The
need for new banks to increase competition and further spread of
banking to cover more population particularly in unbanked areas is
genuine and the recent move of RBI to issue new licenses is therefor
welcome. The selection of banks for grant of new licenses all said is a
difficult process although the guidelines have been very clear and
there is no scope for ambiguity.But how to keep the corporates engaged
in broking and real estate business away from getting licenses is a
formidable task and the RBI will have a tough time in taking the
decision. The risks in granting these corporates licenses are systemic
and can have a adverse impact in maintaining the Financial System's
stability. Both real estate and stock market deals are highly volatile
and speculative in nature and the Corporates have the backing of high
and mighty to prevent RBI in enforcing its regulatory prescriptions on
them. Further financial inclusion is the desire and inevitable need of
the Govt, RBI and the people , these corporates once given Bank
Licenses will never be able to ensure compliance with this, as even the
nationalised banks regional rural banks and private sector banks have
miserably failed to achieve Financial Inclusion with all their rural
spread and continued force from RBI. Once the license is given to such
entities, withdrawal of the same will be a difficult process and
minimising the spread of risks in the economy will become a task by
itself. RBI has to think million times before the licenses are issued
to Broking and real estate entities.( This comment appeared in Times of India dated 26/2/13.)
Monday, February 25, 2013
Sunday, February 24, 2013
STT and cost of transaction
The argument that the abolition of STT on cash and derivative
transactions in listed instruments could enhance volumes and improve
market depth does not carry conviction and is not a solution either to
reduce transaction cost or improve the revenues though capital gains
tax instead of STT.The convenience of collecting STT and the
inconvenience of collecting capital gains tax with all its
disadvantages of tracking the transactions and arriving at the capital
gains tax with room for ever ending disputes etc have to be weighed by
the Govt before removal of STT. Further, the capital gains can be
adjusted against capital loss which also can be disputed adding to the
workload of both the IT administration and assesees. No doubt STT needs
a flexible approach and this can vary for individuals and institutions
with different cut off limits in the volume of transactions.To reduce
the transaction cost, the brokerage,demat charges etc can be reduced
considerably.
(This is in response to the editorial Costless tarding appeared in Business line dated 25/2/11).
(This is in response to the editorial Costless tarding appeared in Business line dated 25/2/11).
Thursday, February 21, 2013
who prevents from taking credible policy action
One hears always very high sounding words to improve the performance and remove all the ills of the economy.But who prevents whom in initiating the action to put the economy on growth trajectory is a bit confusing for the masses.The economy suffers the worst from corruption,black money,high inflation, poor corporate governance,poor growth in agriculture,manufacturing, infrastructure and connected services.Taxes have reached their peak and ordinary people are suffocating.Ethics and values have been given a go bye and at this rate people will forget the meaning of these words.It is time the leaders have a serious introspection and understand the suffering of the ordinary masses in terms of lack of adequate basic necessities of life.What they expect is action and not words soothing to the years.Hope wiser counsel will prevail and corrective actions are taken early to set right things and confidence of the people in their leaders is revived.Welfare of the masses be the only objective now.
Dr.T.V.Gopalakrishnan
This comment is in response to the article credible policy action needed appeared in Buiness line dated 21/2/13.
Improve the services in Railway first.
Before
introduction of new trains, it is better if the Minister improves the conditions
and services in the existing trains. He has to do a few things to improve the
image of railways and imoprove the services to customers. Some of the area he
can concentrate relate to1. Reservation. With all improvements in the system of
Reservation the fact remains that people do not get accommodation in trains and
seats are going empty. There is some total mismatch between the availability of
seats and allotment of seats.I have seen during my travels that many seats are
vacant and people do not get confirmation of seats if they are in the waiting
list. Something is seriously wrong.2. The toilets, beddings and curtains in the
trains are in pathetic conditions and THEY really CAUSE health hazard. Some of the
Doctors have openly advsed their patients to avoid bedding in the train as it
results in some skin and eye diseases.3) Beggars and unauthoried vendors are
freely moving in all compartments and adding risks to the passengers in temrs of
risks of thefts, and health issues as many serve stale and hopeless food..4)
Some of the stations are hopelessly maintained and they never care for passenger
conveniences. They seldom make any announcement of trains arrival and departure
and never display the position of compartments to enable passsengers to
identify their coach postion and board the train comfortably.I had a very bitter experience in mADURAI JN VERY RECENTLY.These are all some
small but important concerns which the Railways should set right before
additions in the number of trains are considered.
