Sunday, August 30, 2009


During the Third week of May, after election results were announced, the share market has gone up. It is possible that market may come down soon. But that should not deter investor to stop buying equity. For the long run equity is the king and this is the time to invest as market goes down through systematic investment plan(SIP) in mutual fund.

According to an expert, volatility is the friend of astute investors. It is actually the volatility that would make you rich.

Prolonged bear phase is not welcome by new and uninformed investors. But astute investors always welcome volatility and bear phase in share market .According to Warren Buffet equity is the king in the long run. Why? Because, in the long term, the share market is bound to have fluctuations and volatility. The volatility ensures better return if invested with prudence. In case investors adhere to systematic investment plan and Systematic transfer plans he or she is sure to benefit. This is the point which most of the casual investors always ignore. For example, in case index would have remained static at 5900(from 2000 to 2004) none would have been able to make money. Since the sensex went down from 5900 to 2800(in 2002) and then again it climbed up to 5900 (in 2004) astute investors made lots of money. When market went down in 2002 people who continued to follow SIP route and kept on buying the units at lower cost they reaped great benefit. As market rebounded the investors were benefited because their cost of acquisition was much lower during the bear phase. So to be frank enough bear phase should not be looked down always. Investors of mutual fund must keep it in mind certain important points.

1 .Investors should not time the market always. Investment can be made at time .Only points to be remembered is buy in phased manner.

2. All the money at the disposal of investors should not be invested in equity. Depending on the age of investor and income of investor it should be invested proportionately in debt and equity.

3 The money required for day to day expenses should be invested in debt funds & bank fixed deposit.

4. The balance of investment in debt and equity should be changed as the years pass bye.

As investors advances in age more should money be allocated in fixed income and less should be earmarked in equity.

5. While share market recovers never invest lump sum money at one goes. It should be through SIP or through STP. My personal preference is STP. You can invest in lump sum only when you are sure bottom has been touched already. (This is very difficult to predict). Can you really predict the bottom? So avoid putting money all together.

Dhirendra Kumar , well known mutual fund expert recently said “Any investors who have followed the time honoured prudent advice would be sitting pretty today, largely unaffected by the current turmoil of 2008. He felt that the market value of your investments may be down today but since you do not need any of it for the years to come, it doesn’t really matter. Long before you will need the money it would have had a chance to grow again. (Personal Finance, The telegraphs, 3rd November).

The loss in front of the eyes of investor today is actually notional loss. This would be made good when market takes a turn for the Good. But where is the guarantee that market is going to rebound? In share market no body can predict the behavior of the market. There was no guarantee that market would touch the bottom similarly there is no

Guarantee that market would surely move up. But our experience reveals that market is going to go up sooner or later as there would be growth in the economy in the long term. If the world can recover from great depression in 1927 there is no reason why the turmoil of 2008 would not be able to be handled. No doubt time is difficult. Depression can be seen all around but efforts of all the authorities are also genuine to give a push for the growth of the economy.

I would like to quote the remark of Dhirendra kumar “Despite the crashes, equity is a far safer option over the long run. The real danger to your financial well being is not the market crash, but from the insidious effect of inflation’. Yes, equity is not really unsafe, what is really unsafe is our mentality and fear psychosis.



It was nice to hear the President of India unfolding the new deal plan of Man Mohan Singh’s Government with quotation from Rabindranath Tagore. Long back, Plato wished that the city state should be governed by the writers and philosophers. If that was not possible now, it was of course possible to seek advice from intellectuals and writers. The President Prathiva Patil exactly did that while addressing the joint session of parliament yesterday.

Rabindra Nath Tagore once said “The dreary desert sand of dead habit must be left behind. Our young people are tearing down the narrow domestic walls of religion, regions, language, caste and gender that confine them. The nation must invest in their hope….” The words were simple yet full of profound thoughts. If really Government can achieve what it promised to do within 100 days it would be an achievements of a short. It appears Man Mohan Singh is bent upon achieving the objective at least as on date. He and Sonia Gandhi would do deserve kudos even if the government can achieve half of the promise.

The government’s promise of transparency and accountability in New Deal programme would be a difficult task.. It easier said than done. The president referred that the next decade would be dedicated as the decade of innovation. “It is a symbolic gesture but an important gesture to drive home need to be innovative in finding solutions to our many challenges”. Now the question arises whether Government of Indian will be able to stand by what it has promised to achieve during 100 days?

The divestment promised would perhaps be symbolic. The Government needs lots of money to bring down fiscal deficit. The divestment could have been a very important vehicle to make available huge monetary resources. Though the opposition from CPM have gone away yet there are a few allay would oppose full divestment. So perhaps Government would be able to divest PSU share to some extent where by control would remain with the Government. It appears except for general public and private investors every one likes that the control remains with the Government only. Neither Bur crates wants to loose control on the enterprises no employees feel secured with large scale divestment.

Other important steps perhaps would be to relax the policy on foreign investment inflows. This would be perhaps possible except in high end retail sector. Investment by foreign University would be helpful and this time perhaps such act could be managed. Tax reform would be other important steps the Government will surely aim at. The GST has to be in place by April, 1 next year; the ultimate objective would be have a unifo0rm value added tax of around 16% as in most western countries.. The increased public investment in infrastructure would have to be made incase the rate of growth has to go up. The focus will have to be on railways, power, highways, ports airports and rural telecom network. This would be the testing ground for the government. The success of the scheme might kick start the growth rate above 8% which now looks impossible.

The passing of the Women’s Reservation Bill within 100 days would be a tall order. The intention of the government is clear with even CPM agreeing to the proposal but whether Government would be able to muster two third majorities? It seems impossible with decent from Bihar & UP Lobby. There is large number of other male chauvinists who would like to kill the issue. Yet chances are much brighter than before with euphoria of women emancipation spirit of late. The National Mission on Empowerment of women and the increased numbers of women in central Government job would surely be coming in. It would be done. Only thing ladies from Assam must get ready to jump on to the new opportunity because it would be a life time opportunity for women to get plum posts. It is matter of pride that over the last few year a brand image of ladies from north east have emerged in the country compared to the ladies belonging to Rajasthan, UP and Bihar . The Assamese ladies are sought in private sector jobs much more than people from even Bengal . This is a matter of great pride. The constitutional amendment for 50% women’s reservation in panchayats and municipalities would be an easier proposal to implement than for parliaments.

The setting up of the National Council for Higher education (NCHE) is a very important proposal and it must be done. But there would be high opposition from the Bur crates itself from UGC; All Indian Council for Technical Education .The Medical Council etc. may oppose formation of the national Council of Human Resource in Health. It would be a tough job but perhaps ultimately the government will sail through passing of legislation.

The Road map for judicial reform is envisaged. It is an excellent proposal. But a model public services law, committing key officials in education, health and rural development to their duties to be drawn in consultation with states would be unlikely to be achieving within 100 days.

The Government deserves kudos surely for it has conceptualize the vision for implementation, it would be on the people who represent “Aam Admi” how they steer clear the impediments. We feel if there is sincere will a way would be found out to implement the new deal that was promised though the inaugural speech of the President of India ...



The change is the only constant thing in life. I have observed in last few years that our society of Northeast India have greatly changed their attitude towards investment. Now a day’s most young men and women have started talking of investment at the beginning of their career itself. A few mothers, now senior citizen, have also called me up to ask how their daughters can be made investment Savvy. A lady asked how much time would it take to be a millionaire? She wanted to know if any salaried daughter ever can be a millionaire while pursuing the path of honesty and integrity? She is happy that her daughter grew up well and is occupying a decent position in a Multinational Company now.

My reply was that her daughter being a young person of 23 years and earning a decent salary is an obvious candidate to become a multi-millionaire before she turns 53 years. But trait of a prospective millionaire is patience, hard work and attitude towards saving and investment. She must be frugal in her habits and must not be spendthrift .These traits and habits are very rare in younger generation but not impossible to inculcate.. The mother again asked how much money would she require if she start investing from 2009? It will depend on the money she can afford, was my reply.

If her mother or any other relatives gift her around Rs.75, 089/- at this time she can be crorepati in 35 years by investing in good Mutual fund. There are a few persons who kept on investing Rs5233/- per month in the account of their daughters from First September 1992 and found that at the end of fifteen years on 31st August 2007 she received a sum of Rs Fifty lakh on 15th years. But most important thing is not how to become a crorepoti but to develop the habit of saving and investment on a regular basis. How can that are achieved?

This can be achieved by explaining the magic of cumulative effect to children. Take them to a bank early in life and show how a bank or post office operates. Give them a piggy bank and ask them to collect and save one rupee coin whenever government Mint issues it. Let the entire monetary gift, received by them every year from their relations, be deposited in PPF account. Explain to them what PPF is.

Show them how they can build up a fortune through the magic of cumulative effect. A small amount collected and saved regularly can make our children a millionaire. The fact can be noted from the example given here under. Take the children to ATM. Show them how these are operated. The children would be excited. Some of the modern schools have stated teaching at the primary level, how to plan marketing, how to budget and how to save money. These are fundamentals of life. Parents can take initiative and can coach boys and girls to save money and ask them to buy a book on general knowledge rather than buying an expensive garments, shoes and cell phones as they grow up.



