Economic Theory and well off people

This article reads well and is an indication that no economic theory what ever may be its proven success rate in any advanced economy does not work in India.This establishes another theory that well off people in Indian society are not affected by the general theory of price effect on demand.The fact that FMCGs perform well in India is evident as to how the well off society in India behave differently despite rise in prices due to their increased propensity to consume which is inelastic to the increase in prices.This only shows the prevalnce of black money and the ineffectiveness of the taxation policies and their implementation.In our economy which is characterired by predominance of black money, corruption,mal adminisration,it is uncharacteristic to compare the economic theories of advnced nations.The realities of poverty,unemployment and ever widening disparities of income and wealth have to be factored in while evaluationg the economic theories.This article should be an eye opener.

from: Dr.T.V.Gopalakrishnan
This is in response to the article that appeared in Business Line dated 15/04/12 by TCA Srinivasa Raghavan)

Posted on: Apr 15, 2012 at 09:05 IST

Prices of Real Estate

Dr.T.V.Gopalakrishnan , Mumbai , says: Property prices will come down in 2012 provided Govt is seious in curbing black money and corruption.The prices do not reflect the purchasing power of an average Indian. The rate of interest and the cost of funds in the economy have been ruling very high and the EMI and cost of real estate are beyond the reach of many. The mismanagement of the economy if rectified and administrative reforms which include accountability are introduced in all regulatory areas the cost will automatically come down.The real estate transactions need to be made more transparent and brought under a monitoring system using information technology. Cash payments need to be eliminated and there needs to be a tie up among banks,the purchasers,sellers and registrars of properties.All real estate transactions above a particular cut off limit should be tracked bY Income tax DEPT. If the Govt is willing,the property prices can be brought down considerably.
9 Jan 2012, 1845 hrs IST

(This appeared in ET dt 9/1/12)

Govt and Lokpal bill

Dr.T.V.Gopalakrishnan , Mumbai , says: The GOVT has hot been observed to be sincere and honest in eradicating corruption and black money in the economy which take away the strength of the economy. The Lokpal bill could have been brought out by the GOVT right royally sensing the mood and demand of the people. The awareness among the people about the corrupt practices very cleverly perpetrated by politicians and bureaucrats has been well spread by Sri Anna Hazare and his team and it is not easy for any force to erase that from the people. Earlier the Govt realises the better for the present and future Govts. Time has come with or without a lokpal bill to remove corruption from society and a proper bill will only be a facilitator.With the passage of an effective bill the Govt can earn the lost image and goodwill and it should put all positive efforts to bring out a bill acceptable to the society. Trying to be oversmart in avoiding an effective bill in the name of politics will not be tolerated by any right thinking person.
1 Jan 2012, 1615 hrs IST

(This appeared in ET dt 1/1/2012

Make the Service Meaningful for self and others in society:

“People , it is said , can be placed in three classes; the few who makes things happen, the many who watch things happen, and the overwhelming majority, who have no idea what has happened”. The bank officials in general and public sector bank officials in particular have to necessarily find their place in the first category as by any standard they enjoy all possible comforts one can think of in a developing economy and they are comparatively in a commanding position by means of resources and support they get from the authorities to be of great service to society.

Corruption has been rampant in India and it has become a subject of discussion even among illiterate masses who are unfortunately the worst victims as they are at the receiving end in the sense unless bribe is given, they do not get their entitlements as citizens of this great nation. It is more than six decades since the country got independence, but have the people got their economic independence and dues for a comfortable and peaceful life is the question lingering in the minds of all right thinking human beings. The bank officials right from top to bottom can do a lot to improve the living conditions of masses and have the satisfaction of serving them in letter and spirit and giving the support system to give a big boost to the economic growth provided they get fully absorbed and involve themselves with commitment in the discharge of their responsibilities. The mandate for this has to come from within and for that everyone has to do an introspection to satisfy himself or herself as to whether justice has been done to the society which takes care of everyone’s need and to some extent greed also.

