Velvet Rope Marketing

        The Pareto Principle (80:20) reveals that 80 percent of an organization’s revenue comes from 20 percent of its existing customer base. Further emphasizing the importance of existing consumers, KPMG International’s ‘The Truth about Customer Loyalty’ report (2019) highlights that over 55% of consumers in India will buy their favourite brand even if it is cheaper and more convenient to buy from a rival company. On these principles, the Velvet Rope Marketing (VRM) strategy believes in creating exclusively unique experiences for these 20 percent of existing consumers who are your biggest evangelists by rewarding them for their loyalty.

Referring back to the Pareto Principle stated earlier, if we focus on profitability instead of revenues, the 80:20 rule reveals to be a 200:20 rule, where 20 percent of the customers provide almost 200 percent of the profit, as has been explained in the book “Building Digital Strategy” by Sunil Gupta.

VRM helps enterprises of diverse sizes effectively double their profits with the twin engines of increasing revenue from their best customers and decreasing acquisition costs.

VRM is much more than a loyalty programme. In a loyalty programme, anyone can sign-up and collect points. In a VRM programme, it is the brand that decides which customers are eligible for the differentiated experience. While many companies have a loyalty programme, very few do VRM. As the best customers can be many times more valuable than the median customers, by missing out on deepening relationships with their best customers, marketers miss out on opportunities to increase their profits. Taking cognizance of this, we will now touch upon how marketers can reap maximum benefits from VMC by getting it right.

Offer a sense of achievement & privilege with unique experiences

On July 22, 2021, audio-based social media platform Clubhouse announced the ending of its over-a-year-long, invite-only clause. However, the immense popularity its application gained in the last year is evidence of the impact that concepts like ‘exclusivity’ or ‘privilege’ have on consumers. Wikipedia notes that in less than a year of its launch, Clubhouse witnessed 600,000 registered users and there were several others aspiring to be part of the ‘club’.

Maslow's Hierarchy of Needs highlights that following the basic needs, self-esteem, cognitive, aesthetic and self-actualization are of key significance for humans. Since we are born, we love to feel special. Labels like premium or gold membership & elite tiers elicit a sense of pride and the feeling of accomplishment. If brands are looking to demonstrate gratitude to their loyal consumers, they will need to create a separate stage to gratify them. Brands will also need to go beyond expectation to surprise these consumers with ‘wow’ experiences during different stages of the consumer’s journey.

Enable your best customers to do more with ease, access and exclusivity.

Take a scenario where you are waiting for your flight at the airport which has been delayed by a few hours. While you are finding yourself frustrated about waiting for a long duration, you get approached by the staff informing you that there is a special reservation for you at the premium airport lounge so that you can wait comfortably. All of this, just because you have been a loyal flyer of that particular airline. As a consumer, this will be an experience which you will never forget. Most importantly, the airline has earned itself a cheerleader-for-life.

Easing the customer’s journey to purchase will go a long way in creating sustained revenues for any brand. As against big gestures like the one stated above, simple actions like exclusive discounts, early access to information, special privileges and access to limited edition products are some of the ways, when backed by the right anticipation of the needs, can empower brands to have a lasting impact on the consumer.

Identify & leverage the power of AI-enabled VRM

One major challenge that marketers often face is however defining who these high-spending consumers are and what are their motivations. At the end of the day, personalization when not done right can have the opposite effect. As a solution to this, today, Artificial Intelligence offers marketers the power to accurately determine the 20% of best consumers with a metric called Customer Lifetime Value (CLV). Armed by this information, marketers will then need to integrate the consumer data secured by the AI-tool. This will enable them to segment and therefore create relevant journeys or draw a ‘velvet rope’ for their best consumers. When built with adtech and martech, the VRM model leads to determine the history of a consumer’s loyalty, anticipate future loyalty, calculate the number & value of transactions undertaken and also other non-financial activities that the consumer may have engaged in which benefited your brand like positive reviews online or references.

Concluding, in the days to come marketers would need to move the needle from ‘all consumers’ to only 20% of their best consumers effectively, backed by the advantages of Artificial Intelligence in Velvet Rope Marketing, to develop a sustainable infinity pool of profitability. This will not only benefit them in the present but will also pave the way for a long-term profitable growing future.

- Authored by Rajesh Jain, Founder & MD at Netcore Cloud 

(Source : www.cnbctv18.com)

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Arbitrage funds help in volatile market

 

            Fund managers try to take advantage of differentials in current prices and future prices of a security. For example, a fund manager can buy shares in the cash market and sell the same stock and the same quantity in the futures or derivatives market, earning the differential without taking any risk.

This can be further explained with an example. Let’s assume that stock A is trading at Rs 100 in the cash market but the price of futures expiring next month is Rs 105. So fund manager will buy the specified quantities of the stock in cash and simultaneously sell in the futures market. Thereby earning a return of Rs 5 when the settlement takes place on expiry. A reverse transaction is also possible if the prices in the futures market of security are lower than the cash prices.