Dr.T.V.Gopalakrishnan
THIS HAS BEEN PUBLISHED IN tIMES OF iNDIA DATED 21/2/13.
THIS HAS BEEN PUBLISHED IN tIMES OF iNDIA DATED 21/2/13.
Wednesday, February 20, 2013
Deteriorating Customer Service in Banks
This advice from the Dy Governor to Bank employees is commendable and deserves appreciation for his understanding of the deteriorating customer service in Banks.Things are so bad in some of the PSBs that even Customers' service to employees to make their job easy is not properly responded.The very approach even to customers who want to deposit some money is to drive away the customers even without seeing their faces.They pretend to be terribly busy and ask the customers some queries as if to comply with KYC norms and the moment they notice that customers have not brought the particular information, they will insist on thatand drive them away.Earlier the customer is driven away the better seems to be the approach and the officials are not bothered about deposits or advances or any other matter. Expecting customers to report complaints is not pragmatic and this is not workable.Even if some one takes the initiative,the experience may not be that encouraging.Hope the DG will pursue further
from: Dr.T.V.Gopalakrishnan
(This comment is in response to an article Banks should focus on Cutomer Service appeared in Businee Line dated 19/2/13)
Monday, February 18, 2013
Super Rich and Tax
Super Rich will always argue on these lines as they are more greedy
than average people.They do not understand or bother to understand the
problems faced by the average people of this country.By paying a little
extra tax their life style may not change even a bit where as by making
the ordinary people to pay more out of their limited income, their
living standards will get badly affected. As it is they are robbed of
their earnings because of high inflation and many are not able to
provide quality education to their children,take care of their own
health issues,and their old aged parents.These things the super rich
will not realise or understand as they have enough to spend and mostly
their expenditures are borne by others.Even the very thought of
increasing the tax rate irks them and they outburst with silly
arguments forgetting the fact they have made the money from the same
society and they have a responsibility or liability to pay back to the
society when it needs.Time they introspect
from:
Dr.T.V.Gopalakrishnan
Posted on: Feb 19, 2013 at 09:15 IST
(This comment in response to an Article Taxing super Rich will be counter Productive appeared in Business Line dated 19/2/11)
Sunday, February 17, 2013
Poverty and Trade union
The Dy Governor is good at making some abstract expressions without
giving any meaningful suggestions and support from the policy
perspective where as What professor Amartya sen said in the same
function carries some sense which the Dy governor should understand and
do as a policy maker at a very senior level.Reserve Bank pensioners
demand to update the pension for the last two decades has been kept
pending for no valid reason and many are finding it difficult to make
both ends meet in these days of ever soaring prices all around.Those
who preach should be role models and what they speak should be
convincing and acceptable.Poverty can be minimised to some extent
provided the Financial Inclusion is made 100% succes which has not been
happening as banks have been elusive and evasive to make it a
reality.The Dy Governor has commented several times on this also but
the fact remains that poor people have no access to banks.Charity
begins at home is perhaps the message he should realise.
Dr.T.V.Gopalakrishnan
( This is in response to an article Trade Union can help Management to remove poverty appeared in Business Line dated 18/2/13)
Electoral Victory and Economic Activism
Iyer has brought out some facts
although he has favoured the UPA II. Electoral victory does not depend
on economic performance . It depends on the maneuverability of
political parties with the strength of the black money and cheap
gimmicks they always resort to exploiting the ignorance of the masses.
