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Overall FY12 deficit may touch 8.6% of GDP
Soaring prices dull gold’s lustre
2G: CBI to oppose bail for executives in SC
Radia quits PR, Tatas appoint Rediffusion
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Tax Advice
personal
finance
Markets to remain volatile this week
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Overall FY12 deficit may touch 8.6% of GDP
New Delhi, October 30 According to global research firm Macquarie, consolidated fiscal deficit of the country including off-budget items like food, oil and fertilizer is likely to be around 8.6 per cent amid slowing revenue growth and "lack of expenditure management by the government". Macquarie further warned the country's fiscal deficit already remained high and any further slippage can increase the risk of "credit rating downgrade and loss of business confidence". It said the Indian government needed to adhere to the path of fiscal correction and curtail expenditure growth to create a room for private investments. The overall fiscal deficit in FY2010-11, excluding the 3G spectrum receipts stood at 9 per cent, it said. "This, in an environment of weak global capital markets, could result in higher cost of capital and further crowding out of private investments and thus slower growth," the report said. — PTI
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Soaring prices dull gold’s lustre
Mumbai, October 30 The auction that attracts thousands of devotees ever since it began in 2009 saw just 34 of the 176 items on offer finding takers. "We could raise less than Rs 5.5 lakh while the proceeds last year were almost double," says Nitin Kadam, a trustee of the shrine associated with the auction. Of these only one item, a jewelled bracelet alone was valued at Rs 1.23 lakh. Items remaining unsold include some necklaces and waistbands encrusted with semiprecious stones. According to Kadam the temple authorities are planning to hold another auction by the yearend. “Gold prices have gone up, so people are only buying small items," he said. Apart from the Diwali auction, the shrine organizes auctions every few months where items made of precious metals are disposed of. According to officials of the Maharashtra government, which is the shrine’s custodian, the value of gold, silver and other jewellery in the Siddhivinayak temple's vaults have been valued at nearly Rs 10 crore. Prior to 2001, gold items donated by devotees were melted and turned into bars for depositing in the government treasury. However this practice was discontinued after it was discovered that people were willing to pay a premium over the market rates for pieces of jewellery considered “blessed”. The demand for such gold items remained healthy till early last month, according to reports. The Siddhivinayak Temple is using the proceeds of the auction to set up medical centres across Maharashtra. Buyers, particularly for the high-value items at these auctions, comprise mainly of businessmen and their families belonging to the Gujarati and Marwari communities. Soaring interest rates has dulled business sentiment and many of them are cutting down on discretionary purchases, according to reports. Regulars who visit the shrine at least once a year to buy some gold jewellery are simply buying less or not buying at all. |
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2G: CBI to oppose bail for executives in SC
New Delhi, October 30 Sources close to CID confirmed it has instructed the lawyer to oppose the plea of corporate executives — Unitech Wireless MD Sanjay Chandra, Swan Telecom director Vinod Goenka and Reliance’s Anil Dhirubhai Ambani group executives Hari Nair, Gautam Doshi and Surrendra Pipara — who have approached the SC for bail. Earlier on October 24 the CBI did not oppose the bail plea of Kanimozhi, Kalaignar TV MD Sharad Kumar, directors of Kusegaon Fruits & Vegetables Asif Balwa, Rajiv Agarwal and Bollywood producer Karim Morani before a special CBI court here. It had, however, opposed the bail plea of Swan Telecom promoter Shahid Balwa and A Raja's former private secretary RK Chandolia in the trial court. Monday’s proceedings in the Supreme Court assumes significance as the apex court had earlier said the suspects in the 2G scam can seek bail after framing of charges against them which was done on October 22. All the suspects have pleaded they had not done anything wrong and refuted the charge of drawing illegal benefits in allocation of 2G spectrum. — PTI |
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Radia quits PR, Tatas appoint Rediffusion
New Delhi, October 30 Following this decision, the Tata group has appointed Rediffusion to handle the public relations and public affairs of the Tata group companies. Tata Sons said in a statement issued Sunday this would be effective from November 1 and follows the expiry of the contract with Vaishnavi Communications. “To give precedence to my personal priorities of family and health, I’ve decided against renewing any client mandates and to exit the business of communications consultancy. It’s a painful decision, taken after much consideration and consultations,” Radia said in a statement. Radia had been mired in controversy in the 2G scam initially when it broke out. She was in the media glare last year when leaked tapes of her conversations became public. She was questioned by the CBI but no charges were filed against her and was named as a witness by the agency. Reacting to the development, Tata Group chairman Ratan Tata said: “The Tata Group respects the personal wishes of Niira Radia in not renewing any client mandates. She has built Vaishnavi from scratch into the company it is today”. |