Thus, market volatility is a great friend of Arbitrage Fund Manager, as the differentials between cash and futures markets tend to amplify during the periods of volatility. Also, speculative activity is on the rise during the period of market volatility, so demand for security in the futures market could be higher than in the cash market, leading to a higher differential.

Arbitrage Funds also keep some part of funds in the high-quality debt and money market instruments to provide stability to returns. This also helps them ready availability of funds in case there is a sudden opportunity to be exploited.

During the current phase of the low-interest scenario, most short-term instruments like Liquid Funds are generating low returns of around 3 percent pa. Similarly, returns on short-term bank deposits are also very low.

While the Arbitrage Funds are able to generate higher returns in the range of 5-6 percent pa taking advantage of the volatility in the market. Stock markets have been volatile in recent months due to both negative and positive news flows. On one side, there has been uncertainty about the economy due to the massive 2nd wave of Covid, on the other hand, there is a lot of liquidity driving the market along with the expectation that economy will recover faster than anticipated.

Taking advantage of the situation, smart investors have started moving money into Arbitrage Funds from other short-term avenues. Liquid Funds saw a net outflow of Rs 45,000 crore in May 2021. While Arbitrage Funds saw a net inflow of Rs 4,520 crore in the same month.

Arbitrage Funds also offer a tax advantage over other short-term avenues like Liquid Funds of Bank Deposits. Arbitrage Funds are classified as Equity Funds, hence the short-term gains are taxed at 15 percent while gains accruing after one year of holding attract a tax of just 10 percent, that too for a gain of more than Rs 1 lakh during a financial year. However, returns on Liquid Funds or Bank Interest Income is taxed at marginal tax rate for up to 3 years, which means investors in high tax bracket will pay much higher taxes on these options.

So Arbitrage Funds definitely are a great option for parking short-term funds as long as the market volatility continues!

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5 benefits of filing ITR even if your income is not taxable

 

                There are many benefits pursuant to filing the tax return even if you earn below the taxable limit.

Filing of tax returns in India is mandatory for individuals only when their taxable income exceeds Rs 250,000. Besides, individuals paying towards consumption of electricity more than Rs 100,000 or those who have undertaken foreign travel for over Rs 200,000 are also required to file a tax return. However, there are many other benefits pursuant to filing the tax return even if you earn below the taxable limit. Here we are taking a look at some of them:

1. Claiming a tax refund

Certain passive income such as term deposit interest or dividend income suffers tax withholding. For many individuals these could be exempt if it is below the threshold. “Most of the individual taxpayers having only the above-mentioned income would need to file the tax returns for claiming refund of taxes. Even in the cases of salaried taxpayers where excess taxes are withheld, filing of returns would be mandatory to claim the refund of excess taxes. By filing an ITR online, the refund of taxes can be claimed in the individuals bank account that is KYC-compliant,” says Sudhakar Sethuraman, Partner, Deloitte India.

2. Processing of Documents

Income-tax return is a key document for the purpose of processing applications for various purposes. For example, at the time of lodging an application for processing of a house or auto loan, bankers seek the copies of tax returns filed to verify the individual’s sources of income. The tax returns filed on prudent basis help in smooth processing than having to explain why returns for certain years were not filed. Besides securing a loan, the income tax return helps in the processing of obtaining credit cards, insurance policies, etc.

3. Application for VISA

Where individuals are planning to take up a job or conduct business visits outside India, the immigration authorities request for copies of tax returns filed in the past. The tax return filing ensures in smooth processing of VISA applications as immigration authorities then deem the individual as tax-compliant. It is seen that certain embassies that of the US, Canada, the UK, etc. are particular about the tax return records of the individual.

4. Claiming losses

Filing of tax return within the due date is mandatory to claim specified losses for an individual taxpayer, such as losses from capital gains, business, or profession, etc. “By opting to file tax returns, not only does it benefit the individual to claim the losses carried forward in future years, but it also serves as a document to track losses that can be claimed in the future. For example, an individual taxpayer who makes a profit from the sale of mutual funds or equity shares can adjust these profits with losses incurred in the past by filing tax returns on time,” informs Sethuraman.

5. Serves as Proof of Income

Self-employed taxpayers do not have any proof of income unlike salaried individuals who receive a salary certificate in Form 16. Therefore, the income tax return serves as a proof of income for these self-employed taxpayers with detailed break-down of income and expenses incurred by these individuals during any financial year. Besides, self-employed taxpayers can also furnish these documents before various forums as proof of income.

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Forex reserves holding of central bank and its impact

 

            The Reserve Bank of India (RBI)’s foreign exchange reserves have been increasing sharply, suggests new data. Since April 2020, the RBI’s dollar reserves have grown by over $100 billion to now stand at $608 billion, making India the fifth-largest reserve holding country in the world.

The central bank has justified its forex intervention by talking about reserve adequacy. It has been argued that the RBI does not hold more than 15 months of import cover while some countries hold more. Switzerland, Japan, Russia and China hold more reserves than India and their import covers are 39 months, 22 months, 20 months and 16 months, respectively.

However, over the last two decades, the RBI’s forex intervention has been motivated by concerns about currency movements.

