Indian economy on boom or doom?

A Reuters report dated October 10, 2007 states that India has an economy on the roll but not the kind of attitude or infrastructure to sustain the climb.

How to open a business in India

Reuters - Opening a business in India usually involves navigating through mountains of red tape. A World Bank report ranks India 120th out of 178 countries in ease of doing business.
Here is a look at some key approvals required to start a business in India:
AUTOMATIC/FIPB ROUTE:
- The country's central bank (Reserve Bank of India) gives an automatic approval based on the percent of the foreign direct investment (FDI) to a foreign company to start business in India, subject to the nature of business.
Otherwise there are some sectors in which foreign businesses can invest with prior approval from the Foreign Investment Promotion Board (FIPB) of the Ministry of Finance.
REGISTERING A COMPANY:
- Setting up a company in India requires incorporation with the regional registrar of companies (ROC). A public company would need a certificate to commence business.
- There are more than 12 approvals that are required if a foreign firms wants to own land and construct its own premises.
REGULATORY BODIES:
- Registration for Import-Export code from the Directorate General of Foreign Trade (DGFT) is essential for foreign firms to facilitate imports and exports and to comply with its rules.
- Software Technologies Parks of India registration (STPI) is required to run a software or an outsourcing firm as it entails tax and import benefits.
- Approval from the Securities and Exchange Board of India (SEBI) is required for financial firms or the Insurance Regulatory and Devlopment Authority (IRDA) for insurance firms.
- Approvals from the Director of Mines and Geology if a firm is engaged in extraction or mining, the Regional Office of the Bureau of Indian Standards (BIS) for quality certification, the Inspector of Weights and Measures depending upon the nature of business, the Trademark Registrar of the Registry of Trademarks.
TAX AUTHORITIES:
- Approvals for registration of the company for payment of various taxes is required. A Permanent Account Number (PAN) for the payment of income tax from the UTI Investors Services Limited, registration with the area sales tax officer for Value Added Tax (VAT), registration under the Shops and Establishment Act if applicable and another for profession tax will be required. These approvals also entail tax benefits in some cases.
LABOUR WELFARE BODIES:
- Approvals from the Employees' Provident Fund Organization (EPFO), Employees State Insurance Corporation (ESIC) for medical insurance and the RBI to employ foreign nationals are required.
ENFORCING CONTRACTS:
- India ranks 177th out of 178 countries in the World Bank-International Finance Corp "Doing Business 2008". Enforcing contracts takes on average 46 procedures, 1,420 days and takes up 39.6 percent of the cost of claim.

CLOSING BUSINESS:
- The report ranks India 137th and says it takes nearly 10 years to close a business.
Sources: Department of Industrial Policy & Promotion (www.dipp.nic.in); Directorate General of Foreign Trade (dgftcom.nic.in); Reserve bank of India (www.rbi.org.in)

Now, citizens like me who are rejoicing that the sun is shining bright on the Indian economic horizon feel alarmed and wonder if anyone in the government is hearing all this, noting the world's views and doing anything to remedy the situation.

After all this time while the sun shines will not come back to us like a loan if we fail to make hay in correct time.

To build that dream house on a loan!

A report by the reputed daily Hindu Business Line (HBL) said:

Demand for home loans slowing down

High interest rates, rising property prices restrain customers


It reads that the demand for home loans has slowed down over the past few months due to rising property prices and high interest rates. The number of applications for home loans and registrations of new flats have come down reports the newspaper, quoting bank officials and analysts.

Interest rates for home loans have seen a steady rise for over a year now with the Reserve Bank of India following a tight-money policy, to ensure price stability and growth.

The stricter prudential norms for the real estate sector have pushed up property prices across the country. This has led to a drop in inquiries with builders and with banks.

The HBL quotes Mr Sunil Rohokale, General Manager, Mortgage Finance and Real Estate, ICICI Bank as saying that the declining trend has been noticed since the past three to four months.

