Manage Food Inflation Differently.

 

This refers to the news report "Centre-RBI disagreement deepens over inflation and rates cuts"that appeared in BL dated 20th Nov 2024. The best and only way to contain food inflation is to have a different approach by creating a' Food Inflation  Neutralisation and Stabilisation fund ' under the auspices of Reserve Bank , NABARD and the Banking System administering effectively the supply chain management of the sensitive food commodities particularly, Tomato, Potato and Onion and other vegetables and fruits , involving state Governments. The need to activate RBI Local Boards in the matter is very  paramount . It is high time MPC and RBI local Boards coordinate and think of some concrete measures to contain the food inflation which remains  broadly undefined and defiant.  Man made inflation cannot be controlled by the Monetary theory policies alone is a proven fact as inflation inter- alia  is a creation of poor administration with active support of unhealthy politics and tolerance of unethical  and all sorts of malpractices . RBI has been providing the best of accommodative policies for years and has strengthened the financial and Banking system stability perhaps unheard of so far , but still the inflation continues  to be a major stumbling block in the economic  growth which cannot be allowed any more to realise the dream of India becoming an advanced economy by 2047. The peoples' aspirations to see India as a welfare nation can be  fulfilled  only by adopting and adhering to some very dynamic and untried policies and approaches. 

T V Gopalakrishnan

( Sent to Hindu Business Line ) 

Manage Inflation Differently         

Apropos the news item Food prices have nothing to do with Managing Inflation,(ET 15/11/24) the Commerce Minister's call  to  the RBI to Cut rates saying that it is an absolutely flawed theory to consider food inflation while deciding policy rates, makes a lot of sense in Indian context. The food inflation inter alia  is basically man-made taking advantage of political uncertainties, nature's  failure, ineffective governance , lack of financial discipline particularly at state levels and play of dirty politics to exploit the situation gambling on price sensitive commodities adding to inflationary pressures. A strong administration and prudent management of Fiscal Areas of the Central and State governments can to a great extent manage and contain the food inflation with sensible  supportive policy changes  in the production, export, import, procurement, storage, and smooth distribution of agro based commodities. Perhaps a very closely coordinated approach  involving  NABARD , Local Boards of RBI, Commercial Banks, RRBS , Cooperative banks  and Agricultural departments of both Central and State Governments can definitely play a key role in containing the food inflation. In this context, even setting up an Inflation Neutralisation and Stabilisation Fund  under the auspices of RBI  can be seriously thought of to tackle food inflation particularly vegetables like Onion , Potato and Tomato. The food inflation  which is a creation of administrative failures basically cannot be allowed to distort the twin objectives of Monetary policy  Viz Economic Growth and  Price Stability and make the dream of the PM to make the  nation to be an advanced economy by 2047 unrealistic.WE cannot afford to lose the battle for want of a nail .

  

            

T.V.Gopalakrishnan

Introduce Inflation Neutralisation and Stabilisation Fund and implement Moral Law to control Inflation

   Introduce Inflation Neutralisation and Stabilisation Fund and implement Moral Law to control Inflation. 

Retail Inflation surges to a 14 month high of 6.2% in October ( TOI dt 13/11/24)

Retail Inflation at 6.2% Dims Early Rate Cut Hopes (ET dt 13/11/24) .

The  Country being very vast, having  very huge population with different beliefs and faiths, poverty , illiteracy, infrastructure bottlenecks continues to suffer from multitudes of political, economic , social and technological problems and there is an urgent  and paramount need to fix the issues in such a way that the vision and dream of the PM to make it an advanced nation by 2047 is realistic and achievable by all means.The country is really rich by all means in terms of wealth in different forms, highly talented human resources, enviable heritage, culture, and unfathomable civilisation, knowledge , natural and  artificial intelligence with its high tech oriented human resources. Above all, the choice of democracy to run the country is a great blessing and sure way of reaching the top of the world not only in the development of the economy but also in providing the much wanted universal peace for the humanity and  the enhanced quality of life enjoying the powers and resources  of nature and the superpower of the creator of the whole universe.       

The acceptance and successful functioning of democracy established since the country's independence is a sure sign of health and strong foundation to nurture the economy with a very dynamic Legislative, redoubtable Judiciary and very competent Executive set up.However, with such a strong background, the nation’s social and economic progress cannot be said to be impressive to match its potentials.The country lags behind in performance despite the presence of strong Institutions, very dynamic markets and varieties of products and services without, however, fully benefiting the nation and its population. Somewhere something is amiss and adequate attention has not been given to identify where the shoe pinches. The age old saying that  “for want of a nail the battle is lost” is what is being experienced and this needs introspectiion in depth and quick workable solution.By any stretch of imagination, the nation cannot afford to miss the target fixed for being an advanced economy by  2047 and the economy should not derail from the fast track it is already on. From this angle a few thoughts / ideas that come to mind can perhaps be thought of for serious consideration and sensible implementation.These can be broadly categorised into Data collection and analysis,Innovation and Research in all segments of the economy, Viz, Investment, employment,Production,Marketing and distribution, and enhancing the quality of Governance at all Micro and Macro levels.The evaluation of performance should be based more on quality  than on quantity except in the creation of employment of human resources.The need to have a relook at the Economic Policies and suitable enunciation of fiscal and monetary policies keeping the 2047 objective in view is paramount and expeditious reforms have to be introduced to attract all round investments from everywhere, massive employment and production, generate  enormous wealth and equitable distribution of wealth inevitably reducing inequality, resulting in  lower cost of production and affordable level of inflation ensuring growth. If there is a will there's a way and the benefit of democracy i.e. participative management by the people can only be had and enjoyed by all with prosperity everywhere and welfare for all in every sense. 

The culture of freebies in a developing economy having  democratic set up only smacks of lack of credibility, inability of the people who offer and who accept freebies to think, act and adhere to the principles of democracy. It is only an admission of illiteracy of the people and prevalence of poverty due to failure of the policies pursued. Freebies make people not only lazy but also develop devils workshops bringing more harm to the society and creating avoidable hurdles in the economic development.Freebies culture just to win votes costs the economy very badly in terms of fiscal indiscipline,social and moral hazards eroding the values and ethics, the very health of electoral processes devaluing the very sanctity of vote and election of best leaders, indirectly providing opportunities for persons having criminal and other unworthy backgrounds to come to power by hook or crook. 