Eye on currency, but conflict with inflation targeting

The recent increase in reserves has been prompted by an attempt to prevent large rupee appreciation. In June 2020 the rupee-dollar exchange rate stood at 75.6 while now it is around 72.8, a small appreciation. Intervention helped prevent a larger appreciation.

Not only does such currency manipulation invite the ire of other nations, it is costly as it is inflationary.

Moreover, if there is a serious speculative attack on the currency, reserves are not used to prevent depreciation. In the past, the RBI has tightened monetary policy and used capital controls in order to prevent the rupee from falling, instead of selling off its billions.

The central bank does not want the rupee to appreciate as that makes exports uncompetitive. Hence it intervenes in the forex market to buy dollars.

Such a course of action, as adopted by China for many decades, is seen as a “beggar thy neighbour” policy because it makes other countries worse off. This is not looked upon kindly.

In April this year, the US decided to retain India on its watchlist of currency manipulators. India had been on this list since December 2020.

The US puts countries on the list of manipulators if they meet two of the three criteria over a 12-month period: (a) bilateral trade surplus with the US of over $20 billion; (b) current account surplus of at least 2 per cent of GDP; (c) net purchase of foreign currency amounting to at least 2 per cent of the country’s GDP.

According to the US Treasury Department’s report released in April, India was kept on this list because the RBI’s net forex intervention amounted to 5 per cent of GDP in the previous 12-month period, and because India’s bilateral trade surplus with the US had exceeded $20 billion.

Among the many costs of RBI’s currency intervention, an important one is that adding to its forex assets increases the money supply in the domestic financial system.

An expansion in the money supply exerts inflationary pressures which might be damaging for the economy.

Are forex reserves held for preventing currency weakness?

One of the reasons a high level of reserves is considered useful is because it gives the central bank enough ammunition to fight against future currency depreciation.

If the currency starts depreciating against the dollar, then the central bank can sell its dollar reserves and buy the local currency in order to stop the depreciation. But this rarely happens in the case of a speculative attack on the currency.

With the US economy overheating due to the massive fiscal stimulus implemented by the US government, inflation in the US is on the rise. This could prompt the US Federal Reserve to start raising the policy interest rate.

If that happens, the situation for emerging economies like India will be similar to the Taper Tantrum episode of May 2013, when the US Fed had signaled a tapering of its Quantitative Easing policy. This had led to capital outflows from India as well as other emerging economies causing their currencies to depreciate.

Defending the exchange rate by selling reserves invites speculators. When people see that the RBI is selling reserves, they expect that when reserves will fall to a very low level, the central bank will be forced to stop intervening and the currency will weaken. Foreign as well as domestic investors start taking money out before this event materializes. Their speculative attack on the currency ends up hastening the currency depreciation.

During the taper tantrum, to prevent depreciation, the RBI tightened monetary policy, squeezed liquidity from the system and imposed capital controls. It used a very small part of its reserves.

In May 2013, RBI’s forex reserves were at around $288 billion. Between May and September, 2013, it sold roughly $22 billion. Even so, the rupee witnessed a sharp depreciation from 56.5 in May 2013 to 62.8 in September 2013.

The central bank’s build-up of reserves lets businesses believe that the rupee will not weaken sharply. They think that RBI’s stock of reserves will be used against big currency fluctuations. This in turn prevents these firms from hedging the dollar exposures on their balance sheets.

It creates a never-ending vicious cycle wherein the more RBI hoards, the more confident these firms become to take unhedged exposure, thus avoiding the costs of hedging and then the greater the justification for the RBI to hoard reserves.

(Source : www.theprint.in)

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Stock split vs Reverse stock split and Bonus shares

 

Stock split vs Reverse stock split and Bonus shares

Stock Split

Meaning of Stock split

A stock split (or a Traditional stock split or a Forward stock split) is a corporate action in which a company divides its existing shares into multiple shares based on the face value of the share. Basically, companies choose to split their shares so they can lower the trading price of their stock to a range deemed comfortable by most investors and increase the liquidity of the shares (to boost the stock's liquidity). The total value of your shares would remain consistent compared to pre-split amounts, because the split does not add any real value. When a stock split is implemented, the price of shares adjusts automatically in the markets. A company's board of directors makes the decision to split the stock into any number of ways. For example, a stock split may be 2-for-1, 3-for-1, 5-for-1, 10-for-1, 100-for-1, etc. A 3-for-1 stock split means that for every one share held by an investor, there will now be three. In other words, the number of outstanding shares in the market will triple. No impact will be on taxes by stock split.

 

Reasons for a Stock Split

 Increase Liquidity

Often, the share price of a company may be too high for investors to buy and any further rise in prices can discourage them from participating. By reducing value of a stock through split, the shares are made accessible to all. The higher number of shares outstanding can result in greater liquidity for the stock, which facilitates trading and may narrow the bid-ask spread. Increasing the liquidity of a stock makes trading in the stock easier for buyers and sellers.

Increase Stockholder Base

With stock split, the number of outstanding shares of a company increases and it gives opportunity to more investors to purchase shares. This helps increase the stockholder base for a company.

