Safe Investment Havens of India

India is the Land of Miracles and Indians are a special breed. We want “Safety and Security” in everything we do. In fact, up until a couple of decades before, anyone working in a Private Sector Firm was considered Crazy to risk their careers because only a “Government Job” was considered Safe. When it comes to Investments, our forefathers were even more cautious. Anything that did not have the “Backing” of the Government was not even remotely considered.

Even with all the recent developments in Technology, Education and the world of Finance, we Indians are still very reluctant to invest in the Stock Market. If we try to think about the reason for this, our Mentality and Conservative Mindset occupy the top slots. Anyways, the purpose of this book is not to analyze why our mindset is like that…

In order to cater to the Conservative Investor Population, there is a whole Myriad of Investment Products available in India that is not only fully 100% safe but also gives you good returns. Most of our friends and family members would be interested in safe investment options but aren’t fully aware of what they are. The purpose of this book is to help you understand in great detail about these “Safe Investment Havens”.

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Hope you find this book useful.

Best Wishes

Anand. 

2014 Indian Budget – The Good, Great and Awesome!!!

In the last article, we covered the points from the 2014 budget that were Not So Good and also why I felt that way. One of the things I had mentioned in that article was that, the budget had a lot of good stuff and that we would take a detailed look at them soon. So, here we are. The purpose of this article is to cover all those in detail. We will also categorize them as – Good, Great and Awesome

The Good Aspects of our Budget

Fiscal Deficit 

Though the Government has not changed its fiscal deficit target for this year (which will be 4.1% of the GDP), the budget has set targets for the next financial year for the deficit to be at 3.6% of GDP and for 2016-17 at 3% of the GDP. 

This indicates that the Government is keen on Fiscal Consolidation and is taking steps towards the same. GDP is the measure of our Country’s Economy and if it grows, its Good News. Isnt it? 

Sanitation Schemes 

One of the biggest reasons for the developed nations to think we are a Third World country is the fact that, a majority of our population that live in Villages still don’t have access to Toilets or clean Sanitation. The Government is planning to cover every household with Sanitation through the “Swatchh Bharath Abhiyan” scheme by the year 2019. This year marks the 150th birth anniversary of Mahatma Gandhi and the Government is aiming to accomplish this humongous task by that time. 

Such a scheme that can help improve the living conditions of millions of Indians and improve our nations image globally would definitely qualify as Good News. Right? 

New Smart cities to be Built

Our honorable PM Mr. Modi envisions creation of 100 Smart Cities as Satellite Towns across the country. In fact, for this purpose, the Finance Minister has allocated Rs. 7060 crores in this Budget. This is good news for the public as well as Infrastructure and Real Estate Companies. 

Clarity on Indirect taxes

As you might already be aware, our government taxes industries for production of goods and services. It also charges an amount for import of goods. As part of this budget, the FM has reduced basic custom duties on certain items which are used as raw materials. This is to encourage investment and domestic production. This tax cost is usually passed onto consumers. As a result, a change in indirect tax often leads to a rise or fall in retail prices of goods to consumers. 

If there was more clarity in terms of how much cost savings will get passed on to us (Retail Customers) this news could have qualified as Great or Awesome but since we don’t have that info right now, we just qualify as Good because, at the end of the day, if this isn’t Good News, what is? 

Cultivating Interest in Sport 

Nations whose population is 1/100th or lesser than ours and Economies much smaller than ours manage to get more medals than us. One of the reasons for this is our lack-of-focus on Sports. 

Excepting Cricket (which has become more of a multi-billion-dollar Industry) Parents don’t want their kids to spend time on Sports because – they feel it is a waste of time. No wonder - In a country of Billion plus people, we struggle to get a couple of medals every 4 years in the Olympics.

In order to help improve participation in Sports, National Sports Academies will be set-up in Major Parts of our country for Track and Field events. A Sports university will also be set up in Manipur. The government has set aside Rs. 100 crores for this. 

Though 100 crores is a very small amount considering the amount of work that is required to take us towards medals in the Olympics, this is a start and hence this qualifies as “Good”. 

The Great Aspects of our Budget

Economic Growth

This Budget has actually announced a roadmap of policy initiatives that could help lead our Indian economy back to 7-8% growth levels in the next 3-4 years. The government also aims to stabilize the macro-economy with lower levels of inflation, narrow fiscal deficit and a manageable current account deficit. All these put together, translates to Great News…

Farmland Irrigation 

A Huge Chunk of our Farm Lands are Irrigated by “Rain Water” and are directly dependent on Monsoons. We all know how unpredictable these Monsoons could be and as a result, our Agricultural production gets affected. In order to cut down on this rain risk, our Government has proposed to set aside a sum of Rs. 1000 crores under the scheme “Pradhan Mantri Krishi Sinchayee Yojana” which will help provide Irrigation to farm lands. 
This is great news, isn’t it? 

