New Delhi, October 6
Apart from the contentious border issue, economic and trade cooperation will be high on the agenda when Prime Minister Manmohan Singh holds talks with Chinese leaders during his visit to Beijing in the fourth week of this month.

China is learnt to have proposed to India that an announcement about launching negotiations on a Regional Trading Arrangement (RTA) between the two countries could be made during the PM's visit. The proposal was made at the 6th India-China strategic economic dialogue held in Beijing on September 25-26.

When Chinese Premier Li Keqiang visited New Delhi in May, the proposal for an RTA for the first time had found a mention in the joint statement issued by the two countries.

Ever since a joint study group set up by the two countries in 2007 recommended that an RTA would be a win-win situation for both the countries. Beijing has been pressing New Delhi to launch negotiations on the pact. However, New Delhi's fear is that the RTA would increase the trade gap in China’s favour. India has taken note of some steps taken by China to reduce the trade imbalance in recent months, but Beijing has still not facilitated easy access for Indian IT and pharmaceutical companies to the Chinese market.

India and China had in 2010 set a new bilateral trade target of $100 billion to be achieved by 2015. Though the bilateral trade grew from $61.74 billion in 2010 to $73.9 billion in 2011, it declined to $ 66.57 billion in 2012.

Manmohan Singh’s trip to Beijing is significant as this will the first time since 1954 that India and China will exchange visits at top level during the same year.

The proposal for Chinese industrial parks in Uttar Pradesh, Andhra Pradesh, Maharashtra, Gujarat and Karnataka will be discussed when the two PMs meet. The key objective is to attract Chinese investment in Indian infrastructure.

Sources said the parks would facilitate Chinese companies which export electronic and other goods to India to establish their service centres in the country. However, the country’s security concerns would be kept in mind while allowing Chinese companies to set up their units in India.

China is also pressing India to initiate steps for the formation of the ambitious Bangladesh-China-India-Myanmar economic corridor to consolidate trade links among the four nations. Beijing had recently held talks with both Bangladesh and Myanmar to give a concrete shape to the proposal. However, India believes a progress on the proposed trade corridor could be made only after India was able to resolve its own transit issues with Bangladesh.

New Delhi, October 6
Three oil PSUs have moved the Supreme Court seeking modification of its earlier order that the Aadhaar card is not mandatory and no person should suffer for want of it in getting benefits of government schemes.

IOCL, BPCL and HPCL would mention the matter on Monday for urgent hearing before a Bench of Chief Justice P Sathasivam and Justice Ranjan Gogoi which has already listed a similar plea of the Ministry of Petroleum and Natural Gas (MOPNG) for consideration on October 8.

Khushbu Jain, counsel for the PSUs, said Additional Solicitor General Nageshwar Rao would mention the plea before the Bench as the earlier order has created "serious doubts, confusion and uncertainty" in the minds of citizens who have already enrolled for the Aadhaar card to avail the Direct Benefit Transfer for Liquefied Petroleum Gas Consumers (DBTL) scheme to get subsidised cylinders.

The DBTL has already been implemented and has been running successfully in 54 districts and the old system of subsidy has been stopped, the PSUs said, adding that the firms are in process of implementing the scheme in 235 other districts.

Earlier, the apex court agreed to hear on October 8 the plea of the MOPNG that has sought "clarification or modification" of the order for continuing with its DBTL scheme which can be availed only by those persons who have secured Aadhaar cards. — PTI

New Delhi, October 6
Under attack from the Opposition, including the Left, for his remarks that the government was ready to privatise Air India, Civil Aviation Minister Ajit Singh today backtracked saying it has “no intention” to do so.

“This government has no intention to privatise Air India. After this package of Rs 32,000 crore, the government will not give any more money. Air India will have to fend for itself,” Singh told a news channel.

“Employees and the management of Air India will have to understand that aviation is a competitive market. The margins are thin and it’s a capital intensive industry,” he said.

The change of stand by the minister came amid mounting pressure by the Opposition parties, which accused him of selling public asset without bringing a civil aviation policy. — PTI

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Most people think of mutual funds as only being equity. In reality, mutual funds have a variety of solutions like equity funds (large cap, mid cap, diversified, thematic, etc.), fixed income funds (liquid, short term, dynamic, government securities fund, FMPs etc.) and hybrid funds (balanced & MIP) to offer investors. Each of these is a vehicle to help investors achieve their financial goals. However, to invest correctly investors first need to define their goals and then design the best route to get there.

Mutual funds mix

Here are a few questions to help readers identify the correct mix of mutual funds to have in their investment portfolio.

Where am I? Where do I want to reach?

As you start planning your finances, it is important that you take stock of your current portfolio and asset mix. Think again — what instruments are you currently investing in? What is the proportion of your existing investments between equity, fixed income and gold? Then, note down your key financial goals and target value of each goal. Your goals can be — buying your dream home, saving for a new car, saving for your child’s higher education or even marriage expenses.

By when do I want to get there?

Now, assign a timeline to each goal so you are clear about the time required to reach it. This action has an important bearing on the type of fund to choose, as equity funds are best for long-term goals (10+ years), hybrid funds for medium-term goals (4-8 years) and conservative fixed income funds for goals that fall within the next 2-3 years.

What is my goal amount?