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Tax Advice Q. I had filed my income tax returns for assessment year 2010-11 as under: Income after rebate u/s 88C/50G, etc: Rs 3,31,410; exemption up to Rs 2,40,000: Rs 2,40,000; net taxable income: Rs 9,14,10; tax: Rs 9,140 + education cess Rs 275 + Rs 9,415. However the income tax officer concerned calculated my tax at Rs 33,140 and Rs 36,282 and gave rebate on Rs 2,40,000 (Rs 24,000), with the balance tax being Rs 12,650. My query is: Is the amount of Rs 24,000 also a rebate and is it "income rebate" and not "tax rebate"? A distinction has to be made between the two. Earlier it used to be standard deduction and now as tax is nil on Rs 24,000 it is the same deduction and not tax deduction. I hope you will help to clarify the legal points in this matter. - BK Duggal A. The tax computed by you is not correct as, for the assessment year 2010-11, tax at the rate of 10 per cent is chargeable up to Rs 3,00,000. On the balance amount the 20 per cent slab is applicable. Accordingly, the amount of chargeable tax would work out as under: Rs 60,000 @ 10%: Rs 6,000; Rs 31,410 @ 20%: Rs 6,282.00 = Rs 12,282; education cess: Rs 368; total: Rs 12,650. The computations made by the income tax department are therefore correct. The amount of Rs 240,000 is with reference to the maximum limit up to which it is not chargeable and is not a rebate in the real sense. Inheritance tax
Q. Kindly elucidate the tax liability of someone (say, Mr A) who inherits a few lakhs of rupees as the nominee in bank/post office accounts and house properties under a will after the demise of his father. — Bharadwaj A. I hope Mr A who has received the amount in bank/post office accounts after the demise of his father is the only legal heir entitled to inherit such deposits. The reply to your query is based on the said presumption. Mr A, who has inherited the amount of deposits in bank/post office accounts as well as house properties, would be liable to pay income tax on the income arising on such deposits as well as from the house properties. In case the properties are covered under the provisions of the Wealth Tax Act, 1957 for eligibility of wealth tax, he will also be liable to pay wealth tax in case his net wealth exceeds Rs 30 lakh. Gift to relatives
Q. I had read some time back in The Tribune that the maximum limit of money to be gifted to relatives such as wife, son, grandson and granddaughter has been increased from Rs 50,000 to Rs 1,00,000 during AY2011-12 and afterwards. What is the correct figure? — Ram Sarup A. The amount that can be gifted to a person up to Rs 50,000 need not be a relative. There is no limit prescribed for the amount to be gifted to wife, son, grandson and granddaughter. A person can therefore gift any amount to these persons without any limit. However, any income arising from the amount gifted to wife or daughter-in-law would be clubbed in your hands. The amount of income arising from such gifted amount to a minor grandson and/or granddaughter would be clubbed in the hands of either of their parents whose total income is greater. |
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personal
finance
It was yet another depressing credit policy dominated by another futile attempt to control food price inflation through monetary policy. There was one silver lining however: The long awaited freeing up of savings bank rates.
At the micro level it is a wonderful development - most banks are profitable because there is a huge amount of practically free money lying in savings accounts. The banks can earn a good return on this money which is why in any bank's priority list CASA (current/savings account) ranks at the top. Yes Bank was the first to respond by increasing savings account rates to 6 per cent from 3.5 per cent. This is good news for us, but not so good news for banks - they will have to shell out more to be able to keep your money. Small and new banks can entice you away from you current banker by giving a higher interest rate. The stock market responded by selling off stocks of leading state-owned banks that are seen as slow and therefore most likely to be hit by aggressive smaller banks. But is this really true? Most of us keep money in savings account to manage short-term needs - that electricity bill that must be paid 15 days after the salary is received or that EMI installment that falls due on the fifth of each month. It is highly unlikely that for 2 per cent or 3 per cent even if you have an average balance of Rs 100,000 (that is, between Rs 200 and Rs 250 more interest in a month) someone will change a banker with whom they have a variety of service requirements, including perhaps a conveniently located ATM or a locker. A few very high net worth account-balances may move on the back of changes in interest rates or changes in bank charges, but usually the impact of such initiatives have been tiny. As a shareholder don't be in a hurry to sell stocks of public sector banks and buy those of private banks: I have found that most of the former tend to respond very fast if there is a material impact, but are unlikely to make a change unless they see a visible change in customer behaviour. They have the bandwidth and the staying power in a battle of muscle and have less sensitivity to loss of revenue in the short term if it comes down to a battle of interest rates, but - more importantly - they are likely to gauge the inertia of people far better and make a calculated call not to lose revenue. There is one possible scenario, however, which could favour banks that pay a higher rate of interest. People with accounts in multiple banks will keep more float in the ones that offer a better rate, if they are not tied in with a wide variety of automated transactions. What