LONDON: India and China, besides some developed countries, may face economic downturn in the coming months, according to an analysis by OECD -- a grouping of mostly advanced nations.
It also said the global economic growth is slowing down. The latest reading is in contrast to the bullish outlook for fast-growing economies such as India, which tackled the global financial meltdown better than many other countries.
The Organisation for Economic Cooperation and Development (OECD)'s latest Composite Leading Indicators (CLIs) released today show that global economic expansion is slowing down.
CLI provide early signals of turning points in business cycles - fluctuations of economic activity around its long term potential level.
"The outlook given by the CLIs for Canada, France, Italy, the United Kingdom, Brazil, China and India points strongly to a downturn," OECD said in a statement.
CLI for India stood at 100.4 in August, a tad lower than 100.6 recorded in July. In the case of China, the August indicators slipped to 101.3 from 101.7 in the previous month.
Interestingly, a few days ago, Finance Minister Pranab Mukherjee had said that in the short term it is reasonable to expect the national economy to go back to the "robust growth path of around 9 per cent average".
India's economic growth rate was 7.4 per cent in 2009-10 and is projected to be over 8.5 per cent for the year ending March 31, 2011.
From over 9 per cent average for three years till 2007-08, the growth slipped to 6.7 per cent in 2008-09 because of the global economic crisis that began in 2008.
India is not part of the Paris-based grouping. Apart from India and China, OECD also provides CLIs for three other major Asian economies -- Indonesia, Japan and South Korea.
Meanwhile, the indicators for the OECD region, comprising 33 economies including the US and Germany, marginally fell to 102.9 in August. In the previous month, the same was at 103.
OECD, which accounts for over 60 per cent of the global economic output, said that August indicators "reinforce signals of slowing economic expansion already seen last month".
The CLI for the OECD area decreased by 0.1 point in August, making it the fourth straight month that the index has shown negligible or negative growth.
However, the grouping pointed out that there are stronger signals of a peak emerging in the world's largest economy US.
"For Germany, Japan and Russia the CLI points to a continuation of the expansion phase," it
Monday, October 11, 2010
Wednesday, October 6, 2010
US green card's now more of a tax sword for Indians
MUMBAI: Is the American dream losing its appeal? Though the US still continues to attract the best minds from the world over, including India, stringent tax laws are forcing many Indians to re-look at the decision to settle in a land that has for long been their dream destination .
This is reflected by the increasing number of Indians wanting to give up their green cards or US citizenship after the country’s heavy budgetary deficit and a drive to trace unreported income through tighter tax laws and disclosure norms.
Tax laws in the US empower the Internal Revenue Service, the apex body for US tax administration, to tax global incomes of those holding US citizenships or the green card. As a result, Indians who hold a US citizenship or green card, face the threat of being taxed in the US for income generated in India, even if the Indian business has no territorial nexus with the US.
For example, many Indians in the US send money back home, which is invested in the stock market in India, where dividend and long-term capital gains are tax exempt.
Nevertheless, they are liable to pay tax in the US for income generated in India. According to reports published internationally, over 500 US citizens had given up citizenship in the last quarter of 2009, to settle in convenient destinations. This figure was almost double the number of people who severed ties with the US in 2008.
“It’s is true that several clients are giving up US citizenships,” said Sudhir Kapadia, a partner with consulting major Ernst & Young. “A major reason is the stringent tax laws. With rising budgetary deficits, their tax laws are increasingly becoming stringent. And more such laws are in the offing. From 2011, Inheritance Tax, at the rate of 20%, would be levied on heirs of US citizens. Many Indians are wary of such laws,” Mr Kapadia said.
There is another side to this development. Even if a person is not residing in the US, he is liable to pay tax if he holds a green card or has citizenship. In other countries, for example India, a person is bound to pay tax in the country if he resides there for more than 182 days in a year. However, the number of days a taxpayer resides in the country is irrelevant for the purpose of taxation in the US. What matters is whether he holds US citizenship or a green card.
