Eight Serial bomb blasts in Bangalore

A woman was killed and at least six people were injured in a series of five low-intensity blasts carried out in eastern parts of the information technology capital this afternoon.

The woman, who was waiting at a bus shelter in Madivala on the Bangalore-Hosur road, was killed in the blast and her husband and another person were seriously injured, police said.

Bangalore was rocked by a major terrorist attack in December, 2005 when extremists opened fire in the famous Indian Institute of Science complex in which a Delhi IIT professor lost his life.

There were also blasts in other areas like Panthrapalya, Audugodi and Vittal Mallya Road within minutes of each other from the first blast at around 1330 hours.

Police Commissioner Shankar Bidari appealed to the people of the city to maintain calm and carry on with their normal life as police have been put on alert throughout the city.

He said timer device has been used in some of the blasts and explosives in quantity equivalent to one or two handgrenades have been used in some others.

Bidari termed it as an "act of miscreants" trying to disturb peace in Bangalore and appeared pre-planned. "We will get to the criminals and arrest them," he said.

Bomb disposal squads and forensic experts have rushed to the spot for investigations.

http://www.ndtvprofit.com/2008/07/25155143/Serial-bomb-blasts-rock-Bangal.html

Eight serial blasts hit Bangalore, India - Bangalore Blasts Live Streaming

Watch Live Streaming of BJP MP Shows 10 Million in Indian Lok Sabha

Watch Live Streaming of BJP MP waved wads of notes in lok sabha

Indian government wins confidence vote - Prime Minister Manmohan Singh

Indian Prime Minister Manmohan Singh's government won a vote of confidence in parliament on Tuesday, ensuring the survival of the ruling coalition and a civilian nuclear deal with the United States.

The government said it would now push ahead with the pact, which would give India access to foreign nuclear fuel and technology and end decades of isolation, as well as work towards reforms to liberalize the trillion-dollar economy.

"This will send a message to the world at large that India's head and heart is sound, that India is prepared to take its rightful place in the comity of nations," Singh told reporters. "I have always said the deal was important and now we know it."

The United States welcomed the support for the deal in India's parliament.

"We will work closely with the government of India in the days ahead for a rapid completion of the ratification process through the International Atomic Energy Agency, the Nuclear Suppliers Group and the U.S. Congress," David C. Mulford, the U.S. ambassador to India, said in a statement.

The Indian government's joy at its victory was tempered by a bribery scandal, after opposition lawmakers interrupted the debate to wave wads of cash to protest against what they said were bribes offered by the government to abstain.

The furor was described as one of the lowest points in parliamentary history, and led to fresh demands for Singh to resign, and catcalls preventing him from delivering his concluding remarks after the two-day debate.

The run-up to the confidence vote in the world's largest democracy was marked by both sides wooing regional and caste-based parties.

The government even renamed an airport to honor the father of a wavering lawmaker. Others, in jail for murder and extortion, were freed for a few days to cast their votes. Some ill members were wheeled in on hospital beds.

But in the end, the government won more comfortably than expected, by 275 votes to 256 with 10 abstentions.

Investors had expected a narrow win for the government, and said the victory could boost markets. The main share index has risen by more than 12 percent in the last four sessions.

"The next task for the government will be how much it will be able to push through on the reforms front," said Agam Gupta, head of trading at Standard Chartered Bank in Mumbai.

"Stocks should start on a strong footing and bonds will also get bought. This is a positive for all the asset markets."

But it will not be plain sailing for Singh.

"The bribery scandal will come back. Expect an opposition offensive in the coming weeks," said political analyst Mahesh Rangarajan.

Nevertheless, analysts said the government should now survive until the end of its term, with polls due by next May.

Source:http://timesofindia.indiatimes.com/articleshow/3264707.cms

Cash-for-vote: BJP MPs allege bribe by SP

The Intelligence Bureau took away for questioning the three BJP MPs who today claimed they were offered crores by senior Samajwadi Party leaders to abstain from voting.

Sources said that if the Speaker felt the need for a more thorough probe, a CBI inquiry could be ordered.

Speaker Somnath Chatterjee handed over the cash that the MPs waved in the House — they said it was Rs 1 crore — to Delhi police commissioner Y.S. Dadwal.

Sources in the Intelligence Bureau said the three men had told investigators that Morena MP Ashok Argal was the first to be approached by Samajwadi leader Amar Singh. Argal’s constituency is going to be affected by delimitation and he had been promised an Assembly seat instead.

“He was apparently told he was anyway going to be without any constituency in the next Lok Sabha elections. This is perhaps the last time he would be in the House, so he might as well make money and abstain from voting,” an IB official said. He was given Rs 1 crore as advance and offered another Rs 2 crore after the voting, the MPs told investigators.

“Argal had also been asked to get some more MPs on board. He called Mahavir Bhagora and bragged about the money he had got. Now Bhagora, according to what they have been saying, informed L.K. Advani. When the BJP leader questioned Argal, he said he was trying to expose the SP and the Congress. He claimed even Congress leader Ahmad Patel was in touch with him,” the official said, giving the MPs’ version.

With Advani’s go-ahead, the two got Faggan Singh Kulaste, MP from Mandla in Madhya Pradesh, on board and did a sting operation along with a television channel.

The channel, CNN-IBN, however, said it did not telecast the tapes because some loose ends were yet to be tied. The tapes would be handed over to the Speaker, it added.

In 2005, a sting operation by another channel had caught Kulaste on camera demanding bribe for sanctioning local area funds.

Railway minister Lalu Prasad said the three MPs should be subjected to a narco-analysis test to check if they were speaking the truth. “Yeh sab jali hai. (This is all planted),” he said, even as the Opposition demanded the Prime Minister’s head.

source:http://www.telegraphindia.com/1080723/jsp/nation/story_9588492.jsp

Looking beyond the budget - Indian Union Budget 08-09

It would be na and #239;ve to say that the budget was a surprise. With one eye firmly on the vote banks, the Finance Minister's whopping farmer loan write-offs and focus on increasing consumption by lowering excise duties and raising the income tax slabs demonstrated the expected intent - a conscious shift in expenditure towards health, education and the rural sector! After the expected applause from the manufacturing, pharmaceutical and healthcare sectors, and a temporary sulking in the stock markets, it has to be business as usual for corporate India as we move towards the end of the financial year.

The question now is - how wills the future shape up with the cloud of a global recession darkening the horizon? There are many good initiatives announced by the Finance Minister that will have medium term positive impact on business. Substantial outlays in Education with more IITs and higher education universities announced will boost the availability of talent and hopefully elevate the levels of research which are abysmal at present.

The focus on vocational education if implemented well in conjunction with the ITI schemes will alleviate the paucity of skilled manpower that is plaguing most of the growth sectors. Wide-ranging public private partnerships in education can see the beginnings of the long awaited total reform in the education sector and provide succour to resource starved sectors like retail,healthcare and business process outsourcing (BPO).

So why the anxiety in the IT and BPO industries? The double whammy of service tax on customised software purchases, which will make the nascent domestic demand relapse into inertia all over again is one big dampener. And the lack of any clear direction on the continuing of 10 A / 10 B benefits under the STPI scheme have left many insiders puzzled.

What does make the sector mad is the fact that the development of entrepreneurial start-ups and the spread of employment to smaller towns in the country will be derailed if the STPI (Software Technology Parks of India) scheme does not continue beyond March 2009 and the weaker profitability of BPO units, already shaken by the change in dollar-rupee conversions, will make the industry less attractive to global customers with competing countries offering every incentive under the sun to move their business there. It is important to dispel the myth that the possible withdrawal of STPI benefits will bring the industry crashing down.

Most significant IT firms have established strong beachheads within their client bases in key geographies and will adopt a judicious mix of SEZ (special economic zone) and other investments to continue to grow their bottom lines, albeit at a lower clip than the continuing 25 percent revenue growth that can be expected till the end of this decade. However, in the interest of inclusiveness, it is essential that a level-playing field is created for the smaller players as well.

As the year progresses, we hope and expect that the persistence of NASSCOM in pushing the cause of these weaker segments of industry will be rewarded with success. The industry continues to be strong and a little help from the powers-that-be will enable it to grow to true global supremacy status.


http://in.news.yahoo.com/hindustantimes/20080312/r_t_ht_bs_india/tbs-looking-beyond-the-budget-d71fbae_1.html

Key Features of Budget 2008-2009

THE ECONOMY : AN OVERVIEW
! The Gross Domestic Product increased by 7.5 per cent, 9.4 per cent and 9.6 percent
in first three years, of the UPA Government resulting in an unprecedented average
growth rate of 8.8 per cent. The drivers of growth continue to be 'services' and
'manufacturing' which are estimated to grow at 10.7 per cent and 9.4 per cent
respectively.
! Growth rate in agriculture for 2007-08 is estimated at 2.6 per cent.
! Food grain production in 2007-08, estimated at 219.32 million tonnes-an all time
record. Rice production at 94.08 million tonnes, maize at 16.78 million tonnes,
soya bean at 9.45 million tonnes, cotton at 23.38 million bales each, an all time
record.
! Rashtriya Krishi Vikas Yojana launched with an outlay of Rs. 25,000 crore, National
Food Security Mission with an outlay of Rs. 4,882 crore under National Policy for
Farmers in the Eleventh Five Year Plan.

THE GROWTH STORY : FASTER AND MORE INCLUSIVE

! Agricultural credit poised to reach Rs. 2,40,000 crore by March, 2008.
! 11.4 crore children covered under Mid Day Meal Scheme, the largest school lunch
programme in the world.
! Under National Rural Health Mission 8,756 primary health centres have been made
24x7 .
! 1,82,000 girls enrolled in residential schools under Kasturba Gandhi Balika
Vidyalaya Scheme.

BHARAT NIRMAN
! Bharat Nirman has made impressive progress in 2007-08 with 290 habitations
provided with drinking water each day, 17 habitations connected through all weather
road, 52 villages provided telephones, 42 villages electrified & 4,113 rural houses
completed each day.