Single Demat account

The finance minister announced during the budget that investors can now operate all their financial products through a single operating Demat account. This means that, you can now access all your Investments including Bonds, Fixed Deposits, Stocks and Mutual Funds through your Demat Account itself. This also means that, the Know Your Customer (KYC) norms will also be uniform across the financial sector. 

More Autonomy to PSU banks

One of the reasons why Private Banks are able to grow much faster than Government Banks is the fact that, they need to obtain so many approvals and permissions from Government Entities which kind of delays things. An RBI committee had recommended that the government give greater autonomy to PSU banks to help improve their profitability. The government has given its in principle approval for this. This will help PSU Banks perform better and grow much faster than they do now. This is great news for the country’s financial sector. 

New IITs, IIMs and Medical Colleges in India

As part of this budget, the Government has set aside huge sums of money to build new AIIMS, IITs and IIMs across the country. This is great news for students. 

New and Improved Airports

Though a lot of new flights are being introduced in our country, a majority of them are actually straining the existing infrastructure that is working on “Peak Load” which results in a lot of delays. To help improve our Air Connectivity, the FM has introduced a scheme for development of New Airports in Tier I and Tier II cities plus upgrades to our Existing Airports. This is definitely great news for us as a Nation because, lack of Air Connectivity to smaller cities/towns and inefficient airport service is one of the major complaining points for Indian travelers as well as foreign tourists who visit us. 

Increased Personal Tax Exemption Limit 

The Finance Minister has announced that the minimum taxable salary (or Tax Exemption Limit) is hiked by Rs.50,000. For regular citizens it goes up from 2 lakhs to 2.5 lakhs. The same for Senior citizens is also hiked from 2.5 lakhs to 3 lakhs. On top of this, the Section 80C Limit has been hiked by Rs. 50000 too. It was 1 lakh earlier and will be 1.5 lakhs from this year onwards. This means that, you can invest a bit more each year and achieve your financial goals much faster. 

Personally I was expecting a lot of upgrades to our taxation structure. The allowances like Medical, Transportation etc. are very low and do not reflect the current financial situation. However, the Finance Minister clarified that he wanted to help out the common man more but due to our Nations Fiscal Deficit & Economic Situation, he wasn’t able to give more for us. Though this hike will actually reduce the “Tax Income” for our Government, it was given to help out the Common Man. Had all sections of our Tax Structure been revisited, this would have been Awesome News. Nonetheless, a benefit is a benefit and hence, this classifies as “Great News”

Note: In my book on Indian Income Tax, to help the readers, I had actually created an Example Tax Calculation for Mr. Hari. He had an Income of about 11 lakhs per annum and fell in the 20% tax bracket. His Tax Liability of Rs. 84000 per year. With these revisions his tax liability actually came down to just Rs. 68,500 per year. And this reduction would’ve been much higher had Hari been in the 30% Tax slab. If you want to know more about Indian Income Tax – All you gotta do is buy this book. Check out the current offer about the book By Clicking Here.

A Boost to our Tourism Sector 

As a Boost to Tourism, the Government is facilitating Visa on Arrival (Technical Term – Electronic Travel Authorization) in a phased manner across 9 Major Airports in India. The necessary infrastructure required for this would be put in place over the next 6 months. The list of countries for which this visa on arrival will be made available will also be released shortly. 

The Indian Visa Formalities have been considered age-old, complex and time consuming by most foreigners. In spite of this, thousands of them visit us every year. Imagine the hike in tourist inflow into our country with easier visa norms.. This is Great News for both Tourists and our country. 

A Helping Hand to MSME’s 

The micro, small and medium sized enterprises (MSMEs) are the backbone of our economy. Not every company can be of the size of a Reliance or a TATA. The biggest problem these companys face is the “Funding Shortage”. The Government has proposed to establish a Rs. 10000 crore corpus to act as a catalyst to attract private capital by way of providing equity, loans and other risk capital for start-up companies. The Finance Ministry has also said that, the definition of MSME will be reviewed to provide for a higher capital ceiling. This will help companies get funds easier.

This is great news because, this will help companies grow and this in-turn will generate more employment and greater GDP for our country.

The Awesome Aspects of our Budget 

Pension for Senior Citizens 

The Government is reviving the “Varishtha Pension Bima Yojana” Pension Scheme for Senior Citizens for 1 year to provide pension to citizens aged 60 and above. On top of this, the government is planning to try and use the large amount of unclaimed funds in PPF and Post Office Savings Accounts to benefit the Senior Citizens of our country. 

