Improve the number of tax assessees

This refers to the  news report in Economic Times dated 30/4/16 that only ten lakh people are declaring income  above Rs ten lakhs. Obviously something is seriously wrong with the Income tax assessment and the number of people filing the IT returns.  This is nothing but absurd. Even a lay man with even below average common sense cannot take this figure as correct as he knows that in his own surroundings wherever he is in any metropolitan City  in India that there are lakhs of people earning more than Rs ten lakhs.  In IT Companies alone there will be lakhs of  employees earning more than Rs 10 lakhs per annum. Then what about the Central Government employees, Bank officials, professionals like Accountants, lawyers, Doctors, Consultants  and specialists attached to various multinational companies, Real estate Dealers, Brokers, Traders, Commodity dealers, Persons engaged in scrap dealings,  Interior decorators, Hoteliers , Merchants, Medical shops, Car service Providers, Second hand car dealers,  and all sorts of middlemen operating in different areas and commodities.  Herein lies the influence of black money, corruption and inefficiency in tracking the transactions and capturing them for improving the data collection and augmenting the resources of the Government. Definitely there is ample scope to augment the revenues of the Government through Direct Tax and reduce  the rate of tax for lower income groups. It is time for  the Income Tax Department  to realise the realities of the economy and capture the information relating to the informal economy which is more or less equivalent to the formal economy.

Dr T V Gopalakrishnan

Make the Boards Accountable for lapses.

The Governance Standards are deteriorating every where in general and Corpoartes in particular these days. 

it is for all Corporates to introspect and examine for themselves as to  whether the Corporate Governance standards expected of them in respect of Production in terms of quality and quantity,  Accounting, Transparency needed to satisfy the regulatory prescriptions of all regulators are in place and well adhered to as per the set national and international standrads.It is the responsibility of Boards of Directors of all Companies to qualify their annual statements of accounts with regard to the compliance of Governance standrads and highlight the merits and demerits if any.The Charteed Accountants Association of India has also a moral responsibility to ensure that the Companies they certify comply with the Corporate Governance principles in letter and spirit. The Securities   and Exchange Board of India should take note of the companies being fired or penalised for failure of maintenace of quality and other Governance stanndards and accordinly notify those companies for improvement and facing penal measures in case of failure to comply with the standards expectedof them. Business without ethics  cannot be sustainable and the reputation risk for being unethical is unpardonable and highly damaging not only to that business but to the country as a whole which is definitely avoidable and needs to be avoided to make in India a success story for ever..          

Dr T V Gopalakrishnan

( This comment is sent to Business standard on the 21st April 2016.)

Welcome and timely intervention by the Supreme Court.

Apropos the news item SC seeks RBI report on action against bad loans,(ET dated 13/4/16) the fact remains that though RBI has regulatory and supervisory powers over the banks it can at best bring some pressures on the banks in the matter of maintaining provisions on bad loans. It has no authority as such to prevent the sanction and release of loans to different parties and fix the terms and conditions of the loans. Even the powers, RBI has on banks in terms of Banking Regulation Act. 1949, they can only be exercised knowing the mindset of the Government in power, the policies to be pursued by the public sector banks in particular in the grant of loans particularly in the absence of a full fledged  bond market, development finance institutions and the need to cater to the socio economic needs of the country. PSBs are functioning as if they are an extended arm of the Government to raise and deploy funds as the Government dictates. RBI has to dance to the tunes of the Government and maintain the credibility of the banking system in the interest of systemic risks, and the mobilization of savings badly needed by the economy. The court’s intervention is a welcome move as the recurring loss suffered by the economy and its stakeholders in general and share holders, depositors and employees in particular because of staggering non performing loans is something mind boggling and unfortunately no estimates have been made in the matter so far. Apart from loss of production and value addition to GDP, the loss incurred year after year through recovery process and write offs is something too big to be ignored. Besides, the erosion of values and ethics due to ever increasing bad loans sends a wrong signal to the business world. Hope SC’s intervention would help bring in the much needed discipline in the Government, RBI, and Banks and among the borrowers. An active corporate bond market would be of immense help to bring down the pestering problem of NPAs in banks.

Dr T V Goplakrishnan

( Comment sent to ET on 13/4/16).

RBI, Supreme Court and Banks' defaulters

The fact remains that RBI is not micro managing things at banks' level. No doubt RBI has a statutory role to regulate and supervise banks in the interests of the economy and financial soundness.When ever the banks cross their limits in the grant of loans and the loan portfolios of banks go weak affecting the banks health , RBI takes stringent measures and advises banks to desist from such reckless grant of loans and keeps a close watch on such banks which are getting badly hit eroding the depositors money.It also ensures to issue strong regulatory prescriptions to ensure against deterioration of banks advances portfolio. No doubt RBI gives a long rope to even very badly run banks to correct themselves with directions, advice, moral suasion and penal measures etc. With all these, things are not changing and the banks position moves from bad to worse, RBI never fails to set right the bank and takes all measures under its command to protect the depositors interest. RBI as a regulator of banks has to ensure that the credibility of the banks does not get eroded affecting the financial stability. Banks are run on trust and this trust RBI ensures to maintain to ensure that there is no risk for financial stability.Unfortunately in Indian Scenario we have two sets of banks ie Private sector and Public sector. While RBI has 100 % control on Private sector banks the same cannot be said to be true with Public sector banks which are owned and in a way managed by the Government in practice. This makes for the difference and RBI is answerable to the Government for everything.RBI is right in not disclosing all the deafulters because many default due to business failures because of political,economic technological and social reasons and displaying their names can cause undue damages to the whole system of Finance and its credibility causing ireparable consequences. No doubt core wilful defaulters can be made transparent but even here patience pays a lot and RBI' s approach is appreciable. It does not mean contempt of Court which in all Probability will appreciate its stance in the interests of the economy. RBI as an Institution has never failed to protect the interests of the Government, the economy, the people is a wordly acknowledged fact though some lapses here and there do occur for which more than RBI the government is responsible. Further, more than RBI, The Government has more information on all PSBs as they are owned by the government. RBIs' powers are getting stripped day by day is also a well known secret  known to all in the Financial World..