Although these laws have been in force for some time, it was only two years back that the US government decided to strictly enforce them after the government detected unreported accounts of US citizens with the Swiss bank, UBS. Ever since, the US administration has initiated the project to collect as much data as possible about the global income of US citizens not reported to the Internal Revenue Service.
“For many Indians who hold green card or have US citizenship, America has ceased to be attractive,” said Dilip Lakhani, a Mumbai-based senior chartered accountant, who advises green-card holders doing business in India. “Many do not know they have to pay tax in the US for their Indian income. If they continue ignoring the requirement, they may land up in jail in the US. My advise to them is to comply with the US laws.” Defaulters will be in jail for at least six months.
A number of chartered accountants, who don’t want to be identified, said they have even advised their clients against going to the US for delivery of children. “These are from well-to-do clients for whom US tax laws would become a liability later in life. Most of them complied with the advice,” said a chartered accountant. Indians with green card or citizenship in US also find having to reporting foreign accounts with deposits of $10,000 or more
highly irksome.
This is reflected by the increasing number of Indians wanting to give up their green cards or US citizenship after the country’s heavy budgetary deficit and a drive to trace unreported income through tighter tax laws and disclosure norms.
Tax laws in the US empower the Internal Revenue Service, the apex body for US tax administration, to tax global incomes of those holding US citizenships or the green card. As a result, Indians who hold a US citizenship or green card, face the threat of being taxed in the US for income generated in India, even if the Indian business has no territorial nexus with the US.
For example, many Indians in the US send money back home, which is invested in the stock market in India, where dividend and long-term capital gains are tax exempt.
Nevertheless, they are liable to pay tax in the US for income generated in India. According to reports published internationally, over 500 US citizens had given up citizenship in the last quarter of 2009, to settle in convenient destinations. This figure was almost double the number of people who severed ties with the US in 2008.
“It’s is true that several clients are giving up US citizenships,” said Sudhir Kapadia, a partner with consulting major Ernst & Young. “A major reason is the stringent tax laws. With rising budgetary deficits, their tax laws are increasingly becoming stringent. And more such laws are in the offing. From 2011, Inheritance Tax, at the rate of 20%, would be levied on heirs of US citizens. Many Indians are wary of such laws,” Mr Kapadia said.
There is another side to this development. Even if a person is not residing in the US, he is liable to pay tax if he holds a green card or has citizenship. In other countries, for example India, a person is bound to pay tax in the country if he resides there for more than 182 days in a year. However, the number of days a taxpayer resides in the country is irrelevant for the purpose of taxation in the US. What matters is whether he holds US citizenship or a green card.
Although these laws have been in force for some time, it was only two years back that the US government decided to strictly enforce them after the government detected unreported accounts of US citizens with the Swiss bank, UBS. Ever since, the US administration has initiated the project to collect as much data as possible about the global income of US citizens not reported to the Internal Revenue Service.
“For many Indians who hold green card or have US citizenship, America has ceased to be attractive,” said Dilip Lakhani, a Mumbai-based senior chartered accountant, who advises green-card holders doing business in India. “Many do not know they have to pay tax in the US for their Indian income. If they continue ignoring the requirement, they may land up in jail in the US. My advise to them is to comply with the US laws.” Defaulters will be in jail for at least six months.
A number of chartered accountants, who don’t want to be identified, said they have even advised their clients against going to the US for delivery of children. “These are from well-to-do clients for whom US tax laws would become a liability later in life. Most of them complied with the advice,” said a chartered accountant. Indians with green card or citizenship in US also find having to reporting foreign accounts with deposits of $10,000 or more
highly irksome.
Wipro fraud probe hints at involvement of multiple officials'
BANGALORE: Early investigations into the embezzlement reported at Wipro, earlier this year, hint at the involvement of multiple officials and units within the company’s financial department, people familiar with the ongoing probe told ET.