In 10 years

In 15 years

In 20 years


5168 per month

2643 per month

1498 per month



4348 per month

2002 per month

1011 per month



3634 Pr month

1496 per month

668 per month


The above table clearly shows that assuming a return of 9%, a monthly investment of Rs. 1498/-for 20years can give an investor a return of Rs. One million. The 9% interest is available in Housing companies, and in many other corporate houses and also in banks. In case the person wants to invest in Mutual fund as low as Rs 668/- P.M. also can given him a million in 20 years. If a person can afford Rs 3634/- per month to save he can be a millionaire with in 10 years time. To become a millionaire is not very difficult as it is made out to be. The required qualities are the patience, hard work and formation of habit to spend less and save more for brighter future.



Small tea growers are now an economic force for the state of Assam. This fact should be recognized by the state ministry now. Around 65,000 small tea growers are involved currently in tea production in the state. It is a matter of regret that most of the grower does not have land patta even now. The small tea gardens are now the backbone of economic rejuvenation. Tea industry kept local population away from the industry for long years. The fault, of course, was partly due to hesitation of the local population also. They never wanted to be involved in tea growing activities like south India and Chinese population in the past. However economic consideration and spread of education brought in entrepreneur- ship during the last part of twentyeth century. The twenty-first century saw large numbers Assamese youth participating in plantation and production of Tea. It has given money power to local population for the first time. These activities need to be encouraged. The question arises why land patta are not been given to small growers?

According to us land holding should be regularized. This would not only provide legitimacy to entrepreneurs but Government would actually know what the actual production of tea in the state is. This would help planning in economic and budgetary activities in future. This would also ensure better control to the Directorate of Tea for developmental planning. It is a matter of shame that State has failed to legalize the tea growing business where mostly son of the soils are involved. It is a well-known fact that without land pattas none would be able to avail loans from banks. Small growers as such would not be able to avail the benefit of several schemes of Tea Board in absence of possession certificate. We are aware there are some problems in granting land patta. But the matter should be addressed before it is too late. There was a time when green teas were stolen from garden to garden and were resold to factories through a n illicit agency system. The Government needs to look into this pitfall too.

Now a day’s small tea growing business has given money power to local Assamese youngstars for the first time. They should be encouraged so that in a given time they can diversify to production and marketing of the product. The marketing of tea is complex process. It needs business acumen, finance and technical expertise. If small growers are supported today it would help building up their confidence to embark upon the marketing ventures. I had stated earlier that gone are those days when people used to grow tea and relaxed. It automatically got sold. Time has changed. There is intense competition from ready to drink segments. Unless local youth are given a fair chance to learn the tricks of the trade slowly in the home ground small gardens would get sold to unwarranted businessmen. Local population would once again miss the opportunity to become creator of wealth. We should not forget that in later part of 19th century Assamese population missed the bus when they refused to become part of tea growing system on the sentimental ground of forsaking personal independence.

Presently Assam produces around 480 million kg tea. Out this amount around 30% tea comes from small tea grower. This is not a small contribution. This segment of small grower should be taken into confidence. Some of the small tea growers are threatening to start a movement. The Government Assam should nip this matter in bud itself. The imposition of cess on small grower is not illegal. Government surely can impose tax. The small grower has taken the matter to court. Since the matter is sub-judice now, it would not be proper to comment for us. But if past experience is considered the small grower may not have a cause to cheers. Rather small growers need to bargain with the Government to fix up the selling price of the green tea with built up incidence of cess and land revenue. In today’s economic scenario it is the quality of tea produce would determine the price and not the quantity. Our neighboring state of arunachal has realized the fact faster than Assam ’s small growers. This is despite the fact that small tea gardens of Arunachal are not very old. According to my belief the small tea growers should try to develop their own niche while producing green tea leaves. They can concentrate on organics tea manufacturing which commands a much higher value, even in today's bad market condition.

Notwithstanding the power of Sovereign to impose taxes and rates it needs to be mentioned that neighboring states like Bengal have withdrawn cess on green leaf. It is not necessary that Assam should do what others have done. Yet, since Assam has improved on their finance by better administration and by better realization it might provide some concession to the industry which always provided the government in power the economic , political and social support as a part of democratic process. Let tea industry flourish and bring peace and prosperity to the state. People would bless the government. Tea industry is no longer dominated by its producers only. It is the workers who dominates the political clouts. To ignore their cause would be suicidal for party in power both socially and economically even if it can ignore political angle.



Los Angeles, June 26: Michael Jackson, dubbed as the King of Pop, is dead yesterday afternoon while he was doing his rehearsal on the eve of his come back tour. The news was so sudden that gloom has comedown heavily on the lovers music world. He was fifty and is survived by his parents , eight siblings and his three children and millions of admirer.

While driving through the Sunset Boulevard of Los Angeles downtown suddenly we noticed a huge assembly of youth and aged persons lining up the footpath of Beverly Hill.When we stopped the car at the crossing of the street a person from the crowd yelled" the king is dead". We were unaware what that meant. I switched on the radio and heard that Jackson had a massive cardiac arrest and dropped dead. The initial rumur circulated widely meant that it was a case of suicide which was not a fact. However a police investigation is on its way for sudden death of a super celebrity calls for such an investigation, in this country.
He was a major talent of world of music at the same time he was considered by many as the "bizarre Persona". Jackson dazzled with his music but baffled the world with his peculiar emotional behaviour. Perhaps, he felt insecured all the time.

Born with abject poverty he had God gifted talent which his father forced him to develop with iron hands. At time he was punished rudely by his father for missing a step while dancing when he was five years old.His mother recognised the talent and advised her husband to be less rude on him.She was convinced that her fifth son would excel one day. The remark of his mother was prophetic and Jackson became famous before his was teen aged.

It is Jackson who popularised the concept Music album in the world. With his "moonwalk" he brought in a new style of dancing performance in stage. He was a lover of children. But he was also accused of molestation of child for which he had to pay 22 million dollar in settlement of the suit. The accusation was never proved in the court of law.

Jackson did not sing a song after 2001 and was making a come back. His performance was to be held in London and all fifty shows he was suppose to perform was oversold. Michel Jackson's life was full of contradiction. He was born black child but turned white during youth through artificial face lift that he admitted later. He himself was a celebrity yet, he was hugely fascinated by other celebrities like MaMarlynonroe, Charlie Chaplin and Elvis PrPresleyHe installed the statue of Marlyn, woworshippedharlie Chaplin and married the daughter of Elvis. His first marriage lasted 19th months.

He inspired young generation of twentieth and twenty first century, though ironically, he had not released any new song during the entire twenty first century.
Despite being one of the richest man of the music world by the end of last century, he was in debt during last few years. The repeated plastic surgery made his face a "bizarre", according to his critic. But as a performer he tore down geographical boundaries. The transformation of music and power of costume, on and off stage, influenced the whole generation. It was his biggest asset and later became his liabilities too.
We noticed last evening a huge young crowd , in front of the UCLA medical center, dressed up like Jackson to express their tribute to the Master. His life long friend Frank Di Leo said Michael is no more but his music would live on. Perhaps it correct for hr picked up total 13 Grammy award. The most friends said it is a tragedy that the world has lost one of the most influential and iconic figure so soon.



Sitting with a few economist friends, during the night of 5th July( 6th July in India), in the campus UCLA, California, we found despite a bold budget provisions announced by the Finance minister Pranab Mukherjee, aiming at higher growth and making provision for better domestic consumption the budget never looked populist and might not enthuse the share market immediately. However it is one of the complicated, wise and intelligent budget in recent years, we all agreed.

The budget is a balanced budget. The actual impact of the budget would be seen in time to come. The knee jerk reaction of market is not the real worth of the Budget. It is a budget of wisdom. It does not show the fruit immediately. It is an indication of maturity of Finance Minister who without spelling in populist language have really conveyed the new structure of the steps to be taken in time to come. The result would be amaging by the time year 2014 is reached. May be result of this budget would be reflected by the year end or early next year.
The Fiance minister aimed at 9% inclusive growth rate over the years, abolished STT( transaction Tax) in shares and commodity. The infrastructure sectors have been given due importance. There is nothing new in corporate taxes but that should not have been negative impact.

The finance Minister also gave some relief to senior citizen, women and general public. The recommendation of the finance minister in respect of fertilizer to farmers directly is noteworthy. The finance minister intent on agriculture was shuttle but positive.

The finance minister have clearly stated that Banking and insurance would remain in public sector. This is good move. But have not liked by most of the specialist economist. But if we notice even in open economy of America banks have come under government control following recession, aftr accep0ting stimulus package from Obama administration. Some of the banks have started paying back the money to get out of government control here.But in India pople are hapy if the banks are kept in governmental control.

This is a very intelligent budget. This is not a popular budget but a wise budget since there is clear signal that the country is going to have better fiscal control. He kept the expenditure going. rationalization of tax cannot be done in a short time. It is reformist move. Announcement of new tax code is a good direction. The rise of MAT from 10% to 15% is hurting the sentiments rather than real loss to corporate. It is extremely tax reformist.

