Lost to chatters of Gymkhana club

What if oil prices had not crashed by about 80 per cent from its peak? 

In a few hours, India will know finer details of the third General Budget of the Narendra Modi government. Indian economy is huffing and puffing to stay just a little above seven per cent mark. 

A year of collective shock to Modi's economic incrementalism called creative by some has passed by. Admirers of Modi exude sense of resignations. His foes betray exultation. People at large give a sense of disbelief, and seek refuge in collective silence.

A government sitting on a bounty of over Rs 1.50 lakh crore of oil windfall has mostly been on expenditure freeze. The fiscal deficit is well within target. But all other targets set in the Budget for 2015-16 coming close to the timeline suggest authorship of some drunken economic lunatic. Direct tax collection is off target by 10 per cent, and suddenly woken up tax men are doing some crazy things to make nightmarish reality little less acerbic.

Indian economy had a joy ride for a bout a decade from 1999-2008. The Gross Domestic Product (GDP) flew past magical eight percentage points. But the journey 2009 onward has been down the hill.

The decade long golden run of Indian economy was arguably not fueled by great software export or manufacturing expansion. It was a golden gift of the weather God. The Monsoon had been steady. The government incentive to produce foodgrains enabled farmers to sweat to sweet income. The farmers had money in their pockets to go out and buy. Additionally, the government splurged on rural income, pouring at least Rs five lakh crore by way of National Rural Employment Guarantee Scheme (NREGS) and its various earlier avatars and Pradhan Mantri Gram sadak Yojna (PMGSY) in that golden decade. 

Afterward, the government got wiser, knowing that its rural splurge was past the line to give political dividend anymore. And, the powerful stream suddenly turned into trickle. 

The weather God too got angrier. The Monsoon rains turned wobbly. The spread was not even. The year 2008 brought a pause to the golden agrarian run. Many parts of the country came under the spell of drought. And since then the drought areas had only been geographically shifting, while some like the Bundelkhand, Marathwada, Vidarbha, parts of Karnatka and Gujarat staying under long spell of dry weather. 

The parched land dried rural splurge stream battered the Indian economy by 2013. The GDP growth kissed five per cent. The Modi government's first year saw a major sub-normal Monsoon. A year later, his government watched clueless to the blow of the unseasonal rains and hailstorm. Another year later, the Monsoon left large parts of the country parched. 

And Modi never believed in rural splurge. But the economy crawled back to seven plus mark, but the Manmohan Singh's time of jobless growth stayed with Modi too. 

With jobs not in sight and rural income gone, the facade of India's robust economy has been exposed to all. 

The governments without exception have been fascinated with those flashing degrees from Harward University and its likes. Such tribe penetrates the government echelon with ease. Those who had never seen a village in their lives manned the Ministry of Rural Development not long ago. Those who are enamoured with American economic flamboyance had been eyes and ears of P Chidambaram. With the change of the government, the tribe has not gone away, but only changed their robes.

Arun Jaitely had apparently lobbied hard to get into Ministry of Finance when Atal Bihar Vajpayee was Prime Minister. All lawyers turned politicians dream of becoming Finance Minister. But Vajpayee had a good measure of caliber of all around him. And, Jaitely was not allowed anywhere near North Block. 

India's irony is such a man is now Finance Minister who to his credit has not a single idea original to him which could inspire an awe. Millions of people in the country are now awe-struck to the poverty of ideas of the North Block.               

If oil had not crashed by about 80 per cent from its peak, India would have seen Modi government as UPA-III in much worse form. Difference is arguably just of an accidental gain from outside.

Indian economy is sadly slave to chatters of the Gymkhana club. And, only idlers go to a club.

Debt funds: How dividend is taxed

Mutual funds carry wide basket to fulfill diverse needs of investors. While equity oriented funds come with promises of high growth, they carry risk in the proportionate manner as well. The debt funds offer predictable returns with investors not needing to lose their peace of mind in times of volatility. 

Yet, taxation in the case of debt funds is largely least understood. 

Dividend distribution is the key attraction of most of the funds and a possible way 

for wealth creation. The investors do not need to run after their charter accountants to figure out their tax liability at least on dividends received. The reason is simple that there is no tax on dividend received by an investor. But investors at the same time should not ignore the taxation on dividend on debt funds for the simple reason that may affect their anticipated returns on the funds.

Even while a unit holder is exempt from tax on dividends received, the fund house has to pay a dividend distribution tax (DDT) before distributing this income to its investors. So, DDT is deducted by the asset management company prior to disbursal of dividends. The DDT is applied at the rate of 25 per cent, which in the past was 15 per cent. In addition there is a 10 per cent surcharge along with an education cess of three per cent. 