Last week, Wipro said it will file its annual report with the US Securities and Exchange Commission for the year-ended March 2010 more than a month after the scheduled September 30 deadline, as it awaits the investigations to be completed.
Audit firm Ernst & Young, apart from an internal probe committee led by Narayanan Vaghul, former chairman of ICICI and an independent director with the country’s third-biggest software exporter will submit their reports to the company’s board later this month, according to persons with knowledge of the developments.
“The embezzlement has been happening over three years. It cannot be carried out in isolation. The objective of investigations is to identify the process improvements and even fix accountability,” one of the persons told ET, requesting anonymity. He added that it was still too early to draw conclusions, since the investigation is expected to be completed by October-end only.
The fraud came to light in December last year after a banker to the firm alerted Wipro about an overdraft. An employee working with Wipro’s ‘controllership’ division, within the finance department, had embezzled about $4 million by exploiting the exclusivity of access to the company’s banking accounts. Wipro declined to offer any comments, as the company is in a silent period ahead of its second quarter results later this month. An Ernst & Young spokeswoman did not respond to a query sent by ET.
As reported by ET in February this year, a Wipro staff embezzled crores of rupees over the past three years, sending the country’s third-largest software exporter scrambling to tighten internal controls in the finance division, where the incident took place. The employee had been working with the company for the past three years in the ‘controllership’ division, within the finance department. This cell is responsible for keeping the company’s financial books and also has powers to authorise payments whenever needed. The employee siphoned off the company’s money to his personal savings accounts in multiple transactions, worth anywhere between Rs 1 lakh and Rs 1.2 crore, and used the money to acquire jewellery, apart from making other investments, including buying land.
Apart from investigating how the processes were tweaked to carry out the embezzlement, E&Y, along with the internal auditors, is also examining if there were more departments and people involved in the incident. For instance, while the controllership unit, where the embezzlement happened, is responsible for authorising payments, such requests are processed by Wipro’s payments-processing department called Wividus.
Last week, Wipro said it will file its annual report with the US Securities and Exchange Commission for the year-ended March 2010 more than a month after the scheduled September 30 deadline, as it awaits the investigations to be completed.
Audit firm Ernst & Young, apart from an internal probe committee led by Narayanan Vaghul, former chairman of ICICI and an independent director with the country’s third-biggest software exporter will submit their reports to the company’s board later this month, according to persons with knowledge of the developments.
“The embezzlement has been happening over three years. It cannot be carried out in isolation. The objective of investigations is to identify the process improvements and even fix accountability,” one of the persons told ET, requesting anonymity. He added that it was still too early to draw conclusions, since the investigation is expected to be completed by October-end only.
The fraud came to light in December last year after a banker to the firm alerted Wipro about an overdraft. An employee working with Wipro’s ‘controllership’ division, within the finance department, had embezzled about $4 million by exploiting the exclusivity of access to the company’s banking accounts. Wipro declined to offer any comments, as the company is in a silent period ahead of its second quarter results later this month. An Ernst & Young spokeswoman did not respond to a query sent by ET.
As reported by ET in February this year, a Wipro staff embezzled crores of rupees over the past three years, sending the country’s third-largest software exporter scrambling to tighten internal controls in the finance division, where the incident took place. The employee had been working with the company for the past three years in the ‘controllership’ division, within the finance department. This cell is responsible for keeping the company’s financial books and also has powers to authorise payments whenever needed. The employee siphoned off the company’s money to his personal savings accounts in multiple transactions, worth anywhere between Rs 1 lakh and Rs 1.2 crore, and used the money to acquire jewellery, apart from making other investments, including buying land.
Apart from investigating how the processes were tweaked to carry out the embezzlement, E&Y, along with the internal auditors, is also examining if there were more departments and people involved in the incident. For instance, while the controllership unit, where the embezzlement happened, is responsible for authorising payments, such requests are processed by Wipro’s payments-processing department called Wividus.