I am delighedt FBT fringe benefit tax) has gone. It never helpped government but created lot of bad blood in the corporate sector. The finance Minister has has given 45 days time for new code of inocme tax.. The market is over reacting on MAT. The disinvestment have not been quickly brought in and also it has not been clearly mentioned clearly how how much disinvestment he would like to do. i. But that could be more professional approach than political. It is now apparant that there would be disinvestment without sacrficing the government control. May be in due course of time ther would be disinvestment upto maximum of 10% of government undertaking's share. The market has not liked it as it has not been clearly mentioned. There was ofcourse enough indication in this regards.

During last thirty years fiscal deficit have been always 10% every year. The finance minister has tried to bring it down now. This is a good signal. According to us at Los Angles the budget is very intelligent budget though popular views may be different.

Many of us feel that exemption of tax on pension benefit is ging to be a far reaching
proposal. This point has to be noted because pensioner would be greatly benefited in due course of time. This is because the new pension scheme would be applicable to common persons also.

The senior citizen would get from now onward exemption limit of Rs 2.40 lakh, women would get Rs 1.90 lakh and general public would get Rs1.60lakh. This would give substantial benefit to common IT payers.

Perhaps abolition of Fringe Benefit Tax would give a brighter smile to corporate sector though no corporate tax has been reduced.

During the course of our discussion we all agreed that It is a futuristic budget which has aimed for the betterment of society and poorer section of people. We were sure that market leaders may have reacted in haste , like a anguished small school boy who have not been denied a lollipop, but it bound to bounce back soon as the implications and real intention of the finance minister would be clear to them.

We all concluded in our discussion that this a progressive and very intelligent budget ushering in a new era of fiscal and budgetary discipline.


During my recent visit to USA some of my American and NRI friends asked me if it would be wise to invest in Indian centric stocks now? Whether Indian share market has decoupled from the influence of American share market? Would Indian share market continue to go up from now onwards?

My reply to them was aftermath of Indian election results were announced, the share market has gone up continuously in Euphoria. It is possible that market may come down soon. But that should not deter investor to stop buying equity.In the long run equity is the best asset along with Gold and real estate. I also reiterated that this was the time to plan investment when market goes down through systematic investment plan(SIP) in mutual fund.

I was surprised to find as to why more and more American citizens and NRI were interested in investing in Indian market. On inquiry I found tat senior citizen of America, who retired from 2008 onward, had to suffer a lot due to down turn of the wall street. Their pension was greatly effected. Unlike our countries most of the citizens here do not keep money in banks.
They invest in share market or in real estate. Since both these sectors are in doll drums retired persons had to go back to work in order to maintain their standard of living and livelihood.. Senior citizens of America and Britain were greatly anguished, on banking institutions primarily. Some of them have been advised by their personal finance advisers to invest in "BRICK" countries now . Younger generation are also getting ready to look towards India and China as the share market of western countries are in bad shape.

I also advised them that it would be foolish to assume that Indian share market has completely decoupled from US market. The recession in US would surely have impact on Indian economy. Yet the growth story of Indian and Chiana would be much better than US and Britain in next five years atleast. I had no hesitation to recommend investment in India and China centric shares. Since I had no proper studies on Brazil and Russian share market it was better for me to refrain from commenting on those two economies.

According to an expert, volatility is the friend of astute investors. It is actually the volatility that would make investors rich. Prolonged bear phase is not welcome by new and uninformed investors. But astute investors always welcome volatility and bear phase in share market .According to Warren Buffet equity is the king in the long run. Why? Because, in the long term, the share market is bound to have fluctuations and volatility. The volatility ensures better return if invested with prudence. In case investors adhere to systematic investment plan and Systematic transfer plans he or she is sure to benefit. This is the point which most of the casual investors always ignore. When market went down in 2002 people who continued to follow SIP route and kept on buying the units at lower cost they reaped great benefit. As market rebounded the investors were benefited because their cost of acquisition was much lower during the bear phase. So to be frank enough bear phase should not be looked down always.

I had told my friends that .Investors should not time the market always. All the money at the disposal of investors should not be invested only in equity. Depending on the age of investor and income of investor it should be invested proportionately in debt and equity.

The money required for day to day expenses should be invested in debt funds & bank fixed deposit. In America none want to keep money in Bank FD as the return is absolutely low. How ever they agreed to my suggestion that more money should be allocated in fixed income and less should be earmarked in equity as persons become older. In US there is no fixed retirement age. In Britain people are enocuraged to retire at 65 years of age.

During our discussion it was pointd out to my friends that as share market recovers no lump sum money be invested at one time. It should be through SIP or through STP. My personal preference is STP. Now days investment in India centric funds can be made from US itself.I have no hesiotation to recommend investment in India centric fund so long as the american share market remains dormant. But it should be done as per advice of astute personal finance advisors.

I also pointed out to them that any investors who have followed the time honoured prudent advice would be sitting pretty today, largely unaffected by the current turmoil of 2008.The market value of investments may be down today but it would surely come up sooner or later..

The loss in front of the eyes of investor today is actually notional loss. This would be made good when market takes a turn for the Good. But where is the guarantee that market is going to rebound? In share market no body can predict the behavior of the market. There was no guarantee that market would touch the bottom similarly there is no guarantee that market would surely move up. But our experience reveals that market is going to go up sooner or later as there would be growth in the economy in the long term. If the world can recover from great depression in 1933 there is no reason why the turmoil of 2008 would not be able to be handled.

I would like to quote the remark of Dhirendra kumar “Despite the crashes, equity is a far safer option over the long run. The real danger to your financial well being is not the market crash, but from the insidious effect of inflation’. Yes, equity is not really unsafe, what is really unsafe is our mentality and fear psychosis.



"Spiraling health care cost are bankrupting Americans, causing 14000 people to lose their health insurance everyday and will also bankrupt the nation", President Barak Obama said while defending his new Health care proposal for poor people of America.

The Health Insurance reform is the central to the theme of the rebuilding the crisis laden economy of the country stronger than before, he asserted.

In India helath insurance has not come up of the age.The health insurance in India is still vrerycostly and cannot be afforded by the senior citizen and poor people of the country. However India has medical system in place to healp the poor and rich alike through civilo hospitals but it doesnot work, properly.

In India health care is miserable yet we are not getting enough fund to take care of the humanity.The civil hospitals were set up during British Raj. The best of Doctors were deployed in the civil Hospitals and the Civil surgeon of the district was considered top Government official along with the District Magistrate, Police super and the Chief judicial Magistrate. These civil hospitals were serving humanity very well till the middle of twentieth century. Now a days the service of the most of the hospitals have deteriorated and in some case the condition is deplorable. Despite adopting socialistic pattern of society concept in our constitution the Health care institutions in our country have not improved, primarily due to lack of funds and secondarily due to bad management and lack of work and service culture of the society. The rate race of making money has blind folded the responsibility of service class of health care fraternity. Availability of Fund remains a problem even after sixty two years of independence. During my recent visit I found that America has almost fifty billion people who is deprived of proper health care facility. The Obama Administration has tried to rejuvinate this sector now. How ?

Depite the country is passing through worst even recesssion aprogramme to rejuviate the healkth care has taken up . This is for the first time in the history of America the congress is considering a bill which would virtually mean that robe the Peters to pay for the Paul. The bill under discussion would imposed an income surtax on wealthy american to pay for the more than 50 million citzens of America who are deprived of proper health care fascilities. This shows how capitalist America is turning towrds socialistic values of late. The most of the right of the middle path American donot like it. They never liked it when bank and auto giants were also helped. They feel that this kind of asistance by government would put their progonies under debt for many decade. This is not always true.

However the bill now proposed that he House bill would cost between $1 trillion and $1.2 trillion over the next decade, depending on changes to Medicare physician payments. It would impose a surtax on wealthy Americans, beginning with a 1 percent levy for couples earning $350,000 and rising to 5.4 percent on income above $1 million. A single tax payer now drawing income of more than $200.000 shal have to also pay surcharge. There are lots of professors, service holders, scientist and Mangers who draw a salary of $200 0000. Those persons would not like the imposition.

Business leaders issued several critiques of the House approach. Both the National Federation of Independent Business and the U.S. Chamber of Commerce weighed in forcefully against proposals requiring employers to contribute to the cost of health care.

About 1,000 insurance agents fanned out across Capitol Hill, lobbying against creation of a government-sponsored health plan that would compete with private firms.

"This scares the heck out of me," said Tom Minkler, president of the Clark Mortenson Agency, an insurance and financial services agency in Keene, N.H. On visits to congressional offices, he expressed fear that the so-called public plan would lead to a European-style, single-payer system.

Obama, acknowledging the enormity of the task, observed: "It's time for us to buck up."

But there are a few intelectural who have hailed the move. one such person is
Robert Reich, a professor of public policy at the University of California at Berkeley. He was the secretary of labor during the Clinton administration. He said recently

"I don't recall the last time Congress came up with such a direct redistribution. Occasionally Congress closes a few tax loopholes at the top and offers a refundable tax credit to workers at the bottom, or it creates a poor people's program like Medicaid, paid for out of general revenues from a progressive income tax. But to say out loud, as the House has just done, that those in our society who can most readily afford it should pay for the health insurance of those who cannot is, well, audacious."

