Finance Minister P Chidambaram has asked the Income Tax department to focus on the companies that pay less than effective tax rate of 24 per cent.

Know the companies that pay low tax

Business Standard

Foreign institutional investors (FIIs) have been worried about the rising debt levels of India&rsquo;s large business groups for some time. But their latest concerns focus on the presence of the chief of a major infrastructure group on the board of the Reserve Bank of India (RBI), which regulates the banking sector. He was inducted last September for a four-year period. On the face of it, there is nothing unusual in this since chiefs of other corporate groups also serve on RBI&rsquo;s board, Azim Premji and Kumar Mangalam Birla among them. But FIIs have recently raised the issue of a conflict of interest because the group has a debt of approximately Rs 30,000 crore and an interest coverage ratio of 0.6, which means that the group&rsquo;s earnings are not sufficient to service its debt. True, the group is not looking at restructuring its debt so these questions are being raised pending its reported asset sales.

Across the board

Finance Minister P Chidambaram on Monday asked the tax department to go after low tax-paying sectors. The minister said though the applicable tax rate for companies was 30%, the average tax rate came to 24% and even lower.

'Below-average' taxpayers

Certainly, the current scandal over coal that has convulsed the media and stalled Parliament was on everyone&rsquo;s mind at the ACMA convention. In his speech &ldquo;Motorcycle Maharaja&rdquo; Pawan Munjal said as a child he recognised &ldquo;Colgate&rdquo; as a toothpaste that made your teeth white; with &ldquo;Coalgate&rdquo;, the association was with something dark. He also observed that mass hysteria has been caused by technology leading to the exodus of north-eastern people from south and west India. Yet it is this uncertainty, he claimed, that holds the key to future success. &ldquo;The future belongs to those companies who can embrace uncertainty and do rapid mid-course corrections in these times.

Change in black & white

Indeed, the change to which Munjal was referring has directly impacted him too.

All for sport

Apropos the issue of whether we need the cash reserve ratio (CRR) or not, Deputy Governor K C Chakarbarty needs to rethink his position that regulatory issues need not be subjected to debates. If the Constitution of India can be amended 116 times over 62 years, why can&rsquo;t we consider changing the regulatory framework? State Bank of India Chairman Pratip Chaudhuri&rsquo;s suggestion that CRR doesn&rsquo;t benefit anybody can&rsquo;t be denied. It&rsquo;s a well known fact that banks&rsquo; profits are under stress because of non-performing asset (NPA) norms, and the money locked up as CRR and statutory liquidity ratio.

Letters: CRR is not beyond debate

This refers to the controversial remarks made by both the Thackeray brothers on Biharis. Mumbai has a huge heart: it has accommodated industrialists like the Tatas alongside union leaders like George Fernandes. The city belongs to Gujaratis, Parsis and Biharis as much as it does to Marathis. A truly cosmopolitan culture should have enough space for people from across India irrespective of their regional identities. Perhaps the Thackeray brothers can learn a thing or two from Bollywood that is based in Mumbai and has accepted people from all over India whether they are Punjabis or Bengalis. It is high time the two leaders focus on more serious issues that ail the financial capital of India instead of inciting people by making provocative speeches.

Letters: Learn from Bollywood

Birla Sun Life Short Term Fund has been ranked in the top 30 percentile in the short term income funds category for the past two quarters under the CRISIL Mutual Fund Ranking methodology.

Fund Pick: Birla Sun Life Short Term Fund

Greeted with a lal salaam (red salute) by a comrade on the eve of a central trade unions convention this week, a veteran leftist trade unionist sighed and replied, &ldquo;It is no longer lal salaam, comrade. Maybe we can say peela [yellow] salaam.&rdquo; Red (the traditional colour of communism) was in serious danger of fading away, he explained, adding, it was already diluted after allying with trade unions representing all hues including saffron and the bonding has been going strong for the second year running. He then added that the unions were in peril, whether of red or any other colour. Anyone can sack 500 workers and we are not able to do a thing, he said gloomily.

'Peela salaam'

White churidar-kurta or safari suits have long been a mark of the Indian male politician. But the Bharatiya Janata Party (BJP) wishes to use white outfits to establish that its members, especially the chief ministers, are Mr Cleans. At a public meeting in Raipur over Coalgate, Rajnath Singh, the former party president, made the eccentric suggestion that Chhattisgarh Chief Minister Raman Singh should continue wearing white &ldquo;because a small blot will focus on the white colour&rdquo;. Now, the Madhya Pradesh chief minister normally wears white trousers and shirts, so he doesn&rsquo;t have to make much of a change. But it is unlikely that anybody else in the state BJP will wear coloured clothing any longer, lest they be accused of corruption.

