The fluctuating rupee

Up or down, some Indians have to remit money home anyway, others can afford to wait

• By Gaurav Ghose, Financial Features Editor
• Published: 00:00 May 22, 2010
• 

• Foreign funds have already pulled out around $987 million from Indian equities so far in 2010, and there are concerns the pressure may continue until the euro zone situation improves.
• Image Credit: Virendra Saklani, Gulf News

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Though it means sacrificing more at his end when the value of the rupee appreciates against the dirham, Mohammad Rafi is a little blasé about the fluctuating exchange rates.

That feeling is not without a reason. He has witnessed the value of rupee going up and down many times in the last 16 years. He has seen one dirham fetching more than Rs14 as in March of last year. He has also seen it plumb the low depths of Rs 10.65 in 2007.

Rafi, 36, who today runs his small independent transport business in Abu Dhabi, has been remitting part of his earnings home since he first came to the UAE.

For the past few years, the amount sent has remained constant every month. He sends Rs15,000 to his family in Guruvayur town in Kerala, where his wife and two young children reside with his parents.

"Of course it hurts when the rupee value strengthens, but what can you do? But never do I send a penny less to home," says Rafi. "They need that money. I make adjustments to my spending here."

He also remits between Rs25,000 and Rs30,000 to his home country bank as repayment amount towards a personal loan of Rs300,000. This amount is also largely constant, he says, as it is never less than Rs25,000.

From the peak of Rs14.25 in March 2009, the rupee has appreciated against the dirham by about 10.45 per cent. That means one gets fewer rupees per dirham now. In mid-April this year, when rupee reached a 19-month high, one dirham had dropped to Rs 12. With rupee weakening this month and accelerating in the last few days, smiles in the faces of expatriates are slowly returning. On Friday, a dirham was valued at around Rs12.76.

For many Indian expatriates in the UAE, particularly of the lower socio-economic bracket, a stronger rupee means less money being transferred to India to meet the obligations back home. Their families have to deal with a lesser amount and at times bear some form of hardship.

In some cases, when the rupee appreciates, some expatriates who are earning less dig into their savings here and even take loans to keep their families happy.

"Any time it happens, the strengthening of the Indian rupee it is a very serious problem for low and middle income expatriate workers in GCC countries," says K.V. Shamsudheen, partner and director at Barjeel Geojit Securities (LLC). As chairman of the Pravasi Bandhu Welfare Trust, he advises Indians struggling with debt-related issues.

Lifestyle

"Having gotten used to a certain lifestyle, the families at home keep demanding the same amount, if not more and do not realise the sacrifices being made by the earner here. It compels them to take a loan pushing them into a debt cycle."

However, there are other Indian immigrants whose families back home do not regularly depend on their remittances. They can afford to wait and track the currency movements and then send money home.

"Compared to the ones who remit monthly, mostly labourers and middle class who have families back home, the ones who wait and send, though low on volumes are usually big tickets," says Sudhir Kumar Shetty, CEO of UAE Exchange. "That is, when they remit, it's a big amount. They are willing to wait for the best rate."

Mostly, they send money to India for purely investment purposes, whether it be in stocks, mutual funds, corporate bonds, fixed deposits or real estate.

A teacher in Ras Al Khaimah, B.R. Chaudhury, 45, is one such expatriate who sends money when the rate is good. She sends money two or three times a year and the amount is usually in the range of Dh10,000 or more, mostly for real estate investments.

"I always send fairly large lump sum amount to my bank in India when the rate is good to pay for my monthly repayments of the loan towards a real estate investment and other expenses when needed," says Chaudhury.

The dirham being pegged to the dollar essentially means movements in the dollar, seen in recent days amid the euro zone crisis, affects the strength of the rupee. Not to forget, the rupee's fortune is also closely linked to the foreign fund flows into India and stock market sentiments.

The outcome of the gains in the rupee over the last year and a half has been on the back of steady gains in Indian stock markets, says Pradeep Unni, senior analyst at Richcomm Global. Last year record foreign institutional investors' inflow of $17.5 billion into the Indian stock market helped the rupee rise 4.7 per cent.

