employment, The economic objective of producing saleable articles, and
The wider objective of creating self-reliance amongst the poor and building up of a strong rural community spirit. The KVIC is charged with the planning, promotion, organisation and implementation of programs for the development of khadi and other village industries in the rural areas in coordination with other agencies engaged in rural development wherever necessary.
Coir Board
Coir Board is a statutory body established by the Government of India under a legislation enacted by the Parliament namely Coir Industry Act 1953 (45 of 1953) for the promotion and development of Coir Industry in India as a whole.
http://niesbud.nic.in/agencies.htm
Big tax cut coming your way
NEW DELHI: Finance minister Pranab Mukherjee on Wednesday unveiled a roadmap for reforms in direct taxes that promises to drastically cut the tax The most significant changes proposed are in personal income tax, which could lead to tax savings of up to Rs 2.67 lakh each year. The 10% tax rate, currently applicable for incomes between Rs 1.6 lakh and Rs 3 lakh, will apply to incomes between Rs 1.6 lakh and Rs 10 lakh, which means those with incomes between Rs 3 lakh and Rs 10 lakh could save up to Rs 1.17 lakh from their annual tax liability. The next slab of 20% would be applicable for incomes between Rs 10 lakh and Rs 25 lakh instead of — as is currently — between Rs 3 lakh and Rs 5 lakh and the 30% slab would be for incomes exceeding Rs 25 lakh, which now kicks in at Rs 5 lakh. The benefits to taxpayers with annual incomes of Rs 25 lakh or more as a result of these changes would be about Rs 2.67 lakh per annum. As the icing on the cake, the new code proposes to allow for exemptions on savings up to Rs 3 lakh rather than the Rs 1 lakh now allowed under Section 80C of the I-T Act. There is a catch, though. There is no mention of any exemption for housing loans, though the exemption for higher educational loans will stay. The exemption limit at which taxes kick in will continue to be higher for women and senior citizens. For women, their tax meter will start ticking when their income exceeds Rs 1.9 lakh per annum, whereas senior citizens will have to pay tax only if they earn more than Rs 2.4 lakh a year. A change that could be problematic for many individuals is in the treatment of post-retirement benefits like provident fund. The adoption of the EET (exempt-exempt-tax) method will mean that any withdrawal of money from your PF account, for whatever reason, will attract a tax since the amount withdrawn will be treated as part of your income for that year. This will, however, apply only to amounts that accrue April 2011 onwards. Like personal taxes, the corporate tax rate too is to be cut from the existing 30% (excluding cesses and surcharges) for domestic firms to 25%. Also, companies can carry forward losses for as long as they like, while earlier, a loss in a year could be set off against profits only within the next eight years. In the case of foreign companies, however, in addition to this 25% tax, there will be a 15% tax on ``branch profits''. Branch profits, the code explains, are defined as total income minus corporate tax. This seems to suggest that the effective tax rate for foreign firms could actually be slightly higher than the current 35%. Another big change is inclusion of financial assets — like shares and deposits — in the calculation of wealth tax. The whammy is sought to be offset by a reduction in the wealth tax rate from 1% to 0.25% and an increase in the threshold limit to Rs 50 crore. It's also proposed to do away with the securities transaction tax, and change the manner in which tax holidays for infrastructure industries is given. Explaining the rationale behind these changes, the FM said: ``The aim of the direct tax code is better compliance and better realization with likely expansion in the tax base.'' He added, ``All direct tax laws have been brought under one umbrella and laid down in a manner that it will eliminate the scope of litigation.'' Former FM and union home minister P Chidambaram who had begun the process of rewriting the tax laws after Budget 2005-06 said: ``It underlines the philosophy of the government, that is, a regulated free market system... The new direct tax code will promote economic activity and entrepreneurship.'' The code has been put up on the finance ministry's website and the government has invited suggestions. It plans to introduce a draft bill to enact the new code in Parliament in the Winter Session. | |||
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 Kanwal Rekhi, Founder, Inventus Capital Partners |
Since 1994, Mr Rekhi has led the first venture round in numerous early-stage companies, guiding entrepreneurs to 19 exits, including six IPOs. The 64-year-old millionaire philanthropist speaks on his investments and the government’s role in education.
How many start-ups will Inventus invest in and how much?
Over the next three years, we will invest in 15 companies and then, raise our next fund. The existing fund will invest in Indian companies — they may be based in and outside the country — with exposure in technology. We typically lead the first venture round with $500,000 to $3 million and later, it could grow to $5-8 million as the business expands.
Why are you focusing on technology firms in India? Has this industry not fallen off its high?
The tech boom will never be over. Everything you do depends on technology. It is a very high-risk business. I am not a financial person who uses spread sheets, but I play the game that I know. Everyone needs technology as a daily dose in their lives. For instance, per capita income is very low in India as productivity is very low compared to China.
This is because there is very low use of technology and poor automation. Hospitals are not automated, if they were people would not have to carry paper reports with them and stand in long queues. The technology market will boom in India for the next 30 years and the national ID project by the Indian government will be a step towards this growth.
How do you the see growth of entrepreneurship in India? How are VCs looking at this?
The beauty of an entrepreneurial set-up is that entrepreneurs imagine and deliver even before governments think of it. IT industry in India happened, government did not do it. When it started to happen, there were lot of concerns initially of round tripping funds where a company sells an unused asset to another company while at the same time agreeing to buy back the same or similar assets at about the same price. The government has now started addressing this.
How are entrepreneurial technology providers better than the larger IT companies?
Larger companies in India focus on selling the solution and not creating them. It’s the emerging India which creates these technology solutions which suit the local markets.
These are not just people in Bangalore, but in Bhopal and Kanpur too. It starts off with designing a solution that is for the particular city and can then be adapted for others as well. These solutions have a better cost arbitrage than the larger companies like Infosys, TCS and others.
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