ELEVENTH FIVE YEAR PLAN: THE CRUCIAL SECOND YEAR
! GBS 2008-09 at Rs.2,43,386 crore higher by Rs. 38,286 crore over 2007-08. Central
Plan allocation at Rs.1,79,954 crore, an increase of 16 percent over 2007-08; Bharat
Nirman to get Rs. 31,280 crore.
! Sarva Shiksha Abhiyan (SSA): Sarva Shiksha Abhiyan provided Rs.13,100 crore
with the focus to shift from access and infrastructure at the primary level to enhancing
retention and improving quality of learning. Mid-day Meal to get Rs. 8,000 crore;
secondary education to get Rs. 4,554 crore.
! Jawahar Navodaya Vidyalaya : Rs. 130 crore provided in 2008-09, to establish
Navodaya Vidyalaya in 20 districts having large concentration of Scheduled Castes
& Scheduled Tribes.
! Kasturba Gandhi Balika Vidyalaya: Funds (as part of SSA) provided for additional
410 Vidyalayas in educationally backward areas. Rs. 80 crore allocated to set up
new or upgrade existing hostels attached to Balika Vidyalaya.
! National Means-cum-Merit Scholarship: Rs. 750 crore allocated to build up a corpus
of Rs.3,000 crore in four years. 1,00,000 Scholarship to be awarded beginning
2008-09.
! Nehru Yuva Kendra: Rs. 10 crore allocated in 2008-09 to set up a Kendra in 123
districts, and to cover recurring expenditure in the first year.
! Mid Day Meal Scheme: Extended to upper primary classes in Government and
Government aided schools in all blocks which will benefit 2.5 crore children taking
the total number of children covered under the scheme to 13.9 crore.
! Institutes of Higher Education: India to become a knowledge society, three IISERs
at Mohali, Pune and Kolkata; and an IIIT at Kanchipuram have started
functioning.Government to set up 16 Central Universities in each of the hitherto
uncovered states; three IITs in Andhra Pradesh, Bihar and Rajasthan; two IISERs
at Bhopal and Tiruvananthapuram; and two Schools of Planning and Architecture
at Bhopal and Vijayawada: Rs. 5 crore grant provided to Deccan College, Postgraduate
and Research Institute, Pune.
! Science and Technology: Rs.85 crore allocated for Innovation in Science Pursuit
for Inspired Research (INSPIRE); which will include scholarships for young learners
(10-17 years), scholarships for continuing science education (17-22 years) and
opportunities for research careers (22-32 years); Rs. 100 crore provided for
establishing the National Knowledge Network.
! Health Sector: Rs.16,534 crore allocated, for the sector marking an increase of
15% over 2007-08.

http://indiabudget.nic.in

Commodity indices want FM to withdraw trasanction tax

The proposed commodities transaction tax (CTT) in the budget is expected to have a detrimental effect on the country's commodity market, which is just four year's old and yet to mature. The CTT at the rate of Rs 17 per lakh could be the harbinger of reduced volumes in commodity exchanges since commodity markets work on very thin margins.

PH Ravikumar, managing director of National Commodity and amp; Derivative Exchange (NCDX), said: "The imposition of CTT would result in a significant increase in the transaction cost by more than 800 per cent. The effective transaction cost after the CTT is expected to be highest in the world," he added.

Comparing the commodity derivative market with the securities derivative market, Ravikumar said:. "The securities market has matured with many types of derivatives instruments, while the commodities derivative market is at a nascent stage with one product - future," he said.

Jignesh Shah, MD, Multi Commodity Exchange, said: "Unlike the securities market, commodity markets are globally-linked and traders have the option to trade on other stock exchange. In case one increases the transaction cost, it is certain that traders would move to other globally competitive markets.

" Currently, the cost of transaction on the commodity exchange is Rs 2 per lakh. However, after imposition of the CTT at Rs 17 per lakh and and service tax of Re 0.

25 per lakh as per the proposal, it will go up to Rs 19.25 per lakh.

The government has estimated a revenue collection of Rs 1,000 crore through this route from the commodity markets that would have gross turnover of Rs 50,000 crore. Experts said that since the hedging market is much cost sensitive, increase of cost by 800 per cent would make the market highly inefficient.

Indian exchanges will become the costliest in the world losing global competitiveness.The chiefs of NCDX, MCX and the National Multi-Commodity Exchange have made representations to commodity regulator Forward Market Commission and to the secretary of the Ministry of Consumer Affairs.

http://in.news.yahoo.com/hindustantimes/20080307/r_t_ht_bs_markets/tbs-commodity-indices-want-fm-to-withdra-75dd1f2_1.html

Indian FM asks banks to lower home loan rates - Indian Budget 2008-2009

India's finance minister, Palaniappan Chidambaram addressing a post budget industry meet on March 06 asked banks to consider lowering rates on some housing loans while the central bank maintains .

http://in.news.yahoo.com/ani/20080306/r_v_ani_bs/vbs-indian-fm-asks-banks-to-lower-home-l-cc4aa0b.html

Railway Budget does little for Bhavnagar's women porters - Indian Rail Budget 2008-09

Railway Minister Lalu Prasad Yadav's recent announcement to absorb porters as gangmen led to a wave of celebrations across railway stations in the country, except at Bhavnagar Junction here.

The porters at this main junction in Saurashtra have little to cheer about as 22 of the 25 porters are women above the age of 35 - one of the two factors that make them ineligible for a government job that demands heavy physical work.

It was in 1880 that Takhtsinhji Thakor, the then ruler of Bhavnagar, started a rail link for his kingdom. With that, he gave women from the Koli community permission to work as porters. He issued badges, recognised by the Bhavnagar state, to all the 40 porters appointed at that time. In Thaktisinhji's time, the badge could be passed on to a daughter only. While this has not become a rule, the community has followed the tradition even after Independence. Today, women porters without the badge are not allowed to work at the station.

But 55-year-old Hariben Chaganbhai, who has been working as a porter for close to 30 years now, feels the new Railway Budget won't change anything for her.

"I earn Rs 2,000-3,000 per month ferrying goods of passengers. I am not educated, but I do know that to become a gangman, one needs some qualification and one has to be in the right age bracket. Given such conditions, nothing is going to change for me or other women porters here," she said.

Gomtiben, 60, another porter, opines that either the Railway Minister doesn't know about women porters or he has simply ignored them. "I am happy for other porters. But the Government should also consider cases of women like me," she says.

Like Gomtiben, Champaben Varmani has also been assisting her mother at the station since the age of 15. Now she is 40. "I have learnt from my mother how luggage is to be taken care of, and how to earn the faith of a passenger," says Champaben. She charges Rs 20 to Rs 50, depending on the weight of the luggage.

With one long-distance train and a couple of short-distance ones stopping here, a porter on an average at Bhavnagar station earns anything around Rs 100 per day. Says Champaben, "Gangmen have two advantages. They earn around Rs 5,000 per month and they are also Government employees."

"We also work as maids. So, we can have multiple sources of income," adds Hariben.

Mahavirsinh Gohil, chairman of Western Railway Mazdoor Sangh, is also sceptical that the new arrangement would be of help to women porters. "The parameter for the job of gangman like minimum SSC pass and 28 years of age for direct recruitment are expected to be followed."

Gohil adds that that of the nearly 4,000 gangmen in Gujarat, the number of women workers is not more than 50. Besides, these women were recruited as replacement following the death of a gangman, and rarely as a direct appointment.

http://in.news.yahoo.com/indianexpress/20080305/r_t_ie_nl_politics/tnl-railway-budget-does-little-for-bhavn-0058794_1.html

PC's fans -Indian Union Budget 2008-2009

Finance Minister P. Chidambaram's farmer-friendly budget, which had not made much of an impression on our dour comrades, is finding an entirely unexpected resonance in communist China. Raving about the Indian budget in a signed article published in Beijing News, Chinese scholar Zhu Sipei says it reflects the "Indian government's determination to let farmers gain a share of the wealth created by the country's rapid economic growth."

That was not all. Zhu insisted that "the same is overdue for China's peasantry, which has played the biggest role in China's road to prosperity with its sacrifices to feed and enrich the country's modern cities."

The Chinese enthusiasm for India's budget comes amidst mounting rural unrest in our northern neighbour. In recent years, China has moved to grant a measure of property rights to its citizens, especially in urban areas. The peasants do get leases on land, but can't own it. The Communist Party is reluctant to touch the socialist dogma on 'collective ownership of land'.

Driven to desperation, Chinese farmers are fighting back with the slogan 'land to the tiller' that should sound familiar to our communists. China's rural unrest is gaining new international and domestic attention, thanks to the focus on the Olympic Games to be held in Beijing later this year.

Last month, a Chinese land rights activist, Yang Chunlin, was put on trial for subversion. Yang gathered 10,000 signatures for an open letter demanding farmers' rights. To rally support, he posted the letter on the Internet with the title, 'We want human rights, not the Olympics.' For now, opposing the Olympics is the bigger, more urgent crime.

Lalu's big think

While Chidambaram has reasons to be pleased, Railway Minister Lalu Yadav might want to check out what the Chinese Railways are up to in Nepal which shares a long border with Bihar.

After it completed the rail link to Lhasa a couple of years ago, Beijing has repeatedly signaled its interest in extending it up to the Nepal border. Now there are indications that China is ready to push the line right into the Kathmandu valley.

An assistant foreign minister, He Yafei, who is visiting Nepal this week, has reportedly reaffirmed Beijing's interest in the Kathmandu rail link. The minister has also promised to make permanent arrangements for the supply of petroleum products to Nepal from China. Until now India has been the sole supplier of fuel to land-locked Nepal.

When these two projects go through, China would have neutralised India's geographic advantages in Nepal. Rather than oppose these projects, India should expedite its own plans to build oil pipelines into Nepal and deepen the Indian rail network's presence in our northern neighbour.