I really agree with views of intellecturals here that it's the most blatant form of Robin Hood economics ever proposed. The universal healthcare bill reported by the House Tuesday pays for the health insurance of the 20 percent of Americans who need help affording it with a surtax on the richest 1 percent.Taking a tiny sliver of the incomes of the top 1 percent will reduce all that much of their ardor to invest, innovate and hire in the future. Yet if this tiny sliver means affordable healthcare for a far larger number of Americans, who will be able to get regular checkups and thereby stay healthy and productive, the positive effect on the American economy is likely to be far greater.

There several critic who pointed out that French Government once tried to do the same thing but failed. The French experiece resulted in a net loss of national income as high wealth families fled to tax havens in Luxembourg, Liechtenstein and Switzerland. No, if Obama really wants to make this work he has to royally stick it to the middle class. They can't leave the country.

It is foolish to think American businessman would leave the country for imposing 1% tax on them Where would they go? Mexico, Canda or Soth America? The level playing field of those countries would not make them comfortable there. People no forget that most of the American were paying much high tasxes two decades before. The health care bill would gnerate lots of criticism but according to some of us feel that this is an act which would combine the society and enriched the society much nmore gloriously.



I have always been writing that the term insurance should never be considered as a corollary and substitute for saving and investment. It is an established fact that life Insurance is not an investment but a safety and security net for life. Many people have written to me inquiring if it is enough to take ULIP without taking traditional life insurance policy at all. This would be a wrong perception. The Life insurance is much more important to modern family compared to Saving and investment.It should be clearly understood that the Life insurance is a safety belt for the family. It is not only safety belt it also security of the family. In today's world there are danger in every steps of life . According to me as soon as any person start his working life he should cover himself up with insurance, in case he has liabilites of the family with him. In case he has no libailities at all he can take insurance at a later date when he begins his family life. During this period he can start investment in Mutual fund or PPF. I would like to reiterate that ULIP is not a product of investment . It is a product of insurance coupled with investment procedure. It is like two in one system, yet is not very cost effective.

One of my collegue Rajib Baruah was forced by an insurance advisor to take life insurance cover during his mid career. Rajib is to tell him that here was my insurance point out to his brilliant son. Rajib is to tour a lot. In one of ambush in Northeast suddenly Rajib succumed to the injuries and the family was in great agony. Fortunately only six months before his friend forced him to take an life insurance cover of Rs 10 lakh that helped his family to complete the education of his brilliant son. Rajib's wife and his son confirms that without Rajib's insurance it would have been impossible for them to keep their body and soul together during the last ten years. Rajib son is employed now in a Multinational company.

My suggestion is no one should ignore taking insurnace cover during the working life. The ULIP is no doubt good product but it is costly. Who so ever have taken ULIP must have realised by now that the return on ULIP is not very encourging during the first three years . In case It can be kept alive for fifteen years the return of the ULIP should be good depending on the market condition. The ULIP is good for planning childrens higher education or to utilise the money for the daughter marriages. But not as a part of Life insurance becuase it is costly. The middle class people need cost effective insurance cover for his family. I recommend each younger persons with family responsibility to cover him with Term Insurance.
As against a premium of over Rs 50,000 for a Rs 1 crore cover for a 30-year old woman charged by Life Insurance companies a decade ago, now some of the private life insurer companies like Birla Sun Life are offering a similar cover for an annual premium of around Rs 15,000. The competition has made insurace cheaper now.

The term insurnace is easy and cost effective way to protect the family. The Life insurance have never been so cheap as is now. I am happy that insurance companies have realised that more and more people would be attracted to insurnce provided they bring down the premium. They have done this without advertisement etc so I thought it would be prudent for me to inform my readers to consider Term insurance in case they are planning to have insurance cover for life.

Without much publicity life insurance companies have drastically reduced premium rates on high-value term insurance policies of Rs 1cr and above.

I understand recently that Some other life insurers, such as ICICI Prudential life and HDFC Standard Life, have also reduced their term insurance rates. The term rates for LIC policies, too, have come down drastically as compared to 10 years ago.A few months earlier a few readers of our column wrote to us asking for advice on term insurance. At that time the insurance premium were not as cheap and reasonable. Those readers should now contact their insurance comapnies to re asses their requirments of term cover.

Buying a Rs one -crore life insurance cover was never so cheap.

There is perhaps , a quiet rate war raging among insurers that has brought down the cost of Rs 1 crore cover to Rs 15,000 from over Rs 50,000 per annum a decade ago. A big chunk of the reduction has happened only very recently that too the companies have brought down the premium without much funfare.

It should be understood that the Term insurance is a cover where the benefit of insurnace would be available if the insured dies during the term of the policy. It is an annual policy like motor insurnace and in case the person survives the preimum is not returnable.
The Term Insurance is a basic product of life insurance and every company has its own range of premium. This would be avialble from the website of the insurance companies or their advisor would be able to quote. Genrally most of the insurance advisor doinot suggest termed insurnace as their comission may be very low in this insurance.

Why premium of Term Insurance has come down renctly? perhaps most of the people, especially upper Middle class people now have access to quality healthcare and lead a relatively superior lifestyle, their life expectancy is high,er than before . This must have a translated into lower rates.

I understand from some of insurance officials that the Term insurance premium rates have started declining since the last three years. Over the last couple of years, the premium have dropped by nearly 30% . One of the reasons for this, offical explained, is the increasing demand, mainly from the high net worth segment, which has inflated the volumes. It is possible that increasing volumes are driving the rates down and lower rates, in turn, are stimulating the demand for term insurance, now.

But one thing must be kept in mind that the price reduction is limited mainly to high value policies targeted at the middle and upper middle class segment, that is, people earning over Rs 30,000 and above per month, who seek policies entailing a sum assured of more than Rs 25 lakh. But there is a stronger possibilites of reduction of premium for laower middle class people also after some time. People must keep vigilant .

HDFC Standard Life Insurance, for instance, has reduced the premium rates of its term plan by around 25% across different premium and age bands. This is a good news for the time being. I would again reitrate that life insurance is not a product of investment. It is a safety and security belt for the family. In today's uncertain time it should not be ignored when there is a drastic cuts in premium rates.


During the month of March when I recommended my readers to enter the share market and buy large cap Mutual funds under SIP a few old friend of mine called me up and told me that they did not want to invest in such a dull and depressed market. I told advised them that the basic principal of investment is that when market was depressed get in so that you would be the first person to reap the benefit when market turns around. My friends were not convinced. They laughed at me and hung up.

However a few young readers thought what I did say was sensible and they mustered enough courage to enter the market when the Sensex was around 10,500 only. Today with in 120 days market has turn around and those who laughed at me called me up and again asked whether they can enter the market now. The sensex at present is flat at 15,500 . My old friends lost the opportunity but young readers gain handsomely.This has happened always. I replied to them to hold on to their money. There would be correction after some time It would be prudent to enter the market then. They asked me when the correction would start? I replied that it is impossible to pin point a date but it would be soon.

The most important trait is that investor must have patience accompanied by his risk taking capacity. Those investors who entered the market in the Month of March made 30% profit already. My advice to them was if you are chicken hearted then book the profit. If you are bold and brave then hold on. There would be correction soon but that would be followed by a gradual upturn and Sensex may go up to 17000 points by April 2010. At this point of time I would like to remind my readers that by 2010 June the Sensex would see a new high. So on every dip in the share market try to buy some share or the units of large cap mutual funds. Younger persons can buy 60% equity whereas Mid aged person should by 40% if they have risk taking capcity for longer years (atleast for five years)

One thing must be kept in mind that these are only calculated guess work. Nobody in the world , not even Warren Buffet , can predict exactly the behavior of Share market and consequently of the Mutual funds. The advisors and experts can hopefully wish but cannot predict. No science have been perfectly developed so far which can forecast the behavior of the share market. If such predications could have been possible there would not have been great depression in the world. During 2008 world was engulfed with recession despite the fact that this world have got highest number noble laureates in Economics and very large numbers of financial honchos who are rich and proud..

The Reserve Bank Governor conceded recently that Indian economy will revive faster than other countries of the world but it was not possible to predict a date. It is a fact that India would be the growth engine of the world economy sooner or later. So we need to keep patience and move ahead and invest in a determined manner. We need to ensure safety but agree to take a little calculated risk should money be made for future .However safety and prudence should be the watchword for economy would take time to revive.

It is absolutely necessary to switch investment in order to earn better returns. Some Mutual funds provides better return for a year or so and later fails to earn better returns. Once Magnum Global Fund and Prima Fund were darling of investors’ .Today, these are tired funds. Switching of fund provided better earning scope always. The investor must try to protect his investment all the time. Investor must reshuffle his investment from time to time periodically, in case he wants to maximize his return. Investing money is only first step in financial planning. The second step is the most important step and that is protection of invested money.

Investor must redeem his units in mutual fund as soon as he makes 30% return. The Golden rule of investment is that do not invest all your money in Share market or in Mutual fund. Any person desirous of investing money (other than in saving bank account) should invest adhering to the formula of “100 minus his age = % in equity.” So what should be done by small investors? The small investor must buy mutual fund only through Systematic investment plan for long term.. No investment should be done in lump sum. Another important thing before investment is done investors should consult a qualified investment advisor. Thirdly, investor should set an investment goal for himself and put in place an asset allocation strategy depending on the risk bearing capacity. You must invest in equity or equity link instrument if you are young. The older persons should be more cautious while investing in equity. No investment needs to be done in equity after seventy five.