This month, however, the rupee has slipped. That is especially on the back of the weakness in stock markets and fears of foreign institutional investors pulling out of Indian equities. Foreign funds have already pulled out around $987 million from Indian equities so far in 2010, and there are concerns the pressure may continue until the euro zone situation improves.

The latest outflows have played a role in pushing the rupee down 4.3 per cent in May, trimming gains in 2010 to just 0.4 per cent. So for expatriates here, weaker the better, which means transferring more rupees in the hands of their family members or into investing in equities and other assets in India.

Taking into account the recent developments in the global financial markets and more importantly the chaos in the euro zone, a potential correction is impending in the Indian stock markets and this hints that the rupee could weaken a bit more against the dollar in the coming weeks, Unni says.

Further ahead, the currency might get marginally weaker, but the weakness might be limited to between Rs47.50 and Rs48.50 to the US dollar as a potential long due correction in stocks might end by then, he adds.

"Thus expats can wait for a few more weeks to send their money home as they would get better exchange rate by then," Unni says. "At the same time, stocks would also reach levels to re-enter."

However, taking into account the underlying fundamental strength of the economy, the bullish outlook for the rupee beyond six months is intact, he says. But a general cautionary note is sounded when it comes investing in equities, perhaps the riskiest asset class.

"Having known that stock market is more of ‘tangled web' with too many factors playing at the same juncture and no factor can be discounted to the other, it's prudent to diversify the investment in different asset classes so that the risk is diversified," Unni says.

Opting to hedge the currency risk

In light of the recent currency fluctuations, the more savvy investors could very well opt to hedge the currency risk, Pradeep Unni, senior analyst says.

That opportunity is available for such investors right here, whereby the risk can be hedged in the Indian rupee contract on the Dubai Gold and Commodities Exchange (DGCX).

"Alternatively investors can also invest in the Indian currency for pure investment sake as the underlying strength in the economy is reflected in the currency too," Unni adds.

The DGCX contract is the only Indian rupee futures trading contract outside India which provides the opportunity of profit from movements in the Indian currency. The contract is a boon to all Indian expatriates in the Gulf and other countries as the Reserve Bank of India [central bank] effectively prevents nonresident Indians from trading in the same contract traded in India.

"Smaller size contracts with low margins with extended market hours make the contract an ideal one for both institutional and retail investors," Unni says. "We currently see a lot of investors visiting us to understand and trade this product."

Also, being a developing currency, the rupee is subject to significant volatility. Money funds in the form of some offshore Indian rupee funds are a relatively low-risk way to grow one's investment. But he points out, such funds are typically for investors who posses large capital and aren't dependent on a regular income from it but might need to access it at short notice.

As far the accounts are considered, given the same argument that the rupee is volatile, it's ideal to keep the US dollar as base currency, Unni adds. Some quick minded investors will transfer funds to India when the rupee grows weaker and repatriate them back to US dollar accounts when the rupee grows stronger. This was quite evident when the rupee went past 50 to the US dollar in March and April of 2009, and reversing back at Rs47-Rs46 levels. The result was a pure gain of Rs3 to Rs4 on idle funds.

INTRODUCE INFRASTRUCTURE BOND FOR NRKs

Pravasi Bandhu Welfare Trust

Post Box No. 940, Sharjah

www.pravasibandhu.com

Email: kvshams@gmail.com

Tel: +971506467801

 February 23, 2007

PRESS RELEASE

INTRODUCE INFRASTRUCTURE BOND FOR NRKs

We came to understand from the media that Government of Kerala floated a new company called Infrastructure Kerala Limited (InKel), to channelise investments from non resident Keralites (NRKs)  with a paid up capital of Rs. I billion out of that  26 percent stake would be held by Kerala Government.   NRKs had supported and invested in more than two dozen Kerala Government promoted companies since 1976.

