Taxing idea

| Updated on March 10, 2011 Published on March 10, 2011






With reference to “An idea whose time has gone” ( Business Line, March 9), it must now be highlighted why fund-based services such as hire-purchase transactions come under service tax. This is highly discriminatory, as all bank loans are not taxable, while NBFCs' transactions are being taxed, thereby creating complications.




If fresh levy is selectively imposed on clothes with a label and which are, say, Rs 500 and above per piece, there would be no mass-scale protest against it.

K. Mundanad



The Minister should have clearly mentioned the motto of levying tax. The tax will be a big burden for companies and consumers who like branded clothes. Some may think of ways to avoid the tax bracket.

A. Myilsami Sulur


Ready-made garments for children, whether with a label or tag, should be outside the purview of the new levy.



Rate hikes

Interest rates are being hiked by banks to mop up funds before the year end . It is mostly the senior citizens who keep money in term deposits.

Instead of levying a penalty for pre-closure, banks can show their concern to senior citizens by allowing them to migrate to higher interest-generating schemes of the bank.

C. N. Sanjeevi



The Andhra Pradesh Government appears determined to ensure that microfinance institutions cannot do any business in the State (“AP gives more teeth to MFI Act”, Business Line, March 8).

The instructions that the MFIs should not lend to males in the households of Self-Help Group members is rather carrying the issue too far.

What mistake have the male members committed which makes them ineligible for a loan for some income-generating activity or any other productive purpose?

Due to the stoppage of loan disbursement by micro-finance institutions from October 15, 2010, there is an acute shortage of money, particularly in rural areas as the banks have stopped lending to the self-help groups due to poor recovery.

The money lenders are having a field day, charging as much as 300- 3,600 per cent on the loans. It is time a workable solution is arrived at by all the stakeholders.

B. Vithal Rao


Bank mergers

The editorial ‘‘Regulating bank mergers'' ( Business Line, March 8) reminds the executive to bring necessary amendments to expedite the consolidation in the banking sector.

The supervisory role on mergers granted to the RBI would ensure priority to the important provisions of the Banking Regulation Act .The remaining hurdles in this regard in respect of the purview of the Competition Act should be removed through further legislative attempts.

With the foreign banks getting more freedom to operate in India, the competition in the sector is likely to intensify. This warrants expediting the merger of Indian banks.

The merger story of the State Bank group would strengthen State Bank of India. It is to be seen whether the joint structure of the public sector banks would join this group or remain as a separate entity. The Finance Ministry would have to do some elaborate home-work along with the RBI, to weigh the most suiting scenarios. As the future doses of reforms require the co-operation of the banking system, the consolidation process requires a lot of grass-root level analysis, with various options such as regional and national factors in minds.

The consolidation in the banking sector is imminent and it remains to be seen how this gigantic process unfolds.

C. P. Velayudhan Nair


Urban development

This is with reference to “Expert panel wants cities to become engines of national development” ( Business Line, March 8). It is true that the urban population is going up every year by migrating from rural areas. The Dr Isher J. Ahluwalia report may have a plan for Rs 39.2 lakh crore. Urban development is necessary. But to find a permanent solution, the PURA plan of the former President, Dr A. P. J. Abdul Kalam, to bring urban facilities to rural areas may be the best. First, all villages should get power supply. In this age of technological advancement, it could bring revolutionary changes in education, employment, healthcare, industry, service sector, and so on. It could also solve problems such as land availability.

We should think of extending industry to rural areas than concentrating it by the side of urban areas. It could help by giving relief to the urban areas, while promoting the development of the rural areas. We can also think of the cluster method followed by industries in China. In this context, the Tamil Nadu Government's initiative to build concrete houses in the rural areas is a welcome move in this direction.

Jacob Sahayam


Published on March 10, 2011

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