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GDP growth expected to remain below 6% in 2012-13: CII
158 infrastructure projects delayed, says report
FIIs invest about Rs 11,000 cr in August, highest in 6 months
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Hefty pay hike for blue chip companies’ CEOs
BSNL's losses widen to Rs 8,851 cr in FY12
Aviation Notes
Tax Advice
Take interest in ‘interest’ rates
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GDP growth expected to remain below 6% in 2012-13: CII
New Delhi, September 2 The survey indicated that the GDP growth during 2012-13 is expected to remain below 6%, it said. "This reflects low confidence levels in industry. The first quarter GDP numbers corroborate the fact that the slowdown is sustaining. Our best hope would be that the economy is bottoming out," CII Director General Chandrajit Banerjee said in a statement. However, from the results of the snap poll or from government data, the industry body does not have adequate indicators to substantiate this hypothesis. Poor showing by the manufacturing sector pulled down the GDP growth to 5.5% in the April-June quarter, the decade's worst Q1 performance. Over half of the 75 CEOs who participated in the survey expect the average rate of inflation in this financial year to be in the range of 7-8%. About 75% of the respondents do not expect economic reforms - introduction of GST, FDI in multi-brand retail and FDI cap in insurance and pension sectors - to move forward given that general elections are coming up in 2014. Majority of the respondents expect both domestic and international investment either to increase or remain unchanged during 2012-13, CII said.
— PTI |
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158 infrastructure projects delayed, says report
New Delhi, September 2 The Road Transport and Highways Minister, C P Joshi, said "We have entered an EPC (engineering, procurement and construction) mode and in that we hope to award 4,000 km, in the 12th Five-Year Plan." The reports stated the share of passenger movement by rail has declined from 74% in the 1950s to present levels of 13% and for the same period, the share of freight movement by rail has dropped from 86% to 39%. “In the last round of bidding, we received a premium to the tune of Rs 3,000 crore,” he said adding that this time we are hopeful of doing better. The Cabinet Committee on Infrastructure, this month, approved the Model EPC Agreement Document for construction of two-lane national highways works. “I am concerned when I hear bids are not being received or only single bid is being received in well structured projects. We have made earnest efforts to understand the reasons thereof and wish to resolve the issues,” Joshi said. Meanwhile, the report, which is a clear comment on the performance of the government in the infrastructure sector said that the Indian Railways has only added 1,750 km of new lines, from 2006 to 2011. While China for the same period has added 4,000 km, excluding a high-speed network of around 10,000 km. The report said there was a need for strengthening national highways, which constitute around 1.7% of the road network, but carry 40% of the total road traffic. Yet only 24% of the country’s national highways are four-lane and meet the required standards. |
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FIIs invest about Rs 11,000 cr in August, highest in 6 months
Thus, FII investment in the country's equity market has reached Rs 63,070 crore so far this year, and Rs 24,518 crore in the debt market during the same period. In August, Foreign Institutional Investors (FIIs) were gross buyers of shares worth Rs 48,136 crore, while they sold equities amounting to Rs 37,332 crore -- net inflow of Rs 10,803 crore (USD 1.94 billion), according to the data available with the market regulator Securities Exchange Board of India (SEBI). This was the highest net investment by FIIs in stocks since February, when they had infused Rs 25,212 crore. In July, they had pumped in Rs 10,273 crore. Market experts said that despite slowing economic growth and a high interest rate regime, foreign investors continued to prefer Indian equities on expectations that government would take fresh policy initiatives. Besides, they said, investors were anticipating monetary policy easing by the US Federal Reserve and the European Central Bank as global economy remains fragile. Geojit BNP Paribas Research Head Alex Matthews said, "FII inflow continues, as hopes of policy reform announcements are still alive. But if there are no reform announcements, there might be slowdown in inflow or could be a pause as well." However, the current political environment may dash hopes as the monsoon session of Parliament has been stalled many times following the CAG's report on coal block sanctions. "The huge FII inflows were driven on anticipation of monetary easing by the US Federal Reserve and the European Central Bank," Destimoney Securities MD and CEO Sudip Bandhopadhyay said. Another market analyst Kishor Ostwal of CNI Research Head said, "FIIs have been infusing money into the defensive stocks such as pharma and FMCGs which have led the inflows." Apart from equity, FIIs also invested Rs 265 crore in the debt market last month. Buoyed by strong inflows, the BSE 30-scrip index, Sensex, rose 194 points or 1 per cent last month to settle at 17,429.56 points on Friday.
