Monday 3 June 2013
EXPECTED DEARNESS ALLOWANCE FOR BANK EMPLOYEES IN INDIA FROM AUGUST 2013
Saturday 2 March 2013
DA FOR BANK EMPLOYEES FROM MAY 2013 IN INDIA
The CPI for the month of Jan13 & Feb13 has increased by 4 (2 points each) at 221 & 223 points respectively, assuming that there will be an increase of another 2 points for the month of March, 2013, thus DA will increase by 4.25% (84.50%) - effective May 2013. Even, if the the index remains same for the month of March 2013, the increase of 3.30% is still due. We, Bankers are already low paid, therefore, DA increase gives us a sigh of relief.
Tuesday 1 January 2013
Probable DA for the bank employees in India for the months of February, March & April 2013
CPI for the months of October & November 2012 is already out at 217 & 218 points respectively. If for the month of December 2012 there is slight increase of 1 point to CPI at 219, the probable DA would be 80.25%, thereby an increase of 3.75% in the projected Dearness Allowance payable for the months of February, March, April 2013 to Bank employees in India who opted for IBA pattern DA.
JK Bank
Expected DA for bank employees in India for the months of Feb, March, April, 2013
CPI for the months of October and November 2012 has already come out and is 217 & 218. Assuming for the month of December 2012 there is increase of 1 point at 219.
Calculating the probable DA for the months of Feb, Mar, April 20113, the DA
Calculating the probable DA for the months of Feb, Mar, April 20113, the DA
Tuesday 9 August 2011
Inflation (Afrati zar)
Inflation (Afrati zar)
Does money depreciate in value?
In simple terms money is a medium of exchange, but when we talk in broader sense, money is a commodity, which is generally acceptable in final payment of dues. Money is also known as “gigantic confidence trick” – means money has power. The value of money, like that of any other commodity, is subject to fluctuations. Any decrease in the value of money as a result of variation in the demand and supply of goods is called depreciation in its value. When we can buy more good for a unit of money than before, the value of money rises, but when we can buy less goods for same unit than before, the value of money falls. As a matter of fact, depreciation in the value of money disturbs the even basis of an individual’s consumption and saving. In order to maintain the standard of living, a consumer has to spend more money than before because of wearing down in the value of money available with him. Alternatively, the consumer refers this absurdity to an increase in the prices of goods and services required by him. Obviously, such an increase in the prices calls upon the consumer to possess more quantity of money. Sometimes it so happens that the government deliberately increases the volume of currency in a period of such monetary and financial inflexibility till it exceeds the legitimate currency requirement of the country. Such deliberate increase in the volume of currency in excess of legitimate demand for it is called Afrati-zar or inflation. Afrati-zar - depreciates the values of the money and raises the general price level.
It is believed that a mild degree of Afrati-zar – increase in prices is necessary for the growth of an economy but if the prices increase beyond a particular limit, it may prove dangerous for the economy. Here, it is to understand as why does the money depreciate and cause a rise in the prices. Two important factors are responsible for it. 1) limited supplies and 2) increasing demand. Limited supplied is a result of stagnant agricultural/industrial production and high prices of imports while as increasing demand is an off-shoot of increasing population and public expenditure, deficit financing and increased money supply. Other factors responsible for rising prices are hoarding, defective distribution system, poor resistance from consumers and more or less unstable political conditions in a country.
Measuring inflation is a difficult task. To do so a number of goods that are representative of the economy are put together into what is referred as a "market basket." The cost of this basket is then compared over time. This results in a price index, which is the cost of the market basket today as a percentage of the cost of that identical basket in the starting year. In India two types of index: Consumer Price Index (CPI) and Wholesale Price Index (WPI) are used to monitor inflation. Off the two, Wholesale Price Index (WPI) is the most widely used price index in India. It is used to measure the change in the average price level of goods traded in wholesale market.
Afrati-zar leaves its negative effect on people’s ability to save because they have to spend more to maintain their given level of living. Ultimately it keeps holding the country’s real capital stock and does not allow it to increase. Some economists have aptly called it as a “legal robbery”. In order to check this menace of Afrati-zar (or inflation/deprecation of money), economy needs to regulate the supply of money in it. The idea can squarely come to grips if the flow of bank credit is regulated both in terms of its quantity as well as availability. This task is generally entrusted to the central bank of a country. Further, government has to set up an efficient system to mop-up the excess purchasing power available with the individuals in the country and raise the output by adopting both short term and long terms measures. Compulsory and voluntary savings schemes and the honest payment of the taxes reduce the purchasing power of the community and helps greatly in the control of price rise. Temporary measures like the price control and rationing also help. But for a sustained control over price rise, it is imperative to keep raising the output to the level of existing demand. At a micro level some people are wise enough to hedge their savings against deprecation by investing in lucrative schemes of banks or by sinking it into other judiciously economic channels.