Apart from all the fiscal and monetary measures in force which have their own limitations to contain inflation IN GENERAL AND FOOD INFLATION IN PARTICULAR the additional measures can be administrative measures like preventing corruption, black money generation, malpractices in the procurement, storage, transportation and distribution of perishable and other price sensitive commodities having  INFLUENCE ON inflationary impacts, expectations, EXAMPLE POTATO, AND ONION. THE ONE solution THAT CAN BE THOUGHT OF, THOUGH A BIT DIFFICULT IN POLITICALLY SENSITIVE STATES IS THROUGH CREATION OF A FUND ‘INFLATION STABILIZATION AND NEUTRALISATION FUND’  AND SMARTLY AND DIPLOMATICALLY USE THE FUND TO CONTAIN THE MAN MADE INFLATION DILIGENTLY BY SPECIALLY SET UP CELLS  UNDER THE AUSPICES OF THE GOI / RBI. THE  CELLS CONSISTING OF GOVERNMENT, RBI  STATE GOVERNMENT OFFICIALS AND MEN OF EMINENCE PROVEN IN TERMS OF PROFESSIONAL AND SOCIAL WORK can be set up in centers where the pressures of inflation is suspected to emerge. THESE CELLS WITH THE BACKGROUND OF EXPERTS AND MARKET INTELLIGENCE INPUTS ON BLACK MARKETING, MANIPULATIONS OF SYSTEMS AND PROCEDURES,INITIATION OF INNOVATIVE AND CORRUPT PRACTICES TO CREATE ARTIFICIAL DEMAND AND SUPPLY INCLUDING KNOWN SEASONAL DEMAND AND SUPPLY OF ESSENTIAL FOOD ITEMS CAN HELP TO PREVENT CREEPING INFLATION TO A GREAT EXTENT. THE FUND CREATED BY THE GOVERNMENT AND RBI CAN TAKE CARE OF THE UNDUE INCREASES OR CRASH IN PRICES SEEN IN SOME PRICE SENSITIVE  COMMODITIES AND NEUTRALISE THEM WITH CAUTION AND DILIGENCE AND ALSO PROVIDE INPUTS AND  SUGGEST  WAYS  AND MEANS  TO THE MPC AND THE RBI WHY AND HOW PRICE INCREASES AND INFLATIONARY AND DEFLATIONARY CONDITIONS EVOLVE AND WHAT BEST CAN BE DONE TO MODERATE INFLATION BY MONETARY AND FISCAL MEASURES. Local Boards of RBI and the Offices of NABARD can be more proactive and in coordination with the state Governments can think of some administrative measures and develop some checks and balances in controlling the undue speculation in such sensitive commodities involving unscrupulous traders, profiteers and even banks by providing ineligible credit facilities. A caution list of black marketeers, profiteers, prepared using inputs from various sources would be of great help.   

Like Mutual Funds are subject to Market Risk, Inflation in a developing economy  is subject to Policy risk and Administrative risks  including unfortunately ethical risks as our educational system seems to have failed to promote value system, adherence to laws of the land in letter and spirit.The nation has to necessarily build up the data to capture the wealth creation, wealth concentration, wealth distribution, by having the statistics on population, details of  employment in organised and unorganised sector, people having stable sources of income with all particulars like agricultural activities, non farming activities, professionals of all kinds, people having different and multi sources of income and their tax paying capacity, tax compliance and tax evasion and methods of avoidance or evasion of tax etc. The need to have the data on the poorest of poor is a must to decide on freebies or tax concessions.The concept of freebies should never be in the dictionary of democratic system as it may distort the policies and bring in all sorts of malpractices in political, economic and social life. In this context the Finance Minister's philosophy, approach and intent brought out in the context of Digitalisation ie use of public money to create Digital infrastructure (ET dt 10/11/24) seem to be very apt and need to be fully explored  by all who deal with Finance. To quote the FM “our philosophy is for every Rupee we collect as tax, we should create assets..I should account for every Rupee so that it does not get frittered away.” This approach  to account for every Rupee should be practiced in letter and spirit by all Institutions, Corporates, Professionals of all kinds and even High net worth Individuals.The freebies in Vogue in  some states at the cost of the Public Finance  definitely cannot create any national wealth and help the nation and its people in any manner. The objective of Public Finance should always be to benefit maximum people resulting in mass welfare.The thrill of joy can be  there only if Public Finance is used  for all to enjoy. This should be identifiable and transparent. Greed of a few  for power and money cannot take away the happiness  and welfare of the majority in a democratic set up.       

 

The other areas where some serious changes can be thought of are: 

1 Income Tax Act 1961 Needs an urgent review and very exhaustive Reform to capture very comprehensive information on individual tax payers. The basic data such as Name of the Person and Pan Number.Address Permanent and Mailing address,Employment, Profession, Self  employed, details of assets and liabilities etc. should reflect in the Return. The returns should cover Sources of Income like Salary, wages, Rent, Interest, Dividend, professional fees, etc., Assets owned Movable and immovable with details and Values Details of Bank accounts and Aadhar Card No. number of  dependent Members and their details in brief, details of Credit cards, Debit Cards , UPI , etc The returns can be made compulsory for all either by way of compliance by the tax payers or by the different authorities through a system constructed based on needs.The very purpose / need for returns itself can be decided based on the alternative modes of collection of taxes.The wealth held by individuals and others in various forms in the country and abroad has to be captured smartly, intelligently, systematically and fruitfully to benefit the economy through change in economic policy, fiscal and monetary policies. Time is very ripe to have a total review of income tax return and introduce a self contained return so as to reflect the wealth creation and wealth distribution in a very comprehensive manner ensuring high level of tax compliance without any force but without any scope for evasion.Tax compliance should be a matter of pleasure and satisfaction and should not be a curse and headache.         

2 Reduction on inequality. The presence of  formal and informal economy widely seen in the country needs to be studied in depth by the authorities to get an idea about the fundamental reasons as to why the informal economy is growing and the issues that are getting generated and affecting the policy making process badly. Digitalisation has been observed to be a  tremendous success and with this background   the removal of physical currencies and attendant costs, administrative  headaches , corruption and black money hoardings can be a very viable and sensible option to be seriously considered and implemented. 