T.V.Gopalakrishnan
(This is in response to the article that New Economic Activism has strong political roots appeared in ET dated 17/2/13)
T.V.Gopalakrishnan
(This is in response to the article that New Economic Activism has strong political roots appeared in ET dated 17/2/13)
Saturday, February 16, 2013
Callousness in Madurai junction A bitter experience
Dear Sir,
Re: The small lapse at Madurai Jn
which can land the travelers in serious trouble.
Myself and my mrs both senior
citizens traveled from Madurai 5.45PM as the scheduled
departure time of this express was 5.30 PM .
At around 5.45 PM a train arrived
with some boards indicating the train number 11021and some other numbers as we
could not propery make out. The names indicated on the boards were Dadar,
Tirunelvi and some name starting with S. Since there was absolutely no announcement
of the delay in the departure of the train, and the train that arrived at
5.45PM had different names and numbers without any
indication that the Train was chalukya Express and going via Yeswntapur, we had
our anxious moments and I had to rush to the Duty Station Manager to confirm
about our train to Yeswantapur. Immediate came the reply that the train
standing in the platform and about to depart was the train for Yeswantapur. I
had hardly any time to call my mrs who was standing with the luggage far away
from the AC coach. She in her own way made some enquiries with some official
who was the same person with whom we had made some enquiries and he was
surprised to see her standing with the luggage without boarding the train. He advised
her to rush to the AC coach and with great difficulty she carried the whole
luggage to the AC Coach. I had to run helter -skelter searching her. Luckily we
had separate mobiles and she phoned me up to come to the AC coach.
Since the AC coach was just in
front of the office of the DUTY Station Manger I expressed my
anger at him for his and other staff failure in making proper announcement
which helps a lot to the passengers Instead of being apologetic for his
negligence and failure of responsibility he was arguing and defending without
understanding the seriousness, the small lapse and casual approach could have
caused to passengers. Luckily we could board the train or else. we would have
got stranded in Madurai
The whole incident could have
been averted, had the operating staff as a team taken care of these small lapses and avoided the inconveniences to the
passengers. Travelers include old
people, sick persons, immobile and handicapped people depending on stretches,
family with small kids and children and their conveniences should be the utmost
concern of the staff operating in stations. They are all paid for that and they
have certain duties and responsibilities to the traveling public, the
organization they serve and their own families. An incognito visit by some
supervisory staff to Madurai Railway station can make the things clear provided they
report what exactly happens in station without any bias or favour. It is not a
great obligation from staff but it is only a consideration they extend to their
co citizens, their own families, friends and relatives.
Hope this will be taken as a
suggestion and not as a complaint to initiate some action to serve the public
better and improve the image of the Madurai Jn in particular and Indian
Railways in General. A one line reply from your office will confirm that action
will be contemplated and public can expect a better service.
Thanking you,
( This feed back was sent to Indian Railways on the 16th of February)
The budget needs to be less market,more people orinted
Will Budget 2013-14 bring relief to the masses from the
spiralling inflation? Will it be people-oriented, market-oriented, or
both?
Of late, the Government initiated some reform measures,
perhaps keeping in mind the general elections in 2014. Also, the threat
of possible downgrade by international agencies because of the high
current account deficit (exceeding 4.2 per cent of GDP) and fiscal
deficit (estimated at 5.3 per cent of GDP) caused largely by fuel, food
and fertiliser subsidies must have prompted the Government to act.
Steps such as cap on number of subsidised LPG
cylinders, hike in rail fares and partial deregulation of diesel prices
have already been effected to augment the resources and make the Budget
look impressive when presented on February 28.
However, these are likely to have a cascading effect on
the general price level and are bound to hurt the masses. The timing of
these revisions in the backdrop of continued inflationary pressures has
been debated, but the Government seems to justify the the same on the
grounds of having to set right the fiscal imbalance and find resources
to support economic growth which has been lagging.
The Finance Minister, therefore, has a tough job on
hand formulating this year’s Budget. Being a pre-election year, the
Budget has to necessarily be people-oriented with populist measures
and, at the same time, market-oriented too given the fiscal pressures.
