Reliance Power listing is a big awaiting event for every investors on the street, who have got allotment of it shares as well as for market as it was the biggest issue in Indian Capital Market history. It is going to list on Monday, February 11, 2008.
During the issue time, experts were expecting the premium for Reliance Power nearly Rs 400-450. Everyone was very optimistic about this listing. But as the market's turmoil has been started post issue, the premium also start declining. It reduced to Rs 120-150 as per experts quote. So we will check what experts are expecting on listing?
Manisha Bhatt of Prabhudas Lilladher says, "Reliance Power is expected to list with Rs 120-130 premium. One can book partial profits during the day. The stock can go below issue price of Rs 450 if market remains subdued."
According to R S Iyer of K R Choksey Securities, "The stock is likely to list at around Rs 450-500 after looking at negative sentiment and low volumes in the market. It will not slip below issue price. People should not sell the stock due to panic, they should wait for better price. The stock will see the price of Rs 650 in near term but not on listing day. So once this sentiment would get improved in near term, investors can sell the stock at that price, till that time wait."
"It is presumed that share will list at around Rs 600 per share, on 11th February. In that situation, it is likely that majority of HNI Category investors would come to sell in the market and this category is holding about 2.28 crore shares. Since, majority investors of this category had gone for margin funding, purely from trading angle, this liquidation is likely to happen", Investment Advisor, S P Tulsian said.
He also said, "Retail Category is holding about 6.84 crore shares and since, returns to them are quite high, as compared to HNI Category, good amount of profit booking is expected by these investors as well. While talking about QIB Category, they are always smart to take the side, where wind is blowing. Since, investment of only Rs 45 per share, having made by this category of investors, interest cost to them is low at around Rs 27 per share. Hence, they will be too eager to book profit on the listing day at a price levels of Rs.600 per share."
"Hence, it is likely that selling of close to 5 crore share, may get witnessed on the listing day, from all categories of investors, put together. Due to dull sentiments now prevailing in the secondary market, matching buying may not emerge, which could keep share price soft on the listing day. Profit booking is advised in the counter upto Rs.575 level, as prices are likely to fall below this level, in the next 15 to 20 days and may get settled at around Rs.500 levels. Buying is not advised above Rs.550, for first couple of days, as lot of volatility is likely", he added.
The issue price has been fixed at Rs 450. The stock will be part of NSE F&O, the lot size is of 450 shares and options strike priced between Rs 10-1350. Reliance Power IPO was oversubscribed approximately 70 times. Portion reserved for qualified institutional buyers was oversubscribed 82.5 times, 10% of the net issue reserved for non institutional investors was oversubscribed 159.6 times and 30% of the net issue reserved for retail investors was oversubscribed 13.6 times. With approximately 42 lakh shareholders Reliance Power will be the largest shareholder base company among the companies listed on the Stock Exchanges.
Reliance Power is the flagship company of the Reliance ADA Group to develop, construct and operate power generation projects. The company is currently developing 12 power projects with a combined planned installed capacity of 28,000 MW, one of the largest portfolios of power generation assets under developments.
Saturday, February 16, 2008
Make real estate deals more transparent
The success story of the booming real estate market in India coupled with strong economic growth have spelt good news for the country. Nonetheless, reforms are necessary. Reforming the real estate sector in this budget will add to the success story of the country. So this budget, the Government should further reform and tighten norms for the real estate sector to protect the interests of the investors. This will encourage the actual homebuyers and NRIs who are looking to invest in India. Certain reforms are needed to ensure housing at affordable prices to appeal to the masses. The developers and builders in India have been having a field day with no control over built up and carpet areas, illegal property documents and constructions, possession related issues and other illegal entanglements. In Mumbai, rules and regulations for re-development of old buildings and the slum rehabilitation should be made more lucrative for investors and builders.Our expectations from the budget with respect to the real estate sector are as follows:1. Section 80 IB of the Income Tax should resume. This act gives tax relief to the builders who construct units less than 1000 square ft built up in metros. However, the benefits under this section have been stalled since last year. A lot of builders have created houses under this scheme and consumers are benefited through the mass construction. The only problem here is that while the builder gets tax relief there is nothing passed onto the consumer. A majority of home buyers are unaware of this tax respite which the Government had given to the builders. The Government should continue giving this subsidy to the builders as this will encourage them to make more affordable homes. This will also be in line with the Government's 10th Plan estimate where the shortage of housing units is expected to be in the range of 22.4 million square ft. This benefit is the need of the hour but with some rider that the benefit is mandatorily passed on to the consumer.2. Under Section 24 of the Income Tax, the exemption of the interest on home loans should go up from the present Rs 1.50 lakh to atleast Rs 3 lakh. This is keeping in mind the average size of the apartment price has grown 200% over the past few years. Also, the tax benefit should be given from the date of booking of the property and not from the possession.
3. Tax deducted at source (TDS) on housing rental income for individual home owners should be brought down from 16.83% to 10%. A flat slab of 15% or a tax holiday of initial 3 years should be considered on rental income for NRIs. This will boost NRI investment into the country or else they'll look towards other countries for returns on their investment. Also, this will rationalise the prices of rentals in many metros and more people will be willing to rent out properties. A lot of NRIs lock up their apartments for fear of an upfront deduction of TDS of more than 30%, which affects return. Further, a standard deduction of 30% towards maintenance should be increased to 40% for local residents and 50% for NRI houses.4. Stamp duty charges should be reduced to 2.5% from the current 5% as it will benefit the property buyers.5. The interest given on bonds should be linked to bank interest rates on fixed deposits. This is extremely helpful to elderly in ensuring their safety for future. A lot of property owners still are conservative and prefer to invest their money in capital gain bonds and earn a living out of them.
6. The buyers should be allowed to invest in residential properties from the sale of commercial properties and purchase residential properties with the money recieved from the sale of commercial properties. Buyers should also be allowed to invest in both commercial and residential properties from the proceeds of one single property.
7. The Government should take more steps to curb money made illegaly in the land deals. Cheque transactions will automatically yield in more money flowing out of bank accounts than from hidden lockers.8. Presently, not many builders are making one Bedroom-Hall-Kitchen (BHK) apartments. The builders should be given incentives to build one BHK of less than 400 square ft carpet area particlaurly in Mumbai.
9. Fringe benefit tax (FBT) for corporate employees who rent properties should be reduced from the current 20% to 5%. This is because they already have an option to get into an individual lease without paying FBT. 10. Individuals, companies and employees of multi national companies should be given 100% tax exemption for the rent paid towards renting a house on leave and license/lease basis. This will help people make a decision to lease the properties and avail tax benefits if they cannot afford to buy the properties. 11. Tax incentive should be given to owners renting out their properties for a minimum lock-in period of 3 years with no right of termination to either the landlord or the lessee, and a built in fixed escalations in the rent price. This will encourage people to change houses once in 3 years. 12. Floor Space Index (FSI) should be increased within city limits with immediate effect to bring down real estate prices. Also, builders should be strictly made to create the required infrastructure to meet the demand for water, electricity, parking and sewage system by using innovative and latest methods available.14. The Coastal Regulatory Zone (CRZ) should be further rationalised as a lot of prime properties are stuck because of this.15. Incentive in the form of higher FSI should be given to builders who re-develop housing societies because the prices of real estate are unaffordable.16. Buyers of real estate should be allowed to exit/sell after a span of two years with a lesser tax slab so that it becomes easier for them to exit. This will curb the black money movement in the market. An artificial shortage of property is created and prices are hiked because the sellers are unable to sell within a short span and also because they pay higher tax.
17. Real estate brokers / agents should be given proper licensing to practice real estate business. By doing so there will be a decline of unscrupulous transactions.
18. Benefits to be given to developers who adopt area management schemes in and around their complexes for beautification and development of the area and keeping the location neat and clean.19. The Government should manadate ratings to property developers. A regulatory body should keep a vigil on the activities of builders who create smaller dwellings of less than 100 units a year.20. An code of ethics should be cerated for real estate developers and agents to help them offer better professional services.21. Property taxes should be rationalised for leasing both residential and commercial properties.22. Information Technology (IT) and Information Techonology enables services (ITes) benefits with respect to Software Technology Parks of India (STPI) should continue but with lesser rigid regualtion.23. Commercial and retail premises given to banks/ATM’s should be exempted from property tax as they are given for longer periods of time and lesser escalations in the license fees.Real estate sector is a big economy driver and any positive step towards the interest and welfare of the small consumer will have a macro impact on the economy.
US slowdown can have positive spin-offs for India
Indian economy will attract more global investments benefiting from the US slowdown but the country should not get "psyched" by the bubble burst there, Commerce and Industry Minister Kamal Nath said on Wednesday.
However, on the cautious side a study has been initiated in his Ministry to assess the impact of US slowdown on the Indian economy.
"It will take a fortnight to do an assessment of what it means to India," he told PTI.
Earlier, the US was the most attractive investment destination for funds from the Middle East and Russia. "All this is changing... India is becoming an important parking lot for investments," Nath said, adding gloomier the US outlook, better it was for India from an investment point of view.
"We must ensure we do not get psyched into the sentimentality of the US downturn. It should not psyche India into pessimism or into an economic impact here," Nath said.
He said the fundamentals of the Indian economy remained strong "but a fine calibration is required to ensure that the momentum continues despite the gloomy economic outlook globally".
Nath said the country's GDP would grow by more than nine per cent in 2007-08 when asked whether he shared the optimism of Finance Minister P Chidambaram. "I agree with the Finance Minister. It (GDP growth) could be higher than nine per cent," he said.
However, on the cautious side a study has been initiated in his Ministry to assess the impact of US slowdown on the Indian economy.
"It will take a fortnight to do an assessment of what it means to India," he told PTI.
Earlier, the US was the most attractive investment destination for funds from the Middle East and Russia. "All this is changing... India is becoming an important parking lot for investments," Nath said, adding gloomier the US outlook, better it was for India from an investment point of view.
"We must ensure we do not get psyched into the sentimentality of the US downturn. It should not psyche India into pessimism or into an economic impact here," Nath said.
He said the fundamentals of the Indian economy remained strong "but a fine calibration is required to ensure that the momentum continues despite the gloomy economic outlook globally".
Nath said the country's GDP would grow by more than nine per cent in 2007-08 when asked whether he shared the optimism of Finance Minister P Chidambaram. "I agree with the Finance Minister. It (GDP growth) could be higher than nine per cent," he said.
Mkt won't move beyond 18,600 before Budget: Arpit Agrawal
Mkt won't move beyond 18,600 before Budget: Arpit Agrawal When asked whether, between now and the Budget, he could make a case for a short term market rally, especially in sectors like real estate and metals, Arpit Agrawal of Arihant Capital Markets said that there are a lot of value picks and that there’s a lot of sector and stock specific action. However, in the short-term, till the Budget, he doesn’t see the markets moving beyond 18,500-18,600 levels.
“I think the market will face resistance. It can move up by another say 800-1000 points on the Sensex from hereon, but can again face resistance. Internationally a lot of news flow has been coming in everyday, but I feel the market is going for a consolidation for a longer period, may be six-months. We may be able to just make the high we crossed in this financial year,” he explained.
“I think the market will face resistance. It can move up by another say 800-1000 points on the Sensex from hereon, but can again face resistance. Internationally a lot of news flow has been coming in everyday, but I feel the market is going for a consolidation for a longer period, may be six-months. We may be able to just make the high we crossed in this financial year,” he explained.
Chidambaram dedicates Budget to India's poor
Finance Minister Palaniappan Chidambaram on Wednesday used the fiscal elbow room provided by a booming economy and rising tax collections to deal with the twin challenges of political setbacks for his government in recent elections and rising pressure on prices.
In the Union Budget for 2007-08 he boosted spending on key growth drivers, while slashing taxes on key commodities to fight inflation, and unveiled a slew of measures targeted at India's rural poor.
Agriculture took up the bulk of the finance minister's speech — he justified the attention by quoting his favourite poet Thiruvalluvar – "If ploughmen keep their hands folded, even sages claiming renunciation cannot find salvation."
Stating that boosting agriculture was "imperative" for policy planners, Chidambram hiked planned outlays for the sector to almost a third of the entire budget.
Stressing the need for greater access to cheap farm credit, the minister said an additional 5 million farmers would be brought within the banking system in the next fiscal, with additional fertiliser subsidies and a targeted water subsidy scheme for "especially distressed districts".
He also announced a new scheme called 'Aam Admi Bima Yojana', which will provide death and disability insurance through LIC to landless rural households. The government will bear half the premium of Rs 200 per year per person, with the balance being funded by the states.
Social sectors also got a major boost, with spending on social welfare by nearly 22 per cent.
Chidambaram left personal and corporate income tax and most indirect taxes virtually unchanged, while announcing a 21 per cent jump in government spending.
With a booming economy expected to drive tax collections up by almost a fourth, the finance minister provided some relief to taxpayers by marginally increasing the exemption limit for income-tax by Rs 10,000. This, he said, will "reduce every taxpayer's burden by Rs 1,000."