NRKs had very bad experience in investing in companies fully or jointly promoted by Government of Kerala. The first company NRKs had invested was Keltron Component Complex Ltd year back 1976. Keltron Component Complex Ltd had paid its first and last dividend after 11 years where as Cochin International Airport Ltd made its maiden dividend after eight years. Most of the companies are disappeared with total loss of capital.  Notably majority of the investors in these companies are low and middle income NRKs, all of them had invested their hard earned money expecting some return form the investment.  Ninety five percent of  NRKs from this segment are not having financial resources to get a regular income for their lively hood when they return for permanent settlement. If such investors are not getting any return on the investment or totally loosing their investment is not affordable to them.   In addition to that among State-level public sector enterprises (SLPEs) in Kerala 49 enterprises incurred losses amounting to Rs 501.50 crore during the 2004-2005.  So, NRKs who knows the past experience in investing in Kerala based companies will not invest again.

If government is really looking for financial participation of NRK in the development of Kerala, the newly set up InKel must have a professional management and that company must raise fund by long term bonds in the line of Konkan Railway or Naiveli Lignite or Narmada Sarovar Nigam who raised fund for their project as Bonds. a) The return of these bonds must be higher than NRE bank deposits. b) Such bonds must have guarantee from the federal government on timely payment of the offered return to the investors because state had defaulted earlier.  

During the regime of E K Nayanar Government of Kerala made attempt to raise fund from the public for infrastructure development. Instead of using that fund for infrastructure development the government diverted Rs. 5 billion into pay salary of the employees. Since the financial situation of the state is still bad, how we could believe that this government will use this fund for the infrastructure development?

A large number of Gulf returnees are now demanding for the government help for their rehabilitation.   A government who has more 3.9 million jobless people in the state will not help them. Kerala had received more than Rs. 22,000 crores last years as remittance from NRKs.   If government could mobilize 10% of the yearly remittance for the infrastructure and industrial development of the Kerala, we could change the face of Kerala.   In addition to that the income from such investment will be a shelter for thousands of NRKs for their resettlement.  

For More details, please contact:
K.V Shamsudheen
Chairman
Pravasi Bandhu Welfare Trust
Overseas Contact: Post Box No. 940
Sharjah, United Arab Emirates
Tel: 00971506467801
Email: kvshams@gmail.com
www.pravasibandhu.com

NRI body slams move to charge User Fee at Trivandrum airport

Report appeared in India media

 

NRI body slams move to charge User Fee at Trivandrum airport

Dubai, May 12 UNI

 

An NRI organisation working for the welfare of the low income overseas Indians in the Gulf has slammed the India government's decision to slap a user fee of Rs 755 on every outbound international passenger saying it is discriminatory.

 

In a letter to the civil aviation minister Praful Patel, the Pravasibandhu Trust said it was surprised that the Airports Economic Regulatory Authority (AERA) had rejected the Airports Authority of India (AAI) demand to levy the same fee on domestic passengers.

 

The government should have studied the profile of the international passengers from the airport, majority of who are low paid blue collar workers compared to domestic users who are far richer in comparison, Mr K V Shamsudheen, Chairman of the Trust told UNI.

 

"If the AAI feel the fee is essential to make the project viable, they may introduce a reduced fee of Rs 250 from all the users of the airport, one way" he said appealing for immediate intervention by the minister.

 

The member of Parliament from Trivandrum Dr Shashi Tharoor has also opposed the fee, which will be a double whammy on the low income Gulf workers many of who are now

returning from the region because of recession. UNI

Pension scheme launched for non-resident Keralites

Pension scheme launched for non-resident Keralites
By BEGENA P PRADEEP, Posted on » Saturday, May 15, 2010

BAHRAIN'S Keralite community is being urged to join a government-backed pension fund introduced for expatriates.

People need to pay a fixed premium every month to the India-based Kerala Pravasi Kshemanidhi Board (Kerala Expatriate Welfare Board) to receive a pension from the government when they reach 60.

The Bahrain Prathibha Association is spearheading an awareness campaign in Bahrain and held an interactive session with board chairman T K Hamza at the Bahrain Keraleeya Samajam, Segaiya.

"This scheme is open only for expatriate Keralites and is run by the Kerala government," said Mr Hamza who is also a former MP.

"People need to pay a fixed premium every month in order to receive a pension from the government when the he or she turns 60.

