Inflation rate declined

Ankit Kumar

 

New Delhi, Feb. 14: 

Inflation declined marginally to 8.23 per cent in January from 8.43 per cent in the previous month, as prices of certain commodities such as wheat, pulses and sugar eased, although essential items such as onion and other vegetables continue to remain dearer.

The headline inflation, based on wholesale prices, has remained above 8 per cent-mark since January 2010.

The fall in inflation has been mainly on account of declining prices of sugar (down 14.99 per cent), pulses (12.78 per cent), wheat (4.94 per cent) and potato (1.21 per cent).

However, vegetable and fruits continued to remain expensive. On an annual basis, vegetable prices rose by 65 per cent, and onion prices nearly doubled. Also, fruits became costly by 15.01 per cent and egg, meat and fish by 15.09 per cent.

Overall, primary articles became costly by 17.28 per cent with food articles rising 15.65 per cent.

In the non-food articles category, fibre prices rose by 48 per cent on an annual basis.

Prices of fuel and power shot up by 11.41 per cent, with petrol rising 27.37 per cent on an year-on-year basis.

However, among manufactured items, sugar prices fell by 15 per cent, while edible oils turned costlier by 7.16 per cent.

The inflation number for November has also been revised upwards to 8.08 per cent from 7.48 per cent, according to government data released today.

The easing of inflation is expected to come as a morale booster for the Government, which has been under pressure due to high prices of food items in recent months.

It may be recalled, the food inflation, which accounts for over 14 per cent in the overall Wholesale Price Index (WPI) inflation, has remained high since December scaling up to 18.32 per cent.

At its third quarterly review last month, the RBI revised its inflation estimate to 7 per cent by March-end, from the earlier 5.5 per cent.

Keywords: Inflation

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Recession hit air traffic to US, Britain

MUMBAI: The global economic downturn not only caused heartburn in India, it also dampened Indians' newfound wanderlust. Encumbered by the difficult times, Indians reduced their travel to and from various international destinations, but not all.

While flights operating between India and countries like the US, UK, Singapore, Sri Lanka suffered between 2008 and 2010, a few places like Dubai and Hong Kong witnessed a surge in passenger traffic. Of these, Hong Kong was the biggest beneficiary; air traffic between India and the bustling Chinese city grew by 128% in 2008-09 and by 68% in 2009-10. During these years, air traffic to most other countries fell by an average of 10%, according to data released by the Directorate General of Civil Aviation (DGCA) on Saturday.

Experts say the reason Hong Kong has suddenly found favour with fliers is the bilateral agreement signed between the special administrative region and India, which has allowed Cathay Pacific to operate more flights between the two destinations.

The DGCA statistics also show that Indian airlines are slowly catching up with their foreign carriers on international routes. Though foreign airlines continue to ferry the majority of passengers to and from India, fliers have somewhat warmed up to Indian carriers in the last five years. In 2004-05, 71% of passengers flying between India and other destination chose foreign carriers; by 2009-10, that number had fallen to 66%.

"With airlines like IndiGo scheduled to launch international operations this year, Indian carriers will continue to catch up," said a top airline official.

Yet, airlines like Air India, Jet Airways and Kingfisher Airlines are several nautical miles behind their foreign rivals like Emirates, Air Arabia and Qatar Airways when it comes to plain-vanilla numbers. In 2009-10, only 1.1 crore passengers flew Indian carriers on international routes compared to the 2.1 crore who chose foreign carriers.

The official warned against making a linear comparison between domestic and foreign airlines. "One must remember that these numbers do not make a distinction between, say, a passenger flying to Singapore and the one flying to New York," he said.

In the last five years, airports like Doha and Dubai have emerged as major air hubs between India and the world. So, of the 2.1 crore passengers who flew to and from India on foreign carriers in 2009-10, a huge percentage would have transited at Doha or Dubai.

"What you have is a passenger flying, say, the Mumbai-Dubai-New York route on Emirates and another flying Mumbai-Dubai on Air India Express. In the statistics it will show as one passenger each for an Indian carrier and the foreign carrier. But there is a world of difference here," says the official.

