FDI In Retail

Lately we have been hearing about FDI in Retail.....so why does the opposition is against it....will the FDI help the Indian economy or India as a whole..lets see

Try and think of this imaginary scenario. It’s 1991, a Congress coalition government rules in Delhi. Our economic situation is terrible — so bad that the government has had to secretly pledge its gold to keep the country’s head above water. There’s only one solution: to get out of this hopeless morass and to stop India from becoming a basket-case, Manmohan Singh and his Finance Minister Pranab Mukherjee jettison the socialist economic model, so far sacrosanct, and announce a liberalised economy.

But there’s a problem. The BJP-led Opposition does what it does best: it opposes the move, notwithstanding the fact that it wanted to liberalise the economy when it ruled the country. Parliament is brought to a standstill. Slogans are shouted. The Opposition stages walkouts. The house gets adjourned every day. Finally, Singh and Mukherjee bow to the inevitable, and abandon the idea of liberalising India’s economy.

Far-fetched? Not really. Look at what is happening in Delhi now. FDI in retail is an old idea which – like economic liberalisation – has been debated and discussed threadbare for years. The NDA government wanted it in 2003; in fact, Murasoli Maran, the then commerce minister, had recommended 100 percent FDI in retail! Maran, as we know, is part of the DMK, and DMK as we know is now opposing even the 51 percent FDI proposal.

Kirana shops are really convenience stores where people from the immediate neighbourhood go. Will people trek long distances to a Wal-Mart to save money? Reuters

This is not the first time, nor will it be the last, that politicians and political parties do a flip-flop. But if we put aside for a moment the shameful scenes in Parliament and look at issues calmly, this is what we see:

• FDI in retail will benefit consumers

• It will benefit producers, i.e. farmers, who will then sell directly to the retailer through a contract agreement, thus cutting out the middle-man.

Does anyone — BJP, DMK, Marxists and the others — dispute this? They don’t. They are concerned about the ‘harm’ the new retail policy will do to the kirana shop owner. If you look at the overall picture, there are far more consumers and producers than shop owners, so the opposition is protecting the interests of a minority while ignoring the vital interests of the majority!

This is particularly astonishing coming from Marxists and the Trinamool Congress who espouse the cause of farmers.

As it is, I am not even sure that the kirana shop owner will be hit as badly as people imagine. Take any large city: the kind of space that will be needed by a Wal-Mart is not easily available, so these retail giants will only go to certain areas where they can find real estate.

Kirana shops are really convenience stores where people from the immediate neighbourhood go. Will that change? Will people trek long distances to a Wal-Mart to save money? The only people who will do this are shoppers with cars who might do their month’s shopping as they do now at Big Bazaar and similar outlets.

Question: Have the Big Bazaars killed kirana shops? Answer: No. Are political parties then opposed to Wal-Mart & Co only because they are foreign companies?

I remember – and I am sure you do too – the furore that accompanied the entry of Coca Cola, Pepsi, KFC, McDonald and similar Big Bad Foreigners. So what happened? They are now as Indian in India as any local company. They hire Indian managers and labour, source from Indian producers, use Indian distributors, etc. They have benefited the Indian economy in very many ways…

I wish our frothing politicians would just check this out for themselves. Where do McDonald’s get their patties from? Their potatoes? Their chickens? Where does Pepsi get the raw material for all the snack foods they make? From the US? From Europe? They don’t for the obvious reason that they aren’t crazy.

The crazies are in Parliament. They have done their best to ruin the country, and will continue to ruin it as much as they can if we let them....

Its not worth cursing the political leaders everythime....its high time that Indian Youth(Read Educated) needs to enter politics !!

A look @ the finance budget 2011-12

Following are the highlights of the budget:

GROWTH, INFLATION EXPECTATIONS

* Economy expected to grow at 9 percent in 2012, plus or minus 0.25 percent

* Inflation seen lower in the financial year 2011-12

SPENDING

* Plan expenditure seen at 4.41 trillion rupees in 2011-12, up 18.3 percent

REVENUE

* Gross tax receipts seen at 9.32 trillion rupees in 2011-12

* Non-tax revenue seen at 1.25 trillion rupees in 2011-12

DISINVESTMENT

* Disinvestment in 2011-12 seen at 400 billion rupees

POLICY REFORMS

* To create infrastructure debt funds

* To boost infrastructure development with tax-free bonds of 300 billion rupees

* Food security bill to be introduced this year

* To permit Securities and Exchange Board of India (SEBI) registered mutual funds to access subscriptions from foreign investments