The celebration of Vigilance Awareness week has been going on for decades and the taking of oath on elimination of corruption has become a ritual and has been taken faithfully by each and every employee of Public Sector during the week. Bank employees, by and large are not corrupt, is a great consolation, but are they fully satisfying the expectations of the economy or the society consisting of around 70 percent of the people living below poverty line? It is not that banks alone can remove the poverty in India, but they can easily come to the rescue of poor people and give them the recognition they badly need in society for their survival.

Banks’ raw materials are basically money and people but they discriminate a lot, not by rule but rather by convention in their day to day business by not entertaining people of less means. This is a fact which cannot be ignored and this is exactly the reason for the financial inclusion not being a success despite persuasion, compulsion, motivation, incentives and encouragement. Why this reluctance and discrimination on the part of a bank official who deal with public deposits and authorities want financial inclusion by all means? There are millions of bank employees scattered throughout the length and breadth of the country and they are better placed to bring people of less means and less privileged under the banking fold. Employees have their own servants, iron wallas, plumbers, electricians and contacts with all categories of people in a society right from pan wallas to Gold merchants .Many people like carpenters, dealers in scraps, waste materials, traders etc do not have bank accounts or do not operate the accounts even if some have. If employees turn their attention a little and no special effort is called for, millions of people can be brought under banking fold. All their contacts can be easily encashed and many can be brought under banking fold. The officials have to take financial inclusion as an opportunity to show humanism and at the same time help the needy to improve their lot. Through financial inclusion bank employees can provide life to many and this will the greatest satisfaction one can derive from service.

KYC is a weapon to serve the customer better by understanding him and his requirements fully and not to kill him. Here the bank officials can perform better and add business to the bank. The present day banking is enjoying lot of freedom, products and advanced technology to improve business. Full understanding of Financial Inclusion and Know Your Customer norms offer excellent business opportunities and help the bank to comply with the authorities’ requirements. By adopting a human approach rather than being mechanical, even the NPA menace which has been growing like a cancer in the banking system can be tackled to a great extent. Mind should be devoted for service and service alone. Will the employees rise to the occasion and be more humane in their responsibilities to the society? By being humane, one derives great mental satisfaction and no money or compensation can achieve that?

I wish each and every bank employee would emerge as a great leader with the qualities defined in Sloka-21 of Chapter -3 of Bhagavat Geetha which says “Whatever action a great man performs, common men follow. And Whatever standards he sets by exemplary acts, all the world pursued”. It is time for each and every bank employee to set standards in his actions.

(Views expressed are personal)
Dr. T.V.Gopalakrishnan,

Time to clear off real estate accummulation

It makes sense to sell real estates particularly flats at current prices or even at discounted prices to clear off debts and avoid future losses. The market sentiments are against corruption and black money and accummulation of wealth by a few at the cost of masses will not be tolerated anymore. If the Govt is serious in tracking black money and accummulation of illegal wealth, the prices of real estate will have to crash sooner than later. This is the ideal time for builders to get rid off the stocks even at a lesser margin and profit than to incur heavy losses and debt.The advice by HDFC chief makes sense and worh pursuing.

T.V.Gopalakrishnan (Mumbai)
06 Nov, 2011 03:12 PM

New Version of Loan Mela and the PSBs

The Govt's plans to dole out Rs 10000 to aam aadmi to boost rural economy through PSBs is nothing but replica of the 1980s loan melas and do not sound good economics or good politics. The banking system though financially sound thanks to Reserve Bank's regulation and supervision,but it is still under the Govt's direction is a curse.Particularly PSBs at this rate cannot be expected to be run on professional lines whether they come under RBI or not,as longs as Govt's interference is there. The system of financing agriculture is in a mess and the contribution of agriculture to the GDP is dwindling year after year. The presence of NABARD exclusively set up to develop rural and agricultural development is never felt and the RRBs, Local area banks and cooperative banks have equally failed to give a boost to the rural segment.Six decades of independence have not been beneficial to the rural masses is a stigma to our political system and economic management.Giving out doles like this to the poor only indicates that people can be fooled and they have not come out of their ignorance to have an independent thinking to assess our system of administration of the economy. This approach is nothing but an intelligent way of exploitation of the poor. This is another form of corruption perpetrated on the poor in our economy by the Government. It is time to change and see that real economic activities are introduced in our rural areas using the institutions set up with public money. Will the Govt act ?.

