Financial Planning: How to overcome poor financial habits



All of us are guilty of having at least one bad money habit. It might be something as simple as indulging in a sudden shopping spree or over spending at a restaurant. Though these habits seem harmless in the beginning, it can wreck your financial goals over a period of time. Your money management skills or the lack of it is the single most reason to become rich or poor. Many of us are born spenders, impulsive purchases can lead to financial trouble. Big spenders do not even realise the amount they spend until considerable time has passed and they are left with huge bills.

The flag off point in the journey to be rich is to be prudent with your spending. Here are simple ways to get away from poor financial habits

Set limits or budgets: Spending or comfortable living can be guilt free, stress free and debt free if one sets an internal limit on the amount they have to allocate for particular expenses. Usually not having a limit or budgets makes one go overboard and only in hindsight it looks ballooned. Therefore knowing beforehand the amount of monies to allocate and spend for your requirements within a limit is prudent.

Track your spending habits: This is an important step towards moving away from bad money habits. Begin by making a list of all your expenses. Classify your expenses into needs and wants. Needs are those expenses that are a necessity, whereas wants are those items that are desired by an individual. Cut down on your expenses by carefully doing away with wants that can be planned for later. Create a list of priorities and allocate funds to satisfy the most important needs and wants. This evaluation will help you maintain a balance.

Cut back on daily spends: Do you have a subscription or a gym membership that you never use? Make a list of all your subscription services for which you have registered. Track the number of times you have made use of those services and the money it costs you. Cancel those subscriptions that you rarely use. Do you eat out everyday? Dining out or ordering in can be huge time saver but it comes with its costs. Try to make home cooked meals at least twice a week to save money on food.

Make yourself accountable: A bad financial habit, like any other, is a behaviour that is learnt over time. If you are constantly on a shopping spree or if you experience chronic debt problems, it’s simply because you have made it a habit. Be aware about your unhealthy money habits. Drop them to get a grip on your money. Here are a few ways to make yourself accountable:

Create a budget that will help you effectively allocate your money. Be aware about how much you can afford to spend. You definitely cannot spend more than you earn. Allocate at least 10% of you salary on savings.Choose a financial accountability partner who can help you work towards your financial goals. Ask your close friends or family members to keep a track of your spending habits. Just as you go to a doctor for medical advice and a lawyer for a legal advice, get in touch with a financial advisor who can help you pave an easy path for financial security.Start saving from the day you start earning. Many of us have the tendency to push money planning to another day or postpone it till the last minute, simply because we have something else to do or we don’t understand it. If only we can avoid the one day syndrome and opt for financial planning from day one, you are sure to get a grip of your money matters.


Nisha Shiwani has worked in many companies in various capacities and in her free time loves to express herself through her articles. She is based out of the pink city Jaipur.

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Personal Finance

FINANCIAL PLANNING: Who will win the fight – EMI or SIP?



Behaviourally, spending money makes us happy and saving is boring. Easy access to credit feed our craving for instant gratification, thereby making us live on future earnings.

Should I buy the car on Equated Monthly Installments (EMI) or invest in monthly Systematic Investment Plan (SIP) and buy it outright without the loan burden? What’s right for you?

EMI (Buying the car on loan) – Assume that you plan to buy a car of Rs 11 lakh by availing a loan of Rs 10 lakh, at an inter of 9.5% per annum for a period of seven years (that is, 84 months). The EMI for the Rs 10 lakh loan would be Rs 16,265. The effective payment over the life of loan of seven years would be Rs 14.66 lakh an additional interest pay-out of Rs 3.66 lakh.

SIP (Investing to achieve the goal) – On the other hand, instead of EMI of Rs 16,265, if you invest the same amount (Rs 16,265) in Mutual Fund via SIP generating a return of 10% per annum to accumulate the car value of Rs 11 lakh (please note I haven’t factored inflation on the car value because the technology advancement hasn’t increased car prices much; on the contrary there is a much wider choice with more advance features in the same price range. SIP of Rs 16,625 over the next 4.5 years (that is, 54 months) adds to a principal investment of Rs 8.98 lakh. In reality an investment of Rs 8.98 lakh buys the car worth Rs 11 lakh.

