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Around 3.5 lakh companies in the country hope to lower their tax burden in the next financial year. The prevailing corporate tax rate is 33.99% and the companies expect the government to scrap the surcharge or lower the basic rate of 30%. The buoyancy in corporate tax revenues may bolster their case for a rate cut.

But what is the effective tax paid by India Inc? Effective tax is taken as the ratio of tax amount disclosed by a firm in its financial statement to profit before tax. Factoring in all the exemptions, a large number of companies have paid around Rs 24 as tax on a profit of Rs 100 till December 2007.

This is based on an analysis of 3,070 listed companies from ETIG database.

What this means is the effective tax liability of India Inc is 24%. The catch, however, is that it has gone up in two years ago.

The analysis shows the effective tax rate on income earned in 200506 was 22.5%, which this rose to 23.66% in 2006-07. That is a significant increase when considered in absolute terms as the total corporate tax paid by the sample amounted to Rs 75,039 crore.

Normally, companies file tax returns based on tax payouts in the previous fiscal. So, the government data to corroborate the trend will be i available only later.

There is an increase in the effective tax rate if either base corporate tax rate goes up or compliance improves or some cushions like tax holidays are withdrawn. The expiry of time-bound exemptions like a five-year tax holiday is believed to have pushed up the effective rate 0 some sectors. Other reasons that could increase the effective tax are inclusion of past losses or a dip in the depreciation amount.

Leading the pack were banks and cement companies who made more profits during the period. The effective tax liability in the sectors saw a whopping 6% jump. Next wert companies in steel, other metals, automobiles, mining and shipping.

Interestingly, the effective tax rate dropped marginally for the IT sector which is lobbying for the continuation of tax breaks on export profits. So was the case for sectors such a pharmaceuticals, hotels, sugar and telecom service providers.

The ETIG analysis is based on financial results declared by companies and, hence, may not match the effective tax rate computed by the government, but it signals a trend. The finance ministry had estimated the rate at 19.26% in 2006-07, based on a sample of three lakh companies that had filed tax returns.

According to a top government official, the effective tax rate of companies could be 20% in 2007 -08, given that they still enjoy major exemptions. These include tax holiday on profits of companies developing infrastructure facilities, tax breaks on export profits for units in software technology parks and tax benefits for Jammu & Kashmir and backward areas, among others.

“The effective tax rate would go up if exemptions are removed or if there is a change in the tax behaviour of taxpayers,” a finance ministry official said. With polls just a year ahead, the UPA government may prefer a status quo on exemptions to companies. The extra corporate tax collections could offset the revenue loss on a surcharge cut. Indications are the corporate tax revenues would surpass the Budget estimates of Rs 1, 68,000 crore byRs20, 000 crore.

International comparisons show the country’s corporate tax rate is higher than Malaysia (27%), Russia (24%), Thailand (30%) and China (33%), but lower than the US (40%).

Local bodies may soon find it difficult to milk the telecom infrastructure cash cow. The Department of Telecom (DoT) will write to all state governments that if service providers share towers and other infrastructure, then levies charged should not be more than 1.2 times the amount being charged from a single player. At present, some state governments and municipal bodies impose several different levies on telcos for setting up of towers and other infrastructure which include registration charges, processing fees, stamp duty, octroi amongst others. Each operator has to pay these levies independently even if they share the infrastructure with existing players.

The DoT will initiate this move after the Telecom Commission approves. “Only states which are charging some amount from the service providers for putting up tower will be requested by the DoT to charge such amounts from all service providers sharing infrastructure so that the total amount charged per tower should not be more than 1.2 times of the amount being charged from individual service providers when the tower is not shared, instead of charging the same amount of processing fee and other charges from all operators sharing a site,” the DoT said in its communication to the Telecom Commission (TC).

However, the DoT will not direct state governments to mandatorily follow its request. This means, local bodies can continue to follow the existing levy structure even after the DoT’s request. The proposal to ask local bodies reduce levies on shared infrastructure was first mooted by sector regulator TRAI last year. Trai chairman Nripendra Misra told that he had already taken up the issue with urban development minister Jaipal Reddy. “It is not just towers, but local bodies charge all sorts of taxes for Right of Way. (Telcos need to obtain RoW from several different municipal bodies before they can lay optic fiber cable.) All kinds of fees and royalties are charged because local bodies see this as a source of revenue. Telecom is an infrastructure that must be encouraged by all state government, “Mr Misra said. The Trai chairman also added that DoT, after writing to all state governments must in the next step push for the inclusion of this in deliberations of the National Development Council. “This will ensure that Chief Ministers can then implement this as a policy,” Mr Misra added. Industry analysts are of the view that allowing telcos to share the levies for shared telecom infrastructure will result in considerable reductions in the capex. They also added that it would be difficult to put a figure to the savings as local levies differed from state to state.

The long anticipated series on nutrition published earlier this month in the British medical journal The Lancet has profound consequences for India. True, economic growth is at an all-time high, literacy is improving, and even infant mortality has shown a decline over the past decade. But on one critical front we continue to have the dubious distinction of being among the worst-off in the world: a high percentage of malnourished children.