— PTI |
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Hefty pay hike for blue chip companies’ CEOs
New Delhi, September 2 An analysis of remuneration paid by the 30 Sensex firms to their chiefs during the last fiscal shows that the pay packages rose for more than half of them -- including for Chanda Kochhar, A M Naik, Rahul Bajaj, Pawan Munjal, Nitin Paranjape, Anand Mahindra, Navin Agarwal and N Chandrasekaran. On the other hand, industry leaders like Wipro's Azim Premji, Infosys' S D Shibulal and Bharti Airtel's Sunil Mittal took a cut in their total pay packages during 2011-12. Besides, Reliance Industries chairman and managing director Mukesh Ambani and Hindalco Industries' chairman Kumar Mangalam Birla kept their respective remunerations unchanged. Mukesh's younger brother Anil Ambani also saw his total remuneration from the four main companies of Reliance Group fall by nearly two-third during the year, although none of his group firms are currently part of the Sensex. Among the 30 companies forming part of the stock market barometer Sensex, the pay package was highest at Rs 73.42 crore for Jindal Steel & Power's chief Naveen Jindal, putting him in the front for being the country's top-paid executive for second consecutive year in 2011-12.
— PTI |
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BSNL's losses widen to Rs 8,851 cr in FY12
New Delhi, September 2 Total revenue of the company for 2011-12 declined to Rs 27,933.5 crore during the year, compared to Rs 29,687.62 crore it posted a year ago. "During 2011-12, we were in position to arrest losses. However, due to some regulatory issues there was adverse impact of around Rs 3,100 crore on our financial performance," BSNL chairman and managing director R K Upadhyay said. BSNL's profit started declining continuously from Rs 10,183 crore in 2004-05 before recording a loss in 2009-10. During 2010-11, BSNL losses rose to Rs 6,384 crore mainly due to hefty outgo on salaries and expenses borne by the PSU for procuring 3G and BWA spectrum.
— PTI |
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BIZ TALK
A technology giant Dell is making constant efforts to strengthen its relations with the small and medium businesses (SMBs) segment in India. Dell India president and managing director, Sameer Garde in an interview to Girja Shankar Kaura talks about how the firm is betting big on Indian market through SMBs.
Q: What is the addressable SMBs market for Dell in India? A:
A recent study by Zinnov Management Consultancy, states that the overall domestic IT spending is expected to grow at a CAGR 12% to 36 billion dollar by 2015, SMBs at the same time will grow at a CAGR 15% contributing 15 billion dollar by 2015. As per the report, India is home to around 50 million SMBs, including million technology-ready SBMs. This segment will contribute more than one third of domestic IT spending, thus, creating an addressable market of about
$12 billion. Q: Which other regions Dell is focusing on particularly with respect to the mid-market? A:
India is the first market for Dell to define and categorize the new market opportunity as the mid-market segment. Dell India calls it the ‘growth markets’ and identifies market beyond top 8 cities as future growth markets for its broadened products and solutions portfolio. For us, the mid-market businesses are also defined by the employee base; so organizations with 100 to 499 employees would typically fall under this category. Q: What are the major technological challenges faced by SMBs? A: India’s mid-market businesses are still facing challenges like lack of technology know-how, unclear return on investments, cluttered product portfolio, high cost for technical support and high investments made in legacy systems. Enterprise customers have shifted their focus from the latest, greatest device to how IT can help them solve problems and achieve their goals. Ease of deployment and management will be a key issue in the minds of mid-markets’ executives. Q: What strategy Dell is following to position its businesses in the growth markets? A: Dell’s midmarket design point approach is aimed at providing customers with open systems that are highly affordable, user friendly, and easy to scale to meet the needs of a wide range of organizations - from large enterprises to small and medium businesses. The changed mindset of customers has fundamentally influenced our business strategy, compelling us to evolve well beyond PCs and devices to address the end-to-end IT needs for customers around the world. The global acquisitions of Quest, Wyse, Force 10, SonicWall, Compellent will bolster Dell India’s position as an industry leading solutions provider - with offerings from the edge to the core of technology. Q: What about the Indian market statistics for Dell in the SMB segment? A: The company moved from a lowly 6th rank in end-2008 to be ranked No.1 in Q1 of 2012 in the SMB segment (ranked No.1 in MB with 28.7% market share and ranked No.2 in SB with 10.5% market share) While the company has been a leader in the large enterprise segment for many years, just little less than three years back, Dell’s SMBs market share was a miniscule 2.5% and in this small period of time, that share has now grown to 14.9%. Q: How are you addressing this market through channel community? A: We have an aggressive go-to-market strategy as Dell looks to increase its reach and enhance enterprise solutions knowledge amongst partners. Global Commercial Channel is focused on enterprise business, single face to Dell will allow our partners to tap the market better and increase the width and depth of market penetration. Elite Partner Program is aimed to increase partner profitability for those who operate in the data center space. This will also enable partners to secure a higher payback and rebate and also drive their enterprise solutions business. Continuous affirmation of Dell’s focus towards channel - to gain greater coverage and customer access in the Indian markets. |
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Aviation Notes
The fate of public-private partnerships in the aviation sector, comprising about 460 airports and airstrips, does not appear promising. Such tieups have been marginally successful at the Cochin, Hyderabad and Bangalore airports, but have encountered problems at many others due to political interference.