However, this was offset by an additional one per cent education cess on all taxes, to fund a massive 34.2 per cent jump in spends on primary education, scholarships for the underprivileged, and enhancing employability of youth.The news was not so good for the markets, which reacted negatively to a 2.5 per cent increase in dividend distribution tax and the imposition of a 'minimum alternative tax' on India's booming and hitherto untaxed IT sector. Even as the finance minister was speaking, the Sensex tanked more than 500 points, reacting in a major way also to a meltdown in global markets.
Chidambaram also brought employee stock options, pioneered by the IT sector but now used across industry, under the ambit of the fringe benefit tax.
However, he removed a major irritant by fixing the income tax Permanent Account Number (PAN) as the sole identifier for all market transactions.
While upping spends on critical infrastructure like ports, roads and power by 40 per cent to Rs 134,000 crore, Chidambaram shifted policy focus on the agriculture sector and the rural poor.
At the end of the day, the countryside was smiling, and Bharat had grabbed the lead role into the Great Indian Growth Story.
In the Union Budget for 2007-08 he boosted spending on key growth drivers, while slashing taxes on key commodities to fight inflation, and unveiled a slew of measures targeted at India's rural poor.
Agriculture took up the bulk of the finance minister's speech — he justified the attention by quoting his favourite poet Thiruvalluvar – "If ploughmen keep their hands folded, even sages claiming renunciation cannot find salvation."
Stating that boosting agriculture was "imperative" for policy planners, Chidambram hiked planned outlays for the sector to almost a third of the entire budget.
Stressing the need for greater access to cheap farm credit, the minister said an additional 5 million farmers would be brought within the banking system in the next fiscal, with additional fertiliser subsidies and a targeted water subsidy scheme for "especially distressed districts".
He also announced a new scheme called 'Aam Admi Bima Yojana', which will provide death and disability insurance through LIC to landless rural households. The government will bear half the premium of Rs 200 per year per person, with the balance being funded by the states.
Social sectors also got a major boost, with spending on social welfare by nearly 22 per cent.
Chidambaram left personal and corporate income tax and most indirect taxes virtually unchanged, while announcing a 21 per cent jump in government spending.
With a booming economy expected to drive tax collections up by almost a fourth, the finance minister provided some relief to taxpayers by marginally increasing the exemption limit for income-tax by Rs 10,000. This, he said, will "reduce every taxpayer's burden by Rs 1,000."
However, this was offset by an additional one per cent education cess on all taxes, to fund a massive 34.2 per cent jump in spends on primary education, scholarships for the underprivileged, and enhancing employability of youth.The news was not so good for the markets, which reacted negatively to a 2.5 per cent increase in dividend distribution tax and the imposition of a 'minimum alternative tax' on India's booming and hitherto untaxed IT sector. Even as the finance minister was speaking, the Sensex tanked more than 500 points, reacting in a major way also to a meltdown in global markets.
Chidambaram also brought employee stock options, pioneered by the IT sector but now used across industry, under the ambit of the fringe benefit tax.
However, he removed a major irritant by fixing the income tax Permanent Account Number (PAN) as the sole identifier for all market transactions.
While upping spends on critical infrastructure like ports, roads and power by 40 per cent to Rs 134,000 crore, Chidambaram shifted policy focus on the agriculture sector and the rural poor.
At the end of the day, the countryside was smiling, and Bharat had grabbed the lead role into the Great Indian Growth Story.
Valentine's Day grosses Rs.262 mn for flower sellers
For the young at heart it may be just moments of love, romance or even sneaking chance to drop a romantic hint, but for flower sellers in the capital, the Valentine's Day meant big bucks pouring in. They grossed over Rs 262 million ($6.6 million) in a single day.
While retailers in the national capital registered flower sales of over Rs 252 million, the flower wholesale market in Connaught Place in the heart of the city grossed a little over Rs 10 million.
"The capital has a total of 2,100 flower retail outlets and each retailer sells about 6,000 roses on the V-Day, ranging between Rs 20 to Rs 50 per rose bud. So, retailers earn about Rs 252 million in a single day," NC Pandey, owner of Celebration Flora, a wholesale shop for fresh flowers, told IANS.
"There are about 100 wholesalers of fresh flowers in Delhi. Of them, nearly 20 deal with roses. As rose rules the roost on the occasion, its wholesalers earn no less than Rs 5 million in a day," Pandey pointed out.
Commenting on the sales, Birju Bhai Pradhan, president of All India Cut Flower Growers and Suppliers Association, said: "There are nearly 1,000 flower traders in the wholesale market, out of which about 40 are the bigger ones, who earn at least Rs 500,000 on the V-day while the income of rest ranges between Rs 10,000 and Rs 50,000."
Contrary to expectations of flower traders, the wholesale market did not witness overwhelming business this year.
"Every V-day, the market registers at least 25 per cent growth. However, this year the business was almost equal to the business we did last year - nearly Rs 10 million," said Pradhan.
But flower dealers are upbeat about the business in the coming years.
"Maybe because of cold weather, the sales were affected adversely. However, the craze of the occasion is increasing every year, so we are hopeful about next year," he added.
"In 2006, we grossed Rs 10 million on V-day. In 2007 it was Rs 15 million and this year the sales raked in almost double of last year," said Pawan Gadia, vice-president of chain flower boutique Ferns 'N' Petals Group.
"There is a remarkable increase in the business we are doing on V-Day, and I am upbeat about its future," said Gadia, who is also department head of the e-commerce and retail arms of the group.
Gadia said the country's flower market is worth no less than Rs 4 billion, out of which exotic flowers account for 25 per cent.Valentine's Day grosses Rs.262 mn for flower sellers
While retailers in the national capital registered flower sales of over Rs 252 million, the flower wholesale market in Connaught Place in the heart of the city grossed a little over Rs 10 million.
"The capital has a total of 2,100 flower retail outlets and each retailer sells about 6,000 roses on the V-Day, ranging between Rs 20 to Rs 50 per rose bud. So, retailers earn about Rs 252 million in a single day," NC Pandey, owner of Celebration Flora, a wholesale shop for fresh flowers, told IANS.
"There are about 100 wholesalers of fresh flowers in Delhi. Of them, nearly 20 deal with roses. As rose rules the roost on the occasion, its wholesalers earn no less than Rs 5 million in a day," Pandey pointed out.
Commenting on the sales, Birju Bhai Pradhan, president of All India Cut Flower Growers and Suppliers Association, said: "There are nearly 1,000 flower traders in the wholesale market, out of which about 40 are the bigger ones, who earn at least Rs 500,000 on the V-day while the income of rest ranges between Rs 10,000 and Rs 50,000."
Contrary to expectations of flower traders, the wholesale market did not witness overwhelming business this year.
"Every V-day, the market registers at least 25 per cent growth. However, this year the business was almost equal to the business we did last year - nearly Rs 10 million," said Pradhan.
But flower dealers are upbeat about the business in the coming years.
"Maybe because of cold weather, the sales were affected adversely. However, the craze of the occasion is increasing every year, so we are hopeful about next year," he added.
"In 2006, we grossed Rs 10 million on V-day. In 2007 it was Rs 15 million and this year the sales raked in almost double of last year," said Pawan Gadia, vice-president of chain flower boutique Ferns 'N' Petals Group.
"There is a remarkable increase in the business we are doing on V-Day, and I am upbeat about its future," said Gadia, who is also department head of the e-commerce and retail arms of the group.
Gadia said the country's flower market is worth no less than Rs 4 billion, out of which exotic flowers account for 25 per cent.Valentine's Day grosses Rs.262 mn for flower sellers
Friday, February 15, 2008
SBI rights issue likely on Feb 16-18: FM
SBI rights issue to raise over 16,000 crore is likely to open on February 16-18 and will invite subscription for one month, Finance Ministry sources said.
The Government will subscribe to its over 59 per cent shares on the last day of the issue, the sources said.
When asked whether the current volatility in the stock exchanges would affect the pricing of the issue, the sources said the fluctuation would not impact the offer announced by the bank.
Earlier last month, SBI had priced its rights share at Rs 1,590 per share (face value Rs 10 each). Even after decline in its price in the recent days, SBI share was ruling at over 25 per cent premium over the rights issue price. The scrip was ruling at Rs 2,131.90 in the afternoon trade on BSE, down 1.08 per cent from yesterday's close of Rs 2,155.20.
Under the issue, existing shareholders would get one for every five shares they hold.
The bank will raise Rs 16,736.31 crore by way of the rights issue, which will be made to the government and other existing shareholders, including GDR holders. It will also issue shares to employees under employees stock purchase scheme.
SBI will increase the issued capital from Rs 526.30 crore to Rs 650.00 crore.
Clearing the SBI's rights issue, the Union Cabinet had earlier decided to contribute around Rs 10,000 crore for its 59.73 per cent stake, but this would not come in cash.
The Government will subscribe to its over 59 per cent shares on the last day of the issue, the sources said.
When asked whether the current volatility in the stock exchanges would affect the pricing of the issue, the sources said the fluctuation would not impact the offer announced by the bank.
Earlier last month, SBI had priced its rights share at Rs 1,590 per share (face value Rs 10 each). Even after decline in its price in the recent days, SBI share was ruling at over 25 per cent premium over the rights issue price. The scrip was ruling at Rs 2,131.90 in the afternoon trade on BSE, down 1.08 per cent from yesterday's close of Rs 2,155.20.
Under the issue, existing shareholders would get one for every five shares they hold.
The bank will raise Rs 16,736.31 crore by way of the rights issue, which will be made to the government and other existing shareholders, including GDR holders. It will also issue shares to employees under employees stock purchase scheme.
SBI will increase the issued capital from Rs 526.30 crore to Rs 650.00 crore.
Clearing the SBI's rights issue, the Union Cabinet had earlier decided to contribute around Rs 10,000 crore for its 59.73 per cent stake, but this would not come in cash.
Budget 2008-09 may benefit common man: Survey
India Inc is not expecting any major announcement for itself in Budget 2008-09 as Finance Minister P Chidambaram is likely to focus on higher budgetary allocations to ensure growth of sensitive sectors like agriculture, education, health, defence and manufacturing, an Assocham survey said.
The Budget is likely to be "traditional" for India Inc since the key challenge for the government is to sustain the growth momentum, the survey said.
"The government should ensure that the manufacturing sector grows at 15 per cent and inflation remains below the five-per cent mark for the next 10-15 years. Thrust should be given to development of agriculture and industry," it said.
About 85 per cent of the 300 CEOs polled said the forthcoming Assembly elections notwithstanding, the Finance Minister may not dole out fiscal concessions for India Inc.
The common man, and not India Inc, is likely to gain more from the Budget as "the government would like to maintain growth inertia and honour its commitments to improve infrastructure and agriculture.”
"There may be no significant tax cuts since Chidambaram's top priority will be to hike his revenue collections for higher budgetary allocations to agriculture, education, health, defence and manufacturing," an Assocham release said.
About 255 CEOs said subsidies for sectors such as food, fertiliser and petroleum may also be hiked by 10 per cent, while 90 per cent of them said the Finance Minister may strike a balance and present a Budget that appeases Indian industry.
Whereas about 260 CEOs felt that personal income tax ceiling would be raised by nearly Rs 30,000. 15 per cent of them maintained their demand for a reduced taxation structure would not be ignored and there could be some legitimate cuts in the duty structure in the Budget.
The Budget is likely to be "traditional" for India Inc since the key challenge for the government is to sustain the growth momentum, the survey said.
"The government should ensure that the manufacturing sector grows at 15 per cent and inflation remains below the five-per cent mark for the next 10-15 years. Thrust should be given to development of agriculture and industry," it said.
About 85 per cent of the 300 CEOs polled said the forthcoming Assembly elections notwithstanding, the Finance Minister may not dole out fiscal concessions for India Inc.
The common man, and not India Inc, is likely to gain more from the Budget as "the government would like to maintain growth inertia and honour its commitments to improve infrastructure and agriculture.”
"There may be no significant tax cuts since Chidambaram's top priority will be to hike his revenue collections for higher budgetary allocations to agriculture, education, health, defence and manufacturing," an Assocham release said.
About 255 CEOs said subsidies for sectors such as food, fertiliser and petroleum may also be hiked by 10 per cent, while 90 per cent of them said the Finance Minister may strike a balance and present a Budget that appeases Indian industry.
Whereas about 260 CEOs felt that personal income tax ceiling would be raised by nearly Rs 30,000. 15 per cent of them maintained their demand for a reduced taxation structure would not be ignored and there could be some legitimate cuts in the duty structure in the Budget.
Relationships: Your money or mine?
There is much, they say, that makes a marriage difficult. And adding to the woes of the 21st century Metro Marriage, there’s a new-improved villain, not infidelity and cheating partner, but money.
With rising prices, growing aspirations and a desire to provide all, many marriages have both partners working today. However, with more disposable income, there are more differences regarding money as well.
Many a research shows that money is by far one of the biggest reasons why couples fight. Some don’t disclose their income to their partners, others keep a tight hold on the purse strings or still others don’t share details of how they spend their money. In fact, a recent research by Internet company PayPal showed that 82 per cent of the respondents hid their shopping bags from partners.
But is it not strange that when a marriage is ideally a partnership on sharing and trust, the sharing of money should create so many problems?
