The global financial crisis –best opportunity to bring world economies closer

The present global financial crisis, which emanated from the failure of financial system in US and spread to developed and developing economies alike thanks to inter -linkages of economies under liberalization, is threatening the very stability of the world economy. Seemingly, a Great Recession if not a repetition of 1930’s Depression is gathering momentum. As per the IMF the world will likely contract this year in a great recession. It expects global growth to slow below zero this year, the worst performance in most of our life times. Although the conditions of economies in 1930 and now differ widely due to substantial changes witnessed in political, economic, social and technological scenario over the last eight decades, the solution so far tried by various countries through fiscal and monetary polices, more or less on the same pattern adopted in the 30s, has not met with the desired success. There is a pall of gloom and crisis of confidence everywhere. IMF MD told financial leaders recently that “continued deleveraging by world financial institutions combined with a collapse in consumer and business confidence is depressing domestic demand across the globe, while world trade is falling at an alarming rate and commodity prices have tumbled.”

The present crisis needs a different approach altogether. It requires a socio economic- educational and cultural approach involving government, financial, social, educational institutions and cultural organizations. The problem can to a great extent be tackled culturally and socially by encouraging tourism both domestic and international. The maxim ‘demand creates supply’ has to be recognized and adopted for implementation by all economies in letter and spirit. Tourism industry can create all round demand and supply will have to be necessarily met.

Tourism can be at local, regional, state and international levels depending on the profile of people. Economies have to be actively proactive in encouraging and supporting each other in developing both national and international tourism. Educational tours, social, cultural and business visits, travels for the purpose of basic and advanced learning in different areas of science, technology and humanities within and outside countries will create demand for all sorts of goods and services. This is the time to organize both at national and international levels seminars, workshops, symposiums etal to understand in depth the causes that led to this deep crisis, the extend of damages inflicted in different economies and arrive at solutions which are easy to implement. The miserable failure of risk management so far understood and practiced need to be revisited, redefined and replaced with simple measures which are intelligible and implementable and finally capable of de- risking institutions and economies.

Domestic tourism subsidized and induced by the governments by offering incentives will encourage travel creating demand for infrastructure like roads,transports, communication, hotels, motels and entertainments. This is the time for Corporates and all types of large scale organizations all over the world toincentivize tours and travels through innovative compensation packages. This will also help inter-alia improve productivity within the organization.

Economies have to open up socially and culturally paving way for economic development. International tourism is the way out. Since exotic financial products introduced have ruined the financial system in many countries starting with US and brought disaster to the real economies through out the world shaking the confidence of people every where, the only pragmatic way to revive the confidence and bring back the people to active and constructive economic activities is through educational tours, social and cultural visits and that is possible only by way of induced international tourism. Understanding the socio, economic. cultural political conditions of different economies by people belonging to different classes / groups will also go a long way in framing and implementing economic and fiscal policies for the future which can minimize damage and maximize gains. People around the world need worldly exposure in these days of global integration and this can be achieved only by encouraging international tourism.

Though the idea may not look impressive and appealing in the present scenario of all round crises, it can turn out to be successful and turn around the economies if implemented with commitment and sincerity. It is comparatively inexpensive, easily implementable and definitely result oriented. Risk if any, is bearable and manageable. Supplies to meet the varieties of demands of tourists which include among other things food, shelter and clothing apart from transportation will automatically give a boost to varieties of economic activities including services. Timing of tourism and meticulous implementation of incentive package will do the trick. The direct and indirect benefits that accrue to the economies out of well managed tourism will be substantial and will turn out to be a boon particularly for real economies consisting of agriculture, manufacturing, exports, imports and services.

The confidence lost has to be regained and for that measures other than fiscal and monetary measures have also to be seriously considered and implemented. The ultimate objective is to achieve economic recovery for the whole world and the activation of tourism industry both domestic and international can be one of the easy options towards this end and it should form part of the stimulus package.

Dr.T.V.G.Krishnan

Can Gold Reserves Rescue the World?