Perception of Future Growth

Companies going for stock splits are perceived to be growing entities. It is a general perception among investors that if a company goes for stock split it has plans for growth, and this belief creates a positive image of the company in the market.

What happens if I own shares that undergo a stock split?

When a stock splits, it credits shareholders of record with additional shares, which are reduced in price in a comparable manner. For instance, in a typical 2:1 stock split, if you owned 100 shares that were trading at $50 just before the split, you would then own 200 shares at $25 each. Your broker would handle this automatically, so there is nothing you need to do.

Are stock splits good or bad?

Stock splits are generally done when the stock price of a company has risen so high that it might become an impediment to new investors. Therefore, a split is often the result of growth or the prospects of future growth and is a positive signal. Moreover, the price of a stock that has just split may see an uptick as new investors seek the relatively better-priced shares.

Does the stock split make the company valuable?

No, splits are neutral actions. The split increases the number of shares outstanding, but its overall value does not change. Therefore, the price of the shares will adjust downward to reflect the company's actual market capitalization. If a company pays dividends, new dividends will be adjusted in kind. Splits are also non-dilutive, meaning that shareholders will retain the same voting rights they had prior to the split.

 

Reverse stock split

A company that issues a reverse stock split decreases the number of its outstanding shares and increases the share price. Like a forward stock split, the market value of the company after a reverse stock split would remain the same. A company that takes this corporate action (Reverse stock split) might do so if its share price had decreased to a level at which it runs the risk of being delisted from an exchange for not meeting the minimum price required to be listed. A reverse stock split consolidates your shares in a way that results in a higher per-share price that can keep you trading on a public and accessible exchange. Stock split ensures that more people can access the shares and keeps existing shares liquid. While a reverse stock split is often thought of as a red flag for investors, in the long run, it can help a company survive and recover from a rough patch.

In the end, a stock split or even a reverse stock split doesn’t have a huge practical impact on a company’s current investors. A stock split’s biggest impact is on investors who might be watching a particular stock and hoping to purchase a full share for a lower price. For those investors, a stock split can provide a powerful motivator to get off the side lines.

Issue of Bonus shares

A bonus share is a free share of stock given to current shareholders in a company, based upon the number of shares that the shareholder already owns. While the issue of bonus shares increases the total number of shares issued and owned, it does not increase the value of the company. Although the total number of issued shares increases, the ratio of number of shares held by each shareholder remains constant. An issue of bonus shares is referred to as a bonus issue. When a bonus share is issued, it brings down the EPS (earnings per share) of the company since there are more shares now (the additional shares having no consideration) with the same paid-up capital. Generally, a company is exempted from paying taxes on bonus shares. On the other hand, where a company intends to declare dividends to its shareholders, it has to first pay dividend distribution tax (DDT) which is levied on the company’s earnings. From the investor’s perspective, he/she does not have to pay tax up to a certain limit. Thus, we see that a company is better off issuing bonus shares rather than declaring dividends. Dividend is only paid out of the profits made by the company in a given year. However, the declaration of dividends is contingent upon the decision of the Board of Directors. So basically, dividend is paid out of profits. On the other hand, a company may issue bonus shares even when it is not making profits or is running at a loss. Bonus shares can be issued both ways either out of the current year profits or from the reserves of past years.

Bonus shares and stock splits look deceptively similar insofar as both of them result in an increase in the number of shares, no cash flow is involved and the shares are made more affordable by bringing the market value of each share within an affordable range. However, the main difference between them could be seen in terms of face value and their availability. Bonus shares are only available to the existing shareholders while in case of stock split, the new shares are available to both the existing shareholder as well to any potential investor. Regarding face value of a share, when a bonus share is issued, the face value of the share remains the same while in case of a stock-split, the face value of the share is changed.

Let us consider the example of Mahindra & Mahindra Limited. In the year 2017, it announced bonus shares at the ratio of 1:1 i.e. for every one share that a shareholder held, he/she would get another share without consideration. As on 26th December 2017 Mahindra & Mahindra was trading at ₹ 1,555.90. The very next day, the value of share went down to ₹ 777.95. This explains that when a company issues bonus shares, the value of the share in the market reduces as per the ratio. This is referred to as a dilution in equity. A bonus issue is a signal that the company is in a position to service its larger equity. What it means is that the management would not have given these shares if it was not confident of being able to increase its profits and distribute dividends on all these shares in the future. A bonus issue is taken as a sign of the good health of the company.

After the exercise of issuing bonus shares, the number of shares, obviously increase in the market. Consequently, the EPS reduces. So now when there are more shares in the market, it becomes liquid thereby making it easy to buy and sell. A company thus issues bonus shares also with the intent of encouraging more participation in dealing with shares. Where due to issuance of bonus the supply of shares in the market goes up, the demand of the same accordingly adjusts. The hidden benefit that is accrued to the company is that no sooner does it announce bonus shares than a bulk of investors tries to purchase them.

