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Union Budget 2010-2011 (Govt. of India)

  • More services to be brought under service tax net
  • Service tax to result in net revenue gain of Rs 3000cr
  • Customs duty on gold to be reduced; silver at Rs 1500/kg
  • Uniform concessional duty of 5% on all medical appliances
  • Rationalising of customs on gaming software
  • Custom duty of one of the key component of microwave oven reduced

Read Complete highlights @

Highlights of Union Budget 2010 (Govt. of India)

  • Finance Mister, Mr. Pranab Mukherjee presented the Budget for 2010 – 2011 today with an eye towards growth, yet targeted to enforce fiscal discipline. With the reduction in income tax rates (providing much relief to the already stretched wallet of the Indian tax payer!) as well as the hike in rates of petro products, the FM has shown that it is serious in terms of achieving its objective of implementing reforms in the areas of direct tax and reduction in subsidies. An unexpected announcement was that of the grant of new banking licenses to private players including NBFCs.
  • The fiscal deficit target for FY11 has been set at 5.5% of GDP, with further improvement to 4.8% in FY12 & 4.1% in FY13. The reduced government borrowing of 3.45 lakh crores for FY11 is a positive.
  • Divestments for the current year are targeted at Rs. 25,000 crores which seems achievable. Key areas requiring attention have been addressed with increased spending on infrastructure, agriculture, rural development, health and education.
  • The much awaited reforms in taxation, Direct Tax Code (DTC) and GST have not been discussed in detail but confidence was restored with rollout been fixed as 1st April, 2011. Nevertheless, with the reduction in tax rates, the FM has clearly displayed his seriousness in ensuring the smooth rollout of the DTC.
  • The Budget has partially rolled backed stimulus measures by hiking excise duty by 2% on all non-petroleum goods like cement, auto, etc. The hike in excise duty levied on petroleum products will have an inflationary impact.
  • On the corporate side, surcharge on corporate tax has been reduced to 7.5% from 10%, with the effective corporate tax now lower at 33.22% versus 33.99%. MAT has been increased to 18% from 15% which can impact some large corporates.
  • The Government has taken steps to simplify the FDI policy by consolidating all prior regulations and guidelines into one comprehensive document. This we believe is a good step in order for a developing country like India to continuously attract long term funds. The issue of FDI in sectors like Retail and Insurance have not been discussed in the Budget, but it could be brought up in the FDI policy document.

The FM has re-emphasized his commitment to the reform process and positive steps have been taken in this regard. However, the final verdict will depend on the conversion of this positive intent into actual execution.

Source :

Six reasons why real estate is a good investment

Kavita Sriram, Time of India Journalist says this is a good time for investors to buy property as part of a portfolio

Leading a life of luxury on borrowed money may not always be the right thing to do. How prudent would it be to make an exception on home loans? Should you buy your dream house or invest in some piece of land? Is it time to invest in real estate?

Real estate is less volatile than stocks. While real estate may be less liquid, and you may have to wait indefinitely before a buyer agrees to purchase your property for the price you seek, the prices are not as volatile as the stock markets. The transition towards a correction or boom takes place gradually, giving ample time for investors to read the transition and safeguard their positions.

The economic slowdown had an impact on this sector. The rates have come down over the past few months. Wouldn’t it make a lot more sense to invest in real estate when a price correction is taking place rather than in a heated market? People with a large disposable income can explore investing in real estate for diversification of their assets. Lowering home loan interest rates and lower property prices makes it an opportunity hard to resist.

Some investments are considered safe in times of recession like precious metals and foreign currencies. In this list of investments that are popular during times of financial uncertainty, real estate can be included. Focus on achieving positive monthly cash flows rather than immediate appreciation. Cash flow refers to the amount of cash coming in relative to the amount going out.

Real estate and gold are considered a hedge against forces of inflation. Inflation has led to the rupee value depreciating and property prices travelling upwards. Property investments are typically held over a long term.

Home loan borrowers are eligible for tax deductions on their interest and principal repayments subject to a certain limit. Further, you can use the rental income from the property to make a portion of the EMI repayments.

Investments in property has always proved to be stable and yielded good returns over the long term. With lesser risk and probability of higher returns, this is a much favoured investment option. Stimulus packages announced by the government are expected to show good results and bolster the economy. Cement, a key construction material, has indicated a growth of 12 percent in May. This is enough indicator of vigorous economic activity. Borrow as little as possible and consider investing in property.