The actual saving, which is actual payment made by EMI route minus actual principal investment via SIP, works out to Rs 5.68 lakh (that is, Rs 14.66 lakh minus Rs 8.98 lakh). The car effectively comes at a cost of 60% of the total payment made via the EMI route.

Now, the choice is bewteen buying the car now and paying almost 60% more or delaying the buy for 4.5 years and saving almost 40%. It is a choice between instant gratification v/s delayed gratification…choice is yours.

For whom car loan make sense?

Businessmen can actually buy the car on the company name; debit all the car related expenses such as (EMI, annual insurance costs, driver expenses, fuel expenses and any other car maintenance expense) and also avail depreciation benefit to reduce their tax liability.

Are all EMIs are bad?

Let us understand what are good loans and what are bad loans?

Good loans – Home loans and education loans are good loans. The former is taken for an appreciating asset while the latter is for upgrading our skill set enabling us to earn better. Secondly, both provide tax relief and are generally available at a competitive interest rate.

Bad loans – Loans such as credit card loans, personal loans, pay-day loans from online portals and consumer loans are all bad loans. They are taken for either depreciating assets or consumption; do not carry any tax benefits and are mostly expensive loans; for example, a credit card would charge a monthly interest rate of 3% thereabout, some pay-day loans quote 0.1% per day interest rate, effectively charging at 36% per annum.

Logically speaking EMI is good provided it is for good loans. However, whenever it comes to depreciating assets or consumption loan, it would be prudent to save via SIP and then buy it upfront. Instant gratification may delight but patience has its own virtue.

Having said that let me throw some light on why we are rationally irrational. Our brain has three layers: The Top-layer (Neo-Cortex); the middle-layer (Limbic Brain); The inner-brain (Brain Stem & Cerebellum). The Neo-Cortex is the logical brain, the Limbic is the emotional brain, whereas the Brain-stem & Cerebellum is the instinctive brain.

Whether it is an impulsive buying decision or a well thought out buying decision both get initiated at the Limbic brain and have emotions attached with it.

The fight is actually more intense than just EMI v/s SIP; it is a fight between instant gratification v/s delayed gratification; it is a fight between your emotional v/s logical part of the brain.

Well, I will not be surprised if you read this article and yet opt for a car loan!

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Deposits in Jan Dhan accounts set to cross Rs 90,000 crore: Finance Ministry



Total deposits in Jan Dhan accounts are set to cross Rs 90,000 crore with the government making the flagship financial inclusion programme more attractive especially by doubling accident insurance cover to Rs 2 lakh.

According to data from the finance ministry, the deposits, which have been steadily rising since March 2017, have already reached Rs 89,257.57 crore as on January 30, and are steadily rising.

The deposits stood at Rs 88,566.92 crore on January 23.

The Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched on August 28, 2014, with an aim to provide universal access to banking facilities for all households.

Enthused by the success of the scheme, the government has enhanced the accident insurance cover to Rs 2 lakh from Rs 1 lakh for new accounts opened after August 28, 2018.

The overdraft limit has also been doubled to Rs 10,000.

The government has also shifted the focus on accounts from ‘every household’ to ‘every unbanked adult’.

According to the latest data, there were 34.14 crore account holders under the PMJDY.

An average deposit in these accounts was about Rs 2,615, compared with Rs 1,065 on March 25, 2015.

Over 53 per cent of the Jan Dhan account holders are women, 59 per cent accounts are in rural and semi-urban areas.

As per the data, 27.26 crore accounts holders have been issued RuPay debit cards with an inbuilt accident insurance cover.

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Centre to decide on start-ups to be exempted from angel tax



The government will soon decide on the controversial angel tax, Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra said on Thursday.

He said that the government was examining the issues faced by startups on the angel tax issue.”Very shortly we will find out a solution on the basis of the suggestions we have received. We will have to decide which startups are real startups and how they can be exempted from Section 56(2) of the Income Tax Act,” he said.

Last week, the Department for Promotion of Industry and Internal Trade (DPIIT), along with tax officials, had met several representatives of the start-up industry.

Chandra said that several suggestions have been received from start-ups on exempting them from the angel tax.