"Members can also avail a loan for a nominal rate of interest from this amount to build a house, for their daughters' marriage or (medical) treatment.

"Though the registration fee is a fixed Rs200 (BD1.7) for all, the receivable pension amount varies according to the category they belong to, based on whether the person is living outside Kerala but in India, outside India or has returned after working outside Kerala."

Mr Hamza said the monthly premium for those living outside India was Rs300 (BD2.500) and Rs100 (800fils) for others.

"This scheme is definitely reliable because it is government-run and any member who has paid their premium for five years and above will become eligible to get a pension when they reach 60," he said.

"All they need to do is fill the application form and send it to their office in Kerala, along with a passport-size photo and copies of their passport including the page with the visa stamped on it and a demand draft of Rs200.

"People can also co-ordinate with a registered association or club in Bahrain who can co-ordinate and send the forms of many people.

"As proof of their membership with the scheme, they will receive an identity card with their picture on it."

Bahrain Prathibha president P T Narayanan said the group was visiting labour camps across Bahrain to educate people about the benefits of the scheme.

"We have also met with the heads of various associations who have pledged their support," he said.

Application forms are available at Bahrain Financing Company branches and the Bahrain Prathibha office in Salmaniya.

The GDN reported in March that only five per cent of Indian expatriates working in Bahrain and the Gulf would be able to lead a comfortable life if they were forced to return home, according to a regional study by the Pravasi Bandhu Welfare Trust (PBWT).

The results reflected the extravagant lifestyles of their families who they send money to and the fact they do not save the money received, said chairman K V Shamsudeen.

He warned the problem was putting more pressure on low- and middle-income Non-Resident Indians (NRIs) and said many, who had worked abroad for decades, were returning home with no resources to look after their families.

Only two per cent of families were found to be saving from their remittances and though 98pc agreed the lifestyle of their families had improved, only 5pc felt they could lead a comfortable life if they go back to permanently settle in India.

Around five million NRIs work in the Gulf, 60pc of whom are from Kerala with the majority belonging to middle- or low-income groups.

Know budgeting skills to manage money

Emirates Business 24-7


Know budgeting skills to manage money
Managing household budgets can become a tricky affair if not done properly.
By Sunil Kumar Singh
Published Tuesday, April 13, 2010

NRIs need to curtail wasteful spending as an answer to appreciation of the rupee, say analysts. (EB FILE)

Control your spendthrift lifestyle and profligacy before it becomes an albatross around the neck. In case of managing daily expenses, this old wisdom is perhaps more aptly suited. But managing home budgets or household expenses can turn out to be a tricky affair if not managed properly.

Case in point being the concerns of non-resident Indians (NRIs) as the rupee has appreciated in value. Many are thinking to curtail the amount of money they remit for household expenditure to their families in India. But analysts say the solution lies somewhere else. So what is the best way to manage monthly expenses?

Analysts say most expatriates have to go back to their roots and settle in their home country one day. Hence, if they don't have sufficient savings back home they'll have no financial security.

Save first, spend later

The basics of budgeting start with a clear understanding of what comes first – saving or expenditure. However, analysts say a lot of people err when it comes to making a clear distinction between these two.

KV Shamsudheen, Director of Barjeel Geojit Securities, Dubai, said: "A major misconception is that saving is whatever that is left after the expenditure. This notion of saving is completely baseless and if they follow this definition they won't be able to save anything. On the contrary, I tell them to reverse the definition, that is, save first and then spend."

He says another way to manage family expenditure is to scrutinise the monthly spendings and mark out which ones are necessary and which ones are not.

"They should follow an expenditure control chart where they should note down all daily expenses and this suits to all workers – low, middle as well as high-salaried," says Shamsudheen. "Draw three columns – essential, optional and waste. At night, before going to sleep, take a look at the daily expenses and people will find out how much of their daily expenditure is either unnecessary or wasteful.

"People should also stick to a fixed monthly saving amount, which they should write above the chart so every time they look at the chart, it reminds them of the amount they have to save," he says.