Is this the time for investment? This is a million dollar question. I feel that there could be correction soon and our investors should not miss the opportunity to enter the market then. If some of the investors are seating now they can enter the market but through systematic investment plan in diversified mutual fund in the opportunity and infrastructure sectors. Do consult your advisor but decision needs to be taken by individually always.



During my recent visit, during the months of August, to the Natural History Museum based at San Diego I was fascinated to see a show of human body that created sensation in my mind. I have never seen such an exhibition in my life . I had heard about the exhibition and felt indomitable desire to view it. It is an exhibition alright but that is not just an end of it. It is a beginning of a thought process which dominates your sensitivity and touches your soul. It forces you to think and question your mind. That is exactly what happened to me ! There were active corpses all around you but you do not have any bizarre feelings. Rather ,you feel fascinated. You get awestruck.

The exhibits of " Body world " are real corpses of human beings..These are real human bodies who were once alive and now dead but reborn as exhibits in real form with flesh and nerve. These are, of course, Skinless human bodies. The body has been kept alive, almost alive, through the process of plastination invented by a scientist : Gunther Von Hagens ..The exhibits created by him are the first public anatomical exhibitions of real human plastinates. They have been on display worldwide for ten years and so far, more than 28 million visitors have viewed the exhibits at venues in cities across Asia, Europe, the United States and Canada.

This exhibition has not been displayed in India, nay, in Asia- save Japan -so far. It is a rare technology invented by the German scientist which preserved the body. It is not mummified.
These are corpse in action. The body has been plasticined on the real human skeleton . It comes alive right in front of viewers eyes . The corpse looks at you on your face expressing tremendous beauty of physical prowess, strength of mind and philosophy of human misery and happiness. In a Mummy, the body is seen only in lying down pause as if in sleep. Here body stares at you. It does not evoke the sense of fear. The actions of corpses made me awestruck. The bodies bring out the sense of adventure and the secrets of human power through action of muscle and nerves.It was unimaginable for me how fascinating to view a humanl body without skin but full of muscles and veins. Oh really ! beautiful bodies that tingle your mind.

You could see a body's reaction of muscle when an exhibit was playing the base ball. Another body was laughing. You would be able to see the powerful face muscle when the exhibit laughed. There was a lady in reclining pause with her belly open with a baby in her womb. The growing baby in the womb head down was almost ready to be born. Viewing this kind of corpse in action provides you a sensation of your birth.
The satisfaction of the- would be mother - visibly appeared very real on her face muscle . The persona of a player, a mother ,a happy person makes you brood. It is not only technical marvel but also an exhibition of art as well as anatomical and physiological study of human being. You do not just see it . You marvel at it.

The exceptional success of the exhibits is to a great extent due to its educational value. They are structured in such a way that visitors experience it much as they would read a three-dimensional textbook: The anatomy as the foundation of the body is laid out in an educational and elucidating fashion. Visitors learn about the body’s functions; they also realize how highly sophisticated and beautiful, and yet how fragile the human body is. There are not much of femable bodies. Most bodies are male bodies complete with genitals with nerves. There are few femal body with their great glories.

Due to huge sucess of the body world exhibiton I am told that many plagiarists have sought to exploit the BODY WORLDS phenomena by appropriating the Plastination process invented and patented by Dr. Gunther von Hagens, and offering inferior imitations products. However, Dr. von Hagens believes that BODY WORLDS alone resonates with the public, "because it fills the longing for the authentic in a time of practically unlimited reproducibility."

I was told by the specialist guide at the exhibition Hall that Dr. Gunther von Hagens was the world’s leading anatomist, the inventor of Plastination (the method of specimen preservation that makes anatomical display possible), and the originator of BODY WORLDS or KOERPERWELTEN(its German title), the first of its kind anatomical exhibition. Dr. von Hagens invented Plastination at the University of Heidelberg in 1977, developed the use of plastinated specimens for medical education and preservation, and established the International Society for Plastination. More than 400 universities in 40 countries utilize Dr. Gunther von Hagens’ preservation technique in their curriculum. I am a humble student of Economics and did not understand the intricacy of the chemistry of plastination. But I felt the wonderful sensation the exhits conveyed. I surely recommend all my readers given a chance to view this exhibiton. It is modern marvel of scientifice exploration of human body and wolrk of art too. This particular exhibtion would continue till 2009 November in Natural History Museum of San Diego. Anyody visting USA can make an effort to visit the exhibiton. It should be noted that body recreated by the scientist were obtained through donation of body. The exhibiton stem from a unique Body Donation Program established in Heidelberg, Germany in 1983, later managed by the Institute for Plastination established in 1993. But ther many people who have not liked this marvel for they felt the after death body's place is in tomb or in insunator. The body has no role without vital breath or" Prana"and should be allowed to respectfully kept burried or burnt. The scientific world did not believe that and the result was beautiful body world that speak out with vengence!

Currently, the Institute for Plastination has a donor roster of 9,200 individuals which includes nearly 9000 Europeans and 800 North Americans. Since 1995, more than 25 million people worldwide have visited Gunther von Hagens’ BODY WORLDS’ exhibitions that are currently displayed here. I enquired the specialist guide as to what is plastination"?

He replied that the process plastination was Invented in 1977, Plastination is the groundbreaking method of halting decomposition and preserving anatomical specimens for scientific and medical education. Plastination is the process of extracting all bodily fluids and soluble fat from specimens, replacing them through vacuum forced impregnation with reactive resins and elastomers, and then curing them with light, heat, or certain gases, which give the specimens rigidity and permanence.

The corpses pause in action in the exhibition .These looks alive.
why were these corpses made to be in action? l The brief reply was that the pauses and actions of the plastinates have been carefully thought out and serve educational aims. Each plastinate is posed to illustrate different anatomical features. For instance, the athletic poses illustrate the use of muscle systems while playing sports. The pauses allow the visitors to relate the plastinate to his or her own body. The primary goal of the exhibiton is Health education. The exhibiton is targeted at lay audience to know their own body , how it function, where different organs are located and what are their function . Every individual is unique. Human being reveals their individuality not only through the visible extrerior, but also through the interior of their bodies. Each body is distinctly different from any other. The body's positon , size shape and structure of skelton, muscles nerv es and organes determines our " interior face", added the guide.

Can these information not be conveyed through models of clay?

Absolutely impossible, Guide replied.In that case it would be a simplified version of the real thing. The authenticity of the specifmen not only fascinates but enables the observer to experience the marvel of the real human body.

I returned back from San Diego exhibition hall with a tingling in my mind and marveled at the human ingenuity.Perhaps , I thought, that is why the exhibiton is dedicated to the "individual interior face". It is sad that no photgraphs are allowed to be taken in the exhibiton. May be a few can view these marvelous bodies in action in the internet, if possible.



Ever since my arrival at Los Angeles in July, I started meeting a few college teachers, in the neighborhood of Los Angeles county, a number of times.To my utter surprise I found that the economic recession has not spared even the education system of this great country. I was aware of the fact that recession created unemployment in industry and trade. But I had no idea that college education system could be also a victim of the recession.. Now a days in America most of the young graduates who joined the service , during last few years, have lost job in industry and trade. The shutters of many medium sized trading houses have been brought down. Till now ,I was under the impression that jobs in education and government sectors were recession proof. But I found here that even in Government sector employees have accepted pay cuts so that cost of running the government could be salvaged. Only grocery stores, seven to eleven stores and health clinics and pharmacy are doing moderate business and only the department of defense is still trying to recruit people offering extra fascilites.

California is the eighth biggest economies of the world. But recession and excessive spending by government has made it a sick state. The Governor of California Mr. Schwarzenegger publicly admitted that had the state of California would have been a corporation it would have been compelled to declare bankruptcy. It was a revelation for me that once such a strong Lion like economy can also be turned into a dormant rabbit. However Economist here greatly differ in their views and some of them felt that California has enough resilience to come back to life again. Perhaps those economist may be true in their conviction but presently the economy is surely under stress. None knows how to empower the economy immediately. Now any visiting person can feel the air of depression as well without being an expert..I was impossible to believe that a hotel room in a four star hotel at San Jose area of Silicon valley, which used to cost around $200 dollar a day, is now available for $ 56 dollar a day with breakfast and evening tea as complimentary deal. I was sadden at the turn of event. During the month of July Governor of California has increased the tuition fee of all school going student by 20% and budget allocation for the school education slashed forcing less numbers of teacher per school now.

I had visited California number of times in my life but never found people so depressed. A pound of clean fresh whole chicken is now available; in our neighbourhood of Castaic city, at Ralphs Grocery Store at 55 cent a pound. Translating it to Indian rupees and weight the cost stands at Rs 53 a KG ( the cost of chicken at Guwahati is much higher now). With the cost of product going down people should have been happy but they are not. Why? Because this is the sign of strong depression. The deflation now can set in at any time, they were afraid. We need to remember that if the strongest economy in the world can suffer, how vulnerable our country is against recession.So we need to save now and invest when opportune time knocks at our door. The share market is high now and surely it would come down .Invest money at that point of time to reap the benefit after a few years.