A decision will soon be taken on the kind of start-ups that can be exempted from angel tax by the I-T Department, he said.

Various start-ups have raised concerns about the notices sent to them under Section 56(2) of the I-T Act to pay taxes on angel funds. The law provides that the amount raised by a start-up in excess of its fair market value would be deemed as income from other sources and would be taxed at 30%.

Introduced in 2012, the provision of angel tax deals with the premium paid by the angel investors when they invest in the companies.

Last month, the government eased the procedure for seeking income tax exemption by start-ups on investments from angel funds and prescribed a 45-day deadline for a decision on such applications.

The new procedure says that to seek an exemption, a startup should apply with all documents to DPIIT. The application of the recognised start-up shall then be moved to CBDT. A startup recognised by DPIIT would be eligible to seek an exemption, subject to certain conditions.


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Consumer electronics co Hyundai Corp to re-enter India



Hyundai Corporation has re-entered the Indian consumer electronics and appliance space after exiting the market over a decade ago. The South Korean multinational has partnered Akshay Rajkumar Dhoot who acquired the brand licence rights for India region, which is renewable every five years.

His venture Hyundai Electronics India is an independent Indian company and not a subsidiary of the Korean multinational.

Dhoot earlier was chief technology officer of Videocon Group’s consumer electronics vertical and had joined the family business back in 2015. The partnership with Hyundai Corp is Dhoot’s own venture and has no connection with the family business.

Speaking with DNA Money, Dhoot said the Hyundai Electronics India business has no association or connection with Videocon. “I have been planning to start my own consumer electronics brand since over a year now. I connected with Hyundai Corporation who were planning to venture into the Indian market and were on the lookout for a partner. Post initial discussions, they agreed to offer the Indian entity brand licence and together we’ll be launching Hyundai branded electronics and appliances in India,” Dhoot, who is the CEO of Hyundai Electronics India.

While Hyundai Corp will be responsible for quality control, research and development (R&D), product selection and market research, the India unit will focus on marketing, distribution, after-sales service and other related activities. “The ownership of the India unit is with me and the understanding with Hyundai Corporation in the brand licensing agreement is that we will market and distribute all of Hyundai’s electronics and appliances. This includes television, refrigerator, washing machines, air conditioners, kitchen appliances and personal care products like shavers, trimmers, blow dryers, etc,” said Dhoot.

Dhoot said the new India unit will bring a lot of R&D and product differentiation to the table. “We are targeting 3% market share in every state that we are going to be present in, in the first year of operations. This will be across television, refrigerator, washing machines and air conditioner products,” he said.

Catering to the mid and upper segment of consumers, the products will be high on features and advanced technology. The pricing strategy adopted by the company will position Hyundai along the lines of LG, Samsung, Panasonic and Sony, among others, he said.

“All the existing re-entrants are mainly playing the pricing game. Our pricing strategy will be in line with the market positioning and the competitive set. In the initial stages, we will adopt a slightly competitive pricing, but will be at par with them in 15 months or so. We will focus on product innovations and feature-rich offerings. For instance, the television (TV) we will launch will have artificial intelligence (AI) with the ability to control any set-top box, internet of things (IoT)-enabled features, control through voice or mobile phone and so on,” he said.

Over the last few years, many defunct consumer electronics brands such as BPL, Thomson, Akai, Sharp and Philips have re-entered the India market. In fact, the segment has become crowded with international and Indian – national/ regional brands vying for a share of the Indian appliance and consumer electronics (ACE) market.

According to India Brand Equity Foundation (IBEF), ACE market reached Rs 2.05 lakh crore in 2017 and is expected to increase at a 9% compounded annual growth rate (CAGR) to reach Rs 3.15 lakh crore in 2022.

Adopting the start-up approach, the India unit currently houses a lean team of 75 employees across functional areas and does not intend to set up manufacturing facilities for the products going forward. It has outsourced production to third-party manufacturers in the country.

“We have already started production in Maharashtra and Uttarakhand/ Uttar Pradesh. The categories being offered currently include television, refrigerator, washing machines and air conditioners. By the end of January, we will be present in towns and cities across five states viz. West Bengal, Maharashtra, Uttar Pradesh, Rajasthan and Madhya Pradesh, that constitute 40% of India,” Dhoot said, adding that the other product categories will be introduced gradually on a quarterly basis and the complete range within 12-15 months when the company will cover 80% of the India market in terms of distribution.