Cairn doesn't expect delays in Vedanta deal
LONDON: Cairn Energy said the results from its drilling programme in Greenland this summer were as good as it hoped for and said it did not expect delays to the planned sale of a stake in its Indian unit to Vedanta Resources.
"It's about as good as outcome as we could have expected in our first season of drilling," Mike Watts, Cairn exploration director told the RBC Capital Markets exploration conference on Wednesday.
"If we were playing poker, and we got two types of gas and two types of oil, we'd have a royal flush, and that's what we've got in Greenland," he added.
Cairn has completed two wells in Greenland and is working on a third currently.
Watts said Cairn could spend $1.2 billion in total in coming years in drilling in the Arctic country.
Watts also predicted Cairn would close the sale of a stake in its Indian unit, Cairn India , worth up to $8.5 billion, to Vedanta Resources in the first quarter of 2011.
Some Indian newspapers have reported the deal could be delayed for up to two years.
"It's about as good as outcome as we could have expected in our first season of drilling," Mike Watts, Cairn exploration director told the RBC Capital Markets exploration conference on Wednesday.
"If we were playing poker, and we got two types of gas and two types of oil, we'd have a royal flush, and that's what we've got in Greenland," he added.
Cairn has completed two wells in Greenland and is working on a third currently.
Watts said Cairn could spend $1.2 billion in total in coming years in drilling in the Arctic country.
Watts also predicted Cairn would close the sale of a stake in its Indian unit, Cairn India , worth up to $8.5 billion, to Vedanta Resources in the first quarter of 2011.
Some Indian newspapers have reported the deal could be delayed for up to two years.
CWG: Renu Bala retains 58kg weightlifting title
EW DELHI: India's Renu Bala retained her Commonwealth Games 58kg women's weightlifting title on Wednesday with a commanding performance which delivered her country's first Delhi gold in the competition.
Bala, who turned 24 on Saturday, set a new Commonwealth record by lifting 90kg in the snatch before piling on the pressure with a clean and jerk of 107 for a 197kg total.
Australia's Sean Lee, with a total of 192kg claimed silver to add to her 2002 bronze medal from Manchester.
English 16-year-old Zoe Smith took bronze with a 188kg total after a brave late attempt to knock the Australian from the silver medal position when she twice attempted 108kg in the clean and jerk.
Canada's Emily Quarton, who won the silver at Melbourne four years ago, finished in a disappointing fifth place behind Clementina Agricole of the Seychelles who had been in second spot after the snatch.
In shooting, Omkar Singh bagged the 8th gold medal by winning gold in the 50m pistol event, while Gagan Narang pipped Abhinav Bindra to win gold in the 10m Air Rifle event and shooter Anisa Sayeed won gold in 25m women's pistol event at the Karni Singh Shooting Range.
Bala, who turned 24 on Saturday, set a new Commonwealth record by lifting 90kg in the snatch before piling on the pressure with a clean and jerk of 107 for a 197kg total.
Australia's Sean Lee, with a total of 192kg claimed silver to add to her 2002 bronze medal from Manchester.
English 16-year-old Zoe Smith took bronze with a 188kg total after a brave late attempt to knock the Australian from the silver medal position when she twice attempted 108kg in the clean and jerk.
Canada's Emily Quarton, who won the silver at Melbourne four years ago, finished in a disappointing fifth place behind Clementina Agricole of the Seychelles who had been in second spot after the snatch.
In shooting, Omkar Singh bagged the 8th gold medal by winning gold in the 50m pistol event, while Gagan Narang pipped Abhinav Bindra to win gold in the 10m Air Rifle event and shooter Anisa Sayeed won gold in 25m women's pistol event at the Karni Singh Shooting Range.
Car loan default: What, when and how?
When the economy slumps unemployment percentages, grim job prospects, and high inflation rates can rock any individual's boat. Those who once had a great credit score and made payment of bills on time could now face the fear of defaulting on their loans.
