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Understanding the effect of rolling back petrol prices
While Petrol prices seem to be running astray, what one must understand is that causing “Bharat Bandh” and other protests and eventually rolling back prices may not help the situation.
For example, India sells 100 units of produce at Rs 1000. This means as long as India spends Rs 1000, it can recover it by selling 100 units. At this stage, the economy is balanced. Now, let’s say India sells a liter of petrol at Rs 50 instead of Rs 75 (its true value) thus making a loss of Rs 25 per liter. To compensate for this Rs 25 loss, India will either borrow Rs 25 or print currency of Rs 25.Whatever be the case, for the additional Rs 25, India does not produce any goods. The number of units continues to remain at 100. In the absence of any real production, India will recover the Rs 25 from its citizens by spreading the loss across the 100 units.
So, the system had 100 units and was sold at Rs 1000. However, due to the loss, an additional Rs 25 (borrowed money or printed currency) was added into the system. So while the units remained 100, the money in the system became 1025. While the price per unit in the previous situation was 1000/100 = Rs 10, now the price per unit would become 1025/100 = Rs 10.25. This is how the recovery takes place across all the units. In other words, the value of the rupee goes down because the same number of units is now purchased at a higher amount.
A very similar thing is happening in India. People are spending more than they are producing. This is causing fiscal deficit or a gap between what we spend and what we earn. So naturally, the value of money is eroding in the economy as explained in the earlier example. India does not produce enough petrol and therefore imports because petrol is an essential commodity. As shown in our earlier example, the increase in petrol prices is not being passed on to the end consumer. Had the increase been passed on to the consumer, the system might have self regulated itself by way of the consumer and reducing the consumption because of higher prices.
Since the price rise does not get fully passed on, the demand for petrol remains unabated and India has to import more quantity of petrol. This naturally leads to more paper money (or borrowing) in the economy without a commensurate increase of real goods in the economy. This means that the price of goods in the economy increases to offset the loss of petrol sales. Thus, instead of fewer people paying for the increase in the price of petrol, now they pay by way of higher prices of goods. This is what is commonly called inflation. So in essence, by rolling back prices, the people at large may not benefit as they are hit by inflation which erodes the value of their money.
Hope this note gives you an idea on the effect of rolling back petrol prices.
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I think these tips will help me get rich soon.
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As Rivals Falter, India’s Economy Is Surging Ahead
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Know your forex limits before going abroad—Rakesh Nangia
The amount may range from $10,000 for a holiday to
$250,000 under the Liberalised Remittance Scheme
Whether you plan to go abroad for studies, holiday, business travel or any other purpose like making investment in shares and property, you need foreign exchange in the local currency. Your budget can go haywire if you are unaware of the relevant limits under foreign exchange regulations. The Reserve Bank of India (RBI), the nodal body for managing foreign exchange, has prescribed limits up to which a resident individual can remit or spend foreign exchange freely i.e. without any approval requirement.
Holiday: Holidaying abroad may require spending in foreign currency for hotel accommodation, tour arrangements, shopping, etc. Under this category, an individual is allowed to draw foreign exchange up to $10,000 in a year for one or more private visits abroad.
Business trip: If you are going abroad for business travel, attending conference or specialised training, you can apply to your bank for release of foreign exchange up to $25,000.
Employment: RBI has allowed drawing foreign exchange up to $1,00,000 for taking up employment abroad.
Education: You can draw up to $1,00,000 equivalent per academic year for studying abroad. Studying abroad covers all expenses relating to education including admission fee, tuition fee and purchase of study material. However, if you require funds in excess of $1,00,000, you need to produce an estimate from the institute you intend to study to the concerned bank.
Medical treatment: An individual willing to travel abroad for getting medical treatment is allowed to withdraw foreign exchange up to $1,00,000 based on self-declaration of essential details without providing any estimate from a doctor or hospital. However, if the individual wishes to take money over the prescribed limit, s/he will have to provide an estimate from a hospital or doctor. In addition, a maintenance expense of up to $25,000 is allowed.
Emigration facilities: RBI has allowed drawal of foreign exchange for emigration facilities up to $1,00,000 based on self-declaration or an amount prescribed by the country of emigration.
Liberalised Remittance Scheme (LRS): In addition to these limits there is a scheme known as Liberalised Remittance Scheme in force since 2004 which allows resident individuals to draw foreign exchange up to a specified limit. The remittance limits under LRS keep changing and under the present limit an individual can draw up to $250,000 per year for the transaction permissible under the scheme. Under this scheme, an individual can freely acquire and hold shares, debentures, units of mutual funds, venture capital funds, unrated debt securities, promissory notes or any other instrument of like nature. Further, the resident can invest in such securities out of the bank account opened abroad under the Scheme. He can also set up a company, enter into joint venture or buy immovable properties abroad provided the law of the host country allows such transactions. Apart from the above, this scheme allows an individual to make remittance as gift or loan to his relative abroad who is a non-resident Indian i.e. an Indian Citizen who resides outside India. Further, where an individual has availed of a loan at a time when he was non-resident, he can take the benefit of this scheme to make remittance for repayment of loans.