Thus, the effective DDT comes at 28.33 per cent. And, since the fund house deducts the amount from the corpus, the net asset value of the fund correspondingly comes down. And, therefore, an investor should be concerned enough to know whether he has taken the right decision to invest in a debt fund or not, and if yes, then should also know how long he should stay invested to make the best out of the fund.  

What are debt funds?

Simply put, the non-equity funds qualify as debt funds for the purpose of taxation, which will include all types of debt funds, international funds, monthly income plans (MIPs), and Gold ETFs.

An investor would serve his interests better by knowing the full implications of taxes on debt mutual fund before taking the decision to put the hard earned money in a fund.

Besides, the dividend distribution tax paid by the fund house, an investor would incur short-term capital gains if the holding period is less than three years. As per the taxation rules, short-term capital gains would be added to the income and taxed as per the individual's income tax slab. And, thus, the consensus among the fund managers is that debt funds would not be superior to other options of fixed deposits in banks if the holding period is less than three years. The tax slab as is known is nil tax for income up to two lakh, 10 per cent for income between Rs 200,001 to Rs 5,00,00, 20 per cent for income between Rs 5,00,001 to Rs 10,00,000, and 30 per cent for income above Rs 10 lakh.  

In case, the holding period is of three years, the investor will incur long-term capital gains, which come with flat 20 per cent but with indexation. Indexation is the process which adjusts inflation from the time an investor gets into the fund till the exit. This process allows an investor to inflate the purchase price of the mutual fund units to take into account the impact of inflation. This gives an investor the benefit of lowering tax liability.

The government in 2013 had introduced rebates as well, which is of Rs 2,000 for total income upto Rs 5,00,000. In addition, those who are above 60 years of age but below 80 years, the basic exemption is Rs 2,50,000, which in the case of those who are above 80 years of age is Rs 5,00,000.

Besides, three per cent education cess is applicable across all tax slabs. Also, a 10 per cent surcharge is applicable on income exceeding Rs 1 crore. 

Growth or Dividend?

In fact, an aware investor needs to make the prudent choice to understand the tax implications before choosing a fund, and he should seek to know whether he should go for a fund with the option of dividend or growth. It may be borne in the mind that a realistic assessment can only be made by factoring in the returns of the fund post taxes, and should stay away from the lure of pre-tax return picture often shown to a prospective buyer of a mutual fund product.

Needless to say no dividend is given in a fund plan which is growth oriented. The

fund managers are of the opinion that growth funds are best suited for those who are keen for long term investment. It naturally gives the benefit of compounded growth to an investor. Also, all income under a growth fund would attract only long term capital gains if held for three years or more. This, off course, is in contrast to dividend option, which is suited to serve the needs of the regular income of the investors. But it must not be taken for granted that the dividends would necessarily be paid out, as it all depends on the fund. 

In addition fund houses also offer the option of dividend re-investment in which case dividends would not be paid out be reinvested in the scheme and the investor gets additional units of the scheme. But it has to clear that the new units would be treated as new investment and would invite the normal lock-in restriction as laid out by the fund houses and also for the taxation purposes. The fund houses may also impose entry and exit loads if the new units are sold within the lock-in restriction. 

And, thus, an investor has a choice to choose between a growth fund or a dividend re-investment fund if he is not comfortable with DDT eating away the gains from the dividend pay out options.

Arbitrage fund taxation

THE wave of volatility has taken the stock market in the full grip. Not that Indian 

stock markets have tumbled, the world over the wave of volatility has only been 

gaining strength ever since the US Federal Reserve decided to hike the rates, 

which were at sub-zero level for years. 

Now that the panic is palpable on the street, and the retail investors are arguably 

rushing in to liquidate their mutual fund and other equity holdings, the arbitrage 

fund is being seen as viable option to park short term funds. Incidentally, the 

arbitrage funds are popularly known as instruments of investments in the times of 

volatility. 

With interests on short term saving instruments coming down, retail investors have 

begun inquiring about the arbitrage funds, which had for long been the destination 

of institutional investors and high net-worth investors (HNIs). After the 

government in 2014 tweaked the tax rules for short term debt funds, the arbitrage 

funds were seen better option for those who have liquid money. So, number of 

arbitrage funds is on the rise, and they have given return in the range of eight to 10 

pert cent a year.

In contrast, return on savings with banks have stayed in 4-5 per cent range, with a 

few giving even six per cent but now more on the condition that relatively higher 

sum be parked in the account.

WHY is the arbitrage funds gaining attention?

