Vol. 25 No.12 March 2012
IN 4 4
President’s message Chamber’s Activities • Seminar on Transfer Pricing • Discussion on Indian Economy – Taking Stock of Things • Workshop on Post-Union Budget • National Conference on Potential & Strategies for Public Private Partnerships in the Urban Water Sector
THI S
I SSUE
• Seminar on Propelling Growth of SEMs through IT • MCCI-MMA Video Discussion on Team Work : How Synergy Succeeds 4 General Committee 4 SPOT LIGHT BRICS 4 Budget Highlights:
• Union Budget • Railway Budget • TN State Budget 4 Press Releases 4 Policy Watch 4 Coffee Table Book – Review by The Hindu 4 Increase in US Visa fee 4 Economic Review
Seminar on Transfer Pricing
S Suresh Kumar, Joint Commissioner – Transfer Pricing addressing. Seated l to r: R Sethuraman and K Saraswathi.
Discussion on Indian Economy – Taking Stock of Things
Speakers seated l to r : T C A Srinivasa Raghavan, R Raghuttama Rao,T Shivaraman, Vice-President, MCCI, C R Rajan and M R Venkatesh.
Workshop on Post Union Budget
T T Srinivasaraghavan, President, MCCI delivering the welcome address.
K Vaitheeswaran addressing.
National Conference on Potential and Strategies for Public Private Partnerships in the Urban Water Sector
Dr S Narayan, IAS., (Retd.) addressing. Seated l to r: Deepa Karthykeyan(Athena), S Krishnan, IAS., Secretary, Finance Department, (Expenditure), GOTN, Suresh Prabhakar Prabhu, Member of Parliament & Former Chairman, Task Force for Interlinking of Rivers, T T Srinivasaraghavan, President, MCCI, Mike Nithavrianakis, Deputy High Commissioner, British Deputy High Commission and T Shivaraman, Vice-President, MCCI.
Sriram Seshadri addressing. M R Venkatesh at the mike.
Seminar on Propelling Growth for SMEs through IT
S Sivagnanam, Director, MSME Development Institute addressing. Seated l to r: Clynton Almeida and K Saraswathi.
MCCI- MMA Video Discussion
Roshy Sebastian, Trainer, conducting the video discussion. 2
PRESIDENT’S MESSAGE large cities, construction of 2,000 km of 6/8 lane highways, industrial corridors, three Greenfield ports and five minor ports - all sound quite exciting. Thrust to SME clusters and efforts to boost agricultural growth are equally laudable. Skill Development is also a national priority now.
Taking Tamilnadu to the Top On March 22, the Tamilnadu Chief Minister released the Vision 2023 Document for the State, which is “a Strategic plan for infrastructure development to catapult Tamil Nadu to a high growth plane“ as the CM states in her foreword. This, according to her, is the first part. The second part, with project profiles and with investment details and the third part with the road map for implementing the longterm initiatives are expected to be released shortly. Infrastructure has become the key word for any discussion on development. It is therefore heartening to see that the soul of the Vision 2023 is the ambitious projection of Rs 15 lakh crore investment in State infrastructure. Equally heartening is the progressive target of 11% growth rate of GSDP with manufacturing growth rate aimed at 23 %. The signature projects such as developing 10 world class Centres of Excellence, setting up two medical cities, doubling water storage capacity, high speed broadband connectivity to every village, two supercritical and other power projects of cumulative 20,000 MW capacity, gas grid connecting ten
The ten objectives sought to be accomplished in the 11 years deserve appreciation. This includes raising the per capita income of Tamilnadu's residents to $10,000 per annum (at 2010 prices) from the present $1,628, bringing about a high standard of social development, with the Human Development Index of the State matching those of developed countries by 2023, providing high-quality infrastructure all over the State comparable with the best in the world, and making Tamil Nadu the knowledge capital and innovation hub. Though there are some questions raised about the feasibility of the Vision, I am optimistic that, given the entrepreneurial mettle of our business community, attaining these goals is not impossible. Tamilnadu has been a progressive State all along, leading in many fronts. Our entrepreneurs have battled many odds and have managed to stay afloat even in difficult economic situations, thanks to their vibrant business spirit and other favourable factors. Such a forward looking vision, which is also the dream of business and civil society, is therefore, a welcome one. However there are two critical points that must be borne in mind. One is that infrastructure and investment is a chicken and egg game. If the State provides good infrastructure, more investments will come in whereas the Vision
talks about investment into infrastructure development! This definitely requires a great deal of planning and detailing- especially when nearly 40 % of the total investment of Rs. 15 lakh crore is expected from the private sector. The second important point for the Vision 2023 to become a reality is faultless execution; otherwise, plans will remain largely on paper. Quick and transparent decisions and time bound implementation of projects are the prerequisites, especially on the infrastructure front. The administrative machinery of the State has to gear up and buy into this vision. Given the complexity and the scale of Vision 2023, it is absolutely vital that the various stakeholders, including Chambers and Associations, be involved in this historic initiative, through formal, periodic consultation and interactions. If all these are made possible, then the major socio economic transformation of the State, as envisaged by the Vision 2023 document could well become a reality. The Chamber is happy to pledge its support! Best Wishes
T T Srinivasaraghavan President
CHAMBER’S ACTIVITIES 2nd March 2012:
the prices at which the enterprises transfer the
Seminar on Transfer Pricing:
goods and intangible properties and services
Transfer Pricing is an important evolution in the corporate arena that tax executives the world over are required to handle today. With various policies and rules being introduced and implemented, Transfer Pricing has become one of the top tax issues affecting the corporate tax management. Indian tax
to the associated enterprises. Considering the strict penal provision and tax implications, he said it is essential that Finance and Taxation Executives of the Corporates look deeply into all the international transactions
and Don’t as asfollows: DO’s l Every
Company
entering
into
an
international transaction shall do necessary documentation for each such transaction / relationship.
and structure them properly before-hand to
l To compute arm length’s price by
avoid disputes with the Government.
choosing one of the prescribed methods being the most appropriate method
authorities have increased their focus on
Any adjustment in the Transfer Pricing during
international transactions between related
the Assessment, will attract 100% to 300%
l Maintain full information and documents
parties, auditing of inter-transactions and
tax on the adjusted amount and failure to
in support of the method so adopted and as
issues connected with Transfer Pricing. Due
maintain accounts, furnish documents,
prescribed under the Transfer Pricing Rules.
to exponential growth of global business
furnish Accountants Reports reaps further
activities of Indian Companies, understanding
revenue to the Government @ 2% of
l Prescribed information and documents
Transfer Pricing and updating oneself about
the value of such adjusted international
the current approach to the same has
transaction for each failure plus Rs. 1 Lakh.
become very important.
Indian Transfer Pricing
authorities are
8 years from the end of relevant assessment year. l Submit Accountants Report in Form 3
To understand and analyse the issues
increasingly
involved, the Madras Chamber organised
addition in the last 7 years is more than
a half-a-day Seminar on Transfer Pricing at
Rs.85,000 crores and in more than 60% of
Pleasant Days Resort,
the cases, ‘adjustments’ in the arms length
professionals for advice and support.
price have been made.
Don’ts
Transfer Pricing disputes in India are the
l Don’t
Mrs K Saraswathi, Secretary General of the
highest among the Global Transfer Pricing
transaction
Chamber, welcomed the participants and
Disputes.
Sembarambakkam
(Near Queensland Theme Park).This was one of the outreach programmes of the Chamber.
informed them of the recent initiatives of the Chamber – particularly the setting up of the Vocational and skill Development Centre and the Sustainable Chennai Forum. She said that the Chamber is willing to focus on the need based programs outside the metro limits and welcomed the members to come out with their suggestions of subjects that they want trainings to be organsied. Mr.R.Sethuraman, Senior Vice PresidentFinance & Corporate Affairs, Hyundai Motor India Ltd. thanked MCCI for organizing a seminar on Transfer Pricing especially for the
aggressive and estimated
must be kept and maintained for a period of
arm’s length price
have raised the issue of “arm’s length return” for the entities that are not legal owners but have economic ownership because of usage. The notion of economic ownership Vs legal ownership, will have to be dealt with, along with the valuation of the intangibles. MNCs are faced with a host of tax litigations.
Hence, to provide clarity and
l Don't fail to maintain proper records / information pertaining to actual workings carried out for determining the arm’s length price l Don’t enter into any oral contract /
understanding
of
any
international
transaction.
certainty, introduction of an advance pricing
In his address, Mr.S.Suresh Kumar, Joint
arrangement (APA) could be beneficial.
Commissioner-Transfer Pricing who was
are located.
could be introduced.
4
international
transfer pricing assessment proceedings,
mechanisms, certain safe harbour provisions
place among the related parties”. These are
any
to the prescribed methods of computing
Tiruvallur Districts, where many of the MNCs
“value of prices at which transactions take
conceal
l Don’t conceal income by not conforming
Apart from the above dispute resolution
definition of “Transfer Pricing” which means
l Always engage qualified and experienced
He further said, Indian tax authorities, in recent
Corporates located in Kancheepuram and
In his address he explained the simple
CEB within the time prescribed.
Safe harbour rules
provide for the circumstances in which tax authorities would automatically accept transfer prices. He informed the participants of some Do’s
the Chief Guest, thanked the MCCI for the opportunity given to him to inaugurate the seminar. He said he was recently transferred to the Transfer Pricing Department and has earlier worked with various departments namely
Investigation
Directorate
and
corporate and business circles. He appealed to the corporates and participants to bring
CHAMBER’S ACTIVITIES to his notice any issues relating to TP. He
some commentators, the Indian economy
All these seem to raise lot of questions not
said TP should not be looked as merely
is now virtually on the threshold of a crisis
only in the minds of the policy makers but
a year-end compliance activity. He stated
arising out of three deficits – Current Account,
with all sections of people. What would
that the Dispute Resolution Panel (DRP) has
Governance as well as Fiscal Deficit.
be the outlook for next FY, how the Indian
substantially improved its working within the current legal framework. He further said that face to face discussions would help to sort out many issues.
Questions arise whether some the above are only short term cyclical dip or long term fundamental problems. Are there any silver lines in the whole gloomy economic picture
Mr.Hardev Singh, Executive Director and Mr.Aravind Srivatsan, Partner, BSR & Co., made presentations on the recent TP assessments.
now? With
businesses will perform domestically and globally, would the high inflation we have been experiencing remain the same, these are some of the uncertainties we face to day. He hoped that the presentations and the
annual
budget
of
the
Central
Government around the corner, the Chamber
interactions from the participants will lead to interesting and useful deliberations .
The programme was attended by about 70
deemed it fit to host a discussion meeting
Mr M R Venkatesh, Chairman of the
delegates.
consisting of eminent experts who could
Chamber’s Expert Committee on Economic
throw some light on the issues on hand.
Affairs anchored the programme.
