HOME LOANS SHOULD BE OUT SIDE THE BASE RATE

The base rate, which will replace the current benchmark prime lending rate (BPRL) from July 1, should keep the all categories of home loans out side the base rate. Currently, home loans are offered at 8.5% p.a. The base rate is expected to be around 10% p.a. Even an increase of one percent in interest rate will push up the EMI of housing loans substantially, since the tenure of the loans ranges from 10 to 25 years. A shelter for themselves is what the middle class and the poorer section of the society always want to own. Affordable housing loans should be made available to these deserving sections of the society. The economics of cost of funds for banks, while lending to this section, must be kept out of the purview.

WOMEN RESERVATION BILL

There is apprehension in some quarters of the Congress that if the bill is passed, the party may lose allies it may need later. The so-called allies who are supporting the UPA from out side are – RJD and SP. The BSP may vote in favor or abstain on some frivolous reason. There are number of small parties and independents who will support the bill, which is pending since 1996. On the pretext of sub quota for OBCs and minorities, the Yadavs moving heaven and earth to stall the same. The Congress should ignore the threat of Yadavs and get the bill passed in both the houses. There is already dissent in JD (U) and the Bihar chief minister Nitish Kumar has come out in support of the bill. The Congress need not worry about the remaining tenure of the UPA. Even if RJD and SP withdraw their support, the UPA will have comfortable majority in the Lok Sabha.

BASE RATE FROM JULY 1, 2010

The RBI, which had set the April 1 as the deadline for banks to migrate to the base-rate regime, has given the banks a three-month breather to move to base rate. The loans against fixed deposits, staff loans and DIR loans are exempted from base rate. While determining the base rate banks have to take into account the cost of deposits, adjustments for negative-carry for CRR and SLR, unallocated overhead costs. Bankers request for lending below the base rate for corporates (short term) was not considered fauvorably by the RBI.

STILL IN DEEP WATERS

With the exception of Paramount Airways and Indigo Airlines, all other airlines reported losses for the financial year 2008-09. The national carrier, Air India reported the highest loss of Rs 5548cr. The following table shows the profit/loss reported by other airlines.

(Rs in Cr)
NAME OF THE AIRLINE PROFIT/LOSS

Kingfisher -1602
Jet Airways -402
Go Air -23
Spice jet -353
Jetlite -630
Paramount Airways +7
IndiGo +82


Indian and international air travel has rebounded from last year's slump because of an economic pick-up. Domestic Indian travel jumped 23 per cent in January to 4.1 million passengers, according to the Civil Aviation Ministry. Worldwide international airline passenger traffic rose 6.4 per cent that month, to the International Air Transport Association.

The last quarter of 2009 and early signs in 2010 gives an indication that the worst could be over, if the present growth is maintained, the Indian aviation sector is on a strong path of recovery by the beginning of 2011.

However, Air India is still struggling amid the upturn as its debt had more than doubled after paying for 100 odd new planes. The government last month approved Rs 800cr cash injection into Air India.

IT HAPPENS ONLY IN INDIA

It was saddening to note the death of 63 people, mostly women and children, in a stampede incident at an ashram in Kunda, Uttar Pradesh. The number may go up to 100, since many are still battling for life in the hospital. Stampedes at temples and other religious places in India have claimed more than 700 lives in the last eight years. Now the state government will order an enquiry, like most of the enquiry, nothing will come out and no action is going to be taken against the people responsible.

US - ON RECOVERY MODE

The US economy continued to improve at a modest pace.

The unemployment rate fell from 10.0 to 9.7 percent in January 2010, according to data released by the U.S. Bureau of Labor Statistics.

Non-farm business sector labor productivity increased at a 6.9 percent annual rate during the fourth quarter of 2009.

Manufacturing sector productivity rose by 6.6 percent in the fourth quarter of 2009.

With the expected GDP growth of 5.8 %, for 2010, the recovery in world’s largest economy may happen earlier,than expected.

VINEET NAYYAR: MAY HIS TRIBE INCREASE

How many of the wealthy and rich persons have the mindset and heart to donate one-third of their wealth for a charitable cause. Not many, neither in our country or else where. Vineet Nayyar, managing director of Tech Mahindra has gifted one third of his holdings in the company, approximately valued around Rs 32cr to Delhi based NGO, a charitable organaisation that supports of education of underprivileged children. Even, if ten percent of the wealthy, follow his footsteps, the government tasks in providing quality primary education to the under privileged, handicapped and other unfortunate sections of the society becomes easier. One only hopes that many will follow Nayyar.

BUYING STOCKS NOT SO EASY

The stock market is always an opportunity for increasing returns on investments compared to other segments including real estate. However, investing in stock market is not so easy, including investments in mutual funds. There are many factors –both at macro and micro level, which influences the stock prices on daily basis. Stock index may go up by 3000 points (during a particular period), due to reforms, inclusive policies and other feel good factors. However, prices of all stocks will not go up proportionately. In fact some stock under perform inspite of index moving upwardly. Hence, blind investment,will not give maximum returns on investments. Apart from this, stock prices of companies, including the best managed and having highest corporate governance, are subject to manipulation in the exchanges. If investments in stock were to be so easy task, every one would have been in the business of investing in stocks. More importantly, not every one can make money. Some will lose and some gain. There is a golden saying in stock market investing – whenever buying or selling takes place, some one is committing a mistake. There is nothing like win – win situation.

VOLUNTARY RETIREMENT FOR AGEING CPM LEADERS

The CPI (M) leadership is thinking of voluntarily retire, the ageing, unfit ministers and functionaries to rejuvenate the party. The party has cited the example of CPM patriarch the late Jyoti Basu, who always volunteered for this kind of proposals. The CPM top brass need not have to initiate such a painful and unpleasant exercise. Just they have to wait for couple of months – for the assembly elections in West Bengal and Kerala. All leaders, irrespective of age and fitness will be forced to retire compulsorily. There is no necessity for the leadership to take such unpleasant decision now.

NO WAKE -UP CALL FOR THE CONGRESS

Pankaj Vohra’s views –Wake-up call for the Congress (HT 02-03-10) on the reactions of the opposition parties to the finance budget are wrong. Where is the unity among the opposition? It is all opportunistic. The unity has already withered away. Can Mulayam Singh, Lalu Prasad Yadav and BJP share a common platform and express their views against the ruling coalition. Will Yadavs accept the BJP as secular party? It is beyond the stretch of any kind of imagination. The writing on the wall is very clear for CPM. It is like Tiger census. Most of these leaders do not understand the long-term implications of the budget. They have come together since they are bereft of any real issues to fight, other than vote bank politics. The situation was different in 1977. After the emergency excesses, all opposition parties came together under JP’s leadership. The Advani’s rath yathra and Ram temple movement dramatically changed the saffron party’s fortune and in1989 the BJP led NDA came to power. Comparing those situations, to the current opportunistic move by the opposition parties, is ridiculous. The fortunes of Yadavs after the last Lok Sabha election has taken a severe beating. Going by the recent trend in the elections, young voters, who constitute nearly 70% of the total voters, are aware of this kind of opportunistic politics and are averse to see such leaders in Parliament. Hence, the chances of such parties/leaders being elected again in the 2014 elections are bleak. The brand equity of Man Mohan Singh, Pranab Mukherji, Sonia and Rahul Gandhi is strong and rising. There is no threat to Congress. There is no wake-up call.