Month: February 2013

Indian Budget 2013-14 Quick Highlights

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Here are some quick pointers from common man’s perspective for Budget 2013-14. I have added my thoughts in italics.

Income Tax:

  • No revision in income tax tax rates. The tax slab remains the same as of last year. Click here to view the Tax slabs for FY 2013-14 (same as FY 2012-13).
  • Education cess to continue.
  • Tax credit of Rs 2,000 for income up to Rs 5 lakh. 
  • Surcharge of 10% on Rs 1 crore plus income earners. Raised surcharge for only one financial year. Fact: Only 42,800 people with taxable income over Rs 1 crore in India.
  • The much awaited DTC (Direct Tax Code) remains work in progress.

RGESS (Rajiv Gandhi Equity Savings Scheme):

  • RGESS will be liberalized & the investor will be allowed to invest in mutual funds.
  • The investor will be able to do this for a period of 3 successive years.
  • The limit for investors wanting to invest in RGESS raised from Rs 10 lakh to Rs 12 lakh.

This is good move and would be safer for new investors.


  • People taking a home loan in 2013-14 for an amount up to Rs 25 lakh will be allowed an additional deduction of Rs 1 lakh. Hopefully would give push to affordable housing.
  • Immovable Property transaction: TDS of 1% to be levied on transactions above Rs 50 lakh. Government is trying to curb black mney generation in property deals.


  • India’s first women’s Public sector bank to be set up. Woman’s bank license to be in place by Oct, 2013
  • All PSU banks branches to have ATMs by March, 2014
  • KYC of banks will be sufficient to acquire insurance policies

Tax Free Bonds:

  • Tax Free Bonds – Will allow some organisations to raise funds strictly based on need.

Inflation Indexed Bonds:

  • In consultation with RBI, the FM proposes to introduce inflation indexed bonds or certificates.
  • The details will be announced later.

This is good move and hopefully would benefit retail investors and reduce investment in Gold to an extent.

Stock Markets:

  • Pension funds will be allowed to invest in ETFs. This would give a boost to stock markets and also give higher returns to pension funds.
  • STT (Securities Transaction Tax) rates cut on equity futures to 0.01% from 0.017%

Duties and Indirect Taxes:

  • One time amnesty scheme for service tax defaulters due from 2007
  • Higher customs duty on set top boxes from 5% to 10%
  • Excise duty on SUVs raised from 27% to 30%. Will not apply to SUVs registered as taxis
  • Customs duty unchanged for non agri products
  • Extend tax benefit to electrical vehicles
  • Increase in import duty on high end motor vehicles from 75% to 100%; and on motor cycles from 60% to 75%
  • Service tax to be levied on all air conditioned restaurants
  • Excise duty raised by18% for cigarettes
  • For phones priced at more than Rs 2,000, the duty is increased to 6%
  • To exempt vocational courses, testing services from Service Tax
  • Gold duty free limit raised to Rs 50,000 for men and to Rs 1 lakh for women travellers


  • To launch two new industrial cities in Gujarat and Maharashtra
  • Indian Institute of Biotechnology will be set up at Ranchi
  • To expand private FM radio to 294 cities

Zambia’s Central Bank News

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Zambia’s central bank held its policy rate steady at 9.25 percent, saying in a brief statement that it had  noted the moderation in inflationary risks to inflation in March “mainly due to continued improvement in the supply of maize to millers by the Food Reserve Agency coupled with the expected increase in fish supply follow the lifting of annual fishing ban.”
The Bank of Zambia, which raised its policy rate by 25 basis points in 2012, also said a stable supply of vegetables was expected to moderate inflationary pressures.
“This is in spite of some inflationary risks associated with the cost push pressures arising from lagged pass-through effects of the deprecation of the Kwacha,” the bank said in a statement.
The kwacha was rebased on January 1 and the central bank has been selling dollars in recent months to support the local currency.
Zambia’s inflation rate eased to 7.0 percent in January from 7.3 percent in December

Zambia holds rate steady, sees inflation risks moderating – Central Bank News.

Jamaica’s Central Bank News

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Jamaica’s central bank cut its policy rate by 50 basis points to 5.75 percent, effective Feb. 25, saying the move was in light of the “generally weak economic conditions” and the government’s recent approval of debt reduction measures.
“These factors will have a dampening effect on inflationary impulses,” the Bank of Jamaica said in a statement from Feb. 22.
The cut in the policy rate – the rate payable on the Bank of Jamaica’s 30-day Certificates of Deposit –  is in line with the reduction in the rate on government securities on the National Debt Exchange.
    “These actions have occurred against the background of a staff level agreement between the Government and the International Monetary Fund on a medium- term economic programme,” the central bank said.
    Earlier this month the IMF and Jamaica reached a staff-level agreement on a $175 million economic reform program aimed at cutting Jamaica’s “unsustainable debt burden, which has undermined confidence and elevated risks to economic stability,” the IMF said on Feb. 15.
    The IMF’s executive board will take a final decision on the agreement by the end of March, subject to the Jamaican government carrying out some of the agreed measures, including a debt exchange that involves private investors, fiscal tightening and structural reform.

