Business Current Affairs - October 2012

49% FDI in Insurance

Continuing with the reforms momentum, the cabinet approved allowing 49% Foreign Direct Investment (FDI) in insurance. It cleared all amendments of the insurance bill. The government wants to build on the positive sentiment created by its reforms burst while sending out a clear message that it is doing all it can to arrest the deceleration in growth that has been forecast by a stream of forecasters. Last week, the Asian Development Bank cut its growth estimate for this year to 5.6 per cent from 7 per cent earlier. "Unless we go for 49 per cent, we will not have the kind of capital required to underpin the growth of insurance industry," Insurance Regulatory and Development Authority ( Irda) Chairman J Hari Narayana said on the sidelines of a CII event in Delhi.

Rupee to breach 50/dollar in 3-4 months

The Indian rupee continued to extend its winning streak and hit fresh 5-1/2 month high by breaking below 52 to a dollar. The rupee gained in the past one month on the back of government reforms and also due to improvement in the current account deficit, which has narrowed down from record highs. The rupee has also strengthened from dollar inflows in other assets like equities. Also, dollar sales are now coming in from exporters and banks on expectations of further appreciation in the unit. The sharp decline in the crude price is also adding to the rupee strength.

$100 Million Loan Agreement to Support Himachal Pradesh

The World Bank signed a $100 million loan agreement with the Government of India and the Government of Himachal Pradesh (GoHP) to support the mountain State in its move towards an environmentally sustainable model of economic growth. The focus of this operation in Himachal Pradesh (HP) will be towards climate-smart development across the key engines of economic growth in the state – energy, watershed management, industry and tourism. Richly endowed with natural resources, HP provides economically valuable environmental services for much of the country. The state is home to three major river basins, and it serves as a watershed that is critical to the livelihood of more than 200 million people in Haryana, Punjab, Uttar Pradesh and Rajasthan. It is also one of the country’s main sources of clean energy, generating hydropower that can help alleviate electricity shortages in much of North India. The forests of HP also act as an important carbon sink and are known to be global biodiversity hotspots.

Rajiv Gandhi Equity Savings Scheme

The Union Finance Minister Shri P. Chidambaram approved a new tax saving scheme called “Rajiv Gandhi Equity Saving Scheme“(RGESS),exclusively for the first time retail investors in Securities Market. This Scheme would give tax benefits to new investors who invest up to Rs. 50,000 and whose annual income is below Rs. 10 lakh. The Scheme not only encourages the flow of savings and improves the depth of domestic capital markets, but also aims to promote an ‘equity culture’ in India. This is also expected to widen the retail investor base in the Indian securities markets.

Salient features of the Scheme are as under: 

 a.Scheme is open to new retail investors, identified on the basis of their PAN numbers. This includes those who have opened the Demat Account but have not made any transaction in equity and /or in derivatives till the date of notification of this Scheme and all those account holders other than the first account holder who wish to open a fresh account. 

b.Those investors whose annual taxable income is ≤ Rs. 10 lakhs are eligible under the Scheme. 

c.The maximum Investment permissible under the Scheme is Rs. 50,000 and the investor would get a 50% deduction of the amount invested from the taxable income for that year.
d.To benefit the small investors, the investments are allowed to be made in instalments in the year in which tax claims are made. 

e.The total lock-in period for investments under the Scheme would be three years including an initial blanket lock-in period of one year, commencing from the date of last purchase of securities under RGESS.

This post includes the latest Business news for October 2012