The reason lies in one simple tax rule change for the short term debt fund, 

which began attracting a cumulative dividend distribution tax (DDT) of 28.33 per cent.

In contrast, arbitrage funds are treated at par with equity funds, and thus the 

investors pay zero tax on dividend. 

Additionally, if the arbitrage fund is held for more than a year, there is no long 

term capital gains tax as well. 

Incidentally, the Finance Bill introduced in the Lok Sabha in July 2014 after the 

new government under Prime Minister Narendra Modi came to power tweaked the 

tax rule to make the short term debt fund unfavourable, and thus gave more 

incentive to invest in the equity market. The arbitrage funds by nature are largely 

equity oriented. After the 2014 tax changes, the arbitrage funds are seen better 

options than the short term debt funds and short term liquid funds.

But the scenario before July 2014 was different. Liquid funds or short term funds 

till then used to give a return close to 9-9.5 per cent and even after dividend distribution 

Tax (DDT) of around 15 per cent (then), investors used to make a sweet interest of about 

eight per cent. 

And with no exit load on the fund at that time an eight per cent return was 

arguably better than most of the instruments. And, hence, institutional investors 

and high net-worth investors (HNIs) took fancy with the short term debt funds. 

But the July 2014 Finance Bill changed the rule of the game against the short term 

debt funds, as they began attracting DDT of 28.33 per cent. The Bill also 

abolished the benefit of paying tax at 10 per cent before indexation (adjusting 

value with inflation) over the long term. Adding to their woes, the emerging 

scenario of falling interest rates and excessive liquidity in the financial system 

dipped returns on them to around 8 per cent, which after DDT meant only about 

5.5 per cent for the investors. Thus, they became as good as saving account 

interests offered by a few banks.

In contrast, arbitrage funds are treated like an equity fund for taxation purposes. 

Thus, an investor gets to save 28.33 per cent of the DDT as is in the case of short 

term debt funds. With the average arbitrage funds return being about 8.5 per cent, 

an investor, if he stays for a year at least, pockets a relatively high interest, which 

is arguably not given by many of the short term saving instruments.  

Now that the retail investors are also evincing interests in the arbitrage funds, the 

natural question on their minds must be if they are safe. The fund managers are 

mostly of the opinion that such funds are safe.

HOW does an arbitrage fund function?

Simply put, the arbitrage fund manager takes the advantage of the price difference 

between the share price in cash and future market. A fund manager buys a stock in 

cash and sell in futures market. The difference is the return on the fund. 

For the sake of illustration, the fund manager may bu shares in the beginning of 

the month of, say, Reliance Industries are Rs 950 in cash market, which, say, may 

be trading at Rs 985 in the future market. By selling the share in the future market, 

he would make the profit. And, so, arbitrage funds make money by gaining from 

difference in price of a security in different markets. Towards the end of the month 

the prices in both the markets may converge. The fund manager reverses the 

position by selling in cash market and buying it back in futures.  

However, arbitrage funds have introduced exit load of 0.25 to 0.50 per cent for a 

period of 30 to 90 days to dissuade very short term investors. And, hence, it may 

not interest those who have time span less than 90 days. It may also be borne that 

the fund managers believe arbitrage funds do better mostly in volatile markets, 

because of the gains they make through wide gap in prices in cash and derivatives 

segments. But they also add that the markets should be in a bullish phase, and not 

caught in the tight grip of bears. 

Thus, the fund used to hedge against risk should be left for the experts who are 

equipped with technical software to spot opportunities.

JNU: A castle with facade of liberalism

JNU lives on opium of sex, and those deprived of such indulgences unleash the vengeance of intellectual masturbation on the campus.

"Chutiye, tujhe kaha tha naa ladkiyon ke beech mein rahiyo (...had asked you to stay in midst of girls," one young girl shouted to her co-agitationist male friend, who was still shaking, after being pulled out from the police bus with much pleadings with khakhi-clad personnel.  

The boy in his early 20s had chickened out after being shoved into the police bus for violating the section 144 near Shastri Bhavan, which houses Ministry of Human Resources Development (HRD), in New Delhi. The girls shouting at him were skilled agitationists; always running out to corners to escape water canon charge. They knew the tricks. The police put on the job to deal with street agitators largely consist of male constables, and they largely stay away from female agitators.  

They belonged to All India Students Association (AISA), which captured the JNU Students Association (JNUSU) from Students Federation of India (SFI) years ago. The students on the JNU campus flocked to the AISA with thoughts that the SFI was more intellectual, and not brave enough to hit the street to translate the aims as espoused by them into realities.  