Shamsudheen says the concept of micro saving and systematic investment is applicable to everyone. "If a person is saving 1,000 units of any currency every month, the total amount saved after spending 30 years, say in a country like the UAE, would be 360,000 units.

"Whereas, if the person invests this amount every month in any investment scheme, which will give at least 12 per cent return, at the end of 30 years he could get an amount of 3.5 million very easily.

"If the person decides to take the monthly return from the investment for his livelihood after 30 years, he will get a monthly income of 35,000 units. Therefore, instead of saving, an expat working abroad should invest at least 1000 units of the currency of his choice every month," says Shamsudheen.

Understanding savings

"Saving alone is not a solution. Many people misunderstand bank deposits as investment. Keeping money in the bank is not an investment, but a safe accumulation of our saving for investment. The bank where you deposit will always give you a partial compensation of inflation and tax and nothing more that. Even if the bank gives you full compensation of inflation it is not enough," Shamsudheen says.

Understanding our real needs when it comes to spending money is the key. "Whatever salary you are getting is your earning and you've have to live within that earning," he says. "If you live beyond your means, you will have to borrow money. We come across many people here who have four or five credit cards. Also, each of their family members uses multiple supplementary credit card that results in wasteful expenditure.

"Spending Dh20,000 or Dh30,000 in Dubai is easy. But people should realise that when they settle permanently in their home countries, how would they maintain the same lifestyle they were accustomed to in the Gulf," he says.

Shamsudheen also says that families of expatriates, when they receive the money, should manage it properly.

The lifestyles of an NRI and a resident Indian are very different. Families of NRIs in India spend more than those of resident Indians. However, there's a need to control unnecessary expenses back home.

"Family members have to realise the suffering and the nature of temporary stay of their breadwinners and therefore they must inculcate the habit of saving for the rainy day, says Shamsudheen, who has conducted many awareness classes for low- and middle- income Indian expatriates on the need for saving and investment.

Some long-term residents should have residency - THE NATIONAL

THE NATIONAL

Some long-term residents should have residency

Sultan Al Qassemi

Last Updated: February 13. 2010

In Shelter, a converted warehouse in Dubai’s Al Quoz industrial district, a young Emirati stood up in front of a crowd of 200 nationals and expatriates. They gathered to hear him speak about his vision for Dubai as it emerges from the effects of the global financial crisis.

Mishaal al Gergawi, the speaker, who also happens to be a local government official, stood in front of the crowd sporting a black blazer and blue jeans – not the khandoura and ghutra that many expatriates typically associate with Emiratis. While his clothes weren’t representative of the country, his ideas and values were very much reflective of popular sentiments.

The National’s Tom Gara covered Mapping Dubai, a talk that grappled with various issues ranging from labour reform to accountability within government. One issue that Mr al Gergawi mentioned that continues to be misrepresented within the local Arabic press and among nationals is that of residency.

Though a report carried in an Arabic language news service stated that Mr al Gergawi had called for giving citizenship to second and third generation expatriates living in the country in his talk, that was simply not true. I know this because I was there. What was called for and debated was a long-term residency programme for expatriates so they would no longer have the status of transient interlopers, but instead be acknowledged as stakeholders.

In fact, The National has reported other efforts in this direction: the Abu Dhabi Police is initiating a pilot programme whereby it would start recruiting non-Emiratis into its community police force to deal with issues such as antisocial behaviour, dangerous driving and crime prevention. With this, the Abu Dhabi Police have taken the first step into converting the expatriate population into stakeholders.

A misrepresentation of what Mr al Gergawi has said has happened before. Recently a friend of mine told me that he didn’t appreciate “your calls” – as in Mr al Gergawi’s and my own – for granting citizenship to foreigners in the country. Neither of us has ever proposed this. When I asked my friend if he read Mr Gergawi’s article his answer was “no, but someone told me”.

Many locals know expatriates who have been here from as far back as the 1970s. Today many of them are approaching retirement age and are being asked to leave. Many of these individuals contributed to the UAE’s formation; they, along with their Emirati colleagues, were the building blocks of this country.

