Indian Budget 2010 - What it means

New banks will set up shop, more PSUs will list, 2011 will see a new tax code and there’ll be more money in the hands of investors... inflation's the last thing on dalal street's mind.

Infra bonds any takers?

Infrastructure bonds are not great products with interest as low as 5.5-6% and money locked in for 5-10 years. But that’s the only option to save more than Rs 1 lakh by way of tax if you don’t have a housing loan (which entitles you to Rs 1.5 lakh more). If you have an extra Rs 20,000, go for it.

Service tax to hit home buyers

Service tax will be charged if the builder does not produce the ‘completion certificate’. Booking a Rs 1-crore apartment before it’s ‘complete’, will mean a Rs 3-lakh tax over and above the value-added tax (VAT) collected by states. Genuine home buyers should insist on the certificate.
E-loan data registry to curb fraud

A new electronic registry to store title and borrower details will curb home-loan frauds. When a bank processes a home loan, it can find out whether the title deed is clear and no other lender has a claim on it.

Less govt borrowing fine for debt

No pressure to hike interest rates. Short-term plans (with 1-2-year maturity) look good for a 6-month investment since bond prices may rise, post March. Income funds may give decent returns if the govt does not front load its borrowing
Tax rejig to raise ULIP returns

Service tax on charges levied by life insurers on Ulip investors has been reworked. Returns will rise a little as more money out of premium gets invested. Property and overseas mediclaim premium may rise due to service tax on non-life insurance companies.

Service tax on mediclaim premium

Service tax on health claims will be settled by insurers directly with hospitals. Insurers will recover the money from policyholders. Health insurance costs may rise if insurers are not allowed to offset the tax against service tax on premium.

10 things to consider before lending money to friends or family

1. Never lend any amount you are not willing to lose.

2. Learn to say "It's not convenient" when asked to lend money.

3. Be wary of signing as a guarantor for someone else. In this country you can end up in prison.

4. Set a budget in your mind in case you are asked to help someone. Then say "honestly, it's not in my budget" when it isn't.

5. Know that you are not responsible for the troubles of others. It's ok to help others, but it is their problem so don't make it your own.

6. Remember that when the bank will not lend to them, they are probably a bad risk.

7. Offer to help them in some other way, perhaps pay them for work they can do for you, or help them find a better paying job.

8. Start building your own emergency fund. Make sure your loans and credit cards have insurance against redundancy. Get it in writing. If there is no insurance for unemployment — change your bank.

9. Ensure you have security for any lending you do. For instance, assign an investment they own to yourself, or get a letter telling their employer to deduct from salary to pay you, or take a post- dated cheque, or keep their credit card until you are repaid.

10. Don't assume they want to repay you. Many people are ahead of you in the queue for payment from the debtors.

Phone Call to the world for just 1 fils per second

Du Homephone is an economical way to use your existing home landline to make national and international calls from UAE. Once you subscribe to Homephone, simply dial 08888 before the number you wish to call and immediately start saving. Your landline number stays exactly the same.

how much you can save?

Although he's now earning three times the salary he earned more than two years ago, Mahesh Devji Sampat still walks an average of more than 200 kilometres per month — to save money on transport.

The Indian expatriate doesn't have a car. He is the lone breadwinner in the family of five. Now, at 50, Sampat says he is still working hard to secure a better future for his children.

Sampat has been in the UAE for about 20 years, hopping from one low-paying job to another. He has worked as a hotel receptionist, office assistant, accountant, freight-forwarding clerk and later worked his way up to become the manager in a freight-forwarding company.

Until July 2007, he was earning Dh5,500 a month, out of which he managed to pay the rent, school fees of his three children, ages 17, 15 and 10, and groceries. To date, he has never taken a loan and has always remained debt-free.

How did he support a big family with a Dh5,500 monthly income? Making both ends meet means keeping tabs of even the smallest expense, coupled with a lot of self-control and bargain-hunting.

Winning attitude

"I kept an eye on almost every expense. I spent only on things which were necessary. I always bargained and searched for better deals. For example, all the groceries I purchased were from the nearest big supermarket and I carried them by hand to the house," he told Gulf News.

His biggest monthly expense was the two bedroom flat had rented in Sharjah for Dh2,000. School fees for his three kids totalled about Dh1,800, while food, toiletries and other grocery items cost around Dh1,200 per month.

His expenses on out-of-home entertainment were very negligible as most of the family's free time was spent watching television and visiting the nearest parks. However, given his meagre salary, setting money aside for the family's savings pot was next to impossible.

"I was only making both ends [meet], hence [I had] no savings at all. However, I started working part time from 2006 and later, till I resigned, saved some money. With that tiny savings [investments like buying a house or some stocks] do not look possible," he adds.

Nevertheless, Sampat doesn't harbour any misgivings about his small income. "When you have to live, [it's] better to live happily. Making complaints will not help change one's income, so I thanked God for whatever he gave," he says.

New enterprise

Sampat has already left his low-paying job and now runs a small-scale freight forwarding enterprise. On average, he now makes three times the money he earned in 2007.

However, since he's still establishing his business and the monthly inflows are not fixed, saving money remains an onerous task.

When all goes well, Sampat hopes to stash Dh50,000 a year, but until then, he can only keep his fingers crossed about what the future holds.

"I'm spending twice what I spent in 2007 and at the age of 50 still working hard to secure my children's future. For me, every single fils counts, so whenever I see that my hard-earned money is misused, my heart pains," he says.

That explains why until now the hardworking expat still logs over a hundred miles on the road, travelling short distances on foot, whenever possible.

The small savings from transport are obviously better spent on other essentials, such as the food he puts on the table, or perhaps they're better kept in the family's nest egg.

NTPC STOCK follow-on offer to hit market tomorrow

The country's largest power producer NTPC's follow-on public offer to raise about Rs 8,500 crore opens tomorrow and will be closed on
Friday.

The Empowered Group of Ministers (EGoM), in its meeting on February 1, has decided the floor price of the FPO at Rs 201 per equity share.

The government is divesting five per cent stake in NTPC through this FPO.

After the five per cent stake dilution, the government's holding in the power utility will come down to 84.5 percent from the current 89.5 percent.

The Cabinet Committee on Economic Affairs (CCEA) had in October 2009 approved sale of five percent stake of the government in NTPC.

The government has already appointed ICICI Securities, JP Morgan, Citi and Kotak as investment bankers for the issue. The proceeds from the FPO would go to the Investment Fund that finances social sector schemes.

After NTPC, Rural Electrification Corp is also expected to hit the market before the Budget. Mining giant NMDC's offer will come around March 10 while that of Satluj Jal Vidyut Nigam towards the end of March.