“Not really,” says clinical psychologist Dr Madhumati Singh, “Money has always been a reason for dispute and a means of control in a marriage. Earlier, there weren’t as many problems because it was usually only one person who brought in the money and that person controlled the spending of it too. But with women beginning to earn as well, that status quo has shifted. Today, money has become one of the biggest factors, that ‘unreachable’ goal that causes couples to fight and even break away,” Dr Singh adds.
Money means Power
Quite true too. Think about the generation of our parents and grandparents. It was usually the father who brought in the money and the father who decided where and how it was to be spent. The mothers were usually given a pre-allocated amount to run the house and perhaps for pocket money as well. There were cribbing and fights over how much money was allocated, but on the whole, monetary decisions were pretty much a one-man show.
Now, consider the following situations:
Scene 1: The petrol station
En route to office, Ronit and Rajni stopped at the petrol pump. As Ronit lowered his window, he asked Rajni for Rs 500. She looked at him, her eyes narrowed, “I paid for petrol two days back too, you owe me…” “Yes, yes, I remember, can you pay it now? I will return the money this evening,” Ronit said impatiently. Ronit and Rajni have been married for nine years now and have two kids, aged 8 and 4.
Scene 2: The movie hall
“It’s your turn to buy the tickets,” said Prakash, “I bought the ones for Spiderman.”
Lata quickly took out the money and as she handed it to him, added, “But you are paying for the popcorn and drinks, it has to be equal.” Prakash shrugged. They have been married for a year and a half.
Both the above scenarios would perhaps not have happened in the single-person-earning marriage module But given the Metro Marriage scenario – both partners work, kids are looked after by a family member or a nanny and either or both parents have bad working hours – reaching a mutually acceptable decision about money is becoming tougher by the day.
The reason? According to Dr Singh, it’s a “shift in the power status. Since both partners work and earn their money, no one wants to lose control or give up the power. While earlier women were content with the husband’s decision, financial independence has lead the women to want to know where their money is going, how is it being spent, etc.”
Reasons why couples fight
As Dr Singh points out, trouble comes in various shapes in a marriage, but mostly it has to do with power and trust issues regarding money. “The one who controls the money, controls the decisions in the family,” is what she says.
Some people shop clandestinely without telling their partners. Others don’t consult their partners when making a big purchase that blows the budget. Remember the scene in Jhankar Beats where Sanjay Suri’s character buys a synthesizer while wife, Juhi Chawla had been saving up for their soon-to-come baby. That was the only time the couple – otherwise shown to be rather lovey-dovey – fight in the movie.
Similarly there are wives who secretly stash money and don’t tell the husbands, or partners who lie about the cost of a certain purchase. Riya, 29, divorced after two years of marriage, recounts, “I had quit my job after marriage as I wanted to take a break. However, my then-husband started asking for bills for everything. If I went to beauty parlour, he would ask me the cost of each of the services I wanted and would give me only that much money. I had always been an independent person, all that was too much.”
Like Riya’s former husband, there are many who insist that partners keep bills for every purchase. Credit cards, different spending habits, debt repayment… here are money brings with it a whole new set of problems for marriages.
Here are the top five reasons why couples fight over money:
1. Different priorities: ‘You always waste money’
One of the most common reasons for fights is when one partner thinks that his/her purchases are needed; the other feels that it’s a waste of money. So he thinks that spending on linen and pretty things is a waste while she feels that buying five Bose speakers is really blowing the budget.
Experts say the best way to stop cribbing is to sit and talk out how you view each other’s purchases and advice that if there is surplus, both parties should make leeway for some ‘unnecessary’ purchases. However, if there is a crunch, both partners should share the responsibility.
2. Credit card: ‘Our debt and your debt’
While plastic might have made life easier, it sure has made paying back a lot tougher, especially when it comes to couples. The common gripe: If he spent it on his office colleagues, then he should pay it back.
Experts say that couples should clearly keep aside some money for personal spending, money that does not affect the budget or running of the house. It’s also advised that if there are any debts that are hanging from either partner’s single days, it should be mutually decided whether one partner or both would repay that.
3. Saving versus spending: ‘Who decides?’
Again, when one person controlled the money, it was pretty much s/he who decided the spending/saving pattern too. With both partners earning, both want a say in how much is spent, where it’s spent and what and how it’s saved. Here if one partner is a spendthrift and the other too cautious, it could lead to friction.
Experts suggest conversation and clearly deciding on spending and saving budgets. If one partner decides money matters, it is advised that s/he should not get all dictatorial about it.
4. Balancing the scale: ‘He who earns more, pays more’
Distribution of housework and distribution of bill payment lead to the biggest fights. If who does how much work around the house - given that Metro Marriages have both partners working outside the home as well - is always a cause for debate, monetary contributions come a close second. He feels that she should pay some of the EMIs as well while she insists that since she earns lesser, she would only pay for small-ticket household items.
Experts suggest sitting down together or with a chartered accountant to chalk out what all has to be paid on a monthly basis and then either starting a joint Household Expenses record. Given the disparities in earning, couples could either decide to put in equal amounts or whatever either is comfortable with. This decision should be a mutual one.
5. It’s a question of trust: ‘Your money is pocket money, my money is saving?’
While the role of the woman vis-à-vis earning money and managing the household is changing, the transition is not always a smooth one. Men have been handling home loans and mortgages for long. Today fights often erupt when only one partner contributes to the house/saving/investment while the other simply squanders.
Many men complain that the wives - despite earning a good amount - treat their own money as extra pocket money while the entire burden of the house still falls on the man. Experts say that both partners have to work at trusting each other where money matters are concerned. If one partner is a spendthrift and the other feels the brunt of it, sitting and discussing things are in order.
With rising prices, growing aspirations and a desire to provide all, many marriages have both partners working today. However, with more disposable income, there are more differences regarding money as well.
Many a research shows that money is by far one of the biggest reasons why couples fight. Some don’t disclose their income to their partners, others keep a tight hold on the purse strings or still others don’t share details of how they spend their money. In fact, a recent research by Internet company PayPal showed that 82 per cent of the respondents hid their shopping bags from partners.
But is it not strange that when a marriage is ideally a partnership on sharing and trust, the sharing of money should create so many problems?
“Not really,” says clinical psychologist Dr Madhumati Singh, “Money has always been a reason for dispute and a means of control in a marriage. Earlier, there weren’t as many problems because it was usually only one person who brought in the money and that person controlled the spending of it too. But with women beginning to earn as well, that status quo has shifted. Today, money has become one of the biggest factors, that ‘unreachable’ goal that causes couples to fight and even break away,” Dr Singh adds.
Money means Power
Quite true too. Think about the generation of our parents and grandparents. It was usually the father who brought in the money and the father who decided where and how it was to be spent. The mothers were usually given a pre-allocated amount to run the house and perhaps for pocket money as well. There were cribbing and fights over how much money was allocated, but on the whole, monetary decisions were pretty much a one-man show.
Now, consider the following situations:
Scene 1: The petrol station
En route to office, Ronit and Rajni stopped at the petrol pump. As Ronit lowered his window, he asked Rajni for Rs 500. She looked at him, her eyes narrowed, “I paid for petrol two days back too, you owe me…” “Yes, yes, I remember, can you pay it now? I will return the money this evening,” Ronit said impatiently. Ronit and Rajni have been married for nine years now and have two kids, aged 8 and 4.
Scene 2: The movie hall
“It’s your turn to buy the tickets,” said Prakash, “I bought the ones for Spiderman.”
Lata quickly took out the money and as she handed it to him, added, “But you are paying for the popcorn and drinks, it has to be equal.” Prakash shrugged. They have been married for a year and a half.
Both the above scenarios would perhaps not have happened in the single-person-earning marriage module But given the Metro Marriage scenario – both partners work, kids are looked after by a family member or a nanny and either or both parents have bad working hours – reaching a mutually acceptable decision about money is becoming tougher by the day.
The reason? According to Dr Singh, it’s a “shift in the power status. Since both partners work and earn their money, no one wants to lose control or give up the power. While earlier women were content with the husband’s decision, financial independence has lead the women to want to know where their money is going, how is it being spent, etc.”
Reasons why couples fight
As Dr Singh points out, trouble comes in various shapes in a marriage, but mostly it has to do with power and trust issues regarding money. “The one who controls the money, controls the decisions in the family,” is what she says.
Some people shop clandestinely without telling their partners. Others don’t consult their partners when making a big purchase that blows the budget. Remember the scene in Jhankar Beats where Sanjay Suri’s character buys a synthesizer while wife, Juhi Chawla had been saving up for their soon-to-come baby. That was the only time the couple – otherwise shown to be rather lovey-dovey – fight in the movie.
Similarly there are wives who secretly stash money and don’t tell the husbands, or partners who lie about the cost of a certain purchase. Riya, 29, divorced after two years of marriage, recounts, “I had quit my job after marriage as I wanted to take a break. However, my then-husband started asking for bills for everything. If I went to beauty parlour, he would ask me the cost of each of the services I wanted and would give me only that much money. I had always been an independent person, all that was too much.”
Like Riya’s former husband, there are many who insist that partners keep bills for every purchase. Credit cards, different spending habits, debt repayment… here are money brings with it a whole new set of problems for marriages.
Here are the top five reasons why couples fight over money:
1. Different priorities: ‘You always waste money’
One of the most common reasons for fights is when one partner thinks that his/her purchases are needed; the other feels that it’s a waste of money. So he thinks that spending on linen and pretty things is a waste while she feels that buying five Bose speakers is really blowing the budget.
Experts say the best way to stop cribbing is to sit and talk out how you view each other’s purchases and advice that if there is surplus, both parties should make leeway for some ‘unnecessary’ purchases. However, if there is a crunch, both partners should share the responsibility.
2. Credit card: ‘Our debt and your debt’
While plastic might have made life easier, it sure has made paying back a lot tougher, especially when it comes to couples. The common gripe: If he spent it on his office colleagues, then he should pay it back.
Experts say that couples should clearly keep aside some money for personal spending, money that does not affect the budget or running of the house. It’s also advised that if there are any debts that are hanging from either partner’s single days, it should be mutually decided whether one partner or both would repay that.
3. Saving versus spending: ‘Who decides?’
Again, when one person controlled the money, it was pretty much s/he who decided the spending/saving pattern too. With both partners earning, both want a say in how much is spent, where it’s spent and what and how it’s saved. Here if one partner is a spendthrift and the other too cautious, it could lead to friction.
Experts suggest conversation and clearly deciding on spending and saving budgets. If one partner decides money matters, it is advised that s/he should not get all dictatorial about it.
4. Balancing the scale: ‘He who earns more, pays more’
Distribution of housework and distribution of bill payment lead to the biggest fights. If who does how much work around the house - given that Metro Marriages have both partners working outside the home as well - is always a cause for debate, monetary contributions come a close second. He feels that she should pay some of the EMIs as well while she insists that since she earns lesser, she would only pay for small-ticket household items.
Experts suggest sitting down together or with a chartered accountant to chalk out what all has to be paid on a monthly basis and then either starting a joint Household Expenses record. Given the disparities in earning, couples could either decide to put in equal amounts or whatever either is comfortable with. This decision should be a mutual one.
5. It’s a question of trust: ‘Your money is pocket money, my money is saving?’
While the role of the woman vis-à-vis earning money and managing the household is changing, the transition is not always a smooth one. Men have been handling home loans and mortgages for long. Today fights often erupt when only one partner contributes to the house/saving/investment while the other simply squanders.
Many men complain that the wives - despite earning a good amount - treat their own money as extra pocket money while the entire burden of the house still falls on the man. Experts say that both partners have to work at trusting each other where money matters are concerned. If one partner is a spendthrift and the other feels the brunt of it, sitting and discussing things are in order.
What young India wants from '08 Budget?
As Finance Minister P Chidambaram gets ready to present Budget 2008-09 on February 29, CNBC-TV18 gets you a sense of what young India really wants.
Faster and inclusive growth, that’s what young India and young CEOs wanted from the Finance Minister in the last Budget.
This year, the focus is on agricultural reforms, on strengthening infrastructure and R&D and widening the tax base.
Finance Minister P Chidambaram has said, “The year 2007-08, will mark the beginning of the 11th plan. The declared objective is faster and more inclusive growth. I can state with confidence that in the eve of the plan, the economy is in a stronger position then ever before, it therefore beholds us to set higher goals. The approach paper to the 11th plan states that the plan ‘will aim at putting the economy on a sustainable growth trajectory, with a growth rate of approximately 10%, by the end of its period.”
“The economy is set to grow as robustly, as it will, it’ll take a heavy toll on the environment in both, the way goods are created and goods are used. I hope that in this budget or in the subsequent one, the finance minister will bring in this aspect as to how we protect our environment as we grow, because ultimately it’s supposed to be about quality of life,” Rajiv Bajaj, MD, Bajaj Auto, said.
Making his wish list Rajiv Memani, Country Managing Partner, E&Y India, said, “Reducing the custom duty would be the biggest step and that’s what he will try and target through the Budget.”
Anuj Gupta, CEO, Final Quadrant Solutions, is of the view, “Some system of access to information, that’s been the key success factor to the developed parts of the world. People are spreading on more information than we are and I think that’s some thing that the government should look at.”