Lalu has enough political clout to get New Delhi to make an historic offer on building a rail link to Kathmandu and beyond. He could even propose joining up with the Chinese rail network on Nepal's border. That should connect the markets of north India and west China and position Nepal as a transit zone.

A rail line connecting northern India with Kathmandu has been around for a long time. Rail Bhavan's babus, however, have had no stomach for it. After China's breathtaking Lhasa line and India's own spectacular rail road to Srinagar, under construction, why should an Indian rail line to Kathmandu be mission impossible?

http://in.news.yahoo.com/indianexpress/20080306/r_t_ie_op_clm/top-pc-s-fans-7f368a9_1.html

No new taxes in Jharkhand budget 2008-2009

Ranchi, March 5 (IANS) The Jharkhand government has not slapped any new taxes in the Rs.18,989.72-rore (Rs.189.89 billion) budget for 2008-09, which focuses on social sectors.

The budget presented by Finance Minister Stephen Marandi has allocated Rs.9,366.78 crore (Rs.93.66 billion) for non-plan expenditure and the rest for plan expenditure.

The state will generate Rs.8,448.33 crore (Rs.84.48 billion) from its own resources, get Rs.7,333.76 crore (Rs.73.33 billion) as the state's share in central taxes, and the balance will be generated through borrowings.

As much as 13.79 percent of the budget allocation will be spent on rural development, 8.72 percent on energy, 7.99 percent on road construction, 11.23 percent on education, 8.36 percent on health and drinking water, 6.13 percent on agriculture and allied activities, 6.24 on labour, 3.99 percent on industries and transport and the rest on other sectors.

The budget deficit is pegged at Rs.1,682.96 crore (Rs.16.82 billion), compared to Rs.231.78 crore (Rs.2.31 billion) in the previous year.

http://in.news.yahoo.com/indiaabroad/20080305/r_t_ians_bs_india/tbs-no-new-taxes-in-jharkhand-budget-46e8b08_1.html

Deshmukh wants loan waiver eligibility raised to five hectares - Budget 2008

Maharashtra Chief Minister Vilasrao Deshmukh Wednesday sought a revision in the criteria for loan waiver to farmers, saying only 76 percent of farmers will benefit from the relief announced by the government in the national budget.

Deshmukh said the proposed loan waiver announced for farmers by Finance Minister P. Chidambaram was historic, but would not benefit all farmers unless the eligibility criterion was increased to a minimum five hectares.

Chidambaram had announced a one-time loan waiver of a whopping Rs. 600 billion to cover an estimated 40 million small and marginal farmers possessing up to two hectares of land.

'I am pursuing the matter with the government and our party president Sonia Gandhi and hope some positive result will come out,' Deshmukh told reporters after finalizing the state's Rs. 250 billion plan outlay for 2008-09 with the Planning Commission deputy chairman Montek Singh Ahluwalia.

'There are an estimated 2.5 million farmers in Maharashtra having taken loans from different financial institutions, out of which 1.8 million stand to benefit from the loan waiver. All farmers from the state should get the benefit. For this, the criteria have to be upwardly increased.'

Deshmukh earlier met Congress president Sonia Gandhi and requested her to intervene so that all the needy farmers stand to benefit from the government's scheme.

'She has promised to look into the matter,' he said.

Deshmukh said that his government would concentrate on streamlining infrastructure in the urban as well as semi-urban areas, with a special focus on power and irrigation sector.

http://in.news.yahoo.com/indiaabroad/20080305/r_t_ians_nl_politics/tnl-deshmukh-wants-loan-waiver-eligibili-a4b7bec_1.html

Deshmukh for relaxation in farmer loan waiver criterion-India Budget 2008-2009

Maharashtra Chief Minister Vilasrao Deshmukh Wednesday sought a revision in the criteria for loan waiver to farmers, saying only 76 percent of farmers will benefit from the concession announced by the central government in then national budget 2007-08.

Deshmukh said the proposed loan waiver announced for farmers by Finance Minister P. Chidambaram was historic, but would not benefit all farmers if the farmers' eligibility criterion was not increased up to a minimum five hectares.

The government in its annual budget Feb 29 announced the one-time loan waiver of a whopping Rs.600 billion to cover an estimated 40 million small and marginal Indian farmers possessing two hectares of land.

'I am pursuing the matter with the government and Congress president Sonia Gandhi and hope some positive result will come out,' Deshmukh told reporters after meeting Planning Commission deputy chairman Montek Singh Ahluwalia to finalise the annual plan outlay for Maharashtra.

http://in.news.yahoo.com/indiaabroad/20080305/r_t_ians_nl_general/tnl-deshmukh-for-relaxation-in-farmer-lo-b9e311f_1.html

Hold price line, Govt tells manufacturing sector - Indian Union Budget 2008-2009

The Finance Minister, Mr P. Chidambaram, on Wednesday asked the manufacturing industry to hold the price line, highlighting that its products and not the food prices alone that were contributing in a big way to inflation in the economy.

“You have to improve your competitiveness and hold the price line. You gain from volumes what you lose from not increasing the prices and then meet the growing demand. Demand will rise in 2008-09. The challenge is for the industry to produce goods and services to meet the rising demand,” Mr Chidambaram told FICCI members at a post-Budget meeting here.He was responding to the FICCI President, Mr Rajeev Chandrasekhar’s observation that it was primary products and food shortages that are driving inflation predominantly.

The Finance Minister said that the weightage and contribution of the manufacturing sector in the wholesale price index (WPI) was significantly high than the primary articles weightage and contribution.

Mr Chidambaram also asked industry sectors that have benefited from deep fiscal cuts in the budget —pharmaceuticals, two wheelers, buses and paper — to not only hold price line, but lower prices if possible.

He said that the manufacturing sector would hurt itself in the long run if it tried to exploit short term supply-demand mismatch. “In fact, I alluded to this in my Budget speech by pointing out oligopolistic tendencies in some sectors. A year ago when I tried to persuade the cement industry, they put on air of injustice. Two judgments have come from MRTPC, one in the last four days, pointing out that cement industry is acting like a cartel,” he said.

Source:http://www.thehindubusinessline.com/2008/03/06/stories/2008030651971000.htm

India's benchmark index crashes over 900 points -Indian Union Budget 2008

Mumbai, March 3 (IANS) After opening the day in the red Monday, the Indian equity markets plunged deeply despite Finance Minister P. Chidambaram saying there was no cause for worry.

Investors made heavy sales in major stocks like HDFC, Bharat Heavy Electricals, State Bank of India and Reliance Capital Ltd.

At 3.30 p.m., the 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which had opened at 17,227.56 points, tumbled to a low of 16,651.85 points. It lost 926.87 points or 5.27 percent.

The BSE Midcap index, which opened at 7,622.76 points, went down by 289.68 points to a low of 7,379.96 or by 3.77 percent.

The BSE Smallcap index, which opened at 9,591.22 points, went down by 364.66 at 9,263.47 points or 3.79 percent.

On BSE, the market breadth was extremely negative with low trading volumes. A total of 374 shares advanced, 2,325 shares declined and 37 shares remained unchanged.

Earlier in the day, Chidambaram had said the fall in Indian stock markets reflected what was happening globally and there was not much cause for worry as India's growth stock was intact.

'The Asian markets have slipped today (Monday) because of the fears of a recession in the US. And what is happening in India only shows that we are not as decoupled as we may think we are,' he said.

'I don't think we need to worry too much about that. This is reflecting what is happening in the world market,' he added, after the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) opened with a loss of 360 points.

http://in.news.yahoo.com/indiaabroad/20080303/r_t_ians_bs_budget08/tbs-india-s-benchmark-index-crashes-over-6276fdc.html

Kerala farmers stage a "crawling march" Indian union budget 2008-2009

New Delhi, Mar 3 (ANI): Farmers in large numbers participated in a crawling march in New Delhi to protest against the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002 that empowers banks to dispose of defaulters' securities to recover dues.

Farmers who came to Delhi from Kerala on February 23 to launch this protest complain that banks are taking over homestead property by using the centrally enacted SARFAESI Act.

"The Parliament should amend this act. Not only Kerala, all over India, this act is being used without discretion by banks. Nobody is questioning that," said John, Convener, Shelter Protection Committee.

The SARDFAESI Act empowers banks or financial Institutions to recover their non-performing assets without the intervention of the courts.

The act provides three alternative methods for recovery of non-performing assets, namely securitization, asset reconstruction and enforcement of security without the intervention of the courts.

The act brings in an element of non-conventional battle against Non Performing Assets (NPA), as it empowers banks to dispose of defaulters' securities to recover the dues.

The Sarfaesi Act came into existence in 2002 as a fallout of the balance of payments crisis in the 1990s and the recommendations of the Narasimham committee on banking reforms. (ANI)

http://in.news.yahoo.com/ani/20080303/r_t_ani_bs_budget08/tbs-kerala-farmers-stage-a-crawling-marc-946dd1a.html

No leg-up for long-term investment, NPS' woes to continue -Indian Union Budget

Union Budget 2008-09 has not spelt out any concrete measure, which will boost long-term investment. The new pension system (NPS) continues to suffer from adverse tax treatment, compared to other savings instruments such as Public Provident Fund (PPF), Employees Provident Fund (EPF) and General Provident Fund (GPF). While EET (exempt-exempt-tax) structure is applicable to small savings instruments, for pension products, EET structure is applicable, which could prove to be a disincentive for investors to park their funds in long-term savings instruments, which include pension and life insurance products.

In addition, though the exemption level for personal income tax has been raised, the additional ceiling has not been channelised to boost savings.

This is, however, likely to give a push to consumption.

Finance minister P Chidambaram has also remained silent on whether reforms would be carried out in pension and insurance sector. Pension Fund Regulatory and Development Authority Bill is yet to see the light of the day. On the other hand, comprehensive amendment in the insurance sector is also pending. Reforms in these two crucial sectors have almost come to a halt due to still protest from the Left parties.