Deutsche Bank : Gujarat offers the most favourable outlook for growth

Gujarat is the Topmost Investment Destination of India:

Deutsche Bank: “Gujarat offers the most favourable outlook for growth of demand for infrastructure projects”.

Sell benefits instead of features

Sprint’s new ad campaign, What’s Happening, is making some serious waves. The ads are brilliant examples of effective marketing and great presentation design.

Sprint spent a lot of money building a new 4G network and had to figure out how to show it off. They could have taken the traditional approach and created a campaign that explains the network’s new features (e.g. “you can transfer so many megabytes per second on our new network!”), but in reality people don’t care much about features — they care about benefits.

My favorite example of selling benefits instead of features was when Steve Jobs first introduced the iPod in 2001. He didn’t describe the iPod as a “4GB music player”; it was “a thousand songs in your pocket”. Big difference.

Sprint clearly understands the power of selling benefits because instead of focusing on what their network can do, their campaign demonstrates what people can do on their network, and on an incredible scale.

The ads are slick examples of how proper pacing, dynamic visuals, and the right amount of humor can make a fact and data driven presentation extremely compelling to watch. You’ll definitely find inspiration in these videos for new, creative ways to present your data in future presentations.

Source : Apollo Ideas

Crisis of Credit Visualized – Jonathan Jarvis

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

Subprime Crisis: Falling Like Dominos Towards Disaster

Home Buyers Go Shopping
The home has long been touted as a key to financial security. Government policy encourages home ownership by providing federal income tax deductions on mortgage interest and requiring that lenders issue mortgages in poor neighborhoods. Renters are eager to buy and many homeowners trade up several times during their lifetime.

Interest Rates Fall
Interest rates fall to rarely seen lows, allowing the same monthly payment to support a larger loan. This makes homes affordable for people who previously had rented, and it allows homeowners to move up to properties that are more expensive.

Home Prices Rise
By allowing people to borrow more, low interest rates allow them to offer more when they bid on homes, driving home prices up.

Adjustable-Rate Loans
Home buyers finding prices getting out of reach resort to subprime and other adjustable-rate loans that start with low “teaser” rates allowing a person with a given income to qualify for a larger loan. After one, two or three years, rates reset by tracking an index of prevailing rates, causing monthly payments to rise.

Appraisers Help
Before issuing a mortgage, a lender requires that a property be appraised to assure that it is valuable enough to serve as collateral on the loan. Appraisers come under pressure from lenders and real estate agents to support the rapidly increasing home values, despite a growing belief that home prices are in a bubble.

Lenders Relax Standards
As home prices grow faster than incomes, it gets harder for borrowers to qualify for loans under traditional standards. To keep the volume of lending up, lenders gradually reduce down payment requirements from the traditional 10 percent of sales price to zero. They also stop requiring that borrowers prove they have enough income to make their loan payments.

Investors Seek Yield
With interest rates at unusually low levels, institutional investors — such as hedge funds, pension funds, endowments and insurers — hunt around for higher yields with investment-grade ratings. They are eager to buy securities backed by mortgages, since these pay more than U.S. Treasuries. Securities backed by subprime loans pay even more, since subprime borrowers are charged extra-high interest rates.

Securities Firms Comply
Banks and other securities firms such as Bear Stearns feed the yield-hungry investors by repackaging mortgages into mortgage-backed securities offering generous yields. Through this process of securitization, the mortgage lenders’ risk is passed on to investors around the world.

Ratings Agencies Help
Ratings agencies work with mortgage issuers, such as banks and other lenders, and loan packagers to find innovative ways to give investment-grade ratings to risky mortgage-backed securities. While ratings involve an assessment of the chance that borrowers will default, there is little track record for gauging this risk with the new types of securities, so ratings agencies and other participants rely on theoretical computer models.

Interest Rates Rise
As rates go up, resets cause monthly payments on adjustable-rate mortgages to soar, reaching levels many homeowners cannot afford.

Home Prices Fall
Higher interest rates mean a borrower with a given income must settle for a smaller mortgage. As fewer people qualify for big loans, home prices begin to drop.

Borrowers in Trouble
Rising interest rates push up monthly payments on adjustable-rate mortgages, and growing numbers of homeowners fall behind in payments.

