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Monday, September 23, 2002,
Chandigarh, India  
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Excellent
time to invest in real estate
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New options from LIC
Disinvestment
policy hurts sentiment
Specific
location for shelf life details must
Joint Housing loan
FIIs, MFs net sellers
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Excellent time to invest in real estate Ludhiana People are moving outwards
With the city limits spreading to about 10 km in every direction, one interesting factor that has emerged is that people are moving outwards for purchase of residential properties and converting the existing properties in the heart of the city into commercial ventures. Interestingly, while most of the properties in the city are going abegging, select pockets in the south and south-east have shown lot of buying interest in the last two or three months. Commercial properties too have generated a considerable interest among
buyers.
Real-estate transactions are limited to select area
The slight movement in the real estate business in recent months has been focused to a few new colonies on the Ferozepur road and the Pakhowal road due to lucrative housing loans being offered by most private banks on reduced interests. "While some residential plots have started commanding a price of up to Rs 4500 per square yards in some select colonies from around Rs 2800 four months ago, by and large the recession in the real estate business continue", says Mr. Vishal Sood, a local real estate agent.
Properties have good price but no buyers
In most parts of the city, properties command a good price, but there are hardly any buyers, despite the fact that in India investing in property is still considered to be one of the most lucrative and safe. While, he and most other city based property consultants claim that the commercial properties are not as badly affected as residential properties, but most fail to explain why a large number of commercial complexes have failed to get even a lukewarm response. Several commercial complex in the city were/are in a semi complete state.
No silver lining in sight
"Nothing drastic is expected that will alter the scenario in the near future", says Mr K.L. Chhabra, President of the Punjab Builders and Colonisers Association. He strongly advocates that this is a buying time and people must invest in low priced properties that are on the periphery of the city. His logic is simple "what appears far today will become central in a few years. Kitchlu Nagar used to be deserted 20 years ago, but has prices sky-rocketing today". He enforces what others say by adding that one in every four of the 100 odd properties that get registered each day is for a economically priced property in the newly developed areas.
Commercial houses relocated
Ludhiana's commercial hub, the Chaura Bazaar has seen a massive relocation by shopkeepers and businessmen in the recent past due to traffic congestion to mostly areas like the Mall Road, Rani Jhansi Road, College Road, Ghumar Mandi and Model Town Extension, where commercial property prices have sky rocketed. Most business houses like Sant footwear, Jain and Dhir Jewellers, etc now have their retail outlets in these areas, which most of their clients find much more approachable as compared to the narrow inaccessible lanes in the old city. This has led to a commercial property boom in these areas, while in proportion not affecting other parts of the city so much. Construction due to the "elevated road project" on the G.T Road has also led to some relocations from this area.
Deals include higher amount of white money
Mr Preetam Singh Bhairowal, Chief Patron Punjab Colonisers and Property Dealers Association feels that the real estate market has not turned around yet because of the minimum rate of registrations fixed by the administration which is much beyond the expectations of the property dealers association. Higher minimum registration rate relates to bigger transaction in white money that is avoided to save registration fee. Private sources feel that at present the ratio of white and black money exchanged in a property sale is 2:3 (two parts white money and one part black money). Much larger amounts of black money were exchanged prior the administrations fixing of minimum registration rates.
The most sought after areas
The most sought after area for residential purpose at present at Bhai Randhir Singh Nagar, Shaheed Bhagat Singh Nagar, Raj Guru Nagar and Rishi Nagar. Besides Ragunath Enclave, Agarnagar Enclave, Madhuban Enclave, Ranjit Nagar, Sunil Park, Mahavir Nagar, Guru Amardass Nagar, etc are musch sought after as the southern and south-eastern areas of Ludhiana city are relatively pollution free. Eastern Ludhiana like Samrala Road, Delhi Road, etc have industries in the neighbourhood, while north — western area like the Tajpur road, Jalandhar Road, etc are low lying besides being the dairy hub and hence not preferred. Most new development is now taking place in the southern parts of the city. This includes the coming up of the PUDA approved colonies like the Basant Avenue, Sarabha Nagar Extension and South City.
