Another blow to negative sentiments

The move to hike the prices of fuel at this critical juncture will only help to add fuel to fire although the need is paramount . The sentiments are negative and what ever may be the justification, such a move will not be easily acceptable as it may add to inflation and inflation expectations. It would be ideal for the Government to defer this move till such time the rupee stabilizes and the price of Crude Oil in international market also settles down from its present volatility. It may be tough for the Govt to defer the decision, but it will help to improve the sagging sentiments a little which is also essential to stabilize the markets.

Dr.T.V.Gopalakrishnan

(This comment is in response to the news report fuel hike in the offing in Business line dated 31/8/13)

Good idea to convert idle gold into productive asset.

It is a very good move from RBI to convert gold into productive asset.Similarly the RBI also should make banks to buy back gold coins from individuals and institutions so that the supply of gold in the domestic market would improve considerably and bring down the import of gold. Other private gold holdings also should be brought into the open by making banks to take the gold as deposits on payment of some interest and these gold can be repaid either in the form of gold or adjusted against cash payment.The domestic prices of gold also will come down in the process apart from reduction of import of gold.

Dr.T.V.Gopalakrishnan
(This comment is in response to the news report "RBI plans to request Tirupati, Shidi shrines to sell  their  gold pile to rescue rupee fall"appeared in ET dated 31/8/13).

Is not the coordination between RBI and the Govt inevitable?

Well balanced and very well written editorial. As rightly indicated, lack of coordinated approach between the Government and RBI during the last five years did all the damage to the economy  not withstanding the fact that the RBI had warned the Government repeatedly to be more prudent and serious in its Fiscal policy management and supply chain management to control fiscal deficit and inflation. The FM took it otherwise and he felt that RBI did not toe his line. The difference of opinion on policy issues between the Govt and RBI which was made public by their utterances gave room for others to exploit in their own way resulting in the negative outcomes both on fiscal and monetary policy stance. The fact that  RBI has never let down the Government in its history of past several decades of functioning and cannot let down the present Govt for all its objectives has been ignored by the Government causing to widen the gap between the Govt and the RBI. The result is there for all to see and the Government is exposed for its failure for economic growth, high deficit, high current account deficit, high inflation, fast depreciation of rupee and losing the image as a fast growing economy. The crisis of confidence  has led to economic crisis. The economy has all potential to come back on track and the only solution is for the Government and the RBI to come together and act without having any ego on supremacy. The moment they join, economy will turn into a performing one. 

Dr.T.V.Gopalakrishnan

(This comment is in response to the Editorial RBI Governor and his legacy appeared in Business Line dated 31/8/13)

RBI Governor opens his mind.

At last the Governor  opened his mind and openly brought out the frustration and harassment he suffered from the Government for  not only its lack of cooperation but also its impingement on the RBI's functioning. The seeds are sown by the former  FM  who set up the Financial Stability Development Council taking away the supremacy of RBI over the entire financial system and making it as any other organisation without appreciating the importance, excellent and effective role played by the RBI since its inception to maintain price stability with growth, exchange rate stability and financial stability. Further the present FM ensured that  the seeds sown  are grown properly with the required monitoring and support. RBI has given a wonderful support  with a deep understanding of the deep rooted problems of the economy  and extended full cooperation to the Government for all its socio economic development all these decades and the banking system has been developed on a very sound and healthy footing. This has been recognised world over. This Government  unfortunately has its own axe to grind and undermined the role of RBI and treated it as its own Department to be dictated openly, directly and indirectly there by ignoring the professionalism professed and practiced by the RBI meticulously keeping in mind the welfare of the masses and balancing the growth of the economy with its limited powers. Govt played a spoil sport and virtually expedited the crisis knowingly or unknowingly. Dr Subbarao will be remembered for his lone fight with the Government to keep the RBI and its spirit alive. He deserves a special and unique status in the History of Indian Economy and RBI  for his boldness and conviction on the way he carried out his responsibilities without yielding to cheap popularity and pressures from the Government. Institutions have to play their role effectively keeping in mind the benefits that go to the majority of the people irrespective of the situations that may warrant otherwise.This is what RBI demonstrated during the last five years of economically and politically unstable period. Former CAG Mr Vinod Rai and the Governor Dr Subbarao have created a new history and shown to the world as  to how  the Public Institutions should  be run  and deliver the goods expected of them as per the laws of  the land. This is the real strength of the economy.