The denomination of notes of Rs 100 and below can be allowed till such time all transactions are covered by online payments. Coins are practically absent in circulation and people can be asked to surrender if any are left by chance. Since,even beggars are seen using QR codes  for  receipts and UPI modes for  payments, the relevance of coins in the system and their minting and circulation do not serve any purpose.Some seigniorage costs can be very well saved if coins are withdrawn

Digitalisation has found great acceptance among the masses and it is the most appropriate time for the GOI and the Reserve Bank to be more dynamic and proactive to capitalise the trend  and encash the opportunity to withdraw high denomination notes of Rs 500 and Rs 200 and bring out the black money held in different forms like currencies  and commodities.The need to eliminate corruption and black money to cleanse the financial system and minimise the inflationary expectations and inflationary conditions is very paramount to maximize the growth potential and reduce the widening inequality in the economy at the earliest to strengthen the momentum of growth.The chaos seen in the society because of the presence  of black money and corruption can be minimised if not altogether eliminated if digitalisation can be further accelerated with adequate checks and balances to prevent misuse and abuse using technology.       

4 Resource Mobilisation  by the Govt without having any inflationary Impact. 

STT revenues earned by the Government have no inflationary impact on consumption items. The approach of the Government to raise resources for development should necessarily be  without affecting the prices of goods and services consumed by the majority of the masses, Some of such transactions that are not price sensitive and not touched by ordinary masses can be real estate transactions beyond a cut off limit, high value commodities like Gold, silver, diamond beyond a cut off limit, Professional fees collected by highly skilled professionals like Advocates, Doctors, Architects, high level priests attached to major  temples, etc. Part of temple collections, Churches and mosques can be earmarked for economic development and the Government should have powers to levy them without giving room for adverse and religious linked biases, favors and criticisms. All human beings are equal before the laws of the country and the fruits of the economic developments should be equitably distributed among the people.

Gold Reserves: 

The country is reported to be having 27000 tonnes of Gold as family holdings apart from gold held by the Reserve bank and other miscellaneous financial institutions, temples, churches and other gold related business establishments. This gold holding is a biggest non performing asset and as such some serious efforts should be thought of converting this into a productive and very fruitful asset to benefit the economy and the people in a very sensible manner without having any impact on the inflation aspect.Likewise the GST also needs to be revisited to ensure that it does not have any possible cascading effect on the mass consumption goods and services. The authorities need to be extra conscious in having policies and levying of taxes without having any impact on the commodities and services consumed by the masses thereby expecting freebies, and leaving any  room  for other malpractices to be in vogue .         

The whole Governance can be said to be a success only if the people are happy enjoying a peaceful, comfortable, contented life free from anxieties of economic and emotional needs to survive somehow. Continuous and perennial inflation which is man made out of greed, mismanagement and  immoral acts cannot have any fiscal and monetary policy remedies is also a fact which needs to be recognised, understood and acted upon appropriately. This is nothing but the Moral Law which is Supreme and Divine and can ensure all  good for humanity. One has to aim and work for it .

Sarve Jana Sukhino Bhavanthu. 

TVG Krishnan.

( personal Views) 

Affordability of People, an emerging Concern. an

 Affordability of people , an emerging concern.

Apropos your Editorial Give Urban Spenders A Nudge to Spend (Nov1), though, the economy is poised to grow as per RBI, GOI and even IMF, the fact remains that the affordability of the  people particularly those in Urban areas cannot afford to give a boost to consumption demand and aid the the growth of the economy as envisaged in the background of high inflation,  economic policies in vogue and uncertainties on political stability and geopolitical situations. The real wages have been on the decline for quite some time without adequate compensation from the employers, fiscal and monetary policy authorities and even from the  so-called free market forces of demand and supply. It is high time the  authorities wake up  and see the realistic position at the ground level and attune their fiscal  and monetary policies in such a way that the salaries wages, interest  on savings, factor the unabated inflation with the support of very effective administrative measures including the persuasion and moral -suasion approach wherever necessary to ensure that the economic growth envisaged is on right track and the flow is very smooth and equitable.          

T V G Krishnan

Welcome and encouraging Change in Monetary policy

 Welcome and Encouraging Change in RBI's Monetary policy stance

This refers to the Monetary policy announcement by the Governor RBI(9/10/24) based on the deliberations of the new MPC committee since set up very recently in its recently held meeting  meeting. While the RBI has changed its monetary policy stance from withdrawal of accommodative to neutral taking into consideration the benign inflationary conditions, improved consumption, investments and continued strong financial stability, the overall confidence level exhibited on inflation front seems to be hawkish in the background of uncertainties and risks lying ahead, notwithstanding the fact that growth of the economy and inflation are well poised as of now. However, it is noteworthy to observe that though RBI has decided to maintain the status quo keeping the policy rates unchanged, the consensus of  all the MPC committee members to such a decision is absent as one new member of the MPC seems to have desired a cut in policy rate. All said, the RBI's  stance in the present scenario of disturbed  neo- political conditions and uncertainties in the International and domestic economic scenario seems to be accommodative and highly supportive of the economy to move in its  fast track as envisaged and motivated by the Government. The change in approach from accommodative to neutral is welcome and encouraging.            

T V Gopalakrishnan

Inflation perception and Reality

  Low Inflation is the key to ensure fast, equitable economic development and welfare for all.

Control high Inflation,bring down the  cost of living and cost of  production, reduce the inequality and realize the dream of the nation to be the most advanced Economy by 2047. High Inflation Kills the economy, people’s enthusiasm to live by honest means, tarnishes the image of Policy makers and administrators of the Nation and shatters the dream of all aspiring to make India, the most advanced economy  of the world by 1947. Inflation in moderation not only helps economic growth but also enhances respect for values and ethics, happiness and brings in the desired welfare for all. This is evidenced in almost all advanced economies Viz, USA, Australia, Japan, China,New zealand, Canada etc. The analysis based on data is intentionally avoided here as the policy makers, administrators and the well off categories in the society  have the wealth of knowledge and information and they may definitely be aware of  the ground realities among the vast majority of the people and their standard of life.   

