M G Warrier's My Page, February 2013
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 fourth week of every month. Please send
your responses and views to mgwarrier@rediffmail.com
Vol III, No 2, February 2013
M G Warrier, MLR-116-B, Mangalam Lane
Dear Reader
My
Page is also being posted on Warrier’s Blog at mgwarrier.blogspot.com Links to
articles and important comments are posted at the blog as and when they are
published. Those esteemed readers who have difficulty in accessing blog can
contact mgwarrier@rediffmail.com
Regards
M G Warrier
M G Warrier
February , 2013
The following articles were
published during December, 2012-February, 2013 (Till February 20 , 2013)
- Budget 2013-14, February 2013, Warrier’s Blog
- Need to institutionalize behaviour or service audit, February
2013, Moneylife.in
- Fiscal deficit: Restore credibility of institutions, February
2013, Global Analyst(A monthly magazine published by Media Five Publications,
- Fast-track justice? The judiciary needs to do more. February 5,
2013, Moneylife.in
- Universal Healthcare, January 2013, Moneylife.in
- Introduction of Contributory Pension Scheme in Kerala, January
2013, Moneylife.in
- Taming inflation, December 17, 2012 Moneylife.in
- Will Direct Cash Transfer good for common man?, Moneylife.in,
January 2013
- Financial inclusion: Surmounting the insurmountable, December
2012, Global Analyst(A monthly magazine published by Media Five Publications,
- HRM in banks: Talent deficit is the product of deliberate
neglect of HR issues, December 2012, Business Manager, HR magazine.
Letters/Comments
Online comments, Budget 2013-14
Economic Times: Expect India
to outperform other EMs ….
Online comments, February 20, 2013
M G WARRIER (THIRUVANANTHAPURAM)
With
reference to the observation “The Finance Minister has to focus on pleasing the
rating agencies.”, I feel that it is high time, rating agencies, or for that
matter whosoever judges the performance of economies, changed their parameters,
to factor in the inherent strengths and weaknesses of nations. Countries like India India to think in terms of setting up a rating
agency of international standard which will understand India and advise stakeholders about the health
of domestic financial institutions and the financial institutions and
governments abroad with which India India
Economic Times:
Online comments, February 19, 2013
Budget
2013: Social sector spending may see 6% jump
The ‘below
moderate’ rise in plan expenditure, at 6% over the previous year, shows the
saturation level GOI’s capacity to mobilize resources within the budgetary
framework. But this should not dishearten FM. Money is accumulating almost with
the same speed at which heaps of garbage are growing in cities and suburbs,
outside the government fold. It is government’s responsibility to canalize such
hoardings for productive purposes. Even if money outside government accounts
are not accounted in the budget, GOI’s guidance expressed through Budget Speech
should be clear about the social responsibility of people who ‘grow’ exploiting
nation’s resources. Perhaps the responsibility to develop infrastructure for
healthcare, transport, education, old age care and so on in geographical areas
close to large industrial establishments could be entrusted to the
industrialists concerned. Tata has been doing this voluntarily in certain
areas.
For a change, I would like to do some back of the
envelope, reverse accounting, keeping in mind the estimated loss of 15,000 to
20,000 crore(estimated by Assocham), if the two-day strike really happens. (i)
The loss to the employees joining government and public sector services
pursuant to introduction of New Pension System (ii) The recurring loss to the
workforce in India due to faulty working out of and non-implementation of
minimum wages (iii) The loss to the Indian consumer due to irrational and
one-sided pricing policies (iv) The loss suffered by Indian citizens availing
transport services from airlines, Railways and other public transport systems
(Railways, sometimes, do not even care to identify the individuals who die
while traveling, story of delayed and denied compensations too is agonizing).
Just to remind that GDP is an aggregation of efforts made by millions of people
and occasionally, those in charge should remember the roots.
