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Manufacturing key to growth above 6.5%, says RBI
MCX-SX gets nod for currency options
General Motors bullish on Sail’s prospects in India
AI likely to resume key international routes by month-end
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Aviation Notes
Mauritius entities in exit mode
KF lessors denied permission to take back aircraft
Tax Advice
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Manufacturing key to growth above 6.5%, says RBI
Hyderabad, August 5 The manufacturing sector has the scope for creating jobs for millions of people who leave other sectors such as agriculture, RBI Governor D Subbarao said in his keynote address here at Centre for Economic and Social Studies yesterday. His remarks assume significance in the backdrop of dwindling contribution of manufacturing sector to the GDP. India's economic growth rate slipped to 5.3 per cent in the fourth quarter of 2011-12, the lowest in nearly nine years, following poor performance of the manufacturing and farm sectors. During the quarter ending March 31, growth in the manufacturing sector contracted to 0.3 per cent, from 7.3 per cent in the corresponding period of 2010-11. "Every unit of manufacturing needs more credit than for every unit of services output to GDP. And we need to be focussing on manufacturing because you cannot accelerate growth from the current level of 6.5 per cent...without focus on manufacturing," Subbarao said. "You cannot provide jobs to hundreds of millions of people who are released by agriculture sector and other sector unless you focus on manufacturing," he added. Talking about the credit demand in future, Subbarao said India as a structurally transforming economy needs more credit as the focus is shifting towards manufacturing. "Ours is a structurally transforming economy. In a structurally transforming economy, credit-GDP ratio moves up. Secondly, we are going to shift increasingly from services to the manufacturing sector. And, the manufacturing sector is more credit intensive," he said. Replying to a query from the audience, Subbarao said one of the challenges to Indian banking system is to innovate financial products that are long-term in nature which are suitable for infrastructure sector. He, however, said long-term lending in the country may not be possible at the moment as mobilising deposits on a long-term basis would be difficult. According to him, long-term lending in advanced countries is possible due to the participation of pension and insurance funds in lending. — PTI
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MCX-SX gets nod for currency options
New Delhi, August 5 These approvals will enable the exchange to expand its offerings in the Currency Derivatives Segment (CDS) by introducing currency options in the Dollar-Indian Rupee (USD-INR) currency pair. MCX-SX said it held a successful mock trading session on August 4, 2012 and will soon announce the date of live trading of currency options. Currency options are contracts that grant the buyer of the option the right, but not the obligation, to buy or sell the underlying currency at a specified exchange rate during a specified period. For this right, the buyer pays premium to the seller of the option. Currency futures contracts in US Dollar-Indian Rupee, Euro-Indian Rupee, Japanese Yen-Indian Rupee and British Pound-Indian Rupee pairs are already traded on MCX-SX. MCX-SX, whose application for a full-fledged stock exchange was recently approved by SEBI, currently offers trading in only currency futures. It has witnessed a steady and significant growth in currency futures turnover and open interest and continued to maintain its leadership in currency futures with a market share of 43.57 per cent in the last fiscal (FY11-12). — PTI What are currency options?
