[aaykarbhavan] Business standard news updates 11-1-2014

No- tax proposal divides BJP leadership

AKSHAT KAUSHAL New Delhi, 10 January The Bharatiya Janata Party (BJP) appears to be divided over proposals that suggest scrapping of all taxes and replacing these with a single banking transaction tax. The party has decided to study the proposals further and see if a consensus emerges. The party's prime ministerial candidate, Narendra Modi, had on Sunday promised to reform the taxation system if voted to power. Those keen on the proposal to remove taxes of all kinds have found a strong supporter in the Leader of Opposition in the Lok Sabha, Sushma Swaraj. The senior BJP leader is believed to have termed the proposal " fantastic" and needing only " willpower" to be implemented. The taxation proposals were developed by a littleknown Pune- based economic think tank, ArthaKranti. A proposal suggests that all central, state and local taxes be scrapped. Only import duty would be levied. Every transaction routed through a bank would attract a two per cent bank transaction tax, it said. ArthaKranti's proposal also suggested a ban on all currency notes above ₹ 50 and restricting cash transactions to ₹ 2,000. Transactions of larger amounts would be through a bank. Differences within the senior leadership of the party emerged on January 2, when a meeting was held at senior party leader Lal Krishna Advani's residence. The meeting was called to discuss this proposal and was attended by Swaraj, former BJP president Nitin Gadkari, Leader of the Opposition in the Rajya Sabha Arun Jaitley, former finance minister Yashwant Sinha and BJP member Subramanian Swamy, among others. "Swaraj said it was a fantastic proposal. She said we only needed willpower to get it implemented," said a senior party member who attended the meeting. " I was aghast that the top leadership was even discussing such a proposal." At the meeting, Swaraj, Gadkari and Swamy were believed to have endorsed the tax proposals. Sinha and Jaitley opposed these, arguing that withdrawing state taxes would be opposed by the state governments. Further, Sinha argued the proposals were regressive and would spread panic among people. Gadkari said over telephone from Nagpur: " Swaraj supported the proposal. But Jaitley had some reservations on how practical some of the suggestions were, like whether states would be comfortable giving up some of their powers." He said the proposals were being studied and would soon be sent to the BJP's parliamentary board. Gadkari and Swamy have been vocal advocates of the notax proposal and were behind organising the presentation at Advani's residence. Earlier this week, Gadkari had even given a presentation on the proposals to select journalists. He said he had been discussing the proposals with various groups. Swaraj, Gadkari and Swamy believed to have supported plan to scrap all levies but Sinha and Jaitley against it FREEDOM FROM TAX What Pune- based think tank ArthaKranti proposed: |Complete withdrawal of taxation system |Retain only Customs and import duties |Impose a bank transaction tax of 2% |Withdraw currency notes over ₹ 50 |Make legal provisions to restrict cash transactions up to ₹ 2,000 ECONOMY 4 > >India bets on Modinomics, whatever it is

Moily clears projects worth ₹ 1 lakh cr within 20 days  As will several other major projects, with Moily in charge at

BS REPORTER New Delhi, 10 January Within 20 days, officiating Union Environment Minister MVeerappa Moily has cleared projects worth a little more than ₹ 1 lakh crore, including the one from South Korean steel major Posco, attracting the largest foreign direct investment in India so far at ₹ 54,000 crore. The minister has been instrumental in even a U- turn in nuclear policy, by giving environmental clearance for the 2,800 Mw atomic power project at Gorakhpur in Haryana by Nuclear Power Corporation of India, which would see an investment of ₹ 23,000 crore. Others having got a green clearance include a ₹ 6,000 crore (800 Mw) project of NHPC in Arunachal Pradesh, a ₹ 5,000crore deepwater container trans- shipment port to be set up at Vizhinjam in Kerala, expansion of a coal beneficiation plan by Global Coal and Mining in Odisha by two million tonnes annually, a ₹ 467 crore Kapurdi Lignite Mine Project in Rajasthan and Indian Oil Corporation's ₹ 5,000 crore liquefied natural gas LNG terminal (five mt capacity) at Ennore in Tamil Nadu. Moily confirmed giving approval for revalidation of environment clearance on Friday, which was stuck due to issues relating to forest and environment clearance and land acquisition since 2005. This comes ahead of South Korean president Park Geun- hye's visit to India on January 15. The initial requirement of land for the 12- mt integrated steel plant was 4,000 acres. Of this, 2,700 acres is required during the first phase comprising 8 million tonne steel capacity. " I am clearing at least 80- 100 files on an average per day. I will not allow any project to be stuck here," Moily told Business Standard, when asked about the fast pace of clearances the ministry has been witnessing after he took charge. Moily took charge after former minister Jayanthi Natarajan resigned on December 21. She was heavily criticised for holding up projects worth ₹ 10 lakh crore. Meanwhile, Moily who also handles the petroleum ministry, has cleared 70 oil and gas blocks for bidding in the coming round of New Exploration Licensing Policy auctions. The blocks for the next round of Nelp auctions would be announced on Sunday. According to reports, at least 35 mega projects worth above ₹ 1,000 crore each, were held up for final clearance by Natarajan. For the criticism of being the roadblock for even projects cleared by the Cabinet Committee on Investment, Natarajan had said, " Only eight per cent of projects that need environment clearance comes to MoEF ; the rest are cleared by the respective states and regional offices. Hence, it is wrong to say that I was sitting on projects with huge investment figures." Kapurdi Lignite Mine Project in Rajasthan 467 Major projects/ investments (₹ crore) FAST- TRACK Posco' s 12 MT steel plant, Odisha 52,000 NHPC' s Arunachal Pradesh hydro project 6,000 NPC' s 2, 800- Mw power plant in Haryana 23,000 Ennore LNG terminal 5,000 Vizhinjam deepwater container transshipment port 5,000 environment ministry; says he's clearing 80- 100 stuck files daily POSCO GETS GREEN NOD