* Raised foreign institutional investor limit in 5-year corporate bonds for investment in infrastructure by $20 billion

* Public debt bill to be introduced in parliament soon

SECTOR SPENDING

* To allocate more than 1.64 trillion rupees to defence sector in 2011-12

* Corpus of rural infrastructure development fund raised to 180 billion rupees in 2011-12

* To provide 201.5 billion rupees capital infusion in state-run banks in 2011-12

* To allocate 520.5 billion rupees for the education sector

* To raise health sector allocation to 267.6 billion rupees

AGRICULTURE

* Removal of supply bottlenecks in the food sector will be in focus in 2011-12

* To raise target of credit flow to agriculture sector to 4.75 trillion rupees

* Gives 3 percent interest subsidy to farmers in 2011-12

* Cold storage chains to be given infrastructure status

* Capitalisation of National Bank for Agriculture and Rural Development (NABARD) of 30 billion rupees in a phased manner

* To provide 3 billion rupees for 60,000 hectares under palm oil plantation

* Actively considering new fertiliser policy for urea.

So in true & simple meaning we can have the following resultant from the budget that pranab da proposed in the parliament:

L Service tax on hotels charging above Rs 1000 per day

J Homeopathic medicines, steel, LED, diaper get cheaper

L Service tax imposed on diagnostic tests

J Individual to gain Rs 171 every month under new tax slab

J Customs duty on mobile phones reduced—means it will cost less.

L Service tax on air-conditioned restaurant hiked

L Healthcare to cost more due to hike in service tax

J Farm related equipments will going to cost less due to slash in tax.

J Priority home loan limit raised to Rs 25 lakh

J TV, mobile and ACs will be cheaper

L Air travel and branded clothes become expensive

L Service tax imposed for treatment in AC hospitals

J Basic customs duty on silk slashed from 30 per cent to 5 per cent

J Minimum gain for individual taxpayers under new tax slab will be Rs 2,060

J I-T exemption for senior citizens increased from Rs 2.4 lakh to Rs 2.5 lakhs and age bracket reduced from 65 years to 60 year

J New category of senior citizens above 80, tax exemption limit Rs 5 lakh

J Tax slab has been incresed from Rs 1,60,000 to Rs 1,80,000 & proposes that salaried class not to file I-T returns, employers to provide data directly to I-T

J Allocates Rs 52,057 crore for education sector, increase of 24 per cent from last year

(Rs 200 crore for development of IIT Kharagpur, To provide Rs 20 crore grant to IIM Kolkata,

Rs 50 crore grant to Aligarh Muslim University)

J Anganwadi workers' pay hiked from Rs 1500 to Rs 3000 per month

J Pension amount hiked from Rs 200 to Rs 500 for people above 80-year

J Rs 30,000 crore proposed for tax-free infrastructure bonds- for Bharat Nirman.

Emphasis on rural development

J NABARD capital base to be strengthened by Rs 10,000 crore

J Rs 100 crore to SIDBI for women

J Enhance rural housing fund to Rs 3000 crore

J Allocation to farm development raised to Rs 7,860 crore

That what we gonna have in this 2011-12 finance budget..Hope the info useful!!

Budget is coming..

Dear friends, It’s that time of the year again which individuals and corporate eagerly await for. The time when the Finance Minister opens the suitcase that affects the fortunes of millions at least for a year. Yes, it’s time for ‘The Union Budget 2011-12.

As individuals our primary interest in the budget is how much money are we going to pay/save as tax and which things are going to be cheaper or expensive. However, the Union Budget is important from another perspective as well – the effect it has on the price of stocks because of speculation on the outcome of the budget!

Every year, we see the market rise or fall leading up to the budget; once the budget is out, we again see a rise or fall depending on whether expectations were met or not. So, how does this help us Value Investors?

Remember what Warren Buffet said about investing –

“Be fearful when the market is greedy and be greedy when the market is fearful!”

And one thing you can be sure of is that close to the budget, the market is usually acting greedy or fearful – never rational!

So, the budget could present you an excellent opportunity to buy that awesome stock that you always wanted in your portfolio but could never buy because the price seemed quite high. Or it could also give you an opportunity to book profits on some of your stocks (You only earn returns when you sell your stocks remember!) and laugh all the way to the bank. This is the time when you have to put on your Value Investor’s shoes, stretch a bit and get ready to buy or sell stocks!

So pull your socks up & jump into the market, but with safety precaution (read thro research & valuation)…

Best wishes for the budget..lets see what’s in the bag??