Inflation remains and continues to be the main enemy of the average prople the so called common man  in particular  as of today. They lose their sense of thinking, judgment, adjustment to sentiments, emotions and life surroundings and calculations without any end and finally to anything to survive peacefully, comfortably and happily. Happiness linked to their earnings and survival are only for a few. For the majority of the people, fighting inflation throughout life, makes living in misery and destined to destiny unfortunately man made mostly. High Inflation also is a challenge to all Policy makers,politicians, administrators,sociologists and all well wishers of welfare of the people anywhere and everywhere.Very high Inflation is perhaps welcomed only by tax evaders, black money holders, anti socialists and those bad elements  who believe and survive exploiting the society by any and all means taking full advantage of  complexity in taxes, laxity in governance and  playing with  sentiments of different faiths diligently. This number is insignificant but is poisonous to spoil the food.       

By theory,inflation means, too much money chasing too few goods but by practice in an inflationary condition,what happens is that too few goods chase very few lucky people who have all the money and  affordability and leave those who have no affordability at lurch. Very high inflation takes the very charm of Life. Smart politicians in power make merry by offering freebies at the cost of taxpayers and the establishments are compelled to tolerate all corrupt practices making the position of governance vulnerable. Unfortunately a large segment of the population who respect values and ethics is caught in between as they cannot afford high prices to chase the goods and indulge in malpractice to survive the very high inflationary conditions by sacrificing a lot and miss a decent and dignified life. Not only can they fight  high inflation but they cannot think of surviving THE HIGH COST OF LIVING  as food, shelter and clothing apart from health, travel, insurance, electricity, water, social life cost unimaginably prohibitive. Factors responsible for uncontrolled  creepiing inflation not susceptible to regulatory measures also cause to increase the money supply and velocity of circulation of money, Increase in currency circulation due to official money supply, black money,  official build up of  forex reserves, Inflows of foreign exchange both official and unofficial,digital payments and increased rate of circulation of money, corruption and corrupt practices all around, increase in real estate transactions and attendant black money, unaccounted and unnoticed illegal payments both in formal and informal economies in varieties of details not being captured apparently by any means anywhere.Neither the Government, nor the RBI can have a track of all these except some broad parameters in the absence of meaningful governance and data collection,data analysis and enlighened public and sensivity of all concerned with administering the economy. India’s forex reserves almost doubled from $382 billion in June 2017 to $704billion in September 2024 a performance par excellence by any reckoning, but has brought with it the inflation pressures is also a fact which cannot be ignored while fixing the inflation target.         

The food inflation which fortunately gets the better attention of the authorities though remains unbearably high  for average people, also seems to be not properly assessed to the shocking surprise of the people as the official claims on inflation control do not seem to be reflective of ground level realities. Unethical pricing,under the guise of inflationary trends and smartness of traders and vendors to exploit mercilessly to make fast bugs also add to the desperation of the people.Technically speaking, all unfair trade practices and very high prices should attract the provisions of the Consumer Protection Act, but the people left for themselves to survive cannot afford to waste money and time to fight unfair trade practices and  high inflation in Consumer Court.

The Goods and Services Tax came into effect in July 2017. The Government of India introduced the GST mainly to replace the multiple taxes and have a single tax system.The GST, which replaced several indirect taxes, is a comprehensive, destination-based and multi-stage tax that is levied on every value addition.In simple terms, the GST is an indirect tax that is levied on the supply of all goods and services. It is ONE tax that is applicable all over India. (As per the GST act) An invoice bill from a provision store indicates MRP,GST, CGST, SGST and IGST.For instance in a bill of Rs797 for total  8 items purchased on 2/10/24, total taxable value is indicated as Rs 740.15 and the taxes levied are indicated as 56.84,28.42,28.42 and 0.00 respectively towardsGST, CGST, SGST and IGST.This means for an essential provision of Rs 740.15, GST alone comes to Rs 56.84 which works out to 7.68%. This Rs 740.15 Is paid from the tax paid pension income. If this tax amount can be used for quality food by a common man, the health, happiness and emotional quotient can definitely improve, bringing benefit to the nation’s economy.  

The GST no doubt is  innovative for all its merits and is good and simple. But, in practice and realistically,  it seems to be highly inflationary in its implementatin and largely perceived as the Government's Smart Tax to augment resources free of hassles.Though the GST is in operation since 2017, it has turned out to be inflationary and the cost of production and the overall cost of living have increased considerably. The GST collection which amounted to Rs 95633 crores in Sept 2017 though increased to Rs 1.73 Lakh Crores in sep 2024 (almost doubled ) has perhaps benefited the Government to contain the overall deficit, the cascading effect of such an increase has to naturally reflect on the products and services impacting the ultimate consumers whose income levels cannot definitely have doubled and have to bear the brunt of GST.Thus the inflation on food and non food items and cost of Living have increased making the majority feel let down and the perception of the people that GST is inflationary in character is just and justifiable, calling for an in depth examination of the rates and rationalization of the rates to acceptable and convincing rates. Willy-nilly , the  GST instead of emerging as a benevolent, egalitarian, and equitable tax benefiting the people all around, has in reality turned out to be an inflationary,inequitable,cash rich resource and widely undesirable / unacceptable among the masses and consumers of very essential goods and services. Besides, as envisaged this tax has not removed many other taxes directly and indirectly levied although some taxes are said to have been subsumed in GST. AS the proof of  pudding is said to be in eating, the proof of all merits of GST is yet to be established with conviction and acceptability by the people and perhaps by the Authorities as well, as the Inflation since introduction of GST with high rates irrespective of mass Consumable goods alongside all other major taxes in vogue continues to be a big challenge despite very accommodative and sensible monetary policy and unheard of success seen in the digital transactions possibly eliminating a big chunk of currency notes at retail levels in particular notwithstanding the fact that the  Pandemic Covid19  has destabilised the measures though. 