Dr.T.V.Gopalakrishnan

(This comment is in response to Dr Subbarao's Parting shot appeared in different dailies on the 30th of August).

What is happening in the economy?

At this rate what will happen to the economy and the masses. People are losing their sleep as they are unable to understand or secure their life economically, socially and physically. As on today, a hundred rupee note can at best fetch a kg of Onion and perhaps one Kg of Potato. And there are people who have not seen or handled even hundred Rupee note. What is this Government doing for the masses. The equitable management of the economy has been given a go by and a few who are after power and money are allowed to dictate. The RBI and the Govt have no targets for rupee dollar rate but some segments of the market have a definite target and they are able to pull down the rupee the way they want. Mismanagement of the domestic economy is the root cause for all these evils and creation of wealth by a few at the cost of majority of the masses have taken the economy to such a pass. Absence of the Governance system which is the very essence of keeping the economy on track has led to this state of affairs and for this the bureaucracy and the Government in power are only answerable.Now the task is really difficult.

Dr.T.V.Gopalakrishnan

(This comment appeared in Business line in response to an article " Dollar Demand sinks the rupee" in BL dated 28/8/13).

What is the level of the rupee?

No doubt rupee will find its own level like water. But the level cannot be so low to damage the stability of various markets and create a panic situation. It cannot be allowed to have a free fall when the country has abundant resources in the form of Gold , forex reserves, cash rich corporates, non resident indians waiting to get an opportunity to freely invest in India provided the atmosphere is conducive for investment, high savings potential completely ignored because of wrong taxation policies and laxity in administration,etc. Before the situation becomes beyond control, steps have to be initiated as if the economy is facing a Financial emergency situation. some of the steps can be to revisit the NRI related inflows, enhance SB and FD interest rates, convert house hold savings of gold into cash by offering some incentives, remove or raise the Interest rate ceiling on Bank interest from Rs 10000 to Rs 100000. compel the cash rich corporates and HNI to invest in infrastructure bonds to be issued by the Govt, offer incentives to manufacture import substitutes, enhance the facilities in terms of infrastructure to improve exports, etc. Efforts have to be taken on a war footing so that the market will get the signal and the negative sentiments will get a change.

Dr.T.V.Gopalakrishnan

(This comment in response to Mr Chidambaram's observation "Rupee will find its level" appeared in BL dated 27/8/13)

Non performing Managers.

This refers to your editorial Non performing Manager (Business standard 26/8/13). The Deputy Governor’s remark that the reason for unabated growth in NPAs of public sector Banks is that "non-performing administration, poor project appraisal techniques, herd mentality, lack of accountability, post-disbursal supervision, etc.” is very true and this callousness gets accentuated when the slow down of the economy also becomes handy to justify non performance. The banks’ Chairmen generally get not more than two years and as rightly pointed out in your editorial, they spend first year exposing the previous chairman for his creating accounting practices to project a better image of the bank and its balance sheet and the second year they have their own agenda to window dress the balance sheet and project a lower level of NPAs as if they could do some magic and introduce solid measures to improve banks’ profitability and bring down the level of NPAs. These sorts of accounting gimmicks have been a regular feature as there has always been a trade off between the auditors and the management and the exact position gets highly camouflaged. Even the RBI becomes helpless as its system of regulation and supervision does not provide scope for 100 % scrutiny of all transactions and borrowal accounts. Unfortunately the loss on account of NPAs is borne by the Stakeholders who include shareholders, depositors and good borrowers. The only way to solve this menace of NPAs is to make the banks and borrowers accountable with a penalty imposed through close monitoring and supervision of loan accounts from the very first day of grant of loans. There are lapses on both and these lapses need to be fully accounted for. The duration of Chairman and incentives will have only limited applicability to bring down NPAS.The inefficiency of banks and extra smartness of borrowers generate NPAs and this can be curbed only through a built in mechanism to discipline both.Time other stake holders resist this sort of accumulation of bad loans and write off of such loans.

(This comment appeared in Business Line in response to the editorial on Non Performing managers.)