 The world is in financial crisis and the economies including developed, developing and underdeveloped are struggling to survive the recessionary conditions. Except perhaps Gold, the prices of all other assets have nosedived creating panicky situation and leading to erosion in the confidence of investors to find alternate avenues of tangible investment. Gold is emerging as the safest and dependable investment to hedge against inflation and erosion of confidence in the whole system and values in every sense. There is an unusual rush to invest in gold and the price of  the yellow metal has been skyrocketing. Investments in gold beyond some prudential limits either at individual levels or national levels or central bank levels in the present day crisis conditions only takes the situation from bad to worse.  Is it justifiable or warranted in the present world economic conditions is a billion dollar question to fiscal and monetary authorities of all countries that are expected to provide the much needed confidence and reliefs through appropriate measures to revive the sagging economies. Even there are reports that some of the leading Central Banks are accumulating gold instead of liquidating gold and providing monetary liquidity to support the liquidity starved economies.

 

 As per the data  at the end of 2004, Central Banks and official organizations held 19% of US $ 4.39 trillion  of gold ever mined as  a reserve asset  (http://en.wikipedia.org/wiki/official_gold_reserves). This is the time for Central Bankers to come together and do an introspection on the need to keep so much of gold reserves when the real economies are in doldrums and  are badly in need of liquidity for both short and long term investments.  No doubt gold serves as a hedge against high inflation and other intangible assets but too much of attachment to gold in these times of crises is neither economically desirable nor socially acceptable. These investments in gold by those who can afford help only to widen the chasm between the haves and have nots.  Unfortunately even the poorer countries try to amass gold at any cost irrespective of their capacity and the need for the same from the economic, social and cultural angle. The love for gold needs to be reviewed and it is time for all central bankers to review their gold reserves and liquidate part of the reserves and improve monetary liquidity in the system. The heavy fiscal deficit incurred by various Governments and monetary concessions offered by Central bankers can be to a great extent offset / adjusted by liquidating part of the gold. Gold reserves any where should be viewed on par with Non Performing assets as far as the economies are concerned and there should be a prudential limit fixed on such assets. The approach of countries, their central banks, IMF and the World Bank should  be to review the position of Gold in the fast changing global scenario and take away the excess glitter it enjoys and use it to provide the much sought after happiness and welfare in society through creation of employment opportunities.

 

  

 What the world requires badly today is  a golden age and not gold reserves. The build-up of gold needs to be discouraged and concerted  efforts have to be put to convert gold into liquid monetary resources and utilize  them for  productive investments in avenues capable of creating massive employment leading to massive consumption. It is time for various governments and central bank authorities to think differently in respect of investments in gold and initiate appropriate measures to liquidate part of the gold, improve liquidity in the system and encourage productive investments. What the world is facing today is an unusual situation and this has to be countered only with an  unusual solution. May be the gold reserves can rescue the situation. International Monetary Fund can take the initiative in the matter.  The wisdom lies in converting the gold reserves into social good for the welfare of humanity.            

Fraud Mitigation Fund

Frauds in Capital Market occur at regular intervals and volumes are written on the modus operandi of the frauds, the losses suffered by many on account of frauds and preventive steps to be followed to ensure against recurrence of frauds. The detection of frauds makes sensational news and people not affected by the frauds enjoy the excitement, criticize the system deficiencies, evaluate the efficacy of our law enforcing  authorities apart from indulging in characterization of all those  connected with the regulatory and supervisory mechanism. With the visual media being very active in exposing the people behind the frauds, the whole thing becomes a time pass for many. The ultimate sufferers on account of these frauds are the Government, the economy, and some innocent share holders. Every time a fraud comes to light the government becomes a defendant and puts all efforts to cover up the case, salvage the image and put up a brave face as if nothing serious has happened although  the loss of confidence and the pecuniary loss on account of these frauds are something serious and cannot be easily quantified.

Some of the major frauds detected during the last two decades and the amount involved roughly are given under.

                                   

 

Scamster	Year	Amount (Rs Crores)
Harshad Mehta	1992	4000
Bhansali	1995	900
Dinesh Dalmia	----	595
Abdul Karim Telgi	2000	171
Ketan Pareikh	2001	1500
Ramalinga Raju	2008	8000

 

 

Apart from these few detected frauds, there are several other irregularities which go unnoticed. Institutions also had to be closed down/forcefully merged with some healthy institutions to save deposits/investments of public   and restore the confidence level in the system. They include Global Trust Bank Ltd, Madhavapura Coop Bank, United western bank Ltd, Lord Krishna Bank Ltd and several small and medium sized cooperative banks and financial companies.   There are several instances of companies which have raised huge funds from capital market and were allowed to be liquidated, vanished. Public have lost heavily and the economy has suffered very badly.  SEBI should be having the list of companies which have raised capital and vanished subsequently without compensating the gullible public who were lured to invest in capital market through IPOS. The overall loss,  on account of scams, frauds, irregularities and fudging of accounts with the knowledge and without  the knowledge of the authorities, to the exchequer  and ultimately to the public runs into thousands of crores directly and indirectly.     