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General Motors bullish on Sail’s prospects in India
How different has your approach been in India, vis-à-vis the competition? We have taken the right approach in this market in terms of business strategy and competition. Having said this, we are not currently participating in all the key segments of the market. Mini B1, the segment where we have our highest volume Spark and Beat models has seen a sharp de-growth. Beat sales have outperformed the segment overall, driven by strong demand for the Beat diesel and its mileage of 25.44 kmpl. Starting later this year, we will expand into the key Mini B2, small and MPV segments with our new Sail and Enjoy MPV, respectively. What do you feel is the present state of the Indian market and how soon do you think it will revive? The market continues to remain sluggish due to high interest rates, high petrol prices, high commodity prices, nagging inflation and negative market sentiments - there are too many factors to the list. We do expect the market to show some improvement after monsoon and during the festival season, but it's still a difficult call to say where we will wind up growth for the year. I am hoping for something between 6 and 8%. What do you feel is the future of the Indian market and how big it really will be by 2020? The market holds good promise for the long term if the required fundamentals are in place. India is projected as one of the very promising and fastest growing automobile market. We are expecting the total industry to be around 6.5 million units by 2020. As far as passenger cars are concerned, we expect the market to be around 4.5 million units by 2020. You are getting ready to launch some new models. What do you think would be the response to them and could you elaborate on the SAIL and Enjoy? We are planning to launch Chevrolet Sail hatch and notch as well as the MPV Enjoy in the last quarter of this year. Details of the vehicles will be announced closer to the launch of the products. Both these products will be manufactured in India. Sail has already proven itself to be a game changer, even before coming to India. With sales of over 25,000 units in China last month, Sail has become the top-selling vehicle in the world's largest passenger-car market. We're very bullish about Sail's prospects. You have been launching new models in India. How do you see yourself in India over the next few years? It's much of the breadth of the portfolio per se than of continuously updating our portfolio to meet Indian requirements and expectations. The Beat was a bit slow to get started, but we have addressed that with the addition of diesel variant, whose sales are steadily increasing. In fact, last month we sold 5,236 units. Likewise, our entries in Mini B2 and Small were not dieselised at a time when fuel preference shifted dramatically, but we will address the space with the new Chevrolet Sail. When we add the Enjoy MPV, which is entering an entirely new segment, I expect our market share to grow significantly. Presently, which models do you see really building GM's volumes in India ? Beat is generating very good numbers followed by Tavera, Spark & Cruze. The Beat, especially diesel version, was designed for the heart of the Indian car market. The Beat's unique 1.0L diesel engine was developed specifically for India and its numerous awards and growing customer demand are a clear indication that consumers are embracing this highly efficient product. Likewise the Tavera, our traditional workhorse continues to be a strong favourite of both private customers and commercial fleet operators around the country because of its ability to provide reliable, efficient and comfortable transportation despite the toughest road conditions. Cruze was tailored to meet Indian needs in several areas, and continues to be a strong seller in its segment. The fact that Cruze continues to be the best-selling Chevrolet name-plate around the world with more than 350,000 sold so far this year and more than 1.65 million sold since its launch in over 140 countries indicates that there is a strong potential for a global product suitably tailored for local tastes. These and other vehicles like Sail and the MPV, which we plan to launch in near future, should build the volumes for us going forward.
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AI likely to resume key international routes by month-end
Mumbai, August 5 The airline was forced to scale down its international operations massively following the recent two-month strike by a section of pilots. "We will be ready to restart our full international operations by the end of August. We will restore New York, Chicago and Paris flights by then...also resume flights to Hong Kong and Shanghai," an airline official said. Air India will also add more services to the busy Southeast Asian regions by mid-August. — PTI
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Air cargo potential not yet fully tapped
By K.R. Wadhwaney India is one of the handful countries which has not yet fully realised the importance and potential of air cargo. Analysts say what Air India loses on passenger traffic can make it if it gives the needed priority to export and import of cargo. There are airlines which are operating combi-aircraft - one-way all cargo and another way passenger-cum-cargo. This arrangement removes directional imbalances and airlines are surviving and throbbing on this system. Recently, first phase of the new cargo terminal has been commissioned at the Indira Gandhi International Airport (IGIA). When fully operational, the terminal will have double-triple handling capacity. Built at over 70,000 square metres, it is divided into two plots. Cargo analysts believe that soon there will be no backlog. Airport authorities say some airlines have begun operating all-cargo flights and more than half-a-dozen are awaiting clearance to operate flights via Delhi. The new terminal was the need of the hour as the old terminal, built in 1986, was not able to handle growing traffic. There were long queues and perishable articles got badly affected. The new spacious terminal will soon be an ‘international cargo hub of India’. The analysts say this is not enough. They say it can be a rags-to-riches story if the government in general and Air India in particular see beyond passenger traffic. “Cargo is money; it is more money than passengers,” said three internationally renowned air-cargo experts, adding: “A study shows that only 15 per cent expenses are incurred on cargo movement while 80-85 per cent are incurred on passengers”. Reports say British Midland International (BMI) will withdraw operation between Amritsar-Almaty-London and back from October 27. Air India can easily step in so that Punjab’s cargo movement remains unaffected.
