M G Warrier's My Page, March 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 3, March 2013
M G Warrier, MLR-116-B, Mangalam Lane
Dear Reader
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
March 20, 2013
The
following articles were published during February-March, 2013 (Till March 20,
2013)
- Wage Revision in Banking Sector, March 2013, Business Manager,
HR Magazine from Alwar, Rajastan
- Succession plans in
- 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
Letters/Comments
The Hindu Business Line
Letters
Pension scheme
This refers to the
report “Retirement age raised to 60 for new recruits” (Business Line,
March 16).
It is intriguing
that the Kerala Finance Minister has proposed raising the retirement age of a
category of employees who are yet to join the service at a time when his
government is struggling for existence. This is likely to be interpreted as a
gimmick to divide opinion and divert attention from crucial issues. The
‘innocent’ omission of the relevant proposal while delivering the Budget Speech
makes the motives murkier.
M. G. Warrier
e-mail
(This article was
published on March 17, 2013)
{For clarifying my
position on the subject, unedited version of the letter copied below:
February 28,
2013
The Editor
Hindu Business Line
Letters
NPS challenge
This refers to the report
“Rollout of New Pension Scheme in SBI challenged” (February 28). While the
Hon’ble court will go into the merits of the prayer limited to application of
NPS to employees joining SBI on or after August 1, 2010, it would be prudent
for GOI and employees in government (including state governments), public
sector organisations and statutory bodies who have been brought under NPS from
various dates from January1, 2004 to revisit the pros and cons of introduction
of NPS without waiting for the court verdict.
Issues like the legality of
commitment taken by IBA from employees’ organisations on introduction of NPS to
a category of employees yet to join service and the enforceability of 9th
bipartite wage settlement on SBI employees joining service long after the
settlement should be gone into by the stakeholders, independent of the present
court case. These are matters affecting the legal validity of introduction of
NPS by government and various other organisations.
M G Warrier, Thiruvananthapuram}
The Hindu Business Line, March 6, 2013
Letters
RBI appointments
The Reserve Bank is one statutory
body in the country which has been able to withstand succession issues for more
than seven decades, thanks to the maturity shown by those in charge of
governance in New Delhi .
Recent developments bring to the fore the need to recall this and give an
assurance that the whims and fancies of individuals will not change this image.
In 2011, the timely decision by
the Centre to give a two-year extension to RBI Governor D. Subbarao stood apart
as a decisive vote for stability at the central bank. A change of guard would
have resulted in slowing down of the processes of change in areas such as
fighting inflation and forex reserves management.
It would be appropriate now to
extend the tenure of Subbarao by another year.
M.G. Warrier
Thiruvananthapuram
(This article was published on March 5, 2013)
{Longer (unedited) version:
Continuity at the top
Reserve Bank of India is one statutory body in the country which
has been able to withstand the pangs of succession issues at the top for more
than 7 decades of its existence, thanks to the maturity shown by those in
charge of governance in Delhi .
Recent developments brings to the fore the need to recall this and get a
reassurance that whims and fancies of individuals destined to take decisions
will not change this image.
In 2011,
the timely decision by Centre to give a two-year extension to RBI Governor Dr
Subbarao stood apart as a decisive vote for stability at the Central Bank. This
ensured continuity of policy perspective at a time when it was needed most and
strengthened the RBI to pursue the right course it was following in different
areas of its responsibility. A change of guard at that time would have resulted
in slowing down of the processes of change in areas like fighting inflation,
forex reserves management, financial inclusion and outreach and transparency in
policy prescriptions where Dr Subbarao has made perceptible progress.
Recent
developments which saw easing out of a Deputy Governor (Subir Gokarn) for no
fault of his and compulsions to retain another Deputy Governor for another year
calls for a review of the selection and placement procedure at that level.
Perhaps the pool from which selection is made and the age profile (raising the
upper age limit by 3 to 5 years from the present ‘normal’ at 62 years) need a
review. In the circumstances, it would be most appropriate to extend the tenure
of Governor Dr Subbarao who is to retire within months, initially by another
year at this juncture.
Formulating and implementing
succession plans for top government/public sector jobs with professionalism and
efficiency in a graceful manner is imperative for allowing the institutions to
function with reasonable functional autonomy within the legislative mandates.