Unless and until some very concrete measures are in force to compensate the innocent shareholders  / investors / depositors who become victims of frauds perpetrated by promoters of companies such as Satyam, they will not have confidence in capital market. Investors are often taken for a ride by promoters, market operators and even by regulators by either not adhering to the regulatory prescriptions or taking advantage of the loopholes in the supervisory system.  Apart from compensating the share holders  for their losses on  account of frauds committed  by promoters, there should be severe penalty for any irregularity observed in capital market related transactions and it is advisable in this regard for SEBI to have a separate FUND mobilized from all listed companies / those connected with companies and market operations. Promoters, Board of Directors, Accountants, Auditors, Bankers and others including Regulators who are party to any irregularity should be made to compulsorily contribute towards this fund.  Penalties should be imposed depending on the magnitude of irregularities / loss to the exchequer. SEBI should maintain this fund and make it transparent for public to see. The size of the fund over a period will turn out to be a good indicator for all to see to what extent the listed companies adhere to the regulations and what type of irregularities are being committed / detected. This will prove to be a mechanism to discipline accountants, auditors, bankers and all connected with the companies' operations. The fund can also be utilized to meet the expenditures connected with detection of fraud or subsequent investigations and finally to compensate the investors... This will go a long way to restore the much needed confidence in capital market.

Public investors need compensation in the form of money and that alone will satisfy them. This requires a fund and it should come from the perpetrators of fraud and not from the Government. The Message should be very clear to promoters of companies, Board of Directors, top executives, accountants, auditors, bankers, regulators and who ever is connected with the affairs of the companies. This is the social responsibility of the Government and part of the corporate governance of the companies.

 

Dr.T.V.G.Krishnan    

World Financial Crisis, Global Recession and the role of Twin institutions viz; The World Bank and the IMF.

World Financial Crisis, Global Recession and the role of Twin institutions viz; The World Bank and the IMF.


The world is in financial turmoil and the global economy is in recession. Economic slowdown, Unemployment, Loss of income, Erosion of confidence in the leadership and regulatory system are the results. Because of the inter-linkages of various economies, the contagion effect is faster and the resilience of individual economies has limitations. This has adversely affected both the developed and developing economies. In US and other developed countries the financial sector crisis got passed on to real sector and in some developing countries like India the real sector crisis gets passed on to the financial sector. Fiscal and monetary measures taken by various Governments and Central banks of different countries have not helped to tide over the crisis. Situation is worsening day by day and the fear of facing a depression comparable to that of 1930 world depression is being talked around. Is it so bad and really unmanageable as is made out to be? The conditions in 1930 and the present conditions have no comparison what so ever taking into consideration the developments witnessed in the world’s political, economic, social and technological scenario particularly during the last four decades.

The present days problems are basically man made and have come out of greed. The financial system which is to provide only a supportive role to the real sector is unfortunately allowed to take a lead and the result is there for all to see and experience now. In the name of innovations under the guise of Risk Management several exotic financial products were introduced and encouraged without examining the essentiality of such products and ensuring adequate regulatory system so that the products really served to support the real sector and emerged as something to be proud of. On the contrary the so called innovative financial products vanished from the scene without any trace leaving the real sector in doll rums .The problem in the real sector is a reality now and nobody knows how to come out of it. The reasons for 1930 depression and present day recession are therefore strictly not comparable although the results are more or less same.

The failure of regulatory system and the lack of initiatives from the world renowned institutions like the Word bank and the IMF who have played a key role in reconstructing the world economy from the devastations of the 1930 depression and the world war, have in a way contributed to the present state of affairs. The twin institutions with their expertise and knowledge of the economic and various other conditions of different countries could have visualized the dangers the world was facing the moment symptoms appeared in the US and come out with some concrete measures to prevent the present world crisis. They could and should have played a pro active role and initiated measures to sustain the growth momentum in some of the developing countries particularly the BRIC group which has the potential to support the world economy in its present crisis. Billions and billions of dollars have been spent and earmarked by various central banks and governments to bail out their respective economies and financial systems, but there are no indications of any tangible outcome as production of real goods and related services have come to a stand still or declined considerably may be due to lack of effective demand from developed countries in particular. There is basically crisis of confidence every where and this is where these two institutions have to take the lead and resolve the crisis. This is the time for these world level institutions to muster resources, identify the gaps and potentials for real sector development taking the positive sides of linkages of integrated economies. This is the best opportune moment to transfer technology and technocrats from advanced countries to developing and underdeveloped countries to develop the very essential infrastructure in these countries which can sub serve the needs of even the developed countries. Such a measure will help to solve the unemployment problem in the developed countries and at the same time take care of employment of huge human resources scattered all over the world. Some of the specific areas where these twin institutions have to seriously think and be pragmatic in solving the present global crisis are as under.