Mr T Shivaraman, Vice-President of the
The speakers then made their presentations
Chamber presided over the meeting. In his
as follows:
***********
2nd March 2012:
Discussion on “The Indian Economy – Taking Stock of Things”: Indian Economy is once again at cross
welcome he said that the Madras Chamber is in its 176th year of service to trade and industry and these kinds of programmes are almost part of our DNA - be it a pre-budget
Mr R Raghuttama Rao, Managing Director, ICRA Management Consulting Services Ltd.
analysis, analyzing the state of the economy
Making his presentation on the ”State of the
at different stages, post budget analysis and
Economy and Business Environment – How
above all, impact of all this on trade and
do we get back to the path of growth,” Mr
growth in Farm sector tepid. Inflation seems to
industry.
Rao said the deceleration in GDP growth
be extremely sticky and the monetary stance
He said all of us are part of the system in one
adopted by the RBI had a debilitating impact
way or the other. There are concerns about
on growth and not on inflation. Consequently
the decelerating GDP growth rate – a recent
we have been witnessing a huge trade deficit
report reads at 6.1% - lowest in the last few
– estimated at approximately US$ 15 billion
years. It is not long ago when we were talking
every month- which in absolute and relative
about a double digit growth but with global
terms is a cause of concern.
developments and local actions or inactions,
Simultaneously the fiscal deficit – and more
this has almost been forgotten now.
roads. While the growth in services sector seems to have plateaued, the growth in the manufacturing sector is spluttering and
importantly the revenue deficit – is also a
The
current discussion is whether we will sustain
huge cause of concern with the government
at least this growth or do slightly better.
unable to control its spending. On the other
There are lot of speculations, debates,
hand, given the state of the economy, newer
dilemmas on the Indian economy and how
avenues to raise taxes seem to be virtually
businesses are doing now. The RBI has, as
non-existent.
we all know raised the interest rates 13 times
The net effect: The Indian economy seems
within a period of 18 months to tame the
to be under-performing on infrastructure, manufacturing, mining, power and of course
rising inflation bug but not much results were seen. Rather there is a feeling that this
on certain structural and social sector issues.
has affected the growth momentum .
More importantly with repeated scams
The fiscal deficit about which we were all
hitting governance, the trust deficit – so very vital for the growth of the economy - seems to be burgeoning by the day. According to
arguing should be controlled, has in fact exceeded the budgetary level even before we reached the budget period.
rates has been causing concern. While the services sector has managed to grow at over 9%, the industry sector has shown the steepest fall. Speaking about the trends in consumption expenditure, he said private consumption has fallen; the gross fixed capital formation has been a casualty; and there has been a stagnation of investments over the past few quarters. He said growth in the current year is distinctly below potential and continues to fall; the weakening investment sentiment and poor external demand seem to be the main drivers although high bouts of inflation is also impacted. Industry has slowed down and there is drop in mining, manufacturing and construction as well as sharp fall in corporate investment activity. Credit growth has slackened he said and there is fall in demand due to slowdown and poor sentiments. Does good economics gel with success 5
CHAMBER’S ACTIVITIES
said that due to various political and other
He stressed that Government should pass
compulsions and pressure to give freebees
compulsions,
important
the Goods and Services Tax, the Companies
will always be there in a democracy. The era
decisions are being taken by the Central
Bill 2011 and the Direct Taxes Code replacing
of coalition politics will stay and the Centre-
Government and this has also slowed down
the Income Tax Act at the earliest.
State tensions will grow.
the economy which is already under the
in politics? he asked.
There are political
However, he said the balance between technocrats and politicians is likely to get better and the success stories will tend to inspire better governance and decisionmaking. More globalization of India will create new forces for reform on politicians. He felt that business of Government should be to govern the nation. It should enable
practically
no
impact of the global crisis. He also mentioned that the high machineries like the Planning Commission are not looking at the ground realities and do not come out with practical
There was a very interesting Q&A Session after which with formal vote of thanks by the Secretary General, the meeting concluded with dinner.
analysis of the economic situation and offer
The programme was supported by Cosmos
realistic and feasible solutions.
Bank who recently started their first branch in
Mr C R Rajan, Former President (Strategy)
Tamilnadu in Chennai.
Murugappa group:
******
economic growth of 10% p.a. in real terms
Mr Rajan made a presentation on
in a sustainable and reasonably distributed
Indian Economy – Looking Back and Looking
manner. It should facilitate the creation of
forward”. He said the following 8 major
meaningful jobs in adequate numbers; create
trends were shaping the Global Business
conditions for provision of goods and services
landscape namely:
Workshop on Post Union Budget 2012:
l Urbanisation
This is an annual exercise of the Chamber
l Global rebalancing
the presentation of the Union Budget by the
and keep inflation and fiscal position in check. Agriculture sector should grow by 4% - this is possible by increasing productivity; focusing on technology; new models to handle scale,
l Infrastructure boom
risks,investments and training; restructure of
l Expensive capital/resources
subsidy framework.
“The 17th March 2012:
wherein a workshop is held immediately after Finance Minister to analyse the implications of the Budget. This year the workshop was held on 17th March, a day after the presentation
l Emergence of mass affluent
of the budget, at Hotel GRT Grand.
by 12% if focus is given to sectors where
l Technology boom
Mr
India is competitive globally namely auto
l 2nd Agricultural revolution
We can expect manufacturing sector grow
engineering, electronics, consumer goods,
T
T
Srinivasaraghavan,
President,
welcomed the gathering and said the budget was on the expected lines and we can hope
l Energy scarcity
for better things in the next year’s budget.
and coal should be overhauled completely;
He said there were many opportunities to
He said the annual budgets are always full
Labour reforms must take place. GST should
emerge in the power sector.
textiles, food processing, etc he said. Electricity
be in place.
Coming to investments and savings he
On the role of Government in skill
said Indian banks continue to remain well
development, he felt Government should
capitalised as per Basel II requirements.
expand NSDC and enable it to scale; establish
NPAs are at manageable levels despite the
sector skills councils, train the trainers
downturn.
and combine MGNREGA with basic skill development. Mr T C A Srinivasa Raghavan, Senior Associate Editor, The Hindu Business Line: Mr Srinivasa Raghavan pointed out that RBI ‘s efforts to curtail inflation through interest hike has not yielded necessary results. He
He said structural reforms were on their way
know how much we have achieved. Over the years, everyone has been awaiting to listen to the budget with much keenness with the hope that it will have something to cheer about. This year’s budget seems to have a stiff dose on indirect taxes.
– e.g.
He said the GDP projected to grow at 7.6%
l Discussion paper on licensing new private
the attention of the audience to a news item
sector banks issued in August 2010
for 2012-13 seems to be far away. He drew in the Hindu on 17th March titled “When
l Discussion paper on presence of foreign
Madras Opposed the Budget”. The first ever
banks to be issued shortly
budget of the country was presented on
l Working group looking into holding company structure
6
of promises, assurances, etc. but we do not
18th February 1860 in the imperial capital of Calcutta. In Madras, the imposition of income
CHAMBER’S ACTIVITIES
tax met with spirited protest. Henry Nelson,
Seshadri said - it is a sad state of affairs. 24
understandable. However the question
Chairman of Parry & Co., and Chairman
retrospective amendments have been made.
remains whether this is enough justification
of Madras Chamber of Commerce, led the
No changes in corporate taxation while there
to change the law with retrospective effect.
protest. Public meetings were held. The then
is a slight reduction in STT.
Governor of Madras Sir Charles Trevelyan opposed the budget. However, later the spirited Governor who fought income tax had to implement it!
Minimum Alternate Tax at the rate of 18.5%
On international taxation, he said the income
extended to firms, AOPs and individuals who
deemed to accrue or arise in India under
claim deduction under Chapter VIA.
provisions of Section 9(1) has been given retrospective effect from 1st April 1962. This
Major amendment in capital gains tax – value of consideration to be the fair market value.
The Chamber has a long and glorious
will have tremendous implications. Section 9
tradition of debating the budgets and
is a deeming provision which provides that
His presentation was followed by an address
sending the post-budget memorandum
income accruing or arising whether directly or
by Mr M R Venkatesh, Chairman of the
to the Government for consideration. This
indirectly through the transfer of capital asset
Expert Committee on Economic Affairs of the
year too a memorandum will be sent to the
situated in India shall be deemed to accrue or
Chamber. He said the indirect tax collections
Government shortly.
arise in India.
are going to be huge. Government had
He said the message is clear that tough times
He also spoke of validation clause and royalty
are ahead for every one of us.
being taxed in India. On obligation to withhold tax, he said
Consultant and Chairman of the Chamber’s
amendments have been made to the effect
Expert Committee on Indirect Taxes, made
that the obligation to withhold tax would
a presentation on “Analysis of Indirect Tax
also extend to non-residents whether or not
Proposals”.
such non-resident has a place of residence in
K.Vaitheeswaran,
Advocate
&
He said the Budget 2012 will be cruel
India.
and the budget 2013 will be kind
On transfer pricing, he said the international
because it will be with an eye on elections.
transaction
This year’s budget is harsh budget indeed as it seeks to raise resources through indirect taxes which hit the rich and the poor alike, the latter more than the former. A huge hike in indirect taxes will cause a fall in both savings and consumption, achieving the opposite of what was intended.
definition
estimated revenue and hence the 6% fiscal deficit.
Tax
Mr
under-estimated the expenditure and over-
itself
has
been
opened up. GAAR Rules are proposed to be introduced under a new Chapter X with effect from 1st April 2012. The explanatory amendment inserted in the Income tax Act with retrospective effect seeks to clarify that transactions between two overseas entities will be taxable in India if the
He said Rs 2 lakh crores have been spent on MNREGA, the flagship scheme of the UPA Government, which has not yielded the desired results. He stressed that the FRBM Act should be amended. He referred to the agricultural growth rate of 8.9% in States like Chattisgarh and Gujarat and said if these two States can grow, why not the other States? He felt the Government should cut down expenditure and wanted IT Act, DTC and the Companies Bill to be synchronized. He cautioned that the inflation is going to be 10% shortly and we will have to live with it.
underlying asset is located here. And the
The workshop was attended by about 100
He said the FM with most of his direct tax
amendment will be deemed effective from
persons.
imposts and cuts concerning only non-
April 1, 1962 when the Income tax Act came
corporates, puts into consumers’ pocket Rs
into force.
4500 crore by net cut in direct taxes but he picks their pockets almost by Rs 46,000 crore by raising indirect taxes. It is needless to say that this will erode, not promote, domestic demand. This was followed by a presentation on Direct Taxes by Mr Sriram Seshadri, Director, BMR Advisors and Chairman, Expert Committee on Direct Taxes, MCCI.
This means that it is not just the Vodafone
16th March 2012:
deal but all transactions between overseas
Budget Telecast:
entities in the last 50 years are now liable to
Select members of the General Committee
be scrutinized for their tax liability.
and Expert Committees met at the office of
The Government is piqued at losing Rs
Vice-President to watch the budget telecast
11,000 crore due to the adverse Supreme
live and formulate the views of the Chamber.
