Indo-EU summit asks India to introduce power reforms

COPENHANGEN, Oct 10: The third India-EU Summit, expressing grave concern over negative trade and investments flows between the two regions in 2001 due to the global economic downturn, has asked India to introduce far-reaching power sector reforms, improve the overall efficiency in the banking and life insurance industries and and simplify project approval procedures.

The two-day summit, which ended last night, adopted a set of specific recommendations to facilitate and improve India-EU trade and investments within four sectors — bio-technology, textiles and clothing, power and energy ,and financial services.

The recommendations of the summit, organised jointly by the CII and FICCI on the Indian side and the Danish Chamber of Commerce and Industries on the EU side, were presented to Prime Minister Atal Bihari Vajpayee , Mr Anders Fogh Rasmussen, Prime Minister of Denmark and EU president, and EU Commissioner for Enterprise and Information Society.

Laying stress on reforms in the power sector, the summit asked India to enact the electricity bill 2001, which provides for several new features like trading and open access. India should adopt a national energy policy, recognising power as a basic consumer right.

The Government should set a deadline for "cleaning" the balance sheet of all State Electricity Boards (SEBs) through one-time payment of outstanding dues payable to generating companies and securitisation of debts through issuance of bonds by SEBs.

The Government should introduce multi-year instead of annual tariff orders, with a provision for indexing the tariff with fluctuation in fuel prices.

The summit said India should enact and enforce strict anti-theft laws in all the states and evasion be declared a criminal offence.

Distribution companies should be empowered to disconnect supply to non-paying customers without notice and to prosecute those involved in the power theft. The business summit wanted India to set a deadline for 100 per cent metering in all the states and link disbursement to SEBs. The Government should also introduce a model project involving it as a tool to detect thefts and faults as a step towards reducing human interface.

The summit asked the eu to offer level playing field for Indian companies competing in european tenders by removing conditions regarding experience outside the continent, counter trade commitments and preferential customs duty for other countries.

It said India and EU could cooperate in technology assistance programmes for reducing losses and improving the quality of power.

Referring to the reforms in the banking and life insurance sectors, the summit said income taxation and other regulations should be homogenised between the foreign and domestic institutions.

It wanted that the 26 per cent limit on participation by foreign insurance companies should be increased, especially since the heaviest capital increases occur in the initial stages of life insurance development.

The Income Tax Act, 1961 and other fiscal legislation should be reviewed to ensure that there was no inconsistency between the laws on taxation of insurance companies and the Indian Insurance Law.

The concept of "compulsory" priority lending should be phased out for the entire banking sector. The ultimate objective should be to clearly separate "economic development functions" from "commercial operations by banks".

The summit said the EU should allow Indian banks to market products designed, managed and lodged in India in the EU markets, provided all the regulatory requirements in terms of the nature of the products and disclosures were met with.(PTI)

IBM announces Lotus Software products

NEW DELHI, Oct 10: To boost the productivity of individuals and organisations, IBM India today announced the availability of its enhanced lotus software products.

"Either as stand-alone offerings or integrated with other offerings, the capabilities of the new lotus software can help increase the extent to which long standing or newly acquired knowledge is applied to mission critical activities and problem-solving," vice president, Mesaging Solutions, Lotus Software, Ken Bisconti said at a press conference.

The new products for which the R and D has also been done in India represent major steps forward in supporting dynamic work-collaboration, learning and knowledge sharing across organisational, geographical and technical boundaries.

The new array of products from IBM under the lotus brand includes lotus notes and domino 6, sametime 3 and quickplace 3 and learning space-virtual classroom. The increased security features of the mail solution in lotus notes 6 can help make it easier to fight costly distractions such as spam. The quickplace 3 features enhanced collaboration functionality such as ‘sametimes’s presence awareness. And lotus learningspace-virtual class room enables the use of realtime communication between instructors and learners, helping improve the e-learning experience.

"Today’s working environment is dynamic and enables employees to collaborate in realtime, no matter what applications they are working in," Mr Bisconti said.

Country manager-lotus IBM software group, Pradeep Nair said with these new offerings, IBM India is addressing the growing need that today’s workers have for filtering information, pooling skills and expertise and collaborating securely.

Lotus software helps redefine the concept of conducting business through practical knowledge management, e-business and other ways of connecting ideas, thinkers, buyers, sellers and communities around the world via the internet. Lotus software is marketed in more than 80 countries worldwide through direct sales and business partner channels. (UNI)

AHMEDABAD, Oct 10: Gujarat’s quake-ravaged region of Kutch is gradually finding its moorings again as eight new industries, set up at a cost of Rs 46.02 crore, have started production while 61 other industrial projects, involving an investment of Rs 1,287.08 crore, are already in the pipeline.