Speaking to FE, D Swarup, chairman of PFRDA pointed out, "We were hopeful that NPS contributions will be brought on par with PPF, EPF GPF in terms of tax treatment. This does not seem to have been done and NPS continues to be under the EET regime whereas the other saving products are exempt from tax at every stage." He added that this will be a disincentive for potential NPS participants after the PFRDA Bill is passed.

"The additional income in the hands of an individual on account of higher exemption limits could have been channelised towards savings if the ceiling under Section 80C of IT Act been enhanced too. We need the savings rate to go up even further to spur investments," he said.

However, CS Rao, chairman, Insurance Regulatory and Development Authority (IRDA) said that the increase in tax from 10% to 15% on short term capital gains may encourage people to go in for long term investment options. "This increase in tax structure is bound to give a push to long term investment," he told FE.

Rao further added that the health insurance segment would benefit from the tax benefits which have been provided to individuals who pay premium on behalf of their parents. The budget provides a deduction of Rs 15,000 under Section 80D to an individual who pays medical insurance premium for parents. "This is a boost to senior citizens and would be beneficial for the health insurance segment," Rao

pointed out.

In addition, insurance schemes for the unorganised sector have also been introduced this year, he said. The "Aam Admi Bima" yojana is aimed at providing insurance cover to the poorer section of the society.

http://in.news.yahoo.com/financialexpress/20080303/r_t_fe_bs_budget08/tbs-no-leg-up-for-long-term-investment-n-7435665.html

E-bike manufacturers disappointed over Budget 2008-09

The Union Budget has dampened the spirits of electronic bike (E-Bike) manufacturers as the government has left the issues of excise duty on such bikes and import duty on battery untouched.

The E-Bike manufacturers had sought from Union Finance Minister to exempt excise duty on E-Bike and reduce import duty on battery, which is a key input for a bike.

Upset over not acceding to the request of the industry, Onkar Singh Pahwa Managing Director of Avon Cycles -- a e-bike manufacturer-- said it is beyond his cognizance that "why Finance Minister ignored the common man's dream of owning an affordable battery-powered two-wheeler while battery-powered car is given exemption from whole of excise duty."

The electric two wheelers in particular continue to attract 8 per cent excise duty "which is social injustice of the cruelest kind," he remarked.

Current taxation on E-Bike and its parts makes its ownership prohibitive for the average aspirant in this segment, he said therefore, these be fully exempted, as in the case of electric car, he said.

Echoing similar views, Hero Cycles, which is also a big player in this segment, expressed surprise over not touching the demands of E-Bike industry in the Budget. "The government should have reduced the import duty on battery which constitutes almost 25 to 27 per cent of the cost," Hero Exports (part of Hero Cycles) Senior Vice President Ashok Abrol said.

Several players, including Yo bikes, Hero Electric, Avon Cycles have ventured into this segment which is still at nascent stage

http://sify.com/finance/fullstory.php?id=14614144

Yashwant Sinha sees communal colour in Budget 2008

The Bharatiya Janata Party (BJP) has found a communal angle in Budget 2008-09 with which it aims to rejuvenate its Hindutva agenda.

Former finance minister Yashwant Sinha, who tabled six successive Budgets during the rule of the BJP-led National Democratic Alliance, noted that finance minister P Chidambaram made specific mention of recruiting more Muslims in the central paramilitary forces in tune with the Justice Rajindar Sachar Committee's recommendations.

"What has the Budget to do with Sachar committee recommendations? How can recruitment figure in a budget?" Sinha said.

"This is for the first time in the history of Indian budget that a finance minister has announced benefits on religious lines and given a communal reflection in it," said Sinha, who has the distinction of having tabled one Budget more than Chidambaram.

He was here to address three separate meetings of chambers of business.

"We will go to the people telling that we will just reverse it when we come to power. Any budgetary programme announced will be beneficial for all section of minorities and not of a particular community," Sinha said.

He said while the budget has shown a fiscal deficit of 2.5% of the GDP, it has concealed the deficits on the account of food, oil and fertiliser subsidies, the load of the sixth pay commission---- Rs 30,000 crore at least in 2008-09 --- and the Rs 60,000-crore farm loan waiver.

The Fifth Pay Commission had an impact of Rs 200,000 crore, Sinha pointed out.

http://in.news.yahoo.com/financialexpress/20080305/r_t_fe_bs_budget08/tbs-yashwant-sinha-sees-communal-colour-7435665.html

Time to buy datacard, DVD or MP3 -India Budget 2008

It may be time to opt for that satellite cable connection for your TV or Internet (wireless datacard) connection for your notebook or a DVD or MP3 player to play soothing music.

The Finance Minister, P Chidambaram, has proposed that specified parts of set-top boxes and raw materials used in the IT/electronic hardware industry should be exempted from customs duty, whereas the customs duty on convergence products should be slashed from 10 per cent to five per cent.

This will lead to a drop in prices, albeit small in some cases, after reading the fine print, according to industry experts and analysts.

"If one reads carefully," noted Ramesh Vaswani, Executive Vice Chairman, Intex Technologies, "the reduction in customs duty and one per cent reduction in central sales tax (CST) will not really reduce the retail prices of portable media players such as MP3, MP4 and DVD players by a significant margin."

The prices could fall anywhere between Rs 100 and Rs 200 for an MP3 player that costs Rs 3,000, said Vaswani.

Meanwhile, the cut in excise duty -- from 16 per cent to nil -- on wireless data cards would accelerate the Internet penetration among middle-class laptop users. Notebook sales have been growing by over 70 per cent annually.

"Since notebook sales are primarily driven by consumption in the household segment, according to MAIT, it makes economic sense to have cheaper wireless data cards for home browsing," observed R Muralidharan, Associate Director, PricewaterhouseCoopers.

Both Airtel and Tata Communications said they will pass the entire benefit to customers. Manoj Kohli, CEO and President, Bharti Airtel [Get Quote], said, "The benefit of duty cut on wireless data cards would be passed to the consumers completely."

Muralidharan, though, added a word of caution: "We are not sure if wireless data cards include the USB dongles, which have become quite popular lately."

A quick calculation shows that if the duty cut benefit is completely passed on to consumers, a USB data dongle priced at Rs 3,000 will be cheaper by almost Rs 500.

A dampener, though, was the budget proposal wherein the finance minister imposed a National Calamity Contingent Duty (NCCD) at the rate of 1 per cent on mobile phones.

Powered by -Business Standard

Source:http://www.rediff.com/money/2008/mar/03budget6.htm

Budget and your stocks Sectoral analysis

What the Budget does

Exemption from customs duty on specified parts of set top boxes and specified raw materials for use in the IT/ electronic hardware industry.
Reduction in customs duty on convergence products from 10% to 5%.
No change in the corporate income tax rates.
No change in the rate of surcharge and dividend distribution tax.

Impact on sector

The exemption of customs duty will bring broadcasting equipment like set top boxes on par with rates applicable on telecom equipment and provide a fillip to the DTH industry that uses set top boxes.
It will also encourage domestic production of set top boxes.

Source:http://specials.rediff.com/money/2008/feb/29budsec1.htm

Pharma shares act as defensives - India Budget 2008

Shares of pharmaceutical companies seemed oblivious to the carnage in the markets on Monday, with the Bombay Stock Exchange (BSE) Health Care index?losing just 0.2% in value.

Both the Sensex and the broader BSE 500 index lost 5% in value, taking cues from the fall in US stocks last Friday and the drop in Asian markets on Monday. The pharma industry got a fair bit of mention in this year’s Budget, with a number of positive announcements, but an analyst with a foreign brokerage said he doubted the resilience in pharma shares had anything to do with the Budget.

The upside from the Budget had already been factored in on Friday. In any case, the benefits weren’t huge.

The cut in excise duty from 16% to 8% will have a limited impact. Unlike some other products, pharmaceuticals aren’t so price-sensitive that excise-related cuts will lead to a surge in demand.

So, firms are likely to retain some of the benefits and earnings may increase. Morgan Stanley recently estimated the earnings of the firms under its coverage may increase between 1.

5% and 4.5%, on the assumption that 40% of the duty cut is retained by firms.

Companies that have heavily invested in setting up facilities in tax-free zones, such as Baddi and Sikkim, may stand to lose out. The transportation cost from these facilities is significant, and devoid of the 16% excise differential, their cost benefit of these units would be reduced substantially.

Firms that conduct clinical trials in their overseas units haven’t got the benefit of weighted deduction on the research and development spend. The markets were expecting this, which explains why shares of Sun Pharmaceutical Ltd’s hived-off research and development wing have lost more than 4% since the Budget announcement.

In sum, the Budget proposals hardly provide any reason for pharma shares to outperform the market by around 7%. Their outperformance lately could well be because they are being seen as a defensive play in a falling market.

Apart from the FMCG index, the pharma index has fallen the least from its highs in January. These stocks had underperformed the market by a large margin in the past and since prices of generics have already fallen sharply in most markets, earnings growth is expected to be steady in the near future.

With valuations already running low, pharma stocks are among the few where the downside seems limited.

http://in.news.yahoo.com/mint/20080304/r_t_mint_bs_budget08/tbs-pharma-shares-act-as-defensives-a839eca.html

Union Budget 08-09 & impact on Indian IT industry

Union Budget is welcome for India as a whole. Its quite inclusive & have much needed focus on inclusive growth. India growth story cannot be continued without making every Indian part of it.
From IT perspective & for me as IT enterepeneur its bit dis-appointing budget. Specially

1) No mention of STPI scheme extension plan. Its very critical for SME IT companies. Bigger companies can always opt for SEZ.

2) Inclusion of custom software services & software testing services under service tax net. Big dampener for domestic IT business.

3) Increase in excise duty on packaged software. Will make local software product costlier as compared to international ones.

Lets hope there will be some positive developments atleast on STPI front during the year before deadline of 2009.