The expectation of another dream Budget by every segment of society
cannot be easily overlooked.
Balancing act
The balancing will not be difficult if the Finance
Minister distinguishes between revenues which are inflationary and
those that are not and, accordingly, initiates measures while
formulating the Budget.
More than 80 per cent of the population are middle
class and below, and this segment gets badly affected when prices rise.
This needs to be factored in while assessing the impact of the tax
measures.
Though direct taxes, particularly income-tax, do not
generally add to inflation, indirect taxes do, by pushing up
production, storage, transportation, distribution and marketing costs
of goods and services.
Service tax is a case in point. No doubt it helps the
Government fetch good revenues, but the uniformity and wide coverage of
this tax need to be looked into to soften the effect on inflation.
While food subsidy for the poor is justifiable, the
continuance of fertiliser and fuel subsidies without any relationship
to the affordability of those who benefit from these is undesirable.
It should be need based and the Government should ensure that these do not add to inflation.
While diesel for transportation of essential goods
needs to be subsidised, for those who use it to run their private,
fuel-guzzling vehicles it should not.
Of a population of around 130 crore, less than four
crore come under the income-tax net or file tax returns. This is not
acceptable as the living conditions of many have improved considerably,
thanks to the economic liberalisation of the early 1990s and the
information technology revolution.
With the construction and auto boom witnessed in the
economy over the last two decades, the self-employed group and the
number of well-to-do people both in villages and urban areas have
increased manifold and many do not seem to be even aware of the
taxation policies of the Government.
Tax the super-rich
The value of land has increased considerably and many
have become super-rich overnight. Whether they come under any tax net
is doubtful.
More indirect taxes such as the Securities Transaction
Tax, and luxury tax on movable and immovable items beyond a cut-off
limit need to be identified and introduced for the rich and super-rich.
Capturing information and tracking transactions are essential to bring
these neo-rich into the tax net.
The Government has to necessarily improve its data
collection mechanism to correctly classify people based on income and
wealth. It should ensure that the whole population is covered by its
policies.
Inflation indexation and the components of inflation
also may have to undergo change in such a way that the pattern of
consumption of the middle class and below is captured; the consumption
pattern of the rich and super-rich need not necessarily figure in
there. Also, the present WPI and CPI parameters need a re-look.
The fiscal and current account deficits must be reduced
by containing the fertiliser and fuel subsidies and improving the
investment and savings climate.
Revisiting the expenditures of the Government and all
institutions both in the public and private sectors would help enhance
efficiency and avoid wastage.
The Budget can and should emerge as an important tool
to bring in efficiency in the areas of administration, production,
distribution and marketing of goods and services through improved
taxation policies, tracking of information, and cross-checking the
same.
The objective should be to improve the standard of
living of all categories of people. For this, the Budget should be more
people-oriented and less market-oriented.
The market sentiments will definitely improve once the
economy is back on the growth path. The economy needs a boost and the
Budget can do the trick.
(The author is a Bangalore-based consultant. Views are personal.)
The cap on number of subsidised LPG cylinders, hike in rail fares and
partial deregulation of diesel prices have a cascading effect on
prices.
(This article was published in the Business Line print edition dated February 11, 2013)
Thursday, February 7, 2013
Police Protection, VIP and Common People
| The need for police protection does not arise if the administration is pretty strong to minimise / eliminate terrorism, people are given good education with emphasis on values, good culture, morale, ethics and being considerate to fellow citizens. What the country needs is good citizens and and a good society. This is unfortunately taken away by bad governance, irresponsible leaders, the education system which teaches to make money as short a time as possible by hook or crook. Every citizen can be a good policeman and every VIP or a leader becomes a role model worthy of enjoying respect and following out of liking for his integrity, honesty, sincerity, hard working nature, and competence par excellence. Have we such leaders? Time for all citizens in every walk of life to introspect and change himself first and make others also to change. Number of policemen and protection will not arise. It is not a big task for this country with all its rich civilisation culture and heritage. | ||||||||
| Dr.T.V.Gopalakrishnan |
india's GDP growth a horror story
The growth horror seen in India is unfortunately the making of the Government which has lost its grip on Governance, prevention of corruption and accumulation of black money. Who ever has some power to wield and some money to exploit has been playing havoc with the economy throwing all norms, ethics and values to the wind and indulging in making fast buck as there is no future. This tendency has been visible with the outbreak of several scams.
Dr.T.V.Gopalakrishnan
( This comment appeared in both Times of India and ET dated 8/2/10 on line)
Dr.T.V.Gopalakrishnan
( This comment appeared in both Times of India and ET dated 8/2/10 on line)
Wednesday, February 6, 2013
SBI Chairman,CRR and Metros
This is typical of a commercial banker always thinking of investment and making profit. He forgets for a moment that if commericial banks are allowed their way, many may not exist to make that investment and profit. So many King fisher like companies would take the hard earned money of small people which are kept as deposits with the banks and vanish from the scene. Mr Choudhari should go back to his own banks, balance sheet and observe that the bad debts written off by the bank and the npas of the bank had been avoided, more metros, more roads and more infrastructure, the economy would have got. If the entire banking system's bad debts write offs and NPAs are avoided by better functioning, the fiscal deficit could have been easily wiped our in one stroke and the economy would be running a surplus. Earlier such bank executives leave the system the better for banks and the financial system to have some semblence of stability and soundness.They are not matured enough to appreciate the efficiency and effectiveness of the regulatory system despite having witnessed the financial turmoil the advanced economies has faced in the year 2008. Such top executives act as a hindrance to transmit the monetary policy mechanism as they never act in letter and spirit as the Reserve Bank as a worldly recognised regulator and promoter of sound banking and financial system desires. This is unfortunte and the governor has not been lucky enough to have the backing and support of major bankers. Even some of his own lieutenants seem to be not in agreement with his way of thinking in policy matters as is made out and reported in media. With all these, the RBI has been a success in maintaining its status as a good regulator and a central bank.
Dr.T.V.Gopalakrishnan
(This comment is in response to an observation by Mr Choudhari SBI Chairman on CRR maintenance)
Dr.T.V.Gopalakrishnan
(This comment is in response to an observation by Mr Choudhari SBI Chairman on CRR maintenance)
Raise in deposit rates
This
is to fool every one.The year end for banks is 31st March and all banks
will raise deposit rates for short term period only .By first week of
April all rates will come down. This is the window dressing banks
resort to every year and RBI keeps quiet although window dressing is
objected to. Banks want to show an improved performance which is judged
by the year end figures and for that they enhance the deposit rates
keeping in mind high net worth individuals and corporates.This is an
year end exercise and PSBs indulge in more of such activities as the
top executives have a good stake in terms of bonus and career
progression. They also give short term loans so that the same funds
will be kept as deposits. Even some banks incur cash losses to project
a better image. Dr.T.V.Gopalakrishnan(This is in response to a news item that OBC increases the deposit rates appeared in ET dated 6/2/13)
Tuesday, February 5, 2013
Risks in investment in Gold
MrChakrabarty has been harping on this issue for quite some time
perhaps to dissuade the people from investing in gold and reducing the
demand for gold.Risks are there in any investment is a basic
principle and the risks in bank savings are more now a days thanks to
erosion of value due to unabated inflation which the authorities fail to
even recognise. Black Money holders save in gold for certain obvious
advantages where as poor people invest in gold for sentimental reasons
and to hedge against inflation as well.They have no backing or mindset
for speculation.If interest rate offered is a bit high and covers
inflation,people will come back to banks. Banks offer higher rate of
interest to high net worth individuals who accumulate both gold and
savings.Compared to any other investment,gold is the safest as on today
which cannot be argued away just like that Authorities in power have to
have an understanding of the over all economic situation before they
make such such statements frequently.
Dr.T.V.Gopalakrishnan
( This comment appeared in Business line dated 6/2/13 in response to an article Risk in investment in Gold has heightened).
Dr.T.V.Gopalakrishnan
( This comment appeared in Business line dated 6/2/13 in response to an article Risk in investment in Gold has heightened).
Budget 2013 Affordable Housing to get an Infrastructure status
The
definition of affordability and affordable housing should have been
defined by the Minister. In Mumbai a 400 Sft house in a far off
suburban costs anything between Rs 20 lakhs and 40 lakhs. A salary of a
Govt servant or a school teacher or lowest grade staff may be in the
range of Rs 10000 and Rs 20,000. In case such a fellow has a family of
Four members including himself he cannot afford to dream of owning a
house in life time after meeting his family expenses, education medical
, travel expenses etc which have skyrocketed beyond the imagination of
any economist worth the name. The affordability if linked to corruption
then many do not become eligible as majority of the people with all
problems try to maintain some honesty dignity and straight forwardness.
The housing has become so costly that those who earn salary in lakhs
and make black money only can afford. That is the ground reality. Dr.t.V.Gopalakrishnan (This comment in respponse to an article 2013 Housing to get an infrastructure Status appeared in ET dated 5/2/13)
IMF forecasts India's gowth at 4.5% to lose its tag as the second fasted growing economy
It is unfortunate with all the potential available in terms of natural and human resources we are not able to register and outperform other nations in Good Economic Growth. It is time our politicians bureaucrats , academicians, economists, scientists and technocrats, industrialists, bankers and social reformers sit together and introspect to find out what has gone wrong. People are suffering for want of some very basic necessities like, food shelter and clothing on one side and many are indulging in the highest luxury life in the same country speaks of exploitation and lack of Governance in all areas of production and distribution. This year is being celebrated as Swami Vivekanandas 150th birth anniversary and befitting this occasion the country should take an oath that poverty anywhere will never be tolerated and all irrespective of caste religion, social status etc will work in unity to ensure that the economy progress fast and wealth distribution will be targeted to remove the poverty at all levels. Dr.T.V.Gopalakrishnan ( This comment in response to an article on IMF forecast on India's growth appeared in ET dated 5/2/13)
Monday, February 4, 2013
Strategy for growth and inflation control
How to tame inflation has not been brought out clearly.Inflation
has robbed of the people their savings potential and its impact is
reflecting in bank deposits and living standards.The service tax and
fiscal deficit are the culprits challenging the inflation control
measures. Service tax needs to be need based and should not have
inflationary impact.For instance,service tax on tourism sector can be a
bit high compared to service tax on consumable items.Fiscal deficit can
be wiped out only through improved GDP and for that the measures have to
be totally different.Rich earning dividends in crores do not pay any
tax where as the poor earning a little for his sustenance is taxed
heavily through unbearable inflation.Fiscal deficit needs to be
contained by levying improved taxes which do not affect the
inflation.Taxes like STT needs to be identified and more of such taxes
can be the solution to bring down fiscal deficit.Budget should be
people and not market oriented.There lies the solution.
Dr.T.V.Gopalakrishnan
( This is the comment in response to Rangarajan's three poit fotmula to achieve 8-9% growth in Business line dated 4/2/13)
Sunday, February 3, 2013
Transparent Budget
Openness
is good but the budget should be fair and people oriented and not
market oriented. The major problems of the economy is inequality of
income and high level inflation creating a big social issue and people
are becoming intolerant. The FM can do a lot in his transparent budget
to minimise the gap between the poor and the rich through direct and
indirect tax. The service tax is wide spread adding to inflation. The
cost of living has to be considerably brought down and the FM can be
transparent as to how much the rich and poor earn and how much they
spend and save. Dividend earned in crores of rupees is not taxed where
as the poor man is robbed of his entire income earned through his
labour by way of inflation. Can the FM be transparent. The
author has not touched upon the major issues of the budget and how it
has been harassing the majority of the people. Dr.T.V.Gopalakrishnan
( This comment is in response to an article on From Kirana store Budget to Budget in of Times of India dated 3/2/13)
( This comment is in response to an article on From Kirana store Budget to Budget in of Times of India dated 3/2/13)
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