Financial Daily
from THE HINDU group of publications

Saturday, May 19, 2001





US and India: Tale of two macro-economies -- I
AMONG large economies, the US is the most developed, while India is probably the least developed. It would be interesting to compare the two economies from a macroeconomic angle. The Economic Report of the President of the US gives valuable information f rom the above angle. There is no comparable document in India but by putting together the CSO's (Central Statistical Organisation) National Accounts, the Economic Survey of the Finance Ministry, and the RBI's Reports, it should be possible to obtain a co mparable picture of the Indian economy.

Pulling the plug
GIVEN THE PROBLEMS the Dabhol power project is facing, it is no surprise that tears are not being shed for the annulment of the power purchase agreement on the Reliance-promoted Patalganga project, particularly by the Maharashtra State Electricity Board.

After the polls
SO NOW the elections are over and the results are there for all the world to see -- and think about. Except for West Bengal, the point can perhaps be made that the Congress(I) has emerged the winner, so to speak.

`Fixit' fix
MR FIXIT is an adhesive that can possibly fix anything, except, perhaps, the CE Department, Pune. Mahindra and Engineering Products had imported cyanoacrylic adhesive packed in carbuoys, and passed on the same to Pack Trade for filling into metal tubes, each holding two or three gm. Since the substance hardens on exposure to air, Pack Trade had to flush out air from the tubes, using nitrogen, before filling the adhesive.

Re-drafting I-T Act
THE Income-Tax Act is being re-drafted to make it in tune with the current circumstances. In this context, the following suggestions may be considered:

Scope of Section 44AD of the I-T Act
THE then Finance Minister, Dr Manmohan Singh, introducing the Finance Act, 1994, by which Section 44AD was inserted, stated in the Budget speech: ``In addition, I am introducing a new estimated income scheme for contractors with a turnover of up to Rs 40 lakh... In the case of contractors, the net profit will be estimated at 8 per cent of the gross receipts. No further deduction on account of depreciation or interest or other expenses will be allowed... The scheme will be simple and free of irritants, a nd I expect an enthusiastic response.''

Stock exchange and the tax law
T. C. A. Ramanujam on the limitations of the I-T Department in taxing stock exchanges

No capital gains when partner retires
THE Apex Court in CIT vs R. Lingamallu Raghukumar 247 ITR 801 has affirmed the decision of the Andhra Pradesh High Court (141 ITR 674) holding that where a partner retires from a firm and receives his capital sum in the manner prescribed by the partnersh ip law there will be no chargeable capital gains.

Cotton: Meeting the global challenge
THE textile industry accounts for nearly 35 per cent of India's total foreign exchange earnings. Hence, its long-term economic well-being warrants attention. The Government's consistent support for the development of the industry is, indeed, commendable, and the Textile Upgradation Fund (TUF) deserves special mention. At the same time, impetus must be given to the raw material units to minimise the cost of production. For, in the absence of adequate raw material, the TUF alone will not help achieve the desired results.

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