Monday, May 30, 2022

Fake notes and RBI

 The figures are disturbing and the benefits of the demonitasation if at all have been nullified. There is no semblence of Governance and in the name of librealisation the well established and meticulously developed systems and procedures pursued by the RBI for decades have been given unfortunately a go bye over a period. THE RBI seems to have lost its glory and perfection in carrying out its responsibilities with utmost accuracy and without giving any loopholes to subvert its own rules and regulations.RBI never indulged in extravagance and was a role model for many of the central banks of the world for discharging its functions in the best interests of the Government and the whole economy. The deterioration seen, of late, is regretable and needs to be deeply introspected for reestablishing its glory and independent status. An independent and efficient Central Bank is always a proud of any economy and nation.

TVG Krishnan

( this comment appeared in Business standard dated 30/05/2022 against the article fake note of Rs 500 increased by 102% in FY 2022)

Wednesday, May 25, 2022

RBI APPOINTS A COMMITTEE ON CUSTOMER SERVICE IN BANKS

 

  • Very good move badly needed by the suffering customers. The banks have simply forgotten that they survive because of the customers. Customers seem to have given up the expectation of any improvement in service leave alone getting improved service. Having been appointed Retired Senior Officials particularly from RBI it is hoped that they would do full justice to the assignment allotted and come out with some solid and practical suggestions to improve the services and rationalise the service charges. The Fast Eroding TRUST in BANKS and their Services can be regained only if banks care for customers ,understand the customers,and are able to extend services based on their expectations, needs and capabilities to appreciate the gaps now seen particularly in the Tecnological advancements in banks and Customers abilities to cope with to get the services. Ignoring Customers emails and sending standard replies without any intentions to act seem to be the trend in most of the banks and from this angle the customer gets a feeling that they can very well go in for Crypto currency transactions as no identity is known as to with whom they are dealing.The digital world has completely taken away even the very little rapport the customers had with banks is the sorry state of affairs. The time given to the Committee however, is totally inadequate as the committee members should have some interactions with customers who are suffering and the banks to experience themselves the issues faced by customers without revealing their identities.


TVG Krishnan

(THIS COMMENT APPEARED IN BUSINESS STANDARD DATED 23rd May 2023).

Tuesday, May 24, 2022

 

GST is Inevitable for all its Virtues

This refers to your Editorial Make it work (The BL dated 21/05/22).

The Goods and service Tax introduced in 2017 can perhaps be one of the best tax reforms the economy has experienced in the recent past.  The Supreme Court Decision may have constitutional validity, judicially acceptable reasoning and theoretically not workable conditions in terms of the provisions of the law to recognise the GST councils’ recommendations and make them binding on the centre and states, the fact remains that the GST benefits the economy in several ways to make the complicated tax system simple and good for enhancing the cooperative federalism badly needed, improving uncooperative federalism and achieving fiscal federalism. Though there can be ample scope for removing the deficiencies in the overall working of GST mechanism, it has to be accepted and appreciated that any tax policy to get stabilised and derive maximum benefits takes time taking into consideration particularly the movement of goods and services in such a vast economy having different geographical, social, economic, political and technological conditions. All said, the GST collections have recorded solid improvements and the general acceptance by the business community, trade and commerce and general public has also been found to be encouraging. Since the tax system of the country in relation to its implementation and compliance successfully depends upon several factors, the performance of GST has been by and large highly satisfactory with lot of scope for further improvement perhaps, the need to continue it by appealing to the Supreme Court for a review from the point of view of its benefits to the economy and the public good is paramount. After all, the growth of the economy, equitable distribution of wealth, maintenance of price stability and welfare of the masses   which is unfortunately a casualty these days and universal welfare of the people are all dependent upon the taxation  and other policies of which GST occupies a very prominent and indispensable position.

T V G Krishnan

Bengaluru.   

(Sent to BL but not found published.)         