Source: http://www.e-zest.net/blog/post/Union-Budget-08-09--impact-on-IT.aspx

Sensex feels heat of farm loan write-offs, global pressure -India Budget 2008

The Bombay Stock Exchange’s (BSE) benchmark index suffered its second biggest single-day drop ever on Monday, the first day of trading after the 2008 Union Budget was presented, as plans for the country’s largest farm loan write-down added to deepening fears of a recession in the US. While the sell-off on negative global market cues was expected, the massive loan write-off by state-run banks, announced in the Budget, increased bearishness.

The potential losses faced by public sector banks added to the selling pressure,” said Satish Ramanathan, who helps manage $3 billion worth Indian stocks as head of equities at Sundaram BNP Paribas Asset Management Co. Ltd.

The 30-stock benchmark index, Sensex, lost more than 900 points or 5.12% to close at 16,677.

88, as all key Asian markets suffered heavy selling after key US equity indices, Dow Jones Industrial Average and S&P 500, lost more than 2.5% each on Friday’s trade.

The National Stock Exchange’s (NSE) broader 50-stock Nifty index lost 270.50 points or 5.

18% to hit 4,953. The banking index was down 6.

7%, making it the worst hit on BSE. The Budget was presented during market hours on Friday, when the Sensex closed down 1.

4%. On Monday, the bank stocks “pushed down the sentimental scale,” said Ketan Karani, head of equity research at Kotak Securities Ltd, a domestic retail brokerage.

The government has so far mentioned only about “providing liquidity support” to these banks which would be affected by loan write-offs. “Their destiny is unclear.

” Banks, with a cumulative market capitalization of about $150 billion, account for 15% of the Indian market’s total capitalization. State-owned banks account for about half of the sector’s market cap.

State Bank of India (SBI), the country’s largest lender, lost 8.8%, while other public sector banks such as Union Bank of India, Punjab National Bank, Bank of India and Canara Bank, were down between 9.

65% and 7.5%.

Jignesh Desai, head of institutional desk at SBI Capital Markets Ltd, the investment banking arm of SBI, said foreign institutional investors sold heavily on Monday. The selling put pressure on the local currency as these investors convert their rupee exposure in equities into dollar after selling stocks.

The rupee slid to a five-and-a-half month low. The rupee closed at 40.

39/40 a dollar against its Friday’s close of 40.01/02.

Some brokers, who deal with foreign institutional investors (FIIs), claimed that a group of UK-based funds, including FII-registered funds floated by some Indian firms, were big sellers in the FII-pack. According to provisional data on the BSE website, FIIs were net sellers of Rs711 crore in the cash market on Monday, while domestic institutions bought Rs80 crore worth stocks.

It was a free fall in the market in the second-half of trading, said Desai. “There were no buyers.

Domestic institutions—mutual funds and insurance funds—did not participate in late-trade,” he said. “With FIIs continuing to sell and domestic investors down on sentiments, the market channels are dry,” Kotak’s Karani said.

Investors need fresh trigger to rerecognize the growth potential of Indian stocks, which have lost significantly this year, he added. Analysts expect the fall to continue and some some of them even predicted that the index would go down to 15,000 levels by the end of this month.

Jignesh Shah, head of equities at the wealth management division of ABN Amro Bank (India) NV, said global cues “had strong bearing on the Sensex fall than any domestic factor.” High net worth individuals (HNIs) “expect market to achieve stability in sometime,” he said.

“HNIs are buying domestic themes.” Anup Roy contributed to this story.

http://in.news.yahoo.com/mint/20080304/r_t_mint_bs_budget08/tbs-sensex-feels-heat-of-farm-loan-write-a839eca.html

Airlines lobby for low tax on fuel by states - India Budget 2008-09

After receiving little respite from state-owned oil companies on aviation fuel prices and Friday’s Union Budget on a tax on lease payments, airlines in India now plan to lobby hard at least six state governments to reduce sales tax levied on fuel in an effort to cut their operating costs. States apply sales tax at rates ranging from 20-30% on jet fuel, making it an expensive commodity for airlines who count fuel expenses around a third of their operating cost.

As oil prices have escalated in the past few years, losses at domestic airlines are expected to top $700 million (Rs2,821 crore) compared with the Rs2,000 crore lost last year. “We were expecting a lot from the Budget in terms of fuel being made a declared good, and (exemptions on) fringe benefit tax,” said S.

Venkat, executive director (finance), National Aviation Co. of India Ltd that runs Air India.

“It’s quite disappointing that there is nothing contained there.” Late last year, the Federation of Indian Airlines, a lobby organization for all scheduled airlines in the country, together with the civil aviation ministry, had sought a reduction in aviation turbine fuel prices from oil companies, but with little result.

The fuel today costs about Rs47,050 per kilolitre in New Delhi, down from some Rs47,445 in December, the highest in 2007. Even minor reductions, airlines say, can lessen the burden on them.

Chennai-based Paramount Airways India Ltd that runs a five-aircraft operation, for example, saves up to Rs5 crore a month because it flies smaller aircraft, fuel for which attracts a flat 4% sales tax. Air India alone will save Rs30 crore annually from this year after an exemption granted by the Andhra Pradesh government—the only one so far—last month on jet fuel.

Sales tax on aviation fuel sold in the state was reduced from 33% to 4% as the state geared up for the launch of its new international airport in March. The state hopes the airport will help it become a regional hub for air traffic in south India.

But taxes in other states still remain high. Kerala, Tamil Nadu, Karnataka, Gujarat, Maharashtra and New Delhi are the other six states that have airports with potential of becoming hubs for airlinesand will be obvious lobbying targets as state annual budgets are rolled out in the months ahead.

“States also go for their budget soon. We hope Andhra Pradesh will spur others to look at it (a reduction),” said a senior airline executive, who did not wished himself or his employer to be identified.

Airlines believe sales taxes hovering around 4-5% will increase traffic in states that offer this lower rate. “Airlines would like to develop them (airports) as hubs and then operate most of their flights there.

There are several indirect benefits as the volumes rise,” said Air India’s Venkat. A senior official in the civil aviation ministry, who did not wish to be identified, said it too plans to ask states to reduce taxes.

http://in.news.yahoo.com/mint/20080303/r_t_mint_bs_budget08/tbs-airlines-lobby-for-low-tax-on-fuel-b-a839eca.html

Used-car market may surge with Union Budget sops

As the effects of the Union Budget 2008-09 slowly begin to trickle down, auto industry companies feel that there will be a surge in the number of buyers and sellers in the used car market. With the Budget granting them more disposable income, many would resort to buying either new or old cars.

But the demand for used cars, on the other hand, will surge from both those who want to upgrade from two-wheelers to cars and from cars to new car models.

"Any price reduction is good for our business," said Vinay Sanghi, chief executive officer, FirstChoice Ltd, a dealer in secondhand-cars from Mahindra & Mahindra.

"Used cars will see prices fall by nearly Rs 5,000 to 6,000," he added. "In India, the equation between used and new cars is 1:1, that is, for every one new car bought, a used car is sold," said Mohit Dubey, chief executive officer, Carwale.com.

He added that the recent announcements in the Budget would result in a 5%-10% reduction in used-car prices. For instance, a car that costs Rs 2 lakh will now be available for Rs 1.8 or 1.9 lakh.

He added that the used-car market, which is as big as the new car market in India, is growing faster at the rate of 26% compared to 18% for the new car market. Despite expectations of huge sales, used-car dealers see their margins unchanged. "Now, used cars will be sold and purchased at cheaper prices. Hence, there will be no change in our margins," Sanghi and Dubey corroborated.

When asked if excise cuts would lead to people shifting focus from used-cars to new models, Sanghi said, "New cars will still be expensive and unaffordable for many. Further, this also opens opportunities for two-wheeler owners to consider buying a used car, if not a new one."

Finance minister P Chidambaram had proposed to reduce excise duty on small cars and two-wheelers to 12% from the previous 16%, following which several automobile companies slashed prices of their vehicles.

http://in.news.yahoo.com/financialexpress/20080304/r_t_fe_bs_budget08/tbs-used-car-market-may-surge-with-union-7435665.html

Corporates should be willing to sacrifice: Chidambaram Budget 2008

Lauding the growth metered by the Manufacturing and Service sector in the shadow of consistent economic growth, Finance Minister, P Chidambaram, urged the corporate sector to sacrifice something for the comparatively lagging Agriculture sector. He was referring to the principled emphasis given to agriculture and social sector in Budget 2008-2009.

The Finance Minister has proposed loan waivers for farmers, especially small and marginal farmers, for which an amount worth Rs 60,000 crore has been earmarked in the current fiscal's Budget. Chidambaram was addressing business leaders in a post budget interactive session, organised at Vigyan Bhawan in the national capital.

Backing his 'unprecedented' budgetary support for agriculture, Finance Minister said that the production of food grains has become stagnant over the years and growing inter-regional and intra-regional disparities have made some respite for the farmers unavoidable.

"Manufacturing and service sectors are growing like never before, but farming sector is lacking the momentum. Farmers are slipping out of institutional credit system. Though, several efforts have been made by successive governments, but no significant change could be seen. So such comprehensive measure was inevitable and necessary," said the Finance Minister, who presented his Seventh, and Fifth consecutive Annual Budget on February 29.

Highlighting the contribution of agriculture in the Indian economy which has made the country self-sufficient in the food grains production, Chidambaram cautioned against ignoring this sector when he said, "We would be vulnerable to high priced imported grains if the state of farming is left unnoticed for long. So the stress on farmers should be reduced and the time has come to stand-up and say that we are for the farmers. All of us should sacrifice something for farmers."

The Finance Minister also sought for increased participation of corporate sectors in taking up their social responsibility. "We have proposed to provide tax holiday for establishing hotels, schools and hospitals in the hinterland. The Prime Minister announced that the government would be out of the skill development mission. You should take over ITIs (Industrial Training Institutes) for preparing better ground for skill supply in the future," said Chidambaram, while pulling the industry leaders for their lenient approach displayed towards the proposal.