Interestingly, Dhoot will be banking on distributor partners to make Hyundai branded products available across a few thousand retail outlets in the five states. The company has already on board 1,800 so far and another 1,100 will get added over the coming months. The retailing strategy comprises partnering with strong regional chains across various states to sell the products.

“For instance in West Bengal, we are with Khosla Electronics, while it’s Naveen Electronics in the Delhi market. For the Mumbai market, we are going with a distribution house called Jumbo with over 150 counters across the city. The reason for going with these players is that they have a much better market share. We will also be selling through a lot of standalone stores across the country to ensure maximum distribution reach. We will also not sell online mainly owing to discounting issues on that channel,” Dhoot said, adding that over 300 franchisees have been appointed to offer after-sales services for the Hyundai product range.

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Income support expansion may hit fiscal consolidation path



The 2019-20 Budget gives an opportunity to assess the basic thrust of NDA government’s fiscal policy over the five-year period from 2014-15 to 2019-20. Comparing 2013-14, the last year of the previous regime, with 2018-19 (RE), it becomes clear that the NDA government prioritised expansion of the tax-GDP ratio enabling fiscal consolidation in line with the Fiscal Responsibility and Budget Management Act (FRBMA) targets. It did succeed in substantially augmenting the gross tax revenues to GDP ratio by a margin of 1.8% points over this period. This was due to both improvement in the direct and indirect tax revenues to GDP ratios which increased by margins of 0.7% points and 1.1% points, respectively.

However, Centre could not access much of this increase in tax-GDP ratio because of the sharp increase in the share of states in the sharable pool of central taxes following the recommendations of the Fourteenth Finance Commission. As a result, Centre’s net tax revenue to GDP ratio could increase over this period only by a margin of 0.6% points. This gain was further reduced by a fall in non-tax revenues relative to GDP by a little less than 0.5% points. Thus, in the revenue receipts to GDP ratio, the gain was limited only to 0.1% points.

Most of the reduction in fiscal deficit therefore had to be achieved by a reduction in revenue expenditures relative to GDP, which fell by a margin of 0.9% points. This in turn was due largely to a fall in the subsidies to GDP ratio of 0.7% points during this period. After all these adjustments, the fiscal deficit to GDP ratio could be reduced by 1.1% points from a level of 4.5% in 2013-14 to 3.4% in 2018-19 (RE) as well as in 2019-20 (BE). There was a marginal improvement in the quality of fiscal deficit measured as the ratio of revenue deficit to fiscal deficit which fell from 71% in 2013-14 to 65% in 2018-19 (RE).

The thrust of fiscal reforms over the five-year period therefore has all been in the right direction, namely increase in the tax-GDP ratio, fall in subsidies and revenue expenditures relative to GDP and improvement in the quality of fiscal deficit. In the case of capital expenditure to GDP ratio, there was some improvement, although marginal.

These fiscal reforms however, appear to have been stalled as we move from 2018-19 (RE) to 2019-20 (BE). Between these two years, the reduction in fiscal deficit to GDP ratio has become zero. The revenue expenditure to GDP ratio has increased by 0.3% points and capital expenditure to GDP ratio has fallen by about 0.1% points. The quality of fiscal deficit has also deteriorated by 2% points.

In the short run however, the government has aimed to provide a stimulus to growth mainly through three channels. First, it puts additional disposable income in the hands of the farmers, the budgeted cost of which for 2019-20 is Rs 75,000 crore i.e. 0.4% of GDP. The second channel comes from the relief in income tax given to middle-income groups up to the limit of Rs 5 lakh. Although the budgetary cost of this is Rs 18,500 crore, this will directly boost private final consumption expenditure. The third channel comes from the relief given in terms of capital gains linked to ownership of a second house. This should have a short to medium term impact on the real estate sector.