Dress code

Students in India mostly lack soft skills and are oblivious of the skill set required in a particular job. Tie up will not only help student in technical and soft skill but student will also see their goal from beginning and thus can orient their studies to gain knowledge. Besides, these tie ups will force university, colleges to update their syllabus as per the need of the industry. Students will also be able to involve themselves with the live project of the industry thus gaining first hand experience in that field. Thus it will help to generate more employable youth.

Students' corner

Recently, senior Bharatiya Janata Party leader Rajnath Singh told ministers in the BJP-ruled Chhattisgarh that party members would quit office if any allegations of corruption were levelled against them. They would follow the example, he said, of Lal Krishna Advani, who threatened to quit the Lok Sabha with a vow to return only after his honesty was proven. This thundering speech has left ministers in the Raman Singh Cabinet in shock. They are convinced that their political opponents will use this pronouncement to grill them on corruption that will oust them from the state Cabinet.

Knock-on effect

This refers to Abheek Barua&rsquo;s article &ldquo;Look beyond the repo rate&rdquo; (September 4). It is true that a small rate cut will make no difference to the interest rates available to most borrowers. It has been observed that the 50-basis points reduction in the repo rate in April, although beyond market expectations of 25 basis points, had no significant effect on borrowing costs. In fact, we cannot expect a significant interest-rate cut for corporate borrowers in the medium and large-scale segments unless the repo rate is brought down by at least 200 basis points from the present level. This is because of the inefficiency of financial intermediation in the country, as indicated by the prevailing high net interest margins (NIMs). Most Indian banks have NIMs in the range of three to four per cent, which is quite high by global standards.

Letters: Look beyond NIM too

This refers to your edit &ldquo;Debating cash reserve ratio&rdquo; (September 4). At a time when the Reserve Bank of India (RBI) has been fighting a persistently stubborn bout of inflation in the country, the debate on the relevance of the cash reserve ratio (CRR) is unfortunate. RBI has kept multiple tools of credit control to address multiple objectives and the CRR has been used to manage structural changes in liquidity. Although liquidity can be managed through open market operations, the inadequate size and lack of depth in the Indian bond market limit the potency of that tool. Even if the banking regulator agrees to do away with the CRR, the funds that are released to the banking system cannot supplement the liquidity position of banks. Perhaps one way to pacify banks is to reintroduce interest payable on such deposits held as CRR with the central bank.

Letters: RBI needs CRR

The government&rsquo;s sudden move to introduce the Bill to provide reservations to the Scheduled Castes and Scheduled Tribes in job promotions smacks of an agenda to gain political mileage. There&rsquo;s been much discussion in various fora about the need for continuing with the reservation policy. It is high time the leadership stopped pandering to religious or casteist considerations.

Letters: For political gains

The top 10 deals accounted for 42.6% of investments in terms of deal value. In the largest deal, Bain Capital Advisors India invested $1 billion in information technology company Genpact.

A Snapshot of PE activity & deals

The ongoing investigations into wrongdoing in the allocations of coal blocks for captive mining are far from complete. The Central Bureau of Investigation (CBI) has so far filed five FIRs, naming, among others, a Congress member of Parliament, Vijay Darda. Mr Darda and his brother Rajendra Darda, who is education minister in the Congress-Nationalist Congress Party alliance government in Maharashtra, have been named for criminal conspiracy and misrepresentation of facts.

Behind the curve

Users of the 28-kilometre-long Delhi-Gurgaon expressway will not be required to pay toll tax for the next fortnight, thanks to an order the Punjab and Haryana High Court issued on Tuesday. The court was evidently annoyed with the failure of Delhi Gurgaon Super Connectivity Limited, which operates the expressway, to devise a more efficient method of toll collection and ease traffic congestion at the toll plazas.

Fixing expressways

Online term plans are usually considered hassle-free purchases and offer large coverage at an economical price.

Life Insurance: Deepak Sood

&ldquo;The Q1 numbers were good due to a satisfactory winter crop harvest; the monsoon shortfall is expected to affect summer crop production.

Is the worst over for the economy?

Most bureaucrats say it is tough to get a scheme cleared by the government without detailed questioning. Some of them, however, know the tricks of the trade. When the finance ministry was finalising the equity savings scheme, officials came up with a solution to avoid any problems getting it passed. They placed a photograph of the late former Prime Minister Rajiv Gandhi on the first page of the presentation and named the scheme Rajiv Gandhi Equity Savings Scheme. The rest followed smoothly; the scheme was announced in the Budget and is likely to be notified this week.

Business Standard

Business Standard

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