For example, the management of Delhi International Airport Ltd (a consortium led by the GMR Group) is creating problems in operational and administration functioning, though the airport’s Terminal 3 is being projected as the country’s showpiece. What is most unacceptable is the fact that, despite bagging prime land in the capital at a throwaway price by lobbying with politicians, DIAL continues to levy exorbitant airport fees on passengers for both domestic and overseas flights. As a result, the airport operator is minting money while passengers are left to fend for themselves despite paying more. The government had initiated public-private partnerships in a bid to attract funds from nonresident Indians and private entities for airport development. Unfortunately, the effort failed to yield the desired results as politicians have their own vested interests instead of the country’s welfare in mind. What is more important--- the country’s development, smooth air travel or GMR’s growth? No wonder the Supreme Court has rightly questioned the government on the airport fees charged from passengers travelling from Delhi airport. The court has asked who is levying the airport development fee and utilizing the taxes collected from passengers. The Comptroller & Auditor General has been critical of DIAL for getting hold of prime land for the airport through what it called dubious means. The GMR Group, with only Rs 1,813 crore equity contribution to the joint venture, not only bagged the prized land but also secured several other benefits, including commercial rights that provide more scope for making big profits rather than for ploughing the funds back in upgrading the airport. |
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Tax Advice
Q: In his FY2013 budget speech the finance minister had proposed to retain the income tax exemption limit for senior citizens at Rs 250,000. Has this been done as proposed or with some modifications?
— R.N. Gupta A: The tax exemption cap for senior citizens has been retained at Rs 2.5 lakh for assessment years 2012-13 and 2013-14. Q: I am a senior citizen and suffering from a hearing disability (55% hearing loss in my ears). I was issued a certificate from SBI for tax deducted at source) on March 31, 2011 for AY2011-12. Somehow, I could not claim this refund from the income tax department - can I do it at this stage? What is the tax rebate on this disability? — Daljit Singh A: You can claim the refund for AY2011-12 by filing a revised return that can be revised up to March 31, 2013. You are entitled to claim deduction up to Rs 50,000 against your total income under Section 80U of the Income Tax Act, 1961 in case there is hearing loss of sixty decibels or more in the better ear in the conversational range of frequencies. Q: Is the interest earned from a savings account at a post office or bank taxable? If not, will the total interest earned (less than Rs 10,000 in each account) in different accounts be included for tax calculation? — Baldev Raj A: For AY2012-13 the interest earned in a post office savings account is tax exempt up to Rs 3,500 and, in the case of a joint account, up to Rs 7,000. Interest earned in a bank savings account is taxable for the said assessment year. For AY2013-14 (fiscal 2012-13), interest earned up to Rs 10,000 in a post office or bank saving accounts would be allowable as a tax deduction from total income under Section 80TTA of the Income-Tax Act, 1961. Q: As per provisions of a new section (80TTA) of the Income-Tax Act, I understand one can claim tax deduction up to Rs 10,000 from total income in respect of interest earned in bank savings and recurring deposit accounts, as recurring deposits do not come under time deposits (as per Section 194A amended w.e.f. July 1, 1995. What do time deposits imply? — SC Goyal A: For the purpose of Section 80TTA of the Act, time deposits mean the deposits repayable on expiry of fixed period. There is no exclusion of the recurring deposits. Interest earned on such deposits may not be deductible under the aforesaid section in case recurring deposits are repayable on the expiry of a fixed period. |
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personal finance
Financial planning
Financial planning plays an important role in our life. It can be described as a long term process of wisely managing finances so that you can achieve your financial goals. It does not mean using different investment instruments or structures than you may be investing in now. It is using the same instruments in a systematic goal-oriented manner. It brings discipline in our saving and investment. It helps us to set realistic goals and also priorities them. We can easily reach to our destination safely and timely if we set some basic rules for investment and act accordingly. Unwillingness to pay a fee to a professional and complexity of the products available in the market leads to buying wrong products which may not suit individual's future needs. One should analyse properly about their future goals before buying any product and avoid taking such steps which can spoil their financial plan. Financial planning is nothing but knowing where you are today and where you want to reach in the future. Handy tips
Here are some financial planning tips which can help you in making a right decision depending on the future needs.
