India Business Blog | Funding & Telecom Trends | » Money

Falling Rupee chokes the Indian Economy but presents Investment Opportunities

Kaushambi — Wed, 23 May 2012 05:55:10 +0000

Indian rupee has been free falling against the US Dollar for a while and yesterday it touched a new all time low of 55.39 rupees against the American dollar. Whilst there have been recent reports about how the Indian economy is pegged to grow at 7.5% in 2012, depreciation in the value of rupee is not a good sign.

One of the first hits that the economy takes when rupee tumbles is the rise in cost of imports. India imports roughly 70% of its crude oil requirements and a falling rupee means that the government will have to pay more.

Although oil and petroleum prices are controlled, the end consumer may very well bear the brunt of this increase in costs.

US Dollar Vs Indian Rupee [ 1 Year Chart]

In fact, Petroleum Minister S Jaipal Reddy talked about an immediate increase in fuel prices yesterday when the rupee dipped to new lows. He said "If rupee depreciates by one against the US dollar, our oil companies lose Rs 8,000 crore (annually)"

Some Negatives of Falling Rupee

We know that higher fuel prices can spiral into increase in inflation as industries across the board take a hit. This dreadful cycle of higher costs for crude oil resulting in losses for government units and higher fuel costs for industries and the end consumer is a challenging situation for the Indian economy.

The falling rupee also hits companies which rely heavily on foreign currency outflows to keep business operations running. Take for example the airline industry. For airlines that service international routes – International airport fees, lease of airplanes, salaries of expat pilots, jet fuel prices and many more relatively fixed costs are dollar driven. Such outflows in dollar terms become costlier when realized when local currency falls.

A further hit in demand for foreign travel is taken as the common man is likely to cancel outbound overseas trips during these times. Flights, hotel stays and every other service in foreign countries becomes more expensive as the purchasing power of rupee falls.

Even domestic airlines scramble to keep fuel and airline lease costs under tab by implementing measures like avoiding flying at high altitudes, sourcing cheaper on-flight meals, hire local pilots and taxing aircrafts with one engine only.

A falling rupee is also bad for the share market as the negative trend not only portrays a grim picture from a pure number crunching approach but also weighs in on investor sentiment. Foreign Institutional Investors (FII) may suddenly go on sell mode if fear of future losses outweighs likelihood of gain.

On the upside, times like these are excellent buying opportunities. The stock market is currently trading in the vicinity of 4 month lows and blue chip stocks are bottoming out.

There could be an enormous gain potential for such stocks in the long run. Investors who have made their millions from the share markets wait month after month for opportunities like these to buy-in at lower prices and sell when markets rebound.

Some Positives of Falling Rupee

In the midst of this chaos as the rupee tumbles, industries with dollar dominated revenues may in fact benefit from the depreciation of local currency. A prime example is the Indian IT sector which relies heavily on overseas revenue.

As a majority of revenue comes from overseas markets, companies like Wipro, Infosys, TCS, etc may witness higher realization of their dollar dominated revenue. However with low global demand and weaker growth forecasts, the full potential of the upside of rupee depreciation for the IT sector is yet to be seen.

Sectors like domestic travel could witness a boost as travellers will prefer to stay away from foreign destinations where they will get a subdued bang for their buck for the time being. Even Indian expats living and working abroad benefit from rupee depreciation. If they are paid in dollars, the realization potential of their salary in rupee spikes.

The rupee has lost about 22% since the beginning of 2012 and more than 11% since February this year.

Certain analyst camps blame the downfall on global concerns while other claim domestic woes are fuelling the drop. The government and mainly the RBI will need to intervene and clamp down on the sliding rupee to add stability to already volatile markets.

The poor performance of rupee is a drag on the Indian economy however there are definitely certain upsides to a falling currency which represent gain opportunities if investment decisions are taken at the right time.

Airtel Money Super Account launched in partnership with Axis Bank

Kaushambi — Wed, 16 May 2012 15:35:20 +0000

Bharti Airtel has partnered with Axis Bank to use combined forces of telecom and banking to offer financial inclusion (FI) to thousands of Indians who still don’t have any access to banking. Called Airtel Money Super Account powered by Axis Bank, the mobile platform will be powered by Airtel MCommerce Services Limited, a fully owned subsidiary of Airtel. Banking products and services will be brought forth by Axis Bank. Infosys has been roped in as the technology innovation partner to lend its expertise in mobile and e-commerce to successfully deliver this initiative.