Probably the next big thing on your monthly budgets after the mortgage loan is the car loan. And you would not want to default on this for obvious reasons. One, it will destroy your credit history and two you might lose your car to the repo man!
But when does a default actually happen? Does making a deferred or skipping the payment for a month or so constitute a default? Will your car be repossessed then?
Probably the next big thing on your monthly budgets after the mortgage loan is the car loan. And you would not want to default on this for obvious reasons. One, it will destroy your credit history and two you might lose your car to the repo man!
But when does a default actually happen? Does making a deferred or skipping the payment for a month or so constitute a default? Will your car be repossessed then?
US in fight for future with India, China: Obama
WASHINGTON: Saying that the United States was in a fight for the future with countries like India and China, President Barack Obama has taken strong exception to opposition Republican move to slash the education budget.
He strongly disagreed "with the economic plan that was released last week by the Republican leaders in Congress, which would actually cut education by 20 percent," he said Tuesday addressing the White House Summit on Community Colleges, attended by educators, business leaders and officials.
It would reduce or eliminate financial aid for 8 million college students, said Obama. "Think about it. China isn't slashing education by 20 percent right now. India is not slashing education by 20 percent."
"We are in a fight for the future-a fight that depends on education," said Obama. "And cutting aid for 8 million students, or scaling back our community-our commitment to community colleges, that's like unilaterally disarming our troops right as they head to the frontlines," he said.
Noting that the US has fallen from first to ninth in the proportion of young people with college degrees, Obama said: "As far as I'm concerned, America does not play for second place, and we certainly don't play for ninth."
"So I've set a goal: By 2020, America will once again lead the world in producing college graduates. And I believe community colleges will play a huge part in meeting this goal, by producing an additional 5 million degrees and certificates in the next 10 years."
The Republican plan instaed would help pay for a $700 billion tax cut that only 2 percent of the wealthiest Americans would ever see-an average of $100,000 for every millionaire and billionaire in the country, said Obama. "And that just doesn't make sense-not for students, not for our economy."
Describing community colleges as the "unsung heroes" of the nation's education system that "provide a gateway to millions of Americans to good jobs and a better life," he announced that the Gates Foundation is starting a new five-year initiative to raise community college graduation rates.
"This is critically important because more than half of those who enter community colleges fail to either earn a two-year degree or transfer to a earn a four-year degree."
He strongly disagreed "with the economic plan that was released last week by the Republican leaders in Congress, which would actually cut education by 20 percent," he said Tuesday addressing the White House Summit on Community Colleges, attended by educators, business leaders and officials.
It would reduce or eliminate financial aid for 8 million college students, said Obama. "Think about it. China isn't slashing education by 20 percent right now. India is not slashing education by 20 percent."
"We are in a fight for the future-a fight that depends on education," said Obama. "And cutting aid for 8 million students, or scaling back our community-our commitment to community colleges, that's like unilaterally disarming our troops right as they head to the frontlines," he said.
Noting that the US has fallen from first to ninth in the proportion of young people with college degrees, Obama said: "As far as I'm concerned, America does not play for second place, and we certainly don't play for ninth."
"So I've set a goal: By 2020, America will once again lead the world in producing college graduates. And I believe community colleges will play a huge part in meeting this goal, by producing an additional 5 million degrees and certificates in the next 10 years."
The Republican plan instaed would help pay for a $700 billion tax cut that only 2 percent of the wealthiest Americans would ever see-an average of $100,000 for every millionaire and billionaire in the country, said Obama. "And that just doesn't make sense-not for students, not for our economy."
Describing community colleges as the "unsung heroes" of the nation's education system that "provide a gateway to millions of Americans to good jobs and a better life," he announced that the Gates Foundation is starting a new five-year initiative to raise community college graduation rates.
"This is critically important because more than half of those who enter community colleges fail to either earn a two-year degree or transfer to a earn a four-year degree."
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