Dr T V Gopalakrishnan

(This comment appears in Money Life dated 14/4/16 against the article RBI digs its heels on disclosure about defaulters).

Entire Banking including RBI is under Political Fiefdom

Excellent piece from Iyer at last. He has hit right on the head of the nail without mincing any words. Nationalised Banks are run by political bosses and the loot is made easy in the form of bad loans, write off of loans etc. Accounts are fudged and balance sheets are prepared as per the dictates of the Directors appointed by the politicians on banks Boards. Loans are given as per the desires and policies enunciated to suit the political bosses and their fraternity in the Industry. RBI was a hindrance and RBI's powers have been gradually stripped. There are two Government Directors on RBI Board and what they say or hint becomes RBI's policies. The autonomy of RBI is only on paper and RBI has lost its operational independence long back. Banks bad debts are man made with the active support of political masters and industrialists. Iyer has beautifully analysed the issues involved in PSBs.Even the present government does not want to lose its grip either on RBi or banks. On the Contrary , the Government wants more control on banks and Bank Boards Bureau is in that avatar.

Dr T V Gopalakrishnan

 (This comment in response to SA Iyer's article Banks will remain political fiefdoms till privatized appeared in ET dt 10/4/16) 

ALL eyes on RBI's Policy

This refers to your editorial another Baby step (BS dt 4/4/16).The expectation of another policy rate cut ranging between 0,25% and 50% is very high although the pick up in credit off take and surge in demand for products of all kinds have not been anywhere near any justifiable level. Just sentiments and market pressures alone cannot be the deciding factor for RBI to cut the rate though the other fundamentals of the economy Viz Whole sale Price Index, Fiscal Deficit, Current account deficit despite not much of eports are all favourable and the Government's measures to give a boost to industrial and agricultural production are somewhat  positive. The gambling on monsoon is still  a challenge and the Consumer Price Index continues to be unpredictable true to pattern. 

 However, RBI  needs to be really concerned about the liquidity crunch the banks are facing in the background of falling deposit growth, staggering Non performing loans, and not so impressive budget support to generate  domestic demand. RBi has to necessarily   take some policy measures to enhance the liquidity and generate credit demand with all the limitations both the domestic and external economies are subjected to.  Marginal Cost of Funding related lending rate is a new phenomenon the banks have to pursue and expand credit and this also is a factor RBI has to  factor into, to make the banks fall in line to RBI's expectations of transmission of monetary policy. All said, lot of speculations are there in the market and RBI has to fine tune its policy rates to suit  both the domestic and external economic conditions, market sentiments, expectations of depositors and investors and above all the Government's own thinking to give a boost  trough the monetary policy covering up all the gaps observed on the fiscal side. 

Dr T V Gopalakrishnan

Day light Robbery by taxi aggregators

It is heartening to note that Karnataka Nixes surge pricing by IT enabled cab aggregators such as OLa and Uber (ET dated 4/4/16). The loot by the service operators continue unabated and customers are taken for a clean ride by charging even three times of normal fare and that too on Sundays and non peak hours..  This has been the experience by two vedic Scholars who  were  in the city the other day  and who had been  helped by a hotelier to book an ola Cab as they were not having the required app in their mobile.. These hapless victims had to shell out a sum of Rs 1043 on Sunday the 4^th April at 2.20 PM to cover a distance of just 22 Kms as recorded by the Cabbie’s cell phone.  The driver  pleaded innocence and said he did not know anything about the fare fixation. It worked out to Rs 50 a KM for an Indica cab KA 13B 6541 an old model. Even a ride by BMW or a Jaguar would not have cost them so much.  This sort of  surge pricing by indicating 2X, 3X etc in the mobile which is not understood by many and  which is  is nothing but a day light robbery and also  robbing not only of the public money but also the image of the Police, Transport Ministry, the Government, the State and the Country. If such a  greedy and exorbitant pricing are not nipped in the bud itself , this can lead to law and order problem  over a period as apart from open loot the safety of travellers in such cabbies is also at stake as  is reported every now and then.  These cabbie operators do not seem to be investigating about  the antecedents of the drivers and many are  goons and cannot be handled by any sense of decency and in a civilised manner.. The drivers' license details are not made available to the consumers and once something goes wrong even reporting such  wrong doings is rendered impossible, .Public cannot  be expected to have the affordability knowledge of technology  or the patience to bear with/handle such atrocities committed on them by the taxi aggregators.  People can only ventilate their grievances through media or other avenues, but the regulatory action and enforcement of laws have to necessarily come from the concerned authorities. It is high time that anybody can get away with anything is once for all given a good bye by the authorities. Good administration will  definitely turn out to be a win win situation for all stakeholders of the society, the state, economy and the nation.    

Dr T V Gopalakrishnan