57 bids received for fourth slot in 17 circles
New Delhi—Seven companies have evinced interest in bidding for the fourth cellular license in 21 cities, including the four metro circles.
Analysts say that this time around even lucrative metro circles may not be able to fetch fancy valuations like they did in 1995 when the sector was opened up. While four companies bid for Delhi and Chennai, Mumbai and Kolkata got three each.
Surprisingly, Punjab, which is a circle B-state received 4 bids, primarily because the new entrant will essentially be the second operator as only Spice is operating there currently.

While Reliance accounted for 30 of the total 57 bids, companies including HFCL, ModiCorp and Shyam Telecom stayed out of the race. The newly-formed cellular behemoth, BPL Birla-AT&T-Tata, has bid for just three circles.
Reliance, Bharti, Hutchison (under the company Bharakhamba), BPL-Birla-AT&T-Tata (under the company Birla-AT&T-Tata), and Escorts submitted their bid for circles and metros.
A total of 57 bids were received for the fourth cellular licence in 17 telecom circles.
Reliance Communications Private Ltd and group company Reliable Internet Services bid for the same set of 15 circles. Since the lowest bidder gets eliminated, submitting two bids under the name of two separate companies increases Reliance’s chance of getting into the next round. This also increases the chances of elimination of its competitors. Hutchison sprung a surprise by bidding under the company Barakhamba Sales and Services Limited, which according to sources is a subsidiary of Sterling Cellular, which is the subsidiary of Hutchison Essar.
Hutchison sources say this is because of the stipulations in licence conditions that the bidder has to be an Indian company with a minimum networth.
Meanwhile, Hutchison has ensured a pan-India presence with Barakhamba’s four bids. Currently,
Hutchison is present through its various group companies in Delhi, Mumbai, Calcutta, Gujarat. Since it has a strategic alliance with Essar, whose subsidiary Aircel Digilink operates cellular services in three circles, these can be acquired by Hutchison.
Bharti, which currently operates cellular services in six circles, also bid for 11 more circles. Also a surprise bidder called Indmobile submitted its sole bid for Punjab.
Industry sources say that Indmobile belongs to Dr Rao, the erstwhile promoter of JT Mobile. This raises the question on whether the company actually belongs to Bharti Enterprises, which had acquired JT Mobile.
Escorts submitted bids for eight circles, in addition to the three where Escotel already has a presence. "Our bidding shows that we are among the top five long term telecom players in India," said Mr Manoj Kohli, CEO, Escotel. "We hope to win four to five circles," he added.
Existing telecom players who stayed away from the bidding process are ModiCorp and Shyam Telecom. Meanwhile, despite the enthusiasm in lucrative regions, telecom circles of Andaman and Nicobar islands, Orissa, West Bengal, Bihar, and Jammu and Kashmir failed to get any response.
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GDP growth rate for 2000-01 revised to 5.2 percent
New Delhi—The advanced estimates (AE) for gross domestic product (GDP) for 2000-01 growth rate at constant prices have been revised downwards to 5.2 per cent, against the earlier estimated 6.0 per cent. The GDP, as per revised estimates (RE) has been pegged at Rs 12,11,747 crore , down from the Rs 12,21,174 crore reported in the AE released in January this year.
This downward revision will push up the fiscal deficit figure for 2000-01 to almost 5.7 per cent of the GDP as against the budgetary target of 5.1 per cent. It will also bring down the average GDP growth rate in the first four years of the Ninth Five-Year Plan period (1997-98 to 2001-02) to 5.75 per cent as compared to the target of 6.5 per cent. The average GDP growth rate during the Eighth Plan was 6.8 per cent, against the target of 7 per cent.
This revision was done on account of the poor performance of almost all sectors of the economy last year. Community, social and personal services were the only categories, which reported an increase in the growth rate.
The national income at constant prices for 2000-01 is now estimated at Rs 10,63,479 crore (5.2 per cent growth) as against the AE of Rs 10,72,906 crore (6.6 per cent growth). The per capita income estimate was also revised down to Rs 10,561 as against Rs 10,654 estimated earlier.
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CBDT issues draft guidelines on taxing perks
New Delhi—The Central Bureau of Direct Taxes has finally come out with guidelines on what items will be considered perks and the value at which they will be taxed.
Now an employee will be taxed at 10 per cent of his/her salary if the company provides him/her rent-free unfurnished accommodation. In case of accommodation with furnishings like television, air conditioner and refrigerator, an additional sum of 10 per cent per annum of their original cost will be added to the accommodation value.