Court verdict in the Vodafone case. Its angst
Later in the evening, a Press Release was
during a difficult period for the fiscal when
issued – published elsewhere in the Bulletin.
the money would have come in handy is
Commenting on the budget, Mr Sriram 7
CHAMBER’S ACTIVITIES
and explored the potential and strategies for
attention. Water management and water
developing PPPs as a long term solution to
treatment attain more importance. Initiatives
providing clean and reliable water supply in
like rain water harvesting which had proved
urban systems.
to be very successful, have to be pursued.
Athena Infonomics was the host for this
In conclusion he quoted the following from
Conference while the MCCI was the Industry
the World Water Vision Report:
20th March 2012:
Partner. The programme was sponsored by
National Conference on Potential and Strategies for Public Private Partnerships in the Urban Water Sector:
the British High Commission.
The draft National Water Policy document
the gathering and explained the need for
released in January, 2012 by the Ministry
organizing this conference. He thanked the
of Water Resources, Government of India,
eminent speakers who had agreed to speak
has laid the stage for a concerted shift in
at the conference.
the nation’s water management paradigm.
He said Athena Infonomics is a boutique
Emphasizing the need for a national water
consultancy firm that provides research,
framework law, the draft policy demands
analytics and advisory services to businesses
a legislation driven approach for optimum
and governments. They have achieved
development
and
considerable success in delivering complex
categorically argues in favour of taking a
assignments for a diverse set of clients in
‘Partnership’ approach to solving the long
a short span of time. Their approach is
term infrastructure and service delivery needs
characterized by a deep understanding of
in the country’s water sector.
client objectives, thorough planning, rigorous
The draft states that “the Service Provider role
and exhaustive data collection, incisive
of the State has to be gradually shifted to
analysis and delivery of high quality outputs.
that of a regulator and water related services
Delivering a special address, Mr T T
in executing projects that involved tax
should be transferred to community and /
Srinivasaraghavan, President, MCCI said that
payers money, Mr Krishnan said one of the
or private sector with appropriate “Public
water is the lifeline of humanity and yet we
fundamental steps in decision making for
Private Partnership” model. Here Public
do everything we possibly can to destroy its
infrastructure was whether a project was
Private Partnerships, a popular infrastructure
sources or render it unfit for consumption. For
worth its investment and then take a call on
development
economic
many regions of the globe, the future will be
whether it justifies pure public PPP or pure
infrastructure sectors, is explicitly prescribed
characterized by less rainfall and increasing
public management. The next step involved
as a panacea to the country’s complex social
temperature, severely reducing the availability
is assessing the risk bearing capacity of the
sector needs such as water, sanitation and
of water.
private sector partner in the PPP.
of
tool
inter-State
in
the
rivers
education.
“There is a water crisis today. But the crisis not about having too little water to satisfy our
Dr S Narayan, IAS (Retd) President of
needs. It is a crisis of managing water so badly
Athena Infonomics and former Finance
that billions of people – and the environment
Secretary, Government of India, welcomed
– suffer badly”. Mr Mike Nithavrianakis, the British Deputy High Commissioner shared the British experience and said water and energy form the pillar of bilateral relations between India and the UK. The State Government will shortly formulate the institutional framework for the Tamilnadu Infrastructure Development Board, said Mr S Krishnan, IAS., Secretary to Government, Finance
Department
(Expenditure),
Government of Tamilnadu. The Government had already constituted the Board and would in the next couple of months promulgate relevant laws for its governance framework. Advocating a “value for money” approach
He said access to water is a basic human right
He stressed the importance of clearly defining
Given the above context, the Conference
and it is vital to recognize first the basic right
the threshold of risk that could be handled
titled ‘Potential and Strategies for Public Private
of all human beings to have access to clean
by the private sector and a rigorous cost-
Partnerships in the Urban Water Sector’
water and sanitation at an affordable price.
benefit analysis to determine whether the
sought to explore the basis for developing PPPs as a long term solution to the complex infrastructure and service delivery needs of the country’s urban water systems. The event raised important questions on the relevance of PPPs to the urban water supply landscape
8
According to the House listing and Housing Census data 2011 released a few days ago, Tamilnadu has many things to cheer about, but for sanitation. The overall coverage of piped sewerage still remains low with 14.4 per cent and this requires the State’s urgent
public is better served if a project is in the public or PPP sector. However, he cautioned that while PPPs were one of the methods of delivering services or building infrastructure for the public, he cautioned against an overemphasis on this approach.
CHAMBER’S ACTIVITIES
Delivering the inaugural address, Mr Suresh
24th March 2012:
model for a particular sector, say for example,
Prabhakar Prabhu, Member of Parliament and
Seminar on Propelling Growth for SMEs through IT :
Foundry, the same can be replicated.
former Chairman, Task Force for Interlinking of Rivers said that public awareness has to be created on the necessity of viable models for delivering products and services to the public. In India, the quantity and quality of delivery by utilities, whether water or power, false short of ideal. PPP can be an option in meeting the needs. Increasing urbanization is putting pressure on natural resources such as water, which has to be managed equitably. However, most of the utilities are bankrupt, he pointed out. Managing water is key to sustainability as it impacts public health, industry and environment.
World wide, SMEs are accepted as engines of growth. Indian MSMEs, who significantly contribute to the nation’s economy, enjoy a unique and proud place in our industrialization and development process in terms of value. However, in an open economy, this sector faces a number of challenges too.
The
understand that it is an enabler or it is a tool. Awareness programmes such as these need to be conducted by the Government and vendors.
to operate a computer. There is a mindset
reach out to new markets, bring down their
among the small entrepreneurs that their
cost of operation etc. SMEs need to be more
information will be revealed to others.
It is with this in mind, this seminar was
He said adopting lT is a mindset challenge – not a technology challenge. The only tool
conceptualized to create an awareness and understanding of how information technology can help SMEs in improving social
the mindset of the people. They do not
helping them improve their internal efficiency,
There were four Technical Sessions on:
and
are phenomenal. One needs to change
attitudinal problem. SMEs do not know how
effective options before them.
Participation
The opportunities available in the SME sector
On the demand side, he said there is
Chamber, proposed the vote of thanks.
- Community
Government as well he said.
number of solutions for their problems by
aware of such benefits and the various cost
- Pricing and Financial Sustainability
doing this exercise, one needs support from
Chamber felt that IT tools can provide a
Mr T Shivaraman, Vice-President of the
- Policy framework and Governance
In
their competitiveness and take them on the
Mobilisation
growth path and to make SMEs appreciate
- PPP Implementation Issues
and enable them take informed decisions in
the current trends and issues in IT adoption
running across SMEs is Tally he said. Speaking from the Government’s side he said there are many policies to improve the lCT sector but no policies for adoption of ICT in SME sector. We need to give incentives and subsidies for people training in ICT. Sales through internet need to be encouraged. There is lot of discussion on cloud computing
These were handled by eminent moderators
using IT for their business development.
and key speakers such as Dr K P Krishnan,
The welcome address and the theme
for they fear that some one will steal their
presentation was given by Mr Clyton Almeida,
information. It is going to take years for them
Chairman of the IT/ITES Committee of MCCI.
to understand that security will take of this.
Secretary, Economic Advisory Council to the Prime Minister, Mr R Raghuttama Rao, Managing Director, IMaCS, Mr. K Rajivan, IAS (Retd)., former Managing Director and CEO, Tamilnadu Urban Infrastructure Financial Services Ltd., Mr Gourishankar Ghosh, IAS (Retd)., Former Executive Director, Water Supply and Sanitation Collaborative Council, WHO, Geneva, Mr M Raman, IAS., former Chairman & Managing Director, Ennore Port
He said many SMEs and small enterprises have a lot of apprehension when it comes to using technology and this Seminar was to mainly
make them understand how
information technology can really make a big
S
Sivagnanam,
Director,
MSME
Ltd., etc.
Development Institute, Chennai in his
The programme was well attended and well
sector – whether SME or not. There is lack
reported in the media.
He further said SMEs are weak in quality and technology and they have to gear themselves if India has to become a global hub for manufacturing. There is a Cluster Development programme
difference to their businesses. Mr
but you cannot implement this in SMEs
keynote address said that IT is essential for any of knowledge about the use of IT amongst
of the Government where 20 industries can join together and get assistance and through this they can be compelled to adopt ICT. On lean manufacturing he said 10 persons can join together for getting government benefit.
The great accomplishments of man have resulted from the transmission of ideas of enthusiasm.
SMEs and their vendors. Also, financially it is
He suggested that the creamy layer of micro
beyond the reach of the small entrepreneur.
enterprises may be selected and educated
Small industries do not have a budget for IT
and suppliers of tools could be invited to
Thomas J. Watson
infrastructure. He said if any one develops a
find out their requirements, what needs to be
9
CHAMBER’S ACTIVITIES changed and what government support can
- Mr Bala J Raman, Co-Founder & President,
members should agree upon the goals. They
be extended.
Congruent Solutions
should be challenging and realistic, not too
He exhorted the Chambers of Commerce to
- Mr Divya Sethi, General Manager & Head-
take the lead, choose a group of people who
PSS, Airtel.
would listen. The vendor’s products should be tailor made. With the help of State and Central Government he said we can do a lot.
low nor too high and should be measurable. On the roles he said, one should know who
There was a case study – Ms Jayapriya of Southern Agro Engines Pvt Ltd., informed the participants on how the use of IT has
is responsible for what? Interact with one another and share information; communicate your ideas; be specific and be clear.
Mrs K Saraswathi, Secretary General, MCCI
improved the performance of her company
How do we build trust? It can be through
proposing
which
communicating frequently and honestly; by
the vote of thanks said Mr
Sivagnanam’s address was very precise and very open. As he rightly said, it requires educating the
SMEs and the vendors to
adopt IT. This was followed by a Panel discussion consisting of two sessions namely:
manufactures
engines
for
the
agricultural sector. There was good interaction and the speakers answered the queries of the participants. The programme was attended by about 70 delegates and was supported by Airtel through Catapult Marketing.
practicing patience and tolerance; avoiding gossip and allowing failures without blame. He insisted that one should communicate clearly; focus full attention on what is being said. Eye contact is important. There are going to be conflicts in the team.
Session I: IT as a Business Tool – for
How do you resolve conflicts? He said confront
the business/of the business/by the
with the members privately; use ”I” statement 27th March 2012:
to avoid blaming others; be clear and specific about the change being requested; maintain
Infotech Solutions moderated the first session.
MCCI-MMA Video Discussion on Team Work – How Synergy succeeds :
The key speakers were:
The topic for the monthly video discussion
At the end, one should celebrate success he
- Mr R Sandeep, AGM – Business Process
being jointly organized by the Chamber and
Management, Cholamandalam MS Finance
the MMA for March was TEAM Work – How
Ltd.
