India world's 2nd most economically confident country: Ipsos

‘India's economic confidence jumped by 9 points to 74% in the month of February compared to the previous month, becoming the second most economically confident country after Saudi Arabia which tops the chart with 90%:’  research firm Ipsos

Indians have emerged as the second most confident people about their economy across the world on easing inflationary pressure and increased foreign investments, says a report.

According to global research firm Ipsos, India's economic confidence jumped by 9 points to 74% in the month of February compared to the previous month, becoming the second most economically confident country after Saudi Arabia which tops the chart with 90%.

Sweden is the third most economically confident country, where 73% are optimistic about their economy, followed by China (72%), Germany (71%), Australia (66%) and Canada (65%).

“The Indian economy has continuously recorded high growth rates and has become the second most preferred destination for foreign investments and business. India's economic growth is expected to remain robust in 2012 and 2013, despite likely headwind of double-dip recessions in Europe and the US,” Ipsos India CEO Mick Gordon said.

More than half of Indian citizens (51%) believe their local economy which impacts their personal finance is good and 56% people expect that the economy in their local area will be stronger in next six months, Ipsos said.

Mick further noted that inflationary pressure eased as the wholesale price index fell, making daily consumption items relatively affordable and giving hopes that Reserve Bank of India will ease its monetary policy stance by reducing the policy rates in the coming months which will further fuel economic growth of the country.

The report, which examined citizens' assessment of the current state of their country's economy said the overall global average economic confidence remained unchanged at 38% last month.

On the other hand only a handful of those in Hungary (3%) rate their national economies as 'good', followed by Spain (4%), Italy (6%), France (7%), Japan (9%) and Great Britain (10%).

Countries with the greatest improvements include India, China, Mexico, Saudi Arabia and Turkey, while, countries with the greatest declines are Argentina, Poland, Belgium, Indonesia and Australia.

The survey was conducted in February this year among 19,216 people in 24 countries like Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Great Britain, Hungary, India, Indonesia, Italy, Japan, Mexico, Poland, Russia, Saudi Arabia, South Africa, South Korea, Spain, Sweden, Turkey and the USA.

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Extension of tax waiver to private PF trusts likely

Out of 2,700 PPFTs, only 284 have so far been given the exemption certificates from the Labour Ministry while 400 applications are under process

With some 4.6 million employees facing threat of losing income tax waiver on retirement benefits, the government indicated that the I-T exemption to about 2,400 private provident fund trusts would be incorporated in the 2012-13 Budget.
The Finance Ministry is willing to extend tax exemption to private provident fund trusts (PPFTs) in the Budget for 2012-13 in the interest of a “large working population”, an official said. “We may consider it...,” he said.

On its part, the Labour Ministry will soon approach the Finance Ministry for continuation of the tax exemption for the PPFTs, as denial of the tax benefits would impact retirement benefits of about lakh employees.

In 2006, former Finance Minister P Chidambaram had made it mandatory for all PPFTs to seek exemption certificates from the Labour Ministry within a year for enjoying the tax benefits.

Since all these trusts could not get the exemption certificates in that year, annual waiver was being given by successive budgets, on request from the Labour Ministry.

However, the Labour Ministry could not send any such request this year with a result that the Budget for 2012-13 did not find a mention about extending the waiver.

“The Labour Ministry will soon approach the Finance Ministry in this regard,” an official in the Labour Ministry said.

Out of 2,700 PPFTs, only 284 have so far been given the exemption certificates from the Labour Ministry while 400 applications are under process.

The issue has serious implications for both employees and employers. In the absence of waiver, annual accretion to the PF is considered part of salary and is thus taxable. Secondly, income generated out of investment of the trust would attract tax. Moreover, deduction allowed to employers on contribution to the PF fund would also go, officials said.

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ELSS better investment option than PPF, NSC: CRISIL

“Our analysis shows that ELSS gave 26% and 22% annualised returns over three and 10 years, respectively, vis-a-vis 8-9% offered by traditional tax saving investment products such as PPF and NSC,” CRISIL said

Investments in an equity-linked savings scheme (ELSS) of a mutual fund have yielded higher returns compared to other instruments like PPF and NSC in the last few years, a report by CRISIL has said.

“Our analysis shows that ELSS gave 26% and 22% annualised returns over three and 10 years, respectively, vis-a-vis 8-9% offered by traditional tax saving investment products such as public provident fund (PPF) and national savings certificates (NSC),” CRISIL said.

CRISIL added that interest on employees provident fund (EPF) for 2011-12 was slashed to 8.25% from 9.5% in the previous year and thus ELSS can act as a strong alternative to investors.

Though the traditional debt products are considered to be relatively safer bet as they are not affected by volatility, they are unable to generate higher inflation-adjusted returns in the long run.

The PPF accounts fetched 8.12% over the last 10 years and in the similar period, the NSC gave an interest of 9.10%. The average inflation over the past 10 years stood at 6.05%.

“ELSS is not only an attractive option to save tax, but also helps create wealth over the long run. ELSS as a category has outperformed the Nifty 500 across three and 10 years. With average inflation around 7% over the past three years, top CRISIL-ranked ELSS gave an inflation adjusted return of 14%, which is significantly higher than returns offered by other tax saving products,” CRISIL's senior director Mukesh Agarwal said.

The rating agency, however, cautioned that the ELSS investment requires some amount of market risk and had to cherry pick those schemes which have performed consistently well.

“Since investments in ELSS are subject to market risks, investors must take into consideration their age and risk-taking abilities. The investment horizon should be more than five years for higher inflation-adjusted returns.

“Further, investors must choose funds that have performed well both in good and bad times,” CRISIL head for funds and fixed income research Jiju Vidyadharan said.

It said ELSS is not eligible for tax benefits under the DTC, but since the implementation of the new tax regime has been postponed, investors can park their funds in these equity schemes for now.

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COMMENTS

R Balakrishnan

5 years ago

With a start year 2001, results lead to optimistic conclusions. Timing makes the difference between positive or negative. A sweeping statement is misleading. PPF and ELSS comparisons are odious.

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