Byapaar.com – The Indian Business Blog

“I have been begging pardon from my readers again and again for not writing on this blog that now I have lost my face even to do that. Anyway, I consider this blog as some sort of personal and intend to use it to express my views on certain topics from time to time. As I have to maintain a regular job and also spend time on my commercial web properties, the posting won’t be regular though I want to write on a daily basis. So…….. ”

The other day we, colleagues at the school were debating on the current single most important problem faced by us, the common people – ever increasing rise of prices of essential commodities! One colleague, who is a die-hard supporter of a Left party was saying that he attended a party meeting the day before where a member of the party’s central committee attended and told the gathering (general public) that if the Central Government of India used the Rs. 900 billion for subsidizing food grains instead of helping industries, poor people of the country (those Below Poverty Line or called BPL) would have got rice @ Rs. 2/Kg. Very true – why help the rich and deprive the poor?
Or is it?

If the industry goes into recession – then the economy of the country is bound to collapse – don’t you get that?

Almost 65% of the people are engaged in agriculture – but how much does the sector contribute to our economy? One fourth? On the other hand industrial sector (taking service industry together) is contributing the bulk of the GDP.

So first thing – first. We must secure that our economy is in sound health, revenue to the government coffer roll in – only then we could spend them in development and social sector. It is not that the government is keeping people hungry. Even without those 900 billion Rupees that the Left are objecting (they are never industry friendly – say what they may) – Indians holding BPL cards are still getting rice @ Rs. 3/Kg.

Regarding the rise of prices of essential commodities – many political parties including some allies of the current UPA government are holding the Congress (I) responsible. But what can the government do? I think it should just regulate and not control the rise of prices which is natural.

Come to think of it – 25 years ago, I was a high school student and my teachers were getting a salary of around Rs. 1500/- per month. Rice was being sold @ Rs. 2.5/- per Kg. then. Now as a teacher I get roughly 20 times that my teacher used to get. So, salary of my post increased 20 times in 25 years where as price of rice (most essential commodity) – increased only 7/8 times depending on where you live.

And if prices of rice, wheat, vegetables or other essential products are not increased proportionately – then how can you help those poor farmers who produce them?

The other day I was reading a newspaper report about a grape grower’s suicide in Maharashtra because he was burdened with loans and although he was having bumper harvest, still he could not cope with the changing economic situation.

While prices of everything rose including grapes in the open market, the price of that he was getting from the middle-man didn’t change in last ten years. So he didn’t get the benefit of rise in price and was left behind the economic BOOM that our country has been witnessing.

Come on guys – be pragmatic and not get extra selfish. The rise of price is just a natural phenomenon that comes with rapid economic growth. Our system is not like China where the government can regulate strictly.

Just think rationally, think how much you pay for a kilo of grapes – and think about that grape growing farmer who was still selling them for Rs. 10/kilo. If we are really serious about alleviating poverty from our country we should have a pragmatic economic approach.

Our so called leaders – rather than giving tall lectures should help these type of poor farmers by developing a good transportation system, good storage system and also think about some kind of subsidy in case there is drought.

Amidst global economic turmoil and financial crisis caused by US subprime lending crisis that caused havoc in markets around the world, Indian nationalized banks in consultation with the government have announced reduction of interest rates on home loans of up to Rs. 2 million that could lead to partial impetus in the realty sector. Just last week industrial production in India contracted for the first time in 14 years.

According to the new rates set by the banks, housing loans of up to half a million Rupees will now have interests of 8.5 percent and that of loans between half a million to two million will have interest rates of 9.25 percent. Presently, interest for home loans is 9.75 to 10.5 across various sectors in the banking industry.

This brings very good news for millions common people who can not afford to think of a house or flat beyond Rs. 2 million. Another additional feature of the new housing loan package is that interest rates will remain frozen for 5 years which means clients will not have to worry about increased equated monthly installments (EMIs) during this period. Also they will enjoy the benefit of rate cuts in between while banks will take the burden if rates rise. After five years, consumers could choose either fixed or fluctuating rates according to their choice. This makes debt management a lot easier for the common person.

Not only this, but banks have also reduced the margin requirements for loans. While previously, borrowers were required to pay between 20 to 25 percent of the total amount as margin money, it has been trimmed down to 10 percent for loans up to half a million and 15 percent for loans between half a million to 2 million.

