Companies & Sectors
Consumers should be offered lowest mobile call rates: Sibal

According to sources the Centre is likely to approach TRAI regarding the steep hike in call rates by some operators

New Delhi: A day after mobile charges were hiked by leading operators, telecom minister Kapil Sibal has said consumers should be offered the lowest call rates. “We want consumers to be offered calls at lowest rates,” Sibal told PTI.


Bharti Airtel, India’s largest mobile phone operator, and Idea Cellular have raised call charges mostly by way of a reduction in free minutes or air-time available on most plans. Others like Vodafone are likely to follow suit soon.


Another mobile services provider Uninor, however, said it has no plans as of now to increase call rates.


“As a young operator focused on the mass market through basic services on a pre-paid only platform, Uninor has made a commitment to remaining “Sabse Sasta” for its customers. This has been our position so far and will continue to be so in all the circles we operate in,” Uninor said in a statement.


Meanwhile, government sources said the Centre is likely to approach the Telecom Regulatory Authority of India (TRAI) regarding yesterday’s hike in call rates.


“We will nudge TRAI to do something,” a source said.


Meanwhile, TRAI chairman Rahul Khullar said, “Forbearance does not mean that we have closed our eyes. Forbearance reposes faith on operators and we realise there is competition in the market.”


TRAI had decided to continue with forbearance in tariff regime that gives freedom to decide on call and other services rates.


The Indian mobile phone industry, known for the lowest telecom services rates, is witnessing a hike in call rates now.


The hike in call charges come as companies face thousands of crore in one-time surcharge on airwaves they hold beyond a threshold.


RBI committee asks co-op banks to give 70% loan to agriculture

The panel expressed concerns that primary agricultural credit cooperative societies and central cooperative banks were not performing their role and giving almost 40% of their loans for non-agricultural needs

Mumbai: The central cooperative banks should strive to have at least 70% of their loan portfolio for agriculture, reports PTI quoting a panel appointed by the Reserve Bank of India (RBI).


“The Committee... recommends that central cooperative banks (CCBs) should strive to provide at least 70% of their loan portfolio for agriculture. ...if a CCB or state cooperative bank (StCB) consistently under performs and provides less than 15% share of agricultural credit in the operational area, then that bank should be declared and treated as an urban co-operative bank,” the Expert Committee on Streamlining Short Term Co-operative Credit Structure said.


The panel expressed concerns that primary agricultural credit cooperative societies (PACS) and CCBs were not performing their role and giving almost 40% of their loans for non-agricultural needs.


It also said that “30 September 2013 be set as deadline for all StCBs and CCBs to be fully operational on CBS and providing RTGS, NEFT, ATM and POS device based services.”


Moreover, it recommended 31 March 2013 as a deadline for CCBs and StCBs to mobilise funds internally or externally to achieve 4% capital to risk (weighted) assets ratio (CRAR).


“...a large number of CCBs and some StCBs do not have adequate capital to meet even the relaxed licensing norm of 4% CRAR. The Committee recommends that 31 March 2013 may be set as the deadline for these banks to mobilise the required capital either internally or from any other external source so as to achieve 4% CRAR,” it said.


To mobilise funds it recommended that coopreative banks be allowed to issue fixed interest bearing deposits of 10 years or more with a lock-in period of five years and to treat such deposits as tier I capital.


The panel also said the Banking Regulation Act may be amended to give direct and overriding authority to the RBI for superseding the board or removing any director on the board of StCB or CCB.


It also said the government may consider giving income tax exemption to these entities up to 2016-17 for incentivising to achieve 9% CRAR. There should be graded CRAR norms for different business sizes, it added.


It estimated that about 58 CCBs would not be able to mobilise the required capital, or their business sizes are so small that they would not be sustainable in the long run and would have to be therefore consolidated with other CCBs.