The inconvenient truth in containing ground level inflation faced by people at lower and middle class is that the policy makers and the authorities conveniently forget at policy implementation that the fiscal policies and monetary policies have got a cascading effect on the prices of  mass consumption goods and they go beyond the capacity of many .The food inflation in particular has crossed all limits of tolerance of majority of the poor and a very large segment of the population at the lower end of the rung struggling to survive leave alone understanding the need to fortify the food, improve the health and enhance the quality of life.The result is visible in the poor health of the people without adequate nutritious food intake.GST with all its merits has only added fuel to fire and the quantum leap seen in Digital Transactions has only oiled the smooth flow of money and increased money circulation adding to not only inflation but also to the identification of black and white money. This is amply evidenced from the number of people filing Income 

Tax returns assessed at 8.18 crore out of 140 crores of people in the Assessment year 2023-24 till 31/12/23. This is claimed to be an improved status in the filing of returns. The ever widening inequality seen in the country remains an unexplained proof that tax compliance leaves ample scope for improvement. While demoralization of people takes place through high cost of living, the divinity is also seen side by side through motivation and very high sounding promises and initiatives coming from all around enhancing aspirations of the people but with limitations for achievements. A maximum of 20% of the population may perhaps be able to enjoy the fruits of economic development whereas 80% of the population have to depend on food security, subsidies, freebies and other support systems . 

          

Taxes devoid of inflationary impact are rare and other levies recognised and unrecognized at various points of services and sales also add to inflation which by all means seem to go unnoticed perhaps by policy makers and administrators who are associated with inflation control .The fact of the matter is that inflation estimated at 3.65% for August / september  and talked about by RBI as somewhat benign does not reflect the actual increase in prices of vegetables, fruits, staple food items like wheat, rice, bread, roti, grains and oils.Even the prices of salt and Mirchi are becoming prohibitive. The day to day expenditure on only essential food items  does not convince the people that inflation is under control and manageable.Increase in wages, salaries, or dearness allowances etc cannot be a compensation at all to meet the real inflation at the ground level. On the contrary it  also adds to inflation as the demand from a segment of the people increases for the available commodities. The average person  feels the pinch of inflation and swallows all make believe statements emanating from all around . It is time the authorities reach these people , understand inflation and arrive at policies.

 

Apart from food inflation, the overall inflation and  the Cost of living have multiplied by leaps and bounds which go camouflaged from policy issues but adversely and very severely affect the cycle of savings, investment, employment, production, Marketing , Storage , Distribution, Transportation and Consumption. While fiscal policies and monetary policies, if well coordinated and implemented successfully and sensitively to each other's merits and demerits, can to a great extent help contain the  overall cost of production and cost of living. The full  benefit to the public at large and the Economy in general and the Country in particular can be envisaged and made a reality only if the Legislative, Administrative and Judicial system work in very close tandem keeping the objective of making the economy most advanced by the year 2047. Time is short and the task is huge.Readiness is all that matters. 

Welfare for all can be made possible only if food inflation is in moderation, fortified food is ensured to all, right to affordable education is guaranteed for everyone, laws of the country are respected and enforced equally for all without fear or favor and complied with by all citizens, effective governance and accountability in the whole nation turn into a reality and the fruits of economic developments and achievemnts are distributed fairly equitably and the entire humanity feel proud of being counted in letter and spirit and become part and parcel of the nations’ success all around. Existence of poverty and unhappiness  among  a big chunk of the population and enjoyment of affluence by a very few cannot go well with an egalitarian society. Noble thoughts, noble words and Noble Actions need perfect coordination from all those who matter in developing the nation. It is very apt to quote here  Mahatma Gandhi, father of our nation, that “economic equality means that everybody should have enough for his needs.” High Inflation cannot deny the rights of the people  to lead a dignified and minimum standard life. Is it not time to relook into the food inflation and cost of living and relate them to various varieties of taxes by policy makers in a VERY COORDINATED manner and make life comfortable for all segments of the population, by understanding and rationalising all  taxes realise the  dream of being an advanced economy by 2047. LET US MAKE IT AS PEOPLES’ MOVEMENT AND SEE THAT THE NATION ACHIEVES IT COMFORTABLY AND ENTHUSIASTICALLY. 

                    

T V Gopalakrishnan 

Views are personal.                 

  ( This article is published in Money Life on 7/10/24)           

Bit of Horse sense,But a lot of Luck

 

Dear Sir,

Apropos your editorial Three New Horsemen of the MPCalypse(oct 4), the responsibility of the new MPC is huge to maintain the accommodative monetary policy itself so far pursued in the midst of neo political disturbances. leave alone changing the policy rates favoring economic growth though highly desirable. The benign inflation experienced these days seems to be tapering off in the changed political and economic scenario abroad and the domestic food inflation which continues to remain high and unbearable for the  majority of the masses can be a real challenge for the new MPC, RBI and the Government as well to tackle. The economic policy needs to be tuned afresh to suit the tunes of the emerging political scenario at international levels along with the domestic adverse scenario changing very fast due to high cost of living , less consumption, lower savings, and consequent adverse investments and things like that allowing the envisaged growth possibilities an unrealistic possibility.The need to have a very imaginative and pragmatic fiscal policy at this juncture to nullify the cascading effect of increase in prices of food items due to GST and other taxes is paramount, at the same time to make the monetary policy feasible  to tweak the  policy rates to attract savings and encourage investments keeping the cost of production at a reasonable level  simultaneously is a herculean task .Smartness of the new MPC will be judged the way it can diplomatically coordinate the Monetary policy and the Fiscal policy aiming at the impossible possibility of ensuring price stability and economic growth and save the people from the emotional and financial miseries of high inflation and high cost of living.

T V Gopalakrishnan

Bangalore.            

(Edited version of this letter appeared in ET dated 5/10/24)

Improve the image of Tourism through meaningful Governance.

  The Need to Improve the image of Tourism through Effective Governance is paramount.  

I would just like to narrate below my recent unpleasant and unforgettable experience at Salem and the avoidable irritations and problems that I had undergone due to the lackadaisical approach and indifferent attitude of the service providers in booking the hotel online. The callous attitude  and insensitive response to the Customer’s woes after taking the full money only smacks of total disregard for customers,  disrespect for the authorities and lack of  awareness of the importance, the  need and the  development of our Tourism Industry. Sorry to observe that Greed unfortunately blinds the Wisdom is what I experienced. Given a chance, Cheat seems to be a business model as per my personal experience.

Invasion of digital payments and  online transactions have become very handy for unscrupulous, dishonest businessmen and fraudsters. Myself and my wife recently attended a marriage at Salem and our sojourn in Salem assisted by GOIBIBO (for our stay) claiming to be serving 5 Million Customers turned out to be an adventure and Life Experience Par- excellence perhaps of learning a lesson of modern day dependence on Technology and how people can be taken for an easy ride to make easy money without understanding the value of money, the emotional, sentimental, psychological, physical ,mental, financial  agony the aged people undergo in the process unnoticed by the authorities. Luckily we didn't suffer severely except for the loss of a few Rupees and physical and mental strain in a new place and surroundings for some few hours. No learning is possible without suffering physically, financially and mentally.