M G WARRIER (Thiruvananthapuram)
Agriculture
deserves more attention from planners and policy makers. This is a neglected
sector for historic reasons. GOI should look at agriculture not only from the
angles of farm sector production, food security and the millions of
agricultural laborers who cannot migrate to urban areas. In the changed
scenario, there is need to project agriculture as a sector which should
graduate to self-supporting stage viewed from a ‘business’ point of view. This
will need: • Land reforms including need-based cultivation of crops required
for consumption and export/commercial purposes • Change in the approach to
agricultural income and taxation thereof • Nationalization of idle lands which
can be used for cultivation or commercial/infrastructure purposes And so on.
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Letters: Senior citizens and FDs
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Business
Standard /
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This refers
to the report “FinMin: Cut FD
rates for senior
citizens” (February 1). Ideally, such instructions with industrial
and social implications should have been issued through the Reserve Bank of
India ( RBI)
after due deliberations. North
Block appears to be unaware of how interest rates evolved to the present
stage. At the time of retirement in the early 1990s, retirement benefits
deposited in banks or post offices gave a return of 12 per cent per annum. Now,
the return has come down by 20 to 30 per cent. Hence, the 50 to 100 basis
points of additional interest on deposits of senior citizens was instructed to
be paid by banks by the RBI. The Senior
Citizens Savings Scheme with higher than market-related interest
rate and tax benefits was introduced more than a decade back. The pressure on
senior citizen’s personal budget has only increased on account of negative
returns on his/her savings and escalation in costs owing to inflation.
Moreover, the finance ministry’s advice will have no impact on public sector
banks’ profitability, since deposits already contracted may not be affected,
and senior citizens may move their deposits to other avenues that give better
returns.
M G
Warrier Thiruvananthapuram
Online comments @VITALINFO and
Commodity online, February 5, 2013(Report on proposal for setting up of Gold
Bank of India )
It is comforting to see this
report. Let me recall the concluding paragraph in my article “Gold management
needs a makeover” (Hindu Business Line, April 13, 2012):
“INSTITUTIONAL
CHANGE
The time is ripe for authorities to think in terms of dedicated
professional institutions at the regional/state level, which will handle gold
from a banking angle. An apex body should be equipped with linkages for import
and export of gold and gold products with borrowing and lending capabilities.
States like Kerala have successfully intervened in other similar sectors
like chits/kuris and lotteries, which were also areas of exploitation by
vested interests. Private players had to fall in line and function with
discipline and self-regulation.
Establishment of ‘Gold Corporations' with state participation could also
be debated. Such an institution can act as a depository where the gold
possession of individuals now in bank lockers and the pledged gold can find a
safe shelter, provided the purity can be ensured, and the ‘Corporation' can
find the resources and skill to deal in gold and retain the customers'
confidence.”
ET, 020213: HomeMin’s I-Card Plan Lands In Trouble: PM to
set up Ministers’ Panel
Online comments
M G WARRIER (Thiruvananthapuram)
UID, for various reasons
including inadequate funding, nonavailability of in-house expertise and
resultant dependence on external agencies including banks and government
departments is bound to take much more time than originally envisaged, even to
cover the already identified citizens. In the circumstances, a mid-term review
of the UID project was overdue. The present GOM review also may not resolve the
problem of NPR Vs AADHAAR as inter-ministerial rivalry will not allow a
realistic analysis. Still, it is imperative to find out whether at all AADHAAR
will meet the objectives in the near term. If not, considering the huge cost
and viewed from the cost-benefit angle, the project should wait for the country
to mature and become rich enough for such luxuries. Meanwhile, the UID project
under way should be integrated with the Census to expedite completion of NPR
(National Population Register) work. The additional funding and association of
people like Nanden Nilekani and integration of latest technology into the
census procedure will make the process more meaningful and useful.
Home Medicine: Suggestions received in a mail
from Reshmy, my daughter
Home Remedies To Stop
Dry Cough At Night~
1. Garlic is one natural medicine which has its uses in the treatment of several diseases in the human body. It is well-known for its abilities to improve digestion, and it helps prevent simple cold and flu. There are multiple ways of taking garlic to get relief from dry cough. Although chewing one or two cloves at a time greatly helps, some people prefer to take it in the form of a paste. Make a thick paste of the garlic and mix with honey. Whenever you feel the urge to cough, help yourself with a tablespoon of the paste. This will cut the pain and the frequency of coughing.