In fact, my very own business partner arrived in the UAE in 1969 on a British issued visa and has been here ever since. He went on to serve in the UAE army for nearly two decades before starting his own enterprise.

It is not a secret that many Emiratis, including myself, believe that the vast majority of expats would not qualify to be nationals. They don’t speak in our accent, let alone in our language. They don’t dress like us or celebrate according to our customs. The thought of granting them UAE passports doesn’t sit easily at all with us. On the other hand there are expatriates who have served this country well, raised their families here and though they didn’t adopt our customs and traditions, they respected them.

It must be made crystal clear that this residency carries no promise of citizenship whatsoever and is granted completely upon the discretion of the federal government. This could never be a local government initiative as some have promised. It would have been beyond their scope to grant long term residency to people who purchase apartments. The difficulties of such an effort came undone when the financial crisis hit the country. Long-term residency should also be introduced in a manner so that only the right people qualify for it.

But without a long-term residency programme, people will continue to view Abu Dhabi, Dubai, Sharjah and their sister emirates as a short-term investment where they can make a quick buck and move on. I would prefer that those who worked and saved money in the UAE in their productive years could enjoy this wealth and spend it in the country, for instance, in the local malls, using our airports and eating in our restaurants, when they retire. These individuals after all are familiar with UAE customs and, if they returned home, they wouldn’t rant about their problems with this country.

Like Mishaal al Gergawi’s attire during his talk, long-term expatriates may not appear to be representative of the country, but as the Abu Dhabi Police showed with their efforts, their values are not always so different from ours after all.

Sultan Sooud Al Qassemi is a non-resident fellow at the Dubai School of Government

Indian Businessmen Welcome Budget in Khaleej Times

Indian Businessmen Welcome Budget

KHALEEJ TIMES

Issac John

26 February 2010, 9:22 PM DUBAI - Indian businessmen and professionals in the UAE welcomed budget proposals made by Finance Minister Pranab Mukerjee on Friday as “balanced and pragmatic” with a focus on 
fiscal prudence.
While the proposal to lower the Tax Deducted at Source rate on interest earned on NRI deposits from 20 per cent to 10 per cent was greeted by non-residents as a step that would encourage non-residents to deposit their money with banks in India, the forward-looking and inclusive budget also drew widespread applause for its focus on rural development, health and education, housing for the poor, agriculture and infrastructure growth.

The roadmap drawn to reduce fiscal deficit from 6.5 per cent to 5.5 per cent next year and 4.1 per cent thereafter has been expected, but the biggest surprise, most of those who spoke to Khaleej Times confessed, was the reduction of personal taxation – a move that could put around 3-4 per cent additional income in the hands of the taxpayer.

Following are excerpts from their comments:

Yusuffali MA, Managing Director of EMKE Group and Director of Abu Dhabi Chamber of Commerce & Industry:
Given the circumstances, the finance minister has done a good job. The fact that we have achieved a healthy growth rate of 7.2 per cent and aiming for double-digit growth for next year is a commendable feat.

The renewed focus on agriculture, infrastructure, rural development, health, education and housing for the poor is very crucial to India’s development and certainly will pay dividends in the long run. The positive revision in personal income tax rates will put more money in the pockets of the middle class, thereby increasing the buying power.

Easing of foreign direct investment regulations and allowing more private players in the banking sector are very welcome steps. Customs duty has come down. This will ignite growth in the manufacturing sector.

The increase in fuel prices will surely not go down well with the masses and there will be lots of going back and forth on this. But what surprises me the most is the sidelining of NRIs in the budget.

Sunny Varkey, Chairman of GEMS Education Group:
The forward-looking and inclusive budget seeks to spur economic growth and promote social well-being with focus on health and education, housing for the poor, agriculture and infrastructure development. The increased thrust on rural development and job creation make the budget proposals pragmatic and progressive. The budget also gives a roadmap to reduce fiscal deficit from 6.5 per cent to 5.5 per cent next year and 4.1 per cent thereafter. The proposal to lower Tax Deducted at Source rate on interest earned on NRI deposits will encourage non-residents to place their money with banks in India. The Finance Minister has done a delicate balancing act by rolling back some of the fiscal stimulus without hampering the growth prospects of the nation.