Vivek Agarwal, CEO, Liqvid, said, “There is an example that I read, Bhutan for improving the public system of education, made it compulsory for all bureaucrats and ministers to send their children to the government schools where they were actually being run.”
ID Musafir, Director, M & B Footwear, believes, “The divide between the haves and the have-nots is going to increase, so unless you provide basic employment to the masses of India, and learn from examples like China, where everything co-exists, I think this is what the Finance Minister should look at.”
Farzana Haque, Head- Retail & CPG Group, TCS, said, “We are looking at India as a manufacturing hub for small cars, we are looking at semi-conductors, so there are some industries that need their incentive.”
From a population of 1.2 billion in India, only 35% have access to healthcare, in fact the government has made health care one of its top priorities.
With the beginning of the 11th five-year plan, the budget allocation for health and family welfare has been increased by 21.9% to Rs 15,291 crore, but this is just still 0.9% of the GDP, the focus of the government has been on providing primary rural health care through national rural healthcare missions.
But as the middle class in India grows, an increasing number of people are turning to private healthcare providers.
The number one demand of private healthcare players is that the government recognize their contribution without treating them as charities. To get a sense of the prescription to growth, we met one of the prominent names in the Indian healthcare market.
Shivender Mohan Singh, CEO and MD, Fortis Healthcare, who said, “From this year’s budget, I expect the team to put health of the nation to the wealth of the nation and give healthcare, the much required infrastructure status.”
Fortis Healthcare, a Ranbaxy group company, was incorporated in the year 1996. It has 13 hospitals across six states in North India, including cardiac and cancer specialty centers.
Leading the company forward is Shivender Mohan Singh, CEO and MD. He is now looking forward to growing Fortis’s network.
“The focus is going at west and south and also over the next two years, we will be looking at it rationally, though that’s not the major focus, that would be more opportunistic and more strategic. But the strategy of the company going forward in the next 3-4 years is to set up facilities on a national level, so we are looking at expanding our north India footprint, to replicate that in the west and the south and after that, in the east,” he said.
Fortis, now in its 7th year has created super specialty centers across the country. Starting with cardiac care centers, today Fortis Hospitals are multi-specialty facilities that use state of the art technology. But even with the ever-growing number of private health centers around the country, it hasn’t been given an industry status as demanded, so what is the biggest drawback?
“What the government has to do is to stop looking at private healthcare organizations to solve their problems. There was a lot of expectation and talks in the last 4-5 years that whatever the government has not been able to do for access to healthcare, it’s now become the private player’s responsibility or an expectation that the private players will do that. If you expect private hospitals to start giving treatments for free to a percentage of population or a certain level of population, that’s not going to happen because private players are not here to do charity or to government’s job, but we can certainly work together, Singh said.
“There is a lot of scope for the partnership where whatever agenda the government has, they can channel private players to work together and certainly capacity building is not difficult for a private organization to do as long as they see some benefits in that. So there is a lot of scope to work together but I think the approach has to be more collaborative.”
The health care sector for the coming budget hopes that annual poll for incentivising research and annual development will be heard. The sector is also hoping for tax benefits in order to enhance health care service delivery. So how could all of this be achieved?
“Health care is fundamental, the social sectors like health and education are the foundations of any developing country. We don’t have any such incentive in the industry, so I think infrastructure status study comes out as number one, second is that the time now for the health care industries to be give NA status. We have been running as a healthcare sector for long enough and it is required to give it a focus as an industry and therefore give healthcare an industry status,” he added.
“The third and final one to my mind is something we have talked a lot about, but very little has come out of that, is actually giving a separate license for health insurance and promoting players to get into health insurance and therefore have a third party player model for patients to get insured and get covered. Today 80% of health care in India is out of pocket which is pretty significant in terms for an cost for an individual at an episode if something is going to happen to a member of his family, but if there is an insurance, obviously the bite is going to be taken away and therefore the sting is not there for payment at that point of time, the procedure gets to be done or an operation needs to be done. “
“It also will overtime, start promoting preventive health care which for our country of our size and for the healthcare environment that we have, preventive will be the significant focus going forward, so health insurance would be the third and the last one for an incentive for the sector to grow,” Singh said.
Faster and inclusive growth, that’s what young India and young CEOs wanted from the Finance Minister in the last Budget.
This year, the focus is on agricultural reforms, on strengthening infrastructure and R&D and widening the tax base.
Finance Minister P Chidambaram has said, “The year 2007-08, will mark the beginning of the 11th plan. The declared objective is faster and more inclusive growth. I can state with confidence that in the eve of the plan, the economy is in a stronger position then ever before, it therefore beholds us to set higher goals. The approach paper to the 11th plan states that the plan ‘will aim at putting the economy on a sustainable growth trajectory, with a growth rate of approximately 10%, by the end of its period.”
“The economy is set to grow as robustly, as it will, it’ll take a heavy toll on the environment in both, the way goods are created and goods are used. I hope that in this budget or in the subsequent one, the finance minister will bring in this aspect as to how we protect our environment as we grow, because ultimately it’s supposed to be about quality of life,” Rajiv Bajaj, MD, Bajaj Auto, said.
Making his wish list Rajiv Memani, Country Managing Partner, E&Y India, said, “Reducing the custom duty would be the biggest step and that’s what he will try and target through the Budget.”
Anuj Gupta, CEO, Final Quadrant Solutions, is of the view, “Some system of access to information, that’s been the key success factor to the developed parts of the world. People are spreading on more information than we are and I think that’s some thing that the government should look at.”
Vivek Agarwal, CEO, Liqvid, said, “There is an example that I read, Bhutan for improving the public system of education, made it compulsory for all bureaucrats and ministers to send their children to the government schools where they were actually being run.”
ID Musafir, Director, M & B Footwear, believes, “The divide between the haves and the have-nots is going to increase, so unless you provide basic employment to the masses of India, and learn from examples like China, where everything co-exists, I think this is what the Finance Minister should look at.”
Farzana Haque, Head- Retail & CPG Group, TCS, said, “We are looking at India as a manufacturing hub for small cars, we are looking at semi-conductors, so there are some industries that need their incentive.”
From a population of 1.2 billion in India, only 35% have access to healthcare, in fact the government has made health care one of its top priorities.
With the beginning of the 11th five-year plan, the budget allocation for health and family welfare has been increased by 21.9% to Rs 15,291 crore, but this is just still 0.9% of the GDP, the focus of the government has been on providing primary rural health care through national rural healthcare missions.
But as the middle class in India grows, an increasing number of people are turning to private healthcare providers.
The number one demand of private healthcare players is that the government recognize their contribution without treating them as charities. To get a sense of the prescription to growth, we met one of the prominent names in the Indian healthcare market.
Shivender Mohan Singh, CEO and MD, Fortis Healthcare, who said, “From this year’s budget, I expect the team to put health of the nation to the wealth of the nation and give healthcare, the much required infrastructure status.”
Fortis Healthcare, a Ranbaxy group company, was incorporated in the year 1996. It has 13 hospitals across six states in North India, including cardiac and cancer specialty centers.
Leading the company forward is Shivender Mohan Singh, CEO and MD. He is now looking forward to growing Fortis’s network.
“The focus is going at west and south and also over the next two years, we will be looking at it rationally, though that’s not the major focus, that would be more opportunistic and more strategic. But the strategy of the company going forward in the next 3-4 years is to set up facilities on a national level, so we are looking at expanding our north India footprint, to replicate that in the west and the south and after that, in the east,” he said.
Fortis, now in its 7th year has created super specialty centers across the country. Starting with cardiac care centers, today Fortis Hospitals are multi-specialty facilities that use state of the art technology. But even with the ever-growing number of private health centers around the country, it hasn’t been given an industry status as demanded, so what is the biggest drawback?
“What the government has to do is to stop looking at private healthcare organizations to solve their problems. There was a lot of expectation and talks in the last 4-5 years that whatever the government has not been able to do for access to healthcare, it’s now become the private player’s responsibility or an expectation that the private players will do that. If you expect private hospitals to start giving treatments for free to a percentage of population or a certain level of population, that’s not going to happen because private players are not here to do charity or to government’s job, but we can certainly work together, Singh said.
“There is a lot of scope for the partnership where whatever agenda the government has, they can channel private players to work together and certainly capacity building is not difficult for a private organization to do as long as they see some benefits in that. So there is a lot of scope to work together but I think the approach has to be more collaborative.”
The health care sector for the coming budget hopes that annual poll for incentivising research and annual development will be heard. The sector is also hoping for tax benefits in order to enhance health care service delivery. So how could all of this be achieved?
“Health care is fundamental, the social sectors like health and education are the foundations of any developing country. We don’t have any such incentive in the industry, so I think infrastructure status study comes out as number one, second is that the time now for the health care industries to be give NA status. We have been running as a healthcare sector for long enough and it is required to give it a focus as an industry and therefore give healthcare an industry status,” he added.
“The third and final one to my mind is something we have talked a lot about, but very little has come out of that, is actually giving a separate license for health insurance and promoting players to get into health insurance and therefore have a third party player model for patients to get insured and get covered. Today 80% of health care in India is out of pocket which is pretty significant in terms for an cost for an individual at an episode if something is going to happen to a member of his family, but if there is an insurance, obviously the bite is going to be taken away and therefore the sting is not there for payment at that point of time, the procedure gets to be done or an operation needs to be done. “
“It also will overtime, start promoting preventive health care which for our country of our size and for the healthcare environment that we have, preventive will be the significant focus going forward, so health insurance would be the third and the last one for an incentive for the sector to grow,” Singh said.
How banks make you poorer
There's no such thing as a free lunch. Banks today offer a slew of services to the customer, which only seem to increase the amount that they charge you by the day.
Let’s take stock of what you pay to avail of services for a typical savings bank account.
1. Non-maintenance of minimum balance
You must maintain a stipulated minimum balance in your account (Rs 1,000 for a nationalised bank, Rs 5000 for a private bank).
If you fail to maintain this average quarterly minimum balance, you attract a bank charge of Rs 750-1500 respectively.
You could also face fines for cash transactions at branches and ATMs.
2. Chequebook charges
Most nationalised banks provide chequebooks free as per your requirement.
Many private ones, on the other hand, charge you Rs 50-200 per chequebook, if you use up more than 2-3 per quarter.
3. Account closure charges
Some banks charge Rs 50-200 if the account is closed before six months elapse.
4. Charges for certificates
Unlike most nationalised banks, private banks charge Rs 50-250 for documents like balance certificate, interest certificate, address confirmation, signature attestation, photo attestation etc.
5. Cheque return charges
Nationalised banks fine you Rs 50-200 in case of cheque return (due to insufficient funds, signature mismatch etc), but private ones charge you Rs 100-Rs 500.
6. Cash transaction at other branches
In case of a cash transaction at a branch other than where your account is opened, 1-3 transactions are free per quarter. Beyond that, be prepared to be charged at the rate of Rs 5 per for every Rs 1000 transacted.
7. ATM charges
If you use the ATM of another bank for balance enquiry or cash, you could be charged anything from Rs 10-100 per transaction.
8. Account statement
RBI directs that all banks must send free quarterly statements to their customers. Should you require more statements (in case of loss etc), you may have to pay Rs 50-500 per statement.
9. ATM or Debit Card fees
Most banks offer ATM cards free of cost, but some do charge their customers for debit cards. For example, ICICI Bank provides a combo ATM/ Debit card, for which it charges Rs 99 per annum.
Over and above these, there are several other charges, like outstation clearing charge (Rs 50- 500), pay order/ demand draft charge (based on amount), standing instruction charges, home cash delivery charges, old records retrieval charges, activation of dormant account charge etc.
Note: Visit the bank's web site or any of the branches, for a copy of these expenses. It is mandatory for every bank to give it to you.
Let’s take stock of what you pay to avail of services for a typical savings bank account.
1. Non-maintenance of minimum balance
You must maintain a stipulated minimum balance in your account (Rs 1,000 for a nationalised bank, Rs 5000 for a private bank).
If you fail to maintain this average quarterly minimum balance, you attract a bank charge of Rs 750-1500 respectively.
You could also face fines for cash transactions at branches and ATMs.
2. Chequebook charges
Most nationalised banks provide chequebooks free as per your requirement.
Many private ones, on the other hand, charge you Rs 50-200 per chequebook, if you use up more than 2-3 per quarter.
3. Account closure charges
Some banks charge Rs 50-200 if the account is closed before six months elapse.
4. Charges for certificates
Unlike most nationalised banks, private banks charge Rs 50-250 for documents like balance certificate, interest certificate, address confirmation, signature attestation, photo attestation etc.
5. Cheque return charges
Nationalised banks fine you Rs 50-200 in case of cheque return (due to insufficient funds, signature mismatch etc), but private ones charge you Rs 100-Rs 500.
6. Cash transaction at other branches
In case of a cash transaction at a branch other than where your account is opened, 1-3 transactions are free per quarter. Beyond that, be prepared to be charged at the rate of Rs 5 per for every Rs 1000 transacted.
7. ATM charges
If you use the ATM of another bank for balance enquiry or cash, you could be charged anything from Rs 10-100 per transaction.