    “Over the last three decades, the Jamaican economy has experienced very low economic growth, declining productivity, and reduced international competitiveness,” the IMF said, adding the high cost of servicing debt has limited the government’s ability to provide services that are needed to achieve sustained rates of growth.
Jamaica’s Gross Domestic Product rose by 0.2 percent in the third quarter from the second quarter for annual contraction of 0.2 percent, the same rate as in the second quarter.
In its latest quarterly monetary policy report, the Bank of Jamaica estimated that the economy contracted by up to 1.0 percent in the fourth quarter due to the impact of Hurricane Sandy, the postponement of some projects and weak global and domestic demand.
For the first quarter of 2013, the central bank forecasts an expansion of the economy by 0.0-1.0 percent following four consecutive quarters of decline. For the 2012/13 fiscal year, which ends March 30, the central bank forecasts Jamaica’s GDP at minus 0.5 to plus 0.5 percent.
Jamaica’s inflation rate rose to 8.4 percent in January from 8.02 percent in December and the bank forecast inflation in the first quarter of 2013 of 2-3 percent. For the 2012/13 fiscal year, inflation is forecast in a range of 7.5-9.5 percent, a level the bank described as in its “desired range.”
Last month Fitch Ratings lowered Jamaica’s credit outlook to negative, saying the sustained erosion of its international liquidity position had reduced the government’s capacity to manage external and fiscal pressures.
    Jamaica’s net international reserves fell by $131.7 million to $125.6 million with gross reserves at $980.8 million at the end of December, representing 13.2 weeks of imports, according to the central bank.

Jamaica cuts rate 50 bps as government cuts deficit – Central Bank News.

Hungary’s Central Bank News

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Hungary’s central bank, which earlier today cut its base rate for the seventh time in a row, said it would consider cutting rates further if the outlook for inflation remains in line with its 3.0 percent target and the improvement in financial market sentiment is sustained.
The forward guidance by the National Bank of Hungary is exactly the same as in previous months. Since August 2012, the central bank has cut rates by 175 basis points with the rate now at 5.25 percent.
“In the Monetary Council’s judgement, the economic data becoming available in the past month suggest that weak demand continues to exert a strong disinflationary impact on prices, and therefore companies will have limited ability to pass on higher production costs into prices,” the bank said.
In addition, favorable financial market conditions may lead to a sustained fall in Hungarian asset prices which means that the bank’s inflation target can be met with looser monetary conditions.
Hungary’s economy contracted by more than expected in the fourth quarter of 2012, the bank said, adding that it expects growth to resume this year, helped by better exports.
“However, external, and domestic demand factors in particular, point to only modest growth in the period ahead,” the bank added.
Hungary’s Gross Domestic Product contracted by 0.9 percent in the fourth quarter from the third, the fourth quarterly contraction in a row, for an annual drop of 2.7 percent, up from the third quarter’s annual decline of 1.5 percent.
        Last month the International Monetary Fund said in its annual review that Hungary’s economy was estimated to have shrunk by 1.5 percent in 2012 following a 1.7 percent expansion in 2011.

    The IMF also said that further rate cuts by Hungary’s central bank should be “considered very cautiously” as rate cuts are unlikely to have a material impact on aggregate demand, given the difficult operational environment for banks, and the foreign currency exposure of private and public balance sheets remains significant so any sizable currency depreciation could be destabilizing.
    Hungary’s headline inflation rate slowed more than expected in January, the bank said, attributing the decline to a wide range of goods and services, along with a marked slowdown in underlying inflation which may reflect the “stronger-than-expected disinflationary impact of weak domestic demand.”
    The inflation rate fell to 3.7 percent in January, down from December’s 5.0 percent but still above the central bank’s 3.0 percent target. Hungary’s inflation rate jumped last year due to higher indirect taxes, which triggered price hikes, a depreciation of the forint plus higher food prices from bad weather.
     The central bank said global risk appetite had remained strong over the past month, but the contrast between improved investor sentiment and the modest outlook for global growth remains a risk, a warning the bank also issued last month.
    The success of Hungary’s foreign currency-denominated bond issue had also reduced financing risks for the country and cooperation with the European Commission and the International Monetary Fund “might contribute to a further reduction in financing costs,” the bank said.


Hungary to cut rates again if inflation remains on target – Central Bank News.

Virtual Cards-For safer online shopping

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While doing online shopping, our main concern is the safety about the data we share, like our credit/debit cards details. Answer to this concern is “Virtual Cards”. Today in India few Banks offer such cards in different name.

Virtual credit card is also called e-card, is mainly created for for your online purchase. So you can’t use this card for your offline purchase. Let us see it’s features.

  • Compare to your credit/debit card online shopping is safer. Because using this virtual credit card, you are not sharing your underlying credit/debit card details to merchant.
  • Card is valid only for limited period, which is usually in terms of hours.
  • Card creation is only from authorized user.
  • Card can be created from small amount like Rs.100 to Rs.50,000.
  • Customers having internet banking can easily create this card.
  • You are not sharing your Bank Acnt. No., mobile no., email address while doing purchasing with your vendors or merchant.
  • It is only used one time. It can’t be reused again.
  • You can create virtual card limit yourself.
  • Amount will be debited from your credit/debit card once the successful transaction from your virtual card.
  • You can create any number of virtual cards subject to the amount availability in your underlying account.
  • Suppose you created virtual card for Rs.5,000 and you used for Rs.2,500 then as I said above this card is only used once. So you can’t use this card once again. But the remaining amount will be credited back to your underlying card.
  • This is usually a free service. But better to check your concerned bank before creating.
  • You can’t withdraw cash from this card.

Banks offer such e-cards are SBI-Virtual Card, ICICI VCC, HDFC NetSafe,  and Kotak netc@rd.


Virtual Cards-For safer online shopping | BasuNivesh.

9 Economic Facts That Will Make Your Head Spin

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US Economy View


Half the population of the U.S. has slipped into poverty or is barely making enough to get by.

How much will you need for medical expenses in retirement? What does it cost to keep 2.5 million Americans behind bars? Here are a few facts and figures that might surprise you.

1. Recovery for the rich, recession for the rest.

Economic recovery is in rather limited supply, it seems. Research by economist Emmanuel Saez shows that the top 1 percent has enjoyed income growth of over 11 percent since the official end of the recession. The other 99 percent hasn’t fared so well, seeing a 0.4 percent decline in income…


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