Synergy succeeds. Mr Roshy Sebastian, a
business. Mr Malli J Sivakumar, Co-Chairman of the IT/ITES Committee and CEO of Sundaram
- Mr C Harinath, Chief Information Officer, TVS Logistics Services Ltd. - Mr G N Sivaramakrishna, Woodpecker - Mr H Mahalingam, President & Group CTO, Equitas Micro Finance India Pvt. Ltd. Session II: Opportunities and Challenges
tact and calm throughout the discussion and don‘t be carried away by emotions.
said as this makes a big difference.
behavioural trainer and a certified Yoga coach
Govt. of Tamilnadu – Pre-Budget Consultations:
was the faculty. The video
illustrated the seven building
blocks to team success namely: l Synergy l The goals
in IT adoption – Cloud computing &
l The roles
The Government of Tamilnadu
Virtualisation/Open source/IT security/
l The rules
had called a meeting of Chambers
Social media The second session was moderated by
l Building trust
Mr R. Vittal Raj, Partner, Kumar & Raj, and a
l Resolving conflicts; and
Member of the General Committee of the
l Celebrating success
Chamber. The key speakers at this session were: - Ms Jamuna
Explaining these he said, everyone in the team should have synergy or rather energy.
Swamy, Chief Information
They should have diverse talents, abilities,
Security Officer, Hexaware Technologies Ltd.
experience and objectives. This will increase
- Mr K.Shyaam Sunder, Chief Knowledge
productivity.
Officer, Ramco Systems Ltd,.
Speaking on goals, he felt that all the team
10
of
‘Commerce
&
Industrial
Associations and Trade bodiesd to elicit their views for the forthcoming State Budget on 26th March. Mr K Vaitheeswaran, Chairman, Indirect Taxes Committee and Mr P R Subramaniyan, Co-chairman, VAT Committee attended this meeting on behalf of the Chamber.
GENERAL COMMITTEE 19th March 2012:
the meeting..
The Committee discussed the major issues
Service Tax applicability for other services
arising out of the Budget.
rendered by MCCI:
MMA-MCCI Video Discussion –- 27th March:
The President said that the Chamber had
The Committee felt that all the Chambers
The monthly video discussion jointly being
organised a post Union Budget workshop
may take a combined decision. In any case
organized by MCCI and MMA will be held on
on 17th March which was attended by about
there was no respite in the budget and all the
27th March in the Conference Room of the
110 delegates. All the three speakers namely
Chambers necessarily have to charge service
Chamber. The topic for this month would be
Mr K Vaitheeswaran, Mr Sriram Seshadri and
tax for all the services.
Team Work: How Synergy succeeds.
As regards accounting service tax, it was
Proposed Seminar on Companies Bill:
Mr M R Venkatesh spoke extremely well. It was the general view that the budget will only fuel further inflation. Members expressed dissatisfaction at some of the amendments with retrospective effect, mainly arising out of Vodafone case, etc. Mr Sriram Seshadri said share premium is being taxed and assessment officers can assess the value of shares. It looks we are
auspices of the IT/ITES Committee and is
decided to get a legal opinion.
This will be organized in April. The faculty will
The Secretary General reported on the
be Dr. B Ravi, Mr S A Murali Prasad and Mr P
various meetings organised by the Chamber
R Ramesh from Deloitte.
as follows:
MCCI Annual General Meeting:
l Presentation
on
Business
Process
Management – The True Differentiator – 16th February: l Programme on Indo –US Partnership in
back to licence raj he said. The next major issue was TDS on immovable
l MCCI-MMA Video Discussion – 27th
paid by anyone paying a consideration for
February:
purchase of immovable property excluding
l Interaction meeting on Tamil Nadu Value
land.
Members
wondered
whether this was to tackle black money or
Added Tax Act – 28th February
to track transactions. These will impact every
l Seminar on Transfer Pricing – 2nd March
person they felt. There were many issues in
l Discussion meeting on “The Indian
transfer pricing as well.
Economy – Taking Stock of Things” – 2nd
It was felt that a post budget memorandum
March
highlighting 4-5 major issues be sent to the
l Union Budget Telecast & Issue of Press
FM within a week.
Release – 16th March
MCCI-Skill Development Centre – Initiative
l Workshop on Post Union Budget – 17th
and fund raising:
March:
A few courses are being conducted at the
Members were also informed of the
rented premises at Chembarambakkam.
forthcoming programmes as follows::
Only a minimum number of candidates have been enrolled for Fitter as well as Basic Computer course. Efforts are on to expand the activities and mobilise more trainees. The Secretary General suggested that it would be better to create a separate entity for mobilising funds.
The Committee
National Conference on Potential and Strategies for Implementing PPPs in Urban Water Sector – 20th March: MCCI will be the Industry Partner for
noted the proposed
programmes for the year 2012-13 tabled at
be invited for the AGM. New Membership:
members: Omnex India Pvt. Ltd. Business: Quality Consulting & Training Implementation Translink Logistics Pvt. Ltd. Business: International Freight Forwarder First Engineering Plastics India Pvt. Ltd. Business: Manufacturers of Plastic Components & Tools Sri Sivasubramaniya Nadar College of Engineering (Affiliated Member) Business: Educational Services Cogent Innovations Pvt. Ltd. Business: Information Technology Software REV Consulting Business: Consultancy PPM Associates Business: Advocates and Consultants Subscription status 2011-12:
this programme being hosted by Athena
A sum of Rs. 3 lakhs had still remained to be
Infonomics.
recovered from members. The Committee
The
programme
is
being
supported by British High Commission.
Programmes for 2012-13:
The Committee considered the Chief Guest to
The following companies were admitted as
Port & Maritime Sector – 21st February
property. One per cent TDS is required to be
agricultural
being supported by Airtel.
Seminar on Propelling Growth for SMEs through IT – 24th March: This programme is being held under the
was informed that the Chamber Secretariat will continue to follow up the matter till 31st March. The Committee felt that companies who had
11
GENERAL COMMITTEE still not paid cannot be kept on the rolls and
will be initiated in the first week of April 2012
that the Chamber may register under the
authorized the secretariat to remove them
and notice calling for nominations will be
FCRA as a statutory norm to get the funds.
from the rolls of the Chamber effective 1st
issued in April 2012.
April 2012. Reconstitution
Prosperity Funding from UK – Registration of of
General
Committee
2012-13:
MCCI under FCRA:
The Committee was informed that the
The committee was informed that as per the
Chamber has submitted
Rules of the Chamber, the Election process for
for prosperity funding from British High
the General Committee for the year 2012-13
Commission and the Committee suggested
a concept bid
I can't change the direction of the wind, but I can adjust my sails to always reach my destination. Jimmy Dean
POLICY WATCH Anti-dumping duty on yarn imports extended:
non-banking finance companies.
The Central Government has extended the
to maintain a loan-to-value ratio of not
“There will be a formal signing of agreement
anti dumping duty on different types of yarn
exceeding 60 percent for loans granted
(on multiple entry business visas) soon. It will
imported from Indonesia, Korea, Malaysia
against the collateral of gold jewellery. Also, it
be for one year initially,” he said.
and Taiwan for another six months.
has made it compulsory for them to disclose
It shall remain in force up to and inclusive of 20th August 2012 unless the notification is revoked earlier, the Department of Revenue has said in a notification. The anti-dumping duty on fully drawn yarn
It has now made it mandatory for NBFCs
in their balance sheet the percentage of such loans to their total assets.
Centre sets up study team to evolve common tax code:
or fully oriented yarn or spin drawn yarn or
The Government has set up a “Study Team”
flat yarn of polyester was earlier imposed in
headed by Mr M K Gupta, former Vice-
February 2007.
Chairman of the Customs and Central Excise
India-Pakistan talks to focus on removal of non-tariff walls: Trade and Commerce Minister of Pakistan and India are likely to hold parleys on enhancing economic engagement and removal of nontariff barriers, including a liberal visa regime,
Settlement Commission, to look into the possibility of evolving a common tax code for service tax and Central excise duty, which could be adopted to harmonise the two legislations under the proposed GST. The team is to submit its report to the Finance Minister by 30th September.
Both countries will shortly permit multiple entry business visas.
The two countries are also looking at cooperating in tourism, hospitality and education. Besides, Mr Sharma said an India-Pakistan Business Council will be constituted shortly and it will be co-Chaired by both sides. India and Pakistan are also holding talks to permit banks from both the countries to launch branches in each other’s territory, Mr Sharma said. “The Reserve Bank of India and (its Pakistani counterpart) State Bank of Pakistan are in favour of opening branches,” the Minister said.
India, UAE draw up road map to bolster relations: India and United Abrab Emirates (UAE)
two neighbours.
India to allow FDI from Pakistan:
The Pakistan’s Commerce Minister and his
India has in-principally agreed to allow
energy security and investments to firm
Indian counterpart Anand Sharma will hold
Foreign Direct Investment (FDI) from Pakistan,
up their ties. India was looking for larger
talks on various aspects of trade related issues
the Commerce, Industry and Textiles Minister,
volumes of crude imports from the UAE to
following the notification of the negative list
Mr Anand Sharma, said recently.
meet its growing needs.
by Pakistan last month.
This forms part of the process to deepen
With investments of around a trillion dollars
Stricter norms for jewel loans by NBFCs:
the bilateral economic engagement. The
required over the next decade, India is looking
move is expected to result in more Pakistani
for Abu Dhabi's participation in developing its
companies setting up businesses in India.
infrastructure.
to give a fillip to trade relations between the
In a significant move, the RBI has tightened the rules for lending against gold jewellery by
Only procedural requirements are left regarding permitting FDI from Pakistan.
12
sketched out the outlines of a road map, centred on a new partnership rooted in
BUDGET HIGHLIGHTS Highlights of Railway Budget Passenger fares increased marginally. The increase will be by 2 paise per km for suburban and ordinary second class; 3 paise per km for
l 75 additional services to run in Mumbai
l Providing solar lighting system at 1,000
suburban; 44 new suburban services to be
manned level crossing gates.
introduced in Kolkata area, 50 new services to be introduced in Kolkata Metro; 18 additional services in Chennai area.
l 2,500 coaches to be equipped with bio toilets. l Setting up of 72 MW capacity windmill
mail/express second class; 5 paise per km for
l 725 km new lines, 700 km doubling,
sleeper class; 10 paise per km for AC Chair
800 km gauge conversion and 1,100 km
Car, AC 3 tier and First Class; 15 paise per km
electrification targeted in 2012-13.
for AC 2 tier and 30 paise per km for AC I.
l Rs 6,872 cr provided for new lines, Rs
l Minimum fare and platform tickets to cost
3,393 cr for doubling, Rs 1,950 cr for gauge
Rs 5.
conversation, Rs 828 cr for electrification
l SMS on passenger mobile phone in case
l Highest ever plan outlay of Rs 60,100 cr
of e-ticket to be accepted as proof of valid
l A wagon factory to be set up at Sitapali
reservation.