IMF not an option to save the rupee

The editorial why the IMF is a bad option (Business Line, 24 August, 2013)has well captured the present issues relating to the rupee crisis and argued against approaching the IMF as a salve. The problems the economy face today are because of mismanagement which can be easily corrected by making a serious approach to some of the policy changes which have eroded the confidence of investors in general and Foreign investors in particular. The comparison of present economic situation with that of 1991 crisis is meaning less just for the reason that the economy then was a closed one compared to the vast liberalization it has since undergone and benefited in many ways which include the appearance of Indian economy in world economic map as a fast growing vibrant economy. No doubt, the political instability and a series of scams due to laxity in Governance system have taken away the merits of the economy. However, the fact that the resources are in tact and the potential to bounce back remains strong cannot be underplayed. The slew of measures already taken by the Government and the Reserve Bank are on the right direction and the volatility of the rupee which predominantly comes out of undue speculation and partly because of some erratic policies on Foreign investments cannot dictate the market for a long time to come. The need to attract foreign funds through NRI savings, investments in infrastructure projects and build up of the confidence in the Governance system is, paramount along with measures to improve the domestic savings, investments in production and supply chains. It is not conducive to borrow any more either from IMF or other sources.   

Dr.T.V.Gopalakrishnan

(This comment is in response to the editorial IMF not an option in Business line dated 24/8/13.)    

LTC Scam in PSUs

One major reason to indulge in such dishonest practices is the rise in the cost of living. A family consisting of Four cannot lead a decent and honest life even with Rs 25000 a month, is the ground reality and our politicians, top bureaucrats and policy makers keep a blind eye when they frame policies on taxation, corruption, black money,etc. This sort of dishonest practices will only increase if prices are not brought under manageable levels and linked to the earning capacity and affordability of the masses. Such instances should make the policy makers ponder on what is going wrong in the economy.''

Dr.T.V.Gopalakrishnan

Narayana Murthy's reentry into Infosys

Murthy's objective of reentering Infosys has been achieved with the appointment of his son as VP. No one can be saint in this materialistic world however one may try to project one's image as such. Mr Murthy's is over smart and he he has his own axe to grind. Nothing wrong on that. Given a chance every one does it.Only difference is many do not project an image as they are very idealistic and at any cost they would like to maintain all ethics and values.Such persons are yet to be born in India.  

Dr.T.V.Gopalakrishnan

Review Daring to be right by DR Y.V.Reddy

Very detailed and exhaustive review of the book by an eminent Central Banker. Very rare to see such an intellectual review with an in depth understanding of the whole maze of Financial world with all undercurrents of politics and the complexes involved and faced by a central Bank in a developing economy like India. Wonderful review worth reading to have an idea of what is in store in reading the book authored by an equally competent and very well known Central Banker .

Dr.T.V.Gopalakrishnan

(This comment appeared in Financial Express  in response to the review  Daring to be right  by Dr Y.V. Reddy of the Book authored by Dr S.S.Tarapore.)

Why Modi can be the PM.

Why Iyer is so biased against Mr Modi. Our ancient history shows that people can transform themselves and become acceptable leaders. Modi unlike some lucky few, is not a born PM and he has to earn this through hard way. There is a saying that no one makes any inquiry of the past of any saints or Gurus. Modi is an emerging leader and is a man of conviction with great qualities of a good ruler. One has to go by his achievements and capabilities to run the country with all complex and complicated issues based on religion, economics, politics and what not. Once he occupies the position and starts delivering, Iyer will have to take back his words. People can change and they can bring changes. Modi needs to be considered under this category.

Dr.T.V.Gopalakrishnan
(This is in response to an article "Hard political Reality is that Modi cannot become the PM"that appeared in ET and times dated 18/7/2013).

Release of RBI History Volume iv at Delhi on the 17th August 2013.

The PM takes the political line and he has his own axe to grind where as the Governor continues to remain professional and he made his stand clear that low inflation only can bring growth on a sustainable basis and growth has never been ignored in RBI's monetary policy announcements. The professionals will vouch for the Governor's approach and he will prove to be right in the long run. While the Government deviated in its approach and failed to toe in line with RBI's way of thinking, the result is that neither growth nor inflation ie retail inflation at a low level has been achieved. When the next volume of RBI' history is written, this will occupy an important space and the Governor's approach to contain inflation to influence growth would be amply recognised. It is unfortunate that on this occasion of release of Volume iv of RBI history no word has been spoken about the contents, coverage, and utility of the history book. The economic situation of the country is so bad , that the whole attention was some what biased and no reference seems to have been made about the volume released by the PM.

Dr.T.V.Gopalakrishnan

RBI has little Choice but to maintain status quo policy

The RBI’s present concern about rupee stability and its fight to bring down inflation deserve full support. The Government, on its part, needs to boost the confidence in the economy through result-oriented measures.

