Economic survey favours more liberalization

Indian Economic Survey 2007-08– which is a report card on the Indian economy ahead of the Union Budget– has favoured more liberalization and reforms. The Survey contains Policy options which may not necessarily translate into actual policy, or form a part of the Union Budget due to pressures of government’s leftist allies . It however, provide clues to medium-term policy direction the government needs to take.

In case of insurance sector, the Survey recommended raising foreign equity share to 49 per cent, while prescribing 51 per cent foreign equity in a special category of insurance companies – those providing all types of insurance such as health and weather, to rural residents and for all agricultural related activities including agro-processing.

In the banking sector, the Survey favoured allowing 100 per cent FDI in greenfield private rural-agriculture banks. Such a bank would be free to set up any number of branches in any rural or semi-rural area, the Survey said, adding that it would be free to lend agriculture and allied sectors anywhere in the country and to any industry located in non-urban area.

Survey pushes for reviving the disinvestment process, which has been put on the back burner under communist pressure. Survey has asked the government to complete divestment of 5-10 per cent stake in previously identified profit making non-Navratna PSUs.

While advocating FDI in all retail trade, suggested allowing a share for foreign equity in all retail trade, and mooted 100 per cent foreign equity in foreign branded, specialised retail chains like luxury brands, consumer durables, and semi-durables.

Facing a slowdown in the face of a sluggish growth in developed economies, especially in the US, the government will need to find a way out to implement the policy options suggested by Economic Survey to sustain the 9 per cent rate of economic expansion.

why everybody pleased with railway budget?

Indian Railway Budget 2008-09 has been hailed as a good budget by most. One of the Industry/Trade associations has gone ahead and even called it a `Pragmatic, Progressive & Futuristic’ Budget. But why everybody is so pleased with this budget?

First the financial performance is very impressive. Gross Traffic Revenues at Rs 72,755 cr - 16% higher than the previous year and 2% higher than the Budget Estimates. Ordinary Working Expenses register savings of Rs 966 cr. Return on Capital is an all time high of 21 per cent.Cash Surplus before dividend expected to be a record Rs 25,000 cr.

Above all, in view of elections, Budget has taken care of all- the railways, the manufacturers, industries and above all the common man.

However to make Indian railways world class also need is to tackle issues like cleanliness, Technology upgradation, Upgrading skills of manpower and Emphasis on Implementation of plans in an effective and timely manner.

Opening bank account may become easier

Reserve Bank of India has clarified to banks that permanent correct address, means the address at which a person usually resides and can be taken as the address as mentioned in a utility bill or any other document accepted by the bank for verification of the address of the customer.

However,banks can also accept an identity document and a utility bill of the relative with whom the prospective customer is living along with a declaration from the relative that the said person (prospective customer) wanting to open an account is a relative and is staying with him/her. Banks can use any supplementary evidence such as a letter received through post for further verification of the address.

RBI has reitrated that the adoption of customer acceptance policy and its implementation should not result in denial of banking services to general public.

Mortgage Guarantee cos entry may soften home-loan rates

Finally Reserve Bank of India has allowed mortgage guarantee companies to commence the business of providing mortgage guarantee in India. Mortgage guarantee firms would provide guarantee to a home loan lending institution against default. This will provide a cushion to banks and financial institutions.

Since a mortgage guarantee company will provide guarantee against any default, bankers risks will go down. At present, bad loans account in home loan is quite low. So, the cost of buying insurance from the mortgage guarantee company may not be very high. This may result in decline in home loan rates and increase credit flow to the housing sector.

ATM Safety Rules

I feel that if few rules are followed when using ATM can help you crime prevention at or near ATMs when you withdraw , especially at night :


1. ATMs are located in well-lit areas that are highly visible to passing traffic;



2. Minimise your time at the ATM by having your card ready when you approach the machine;


3. Take a look around as you approach the ATM and if there's anything suspicious, don't use the machine at that time;


4. Once you've completed your ATM transaction, put your money away immediately and leave. It's best to count your money later;


5. If you don't feel comfortable using a particular ATM, consider continuing on to another branch or using off-street ATMs in banking lobbies;


(Source: ABA)

On-screen Keyboards a boon to online security

Online security was always seen as a deterrent to many users. In fear of losing the online information to somebody else, the greater threat is when the information concerns about your bank account.

Moreover it is easy for hackers to steal information from newbies. The easiest options for them are to send 'trojans' or 'keyloggers' (programs that record what a user is typing on his keyboard, login information in this case, and send it back to the hacker) and phishing (setting up of genuine-looking, dummy websites to fool users into parting with information). Most security-related programs like anti-virus software overlook these programs as the code is not necessarily like that of a virus.

Recently some banks adopted another technology to combat the issue. It is no rocket-science, but a very smart application of the old scripting language that web-wizards use in their websites. Termed as the Virtual Keyboard, this application nearly eliminates the use of the keyboard while logging into their websites. Users have to type on the keyboard displayed on the screen using their mouse, thus rendering 'keyloggers' useless.

Trade Associations' Disappointment on No Interest Rate Reduction

Recently RBI released its Third Quarter Review of Annual Statement on Monetary Policy for 2007-08. In the review, RBI was expected to cut rates in view of the slowing industrial growth. But the reluctance to do so has disappointed trade associations in India.

FICCI President, Mr. Habil Khorakiwala, expressed his views in this context of the slowdown in industrial growth. He mentioned that RBI could have revised and fine-tuned the interest rates, to sustain a high rate of economic growth. The RBI could have shifted its emphasis from controlling inflation to sustaining the overall growth momentum.

Similar reactions were received from ASSOCHAM President, Mr. Venugopal N. Dhoot. He said the reluctance in the interest rates cut would make it difficult for the various industry segments to cope with the slackening demand, rising imports and high borrowing cost. The economy is not prepared for copious capital inflows which would arise with increasing FIIs and ECBs taking advantage of interest rate differences between India and developed economies of US and Europe.

Industrial growth in November this year was at 5.3% compared to 15.3% in the previous year. Along with the rising rupee, high interest rates have taken a big toll on the small and medium enterprises - which in absence of funding from equity markets and competition from cheaper imports, is bearing the maximum brunt of the slowdown in demand and expensive domestic funds.