Inflation and behaviour of people

The inflation has started affecting the behaviour of people in the society as his inability to cope with the pressures of living finds expression in their day to day interactions.The arrogance seen among the lower class people particularly among small vendors of essential items, auto and taxi drivers, servants etc is on account of high inflation and they are not able to make both ends meet leave alone other expenses like education, medical, travel expenses etc.The other day I had to engage a taxi for a distance of 7 kms to catch a train around 11PM in the night in Kochi and the driver demanded Rs 250 ignoring the Govt rules and normal prudential practices citing the inflationary pressures and all round increases in prices of commodities and services.One cannot dare to think of going for a house and providing good education to children after meeting his minimum expenses for living, Milk, provisions, vegetables etc are so costly and the non affordability of majority of the population irritates.

 Dr.T.V.Gopalakrishnan

Posted on: Sep 11, 2012 at 15:58 IST in The Business Line  

Price Hike for Diesel

The expectation that the economy will improve despite all the problems of corruption, black money, has been completely shattered with the hike effected in Diesel Price and cap introduced on LPG cylinder per family. This Govt will ensure that aam admi will die of poverty, frustration and desperation.Already with the persistent inflation the common man is suffering and finding it extremely difficult to make both ends meet, leave alone giving education and medical assistance to family members. The insensitiveness of the Govt to the suffering of masses has reached ultimatum and it is not that easy to erase the wound in the hurts of the people caused by the indifference of the Govt. God save the people.( This comment appeared in Times of India dated 14/09/12 )

 

Service cost in Banks are high

The analysis is very good. The cost of services can be brought down considerably if the banks can improve the credit portfolio and the expenditures incurred on the ever increasing Non Performing Loans (NPL) are minimised if not avoided. NPLs cost banks heavily in the form of legal expenses, monitoring and supervision charges, maintenance of securities if any, provisions,loss of opportunity costs because of nonavailability of funds for recycling, write off of loans etc. In fact all these costs are unfortunately passed on to all stake holders of banks other than bad borrowers and nobody bothers about it. In this back ground, this sort of analysis will help the service takers to understand that they are subsidising the NPLs of banks and the borrowers enjoy at the cost of others who include the common tax payer who have not entered banks.

from: Dr.T.V.Gopalakrishnan

 

(This comment is in response to the article on 'Customers are paying more for Banking Service' in Business line dated 14/09/12)

Posted on: Sep 14, 2012 at 08:01 IST

Payment system

Payment System

Payment system should be improved in such a way that it should gradually lead to elimination of corruption, black money and high denomination notes of Rs 500 and 1000.Prepaid instruments should be made compulsory in high value transaction areas like bullion and other commodity markets, whole sale markets in vegetables and fruits, scrap dealings, etc. Trails of transactions should not be the immediate objective although it may be the end result,as it may discourage many to switch over to PPIs. The efficiency of the Payment System should be one of the yard sticks to assess the inherent strength of the economy. This will also make Financial and banking inclusion a reality over a period. The economy will definitely get a boost if payment system is improved with all safety,speed and accuracy. With improved IT system, the efficiency of the Payment system can easily be targeted and achieved. Many of the present ills of the economy, the Payment system will prove to be a solution.      

(This appeared in Business Line dated 13/09/12).

Retail investors and capital market

Attract retail investors to Capital Market

The editorial is well written pointing out how and where SEBI has failed to fix capital market. It is a pity to note that only 5 percent of household savings are in shares and debentures ( Business Standard dated 12/09/12). The efforts from SEBI if any to increase the percentage of household savings in shares and debentures have not borne fruit only reflects the lack of seriousness, initiative and involvement  on the part of SEBI in this direction. The reasons for poor savings in capital market are basically financial illiteracy among the people, failure of banks to bring well to do people under banking fold, the reluctance on the part of corporates to attract and retain retail investors despite SEBI’s instructions to have minimum of 25 % of share holding by retailers, lack of corporate governance to compensate the retail shareholders adequately with good dividend and bonus shares and persistent inflation at very high levels making it difficult to save in shares where the rate of return and capital appreciation are not attractive enough. The SEBI and the Banks should put some joint efforts to educate the households and attract them to market by facilitating opening of bank and demat accounts without any hassles. The Corporates also have to do their bit to attract retail investors as a matter of policy.

(This comment was in response to the Editorial).

STT Proposal

STT proposal

This refers to your editorial “Reality check on tax avoidance” (Business Line, September 4). The proposal to introduce General Anti Avoidance Rules in this year’s Budget has shaken the confidence of investors and affected the sentiments of the market. The Shome Committee’s suggestion to defer the implementation of GAAR brought a sigh of relief to the market. The move to do away with short term capital gains and enhance STT is a good suggestion. The STT can be different for purchase and sale transactions, for different volumes and for different securities. It can also be introduced for gold and silver transactions.

 

( This appeared in Business Line dated 5/09/12).

 

T.V.Gopalakrishnan

Committee on CRR- RBI governor

This joke from the Governor has conveyed sufficient message to Mr Chakraborty RBI Dy Governor and Mr Chaudhari SBI chief. The doubt is whether these two persons are cutting jokes on each other by referring to some important policy issues like CRR. If it is so, it is time for both to be in different places as the issue of CRR has created lot of controversies and even the Chamber of Commerce has commentd on it saying that CRR without interest should continue.The economy is having its own problems and the senior bankers should discuss something serious to prune down NPAs and pass on the benefits to other stake holders The issue of reducing interest is dependent on efficient management of assets and liabilities factoring therein the regulatory requirements. The CRR has been there since the establishment of the RBI and it cannot be withdrawn just like that when the banking system is not able to recognise the ills of the economy and adjust itself with the safe management of public money.
( This is in response to a report on CRR committee appeared in Business Line dated 4th Sep 2012)

from: Dr.T.V.Gopalakrishnan

Posted on: Sep 4, 2012 at 20:47 IST