It is only the regular full year 2019-20 Budget which would come after four months that may indicate whether the fiscal reform path to consolidation will be restored. The risk factors include further increase in the income support commitments for the farmers which may even be expanded to include broader segments of population below the poverty line. The target of reducing fiscal deficit to 3% of GDP in 2020-21 in one stroke from 2019-20 (BE) also appears difficult in view of the stickiness of fiscal deficit at levels of 3.4% to 3.5% of GDP for three years in a row.

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Mediclaim can’t be rejected if original bills are lost: Here’s why



a relevant order, a consumer forum has held that if an individual has lost their original bills but can provide the duplicate bills, their mediclaim then cannot be rejected by the insurance company.
According to a report in Times of India, A Mumbai doctor, Satyapriya Dhabuwala suffered from brain haemorrhage in 2012 the district forum has ordered New India Assurance Co Lt and Health India TPA Services (I) Ltd, to pay Rs 2.21 lakh compensation (reimbursement of Rs 1.71 lakh and rest as interest and costs.
The forum observed that Dhabuwala had been purchasing the insurance policy since 2004 and also renewing it by paying the annual premium.
Over the order of the consumer forum, Rupam Asthana, CEO, Liberty General Insurance Firm has said, “In absence of an original bill the consumer should not suffer in the era of technology, the insurance firm should investigate the case with the hospital bills itself.”
INSURANCE: Critical illness cover can add to mediclaim
Critical illness health insurance pays a fixed amount if you get any of the diseases listed in the insurance. This benefit amount is not linked to the costs you incur. The diseases are defined in the policy wordings and buyers should take comfort from the fact that these definitions are supervised and standardised by the insurance regulator. The insurance is terminated once a claim is paid and cannot be renewed. These insurances may be bought as standalone individual plans or as riders to life insurance.
Critical illness differs from standard mediclaim in three ways. The critical illness benefit is fixed per illness, whereas mediclaim covers actual hospitalisation expenses. Critical illness pays if you suffer a specified disease, whereas mediclaim covers hospitalisation costs for any illness. Critical illness terminates when you claim whereas mediclaim can be renewed life-long even if you make a claim. For these reasons I suggest buying critical illness as a second, supplementary insurance, once you have your basic health insurance in place.

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UK orders liquor baron Vijaya Mallya’s extradition to India



  • In a much-awaited move, UK Home Secretary has ordered liquor baron Vijay Mallya’s extradition to India. Earlier he was deemed as economic offender in India and a British Court had given verdict in favour

in favour of his extradition to India. However Mallya can appeal against this extradition order which he intends to do. He has 14 days to appeal against this extradition order.

A Home Office spokesperson told WION,”On 3 February the Secretary of State, having carefully considered all relevant matters, signed the order for Vijay Mallya’s extradition to India.”

He added, “Vijay Mallya is accused in India of conspiracy to defraud, making false representations and money laundering offences.”

Mallya has 14 days from today to apply for leave to appeal. The Westminster Magistrates’ Court on 10 December had ordered Mallya’s extradition and the UK home secretary had to sign the orders within 2 months–The deadline for which finishes on 10th February.

India has been pressing United Kingdom on extradition of Nirav Modi. India in August of 2018 sent 2 extradition request to London– one from CBI and the other from the Enforcement Directorate on Nirav Modi. According to the Ministry of external affairs, the “requests are presently under the consideration of the concerned UK authorities.”

Taking note of the development, Govt sources told WION, “While we welcome the UK Government’s decision in the matter, we await the early completion of the legal process for his extradition.”Union Finance Minister Arun Jaitley Tweeted, “Modi Government clears one more step to get Mallya extradited while Opposition rallies around the Saradha Scamsters.”

In the last four years, 16  fugitive criminals have been extradited back to India. In 2018 New Delhi brought back 5 fugitives. Out of these 5 fugitives, 3 were Indian, one was Romanian, one British–Christian Michael James.

Mallya is wanted in India for alleged fraud and money laundering charges amounting to an estimated Rs 9,000 crores.

Vijay Mallya last week slammed the Indian authorites in a series of tweets. Mallya who has been declared economic fugitive and is accused of committing fraud of Rs 9,000 crore protested dogged persual of Indian government in several legal cases against him.

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Modi’s interim budget doubles income tax limit to 5 lakhs. Benefits salaried class, sr citizens, small entrepreneurs n pensioners.



