The inflation oscillated below and beyond the upper end of the target of 6 percent fixed under the flexible inflation targeting (FIT) framework. CPI inflation was 6.52 percent in January 2023 and hit a peak of 7.44 percent in July 2023 and a low of 4.31 percent in May 2023. The food and fuel inflation was the major contributor to the spike in inflation. RBI is well focused on reaching the 4 percent midpoint target of the glide path of inflation of 4 percent +/- 2 percent. The crude oil prices close to US $90 per barrel may also be a threat if its prices increase steeply with OPEC + considering a cut in oil production. WPI at 4.73 percent in January 2023 began to moderate to 3.85 in February. The average WPI– April – November was at -1.34 percent and touched positive at 0.26 percent. Looking at the trend, RBI projected average CPI inflation at 5.4 percent for FY24 and is expected to reach 4 percent in Q1 of FY25 after which RBI may start cutting interest rates.

1. Trends of GDP growth:

The year 2023 began with Q4 GDP growing at 6.1 percent, Q1 of FY24 recording GDP at 7.8 percent, and Q2 of the current fiscal posting GDP growth at 7.6 percent sequentially showing its resilience and continuity of good growth. Economic activity exhibited buoyancy in Q2 aided by strong domestic demand. GDP in Q2 was largely driven by investment and government consumption. Turning to Q3, two-thirds of rabi sowing has been completed despite the late harvest of Kharif crops in some states. The manufacturing sector gained strength with easing input cost pressures and pick-up in demand conditions. Eight core industries recorded healthy growth in October and continued the rising trend since June this year. They grew by 8.4 percent in June; 8.5 percent in July; 12.5 percent in August; 9.2 percent in September; and 12.1 percent in
October. The purchasing managers’ index (PMI) for manufacturing rose in November. The services sector buoyancy has remained intact as reflected in high-frequency indicators. GST collections at Rs.1.68 lakh crore in November 2023 were buoyant. Services PMI displayed healthy expansion in November.

2. Global headwinds:

In the mixed state of equilibrium of growth and inflation in India, external sector developments, persisting supply-side disruptions, and geopolitical risks could impact growth in 2024. Over the next two years, the global economy is expected to slow moderately before returning to near-trend rates. Global growth is projected to weaken to its lowest annual rate in 2024 since the global financial crisis other than the first year of the pandemic. With inflation expected to converge to targets only by 2025, the central banks of major economies may give up their disinflationary stance although the effects of past tightening will linger. Though the US may not enter into recession in 2024, companies and investors, are actively bracing for a slowdown caused by tepid consumer demand. A strong level of prudence and caution is seen from some top companies as they outline their plans for next year.

3. Way forward 2024:

In a recent report, the IMF warned that India’s general government debt may exceed 100% of gross domestic product (GDP) in the medium term, stating that long-term risks are high because the country needs considerable investment to improve resilience to climate stresses and natural disasters. This suggests that new and preferably concessional sources of financing are needed, as well as greater private-sector investment and carbon pricing or equivalent mechanisms.
Given it, the government emphasized a decline in general government debt from around 88 percent in FY21 to approximately 81 percent in 2022-23. It affirmed its commitment to achieving fiscal consolidation targets, aiming to reduce fiscal deficit below 4.5 percent of GDP by FY26.

Sources : Economics Time

The post INFLATION first appeared on Erigoindia.

SIP, or Systematic Investment Plan, is an investment strategy that allows individuals to invest in mutual funds regularly over a specified period. It involves investing a fixed amount at regular intervals, typically monthly. SIP offers several advantages, making it a popular investment method. Firstly, it promotes financial discipline by encouraging regular savings. Secondly, it provides the benefit of rupee cost averaging, allowing investors to buy more units when prices are low and fewer units when prices are high. Additionally, SIPs offer flexibility and convenience, as investors can start with a small amount and increase it gradually. Overall, starting a SIP is a wise choice as it helps inculcate disciplined investing habits and offers potential for long-term wealth creation.

What is an SIP?

SIP, or Systematic Investment Plan, is an investment option provided by mutual funds that enables investors to invest a fixed amount at regular intervals, typically monthly or quarterly. It promotes the habit of regular savings and investing, regardless of market conditions.

What are the benefits of SIP?

The benefits of SIP investment are several. A few of them are rupee cost averaging, disciplined investing, flexibility of investment & amount, long term wealth creation as a resultant of compounding effect.

How to start an SIP?

Starting an SIP is easy. First, you need to select a fund that is best suited to your long-term goals and risk profile. You can do this yourself, or you can take the help of a professional financial advisor. Once you have zeroed-in on a fund, you need to fill the SIP application form, post which a fixed amount is deducted from your bank account every month and directed towards the mutual fund you choose to invest in.

How much return can I expect on an SIP investment?