2. Every morning after brushing your teeth, take a glass of warm water (not hot but warm) and mix the water with one or two teaspoons of salt and stir well. Thereafter, gargle with the water for 5 minutes or so. Take your time and gargle well. This method also helps in reducing the pain and in subsiding the cough to some extent. This method is also does great for sore throat.
3. For dry cough at night, ginger root works miracles! Every night before you go to bed, put a small piece in your mouth and chew it slowly and swallow the juice. You may feel uncomfortable in swallowing the juice, but then you can sleep peacefully with less coughing than normal. Similar to garlic, you can also prepare a paste of ginger and honey and use it when need arises.
4. Herbal tea ( Specially Green Tea) also helps in treating ailment. It not only rids your body of several antioxidants, but soothes a lingering cough as well. Add a few drops of lemon juice and honey instead of sugar and take it hot.
1. Garlic is one natural medicine which has its uses in the treatment of several diseases in the human body. It is well-known for its abilities to improve digestion, and it helps prevent simple cold and flu. There are multiple ways of taking garlic to get relief from dry cough. Although chewing one or two cloves at a time greatly helps, some people prefer to take it in the form of a paste. Make a thick paste of the garlic and mix with honey. Whenever you feel the urge to cough, help yourself with a tablespoon of the paste. This will cut the pain and the frequency of coughing.
2. Every morning after brushing your teeth, take a glass of warm water (not hot but warm) and mix the water with one or two teaspoons of salt and stir well. Thereafter, gargle with the water for 5 minutes or so. Take your time and gargle well. This method also helps in reducing the pain and in subsiding the cough to some extent. This method is also does great for sore throat.
3. For dry cough at night, ginger root works miracles! Every night before you go to bed, put a small piece in your mouth and chew it slowly and swallow the juice. You may feel uncomfortable in swallowing the juice, but then you can sleep peacefully with less coughing than normal. Similar to garlic, you can also prepare a paste of ginger and honey and use it when need arises.
4. Herbal tea ( Specially Green Tea) also helps in treating ailment. It not only rids your body of several antioxidants, but soothes a lingering cough as well. Add a few drops of lemon juice and honey instead of sugar and take it hot.
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Letters: No time to waste
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Business
Standard /
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This refers
to the editorial “Now, the supply side” (January 30). We should not expect much
from the graceful action of the Reserve Bank of India ( RBI),
which probably tried to break the stalemate in governance in the financial
sector caused by the finance ministry and the central bank, giving
an impression that there was more than the permissible levels of “give and
take” between them. RBI has decided to work alongside the finance ministry,
since the latter was taking the economy into the wilderness. A 0.25 percentage
point reduction each in the repo
rate and the cash reserve ratio was in the context of both the
finance ministry and RBI governor having reconciled to the fact that the
Government of India and RBI could not afford to waste the pre-Budget and
post-Budget days arguing about the pros and cons of tinkering with base rates,
or the rights and wrongs of easing out former Deputy Governor Subir
Gokarn.
M G
Warrier
Thiruvananthapuram
On Tuesday, the Reserve Bank of
The RBI’s
moves follow what appeared to be a commitment at the time of its last
announcement that the third quarter would see monetary policy actively change
stance to prop up growth. Indeed, the review says on the subject of balancing
growth and inflation:
“It is critical now to arrest the loss of growth momentum without endangering
external stability. The moderation in inflation conditions provides the
opportunity for monetary policy to act in conjunction with fiscal and other
measures to stem the growth risks.” This comes at a time when quarterly
growth in gross domestic product has stagnated at between 5.5 and 5.3 per
cent annualized for three quarters.
While
fulfilling its promise and ensuring its credibility remains unimpeachable,
the RBI has also gestured at the possibility of a further cut. It says that
it expects inflation to be “range-bound around current levels” as the next
financial year begins, creating some space for expansionary monetary policy.