Physical infrastructure.
Development, upkeep and modernization of infrastructure like public transport system i.e; land, air and water particularly in underdeveloped regions, developing nations and including developed nations should be taken up on top priority basis seeking cooperation of all. Similarly other infrastructure like generation of electricity, provision of shelter and clean drinking water to the whole population of the world irrespective of the region where they belong to will go a very long way in arriving at some solution for the present crisis and the whole world would become a lovely place to live and enjoy. There are about 185 countries in the world and they are in different stages of economic development and some countries for no fault of theirs suffer for want of some basic needs for their human race to survive. This is the best opportune moment for all to join together and come to the rescue of the human race who suffers for no reason of their own. Development of all possible physical infrastructure will automatically increase the demand for money, men and materials and help transfer of best technology of the world to places where they are needed. Monetary resources have to be found from through out the world and this is not the time to be commercial minded and self centered. World Bank and IMF can take the lead and with the cooperation of all countries, the present crisis can/should be easily overcome for the benefit of mankind in any part of the world.
Social infrastructure:
This is another area, where world attention is called for. Education, health, general living standards, social systems, customs, civilization, culture, ethics and values etc vary from country to country impeding the economic progress. World Bank and IMF can take some initiatives to identify the problems in different countries and take some pro active measures to improve the living standards particularly in developing and undeveloped regions. This step alone will increase the demand for social goods and help the nations to prosper. These two institutions have to take a lead to think out of the box and come out with really innovative measures in all areas of social development without leaving any scope for greed and exploitation. This is the time for these institutions to have more of a philosophical approach rather than purely commercial to overcome the present crisis. The result will be tremendous bringing economic prosperity every where.


Ups and downs are natural and the present crisis should be taken as a god given opportunity to bring all nations together irrespective of their economic, social and political status and work for the welfare of humanity as a whole irrespective of their religion, caste and creed. These twin institutions with their experience, expertise and knowledge of the economic social, political and technological conditions of each and every country can do wonders and once again prove their mettle in saving the entire world from the present crisis. Technology particularly information technology should be put into optimum use to save the whole world from the present rut. Human welfare through out the world should be the long term vision and getting out of the present global crisis as early as possible should be the short term mission of these world class institutions.

Dr.T.V.G.Krishnan

Measures urgently required in Capital Market

Measures urgently required in Capital Market


Frauds in capital market occur at periodical intervals and each fraud is different from the earlier one. Fraudsters outsmart the authorities with their ingenuity in bypassing the regulatory and supervisory norms and taking every stake holder for a ride after winning the full confidence of all stakeholders. This is the Corporate Governance in practice in majority of corporate bodies. Truth only Triumphs is more practiced in breach than in action. The authorities have to factor in the ground realities of Corporate Governance when the rules and regulations are framed and supervisory norms implemented. If every body practices in letter and spirit the principles of Corporate Governance the present crisis the world is facing and our own country is subjected to could have been avoided if not eliminated.

To ensure smooth operation of the capital marked and to minimize the occurrence of frauds it is essential that some of the ground realities and market practices have to be thoroughly understood, areas where possibility of commitment of irregularities have to be identified and appropriate checks and balances to be introduced with provision for close scrutiny and supervision. Public should not be victims and their hard earned savings should be safe when they invest in companies although there is an element of risk in equity investments compared to bank deposits. Capital formation requires public involvement and loss of money due to greed of some promoter share holders as it happened in Satyam should be prevented at any cost. There should be credibility in the rules and regulations and loopholes if any to take the system for a ride need to be plugged. The market particularly secondary market should have flexibility, liquidity, transparency and above all public confidence in order to attract funds from individual investors, institutional investors both from domestic and international markets. To ensure credibility and continued support for the market SEBI has among others a key role to play and from this angle the following measures would be worth attempting.