8. Account statement
RBI directs that all banks must send free quarterly statements to their customers. Should you require more statements (in case of loss etc), you may have to pay Rs 50-500 per statement.
9. ATM or Debit Card fees
Most banks offer ATM cards free of cost, but some do charge their customers for debit cards. For example, ICICI Bank provides a combo ATM/ Debit card, for which it charges Rs 99 per annum.
Over and above these, there are several other charges, like outstation clearing charge (Rs 50- 500), pay order/ demand draft charge (based on amount), standing instruction charges, home cash delivery charges, old records retrieval charges, activation of dormant account charge etc.
Note: Visit the bank's web site or any of the branches, for a copy of these expenses. It is mandatory for every bank to give it to you.
Early pocket money leads to spoiled kids
Virtually all parents think that American children today are spoiled -- and over half of them admit that they are largely to blame, according to a survey.
A poll conducted by family magazine Cookie and AOL Money & Finance found that 94 percent of parents felt American children as a whole are spoiled -- and most of these, 55 per cent, think their own kids are contributing to the situation.
But although parents realize their children are spoiled, this has not curbed them from giving youngsters pocket money, some starting to hand out an allowance from the age of three.
The survey found that nearly one in five parents give their children a weekly cash allowance without any discernible responsibility attached, such as regular chores.
About 13 percent of children earn $ 15 a week or more although parents were split on what age to start giving an allowance.
Just over four in 10, or 41 per cent, gave it between the ages of six and eight, 28 per cent between the ages of nine and 11, and 18 per cent at age 12 or older.
But 13 per cent started giving children a regular allowance between the ages of three and five.
As well as pocket money, nearly four out of every 10 respondents in the online survey of 1,500 people said they reward a huge accomplishment, like getting straight As at school, with money.
Only four per cent insist that a portion of the child's allowance go to charity.
"With parents having children later in life, there is more disposable income floating around," Pilar Guzman, editor-in-chief of Cookie, said in a statement.
"It is our responsibility as parents to teach our children the value of a dollar, as well as the importance of giving to those less fortunate. Instilling these values in our homes and taking small steps around the holidays are the perfect ways to reinforce the importance of this message."
(Reporting by Belinda Goldsmith; Editing by Patricia Reaney)
A poll conducted by family magazine Cookie and AOL Money & Finance found that 94 percent of parents felt American children as a whole are spoiled -- and most of these, 55 per cent, think their own kids are contributing to the situation.
But although parents realize their children are spoiled, this has not curbed them from giving youngsters pocket money, some starting to hand out an allowance from the age of three.
The survey found that nearly one in five parents give their children a weekly cash allowance without any discernible responsibility attached, such as regular chores.
About 13 percent of children earn $ 15 a week or more although parents were split on what age to start giving an allowance.
Just over four in 10, or 41 per cent, gave it between the ages of six and eight, 28 per cent between the ages of nine and 11, and 18 per cent at age 12 or older.
But 13 per cent started giving children a regular allowance between the ages of three and five.
As well as pocket money, nearly four out of every 10 respondents in the online survey of 1,500 people said they reward a huge accomplishment, like getting straight As at school, with money.
Only four per cent insist that a portion of the child's allowance go to charity.
"With parents having children later in life, there is more disposable income floating around," Pilar Guzman, editor-in-chief of Cookie, said in a statement.
"It is our responsibility as parents to teach our children the value of a dollar, as well as the importance of giving to those less fortunate. Instilling these values in our homes and taking small steps around the holidays are the perfect ways to reinforce the importance of this message."
(Reporting by Belinda Goldsmith; Editing by Patricia Reaney)
Budget FAQs
What is the Union Budget?
The Union Budget is the annual report of India as a country. It contains the government of India's revenue and expenditure for the end of a particular fiscal year, which runs from April 1 to March 31. The Union Budget is the most extensive account of the government's finances, in which revenues from all sources and expenses of all activities undertaken are aggregated. It comprises the revenue budget and the capital budget. It also contains estimates for the next fiscal year.
What is a revenue budget?
The revenue budget consists of revenue receipts of the government (revenues from tax and other sources), and its expenditure.
Revenue receipts are divided into tax and non-tax revenue. Tax revenues are made up of taxes such as income tax, corporate tax, excise, customs and other duties that the government levies.
In non-tax revenue, the government's sources are interest on loans and dividend on investments like PSUs, fees, and other receipts for services that it renders. Revenue expenditure is the payment incurred for the normal day-to-day running of government departments and various services that it offers to its citizens.
The government also has other expenditure like servicing interest on its borrowings, subsidies, etc.
Usually, expenditure that does not result in the creation of assets, and grants given to state governments and other parties are revenue expenditures. The difference between revenue receipts and revenue expenditure is usually negative. This means that the government spends more than it earns. This difference is called the revenue deficit.
What is a capital budget?
The capital budget is different from the revenue budget as its components are of a long-term nature. The capital budget consists of capital receipts and payments.
Capital receipts are government loans raised from the public, government borrowings from the Reserve Bank and treasury bills, loans received from foreign bodies and governments, divestment of equity holding in public sector enterprises, securities against small savings, state provident funds, and special deposits.
Capital payments are capital expenditure on acquisition of assets like land, buildings, machinery, and equipment. Investments in shares, loans and advances granted by the central government to state and union territory governments, government companies, corporations and other parties.
What are direct taxes?
These are the taxes that are levied on the income of individuals or organisations. Income tax, corporate tax, inheritance tax are some instances of direct taxation.
Income tax is the tax levied on individual income from various sources like salaries, investments, interest etc.
Corporate tax is the tax paid by companies or firms on the incomes they earn.
What are indirect taxes?
Indirect taxes are those paid by consumers when they buy goods and services. These include excise and customs duties.
Customs duty is the charge levied when goods are imported into the country, and is paid by the importer or exporter.
Excise duty is a levy paid by the manufacturer on items manufactured within the country. Usually, these charges are passed on to the consumer.
What is plan and non-plan expenditure?
There are two components of expenditure - plan and non-plan.
Of these, plan expenditures are estimated after discussions between each of the ministries concerned and the Planning Commission.
Non-plan revenue expenditure is accounted for by interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments.
Non-plan capital expenditure mainly includes defence, loans to public enterprises, loans to States, Union Territories and foreign governments.
What is the Central Plan Outlay?
It is the division of monetary resources among the different sectors in the economy and the ministries of the government.
What is fiscal policy?
Fiscal policy is a change in government spending or taxing designed to influence economic activity. These changes are designed to control the level of aggregate demand in the economy. Governments usually bring about changes in taxation, volume of spending, and size of the budget deficit or surplus to affect public expenditure.
What is a fiscal deficit?
This is the gap between the government's total spending and the sum of its revenue receipts and non-debt capital receipts. It represents the total amount of borrowed funds required by the government to completely meet its expenditure.
What is the Finance Bill?
The government proposals for the levy of new taxes, alterations in the present tax structure or continuance of the current tax structure beyond the period approved by Parliament, are laid down before Parliament in this bill.
The Parliament approves the Finance Bill for a period of one year at a time, which becomes the Finance Act.
What impact does the Budget have on the market and economy?
The Budget impacts the economy, the interest rate and the stock markets. How the finance minister spends and invests money affects the fiscal deficit. The extent of the deficit and the means of financing it influence the money supply and the interest rate in the economy. High interest rates mean higher cost of capital for the industry, lower profits and hence lower stock prices.
The fiscal measures undertaken by the government affect public expenditure. For instance, an increase in direct taxes would decrease disposable income, thus reducing demand for goods. This decrease in demand will translate into a decrease in production, therefore affecting economic growth.
Similarly, an increase in indirect taxes would also decrease demand. This is because indirect taxes are often partially or completely passed on to consumers in the form of higher prices. Higher prices imply a reduction in demand and this in turn would reduce profit margins of companies, thus slowing down production and growth.
Non-plan expenditure like subsidies and defence also affect the economy as limited government resources are used for non-productive purposes.
The Union Budget is the annual report of India as a country. It contains the government of India's revenue and expenditure for the end of a particular fiscal year, which runs from April 1 to March 31. The Union Budget is the most extensive account of the government's finances, in which revenues from all sources and expenses of all activities undertaken are aggregated. It comprises the revenue budget and the capital budget. It also contains estimates for the next fiscal year.
What is a revenue budget?
The revenue budget consists of revenue receipts of the government (revenues from tax and other sources), and its expenditure.
Revenue receipts are divided into tax and non-tax revenue. Tax revenues are made up of taxes such as income tax, corporate tax, excise, customs and other duties that the government levies.
In non-tax revenue, the government's sources are interest on loans and dividend on investments like PSUs, fees, and other receipts for services that it renders. Revenue expenditure is the payment incurred for the normal day-to-day running of government departments and various services that it offers to its citizens.
The government also has other expenditure like servicing interest on its borrowings, subsidies, etc.
Usually, expenditure that does not result in the creation of assets, and grants given to state governments and other parties are revenue expenditures. The difference between revenue receipts and revenue expenditure is usually negative. This means that the government spends more than it earns. This difference is called the revenue deficit.
What is a capital budget?
The capital budget is different from the revenue budget as its components are of a long-term nature. The capital budget consists of capital receipts and payments.
Capital receipts are government loans raised from the public, government borrowings from the Reserve Bank and treasury bills, loans received from foreign bodies and governments, divestment of equity holding in public sector enterprises, securities against small savings, state provident funds, and special deposits.
Capital payments are capital expenditure on acquisition of assets like land, buildings, machinery, and equipment. Investments in shares, loans and advances granted by the central government to state and union territory governments, government companies, corporations and other parties.
What are direct taxes?
These are the taxes that are levied on the income of individuals or organisations. Income tax, corporate tax, inheritance tax are some instances of direct taxation.
Income tax is the tax levied on individual income from various sources like salaries, investments, interest etc.
Corporate tax is the tax paid by companies or firms on the incomes they earn.
What are indirect taxes?
Indirect taxes are those paid by consumers when they buy goods and services. These include excise and customs duties.
Customs duty is the charge levied when goods are imported into the country, and is paid by the importer or exporter.
Excise duty is a levy paid by the manufacturer on items manufactured within the country. Usually, these charges are passed on to the consumer.
What is plan and non-plan expenditure?
There are two components of expenditure - plan and non-plan.
Of these, plan expenditures are estimated after discussions between each of the ministries concerned and the Planning Commission.
Non-plan revenue expenditure is accounted for by interest payments, subsidies (mainly on food and fertilisers), wage and salary payments to government employees, grants to States and Union Territories governments, pensions, police, economic services in various sectors, other general services such as tax collection, social services, and grants to foreign governments.
Non-plan capital expenditure mainly includes defence, loans to public enterprises, loans to States, Union Territories and foreign governments.
What is the Central Plan Outlay?
It is the division of monetary resources among the different sectors in the economy and the ministries of the government.
What is fiscal policy?
Fiscal policy is a change in government spending or taxing designed to influence economic activity. These changes are designed to control the level of aggregate demand in the economy. Governments usually bring about changes in taxation, volume of spending, and size of the budget deficit or surplus to affect public expenditure.
What is a fiscal deficit?
This is the gap between the government's total spending and the sum of its revenue receipts and non-debt capital receipts. It represents the total amount of borrowed funds required by the government to completely meet its expenditure.
What is the Finance Bill?
The government proposals for the levy of new taxes, alterations in the present tax structure or continuance of the current tax structure beyond the period approved by Parliament, are laid down before Parliament in this bill.
The Parliament approves the Finance Bill for a period of one year at a time, which becomes the Finance Act.
What impact does the Budget have on the market and economy?
The Budget impacts the economy, the interest rate and the stock markets. How the finance minister spends and invests money affects the fiscal deficit. The extent of the deficit and the means of financing it influence the money supply and the interest rate in the economy. High interest rates mean higher cost of capital for the industry, lower profits and hence lower stock prices.
The fiscal measures undertaken by the government affect public expenditure. For instance, an increase in direct taxes would decrease disposable income, thus reducing demand for goods. This decrease in demand will translate into a decrease in production, therefore affecting economic growth.
Similarly, an increase in indirect taxes would also decrease demand. This is because indirect taxes are often partially or completely passed on to consumers in the form of higher prices. Higher prices imply a reduction in demand and this in turn would reduce profit margins of companies, thus slowing down production and growth.
Non-plan expenditure like subsidies and defence also affect the economy as limited government resources are used for non-productive purposes.
PRE BUDGET Details
Ad-valorem duties: This Latin term refers to duties or taxes that are imposed on commodities based on their value.
Budgetary Deficit: When expenses exceed revenues, it leads to a situation of budgetary deficit. The entire budgetary exercise falls short of allocating enough funds to a certain area.
Budget Estimates: These estimates contain an annual estimate of Fiscal Deficit and Revenue Deficit and include the estimates of the Centre's spending during the financial year. It also contains the income received as proceeds of tax revenues.
Balance of Payment: The annual overall statement of a country's economic transactions – spending and income – with the rest of the world.
Bank Credit: This refers to the borrowing capacity advanced by a bank to an individual, firm or organization in the form of loans, cash credit and overdrafts.