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New options from LIC DESPITE tremendous availability in terms of opportunities to secure a safe post retirement phase in the form of savings and investments offered by native companies and their foreign tie-ups — the Life Insurance Corporation (LIC), which is the oldest players in the insurance sector, continues to remain a hot favourite commanding a market share that is manifolds larger than all the new entrants in the insurance business put together. Aware of the impending competition, the LIC has pulled up its socks and introduced some new pension schemes and updates its terms to retain its large customer base. The LIC is further expected to come out with lucrative offers for its existing clients and potential policyholders over the next two months. But at present too, the LIC offers three new schemes that are aimed towards pension for those who want some additional income in the post retirement era. These are the Jeevan Akshay, the New Jeevan Suraksha and the New Jeevan Dhara fall under the schemes that are aimed at the pension benefits. Jeevan Akshay The Jeevan Akshay is aimed at all those people who have already attained the age of 40 but are yet to complete 79 years of age. A minimum promised annuity instalment is Rs 250 with an investment of Rs 25,000. The scheme guarantees an annuity for life and is thrown in with a ‘return of purchase price’ clause. As per the details of the scheme the LIC offers an increase in annuity at a simple rate of interest of 3 per cent annually. The company also has a provision for 50 per cent of the annuity to the spouse of the annuitant for life on death of the annuitant The policy holder has the option to receive the pension in yearly, half-yearly, quarterly or monthly instalments, subject to a minimum annuity of Rs. 250. However, if the annuity payable under a particular mode is less than Rs. 250, then the allowable mode should be so altered such that the minimum annuity payable is Rs.250. On this scheme the LIC offers incentives for high purchase price that vary from time to time. The negatives of the policy are that LIC offers no loans to policyholders under this plan and also the policyholder cannot get any money on surrendering the policy. New Jeevan Suraksha The New Jeevan Suraksha is aimed at helping out the policy holders in saving taxes while they earn and secure a pension after they retire. All premiums paid up to Rs 10,000 is fully exempt from income tax under section 80 CCC. Unlike Jeevan Akshay where a person should be at least 40 to enter the scheme, the New Jeevan Suraksha is available to all between 18 and 65 years of age with the minimum vesting age being 50 and the maximum 79. Barring a few exceptions, terms of payment are similar in most LIC policies. Under the scheme the annuity rates will be that available under the version of the New Jeevan Akshaya Plan current at the date of vesting. A rebate of 3 per cent will be available on the purchase price of the New Jeevan Akshaya Policy. Option for the annuity type must be exercised at least 6 months before the date of vesting. New Jeevan Dhara The New Jeevan Dhara too like the New Jeevan Suraksha is aimed a saving while earning and an annuity plan or the post retirement period and is open to all between ages 18 to 65. The policy offers a term rider option, which becomes operative in case of death of the policyholder. The term assurance sum assured along with all premiums paid up to the date of death accumulated at the rate of 5 per cent annually compounding will be paid to the nominee. When the policy is not in-force, only return of premiums with interest will be available. The LIC has kept a rider that the interest will be decided by it from time to time. The term rider option is available only on the Annual Premium Plan. New clause added A new feature added by the LIC is that after at least two full years premiums are paid in respect of the above policies, any delay in payment of subsequent premium will not make the policy wholly void. “But the amount of Notional Cash Option shall be reduced to such a sum as shall bear same ratio to the original, as the number of premiums actually paid shall bear to the total number of premiums originally stipulated for in the policy. The policy so reduced will thereafter be free from all liabilities for payment of the within mentioned premiums but shall not be entitled to participate in future profits”, according to the corporations regulations. No loan options A down side of the LIC annuity plans is that it offers no loan options to the policyholders.