Bank Accounts: The RBI has allowed resident individuals to open, hold and maintain foreign currency accounts with their banks. The amount standing in these accounts can be utilised for making remittances abroad for permissible transactions.
Exchange Earners’ Foreign Currency Account (EEFC): The balance in this account represents earnings in foreign exchange and can be utilised towards current and capital account transactions like private visits, business visits, purchase of property, and payment of custom duty. There is no restriction on withdrawal in rupees of funds held in an EEFC account. However, the amount withdrawn in rupees shall not be eligible for conversion into foreign currency and for re-credit to the account.
Resident Foreign Currency Account: An individual can open, hold and maintain with a bank in India a Foreign Currency Account, known as a Resident Foreign Currency (RFC) Account, out of foreign exchange received as pension, gift, proceeds from sale of property outside India, maturity proceeds of insurance policy, etc. The funds in this account are free from all restrictions towards utilisation including investments.
Resident Foreign Currency (Domestic) Account: Resident individuals have another option by opening and operating an account with a bank known as Resident Foreign Currency (Domestic) Account. The credits in this account are allowed to be out of foreign exchange acquired in the form of currency notes, bank notes and travellers’ cheques while on a visit to any place outside India by way of payment for services, gift from close relatives or unspent amount of foreign exchange acquired for travel abroad. The balance held in this account can be utilised for permissible current and capital account transactions like private visits, business visits, and purchase of property.
Documentation: RBI has not prescribed any documents except self-declaration satisfying the banker that the foreign exchange will be utilised only for the transaction for which request to the banker for the release of foreign exchange is made and Form A2. However, practically, banks may ask for some additional documents as per its internal policies. Therefore, it will be better to carry all important documents with you while applying for release of foreign exchange.
The writer is managing partner, Nangia Co.
The amount may range from $10,000 for a holiday to
$250,000 under the Liberalised Remittance Scheme
Whether you plan to go abroad for studies, holiday, business travel or any other purpose like making investment in shares and property, you need foreign exchange in the local currency. Your budget can go haywire if you are unaware of the relevant limits under foreign exchange regulations. The Reserve Bank of India (RBI), the nodal body for managing foreign exchange, has prescribed limits up to which a resident individual can remit or spend foreign exchange freely i.e. without any approval requirement.
Holiday: Holidaying abroad may require spending in foreign currency for hotel accommodation, tour arrangements, shopping, etc. Under this category, an individual is allowed to draw foreign exchange up to $10,000 in a year for one or more private visits abroad.
Business trip: If you are going abroad for business travel, attending conference or specialised training, you can apply to your bank for release of foreign exchange up to $25,000.
Employment: RBI has allowed drawing foreign exchange up to $1,00,000 for taking up employment abroad.
Education: You can draw up to $1,00,000 equivalent per academic year for studying abroad. Studying abroad covers all expenses relating to education including admission fee, tuition fee and purchase of study material. However, if you require funds in excess of $1,00,000, you need to produce an estimate from the institute you intend to study to the concerned bank.
Medical treatment: An individual willing to travel abroad for getting medical treatment is allowed to withdraw foreign exchange up to $1,00,000 based on self-declaration of essential details without providing any estimate from a doctor or hospital. However, if the individual wishes to take money over the prescribed limit, s/he will have to provide an estimate from a hospital or doctor. In addition, a maintenance expense of up to $25,000 is allowed.
Emigration facilities: RBI has allowed drawal of foreign exchange for emigration facilities up to $1,00,000 based on self-declaration or an amount prescribed by the country of emigration.
Liberalised Remittance Scheme (LRS): In addition to these limits there is a scheme known as Liberalised Remittance Scheme in force since 2004 which allows resident individuals to draw foreign exchange up to a specified limit. The remittance limits under LRS keep changing and under the present limit an individual can draw up to $250,000 per year for the transaction permissible under the scheme. Under this scheme, an individual can freely acquire and hold shares, debentures, units of mutual funds, venture capital funds, unrated debt securities, promissory notes or any other instrument of like nature. Further, the resident can invest in such securities out of the bank account opened abroad under the Scheme. He can also set up a company, enter into joint venture or buy immovable properties abroad provided the law of the host country allows such transactions. Apart from the above, this scheme allows an individual to make remittance as gift or loan to his relative abroad who is a non-resident Indian i.e. an Indian Citizen who resides outside India. Further, where an individual has availed of a loan at a time when he was non-resident, he can take the benefit of this scheme to make remittance for repayment of loans.
Bank Accounts: The RBI has allowed resident individuals to open, hold and maintain foreign currency accounts with their banks. The amount standing in these accounts can be utilised for making remittances abroad for permissible transactions.
Exchange Earners’ Foreign Currency Account (EEFC): The balance in this account represents earnings in foreign exchange and can be utilised towards current and capital account transactions like private visits, business visits, purchase of property, and payment of custom duty. There is no restriction on withdrawal in rupees of funds held in an EEFC account. However, the amount withdrawn in rupees shall not be eligible for conversion into foreign currency and for re-credit to the account.