Affordable Housing 

The government is keen on taking steps towards Affordable Housing. Not only are steps being taken towards building cost-efficient or low-cost houses, the government has also hiked the Interest Exemption on “Self Occupied Property” which is on “Home Loan” by Rs. 50000/-

So, up to 2 lakhs Interest that you repay each year towards your home loan is exempt from Income Tax. Isnt this Awesome News? This will boost sale of houses as well as increase the demand for home loans. Not to mention the tax savings for us. 

PPF Investment Limit Increased 

One of the biggest and most popular Safe Investment options in India is the Public Provident Fund or PPF. Most people would like to invest more in PPF but are unable to do so because of the 1 lakh per year upper-limit set by the Government. As part of this budget, this upper limit has been hiked to Rs. 1.5 lakhs. This will help us save more each year. 

Roads & Infrastructure 

If you have travelled by Road in India, you will definitely agree that our Roads need a lot of help. The government aims to construct about 8500 kms of Roads in the current financial year and about 37,880 crores has been set aside for the same. About 3000 crores from this amount has been specifically earmarked for the North-East. 
On top of this, 14,839 crores has been set aside for improving or laying of roads in our villages as part of the Pradhan Mantri Gram Sadak Yojana. 

Interest in Renewable Energy

The Government has kick-started the move towards Renewable Energy Sources like Wind-Energy and Solar Energy to meet our Energy Requirements. New Solar and Wind Power Projects are planned across India. This will not only help meet our electricity needs but also help prevent further damage to our environment. 

Some Final Words

As you can see, there are tons of good, great and awesome aspects of our Budget. Though there are many more things our Government could’ve done, we have to remember the fact that its been just a couple of months since the new Mr. Modi Led government took charge and there is a lot of work left to do for them as well. 

Personally, I feel that, this budget is a good starting point towards the Governments commitments towards Growth and Prosperity.  What more can we ask as a citizen? 

Jai Hind!!! 

The 2014 Indian Budget Review – The Not So Great Aspects

Dear all, yesterday I posted an article covering the “Highlights” of the Indian Budget that was presented yesterday in the Parliament. It was more like a News Coverage kind of article and did not contain any detailed analysis about the points raised in our Budget. As I promised yesterday, this article is going to review the Budget and help you understand things that categorically…

Bad News First:

As with any budget, this budget too has its flaws but considering the magnitude of the Good News that will follow shortly, I think we can ignore these as minor hiccups from a new Government. Anyways, lets complete the bad news part so that we can cover the Good News Part in great detail in the next article…

Bad News No. 1: Not Much Increase in Tax Revenue

As you might be aware, Tax Revenue is the biggest contributor to the Governments Budget or the Khazana as we commonly call it. With a low-growth situation, high fiscal deficit and a need to revive the economy, tax reforms were expected in this budget. However, the FM just mentioned that the new Goods and Services Tax or GST will be finalized and introduced towards the end of this year. This new GST could potentially boost tax revenue for the Government. For the time being – the tax rates were left unchanged and so, the Tax Revenue will remain flat.

Category: BAD

Justification: With the Government Keen on Economic Reforms and Reducing the Fiscal Deficit, higher Tax Revenues were Imminent. Considering the fact that the Government is just 2 months old and the fact that they are working on finalizing the new GST, the category is just BAD.

Bad News No. 2: GAAR Left Untouched

The General Anti-Avoidance Rules or GAAR as they are commonly called has been a topic of confusion and distrust for Investors. Since it got introduced in the 2012-13 budget by the previous regime, it has caused nothing but pain and distress amongst investors. In fact, the BJP too had criticized the same. However, this budget has done nothing to either Scrap it or make things easier for the Investors.

GAAR is a concept which generally empowers the Revenue Authorities in a country to deny the tax benefits of transactions or arrangements which do not have any commercial substance or consideration other than achieving the tax benefit. GAAR is intended to target tax evaders, especially Indian companies and investors trying to route investments through Mauritius or other tax havens in order to avoid taxes. GAAR provides discretionary powers to revenue authorities to tax impermissible avoidance arrangements. The arrangements as a whole or aim part may be disregarded and tax benefit denied.

However, the only saving grace is the fact that, the government has now said that it will be forming a Committee that will oversee the cases that are under litigation due to retrospective amendments.

Category: BAD

Justification: From a Government that had promised to provide an Investment-Friendly Economy, these kind of misses can turn out to be costly. If the committee had not been appointed, I would’ve categorized this as “Very Bad or Horrible” but this is actually a step in the right direction towards boosting investor confidence and hence classifies as just Bad.

Bad News No. 3: Continuing Subsidies

The previous regime had started out many subsidy schemes that were aimed at targeting the votebank of our nation. These subsidies were a huge drain on the countrys financial resources and were a key impediment in our progress towards growth. I am a firm believer in “No Free Food” concept. All Schemes that help the poor are to be welcomed but at the same time, they shouldn’t turn into charitable schemes where people just get freebies all the time and lose the drive to actually work or earn.