Last year’s release of the National Family Health Survey (NFHS) data showed that 45 per cent of Indian children are underweight and 70 per cent are anemic. Indian children are twice as likely to be malnourished as even those in sub-Saharan Africa, and nearly five times more likely to be so than children in China. Even with its remarkable economic progress, India’s malnutrition levels in the seven years since the last NFHS survey have not been getting any better. What is more, inequalities in nutrition between demographic, socioeconomic and geographic groups have intensified during the 1990s.

Should we be concerned?

Yes. Malnourished children are more susceptible to disease, have a reduced capacity to learn, and are much more likely to drop out of school. Once in the job market, their productivity is low. For the economy as a whole, this translates into losses of nearly 3 per cent of the GDP. All this places India’s large young population - the basis of its much-awaited demographic dividend - at a growing disadvantage in today’s globalizing world.

Before malnutrition can be adequately addressed, however, its causes need to be understood. It is primarily an outcome of three interlocking sets of factors: one, inadequate access to food; two, an unhealthy environment and limited access to healthcare; and three, inappropriate and often misunderstood child caring practices. In dealing with the problem, certain common myths also need to be dispelled, for it is not poverty and the lack of food alone that cause malnutrition. In fact, in the richest 20 per cent of India’s population, more than one in four children are underweight and nearly two out of three are anemic.

Another myth relates to the programmes needed to address the problem. Evidence shows that most of the damage caused by malnutrition happens either when the child is in the womb or in the first two years of life.

And most of the impairment to brain development and future productivity in these early months of life is irreversible. Therefore, supplementary feeding through school feeding programmes is, for nutritional purposes, too late, too little and - since nutrition budgets are limited - too expensive.

So, there is a clear need to focus on the nutrition of the very young. As for geographic focus, malnutrition in India is concentrated in a relatively small number of states, districts and villages. A recent World Bank report noted that five states account for about 80 per cent of India’s malnourished children. A follow on mapping study has identified the districts where the problem is most severe.

A balanced nutrition policy in India would, therefore, review the epidemiological evidence for the causes of malnutrition. It would design a public policy that institutes a strong nationwide information campaign promoting good nutrition practices during pregnancy and the first two years of life. It would promote and support traditional practices, such as adequate rest during pregnancy; and exclusive breast-feeding for every child until six months of age, and the introduction of appropriate complementary foods at about six months of age. Such an information campaign alone could help improve nutrition outcomes among those who are better-off. In addition, the policy would support large-scale fortification of commonly consumed foods with micronutrients such as iodine, iron, vitamin A and zinc such as iodine, iron, vitamin A and zinc and encourage women to take iron supplements during pregnancy.

This would ensure that the limited public resources are conserved for use among the poorest that may need more, for example food and vitamin A supplements, as well as assistance to prevent common childhood diseases like diarrhea. At the same time, these policies would continue to explore innovative options to improve nutrition. These include the production of double-fortified salt to address the widespread anemia (salt fortified with iron, as well as iodine), and possibly cash transfers to poor mothers, conditional on their participation in programmes aimed to improve child-care practices.

One of the reasons India has not moved more aggressively to address the malnutrition scourge is the view of some here that global growth standards that are used to assess nutrition overstate the problem in India. A few have put something of a political spin on the issue by questioning the validity of the alarming nutrition data published about India. True, the unpalatable information sometimes appears in reports of international organisations. But those reports are derived from India’s own NFHS data, verified by Indian scientists and demographers. In short, the problem of malnutrition in India is large and real. The launch of the Lancet nutrition series in India will provide a good opportunity to revisit what needs to be done to address this scourge.

This will, in turn, help India to build a well-nourished and strong nation that can make the most of the new opportunities that are coming its way.

‘Passenger is the king’, seems to have been driving mantra of union Railways Minister Lalu Prasad as he unveiled a basket of goodies to make train travel more comfortable and greener. Forget the long queues to book your tickets. You could do it through your mobile phone, if the announcements made in the Railway Budget 2008-09 are anything to go by. Harping on use of IT, the Railways is all set to make ticketing a child’s play. Automated vending machines issuing tickets would be increased from 250 to 6,000 while unreserved ticketing system windows would increase to 15,000. E-booking could now be done for a waitlisted ticket as well.

All coaches on trains would have an online display board giving train arrival and departure information, reservation information. This facility would be available to passengers by March 2009. The initiative not only makes travel easier for passengers but could also spell a huge business opportunity for IT companies. The high quality display panels with touch button facility will be installed on all stations. Select mail and express trains will get a public address system, akin to the one installed in Shatabdi and Rajdhani category of trains.

The bag of goodies is not yet over. “Atithi Devo Bhav”, passenger is our revered guest,” said Mr Prasad as he went on to announce the landmark initiative - discharge free toilets. The long-standing demand of train travelling public could turn into a reality in next five years. Indian railways would provide for such toilets in all 36,000 coaches in next five years at a cost of Rs 4,000 crore. Modular and ergonomically designed toilets will replace the dreary ones in the new stainless coaches which the Railways is proposing to introduce.

Besides, passengers will not have to bear with dirty coaches in their journey with the new on-board cleaning facility that would be outsourced to private agencies. The stress on cleanliness will not be limited to just the trains.

 The platforms will also get a new face with a large number of them witnessing an increase in height to make them passenger friendly. All high-level platforms would get foot -over bridges and all major stations will be fitted with lifts and escalators. Length of 30 more platforms would be increased and provision for platform shelters would be made even at small stations.