NSG
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by J. C. Anand Disinvestment policy hurts sentiment SOME adverse reports have given a setback to the market sentiment. During the last fortnight, the Sensex came down from 3170.33 points (on September 6 to 3019.40 points (on September 20), with a loss of 130.93 points (4.75 per cent). Market capitalisation has also gone down. When the Union Cabinet decided to defer the selloff of two major oil companies (BPCL and HPCL) to December and left and final decision to the Prime Minister, the market declined sharply. BPCL and HPCL crashed to eight-month slows. The PSU stocks collectively lost Rs 8668 crore. There is no doubt that it was a major setback to economic reforms. Inside the government, there is opposition to disinvestment in BPCL and HPCL from the Oil and Natural Gas Minister, Ram Naik and the Defence Minister, George Fernandes. The latter has opposed it on the grounds of security concerns for the country. Last week when the market closed, BPCL and HPCL have lost about 50 per cent of their market price as it was a fortnight back. An analysis shows that many of the portfolios of leading mutual funds were heavily loaded with this two scrips. According to Economic Times, about 90 per cent of the diversified equity funds had HPCL before the Cabinet’s decision to defer the disinvestment in these two major oil companies. HPCL was present in the portfolios of 63 mutual funds. There is also a lot of opposition gathering up against the disinvestment in Nalco. Apart from the Government of Orissa and Orissa public, even the Congress party has raised this slogan “No disinvestment in Nalco”. It is not surprisingly that the market price of Nalco has moved down from Rs 120 to Rs 94. Disinvestment in Balmer Lawrie is, however, moving apace. Response from prospective buyers of government-held equity shares is good but there are not many big names in the prospective buyers’ list. It appears that the sale price of equity shares in this PSU may not be much higher than the present market price. It has already come down from Rs 104 per equity share (of Rs 10 face value) to Rs 80. Another disturbing news is that of a major setback to India’s credit worthiness has down-graded India’s long-term local currency rating on the ground of poor finances of public sector and India’s growing debt burden. The long-term sovereign local rating has been lowered to ‘BBB-’. This rating places India in the category of junk-bond status category and denoting a high risk of default. The Finance Ministry has, however, denied any negative impact of S&P’s rating on India’s economy. It may also be noted that S&P has affirmed ‘BB’ long-term and ‘B’ short-term foreign currency sovereign rating for India. India has large foreign currency reserves and the flow of foreign capital has not much slowed down. Due to down-rating of local currency credit rating. India may have some difficulty in raising loans in the foreign market. The stock market is likely to move within a narrow range during this fortnight. By mid October, the 2nd quarter results are likely to be announced by the corporate sector and the nature of these results would determine the nature and pace of the stock market. It is, however, almost certain that market is not likely go down from the present readings of the stock market Indices. A market survey conducted among mutual fun executives, indicates that the market is likely to move close to 4000 points on the Sensex next year. UTI, Master share has declared 10 per cent dividend for 2001-2002 and record date for the receipt of the dividend has been fixed on October 12. The book closing would be from October 12 to 15. The net asset value (NAV) stands at Rs 11.36 (as on September 18, 2002). |
by Pushpa Girimaji Specific location for shelf life details must TO prevent the sale of stale and unsafe foods, the Health Ministry amended the Prevention of Food Adulteration Rules and made it mandatory for all food packages to indicate the shelf life in addition to the date of manufacture or packaging. And this was brought into effect from September 1, 2000,. Three years hence if you see the way it is being implemented, you wonder whose interest the enforcement agencies are protecting — consumers or manufacturers. As per the Rules, while food packages with a relatively longer shelf life need mention only the month and year of manufacture and expiry, packed foods with a short shelf life should also mention the date, besides the month and year of manufacture. The best before date should also specify the number of days within which it is best consumed. However, if one were to look at the food packages displayed on shop shelves, what becomes apparent is that (a) there are any number of packages that blatantly violate the Rules and do not carry the required information at all. And (b) even where packages give the required information, the attempt, in most cases, seems to be to conceal rather than reveal the all-important information on the shelf life of the product. Most packages, for example, say the food is best consumed within six or 12 months from the date of manufacture or packaging. So, to calculate the shelf life, one has to know the actual date of manufacture or packaging and it is only logical that this is displayed just above the “best before” information. But on most packages, it is not so. As a result, one has to spend a considerable amount of time searching for these two pieces of information on the package, and believe me, it is not always easy to find them. One may be on the side of the carton, and the other at the bottom or top of the carton or pack. And even here, many times the date of manufacture is embossed and is