With the new government targeting prudent spending, one of the key expectations was that, it would curtail expenditure and cut-down on expensive subsidy programs. The FM did not say announce any major decisions about this sensitive topic. He just said that the Government will review the Food and Fuel subsidies and a committee is being formed to do so.  In fact, marginal rise in subsidies for fertilizer and defense equipment has also been announced.

Category: VERY BAD

Justification: Subsidies are a huge drain on our resources and one of the highest contributing factors to our current Financial Mess. By not addressing this during the budget, the government has essentially delayed the decision on subsidies. Everyone (including me) wanted the government to bring down subsidies. Lets hope such schemes are reviewed and scrapped to help our country develop faster.

Bad News No. 4: Sardar Patel statue

Except Gandhi and Nehru, almost all national leaders have been forgotten and am actually glad that one of the country’s strong icons and our first Home Minister is getting a statue. However, at a time when our government is taking steps to curtain expenditure and help boost the economy, such a huge allocation does not sound right.

Category: Very Bad

Justification: Though I am a big Sardar Patel fan, 200 crores in this kind of economic situation sounds overkill. They could have allocated a smaller amount or plan installing a smaller statue and divert the rest of the funds towards other schemes like “Women Safety” or “Infrastructure Growth”.

Bad News No. 4: Disinvestment of PSU Entities

Disinvestment of PSU Entities is one huge source of Non-Tax Revenue for the Government. Though the previous regime did come up with a few such decisions, they were not widely implemented due to the fact that such decisions were termed unpopular and against voter sentiment. Most Economic Experts expected the Mr. Modi led government to come up with a huge scheme that would raise at least 70,000 crores or maybe even more. However, the FM did not touch this topic at all in the budget.

Category: Very Bad

Justification: With the government tightly placed for cash, disinvestment of PSU Co’s could’ve helped infuse a lot of capital into the coffers. Yes, this will be an unpopular decision because most employee unions will be against such decision in fear of losing their “Government Jobs”. But, the government isn’t going to sell these companies. They are only going to sell a small % of their stake to raise capital which will be used to fuel the nations growth. I was personally expecting cracker declarations to come-up in our budget but it hasn’t. Hence the categorization as “Very Bad”.

Some Last Words:

Personally, I was expecting fireworks in this budget. However, realistically speaking, years and years worth of mismanagement cannot be fixed overnight in a single budget. The next article will cover all the “Good News” from this budget and that will definitely bring cheer to you. It will also reinforce the fact that, this budget is the first among the many to come in future to take india forward.

Hoping for the best!!!

The 2014 Indian Financial Budget - Highlights

The Finance Minister Mr. Arun Jaitley presented the new BJP Governments maiden Financial Budget today in the Indian Parliament. With expectations skyhigh and a lot of pressure due to the current Indian Economic and Financial situation, this budget will be crucial to India's future as a nation as well as for its Growth.The purpose of this article is to highlight the key points from the Budget that was presented today.

Before We Start:

The Idea of this article is not to Review the Indian  Budget from a Political perspective.The purpose of this article is just to give you an overview of the key highlights of this Budget. This is not a Politically Motivated Review of the Budget. I am just a blogger and my take on this budget is just my personal view. You are free to disagree with me :-) but please be civil in the comments section.

Points to be Considered - Before Looking At the Budget Highlights

The following are some of the key points to be considered before we look at our budget and its highlights. These are points that the ruling BJP Govt, our PM Mr. Modi and our FM Mr. Jaitley would've or should've taken into consideration before coming up with the budget.

• Inflation is at an all time high. The cost of living in India has gone up exponentially over the past 10 years. The Common Man or Aam Aadmi (No, I am not referring to the supporters of the AAP Party) is struggling to make ends meet. 
• The Indian Economy is under severe stress due to reduced growth
• Our previous Budgets have done very little to address the Fiscal Deficit. With the deficit getting larger and larger, this budget cannot come up with populist freebies or sops
• Our GDP is much lower than our peer Developing Nations. We need to revive our growth
• A Majority of our Population still live in Villages and Tier II or III Cities/Towns with little access to power, clean water or sanitary conditions. These people are well below the Poverty Line and need help

Key Highlights of the Indian Financial Budget

The following are some of the key highlights from the Indian Financial Budget for 2014-15 that was Presented today in the Parliament.