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Mauritius entities in exit mode
New Delhi, August 5 The companies whose shares have been sold by various Mauritius-based entities, many of which are units of large global investors, include companies like Yes Bank, Axis Bank, Bajaj Hindusthan and state-run MTNL. These shares have been mostly sold through large open market transactions in the past four months. As per the data available with the stock exchanges, various Mauritius-based entities have sold shares worth close to Rs 3,000 crore, while the total stock purchase made by them since April 1, 2012 amounts to just about Rs 600 crore —translating into a net outflow of over Rs 2,200 crore. This large-scale selling has come at a time when many Mauritius-based entities have come under the regulatory scanner for possible routing of illicit wealth of Indians and NRIs back into the country. Market regulator SEBI has come across numerous Mauritius-based funds during its stock-specific probes in cases of market manipulation, as also irregularities related to IPOs, GDRs, takeovers and insider trading, sources have said. There are fears that many of the Mauritius funds could be related to each other, as Sebi has found some common threads between different entities based out of the island nation. Mauritius-based entities form a major chunk of foreign investors in the Indian market, but most of them have either stopped infusing fresh money or have been selling their investments in recent months. — PTI
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KF lessors denied permission to take back aircraft
Mumbai, August 5 The lessors want the aircraft back as Kingfisher Airlines (KFA) has defaulted on rentals. "AAI has said no...to Kingfisher lessors to allow them to take back six aircraft parked at Chennai airport," sources said. One of the lessors has sent a legal notice to AAI for not passing the releasing order. AAI's contention is that it can not let the aircraft go, as it too has to recover dues of about Rs 300 crore.— PTI |
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No rebate on amount paid for becoming CGHS member
By S.C. Vasudeva Q. I am a Central government pensioner and a taxpayer. I paid Rs 60,000 in May 2011 to become a member of the Central Govt. Health Scheme (CGHS). Kindly advise if this entire amount or how much of it is admissible for IT exemption and if so, under which section of IT Act. I avail of the CGHS facility for my wife also who is a house wife. — Ajit Singh A. The amount paid by you to become a member of the Central Govt. Health Scheme (CGHS) is not allowable as deduction under the provisions of the Act. Q. I retired as an Associate Professor on 31.10.2008. At the time of my retirement, I was paid a gratuity of Rs 3,50,000. With the revision of pay scales w. e. f. 01.01.2006, the amount of gratuity was raised from Rs 3,50,000 to Rs 10,00,000. After making many representations to the principal of the college, I along with my colleagues had to move to the Punjab and Haryana High Court, Chandigarh. The court has decided the case in our favour and also allowed interest at the rate of 9% per annum on the total amount due. We again approached the principal after the court's order for payment and the payment in my case was calculated as under:
Since the payment was made on June 14, 2012, that is during the Financial Year 2012-13, the tax deduction should have been according to the rules of income tax slab for the Financial Year 2012-13. Please advise regarding tax deduction. Also clarify when and how to file the return in my case. My age is 64 years. — Davinder Pal A. Section 192 of the Act dealing with the deduction of tax at source in respect of salaries provides that any person responsible for paying any income chargeable on his salaries shall, at the time of payment, deduct income tax on the amount payable at the average rate of income tax computed on the basis of rates in force for the financial year in which the payment is made. Therefore, in your case, the deduction of tax at source should have been at the average rate of the income tax applicable for the financial year 2012-13. Q. I am a senior citizen and pensioner. I opened an NSS account in 1990. For two years, I contributed Rs 45,000 in the account. Up to financial year 2011-12, the total amount in the said account has exceeded Rs 3 lakh and the rest is interest accrued. I have been filing my I-T returns regularly without showing the interest income gained in the account. My total income from pension etc. in the financial year 2012-13 will be around Rs 2,20,000 after availing of deductions under Section 80C. Can I withdraw Rs 30,000 from this account after submitting Form 15H, the limit being Rs 2,50,000 for a senior citizen. — RK Sharma A. The amount of interest accrued in an NSS account is taxable as and when any withdrawal is made from such an account. Therefore, you can withdraw Rs 30,000 and file Form 15H so as to avoid deduction of tax at source in respect of such an amount.
