FRBM report is out. This is why it matters to you

The Fiscal Responsibility and Budget Management (FRBM) Committee submitted its report on 23 January 2016, a bit over seven months after it was set up. Read more on the origin of FRBM here: bit.ly/2klLFki. Though the report is not public, news reports say that the panel has recommended fiscal consolidation, but not at the expense of growth. Reports say that it tells the government not to worry if the fiscal deficit stays at, or just above, 3%. If your eyes are glazing over, unglaze them, because we’ll find out what this means and how it affects our lives.

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From junkets to knowledge

Rolf Dobelli is the author of the best-seller The Art of Thinking Clearly. The book http://www.dobelli.com/ is a guide to how not to fall prey to making mistakes we are wired to make. Dobelli’s book is the result of a personal quest to better manage his money.

As he read more, he hit upon a much larger field of academic work that pinned down the mistakes we make due to the way the brain has been wired through evolution. The hunter-gatherer instinct still lurks in a very different world, he says.

Carl Richards runs www.behaviorgap.com and is in the business of simplifying complicated financial ideas. Author of two books around the theme of getting people to stop doing dumb things with their money, he is a columnist, corporate trainer and speaker. Known as the Sketch Guy, Richards does a regular column for The New York Times.

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Irdai hikes agent payouts

As the entire financial sector moves towards lower fees, payments and charges, there is one outlier—the Indian insurance industry. The industry is not at fault; for that we must look towards what the regulator is doing. Almost a year after it floated a draft on rethinking commission rates, on 14 December 2016, the insurance regulator—Insurance Regulatory and Development Authority of India (Irdai)—hiked the total payout to the distribution arms. You can read the document here: http://bit.ly/2jjM69X.

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Is a long-term capital gains tax on equity a bad idea?

The feeding frenzy on the possibility of long-term capital gains tax coming to equity for a while with editorials and TV shows hand-wringing about the retail investor getting hurt. But will we? Is a long-term capital gains tax on equity such a bad idea? Let’s get the basics out of the way first. The money we invest in different assets (bank fixed deposits or FDs, bonds, gold, real estate, equity and into some of these through mutual funds and bundled life insurance plans) throw off money in different forms. There is rent, interest and dividend that comes as income from an asset. This is income from owning and using an asset—financial (stocks, FDs and bonds) or real (gold and real estate). When you sell the asset you can either make a profit or a loss. Profits on sale of assets are called capital gains and in India are taxed under two heads—short-term and long-term.

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