(Ganjam District of Odisha)
l Introduction of satellite based real time
l A rail coach factory with the support of
train information system (SIMRAN) to provide
Government of Kerala to be set up at Palakkad;
train running information to passengers
two additional new manufacturing units for
through SMS, internet, etc.
coaches to be established in the Kutch area in
l On board passenger displays indicating
Gujarat and at Kolar in Karnataka with active
l Three 'Safety Villages' to be set up at
next halt station and expected arrival time to
participation of the State Governments.
Bengaluru, Kharagpur and Lucknow for skill
be introduced.
l Setting up of a factory at Shyamnagar in
l Installation of 321 escalators at important
West Bengal to manufacture next generation
l Over one lakh persons to be recruited in
stations of which 50 will be commissioned in
technology propulsion system for use in high
2012-13: backlog of SC/ST/OBC and other
2012-13.
power electric locomotives.
categories to be wiped off.
l Introduction of regional cuisine at
l Creating Missions as recommended
l Institution of 'Rail Khel Ratna' Award for 10
affordable rates; launching of Book-a-meal
by Pitroda Committee to implement the
rail sports-persons every year.
scheme to provide multiple choice of meals
modernization programme.
l Freight loading of 1,025 MT targeted; 55
through SMS or email.
l Setting up of Railway Tariff Regulatory
MT more than 2011-12
l Introduction of coin/currency operated
Authority to be considered.
l Passenger growth targeted at 5.4 per
ticket vending machines.
l Rail-Road Grade Separation Corporation
cent.
l Upgradation of 929 stations as Adarsh
to be set up to eliminate level crossings.
Stations including 84 stations proposed in
l Indian Railway Station Development
2012-13; 490 stations have been completed
Corporation to be set up to redevelop stations
so far.
through PPP mode.
l Specially designed coaches for differently-
l Logistics Corporation to be set up for
abled persons to be provided in each Mail/
development and management of existing
Express trains.
railway goods sheds and multi-modal logistics
l Setting up of AC Executive lounges at
parks.
important stations
l Introduction of a ‘Green Train’ to run
l 75 new Express trains to be introduced.
through the pristine forests of North Bengal.
l 21 new passenger services, 9 DEMU
l Setting up of 200 remote railway stations
services and 8 MEMU services to be
as ‘green energy stations’ powered entirely
introduced.
by solar energy.
plants in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and West Bengal. l Installation of Integrated Security System at all 202 identified stations to be completed in 2012-13. l Escorting of trains by RPF/GRP extended to 3,500 trains. l Integration of RPF helpline with the All India Passenger Helpline. l Setting up of a Railway Safety Authority as a statutory regulatory body as recommended by Kakodkar Committee
development for disaster management.
Have the courage to follow your heart and intuition they somehow already know what you truly want to become. - Steve Jobs
13
BUDGET HIGHLIGHTS Highlights of Union Budget 2012-13 l Budget identifies five objectives relating to growth recovery, private investment, supply bottlenecks, malnutrition and governance matters l GDP growth to be 7.6 per cent (+ 0.25 percent) during 2012-13 l Amendment to the FRBM Act proposed as part of Finance Bill. New concepts of
their cooperative societies; mega handloom clusters in Andhra, Jharkhand; weaver service centres in Mizoram, Nagaland and Jharkhand ; powerloom mega cluster in Maharashtra;
particularly in tribal areas l Widow pension and disability pension raised from Rs. 200 to Rs. 300 per month
Rs. 500 crore pilot schemes for geo-textiles in
l Defence services get Rs. 193407 crore;
North-Eastern region
any further requirement to be met
l Rs. 5,000 crore India Opportunities
l 4000
Venture Fund to help small enterprises
constructed for Central Armed Police Forces
l Target for agricultural credit raised to Rs.
l UID-Aadhar to get adequate funds for
5,75,000 crore
enrolment of 40 crore persons, in addition to
be
the 20 crore persons already enrolled
Term Expenditure Framework” introduced
crop loans to farmers at 7 per cent interest
l White Paper on Black Money to be laid in
continues; additional 3 per cent for prompt
the current session of Parliament
paying farmers
l Tax proposals mark progress in the
l Rs. 200 crore for awards to incentivise
direction of movement towards DTC and GST
agricultural research
l Income tax exemption limit raised from
management system; LPG transparency
l Provisions under rural housing fund
Rs.1,80,000 to Rs.2,00,000; upper limit of 20
portal; scaling up and rolling out of Aadhar
increased to Rs. 4,000 crore from Rs. 3,000
per cent tax slab raised from Rs.8 lakh to Rs.10
enabled payment for government schemes in
crore
lakh
at least 50 districts.
l Interest subvention of 1 percent on
l Interest from savings bank accounts
l Rs. 30,000 crore to be raised through
housing loans upto Rs. 15 lakh extended for
deductible upto Rs.10,000; deduction of
disinvestment
one more year
upto Rs.5,000 for preventive health check-up
l Efforts to reach broadbased consensus
l National Mission on Food Processing
l Senior citizens without business income
on FDI in multi-brand retail
to be started in cooperation with State
exempt from advance tax
Governments
l Investment linked deduction of capital
allow income tax deduction to retail investors
l 58 per cent rise in allocation to ICDS, at
expenditure enhanced for certain businesses;
on investing in equities
Rs. 15,850 crore
new sectors eligible for investment linked
l Rs. 15,888 crore to be provided for
l Rural drinking water and sanitation gets
capitalization of public sector banks and
27 per cent rise in allocation to Rs. 14,000
l Turnover limit for compulsory tax audit for
financial institutions
crore;
SMEs raised from Rs.60 lakh to Rs.1 crore
l A central
l 6000 schools to be set up at block level
l STT on cash delivery reduced by 25 per
as model schools in the 12th Plan; Credit
cent to 0.1%
Guarantee Fund to be set up for better flow
l General Anti Avoidance Rule being
1.75 per cent of GDP over the next 3 years. l Proposed:
Mobile
based
fertilizer
l Rajiv Gandhi Equity Saving Scheme: to
“Know Your Customer”
depository to be developed l Investment in 12th Plan in infrastructure to go upto Rs. 50,00,000 crore; half of this is expected from private sector l Tax Free Bonds of Rs. 60,000 crore to be allowed for financial infrastructure projects l Allocation
of
Road
Transport
and
Highways Ministry enhanced by 14 per cent to Rs. 25,360 crore l Financial package of Rs. 3,884 crore for waiver of loans to handloom weavers and
short-term
to
l Interest
cent of GDP; to be further brought down to
for
quarters
“Effective Revenue Deficit” and “Medium
l Central subsidies to be kept under 2 per
subvention
residential
of credit to students
introduced
to
counter
aggressive
tax
l National Urban Health Mission is being
avoidance
launched
l A number of measures proposed to deter
l 34 per cent increase in allocation to
generation and use of unaccounted money
National Rural Livelihood Mission, to Rs. 3915
l All services to attract service tax except
crore l Rs. 1000 crore allocated for National Skill Development Fund l Bharat Livelihood Foundation to be established to support livelihood interventions
14
deduction
those in the negative list l Central Excise and Service Tax being harmonized l Standard rate of excise duty raised from
BUDGET HIGHLIGHTS 10 per cent to 12 per cent; service tax rates
l Total expenditure budgeted at Rs.
l Rs. 3,573 crore electricity transmission
raised from 10 per cent to 12 per cent; no
14,90,925 crore; plan expenditure at Rs.
projects mooted with JICA funding
change in peak customs duty of 10 per cent
5,21,025 crore – 18 per cent higher than
on non-agricultural goods
2011-12 budget; non plan expenditure at Rs.
l Relief in indirect taxes to sectors under stress; agriculture, infrastructure, mining, railways, roads, civil aviation, manufacturing, health and nutrition, and environment get
9,69,900 crore
lakh huts l Free notebooks for Students of standard I
Highlights of Tamilnadu Budget
duty relief
to X l State level Property Tax Board to be set up l Rs.200 crore for programme on livelihood
l Certain cigarettes and bidis attract higher excise duty; large cars attract higher customs duty l Excise imposed on unbranded jewellery also; measures to minimize impact on small artisans
l Free compact fluorescent lamps for 14.6
and goldsmiths; branded silver
l 12th Five Year Plan outlay fixed at Rs. 2 lakh crore l Revenue surplus of Rs.2,376 crore projected l State Disaster Rescue force to be formed
jewellery exempted from excise duty
l Food subsidy – Rs.4,900 crore
l Net gain of Rs.41,440 crore due to
l 7,000 rural habitations to be covered for
taxation proposals
water supply improvement
security for urban poor l Integrated solid waste management policy to be unveiled l Full VAT exemption for wheat, oats, feeding bottles, insulin and helmets l 14.5% VAT for alcohol at the final point of sale l Additional
resource
mobilization
of
Rs.1500 crore expected
PRESS RELEASES Railway Budget – Press Release
not become a mere statement of intent and
etc. Permitting ECB to airlines, sectors like
not a statement of action.
affordable housing are welcome.
The Madras Chamber welcomes the proposal
Chennai
The elimination of cascading effect of dividend
to create a terminal at Royapuram which will
14th March 2012
distribution tax on multi layer corporate holding structure is welcome.
be the third terminal in Chennai and will help both passengers and freight movement. The positive note about the completion of MRTS next phase in Chennai, is also encouraging. Plans to set up Indian Railways Stations Development Corporation and Logistics Corporation and proposals to bring down
Union Budget 2012 – Press Release
The
The Chamber feels that the Union Budget
moves.
presented by the FM today is on the expected lines.
weighted
deduction
for
R&D,
incentivizing Skill development initiatives with additional funds allocation are welcome
Fillip to MSME sector and provide better access to funds is laudable.
operational ratios will also help the Railway
While the Chamber appreciates the focus
sector in the long run. The Rail connectivity
and moves towards fiscal consolidation
to Nepal and Bangladesh is also a welcome
and rationalization of subsidies, the greatest
move. The focus on augmenting revenue
fear is that the increase in service tax, along
The deepening of bond market particularly
along with rationalization of fares and
with broadening the tax net and targeting a
for corporate bonds by permitting QIB
increasing the infrastructure and efficiency is
multifold increase in indirect tax gains, is likely
investment is a welcome move.
also the need of the hour. The idea of having
to fuel greater inflation.
a “modernized, safe and green” railways also reflects the current trend. However, the Chamber feels that the budget has a direct and indirect pressure on funds allocation and as a result the budget should
Welcome points: The Chamber welcomes the relaxation in rules and the reduction of withholding tax
Launching a National Mission on Food Processing is to be appreciated.