I booked through online a room offered by GOIBIBO in WINDSOR Apartments, Iyyan Thirumalligai , Salem Municipal town DOOR NO ¼, paying the full amount as an advance.for our one day stay commencing at 12 noon 7th September to 12 noon on 8th September 2024. Salem being an industrial and tourist attractive Center thanks to Yercaud and its natural surroundings,I found the rate in a service apartment is reasonable though comparatively high as subsequently experienced by me in Salem. However, the entire expectation of spending a night in the room offered turned out to be a total disappointment, nightmare and disaster when we saw the apartment in a dilapidated condition and the room in a very pathetic, unliveable and horrible state. Without having a second thought we canceled the accommodation on the spot and sent an email to GOIBIBO as advised by the receptionist in the Windsor Apartment with the assurance that I would be fully refunded. My worry at that moment was not the refund but to have our Lunch being aged and diabetic patients and finding alternate accommodation taking into consideration our health issues. Being strangers to the City and urgency to have lunch at that point of time around 12.45 PM.as we had exhausted ourselves travelling by car covering a distance of 200kms. The fact is that we missed taking a photograph of the room allotted to us in that melee.Unfortunately, the missing photograph of the room and the toilet which became the inevitable and essence of the issue for not considering the refund of our money by IBIBO was a surprise to us. May God save the noble minds with their greedy thoughts and avaricious actions. Does not matter as I can very well  understand the thoughts of petty minds. “Given a chance, Cheat”.Jane Do attitude of Customers Provides escape route as the remedial  and follow up measures are not worth the recovery of loss incurred. Never Had I been informed that the amount was not refundable.      

The concept of online booking is very good, innovative  and definitely convenient to save time, carry out the needed transactions and free from many of the known and unknown hassles, provided the culture of ethics, values, honesty and reliability are guaranteed by dependable practices and high levels of morality and integrity of the highest order are maintained at all levels of Execution and Administration. Herein lies the problem as this mode of carrying out the transactions has become a source of easy money and no traceability for further follow up and remedial action for want of any dependable and accountable administrative and other systems and procedures. Unfortunately this concept of online transaction seems to be an EASY source of FRAUD by smart operators, business establishments, involving banks and exploiting the people including intelligent, smart, literate , illiterate, gullible taking advantage of laxity in governance, corruption, ignorance and easy go culture in vogue knowingly or unknowingly developed with the invasion of liberalisation of rules under the guise of ease of doing business and lack of accountability seen anywhere and everywhere.The free and upper hand enjoyed by these types of business establishments can turn out to be a disaster and can definitely damage the reputation of authorities all around. Fraudsters adhere to a different KYC norms ( though not desirable ) which our own commercial establishments like banks, internet and mobile service providers fail to adhere although it is a strict requirement by rule.

 

 My objective of bringing a brief note is that such frauds and cheating of innocent, gullible public of all ages ignoring the impressions such perpetrators of frauds, tricksters, liars and cheats can create /  cause unpardonable  damage to the State’s and Nation’s  economy, image, very high culture, heritage, and civilisation and Law enforcing Authorities’ reputation, which by all means is avoidable and needs to be nipped in the bud itself however, or whatever  may be the might or powerful the people behind such business ventures. In the above referred case that I badly  experienced, I strongly feel that  the whole issue could have been  well avoided /handled better had the GOIBIBO taken  a little effort and care to ensure that only standardised and reputed service apartments and hotel come in their approved list and they are amenable to the norms and conditions well prescribed by the laws of the nation and the enforcement  authorities.The amount if at all refunded (though chances are very remote), would rather be spent in the upkeep of the room on my behalf or given for some charities.The most important aspect that I would like to highlight is that the technology commissioned by the GOIBIBO is customer friendly perhaps only to cheat or perpetrate fraud and the customer service support and seeking feedback and all is only an eyewash as the feedback sought by them will not reach them or is designed not to reach them as they know that the complaints are genuine and and their intentions / greed are met/is satisfied. This is my experience .My worldly knowledge /wisdom and understanding perhaps make me believe  that thieves, robbers, fraudsters outsmart others and authorities.as well. Survival for intelligent,  innocent, and ignorant people is becoming rather difficult.

I maintain a view that Tourists should carry some good image and impression of the state and places of their visits, the hospitality, the law and order situations, and a feeling of comfort, confidence, safety and well being and urge them to think of more of such visits often.       

I would like to emphasize here that the Success of businesses associated with the tourism Industry depends on their ability to make Travel And STAY more pleasant, Comfortable , memorable , highly reliable and trustworthy service. The authorities and all Service providers should feel proud of the facilities and hospitality they provide to tourists coming from India and abroad with lots of expectations from a fast developing nation. GOIBIBO definitely is a miserable failure by any standard and May God save them from disaster.  One can only feel ashamed the way they have modelled their business from my personal experience.    

Sarve Jana Sukhino Bhavanthu.

May God BLESS  US All  ALWAYS  and  IN All WAYS.

T V G Krishnan,

Honourable PM's Clarion Call

  PM MODI’s Clarion Call 

      I PROMISE To FACILITATE, You Must Promise to Innovate 

      I PROMISE STABLE POLICY REGIME, You Must Promise Positive Disruption

      I PROMISE Reform, You Must Promise to Perform

      I PROMISE HIGH GROWTH, You Must Promise High Quality

AT the inaugural edition of The Economic Times World Leaders Forum, Honourable PM Narendra Modi said, India is a land of opportunities and in its prosperity lies the prosperity of the world. ( ET dated 1/09 /24).