August 11, 2013:  

The Reserve Bank in its latest review of monetary policy decided to keep the repo rate, reverse repo rate and CRR unchanged at 7.25 per cent, 6.25 per cent and 4 per cent, respectively. The other changes introduced on a temporary basis on July 15 to contain rupee volatility were also retained.

Also, the current macroeconomic indicators do not give it room to ease its monetary policy stance.

The RBI is in a Catch-22 situation. It is compelled to maintain the internal and external value of the rupee at any cost, which is becoming difficult in the background of lack of growth, increasing deficits (fiscal as well as current account), declining investor confidence, and falling savings trend.

Also, there is no quick-fix to bring down the persisting high retail inflation caused by rupee depreciation. Inflationary expectations are also high because of the increasing fiscal deficit and the political agenda to implement the food security bill.

Banks are feeling the heat of liquidity constraints. Finding it difficult to raise resources from the Reserve Bank, they are forced to raise interest rates to get deposits. But they don’t have an adequate market to deploy them profitably, and recovery of loans is becoming increasingly difficult.

At this juncture, banks cannot think of reducing the rate on advances. The chances are that they may have to eventually raise it.

Now, what is the FSDC (Financial Stability Development Council) doing? Its very creation undermines RBI’s supremacy over the financial system. And, an element of uncertainty has crept into the equity, bond and forex markets as well.

The quarterly results of companies, except perhaps of those in the IT and pharmaceutical sectors, are not impressive and investors’ confidence in the equity market is on the wane.

The debt market has also been showing symptoms of weakness. The forex market continues to be volatile despite the RBI’s specific measures to contain the rupee fall, which has again breached the Rs 61/$ mark.

Speculation in the currency market seems to have affected the sentiments of both importers and exporters alike, choking the growth in trade, which, in turn, has a negative impact on production, inflation and GDP growth.

Of late, the bullion market has also been fluctuating with an upward bias, indicating more confidence of investors/savers in gold than in any other asset

The external market also does not offer any solace, as raising funds overseas is not exactly cheap but also risky in the context of the unstable rupee. The scope for NRI/sovereign bonds is limited as the funds may not come cheap in the background of weak macroeconomic factors.

The only way to raise inflows is to enhance NRI deposits, by offering additional interest and incentives through CRR relaxations. The prospects of attracting debt inflow look bleak.

This is the time for the FSDC to come to the rescue of the entire financial system, by focussing on the positives of the domestic segment of the economy.

EASE TAXES

One way to to pull the economy out of its present condition is to ease some tax rates and, thereby, attract both savings and investment.

The tax on fixed deposits needs to be completely eliminated to compensate the investors against inflation and, at the same time, prevent them from parking their funds in real estate and gold.

The savings potential needs to be fully tapped to bridge the gap between savings and investment.

The costs, if any, incurred in this regard are worth the salt. Simultaneously, the administrative hurdles inhibiting production and supply, particularly of food products, need to be identified and removed as fast as possible to bring down retail inflation.

The need of the hour is to boost the confidence in the economy and any attempt to raise revenue now will only boomerang.

The RBI’s present concern on rupee stability and its fight to bring down inflation deserve full support from all segments of the economy and, for this, the confidence level in the economy needs a boost through result-oriented measures from the Government.

Dr.T.V.Gopalakrishnan

(The author is a Bangalore-based financial consultant.)

(This article was published on August 11, 2013)

Keywords: Reserve Bank, latest review, monetary policy, repo rate, reverse repo rate, CRR, RBI

The Governor and his worst political environment

 Dr Subbarao Governor RBI faced the worst political environment and also suffered from the lack of support from the banking system. This is really unfortunate though Dr Subbarao did his best to prevent the damage inflicted on the financial system because of indifference of the Government. The economy got into trouble for want of initiative and actions from the Government in coordination with the Central Bank. Dr Subbarao will have his unique place in the history of the Reserve Bank for his conviction to fight inflation even  at the cost of growth and for his boldness to fight the government for the Central Bank's independence although not appreciated and succeeded to his satisfaction. He has made his mark and his contribution will be recognized though not at this moment of crisis but at a later date if some one were to analyze  unbiasedly the background and circumstances under which he spent his time as Governor.

