My Page Happy Onam 2012

M G Warrier’s

My Page



A monthly bulletin from M G Warrier incorporating select published letters/articles (and some stray thoughts based on what he read/saw and wrote during the month). Mailed during the last week of every month. Please send your responses and views to mgwarrier@rediffmail.com



Vol II, No 8, August 2012







HAPPY ONAM



•

M G Warrier, 2005/1-D, DREAMS, Bhandup(West), Mumbai-400078 (9349319479)



Dear Reader



For those of us who write mostly when we find aberrations from the normal or observe hijacking of policy by the rich and the powerful, the month of July has been hectic. My Page will cover only select letters and comments to make life peaceful for its readers.

Regards



M G Warrier



Time magazine dubs PM an underachiever: TOI, July 9, 2012

Comments:



M G WARRIER (MUMBAI)

It is Dr Manmohan Singh’s achievement that developed countries have started taking note of happenings in India and are now getting panicky about India not going as fast as they expected, following the LPG(Liberalisation-Privatisation-Globalisation) prescriptions with implicit obedience which they are used to from ‘pockets’ like oil-rich countries or for that matter even Singapore. No one knows better than Dr Manmohan Singh that India cannot cut and paste policy initiatives tested in countries like Singapore or Switzerland (with less than 10 million population) or even UK which has a developed infrastructure and 100 per cent literacy. Though he has not fought an election yet, India’s PM knows the problems of 1.2 billion people and if he is going slow on certain measures which will help the commercial interests of business and industry, but will make the poor poorer and rich richer, you cannot put the entire blame on coalition compulsions. Incidentally, India’s GDP growth today is at a comfortable rate compared to the ‘developed’ world.





Online comments under ‘Health Ministry planning inspection fee…’, ET, 020712



M G WARRIER (MUMBAI)

08 Jul, 2012 03:01 PM



On the face of it, the proposal to levy a fee for inspection of drug manufacturing plants would appear to be an innocent effort to improve the financial position of the Drug Controller General of India (DCGI) making it possible for the organisation to improve its infrastructure and augment its manpower. The additional expected annual revenue is Rs100 crore. The comparison with US proposal to charge inspection fees where the revenue increase is $1 billion to be collected mostly from overseas generic drug companies may not be very relevant in this context. Though in an ideal situation, barring defense, governance (including internal security, law enforcement and administration) and social security, all industries and services should become self-financing, time is not opportune in India for all regulatory bodies to independently collect charges for services. There is a difference between toll collection for bridges and flyovers under BOLT and regulatory bodies administering statutes collecting a fee for inspection. As this proposal is only at a nascent stage, one hopes the Finance Ministry will consider all these aspects and more importantly, provide adequate budget to DCGI for carrying out its mandated responsibilities.



Business Line, July 7, 2012

Making gold work

This refers to the article ‘‘Managing gold, a policy challenge’’ (Business Line, July 6).

This is a timely alert to the Government and the RBI to manage India’s domestic stock of gold to the country’s advantage. Instead of handling the issue piecemeal, the Government and the central bank should evolve a gold policy which should factor in:

The imbalance between import and export of gold and gold-based products;

Mapping the domestic stock of gold and jewellery;

Gradually converting the official gold stock with government and banks into standard gold, acceptable internationally;

Charging inspection fee (there should be arrangements for inspection) and an annual charge payable to government on gold beyond a stipulated limit retained with private individuals/institutions.

This will partly finance the security costs borne by the government.

M. G. Warrier

Mumbai

Managing gold, a policy challenge;BL 060712

Online comments



As the country is having a handsome domestic stock of over 18,000 tonnes (according to World Gold Council estimates, which must be conservative) at least a sizeable portion of which could be made available for domestic commercial use, given the will to manage the stock with appropriate incentives and disincentives, GOI should think in terms of reforms in gold management policy. The suggestions in the article should be seen in this context.

It is sad that there is no perceivable effort from the government’s side to discourage further accumulation of ‘ornament gold’ in households which is partly responsible for financial loss to middle class families in India and to some extent, dowry-related issues and security problems.

Last year the Tirumala Tirupati Devasthanams (TTD) deposited 1000 kg of gold with State Bank of India. These deposits earn a small interest also. This is a healthy move and is expected to trigger similar moves by other temples, institutions and may be, private individuals/families.