 

Govt's Suuti stake sale set to evoke good FII interest SNEHA PADIYATH Mumbai, 10 January The proposed sale of government shares in ITC, Axis Bank and Larsen & Toubro ( L& T), held under the Specified Undertaking of Unit Trust of India ( Suuti), is expected to sail through smoothly. Fund managers and brokers said the shares were likely to be lapped by institutional investors, including foreign ones, whose appetite for Indian companies with healthy earnings' prospects has been voracious. "There is a lot of appetite among investors for these stocks as these are good companies with good long- term prospects. These stocks are very liquid and there is also a lot of foreign institutional investor ( FII) interest in these," said Rikesh Parikh, vicepresident, equities, Motilal Oswal Securities. Suuti, the restructured unit of the UTI, holds 23.58 per cent stake in Axis Bank, 11.54 per cent in ITC and 8.27 per cent in L& T. The total value of government's holdings in these was ₹ 47,500 crore as on Friday. The stake sale could help the government reach its divestment goal of ₹ 40,000 crore for FY14. Last month, the government had approved Axis Banks proposal to raise the foreign investment limit in the lender to 62 per cent from 49 per cent. Brokers said the bids in these sales were likely to be higher in Axis Bank and ITC than L& T, bogged by concerns on its outlook. But, L& T may interest long- term foreign institutional investors, such as pension funds, said brokers. Investment bankers and industry officials have ruled out the possibility of any foreign player acquiring a controlling stake in ITC and L& T. Bankers said a reason for the delay in the sale of stakes in ITC and L& T have been worries about covert acquisition attempts. ITC was a target of such a takeover attempt in 1996, when British American Tobacco, the single largest shareholder in the company, made a bid to take control. But, the attempt was not successful after the government intervened. L& T was also a target of such attempts in the late 1990s. Analysts said the government will not need to price the share sales at a steep discount. They expect the shares to be under pressure in the near term. "Initially, there will be some correction in the stock prices because investors would look at offloading the shares first and buying it during sale," said Parikh. Analysts expect the government to lap ₹ 14,000 crore. Market participants expect the sale to be done in tranches, to avoid huge liquidity pressures on the market. " Liquidity would get sucked depending on how the government goes about the sales. However, there will not be a huge impact on the market," said Dipen Shah, senior vice- president, research, Kotak Securities. I- bankers rule out possibility of a foreign player acquiring a controlling stake in ITC, L& T ITC Stake 11.30% Shares ( mn) 896.72 Price (₹) 322.45 Value: ₹ 28,915 cr Stake 20.72% Shares ( mn) 97.22 Price (₹) 1,164.55 Value: ₹ 11,322 cr Stake 8.20% Shares ( mn) 75.93 Price (₹) 956.00 Value: ₹ 7,258 cr THE SLICES FOR SALE Specified Undertaking of the Unit Trust of   Google linking of social network contacts to email raises concerns REUTERS San Francisco, 10 january A new feature in Google Inc's Gmail will result in some users receiving messages from people with whom they have not shared their email addresses, raising concerns among some privacy advocates. The change, which Google announced on Thursday, broadens the list of contacts available to Gmail users so it includes both the email addresses of their existing contacts, as well as the names of people on the Google+ social network. As a result, a person can send an email directly to friends, and strangers, who use Google+. Google is increasingly trying to integrate its Google+, atwo- and- a- half- year old social network that has 540 million active users, with its other services. When consumers sign up for Gmail, the companys Web- based email service, they are now automatically given a Google+ account. Google said the new feature will make it easier for people who use both services to communicate with their friends. "Have you ever started typing an email to someone only to realise halfway through the draft that you haven't actually exchanged email addresses?" the company said in a blog post announcing the feature. "You're in luck, because now it's easier for people using Gmail and Google+ to connect over email." Google said that users who did not wish to receive email messages from other people on Google+ could switch the settings so that they receive messages only from people they have added to their networks of friends or from no one at all. Some privacy advocates said Google should have made the new feature " opt- in", meaning that users should explicitly agree to receive messages from other Google+ users, rather than being required to manually change the setting. Marc Rotenberg, the executive director of non- profit Electronic Privacy Information Center, called the new feature "troubling". "There is a strong echo of the Google Buzz snafu," he said, referring to a social networking service that Google launched in 2010.

 

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CS A Rengarajan

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