• FDI (Foreign Direct Investment) to be allowed in several sectors of our Economy. This will help boost Manufacturing and Industrial Output as well as our GDP. Not to mention the additional employment this would generate
• Banks to be allowed greater Autonomy to make them more Responsible and to stabilize the Financial Situation in the Country. 
• A national program called Skill India to be introduced to provide training and support for employment: Jaitley.
• Visa on Arrival facility (e-Visa's) to be introduced in 9 Major Airports in our country. This will make India an even more attractive Tourist Destination and increase tourish revenues
• 'Pradhanantri Krishi Sichayin Yojana' to be started to help Farmers with Irrigation for their Agricultural Lands
• EPFO will launch a unified account scheme for portability of Provident Fund accounts. No more submitting for Transfer of EPF when we switch jobs. Just mention your unified PF Account number and continue your PF Account without hassles
• Idle Money lying around in the coffers of the Post Office (And other government Establishments) to be put to proper use. 
• Rs. 100 crores set aside to help the Girl Children of India. 'Beti padhao, beti badhao yojana' will facilitate the same
• Pradhan Mantri Gram Sadak Yojan or PMGSY to get Rs.14,389 crores to boost Rural Development
• A new National Housing Banking programme created and Rs. 8000 cr set aside for the same
• Rs.3600 crore set aside for National Rural Drinking Water programs
• Four more new AIIMS to be set-up across the country. Rs.500 crore set aside for this. The four new AIIMS will be in Andhra, West Bengal, Vidarbha and Purvanchal
• 5 new IIM's and 5 new IIT's to be set-up across the country. 
• 12 New Govt Medical colleges with dental facilities to be built
• 15 Model Rural Health Research centers to be set up for rural health issues
• Rs. 500 crores set aside for the National Rural Internet and Technology Mission
• Rs. 400 crores set aside to incentivize development of low cost housing
• Rs. 100 crores set aside for Metro Rail project (in Public-Private-Partnership or PPP Mode) in Ahmedabad and Lucknow
• Rs. 100 crores set aside for Modernization of Madrasas across the country
• Rs.200 cr set aside to build New Agriculture Universities in Andhra & Rajasthan and Horticulture Universities in Haryana & Telangana. 
• To help Farmers - Soil Testing Labs to be built across the country and issue Soil Health Cards. Rs. 56 crores set aside to build the testing labs and Rs. 100 crores set aside for the health cards program. 
• Financial Aid to be provided to 5 lakh farmers through NABARD (National Bank for Agriculture and Rural Development)
• Rs. 5000 crores set aside for the Rural Infrastructure Development Fund
• A Rs.5000 cr short time rural credit refinance fund set up to help Farmers this year
• Rs.100 cr set aside for Kisan Television to provide real time information on various farming and agriculture issues to help Farmers
• All govt departments and ministries to be integrated through E-platform by 31 Dec this yea
• Rs.50 cr set aside for pashmina production programme in Jammu and Kashmir
• Rs.4200 cr set aside for the Jal Marg Vikas project on river Ganga connecting Allahabad to Haldia,over 1620 km
• In order to complete gas grid, 15000 km of additional pipeline to be developed through PPP mode
• New airports to be developed through PPP mode (Details on where and how is still awaited)
• Bank will be encouraged to give long term funds and loans to the infrastructure sector to help revive the same
• Schemes to make Banking & Insurance services reach the common-man to be introduced. 
• Rs. 7060 crores set aside to develop & build new Cities 
• Rs. 6000 crores set aside for the welfare of Senior Citizens across the country
• Rs. 150 crores set aside to improve women safety 
• Rs. 5000 crores set aside (over and above the amount set aside in the Interim Budget) to strength the country's defense
• Rs. 100 crores set aside for the Project that aims at linking Rivers
• Rs. 2037 Crores set aside for the "Namami Ganga", an integrated Ganga Development Project
• Rs. 28,000 Crores set aside to provide Sanitation (toilets) in all Primary Schools
• Biotech clusters to be set up in Bangaluru and Faridabad to take science and technology to new heights
• Govt will set up national sports academy for different sports in different parts of India
• Rs. 100 crores set aside to build a Sports University in Manipur
• Rs.200 crores set aside for upgradation of indoor and outdoor stadium in Jammu and Kashmir to international standards
• Rs. 500 crores set aside for the Project to help Displaced Kashmiri Migrants 
• Rs. 8,00,000 Crores set aside for development of Agriculture in India
• Rs.1000 crores to be provided for rail connectivity in North-Eastern regions
• Rs.100 crores set aside for development of organic farming in north east India
• Rs.150 crores set aside for communication needs of Andaman and Nicobar islands.
• Rs. 30 crores set aside to build a Hasthkala Academy for the revival of Indian Handicrafts
• Rs. 37,800 crores set aside for the NHAI (National Highways Authority of India) to build roads across the country
• Rs. 3000 crores set aside to construct/upgrade roads in North East India 