Resident Foreign Currency Account: An individual can open, hold and maintain with a bank in India a Foreign Currency Account, known as a Resident Foreign Currency (RFC) Account, out of foreign exchange received as pension, gift, proceeds from sale of property outside India, maturity proceeds of insurance policy, etc. The funds in this account are free from all restrictions towards utilisation including investments.
Resident Foreign Currency (Domestic) Account: Resident individuals have another option by opening and operating an account with a bank known as Resident Foreign Currency (Domestic) Account. The credits in this account are allowed to be out of foreign exchange acquired in the form of currency notes, bank notes and travellers’ cheques while on a visit to any place outside India by way of payment for services, gift from close relatives or unspent amount of foreign exchange acquired for travel abroad. The balance held in this account can be utilised for permissible current and capital account transactions like private visits, business visits, and purchase of property.
Documentation: RBI has not prescribed any documents except self-declaration satisfying the banker that the foreign exchange will be utilised only for the transaction for which request to the banker for the release of foreign exchange is made and Form A2. However, practically, banks may ask for some additional documents as per its internal policies. Therefore, it will be better to carry all important documents with you while applying for release of foreign exchange.
The writer is managing partner, Nangia Co.
https://www.desidime.com/discussions/day-to-day-sof-tips-simplifly-own-finance?page=11#post_2045483
Small savings rates for FY 2015-16 announced
The government today announced key small savings rates for the new fiscal, 2015-16, that starts from tomorrow.
Public Provident Fund: 8.7 percent (unchanged from FY15)
Kisan Vikas Patra: 8.7 percent (unchanged)
10 year National Savings Certificate: 8.8 percent (unchanged)
5 year NSC: 8.5 percent (unchanged)
5 year Monthly Income Scheme: 8.4 percent (unchanged)
5 year time deposit: 8.5 percent (unchanged)
5 year recurring deposit: 8.4 percent (unchanged)
1-3 year time deposits: 8.4 percent (unchanged)
Savings deposit – 4 percent (unchanged)
The government announced changes in two schemes:
5 year Senior Citizen Saving Scheme: increase from 9.2 percent to 9.3 percent
Sukanya Samriddhi Account Scheme: increase from 9.1 percent to 9.2 percent
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Exchange-Traded Mutual Funds (ETMF)
An ETMF, or exchange-traded mutual fund, is an exchange-traded security that is a hybrid between an exchange-traded fund (ETF) and an actively managed open-ended mutual fund. It allows a standard net asset value (NAV)-based mutual fund to trade in real-time on a stock exchange, similar to the trading of a stock or ETF.
ETMF intraday trading prices will be directly linked to the fund’s next end-of-day NAV. All bids, offers, and trade prices will be quoted in terms of premium or discount to the end-of-day NAV (like NAV+$0.02, or NAV-$0.05). For each trade, the premium or discount to NAV is locked-in at trade execution time, and the final transaction price is determined once NAV is calculated at the end of the day.
https://www.desidime.com/discussions/day-to-day-sof-tips-simplifly-own-finance?page=11#post_2292027
Warren Buffett: The Road To Riches
http://www.investopedia.com/articles/financial-...
How to Invest in a Teetering Stock Market
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American Dream
The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version of success in a society where upward mobility is possible for everyone. The American dream is achieved through sacrifice, risk-taking and hard work, not by chance. Both native-born Americans and American immigrants pursue and can achieve the American dream. In contrast to other political and economic systems, such as communist dictatorships, America’s free-enterprise system makes possible the circumstances that allow individuals to go beyond meeting their basic needs to achieve self-actualization and personal fulfillment.
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Risk-Return Tradeoff
The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with low potential returns, whereas high levels of uncertainty (high-risk) are associated with high potential returns. According to the risk-return tradeoff, invested money can render higher profits only if it is subject to the possibility of being lost.
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Bund
A bond issued by Germany’s federal government, or the German word for “bond.” Bunds are the German equivalent of U.S. Treasury bonds. The German government uses bunds to finance its spending. Long-term bonds are the most widely issued, with billions of euros’ worth outstanding, and these come in 10- and 30-year durations.
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Hi everyone.. I am doing my MBA from Dubai presently.. Planning to do Certified Financial Planner (CFP). I’ve done all my research over the internet but the problem is that I have nobody to speak to who is already in the field of Finance or who can guide me into this.. Actually, what I wanted to know is the ground reality of doing this course in our market.. If someone could help me into this, I’d really appreciate that… This is a much needed help.. @B@R_0_0_D sir, if u can?
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so is you back cameing to Satna or making studies in Dobhai? yes @B@R_0_0_D sir ease hapl averyone (even 333oneone?)
still 99677 ? have?
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@Ishan wrote:
Hi everyone.. I am doing my MBA from Dubai presently.. Planning to do Certified Financial Planner (CFP). I’ve done all my research over the internet but the problem is that I have nobody to speak to who is already in the field of Finance or who can guide me into this.. Actually, what I wanted to know is the ground reality of doing this course in our market.. If someone could help me into this, I’d really appreciate that… This is a much needed help.. @B@R_0_0_D sir, if u can?
shall pm u
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vary informative thrad, bookmarkings eat!
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