The RBI had formed the committee in July 2012 under NABARD chairman Prakash Bakshi.



s kumar

4 years ago

The Panel and and it's report is farce. NABARD has been conducting Statutory Inspection of SCBs and DCCBs since 1982. They never recommend Supersession of Board of these banks even they know well that these structures are down upto neck in corruption / mismanagement. It was only in 4 or 5 cases out of more than 10000 inspections conducted till now that Supersession of Board has been recommended by NABARD. It is a glaring example of Institutional Hypocracy. Further NABARD has been all the time sermoning rural Short Term Cooperative Structure to diversify and lend to NFS activities despite the fact that they have been unable to meet agri credits. Still NABARD should tell how many Banks/ PACS have not lent more than 70% or 80% to agriculture. The fact is that all of them have lend more than 90% of their portfolio to agri only. More than Rs 25000 crore has gone down the drain in the name of Revitalising STCCS or Vaidyanathan Reforms. NABARD was a strong advocate of the recommendations of Vadyanathan. NABARD has basically interested in increasing its own Profit / Balancesheet at any cost. Diectors of nabard like those of other public sector institutions never bothered to look into the functioning on this Leviathan Institution. RBI is equally a culprit in this all dirty game of promoting so called rural development through credit.

Foreign brokers fall for FM’s charm – again

The finance minister admits that an unstable government has hurt reforms and is hard-selling to foreign investors to pour money into India. But foreign investors have fallen for the FM’s charms and are chanting the bullish mantra

Palaniappan Chidambaram, India’s Finance Minister (FM), has managed it again. He went on a two-nation tour of Hong Kong and Singapore, to woo investors and bring much-needed capital into the country. And foreign brokerages are falling head over heels for his charms. This isn’t the first time an FM has gone to great lengths to appease and woo the international investment community. Foreign investors have fallen for this before and have made mistakes in 1994, 1998 and 2007. Will this time be different? At least the FM knows the main concerns of foreigners and has managed to address them.

The first is high fiscal deficit. The FM addressed several foreign institutional investors (FIIs), debt investors and corporates in Singapore and Hong Kong, where he promised a magical 0.6% reduction in the fiscal deficit each year to bring the deficit to 3% by 2016-2017 without raising tax rates. This would be achieved by a combination of cost cuts and austerity measures. Is this even plausible as we approach the elections and the Congress, a believer in welfare state, is continuing to drain the coffers to win voters? Foreigners seem to have bought his logic, though. Citi Research’s report said, “The FM was both clear and confident—of what needs to be done, how and when it will be done, and timelines. This is across a spectrum of issues (fiscal, growth, investments, current account deficit, FII taxation/regulations and general sales tax [GST]), and in meeting near-term targets (5.3% fiscal deficit, GDP growth of 5.7% in FY13). Importantly, there was also a lot of openness and willingness to take in audience feedback and suggestions. So he was not just talking, but also listening.”

Indeed, the stiff targets set by the FM is a tall order to achieve but it would seem that so called “smart” and “intelligent” analysts have fallen for his spiel. Apart from Citi Research, brokerages like Credit Suisse (CS), JP Morgan and Nomura, to name a few, have all sung FM’s praises. Cynics who know the FM well may argue that foreign brokerages may have been persuaded to take a pro-FM line but who can prove that?

We had written about the CS report in detail here. CS cites FM’s track record and the possibility that he could pull it off again. We feel that foreign brokers gives too much credit to P Chidambaram for turning around India’s economy in the past, when actually it was the endless quantitative easing by the United States Federal Reserve that found its way into Indian markets exactly at a time when Indian economy faced high demand, low capacities and low interest rates. A combination of these four factors worked like a magic for India in 2004-07. The FM had no major role in any of these factors. Indeed, he was the author of some irritating taxes like Fringe Benefits Tax and Banking Cash Transaction Tax and presided over massive loan waivers.

With the budget coming up, it is unlikely that Chidambaram will take any hard decisions, keeping in mind that it will be United Progressive Alliance’s last full-year budget with the general elections coming up next year. Of course, Chidambaram has sung the right tune. He assured that the GST Bill will be passed by December this year and he will be able to get backing from political parties. Despite admitting that an unstable government was to blame for lack of reforms, he seemed supremely confident of getting lot of things done, mostly through, in Citigroup’s words, “invisible politics”, whatever that means.

According to Citi Research’s report, “India’s politics has been a key swing element in some recent challenges - as also in the turn-around since July 2012. The FM was quite confident of the policy turnaround, going forward. He suggests most political parties are on board; there is the support of ‘invisible politics’ to implement reforms”.