Tuesday, May 17, 2022

This refers to your Editorial Up and Away(BL dated 16/05/22). The ever soaring Consumer Price Index at 7.79% and the Consumer food Price Index at 8.38 experienced in April not only affect the poor and the lower middle classes particularly in the unorganised sector but also affect them economically, socially and emotionally as well. The inflation index prevailing is far above the one fixed  at 6%  tolerance level by the monetary policy Committee of the RBI reflecting thereby the distortions in arriving at the realistic situations at the ground level and the ineffectiveness of the policy measures.  As  low cost of funds  helps the economy to grow , low cost of oil and gas helps the country to keep the inflation low and make both the economy and the people prosper fast also needs to be recognised and factored into in containing the cascading effects of oil price and gas price increases on inflation and inflation expectations.  This seems to be a great miss or lapse in the fiscal policy calculations upsetting the other calculations in respect of macroeconomic factors.  This unfortunately takes away all connected and interlinked socio economic benefits and issues in the society. Time has come to think of undocking oil from the inflation shuttle and find out ways and means to fund oil requirements separately and remove the cascading effects of increase in the prices of oil and gas and adequately factor into this vital aspect in the Inflation index computation.  The need has arisen to revisit the fiscal policy and think of innovative measures to augment the revenues in such a way that the revenues which have inflationary connotations are minimised and those revenues which have non inflationary characters are increased. This sort of approach would turn out to be a win- win situation for the Government, RBI, the Economy and the people particularly in the poor and lower segment. There are umpteen ways to augment the non inflationary revenues like STT, and other direct taxes.

T V Gopalakrishnan

Bengaluru.      

( Slightly edited version of this letter appeared in the Hindu Business Line dated 17/05 /2022) 

Friday, May 13, 2022

 Dear Sir,


This refers to your Edit Feeling the pressure of Retail Inflation ( May 13). The very high Consumer Price Index at 7.79%  and the The Consumer Food Price  index at 8.38% in April 2022 affect the poor and lower middle class segment particularly in the unorganised sector not only economically but socially and emotionally.Further the economic growth and the benefits expected of it to the society also gets jeoparadised because of continuing inflation upsetting all the calculations.The need to contain the soaring inflation therefore on an ongoing basis  to save the economy and the people is paramount and the authorities have  no choice but  to think of some innovative methods to come out of this mess.  
Since such a high level of inflation takes away the real interest rate and savings habit of the society and insulates the rich from  their spending habits and maintaining their living standards simultaneously, it is time to revisit the Fiscal Policies and Monetary policies and find ways and means  to fund oil requirements separately (which seem to be the major cause of inflation) and free the economy from the challenges of high fluctuations in oil prices because of Geo political and other reasons like exchange rates and interest rate changes based on sharp movement of funds. Insulating the oil and gas prices from the construction of price index  in view of its chain effect right from salt to camphor would be of immense relief to save the situation. Time has come  to think of raising  non inflationary revenues like Security Transaction Tax or some direct taxes which have no cascading effect in the pricing of daily consumption items of the poor segment of the society. It would be a very wise move to have revenues with and without inflationary impact and the Government and RBI would have to  have a coordinated approach  to arrest the inflationary trend and expectations with policies  that do not get hit people of average means because of  the imported or domestic inflation.

T.V.G Krishnan
 ( Slightly modified version of this letter appeared in Economic Times Dated 14/05/22). 

Monday, May 2, 2022

Equality and inequality in the wealth creation and distribution of wealth .

 

Equality and Inequality.

While Equality is highly desirable and laudable objective to be aimed at, Inequality unfortunately seems to be the end result  in the distribution of wealth as per the experience of many countries. Creation and distribution of wealth is a function of administration but how far the wealth created is distributed equitably seems to be the function of politics and political set up. The enlightened politicians and the enlightened public if come together equality of wealth can be a reasonable expectation but in practice Politicians, Administrators and the Public are seldom together to achieve the intended results of equality. It is time to have an in-depth analysis of different countries where wealth creation and equality of distribution of  wealth created are somewhat reasonable and how they have been achieved. The problems with emerging economies are different as their inbuilt enemies by and large are poverty, inflation, illiteracy, and unimaginable corruption of all kinds. There are no level playing fields to have sound policies and their implementation. There are political, economic, social and technological corruptions which play havoc in the very build up of the economy. Challenges are very many and these need to be well factored into while assessing and evaluating the equality in the creation of Wealth and its Distribution.  Very sound and Equitable Economic policies supported by strong governance plugging all loopholes to evade laws of the country can perhaps be workable solution to minimise the negative impact of inequality in the society and bring in albeit at a slow pace the positive changes in lessening the inequality. Political Leaders and Administrators need to be role models to the public to emulate their actions and enhance the quality of life enjoying the wealth of the nation intended for the welfare of all. Corruption and black money if minimised can work wonders in the economy benefiting all segments of the population irrespective of caste, religion, politics and accumulation of wealth by hook or crook by some.        


Dr TVG Krishnan