Dr.T.V.Gopalakrishnan

New Governor RBI and the Challenges

Governor RBI is a different game altogether. The IMF experience and his short stint in Government may stand him in good stead but the nuances and intricacies involved while formulating policies as a Central Banker without much of independence and without displeasing the mandarins of ministry of Finance are really complicated. Dr Reddy's period was some what smooth and he had the skill of communication and diplomacy to have his own way of handling Central banking policies and the Ministry of Finance.Mr Subbarao came at a period when the global Financial crisis was looming large and his whole attention was to insulate the economy from the damages of the financial crisis the world experienced from Lehman breakdown.The political stability which helped Dr Reddy a lot to have his own way of doing things was unfortunately not there for Dr Subbarao and he had to take some tough policy stand much against the wishes of the Government. The saying that when problems they always come in battalion has been well proved and  Dr Subbarao unmindful of the displeasure of the Government stood firm on his policy stand to fight inflation first and then support growth. Some of the moves of the Government widened the Gap between the RBI and the Govt and RBI and the Banks distorting the whole confidence in the financial system.Many have warned the consequences of having  such a disturbed relationship and repeatedly advised through media to have a coordinated approach, but they have all fallen in deaf ears and the economy is in a mess now.These are perhaps some of the pinpricks the new Governor may not be familiar with and more than the sound knowledge of economics and experience in the field of finance, handling politicians is an art by itself and this is where the new Governor has to worry about. Herein lies the success of any governor. Wish the new Governor all the best.

Dr.T.V.Gopalakrishnan 

RBI, Government and the New Governor

This refers to your editorial “The Promise of Change” (Business Line August 8).As rightly pointed out if the appointment of Raghuram Rajan as the next Governor of the Reserve Bank of India can bring in improved relationship between the Government and the Reserve Bank, that itself will go a long way in enhancing the confidence in the economy a lot. The problems faced by the economy are basically from the inadequacies of the fiscal and monetary policies and these have arisen due to lack of coordinated approach and mutual understanding between the Government and the RBI. The Government failed to appreciate the stance of the RBI policy to contain inflation to ensure sustainable growth and did not support the move of the RBI which led to widen the gap between the RBI and the banking system. The banking system lost its focus to concentrate on its basic functions to mobilize savings of the households and lend to productive purposes. The final result is that the economy lost its grip on growth and retail inflation, the Government lost its grip on building the vital business confidence, the RBI lost its grip on growth and the banks lost its grip on savings and good lending culture. Hope the change of Governor will bridge the gap between the Govt and RBI and bring in the promise of change very badly needed by the economy to boost the confidence level wherein the solution for all the ills of the economy lies.   

Dr.T.V.Gopalakrishnan    

The new Governor and the economy

The economic problems of this country are something unique which a world class economist cannot solve overnight or even after several months. Corruption, Black Money and Informal economy are major impediments which RBI cannot control easily unless and until the Government takes the initiative. Inflation is supply linked and RBI has limited say in the matter as the dear money policy can have its own adverse impact  on the growth side. The physical and social infrastructure needed to support the economy can be provided only by the Government for which the political Stability is a must. Laws of the land are strong but their implementation is the weakest creating chaos in the system. Rupee depreciation is an issue which can be tackled only with the active performance of the Government to augment production of quality goods and create proper environment to export with adequate incentives and support. The gap between the rich and the poor has been widening and the poor feel the pinch of inflation and the rich merrily enjoys at the cost of the whole economy on which RBI has limited control. Savings and investment which are linked to the tax structure and  confidence level in the economy are beyond the jurisdiction of RBI. The import of oil at a high cost particularly  when the rupee is at a depreciated level is causing  heavy damage to the cost of production, supply  and inflation, is not  fully under RBI's domain.  The challenges for the new Governor are aplenty and there is no magic wand to put the economy on growth trajectory without inflicting some pains. Herein lies the competence of the Governor to win over the confidence of the Power of the Government and act independently. The task is not that easy as good politics and good economics seldom go together especially when the election is round the corner  and all the parameters of a healthy economy are negative and moving from bad to worse. Wish the new Governor all success.

( This comment is in response to the article Right On, Rajan that appeared in TOI dated 7/8/13)

New RBI Governor A world class Economist.

He is a world class economist of 21st century and has proved his mettle in International market through his career in IMF. But the world class standards are not in India is a fact he will realise sooner than later.Here many are illiterates and many are rich without paying any taxes to the Government. Poverty is extreme and there are people with billions and billions of rupees. Here what we require is administration and effective Governance Standards.Implementation of the laws of the Country without fear and favour is what is required in the Country for the present. Raghuram Rajan Should not repent later on for having taken up this task. Here expertise in knowledge is not what is required but smartness in handling politicians is what is required. Rajan is a world renowned economist but can he deliver with the present set of politicians and their agenda which never includes good economics.