RBI also should, at this stage, seriously consider realignment of its portfolios especially under forex reserves, increasing gold holdings.

Online comments under report “Finmin pushing ATMs for financial inclusion”, ET, 050712

M G WARRIER (MUMBAI)

05 Jul, 2012 02:04 PM

The hurry with which UIDAI project and White Label ATMs are being marketed by finance ministry involving financial inclusion and direct transfer of benefits under government sponsored programmes is intriguing. Going by Economic Survey 2011-12, UID project has so far generated 13 crore Aadhaar numbers and assuming a 75% capability(10lakh UID numbers a day) utilisation, it would take at least 5 years to cover the country’s population. To pressurize citizens to acquire UID numbers these have already been ‘recognized’ as valid proof of identity and proof of address for various purposes including LPG connection. Pushing ATMs in places where banks are yet to reach with the promise of ‘direct transfer of benefits’ to a clientele yet to be initiated to banking services is another case of putting cart before the horse. Past experience in areas like microfinance has shown that, given an opportunity, private sector has been merciless in collection of service charges from helpless customers. At this stage, therefore, it would better to go slow on allowing non-banking entities to operate ATMs. Instead, banks should be encouraged to open more ATMs in smaller places where bigger branches (in terms of number of customers) exist. This would be more cost-effective and ensure more reliable service. Another option worth considering is fast-tracking the proposal of Department of Posts to open ATMs and networking them with banks.





Hindu Business Line, July 2, 2012

All's not fair at work

Ramaprasad R.

July 1, 2012:

A globally acknowledged economic phenomenon is that government-run enterprises sacrifice efficiency for equity (or fairness). With the economic conditions changing rapidly across the world (mostly for the worse), it is time that government firms in our country enforce fairness from a business and economics angle too.

In India, it is almost a matter of right for most government workers to not report to work on time, complete their tasks on time or perform their duties properly. On the other hand, it is just the opposite for most workers in the private sector……………………………….



Comments:

This blanket indictment of employees across government and public sector is somewhat amusing. The categories covered include among others, defence personnel, railway employees, civil service personnel and all public sector employees. Defending their side of the story is not my brief. One should remember that GOI has not tolerated strikes in government establishments at any point of time. Whenever central government employees went on strike, invariably they failed and it took years for reinstatement of dismissed/suspended employees. The organized Indian private sector has always avoided hard work or going into remote areas where India lives. The success of IT sector or some city banks or oil companies do not add up to the country’s GDP. Blame the political masters for not allowing government departments and public sector institutions to grow with the times and improve HR and bring in state of the art technology in these areas. Many of them treat Govt employees as 'their' servants.

from: M G WARRIER

Posted on: Jul 2, 2012 at 18:53 IST





The Economic Times, July 13, 2012



CHAT ROOM



Keep your word



This refers to news report “Singapore Gives the Alarm to Asleep India” (ET, July 12). Here is a man who communicates his perception of India’s business environment and expresses his country’s expectation from a business-partner. Manmohan Singh assured the Singapore PM of India’s commitment to reinforce its status as an investment-friendly country. If the PM honors his commitment, it will be easy for the government to mobilize internal resources and tap NRI-funds-as different from FDI about which there is a controversy- adequate to make the country’s development agenda take off.

M G Warrier

Mumbai, July 12



Unedited version which appeared as online comments @Economic Times



Message from Singapore

This refers to the report “Singapore Gives the Alarm to Asleep India” (July 12). Unlike the rating agencies which manipulate and time their observations to satisfy or protect their masters’ interests, or a section of media which echoed the sentiments of certain business interests, here is a man who communicates his perception of India’s business environment and expresses his country’s expectation from a business-partner. This gesture elicited the right response from Dr Manmohan Singh who assured the Singapore PM of India’s commitment to reinforce its status as an investment-friendly country.

If PM honors his commitment, it will be easy for the government to mobilize internal resources and tap NRI-funds (as different from FDI about which there is a controversy) adequate to make the country’s development agenda take off. Though the Singapore PM asked for the skies in a different context, a business partner expecting ‘a predictable regulatory regime and a hassle-free, rule-based business environment’ is quite normal. This is what even the panwallah expects from the government and this is what is conspicuous by its absence in India today. Why blame rating agencies and Time Magazine?