I see as a more likely scenario is a battle between the newer and smaller banks in which they may actually all end up hurting themselves. We saw this happen in the mutual funds industry when the advent of a lot of new players saw brokerages and incentives going through the roof. The big boys were able to outspend the smaller ones strategically without hurting themselves, while most of the so-called aggressive startups just burnt themselves out. In fact if you can really plan your float well there is a far better option than keeping money in a savings account - use liquid funds that will not only give you a better interest rate, with better tax efficiency, but - if you know your requirements before noon on any day - can get your money back into your savings account by afternoon. Banking is about a wide variety of services and cost/revenue on one's float is a very minor factor. Choose your banker based on his services and use liquid funds to make your money work for you. However, this little measure has a greater symbolic significance. At a time when the world suspects our bureaucrats are using the global economic crisis as an excuse to abandon the path of economic progress, it is a welcome "quick-single" for our side. The recent economic crisis, like the Asian crisis of 1997, gave Indian bureaucracy (especially the Reserve Bank of India) an excuse to pat themselves on the back and try to muscle us back on the path of the license-permit raj. I am glad there is a little hope they will not achieve a complete rollback to the 1960's under the pretext of improving systemic safety. Therefore the freeing up of interest rates to me is a small step for economic reforms but a giant step for reformists. The author is co-chairman of Mi India Capital Consultancy. The views expressed are his own |
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Markets to remain volatile this week
Fireworks continued after Diwali and we probably had the best week for the year with the benchmark Bombay Stock Exchange Sensex gaining four digits. This upswing had nothing to do with any domestic factors but the apparent settlement of the crisis concerning a potential debt default by Greece. Global markets rallied and India followed. Bullishness in the markets is something no one would complain about. However the moot point is whether the present mood will last or whether it was a flash in the pan. Time will tell, but the one thing that is certain extreme volatility will continue to be the order of the day. In a short Diwali week the Sensex gained a staggering 1019.16 points or 6.07% to close at 17,804.80 points. The National Stock Exchange Nifty gained 310.75 points or 6.15% to close at 5,360.70 points. The broader indices like the BSE 100, BSE 200 and BSE 500 gained 5.62%, 5.32% and 4.97%, respectively. The breadth of the market was poor and the bullish fervour did not did reach the BSE Midcap and BSE Smallcap, which gained much less at 2.67% and 1.97%, respectively. The rally was led by the metal pack and the BSE Metal index rose 9.39% while the BSE Realty gained 8.48%. In individual stocks Hindalco led from the front gaining 16.89% while Tata Steel chipped in with gains of 11.21% Tata Motors gained 15.88% while ICICI Bank rose 7.24% SBI was an exceptional loser with losses of 2.15%. The RBI raised repo and reverse repo rates by 25 basis points but signalled it would not do so in future provided inflation stayed at 7% or below. It sure is a tall order to expect inflation to fall more than 200 basis pts in the next 4 to 5 weeks and sustain those levels. The second thing the central bank did was to deregulate savings bank rates and it appears that we are likely to see savings rates offered by banks to go up by anywhere between 50 and 150 basis points in the near future from the present 400 basis points. Interest rates seem to be on the rise as the treasury bills auction remained undersubscribed and the 11-year bonds have reached a rate of 8.95%. This is considered a risk-free rate of interest. The market in its sharp move on Friday made a huge upward gap. The important thing is that it is almost identical to the gap left in its downward journey on August 5. Coming to the week ahead it appears the celebrations about Europe look a little premature and we could see the stock market correcting and tempering the euphoria of last week. The markets are likely to be circumspect and look for the actual resolution of the crisis and the details of the plan to emerge. Back in India we could see markets moving down in the initial part of the week and then move up if the European resolution happens or further weaken if nothing happens. The BSE Sensex has support at 17,681, then at 17,445, then at 17,166, then at 16,898 and finally at 16,670 points. It has resistance at 17,918, then at 18,175, then at 18,268 and finally at 18,440 points. The NSE Nifty has support at 5,322, then at 5,245, then at 5,163, and finally at 5,178 points. It has resistance at 5,399, then at 5,477, then at 5,521, and finally at 5,591 points. Trade with caution as the market technicals are extremely confusing and at very crucial levels. The author is founder of KRIS, an investment advisory firm. The views expressed are his own
PN: The rates given above are for the initial period only. For the subsequent period, the interest rates vary from bank to bank. * These lenders also have floating interest rate scheme where the interest rates are fixed for the initial few years and thereafter the then prevailing floating rates are applicable. The home loan rates are indicative rates, which may change according to the credit profile of the customer. Source: ApnaPaisa Research Beureau www.apnapaisa.com
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