M g Warrier, Thiruvananthapuram}
Business Standard | New Delhi
Letters: Responsible charity
This refers to the article “Necessary virtues” (Swot, March
14). Beyond the comfort that corporate social responsibility (CSR) is gaining
recognition as a necessary feature of “being rich”, it is soothing to find that
entrepreneurs like P N C Menon are leading by example by stating that at least
half of his wealth belongs to the society, and individuals who own such wealth
have a “trusteeship right” to canalise resources. Such gestures, hopefully,
will open a debate that will ultimately redefine CSR.
Spending on social causes, by and large, has remained at the bottom end of priorities of the government and corporations so far. Those rich individuals who have finally started recognising CSR as part of their way of life have done so either too late, or because of “certain compelling circumstances in life” that they had not bargained for. Without struggling to put together a legal definition for CSR, those who are lucky to govern and manage resources that ultimately belong to society should take on themselves the responsibility to alleviate poverty, provide shelter and potable water, promote literacy and ensure reasonably affordable health care. Menon had hogged the limelight in Guruvayur for donating huge quantities of gold to Lord Vishnu, and one expected further follow up of developments in the township in terms of provision of minimum facilities like potable water and a reasonably acceptable waste management system. But I was surprised to discover on a recent visit to Guruvayur that the local middle-class population depended on free food served in temples, and used the money saved to buy bottled drinking water at Rs 15 per litre.
Spending on social causes, by and large, has remained at the bottom end of priorities of the government and corporations so far. Those rich individuals who have finally started recognising CSR as part of their way of life have done so either too late, or because of “certain compelling circumstances in life” that they had not bargained for. Without struggling to put together a legal definition for CSR, those who are lucky to govern and manage resources that ultimately belong to society should take on themselves the responsibility to alleviate poverty, provide shelter and potable water, promote literacy and ensure reasonably affordable health care. Menon had hogged the limelight in Guruvayur for donating huge quantities of gold to Lord Vishnu, and one expected further follow up of developments in the township in terms of provision of minimum facilities like potable water and a reasonably acceptable waste management system. But I was surprised to discover on a recent visit to Guruvayur that the local middle-class population depended on free food served in temples, and used the money saved to buy bottled drinking water at Rs 15 per litre.
M G Warrier Thiruvananthapuram
Business Standard | New Delhi
Letters: An innovative Budget
This refers to T N Ninan's column "Nine
years later..." (Weekend Ruminations, February 22). With the 2014 general
elections approaching, and not much change for the United Progressive
Alliance-II in the last one year, the media and economists are not expecting
many surprises in the upcoming Union Budget. But the common man continues to
hope that the Budget will bring some relief to his mounting woes. From this
perspective, the finance minister could factor in some innovative proposals in
his Budget speech:
- Agriculture deserves more attention from planners and policy makers - not just on the eve of the annual Budget. It is a neglected sector, and the government needs to pay attention to farm-sector production, food security and millions of agricultural labourers who cannot migrate to urban areas. It should be projected as a sector that can graduate to a self-supporting stage, viewed from a "business" point of view.
- The finance minister should propose that the super-rich part with a small portion of benefits that they derived from the liberal government policies of recent years. These include:
- Steps
to price land and other resources "gifted" to corporations and
rich individuals under various pretexts at market rates, and plan
recovery of costs as and when such "gifts" start giving
returns;
- A
one-time surcharge on income tax payable by super-rich, and create a
rolling fund for financing the social sector;
- According to one assessment, a 10 per cent surcharge on the tax payable by taxpayers, who report an annual income of more than Rs 10 lakh, will fetch Rs 110 crore in a full financial year. A reasonable surcharge on tax payable by this category should be considered.
- Abolish
the New Pension System (NPS) to absolve employers' commitment to make
"matching contributions". As a company's financial position
improves, employers should create pension funds to honour future
commitments. Simultaneously, the Employees' Provident Fund Organisation
should be strengthened, and the scheme made more popular.
- Stop subsidising interest rates on loans for any purpose, including agriculture, beyond reasonable levels. Kerala has come out with zero-interest rate short-term agricultural loans. If the states do this on their own in such a way, they introduce disincentives.
M G Warrier
Thiruvananthapuram
Online comments
VITALINFO,
March 19, 2013
On
growth and inflation C Rangarajan and Raghuram Rajan have different views:
This
comment is limited to the following observation attributed to Raghuram Rajan:
“Rajan
however pointed out stagflation is a situation when prices are rising but
production growth remains stagnant. With India
growing at 5 per cent annually, you cannot say India India
Growth
at 5 per cent, and inflation at 10 per cent (overtaking the growth rate by 5
per cent), is as good as ‘stagnant’ growth and 5 per cent inflation. Just to
point out that Rangarajan was not ‘off the mark’ and that figures in isolation
do not mean much in economics. In politics, such statements help to carry the
day. We should avoid comparison with developed economies, as such comparison
does not lead us to ‘scientific’ and acceptable conclusions.