According to bankers, this move will see around Rs. 150 to 200 billion being released over next few years and help the common men who constitute eighty percent of nationalized banks’ housing loan book. (continue reading…)

First of all, my heartiest congratulations to Abhinav Bindra J who made India proud by winning gold medal for the 10m Air Rifle section at the Beijing Olympic. It is the first ever individual gold that India won in the history of Olympic.

Now, this post is a little bit personal as I’ll try to put a point across by taking example of one of my friend. But before I dwell into that, let me give a brief update on the latest business scenario.

Inflation is at 18 years high that stands more than 12 percent. Stock market has recovered to some extent and has been on a bullish run for last 10 days or so. Tatas and Reliance Infocom have decided to invest huge sum to create GSM based network while keeping their CDMA services. The central government has decided to come to the exporters’ aid and has announced that it would return taxes already paid.

Well, that’s what I call brief update. J

Now the main topic! The other day I was called by my fried who got some exorbitant Credit Card bill and didn’t know where he spent the money. He called me because we went to some websites one night and used it to get membership. It was quite late in night and he didn’t know how to browse the net properly. L So I told him not to browse the net any more after I left. He did!

For the next 3 months he kept receiving those bills and soon he was in debt. I repeatedly asked him to contact the issuing branch to block the card. He didn’t! But when the bill piled on, he was desperately looking how to get out of debt and this mess. Finally he called the customer service of the issuing bank and they did oblige his request.

I am blogging on this because this might happen to anybody who is regularly using credit cards for online purchase – especially from phony sites. There are lots of instances of unauthorized use of credit cards by hackers who steal the card access codes. So everybody must first check how reputed and trusted the site is (Verisign verification is one of those) before putting the sensitive personal data.

While plastic money in the form of credit or debit cards is of great convenience, one must use it judiciously even if they are not using them online. As one does not have to carry and dish out lots of cash, it is very easy to spend a lot by swiping the card at various counters. Its only after that you start worrying how you pay off credit card debt that is now quite a huge amount.

(continue reading…)

The Union Budget for the financial year 2008-09 has brought few smiles on the faces of middle class people. It is clear that, the UPA government has an eye for early national pools -may be by end of this year and hence there is lots of cheers for the all powerful middle class.

The Finance Minister has not only raised the taxable income level from that of last year, but it has also offered some schemes to lessen tax liability. For example, if someone is earning a monthly income of Rs. 25,00/month, his current tax liability is around Rs. 3,347.50/month. In the new taxation syste, the liability for the same income will be Rs. 1,287.50/month and that too without claiming any tax benefit on offer.

So how to save this extra money?

The best way, according to analysts is to invest in real estate. Due to higher interest rates – the rela estate market has been going through a price adjustment or correctional phase over the last few months. So price is quite stable at the moment. The new budget is not offering any extra benefit under Sec. 80 C or Sec 80 D – but due to lower tax liability, the taxpayer can easily utilize the fund judiciously.

The Sec. 80 C has been facilitating tax benefits for certain saving instruments including repayment of home loans. But only Rs. 1,00,000/annum can be accounted for this purpose. One can also claim benefit for Rs.1,50,000/annum as repayment of interest for the housing loan. So thats a cool benefit for Rs. 2,50,000/annum.

Another attractive factor in this regard is that, some banks are already lowering interest rates for housing loans and it seems that, the home loan interest rate might come down further due to global meltdown trend.

Now, we may consider how one gains through investment in real estate properties. Studies have shown that value of Indian real estate properties has seen a compounded annual growth rate of around 15-18 percent. S, the value is always increasing.

Just one point to be cautious is that, the government is giving these sops for personal or live in properties only. If some one buys a property and sells it within next five years, then he/she will have to pay taxes for all these years.

If you have a house and are pondering at what to do – just go ahead, take home loans, buy a nice property and rent it out. The rent will help you pay the EMI (Easy Monthly Installment) and by the time you are ready to settle down, your home loan liability will be NIL. You can enjoy your superannuiation benefits for your recreations. Just remember one thing – the tax implications in this case will have to be worked out after deducting the rent you get. Still you are the winner.