onomi on epts and erminolo ies 22.21
mounted to privatise it, so that a chosen few could
not corner its huge profits.
The international trade among an agreed-upon
forwArD contrAct group of countries without any barriers (such as
tariffs, quotas, forex controls, etc.), promoted
A transaction contract of commodity on an agreed
with the objective of securing international
price which binds the seller and buyer both to pay
specialisation and an edge in their foreign trade.
and deliver the commodity on a future date. The
price agreed upon is known as forward rate.
One must not confuse this with the term
‘future contract’ as in it, the term of the contract A port that is designated as such is the one where
cannot be decided by the mutual needs of the imports are allowed without any duty, provided
parties involved (which is possible in a ‘forward they are re-exported (i.e., entrepot). If the same is
contract’). correct in the case of an area, it is known as the
free trade zone.
A trading system in certain shares (as allowed by fringe benefit tAx
the SEBI in India) in which buyers and sellers are The Finance Act, 2005 introduced 30 per cent
allowed to postpone/defer payment and delivery ‘Income Tax on fringe benefit’ on fringe benefits
respectively after paying some charges. If the
received by the employees from his employer.
buyer wants deferment, it is known as badla (an
Indian term for contango) and if the seller goes It means any privilege, service, facility or
for deferment of delivery of shares, it is known amenity, directly or indirectly provided by an
as undha badla (in India, elsewhere it is known as employer to his employees. It also includes such
backwardation). facilities provided to former employees. Any
reimbursement made either directly or indirectly
frActionAl bAnking to the employer will also be considered as a fringe
benefit. Travelling ticket provided by the employer
A system of banking in which banks maintain a to the employees and his family members would
minimum reserve asset ratio in order to maintain be a fringe benefit. Even an amount, which is
adequate liquidity to meet the customer’s cash a contribution by the employer to an approved
demands in its everyday business (the SLR in India superannuating fund would be called a fringe
is such a provision,). benefit.
It applies on deemed benefits, too such as
free gooDs entertainment, festival celebration, gifts, use of
The goods which are in abundance (as air and club facilities, provision of hospitality facilities,
water) and are not considered as scarce economic maintenance of any accommodation in the nature
goods. As such goods have zero supply price and of a guest house, conference, employee welfare, use
they will be used in large volumes resulting into of health club, sports and similar facilities, sales
rising environmental pollution (point should promotion including publicity; conveyance tour
be noted that today air and water may not be and travel including foreign travel, hotel, boarding
considered as the typical free goods, at least the and lodging, repair, running and maintenance
‘pure air’ and ‘pure water’). of motorcars, repair running and maintenance