The industrial scene in the region has picked up just within 14 months of the State Government’s announcements offering a five-year excise holiday and sales tax incentives up to 10 years, according to information available till the end of September.

The engineering sector alone accounts for 96 per cent of the total investments in the new projects commissioned. Some of the projects include PSL Holdings, VAMCO Building Materials, Precision Transmission (auto parts-gears).

Projects under various stages of implementation include those of Reliance Industries (telephone handsets), Sanghi Industries HDPE-PP woven sacks asbestos sheets, Steel Ingots, Hotel, Adani Group (salt arm), Anchor Electricals (household electric goods), Parle Products (biscuits and confectionery), Bilt Chemicals (liquid bromines), Exel Industries (aluminium phosphide), Hindustan Seals (aluminium foils), Aquagel Chemicals (soaps and detergents, dairy whiteners, premix powder for tea and coffee), Nova Petrochem and Jindal Polyester (both bopp films), Vishwakarma Steels (alloy steel castings/billets) and Euro Ceramics (granite tiles).

Eighty per cent of the investment in the industrial projects in the region falls in the Rs 20-crore bracket while there were three projects costing Rs 100 crore each and five projects with an investment of Rs 50 crore each.

The Central Government had offered unlimited excise exemption to projects exceeding Rs 20 crore and exemption on manufactured goods to twice the value of plant and machinery for projects up to Rs 20 crore.

The century’s worst earthquake in the country had hit Gujarat on January 26, 2001, causing maximum damage to the Kutch region as all its economic activities ground to a standstill.

As an incentive, the Union Government then announced a five-year excise holiday for new industries set up between July 31, 2001, and July 31, 2003.

This period was extended by another year till July 31, 2004, following a special request made by the State Government.

Simultaneously, the State Government also announced sales tax (ST) incentives on July 31, 2001 for the new units set up between July 31, 2001 and July 31, 2003 in the form of exemption or deferment of ST for 5 to 10 years, depending upon the level of investment, to revive economic activity and generate employment in the quake-hit district.

The State Government also opened an investment promotional cell in Gandhinagar even as Gujarat Industrial Development Corporation (GIDC) decided to allot plots with a concession of Rs 100 per sqm at its industrial estates in the district. The authorities expect many more projects to come up in the district since the operative period for the new industries to avail the incentives was still on.

The investments so far line up in the district have not yet explored the unique strengths of the district along its long coastline-such as salt production, modern fishery or fish-processing activity, currently being carried out at a small-scale level around Tunjakhau, ship-building, coastal tourism and developing the virtually virgin beaches near Mandvi, the sources said.

Since Kutch is a water-scarce region, seawater desalination plants now being set up by certain industrial units for captive purposes could be developed as a stand-alone industry, they said, adding that there was also scope for promoting service sector and ancillary industry in the days to come.

They said the State Industries Minister held a review meeting of all the officers concerned on August 10 followed by another meeting Presided by Principal Secretary to assess the investment scenario in the district.

Last month, the District Collector of Kutch constituted a high-level task force to review the progress of projects under implementation on a fortnightly basis and grant district level clearances on a fast-track basis. (UNI)

Nobel winners pioneered economics lab experiments

NEW YORK, Oct 10: Have you ever spent four dollars on gasoline driving to a warehouse store to save three dollars on paper towels? or bought an expensive service contract for an appliance that would be cheap to replace and probably won’t break anyway? the last time you rented a car at the airport, did you purchase insurance at 20 dollars a day "to be on the safe side?" (that’s an annual premium of 7,300 dollars by the way.)

Designing experiments that can explain why people can make such irrational economic choices in a theoretically "rational" marketplace helped Princeton university cognitive psychologist Daniel Kahneman win a share of the 2002 nobel economics prize.

The prize, announced yesterday, went to Kahneman, whose work examines just how irrational economic decision-making can be, along with experimental economist Vernon Smith, whose experiments tested fundamental precepts of economic theory.

Smith, a Kansas-born, pony-tailed professor of economics and law at George Mason Iniversity in Virginia, was honored for his work in establishing controlled laboratory experiments as a vital tool for understanding how financial, labor and product markets work.

Kahneman, born in Tel Aviv in 1934, a US and Israeli citizen and professor of public affairs at Princeton University, was honored for using insights gained from psychological research to challenge the traditional economic theory that self-interest and rational decision-making govern people’s economic choices. Smith told a press conference that he hadn’t expected the nobel prize, but was very happy that his friends who had been predicting that outcome for 22 years had "finally got it right."