  

These are all words of Wisdom Coming from Noble thoughts and expectations of actions from all those who matter in the development of the Nation Politically, Economically, Socially and Technologically to ensure universal welfare for all. The Country has all the potential in terms of human and natural resources and the need of the hour is to use these resources optimally to benefit nature and  humanity. After all life is a  mystery and temporal whereas nature is perennial, all powerful and  provider of  everything that is needed  to sustain life. No doubt, Religion and Science provide the wherewithal,  guidance and support system to make the life wonderful, worth living enjoying the nature and adding to the comforts , discipline and order and bringing in some challenges of quality in living through evolutionary processes, civilisation, culture,  education and strong  administration to  avail  of all  opportunities and at the same time devoid of negatives for want of equality of Justice in the system.  Political Stability is sine qua non for the nation to look forward to developing the economy and provide social justice. The right leadership and the right direction of the economy can eliminate all stumbling blocks if any in moving  the economy forward without,  however, allowing rising of any malpractices which is an easy possibility in any democratic set up with a poor economic  background.

People the major beneficiaries of economic development should turn out to be watchdogs to prevent spread of corrupt practices and emergence of wrong doings taking advantage of lapses of administration, weaknesses of judiciary, and accountability of political set up.Wealth of the nation is for all to enjoy , but the way wealth is  generated, distributed, and deployed for further growth matters a lot and herein lies the smartness of the leaders and efficacy of the Governance system. Inequality in the generation and distribution of wealth needs to be minimized by provision of equality of opportunities in all respects. The key area perhaps requiring all round attention is reduction of Cost of Living , through reduction of Cost of  Education,Cost of  Production, Distribution, Marketing,  Traveling and  diligent elimination of Corrupt Practices seen practically in all areas of day to day life particularly of average person. The need for a very simple,  equitable and acceptable  tax system for all segments of the population and the economy is perhaps the KEY to kickstart the economy and bring in all round achievements to realize the dream of an advanced nation in terms of economic performance and welfare for all .From the development angle, a review of construction of Inflation Index, influence of GST, fuel levies, black money , corrupt practices seen in and around all high end consumption areas having both imported and domestic inflation impact would make sense followed by prompt corrective action. The proof  of pudding is in eating and not in the ingredients.        

Inorder to derive the full benefits of intended reforms, the time has come for all well intended people to perform well in their respective field with devotion, commitment, sincerity , utmost loyalty and above all  with adherence to the very noble  message of Bhagavat gita that  we should do our best and serve the respective profession with perfection and without expecting any self gain or reward. Reward comes in the form of national prospirity and welfare for all to share and rejoice.

Every institution and every individual irrespective of their stature in the overall system should feel highly proud of their involvement and contribution to take the country forward utilising all their potential and resources and see that the efforts they put in bring in benefits in terms of joy, delight. happiness, satisfaction and self actualisation. There should be unity of thoughts and actions among the Constitutional Experts, Administrators, Agriculturists,  Educationists, Financiers,Industrialists,Journalists, Law Enforcing authorities, Legislators, Religious Leaders, Scientists, Social Reformers, Technocrats and all Well Wishers who relish welfare of all in letter and spirit. The Year 2047 is not that far off to realise the dream of the developed world with the Readiness of All Citizens  under the leadership of the honourable  PM MAN OF DEVELOPING INDIA.

Loka Samastha Sukhino Bhavanthu. Hope the whole nation accepts the  promises,  works,  achieves and fulfills the aspirations of all everywhere.      

T V G Krishnan

( Personal Views )

Congratulations to Times of India Team

 Hearty Congratulations to the Times of India Team for its edition of 15th August 2024  i.e. India's 78th independence day for bringing out the  Independence Day Special supplement as an Advertorial and promotional feature presentation under the Title Leaders of Change. It is  not only a very timely and imaginative presentation but also the most appropriate,  very motivative and provokingly excellent food for thought  to the people of the Great Nation to introspect, act and  realise the dream of being a developed nation by 2047. The topics covered inter- alia include broadly Politics, Economics, Social and Technological aspects and provide enough of ideas  to all intellectuals and leaders engaged and sincerely interested in the development of the nation and making it a powerful economy of the world ensuring welfare of the humanity in the whole Universe in terms of peace, prosperity and fulfilment in every sense. Such a well intended and highly objective journalism would definitely add values and enrich the people a lot. Keep going strong and let us all be really proud of our nations' highly potential  capabilities, resources and  achievements. May God bless us All Always and in All Ways. 

Loka Samastha Sukhino Bhavanthu. 

TVG Krishnan 

(personal Views)

Deposits the Bread and Butter of Banks and THE DEPOSITORS as well.

 

         

          Deposits the Bread and Butter of Banks and the Depositors as well.

This refers to the  news report ' FM tells lenders to bulk up Deposits (ET 11th Aug)' .The need to enhance the deposits of banks is sine qua non for not only for  banks but also for the economy to realise the dream of the PM to make the  economy fastest growing  and realise the dream of our PM  to take the nation forward and outsmart other advanced economies to reach on top of the world by 2047. Banks, the most powerful engine for the growth of the economy, need to mobilise the savings of the masses particularly the household savings  lying in different forms searching for better returns, safety and liquidity despite high inflation, dwindling deposit rates, varieties of taxes  and risks of loss of savings itself in speculative ventures.Even the RBI Governor has goaded the banks to find innovative ways to augment deposits and minimise the mismatch between the deposits growth and credit growth. The fact that both the FM and the RBI Governor have  echoed the  same views on the need  for banks to augment deposits by all means , it should make the policy makers to introspect deeply on  arriving at the fundamental causes that lead to erosion  in  deposits, household  financial savings , diversion to speculative savings to make a little extra and think of a fresh approach to have well coordinated  fiscal and monetary policy measures through a well thought out economic policy. While the  Fiscal policy of the Government  can definitely incentivise the savers and banks to augment the deposits through tax changes  , the monetary policy of the RBI can definitely influence the banks to have innovative ways to attract deposits and quality credit deployment . Added to these, better, meaningful, result oriented administrative initiatives in enhancing the quality of Customer Service intended and rendered by banks at the ground level can do wonders in augmenting the deposits by leaps and bounds.  As long as the real rate of interest earned remains 0 or negative because of inflation and high cost of living , the banks cannot expect to mobilise  household savings and public cannot be expected to provide any  emotional and economic support  to the Government for all its economic development. Ground realities at micro level need to be understood and factored into while making economic policies  by policy makers and administrators while implementing the policies.       

Though  the  Middle class remains the backbone of any nation and the banking system remains the backbone of the economy the approach and treatment meted out to  the middle class  need to be reexamined, reviewed and effectively  managed diplomatically, logically, politically, financially  and socially in letter and spirit. Hope some sensible and noble thoughts and actions would follow from the authorities for a change in outlook in policies aiming at the welfare of the masses all round and  betterment of the economy covering all segments of the economy and faster growth of the country. 