It is no surprise then that Dubai did not witness a fall in air traffic. Numbers flying between India and Dubai have maintained a steady growth rate of 26% in the last five years. The only other destinations that have managed to have such a steady growth are those in the Gulf.
DEEPAK KUMAR JHA
PGDM(2010-12)
RROLL NO. 06

World's slimmest smartphone: Samsung launches bigger Galaxy Tab 10.1

BARCELONA(Spain): Samsung launched a second tablet computer on Sunday, with a bigger screen and more processing power than the original Galaxy Tab that is seen as the only real rival to Apple's iPad .

The Galaxy Tab 10.1 is intended to be a multimedia hub for afficionados of games, electronic books and social media, with a 10.1 inch (25.7 centimetre) screen, dual surround-sound speakers, and front- and rear-facing cameras.

The tablet, with two core processors to better handle media, is based on the latest Google Android platform, Honeycomb -- which has been optimised for tablets.

It will be sold by Vodafone in more than 20 countries before being released to other carriers.

Samsung, now the world's second-biggest phone maker after Nokia, also launched a new premium smartphone, the ultra-slim Galaxy S II, designed around hubs for social networking, reading, games and music.

South Korean electronics giant Samsung, whose telecoms division accounted for nearly half its profit last quarter, has sold around 10 million Galaxy S smartphones since its June 2010 debut, and 2 million Galaxy tablets.

"If I were (chief executive) Stephen Elop heading up Nokia, I would be looking over my shoulder at Samsung and feeling extremely nervous," said Ben Wood, lead analyst at telecoms research firm CCS Insight.

Samsung also announced a range of enterprise services compatible with its two new devices, to address some of the security concerns that have held Android phones back from a serious challenge to Research in Motion's BlackBerry.

DEEPAK KUMAR JHA

PGDM (2010-12)

SEMESTER-2 ND

Ramping up a financial plan for your child! Here’s how!

All parents dream of fulfilling all the requirements and desires of their kids. They want to give the best to their juniors. Best of education, best of toys, best of health, best of everything! The only problem with these best things is that these have the best (read expensive) price tags too!

Let's take education as a case. After paying Rs. 2,000 to Rs. 5,000 per month in play school, a father takes his kid to the best private school in town. This school makes him forcefully pay huge sums of donation, though donations were meant to be paid wilfully. After this donation which runs into a few lacs of rupees, every month the parent is required to pay tuition fee of his/her kid, which may be again around Rs. 2,000 to Rs. 4,000. And, if the parents have chosen an air-conditioned, well-built school with all upgraded infrastructure facilities, then the monthly outgo maybe around Rs. 7,000. But what can a father do, after all it is about the child's future. Or is this really the case? Maybe something could have been done. Some financial planning and some investment based on such a plan, perhaps? A cynic says this of planning - "planning might not yield best results but saves from the worst ones!".

But what is special about investing for kids, one may ask. After all it is just money to be saved and invested. However, investment is not just putting aside some x amount of money in a trading account with a broker and have it invested in any x-y-z security.

Broadly speaking, investment can be said to be a function of purpose, duration and risk tolerance. Let us put this in perspective with investment for children.

The purpose for kids could be - secondary education, higher studies (in India or abroad), marriage, house, other facilities like car, etc. So one has to enumerate what all is required to be catered to. Each of these items has a cost - some cost many more times than other. Take higher studies for instance. A typical coaching institute may charge anywhere between Rs. 1-2 lacs for say, an IIT JEE exam. A good car may cost Rs. 5-7 lacs. Providing a house is another challenge in itself with housing prices increased exponentially in past five years, especially in metros like Mumbai, Delhi, Bangalore, Hyderabad, Haryana and so on.  A simple 3 BHK flat in a nice locality now is a matter of about Rs. 50 - 90 lacs. But these are current cost estimates. Imagine what these figures will grow into when inflation adds in them for so many years. Going by our above estimate for cost of car of Rs. 5 lacs and an inflation estimate of  say 5%, the cost after 25 years stands at Rs. 16.93 lacs. By now, one must have figured out that it is not a cake walk preparing for such needs.

Duration depends on when planning is started. It is no-brainer in investment world that the sooner we start, the better it is, and for a very basic reason - the magic of compounding. Think of a parent who started planning for their kid even before it was born and begun investing when the little one arrived. They had a pretty long time (about 18 years for higher studies and 25 years for marriage and house). With such a long period one can think of an equity skewed portfolio. Even though this couple might face some black years like 2008, it can still work out to a respectable net worth at the end of 18 or 25 years. Imagine the couple saved Rs. 40,000 a year for their nestling. It could have Rs. 33.88 lacs after 25 years, taking annual return of a meagre 9%.