Securities Lose Value
The growing mortgage delinquency rate exceeds expectations in the computer models, causing prices of mortgage-backed securities to plummet. Financial institutions that invested in them suffer enormous losses.

Credit Markets Freeze
Financial-market participants worry that institutions losing money on mortgage securities – the list includes investment houses and large institutional investors – may be forced to sell securities based on other types of debt, such as bonds, to raise money. That would cause a flood of supply that would depress prices. Investors thus become leery of all types of debt securities, causing prices to drop and making some nearly impossible to trade.

The Economy Slows
As it becomes harder for individuals and companies to borrow, economic activity slows. The economy heads toward recession.

Homeowner Feels Impact
Growing numbers of homeowners find they cannot afford their higher mortgage payments, and many discover their homes are no longer worth what they owe on their mortgages. As the economy weakens, unemployment rises. More and more homeowners fall behind in mortgage payments and enter the foreclosure process. They lose their homes, their jobs, or both.

Credit Markets Freeze
Financial-market participants worry that institutions losing money on mortgage securities may be forced to sell other types of securities to raise money. That would cause a flood of supply that would depress prices. Investors thus become leery of all types of debt securities, causing prices to drop and making some securities nearly impossible to trade.

How the economic crisis is affecting MBAs : Suhas Anand

Insanity is dead. Welcome to normalcy

Just about two months ago, an MBA from a top b-school held promise of gold class jobs on the Wall Street. All that became history when Lehman Brothers and Merill Lynch crashed. How are MBA alumni from three years ago dealing with it? What have they learned from it?

Suhas Anand, IIM Ahmedabad alumnus from the class of 2006 writes

I was at the Indian Institute of Management (IIM), Ahmedabad campus recently as part of my company’s summer recruitment process. It was a cool November evening at WIMWI. Things were also a little cold with the placement scenario, quipped an old time friend. News of top 20 MBA campuses in India not being able to place all its students for summer internship was also doing the rounds. All this was unthinkable just about a month back.

We then got into a debate about what could have fundamentally altered everything in 30 days, making the world go into a spin. The stock market of course, was one reason. The plunging valuations have put a brake on the grand growth plans of top companies. Their ability to raise fresh debt as well as the ability of financial institutions to give new loans has taken a beating, resulting in fewer avenues for fresh MBAs interested in the finance sector to work on.

The second and a more pronounced aspect in my opinion is also fear of the unknown, that of the very primitive kind. These days, across industry, nobody knows what tomorrow might look like. This uncertainty is a bigger reason stopping companies from absorbing smart MBAs than any so-called impediment in the India growth story.

A sense of fear lurks in the hallways of many top b-schools too. I tried to sweet talk a few students during my Ahmedabad visit into looking at the broader picture. I tried to prod them into thinking about a long term career spanning, say, 40 years where they were bound to see many more such major ups and downs. By the time these students graduate next year, the uncertainty would probably be history. However, things could also be as bad as they are now. But if things are as bad a year down the line, we would know for sure they are going to be that way for at least a couple of years, thus putting away the uncertainty and fear. Companies will then go back to the drawing board, rework their strategies and recruitment priorities.

Internationally too the situation is not very rosy. Quite a few of my batchmates have been directly hit. Even our wildest nightmares could not have prepared us for the shocking fact that Lehman Brothers or Merrill Lynch are no longer around. They were clearly among the most coveted jobs on campus at IIM Ahmedabad. Make no mistake about it – they attracted the absolute cream of talent from across campuses, second only to McKinsey and Goldman Sachs. Back then, I would have any day accepted a job offer from either of these pre-eminent former investment banks. That is when the realization hit me. I could very easily have been ‘Joe the Banker who lost his Wall Street job in which he used to sell unknown derivatives‘, had I been working in those banks.

Some of these batchmates have found new jobs and their life is back to normalcy. The events have affected them in a big way, but it has also given some the opportunity to sit back and think deeply about what is really meaningful for them, personally and professionally. A friend of mine left Wall Street for good to join MTV. Another person is taking six months off to travel around, doing photography and working on wildlife conservation. Some have come back to India and taken less stressful jobs in cities where their parents stay.

Barring the fact that I’ve lost quite a bit of moolah in the markets, this downturn hasn’t materially affected me much. However, it has made me humbler. It has made me more aware of good old thriftiness and the importance of diversification of assets. I have stopped making fun of my mother who invests in post office schemes and PPFs!