Hitherto, only 244 ITIs have been taken over by corporates out of the existing 1396. This year's Budget had proposed reduction in CENVAT, excise and custom duty apart from leaving more money in the wallets of consumer in the form of income tax rebates, which would certainly fetch increased demand for goods and services and consequently the manufacturing and service sector would reap the dividends.

http://www.headlinesindia.com/archive_html/03March2008_71768.html

Media & Entertainment yet to find favour - India Budget 2008

The media and entertainment industry (M&E industry) has seen significant activity in the recent past. As the Indian economic growth matures in to long-term sustainability, the industry is set to play a significant role in such a growth, and is evidenced by the fact that global media giants queuing up to garner a greater share of this fast growing segment.

The burgeoning growth brings with itself challenges that are complex and unprecedented. Not only has the Indian tax legislation not kept pace with the changing dynamics of emerging business models, the industry itself is guilty of not appreciating the complexities involved.

From the income tax perspective, the taxability of broadcasting companies and film distribution companies, applicability of withholding tax provisions, and connected issues, present significant challenges in business operations, especially with the growth of cross border transactions in this sector.

It was expected that Budget 2008 would address some of these key concerns and ease out the prevailing uncertainty. However, like the past few years, the industry is yet to find favour with the ministry of finance.

The proposals relating to indirect taxes also do not contain any significant policy announcements or initiatives undertaken. Some marginal amendments, however, do impact the industry. The Cenvat rules, for example, have been rationalised to an extent by dispensing with the restriction on utilisation of cenvat credit in case of service providers rendering both taxable and exempt services. Such service providers now have the option to either pay 8% of the value of exempted services or proportionately reverse the cenvat credit attributable to inputs/input services used in providing exempt services. This would significantly benefit industry players such as broadcasting companies, which often provide a bouquet of taxable and exempt services.

Even the restriction on removal of capital goods outside the premises of the service provider has been withdrawn. This amendment would benefit companies in the DTH space whose assets are commonly used at customer premises.

As far as customs duty is concerned, there has been no change in the peak rate of customs duty; however, certain existing concessional duty rates have been extended to SMPS power boards and IR modules and MP3, MP4 and MPEG players having audio and video reception facilities, respectively.

The excise duty rate has been reduced from 16% to 14% across the board. Specifically, the concessional excise duty rate of 8% has been extended to MP3/ MP4 and MPEG players having audio and video reception facility. The rate of central sales tax has also been reduced from 3% to 2%.

On the whole, Budget 2008 has provided some relief to the M&E Industry. However, industry players would continue to operate in a realm of uncertainty, posing significant challenges and distractions to growth, at least for a year more!

Frank D'Souza is a partner and Malini Mallikarjun is a director with BMR Advisors

http://in.news.yahoo.com/financialexpress/20080303/r_t_fe_bs_budget08/tbs-media-entertainment-yet-to-find-favo-7435665.html

Centre, state govts should work in sync for growth

The Budget this year is a progressive one and is expected to bring in 'all-inclusive' growth. It has focussed on social sector, physical infrastructure and controlling inflation.

However, the challenge lies in monitoring and implementing the schemes. For this, it is essential that the Centre and state governments work in close coordination .

Although no incentives have been provided for NRIs, we are happy to see that the recommendations of IndusInd International Federation on investment in social and physical infrastructure, monitoring and implementation, rationalisation of indirect taxes, reduction in personal taxation, trading in carbon credits, activating the corporate bond market have been accepted in one form or the other.

The author is chairman, Hinduja Group

http://in.news.yahoo.com/financialexpress/20080303/r_t_fe_bs_budget08/tbs-centre-state-govts-should-work-in-sy-7435665.html

Tax on IT services Union Budget 08-09

The IT/ITES sector has been among the key contributors to India's exponential economic growth over the last decade. And the sector had been getting due focus from direct as well as indirect tax perspective in the form of various concessions.

The recent past, however, has seen IT/ITES companies facing a number of challenges such as depreciation in the US Dollar, fears of a US recession and increased manpower costs. Thus, the industry was looking up to the Union Budget to get certain long pending demands fulfilled.

Though the biggest expectation concerning the extension of the STPI scheme beyond 2009 was left unaddressed, Service tax has been proposed to be levied on all conceivable IT services. IT services were thus far excluded from service tax ambit, on account of which software services exporters were unable to utilise the mechanism put in place for refund of input service tax, and this cost hitherto undermined their competitiveness in the global market. In the Budget, the Hon'ble finance minister proposed to correct this anomaly with the introduction of a new service category, called 'Information Technology Software services', as well as with amendment in certain other existing categories. Thus, upon implementation of the budget proposals, virtually all activities relating to IT software would be covered under Service tax net, thereby making them eligible to refund, subject to fulfilling other export conditions.

Apart from including the excluded services within the levy, another amendment which would prove very significant to the industry relates to changes in the qualification criteria under the Service Tax Export and Import Rules for maintenance, testing and certification services. Software is/would be covered under these categories for certain transactions, and the amendment provides an export benefit or a reverse charge liability depending on the location of the goods, material or immovable property, in relation to which the services are provided, at the time of the service being rendered.

While the above amendments are likely to hugely benefit the exporters of IT services, the impact on importers/domestic users of IT services is yet to be seen. As far as importers/ domestic users of IT services are concerned, the implications of another aspect proposed to be covered under the new levy, namely 'acquisition of right-to-use IT software for commercial exploitation; and acquisition of right-to-use IT software supplied electronically' would be of remarkable relevance.

With this proposal, rights to reproduce, distribute and sell software would become liable to Service tax. Though it remains to be seen whether only customized software would fall in this levy or also packaged software. And, it would be interesting to see the reaction of State VAT authorities on this proposal as they were seeking to levy VAT on transfer of right to use customized software, while packaged software is already liable to VAT. Further, import of right to use software download electrically, which was hitherto not liable to Customs duty may now be liable to Service tax.

Historic conflict of dual levy and applicability of aspect theory are also likely to trigger in again. Implications also need to be examined given the wide coverage of the definition of IT software under Service tax, which includes any data capable of being manipulated by means of any devise or equipment.

Supriya Oberoi Jain, senior manager (Indirect Tax), KPMG India Private Limited

http://in.news.yahoo.com/financialexpress/20080303/r_t_fe_bs_budget08/tbs-tax-on-it-services-bane-or-boon-7435665.html

Current tax slabs to stay: Chidambaram - 2008-09

After giving bonanza to income-tax payers by changing the slabs, Finance Minister P Chidambaram today said the next step should be removal of surcharges if the revenue buoyancy continued.

"Last time anyone has set the tax rates was 1997. This time we have set the tax slabs. I am reasonably confident that these tax slabs are going to stay for long, long time, we have brought moderate taxes and reasonable tax slabs," Chidambaram told TV channels.

The individuals with income of more than Rs 10 lakh and corporates pay surcharge at the rate of 10 per cent and there was a Strong demand from corporate houses to do away with surcharges.

"If revenue buoyancy continues, I am sure the next Finance Minister, which I am sure would be from the Congress party, will begin to remove the surcharges. I think surcharges should go... may be in two steps or four steps," he said.

Chidamabaram had changed the personal income-tax rates to 10, 20 and 30 per cent in 1997-98 Budget, which was touted as "dream budget". Again it was Chidambaram who restructured the tax slabs in his Budget yesterday.

Asked whether general elections were in mind while making this Budget, he said, "every year there are elections in the country, 2006 was an election year, 2007 was an election year and 2008 is an election year. I have presented my fifth Budget...."

According to schedules, elections are in May, 2009.

Budgets don't decide election agenda. Its how you communicate to the people what Budget contains that can help win elections... and what is wrong in that."

http://in.news.yahoo.com/financialexpress/20080301/r_t_fe_bs_budget08/tbs-current-tax-slabs-to-stay-chidambara-7435665.html

Sensex gains 1.32% in the last week

The Union Budget turned out to be a non-event for the stock markets, even as the benchmark Sensex posted a 1.32 per cent gain as the concluding week for derivatives contract sparked shortcovering by investors.

Extremely weak global cues at the weekend, however, left behind a trail of bearish mood for the next week.

A Budget proposal to hike short-term capital gain tax to 15 per cent had a knee-jerk reaction on the market but overall proposals were hailed by the industry captains, expressing confidence that the market will stabilise in the next few days if global factors are encouraging.

The Railway Budget has created favourable conditions for the market as it provided across-the-board concessions in fares and freight rates with a thrust on modernization of rail infrastructure.

Analysts showed more concerns over negative global factors as the bourses continued to be influenced by developments in world markets, especially the US as any recession in the world's largest economy will affect other emerging economies.

Finance Minister P Chidambaram has announced tax sops to industries such as two-wheeler and small car, pharma, infrastructure, hospitals, hotel, consumer product and capital goods in the budget.

In volatile trade throughout, the Bombay Stock Exchange 30-share index moved widely in a range of 18,137.28 and 17,137.99 before ending the week at 17,578.72, a net rise of 229.65 points from last weekend's close of 17,349.07.

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Tata undecided about reducing Nano price - Union Budget 2008-09

Mumbai, March 1 (IANS) Following the reduction in excise duties in the union budget, automobile major Tata Motors has slashed the prices of its Indica and SUV models. However, the company Saturday said it was undecided about lowering the price of its forthcoming model Nano, already considered the world's cheapest car at Rs.100,000 ($2,500).

'It's too early' to say whether this would have a bearing on the prices of the proposed family car, Tata Nano, expected to hit the market at Rs.100,000, a company spokesperson told IANS.

According to present indications, Nano will be available in the showrooms in the second half of this year.

Among existing models, the prices of the popular Tata Indica car series have been slashed between Rs.8,500-Rs.14,600.

In the commercial light motor vehicle segment where the company has more than 150 models, including Tata Sumo and Safari, the prices have been reduced by two percent across all models.