Pressure on RBI
to ‘cut rates’ (March second week)
This comment is
not directed to RBI (RBI knows its job), but to RBI-watchers who get carried
away by observations like this from rating agencies and analysts. The continuous
pressure on RBI to ‘cut rates’ and the assurance that a rate cut will do
wonders in economic growth and the threat of downgrade are tactics being played
by vested interests which do not care about the impact of inflation on more
than 60 per cent of India’s population who contribute most to the country’s
growth and have no voice in deciding the wages they should get or the price
they should be paying for their survival needs. RBI should (and will) continue
to have a total view of the impact of its policy measures on the common man.
The fiscal policy which is caged by the rich and the powerful as also external
pressures need a makeover factoring in the concerns expressed by RBI expressed
through Monetary Policy statements, almost bi-monthly, these days.
Economic Times
Mythili’s Blog, Online comments, March 18, 2013
M G
WARRIER says:
March 18,2013 at 06:40
PM IST
I agree with the views expressed in this
article. But the distorted priorities in planning and resource deployment from
the central pool, especially during the last two decades, call for a re-look at
the way we are making allocations to different sectors and different
geographical areas. Pulls and pushes from different pressure groups, which are
dominating the management of India
On CSR, March 12, 2013(email to ForbesIndia)
ForbesIndia (March 22, 2013)
cover feature on Corporate Social Responsibility (CSR), hopefully, will open a
debate, which, ultimately will redefine CSR. The government’s and Corporates’
hesitant approach to CSR can turn out to be harmful to the country and in the
process to corporates also, in the long run. Spending for supporting social
causes, by and large, has remained at the bottom end of the priorities for
government and corporates so far. Those rich individuals from certain corporate
empires who have started recognizing CSR as part of their way of life have done
so either late in life or because of ‘certain compelling circumstances in life’
which they had not bargained for. Without struggling to put together a legal
definition for CSR, those who are lucky to govern and manage resources which
ultimately belong to the society should take on themselves the responsibility
to eradicate hunger and poverty, provide shelter and potable water, promote
literacy at least to the school level, ensure reasonably affordable healthcare
for those in the ‘command area’ of their governance or business/industry.
Fixing a percentage or routing money through PM’s Relief Fund are all niceties
which may cover shame but will hardly ensure acceptable quick results.
M G Warrier, Thiruvananthapuram
March 12, 2013
Woman’s Bank, Online comments,
VITALINFO, 110313
SEWA is a model that could have
been replicated in several districts in India in different times and situations.
But successful models which are workable in Indian conditions do not get the
needed encouragement from planners and policy makers. I doubt whether the
Woman’s Bank announced in the budget is really going to be a Woman’s Bank. FM
said, and I quote…”…Can we have a bank that lends mostly to women and women-run
business, that supports women SHGs and women’s livelihood, that employs
predominantly women, and that addresses gender related aspects of empowerment
and financial inclusion? I think we can. I therefore propose to set up India ’s
first Women’s Bank as a public sector bank….” The proposal is vague enough for
interpretation. It is a ‘toy’ PC can ask for. Let India buy it for him
Let us remember PC’s earlier ‘avatar’
when he joked that 50 Local Area Banks with 5 crore capital each catering to 2
crore population will bring banks to every door. And RBI took it seriously and
kept some engaged processing license applications. Do not really know what
happened to some LABs which were really ‘launched’.”
For solving the real grass-root
level problems facing women and other weaker sections of society, Ela Bhats
will have to continue their efforts and wait for a mention in passing and a
pause for applause while FMs make budget speech. A public sector bank has a kind of identity
which cannot be made over by giving it a ‘gender-focus’. Specialization is more
necessary along the delivery line of services and processes, post-credit,
rather than in providing capital from the top. From this perspective, there is abundant
scope for the government and banks to support formation and sustenance of
‘SEWA’ model organisations for supporting financial inclusion, not necessarily
with gender-bias.