The balance sheet is not particularly affected because of bonus shares. Bonus shares are issued by converting the reserves of the company into share capital. It is nothing but capitalization of the reserves of the company. Bonus shares involve capitalizing the reserves and relocating the figures from ‘Reserves/Surplus’ column to the ‘Share Capital’ column. No effect is thus observed on the total net worth of a company since there’s no cash outflow.

Example

A company, ABC Co. had a total of 50,000 shares currently issued with a market price of $150 per share.

The company announced a bonus shares issue of 1 bonus share for every 5 shares owned. This means the company issued a total of 10,000 additional shares (50,000 x 1 / 5).

To calculate the share price after bonus issue of ABC Co., the total value of the shares before the bonus issue must be determined. The value of the shares before the bonus issue was $7,500,000 (50,000 x $150).

After the bonus issue, the number of shares of the company increased from 50,000 to 60,000.

To calculate the share price after the bonus issue, the total value of shares before the bonus issue must be divided on the new number of shares. Therefore, the share price after the bonus issue will be $125 ($7,500,000 / 60,000 shares).

This can also be summarized in the table below:

 

People often confuse bonus shares with stock split. Distribution of bonus shares only changes its issued share capital whereas stock split splits the company's authorized share capital.

A bonus issue is considered as an alternative by many companies to dividends. In dividends, a company gives out extra money to shareholders from its net profits, in a bonus issue the shareholders are given extra shares. It increases the share capital of the company and makes it attractive for investors. It is also a great method to increase retail participation. Bonus issue expands a company’s equity base and makes it more liquid.

 

To Sum Up

Both, stock split and bonus issue multiply the number of shares and bring down the market value however it is only stock split that has an impact on the face value. This is a key difference between bonus issue and stock split. Bonus issues indicates that the company has generated extra reserves that it can transfer to its share capital. Stock split is an initiative to make expensive shares available for a larger shareholder audience.

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Recovery and Care After Delivery

 

The Latest Covid-19 Recommendations for New Moms and Babies

            Coronavirus does not stop pregnancy. Pandemic or not, babies are being born, and each new birth represents hope for humanity. The first 60 minutes of life is known as the “golden hour.” This period immediately after delivery contributes to infant temperature regulation, reduces stress for mom and baby, improves mother-baby bonding, and increases breastfeeding success. To preserve the sanctity of the golden hour, labor and delivery units needed to answer this important pandemic question: “Can we keep mom and baby together safely?” Answer is YES. Current data suggest that approximately 2% to 5% of infants born to women with Covid-19 have tested positive in the first 24 to 96 hours after birth.

SARS-CoV-2 is a respiratory virus primarily passed via droplets. An infected mother can pass the infection to her baby and precautions must be maintained to protect the new-borns. Mothers with Covid-19 can safely room in with their new-born with precautions to prevent the transmission of respiratory droplets. Separating infants from the mother did not reduce the risk of new-born infection. Data from the registry shows no published cases of an infant dying during the initial birth hospitalization as a direct result of SARS-CoV-2 infection. What that means in practice is that a Covid-19-positive mom will not be separated from her child unless she or the baby is acutely ill requiring specialized treatment.

Social distancing, face covers, and hand hygiene remain our greatest weapons against transmitting this respiratory virus. Mothers are asked to maintain a six-feet separation when not providing hands-on care. When handling the baby, moms should wash their hands and done a face mask. Non-infected birth partners or family members should also wear a mask and practice diligent handwashing when caring for babies.

Breastfeeding is strongly encouraged. SARS-CoV-2 has been detected in breast milk, but no definitive studies have been done to date to determine if the active infectious virus is secreted in breast milk. We also do not yet know if protective antibodies are secreted in breast milk. The recommendation is for Covid-positive mothers to breastfeed after performing hand hygiene and while wearing a face mask to reduce the transmission of respiratory droplets.

If a mother is too sick to care for her infant, it may be appropriate to temporarily separate mother and new-born. If mom requires medical care at a level that inhibits her ability to care for her infant, the baby will be taken care of by the medical team and the patient’s family.

 

Recovery and Care After Delivery

You need to take good care of yourself to rebuild your strength. You will need plenty of rest, good nutrition, and help during the first few weeks.

1. Get plenty of rest

Get as much sleep as possible to cope with tiredness and fatigue. Every new parent soon learns that babies have different time clocks than adults. A typical new-born wakes up about every 3 hours and needs to be fed, changed, and comforted. To make sure you are getting enough rest, sleep when your baby sleeps. This may be only a few minutes of rest several times a day, but these minutes can add up. Especially if this is your first baby, you and your partner can become overwhelmed by exhaustion. You may not get a solid 8 hours of sleep for several months. Have your baby's bed near yours for feedings at night. In the first few weeks, you need to let someone else take care of all responsibilities other than feeding your baby and taking care of yourself. It’s nice to have visits from friends and family, but don’t feel that you need to entertain guests. Feel free to excuse yourself for a nap or to feed your baby. Get outside for a few minutes each day. You can start walking and doing postpartum exercises, as advised by your healthcare provider.