1) Companies having subsidiaries, joint ventures and having direct or indirect interest in different areas of business need to be classified separately and brought under close regulation and scrutiny. In such cases the manipulation of accounts under circumstances beyond the control of promoters and otherwise to cover up certain difficult circumstances would arise and it would be easy without much of an audit trail and the genuineness of the transactions to indulge in inter-institutional transactions of very high magnitude which cannot be easily established. This is what has happened in Satyam’s case. As per paper reports about 200 companies are understood to have been established where Mr. Ramalinga Raju and his family have direct and indirect interest. How such companies are allowed to be established, from where they have brought capital, the need to have so many establishments, the competence to run (if not to run with the public funds) so many companies etc should have been under the regulators Notice and this information could/should have alerted the market, SEBI, bankers, auditors, investors, and the Government.

2) Promoter share holders stake in the company should be kept always under lock-in period and disposal of shares should be with specific knowledge of SEBI. Under any circumstances these shares should not be pledged and loans taken against these shares without the written consent of SEBI and the pledgee should not dispose of the pledged shares without prior knowledge of SEBI. Timing of pledging and selling of such pledged shares is very crucial in a volatile market and SEBI should factor this aspect while framing rules and regulations for pledge of promoters’ shares.

3) The promoter share holders’ interest in other companies and full details of relationship with other companies should be fully made known to SEBI and
The information should be subjected to periodical verification by an independent agency consisting of Accountants, Auditors, Bankers and Lawyers with proper accountability fixed. This information needs to be disclosed in the Balance Sheet and separate certificate to this effect to be obtained by SEBI from the Company’s auditors and from the auditor’s of the companies where promoter shareholders have interest.



4) The banks’ exposure to promoter shareholders needs to be closely monitored. Their exposure to companies associated with the promoters main company also should be kept under constant watch. Deposits and advances against such deposits need to be closely monitored to ensure against any suspicious nature of end use of funds.

5) Inter-company investment is another area to be closely regulated. For instance the need for investments by L&T in Satyam computers Ltd is questionable by the shareholders of L&T as there is erosion in the value of Satyam’s shares and along with it the value of L&T shares. It is still not known as to how many companies have such investments in Satyam and lost their money? It is better for SEBI to prescribe some measures for such inter company investments. There can be a ceiling on such investments and this ceiling can be linked to the capital of the investor company or invested company and under any circumstances such investments should result in losses for shareholders of Investor Company. Such investments need to be adequately and suitably hedged. It is better SEBI reviews inter-company investments and come out with some prudential norms to protect the interests of shareholders particularly public shareholders. The banks’ exposure to companies which have inter company investments should also be restricted as banks resources are generally scarce and should go only for productive purposes. This sort of exposure should have higher risk conversion for capital adequacy ratio. SEBI and Banks should come out with proper norms for exposures to companies having inter-corporate interest and investments.

6) Auditors should be different for companies having common promoter shareholders. It is advisable to include lawyers as part of audit team to ensure that the transactions involving heavy cash transfers, real estate, family members, close friends etc do not violate laws of the land. Legal system has many weak links and enforceability to secure shareholders’ interest under circumstances like Satyam type of fraud should not face any hindrance what so ever.


The capital market which is the essential link between investors and companies has to function smoothly enjoying flexibility, liquidity, and credibility. While range bound volatility is required in market, but the violent fluctuations particularly on account of irregularities committed by promoter shareholders, banks and institutional investors have to be totally eliminated. This depends on the ability of the market regulator. Fundamentals of the economy and fundamentals of the company are complementary to each other and character and conduct of the promoter share holders are major contributors of the fundamentals of the companies. This is the foundation for success and endurance.


Dr.T.V.G.Krishnan

If seeing is believing,then experiencing is realising

If seeing is believing then experiencing is realizing

It is essential for politicians, bureaucrats and persons occupying high positions who include lawyers, industrialists, professionals of eminence in different fields, academicians who matter in society in framing public policies, rules and regulations, system and procedures and executing them for general welfare of the people, to undergo temporary stay at least six months incognito in a place to understand the experiences of a common man in our society and how he struggles to keep himself and his family alive overcoming more than anything man made rules and the discrimination exhibited in enforcing the rules and at the same time making avenues to make revenues in the process.