M G Warrier, Mumbai

Hindu Business Line, July 14, 2012

Gold standard

This refers to the article “Resurrection of gold standard” (Business Line, July 13). Even if the Nobel Laureate Robert Mundell’s prediction that “Gold will be part of the structure of the international monetary system in the 21st Century” is unlikely to come true within the predicted timeframe, India has every reason to unearth and put to productive use, the country’s gold stock — hidden in households, religious institutions, moneylenders’ lockers and with people who conceal their wealth for various reasons.

According to media reports, observing that gold imports are contributing substantially to India's current account deficit, an RBI panel is looking into the aspects of devising some alternative routes, such as bringing out the gold that exists. The panel is also likely to examine whether domestic stock of gold can be brought into the mainstream by devising appropriate financial instruments. This is a step in the right direction.

People’s emotional attachment to gold in metal form will come down only if the government is able to infuse confidence about the effectiveness of ‘paper gold’ as a store of value with easy liquidity.

Awareness should also be created about the loss involved in abuse of gold for show-off purposes such as gold-plating of roofs, statues and flag-masts or in re-making of ornaments.

M.G. Warrier

Mumbai

(This article was published on July 13, 2012)



Online comments @ ET, July 13, 2012 on Singapore PM Lee’s expectations from India as a business partner:



M G WARRIER (MUMBAI)

13 Jul, 2012 09:09 PM

Unlike the rating agencies which manipulate and time their observations to satisfy or protect their masters’ interests, or a section of media which echoed the sentiments of certain business interests, here is a man who communicates his perception of India’s business environment and expresses his country’s expectation from a business-partner. This gesture elicited the right response from Dr Manmohan Singh who assured the Singapore PM of India’s commitment to reinforce its status as an investment-friendly country. If PM honors his commitment, it will be easy for the government to mobilize internal resources and tap NRI-funds (as different from FDI about which there is a controversy) adequate to make the country’s development agenda take off. Though the Singapore PM asked for the skies in a different context, a business partner expecting ‘a predictable regulatory regime and a hassle-free, rule-based business environment’ is quite normal. This is what even the panwallah expects from the government and this is what is conspicuous by its absence in India today. Why blame rating agencies and Time Magazine? M G Warrier, Mumbai





BS, July 11, 2012: Rajeev Malik on ‘Misunderstood macromanagement’

Online comments:

Posted by: M G WARRIER July 11 , 2012, 13:32 IST

A well-balanced analysis of the present policy scenario. Here again RBI may not be able to make the right noices or bring about changes suggested here unless there is strong fiscal policy support. First, our economic advisors in Delhi must convince GOI the need to augment the forex reserves and generally strengthen the balance sheets of major national level institutions including RBI and al public sector organisations including PSBs. Cash-rich private organisations should be made to take supportive measures. The governemnt should resist the temptation to depend on public sector organisations including RBI and PSBs for 'window-dressing' budget. These institutions should be allowed to plough back profits for developmental initiatives and for augmenting reserves.



TOI, July 11, 2012 HM PC’s remars about prices of petrol, ice cream and mineral water

Online comments

M G WARRIER (MUMBAI) 7 hrs ago

We are being taken for a ride by PC who wants to divert attention, on a day his likely ‘elevation’ as FM has become news, from the possible debate on his past adventures. He is the best lawyer in MMS cabinet. Let us get some clarifications from him. Like: i) What is the cost of production of one bottle containing one litre of mineral water? If the answer is more than Rs3/-, check it out. ii) Where does the Rs10/-(difference between Rs13/-, the price of one bottle of mineral water on Railway platform and the production cost) go? iii) Why UPA-II which is able to ensure adequate supply of mineral water in cities find it difficult to ensure supply of potable water in cities and other areas? (If potable water of reasonable purity was available, who will buy mineral water?) iv) Who are all the beneficiaries of large scale production of mineral water bottles and installation of bottling plants? It may take some time to answer these questions. I am sure someone is going to answer on behalf of PC.