Take target value of each goal and increase it by a reasonable inflation rate to arrive at the amount you will require to successfully fulfill your goal. For example, if you are saving for a car that costs about Rs 5 Lakh today, with a horizon of three years, assuming 5 per cent inflation in car prices, you should target having around Rs 5.79 lakh at the end of three years.

How much can I invest?

Generally, people are used to making investments in lump-sum amounts (FDs, insurance premiums, etc). In most cases, lump-sum amounts meant for investing are collected by people over a period of time. People need to realise that while they spend money on a regular basis, they must also start investing on a regular basis. Systematic investment plans (SIP) are a great way to begin regular investments. SIPs are not only easier on the wallet and reduce the risk of one-time lump-sum investing; they also encourage disciplined savings approach.

For SIP investments, check if you are saving enough by assuming a reasonable growth rate based on past long-term average SIP return. For example, large cap funds have given 14-15% SIP returns in last 10 years. Balanced funds have delivered 12.5% while MIP and income funds have a SIP return of 7.5-8%.

If your saving is not enough, try increasing the SIP amount little by little every year to help bridge the gap.

What is my risk appetite?

While it may be attractive to allocate your investment money in the asset class known to offer the highest return (i.e. Equities), it is very important to invest according to your risk appetite. This depends on multiple factors such as your age, your current savings, time to goal date, etc. Thus, someone who is saving to buy a car after one year will have a more conservative investment mix compared to someone who is saving for his retirement after 20 years.

Do I need a combination of multiple funds and facilities?

Investors need to understand the use of options like systematic investment plan (SIP), systematic transfer plan (STP) and systematic withdrawal plan (SWP) to best manage their investments. Thus, saving for a long-term goal like retirement, it is ideal to use SIP in equity, which can then be incrementally moved to low-risk fixed income funds using STP as the retirement date approaches. Post retirement, the amount can be withdrawn for meeting expenses using SWP.

Last but not the least - it is important to choose a dependable investment partner! After you are clear on the type of funds you need to invest in, look at the track record of the funds in that category. Choose funds that have a long-term record of consistent performance. If required, use the services of an investment advisor, who can help you plan your investments to meet your financial goals!

The author is Co-Chief Investment Officer, Birla Sun Life Asset Management Company. The views expressed in this article are his own

You see a smartphone, are tempted to buy it, till the shopkeeper tells you the price – Rs 30,000. You start turning away and the shopkeeper sees a lost sale so he unleashes his brahmastra – Sir, you just pay Rs 1 by credit card now and pay Rs 2,500 for 12 months – total Rs 30,000 so zero interest cost to you. Now, this looks attractive to you and you whip out your credit card to buy it.

Now, imagine the alternative scenario – as you turned away after hearing the price, the shopkeeper says, “Sir, you can buy it for Rs 27,000 instead of Rs 30,000.” That interests you, but you don’t have the ability to pay Rs 27,000 in one shot. Sensing this, he offers easy instalments of Rs 2,500 per month for 12 months on your credit card with down payment of just Rs 1. You demur. You are paying total Rs 30,000 for equipment that costs Rs 27,000 and that means you are paying an “interest” of Rs 3,000.

Now in both scenarios, the phone was the same and the payment required by you was Rs 2,500 over 12 months (total Rs 30,000). The only difference was that in the first case, you were told the price is Rs 30,000 (and hence you thought you are paying zero per cent interest) but in the second case you were told the truth – the product is priced at Rs 27,000 and you demurred from paying “interest” of Rs 3,000. Our “irrational behaviour” is the subject matter of many popular books on behavioural economics and it is exactly this irrational behaviour of consumers that consumer durable manufacturers have always thrived on and the sales based on the first alternative are pretty high. Remember the same product with a “50% off sale” will sell better as compared to where the same item is sold at its true price which anyways is 50 per cent of the so called “sticker price”.

About 10 years ago, the Reserve Bank of India (RBI) attempted to have transparency in this market when first circular on the subject was released, but it was not enforced. The current circular has more details and has adopted a stricter tone which seems to indicate that this time the RBI is likely to crack the whip on this matter. If it does, then apart from the regular white goods or brown goods the car loan market will be shaken up as it has large direct selling agent (DSA) commissions which are used to distort the interest rates against the less savvy consumers (unfortunately the majority) .

Given how consumers react to transparency, this will clearly depress the sale of these manufacturers. However to the extent that the consumers are prevented from buying something just because “cheap” finance is available, the RBI’s push for “transparency …” cannot be faulted. The RBI’s premise that the consumer should not suffer just because he is not financially savvy cannot be faulted.

In fact, this step will appear more credible if it take this crusade for transparency to benefit even inert consumers to several other fronts more particularly the home loans where even after the so called transparent “base rate” mechanism ushered in July, 2010, some old consumers who took the loan in 2010 are paying at least 1 – 1.5% more than newer consumers. After all just providing a costless exit (the no prepayment regime) only benefits the more savvy consumers and only a strict enforcement of “it is the responsibility of the banks, who are or may be using their good offices to get the better bargain, to make the customers fully aware of these benefits and also pass on the benefits to them fully and indiscriminately while sanctioning loan for the purchase” mentioned in the recent zero per cent circular will benefit even the “inert” home loan consumers who have much larger amounts at stake then the consumer durable buyers who are sought to be protected by the new notification.