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personal
finance
I was amazed so see the shy housewife for many years transforming into a full-fledged entrepreneur or you may call confident photographer. Beaming with pride, she shared with me about the celebrity marriages she was going to cover this season. It set my thought process – How did Naina achieve this remarkable feat? A brief on her background – Naina hails from a middle class family and got married at an early age into a middle-class family. Her husband too had a modest job. I could not contain my surprise and asked her how come she managed such a professional set up when it costs a fortune? To this, Naina replied that it had become possible due to the loan she availed from a PSU bank. The loan enabled her to buy all expensive equipment required for this profession. I thought of putting up more details for the benefit of all those aspiring women who want to turn entrepreneurs. Read on to know the details: Curiosity got the best of me and I started the process of collecting information from various sources. There is a bouquet of loan offerings from various banks available not only to working professionals but also to women entrepreneurs, both urban and rural, who are seeking an opportunity to support their family irrespective of the strata of society they belong to. Surprising is the fact that in India most women tend to go for a joint loan with spouse/approved family members. The ratio of single women availing loan is not something to write home about. Due to insufficient awareness on this subject, not many women are walking into banks for availing loan for startups. This has resulted into closing down/withdrawal of many of such schemes by the banks. Though availing loan under these schemes is time consuming and involves extensive documentation, the process is simple and can be explained in three easy steps. 1. Create a project plan (Basic business plan consisting of nature of business, infrastructure needs etc.) 2. Keep the required documents ready (proof of identity, residence, income etc) 3. Approach your preferred bank The loans are made available for various activities like setting businesses in SSI units, agriculture and allied activities, small businesses like florist, bakery, tailoring, beauty parlour, crèche, coaching centre, travel agency, papad making, ceramics, handicrafts, laundry, canteen and catering, pickle and masala making and many more. The activities for which such loans are given are very exhaustive and cover many business activities. Special additional benefits of subsidy on capital are provided under all such schemes launched by the PSU banks as well as under specific various government-sponsored programmes like Central Bank’s Cent Kalyani, Vijaya Bank's Assistance to Rural Women in Non-Farm Development (ARWIND) & Assistance For Marketing Of Non-Farm Products of Rural Women (MAHIMA), PNB's Mahila Udyam Nidhi Scheme, Mahila Samridhi Yojna, Scheme for financing creches, PNB Kalyani Card Scheme and PNB Mahila Sashaktikaran Abhiyan etc. A woman has to be 18 years old and tenure of such loans varies from 3 years to seven years. An applicant has to contribute some margin money as well but for the loan up to Rs 25,000, no margin money (own funds) is required. For loans above Rs 25,000, the margin money requirement varies from 15% to 25% of the loan amount. These loans are given at concessional rate of interest ranging from 13% to 15%. The processing fee charged for such loans ranges from 0.5% to 2% While borrowing money, the borrower has to provide collateral security (by way of assignment of LIC policy (SV)/Bank’s own TD/NSC/KVP, RBI Relief Bond etc.). There is provision of moratorium period of 3 to 6 months depending on the cash flow/project viability report. The EMI for such loans will start on the completion of moratorium period granted by the bank. Few banks have even clubbed benefits of availing business purpose loans along with savings accounts, widely known as power accounts for women. (e.g. Corp Mahila Power Scheme — a savings-cum-loan product for women. Some PSU lenders in collaboration with NGOs have even launched self-help groups/trusts which provide basic developmental assistance to women who wish to acquire the essential knowledge and skill sets required for starting their own business. These groups provide training on how to start and manage a business, in planning and marketing. It also provides pointers on how to reduce costs and to achieve break even within a stipulated time frame. So, all you women who have that spark in you, ignite it by way of turning entrepreneur and move on the path of self-reliance. It takes only one step to start the
journey! The author is AVP, Apnapaisa.com. The views expressed are her own |
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Fixed income products
a safe bet
Given
the uncertain nature of ‘future’ and the inherent risk associated with it, it is not surprising that conserving resources for later utilisation is an integral part of human behaviour. This natural tendency for savings is rooted in human motivation to seek self-preservation, growth and excellence.