Kahneman, the first Israeli to win the nobel economics prize, said he was "much honored" by the prize, but saddened that he could not share the honor with his friend and colleague Amos Tversky, with whom he developed his influential approach to the study of judgment and decision-making. Tversky died in 1996.

"The award is given largely for work that I did many years ago with my close friend and colleague, Amos Tversky, who died in 1996," Kahneman said. "The thought of his missing this day saddens me."

"For a long time, economics based its models on the idea that people act rationally," said Nicholas Barberis, Associate Frofessor of Finance at the University of Chicago’s Graduate School of Business. "It’s a simple way to view the world, but Daniel Kahnemann has shown us ways in which people don’t act rationally."

Kahneman — in collaboration with the late Amos Tversky —showed that people are incapable of fully analyzing complex decision situations when the future consequences are uncertain, relying on short cuts or rules of thumb instead.

The studies developed the idea of representativeness, in which people are too quick to see patterns in data that are actually random. For instance, an investor may conclude that a fund manager who beat a benchmark index two years in a row is systematically more competent than average investors, whereas the true statistical implication is much weaker. The studies also developed the concept of availability biases.

"The idea is when people try to figure out how likely something is, they scan through their memory," said the University of Chicago’s Barberis. "But recent and salient events are always more memorable. So if you have a friend who was recently mugged, you’re more likely to believe that your city is dangerous, just because it’s a salient event that stands out in your mind."

Such studies have led to a lively area of research known as behavioral finance which applies psychological insights in an attempt to understand the functioning of financial markets. And a new generation of economists is gradually joining two previously distinct research traditions in experimental economics and economic psychology in which Smith and Kahneman, respectively, were key figures.

Alongside his research, Kahneman co-teaches "introduction to psychology," better known as "Psych 101." at Princeton.

"He likes introducing students to the field," said Deborah Prentice, chair of Princeton’s department of Psychology. (AGENCIES)

Rice cartel if developed world does not cut agri-subsidies

NEW DELHI, Oct 10: India today said cartelisation of international rice trade is inevitable in the event of developed countries not stopping trade distorting subsidies as stipulated by the World Trade Organisation (WTO).

The country is projected to be world’s second largest rice exporter this year at around 40 lakh tonnes.

"The objective of the WTO is free and fair trade, but developed world continues to give trade distorting subsidies due to which we have to find a way out to stop the trend in fall in international prices in agriculture," Union Agriculture Minister Ajit Singh said here.

Speaking on the sidelines of an agro-tech function, he said proposals like forming a cartel to control fall in price of rice are a result of trade distortions by the developed world.

When pointed out that the suggestion for an organisation of rice exporting countries has emanated from Thailand due to the price advantage India has in the commodity, he said the prices have been falling for the last 10-12 years due to the heavy subsidies developed world gives to its farm sector.

Such a cartel, however, will be difficult to form due to varied agrarian conditions across the world unlike petroleum in which the prices are managed by controling oil economy at the production stage itself.

In rice there are stocks which can be witheld only for a limited period or else the carrying costs keep increasing with the passage of time.

A council has been proposed to control rice prices in a meeting held in Bangkok in which India is one of the participants. (PTI)

CAIT seeks debate on VAT

NEW DELHI, Oct 10: The trading community has sought a debate on Value Added Tax (VAT) system due to be enforced in the country from the next financial year.

Confederation of All India Traders (CAIT), an apex body of trading community, in a letter to Union Finance Minister Jaswant Singh has demanded a debate on VAT before its enforcement.

Mr Praveen Khandelwal, general secretary, CAIT, stated that though the Government had taken a decision to enforce VAT in the country from April one, 2003, but the atmosphere of confusion is prevailing amongst the trading community.

He alleged that traders were being kept in the dark about the rules and laws of VAT by the respective State Governments, adding that since sales tax was an issue directly related to the trading community, a consensus on VAT laws was necessary to enforce it successfully.

Mr Khandelwal suggested that the Central Government should prevail upon the State Governments to constitute a joint committee of tax officials, traders, industrialists and other related sections to discuss the proposed VAT laws. (UNI)

Recommendations of the tax conference

NEW DELHI, Oct 9: Taxation of farm income with an exemption limit of Rs one lakh, time-bound withdrawal of exemptions and selective use of search and seizures operations are some of the recommendations of the two-day tax conference organised by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in mid-September.

Along with creation of a tax-friendly atmosphere and better tax administration, it suggests that to substantially enlarge the direct tax base in the country amendment should be made in the definition of agricultural income under the I-T Act to bring within its purview at least the cash crops like timber, rubber, cashewnut, coconuts, spices and flowers.

To begin with, the exemption limit income from agriculture could be fixed at a higher figure of Rs one lakh against Rs 50,000 for non-agriculturists.

