InTouch march12

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.

ACHEMA 2012 – 18th to 22nd June 2012, Frankfurt, Germany Orbitz Business Tours organises exclusive tours to this event. If interested, please contact them at Mumbai: 022-24102801 Chennai: 044 43084323/24/25

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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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