Changes to Individual Income Tax

Lets come to the All Important section of this budget. The Income Tax rates were left unchanged. However, the Individual Income Tax Slabs were revised slightly and minor benefits are provided which include:

• Tax Exemption Limit changed from 2 lakhs to 2.5 lakhs - for regular citizens
• Tax Exemption Limit changed from 2.5 to 3 lakhs - for Senior Citizens
• Interest Exemption on House Loan - up from 1.5 lakhs to 2 lakhs
• Section 80C Exemption Limit changed from 1 lakh to 1.5 lakhs

My Take on this Budget

Everyone actually expected a Miracle from Mr. Modi and Mr. Jaitley. Years and years worth of damage to our economy cannot be fixed overnight. Though this budget does not do anything radical, it is obvious that this budget is intended to boost Agriculture, Industrial Production and strengthen our Nations Defense & Infrastructure. The hike in the Individual Tax Exemption limits by Rs. 50,000/- and the additional exemption of Rs. 50,000/- on home loan interest will bring marginal relief to the tax payer. The hike in Section 80C limits from 1 lakh to 1.5 lakhs is a welcome move and will motivate individual saving.

This article hasnt gone into the specifics in-terms of how this budget will impact you. That is because, it requires a little more analysis from my side and I will be posting the same very soon.

The Indian Railway Budget 2014-15 - Highlights

The Railway Minister Mr. Sadananda Gowda has just presented the Railway Budget in our Parliament. The purpose of this article is to give you an overview of the Key Highlights of this Railway Budget...

Before We Start:

The Idea of this article is not to Review the Indian Railway Budget from a Political perspective.The purpose of this article is just to give you an overview of the key highlights of this Railway Budget. This is not a Politically Motivated Review of the Budget. I am just a blogger and my take on this budget is just my personal view. You are free to disagree with me :-) but please be civil in the comments section.

About the Indian Railways

The Indian Railways is one of the worlds largest in all aspects. No matter which aspect you compare our railways against the other nations - like No. of people using it, or No, of trains operated or No, of Employees etc - We will definitely be in the Top 3 or 4 Nations. Anyways, below are some key statistics about our Indian Railways before we get into the highlights of our new Railway Budget

• The Railways is facing a sever cash crunch. Thousands of crores required to complete (Approx. 27000 crores) In-Progress Projects
• Earnings for the last financial year 2013-14 was Rs. 12,35,558 Crores 
• 94% of the Income went into meeting Operational Expenses and only the rest is available as Investible Surplus for the Railways to Modernize or Improve its Services
• 19,000 Trains Operated Daily - 12,000 for Passenger Service and 7,000 for Freight & Cargo
• 25 Million Passengers on an Average utilize Railway Services Daily
• 1 Million Tonnes worth of Cargo gets moved every day 

Improvements Proposed as part of the Budget

The following are some of the Improvements that are planned to be taken up to improve the Railway Services available to the Citizens of our country. 

• Battery Operated Vehicles to help senior citizens move around in railway stations
• Outsourcing of cleaning services to enhance cleanliness of stations and trains. Plus CCTV services to be used to monitor the cleaning services
• Availability of RO Drinking Water in Stations and Trains
• Steps to be taken to improve the quality of food being served to Passengers including strict punishments (cancellation of their contracts) for vendors serving low-quality or unhygienic food
• Ticket booking services to be available through post office and mobile phone 
• 17000 new RPF Personnel and 4000 additional women RPF personnel to be added to enhance security
• Rs. 1780 crores allotted to eliminate Unmanned level crossings - Across India
• Introduction of Wi-Fi services in A category stations (All Major Cities and Towns qualify as A Category)
• New Railway projects and worth over 20,000 crores to be implemented in Andhra and Telengana
• 27 New Express Trains to be introduced on routes across India
• New High Speed Bullet Trains proposed on the Golden Quadrilateral lines
• Special Trains for Pilgrims from major cities to Major Pilgrimage Sites across India
• Special Milk Tanker Trains to be Introduced
• 23 new Projects proposed for North East India
• Improve e-ticketing services to enable more people to book tickets online. The upgraded e-ticketing website will be able to handle a load of 1.2 lakh concurrent users. 
• Waiting rooms to be constructed in all stations to help passengers (along with online booking of those rooms)
• All Railway Stations to have good quality Food Courts 
• Construction of Toilets and Implementation of Escalators in all stations to help passengers

Motivating Factors Behind the Rail Fare Hike

Based on Data Gathered from the Internet below are the two key reasons why the Fares were Hiked recently:

1. A Increasing % of passengers are travelling without tickets and Authorities who are supposed to enforce the ticketing rules are indulging in bribery and allow those passengers to get away with the same. 
2. People are misusing the discount available for cargo being moved for Consumption within India for Items being moved for Export. The Government Offered Discount is not available for Export Goods but as with any service, our people are misrepresenting facts and getting the discount for export products. The losses from this problem alone amounts to lakhs of crores - Each Year. 