It is always advisable to hire a financial planner to prepare a full financial plan for the family. Financial planners offer unbiased fee-based advice which can help you to achieve your financial goals. They take care of all finance-related matters just the way a doctor takes care of all health issues. It is also advisable to separate execution from the advice and buy all recommended products from the third party. It is important to review the plan periodically i.e. at least once in a year and also important to rebalance the investment portfolio. Financial Planning does not only help you in achieving your financial goals but also gives peace of
mind. The author is head of financial planning at Apnapaisa.com, an online insurance price & features comparison engine for loans and investments. The views expressed are his own Benefits of financial planning
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Take interest in ‘interest’ rates
These questions must be worrying you besides your regular financial worries related to buy a house. So first understand about interest rates that play an important role in your decision making process. Home loan interest rates
Let's see how these interest rates are determined. Home loan interest rates are dependent on the loan amount, loan tenure and the profile of the borrower. The interest rate on home loans is also dependent on an interest rate cycle. The borrower's credit history and score under credit information bureau like CIBIL also has an impact on it. These rates can vary from one lender to another. Housing loan interest rates can primarily be classified into two categories i.e. fixed rate and floating rate. There are very few lenders in India who offer pure fixed home loan rates where the rate of interest remains constant for the entire tenure of the loan, while most lenders have a reset clause of 3-5 years. In floating type, the rate of interest on such loans is subject to change whenever there are changes in the repo rates announced by the Reserve Bank of India or any change is there in base rate of the bank. Borrower should opt for a fixed rate of interest only if he is sure that the rate of interest is the lowest in the interest cycle. In recent times, some lenders have come up with innovative home loan products with features like dual rate of interest where the interest rate on such loans remains fixed for initial 10 years and thereafter it automatically moves to a normal floating rate of interest. In case when the borrower prepays the housing loan amount taken
under floating rate of interest, the lender cannot levy any penalty for prepayment of such loan as per the guidelines issued by RBI and National Housing Bank (NHB). The borrower can also exercise an option of converting loan rate from fixed interest rate to floating interest rate and vice versa without paying any fee or penalty. Normally, the home loan interest rate is expressed as certain point above base rate and certain point below PLR (Prime Lending Rate) popularly known as spread. What banks follow
The banks follow a base rate system for calculating their interest rate, whereas the housing finance companies like HDFC Limited, LIC Housing Finance, etc. follow a PLR system. The bank cannot lend below its base rate to any borrower. Any reduction in the base rates automatically benefits all existing borrowers of the bank. No such compulsions exist for the Housing Finance Companies and hence banks that follow the base rate systems are likely to be forced to pass on the benefits of drop in rates to its existing customers. Hence, when there is a downward revision in the interest rates, the benefit, which has a certain degree of ambiguity in the PLR system, has more transparency in the base rate system. This way it is always advisable to compare base rates of various banks and also check the spread offered by them to get the best deal. The author is a product manager at Apnapaisa.com, an online insurance price & features comparison engine for loans and investments. The views expressed are his own Innovative scheme
In recent times, some lenders have come up with innovative home loan products with features like dual rate of interest where the interest rate on such loans remains fixed for initial 10 years and thereafter it automatically moves to a normal floating rate of interest. The borrower can also exercise an option of converting loan rate from fixed interest rate to floating interest rate and vice versa without paying any fee or penalty. |
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BIZ TALK
New Delhi, September 2
Most of the people are ignorant about the financial planning and also hesitate to pay for the financial advice. Most of us seek financial tips either from an insurance agent or a mutual fund advisor who will be more interested in closing their sale deal instead of understanding your future needs. Taking advice from tax professionals or chartered accountants for insurance or investment is not a good option as it is restricted to taxation matters only. Here, it is a commission driven market and a fee-based practice is still not acceptable to investors.
Are you in a process of buying a home? Are you scouting for lenders? Feeling confused how to approach the banks? How to understand the jargons used by bankers?