'We want to pass on the benefits of the excise duty relief to our consumers,' the spokesperson said.

Another auto major Maruti Suzuki has also announced price reductions following the tax cuts.

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Indian Union Tax Budget 2008-09

Tax for Men
Upto Rs. 1,50,000/- Nil
Rs. 1,50,001/- to Rs. 3,00,000/- 10 per cent
Rs. 3,00,001/- to Rs. 5,00,000 20 per cent
Above Rs. 5,00,000/- 30 per cent

Tax for Women
Upto Rs. 1,80,000/- Nil
Rs. 1,80,001/- to Rs. 3,00,000/- 10 per cent
Rs. 3,00,001/- to Rs. 5,00,000 20 per cent
Above Rs. 5,00,000/- 30 per cent

Tax for resident individual of 65 years or above
Upto Rs. 2,25,000/- Nil
Rs. 2,25,001/- to Rs. 3,00,000/- 10 per cent
Rs. 3,00,001/- to Rs. 5,00,000 20 per cent
Above Rs. 5,00,000/- 30 per cent

Corporate Tax - Unchanged
Service Tax - No change in service tax rate

Direct Tax
Short-term capital gains tax hiked to 15%
Securities Transactions Tax unchanged
Banking Transaction Tax withdrawn
Central Sales Tax up from 2% to 5%
Bank cash transaction tax to be exempted

Affected items after the Union Budget 2008-09

Expensive

Non filter cigarettes
Unbranded petrol and diesel

Cheaper

Anti-AIDS drugs
Two wheelers
Small cars
Bulk drugs
Crude sulphur
Buses, Chassis
Water Puriifier
Refrigeration Components
Paper and its products
Naptha
Pharma goods

Indian Union Budget 2008-2009

Union Finance Minister P Chidambaram presented his fifth Budget in Parliament on Friday.

Changes in I-T slab. Threshold of exemption for all Income Tax assesses raised from from Rs 1,10,000 to Rs 1,50,000.
Every income tax assessees to get relief of minimum of Rs 4,000.
No change in rate of surcharge.
New tax slabs will be: 10 per cent for Rs 150,000 to Rs 300,000, 20 per cent for Rs 300,000 to Rs 500,000 and 30 per cent above Rs 500,000.
For women, the income tax limit goes up from Rs 1.45 lakh to Rs 1.80 lakh. In case of senior women citizens, it increases from Rs 1.95 lakh to Rs 2.25 lakh.
Fresh facilities, encouragement to sports and guest houses exempted from Fringe Benefit Tax.
Five year tax holiday for setting up hospitals in tier II and tier III regions for providing healthcare in rural areas from April 1, 2008.
Five year tax holiday for promoting cultural tourism.
Short-term capital gains increases to 15 per cent.
Commodities Transaction Tax to be introduced on the lines of Securities Transaction Tax.
Banking cash transaction tax withdrawn from April one, 2009.
Direct tax proposals to be revenue neutral. Indirect tax proposals to result in loss of Rs 5,000 crore.
Rs 500 crore for corpus fund to subsidise all women Self Help Groups for LIC [Get Quote] cover for permanent disability.
Agricultural loans given by scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007 and due for December 31 that year will be covered under the waiver scheme to address the problem of indebtedness.
No change in corporate income tax.
To protect tigers, Rs 50 crore for National Tiger Conservation Programme. Bulk of it to be used to raise Tiger Protection Force.
Plan expenditure fixed at Rs 2,43,000 crore and non plan expenditure at 5,74,000 crore.
Fiscal deficit pegged at 3.1 per cent and revenue deficit at 1.4 per cent.
Tax to GDP ratio increased from 9.2 per cent in 2004-05 to 12.5 per cent 2007-08.
No change in peak rate of customs duty for non
Customs duty on specified life saving drugs reduced from ten per cent to five per cent.
Special Countervailing Duty on power imports.
Customs duty on specified sports goods machinery down from 7.5 per cent to five per cent.
Duty withdrawn on naptha for production of polymers.
Duty on crude and unrefined sulphur reduced from five to 2 per cent to help raise domestic fertiliser production.
General Centvat on all goods to be reduced from 16 per cent to 14 per cent. Excise duty reduced from 16 per cent to eight per cent on all pharmaceutical goods manufacture.
Excise duty on small cars reduced to 12 per cent from 16 per cent and hybrid cars to 14 per cent.
Excise duty reduced from 16 to 8 per cent on water purification items.
Duty on non filter cigarettes to be raised.
Asset management service under mutual funds, services by stock exchanges to be brought under Services Tax net.
Threshold for small service providers raised from Rs eight lakh to Rs 10 lakh.
Allocation for defence to be increased by 10 per cent from Rs 96,000 crore to Rs 1,05,600 crore.
75 lakh people to be covered by health insurance scheme.
Allocation for Textile Upgradation Fund to be more than doubled.
Micro, small and medium enterprises to continue to get special attention.
Risk Capital Fund to be set up in SIDBI.
PAN requirement to be extended to all transactions in capital market subject to a threshold.
Rs 750 crore for upgradation of 300 ITIs in 25 districts.
Rs 32,676 crore as subsidy to Public Distribution System.
PDS through smart cards in Haryana and Chandigarh on pilot basis.
Three schemes to be introduced for providing social security to unorganised sector workers.
Sixth central pay commission to submit report by March 31, 2008.
Rs 624 crore allocated for Commonwealth Games

Budget 2008-09 Sops for Industry

Rs 5000 crore fund for enhancing re-finance operations
No change in corporate tax
Excise duty on Pharma products down to 8 per cent from last year's 16 per cent
Excise duty on two and three wheelers down to 12 per cent
Excise duty on Hybrid cars reduced to 14 per cent from 24 per cent
Excises duty on buses and chassis reduced to 12 per cent
Special exemptions and reductions for paper, fertilizers and auto industries
Four new services (Asset management service provided under ULIP, services provided by stock / commodity exchanges and clearing houses, right to use goods in cases where VAT is not payable and customised software) brought under tax net
Custom duty on project import have been reduced from 7.5 per cent to 5 per cent
Public Sector Units to get Rs 16436 crore in 2008-09
Export taxes on key raw material of steel to be increased
Excise duty on packaged software increased from 8 to 12 per cent
Change in Security Transaction Tax (STT)
Short-term capital gains to increase to 15 per cent
Banking Transaction Tax (BTT) withdrawn
Commodity Transaction Tax introduced
No double deduction of Dividend Distribution Tax (DDT)

Narendra Modi fights for common man of India in Budget 2008

The Budget must truly provide succour to the Aam Aadmi and protect him against inflation in terms of daily consumption and necessities , including food grains. The Budget should be growth-oriented and achieve double-digit GDP growth.

It should not be populist, as generally apprehended, keeping in view the General Elections in 2009. The Budget must create an environment for providing more employment for the country’s youth by addressing the hitherto neglected informal sector of the economy.

The Centre should not resort to so-called communal budgeting, since poverty knows no religion. It should not encourage schemes which will divide the nation based on religion, which may even encourage religious conversions . Such discrimination based on religion will adversely affect the entire social fabric of the nation.

Instead of creating more and more centrally-sponsored straitjacket schemes for the entire country, the Centre should transfer funds to the states to undertake such development activities which suit the specific requirements of a particular state. It is time the Union Budget considered policies to plough back resources from the parallel black economy to fund various physical and social infrastructure projects in the country. Needless to say, adequate care should be taken to protect the interests of honest taxpayers while devising such schemes. If India has to grow fast, its Budget must focus on power generation.

Special budgetary allocation for setting up power stations via public-private partnership must be focused on. Ten-year tax breaks for companies investing in power generation and taxfree bonds should be introduced to encourage rapid investment in this area. The central government should encourage /reward state governments for policies that help reduce carbon emissions. State governments’ loss of revenue from various state and local taxes should be made good by the Centre. Also, funds should be provided on a grant basis by the Centre to states to improve capacity for monitoring carbon emissions.

Similarly, there should be a better package to encourage non-conventional energy in the Budget. I also look forward to a special provision for Bio-fuel Mission in this Budget.

In recent years, there has been a tendency of announcing certain schemes in the Union Budget wherein the financial burden is borne by the states. For example, the scheme of 7% interest on agricultural loans, though announced by the Centre, has to be borne financially by the states. Such schemes announced in the Budget should be totally funded by the Centre.

Railway Budget

I would also like to make specific suggestions on the Railway Budget. Traditionally, the Railway Budget in India is by and large dictated by popular pressure.

The Railways also needs to have long-term vision. The Golden Quadrilateral programme of the National Highways Authority of India, initiated during NDA rule, brought about pathbreaking changes in the road sector.

A similar vision targeting year 2020 is also needed for the Railways in India and it should be reflected in this Budget. India, with a population of 100 crore, has tremendous potential for religious tourism, which itself can trigger huge economic activities. Private sector should be brought in for running trains specifically meant for special circuits, based on popular religious tourist destinations.

In the end, I would expect the Budget to promote competitiveness in the economy. It would be in the interest of the nation that the Budget promotes efficient utilisation of resources and incentivise progressive states to do even better. In this context, Gujarat has achieved a revenue surplus of Rs 1,770 crore in 2006-07 after completely wiping out its revenue deficit which stood at Rs 6,730 crore in 2000-01 .