2. Seek help

Don’t hesitate to accept help from family and friends during the postpartum period, as well as after this period. Your body needs to heal, and practical help around the home can help you get much-needed rest. Friends or family can prepare meals, run errands, or help care for other children in the home.

3. Nutrition

Your body has undergone many changes during pregnancy and birth. You need time to recover. In addition to rest, you need to eat a healthy diet to help you do that. The weight gained in pregnancy helps build stores for your recovery and for breastfeeding. After delivery, you need to eat a healthy and balanced diet so you can be active and able to care for your baby. Most lactation experts recommend that you eat when you are hungry. But many mothers may be so tired or busy that food gets forgotten. So it is important to plan simple, healthy meals that include choices from all of the recommended groups are divided into 5 food group categories, such as :-

(a) Grains. Foods that are made from wheat, rice, oats, cornmeal, barley, or another cereal grain are grain products. Examples include whole wheat, brown rice, and oatmeal.

(b) Vegetables. Vary your vegetables. Choose a variety of vegetables, including dark green, red, and orange vegetables, legumes (peas and beans), and starchy vegetables.

(c) Fruits. Any fruit or 100% fruit juice counts as part of the fruit group. Fruits may be fresh, canned, frozen, or dried, and may be whole, cut-up, or pureed.

(d) Dairy. Milk products and many foods made from milk are considered part of this food group. Focus on fat-free or low-fat products, as well as those that are high in calcium.

(e) Protein. Go lean on protein. Choose low-fat or lean meat and poultry. Vary your protein routine. Choose more fish, nuts, seeds, peas, and beans.

Oils are not a food group, but some oils such as nut oils have important nutrients. Include these in your diet. Other oils such as animal fats are solid. Don't include these in your diet.

4. Exercise

Your doctor will let you know when it’s OK to exercise. The activity should not be strenuous. You should include exercise and everyday physical activity in your dietary plan. Try taking a walk near your house. The change of scenery is refreshing and can increase your energy level.

5. Stay Hydrated

Drink a lot of fluids to beat exhaustion. It is also important to drink lots of water to avoid constipation. Consume food rich in fibre and balance it by drinking lots of water.

Most mothers want to lose their pregnancy weight, but extreme dieting and rapid weight loss can harm you and your baby if you are breastfeeding. It can take several months for you to lose the weight you gained during pregnancy. You can reach this goal by cutting out high-fat snacks. Focus on a diet with plenty of fresh vegetables and fruits, balanced with proteins and carbohydrates. Exercise also helps burn calories and tone muscles and limbs.

Along with balanced meals, you should drink more fluids if you are breastfeeding. You may find that you become very thirsty while the baby is nursing. Water and milk are good choices. Try keeping a pitcher of water and even some healthy snacks beside your bed or breastfeeding chair.

Talk with your healthcare provider or a registered dietitian if you want to learn more about postpartum nutrition. Certified lactation consultants can also help with advice about nutrition while breastfeeding.

Also, follow the link to know more : https://parenting.firstcry.com/articles/precautions-after-delivery-that-you-should-know/

 

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Federal Reserve signals and Indian markets

 

            The Dow Jones Industrial index in the US fell 0.77% and treasury yields rose on Wednesday after the Federal Reserve indicated that there could be two rate hikes by 2023. In India, the benchmark Sensex fell marginally and the rupee lost over 1% against the dollar on Thursday. If the Fed changed its position in line with the progress in economic recovery and the inflation situation in the US, in India too there have been growing concerns on inflation.

The wholesale price index-based (WPI) inflation scaled a record high of 12.94% in May, pushed by higher fuel and commodity prices, and a low base effect. It also translated into retail inflation of 6.30% in May — a six-month high that breached the inflation target of 4 ± 2% set by the Reserve Bank of India. While it remains to be seen how the RBI responds, market participants feel that if inflation comes alongside a rebound in the economy, it should not be a big concern for investors.

What did the Federal Reserve say?

While maintaining they would continue with an accommodative monetary policy and bond buying programme to support the economy, generate employment and achieve inflation of around 2%, Fed officials also discussed the rate hike and an eventual reduction, or tapering, of the central bank’s bond buying programme.

In a deviation from what it said in March, the Fed signalled that there could be at least two rate hikes by 2023 as economic activity indicators have strengthened and inflation has firmed up. Some members were also in favour of raising rates at least once in 2022. In March, the Fed signalled that they would hold the rates near zero through 2023.

In its statement on Wednesday, the Fed said it “is committed to using its full range of tools to support the U.S. economy in this challenging time… Progress on vaccinations has reduced the spread of Covid-19 in the United States. Amid this progress and strong policy support, indicators of economic activity and employment have strengthened.”

How did the markets react?

A hike in interest rates in the US has a bearing on the debt and equity markets, not just in the US but also in emerging economies such as India that have witnessed record foreign portfolio investments (FPI) over the last one year.

After the Fed’s signalling, the Dow Jones Industrial fell 265 points and the treasury yield rose from 1.498% on Tuesday to 1.569% on Wednesday. In India, the benchmark Sensex fell 461 points or 0.87% during the day before recovering to close at 52,323 on Thursday, a decline of 0.34%. The rupee lost 75 paisa or 1% against the dollar on Thursday to close at 74.08.