Sanjay Kapoor, the CEO of Bharti Airtel for India & South Asia said "….nearly 43% of our country’s population does not have bank accounts and continues to rely on cash for majority of transactions as well as payments". This could be either because they have no access to banking or that they choose to rely on cash out of habit and mindset. In such a scenario, the aim of FI is to offer banking products and services to the under-banked and low income population of urban and rural areas of a country.

Airtel Money Super Account powered by Axis Bank allows customers of Airtel Money to open a No Frills Savings Account through which they will be able to carry out a variety of banking transactions. Airtel Money, launched in February 2012, is basically an account on a mobile phone through which cash can be deposited. This balance can later be used to pay for various products and services such as balance recharges, Digital TV bills, movie tickets, e-shopping, etc.

No Frills Account is essentially a simple Savings Account without the requirement of any fixed minimum balance. It caters to users who don’t need to use many cheques or make frequent withdrawals/deposits. No Frills Accounts were introduced by banks in India as per RBI directives in order to further aid the FI objective and policy of the nation.

The service will be first activated in India’s top remittance corridors like Delhi, Mumbai, Bihar and East Uttar Pradesh. For the time being, users will be allowed to send remittances from Delhi and Mumbai, and receive in Bihar and UP.

Airtel Money Super Accounts promise to be a boon in many ways. Customers can make cash deposits, receive remittances, transfer and withdraw money anytime. These transactions can be done from authorized Airtel Money-Axis Bank outlets.

The hassle of handling cash will be reduced by making banking transactions more secure, convenient and efficient. Customers will be also able to earn interest on their No Frills Savings Account.

There are many other services that Bharti Airtel and Axis Bank have in the pipeline for their customers. These include transferring funds to another bank account through NEFT and access other banking services like RDs, FDs and micro-insurance products.

To open a Super Account, customers can visit the nearest Airtel Money-Axis Bank outlet and fill out an application form. Know Your Customer (KYC) identification documents will be required.

There is little doubt that this alliance is a winning combination of Airtel’s vast reach and Axis Bank’s goodwill. Airtel has about 15 lakh outlets in India while Axis bank is a strong player in the banking sector. Add to this equation, the expertise of IT giant Infosys, the Super Account has everything working in its favour.

However the big question is whether this initiative will actually trickle down and percolate to the target audience.

It would only fair to assume that folks who prefer dealing in cash for tax reasons will continue preferring cash as these transactions are likely to be logged. So the cash loving Indian may not necessarily prefer transferring cash via a medium that will leave a trail.

However the obvious upside to the initiative is the fact that it will allow banking services to percolate down to the roots of the Indian population. As Airtel and Axis Bank add more services and expand the Super Accounts footprint, the currently unbanked population could very well be queuing up to sign up.

India’s Mobile Banking Adoption highest in World!

Arun Prabhudesai — Tue, 15 May 2012 12:34:34 +0000

Mobile Banking has really caught up in India – according to recently conducted survey by ACI Worldwide, 76% of Indian mobile respondents used their mobiles for banking in last 6 months. This percentage is highest across the world.

Comparatively, only 38% respondents from US, and 31% from UK used mobile banking in last 6 months. China, came in after India with 70% users using mobile banking followed by South Africa (61%). The global average for Mobile Banking adoption rate stands at 35%.

Source: Aite Group; ACI Worldwide study of 4,200 consumers in 14 countries, Q1 2012

Mobile Payment Usage

India comes in 2nd in terms of making payments on mobile. 64% of the survey respondents from India used their mobile phones to make payment atleast once in last 6 months, while Chinese led the pack with 66%. Surprisingly, only 30% of US respondents & 23% of UK respondents have made payments on mobile in last 6 months.

Importance of Mobile Payments & Money Movement

According to the survey, the countries with highest levels of mobile payment adoption also display highest importance on mobile payments and money movement. Roughly two-thirds of Indian consumers consider making payments and moving money using their mobile phone in the next three years to be “very important” to them —in contrast only one in 10 French and Canadian consumers think mobile payment is “Very Important”.

Replacing Traditional Payment Cards with Mobile Payments

Over 8 out of 10 Indians responded that they would prefer using a mobile phone to make a payments instead of traditional payment cards.

The lack of importance of mobile payments and money movement in a number of countries belies the interest that many consumers across the globe have in using their mobile phone to replace carrying payment cards. In Brazil, for example, although 39% of consumers consider mobile payment and money movement to be “very important,” 75% would use their mobile phone to replace cards.