However, this suggestion is carefully qualified, first by saying that any
such space is limited – so no deep cuts are likely – and second by pointing
out that much depends on “the evolving growth-inflation dynamic and the management
of risks from twin deficits”. In other words, the government cannot take its
eye off the ball. Its mismanagement of the economy has contributed to a
severe problem with the current account deficit as well as the fiscal
deficit, and
The review says that “the key to
stimulating growth is a vigorous and sustained revival in investment”. This
is indisputably true. As the review points out, recent measures from the
government have lifted market sentiment and might push investment, but that
hasn’t kicked in yet. What is needed is real reform that unleashes
productivity gains and removes supply-side constraints. After all, it is
important to remember that, while consumer price inflation is so high,
financial assets are unattractive to savers. Under those circumstances, deposit
growth will be slow – and so banks will find it hard to increase
lending regardless of whether monetary policy is loosened.
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Letters: Cash transfer loopholes
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Business
Standard /
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This refers
to Shubhashis
Gangopadhyay’s article “Who prefers cash transfers?” (January 26).
Often, serious academic studies become redundant, since policy makers have
scant respect for field-level situations and research findings. At a review
meeting of progress made in the preparations to launch the direct cash transfer
programme last month, the prime minister observed: “The twin pillars for the
success of the system of direct cash transfers that we have envisioned are the
Aadhaar platform and financial inclusion. If either of these pillars is weak,
it would endanger the success of the initiative.” Those familiar with the happenings
on the Aadhaar platform will have the same apprehensions briefly coming out in
the prime minister’s statement. Reportedly, the government handed over the
electoral rolls in respective areas to public sector banks, operating in the
districts selected for launch of cash transfer from January 1, 2013, with
instructions to ensure that every household in these districts has at least one
bank account. One can only wonder why electoral rolls, and not Aadhaar
numbers, were used.
M G Warrier Thiruvananthapuram
There has been some discussion of
late in the popular press and in certain public forums on using direct cash
transfers for at least some of the items distributed to the poor
through the public
distribution system (PDS). In this context, a recent study in
There are
many studies on cash transfers. Most seem to suggest that conditional cash
transfers are more effective in reaching a poverty goal than unconditional cash
transfers. Yet this research is not undisputed, and mainly focuses on improving
school enrolment rates in Latin American countries2. One of the most
controversial issues, which has attracted explicit attention both from policy
makers and in academic circles, relates to conditionality. In other words,
should transfers be made only if the poor undertake certain specific
decisions? Alternatively, should they be given the cash transfer without any
conditions attached, for they will take those actions in any case? If the
second were right, it would vastly reduce the cost of monitoring the
decisions by the poor. Observe that the PDS to those below the poverty line (BPL) is a subsidy to
the poor only if they buy the goods distributed through ration shops. On the
other hand, if the subsidy amount is directly given to the poor households,
it is an unconditional cash transfer without any explicit condition attached
to it on how they can spend it.
There are many who say that direct
cash transfers would not have the desired effect since poor households would
spend the extra cash on things other than food. In particular, men in the
poor households will spend more on alcohol instead of the food they were
getting from the PDS. It is important to understand the assumption behind
such fears. For one, the poor, it would seem, have behaviours that are
inherently different from the non-poor. They, unlike us, generally prefer
alcohol at the expense of food. Alternatively, there is something triggered
by poverty that makes them more vulnerable to choose alcohol over food.
Whether or not this is true is an obvious research question.
In our study, we first asked how
many would want to get cash in lieu of their BPL cards. We randomly divided
all those who came forward into three groups. Group 1 got the cash transfer
through a bank account that was opened for the woman in the household; their
BPL cards were stamped by the
We first checked that the three
groups were more or less similar in their observed characteristics and in
their pre-experiment behaviours. We studied their behaviours twice more —
once after six months and then again after the completion of one year. We
analysed the changes in their behaviour over this year to see if, and how,
the behaviour of Group 3 people was different from the other groups.
