AN INCLUSIVE BUDGET FOR INDIA & BHARAT

THESE ARE EXTRAORDINARY TIMES, DIFFICULT times.With our economy badly needing stimulus, and tax revenues plummeting, what choice does a finance minister have but to allocate funds for big government projects, for employment generation schemes and for helping people below the poverty line get at least two meals a day? Let us remember that the revenue has plummeted by a whopping 4.8%, and the increase in expenditure is primarily due to the stimulus package. While I understand the justification for a high fiscal deficit this year, I wish the finance minister had laid out a clear road map on how he will reduce the deficit from 6.8% to 3% in the next three to five years. I am happy that there are several infrastructural, employment-generating schemes, and subsidy schemes that have received higher allocation in this Budget. I am all for these. Unless we can make life better for every Indian — the urban and the rural; the rich and the poor; and the educated and the not-so-well-educated — this country will not become a developed nation. In that sense this is an inclusive Budget. However, the intended results will be achieved only if we ensure the desired outcomes, the required efficiencies, and eliminate corruption. Unfortunately, the record of successive governments in delivering the promised outcomes is rather poor. I wish the government appoints a commission with eminent men and women to oversee the efficient implementation of each mega scheme. Else, most of the funds earmarked for these mega projects will end up in the hands of middlemen as the late prime minister Rajeev Gandhi had lamented once. Right from 1994, I have been saying that any tax exemption should be limited either to export companies with small profits, or for a limited period. Hence, I am not happy with the extension of tax exemption for my industry till 2011. In my opinion, my industry must be prepared to pay its share of taxes without any exemptions. Scrapping of FBT is most welcome, since it was a mere harassment tool, and did not achieve the necessary results. When the UPA won the elections with a good majority and formed the government without any need for support from the Left, the country expected this government to bring in major reforms quickly. It was even expected that the Budget would unveil several major reform initiatives, including disinvestment, increase in FDI limits, and a flexible labour policy with a good safety net. This has not happened. It is a disappointment. I would give 7 marks out of 10 for this budget.

NR NARAYANA MURTHY CHIEF MENTOR, INFOSYS TECHNOLOGIES

(ET-07/07/2009)

Karat Speaks

Planning your retirement home? Be realistic

Buying a retirement home is part of the planning for many before it’s time to hang up one’s boot. More so, if the individual is living in a house provided by his employer. The disadvantage of such long-term planning is that such early decisions are fraught with pitfalls as many potential buyers have a rose-tinted image of their retirement home. The ‘close to nature’ home might prove to be too distant from civilization for comfort. The area that shows promise as a developing district may well turn out to be a ghost town in the future. Since, buying a property like any other investment involve taking a complete view of the future, it is best to take a decision based on what one needs rather than betting on property.

Convenience first
Needless to say, once you retire the parameters for an ideal home would be vastly different from the ones applicable to a younger buyer. However, certain factors like convenience –in terms of public transport as well as shops catering to day-to-day needs –would be pertinent during the retirement period as well. Healthcare facilities would constitute another indispensable element. Adds Raminder Grover, CEO, Homebay Residential, Jones Lang Lasalle Meghraj : “A retirement home must be easier to maintain than one’s erstwhile dwelling. Not everyone can afford to retain the services of extensive support personnel, so it should ideally be compact. It is best to buy a home in a centrally managed complex that is close to a shopping establishment with home delivery options, a well equipped hospital and public transport points. You should also consider the location for potential resale value, because it is not always possible to predict how you would feel about the purchase a couple of years down the line.”

Pursue your interests
Next, you need to ascertain if the neighbourhood offers opportunities to pursue your interests. “After retirement, many retirees wish to indulge in their hobbies like gardening, painting or teaching. Hence, a conclusive environment is critical,” says Gulam Zia, national director, research and advisory services, Knight Frank, a property consultancy firm. For instance, if you wish to devote some time to teaching, you should scout for a house that offers a training institute, an orphanage or a self-help centre in the vicinity.

Stick to your budget
Before drawing up fancy plans for your retirement home, you need to take stock of your financial position n –affordability should supercede all other parameters. If you have identified a house with all the amenities and ancillary infrastructure that you desire, but it is likely to put an enormous strain on your finances, the property may not be worth the stress.

“The thought of availing of a loan to buy a retirement home should not even cross your mind as the lack of incremental cash flows in the future would make repayment difficult. After all, salary hikes or bonuses will not come by at this age. Besides, most banks will not sanction a loan when the borrower has retired or is nearing retirement,” points out Nikunj Kedia, director, PARK Financial Advisors. Hence it is best to fund the purchase through your investments and retirement corpus. Prior to finalizing a retirement home, you need to undertake an assessment of your liquid assets (including pension payout as well as the rest of the retirement corpus) and lifestyle expense, in addition to making adequate provisions for emergency needs. This exercise will help you determine your affordability.

Besides, since real estate is an extremely illiquid asset, it is unadvisable to buy a second house unless there is a valid reason. “One shouldn’t assume that rental income earned would justify the purchase of an additional house because in India it does not account for more than 3-5% (pre-tax) of a property’s value,” he adds. Striking the right balance between personal preferences and affordability is important to ensure that your dream retirement translates into reality.

Unlike the past, when Bangalore and later Pune were favourites with the retirees, today, the concept of pensioner’s paradise has almost ceased, say property consultants. However, certain towns continue to rank high on the pensioner’s list of desirable places. Informs Mr.Grover : “When it comes to the retirement home segment, certain cities have historically been more popular than others. Pune –the quintessential Pensioner’s Paradise –has still not lost its status as the most preferred retirement home destination in Maharashtra. “Goa too holds charm as a retirement investment destination for many pensioners in Maharashtra. “In Madhya Pradesh, Bhopal figures prominently on the retirees’ wish list, thanks to the excellent healthcare facilities and environmental plus points like lakes and a salubrious climate. In Gujarat, most gravitate towards Rajkot as many small merchants who have pursued business in larger cities already have investments and emotional roots there,” he adds. Towards Delhi, Chandigarh is the preferred destination mainly due to its reputation as a planned city with robust infrastructure.

(The Economic Times, Mumbai – Tuesday, 10 February, 2009 – Preeti Kulkarni)