Bank Rate: This is the interest rate at which the Reserve Bank of India advances short-term loans to commercial banks in the country. Changes in bank rate are reflected in the prime lending rates (PLRs) offered by commercial banks to their best customers.
Borrowings: When commercial banks receive something of value from the RBI against refinance schemes, like general refinance, and export credit refinance.
Cash Balances: Cash Balances with RBI indicate those maintained by scheduled banks with RBI and include these balances under cash reserve ratio (CRR) requirements.
Capital Budget: This plan keeps track of the Centre’s capital receipts and payments and accounts for market loans, borrowings from the Reserve Bank and other institutions through the sale of Treasury Bills, loans from foreign governments and recoveries of loans granted by the Central government to state governments and Union Territories.
Capital Payments: Refer to expenses incurred on acquisition of assets.
Cenvat: Central Value Added Tax (CENVAT) is a substitute for the earlier Modified Value Added Tax (MODVAT) scheme and is aimed at reducing the spiraling effect of indirect taxes on finished products.
Custom Duties: These taxes are imposed when goods are either imported or exported.
Countervailing Duties: Levied on imports that may lead to price rise in the domestic market. Seen as a means of discouraging unfair trade practices by other countries.
Consolidated Fund: This is a big reservoir where the Government pools all its funds including revenues, loans raised and recoveries of loans granted together.
Contingency Fund: As the name suggests, this is an emergency fund to help the Government tide over when in dire straits. The fund is at the disposal of the President and requires Parliament approval and the amount withdrawn from the fund is recouped.
Capital Expenditure: Capital expenditure (CAPEX) is the amount a company spends on buying fixed assets like land, building, machinery and equipment. Loans and advances sanctioned by the Centre to state governments, Union Territories and PSUs also fall in this category.
Capital Receipt: Loans raised by the Centre from the market, government borrowings from the RBI, sale of Treasury Bills and loans received from foreign governments all form a part of Capital Receipt. Other items in this category include recovery of loans granted by the Centre to states and UTs and proceeds from the dilution of the government's stake in PSUs.
Central Plan: Refers to the government's budgetary support to the Plan and the internal and extra budgetary resources raised by the PSUs.
Consumer price index: A price index covering the prices of consumer goods.
Corporate Tax: Tax levied on companies on the profit made by them.
Currency Liability: Comprises one, two and five-rupee coins and other small coinage, and commemorative coins issued by the government mints.
Current Account Transactions: A country's balance of payments on Current Account Transactions includes trade in goods or visibles; trade in services, or invisibles; payments of factor incomes, including dividends, interests, migrants remittances from earnings abroad; and international transfers, that is gifts.
Current Account Deficit: This is an excess of expenditure over receipts on current account in a country's balance of payments.
Current Account Surplus: This is an excess of receipts over expenditure on current account in a country's balance of payments.
Direct Taxes: Taxes which are imposed directly on consumers like Income Tax and Corporate Tax.
Disinvestment: The process of dilution of the government's stake in Public Sector Undertakings.
Demand for grants: A statement of estimate of expenditure from the Consolidated Fund and requires the approval of the Lok Sabha.
Demand deposits: Bank account that allows money to be withdrawn from the available balance by the account holder at his or her will and by any means, without notice to the bank.
Deposit money: Consists of demand deposits with commercial and cooperative banks and also includes current deposit portions of savings bank deposits. These deposits do not earn any interest.
Excise Duty: A tax levied on the consumption of particular goods and may be levied to raise government revenue. Excise duties are often levied at higher rates on goods like alcohol, tobacco and petrol whose consumption is believed to have adverse effects on public health, order and environment.
Foreign Direct Investment: The acquisition by residents of a country of real assets abroad and may be done by remitting money abroad to be spent on acquiring land, constructing buildings, mines, or machinery, or buying existing foreign business.
Finance Bill: This consists of the Government's proposals for the imposition of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by Parliament.
Fiscal Deficit: It is the difference between the Revenue Receipts and Total Expenditure.
Gross Domestic Product (GDP): This is the value of a country’s overall output of goods and services during one fiscal year) at market prices, excluding net income from abroad. It thus includes activities carried out in the country by foreign-owned companies, and excludes activities of firms owned by residents but carried on abroad.
Gross National Product (GNP): This is the total market value of the finished goods and services manufactured within the country in a given financial year, plus income earned by the local residents from investments made abroad, minus the income earned by foreigners in the domestic market.
Gross Investment: Spending on creating new capital goods before making any allowance for capital consumption and consists of gross fixed investment, plus net investment in stocks and work in progress.
Income Tax: The tax levied on income made by individuals. Income tax is normally zero on some bands of small incomes, both on equity grounds and because of the expense of collecting tiny amounts of tax. It is normally proportional up to some upper limit; income beyond this is taxed at higher rates.
Inflation: A persistent tendency in the economy when prices and money wages are on the rise. Inflation is measured by the proportional changes over time in some appropriate index, commonly a consumer price index, or a GDP deflator.
Indirect Taxes: Imposed on goods manufactured, imported or exported such as Excise Duties and Custom Duties.
MODVAT: Modified Value Added Tax is a way of lending some relief to the final manufacturers of goods on excise duties borne by their suppliers.
Merchandise Account: The part of balance-of-payments accounts referring to visible trade or merchandise imports and exports.
Non-Plan Expenditure: This consists of Revenue and Capital Expenditure on interest payments, defence expenditure, subsidies, postal deficit, police, pensions, economic services, loans to public sector enterprises and loans as well as grants to state governments, UTs and foreign governments.
Peak Rate: It is the highest rate of custom duty applicable on an item.
Performance Budget: This is a compilation of programmes and activities of different ministries and departments.
Public Account: An account where money received through transactions not related to the consolidated fund is kept.
Plan Expenditure: This consists of both Revenue Expenditure and Capital Expenditure of the Centre on the Central Plan, central assistance to states and UTs.
Purchasing power parity (PPP): The rates of currency conversion which equalise the purchasing power of different currencies. This means that a given sum of money, when converted into different currencies at the PPP rates, will buy the same basket of goods and services in all countries.
Reserve money: A term which refers to money supplied by the RBI and the Centre. This indicates monetary liability of the RBI and the Government of India to the public, including banks. The reserve money, or currency notes and coins, is held by public and banks in their currency chests and as deposits with RBI. It also includes "other" deposits with RBI.
Revenue Deficit: The difference between Revenue Expenditure and Revenue Receipts.
Revenue Surplus: It is the excess of Revenue Receipts over Revenue Expenditure.
Revised Estimates: Usually tabled in the following Budget, it is the difference between the Budget Estimates and the actual figures.
Revenue Budget: Consists of Revenue Receipts and Revenue Expenditure of the government.
Revenue Receipt: Consists of duties imposed by the Centre, interest and dividend on investments made by the government.
Revenue Expenditure: Expenditure incurred for the normal functioning of the government departments and various other services such as interest charges on debt incurred by the government.
Subsidies: Financial aid provided by the Centre to individuals or a group of individuals to be competitive. The grant of subsidies is also aimed at improving their skills of those who benefit from the subsidies.
Term Deposits: Deposits with a fixed maturity of not less than 15 days, including cash certificates, and cumulative or recurring deposits but excluding the interest accrued and payable on these deposits.
Value Added Tax: Based on the difference between the value of the output over the value of the inputs used.
Wholesale Price Index: The prices of goods, which are dealt with wholesale, mainly bulk goods that are mostly inputs to production rather than finished commodities. A wholesale price index, for example, includes wheat and sheets of steel, whereas a retail price index includes bread and cars.
Budgetary Deficit: When expenses exceed revenues, it leads to a situation of budgetary deficit. The entire budgetary exercise falls short of allocating enough funds to a certain area.
Budget Estimates: These estimates contain an annual estimate of Fiscal Deficit and Revenue Deficit and include the estimates of the Centre's spending during the financial year. It also contains the income received as proceeds of tax revenues.
Balance of Payment: The annual overall statement of a country's economic transactions – spending and income – with the rest of the world.
Bank Credit: This refers to the borrowing capacity advanced by a bank to an individual, firm or organization in the form of loans, cash credit and overdrafts.
Bank Rate: This is the interest rate at which the Reserve Bank of India advances short-term loans to commercial banks in the country. Changes in bank rate are reflected in the prime lending rates (PLRs) offered by commercial banks to their best customers.
Borrowings: When commercial banks receive something of value from the RBI against refinance schemes, like general refinance, and export credit refinance.
Cash Balances: Cash Balances with RBI indicate those maintained by scheduled banks with RBI and include these balances under cash reserve ratio (CRR) requirements.
Capital Budget: This plan keeps track of the Centre’s capital receipts and payments and accounts for market loans, borrowings from the Reserve Bank and other institutions through the sale of Treasury Bills, loans from foreign governments and recoveries of loans granted by the Central government to state governments and Union Territories.
Capital Payments: Refer to expenses incurred on acquisition of assets.
Cenvat: Central Value Added Tax (CENVAT) is a substitute for the earlier Modified Value Added Tax (MODVAT) scheme and is aimed at reducing the spiraling effect of indirect taxes on finished products.
Custom Duties: These taxes are imposed when goods are either imported or exported.
Countervailing Duties: Levied on imports that may lead to price rise in the domestic market. Seen as a means of discouraging unfair trade practices by other countries.
Consolidated Fund: This is a big reservoir where the Government pools all its funds including revenues, loans raised and recoveries of loans granted together.
Contingency Fund: As the name suggests, this is an emergency fund to help the Government tide over when in dire straits. The fund is at the disposal of the President and requires Parliament approval and the amount withdrawn from the fund is recouped.
Capital Expenditure: Capital expenditure (CAPEX) is the amount a company spends on buying fixed assets like land, building, machinery and equipment. Loans and advances sanctioned by the Centre to state governments, Union Territories and PSUs also fall in this category.
Capital Receipt: Loans raised by the Centre from the market, government borrowings from the RBI, sale of Treasury Bills and loans received from foreign governments all form a part of Capital Receipt. Other items in this category include recovery of loans granted by the Centre to states and UTs and proceeds from the dilution of the government's stake in PSUs.
Central Plan: Refers to the government's budgetary support to the Plan and the internal and extra budgetary resources raised by the PSUs.
Consumer price index: A price index covering the prices of consumer goods.
Corporate Tax: Tax levied on companies on the profit made by them.
Currency Liability: Comprises one, two and five-rupee coins and other small coinage, and commemorative coins issued by the government mints.
Current Account Transactions: A country's balance of payments on Current Account Transactions includes trade in goods or visibles; trade in services, or invisibles; payments of factor incomes, including dividends, interests, migrants remittances from earnings abroad; and international transfers, that is gifts.
Current Account Deficit: This is an excess of expenditure over receipts on current account in a country's balance of payments.
Current Account Surplus: This is an excess of receipts over expenditure on current account in a country's balance of payments.
Direct Taxes: Taxes which are imposed directly on consumers like Income Tax and Corporate Tax.
Disinvestment: The process of dilution of the government's stake in Public Sector Undertakings.
Demand for grants: A statement of estimate of expenditure from the Consolidated Fund and requires the approval of the Lok Sabha.
Demand deposits: Bank account that allows money to be withdrawn from the available balance by the account holder at his or her will and by any means, without notice to the bank.
Deposit money: Consists of demand deposits with commercial and cooperative banks and also includes current deposit portions of savings bank deposits. These deposits do not earn any interest.
Excise Duty: A tax levied on the consumption of particular goods and may be levied to raise government revenue. Excise duties are often levied at higher rates on goods like alcohol, tobacco and petrol whose consumption is believed to have adverse effects on public health, order and environment.
Foreign Direct Investment: The acquisition by residents of a country of real assets abroad and may be done by remitting money abroad to be spent on acquiring land, constructing buildings, mines, or machinery, or buying existing foreign business.
Finance Bill: This consists of the Government's proposals for the imposition of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by Parliament.
Fiscal Deficit: It is the difference between the Revenue Receipts and Total Expenditure.
Gross Domestic Product (GDP): This is the value of a country’s overall output of goods and services during one fiscal year) at market prices, excluding net income from abroad. It thus includes activities carried out in the country by foreign-owned companies, and excludes activities of firms owned by residents but carried on abroad.
Gross National Product (GNP): This is the total market value of the finished goods and services manufactured within the country in a given financial year, plus income earned by the local residents from investments made abroad, minus the income earned by foreigners in the domestic market.
Gross Investment: Spending on creating new capital goods before making any allowance for capital consumption and consists of gross fixed investment, plus net investment in stocks and work in progress.
Income Tax: The tax levied on income made by individuals. Income tax is normally zero on some bands of small incomes, both on equity grounds and because of the expense of collecting tiny amounts of tax. It is normally proportional up to some upper limit; income beyond this is taxed at higher rates.
Inflation: A persistent tendency in the economy when prices and money wages are on the rise. Inflation is measured by the proportional changes over time in some appropriate index, commonly a consumer price index, or a GDP deflator.
Indirect Taxes: Imposed on goods manufactured, imported or exported such as Excise Duties and Custom Duties.
MODVAT: Modified Value Added Tax is a way of lending some relief to the final manufacturers of goods on excise duties borne by their suppliers.
Merchandise Account: The part of balance-of-payments accounts referring to visible trade or merchandise imports and exports.