The moves to encourage small investors in the equity market through the Rajiv Gandhi scheme is welcomed. This will encourage retail investors.
on External Commercial Borrowing to 5%
Enhanced
thrust
to
infrastructure
for the sectors such as power, airlines, ports,
development and extending the viability gap 15
PRESS RELEASES funding to increased categories like irrigation
It is also disappointing to note that DTC, GST
transmission network , could help in the long
etc are welcome.
and other such reforms are again deferred.
run , if not immediately. It will be helpful if the
The simplified refund mechanism for exports
Chennai
would greatly help exporters.
16th March 2012
Government comes out with an emergency
Introduction of advance pricing mechanism is a welcome move which will reduce transfer pricing disputes. Points of Concern
Tamilnadu State Budget Press Release Chamber welcomes the TN
The MAT for all forms of business seems to be
Budget released today which is in line with
a negative move. This could affect partnership
the Vision 2023 released by the CM a few
firms also.
days back, aiming at balancing growth and
transactions would push up compliance costs.
in the short term. Incentives to energy consumption and renewable energy should
The Madras
TDS on capital gains for immovable property
action plan to mitigate the power problem
welfare. The focus on financial turn around and containing the fiscal deficit to 2.87% of GSDP, is laudable. The assurance that the
support this. Action to implement Energy Conservation Building Code in commercial buildings is to be appreciated. Focus for skill development and employment and additional allocation towards this is a welcome measure and will help industries, more
particularly
manufacturing.
The
proposal to convert State Skill Development Mission as a SPV and bring more private
State borrowing would be more for capital
involvement is a welcome move.
The tax on share premium received by
expenditures and for creation of infrastructure
companies in excess of market value of shares
Reduction of VAT on energy efficient devices
is heartening.
and e- bikes, exemption to insulin etc. are
The Chamber appreciates the measures
steps in the right direction.
proposed to strengthen the manufacturing
While the increase in guideline values is on
is worrisome. This is an item which cannot be considered as income for
the investee
companies.
sector in the State and the projections to
On personal taxation, there were hopes that
expected lines, the reduction in stamp duty
get Rs. 20000 cores in the next 6 months.
the limit will be increased from the present
by 1 % should give some relief.
Infrastructure is key for the development and
Rs.1.80 lakhs to Rs.3 lakhs. However it is
we are hopeful that the EMRIP project and
disappointing to note that it has been fixed
the other infra projects would be completed
at Rs. 2 lakhs.
on time. Legislation to form TN Infra Board
Anti avoidance provision in direct tax should
with CM as the chairperson and allocation of
be implemented in a manner which is fair and
Rs 1000 crores for TN Infrastructure Fund for
transparent with suitable safeguards.
2012-2013 is a good beginning.
On indirect taxes, the estimated service tax
Developing the Nagapattinam port on a PPP
increase of Rs 18,600 crores seems to have an enormous potential to fuel inflation. The FM could have waited for GST to widen the
mode would hasten development of the Southern Region. The additional allocation to roads and road maintenance would go to
services net.
improve the connectivity.
The across the board increase in excise duty
The proposed State Balancing Growth Fund
to a peak of 12% will also fuel inflation.
computerization of all major departments including revenue, registration, etc., and promotion of common service centers will bring down transparency
development.
collections of Rs.45,940 crores.
Plans to improve urban infrastructure,
Taxing budget at a time when industry and
increased allocation to Chennai Mega city project, proposals to set up waste to energy
and improve
efficiency. On the whole the budget appears to be progressive and realistic and can take the State further up in economic development if the implementation and governance are closely monitored.
should work towards balanced regional
There seems to be a huge gain in indirect tax
public are suffering recession and inflation
E- Governance initiatives and comprehensive
TN Vision 2023 The
Hon’ble
Government
of
Chief
Minister,
Tamilnadu
had
convened a meeting on 22nd March to release the Tamilnadu Vision 2023
does not augur well for the economy.
projects with private participation all go well
document.
On service tax and excise duty, as they are
with the current times and needs. We await the new industrial policy for greater thrust.
Mrs K Saraswathi, Secretary General
The issue of the day for the State is power
attended this meeting on behalf of the
sought to be harmonized, the Chamber hopes that the benefit of set off will be seamless.
16
and
allocation of funds for new power
projects to TANGEDCO and to strengthen
Chamber.
SPOT LIGHT
BRICS
BRICS is an Economic Block of countries
Country Profiles
in the Americas; with a total area of
-the
BRAZIL
8,514,876.599 km2 (3,287,612 sq mi),
acronym
coined
by
Goldman
Sachs Economist Jim O'Neill in 2001
including 55,455 km2 (21,411 sq mi) of water, it spans three time zones. Brazil
to designate the four fastest-growing
is the only country in the world that lies
emerging economies of the world –
on the equator while having contiguous
Brazil, Russia, India and China. Later, in
territory outside the tropics.
2011, South Africa joined the multilateral grouping and BRICS evolved at the Sanya Summit in China. The IMF has pointed out that Brazil, Russia, India and China
President: Ms Dilma Rousseff Total Area :84,14,877 sq km Population : 196.7 million Share in world population : 2.8 % GDP : US$ 2,517.93 billion
Brazil is a federation composed of 26 States, one federal district (which contains the capital city, BrasĂlia) and municipalities. Brazil is the largest national economy in Latin America, the world's seventh
together accounted for 40 per cent of
Share in world exports : 1.4% Human
the world's population, spread over three
Development rank : 84
continents, constituting over 25 per cent
The word "Brazil" comes from brazilwood,
power parity (PPP), according to the
of the global GDP. The multilateral agency
a tree that once grew plentifully along the
International Monetary Fund and the
predicted that this grouping would
Brazilian coast. In Portuguese, brazilwood
World Bank. Brazil has a mixed economy
is called pau-brasil, with the word brasil
with abundant natural resources. The
commonly given the etymology "red
Brazilian economy has been predicted
like an ember", formed from Latin brasa
to become one of the five largest in the
("ember") and the suffix -il (from -iculum
world in the decades to come. It has
or -ilium). The official name of the land,
large and developed agriculture. The
in original Portuguese records, was
official language of Brazil is Portuguese,
the "Land of the Holy Cross" (Terra da
which almost all of the population speaks
they are distinguished by their large
Santa Cruz), but European sailors and
and is virtually the only language used
economies and significant influence on
merchants commonly called it simply
in newspapers, radio, television, and for
the "Land of Brazil" (Terra do Brasil) on
business and administrative purposes.
account of the brazilwood trade.
Rural,mining, manufacturing and service
emerge as the biggest economic bloc by the middle of this century. With the possible exception of Russia, the BRICS members are all developing or newly industrialised countries, but
regional and global affairs. As of 2012, the five BRICS countries represent almost half of the world's population, with a combined nominal GDP of US$13.6 trillion, and an estimated US$4 trillion in combined foreign reserves.
Brazil occupies a large area along the eastern coast of South America and includes much of the continent's interior. Brazil is the fifth largest country in the world, after Russia, Canada, China and the United States, and third largest
largest economy at market exchange rates and the eighth largest in purchasing
sectors, as well as a large labor pool. The most popular sport in Brazil is football (soccer). The Brazilian national football team is ranked among the best in the world according to the FIFA World Rankings, and has won the World Cup 17
SPOT LIGHT
tournament a record five times. The
Russia is one of the most industrialized
rights protected by law".According to the
core culture of Brazil is derived from
of the former Soviet republics. The
International Monetary Fund, as of 2011,
Portuguese culture, because of its strong
defense
are
the Indian economy is nominally worth
colonial ties with the Portuguese empire.
important employers and are able to
US$1.843 trillion; it is the tenth-largest
RUSSIA
offer internationally competitive products
economy by market exchange rates. The
for export. Russia is the world's second
467-million worker Indian labour force is
largest conventional arms exporter after
the world's second-largest.
the United States. Space industry of
CHINA
and
aircraft
industries
Russia consists of over 100 companies and employs 250,000 people. President : Mr Dmitry Medvedev Total
INDIA
Area : 1,70,98,242 sq km Population : 142.8 million Share in world population : 2.1 %
President: Mr Hu Jintao
GDP : US$ 1,884.90 billion
Total Area : 95,96,961 sq km
Share in world exports : 2.9%
Population : 1,347.6 million
Human Development rank : 66 Russia officially known as both Russia and the Russian Federation is a country in northern Eurasia. It is a federal semipresidential
republic,
comprising
83
federal subjects. Russia is the largest country in the world, covering more
Prime Minister: Dr Manmohan Singh
Share in world population : 19.6 %
Total Area : 32,87,263 sq km
GDP : US$ 6,988.47 billion
Population : 1,241.5 million
Share in world exports : 10.1%
Share in world population : 17.1 %
Human Development rank : 101
GDP : US$ 1,843.38 billion
China currently officially named the
Share in world exports : 1.9%
People's Republic of China (PRC), is the
Human Development rank : 134
world's most-populous country with a
than one eighth of the Earth's inhabited
India is the seventh-largest country
population of over 1.3 billion; having,
land area. Russia is also the eighth most
by
second-
however, various historical incarnations.
populous nation with 143 million people.
most populous country with over 1.2
Chinese seat as a permanent member
Russia has the world's largest reserves
billion people, and the most populous
of the U.N. Security Council. China is
of mineral and energy resources and
democracy in the world. Four of the
also a member of numerous formal
is the second largest oil producer and
world's
and informal multilateral organizations,
second largest natural gas producer
Buddhism,
Sikhism—
including the WTO, APEC, BRICS, the
globally. Russia has the world's largest
originated here. The name India is derived
Shanghai Cooperation Organisation and
forest reserves and its lakes contain
from Indus, which originates from the
the G-20. As of September 2011, all but
approximately one-quarter of the world's
Old Persian word Hindu. The principal
23 countries have recognized the PRC as
fresh water. Russia has the world's ninth
official language of the Republic of India
the sole legitimate government of China.
largest economy by nominal GDP. Russia
is Standard Hindi, while English is the
China has diplomatic relations with 171
is a great power and a permanent
secondary official language.
countries and maintains embassies in
member of the United Nations Security Council, a member of the G8, G20, the Council of Europe, the Asia-Pacific Economic Cooperation, the Shanghai Cooperation Organisation, the Eurasian Economic Community, the Organisation for Security and Cooperation in Europe (OSCE), the World Trade Organisation (WTO), and is the leading member of the Commonwealth of Independent States. 18
geographical
major
area,
the
religions—Hinduism,
Jainism,
and
India is the world's most populous democracy. A parliamentary republic with a multi-party system, it has six recognised national parties. India is a federation with a parliamentary system governed under the Constitution of India, which serves as the country's supreme legal document. It is a constitutional republic and representative democracy, in which "majority rule is tempered by minority
162. In recent decades, China has suffered from severe environmental deterioration and pollution. China is the world's leading investor in renewable energy technologies, with $34.6 billion invested in 2009 alone. China currently has the most cellphone users of any country in the world, with over 800 million users as of July 2010.