Gurumurthy’s article on super-rich, The Hindu
As always, excellent analysis by Gurumurthy. Now that, based on his
perception and information he thought correct, FM has revealed there are ‘only’
42,800 persons in India
who admitted to a taxable income exceeding Rs1 crore per year, let us help him
to take the issue forward. As privacy and secrecy issues will prevent FM from
giving out the names of these 42,800 persons, he should arrange to prepare a
district-wise list of these individuals and provide to each District
Magistrate/Collector the number (only the number) of rich people in the
respective districts who have annual income exceeding Rs1 crore. Collectors
should be asked to make ‘discreet’ enquiries and report ‘who’ these persons
could be and who all are likely ‘omissions’ in the list. Quite possible, GDP
may not grow at the expected growth rate, but, next year (2014), FM will be
able to give a decent six-digit figure against the 42,800 he included in the
current Budget Speech.
Moneylife, Online comments, March 10, 2013
First let me quote my own comment
recorded earlier in response to another article on the same subject @Moneylife
itself:
“It is not really Woman’s Bank.
FM said, and I quote…”…Can we have a bank that lends mostly to women and
women-run business, that supports women SHGs and women’s livelihood, that
employs predominantly women, and that addresses gender related aspects of
empowerment and financial inclusion? I think we can. I therefore propose to set
up India ’s
first Women’s Bank as a public sector bank….” The proposal is vague enough for
interpretation. It is a ‘toy’ PC can afford. Let India buy it.
Let us remember PC’s earlier ‘avatar’
when he joked that 50 Local Area Banks with 5 crore capital each catering to 2
crore population will bring banks to every door. And RBI took it seriously and
kept some engaged processing license applications. Do not really know what
happened to some LABs which were really ‘launched’.”
Sucheta, you have brought out the
controversies that can arise, if GOI goes ahead with this proposal. A public
sector bank has a kind of identity which cannot be made over by giving it a
‘gender-focus’. As you rightly said, specialization is more necessary along the
delivery line of services and processes, post-credit, rather than in the
business of banking. All these, anyone at very junior level in RBI would have
explained to those around FM, if only there was a meaningful exchange of views
at the appropriate time before budget announcement.
Economic Survey, 2013
Economic Survey 2013 has
identified ‘scarcity of resources and competing demands’ as the stumbling block
for India ’s
economic development. Correct diagnosis takes you half way to possible cure.
Once the hurdles are identified, there should be conscious efforts to overcome
them or where such efforts will take time, to find out and implement alternate
medium term solutions for immediate problems. This is where one expects
pragmatism in approach from a government which has limited time to show
results. No, here the reference is not to the 2014 Election. The eruptive
symptoms showing up in recent years are becoming more and more severe and it
would be tough to borrow time by telling stories of past glory or making
promises about future action.
Government at this stage should
wake up to the resources lying idle in the form of black money, accumulations
with corporates and other beneficiaries of liberalisation, national assets like
gold and real estate remaining unproductive in various corners of the country
and also send out a loud and clear message about social responsibility and
patriotic approach to extravagance by those who have become rich and super-rich
by short-cuts allowed by lax government policies. Otherwise, future Economic
Surveys and Budget speeches will become repetitive and boring.
M G WARRIER, Thiruvananthapuram,
February 27
On new bank licenses:
Ideal situation in which
regulators and supervisors can function with autonomy within the legislative
mandate does not exist today. GOI through Finance Ministry has been pulling and
pushing RBI ever since the idea of new bank licenses got momentum a couple of
years back. RBI had limited options. One, rush through the formalities and give
half a dozen bank licenses to those who could ‘manage’ them in the given
dispensation. Two, go through some semblance of rational procedures and buy
some time when the central bank could convince GOI about the dangers in giving
banks to ‘manipulators’. Three, convince GOI that financial sector reforms and
consolidation/overhaul of existing banks was a priority and there was no
immediate purposes that will be served by allowing new banks. Now, it seems RBI
is going for a fourth option, namely, accept applications from all, give
licenses to some under pressure, some others whom RBI consider genuine
aspirants and bring to the discipline of banking yet others who are already
doing several things which normally banks are expected to do. It will be a
tough job for the banking industry to come out of the present mess.
Direct cash transfer:
Merits and demerits, ET 260213
Online comments
M G WARRIER (THIRUVANANTHAPURAM)
Not long ago, PM made the following observation at a review
meeting of progress made in the preparations for launching ‘Direct Cash/Benefit
Transfer’ programme: “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.” Anyone familiar with the happenings on the Aadhaar platform
and those who have been following the chase after ‘Financial Inclusion’ since
1970’s (Lead Bank Scheme era) till date will have the same apprehensions
briefly coming out in the PM’s observation. Reportedly, government has handed
over the electoral rolls to the 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.
Bank employees may not risk their jobs by not adhering to the ‘instructions’
from North Block. We can only wonder why electoral rolls and not AADHAAR
numbers were being used. