A survey by consultancy firm Nielson unveils the positive wave that is sweeping the country. Indians top the list of global citizens who are optimistic about their job prospects and personal finances in the coming 12 months. The Nielsen Global Consumer Confidence Report has an overwhelming 92% Indians thinking that they would land their dream jobs within the year.

The report also reveals the fact that 71% Indians believe that this is a ‘good’ time to buy, while 14% consider that this is an ‘excellent’ time for purchases. India stands first in the consumer confidence index for the current quarter, April-June 2010. While India amassed 129 points (a two point increase from last survey), the second position is occupied by Indonesia and Vietnam with 119 points each.

India and Indians should thank the healthy growth the country’s economy witnessed, despite the recessive times. Piyush Mathur, president, the Nielsen Company India said, “The positive attitude of Indians comes on the back of a robust GDP growth (9 per cent) in the April-June quarter of 2010. For the fiscal 2009-10, India’s economy grew by 7.4 per cent due to higher-than-anticipated growth in the agriculture, mining and manufacturing sectors.”

The Nielson survey to gauge confidence, concerns and spending patterns of people worldwide is based on the answers given by 27,000 internet users spread over 48 countries. Indians scored the most on all parameters – job prospects, personal finances and spending outlook.

Rising food prices feature among the top concerns for Indians, while job anxieties and financial worries are relegated to the background. Terrorism, children’s education, parental welfare and global warming also are bothering Indians.

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After releasing the discussion paper on Direct Tax Code (DTC) in August 2009 for public feedback, a revised version of the same was released by the government on Tuesday. The revised DTC has covered some of the issues in the original that attracted widespread criticism.

The new Direct Tax Code is expected to change the income tax calculation of corporate as well as individual assessees. The discussion paper says, “The indicative tax slabs and tax rates and monetary limits for exemption and deductions proposed in the direct tax code will be calibrated while finalizing the legislation.” This may lead to higher tax rates than that proposed in the original draft. However, for individual assessees, the retention of exemption on savings and home loans has brought cheers.

Due to public outcry, the government has amended the DTC to the effect that withdrawals from pension funds, provident funds and life insurance schemes will not be taxed. However, there are still some points that lack clarity. The DTC paper says, “approved pure life insurance products and annuity schemes will also be subject to EEE (exempt, exempt, exempt) method of tax treatment’. This leaves the fate of unit-linked insurance plans (ULIPs) in doubt.

The new wealth tax will cover financial assets such as stocks and mutual funds as well. This is bound to be tougher for individuals. The dividing line between long-term and short-term investment is blurring with the new DTC proposal. With no great distinction between capital gains tax for both, investors will lack the motivation to go in for long-term investments, which is against government policy.

The DTC bill is slated to come up in Parliament in the coming monsoon session. The DTC will come into effect from April 2011 and will replace the Income Tax Act of 1961.

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While green activists are crying hoarse over global warming and soaring temperatures, making this summer one of the worst in the recent times, FMCG companies selling cooling systems such as air-conditioners and refrigerators are laughing all the way to the bank by witnessing amazing growth in sales.

Even during normal years, sale of these products reach a feverish pitch during the summer months. Average y-on-y growth for this category hovers in the range of 20-25 percent. However, the scorching heat of this summer has pushed the sales beyond expectations. While the y-on-y growth in the A/C category is above 50 percent, refrigerator sales grew at an amazing rate of 40 percent.

The growth has been equally good across the entire range of top FMCG companies such as Godrej & Boyce, LG, Samsung, and Videocon. In A/C category, while Godrej witnessed a growth of 50%, Videocon registered a growth of 60%. Samsung is expecting to sell a million units this year to corner 30% market share. Refrigerator sales increased by 30% for Godrej and 40% for Videocon.

All top FMCG companies in the segment had prepared for the deluge in demand. Even with all the preparation, with the demand much exceeding previous years, production capacity is being stretched to the utmost. Most companies like Godrej and LG have doubled their production for the products. Samsung had set up new manufacturing plants for split A/Cs in Sriperumbudur and Noida to meet the summer demand.

Indian consumers are favoring split A/Cs to window units, which is proved by above 70% sales growth for the product. The growth in window A/C sales is negligible compared to this.

A new trend that is seen emerging in recent years is the growth in sales across the country. Indian economy’s good performance leading to more disposable income for people from all walks of life is believed to be the reason behind this.

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The US Treasury Secretary Timothy Geithner embarked on his maiden India visit with promises of growth opportunities for the two economies. However, he added that India’s growth would hinge on infrastructural development. The treasury secretary is in India to launch bilateral economic discussions and cooperation.

Mr. Geithner said, “India is embarked on a very substantial economy, which will depend upon in part on its ability to substantially increase investment in public infrastructure. And future growth in India will depend on part on its success in doing that.”

He added that India has proven its strength in areas like higher education, entrepreneurship and penetration in global market. Together with the government’s reforms, India’s economic growth is bound to scale new heights. Mr. Geithner also pointed out that the strengthening of bilateral relationship would be beneficial to both economies.

“This economic relationship offers very promising growth opportunities for American firms, just as it does for Indian firms. And we are going to work more closely over time to make sure that we are taking advantages of those opportunities not just in infrastructure but broadly across both the economies.” Mr. Geithner said.

At a press conference during launch of India-U.S. Financial and Economic Partnership in the capital, Mr. Geithner said that the US economy was ‘looking substantially stronger’. He cited the US Labor Department report stating that the creation of jobs was at a 3-year high during March.

Mr. Geithner said that the world needs to emerge from strong growth rate and switch over to a balanced and sustainable growth. For this, he said, changes in the US and world countries are necessary.

Mr. Geithner will meet and hold discussions with Indian entrepreneurs and US financial firms in Mumbai today.

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In a bid to promote rural sales in the country, ASSOCHAM, the Associated Chambers of Commerce and Industry of India, has proposed doing away with the service tax for marketing and sales promotion activities in rural areas. This may be achieved by resetting rural sales as service tax exemption benchmark.

With various government schemes such as NREGA, Bharat Nirman and Indira Awas Yojana targeting the rural population as well as the lower tier cities of the country, the disposable income and thereby the purchasing power of this section is on the rise. By exempting sales and marketing activities and expenses from service tax, the government can achieve two goals in one stroke – that of increasing rural sales and promoting inclusive growth.

ASSOCHAM President, Dr. Swati Piramal, submitted a memorandum to the Finance Minister detailing the proposal. The memorandum argues that the demand for Indian industry products is on the rise in rural areas and this can be pushed further up by introducing service tax exemption.

The memorandum further says that the benefits of the exemption will not be restricted to rural buyers alone. It would eventually benefit manufactures of products too. Dr. Piramal said that the industry keeps detailed figures of its rural sales and marketing activities, which may be used by the government for granting service tax exemption.

Dr. Piramal pointed out that this move would be advantageous in preventing sales of fake products in rural areas, even as it increases the sale of quality branded products.

ASSOCHAM is also rooting for service tax exemption on transportation of agricultural products such as oil seeds, edible oil and de-oil cakes, as the country is facing a shortfall in their production.

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