Dr.T.V.Gopalakrishnan
(This appeared in ET E paper dated 10/09/11).

Corporates, Real estate sector and irregularities

T.V.Gopalakrishnan (Fortworth, Texas)
23 Aug, 2011 04:37 AM
The editorial is apt and timely and calls for an immediate action from authorities. The real estate sector needs a comprehensive law and an Ombudsman exclusively to protect the interets of home buyers. The corporates involved in real estate business have umpteen ways of extracting money from prospective buyers of properties and practically there is no accountability for the funds raised by them. Transparency in accounting and auditing is virtually absent and buyers have nowhere to look forward to register their complaints. Money is raised towards corpus funds without any standardised approach towards maintenance, funds for car parking are raised again without any standardised guidelines, terms and conditions are altered without the knowledge of customers, final terms included in the deeds are not maintained and undivided share of land included in the deed are subsequently sold without the knowleddge of customers,etc. are some of the very common mal practices the companies resort to. It is time an audit by a Govt appointed agency is conducted in all multinational companies who indulge in real estate business along with other business and mix up all accounts. Corruptive practices in multi national companies are perhaps worse compared to those in Government and needs to be closely monitored. It can help to bring down the real estate prices and minimise black money transactions also. Such checks and balances definitely bring some order in the transactions.
(This appeared ET E paper on 23rd august).

India and grammar of anarchy

Your strongly worded editorial 'India and the grammar of anarchy' unfortunately fails to identify the genuine reasons why Mr Anna Hazare has to fight the elected Government taking the public support against widely prevalent corruption which make the life miserable for the common man in India. (August 20,2011) It is incorrect to interpret that Mr Hazare demands parliament to create the unelected post of ombudsman, chosen by a panel of worthies, with sweeping powers to haul up any public official on graft charges, without having a full grasp of the whole issue.
The issue of corruption and the suffering of common masses in India have been there since decades and the successive Governments in power have failed to find proper solution to eradicate / minimise the problem. The movement by Anna Hazare against corruption got its momentum in the recent past because of indifference of the Government and casual approach to take action against series of scams detected at Government level and put in place a meaningful system to prevent mal and corruptive practices. The suffering of the masses In India for their day to day life because of corruption at various levels is perhaps unimaginable in US and hence such an editorial.
It is right to say that the remedy to fight corruption through an institutional set up as per the well established Constitutional procedure is more ideal and appropriate. But the Government's response and intentions are not convincing. The bill proposed by the Government to fight corruption is only an eye wash as per the civil Society headed by Mr Anna Hazare and will not serve the purpose. The only way available for the public to fight for an anticorruption bill passed through Parliament is through this movement led by Mr Hazare. The insensitivity and inaction of the Government to understand the suffering of masses due to rampant corruption has forced the public to resort to this sort of agitation. Anarchy in Government's functioning is the cause and Anna Hazare's fight is the effect. Exceptional situation demands exceptional solution and Hence Anna Hazare's most appropriate method to seek solution for the perennial problem.

Dr.T.V.Gopalakrishnan,

( This was sent to The Wall Street Journal).

Independence in India and PM's speech

15 Aug, 2011 07:40

This is another year of Independence Day celeberation. Unfortunately, 64 years of independence, have not been helpul to remove the poverty from the Country and PMs have made wonderful speeches soothing only for the ear. If speeches can remove poverty and problems of this great nation, people can be happy as all the speeches since the 1st independence day to the lat one ie yesterday's will not lag behind. How long can the nation fool the masses is a big question that remains unanswered and our rotten politics, poor governance have only helped to create black money, corruption, and degeneration of society and its values. It is time for all Indians to introspect and see whether we are in the right track in our nation building efforts. Let us believe in actions based on morale, ethics, values and principles to achieve a welfare society. Speeches can wait.

This appeared in ET E paper dated 15th August 2011.

T.V.G Krishnan

(personal views).