If an employee is provided hotel accommodation, it will be taxed at 2 per cent of the salary per month.
For cars provided by the employer, the sum actually spent by the employer for its maintenance will be the value of the perk. Accordingly, the value of the perquisite will be taken as Rs 1,200 per month for cars with less than 1.8 litre cc engines and Rs 1,600 per month for bigger cars. For cars owned by the employer and maintained by the employee, the perk will be valued at Rs 400 and Rs 600 respectively. The value of the perk will be Rs 600 more if a chauffeur is provided for.
If the assessee owns a car for which the company provides maintenance charges, the cost to the employer would be considered for tax purposes.
The department has also proposed that where the employer provides the employee with a sweeper, gardener or a personal attendant, the actual cost of hiring them will be the basis for computation of tax. All utilities including free gas, electricity and water will be charged at cost.
The value of perks in case of interest free or concessional loans in excess of Rs 20,000 will be calculated as the difference between the interest payable on maximum outstanding monthly balance and the interest, if any, actually paid. The prescribed interest rates for housing loan, car loan and loans for purchasing tools of trade will be 10 per cent, 12 per cent and 6 per cent respectively.
All expenses for holidays paid for by the employer will be taxed at cost but free meals up to Rs 50 per meal and tea and snacks during working hours will not be taxed. Educational expenses for children of employees will be exempt to the extent of Rs 500 per month. Credit cards and fees paid by the employer for club memberships will be considered as perk. For computers and electronic gadgets provided by the employer, the perk value will be taken as 25 per cent.
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100 percent FDI in autos mooted
New Delhi-- The heavy industries ministry has proposed to permit 100 per cent FDI in the auto sector through automatic approvals instead of up to 74 per cent as of now.
Unlike earlier, the new policy does not differentiate between cars and commercial vehicles as far as minimum foreign equity is concerned. Foreign equity threshold for motorcars and multi-utility vehicles will be scaled down to $100 million, as against US $250 million earlier which amount would have to be brought within the first three years of operations.
The minimum threshold for two/three-wheelers will be retained at $25 million. The existing FDI threshold for auto investments is $50 million.
The policy retains other conditions such as existing manufacturers would be required to hike up their investments to the levels prescribed for new companies. It also stipulates that the MoUs signed by the existing players would have to be honoured.
Several ministries including the finance ministry are strongly opposed to this proposal on the grounds that there is no need for an auto policy.
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Montek Singh’s strategy to achieve 8 per cent growth
New Delhi— Member, Planning Commission Montek Singh Ahluwalia, has suggested a five-point strategy in order to achieve 8 per cent gross domestic product growth in the 10th Plan period, leading to doubling the per capita income in 10 years.
According to Ahluwalia the crucial component of the strategy is to effect radical reforms in the power sector where the State Electricity Boards suffer 45-50 per cent revenue loss on account of transmission and distribution including theft involving Rs 26,000 crore.
He has also suggested financial reforms particularly in the banking sector. The ratio of tax revenue to GDP has not grown to the desired extent. He suggested implementation of Parthasarthy Shome Committee’s recommendations.
Pleading for the free moment of goods, Ahluwalia suggested enactment of central law to ban any restrictions imposed on inter-state and intra-state movement of goods by the state governments and of scraping of Essential Commodity Act, which had outlived its utility.
The agriculture sector, said Ahluwalia, must grow at 4 per cent from 3 per cent at present to achieve 8 per cent GDP growth. The additional growth in the agriculture should be achieved through diversification. There is also need for stepping up of investment in rural infrastructure.
Ahluwalia strongly advocated elimination non-merit subsidies not targeted to the weaker sections. He cited the example of Railways where passenger fares were cross-subsidised to the extent of Rs 4,000 crore affecting modernisation and expansion the plan of Railways.
He also said that subsidies in power, agriculture and other sectors also needed to be looked at afresh.
Ahluwalia said for 8 per cent GDP growth, i.e. 1.5 per cent, increase from the present level, an additional investment of 5.5 per cent to 6 per cent of GDP would be required.
While household savings are at a satisfactory level, corporate savings have to be stepped up. However, the worst scenario is the public sector undertakings where savings have declined from 1 per cent to –1 per cent. This trend had to be reversed by effecting better fiscal discipline if 8 per cent growth is to become a reality, he added.
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