Given the current economic scenario, which isn’t reassuring, only hard decisions would need to be taken and it is unlikely that this will happen. Most analysts and experts are expecting a populist budget. Even the FM admitted that the budget will be geared towards the poor.

The Citi Research report said, “The market has been cautious leading into what is seen as an ‘election/populist’ budget in February 2013; the FM was decidedly more positive. He suggests the fiscal deficit target will be met, taxes will not be raised – the tax regime will be stable, and while policy will and should be biased towards the poor, the budget will offer a lot.”  He, of course, did not mention where a cash-strapped government would get the money to pull off this balancing act.

While our FM is exuding optimism, ratings agencies have expressed concerns. Even though Moody’s has retained its ratings (which is probably a relief to the FM), they cited government’s finances as biggest hurdles to India’s economic well being. Their report said, "Large government deficits and debt ratios as well as supply constraints in the form of infrastructure, policy and administrative inefficiencies constrain the sovereign credit profile.” Moody's expect Indian economy to grow by 5.4% in the current fiscal and 6% in 2013-14, less than the FM’s estimates. Fitch, a ratings agency, has already sounded warning bells and a possible ratings downgrade for India.

The Reserve Bank of India (RBI) top brass will be meeting on 29 January to decide on interest rates. The FM is expected to meet the RBI governor before this and then is due to visit United Kingdom and Germany later on to continue to the campaign of selling India long.



Vinay Joshi

4 years ago

Hello Mr.Debashis,

You must be having Central Statistics Office [CSO] figures now released about sharper GDP slump as revised for11-12, to 6.2%, whereas for 10-11 revised upward to 9.3%.

I’m keeping out on commenting on policy measures as you had posted this on 24th.

However tho’ fuel subsidy measures initiated, its expected road projects, welfare & defense spending will automatically reduce.

Chidambaran has staked his reputation to limit deficit to 5.3%. Short term economic risk are obvious. The cuts may reduce spending by more than a trillion rupees, 8% of budgeted outlay amounting to 1% of est.GDP.
Every ministry is affected by the budget cuts. But ‘non plan expenditure’ is grey area.

All said, FM wooing FI, FII’s [Jan’13 saw max FII inflows in the capital mkt], FinMin’s IT Dept is again up with it’s transfer pricing assessment.

The dept has accused Shell India of under pricing intragroup share transfer by 15KCR.
ET Now had reported.

The issue of ‘arms length pricing’ has to be addressed – to woo FI & MNC/TNS expansion.

Why APA [advanced pricing agreement with tax dept] fails or its methodology.

Vodafone is still going on [on diff. issue] now Shell will line-up!?

So, we want FI,FII’s!


Dayananda Kamath k

4 years ago

any foreigner willbe happy to come to india. becasue they have a foriegner as ring master.and all the reform programmes are selling the country to foriengn investments and taxing indian people.the newly constituted cabinet commitee on investments is nothing but election fund raising machinery for 2014 elections and authorising flaunting of rules. they have totally mismanaged the economy my be as planned and conspired by the people who matter.


4 years ago


Vinay Joshi

4 years ago

He has successfully sold 'cash subsidy transfer scheme' to get FI,earlier raising bond limits by $10bn et al. But the bearish trend in Q4+Q1 to follow can only wake him up.


Bhat Praneeth

4 years ago

I would like to express my own experience here:
1. As a small business owner, i do turn over of 80 lakhs per annum, being proprietor of the company my house rent allowance (HRA) as per the IT rule is 2000 INR per month!
I employ 20 members and lowest paid member get minimum 5500 INR as HRA.

2. My business is self founded & funded, no investor, no bank loan, no support from govt. If needed, i need to sustain it for minimum 3 yrs (only profitable) to obtain even a bank loan. However I must not avoid paying tax / VAT / service tax / TDS, govt wont wait for 3 yrs to collect tax, as it makes you wait for other betterment to given you.

3. I purchased the car, by loan, paid 1.70+ road tax while registration, each road i go, i will have to pay toll. and those roads are either under maintenance / not managed well.

4. I get rented office from a private land owner, ISP (internet connection) from another private vendor, computer are purchased from another private company, employees are individuals and for them govt does nothing even collecting each month professional tax from each employees salary, sales & marketing channels are from private, all other facilities are from private, i earn hard to make sure my team members & business are taken care, at the end, i need to make profit since no one speak to you if your business is at slow, and before i even take my annual salary, i need to pay tax, tis, vat / services tax. (when nothing is provided / supported / by govt, why on earth i do my business to get money to govt?)