Lastly, risk tolerance is what varies with one's portfolio duration, value, liabilities and return expectations. But in case a couple is looking for such a big time horizon (more than 15 years), risk tolerance should cover all other variables. Equity investments, as shown by countless researches, are best suited for long-term investment durations.

Based on the above analysis one may look at various financial products available in the market. Looking at investment options that provide more exposure to equity is something one should look for. For passive investors, those who find stock symbols like chemical formula, investing directly in equity mutual funds, exchange traded funds (these replicate the performance of an index) could be a preferred option. Also to reap benefits of tax allowance on investments and their disposal, one can allocate some amount to products like Public Provident Fund.

As a matter of prudence one might think of withdrawing investments from risky products to safe ones, just before the requirements arise. Say, disposing off the equity investments just when the junior is 16 or 17 and putting the money in MMMFs or debt funds or fixed deposits. This practice shall definitely bring the return during such period down but can assure reasonable safety of principal.

Vivek Kumar

PGDM,2nd Sem

8.6 pc for current fiscal satisfactory: Pranab

New Delhi, Feb 7 (PTI) Finance Minister Pranab Mukherjee today said the 8.6 per cent economic growth estimated for the current fiscal was satisfactory in the wake of the rising inflation and trade imbalances.

"A 8.6 per cent is quite encouraging despite all these difficulties. Now the other issue is inflation, trade balance.. these are to be addressed," Mukherjee told reporters here.

Mukherjee said despite challenges "it is quite encouraging that it (GDP) is not deteriorating." The Central Statistical Organisation (CSO) today estimated economic growth for the current financial year at 8.6 per cent, as against 8 per cent a year ago.

"All along I was maintaining, it should be around 8.5 per cent plus. 8.6 per cent is accepted. My concern is also about the inflation and trade balance," he added.

The 8,9 per cent growth in the first half of the current fiscal notwithstanding, the government is battling high inflation, particularly food inflation.

The overall inflation has remained above the comfort zone of 5-6 per cent for over a year now.

In December, the inflation has shot up to 8.43 per cent, from 7.48 per cent in the previous month. \ The food inflation is ruling at 17.05 per cent for the week ended January 22.

The RBI in its quarterly monetary policy review last month upped the March-end inflation projection to 7 per cent, from 5.5 per cent.

In the July-September quarter this fiscal, the Current Account deficit (CAD) surged by 72 per cent to USD 15.8 billion, compared to USD 9.2 billion in the same period last year due to higher imports.

The country''''s CAD, representing the difference in inflows and outflows of foreign exchange, barring capital movements, stood at 2.9 per cent of the GDP last fiscal.

Vivek Kumar

PGDM,2nd Sem

Godrej starts booking for second phase of Gurgaon project

NEW DELHI: Godrej Properties today said it has started booking for the second phase of its residential project at Gurgaon.

The company, which is developing Godrej Frontier on Sector-80, had sold over 200 apartments in first phase within two days of its launch in October this year. In the second phase, it will develop 100 flats.

"We are confident that phase-II will do as well as the earlier phase. Godrej Frontier is our first residential project in the NCR region and we are happy with the response it has been getting," Godrej Properties Managing Director Milind Korde said in a statement.

Located in Sector 80 of Gurgaon, this is the Godrej Properties' first residential project in northern India. The company would develop around 1.05 million square feet on 9 acres of land.

Godrej Properties is developing the project with Frontier Home Developers under a joint venture development model.

 Vivek Kumar 

PGDM 1st Sem,

2010

Fixed maturity plans offer better returns

Fixed maturity plans (FMPs) are back in vogue. Since September, more than 100 such schemes have been launched which have managed to collect Rs 24,518 crore, according to Value Research.

An environment of rising interest rates has helped increase their popularity, especially among high net worth individuals.

Also, the fact that interest on fixed deposits (FDs) is taxable makes investing in an FMP a better bet than investing in FDs. Given these reasons even smaller retail investors should be looking at FMPs
Vivek Kumar
PGDM 1st Sem 2010