The ADR-GDR linked stock option scheme for employees may as some of the promised incentives are unlikely to come through. The revenue department has taken a stand that the discount on stocks given to resident Indians under the scheme would be taxed as perks. And perks are taxed as part of salary.

In a significant post budget change, the finance minister has withdrawn the proposal to tax gifts as income of the recipient. Since he had already abolished gift tax on the donor of gifts as part of his Budget proposals, this withdrawal effectively means that gifts made on or after October 1, 1998, shall be free from any tax- either on the donor or the donee. 

The fate of tax exemptions on investments exceeding Rs 20,000 crore made in infrastructure activities during 1997-98 under the provisions of Section 10(23)(G) of the income Tax Act is now under a cloud. 
Following the amendments to the Finance Bill, 1998, the tax shield that was available to investments made last year under the provisions of this section stands withdrawn, perhaps  unwittingly. Companies and investors who took advantage of the tax shield would have to pay advance tax.

The government is planning to further liberalize norms pertaining to foreign direct investment (FDI) proposals in the software sector. Identifying this area as hi-technology and part of the Prime Minister's pet plan, the government is now considering putting on the automatic approval list proposals for 100 per cent foreign equity in the software development area.

The Reserve Bank on India (RBI) has simplified the procedure for investments by Non Resident Indians (NRI) and Overseas Corporate Bodies (OCB) in Indian companies under the 100 per cent scheme. The central bank has declared that Indian companies no longer require RBI permission to receive inward remittance and issuance of shares to these entities.

The government is planning to liberalize the foreign investment norms in the non banking finance sector.  As part of the plans under consideration, the government intends to take out fee based activities from the stringent capitalization norms applicable to all NBFC's.

Bank credit  has shown a positive growth for the second consecutive fortnight- reversing the declining trend prevailing during the first quarter: However, overall bank credit as on July 17 was lower than the figure prevailing on March 31, 1998, implying that old loans have been repaid and there are no takers fore fresh credit.

The Department on Company Affairs (DCA) is short listing all companies which have declared  dividends but have not paid them to their shareholders. According to sources, DCA has issued directions to all regional directors to finalize the list in order to launch prosecution against such companies. Since a large number of companies, big and small, are culprits in this regard, thousands of  companies are expected to fall into the DCA net.

Despite the snub from the public provident funds, private sector companies are charting out plans to tap funds from provident and pension funds.  While HDFC has already floated a 14 per cent bond aimed exclusively at provident funds, the Tatas are reported to be in the process of evolving a debt paper for the same market.  Tatas are biding to make an entry through Tata Electric.

The Union government and the World Bank signed the agreement granting multilateral aid amounting to $129.9 million.  The loan has been granted for diversified agricultural support program.  The agreement was signed by V.Govindarajan, additional secretary (Fund Bank) on behalf of the government, Edwin Lim, country directors on behalf the World Bank and by Jacob Thomas, project co-ordinator, UPDASP, on behalf of the UP government. 

ICI India Ltd is considering a proposal to set up a new paint manufacturing facility in the south with an estimated outlay of Rs 80 crore.  While the company is yet to zero in on the location, ICI sources said that the place of selection will depend on the demand for paints in the state.  The proposed investment will also include the land cost.  The facility will produce both decorative and household paints. 
 

The Economic downturn continues unabated with the production of commercial vehicles, cars, paper, sugar, alkalis, cold rolled steel strips, machine tools, textile machinery, tractors and several other sectors clocking a negative growth in the first quarter of the financial year, 1998-99, as compared to the corresponding period of fiscal, 1997-98.

   The Reserve Bank on India plans to advise banks on the ways to adopted to finance the working capital requirements of software companies.  The boards of the banks, however, would be free to formulate their own guidelines to finance software companies .  This is expected to substantially increase the flow of funds to the software industry. 
The highlight o Rib's recommendation would be that no proposal up to Rs 50 lake to meet the working capital requirement of a software unit should be refused by banks for want of collateral security. 

The finance ministry has given the go-head for the buyback proposal circulated by the Department of Company Affairs (DCA) without making any changes. 
* Buyback for equity revamp, not treasury operations 
* Companies can float public issues to fund buyback. 
* Limit for buyback to be 25% of capital and reserves. 
* Shares bought back will have to be destroyed. 
* Company will have to file solvency report 
* Debt-equity ratio after buyback must be 2:1

The National Bank for Agriculture and Rural Development (Nabard) plans to link one million self help groups (SHGs) within next 10 years, said Mr.P.V.A.Rama Rao, managing   director, Nabard.  Nabard has launched a scheme for the promotion of SHGs as a channel for flow of funds to finance micro enterprises.  The bank has extended refinance to about 14,317 groups.

The FOOD and Agriculture Organisation (FAO) has ruled out further funding for the extension programme of the apiculture project in Karnataka.  Mr.Wim Polman, regional officer for the Asia-pacific region, said there would be no more FAO funding for the new extension programme to be launched by the Karnataka Government.