The BJP led NDA government in order to counter the non BJP opposition’s increasing onslaughts has given unexpected concessions to the middle and lower middle class of the country especially the salaried class which is considered to be the opinion makers of the country.

Since, the general election is just three months ahead with code of conduct likely to be imposed in the month of March, the union government led by prime minister Narendra Modi is leaving no stone unturned to please all sections of the society especially after suffering a serious drubbing in the three Hindi heartland states and confronting special challenge from the new credible pre electoral alliance between the BSP n SP in UP with Congress party’s Priyanka Gandhi also taking a credible plunge in the Uttar Pradesh politics in particular as a new general secretary, incharge of East Uttar Pradesh.

The revolutionary announcement in today’s inyerim budget which will tremendously benefit crores of the central as well as the state government employees is the doubling of the the rebate limit in annual income tax from the earlier 2.5 lakhs to 5 lakhs. This means, that the Rs 15080 tax charged on the annual income of Rs. 5 lakhs would be nil now.

This tremendous rebate, biggest given by any finance minister during the last seventy years is going to sqarely benefit the salararied class, the pensioners, senior citizens, the small entrepreneurs n various other sections earning less than five lak a year.

The executive finance minister Piyush Goyal, minister of Railways n Crporate Affairs, has by this announcement while given major relief to the the aforesaid classes making them extremely jubilant , it has also contributed in countering the increasing opposition impact on the electorates of the country on anti govt propaganda to some extent.

According to Goyal this enhancement would benefit about three crore income tax payees. In addition to this increase, the government has also enhanced the limit of income tax standard deduction from 40 thousand to fifty thousand.

Crores of the post office savers of the country have also been benefitted by the government’s enhancement of tax benefit from 10 thousand intrest income limit to 40 thousand. Now there will be no tax till the interest income of 40 thousand on savings. The government has also launched the pension scheme for the domestic workers. The government has also enhanced its share in the newly introduced pension scheme.

The gratuity payment limit has also been increased manifold from 10 lakh to 30 lakhs. The contribution limit also got enhanced from 15 thousand to 21 thousand.

There are several other concessions granted like enhancement in EPF insurance from 2.5 lakhs to 6 lakhs after the expiry of private sector employee in the small n medium private jobs. About 12 crore farmers owning 2 hectare land would get directdeposit of Rs. 6000 each every year.

It may be recalled that the BJP let NDA government had been quite miser in granting tax reliefs to the government employees in its last five budgets’, but seeing the election round the corner, it wasted no time to make the entire salaried class, pensioners, sr citizens n small entrepreneurs happy by the revolitionery relief in annual income tax exemption limit. This really seems to Prime Minister Narendra Modi’s master stroke say analysts.

In his two tweets the former Finance minister P. Chidambaram has tweeted : (1st tweet) Thank you interim FM for copying the Congress’s declaration that the poor has the first right to the resources of the country. (2nd tweet) It was not an vote on account. It was an account for votes. He termed the government as reckless n unconsititional accusing it of presenting a full budget under the guise of an interim budget/ vote on account which is totally unconstitutional to beget votes in the year of election which are just three months ahead.

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Interim budget expected to be populist one, with sops for all