Dr.T.V.Gopalakrishnan

Poverty Line Debate

If Iyer feels his calculation of poverty line is very logical and sound he should strongly recommend to the Government to reduce the salaries and perks of all MPS, MLAs, Industrialists, bureaucrats and make it uniform to all as Per Tendulkar's poverty measurement and Planning Commissions Measurement.Let all Indians live on that levels of income. Then there wont be any grouse. If wealth cannot be shared reasonably well to all at least share the poverty which should not be that difficult.But fooling people with senseless and mindless calculations without going by the ground realities of the situation can incur only the wrath of the people.

Dr.T.V.Gopalakrishnan
(This is in response to Swaminathan Iyer's article that appeared in Times of India dated 4/8/13).

Bank Licences to Corporates

The argument put forward by the Governor in favour of granting licences to Corporates is surprising in the sense that when actual decisions will be taken on this issue of Licences the Governor may not be in RBI as things stand today. No doubt Corporates having bank Licenses will enhance competition  but that will be unhealthy competition without any ethics or values. They may mobilise deposits by way of Financial inclusion and they may siphon off these funds resulting in financial exclusion. Further, Corporates will interfere in regulation and RBI will be virtually dictated by the Politicians and Corporate honchos. NPAs will increase and write off of loans to benefit the Corporates will become  a regular feature as happened in good old decades. Sick industries will increase asking for tax concessions and incentives of all kinds. The disadvantages will outweigh the advantages and again the masses will have to bear the brunt. Deposits will carry higher rate of interest for huge deposit categories and this will have to be subsidised by small deposit holders and small borrowers.  The exploitation tendencies continue to be prevalent among the large corporates and RBI will also become a party and silent spectator. The competition so highlighted by the Governor will turn out to be unhealthy  and RBI will become helpless. The soundness and healthy banking system so far built up very painstakingly and meticulously by the RBI will  be a given a go by and the risks the economy will have to face then will be beyond control and  easy  solution. The Governor perhaps wants to make the applicant Corporates happy on the eve of his expected departure from RBI and earn their good will  as all along he has been fighting with them  without yielding to the Corporates' market and Government  pressures to reduce the interest rates to contain retail inflation .  

Dr.T.V.Gopalakrishnan

(This comment is given in response to the article" Bank licences for companies will make sector competitive: RBI Governor Subbarao"  that appeared in Business Line dated 3/8/13)

Is there no mandate for the Government?

''The FM should think of the mandate of the Government ie welfare of the masses, growth of the economy with the support of savings and investment, excellent administration without any scope for generation of black money, corruption, delay in taking vital decisions to facilitate production of goods and services without any hassles etc. The Central Bank has to ensure the price stability, financial stability and availability of adequate and timely finance. This is possible only if the Government works efficiently and keeping the welfare of the entire masses in mind. Time the Govt introspects and takes the needed steps to set right things that went wrong.''

Dr.T.V.Gopalakrishnan
(This comment is in response to  Duvvuri Subbarao responds to P Chidambaram, says inflation hurts poor that appeared in ET dated 2/8/13)

Avoid borrowed resources from international markets

Raising funds from overseas may be easier but at what cost? Can the economy bear such losses? The cost will certainly outweigh the benefits. Instead, the FM would do well to raise domestic savings and improve the investment climate to attract inflows. He has to give assurances on the steady  taxation policies  and removals of major hurdles to do the business with ease. Investors need to be attracted and  funds coming only  as investments than loans  are   good for the economy. The present crisis the economy is facing needs solution through improved political climate, reduced inflation and inflation expectations, increased savings in financial instruments particularly in savings and FD deposits of banks,enhanced exports by reviving industries which have fallen short of expectations, reduced imports, well managed expenditure controls particularly expenditures involving foreign exchange, improved efficiency in administration to minimise corruption, black money dealings, red tap ism etc. There are huge cash resources with a large number of Corporates and High net worth individuals and the Government should be able to tap them even at a slightly higher cost to tide over the resources crunch. The solution does not lie in borrowing funds from abroad.

Dr.T.V.Gopalakrishnan
(This comment in response to Chidambaram hints at making  overseas resources raising easier appeared in Business line dated 1/8/13)