extremely difficult to decipher. Or sometimes it is stamped and the ink is so light that one has to really struggle to make sense out of it. And different manufacturers have different ways of indicating the month and year. In short, firstly there are any number of manufacturers and packers who are not complying with the Rules at all. And there are those who are complying, but in such a way that the very purpose of the Rules — that is to give consumers easy access to the information on shelf life — is defeated. The amendment should have simply provided for manufacturer indicating the “best before” date below the date of manufacture, as in the case of medicines. For example, if the product is manufactured in September, 2002, and its shelf life is 12 months, then the package should indicate the “best before” date as September, 2003. This is the simplest and best method of indicating the shelf life. Instead the amendment has unnecessarily complicated the matter by giving manufacturers the option to say instead that the product is “best before” so many months from the date of manufacture or packaging, leaving it to the consumer to check the date of manufacture and calculate the shelf life. One fails to understand the logic behind this. Sloppy implementation of the Rules have also contributed to the poor display of shelf life information by manufacturers. Rule 36 of the Prevention of Food Adulteration Rules, for example, says the types used for declaration will be of such dimension that it will be conspicuous to the person reading the information. If consumers are to benefit from the amendment, then the government should ensure that (a) all packages carry the required information on shelf life and (b) that it is indicated in a manner that tells consumer the shelf life of the product without any difficulty. So first and foremost, the Health Ministry should delete from the Rules the various options provided to manufacturers to display the shelf life. The rules should provide for only the date of manufacture and below it, the “best before” date, to be specified . The Rules should also indicate a specific location on the package where this information is to be displayed. The government should also insist on the information being given in a manner that is easy to read. The declaration on the date of manufacture and shelf life should also be highlighted with a sorrounding line so that the consumer’s attention is immediately drawn to it. And there should be stringent enforcement of the Rules by state governments. In short, the Health Ministry and the state enforcement agencies should together ensure that the Rule facilitates and not hinders easy access to information on shelf life. |
R.N. Lakhotia Joint Housing loan Q: I and my wife have taken a joint housing loan. The principal amount and interest amount of it for the F.Y. 2001-2002 are Rs 48,000 and Rs 33,000. Now my question is whether tax rebate of both amounts (P + I) can be taken by both of us separately. It yes, then please state the rebate amounts for each of us. — S.K. Ahuja, Ambala City Ans: On the facts stated by you, the benefit of tax deduction as well as tax rebate on principal amount repayment can be taken advantage by you only in respect of payments made by you. Thus, you cannot enjoy tax benefit on both the payments. However, your wife can avail herself of the benefit separately in respect of payments made by her. Safe investment Q: My annual salary for the financial year 2002-2003 is likely to exceed Rs 1,50,000 and may be round about Rs 1,55,000. Please advise me investment with rebate under 80CCA i.e. 100 per cent deduction from taxable income. I will get retirement in February 2005. Keeping this in view I want short term safe investment alternatively I may withdraw from the same i.e. premature payment after 4-5 years. In case of insurance premium may be on annual basis but not more than Rs 5000 p.a. Obviously I want to get rebate u/s 88 @ 20 per cent and also tax slab should also be 10 per cent & 20 per cent instead of 30 per cent i.e. above Rs 1,50,000. LIC pension plan Ans: It is recommended that you should make investment in Pension Plan of the LIC so that you can avail yourself the tax rebate u/s 80CCC of the Income-Tax Act, 1961. Another advantage for you is that if you make investment in the pension plan you get tax deduction of 100 per cent from your income thereby bringing down net taxable income to below Rs 1,50,000 so that you can come within the tax slab of 20 per cent only. Q: Please guide in the following case. Salary for the year is Rs 98000, other income is Rs 42000 (including bank interest of Rs 10000), PPF, insurance & PF is Rs 30000. Tax calculated by me is = Rs 98000 - 30000 = Rs 68000 + 42000 = 1, 10, 000 less Rs 9000 (80L) = Rs 101000 Tax on 101000 = 9200 + Surcharge 184 = 9384, Less Rebate under Sec. 88 on 30000 @ 30% = 9000. Hence tax payable is 384 (Rs 384) (for the F.Y. 2001-2002) A.Y. 2002-2003. Sir, is it correct? — S.K. Aggarwal, Amritsar Ans: Yes, your calculation is correct. However, for next year the Deduction u/s 80L has been increased to Rs 15,000.  |
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FIIs, MFs net sellers Mumbai, September 22 FIIs were net sellers in equities for three days. They bought and sold instruments worth Rs 82.7 crore and Rs 164 crore respectively, thus netting their highest outflow of the week at Rs 81.3 crore ($ 16.7 mn) on September 20. The foreign funds were net buyers to the tune of Rs 13.9 crore ($ 2.9 mn) and Rs 29 crore ($ 6 mn) on September 17 and 18 respectively.
PTI
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Inflation rises New Delhi, September 22 |
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