As the budget presented on February 1 will be the last one by the Modi government in this term, it will be termed, as per the existing convention of an outgoing government, an interim budget.
The caveat lies in whether the budget will follow the norms of an interim budget or whether it will have ingredients of a full-fledged budget, sans the economic survey that will be presented by the freshly-elected government in July.
Before leaving for the US for medical treatment, Finance Minister Arun Jaitley had indicated the possibility of the latter, and that the budget may not merely be a vote-on-account one.
“The convention has always been that the election year budget is an interim budget,” Jaitley said on January 17, adding, “and ordinarily, there should be no reason why we should move away from the convention. But the larger interest of the economy always dictates what goes into the interim budget and that’s something which cannot be discussed or disclosed at this stage.”
The government grapevine suggests that the budget will be loaded with big-ticket announcements, with a little bit of something for people belonging to different economic strata, across sectors. With the Lok Sabha elections looming on the horizon, it is expected to border on populist measures.
A major challenge is to leave very little room from criticism from opposition to seep in. The big questions are: How strong a blow is the government ready to endure on the fiscal deficit front? Will it allow it to gallop from the current 3.3 per cent of the GDP to 4 per cent or above?
Given the distress in the agriculture sector, sops for farmers are expected. The budget is also expected to reflect the recent Cabinet note by the Agriculture ministry that addressed income deficit syndrome of small and marginal farmers. It proposed various steps, including a financial package and interest waiver for timely crop loan re-payers.
It is speculated that — on the lines Raythu Bandhu Scheme of Telangana — the government will offer relief between Rs 4,500 to Rs 8,000 per acre annually to small and marginal farmers who have up to 5 acres of land.
Grievances of the salaried class are also expected to be addressed. The 2014 budget allowed for an additional tax-free income of Rs 50,000, but last year’s budget reintroduced standard deduction of Rs 40,000 in place of existing exemption for transport allowance and reimbursement of miscellaneous medical expenses.
The traders’ lobby has been demanding several sops, including Accidental Insurance of Rs 10 lakhs to those registered under GST, subsidy for the purchase of computers and allied goods to upgrade existing business formats, etc.

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Personal Finance

Discipline in financial planning can help battle economic instability



A goal without an action plan is a wish. We all have goals and aspirations for various aspects of our life. While the possibility of us achieving our goals is a function of many factors, the likelihood of getting closer to it increases with planning. And planning is an intricate process. The effectiveness of these plans depends on our deep-rooted beliefs that tie back into our experiences in life.
The makers of the famed ship, Titanic, had never accounted for the ship to ever hit a big iceberg – as such an instance had never taken place at that scale. Often, the quest for a good future, makes us overlook certain risks which the process and the discipline of “planning” will assist us in.
Insuring an aspirational class
Globalisation’s impact has transformed not only our economy, but also our lifestyles. Today propelling the consumer-driven economy, millennials are the economy’s chief earners and spenders, allocating as high as 65% of incremental income on entertainment, eating out, apparel, accessories and electronics.
In such a scenario, to battle the possibility of economic instability, life insurance is the one of the viable ways of building financial certainty. It can protect households from the possibility of the passing away of the primary breadwinner and, enabling millennials and next-generation earners to transition to adulthood without disruption in their lifestyles.
Diverse offerings
Like all financial products today, insurance also can be purchased in diverse forms tailor-made for customer requirements, instead of a one-size-fits-all. These can operate simultaneously and offer a spectrum of benefits designed to meet various needs of the nominees.
i. Term insurance plans – Essential to every household to continue functioning and replace the primary breadwinner’s income, the term plan is a fundamental tool of financial protection. It promises to pay the nominee a fixed lump sum assistance as chosen at its inception, in the case of the death of the primary breadwinner. Modern term plans also include the option of riders that offer additional benefits to the policyholder (on payment of additional premium), room for customisation and modernisation. Riders enable insurance coverage at an additional cost covering specific and unique needs of an individual. Some riders are death benefit, critical illness, waiver of premium, family income benefit, etc.
ii. Health insurance and critical illness plans – An important element of any financial plan is health; that is, to account for the cost of the insured’s medical and surgical expenses and offer cover against life threatening diseases. Health insurance plans purchased from a life insurer come with benefits of affordable premium amounts, simple documentation and claims process and the absence of a co-payment criteria.
iii. Child insurance plans – Child plans are specially customised to address a child’s future financial needs, for their higher educational aspirations and ambitions even in the absence of the primary breadwinner. It combines insurance and disciplined savings to ensure that parents are able to give their children a bright future. It can be customised to offer a lump sum payment at the end of policy term. A child plan can provision to meet financial needs of important educational milestones with flexible payouts.
iv. Retirement plans – Culturally we are attuned to putting our needs last in order of priority. However, in the changing social scenario, where nuclear families are almost becoming a norm, it is important to create a financial plan for our own retirement years. We need to create a corpus that will make those lonely retirement years the truly golden years. The best way to start saving for a nest egg is to begin early by starting to save strategically from a young age. Retirement plans provide protection against the breadwinner’s death, during the years when he is saving for the retirement corpus. Thus they ensure that death in no way negatively impacts retirement planning for the spouse.

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