Even in France, where just 9% of French consumers place a high importance on mobile payments and money movement, 44% express interest in replacing their payment cards.

One surprising fact in all the above findings is that western countries like US, UK, France, Germany etc. are low on mobile banking and payments. One of the reason I see is that they transact more from Desktop PC’s. Whereas in countries like India & China, majority of consumers only have mobiles on which they can carry out mobile banking / payments ( as they don’t own personal computers).

Income Taxes paid by Indians [Overview, Numbers & Graphs]

Arun Prabhudesai — Mon, 30 Apr 2012 12:02:59 +0000

Do you know how many Indians pay Taxes and how much?

You would be surprised with some of the numbers. According to the report released by Indian Finance Ministry, estimated number of taxpayers for financial year 2011-12 stands at just 3.24 Crore people. That means, less than 3 people in 100 pay taxes

Out of these 3.25 Crore people, 89% pay taxes in the tax slab of 0 – 5 Lakh rupees, while on the other end of spectrum, only 1.3% of all tax payers have income about 20 Lakh!

Number of Tax Payers in India & their Slabs

Slab	Number (in lakhs)	Percentage of taxpayers
0-5 lakh	288.44	89.00%
5-10 lakh	17.88	5.50%
10-20 lakh	13.78	4.30%
>20 lakh	4.06	1.30%

The graph clearly shows the inequality in the earnings of Indian people – Imagine, in a country of 120+ crore people, only 4 lakh people earn above 20 lakh rupees a month.

Now, if you consider that many cheat when it comes to taxes, even then the numbers are so skewed that it is mind-boggling.

This next graph will show you further how much wealth is concentrated amongst only a miniscule few!

Tax Collection by Tax Slabs

Slab	(Rs. in crore)	Percentage of tax collected
0-5 lakh	15,010	10.10%
5-10 lakh	21,976	14.80%
10-20 lakh	17,858	12.10%
>20 lakh	93,229	63.00%

The biggest surprise for me was – although, only 1.3% of all tax-payers earn more than 20 lakhs in India, they account for a whooping 63% of all the taxes collected by Indian Government. So 4.6 lakh Indians pay a total of 93,229 crore rupees of tax. That comes to an average of roughly 23 lakh per person!

Although, I was aware of this situation to a certain extent, after looking at the numbers in the report, I was taken aback by amount of inequality we have in India!

Would love to hear your comments on this!

[Via]

Average IT / Software Salaries in India [Report]

Arun Prabhudesai — Mon, 23 Apr 2012 12:20:27 +0000

If you are an IT professional and in midst of a change of job or an appraisal, this report may be very beneficial for you. ZDNet Asia conducted an online survey between March 2011 and March 2012 to find salary packages of IT professionals from India.

The study findings are based on 508 Indian participants. Of these, 176 of them had less than 5 years of experience in IT industry and 254 had between 5 and 10 years, while 78 had more than 10 years’ worth of experience. Although this is definitely not a very large size, it is enough to draw broad conclusions about the salaries that IT professionals get in India.

So, if you are currently unsure of if your salary is more or less compared to your peers across IT Industry – This should definitely give you a good pointer at where you stand.

Average annual salary by IT skills & Experience (in rupees)

IT skills	Years of Experience
IT skills	Less than 5 years	5-10 years	More than 10 years
Application Development	431,616	881,376	1,364,788
Desktops/Software	318,395	640,154	949,618
System Administration	295,679	617,957	979,079
Servers/Networking	349,295	666,986	1,073,571
Web Development	447,126	-	-
Operating Systems	293,032	661,507	954,408
Database Management	386,741	685,909	1,214,667
Web Services	421,458	-	-
Infrastructure Management	334,958	781,422	1,209,714
IT Outsourcing	419,391	-	-
Consulting/Business Services	-	993,250	1,326,471
Web Development	-	798,637	1,271,278
Enterprise Applications	-	892,982	1,292,105

It is clear that if you are less experiences IT professional, Web development is currently the hottest thing. With everything moving on cloud, there is no doubt that web development is only going to grow. While if you are a senior IT professional or a consultant, you stand to earn higher than you peers who have other IT skills.

On the other hand system admin & Operating system jobs are lowest paid in the IT Industry on whole.