Paras Shahdadpuri, Chairman of Nikai Group, and President of the Indian Business and Professional council:
The biggest challenge for the government was to contain its fiscal deficit of estimated 7.8 per cent (which actually has come down to 6.9 per cent) for last year to 5.5 per cent in the new fiscal year. This meant rolling back some of the fiscal stimulus without impacting on the growth of the economy; and the Finance Minister has done a brilliant job on that. While the Western countries with more than 10 per cent fiscal deficit have failed to bring in this fiscal discipline, India has shown the way.

This is a growth oriented and inclusive budget, providing focus to the development of the rural masses. The government has now seriously set its focus on India’s infrastructure growth by offering tax exemption in Infra Bonds. But I strongly feel that much more need to be done to mobilise more than $500 billion required for the infrastructure development. If infrastructure needs are met, India can grow with double-digit GDP for the next 25 years and thus become world’s second or third biggest economic power.

Raju Menon, Chairman & Group Managing Partner, Morison Menon:
The budget was a need based one with respect to the outlay in the area of agriculture, specially for food security, rural development, rural employment creation, empowerment of women, health sector, eradication of slums and so on. Investment in infrastructure is also a need based spending as wide network of roads and rails are considered as the barometer for the development of the economy for the fast progress. It is so encouraging to note that the primary and secondary education nation wide is brought free which will really benefit the poor to empower their children to participate in the development of the country and will provide a hope to transform the entire family to lower middle class from the poor class once these children can qualify for better employment prospects.

Increase in the petroleum prices is not at all justified on the ground of generating more budget revenue as it is giving an increased burden of price hike in every area and it is going to hit as additional burden on the overall price hike exist in the system. It affects 1.1 billion population and finance minister’s justification of today’s low level crude price is not at all acceptable considering the current inflation on the essential commodities. The price increase is going to severely affect the down trodden largely and the 10 million middle class who have benefited out of the direct tax relief may be able to afford to absorb the price hike due to the given 
concessions.

There was a mention about the investigation of the foreign wealth of the residents who had evaded taxes. Probably, in my opinion, Finance Minister should provide an opportunity to declare the undisclosed wealth by providing a lower rate of tax, say 20 per cent flat with out any penalty and there can be a condition that the 50 per cent of the undisclosed wealth subjected to the declaration should be invested in infrastructure projects. Who knows, the entire 6.9 per cent current fiscal deficit may be financed from that source. It is not uncommon to give such concession in India.

Ram Buxani, President ITL-Cosmos Group:
The budget this year is again befitting a seasoned Finance Minister who has tried to take care of all areas within means available to him.

Ignoring Overseas Indians has been his way right from the beginning. Otherwise, with present scenario in Gulf countries, some rehabilitation packages should have been thought of and provided for in the budget for returning workers.

Overseas Indians should be considered as a main export commodity as they bring in valuable foreign exchange. They need to be treated no less importantly than rural population. Government of India may be justified in its attitude towards NRIs in view of present foreign exchange situation, but their role should not be forgotten. A fair percentage of inward foreign remittance should be earmarked for the welfare of returning workers. Tax on income has been further rationalized which should be welcomed by Resident Indians.

Sudhir Kumar Shetty, Chief Operating Officer, Global Operations of UAE Exchange:
It is a very responsible, controlled budget. Road map to control the fiscal deficit from 5.5 per cent of the GDP in 2010-11 to 4.1 per cent in 2012-13 indicates that the government is serious in achieving financial discipline. Even though the middle-income group is given an incentive by way of reduction in individual income tax, the increased Central Excise on petrol and diesel and other taxes will hurt the economy. To control inflation, create more job opportunities and proper management and monitoring of allocations would be a challenge. I am happy that RBI is considering banking licence to private operators.

Kamal Vachani, Director Al Maya group and Regional Director of ESC India:
The revised tax slab proposal will help put more money in hands of consumer and enhance consumption. The proposal to lower customs duty will ignite growth in the manufacturing sector.