SPOT LIGHT SOUTH AFRICA
South Africa, officially the Republic of
is high and South Africa is ranked in the
South Africa, is a country located at the
top 10 countries in the world for income
southern tip of Africa. South Africa is a
inequality. South Africa's most popular
parliamentary republic, although unlike
sports are soccer, rugby and cricket.
most such republics the President is both head of state and head of government, President: Mr Jacob Zuma
and depends for his tenure on the
Total Area : 12,19,090 sq km
confidence of Parliament. It is divided into
Population : 50.5 million
nine provinces, with 2,798 kilometres
Share in world population : 0.7 %
(1,739 mi) of coastline on the Atlantic and
GDP : US$ 422.04 billion
Indian oceans. South Africa has a mixed
Share in world Exports : 0.5%
economy with a high rate of poverty
Human Development rank : 123
and low GDP per capita. Unemployment
South Africa is a nation of about 50 million people of diverse origins, cultures, languages, and religions. South Africa has eleven official languages. Note: Population estimates and Human Development ranks based on 2011 UNDP report. GDP figures are IMF estimates at current prices for 2011; share in world exports are IMF Estimates for Jan-June 2011.
Making of a BRICS bank (Courtesy - Excerpts of article by Rakesh Joshi in Business India)
As India played host to the heads of
cent to 61 per cent, and there is a strong
three had taken different positions in
Government from Brazil, Russia, China
and growing middle class with rising
confronting the west on issues like Syria
and South Africa, the logo, designed
levels of invoice. Over the years, BRICS
and the eurozone problem.
by Sonesh Jain a third year architecture
countries
student of IIT, Roorkee, formed the
growth poles in a multipolar world.
backdrop of deliberations monitored closely the world over.
have come to signify new
Could
a
BRICS
Development
Bank
then bridge these barriers and convert
But while BRICS members have several
individual economic might into collective
things in common – like common
clout? Apparently, that was the starting
On paper, everything about BRICS sounds
emerging
premise of the idea.
great. Together, the five countries make
populations, large area mass and high
very powerful financial tool to improve
up 43 percent of the world’s population
economic growth rates – they differ
trade opportunities,” says Brazil’s trade
and hold a combined GDP of over $18
geographically,
minister Fernando Pimentel.
trillion. According to Goldman Sachs, by
politically.
Geographically, of the five
Delhi Summit has targeted a jump in
2050, the combined economies of BRICS
members, one country is located in
intra-BRICS trade to $500 billion by 2015.
could eclipse the combined economies
Africa, another in South America, two
Given the impact of the eurozone crisis on
of the current richest countries of the
in Asia and one in Europe, unlike the
world trade, this makes imminent sense.
world. With economic recovery in the
EU which is located in one continent.
“Now is the time to focus on setting new
US being fragile and the European Union
Economically Russia, Brazil and South
intra-BRICS trade and investment targets
still enmeshed in troubles, BRICS nations
Africa are commodity producers, while
to ensure easy flow of capital, knowledge
pose a greater opportunity over the next
India and China do not possess an
and
five years.
abundance of commodity resources. In
minister Anand Sharma, adding that
addition, China and Russia have current
such moves as well as the proposed bank
account surpluses, while Brazil, India and
could define the new global architecture.
Intra-BRICS trade is increasing at an average rate of 28 per cent annually and currently stands at about $230 billion. Bilateral investment flows among BRICS members are also increasing. Consumer expenditure in BRICS countries as a percentage of FDP ranges from 35 per
market
status,
economically
large
and
South Africa have current account deficits. Politically, while Russians’ experiments in ushering in democracy have been found wanting and China remains a totalitarian regime, India, Brazil and South Africa are tested democracies.
Till now, all
The
information,”
nuanced
delegation
“It would be a
says
responses
heads,
The New
commerce
from
influential
the policy
makers drawn from think tanks, covered a wide range. Aziz Pahad, a former deputy foreign minister of South Africa and a
19
SPOT LIGHT key policy maker in the African National
Bank and IMF, over which Europe and the
bank to finance many of its projects in the
Congress, felt that BRICS must focus on
US have a traditional hegemony.
African region, or simply co-operate with
opportunities for contextual policymaking
the election of a new head of the World
rather than following the West. Huang
Bank is on the cards.
Huaguang of China said that BRICS must find ways to manage the fallout of the failure in financial governance and respond to crises such as the recent global financial crisis in a co-ordinated manner. Vladimir Davydov of Russia said that BRICS must strive to become more active in responding to political crises. Luciana Acioly Da Silva of Brazil emphasised the need for co-ordinating BRICS’ positions on the upcoming Rio + 20 Summit on Sustainable Development and for
Also
the African Development Bank”. Mashaka says there are also unanswered
Talking of the possibilities ahead, Sreeram
questions about capital structure, such as
Chaulia, vice dean, Jindal School of
which BRICS member state will foot the
International
bigger bill needed to establish the bank,
Affairs,
cautions
that
BRICS must avoid dangling the threat of launching a new bank only to win some more representations within the World Bank and IMF. For instance, sometime back Brazil had proposed that developing countries would be willing to contribute money to solve the eurozone problems in return for more power in the IMF.
and the role of various countries. Even on trade, critics say that the BRICS will have to cover some distance. On the one hand, Brazil and India accuse China of undervaluing its currency in order to gain a competitive advantage by boosting its export industries to the detriment of Brazilian and Indian export sectors. On
allowing greater exchange of ideas and
“The BRICS Bank must not become a
the other hand, China accuses Brazil and
innovations among the countries.
mere bargaining ploy which could be
India of being stoked by the US to press
shelved if more voting rights are given
China to revalue its currency. India has
to the five emerging economies in
a widening trade deficit with China, and
However, the most keenly discussed
the western-led international financial
New Delhi has often expressed frustration
subject at the meeting was the need for
institutions. A bank for the entire Global
at the inability of Indian Pharma and IT
setting up a BRICS Development Bank –
South should be non-negotiable, so that
companies to gain access to the Chinese
an idea which was first mooted by Prime
least developed countries keep faith in
market. Resolving these trade disputes
Minister Manmohan Singh at the China
emerging powers which are growing at a
is imperative for BRICS’ unity. As China
summit last year.
much faster rate,” he says. Perhaps that
continues its gradual rebalancing of
is why senior Indian officials like Vyas
its economy toward consumption, it is
admit that the BRICS Bank is a work in
possible these tensions will subside.
Economic Clout
The bank would lubricate the wheels of the expanding south-south economic ties and also serve the developmental needs of the poorer parts of the world. Singh, according to official sources, appeared to have been inspired by a paper, ‘International Development Bank for Fostering South-South Investment’, written by economists Joseph Stiglitz and Nicholas Stern, in which they have suggested a financial intermediation system
for
recycling
savings
from
progress which would necessitate a lot of follow-up discussions.
That is why
BRICS leaders – Presidents Dilma Rousseff of Brazil, Dmitry Medvedev of Russia, Hu Jintao of China and Jacob Zuma of South Africa, as well as Prime Minister Manmohan Singh-who met in New Delhi decided to ask their finance ministers to examine the proposal in detail and report back at the next summit.
emerging economies for meeting their
John
Mashaka,
investment
Wells
Fargo
However, at the end of the Delhi Summit, the BRICS grouping took heart from two developments. The five nations signed an agreement to extend credit facilities in their local currencies, a step aimed at reducing the role of the dollar in trade between them. Other moves to bring their economies closer together include the launch of benchmark equity index derivatives allowing investors in one BRICS
at
country to bet on the performance of
says:
stock markets in the other four members
bank
“The effectiveness of the bank is yet to
without currency risk. The indexes were
would be most appropriate for such an
be seen; this plan is not going to be a
cross-listed on their stock exchanges from
intermediation role.
cakewalk. China has already said it wants
30th March.
a
requirements,
South-South
and
development
that
Interestingly, the idea of the BRICS Bank has come to the forefront at a time when emerging nations are pushing for greater say and quotas in the economic affairs of Bretton Woods institutions like the World
20
financial
Capital
analyst
Markets,
permanent Presidency. Russia and India may demand the same. We know that
Making a million friends is not a
Africa is a lucrative market for China in
miracle. The miracle is to find a friend
terms of natural resources and as a market
who will stand by you when a million
for industrial products. Africa being such
are against you.
a strategic region, China may want the
Book Review in The Hindu
it way back in September, 1836 within
– 27th March,2012
a week after the birth of a similar
A chamber full of stories
chamber in Bombay. In the process, the
was very British in the beginning. Fascinating stories The book is a journalist's delight, especially if you are a financial writer. Even as it gives an insightful peep into the birth of the Chamber, the book brings out the fascinating stories of its interminable links with the commercial interest of the British political bosses. Author Sriram, however, has deftly sketched out the delicate balancing done by the Chamber in securing the national interest. Interestingly, the book reveals how the then Governor of Madras, Sir Frederick Adam, was instrumental in the Chamber accommodating some Indian names among its British members. This saw native merchants like G. Sidloo Chetty, C. Tiroocawmi Nayak and V. Seth get into the Chamber. One of the early causes that the Chamber campaigned for was the
Sriram reconstructs the road taken by the Madras Chamber from its very
Madras Chamber has also undergone a major metamorphosis. A sense of history is very important for Internet
British beginning
age youngsters to appreciate the pains History
has
seen
many
a
great
institution simply go into oblivion. But this one has stood the test of time. It has seen 175 summers. That it is still surviving is in itself a big achievement. What is significant, however, is that it stays relevant even in modern India. The Madras Chamber of Commerce and Industry (MCCI) has indeed come a long way since 18 wise men met at the office of Binny & Co in Armenian Street (in Madras, now Chennai) to establish
of the past and place the future in perspective. The coffee-table book on the Chamber is indeed a revelation. Not just for the way it is packaged but also for the wealth of information it contains. Even a quick flip through the pages will fetch you an insight into something or the other of the past. Multi-faceted V. Sriram and his highly resourceful team have nicely reconstructed the road to the past when the Madras Chamber
removal of ‘transit duties' (tax levied for movement of goods from one place to another). While the Central Government in Calcutta abolished ‘transit duties' in Bombay Presidency, it declined to do so in Madras. Successive presidents of the Chamber — John William Dare of Parry, William Scott Binny, John Line, James Scott and John Utley Ellis — had all lobbied unsuccessfully with the Central Government for the removal of transit levies in Madras Presidency. The Chamber had also to fight the Central Government in Calcutta on the issue of rupee exchange rate which was fixed differently for the Madras Presidency. 21
As it assiduously worked to change
The book also traces the birth of
the attitude of rulers in Calcutta, it had
Employers' Federation of South India
realised that commerce could flourish
(EFSI), which became a mouthpiece
only if infrastructure improved. The
of the Chamber on labour issues. The
book has brought out in greater detail
formation of Reserve Bank of India,
the proactive initiatives of the Chamber
the development of T. Nagar and the
in fixing the core issues throttling
establishment of ASSOCHAM — you
trade and commerce in this part of the
name it, the Chamber had played a
country. The Chamber battled hard to
decisive role in all of them. These little
push for the construction of the Madras
stories within the big story make for
harbour. That the Chamber always
an interesting reading. A critical mind
worked in tandem with others was
which cares for detail alone could weave
evident when it promised its support
a not-so-esoteric Chamber history into
to
a gripping story.
the
newly-born
Madras
Trade
Association, formed by the retailers and traders in 1856.