Current MBA students should realign their expectations from their career in light of recent developments. Insanity is dead. Welcome to normalcy.

Overall, I can sense a clear change in attitudes amongst my peer group and juniors (hopefully for better). People are now willing to work in India, in firms like Tata Administrative Services and Hindustal Unilever, Reliance and others. Investment banks will still be there this season, at least in the top three IIMs. But they will not recruit as much as they did in previous years. But there is no dearth of options in a large growing economy like ours.

What else would change? Corporates would no longer have time for people who bargain for sky high salaries with three other offer letters in hand, or people who shift jobs every six months for a 20 pc jump. Now is indeed the time to step back and think about the initial years of the career as an investment one is making in oneself. One should not sell out too early. Invest, learn, build relations and ensure that you are well equipped by the time the recession is over, hopefully in the next couple of years.

I personally think that in the aftermath of all this, the world will become a much wiser and saner place. Folks will tighten belts. The sheer insanity that drives million dollar bonuses for the middle management and 1,500-dollar-per-head dinners will be a thing of past. The prudent cost-management measures of old times will be back.

As for MBA aspirants, they should not be worried much. Two years is a long time frame. They would be better off putting all they can to get into the best business schools. That is the best bet against a downturn.

A lot of writers will of course laugh their way to the banks (whichever remain at the end of the carnage) by writing books analyzing what went wrong and the lessons we can learn from this crisis. It would be presumptuous and downright wrong to claim to know what exactly went wrong and how it is going to play out. All we can do is hope for the best and assume that knowledgeable people across central banks and governments are indeed pulling resources together to ensure minimal damage to real economy. As they say, when you come to see that you are not as wise today as you thought you were yesterday, you are wiser today.

Suhas Anand is an IIM Ahmedabad alumnus from the batch of 2006 and working with an internationally-renowned consultancy firm.

Irvine Robbins – I don’t want my employees stealing

Irvine Robbins – American innovator who changed the way ice-cream was sold

Irvine Robbins started with a single ice-cream parlour in Glendale, Calfornia, and with his brother-in-law, Burton Baskin, turned it into Baskin-Robbins, the world’s biggest ice-cream chain. Robbins, who has died aged 90, was an innovator in both business and ice-cream – part of Baskins-Robbins’ success was due to their being among the first franchised retailers. Robbins claimed his franchising model inspired Ray Kroc, to whom he passed it on while supplying milkshake blenders to Kroc’s hamburger stands, called McDonald’s.

But Robbins’ real genius lay in the marketing of ice-cream itself. More than just a food, ice-cream is the great comforter of American life, and Robbins helped turn it into a great indulgence. The explosion of Baskin-Robbins’ 31 exotic flavours killed postwar America’s traditional preoccupation with vanilla, chocolate, and strawberry once and for all. Robbins’ idea was to surprise customers with new flavours, and the idea grew into commemorative tastes

He graduated with a degree in political science from the University of Washington in 1939, returned to the family business and married Irma Gevurtz. He served in the army during the second world war and, after his discharge, cashed in an insurance policy he had received for his bar mitzvah, moved to Glendale and opened the Snowbird ice-cream store. Baskin, who had married Robbins’ sister, had run a clothing store in Chicago before the war, but after his discharge from the navy, followed Robbins, and opened his Burton’s Ice Cream in nearby Pasadena. Robbins’ father had advised against the brothers-in-law going into business together, lest they inhibit each other’s ideas.

But by 1948 there were five Snowbird stores, and three Burton’s, and the brothers-in-law decided to merge. With the merger came their 31st flavour, chocolate mint, which gave them one for every day of the month (vanilla, chocolate, and strawberry were never counted among the 31). It would also be three more than Howard Johnson’s, who famously offered 28. Within a year they were up to 43 stores, growing quickly after deciding to sell each store to its manager, what would come to be known as “franchising“. They renamed the company, with a coin-toss deciding that Baskin’s name would come first.

Soon they were out of the managing business, producing ice-cream at a factory in Burbank, concentrating on the standardised look of the stores and a constant churning of the flavours they sold. Overall, more than 1,000 flavours have filled the scoops of Baskin-Robbins stores, and employees have always been allowed to eat as much as they like, because, as Robbins said, “I don’t want my employees stealing.”

