e-Nagar

According to this week’s Economist, the tax rate in India is the second highest in the world.

All this when we know that there is no Social Security system in India:
1. Government schools are a mess
2. Not even the poor want to go to the government hospitals
3. Lets not talk about the public transport system
etc etc
India has the world’s second highest saving’s rate (after China), and yet government’s borrowing is out stripping the supply.
When I couple these news with the fact that Fiscal Deficit is now a 2 digit figure (in terms of percentage of GDP), I wonder where is all the money going.

The returns from holding a stock could come through various ways.
1. Capital Appreciation (the stock price going up)
2. Splits, bonus, and rights at a discounted rates
3. Dividends
4. Shareholder promotional schemes. (Reliance stock holders get discount at Raymonds, Apollo hospital shareholders get rebates for medical treatment etc)
Almost all indexes (Sensex, S&P CNX Nifty etc) take care of the first 2 return. It is hard to put a monetary figure to the fourth because many of these schemes are never exercised or are little more than advertizing channels.
However Dividends are not taken into account when Index is computed and yet they are not insignificant. During the bear market period, the Nifty dividend yield was about 2% (as per NSE website ) it is 1.09% on 28th Aug. In evaluating a long term portfolio, ignoring this value could be serious.
Interestingly all mutual funds while advertizing their performance would assume that dividends from the mf are reinvested, yet Nifty/Sensex benchmarks are not adjusted. This introduces a bias of 1-2% in returns.

NIFTY Total Return Index does adjusts for dividends, but unfortunately one has to pay to access it.

Most commercial chocolates available in India have coco butter, milk/hydrogenated vegetable oil and sugar. So this sugar and fat loaded bar is not the best friend for a calorie conscious girl who is hooked on to it. It should be possible to replace sugar with artificial sweeteners and coco butter with coco power (which has 10-12% fat). Are there any brands that use this formula and make something that tastes almost as good as the regular bar?

“Effective August 24, 2009, all NEFT Transactions(E-Cheque transactions) will be charged for Rs.5.00 as Service Charge+applicable Service Tax .”

The company had studied the Indian bureaucracy and concluded that when things run smoothly, people tend to take you for granted. Now this goes totally against its motto “Hum Hai Naa!” “We are there”
So based on the recommendation of this report the company has already hived off its ATM Business. After all no use owning the machines that never work.
It has reduced the number of its branches so that people have to travel farther and wait in longer queues.
Finally it realized that this was not enough. People are falling in love with online banking and were extensively using the electronic fund transfer/E-Cheques. Online transactions mean that one does not have to physically interact with either the ICICI Bank or its dysfunctional ATM. Hence from today they will be taxed heavily.

happy ganesh chaturthi!!!

Recently I came across this very interesting personal loan scheme. The merchant would swipe your credit card and max out your credit limit (say 30,000/-) and make a spot payment of 28950/- (he charges a 3.5% commission for these activities).
This thousand fifty of processing fees for the loan might look exorbitant, but actually it works out a lot less.
1. Most credit cards company would offer you a loyalty gift/cashback worth 1% or 300/- for this transaction
2. If you could match the billing cycle, then you can have a 45-50 day loan at 3.5% interest or 33.5% compounded annually. After accounting for the 300/-loyalty points, it comes to only 1.7% monthly which is lower than any other commercial loan of the similar duration. If you have multiple credit cards, then probably you could roll over this credit to longer periods at favorable terms.
3. Cash limit from credit cards is usually lower than the spending limit also when one accounts for the ATM usage charge and the fact that the interest cost starts kicking the second you make the withdrawal, traditional loan against credit card looks less attractive.
4. Most personal loan come for a minimum of 6 months period and has a substantial processing fees and early payment fine. This makes it very expensive for ultra short term loans.
5. Bank overdraft facility is the cheapest option, but unfortunately very few individuals have it.
6. Almost all other credit option require half-one day of processing time, while this is instant.
7. Earlier there used to be a local Marwari/Reddy who would double up as a pawn broker and issue loans. However lately many of them have started shutting shops and rest have become notorious of using physical violence. Hence most customers don’t want to deal with them.
This post is written not to encourage individuals to accumulate huge personal debt but to show how ingenious unorganized sector has become. Also care must be taken to note that this activity is not legal in India. Yet these individuals advertize in newspapers and banks has not yet objected.

A couple of friends cite parental objection as the reson for breakup. A friend of mine even attached parental permission as one of the covenant to their relationship. All this makes me wonder whether parental pressure is for real of is it just a charade?

I beleive that a lot of relationship have their basis in the desire to have some human contact, to hang out and do time-pass till someone better comes along. There is also a lot of peer pressure which forces people to scout for someone special to talk to, to share with. Over the years, many such relationships mature to love. However quite a few of them just continue to linger around. Hence no of years is no measure of how strong the commitment is.

I have known guys who wouldn’t allow their parents to select a dress for them, because they don’t think that their tastes match. Yet when it comes to relationship, I am surprised so many people cite parental objection as the reason for the breakup.

According to Julian Rotter, Locus of control (LoC) is a very important measure of culture. In cultures like India, people don’t like to own their failures and always are looking for an external reason/event to blame. Hence parents could be an scapegoat for the kid who actually does not want to marry. Also as TRR had pointed, if due to some miracle the horoscope do not match then its a bonanza. If aruged well, it provides with such concrete reason which your partner can never even think of challenging.

Unlike the previous generation, today the youth can afford to disobey their parents. Most of the educated middle class are qualified enough to earn their living independently. Hence the traditional threat that “If you marry her, then I would disown you” does not mean economic ruin for the newly weds. They are still attached emotionally to their family and relatives. However realistically speaking, sooner or later the parents have to come to terms and accept the new bride.

Only in movies you see that the guy brings a girl home and say “Maa, she is your daughter in law”. Most boys ensure that the parents have met the girl atleast once. He might not tell them implicitly at that time, but he surely seeks their approval and value their views. Also parents might not be sure of the son’s intentions at that time, but they feel duty bound to nip the bud, esp. if they find her unworthy and that their son is going astray.

Hence no matter what parents say, the news is rarely a bolt from the blue. All the pressure tactics/emotional blackmail etc is only to test his commitment level and make him aware of that fact. All parents want to see their kids to live happily ever after, hence they don’t want to be an agent of sorrow and interference.

PS: A few years ago, I had listed out few of the reasons that my dear friend gave when she broke off her relationship for an arranged marriage.