Average annual salary job function and industry (in INR)

Job Function
	IT, Web & Telecom	Government, Education & Health	Legal & Finance	Media, Marketing & Sales (non-IT)	Manufacturing, Services & Others (non-IT)	Overall


IT Management	1,000,012	574,091	986,500	794,667	874,444	903,216
Project Management	965,149	632,500	453,333	923,488	772,143	930,901
Systems Development	585,276	385,250	688,000	-	492,727	574,525
Communications	722,750	423,667	-	-	384,667	603,281
Support	462,599	234,000	482,500	300,000	438,143	440,505
Administration	489,936	408,700	591,400	320,000	452,100	484,854
Other IT Professionals	834,250	-	-	-	220,000	766,000
Overall	731,996	478,827	667,800	744,217	564,922	695,236

If you are an IT professional working in IT or Telecom Industry you stand to earn much more than your peers in other Industries. Government, Education & health are the worst paying Industries for an IT professional.

Read the entire survey by ZDNet Asia who also have benchmarks based on various IT Job functions, years of experience & IT skills

Per Capita Income of Various Indian States!

Arun Prabhudesai — Fri, 30 Mar 2012 05:17:41 +0000

Did you know that Goa has the highest per capita income in India and on the other hand Uttar Pradesh has the lowest!

Ok, if you are confused about what Per Capita income is – here is a short and simple answer. Per capita income is a unit to measure average income of an individual derived from the income of a geography, such as a country or state or city. It is calculated by taking a measure of all sources of income of a geography and dividing it by the total population.

According to the latest figures released by Government – Goa leads the country with per capita income of Rs. 1,92,652/-, while Bihar has the lowest with a per capita income of only Rs. 24,681/-. An average Goan earns 6 times more than an average Bihari!

As per latest 2012 figures, Delhi comes in second after Goa with PCI of Rs. 1,75,812 followed by Chandigarh (1,28,634 – 2011) & Haryana (1,09,227).

State Wise Per Capita Income Comparison

Sl. No	State/UT	2010-11 (Rupees)	2011-12 (Rupees)	2011-12 % Growth
1	Andhra Pradesh	62912	71540	13.7
2	Arunachal Pradesh	55789	62213	11.5
3	Assam	30569	33633	10
4	Bihar	20708	24681	19.2
5	Jharkhand	29786	31982	7.4
6	Goa	168572	192652	14.3
7	Gujarat	75115	N.A	N.A
8	Haryana	94680	109227	15.4
9	Himachal Pradesh	65535	73608	12.3
10	Jammu & Kashmir	37496	41833	11.6
11	Karnataka	60946	69493	14
12	Kerala	71434	83725	17.2
13	Madhya Pradesh	32222	N.A	N.A
14	Chhattisgarh	41167	46573	13.1
15	Maharashtra	83471	N.A	N.A
16	Manipur	29684	32284	8.8
17	Meghalaya	50427	56643	12.3
18	Mizoram	48591	N.A	N.A
19	Nagaland	52643	56116	6.6
20	Odisha	40412	46150	14.2
21	Punjab	69737	78171	12.1
22	Rajasthan	42434	N.A	N.A
23	Sikkim	81159	N.A	N.A
24	Tamil Nadu	72993	84058	15.2
25	Tripura	44965	50750	12.9
26	Uttar Pradesh	26355	29417	11.6
27	Uttarakhand	66368	75604	13.9
28	West Bengal	48536	55864	15.1
29	A & N Islands	76883	82272	7
30	Chandigarh	128634	N.A	N.A
31	Delhi	150653	175812	16.7
32	Puducherry	98719	95759	-3
All-India Per Capita Net National
Income(2004-05 base)		53331	60972	14.3

India’s average Per Capita Income is Rs. 60,972/-, which is one of the lowest in the world. Some European Countries have over 50 times per capita income as compared to India!

4 Android Tax Calculation Apps for Indians

Kaushambi — Thu, 15 Mar 2012 04:27:00 +0000

The end of the financial year is upon us and fervent calls to chartered accountants and tax planners are bound to me made. If you want to avoid calling your accountant for knowing a few quick answers, put your Android smartphone to good use and download some of these tax calculating apps that will help you know your tax status by simply plugging in a few numbers.

And yes, these Android Tax Calculating Apps are completely free, so if you are an android user give them a try!

Think Tax

Think Tax still hasn’t attained much maturity on Android Market so it would be difficult to say how popular and effective it really is. You can key in details like your salary, investments, savings etc. and the app will tell you how much tax liability you have. Useful features of this app include being able to save your results and share them with others. The app also gives links to pay tax online and e-filing. User reviews have praised this app for having a great UI.