One of my friend Dr. Maria Borrowvitch,an adjunct professor of Sociology in CalState University. She told that she is convinced by now that after her present contract expire in August there would be no renewal of her assignment. She was teaching in the university continously for last fifteen years.

I also visited recently a neighborhood college , the "College of the Canyons". It is in the Santa Clarity Community College District. The community colleges are backbone of the American educational system. It is not a graduate college. It is an intermediate college offering "AB degrees"mostly offering vocational, technical and community demanded courses like security services, water Technology and Recreation services etc.". THESE COLLEGES ARE government aided. The Fall semester in USA begins from August and registration starts from July in these colleges. The Directors of studies replying to my question stated that "the State of California is experiencing a severe budget shortage. The College would get much lesser grants this year. This would require the change in number of courses offered..The class with low enrollment have a greater risk of being canceled, the tuition fee would be required to be upwardly revised." With strong possibilities of cancellation of classes either teachers shall have to be reduced or pay cuts would be inevitable.( Thank God at least in our poor country teachers are not loosing jobs or getting pay cuts due to recession). At first I thought this was the condition of community colleges only. But even the great institute like Harvard university is also facing the impact of recession.It is not just a mere gossip but it is a fact of life now.

During past February, President Drew Gilpin Faust of Harvard said : "We are a community of distinguished scholars, talented students, and dedicated staff-teachers and learners defined by our ideas and discoveries, not by our financial resources." That same month, Harvard announced its first cuts to cleaning and custodial staff at Harvard Medical School, and budget cuts resulting in custodial staff layoffs at Harvard Real Estate Properties and Peabody Terrace.

Many of those whose jobs have been targeted are among the most vulnerable in the community-the lowest paid, the immigrants, the marginalized staff. However .Harvard maintained that the cuts are justified as part of a university-wide response to an estimated thirty percent drop in the value of its endowment this year. Yet, Harvard , according to information given to me, remains the wealthiest university in US and one of the wealthiest non-profits in the world. President Faust declared that, "for Harvard, as for many other colleges and universities, our challenge is to confront the new economic realities and intelligently adapt ourselves to them."

Some economists felt contrary to the above statement. They felt" an institution as wealthy as Harvard can and should find more creative and equitable ways to make up the deficit than by laying off its lowest-paid workers". Since Harvard administration have not done enough to confront the issue many scholars and society leaders are criticising them today.But example that must be appreciated is that seniors , administrators and professers at the University have also taken pay cuts volunteerily. This is what we need to learn from them. Some Bank bosses did not do that and were forced to step back while taking their performance Bonus or return the stimulus package taken.

Harvard's peers are now exploring ways to prioritize jobs through shared responsibility. The president and top administrators of Stanford University have taken a voluntary 10% pay cut for the next two academic years. University of Tennessee Acting President Jan Simek and his executive staff will take a voluntary pay cut of 5%, while Mark S. Wrighton, chancellor of Washington University in St. Louis, will take a 10% pay cut for the next academic year.

In the Boston area, the faculty members have been asked to support a 1% pay cut to help retain employees who work in non-teaching positions at the school, while executives at Beth Israel Deaconess Medical Center recently took a salary cut to preserve several hundred positions.

In US unlike our country, univeristies are growth engine of the community. So depression in universities creates depression in their community.Communities are trying to help the university by endownments, donations and by accepting cuts in their salary and by accepting increase in their tax liabilites in municipal educational rates.

This would be impossible for us to imagine back home.. When lots of people from Assam are getting job loss, the government has dared to declare pay rise for government employees alone. Perhaps, people would have appreciated more if bold steps, to rejuvenate employment situation for youth of the state, would have been taken first before the income raise to the government employees were granted..



There is a good news for mutual fund investors. From August 2009 there would no entry load for investing in Mutual fund. Earlier whenever,except during the time of New Fund Offer (NFO), entry load amounting 2.% to 2.5% was a must. This amount was deducted, from the money given by investor to the Fund house, at the time of allotment of the units.The account statement reflected the deduction made by the fund house. Now there would be no deduction at all as there would be no entry load. This means If an investor invests Rs10,000/- the entire amount would be invested. Earlier money invested was Rs9800/- only though investor paid Rs 10,000/- So this is the happy news that there would be no entry load from now onward,

But always every good news is followed generally by a bad news. Now the bad news is that there would be now a higher exit load . The exit load was nothing new. It was there already.The exit load was required whenever investor is to take out the amount invested before one year. With the abolition of entry load the fund houses may increased the exit load. Till this year exit load was 1%. of money invested. Now it is understood that exit load have been brought up to 2% depending on amount of investment. A few fund house has already introduced the load as well as the period. in coming month. All others are also expect to hike the period and price.So it would be the responsibility of the investor to think over twice before leaving a fund before the specified time limit. My suggestion would be to read the offer document thoroughly before applying for investment .SEBI has already restrained Fund Houses not to charge varying amount of exit load from unit holders depending on quantum of investment. Earlier big investors were not charged any exit load. From now onward it would not be possible for Mutual fund Houses to give concession to big investors denying the small investors. This is a good step.

Shashikant Dubey,an expert of the mutual fund world, gave me another bad news for the investor. With the new provision of withdrawal of entry load the Mutual fund companies may extend the period of exit load. Up till now the exit load was required if an investor leave before one year. This one year's limitation would now probably be converted into two to three years period. That means once any investor joins a mutual fund he would not be able to leave the fund before two to three years without incurring penalty. Up-till now, these actions have not been taken by any Mutual fund but there is a possibility. Perhaps before publication of this article the confirmed news in this regards would be available.

So from now onward, before entering into mutual fund arena, it would be imperative for investors to read the offer document seriously and find out if there is any provision of exit load has been changed or not. I have again and again mentioned that investment is a serious job and none should enter the world of investment without properly understanding the schemes of investment. One needs to ask as many question to the financial advisor as he desires. The need of a qualified investment adviser would be necessary now, who would be truthful to the prospective investors .

The Entry loads were used by funds to help remunerate the fund distributor who serviced investors. Now, investor will have to separately pay the distributor for his services an amount that investor can mutually fix with him as fair payment for his services. The days of free services will go away from now onward. If you get free service then you should consider your self lucky. It would be like buying of air ticket from travel agent. Earlier no charges were imposed. Now a days travel agent charges money for the service rendered.

Apart from entry loads, there are some accompanying changes in the rules that investor must understand. There are no rules not to re fix the exit load .So the mutual fund companies in their exuberance to earn bqck the loss may impose suitably some charges through the exit load. My suggestion is investor must be aware of these points.So that they do not feel cheated later on. Mutual fund companies would be within their right to re-fix the exit load since there is no legal hindrance to do so.

The provision for enhancement of period of exit may do good to investor also. Because, most of the investors used to exit at the fall of sensex or Nifty. In fact this provision, if implemented, may turn out to be a savior for investor also. They would not be able to redeem immediately after the investment is made with out paying penalty. For the fear of payment of higher penalty at least some investors would keep holding back their investment and ultimately may reap benefit. For example, during the share market crash of January to June last year those investor , who had not taken out their investment and stayed with the fund, have regained their investment to a great extent by now. The increasing the length of exit period may help investors to be a long term player.
Probably, investors would be able to count on zero exit loads provided investment periods are longer than three years. These are early days and it’s possible that exit loads may evolve. Exit loads are going to acquire more importance now and one can expect some standardization across the industry sometime later.

. According some expert of the Mutual fund the way things are shaping up, it looks like fund companies will be paying distributors one per cent up front commission even though there’s no entry load. If the investor exits the fund within a year, then the commission gets compensated from the exit load. In any case, investors now need to be aware of the exit load factor, and stay put for longer period in the fund.

The most important factor from now onward would be to be aware of the churning of investment Though entry load has gone yet distributors may still be getting 1% percent commission. This does not harm investors. But investor must be aware that the motive for churning has not gone. In fact, from the point of view of an unscrupulous distribution organisation, a commission of one per cent instead of three simply means that they have to churn three times as much to earn the same revenues.

Fortunately, SEBI has also given investors a tool to protect themselves against this. Now,Distributors are obliged to reveal to investors what commissions fund companies pay them. They are even obliged to reveal what commissions competing fund companies would have paid them. In the run-up to August , this aspect of the new regulation has received the least attention. However, if investors are to benefit fully, then this transparency could prove to be the most important. What is needed is the education of the investors. The investor must read the documents and be aware of the entire fact and then can take their own decision to invest or not to invest at all. It would be prudent for investors to consult a qualified professional financial adviser for creation of their wealth in a most scientific manner.



This is the best time to plan for reduction of Income tax for the year. Though many people do not want to concede that during last three years income tax on middle class has come down considerably but it is a recorded fact. The recent budget has though not been able to enthuse many investors and corporate entities yet it has brought in certain changes in respect of personal taxes. It has also brought in a new dimension to the New Pension Scheme which is meant now for the common people of India. The impact of these two measures are far reaching. It would be imperative to discuss the implications of these two measures for the benefit of the tax payers and assesses now. From this month tax payers will be able to to pay income tax through ATM s also. The Corporation Bank has started the facility and all other banks would surely follow the system soon.