He should move to a new place where his identity is totally unknown and try to set up his family consisting of one or two kids and parents. The exercise starts with hunting for a good house with reasonable safety, adequate water supply, and access to bus stop, school, banks, post office, market and medical facilities. He can consider himself lucky if he gets a house without verifying the know your customer(KYC) norms the landlords have set for their tenants.

The rent is negotiated and the lease is finalized after paying the advance rent depending on market practices. It may vary from three months rent to a huge sum VIZ Deposit without reference to monthly rent without any interest. This has to be generally paid in cash as cheque payment is inconvenient to the landlord. The whole system of leasing a house has undergone some changes in some metropolitan centers thanks to frequent terrorist attacks and problems encountered by the landlords because of tenant’s misbehavior and misuse/abuse of the premises let out. Registration of lease agreement is now insisted upon and it involves additional expenditure towards advocate fees, stamp papers and other miscellaneous expenditures all to be shared equally by the tenant and the landlord.

Once he settles his housing issue, real struggle to live starts. Getting a gas connection is a Herculean task. It requires a ration card or else a very high recommendation to get under VIP quota. Getting a ration card has its own procedures and one has to find time, energy and diplomacy to tackle petty government officials apart from greasing their palms suitably. If one is lucky he can get one in a month’s time or wait indefinitely. Then think of getting admission for the kids. Timing is very essential element here. For academic year starting from June one has to keep trying right from October/November in the previous year. Otherwise one has to carry a letter from VIP to get preference over others from assured quota. Admission involves minimum donation and there is no prescribed ceiling. Cash is preferable and happily accepted. School fee includes library fees, books and stationary, sports and cultural activity fees, transportation and normal fees for coaching for twelve months. This can be conveniently paid in one lump sum payment or in three or four installments. Once school admission is over, one has time to arrange for admission in coaching centers. This is to ensure that kids do well in studies and be prepared to crack admission in well established institutions.


Once the basic and minor responsibilities are over, then one can think of going in for major responsibilities for an election card, change of address, change of vehicle registration if the place of residence is a different state, mobile connection, renewal of driving licence and passport if falling due etc. The system and procedure, expenditure towards officially prescribed fees and the other charges for getting the work done involved for each item of work will make any normal person go in for saintly life but cannot do so as the procedure to become a monk leaving wife and family is still more difficult.

It is high time our administrators and policy makers experience the ground realities an ordinary citizen faces in our country and realize themselves that life is really an adventure. It is time for all of us interested in the welfare of humanity to remember and practise the saying that I shall not pass this way again .Any good that I can do, or any kindness that I can show , let me do it now. Let me not defer it or neglect it, for I shall not pass this away again. It is possible to make the living enjoyable provided the ambience is made comfortable. It is in the hands of policy makers and enforcement agencies. It is apt to quote Swami Vivekananda here “They alone live, who live for others, the rest are more dead than alive.”


T.V.G.Krishnan

Next scam is in Communication area

After IT, the visible boom in India is in communication. Several Companies have come up with revolutionary facilities in communication and the services are really commendable and people are benefited and enjoying. But the services come at a heavy cost although they are made out to be cheap. The overall billing system is not fully known to customers and the customers feel that they are paying more because of some hidden charges which are not verifiable and humanly impossible to keep a track of them and get them satisfactorily checked. Affordability of people to go for such facilities has no doubt increased thanks to visible prosperity in the economy, but this appears to be exploited by the service providers. Besides system and procedure to ensure against fraudulent accounting, auditing etc does not seem to be foolproof as is evidenced in Satyam Computers Ltd where fraud involving around Rs 7800 crores has come to light.

In the area of mobile services, the charges presently levied particularly under the prepaid category do not satisfy the transparency norms if any and customers end up paying what ever is asked for. The validity period under prepaid is one way of taking the customer for a ride as it is very difficult for the subscriber to have his own satisfactory terms complied with. There is no way the subscriber can come in contact with the service provider other than the recorded message route which is very convenient way of avoiding direct contact with customers. Prepaid services are generally availed of by comparatively lower strata of society and it is easy for service providers to exploit them.

It is high time the authorities wake up and ensure that the accounting by service providers is okay and there is no exploitation of subscribers. It is essential that there should be some mechanism for customers to contact service providers and get their doubts convincingly clarified. Otherwise suspicion will continue to linger in the minds of subscribers. There should be some more transparency in the method of collection of subscription money by service providers particularly in respect of prepaid service. Nothing to suspect in their services needs to be assured to the subscribers.

Dr.T.V.G.Krishnan