Download app

FiCal

FiCal is a recently released product of HCL Technologies which allows you to come up with a range of tax calculations by simply entering details of your personal income and savings. To know the status of your interest payments and EMIs on loans, use FiCal’s EMI Calculator. In addition, the useful Loan reduction plan in FiCal will help you to find the number of payments to be made to write off your loan. Based on your current expenses, you can calculate your cost of living after a certain year. A very interesting feature of this Android app is that it has a Crorepati planner, which means that if you want to become a crorepati by a certain age, then you simply plug in your numbers and FiCal will help you plan your finances to reach the goal.

Download app

My Tax India

If you want to work out your tax splits and how much you need to invest to save a certain amount from your income, My Tax India will be your suited assistant. You can also export your tax details in your email, share it with other users and enable multiple user entries through this app. Users have praised the innovative use of graphics in the app – every result is converted into a visual graph so that comparison and understanding of numbers becomes extremely easy for an average reader.

Download app

Tax Calculator India

This app is developed by MapsofIndia and provides two clear divisions of calculating tax. One module being the Quick Tax Calculator to calculate tax based on your annual income and the second module being Advanced Tax Calculator, to calculate tax on annual income from various sources and annual savings (which includes 80C, 80CCF, 80D, 80DD etc.)

Download app

Give them a try and let us know what you feel!

HDFC launches Mobile Payment Service with Movida!

Arun Prabhudesai — Thu, 23 Feb 2012 13:29:42 +0000

The 2nd largest private bank in India today announced the launch of its mobile payment service that allows its customers to make payments through their mobile phones using their debit / credit card registered with the bank.

Movida, a mobile payment joint venture between Monitise and Visa, will provide technology that will enable mobile devices to make payments on phones. HDFC Bank customers can make mobile payments for range of services like Insurance payments, Utility Bill payment, top-up prepaid cards, buying movie tickets etc.

The mobile payment services will be completely free and it will be available across all mobile operators and all kinds of mobile handsets.

How will HDFC Mobile Payment Service Operate?

HDFC users will have to first link their debit or credit cards to their mobile number following which they will have access to service via simple menu based USSD (Unstructured Supplementary Service Data - A protocol used by mobile phones to communicate with the service provider’s servers) mobile technology. After that, it is just a matter of selecting the payment service require and making the payment. The simple menu can complete a transaction in only a few steps [source].

The service will be complete secure and safe for users to use – Only the mobile phone registered with user’s bank can be connected to the service. User also has to setup a unique PIN number on the phone to access the account information.

The best part is, user does not need to have a high end smartphone to use this service – even the most basic mobile handset can be used to avail the HDFC mobile payment services.

The service will be first available to select group of users before being rolled out across the country later this year!

Delhi & Mumbai ranked among cheapest cities in World

Arun Prabhudesai — Mon, 20 Feb 2012 10:25:59 +0000

While India has been struggling with double digit Inflation for past 3-4 years, it still boasts some of the cheapest cities in the world. Within India, Mumbai & Delhi are some of the most expensive cities to reside in, primarily due to the sky-high real estate prices that these cities command. However, when compared to other cities globaly, they still rank among the most inexpensive cities in the world.

According to the Economist Intelligence Unit’s, Worldwide Cost of Living 2012 survey – Mumbai ranked 2nd cheapest city in the world just above Karachi. New Delhi was ranked 4th least expensive city in the world.

World’s 10 Least Expensive Cities

Unbelievable as it might be, this is true – The cost of living in even most expensive Indian cities is less compared to many other major cities in the world. According to the EIU’s survey three of the four cheapest locations hail from the Indian subcontinent, highlighting the reason why India is still an attractive destination for labour outsourcing, relocation and Foreign Direct Investments.

World’s 10 Most Expensive Cities

On the other hand Japanese and Swiss cities are most expensive in the world, with Zurich coming at top followed by Tokyo, Geneva and Osaka. It is interesting to note that not a single city from Asian sub-continent features in the top 10 most expensive cities.

Personally for me it is still hard to believe that Mumbai is one of the cheapest cities in the world. I think there are couple of reasons why these ranking may be skewed – I doubt that EIU’s rankings take into consideration the average earnings of people. And secondly, the rankings seem to be only based on commodity pricing. I am not sure whether real estate pricing is taken into consideration, because if that was the case – Mumbai boasts some of the most expensive real estate pricing in the world.

How much it costs – then and now

If you see the above chart, it will show you the pricing of essential commodities like Bread, White Rice and Petrol. Delhi does boast some of the cheapest prices, however, if you compare it with earning power of people, the prices will give a proper perspective.

What do you think?