Loka Samastha Sukhino Bhavanthu. 

T V G Krishnan

(personal Views )

Mysore Boat Ride in Karanji Lake. Very pathetic administration.

 I happened to visit the lake this Sunday the 28th July with family consisting of six members including two kids. Just for the sake of Kids, I purchased tickets at 12.20 Noon for six passengers for Pedalling Boat but it was a total chaos at the boarding place in the  absence of any organised approach to have a queue in order of tickets numbers and timing of Booking , distribution of jackets, priority for seniors and elders and kids to  have the ride. Might is right was the approach and literally pushing pulling and shouting were the arrangements to get into the boat. After spending an hour and finding no way of handling the crowd in a decent way, I decided to approach the counter clerk who was unfortunately found not only arrogant but also defiant of the way things are handled. Since argument with such insensitive fellows made no sense I decided to get back without going for the ride . I handed over the tickets to some uniformed person at the  main entrance of the Lake and in the absence of any supervisor worth the name advised the officials found  in Kwaki Uniform at the main entrance the matter and left the place for our good. It is not the question of loss of money but the way one carries an image of the arrangement and callousness  and insensitivity of the administration is something definitely avoidable if at all some attention and care are taken care of by those who manage the show. Only very few will take the pain to report out of love for the country and better image of the administration.  

Since Mysore attracts tourists from all over the world and having experienced by them top class arrangements in handling the crowd in a decent and highly organised manner, the expectation of the crowd in enjoying a visit to Mysore and having the joy of seeing the Mysore attractions in a dignified manner and carrying an image worth keeping for long is natural. But unfortunately the arrangement was missing and no semblance of any supervision and accountability for such a small avoidable lapse was found except for selling tickets .Very sorry state of affairs indeed. In this context, I would like to draw the attention of the readers to the concluding para of the  Editorial that appeared in Times of India dated 30th July 2024 "Cities Our tragedies" which says' Urban Chaos and zero oversight by municipal bodies are India's terrifying new normal.' 

Dr T V Gopalakrishnan.

     

RBIs message of ZERO TOLERANCE on Banks'Regulatory and Compliance lapses.

                             RBIs message  of ZERO TOLERANCE on Banks' Regulatory and Compliance lapses.

Apropos to the  news item RBI to Hand -Deliver a message of Zero Tolerance on lapses (Et 9/7/2024), the need to boost the trust in banks and bring them back to be the powerful engine of growth to the economy though mobilisation of deposits and judicious deployment of credit is paramount in the background of depleting household savings in banks and the need for expansion of growth of credit to the essential sectors of the economy to meet the target of the Government to achieve the status of a developed economy by 1947. Having ensured better management of credit portfolio through reduction of non performing assets of banks by solid steps, now it is time for banks to take care of depositors who provide the bread and butter to banks, by enhancing their entitled real  interest rates on their savings devoid of taxes , improved customer service particularly the elder and super senior customers and rebuilding the trust in banks which is  seen to be eroding for  no valid reasons other than the tendency to ignore the customers and adopt technology without human intervention and need based Artificial intelligence. The fiscal policies of the Government need to be essentially people and growth oriented and the financial system particularly the banking system which holds the key to ensure fast and equitable growth needs to be sufficiently strengthened and secured from fraudsters, fraudulent borrowers, misuse and abuse of technology and laxity in Governance standards. The proposed address by the Dy Governors to the Chief Financial Officers and External Auditors are very timely and this needs to be supported by the fiscal incentives from the Government through the ensuing budget to be presented on the 23rd of this month.

T V G Krishnan

( Views are personal)

Sustaining Capital Market and the Highly Bullish Sensex need Imaginative Fiscal policy.

 

Though the trend seen in the stock market is encouraging  due to both enhanced participation of retailers in the market and improved performance of the economy, the need to sustain the stability in the market and confidence in the economic growth is paramount to realize the dream of the Government to achieve the developed status for the economy by 2047.The fact, however, remains that the entire bull run does not seem to have  the full backing of the strong  fundamental macroeconomic factors like mass physical production and employment expansion in tune with the global expectations and also not so encouraging global trends in terms of growth, employment and favorable geopolitical conditions. Even domestically, the widening inequality and uncertainties seen in retail inflation in particular food inflation affecting national savings , employment, investment and production trends can have an adverse impact on the capital market as this segment alone cannot prove to be a support system to sustain the economic growth envisaged. No doubt political stability and the well deserved psychological boost provided by it so far in the system can do a lot of wonders , but the real success can be counted only through very imaginative fiscal and monetary policies capable of taking the full potential of the country to meet the global challenges seen politically, economically, socially and technologically. The capital market boost is welcome but needs to be  made healthy, reflective of all round progress in terms of sustainable savings, investment, employment, production and above all fair and equitable distribution of wealth. Rationalization of both direct and indirect taxes factoring therein the need to bridge the gap between the rich and the poor, aiming at fair distribution of wealth created through dividend distribution, inflation control to help the poorest of the poor, enhancing the  household savings potential to generate demand for goods and services and  keeping the cost of production at reasonably low levels are perhaps some of the  the essential  measures available to the Government to achieve the economic growth  and keep the macroeconomic factors at encouraging levels. This may call for some harsh decisions  to include petroleum products under GST and rationalize GST rates in such a way that the change in rates does not add to inflation but helps to reduce the inequality between the haves and have nots through tweets in the rates by differentaiting goods and services which have inflationary and non inflationary impacts.For instance while any change in rates in respect of mass consumption items like food and travel which has cascading effects on inflation can be minimized where as change in the prices of luxury items like Gold , diamond, foreign travels and high luxury items which are non inflationary can be thought of to lessen the inequality and fair distribution of wealth. Security Transaction Tax and some other innovative products to augment revenues of the government without affecting the cost of living of the masses can also be thought of. The overall approach should be to generate more wealth to benefit all people through enhanced employment, productive investments, fair distribution of wealth through salaries, dividend, bonuses, etc and ensuring perfect and full  utilization of all resources without any leakage of income generation by capturing and improving quality data.  

         

                                Loka samastha Sukhino Bhavanthu 

T V G Krishnan