Non-Plan Expenditure: This consists of Revenue and Capital Expenditure on interest payments, defence expenditure, subsidies, postal deficit, police, pensions, economic services, loans to public sector enterprises and loans as well as grants to state governments, UTs and foreign governments.
Peak Rate: It is the highest rate of custom duty applicable on an item.
Performance Budget: This is a compilation of programmes and activities of different ministries and departments.
Public Account: An account where money received through transactions not related to the consolidated fund is kept.
Plan Expenditure: This consists of both Revenue Expenditure and Capital Expenditure of the Centre on the Central Plan, central assistance to states and UTs.
Purchasing power parity (PPP): The rates of currency conversion which equalise the purchasing power of different currencies. This means that a given sum of money, when converted into different currencies at the PPP rates, will buy the same basket of goods and services in all countries.
Reserve money: A term which refers to money supplied by the RBI and the Centre. This indicates monetary liability of the RBI and the Government of India to the public, including banks. The reserve money, or currency notes and coins, is held by public and banks in their currency chests and as deposits with RBI. It also includes "other" deposits with RBI.
Revenue Deficit: The difference between Revenue Expenditure and Revenue Receipts.
Revenue Surplus: It is the excess of Revenue Receipts over Revenue Expenditure.
Revised Estimates: Usually tabled in the following Budget, it is the difference between the Budget Estimates and the actual figures.
Revenue Budget: Consists of Revenue Receipts and Revenue Expenditure of the government.
Revenue Receipt: Consists of duties imposed by the Centre, interest and dividend on investments made by the government.
Revenue Expenditure: Expenditure incurred for the normal functioning of the government departments and various other services such as interest charges on debt incurred by the government.
Subsidies: Financial aid provided by the Centre to individuals or a group of individuals to be competitive. The grant of subsidies is also aimed at improving their skills of those who benefit from the subsidies.
Term Deposits: Deposits with a fixed maturity of not less than 15 days, including cash certificates, and cumulative or recurring deposits but excluding the interest accrued and payable on these deposits.
Value Added Tax: Based on the difference between the value of the output over the value of the inputs used.
Wholesale Price Index: The prices of goods, which are dealt with wholesale, mainly bulk goods that are mostly inputs to production rather than finished commodities. A wholesale price index, for example, includes wheat and sheets of steel, whereas a retail price index includes bread and cars.
Thursday, February 14, 2008
Mutual funds for your child
Rarely have we seen a time when parents were overwhelmed with so many investment options to help them plan for their children's future. It is equally true that often parents find themselves so preoccupied that they can't seem to find time to manage their own commitments, let alone plan for their children's education and marriage among other events. That is why it is important that they get some professional help. This is where mutual funds come in.
Put simply, mutual funds hire the services of a professional money manager to invest on behalf of a group of individuals. The individuals pool in their savings and leave it to the fund manager to manage their money in an optimal manner. Individuals can go about their work as usual, content in the knowledge that there is professional help at hand.
Mutual funds have much to offer to parents. Consider this - you have office work to complete, household work to do, children's homework to help with and whole lot of other social and personal commitments to take care of. In the middle of all this, where is the time to invest for your child's education or marriage or business?
Say hello to child plans/funds. We mentioned that mutual funds invest on behalf of individuals to achieve a pre-determined objective. For many investors, this objective is planning for a house, retirement, an overseas trip, parking surplus money. For parents, this objective can be 'planning for child's education or marriage or seed capital for his/her business'.
Parents must note some peculiar feature of child funds. These features tell parents exactly what makes these funds tick. It gives them a reason to consider these plans for building a corpus for their children's future.
1. Investment objective
The good news for parents is that there is common ground between their objectives and the objectives of child funds. Child funds are launched with the explicit objective of helping parents build a corpus. Sample this - Principal Child Benefit's investment objective reads - 'To generate regular returns and/or capital appreciation/accretion with the aim of giving lumpsum capital growth at the end of the chosen target period or otherwise to the Beneficiary (child).'
Even more explicit is UTI Children Career Plan's investment objective - 'to provide children after they attain the age of 18 years a means to receive scholarship to meet the cost of higher education and/or to help them in setting up a profession, practice or business or enabling them to set up a home or finance the cost of other social obligation.'
2. Asset allocation
Although most child funds take on a degree of risk by investing in stock markets, they are relatively less risky compared to diversified equity funds that can invest upto 100% of their assets in equities. They are relatively less risky because fund houses have taken adequate measures to ensure that child funds are managed conservatively.
The most important measure adopted by fund houses is to cap the equity investments at a reasonable level. Most of them have capped the equity weightage of the portfolio at varying levels, usually not exceeding 70% of the net assets. These funds have the flexibility to invest in equity and debt markets depending on the fund manager's view on these markets. These funds work like asset allocation plans allowing the fund manager to shift across asset classes so as to maximise returns for the investor. For instance, in an equity fund, the fund manager is usually compelled to remain completely invested in equities even when stock markets appear overvalued and therefore poised for a correction. But a child fund with a cap on the equity component can always shift a portion of its assets in debt when the going gets rough.
On the same lines when equity markets are overvalued, the fund manager can shift a portion of his assets to debt so as to capture gains. When equity markets decline, he can add to the equity component. By smartly allocating assets across debt and equities, he can ensure that he enters low and exits high, the cornerstone of a successful investment strategy
3. Lock-in
We mentioned that fund houses make provisions to ensure that the risk associated with child funds is controlled. One way to lower the risk of equities is to make long-term investments. Over the short-term equities are the riskiest assets; over the long-term, if you tread wisely, they can generate the best risk adjusted returns for you. That is just what fund houses do; they give the fund manager the time and flexibility to make really long-term investments in the child fund. For that, they have what is commonly referred to as a lock-in period.
If you are an investor in PPF (Public Provident Fund) and NSC (National Savings Certificate) then you already know what a lock-in period means. In fact, fixed deposit (FDs) investors are equally aware of this term. Only difference is that child funds have an equity flavour, while NSC, PPF and FDs are debt instruments. Reason why it makes imminent sense for equities to have a lock-in is because they demonstrate their potential over the long-term (at least 3 years in our view). When the fund manager is certain that he can invest the money for a longer period of time without being concerned about the investor standing outside his office demanding his money, he can make more prudent investments that stand a good chance of making money over the long-term.
For parents, who want to build a corpus for their children over the long-term, a lock-in must be seen as an ally for two reasons. One, it enables the fund manager to make investments that are in the investor's long-term interests. Second, it acts as a deterrent for the parent from making premature withdrawals.
As parents will appreciate, child funds have a lot of features working for them. Even if some of these features appear restrictive in nature (cap on equity investments, lock-in period) remember over the long-term they work to the parent's benefit. They instill discipline and have the potential to generate a corpus for the child, and in the final analysis that is all that matters.
5 common investment mistakes
If you are an investor who believes that getting invested is a simple 3-step process i.e. getting hold of an investment agent, filling up an application form and signing a cheque; then you got it all wrong. Investing is a lot more 'sophisticated' than that. It is an important activity that involves systematically short-listing your most important investment objectives and preparing an investment plan to realise them in the best possible manner. Although this may sound a little difficult, it can be achieved simply by avoiding some very common investment mistakes. Investors must note that since the list of mistakes one must avoid is endless; we have highlighted the five most common mistakes.
1. Investing without a plan
The first and most critical step while investing is to outline your investment objectives. Setting an investment objective simply means prioritising your needs into short, medium and long-term investment goals. For instance, planning for vacation (short-term), planning to buy property (medium to long-term), planning for retirement (long-term). Often investors stumble at the starting point while defining investment objectives; this in turn gets their financial plan in a tizzy.
2. Not diversifying well enough
Diversification is one of the basic tenets of investing. At Personalfn, we regularly meet clients who have invested a large portion of their monies in a single asset (like real estate for instance) or a single investment (like a stock). While such investors may do well during a runup in that asset/market (like real estate or stocks), it takes a downturn to underline how important it is to spread your eggs in more than one basket. Investors, depending on their risk profile should diversify their portfolios across asset classes like equities, fixed income, gold and real estate, among others. Similarly, within an asset class, they should diversify across various avenues, for instance within fixed income they should invest in fixed deposits, fixed maturity plans and small savings schemes. More than anything else, diversification helps to minimise/spread risk particularly during a downturn, as one investment can be a backup for another.
3. Ignoring risk
Often investors select an investment avenue/scheme simply because it provides better returns or is recommended by a friend, family member or investment advisor. Investment decisions should not be influenced merely on the basis of performance or a strong recommendation. Investors should understand that various investments have varying risk profiles. For instance, stocks/equity funds have a higher risk profile, while debt is relatively low risk. You must select an investment based on whether it suits your risk profile. For instance, a 55-Yr old who is headed for retirement must avoid technology stocks, which can prove apt for a 30-Yr old.
4. Getting married to your investments
Often investors have 'pet' investments and they can get attached to the same. So despite a dismal show, some 'pet' investments manage to hold their ground in the portfolio. Getting attached to your investments can prove detrimental to your investment plan. Is that house/car/vacation more important or a non-performing investment? The answer is obvious to any rational investor. Ensure that you review your portfolio regularly and weed out the duds. If an investment is no longer contributing to your investment objective, it has no business being in your portfolio.
5. Timing the markets
Some investors often delude themselves into believing that they are experts. So more than investing, they are often engaged in 'pastimes' like timing the markets. To be sure, even when market-timing works (which is rare since no one can predict stock market movements accurately and consistently), it does not do significantly better than regular investing regardless of market movements. Studies have shown that even if an investor called the market bottom consistently and accurately over a period of time, he would have done only slightly better than the investor who invests (the same amount) regularly over the same time period. This is no magic; this is the result of cost averaging and compounding (which incidentally Albert Einstein called 'the greatest mathematical discovery of all time').
Put simply, this implies that risk-taking investors must abandon the temptation to get caught up with stock market highs and lows. Instead, they must work at regularly setting aside a sum of money and investing the same in line with their risk profiles regardless of stock market fluctuations.
Invest in 'all-weather' funds
There is one event that occurs with alarming regularity in the mutual funds segment. Every time the equity markets hit a purple patch, a handful of funds hog the limelight. These funds deliver such superlative performances over shorter time frames, that it is hard to ignore them. The strong buzz surrounding the funds leads investors to believe that ignoring them would be a foolhardy move. It's a different matter that when the tide turns (read markets lose steam), such funds more often than not suffer the most. In effect, minus the rising markets, these funds lose their charm and end up as mundane investment propositions; a bit like 'one hit wonders'.
And it doesn't take much to deliver a blistering performance in conducive markets; all a fund has to do is take on high risk. In rising markets, sacrificing prudence at the altar of performance is often the mantra for success. For example, the fund could take concentrated bets in stocks and sectors that are the season's flavour. And such a strategy works fine so long as the markets are northward bound. Given how markets have moved over the last few years, we have more than a few funds that have made the most of rising markets.
On the other end of the spectrum are 'all-weather' funds. Their forte is delivering steady performances. It is unlikely that these funds will feature in weekly, monthly or half-yearly rankings. All the same, they continue to do their bit in a silent mode. More importantly, when the markets hit a rough patch, they will do a significantly better job on the damage control front vis-a-vis their 'one hit wonder' peers. As a result, over a market cycle, these funds will deliver a better showing as opposed to their flamboyant peers and in the process also expose investors to lower risk levels.
What makes an 'all-weather' fund tick is prudent fund management. The fund steers clear of risky investment calls and in the process forgoes short-term gains. But this brand of fund management does deliver over the long-term. And that's what equity investing is all about - the long-term (which is at least 3-5 years in our view). Expectedly, the investment advisor/financial planner has a role to play in ensuring that 'all-weather' funds find a place in your portfolio over ones that are simply the season's flavour.