THE AISA endeared itself to female students in a big way. It was in contrast to the SFI where female students raised slogans for their male leaders. The SFI seemed ideologically enslaving the female followers. The AISA on the contrary sought to turn the tables. It may be interesting to check for female leaders and positions of eminence they get in the parent political organization of SFI -- the CPI (MP). Brinda Karat is a none face seen from its ranks, and she has to beg to most of politburo members to get a Rajya Sabha nomination. 

Hundreds of students hailing from Jawaharlal Nehru University (JNU) had laid siege to the Shashtri Bhavan for days following the suicide of Rohith Vemula of the Hyderabad University. After a week the Shashtri Bhavan stopped seeing their spectacles. They withdrew from the Jantar Mantar as well.

The SFI and AISA both have strong Kerala connections as far as JNU campus is concerned. But the JNU over the years has begun getting students from other states like Jharkhand and Maharashtra too. The demographic footprint is surely expanding. And this demographic expansion in recent years has led to competitive student politics, with SFI and AISA seemingly looking elitist and not giving voice to those who come from Scheduled Castes (SCs) and Scheduled Tribes (STs) communities. 

And, so, their is a young brigade called BAPSA (Birsa Munda-Ambedkar-Phule Students Association) jostling to be as agile and as fierce to raise the slogans "Down with Modi" at Shashtri Bhavan. Holding all blue flags, girl students of BAPSA proudly give full name of their units, and say "we're not with AISA and have large number of members in JNU". 

The SFI and AISA hailing from the stable of the Left which espoused the causes of the proletariat have seen the Dalits branching out to carve independent identities. Vemula too hailed from All Ambedkar Students Association (AASA) and had snapped ties with the SFI.     

Incidentally, the JNU spread over 1000 acres of land on the ruins of the Arawali mountain range with rich fauna, including jackal, Nil Gai, reptiles, is least intrusive in the lives of the students. Authorities consider it being none of their business if rooms in boys' hostels in night display "don't disturb" tag, "because they're with girls". The campus also has common hostels. The JNU is arguably a campus where girls enjoy sexual liberty, which no place in India may offer. And, those who can't display the tag of "don't disturb" outside their rooms have all the night by themselves to debate and discuss Lenin, Marx, and Mao Zedong in the lawns of various dhabas with bidi, cigarette, and chai in rich supply to their motley audiences.   

AND, students would not mind indulging in taking dreams of Lenin, Marx, and Mao forward -- at least in speeches and on streets -- if they're richly provided with scholarships funded by the tax payers. The Left lives in a castle built with facade of liberalism where they whip up passion for Afzal Guru, "liberation of Kashmir", "break up of India". If they don't do so, they would not look rebels. And not to look rebels would be against the spirit of their ideology, which they wear up their sleeves day and night, and, invariably, spends whole life searching for ways to take off the red robes the JNU gives them. 

They are supposedly researchers, which must be very demanding and time consuming. But cyber cafes nearby at Ber Sarai do a lot of research for them for a few bucks for print outs.  

Telling an old tale

PUBLIC memory is often short, and David Headley's deposition has only reconfirmed India's delusion as pacific justice-seeker.  

What Headley in his deposition to a Mumbai special court was essentially that Hafeez Sayeed, ISI, and Pakistani army are essentially one entity. That the Pakistani army owns and commands Pakistan is now a gospel truth, needing no further substantiation. Yet, nations where rule of law and democracy prevail have not yet brought themselves to such mental fortitude to react proportionately in deeds as meted out by the rogue countries. And, alas, India stays the same deeply pacific nation.

David Coleman Headley, an American with Pakistani origin, made the deposition through video-conferencing to the Mumbai court, after his plea for pardon was accepted in exchange of becoming an approver. He is in an American jail, and has thoroughly been interrogated there and whose details had been shared with India long back. And what Headley had told his American interrogators formed part of the Indian dossiers to Pakistan on 26/11 Mumbai terror attacks.

Thus, Headley only re-confirmed what he has already revealed, that he had been a Lashkar-e-Taiba operative and had been given training under the supervision of ISI through Major Mir, Major Ali, and Major Iqbal. His training was oversaw by Hafeez Sayeed. 

That Pakistan is a democratic country is known well to be a farce enacted by her army to create a facade and escape being branded North Korea of the South Asia. Headley told the court that the former Prime Minister Yousaf Raza Gillani attended the funeral of his father. Gillani is the immediate predecessor of current Pak PM Nawaz Sharif. 

The 26/11 Mumbai terror attacks was arguably the most dastardly. Hundreds were killed, taken hostage, raped and even sodomized. The video footage seen by scribes covering intelligence agencies are too gut-wrenching. Despite all evidences, the world has shown deafening silence on crime against humanity in which nationals of the US, UK, Israel too met the fates of those Indians stuck in the Taj on the fateful night. 