Unlike traditional fixed income products, Mutual Fund investments do not provide a guaranteed return. But, historically, over a long-term, investments in Equity Funds have generated better returns than traditional fixed-income products. Having said that, Mutual Fund investments are subject to market risks. You are advised to read all scheme related documents carefully before investing.

What are some of the best SIP plans?

There is no such thing as a “Best Mutual Fund.” It is a myth. Every fund has a unique investment objective that caters to the needs of different investors. You need to select the right fund basis your risk appetite and time-frame for achieving your life goals. You may decide to invest either via SIP or Lumpsum.

What is meant by “SIP frequency?”

SIP frequency refers to the pre-defined interval at which a fixed amount, mandated by you, is deducted from your bank account. You can go with a monthly, quarterly, semi-annual, or annual frequency.

Is there a minimum amount to start an SIP?

The minimum amount to start an SIP varies from fund-to-fund. Having said that, many funds in India now let you start an SIP at 100 rupees. Investing via SIP is not limited to small amounts. You can invest any amount you want. There is no upper limit on SIP. Minimum tenure of SIP is 6 months, whereas there is no maximum tenure.

What is the maximum amount I can invest through SIP?

Investing via SIP is not limited for any mutual fund scheme. You can start an SIP with any amount that you wish. There is no upper limit on SIP.

Can I have multiple SIPs?
Yes, you can start more than one SIP. There is no restriction on the number of SIPs you can have at a given point in time.

Does SIP offer the options of Growth and Dividend?
Yes, when you start an SIP, you can choose the option of either Growth or Dividend.

Can I switch between the options of Growth and Dividend at any point in time?
Yes, you can any time switch your SIP from Growth to Dividend and vice-versa, in an open-ended fund, without a lock-in period.

Is SIP available for all types of mutual funds?
Yes, you can start an SIP for any open-ended mutual fund.

What is meant by “Rupee Cost Averaging?”

One of the main benefits of SIP is Rupee Cost Averaging. It simply means that you get more units when the market goes down and less when the market goes up. Thus, you average out the cost of total units bought. This helps you to optimize returns over the long term.

Can I change the SIP amount at any time?

Yes, you can increase your SIP amount at any point. There are two ways to do that. You can either start a new SIP with the additional amount or you can opt for a facility, commonly known as SIP Booster or SIP Top-up, that lets you increase your SIP instalment amount at a pre-defined interval.

Can I stop my SIP at any time?

Yes, you can stop your SIP instalment at any point in time. There are no charges levied for stopping an SIP. Moreover, you can withdraw the corpus accumulated through previous instalments.

Can I switch my SIP investment from one fund to another?

No, you can’t switch your SIP from one fund to another. You will need to stop the current one and start a new one in your desired fund. But, the corpus accumulated through past instalments, in an open-ended fund without a lock-in period, can be switched to another fund.

Will I incur a penalty if my SIP installment fails to get through due to an insufficient account balance?

There is no penalty levied by Mutual Funds if your account balance is insufficient when the SIP instalment is due. It’s just that your instalment for that particular month will not be processed, but your SIP will continue normally next month onwards, provided the balance is sufficient.

Can I invest in ELSS using SIP?

Yes, it is possible to invest in an ELSS fund through SIP.

What is the ideal investment horizon for an SIP?

SIP is a good habit of saving & investing a fixed amount regularly with the objective of creating wealth over the long term. Hence, an SIP should be done for perpetuity, unless you are starting an SIP for a specific goal that is due on a particular date.

Which SIP frequency is better – weekly or monthly?

Assuming the same rate of return, a weekly frequency will turn out to be a better choice as you get the benefit of compounding. Unfortunately, the market returns are not predictable. Hence, there is no correct answer as to which frequency is better. That being said, it is advisable to select the frequency based on your cash flow. Hence, salaried individuals prefer a monthly frequency for their SIP.

Should I invest in SIP directly or through an advisor?

There more than 1000 open-ended mutual funds in India. Selecting the right fund is always an uphill task. It requires in-depth knowledge of markets and mutual funds. If you have the time and the required skills to analyse the funds for finding the one that suits your needs and risk appetite, you can go for Direct funds. Otherwise, it is advisable to go with the professional financial advisors who will recommend you the right fund that is best suited to your needs and life-goals.

Is there any extra or hidden cost that I will incur for starting an SIP?

No, there is no extra charge or hidden cost for starting an SIP.

If the returns on my investment are negative, what should I do?
When facing negative returns, the most common mistake investors tend to do is to stop their SIP and withdraw the accumulated corpus. Ideally, if you have a long-term investment horizon, a market downturn should be treated as an opportunity to buy more to average out the cost of total units. This will help you to generate favorable returns when the market becomes positive.

What is meant by “SIP Booster” or “SIP Top-up?”
SIP Booster or SIP Top-up lets you increase the amount of your SIP installments at pre-defined intervals. This way, you don’t need to start a new SIP from time-to-time. The increase in the instalment amount can be a fixed sum of money or it can be a percentage of your current instalment value.