“Interest rates have increased by 250-350 basis points in the last 18 months. Also, the property prices have increased by as much as 40-50 per cent in the same period. Customers have been hit by a double whammy,” he said.

This is reflected in a 30-35 per cent reduction in the number of transactions in new homes, he added.

Mr H.N. Sinor, Chief Executive, Indian Banks’ Association, said that there is need for some kind of relaxation of the prudential norms with regard to sectors such as housing, as the sector is seeing a slowdown.

A recent report by Merrill Lynch also said that banks are beginning to shy away from mortgage lending owing to rising rates and emergence of stronger corporate growth opportunities.

High property prices is the main reason for a slowdown in the housing market, since January or February this year, said Mr Sangeet Shukla, Chief General Manager, (Personal Banking), State Bank of India (SBI). “While high interest rates don’t contribute much to the cost of the property, they do compound the problem,” he said.

For both ICICI Bank and SBI, housing loans contribute as much as 50 per cent to the retail loan portfolio.

As high interest rates push up the EMI (equated monthly installment) which affect the repaying capacity of borrowers, clients think twice before taking a housing loan, said Mr Nandan Srivastava, General Manager, Retail Banking, Bank of Baroda (BOB).

“The inflow of loan applications for home loans has not been up to expectations for the last couple of months,” he admitted.

Bank of Baroda recently announced a cut of up to 50 basis points in the home loan rates an new loans sanctioned from September 1 onwards. Mr Srivastava said that it was merely to align the rates with the market and does not indicate that other players may reduce their lending rates. “We are trying to fall in line with what our peers are offering. The rate of interest an our asset products depends an the cost of funds and we have to keep our spreads and margins in mind,” he pointed out.

Mr Rohokale also ruled out the possibility of a reduction in lending rates, going by signals from the RBI such as the CRR hike and the stricter norms for ECB, which he said are cautionary in nature.

Now does that mean that having delayed investing in the flat as I wanted to, in some piece of property in Nasik or Kolkata, it will remain a pipe dream for me?

I have long since wanted to put some money in buying a house in Nasik. It is a hot and up-coming property market. Lovely weather, developed society and good infrastructure...Nasik , here I come, I have been assuring myself. But a lax builder who is a family acquaintance and circumstances have ensured that I have not yet put a penny, mine or loaned, into an inch of land there.

Now with interest rates on housing loans increased and property rates up...where is mu house, oh Good Lord...I do not see the ICICI, SBI or BOB officials chasing me with any alluring offer of housing loan!

Loans, credits and rich relatives

I have always liked the J K Rowling fairytale. No, not the story of Harry Potter but about the single mother struggling to support a child after divorce and writing a multi million dollar novel over an inexpensive coffee in a tube station cafe!

And to think that the woman is today richer than the Queen of England! Phew!

But since the world already has a Harry Potter series so heavy, I am left with not too many options to earn a fabulous amount of money.

Let me count the avenues open to me...

I have imagined how gory it can be to rob a bank. I could lose my life and freedom. So, I am certainly not robbing a bank.

No rich relative of mine is about to kick the bucket nor is anyone likely to will off their fortunes to me.

I am a bit scared of credit cards. They say that they are monstrous designs by the moneylender banks to have the fool (you and me) and his money part. People warn that huge credits pile up in the name of interest and you will be searching for the nearest exit from the city.

Now what do I do? My job is a simple one that can only allow a modest existence. I am scared to gamble or bet. I also cannot risk the share market for I have heard of investors committing suicide over market-depression. I also do not think I have that kind of source to finance my foray with the bulls and the bears of indices.

I think I will approach the ICICI bank but friends tell me that I will be inundated with calls from money lending franchisees of ICICI Bank and snowed under offers I can use but must not!

Man, am I puzzled? I want to make it rich! But am scared to take any of these paths. I think I will wait till the national lottery makes draws from the voters list and God selects my name.

Until then I will try not to think of Rowling's good fortunes!