Further, there is need to expedite allotment of PAN and the coverage of transactions where PAN is mandatorily to be quoted should be enlarged, computerisation relating to the functioning of the I-T Department should be expedited to enable matching of information to detect non-filers of returns. Voice message system on telephones, during the period when returns become due should be extensively used to induce people to file their returns of income and a time-bound programme should be formulated for networking of all Income-Tax offices across the country.

The conference noted that the tax base and revenue earning get eroded because of umpteen exemptions, incentives and concessions in the tax laws.

Therefore, a time-bound programme needs to be drawn for removing provisions relating to these on the basis of some systematic plan, not in an ad hoc manner.

Also, tax laws should not be used for doing the work of other Departments and Ministries. Tasks such as development of regional and backward areas and industrial development should not be the responsibility of the tax department.

A proper mechanism should be evolved to make effective use of survey operations — both internal and external. For this, concerted attention needs to be given in regard to collection of information, its collation, dissemination, storage and retrieval and fast verification, said ASSOCHAM.

Instead of specifying the sources to be tapped every year, it is recommended that the CBDT should draw up a long-term plan indicating the sources from which information should be collected. The information should be procured in a prescribed form on magnetic tapes. It should be effectively used for discovering new assessees.

Further, search and seizure operation should be used in a selective but effective way to find out about new taxpayers and for unearthing evaded incomes and wealth. However, search and survey operations cannot be an end in themselves. These should also create credible deterrence for making tax compliance.

In an era where nearly 97-98 per cent of returns are to be accepted, the picking up of cases for scrutiny should be done through a process which is secret and fair and creates a climate for voluntary compliance for non-filers. Also, to develop faith in the administration, promises made to the taxpayers such as those contained in the Vision 2005 document should be promptly and sincerely fulfilled.

For developing a tax-friendly atmosphere for better compliance, concerted attention should be paid for redressal of taxpayers grievances, promptness in giving refunds with interest where it is due to the taxpayers, better facilities for taxpayers in tax offices, public relations aspect of Tax Department’s working needs thorough reorientation, educating the taxpayers about their rights and obligations under the tax laws, recognition of the role of honest and sincere taxpayers and formulating a system where the expenditure incurred by the taxpayers in assisting the Tax Department in its functioning in regard to role in the matter of TDS is compensated.

Finally, the ASSOCHAM conference emphasised the need for better tax administration for improving compliance and in increasing the tax base.

For this, the tax administration has to be firm but responsive to the taxpayers needs.(UNI)

Govt to review HMT divestment set up committee to better PSUs

NEW DELHI, Oct 9: The decision not to disinvest HMT Ltd will be reviewed within a month and proper valuation will be done before inviting financial bids, Minister for Heavy Industries and Public Enterprises Balasaheb Vikhe Patil said here today.

Some procedural steps were yet to be taken, otherwise there was no problem in the disinvestment of HMT, he told a news conference.

The minister had earlier indicated that disinvestment in the public sector HMT was stalled for the time being. It was not the right time to get good price or return, he said.

A Committee of Chairmen and Managing Directors of PSUs would be set up by monday to hold quarterly reviews of the performance of psus and suggest ways to improve them, co-ordinate the work and suggest ways to improve marketing and production. The committee that would have five or six members would start working within a week, he said.

The announcement was made soon after a meeting of CEOs of various PSUs.

Replying to a volley of questions on the disinvestment of public sector units, the minister said it was up to the Government to decide which psu should be divested and at what time. "It all depends on the judicious decision of the Government," he said.

"There is no fun in keeping loss making units with the Government," according to Mr Patil. Wherever revival is possible it should be done, the minister said.

However, the core industries should remain with the Government, he added. Mr Patil said his ministry would ask for more budgetary allocations for revival of certain PSUs and implementing the VRS. However, he did not give the quantum of the amount, except indicating that this would be done only selectively.

Earlier, addressing the CEOs, the minister said the performance of each PSU would now be closely monitored. He wanted them to demonstrate a winning leadership for availing huge domestic and global opportunities.

Minister of State for Heavy Industries and Public Enterprises Vallabhbhai Kathiria exhorted the PSUs to build on each other’s strengths through meaningful alliances.

Mr B N Jha, Secretary, Ministry of Heavy Industries and Public Enterprises, highlighted the need of PSUs to be comprehensively responsive to changing environment.

He mentioned about setting up separate task forces on exports of capital industry and the automotive industry.

Chairmen and Managing Directors of BHEL, Hindustan Paper Corporation, Bharat Bhari Udyog Ltd and Engineering Projects India Ltd made presentations on various topical issues. (UNI)

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