Which is better – Lumpsum or SIP?
The answer to this question depends on the stock market conditions. During upward trends, the lumpsum mode of mutual fund investment tends to give relatively higher returns whereas during falling markets, investments made via an SIP generally provides better returns than a lumpsum investment. Having said that, SIP promotes a habit of regular savings and investing, regardless of market conditions.

What is the Power of Compounding?
In compounding, interest is generated not only on the initial investment amount but also on the previously accumulated interest. In case of SIP, the regular re-investment of returns to generate compounding effects over time. Hence, it is advisable to start investing as early as possible to reap the maximum benefits of compounding.

What are the types of SIPs available?
Below are the types of SIP available on Kotak mutual fund website: 1. Perpetual SIP: Investors can choose a perpetual SIP with Kotak Mutual Fund, which continues indefinitely until the investor decides to stop or modify it. 2. Top-up SIP: Kotak Mutual Fund provides the option of a top-up SIP, allowing investors to increase their investment amount periodically by a fixed percentage or a fixed amount. 3. Smart SIP: In a Smart SIP, the SIP installment varies based on market valuations.

Do I need to log in on every SIP date to place the Mutual Fund SIP orders?
No, you typically don’t need to log in on every SIP date to place mutual fund SIP orders. Once you set up the SIP with your mutual fund provider, the SIP orders are automatically processed on the specified dates from your respective bank. You may need to ensure sufficient funds are available in your bank account and maintain an active SIP mandate.

How are SIPs taxed?
SIPs in mutual funds are taxed based on the holding period and the type of mutual fund. Equity-oriented SIPs held for more than one year are subject to long-term capital gains tax, while debt-oriented SIPs have different tax implications. For more details, investor must consult their financial advisors.

The post KNOW MORE ABOUT SIP first appeared on Erigoindia.

For most Indians, purchasing a home is a significant life milestone. In addition to being a source of pride, owning a home is an investment that can grow in value over time. But, purchasing a home is a costly endeavour, and the majority of people need a home loan to fund it.
But now, with the coming of Non-Banking Financial Companies (NBFCs) in India, one can get home loans at affordable interest rates. Moreover, there is a silver lining in the form of tax exemptions and benefits, making home loans less costly. The government provides many tax incentives that can substantially lower your tax obligation. In this blog, learn about some of the tax benefits you can avail yourself of against home loans in India.

Tax Benefits on Interest Paid on a Home Loan
One of the most significant tax benefits you can avail of against home loans in India is on the interest paid on loans. For a self-occupied property, one can deduct up to Rs. 2 lakhs of the interest paid on a housing loan under Section 24 of the Income Tax Act. If the property is let out, there is no upper limit on the amount of interest you can claim as a deduction.
Tax Benefits on Principal Repayment
Section 80C of the Income Tax Act has a provision for a deduction of up to Rs. 1.5 lakh on the principal repayment of a home loan. This deduction can be claimed only if the loan is taken for the purchase or construction of a residential property. However, if you sell the property before five years from the date of possession, the deduction claimed initially will be added back to your taxable income in the year of sale.
Tax advantages on Registration Charges and Stamp Duty
Apart from the tax benefits on interest paid and principal repayment, you can also claim a deduction on registration charges and stamp duty paid at the time of the purchase of the property. Under Section 80C, a person can claim a deduction of up to Rs. 1.5 lakh on these charges. However, this deduction can be claimed only in the year of purchase of the property.
Tax Benefits on Joint Home Loans
If an individual has taken a joint home loan with their spouse or any other family member, they can both claim tax benefits on the home loan interest paid and the principal repayment. The co-borrowers can claim the deductions in the proportion of their share in the loan. This means that both co-borrowers can claim a deduction of up to Rs. 1.5 lakh each under Section 80C, and up to Rs. 2 lakhs each under Section 24.

Tax Benefits on Pre-Construction Interest
If anybody has taken a home loan for the purchase of an under-construction property, they can claim a deduction on the interest paid during the pre-construction period. Under Section 24, they can claim a deduction of up to Rs. 2 lakhs on the amount of interest paid during the pre-construction period, which is the period before the completion of the construction of the property.
The tax exemptions on house loans make it easier for individuals to own their own homes. Moreover, with these tax benefits available against housing loans in India, you can significantly reduce your tax liability. So, if you intend to buy a home, make sure you are aware of the tax benefits available to you, and take full advantage of them.
Non-Banking Financial Companies (NBFCs) have emerged as an important source of credit for individuals looking to purchase a home. The significance of getting a home loan in India from NBFCs is they offer the best loan options that are both flexible and customised to suit the customers’ needs.

The post AX BENEFIT YOU CAN AVAIL AGINST HOME LOAN first appeared on Erigoindia.