CHAMPIONING ENTERPRISE — 175 Years of Madras Chamber of
The Chamber extends a warm welcome to the following new members: Omnex India Pvt. Ltd.
Business: Quality Consulting & Training Implementation
Since its inception, the Chamber has
Commerce and Industry: Sriram V.;
been a staunch protagonist of free
Pub. by the Madras Chamber of
Translink Logistics Pvt. Ltd.
trade. With the dismantling of East
Commerce and Industry,
Business: International Freight Forwarder
India Company, the rule of the crown
Karumuttu Centre,
was ushered in. The Chamber hit the
I Floor, 634, Anna Salai,
headlines when it opposed a move
Nandanam, Chennai-600035.
by Lord Canning to hike customs
P.S : A full page review has also appeared in The Business Line on 7th April,2012. To view, please visit our website www.madraschamber.in
duties. It went on to demand the appointment of “a gentleman of known financial ability'' to pull the deficit-hit Government out of crisis. The nuggets (the box stories with rare pictures) give
Trade Enquiry
one a pleasurable reading experience.
Sea Food Exports
Each one has a story to tell. Do you know where the first organised labour union was born? No prize for guessing. It was in Madras way back in 1918, thanks to Annie Besant, B.P. Wadia and Selvapathy Chettiar. The Home Rule Movement launched by Annie Besant in 1917 indeed had caught the Chamber on the wrong foot. A strike at Binny's Carnatic Mill in 1889 led to weekly holiday becoming a statutory right!
22
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23
ECONOMIC REVIEW
Contents 1. Macroeconomy
1.1 Performance of Indian Scheduled Commercial Banks 1.2 India’s Latest Foreign Trade Performance
2. Corporate Sector
2.1 Sectoral Deployment of Bank Credit
1. Macroeconomy
Performance by Bank-group
1.1 Performance of Indian Scheduled Commercial Banks Spatial Distribution
l Nationalised Banks except SBI and its Associates accounted for 52.2 per cent of the aggregate deposits.
l The top hundred centres, arranged according to the size of deposits accounted for 69.6 per cent of the total deposits and the top hundred centres arranged according to the size of bank credit accounted for 78.5 per cent of total bank credit.
l State Bank of India and its Associates accounted for 21.8 per cent of the aggregate deposits.
l In September 2010, the corresponding shares of top hundred centres in aggregate deposits and gross bank credit were 68.8 per cent and 78.0 per cent, respectively. l Aggregate deposits of top hundred centres increased by 23.5 per cent in September 2011 over September 2010 compared to a growth of 13.7 per cent recorded a year ago. l Annual growth rate of gross bank credit of top hundred centres at 24.3 per cent in September 2011 was higher than the growth recorded in September 2010 (19.7 per cent). l The top 200 centres in terms of aggregate deposits covered 32.4 per cent of reporting offices and 74.5 per cent of aggregate deposits. The top 200 centres in terms of gross bank credit accounted for 31.8 per cent of reporting offices and 81.9 per cent of gross bank credit. 24
l The share of New Private Sector Banks, Old Private Sector Banks, Foreign Banks, and Regional Rural Banks in aggregate deposits was 13.7 per cent, 4.8 per cent, 4.6 per cent and 2.9 per cent, respectively. l In case of gross bank credit, Nationalised Banks other than SBI and its associates held the highest share of 51.6 per cent in the total bank credit. State Bank of India and its Associates at 22.1 per cent and New Private Sector Banks at 13.8 per cent. Foreign Banks, Old Private Sector Banks and Regional Rural Banks had relatively lower shares in the total bank credit at 5.2 per cent, 4.8 per cent and 2.5 per cent, respectively.
Credit-Deposit ratio l At the All–India level, the creditdeposit (C-D) ratio of All Scheduled Commercial Banks (SCBs) as on September 30, 2011 stood at 74.4 per cent. Among the States/Union Territories, the highest C-D ratio was observed in Chandigarh (149.2 per cent) followed by Tamil Nadu (115.2 per cent) and Andhra Pradesh (109.4 per cent).
l At the bank group level, the C-D ratio was above the All-India ratio in respect of Foreign Banks (85.1 per cent), and State Bank of India and its Associates (75.6 per cent), New Private Sector Banks (74.9 per cent) and Old Private Sector Banks (74.6 per cent). The C-D ratio of Nationalised Banks (73.5 per cent), and Regional Rural Banks (63.4 per cent) was lower than the all SCBs C-D ratio. l C-D ratio of All Scheduled Commercial Banks in Metropolitan Centres was the highest (87.2 per cent) followed distantly by Urban Centres (60.0 per cent) and Rural Centres (59.9 per cent). The SemiUrban Centres recorded the lowest C-D ratio at 52.5 per cent.
1.3 India’s Latest Trade Performance
Foreign
India’s Exports during February, 2012 were valued at US$ 24618.08 million (Rs.121039.96 crore) which was 4.28 per cent higher in Dollar terms (12.84 per cent higher in Rupee terms) than the level of US$ 23608.36 million (Rs. 107266.46) during February, 2011. Cumulative value of exports for the period April-February 2011 -12 was US$ 267409.89 million (Rs. 1274839.70 crore) as against US$ 220241.12 million (Rs.1003784.83 crore) registering a growth of 21.42 per cent in Dollar terms and 27.00 per cent in Rupee terms over the same period last year. India’s Imports during February, 2012
ECONOMIC REVIEW were valued at US$ 39781.68 million (Rs.195595.00 crore) representing a growth of 20.65 per cent in Dollar terms (30.56 per cent in Rupee terms) over the level of imports valued at US$ 32973.40 million ( Rs. 149817.29 crore) in February, 2011. Cumulative value of imports for the period April-February, 2011-12 was US$ 434159.81 million (Rs.2069642.80 crore) as against US$ 335502.15 million (Rs. 1529295.07 crore) registering a growth of 29.41 per cent in Dollar terms and 35.33 per cent in Rupee terms over the same period last year.
Oil imports during February, 2012 were valued at US$ 12659.9 million which was 39.45 per cent higher than oil imports valued at US$ 9078.4 million in the corresponding period last year. Oil imports during April-February, 2011-12 were valued at US$ 132560.4 million which was 41.00 per cent higher than the oil imports of US$ 94011.4 million in the corresponding period last year. Non-oil imports during February, 2012 were estimated at US$ 27121.7 million which was 13.50 per cent higher than non-oil imports of US$ 23895.0 million in
February, 2011. Non-oil imports during April - February, 2011-12 were valued at US$ 301599.4 million which was 24.89 per cent higher than the level of such imports valued at US$ 241490.7 million in April - February, 2010-11. The trade deficit for April-February, 201112 was estimated at US$ 166749.92 million which was higher than the deficit of US$ 115261.03 million during AprilFebruary, 2010-11 ( Table 1).
Table 1 India’s Foreign Trade performance (US $ Million)
February
April-February
Exports (including re-exports)
2010-11
23608.36
220241.12
2011-12
24618.08
267409.89
%Growth2011-12/ 2010-2011
4.28
21.42
2010-11
32973.40
335502.15
2011-12
39781.68
434159.81
%Growth2011-12/ 2010-2011
20.65
29.41
2010-11
-9365.04
-115261.03
2011-12
-15163.60
-166749.92
Imports
Trade Balance
Source: Ministry of Commerce, Govt. of India
2. Corporate Sector 2.1 Sectoral Bank Credit
Deployment
of
The following are the details of sectoral deployment of non-food credit by scheduled commercial banks during February 2012. l On a year-on-year (y-o-y) basis, nonfood bank credit increased by 15.4 per cent in February 2012 as compared with 22.8 per cent in the previous year. l Credit to agriculture on a y-o-y basis increased by 8.1 per cent in February 2012, down from 18.3 per cent in the previous year.
l Credit to industry increased by 19.1 per cent (y-o-y) in February 2012 as compared with 26.5 per cent in the previous year. Credit growth to industry in February 2012 was led by infrastructure, metals and metal products, engineering, food processing, gems and jewellery, vehicles, vehicle parts and transport equipments, and mining and quarrying. l Credit to the services sector increased by 15.2 per cent (y-o-y) in February 2012 as compared with 24.2 per cent in the previous year. l Credit to NBFCs increased by 30.9 per cent (y-o-y) in February 2012 as compared with 46.4 per cent in the previous year.
l Credit to the commercial real estate (CRE) sector increased by 11.6 per cent (y-o-y) in February 2012, down from 17.8 per cent in the previous year. l Personal loans increased by 11.4 per cent (y-o-y) in February 2012 as compared with 16.2 per cent in the previous year.
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ECONOMIC REVIEW Table 2 Sectoral Bank Credit Development (%) Sector
Variation (Y-oY)
Variation(Financial Yr)
Food Credit
Feb 25, 2011 / Feb 25, 2010 29.64
Feb 24, 2012 / Feb 25, 2011/ Feb 25, 2011 Mar 26, 2010 34.17 29.98
Feb 24, 2012/ Mar 25, 2011 32.10
Non-food Credit
22.85
15.36
16.77
11.66
Agriculture & Allied Activities
18.34
8.13
5.34
2.96
Industry
26.50
19.14
20.44
16.11
Micro & Small
6.42
16.69
3.59
8.91
Medium
36.69
16.96
31.77
10.73
Large
29.46
19.90
22.47
18.29
Services
24.20
15.17
18.30
9.92
Commercial Real Estate
17.77
11.60
17.11
7.66
Non-Banking Financial Companies (NBFCs)
46.40
30.93
39.93
18.37
Personal Loans
16.23
11.43
14.76
9.27
Gross Bank Credit Source: RBI
22.96
15.69
16.98 12.01 Courtesy - ASSOCHAM
Forthcoming Programmes:
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Saturday 28th April 2012 9 a.m.
FFT on Food Security Bill Hotel GRT Grand, Chennai
Saturday 5th May 2012 9.30 am to 5 pm
Training Programme on Factories Act, Labour Laws, Labour Welfare Laws and Allied Issues Conference Room of MCCI
Faculty: Dr R Ramesh Kumar, Faculty Member, Tamilnadu Institute of Labour Studies Mr R.Natarajan, Director (Finance & IT (Retd)) ESI Corporation Mr Ganesh, Enforcement Officer, EPF Organisation, Chennai
Participation fee: Rs. 1200 for members Rs. 1500 for non-members
Please contact the Chamber secretariat for registration. Tel: 24349452/24349871 Email: madraschamber@madraschamber.in ssn@madraschamber.in
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