The point is, savings is and will remain an essential element in obtaining economic freedom. But that is only a partial truth. Eventually, it is the scientific approach to investment that has the maximum potential to provide the desired outcome. Simply stated, the entire idea of methodical investing can be summed up as: beginning early, knowing your objectives, planning accordingly, doing it regularly, sticking to the plan and reviewing periodically. A brief understanding of the current economic issues also helps. For instance, the economy has been grappling with many systemic and non-systemic issues in the last one year. The low FII participation, apparent reforms lacuna, rising current account deficit and high uncertainty surrounding the fiscal crisis in EU, all have been restricting growth. The rupee has been on the back foot for most of the last 12 months — losing more than 20% of the value during the period. Among other things, the uncertainty surrounding the GAAR regulations had spooked incremental FDI and FII investments in the country. This led to a decline in FII and FDI inflows. The widening current account deficit further aggravated the balance of payment position. To compound that, slackening domestic savings rate, stubborn inflation and high interest rates led to a situation of rapid moderation in the economy. However, the general market belief is that the rupee decline may have largely bottomed out, and may in fact regain some of the lost ground in the coming months. The 20% plus decline in international crude oil prices since June 11 implies a currency saving of nearly $5-6 bn (annually). This may help to reduce some pressure on the aggregate import bill. To further support the rupee, the FII investment ceiling in the gilts has been raised by $5 bn to $ 0 bn. The ECB limit too has been hiked from $20 bn to $30 bn. Externally, hopes of recapitalisation of the European banks in June has helped allay financial contagion fears. This, in turn, has reduced the risk premium globally, leading to a worldwide relief rally. The reaction in India to this has been more pronounced on account of the expected change in the direction of reforms. In these circumstances, the bond market is maintaining a stable to benign interest rate outlook. Factors like fast moderating economy; calibrated OMO action by RBI; and increased FII investment support to the debt market are providing buoyancy to the market sentiment. This, in turn, has led to marginal steepening of the yield curve in the recent past. However, issues like high domestic inflation number, buoyant commodity costs in rupee terms, and the monsoon outlook continue to remain a risk. Overall, it will be the strength and interplay of these factors that will determine the market trend in future. RBI has consequently maintained a status quo in its latest monetary policy meeting to allow for these factors to play through. In this backdrop, it is recommended that investors base their investment decisions on their risk-return appetite and the incumbent investment goals. In the current market scenario, we believe investors should look at increasing duration on the fixed income products. The author is Head of Fixed Income and Product at Kotak Mutual Fund. The views expressed are her own What are Options & Futures*
An option gives you the right to buy or sell the underlying asset . A call option gives you right to buy the underlying asset while a put option gives you the right to sell. An option contract specifies the strike price, that is, the price at which you can buy or sell the underlying asset. In Futures, you buy a contract which will have a specific lot size of shares. When you buy a Futures contract, you don’t pay the entire value of the contract but just the margin. Open interest is the the total number of contracts not closed or delivered on a particular day. |
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Currency options are contracts that grant the buyer of the option the right, but not the obligation, to buy or sell the underlying currency at a specified exchange rate during a specified period. For this right, the buyer pays premium to the seller of the option.
Though General Motors is all set to pip Japanese auto major Toyota to become the largest-selling car maker in the world, it has not been able to get a strong foothold in India. Taking over the reins of General Motors India, Lowell Paddock has a tough task to follow. Talking to Girja Shankar Kaura, President & Managing Director of General Motors India talks about the company’s future plans for one of the world’s biggest markets.
The loans are available for various activities like setting businesses
in SSI units, agriculture and allied activities, small businesses like florist, bakery, tailoring, beauty
parlour, crèche, coaching centre, travel agency, papad making, ceramics, handicrafts, laundry, canteen and catering, pickle and masala making and many more. The activities for which such loans are given are very exhaustive and cover many business activities. Special additional benefits of subsidy on capital are provided under all such schemes launched by the PSU banks as well as under specific various government-sponsored programmes
However, the intricacy of the present economic setup — not the least of which includes investor aspirations, complex financial markets, globally integrated economy, overlapping systemic and non-systemic events — all present an arduous undertaking for an investor. Moreover, the idea of saving without having to invest it; is a risk in itself. That’s because the inflation slowly corrodes the wealth of a non-invested saving corpus. 