Recall that a common criticism
against unconditional cash transfer in lieu of an in-kind food subsidy (or a
conditional cash transfer) is that households would spend less on food and
more on other things that could lead to a loss in nutrition with harmful
long-term effects, especially on children. Our study does not find any
evidence for this. Moreover, we find that unconditional cash transfers
provide opportunities for households to shift to other nutritious options in
the non-cereal segment. The BPL card primarily subsidizes cereal group items
such as rice and wheat. Therefore, it is in line with expectations that
unconditional cash transfers instead of a BPL card would increase the intake
of other nutritious food such as pulses, milk, egg, fish, meat, fruit,
vegetables, etc. What is remarkable, though, is that this increase in
non-cereal food items is not compensated by a decrease in calorie intake from
cereal food items. Our experiment provides empirical support to the
hypothesis that unconditional cash transfers to poor people may be an
important instrument to improve food security.
We also observed an interesting
effect of cash transfer on those who did not receive it. This is the
spillover effect. In particular, we found that the service quality of PDS
shops improved over the period of the experiment. Our hunch is that this
happened because the PDS shops now faced “competition” from private shops as
some of their clients had now shifted to private shops. However, to fully
understand this interesting result, more research is needed.
At the very least, the study
suggests that there could be poor households that would prefer the cash
transfer compared to the PDS and the objectives of the PDS would not be
compromised. This is true in at least those cases in which the poor have
access to alternative sources of supply, as is the case in most urban
centres.
1
Shubhashis Gangopadhyay, Robert Lensink and Bhupesh Yadav, “Cash or Food
Security Through the Public Distribution System? Evidence from a Randomised
Controlled Trial in Delhi, India”, September, 2012
2 IDF is currently carrying out a study on cash transfers to stop girls from dropping out of school The writer is research director at IDF and director of the School of Humanities and Social Sciences, SNU |
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Thank God!
Morning, one gets up from the bed
How many hands would have worked to make
the bed?
Think from the cotton field….to the one
who put the sheet on it yesterday
Continue the same thought process upto
the glass of water you drink or the medicine you take before going to bed….
Thought will go to thousands of
invisible hands….
Let us thank all of them before going to
bed again!
This will be difficult and therefore man
invented God!
Thank God!!
M G Warrier
Whether you call it tax or
forgoing some benefits, FM should not feel shy about asking super-rich to
participate in the development process by contributing their share from the
accumulated resources with them to partially ‘cleanse’ India ’s Balance
Sheet. A substantial portion of the ‘cash’ with the super-rich has their origin
in defective policies of government. If government had ensured some
self-regulation to ensure payment of ‘real’ wages, payment of market-related
prices for the resources they used and reasonably transparent accounting of
sources and uses of funds combined with a commitment to plough back at least a
part of the profits made out of public funds and resources like land,
electricity, water etc they received at subsidized rates, the position would have
been different.
Chidambaram says no rift with RBI on rate cut
The writer
has posted comments on this articleSidhartha
During the investor meet in Singapore, several foreign financial sector players are learnt to have pointed to the fact that the government and RBI seemed to have divergent views on interest rates, with the finance ministry backing a reduction in key policy rates to push growth, something that the central bank has not done so far. Sources present in the meeting told TOI that Chidambaram was quite quick and candid in pointing out that the views of the central bank and the Indian government were the same. At the same time he is learnt to have said that government will always look for growth, while the central bank will always want to tame inflation, which required attention.
Terming it as a "healthy debate", the finance minister said that the final call will be made by the central bank which in line with its independent existence. The statement comes days before RBI's quarterly policy review on Tuesday.
Over the four months or so, the finance ministry has gone public with its suggestion to shift to a monetary easing stance given the severe moderation in industrial growth and a decline in exports. Overall, GDP growth too is expected to hit a decade low of 5.7% this fiscal, resulting in shriller calls for a rate cut, especially from the industry. RBI has, however, stood its ground and has not opted for a rate cut, citing high inflation. Inflation based on the wholesale price index was estimated at 7.2% in December, while retail inflation was back in double-digits.)
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