We are being taken for a ride by PC who wants to divert attention, on a day his likely ‘elevation’ as FM has become news, from the possible debate on his past adventures. He is the best lawyer in MMS cabinet. Let us get some clarifications from him. Like:

i) What is the cost of production of one bottle containing one litre of mineral water? If the answer is more than Rs3/-, check it out.

ii) Where does the Rs10/-(difference between Rs13/-, the price of one bottle of mineral water on Railway platform and the production cost) go?

iii) Why UPA-II which is able to ensure adequate supply of mineral water in cities find it difficult to ensure supply of potable water in cities and other areas? (If potable water of reasonable purity was available, who will buy mineral water?)

iv) Who are all the beneficiaries of large scale production of mineral water bottles and installation of bottling plants?

It may take some time to answer these questions. I am sure someone is going to answer on behalf of PC.



Letters: PM knows best

Business Standard / New Delhi Jul 11, 2012, 00:07 IST

This refers to the report “Time magazine dubs Manmohan ‘underachiever’” (July 8). It is Dr Manmohan Singh’s achievement that developed countries have started taking note of India, and are now getting panicky about India not following the LPG (liberalisation, privatisation and globalisation) prescription with the implicit obedience that they are used to from “pockets” like oil-rich countries or, for that matter, Singapore. No one knows better than Dr Singh that India cannot cut and paste policy initiatives tested in countries like Singapore or Switzerland (with less than 10 million population) or even the UK that has a developed infrastructure and 100 per cent literacy. The prime minister knows the problems of 1.2 billion people and if he is going slow on certain measures that will help the commercial interests of business and industry, but will make the poor poorer and the rich richer, you cannot put the entire blame on coalition compulsions. Incidentally, India’s GDP growth today is at a comfortable rate compared to the “developed” world.

M G Warrier Thiruvananthapuram

Online comments under an ET Blog, July 10, 2012

M G Warrier says:

July 10,2012 at 10:34 PM CST

I think, in due course 'TIME" will help us define underachiever, UQ(Underachiever quotient), E2Q(Ethics Quotient), Corruption Quotient(CQ) and so on. Let us outsource the intelligence for doing this tough job.But it is amazing that thousands of people (including this 67 year old!) have started learning about 'underachiever' and are trying to join the TIME or very few of us, because of overflow of patriotism, searching for arguments to defend underachievement(don't search for the word in the dictionary, I have not used it in that sense). Nice time pass

Online comments under ET edit “For civil servants to work, political bosses must reform first”, July 10, 2012



M G Warrier (MUMBAI)



This approach oversimplifies the real issue. A national policy on prices, wages and income for the country in the context of the open market path now accepted, is overdue. This cannot come about without creating awareness among all stakeholders about the need for discipline and self-regulation within accepted norms even in an open market dispensation. Absence of such a policy leads to sporadic action when problems of national importance which have a bearing on the entire economy’s health crop up. Different ministries, industrial groups, media and those really affected by such off the cuff solutions talk and act differently in such situations. For historic reasons, number of employees in government and government owned/controlled organizations has been high and their salary structure from top to bottom remains interlinked irrespective of skills, tasks and output. Hierarchies will have to be restructured, excess staff in certain areas redeployed or pruned through appropriate exit mechanisms and recruitment, placement and in house skill development methods overhauled, simultaneously introducing a transparent system of industry/work area specific compensation and career development package.





M G WARRIER (MUMBAI)

It is Dr Manmohan Singh’s achievement that developed countries have started taking note of happenings in India and are now getting panicky about India not going as fast as they expected, following the LPG(Liberalisation-Privatisation-Globalisation) prescriptions with implicit obedience which they are used to from ‘pockets’ like oil-rich countries or for that matter even Singapore. No one knows better than Dr Manmohan Singh that India cannot cut and paste policy initiatives tested in countries like Singapore or Switzerland (with less than 10 million population) or even UK which has a developed infrastructure and 100 per cent literacy. Though he has not fought an election yet, India’s PM knows the problems of 1.2 billion people and if he is going slow on certain measures which will help the commercial interests of business and industry, but will make the poor poorer and rich richer, you cannot put the entire blame on coalition compulsions. Incidentally, India’s GDP growth today is at a comfortable rate compared to the ‘developed’ world.