5. Last: business went very slow, no option than selling it off, it was hard to market / sell in India. Salaries are delayed, banks never talked about even loans, none of the paid taxes / money helped us to establish as we are trustworthy. I decided to sell it to someone who can take care of my 3 yrs of handwork and 5 yrs of dream, so sold it for XX,XX,XX,XXX INR (of-course white), immediately my accountant told me to pay 33.33% as capital gain! and submit to IT department???

NOW CAN YOU TELL ME India's FM / PM ever worked hard like we did in 3 yrs leaving every weekend, holidays, travel and even family? have they experienced third day's hunger? that of an entrepreneur? / a capable individual? I couldn't able to pursue my dream, i failed because of over all infrastructure and opportunity given to new innovations and inventions, no PR / press / media talked to us until we sold it to someone. Since they were busy framing paid news, scandals & scams? you expect people to entrepreneur and earn and give money to govt. for nothing?

I have seen so far 18 countries, in no country i visited govt. make people live for them, rather they live for govt. Whats up going here? you born to give vote, you live to pay tax and in return ....??

Govt think billions of indians are fools? give vote, pay tax and get lost?


Vinay Joshi

In Reply to Bhat Praneeth 4 years ago

Dear Mr.Bhat Praneeth,

Are your comments relevant to FI?

1] As a proprietor are you salaried to claim HRA? Pl fwd me IT secs.

2] Before commenting on banking system, are you aware of it? What is the basis of your comments?

3] In what way are you relating it to the crux of the subject?

4] Employees will always be individuals, your employees, tax deductions mandatory to be, "Deposited accordingly". You take your ‘so called salary’ at the end of the year, during the year you do not withdraw anything!? How do you suffice thro’ the year?

5] If at all you’re doing INR8mn turnover, have an accountant, presumably an ICAI member, possibly you have not heeded to his advice.

Do you know how the PM has worked? Or for that matter FM?

I suggest you forward your details, complete with portfolio details to MONEYLIFE, be assured of the confidentiality to resolve & or have suggestions to be an entrepreneur.

Visiting 18 countries, only INR 8mn turnover, [if], should have had a different view point.


Bhat Praneeth

In Reply to Vinay Joshi 4 years ago

Dude, I put those comments under the story of "Taxing Super Rich extra" however your It team / approval team must have put this comment under different subject.

Debashis Basu

In Reply to Bhat Praneeth 4 years ago

Fantastic post. As a small business, we really appreciate this kind of blunt talk and honest feedback from the ground. Sadly, there is no one to listen. Proud to have you as one of our readers

Vinay Joshi

In Reply to Debashis Basu 4 years ago

Dear Mr.Debashis,

I hope you read with due diligence my post to Mr.Bhat Praneeth as above.

You & Ms.Sucheta,require such ambiguous post to exemplify non reality? It saddens me. Put up the facts, i'll initiate action.

The said persons biz model feasibility / viability may be in question? How do you come to a conclusion?

So it's your post on FI, FM wooing investments, 1st time. Check up my other post on the crux of FI.

In the first place, ML should conduct 'entrepreneurial finance'workshops to guide the hopefuls 'on sustain biz model & finance'.

DIC's as per C.Govt. are required
to propagate the policies.

Have you ever questioned any of the state's Industry Minister?

How many know what is micro, tiny, smal-UNITS? What mandatory facilities by PSU banks & PSU mfgrs are for SSI?

What is the share of SSI units in exports? Propagate this & state major exports are attributed to SSI, even if exporters are Star & or Export trading co's.

In our endeavor [ i say 'our']we should get banks & industry experts for the workshops.

Do you have priority sector lending [apart from food] figures at your fingertip? Weaker class, women, micro lending by banks.

SKS micro finance is a scam,i think Sucheta had already talked about it some time back - it was pertaining to scrip & changeover. But w/o scam it was a B'desh model with proven results.

Debashis you know my aspects for promoting financial literacy in 'all aspects'which you undertake but now consider SSI 'finance'.


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