6 January 2001

Forex reserves cross $40-b mark
Mumbai: India's foreign currency reserves have touched the $40 billion mark, an all-time high, for the week ended December 29. The reserves increased by $201 million to $40,008 million as compared to $39,807 million for the last week, the RBI has said in its weekly statistical supplement.

During the past eight weeks, the reserves rose from $34,734 million on November 11, 2000 to the current $40,008 million, which includes proceeds of over $5 billion from State Bank of India's India Millennium Deposits. The rise was also due to increase in foreign currency assets by $201 million taking the total to record highs of $37,254 million, the RBI said.

The foreign currency assets expressed in dollar terms include the effect of appreciation/depreciation of non-US currencies, such as Yen, Euro and Sterling, held in reserves, the RBI statement said. Gold reserves and special drawing rights remained static at $2,752 million and $2 million respectively. Loans and advances to the state governments was up by Rs 385 crore to Rs 4,690 crore, while those to the central government stood at nil.

5 January 2001

Shome panel seeks doing away with surcharge on corporate taxes
New Delhi: The advisory group, headed Dr Parthasarthi Shome on tax policy and tax administration has called for abolishing the surcharge on corporate and income taxes and do away with the dividend distribution tax. The committee has also recommended a steep reduction in the tax rates for both the domestic and foreign companies so as to bring them at par.

Currently, the effective corporate tax is around 38.5 per cent for Indian companies and 48 per cent for foreign companies. The committee had suggested that the rates, for both the categories, be lowered to 30 per cent. The industry has been pleading for reducing the tax on dividends to 10 per cent in the forthcoming Budget. The Shome committee is believed to be of the view that dividend tax be abolished altogether, if not in one shot at least in a phased manner.

The advisory group has submitted the interim report to the Planning Commission. The group set up by the Planning Commission is preparing a strategy paper on tax policy and administration for the Tenth Plan. The final report will be submitted to the commission at a later date.