On top of these two reasons, the Government Offers heavy subsidies to its citizens on Rail fares. Subsidies offered to Railways is one of the biggest parts of the country's Financial budget. One of the reasons why the Railways is facing sever cash crunch is due the same. According to Data provided by the Railway Ministry, the Indian Railways is losing 23 paise per passenger on a daily basis. 

My Take on the Budget

For as long as I can remember, the Quality of services offered by Indian Railways (Including 1st class or AC coaches) is nothing in comparison to the services that are available in foreign countries. Not just the cleanliness of the Trains and Stations but also in terms of the quality of seats, comfort of travel, safety and security etc. The Topic of a Railway Fare Hike is a "Hot Political Topic". In fact,  Almost all opposition parties are already complaining about the fact that the fare raise was unnecessary or that their particular state/territory hasn't got enough trains or that introducing or operating superfast trains isnt a good idea etc. Nobody is worried about the improvement in Quality of Services that are being proposed. 

Anyways, Personally I feel that the Majority of the Passengers (Including Me) will be more than happy to shell out a couple of hundred rupees on their tickets if the quality of Service will be Improved. I would rather pay Rs. 500/- for a safe and comfortable journey than pay Rs. 300/- or Rs. 350/- for a journey that requires me to adjust with ticketless travelers, undergo physical strain due to uncomfortable seats and not to mention the poor quality food or unhygienic toilets.

Though the fares we pay are much lower than most countries in the world, our passengers are still unhappy. I guess, even if we offer free tickets to people, they will probably complain that the government isnt giving them free lunch or dinner. It is high-time we do away with freebies and votebank politics and move towards providing world class services that we can be proud of. 

What is Black Money?

There is a lot of talk these days about Black Money and about bringing back our Black Money from foreign tax havens isnt it? Though many of us read such articles and hope & pray that Indias Wealth from abroad comes back to us, not many of us actually know what Black Money is. The purpose of this article is to help you understand what BLACK MONEY is...

So, What is Black Money?

All unreported incomes whether by legal or illegal means, and their subsequent use in consumption or investment constitutes 'black economy'.

Some simple real-life examples to help you understand:

1. You go to a Pharmacist to buy some general meds like Crocin or Dolo. The Pharmacist asks you do you want a bill and you say No because if he writes a bill, he will charge you a couple of extra rupees (which he is supposed to pay as Taxes). Anyways, you saved a few rupees but whatever money you paid the pharmacist for your meds is "Black" in his hands.

2. You go to a Government Office and try to get something done. The Government officer asks for a "Bribe" and you pay him in Cash. This bribe that you pay is "Black" in his hands.

3. You are employed and also own an extra house that is rented out. You receive the rent each month but you dont show this amount in your Income Tax Returns. This Rent that you receive each month is "Black" in your hands.

4. Your Kids go for private tuition for subjects like Maths, Science etc. The teacher does not issue any receipts and accepts only cash as monthly tuition fee. This fee that you pay is "Black" in the teachers hands.

Do you remember Rajnikanth's "Sivaji" movie? Any money that does not have a proper record and for which proper income tax is not paid by the person receiving it is considered BLACK.

Where is all this Black Money?

A Bulk or significant portion of this Black Money is right here in India. Most of it is stored away in underground safety Vaults and Bank Lockers as "Cash". A lot of it is also stored in Bank Accounts in other people's names (Benaami's) or as assets & property registered on some family members names.

Easily 50% or more of India's Black Money is in India and I remember reading an article by a renowned economist stating that our Government must actually beef-up measures to locate illegaly stashed away Black Money in our country first and work with foreign authorities in parallel because getting their cooperation is very difficult but getting people inside our country to cooperate is lot easy.

Anyways, the rest of the money is stashed away in foreign Tax Havens.

What is a Tax Haven?

A tax haven is a state, country or territory where people find it easy to make financial transactions. These countries usually ask very low questions and welcome any and al customers from foreign countries to deposit their money with them. The main feature of a haven is that its laws and other measures can be used to evade or avoid the tax laws or regulations of other jurisdictions. A Tax Haven Typically:

1. Has Nil or Very Low Tax.
2. Has strong Personal Information Protection and Confidentiality Laws. They will not divulge or share information about their customers with anyone.
3. Lack of Transparency. They will not cooperate (that easily) with Law Enforcement Authorities from other countries
4. No Questions Asked - Most of these countries allow banks and financial institutions to operate with customers with little or no info. You could just walk into a bank in these countries and deposit a million dollars in cash. Nobody will ask you why...