There are enough hints to suggest that Headley was made an approver under plea bargain in an act whose ownership lies with the National Security Advisor (NSA) Ajit Doval. Headley named Ishrat Jahan, who was killed in an encounter and later riled the human rights campaigners for long, as a mole of the LeT. That must have been a cause of relief to the BJP chief Amit Shah, who had been dragged into the "fake" encounter.

Former Prime Minister Manmohan Singh shunned his emotional longings to visit his ancestral Gah village in the Punjab province of Pakistan to stay the course to keep talks with the neighbour in an abeyance until perpetrators of 26/11 were brought to face justice. He arguably withstood all pressure to initiate formal talks with Pakistan.

BUT the 2014 Indian mandate was grand in scale, and intoxicated the winner with idea of grandstanding. So, PM Narendra Modi showcased his "vision" and had Nawaz Sharif as his most favoured guest on the occasion of swearing in ceremony. A little over a year later an Indian Prime Minister landed on Pakistani soil. But none of the perpetrators of the 26/11 had faced justice.

Not only India but the US too are guilty of having forgotten the 26/11 and its hundreds of victims. The US clamps sanctions against nations most often at its whims and fancies. The US crippled Myanmar, Iran, Russia, and others with its weapon of sanctions. Myanmar and Iran toed the American lines to get out of the sanctions.

Headley has told loud and clear that the mastermind of the 26/11 Mumbai terror attacks were not stateless actors but Pakistan herself. He has shared enough evidences to implicate the Pakistani army, which incidentally is the owner, lord, and the only law of Pakistan. 

The US would serve humanity a great service by proclaiming Pakistan as a rogue state and her army a terror militia. The time has come and justice demands that the US imposes a crippling sanctions against Pakistan. 

Justice for Devansh

THE circumstances and conditions in which six-year-old Devansh died leave no doubt that Ryan International School killed him. The school is an upscale and most sought after in South Delhi, yet allowed death traps go unnoticed on its premises. And, that surely makes the top management, besides the staff, complicit in the crime -- murder on the campus. 

The "Aam Admi Party (AAP)" headed Delhi government most willingly shared the report of the magisterial enquiry with the media. The report is seemingly prepared by an officer who poured lots of emotions in his job. And, thus, we have the most graphic account of the incident.

Details of the report would only leave the readers gasping for breath. In fact they would horrify as well. Parents pay out of their skins to send their loved ones to such schools where they're treated like Guiana Pigs.

Not that Devansh is first to die on the school campus in Delhi. Many more kids have met such fates. And, in fact, one kid only a week before drowned to his watery graves in a municipal school in the national capital. Incidents of small kids being sexually harassed on the school campuses have been regularly taking place. The children also face harassment on way to schools in cabs driven by pervert and unverified drivers. 

Devansh Kakrora

BUT the death of Devansh is different for the reason that his father Ram Hath Meena refused to believe the school and fought back doggedly. Despite being emotionally distraught, Meena, who is a paramedic (Radiologist) in All India Institute of Medical Sciences (AIIMS), put out coherent and logical questions, which remained unanswered by the school management. 

That the school had a water tank, which was quite accessible, and there were loose wires hanging out around the reservoir show the school management being most shoddy and ignorant of the rules and norms laid down by none other than the Supreme Court. That such a school operates in Delhi also show how farcical the city government, municipal and fire services authorities are which fail to enforce laws.  

Yet, it's baffling to believe a professionally managed school could hire a principal (Sandhya Sabu), who cast aspersions on the dead child. Her attempt to blame the child for his death would only suggest a pervert and deranged mindset. But she is a principal of a school where thousands of kids study and spend their most productive hours. 

It defies logic that the school called little kids for poetry practice session on a day when the whole nation was having a holiday -- January 30 (Mahatma Gandhi's death anniversary). When there are only a few kids in the school on such days along with a few teaching staff on a holiday, the issue of safety should be on the forefront, because Delhi by all accounts is a city of sexual predators. 

And, now that the Delhi chief minister Manish Sisodia has referred to the claims of Devansh's parents that there was cotton in the anal of the dead kid and that his shoe was separately floating in the water tank awaken the dark fears in the most. Was Devansh a victim of a sexual predator on a school campus?

It's true that only a thorough investigation would allow the truth to come out. But till then the management of Ryan International School has no right to run the school. And, the Delhi government should not lose any time to take over the management of the school.

The safety of thousands of students in the Ryan International School should be of equal concern.