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Europe, US, India view: 7 cues to help you start your week
- Moneycontrol Bureau
The contagion across the Eurozone continues to push global markets towards the brink as whispers of an impending recession get louder. - US Markets
Wall Street closed on Friday mixed in another thin choppy session. Investors continued to be reluctant to commit to the market amid ongoing nervousness over debt talks in Europe and Washington. - European Markets
In Europe, stock markets closed mostly lower on Friday, amid concern about rising borrowing costs for the eurozone's stronger economies, including France. - Currencies
Meanwhile in the currency basket, the euro gained slightly versus the dollar to 1.35 amid speculation that the European Central Bank’s (ECB) buying of Italian and Spanish bonds would stem surging borrowing costs in the region. - Commodities
From the commodities space, crude prices dipped with the Nymex at USD 97 per barrel as concerns. Demand reemerged added to selling pressure from the expiry of the December US Contract and profit-taking. - Local Markets
And back home, the Nifty managed to defend its 4,900 level, but lost a whopping 5% last week. The BSE benchmark index ended on Friday with a loss of 4.8% or 821 points at 16,372. The Nifty fell below the psychological 5,000-mark, to end the week with a loss of 263 points at 4,906. - Stocks Making News
In a CNBC-TV18 exclusive, all ministries are said to be on-board with the proposal to unleash retail reforms. The cabinet is likely to consider the retail FDI note this week. DIPP has proposed 100% FDI for single brand retail and 51% for multi-brand retail.
Now, foreign investors warn against 'policy paralysis'
- After corporate leaders, leading foreign investors, rating agencies and research firms have raised the red flag over the notion about 'policy paralysis' and a slow pace of economic reforms in the country.
- Asserting that factors like a slow decision-making process and delay in implementing key economic reforms are leading to a slowdown in economic growth rate
Big steps in small savings schemes
- Small savings schemes — post office savings bank account, senior citizens' savings scheme, National Savings Certificate, public provident fund (PPF) and others — are sought to be made more popular.
- In accepting most of the recommendations of an expert group, headed by RBI Deputy Governor Shyamala Gopinath, the government proposes to give a market orientation to these schemes.
- The change has become necessary because the administered interest rates applicable to these schemes have lagged behind the deposit interest rates offered by the banking system.
- The difference has become particularly pronounced after banks were given the freedom to fix their own rates on all their deposit schemes.
- move has its basis in the committee's recommendations that wanted the post office savings bank to match commercial banks.
- The committee was constituted more than a year ago. Since then, banks have been allowed to fix their own rates, including on savings bank
- Apart from being asked to comprehensively review the various small savings schemes in operation with a view to making them more flexible and market-oriented, the committee was asked to look at the entire mechanism of the National Small Savings Fund (NSSF), especially its role in financing the Centre and the States.
- Forming a significant part of the internal liabilities of the Central government, small savings are contractual savings of the public, which are not part of the Consolidated Fund of India.
- Net accretions through small savings finance a part of the fiscal deficit. This has been coming down. The government recently announced an extra borrowing of Rs.53,000 crore from the market to make up for the shortfall in small savings.
- With the implementation of the key recommendations of the committee, the process of fixing interest rates on small savings schemes will become transparent.
- the recent changes in the public provident fund (PPF) make it particularly attractive. A tax payer can invest up to Rs.1 lakh (Rs.70,000 now) and claim tax benefits under Sec. 80 C of the Income-tax Act. Besides, because of the linkage to market rates, the PPF will now pay 8.6 per cent, up from 8 per cent.
- committee has recommended just one scheme — the Kisan Vikas Patra — for closure. This scheme, however, accounts for a large share (more than 25 per cent) of small savings. The only reason for its closure is that it is in the nature of a bearer bond and hence prone to be used for tax evasion.
- Small savings should complement bank deposit schemes. They also have an invaluable role as a provider of social security net, which ought not to be downplayed.