Our Government is actively Pursuing Switzerland to share the details of Indian account holders isnt it? Why? That is because Switzerland is one among the "Tax Havens" which are frequented by the "Super Rich" to stash away their Black Money.

What are the Top Tax Havens in the World?

According to the most recent list released by the Organization for Economic Cooperation and Development (OECD) some of the top countries that feature in the list of "Top Tax Havens" are:

• Switzerland
• Brunei
• Panama
• Guatemala
• UAE
• Cayman Islands
• Cyprus
• Seychelles
• Botswana
• etc...

Is Keeping Black Money Illegal?

Yes, Absolutely Yes. Keeping Black Money and concealing income sources is TOTALLY ILLEGAL and if caught you will be Penalized Heavily. On top of the fines and penalties, you may be Jailed Too...

Banking System in India and Black Money

The Banking Regulations in India are very strict. In spite of this people find loopholes in our regulations and conceal black money. Anyways, some of the rules enforced by banks to stop people from stashing black money in banks:
1. All deposits greater than Rs. 50,000/- require a PAN Card. The details of the transactions will be shared with the IT Department
2. All deposits greater than Rs. 10 lakhs require a source of Income to be declared
3. All Accounts that have a balance of more than Rs. 50,000 (This limit changes frequently) and the details of the account holders are shared with the IT Department every quarter
4. TDS is deducted on your Fixed Deposit Interest and requires you to file your tax returns

In spite of all this, people are still able to convert their black money to white and do all illegal activities. Our Bank Officials and Chartered Accountants know all the loopholes in our Law and help rich folks get away with such activities.

Some Last Words:

The Salaried Middle-Class pays taxes promptly and has very little to 0 Black Money. Businessmen and Merchants who make a lot more money than the salaried middle-class have sneaky ways to avoid tax and end up amassing wealth which causes high inflation and economic divide. Unless the Government comes up with a blockbuster move like what Thalaivar Rajnikanth did in Sivaji move, this will continue.

At least, this move to force foreign Tax Havens to cooperate is a step in the right direction. Once people know foreign banks will share their asset info, they will try to conceal their wealth inside India and their chances of getting caught go-up significantly.

Lets hope for brighter or should I say Whiter days!!!

Great News for Credit Card Customers

Almost all of us own one or more credit cards and in fact, in this electronic age, finding someone who doesn't use a credit card is really hard. One of the key problems we face as credit card customers is the hefty fees and interest they charge on us in case we miss the payment due date. The purpose of this article is to elaborate on one of the recent developments that may come as Great News for Credit Card Customers...

So, What is this Great News?

The Reserve Bank of India has instructed or should I say Told all Credit Card Issuing Banks that, they can charge late fees only in the next billing cycle following a missed payment.

This official statement looks a little misleading isn't it? You might understand this as, if you miss the payment date, the credit card issuing bank will charge you the late fee during the next cycle instead of this cycle. Thats all. Isn't it? No, that is not what it means.

RBI has told banks that, they should not charge the customer any Late Fee if the customer completes the payment before the next billing cut-off date.

For ex: Let us say your Billing Date is the 15th of each month and Due date is the 30th of the same month. You received the statement from your card company on the 18th with an outstanding balance of Rs. 5000/-. For some reason you forgot to pay the bill and realize the same only on the 6th of the next month. Up until now the card company would've charged a Late Fee on your card statement already. However, if you make the payment before the 15th of this month (which is your billing date), the card company will no longer charge you this late fee.

How This Affects Me...

The late fee imposed by card issuers ranges between Rs 100 and Rs 700, depending on the outstanding amount as well as the type of card you hold. So, a simple human error like forgetting the due date could result in hefty fees being paid from the customer side.

The Unknowns:

Though this is Welcome News from a customer perspective there are a couple of unknowns here:

1. There is not much clarity on the "Date" by when this instruction has to be implemented by Banks. As this ruling will significantly dent their incomes banks would obviously opt to wait until the deadline date until they implement this. RBI will most likely release this deadline date soon. 
2. There is not much clarity on whether Banks can charge the customer "Interest" in case he/she misses the payment due-date. Along with the late payment fee, banks also charge an Interest (from the date you actually made the transaction) on the outstanding amount. Though RBI has asked banks to not charge this late fee, there isn't much clarity on whether Banks are allowed to continue charging this Interest. More clarity is expected to come-up in the following weeks on this topic. 

What Should I Do?

One of the things I always suggest or recommend to my friends & blog readers is that, always pay your credit card outstanding IN FULL and ON TIME. There is no reason to delay the payment and then hope that the bank will not charge you any penalties or interest. Though this is really good news and can help out in rare scenarios like when you are out of town on business and cant drop the cheque or when you forget. However, this is not a substitute for Financial Discipline and paying your bills on Time.