In what could be a major relief to Income tax payers the Government of India is proposing to impose only 10% tax up to an income of Rs 10 lakh.This is a proposal only for public discourse. Hope the Direct tax code becomes a law replacing IT Act of 1961. In that event middle class will be greatly benefited. This subject need detailed discussion and it would be done in a separate article later.

However it should be noted that Government of India desires that from next April all the persons , who do not have to pay any income tax, shall also have to submit" PAN CARD" to bank or any other authority , in case they have any interest earnings from Fixed Deposit. Till recently no senior citizen, who do not have taxable income, have to submit details of pan card to the bank or any other organization where money is kept in Fixed Deposit.

Despite criticism of opposition parties against low benefit of income tax, in actual practice over last three years personal income tax have come down considerably.During Last year ending March 2008 a person earning above Rs three lakhs annually had paid income tax of around Rs 50,000/ after availing all concessions-. During the current year ending March 2009 he has paid Income tax of around Rs twenty thousand only for the same annual income. In case the person maintains the same level of earning or little more during the year ending March 2010 and handles his savings carefully he might be able to take himself out of the personal Income tax ambit completely. With heavy reduction in tax his real income is going up in 2009-10, despite inflationary effect, for the first time in many years. The most people are not realising the effect due to high cost of commodities.

The recent budget has given good benefit to salaried persons whose annual salary is above Rs10,00,000. Now a days most of the senior executives earn income are around that figure only. Gone were the days when Vice President or a General Manger were getting Rs 50,000/- per month. Now a days an executive directors, General Mangers, Senior general mangers , vice president and Presidents get per month inclusive of Bonus around Rs 85 thousand to Rs one lakh per month and more. From this year they would not have to pay any surcharge on their earned income as such they would get a benefit of around Rs 3 lakh per year.This is a great benefit to the salaried person.

The snior citizens would be also happy for the exemption limit of the taxable income of the senior citizen has been enhanced. Earlier senior citizen did not poay tax if their annual income was within Rs Two lakh twentyfive thousand. per annuam . That means a senior citizen who had a monthly income of Rs Nineteen thousand had to to pay Income tax. Now , a senior citzen shall not be required to pay in come tax even if his earning is Twenty thousand per month or Rs two lakh forty thosuand annually. In case these senior citzen can save around Rs one lakh under 80C then he would not be required to pay income tax even if he earns little over Rs Twentyeight thousand per month. It means some of the retired Judges, retired senior burocrates and retired general Mangers of public sector and private sector undertaking would be out of Incometx ambit as most of the person's pension are around this limit. Naturally senior citizens are happy with the budget.

In many cases where both husband and wife were working and now retired and senior citizen they would have a better financial position than before. A chart is given below to show how new bduget has benefitted the senior citzen.

From the above chart it is apparent that earlier tax liability for senior citizen earning Rs Two lakh forty thousand was Rs 1545 /- annually. Now they will not have to pay any income tax if their income remain same.. In case they earn income amounting to Rs Three Lakh then only income tax would be payable by them amounting to Rs Six thousand one hundred eighty only annually or monthly around five hundred only .

The exemption limit of income tax for ladies has also gone up . A chart of income tax for the laides is also given below ;

From the above chart it is apparent that no lady shall have to pay any income tax, from this year, if her earning is around Rs one lakh ninety thousand per annum or around Rs 17,000 per month. In case they can save money under 80 c they would not be required to pay income tax even if they earn Two lakh ninety thousand per annum or Rs Twenty four thousand per month. This would mean any Government officials and private and public sector executives of middle level would hardly be required to pay any taxes. The new SDC, Police officers, Extra Assistance commissioners, Executive engineers drawing around Rs Twenty five thousand per month would not be required to pay any income tax if saving is planned properly under 80 c.

The budget has also given exemption to common male earning members of the society. The chart given below would show how the budget would impact the pocket of the common male tax payers.

From the above chart it is now apparent that any male income tax payers would have to pay no income tax from now onward till his earning exceeds Rs 1 lakh sixty thousand annually or Rs 13 thousand per month. In case, the same person can save money under section 80 c of IT Act they will not have to pay any taxes even if they earn Rs Two lakh sixty thousand annually or little above Rs twenty one thousand per month..

It is now apparent that if habit of saving is developed then income tax benefit is always going to be higher. I strongly recommend all young employees to save money under NPS for that would give them best benefit in future. We don't have to think only of today. If proper saving could be organized the future would be also brighter for the younger generation.The new Pension Scheme from now onward would be Exempt from IT provided the money taken out of the pension fund is deployed in annuity. This is a good concession which most of the people have forgotten to notice.
I however don't recommend for senior citizen any contribution to NPS. But in case they have still an operative PPF account then they should continue contributing there for that would give them the best benefit during their still older age. Now a days people generally live beyond eighty five years. They should provide for those age now for medical aid has become costly. The modern health scientists have predicted that human mortality in India would further decrease and most of the persons would now live well beyond Ninty by 2030. The health care would be vital during those years and saving for a healthy body, mind and soul would be most imperative then. If Direct Tax Code is implemented in due course of time perhaps the present finance Minister would get greatest blessings from Middle class.


The Credit Card default has reached now such a limit that a new legal provision has been put on place to realise the dues from the salary of the cardholders. With the new provision on place the defaulting card holders have to be very cautious to save their name and the fame from now onward. Defaulting credit card holders may risk their credit worthiness too. Of course, it was also true that most Credit Card Companies used to realise, at the slightest pretext, their outstanding dues by applying strong arm tactics . There were volleys of protest against such uncivilised mannerism of the Credit card companies. Fortunately court debarred Credit card companies from using force and extra legal provisions but it also equipped the banks with legal provision to realise their legal dues from card holders . What is really a credit card ? What is the function of credit card ?

A credit card is a small plastic card and is a part of a system of payments issued to users by banking system. It is a card entitling its holder to buy goods and services based on the holders promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user, to be paid within a specific period of time as agreed. Working class should be aware that from now onward credit card default could be realised directly from salary payment.

The use of credit card is like a double edged sword. When used judiciously and with good intention it is helpful to users. When used recklessly it creates problem for the users. The payment of credit card must be made in time. Though credit card allows payment to be made slowly every month this facility should not be availed off , by salaried persons,as it is a very costly option.The interest charge for the outstanding due are generally more than 40%. The money kept in fixed deposit of bank is paid at the maximum rate of 9% interest now a days. Whereas for any outstanding amount of the credit card interest charged is around 40-%. So even if credit card is used the money should be paid immediately on receipt of the bill to be cost effective.
Recently two most important steps have been taken in respect of the credit card. The first, in case of credit card default the money can be deducted from the salary of the card holder and and the second, is the introduction of PIN number to save card holders from defrauding. These are two important steps,all credit card holds need to know, that have been introduced.

Perhaps by now most of credit card holders know that from the month of August a separate PIN Number would be required to use the credit card on line. This provision came in force as per directive of RBI. The most of the issuer bank has already made arrangement for this procedures. Now it is the responsibility of the credit card holders to apply for this PIn number from their respective bank. This method has been put on place so that fraud could be avoided. The credit card number could be stolen, copied and can remembered but Pin number would be known by only individual concerned .To ensure double safety this concept has been introduced. The card holders now need to apply for the same.

Some credit card users forget to pay their dues in time and dues to be paid multiplies fast. On non receipt of original and subsequent dues dues on time Credit card issuers at first keep on sending reminders and if no response is received the holders then deploy recovery agent, who are actually a gang of muscle power, to realise the due payments. In such situation credit card users face harassment and sometime get bodily injuries beside experiencing traumatic situation.

Sometime younger generation while trying to show off their purchasing power flash out their credit cards and buy goods and commodities and later fails to pay and there by inviting unnecessary trouble for themselves. A few years back an incident took place in Guwahati on misuse of credit card.. There were a group friends who, after graduating , found jobs in a few multinational companies selling white good products. After their office hours these friends used to meet in a rendezvous located near Christianbasti at G.S. Road. They used to enjoy in a nearby restaurant almost every evening after office hours and used to have innocent fun.

Rajib Bharadwaz and Dhiraj Borah, in the group, were two friends working in the same company. One evening when all the friends assembled Raijib' business acymen was discussed and everyone congratulated him for fulfill his annual sales target within six month's time. Rajib told his friends that a special Bonus would be paid for his achievement by the year end. All the friends congratulated him and ultimately pressurized him to throw a dinner party that night itself.. Rajib agreed to the party next week for he had no cash in his pocket then. But his friends were unrelenting and kept on demanding the party that night itself. Ultimately Dhiraz, being his colleague, agreed to use his credit card with an assurance that Rajib would pay him the money next week. Party continued and all the friends thanked Rajib. In due course of time when the bill came Rajib was away on tour. On his arrival Dhiraz gave him the bill and asked him to deposit the money next day as he was going out on tour. Rajib kept the bill with him and forgot later to send the payment to the credit card company.. The due date of payment expired and credit card issuer kept on sending reminders. when the company did not receive payment continuously for three months recovery agents arrived at Dhiraj's home. They insulted his both the parents and forced them not only to pay the amount but to handover their fees as penalty. Parents were shaken. Dhiraz was a regular payers of bills. He took up the matter with the bank but without any avail. Dhiraz then only realised the danger of using the facility of credit card emotionally. He realised it was not correct to flash out the credit card to pay the someone else dues. It was also not correct for him to hand over the bill for payment to someone else. He should have asked for the money next week as decided and pay the bill himself in due course. For his own fault he lost his money and his friend. The realisation came to him too late when already his parents were insulted.

