MoneyVedam

With the dust settling down on the demonetization of Rs.500 and Rs.1000 notes (w.e.f 08-Nov-2016), the next question on everyone's mind is, "Does it affect my returns?". This blog explores demonetization's effect for savers who are also largely tax payers. Financial market With over Rs.8.45Trillion deposited into the banks as of 27-Nov, the system is flush with liquidity. A portion of this money is expected to be loaned out for businesses and individuals to start the investment and demand cycle. However in the immediate next 2 quarters, demonetization will keep demand subdued. RBI is currently in a rate cut cycle with further cuts in the offing. This is causing bonds to be the favorite investment pick among analysts (as bond prices rise when rates fall). However, the rate cut cycle is not a given - the quantum of rate cut is primarily dependent on inflation. Although domestic factors impacting inflation are benign with structural changes in supply side and a goo...

NPS is the much talked about National Pension Scheme introduced in 2004, for government employees. It is now open to all Indian citizens as a retirement saving vehicle. This blog explores the instrument and provides insight into the working of NPS. The account details NPS has a Tier-1 account, which is the non-withdrawable retirement savings account and a Tier-II account, a mere savings account. You can open an NPS a/c online using Aadhar or PAN card. The minimum contribution is Rs.500 pm / Rs.6k pa. Every subscriber gets a PRAN# (Permanent Retirement Account Number). NPS has 3 classes of assets: E: Investments in predominantly equity market instruments. Maximum investment in this class is 50% of total contribution. C: Investments in fixed income instruments other than Government securities. G: investments in Government securities. Investment Choices NPS offers "Active Choice" & "Auto Choice" options to its subscribers. Under the Active choice, th...

There is significant pressure on developing countries to withdraw their farm subsidies. Major developing economies such as India, China & Indonesia have strongly opposed the US & EU and warned them against withdrawal of farm subsidies, as they have billions of mouths to feed. This blog examines the issue and the points of contention! The Contention India's Food Security Act requires its government to feed the poor. India has a well established PDS (ration shop) system through which it distributes basic food grains and kerosene to its poor. The government buys food from farmers at a pre-determined price called MSP (Minimum Support Price), stocks them in its godowns and distributes it through the 5 lac ration shops across the country. For example, the MSP for rice may be Rs.32/kg, but at PDS it is sold to the poor at Rs.5/kg. The difference of Rs.27/kg is borne by the government, which works out to an annual expense of $20bn. According to the west, the difference between ...