This week equity markets fell sharply and closed in negative terrain. The BSE Sensex fell by 8.71% to close at 19,014 points; the S&P CNX Nifty closed at 5,705 points (down by 7.98%). The CNX Midcap posted a loss of 6.75%, before settling at 8,368 points.
| Equity Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| JM Telecom | 13.42 | -9.98% | -3.45% | 1.53% | 27.56% | 5.47% | 0.33% |
| UTI GSF Software | 20.80 | -8.77% | -9.09% | -23.19% | -29.47% | 6.91% | 0.03% |
| Sundaram Select Focus | 97.83 | -8.50% | -2.28% | 39.56% | 55.81% | 8.04% | 0.42% |
| Franklin Opportunities | 36.29 | -8.37% | -3.52% | 20.11% | 32.34% | 8.32% | 0.37% |
| UTI GSFServices | 68.57 | -8.17% | 1.51% | 21.90% | 32.45% | 6.34% | 0.35% |
(Standard Deviation highlights the element of risk associated with the fund. Sharpe Ratio is a measure of the returns offered by the fund vis-a-vis those offered by a risk-free instrument)
Sector/thematic funds dominated the losers' list in the equity funds segment. JM Telecom (-9.98%) emerged as the biggest looser, followed by UTI GSF Software (-8.77%) and Sundaram Select Focus (-8.50%).
| Debt Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| ING Gilt | 12.96 | 0.75% | 3.42% | 5.06% | 6.91% | 0.65% | -0.14% |
| Birla Gilt Plus | 26.52 | 0.58% | 4.64% | 8.88% | 14.29% | 1.20% | 0.25% |
| Kotak Bond | 21.76 | 0.51% | 2.67% | 6.96% | 11.87% | 0.61% | 0.33% |
| Sahara Gilt | 13.12 | 0.47% | 1.35% | 3.31% | 6.02% | 0.36% | -0.05% |
| Kotak Gilt Investment | 25.85 | 0.46% | 4.04% | 6.40% | 9.83% | 1.04% | 0.05% |
ING Gilt (0.75%) topped the long-term debt funds segment; Birla Gilt Plus (0.58%) and Kotak Bond (0.51%) occupied second and third positions respectively.
| Balanced Funds | NAV (Rs) | 1-Wk | 1-Mth | 6-Mth | 1-Yr | SD | SR |
| Canara Robeco Balanced II | 50.79 | -6.48% | -0.63% | 21.62% | 32.92% | 5.52% | 0.34% |
| LIC MF Balanced | 68.25 | -6.14% | -2.42% | 39.87% | 46.52% | 6.99% | 0.34% |
| Escorts (ESCO.BO, news) Balance | 72.63 | -6.12% | -0.48% | 35.39% | 49.22% | 6.26% | 0.40% |
| FT India Balanced | 43.70 | -5.73% | -1.74% | 15.01% | 30.16% | 5.21% | 0.37% |
| ICICI (ICIC.BO, news) Pru. Balanced | 44.33 | -5.72% | -0.27% | 16.14% | 22.56% | 4.92% | 0.32% |
Canara Robeco Balanced II (-6.48%) suffered the most in the balanced funds segment. LIC MF Balanced (-6.14%) and Escorts Balance (-6.12%) also featured in the losers' list.
Ever wondered how at times, mutual funds with similar portfolios have disparate performances to show for. In effect, it's a case of similar portfolios yielding different results! It should be understood although the portfolios are similar at present, they may have originated at different points in time. Similarly, the possibility of one of the funds having maintained a higher cash allocation in a particular month that coincided with a crash in equity markets cannot be ruled out. These are just some instances that explain the disparate performances. While investors taking efforts to study portfolios is a welcome sign, the need to adopt the right approach in order to make an accurate evaluation cannot be overstated.
Rupee at 2-1/2 month lows on dlr squeeze
he rupee fell to its lowest level in 2-1/2 months on Wednesday as a dollar shortage in the market and concerns about foreign funds selling stocks prompted banks to sell the local unit.
The partially convertible rupee ended at 39.76/77 per dollar after falling as far as 39.8950 in afternoon trade, its lowest since November 27. The rupee had closed at 39.66/67 on Tuesday.
"We've seen quite a lot of activity today, with supplies from the stock market reduced and importers buying dollars ... in addition to a lack of dollar supplies," said Rohan Lasrado, head of foreign exchange trading at HDFC Bank.
Foreign funds bought more than $17 billion of stocks last year, a key driver of the rupee's rise of more than 12 percent in 2007. But the funds have sold more than $3.5 billion so far this year as weak global markets heighten risk aversion.
That has led to a dollar shortage in the banking system, spurring dealers to buy dollars in the spot market and sell them in the forward market, pushing near-term currency forwards into discount.
Dollar/rupee forward premiums were quoting at a 0.03-3.20 percent discount for 1-5 months.
"That is why exporters are postponing their dollar sales, as they traditionally book their receivables when it is trading at a premium," the head of trading at a foreign bank said.
India's benchmark share index rose 2.05 percent on Wednesday, snapping a five-day fall, but dealers said most of the gains were due to local fund buying rather than foreign buying.
Data showed India's central bank bought $2.73 billion in intervention in December, taking its dollar purchases in 2007 to $74.9 billion as it tried to stem the rupee's more than 12 percent rise in 2007.
The partially convertible rupee ended at 39.76/77 per dollar after falling as far as 39.8950 in afternoon trade, its lowest since November 27. The rupee had closed at 39.66/67 on Tuesday.
"We've seen quite a lot of activity today, with supplies from the stock market reduced and importers buying dollars ... in addition to a lack of dollar supplies," said Rohan Lasrado, head of foreign exchange trading at HDFC Bank.
Foreign funds bought more than $17 billion of stocks last year, a key driver of the rupee's rise of more than 12 percent in 2007. But the funds have sold more than $3.5 billion so far this year as weak global markets heighten risk aversion.
That has led to a dollar shortage in the banking system, spurring dealers to buy dollars in the spot market and sell them in the forward market, pushing near-term currency forwards into discount.
Dollar/rupee forward premiums were quoting at a 0.03-3.20 percent discount for 1-5 months.
"That is why exporters are postponing their dollar sales, as they traditionally book their receivables when it is trading at a premium," the head of trading at a foreign bank said.
India's benchmark share index rose 2.05 percent on Wednesday, snapping a five-day fall, but dealers said most of the gains were due to local fund buying rather than foreign buying.
Data showed India's central bank bought $2.73 billion in intervention in December, taking its dollar purchases in 2007 to $74.9 billion as it tried to stem the rupee's more than 12 percent rise in 2007.
'India will compete with US, Chinese economies by 2020'
India will be a global economic giant by 2020 and will compete on equal footing with the US and Chinese economies by that period, Minister of State for Mines T Subbarami Reddy said on Wednesday.
"By 2020, India will be one of the most competing countries matching the economies of the US and China. The country's Economy is spiralling high and will continue to do so under the present UPA government under the leadership of Prime Minister Manmohan Singh," Reddy said.
The way in which developed nations were evincing interest in the Indian Economy, it showed that the country has made considerable economic progress, he said after inaugurating the Metallurgy India 2008, Exhibition at Pragati Maidan in New Delhi.
Reddy said Indian steel makers could benefit from the exhibition as it showcased state-of-the-art technology in pipe and other steel products.
Even the oil exploration Companies could take advantage of the platform, in which over 200 exhibitors from across the globe were displaying their products.
"By 2020, India will be one of the most competing countries matching the economies of the US and China. The country's Economy is spiralling high and will continue to do so under the present UPA government under the leadership of Prime Minister Manmohan Singh," Reddy said.
The way in which developed nations were evincing interest in the Indian Economy, it showed that the country has made considerable economic progress, he said after inaugurating the Metallurgy India 2008, Exhibition at Pragati Maidan in New Delhi.
Reddy said Indian steel makers could benefit from the exhibition as it showcased state-of-the-art technology in pipe and other steel products.
Even the oil exploration Companies could take advantage of the platform, in which over 200 exhibitors from across the globe were displaying their products.
ArcelorMittal posts $10 bn profit in 2007
ArcelorMittal, the world's largest steel company, on Wednesday reported an annual net profit of USD 10.36 billion in 2007.
The results represented a 30 per cent increase from 2006 when the steelmaker posted a pro forma net profit of USD 7.9 billion, the company said in a statement.
The 2007 results marked the first full year following the merger of Arcelor and Mittal Steel in June 2006.
"I a very proud of the way the two Companies have integrated so successfully, building a steel company which is focussed on leading the transformation of our industry towards a sustainable future," said Lakshmi Mittal, president and CEO, in the statement.
"Today's result clearly demonstrate the considerable progress that we are making in this regard," he said.
The results represented a 30 per cent increase from 2006 when the steelmaker posted a pro forma net profit of USD 7.9 billion, the company said in a statement.
The 2007 results marked the first full year following the merger of Arcelor and Mittal Steel in June 2006.
"I a very proud of the way the two Companies have integrated so successfully, building a steel company which is focussed on leading the transformation of our industry towards a sustainable future," said Lakshmi Mittal, president and CEO, in the statement.
"Today's result clearly demonstrate the considerable progress that we are making in this regard," he said.
India will feel the heat, warns IMF
The macroeconomic effects of the global crisis in financial Markets will be serious and no region will escape entirely unscathed, the chief of the International Monetary Fund (IMF) said on Wednesday
IMF Managing Director Dominique Strauss-Kahn, who is on a three-day visit to India, said in a speech authorities should respond to any downturn through a mix of fiscal and monetary policy to sustain domestic demand.
Strauss-Kahn said the world Economy had entered a difficult phase with the financial crisis spreading to the real Economy.
"I believe that the effects will be felt increasingly in Europe and I do not think the emerging economies are immune from the crisis," he told a meeting organised by a leading Indian economic think-tank.
"This has become a global problem that requires a global solution. Emerging Markets need to join industrial countries in the macroeconomic and regulatory policy responses. Such a collaborative approach offers the best hope for ensuring the stability of the global Economy."
The IMF chief said central banks would need to continue to provide liquidity to ensure the smooth functioning of interbank money Markets and advised regulatory authorities to make sure they have the capacity to react rapidly to changes.
Strauss-Kahn called on emerging nations to contribute to ensuring global economic stability.
"There is also a broader role that some emerging economies can play to help support global growth -- through policies to strengthen their domestic demand as a growth engine, including greater exchange rate flexibility."
IMF Managing Director Dominique Strauss-Kahn, who is on a three-day visit to India, said in a speech authorities should respond to any downturn through a mix of fiscal and monetary policy to sustain domestic demand.
Strauss-Kahn said the world Economy had entered a difficult phase with the financial crisis spreading to the real Economy.
"I believe that the effects will be felt increasingly in Europe and I do not think the emerging economies are immune from the crisis," he told a meeting organised by a leading Indian economic think-tank.
"This has become a global problem that requires a global solution. Emerging Markets need to join industrial countries in the macroeconomic and regulatory policy responses. Such a collaborative approach offers the best hope for ensuring the stability of the global Economy."
The IMF chief said central banks would need to continue to provide liquidity to ensure the smooth functioning of interbank money Markets and advised regulatory authorities to make sure they have the capacity to react rapidly to changes.
Strauss-Kahn called on emerging nations to contribute to ensuring global economic stability.
"There is also a broader role that some emerging economies can play to help support global growth -- through policies to strengthen their domestic demand as a growth engine, including greater exchange rate flexibility."
Sunday, February 3, 2008
India Net capacity at 80% after cables break
India's Internet services were operating at about 80 percent of capacity on Friday after breaks in undersea cables disrupted Web access, and normal services could be restored in a week, an industry official said.
The underseas cable connections were disrupted off Egypt's northern coast on Wednesday, affecting Internet access in the Gulf region and south Asia, and forcing service providers to reroute traffic.
India's booming outsourcing industry, which provides a range of back-office services like insurance claims processing and customer support to overseas clients over the Internet, played down the disruption, saying it had back-up plans in place.
Rajesh Chharia, president of the Internet Service Providers' Association of India, said service providers were diverting Internet traffic to ensure there was no disruption in services.
"I would say 70 to 80 percent of the Internet services are operating normally now. It will take about a week to bring the services back to normal," Chharia said.
"Though we will continue to see some latency, there won't be any chocking in Internet access that we saw in the last couple of days."
He said cable repair ships had already been SENT to fix the breaches, which are in segments of two intercontinental cables known as SEA-ME-WE-4 and FLAG.
A spokesman for FLAG in Mumbai has declined comment on the state of restoration of operations but Punit Garg, chief executive officer of FLAG Telecom, said on Thursday the cable breaks would not cause any revenue loss to the company.
"Where the cable cut has happened, we are building a new cable over there, which is the FLAG Mediterranean cable, which will connect Egypt to France," Garg told an investor conference call.
"So in future we will see that FLAG will have a fully redundant and resilient network.... For our enterprise customers, that (connectivity) is being taken care through the restoration on other alternate hubs."
FLAG is a wholly-owned subsidiary of India's No. 2 mobile operator Reliance Communications and it operates a cable network of 65,000 route kilometres connecting the US, Europe, Middle East and Asia.
"Connectivity has been restored to a large number of our customers," said a spokesman for Videsh Sanchar Nigam Ltd, an internet service provider.
"NO COMPLAINTS"
Officials at outsourcing firms in India said many had alternate networks and traffic was automatically routed to a different link in the event of a breakdown.
"We have not heard of any customer complaints so far because of this," said a spokeswoman for HCL Technologies Ltd (HCLT.BO: Quote,... Profile, Research), which offers IT solutions and back-office services.
The International Cable Protection Committee, an association of 86 submarine cable operators dedicated to safeguarding submarine cables, says more than 95 percent of transoceanic telecoms and data traffic are carried by submarine cables, and the rest by satellite.
US phone Companies Verizon Communications Inc and AT&T Inc both use the affected cables. AT&T said on Thursday its networks were already back to normal as it had rerouted traffic and Verizon expected service to be restored for all its customers in a matter of days.
Investigations into what caused the break are continuing, but there were storms in the area at the time.
One of the biggest disruptions of modern telecoms systems was in December 2006, when a magnitude 7.1 earthquake broke nine submarine cables between Taiwan and the Philippines, cutting connections between southeast Asia and the rest of the world.
Internet links were thrown out in China, Hong Kong, Singapore, Taiwan, Japan and the Philippines, disrupting the activities of banks, airlines and all kinds of email users.
Traffic was rerouted through other cables, but it took 49 days to restore full capacity....
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