The above incident was a true story. So all the young man should realise that credit and debit card are sacred instruments to be used with utmost care. It is not meant for making any style statement. Please don't let your credit and debit card number be known by anyone. There was another incident when even powerful man like Jyoti Basu was shaken when his DEBIT card was stolen by his security man and used. The person concerned was was later nabbed. So use your credit card , ATM card and Debit card with utmost caution.

Over the years the news of using muscle man in the garb of recovery agent by banks reached the Reserve Bank of India but no substantial steps could be taken. But court delivered judgment that Banks would be in their right to recover their dues of credit card if payment remain due for for long. They can take legal means to recover their dues but would not be able to use brutal force. The recovery agent would have not rights to talk to anyone other than the holder of the card. Despite those legal sanction many persons refrained from making timely payment of the credit card dues. The banks were feeling frustrated because it meant loss for them
Recently a provision has been made by the bank in case any employed person does not pay the credit card dues on time it would be possible for the banks to realise the amount from the salary of the person concerned. Now employed person should be aware of this provision. This may lead to not only the realisation of money from their salary but they may be defamed . Their credit rating may go down and ultimately it might create a black spot in their career. This fact was kept secret till now . The matter came to light when a bank has started using the provision legally.

ICICI bank will be the first bank to utilise this concept. While issuing credit card from now onward they would bind the holders in such a way that in case payments are not received during the due dates the bank would be in a position to approach their employers to deduct the dues from the salary legally and pay to the bank. This provision would be made legally foolproof and others banks are also expected follow the rule when issuing creditcard to holders.

Many educated people also once thought that most of the time dues of credit card can be avoided. But as the days passed by the non payment of credit card dues have been taken as an legal offense. In modern days provision of taking debt would be getting easier but for that credit rating of individual would be very important. From now onward before sanctioning Housing credit and car loan the banks would be demand credit rating of individual. In most of the developed countries such provision are most essential. In India, up till now Loans were easily available for the working persons but now onward even credit rating would be necessary. So every young persons must zealously protect their credit rating status from now onward, by preventing misuse of credit card.
It must be kept in mind that default in credit card payment not only bring bad name to non payer but may also destroy credit worthiness of the persons concerned. So now days beware of credit card default. Regular payers of credit card would have great advantage in building their credit worthiness.



Just after and before the budget session, the Government of India’s Economic advisor as well as the Deputy Chairman of the planning commission in their various statements and interviews stated that though India’s economic parameter indicates possible upturn of economy yet it would not move on the faster tract till American and British economy revive from their recession. The question arises as to how bad or good the American economy is now? During my present trip to US I have tried to study the condition of the American economy and have been analysing how it is going to influence the economy of my home country. I found a dismal picture even now though many economist feel economy is slowly turning up for better. The application for H1 visa which were made in lakhs during last few years have come down to 36,000 from India against available quota of 60,000, currently during 2009.

It is not hearsay; it is the fact of broad daylight that American economy is still facing one of the worst down turn of the history. It is as bad as that of the great depression. The most people think it is worse because during that time no state was facing so much financial crunch as California is facing presently. Had California been a corporate entity it would have forced itself to declare as bankrupt. The situation is as bad that most people now hesitate to buy state bond even on premium. Warren buffet in his latest interview said that he is still optimist of the American economy. He, however, would not risk predicting a time and date. It may turn around within one and half years or take four years. But surely America would be back to normal power and prestige in near future. He would not hesitate even to buy value stock at 9000 Dow. Federal reserve said the American economy is doing better but admitted that health is not as much better as it expected .Legendary investor Warren Buffet’s expression is noteworthy : "The United States economy is now out of the emergency room and appears to be on a slow path to recovery,"

Recent data suggest economies of America and Europe are on mend but experts are not convinced that economies’ can stand on their own without crutches of Governmental massive help as yet. G. J. Sanghvi, a businessman friend of mine, from San Jose sent me a message last week that the American economy lost 467,000 jobs in June equal numbers in July and the unemployment rate edged up to 9.5% percent in a sobering indication that the most painful downturn since the Great Depression has yet to relinquish its hold. On July 5th the vice-president, Joe Biden, admitted that the White House had “misread how bad the economy was”. In January it had predicted that unemployment would peak at 9% without a fiscal stimulus and 8% with one. The $787 billion two-year stimulus is now law but unemployment stands at 9.5% and Barack Obama admitted. It has since dropped to 9.4% now in August.. The payments of stimulus money by government to enterprise have not been taken kindly by American people in general. They felt America being a capitalist country why the government should be allowed to be theowner of free enterprise. Some people have refused to buy cars of General motors for it has accepted Government money. In our country people expect everything from government. There is big difference in attitude of people in both the countries. Yet economies of both the countries are linked due to international trade effect. Even share markets have not yet been fully decoupled.

“The numbers are indicative of a continued, very severe recession” said Stuart G. Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. “There’s nothing in here to show that the economy and the market are pulling out of the grip of recession.” Yet, I find stock market at Wall Street is moving ahead. It is good news for India for Indian stock market is coupled with Wall Street now. In India from a low of 13300 sensex it is moving forward now.
The $787 billion two-year stimulus is now law but unemployment stands at 9.4% ..I had the opportunity to read, at San Francisco, the latest monthly snapshot of the America’s job situation, released on Thursday (2nd July) by the Labor Department. It reinforced a consensus that high levels of unemployment are likely to remain for many months and perhaps years. That will almost surely increase the difficulties of finding work for millions of jobless people while limiting wages and working hours for those employed. I only hope the situation back home in our country don’t get effected so severely. For another month, manufacturing jobs disappeared, dipping by 136,000, while construction jobs shrank by 79,000 and retail by 21,000. Health care remained a rare bright spot, adding 21,000 jobs. Perhaps this is the only sector along with farming and Defense that is breathing easy.
The losses for June brought the tally of jobs shed since the beginning of the recession to 6.5 million — a figure equivalent to the net job gains over the previous nine years.
I want every sensible person to note the words of a famous economist of human resource and get set to plan for our own future to save ourselves from catastrophe. “This is the only recession since the Great Depression to wipe out all jobs growth from the previous business cycle,” Heidi Shierholz, an economist at the labor-oriented Economic Policy Institute in Washington, said in a research note. She called this fact “a devastating benchmark for the workers of this country and a testament to both the enormity of the current crisis and to the extreme weakness of jobs growth from 2000 to 2007.”
The figures for June did show signs that the pace of job losses is continuing to slow. From November to March — after the collapse of several prominent financial institutions — the labor market lost an average of 670,000 jobs each month. From April to June, the decline slowed to 436,000 a month.
Johan Maynard Keynes, once predicted ,as per Buffet, : "By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. . . .The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." In India though official inflation is going down the price of essential commodities are getting higher and higher. Unless government can bring down fiscal deficit,debt and actual inflation there may be temporary revivial of economy but there would be turmoil in the country for consumption as most people would remain marginaly hungry.
Of course we cannot survive without hoping for the best. My own feeling was that the situation back home was not so severe and there bound to be smarter recovery in India Still I do not believe that growth rate of the country would be 7.5% during this fiscal. According to my calculations I feel that India will progress in the path of recovery surely but very slowly. The stock market which saw an upturn from 8000 point sensex to 15000 point is bound to go down, for some time now onward. It was euphoria that brought up the share market. The market can not sustain for long on the basis of euphoria unless fundamentals improve. The silver line for our country is the higher saving rate compared to Western economy. Our weakness is export which is greatly affected due to recession abroad. Early this year, the US administration projected that the unemployment rate would peak near 8 percent with the stimulus in place. But joblessness is already well above that target now. The condition of India will improve surely but at snail’s space till consumption pattern of USA improves and Job creation starts.
Now, millions of households in US owe more to the mortgage lender than their house is worth. Millions more have exhausted their credit. The paycheck has returned as the primary source of spending. Yet, as the June jobs report reinforced, paychecks are eroding even for those who have jobs. The situation back home is surely better than above. But this is the time we need to think of handling our finance with utmost caution.
Mr. Obama himself has proposed a budget-balancing rule that he would have to break to inject more stimuli. "We've begun to put the brakes on this recession and ... the worst may be behind us," Obama said in his weekly radio and Internet address Saturday. He cited recent Labor Department report that showed a dip in unemployment, but said, "We must do more than rescue our economy from this immediate crisis. We must rebuild it stronger than before."
One thing is certain the mood of everyone that matter in US is positive. Depending on this positive attitude share market is reflecting upturn move. India will run faster once US starts turning around. The question is when? It can be in fourteen months or may be in four years, only time would dictate. The revival of economy would be there surely!