India has been seriously suffering from the problem of Afrati-zar and had at times more than 10%. These days it is hovering at the satisfactorily level of around 4% because of measures taken by the RBI like raising CRR (cash reserve ratio – a cash balance required to be kept with RBI by banks) from last so many years besides rapier cut in the prices of essential commodities and above all a good output in agricultural sector.
Uncertainty about the level of future inflation adversely affects the economy because it distorts the savings and investment decisions of households and businesses. Since these decisions typically involve planning horizons of many years, the adverse effects from inflation uncertainty can be reduced by adopting a policy framework that makes future inflation more predictable over long time horizons. We have not to get lost in different ideologies but encourage those industries and production units, which can increase the supply of goods. Government has to keep all profiteering and hoarding activities under control. Check on prices has to be the most important component of any policy that may be drawn up by the policy makers to make use of the existing opportunities to save for the sustained growth of the economy itself.
WHAT IS STOCK MARKET? IS INVESTING IN STOCK MARKET GAMLING
elaborates Abdul Rashid Najar
First of all it is to understand what is “share”? A share is a portion of the total ownership of a company. The more shares you own in a company, the more ownership you have in that company. Simply it is proprietorship. A market or a place where buying and selling of stocks takes place like in BSE, NSE (India), NYSE (USA), etc, etc. A stock market may be a physical place, sometimes known as a stock exchange, where brokers gather to buy and sell stocks and other securities. The term is also used more broadly to include electronic trading that takes place over computer and telephone lines where stocks (shares) are bought and sold.
Now the question arises, is it gambling to enter in trading-of-stocks? And this reasoning causes many people to shy away from the stock market. To understand why investing in stocks is intrinsically different from gambling; we need to analyze what it means to buy stocks. A share of any stock is ownership in a company. It gives the right to the holder to claim on assets as well as profits that the company may generates. But often, investors think that shares as simply meant for trading purposes and they forget their proprietorship rights in the company. As shares are freely tradable and that is why stock prices fluctuate and many a times tend to move to the unexpected directions and therefore these moments though are of short-term in nature do not mean that the company has direct relations with these moments. There are so many variables involved that the short-term price movements appear to be random; however, over the long term, a company is only worth the present value of the profits it will make. In the short term a company can survive without profits because of the expectations of future earnings, no company can fool investors forever - eventually a company's stock price can be expected to show the true value of the company. Contrary to this Gambling is a zero-sum game. It merely takes away money from a loser and gives it to a winner. No value is ever created in gambling. By investing, the wealth of the company is increasing vis-à-vis economy. Therefore, we need not to confuse in investing and creating wealth with gambling's zero-sum game.
The history of the stock market is filled with market volatility reflecting economic and political uncertainties. Research has so far proved un-predictable, even the advent of the internet has made the market much more open to the public than ever before and all the data and research tools previously available only to brokerages are now available to individuals to use. It is true that in stock market 90% people are losers, 5% makes break-even and remaining 5% are gainers, which mainly constitute rich people and brokers, therefore, it is not bad to say that stock market is an exclusive club in which only brokers and rich people make money. People loose money in stock markets in a big way because they are not investing in opportunities instead investing in the rising market and fall pray to declining market. This declining market made them fear and they sold their positions normally at the bottoms. In short, this is situation when stocks take a random and unpredictable path. Critics however, contend that stocks do maintain price trends over time - in other words, it is possible to outperform the market by carefully selecting entry and exit points for equity investments. The smart investor will ignore short-term volatility and will focus instead on investing in businesses that will be worth more in the future than they are today. The famous investor Benjamin Graham illustrated the behavior of the market as: "In the short run the market is a voting machine and in long run the market is a weighing machine". Another remarkable investor, Peter Lynch, once said: "Nobody can predict interest rates, the future direction on the economy or the stock market. Dismiss all such forecasts and concentrate on what is actually happening to the companies in which you've invested". So to answer the first question of whether now is a good time to invest, I would summarize with another quote, this time from the value investor Shelby Cullom Davis: "The right time to invest is when you have the money".
I would like to conclude this as, once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for Rs10. The villagers seeing that there were many monkeys around, went out to the forest and started catching them. The man bought thousands at Rs10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at Rs20. This renewed the efforts of the villagers and they started catching monkeys again. Soon the supply diminished even further and people started going back to their farms. The offer rate increased to Rs25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it! The man now announced that he would buy monkeys at Rs50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him. In the absence of the man, the assistant told the villagers. Look at all these monkeys in the big cage that the man has collected. I will sell them to you at Rs35 and when the man returns from the city, you can sell it to him for Rs50. The villagers squeezed up with all their savings and bought all the monkeys. Then they never saw neither the man nor his assistant, only monkeys everywhere!!! All this happened in another village also.... But the difference was that here instead of monkeys there were goats.... So though the villagers got stuck up with goats, they milked up the goats throughout their lifetime and when they stopped giving milk, chopped them or sold them for being chopped.....
Moral: Buy goats (strong companies) even though they are overpriced, but stay away from monkeys (weak companies).
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