Auto, taxi drivers to get health cover under RSBY

Government has now decided to bring auto and taxi drivers under its ambit for health cover

After extending health cover under Rashtriya Swasthiya Bima Yogana (RSBY) scheme to domestic and beedi workers and porters among others, Government has now decided to bring auto and taxi drivers under its ambit.

A cabinet note on the issue has been prepared and sources in Labour and Employment Ministry said the move was initiated in view of the swelling number of auto and taxi drivers in the unorganised sector.

They said the ultimate aim of the Ministry would be to bring everyone in the unorganised sector under the flagship RSBY programme, under which beneficiaries are entitled to hospitalisation coverage up to Rs30,000 for most of the diseases that require hospitalisation.

About 4,500 private hospitals and 2,000 government hospitals are empanelled under the scheme. The sources indicated that the modalities of the scheme including payment of premium would be marginally different in case of auto and taxi drivers.

At present, beneficiaries need to pay only Rs30 as registration fee while central and state government pays the premium to the insurer. The state government would be identifying the auto and taxi drivers and the help of the regional transport offices would be sought.

RSBY scheme was originally envisaged to cover BPL families, but was subsequently extended to MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) workers, construction workers and domestic workers among others. A budgetary allocation of Rs350 crore was made for the RSBY in the current fiscal.

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Reliance MF launches 150 days Fixed Horizon Fund

Reliance Fixed Horizon Fund-XX-Series 8 issue closes on 13th October

Reliance Mutual Fund has launched Reliance Fixed Horizon Fund-XX-Series 8, a close-ended income scheme.

The investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of central and state government securities and other fixed income/debt securities maturing on or before the date of maturity of the scheme with the objective of limiting interest rate volatility. The tenure of the scheme is 150 days.

The new issue closes on 13 October 2011. The minimum investment amount is Rs5,000. Crisil Short Term Bond Fund Index is the benchmark index. Amit Tripathi is the fund manager.

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Motilal Oswal Mutual to launch Motilal Oswal MOSt Benchmark Government Bond Fund, an open-ended gilt scheme. Should you invest?

Invest in the scheme if you know that interest rates are headed down. A number of similar schemes have been launched in the past by various fund houses—but returns have been disappointing

The primary investment objective of the Motilal Oswal MOSt Benchmark Government Bond Fund scheme is to generate risk-free returns by investing in a portfolio of securities issued and guaranteed by the Central government and state governments. Recently, a similar scheme was launched by Daiwa Mutual Fund, Daiwa Government Securities Fund-Short Term Plan, an open-ended gilt fund launched in April 2011. It has given a measly return of 4% since its launch. There are a couple of fund houses such as Birla Sun Life, DSP and UTI among others, which have such schemes and their average returns since inception are just 8%-that is no more than the returns from fixed deposits. In fact, the current bank interest rate is 9%.

Gilt funds primarily invest in government securities (G-Secs) issued by the Reserve Bank of India (RBI). These funds also invest in corporate bonds, zero-coupon bonds and treasury bills, certificates of deposit, commercial paper and usance bills, as well as derivative instruments like exchange-traded interest rate futures and interest rate swaps. As you know, the NAV (Net Asset Value) of any fund fluctuates on a daily basis just like share prices because the underlying asset-whether bonds or shares-fluctuate on a daily basis. The fact is: anything that is interest-bearing will go up and down with the market. The value of bonds of any kind is primarily influenced by the prevailing interest rates. If interest rates go down, the value of bonds go up. The daily NAV of a gilt fund is calculated by valuing a variety of government bonds, which a fund has invested in, that are traded in the market. As interest rates fluctuate, the value of the securities in which the scheme has invested, fluctuates as well. This, in turn, will be reflected in the changing value of the fund and its NAV.

When it comes to gilts, the usual route for an investor is mutual funds. Retail investors do not have access to G-Secs because these are dealt in large lots which only institutional players can afford to buy. But gilt funds can pool money from retail investors and buy government securities, offering an indirect route to retail investors. However, most investors invest in such funds without realising that gilts may be risk-free, but only on maturity. Meanwhile, the value can go up and down. And investors then cry foul if the NAV falls from the purchase price.

The principal amount that you have invested may erode due to interest rate fluctuations and mark-to-market formula of securities valuation. The right time to invest in a gilt fund is when interest rates in the economy are near their peak levels, inflation expectations are likely to go down, growth slowdown is seen in the months ahead and overcapacities get built up in the economy. An ideal timeframe should be two years, depending on the clues from broader indicators in the economy.

The benchmark for the scheme will be 10-Year Benchmark G-Sec. Entry load is nil. Exit load is 0.50% for exit within 6 months. Minimum application amount is Rs10,000 and in multiples of Rs1.

The scheme will invest 80%-100% of assets in G-Secs, T-Bills, & CMBs with low risk profile and invest up to 20% in money-market instruments and cash at call with low- to medium-risk profile.

Money market instruments include CDs, CMBs, T-Bills, and government securities with an unexpired maturity up to one year, commercial bills, CBLOs, repo/reverse repo and any other similar instruments with a maturity of up to 1 year or less, as specified by the RBI from time to time.

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