THE HINDU BUSINESS LINE
Financial Daily
from THE HINDU group of publications

Saturday, July 07, 2001

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Opinion

Economy
Rising profit rate in US economy
THE rate of profit is an important concept in economics. In classical economics, according to Ricardo, the net product in an economy can be equated with national income minus rents. The net product is then distributed between profits and wages. Interest income flows out of profits and is, hence, included under profits. As we are concerned primarily with the commercial productive sector, and abstract from government running enterprises from a commercial angle, profits would include taxes or tax provision s.

Editorial
Revamp commodity boards
THE P. P. PRABHU Committee has rightly called for a thorough overhaul of various commodity boards and refocussing of priorities. Notwithstanding some good work done by them in the past, for quite some time now, there has been a nagging feeling that the g overnment-funded commodity boards, export promotion councils and authorities have become unequal to the task of effectively facing the challenges of globalisation and were outliving their utility.

Mutual Funds
No options left
EVEN as the Government - in particular, the Finance Minister, Mr Yashwant Sinha, and his mandarins in North Block - and the management of Unit Trust of India (UTI) headed by its new acting Chairman, Mr K.G. Vassal, are striving hard to bail out the premi er financial institution from its unprecedented crisis, the fact remains that the package worked out within the next few days to rescue the small investors would still be a piece-meal solution.

Politics
Politics and propriety
POLITICAL events in Tamil Nadu and their echoes in Delhi have been so bizarre that one should feel relieved that the Constitution and the conventions that have evolved over five decades, could re-emerge after their eclipse for a few days and guide politi cal discourse and governmental decisions. That political sobriety and propriety of decision-makers at the national level could ensure resolution of the issues sparking emotional display in Chennai, is ultimately a tribute to the resilience of the Indian political system.

Tit for tat
AT ONE level, what happened in Chennai a week back should not raise any eyebrows because it was merely yet another episode of `tit for tat politics', which has increasingly come to rule the political scene in recent decades.

Taxation
Double injury
MANY know what jobs the Customs Department does. Add to that a new one: `Acting as scrap sales agent', recently performed for Ratan Kumar Saha. The Customs Commissioner, Kolkata, confiscated 4,500 kg of old and used metal scrap, valued at Rs 9 lakh. Saha was naturally aggrieved by the action and appealed to the Tribunal which scrapped the Commissioner's order. So, Saha repeatedly requested the Commissioner to release the goods. But, in due course, what Saha received was not his scrap but a cheque from t he Department for Rs. 1.5 lakh, as sale proceeds of the seized goods.

Transfer pricing -- Harassment in store
SECTION 92 of the Income-tax Act, 1961 has been replaced by Sections 92 to 92F through the Finance Act, 2001. Section 92, as it existed before being amended by the Finance Act, 2001, tersely said that ``where a business is carried on between a resident a nd a non-resident and it appears to the assessing officer that, owing to the close connection between them, the course of business is so arranged that the business transacted between them produces to the resident either no profit or less than the ordinar y profits which might be expected to arise in that business, the assessing officer shall determine the amount of profits which may reasonably be deemed to have been derived therefrom and include such amount in the total income of the resident.''

Better service from States?
The Shome Panel is in favour of States collecting the service tax. But will this work, asks T. N. Pandey

A leap into uncertainty
Though the gates to trading in index futures have been opened, the tax law in this regard is still nebulous, says T. C. A. Ramanujam


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