In 1967, the partners sold their business, by then some 500 stores, to United Fruit for $12m. The premium ice-cream business took off as baby-boomers reached adulthood. Within six months, Baskin had died, aged 54, of a heart attack. Robbins worked for the company until retiring in 1978. It is now owned by Dunkin’ Donuts, and boasts some 5,500 stores worldwide. Robbins was an ardent anglophile, and an unlikely supporter of Newcastle United, but his Grape Britain ice cream, perhaps fortunately, never left the laboratory.

Robbins retired to Rancho Mirage, his house equipped with a six-seat soda fountain, where he ate three or four scoops daily, frequently adding banana ice cream to his breakfast cereal.

He is survived by Irma, daughters Marsha and Erin, and son John, who rejected the family business, became a vegan, and is the author of Diet for a New America.

Irvine Robbins, businessman, born December 6 1917; died May 5 2008

Ack :-

Is India’s strong enough to weather the storm in the world financial market

The global economic crisis has come to India. Share markets are down; industrial production is down and the mood among businesses and investors is down.

The Prime Minister, Finance Minister and the RBI Governor have repeated said India’s economy strong enough to weather the storm in the world financial market and it’s banks have enough money.“The fundamentals of the Indian economy have been strong and continue to be strong. The Indian banking system is sound, well capitalised and well regulated,” said RBI Governor D Subbarao yet again on Friday night.

Is India’s strong enough to weather the storm in the world financial market? Is your money safe? A CNN-IBN show hosted by Karma Paljor discussed this on Friday with CNBC-TV18’s Banking Editor Latha Venkatesh, leading market expert S P Tulsian, who is the CEO of, and Rajiv Bajaj, MD of Bajaj Capital.

Is your money safe ?

If a bank goes bust

Delhi resident Deven Mehta wanted to know what would happen to his money in savings account if his bank were declared bankrupt? “Is it true that the amount of Rs 1,00,000 is insured in the savings account of any bank?” he asked.

“Yes, an amount of Rs 1,00,000 is insured for every depositor. The rules of Indian commercial banks are such that they render depositors safe,” said Venkatesh.

“For every Rs 100 a bank collects as deposit, Rs 25 will have to be kept with the government as bonds. Governments cannot default, so Rs 25 is anyway safe. Another 8.5 per cent cash should be kept with the RBI, so that is safe again. Besides these there are other safeguards in the banking system.”

“Lehman Brothers lent 40 times its capital as loans and Goldman Sachs lent 27 times it capital but India is nowhere near that kind of cowboy lending,” said Venkatesh.

Safest bank?

As Indians feared for their deposits, the talk on the street was that public sector banks were safer. Is this true?

“Every institution should not be seen in the same light anymore. One should rate the credit-worthiness of an institution and even banks are subject to credit ratings. One should see the credit-worthiness of a bank and not whether it is public or private. I would keep my money in a Triple-A rated institution,” said Bajaj.

Should Indians withdraw their money from British banks? Is it the Indian government which guarantees savings in foreign banks?

Venkatesh’s advice was not to be scared, as the British government was doing its utmost to help its banks. “The British government has gone all out to reassure its banks in a big way. I assume that that assurance applies to branches in India. I think a scare (about British banks) is uncalled for. British banks is an umbrella term, one would have to refer to individual banks,” she said.

Staying invested

Bangalore resident Rakesh Kumar invested in the markets when the Sensex was at 20,000. “I can afford to remain invested for the next three years. Is my money safe or should I sell bearing a huge loss?” he asked.

Tulsian’s advice was: if you are an investor you must hold and if you are a trader you must sell. Now is a good time for people who have funds and are waiting to invest in shares.

Stocks of PSU banks, sugar stocks, pharmaceutical and FMCG companies look good for investment, he said.

It always the right time to invest—investors right now have to decide whether they want to preserve their money or use it to buy stocks which are normally unaffordable, said Bajaj.

“If I want to play safe I would probably put my money in gold mutual funds, which is a very good instrument to invest in this uncertain period,” said Bajaj.

Invest in equity funds and choose a large fund management house, which has lots off assets under management and a track record of at least 5-10 years. “Choose a large-cap and diversified fund. Whenever the market recovers, large and frontline companies will go up first, so invest in a large-cap fund,” said Bajaj.

Wait, watch and invest cautiously was the advice of the experts.

Excerpt From IBN

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