ON THE JOB

Create jobs for youth by focussing on the informal sector

POWER POINT

Special budgetary allocation for setting up power stations via public-private partnership. Offer 10-year tax breaks to companies and float tax-free bonds

RAIL TRAIL

Rail Budget should come out with a Vision 2020 plan on the lines of NHAI’s Golden Quadrilateral programme

FREE STATE

States should be given funds and freedom to devise development schemes that suit their specific requirements

CARBON COPY

States should be rewarded for policies that help reduce carbon emissions

Promote efficient utilisation of resources and incentivise progressive states to do even better PIOUS PROFIT

Private sector should be roped in to promote religious tourism (The author is chief minister, Gujarat)

Source: http://economictimes.indiatimes.com

Agriculture Budget 2008 - 2009

• Debt waiver scheme and relief to small and marginal farmers
• Agri loans disbursed by rural banks, RRBs and Cooperative banks before March 2007 and overdue on Dec 2007 waived
• Overdue agri loans amount to Rs 50,000 cr under the waiver and 10,000 cr under the OTS
• Implementation of waiver to be completed by June 2008
• Farmers eligible for fresh agri loans post the waiver or one time settlement
• National Agri Insurance scheme get Rs 640 cr
• National Horticulure Mission to get Rs 1,100 cr
• Govt sets up irrigation and water resource finance corp with an initial corpus of Rs 100 cr
• Agriculture share in total investment up from 10.2% in 2003-04 to 16% during the 11th Plan
• Agri credit target to be Rs 2,80,000 cr for 2008-09
• Agri credit doubled in first two years
• Agriculture credit to touch 2,40,000 cr in 2008
• Focus on achievement of self-sufficiency in food grain
• Soyabean output to be 9.45 mn tonnes
• Maize production to be 16.78 mn tonnes
• Rice production to be 94.08 mn tonnes
• Total agri production to be 219.32 mn tonnes at all time high
• Agriculture disappointing at average annual growth of 2.6%

Education Everywhere - "Learn India" - Indian Budget 2008 - 2009

• 3 IITs to be set up in Bihar, AP, Rajasthan
• Jawaharlal Navoday Vidyalaya to be set in 20 new districts for SC/STs
• Bhopal and Tripura to get one IIScR each and 2 colleges of art
• IT industry gets Rs 100 cr for connecting knowledge institutions
• Rs 200 cr for providing portable water system in each school in areas of water scarce regions
• 16 Central universities to be set up
• 6000 model high schools to be started
• Science scholarships for young learners
• Education sector gets a boost

Banking In Indian Union Budget 2008 - 2009

• Schedule Commercial Banks farm credit 75%
• 288 public sector bank branches to be opened in areas with concentration of minorities
• LIC to cover all woman SHGs linked to the bank
• Agri loans disbursed by rural banks, RRBs and Cooperative banks before March 2007 and overdue on Dec 2007 waived

Tea Research association gets Rs 20 cr

India is leading Tea producers and exporters in Asia.

Thanks o FM - see this fact on papers and promoting Tea Sector. Now Tea Research association gets fund of Rs. 20 cr. This would definitely help Tea sector in improving quality of product compare to European countries.

Debt waiver scheme and relief to small and marginal farmers

Farmers must be very happy this time. FM didnt forget that we live on Agriculture Ruled Country and our main economy is of agriculture sector.

Debt waiver scheme and relief to small and marginal farmers and Farmers eligible for fresh agri loans post the waiver or one time settlement are focused benefits for Farmers.

3 IITs to be set up in Bihar, AP, Rajasthan

Education is everywhere now!!
New IIMS, IITs !! That's Great. India needs more quality in education. Thanks to FM for realising it at last.
New 3 IITs would be set up in Bihar, AP, Rajasthan.
Let's have more for Gujarat, Punjab too where engineering eduation is yet missing in terms of IITs.

Government of India Union Budget and Economic Survey

Visit - http://indiabudget.nic.in for more details.

Calculate Your Taxes - Taxation Matrix

Tax Man Woman
Rs. 100000 - 150000 NIL NIL
Rs. 150000 - 180000 10 10
Rs. 300000 - 500000 20 20
Rs. 500000 - 1000000 30 30
Rs. 10, 0000+ 33 33

Gift To Parents - Medical Insurance Premium Paid For Parents Eligible for Sec 80 D Deduction

This Diwali - Insurare Your Family Completely!!

Now - Medical Insurance Premium Paid For Parents is eligible for Sec 80 D Deduction!! The deduction under Section 80-D in respect of medical insurance premium is available to an individual where it is paid to insure the health of such individual, the spouse of such individual, dependent parents or dependent children of such individual.

The word ‘dependent’ is not defined in the Section and it should be understood as a person who is wholly or mainly dependent on the individual and probably should also be understood not to mean mere financial dependence.

FM dangles carrot 'n' stick for investors in the Budget 08-09

Despite waiving of the securities transaction tax (STT) on the strike price of unexercised options, the tax is expected to hurt more. Finance minister P Chidambaram has proposed in the Budget 2008-09 on Friday that the money paid as STT should be treated like any other deductible expenditure against business income. At present, it is given a rebate against tax liability. This will mean that STT will become more expensive as deductions under business income are only given a 30% rebate.

The move is expected to make it more expensive for traders who will now be unable to get a full rebate on STT paid, Bobby Parikh managing partner BMR Advisors & Co pointed out.

The government also hopes to earn more revenue through this and the Budget estimates for 2008-09 reveal that STT collections are expected to rise to a whopping Rs 9,000 crore in 2008-09 as compared to Rs 7,500 crore revised estimate for this fiscal.

However bringing some cheer to domestic investors, Chidambaram while leaving the STT rate unchanged has also proposed that the tax in the case of options, will be levied only on the option premium where the option is not exercised, and the liability will be on the seller. In a case where the option is exercised, the levy will be on the settlement price and the liability will be on the buyer.

The move is expected to cheer up the options market, having daily trading volumes of nearly Rs 8,000 crore.

STT is levied at 0.017% rate on both the strike price as well as the premium paid for buying the option and is borne by the seller at present.

Chidambaram has also proposed increasing the rate of short-term capital gains tax to 15% from the present 10%. Investors selling their securities within one year of buying them will have to shell out 15% of the amount as short-term capital gains.

The minister in his Budget speech also said, "The move will encourage investors to stay invested for a longer time." Parikh agreed and said, "This will now be more expensive for both domestic investors and foreign institutional investors (FIIs)."

In a post Budget press conference, Chidambaram however said the move would not hurt retail investors. FIIs too will continue to have the same exit pattern as price by earnings ratio are high and so a higher tax rate would justify a short-term sale, he added.

The proposal however did not go well with domestic bourses and the Sensex dipped close to 500 points within minutes of the announcement.

Making it costlier for investors, the Budget has also proposed instituting a commodities transaction tax (CTT) on the lines of STT. Taxable commodities transactions would include sale and purchase of options in goods, options in commodity derivatives and any other commodity derivatives in recognised exchanges. The tax rate would vary between 0.017% to 0.125%. With commodity exchanges booming and investments in them at an all time, analysts feel it is the right time to introduce the tax.

The changes in STT and the higher rate of short-term capital games will give Chidambaram extra resources, which will prove useful given that he has increased the income tax threshold and provided tax exemptions to the post office time deposit account scheme and the senior citizen savings scheme. These are expected to cost the exchequer about Rs 4,000 crore in 2008-09. While higher STT collections would bring in around Rs 1,500 crore, the rest would be made up by doubling the rate of short-term capital gains.

But to give some relief to corporates, the finance minister has proposed minor changes to exempt certain activities from the fringe benefit tax net.

Chidambaram has proposed exempting expenses and payments through pre paid meal cards such as Sodexho and FoodPlus Card from hospitality expenditure while calculating the tax. Amitabh Singh tax partner Ernst and Young pointed out that this would give more administrative convenience to companies.

Expenditure on providing crèche facility to children of employees, sponsoring a sportsman who is an employee and organising sports events for employees have also been exempted from the tax.

The Budget has also proposed exempting payments made for maintenance of guest houses while calculating the tax. Chidambaram has also proposed reducing the value of fringe benefits on spending on festival expenditure to 20% from the current 50%.

Providing further clarity on the fringe benefit tax (FBT) on employee stock options (Esops), Chidambaram has also said any amount recovered from expatriate employees for FBT on Esops issued by an Indian company can be offset by the expat while paying FBT on Esops issued to him or her by their parent company abroad.

Singh said, "It is a welcome move and will clear the path for expat employees who are currently paying tax twice because of a lack of clarity on the issue." He however added that it would be up to the foreign country to accept this as an offset.

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Extension of special revival fund welcomed -Budget 08-09

The Union Budget proposal to revitalise the ageing cardamom, rubber and coffee holdings with a special fund for re-plantation and rejuvenation has been welcomed by the plantation sector. The Budget mentions that the fund will be similar to the Special Purpose Tea Fund (SPTF) formulated to increase the productivity of the tea plantations.

SPTF for re-plantation and rejuvenation of tea estates was launched last year as the biggest-ever productivity intervention programme by the Union Government to lift the tea industry's fortunes, severely dented owing to both senile tea bushes and depressed auction prices. The total corpus under SPTF is Rs 4,760 crore, spread over 15 years with a funding pattern of 25 % subsidy, 25 % promoters' contribution and the balance 50 % by way of loans from the banks.

Senile and less productive plantations are a drag on the economy and reduce the competitiveness, Ullas Menon of the United Planters' Association of Southern India (UPASI) told FE. "Re-plantation and rejuvenation of old bushes and trees help increase productivity and reduce cost. This will increase the profitability of the sector and help in facing challenges," he said. However, Prince George of Association of Planters of Kerala was apprehensive about the eligibility criteria for the fund in rubber.

"While we welcome the move, we would like to see all plantations being included in the programme irrespective of their holding size," he said. The plantation sector shares a fear that the Union Government may restrict the aid in coffee and rubber to holdings of less than 10 hectares, he added.

Rubber sector is facing problems with growers not keen on replanting due to the prevailing high prices. Besides poor yield, the quality of latex also declines, as the tree gets old. Delay in re-planting could result in lesser supply and increased cost in the future.

Prince feels that the subsidy component for rubber needs to be higher than the 25% allocated for tea, to encourage farmers with smallholdings to participate in the programme. Likewise, cardamom and coffee farmers are also facing increasing pressure to re-plant and at the same time maintain returns from their plantations.

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