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Tax sop for cooperative banks

New Delhi, Feb. 15: Ahead of the budget session, which is expected to get stormy on issues such as price rise and food imports, Prime Minister Manmohan Singh made his first significant political overture towards the Left.

He promised to “sympathetically” consider the demand of cooperative banks for waiving income-tax on up to 33 per cent of their profits.

The UPA government, which is likely to be slammed by the Opposition and its allies for “betraying” the aam admi with its reforms overdrive, also made a gesture towards Dalits by setting up a high-level committee to find out why crimes against them were not declining despite appropriately empowered laws.

This committee, to be headed by Meira Kumar, minister for social justice and empowerment, is perceived by the Congress as a “major political statement” in the run-up to the Uttar Pradesh polls, where it will have to battle the might of the Samajwadi Party, primarily a party of the backward castes, and the BSP, which represents the Dalits.

Last night, a delegation from nine cooperative banks of Karnataka called on the Prime Minister.

Led by Basudeb Acharia, the leader of the CPM parliamentary party, the delegation drew Singh’s attention to the fact that the earlier tax exemptions given to cooperative banks had been withdrawn in the last budget. This, the delegation argued, had “undermined” the foundation of the cooperative sector, which mainly looked after the needs of the poor and the salaried class.

Acharia and the others told Singh it was “unfair” to equate these banks with their commercial counterparts.

They also said the finance ministry’s argument of how tax on profits would discipline the banks’ audits and improve their accountability did not wash because cooperative banks were already regulated by the RBI and the Registrar of Commercial Societies.

Singh’s assurance fulfils a long-standing demand of the Congress, which had urged him to exempt cooperative banks from tax on profits and allow them to charge 7 per cent interest like commercial banks.

Congress chief Sonia Gandhi had suggested in the last conclave of party chief ministers that the Centre should subsidise cooperative banks.

The committee to curb crimes against Dalits was in response to the government’s own statistics, which revealed that despite two major laws, 23.9 per cent of such crimes committed between 2001 and 2005 were pending police probe and 80 per cent were still being tried. The rate of acquittal was as high as 70 per cent.

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