The proposal to ease of foreign direct investment regulations and allowing more private players in the banking sector are steps aimed at attracting more foreign capital to boost infrastructure development. Reforms in the farm sector and an increase in social welfare spending, renewed focus on rural education, employment and development are measures aimed at taking India to the fast track of economic growth.

Rizwan Sajan, Chairman, Danube Building Materials:
I believe it was a balanced and pragmatic budget. It was heartening to hear, for the first time ever, the Finance Minister speak of the “big picture” at the beginning of his speech and stress the fact that the government is ‘‘an enabler” in the development of the country. This is very

positive and demonstrates government’s intent to have public-private partnership for overall economic development. Reduction of fiscal deficit from 6.5 per cent to 5.5 per cent next year and 4.1 per cent thereafter is encouraging. With GDP expected to return to “normal times” at 9 per cent, double digit growth should not be distant dream. This is a commendable achievement given that we are still under the shadow of global recession. Increased spending in infrastructure than revenue expenditure signals the need to build quality assets rather than spend on expenses. Farm sector reforms and social spend increase will augur well for the vast majority of Indians in the agricultural and rural sector. However, petrol/diesel price increase was a surprise and this could have an impact on the overall cost.

Johnson Thomas, Managing Director, First Flight Couriers:
The proposed budget is a balanced, responsible and cautious one. Without the pressure of upcoming elections, the budget focuses mainly on long-term benefits. A major concern is the fuel price hike that would give rise to inflation. Nothing has been done to improve exports that had gone down by 23 per cent in the last fiscal year. Controlled fiscal deficit, tax relief for the middleclass sector and a sustained growth rate are the major positive aspects of this budget. Overall, a solid budget welcomed by the majority. This is evident by the positive response of the share market.

Abbas Ali Mirza, Board Member, Indian Business and Professional Council:
A very responsible budget with not many negative surprises which certainly delighted the Indian stock markets — a swift vote of confidence given by investors to the budget proposals. In the wake of the global economic and financial downturn any boost to investor confidence is a move in the right direction. According to the finance minster this budget was presented with the following three primary objectives in mind, namely, getting back on track the economic growth trajectory of 9 per cent GDP growth rate, fiscal consolidation and inclusive growth.

The finance minister believes these objectives were clearly achieved with a major thrust in the budget on infrastructure spending with a historic 46 per cent budget allocation to infrastructure (including 25 per cent to rural infrastructure) and a significant budget allocation of 37 per cent to social sectors.

Jitendra Gianchandani, Chairman of Jitendra Group of Companies:
This budget is a perfectly balanced one for the burgeoning $ 1 trillion Indian economy. The big picture of finance budget is four fold: one the government is committed to containing fiscal deficit to 5.5 per cent.. Two, the lower personal income tax slabs would enable consumers to have more money, triggering a consumer-led growth. Third point is something that affects even NRIs in some ways.

FM has committed to goods and services tax (GST) and direct tax code (DTC) to start from April 2011. We all know that GST is part of the proposed tax reforms that center round evolving an efficient and harmonized consumption tax system in India.

K.V Shamsudheen, Vice Chairman, Indian Business and Professional Council:
The Finance Minister has decided to collect more direct taxes and corporate tax even after extending highest threshold limit of 30 per cent tax to Rs. 800,000 and providing it for the development and quality life of rural India by increasing allocation for farm credit for agriculture, health insurance and facilities, education and rural infrastructure. It will generate more job opportunities and help boost farmers’ income. The budget has totally neglected non-resident Indians. If we do not react immediately, the passage of Direct Tax Code passes will be a backlash for non resident Indians.

Road Signboards

KHALEEJ TIMES

Road Signboards

2 January 2010

While travelling from Abu Dhabi city to Musaffa through the Ring Road, we have to take a left on the flyover in front of the Sheikh Zayed Mosque. But the signboard indicating Musaffah is not visible because it is completely covered by date palm leaves. If some one misses this road he has to travel a long way to get back to his destination.

I request the authorities concerned to re-erect the signboard on the flyover in front of Sheikh Zayed mosque. This will help motorists is finding their way properly.

K V Shamsudheen,
Sharjah