05.01.2007

• Savings bank accounts may get tax sops
• The Ministry of Finance is considering:
• Tax exemption on interest income on fixed deposits up to Rs. 15,000
• Tax exemption on interest accrued on savings accounts
• Raising the TDS limit to Rs. 10,000 from Rs. 5,000 at present.
• Excise duty on cars
• Small cars suffer an excise duty of 16% and the rest of the cars are subject to 24% duty.
• Small car is one which is of 4 metres in length or less. The government is now considering revising this to 3.8 meters.
• The demand to change the small car specifications is the brainchild of the Auto Policy of 2002.
• Videocon takeover of Daewoo
• The Koreans have opposed Videocon’s bid following concerns of technology leaks and opposition over the migration of technology to Korea’s potential rival, India. Daewoo is estimated have global sales of about $2.5 billion, whereas Videocon Industries’ consumer electronics business is currently generating revenues of about $1.5 billion.
• Presidential assent to OBC quota
• The Central Educational Institutions (Reservation in Admission) Bill, 2006 received the Presidential assent on 04.01.2007.
• The act provides for
• Reservation in admission to students belonging to the SCs, the STs and the OBCs, to central educational institutions established, maintained or aided by the central government.
• The act will not apply to
• Central educational institutions established in tribal areas referred to in the VI Schedule to the Constitution, such as the North Eastern Hill University, institutions of excellence, research institutions, institutions of national and strategic importance specified in the Schedule to this act and minority educational institutions, which have been exempted as per clause (1) of article 30 of the Constitution.
• The act requires that the institutions where the new quota regime comes into practice, do not reduce the number of seats that are available for general category students from the 2006 levels.
• Mining of Pakistan – Afghanistan border
• Pakistan’s plan to fence and mine parts of the rugged 2,430 kilometer frontier with Afghanistan is seen as an attempt to fend off criticism that it does too little to stop Taliban and Al-Qaeda guerillas from crossing the border.
• The UN has voiced concern over the planned use of land mines.
• Afghan officials say militants operate from sanctuaries in Pakistan, but Islamabad insists it does all it can to stop them.
• Beer consumption in India
• Andhra Pradesh, which is the largest guzzler, along with Tamilnadu, Karnataka and Maharashtra accounts for nearly 45 to 50% of the overall beer depletion.
• All India per capita figure is 0.79 litre for FY’06 while the overall domestic volume is pegged at 813,632 litres.
• Indian IT players double share in global ADM (Application Development and Maintenance) space
• During calendar 2005, the total contract value bagged by Indian IT service providers in the large ADM contract space was $1.3 billion, which is about 17% of the global pie.
• In contrast in the first 9 months of 2006, the figure is $1.1 billion or 26% of the market.
• The penetrate and radiate approach: The Indian companies usually use master framework agreements, which have small up-front contract values, but which allow them to compete and grow from the inside.
• Diamond trade and India
• In the global diamond market, diamonds processed in India account for 55% share in value terms and 90% share in volume terms.
• Some quotes from Prof. C.K. Prahalad, the renowned management guru working at the University of Michigan’s Business School on Indian agriculture:
• “I think retailers are going to use extraordinary levels of IT to connect subsistence level farmers to national & global markets. This is going to transform our agriculture. Not more subsidies, more worries about irrigation, more fertilizers.”
• “Amul has 2.2 million farmers and processes 7 million kilograms of milk a day. It is the largest in the world.” It is a similar model; that of giving farmers an opportunity to get a fair price and eliminate middlemen, that would deliver results.
• “The solutions to India’s problems are delightfully obvious… The problems are even more obvious. The question is whether we have the courage to adopt simple solutions that work.”
• Auto fuel doping to be made mandatory
• The government is working on a proposal to make blending more than 10% green fuel with petrol and diesel compulsory from 2017.
• Textile cess abolished
• The central government decided to abolish the textile cess on all readymade garments, with a view to boos the country’s garment industry.
• At present this cess is levied at the rate of 0.05% of the production value of the textile industry, and is used to fund the activities of the textile committee. This committee was constituted by an act of parliament to ensure quality of textile and textile machinery.
• Financing infrastructure: Alok Sheel
• Estimates put India’s infrastructure investment at 3.5% of the GDP in 2003 in contrast to China’s 10.6%. To sustain the current growth rate of 8 to 9%, India needs to raise annual infrastructure expenditure from $21 billion in 2003 to $100 billion in 2010.
• Government guarantees are a bad idea not only because of back-breaking contingent liabilities loaded onto a weak fisc, but because intrinsically unviable ‘white elephants’ (such as Enron) escape critical scrutiny of financiers.
• Winner’s curse: A tendency for the winning bid to exceed the intrinsic value of the item being auctioned, common in sealed bid auctions.
• Innovations such as LPVR (Least Present Value of Revenue) and Swiss Challenge, may eliminate the winner’s curse in project bids, but they would still need to keep within bankable thresholds.
• Swiss Challenge is one in which an unsolicited bid made by a private bidder is used by Government Client as the basis for an Open Competitive Bid, giving the proponent the chance to match the best offer, after the tendering process.
• ‘Present value’ is the discounted value of a future sum or stream of cash flows.
• Benefits of temp jobs
• What are the unintended consequences of current labour laws? Manish Sabharwal, the CEO of Teamlease a leading temp staffing company lists out the following:
• Exploding unorganized employment
• Capital substitution of labour
• Lower low-skill manufacturing jobs
• Blue collar exploitation
• Corruption
• Performance of our employment exchanges
• As against 4 crores registered unemployed last year, only about 1.3 lakhs were given jobs through them.
• Benefits of temporary jobs
• They are a non-fiscal market substitute for social security
• Temping increases the strategic flexibility of employers by lowering fixed costs and not total costs
• Challenges faced by retail sector
• Paucity of experienced manpower for mid-management positions.
• Recruiting senior people with significant retail experience is not an easy task.
• With about 350 malls expected to come up in the next three years, availability of retail space is another concern.
• While tier 2 cities represent an immense opportunity, infrastructure remains a major issue.
• Lack storage equipment such as racks, fixtures and shelves. Some of them are still being imported from abroad.
• Opportunities thrown up by retail
• It is expected to generate employment in excess of 20 lakh by 2010, of which 5 to 6 lakh employees will be needed in the organized sector itself.
• A typical retail space of 275 sq ft requires an employee. WalMart employs an employee per 300 sq ft.
• World’s leading car manufacturers on sales
• General Motors 24.6%
• Ford 17.5%
• Toyota 15.4%