What could be the impact of an early hike in interest rates?

The Fed’s indication of a hike in interest rates earlier than expected resulted in a rise in bond yields and strengthening of the dollar. At the same time, it impacts currencies and stock markets in emerging economies.

News of a hike in interest rate in the US leads not only to an outflow of funds from equities into US treasury bonds, but also to an outflow of funds from emerging economies to the US. Experts say a rise in yields leads to a situation where they start competing with equities, and this impacts market movement. The rupee is also expected to come under pressure as the dollar strengthens.

But many feel that if the economic rebound is strong in the US and India, the impact of the interest rate hike in the US and some inflation may not be a big concern.

If the Fed’s stand in March provided relief and stability to the market as it gave them nearly two years’ time, the change in stance is expected to leave the markets a little watchful.

After June witnessed FPI inflows of Rs 14,500 crore into Indian capital markets, it remains to be seen if there is a slowdown in the pace of inflow over the coming weeks and months.

What are domestic inflation concerns?

Wholesale inflation has been rising for five months, and is expected to rise further as the impact of high crude prices and surging commodity prices feed in.

For a large number of commodities, their global prices are now getting reflected in their domestic prices. For instance, petrol, diesel and LPG witnessed inflation of 62.3%, 66.3% and 60.9%, respectively, in May 2021. The food inflation component for retail inflation rose significantly higher to 5.01% in May from 1.96% the preceding month. Some of the items that pushed retail inflation were fuel, which recorded inflation of 11.6% (the highest since March 2021), transport and communication at 12.6%, edible oil at 30.8% and pulses at 9.3%.

Is it expected to remain elevated, and what can the RBI do?

Rising global crude oil and commodity prices are expected to push up WPI inflation further in the coming months. With most developed countries opting for monetary stimulus measures, global commodity prices are rising amid expectations of a global economic recovery. In India, an ebbing of the second wave of the pandemic and increasing vaccination numbers have led to expectations of a recovery in demand, and higher raw material prices.

This would cause retail inflation to rise as well, putting the central bank on a tightrope walk in balancing the growth-inflation dynamics. While RBI is unlikely to change its accommodative stance or the policy rate anytime soon, it remains to be seen how it responds to developments around the world on interest rates. Meanwhile, as there is no further scope for a rate cut by RBI, all eyes are on the government for fiscal policy action to spur growth.

Should investors be concerned?

If global liquidity flow has boosted Indian markets over the last one year, experts say the rise in interest rates in the US and tapering of the monthly bond buying programme (currently $120 billion/month) may impact stock market movement. These factors, and rising inflation in the domestic market, will be key for equity market movement alongside the economic recovery and growth.

The recovery level of the Indian economy at the time RBI hikes rates rate — which may still be some time away — will be critical. The timing and pace of the US interest are hiked and tapering of the bond buying programme, too, will be critical for equity markets in India, which may witness an outflow of funds following the announcement.

If the Fed’s hawkish tone didn’t go well with the equity investors across the globe, the impact on Indian stock markets was not too pronounced. Pankaj Pandey, head of research at ICICIdirect.com, said that while interest rates will be raised in future, he doesn’t expect a knee-jerk reaction. “While inflation is going up, the underlying (factor) that is driving it is the economic rebound both in the US and in India. While the US will give advance warning before raising rates and tapering of the bond purchase programme, even in India RBI is looking to ignore inflation for some period of time. I do not see it as a big negative for the market if the economy is doing well,” said Pandey.

Source : www.indianexpress.com

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New TDS Rules From July 1, 2021

 

            The Finance Act of 2021 introduced some significant modifications to TDS standards such as purchases of goods, and higher TDS rates for non-filers of ITR. From July 1, 2021 new TDS norms for purchases of goods and higher TDS rates for non-filers of ITR will come into force. Section 194Q, which was recently added, is concerned with the tax deduction at source on the payment of a predefined amount for the acquisition of goods. The regulations of Section 194P shall not apply to a transaction on which tax is deductible under any provision of this Act and tax is collectable under the provisions of Section 206C, except in the case of a transaction defined under sub-section (1H) of Section 206C.

Sections 206AB and 206CCA make specific provisions for non-filers of income tax returns to subtract tax at source. With the insertion of new section 194Q for deduction of tax at source on payment of a certain sum for the purchase of goods, the Income Tax Department has stated on its website that "Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 per cent of such sum exceeding fifty lakh rupees as income-tax."

For the considerations of this subsection, "buyer" implies an individual whose overall sales, net receipts or turnover from the business undertaken by him surpass ten crore rupees in the fiscal year immediately preceding the fiscal year in which the acquisition of goods is conducted. Where any amount referred to in sub-section (1) is credited to any account in the cashbook of the individual accountable to pay such income, either named as "suspense account" or by any other name, such credit of income shall be considered to be the credit of such income to the account of the payee, and the clauses of this section shall pertain accordingly, according to the Income Tax Department.