Time magazine dubs PM an underachiever: TOI, July 9, 2012

Comments:



It is Dr Manmohan Singh’s achievement that developed countries have started taking note of happenings in India and are now getting panicky about India not going as fast as they expected, following the LPG(Liberalisation-Privatisation-Globalisation) prescriptions with implicit obedience which they are used to from ‘pockets’ like oil-rich countries or for that matter even Singapore. No one knows better than Dr Manmohan Singh that India cannot cut and paste policy initiatives tested in countries like Singapore or Switzerland (with less than 10 million population) or even UK which has a developed infrastructure and 100 per cent literacy. Though he has not fought an election yet, India’s PM knows the problems of 1.2 billion people and if he is going slow on certain measures which will help the commercial interests of business and industry, but will make the poor poorer and rich richer, you cannot put the entire blame on coalition compulsions. Incidentally, India’s GDP growth today is at a comfortable rate compared to the ‘developed’ world.



Online comments under ‘Health Ministry planning inspection fee…’, ET, 020712



M G WARRIER (MUMBAI)

08 Jul, 2012 03:01 PM

On the face of it, the proposal to levy a fee for inspection of drug manufacturing plants would appear to be an innocent effort to improve the financial position of the Drug Controller General of India (DCGI) making it possible for the organisation to improve its infrastructure and augment its manpower. The additional expected annual revenue is Rs100 crore. The comparison with US proposal to charge inspection fees where the revenue increase is $1 billion to be collected mostly from overseas generic drug companies may not be very relevant in this context. Though in an ideal situation, barring defense, governance (including internal security, law enforcement and administration) and social security, all industries and services should become self-financing, time is not opportune in India for all regulatory bodies to independently collect charges for services. There is a difference between toll collection for bridges and flyovers under BOLT and regulatory bodies administering statutes collecting a fee for inspection. As this proposal is only at a nascent stage, one hopes the Finance Ministry will consider all these aspects and more importantly, provide adequate budget to DCGI for carrying out its mandated responsibilities.

Managing gold, a policy challenge;BL 060712

Online comments

As the country is having a handsome domestic stock of over 18,000 tonnes (according to World Gold Council estimates, which must be conservative) at least a sizeable portion of which could be made available for domestic commercial use, given the will to manage the stock with appropriate incentives and disincentives, GOI should think in terms of reforms in gold management policy. The suggestions in the article should be seen in this context.

It is sad that there is no perceivable effort from the government’s side to discourage further accumulation of ‘ornament gold’ in households which is partly responsible for financial loss to middle class families in India and to some extent, dowry-related issues and security problems.

Last year the Tirumala Tirupati Devasthanams (TTD) deposited 1000 kg of gold with State Bank of India. These deposits earn a small interest also. This is a healthy move and is expected to trigger similar moves by other temples, institutions and may be, private individuals/families.

RBI also should, at this stage, seriously consider realignment of its portfolios especially under forex reserves, increasing gold holdings.

Online comments under report “Finmin pushing ATMs for financial inclusion”, ET, 050712

M G WARRIER (MUMBAI)

05 Jul, 2012 02:04 PM

The hurry with which UIDAI project and White Label ATMs are being marketed by finance ministry involving financial inclusion and direct transfer of benefits under government sponsored programmes is intriguing. Going by Economic Survey 2011-12, UID project has so far generated 13 crore Aadhaar numbers and assuming a 75% capability(10lakh UID numbers a day) utilisation, it would take at least 5 years to cover the country’s population. To pressurize citizens to acquire UID numbers these have already been ‘recognized’ as valid proof of identity and proof of address for various purposes including LPG connection. Pushing ATMs in places where banks are yet to reach with the promise of ‘direct transfer of benefits’ to a clientele yet to be initiated to banking services is another case of putting cart before the horse. Past experience in areas like microfinance has shown that, given an opportunity, private sector has been merciless in collection of service charges from helpless customers. At this stage, therefore, it would better to go slow on allowing non-banking entities to operate ATMs. Instead, banks should be encouraged to open more ATMs in smaller places where bigger branches (in terms of number of customers) exist. This would be more cost-effective and ensure more reliable service. Another option worth considering is fast-tracking the proposal of Department of Posts to open ATMs and networking them with banks.