The other TDS provision applies to individuals who have not submitted ITRs in the two years before the year of TDS deduction. In such circumstances, the deductor of income should subtract tax at twice the appropriate rates for the applicable transactions or at 5%, whichever is higher. Taxpayers should also remember that the new deadline for linking Aadhaar to PAN is June 30. If it is not done on or before the deadline, the PAN will be considered inoperative, and the individual will be subject to penalties under the ITA for not quoting PAN, as well as higher TDS at a rate of 20%.

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Fixed income: Relative calm amidst new RBI measures

 

            The fixed income market remained calm with a stable profile for the most part of the last month. The accommodative policy of the RBI has been instrumental in keeping the yields stable to lower. Yet another reason is the interbank liquidity which has been on an average upwards of Rs 5 lakh crore. The G-SAP 1 announced in the last monetary policy has already touched down on the turf with two tranches being introduced already.

This has definitely helped soften the rates a bit, though the quantum is quite small compared to the size of the primary issues coming up week after week. The recent announcement by the RBI enhancing the financing support for specific segments like healthcare and small enterprises further reaffirms the fact that the central bank will not be averse to taking actions that are in the interest of the economy and that too in a timely manner. This is significant as the support is going to reach the beneficiaries through the banking system and the non-banking finance companies, with a time horizon of three years.

In the RBI’s assessment there are uncertainties caused by the second wave of the pandemic, and these uncertainties, depending upon how prolonged the second wave would be, may affect the macro variables adversely. These developments rule out any change in the RBI policy in the near future.

Many of the GDP estimates have cut growth by 1.50 percent to 2 percent, and this would certainly be a factor that will affect the trajectory of policy rates. Coming to the issue of primary government debt, while the current secondary market purchases are barely sufficient to cover the entire issues it may be possible that the future secondary market purchases may be of a higher order.

In that case, the yields at the long end of the curve may enjoy some support for a longer period of time. The normalization process from the RBI, and the upward movement in yields would depend on a number of factors – the extent of the likely impact of the second wave of the pandemic on demand and production, the impact on economic growth and the revival of the same, improvements in the global economic scenario. Inflation levels look challenging as it is hovering around the 5.50 percent level, very close to expectations.

The high commodity prices, the higher oil prices, the weaker Rupee have all contributed to the higher price level. This may not get altered much, as the transmission is through the exchange rate. Also, the crop of grains from the last season is aplenty and this may have a favourable impact on food grain prices. One thing that may not get impacted favourably is the prices of pulses and protein rich foods, which have a longer crop cycle. If the second wave of the pandemic starts affecting the demand conditions, we may see some moderation in general price level, but it will be rather transitory.

In fixed income, it is still the short end of the curve that is preferred. Even those who are invested into the short end may gradually move into the very short end over the next two or three months, to avoid any loss of value due to a gradual rise in rates, owing to normalization of liquidity and economic conditions, most likely over the next three to four months.

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Central Government Employees can pick NPS or OPS for benefits on death during service

 

            Under rule 10 of CCS (Implementation of NPS) Rules, 2021, Central Government Employees covered under National Pension System have now been given the option to choose benefits either from the old pension scheme or accumulated pension corpus under NPS in the event of their death during service. However, the family of the deceased Government employee cannot exercise this option. If the Central Government Employee fails to furnish his option, a default option of benefit under the old pension scheme for the first 15 years of service is available. Thereafter, the default option would be the benefits under NPS. Currently, the default option of the old pension scheme is in vogue till March 2024 in accordance with these rules even if Government Employee has completed 15 years of service. CCS (Implementation of NPS) Rules, 2021 were notified through a Gazette notification dated 30th March 2021.

Rule 10 of the CCS (Implementation of NPS) Rules, 2021

Rule 10 of the CCS (Implementation of NPS) Rules, 2021 says, “Every Government servant covered under the National Pension System shall, at the time of joining Government service, exercise an option in Form 1 for availing benefits under the National Pension System or under the Central Civil Service (Pension) Rules, 1972 or the Central Civil Service (Extraordinary Pension) Rules, 1939 in the event of his death or boarding out on account of disablement or retirement on invalidation.” According to this rule, Government servants, who are already in Government service and are covered by the National Pension System, shall also exercise such option as soon as possible Form 2.

In an Office Memorandum (O.M.) dated 9th June 2021, the Directorate General of Health Services (DGHS), said employees who are already in Government Service and are covered by the NPS, also need to furnish the details of family in Form 2 to the Head of Office along with Form 1 for record and onward submission to Central Record Keeping Agency. The DGHS had asked all officials to furnish their options to the Head of Office through their respective Establishment Division by 11th June.

Benefits on in-service death of Central Government Employees covered under NPS

Family pension under CCS(Pension) Rules, 1972 as per option exercised by Government servant or default option or in case, Government servant has opted for benefits under NPS, family would get benefits from his accumulated pension wealth under NPS.

• Death Gratuity

• Leave Encashment

• Benefits from CGEGIS

• CGHS facilities

Salary to Central Government Employees is paid as per recommendations of the 7th Pay Commission.

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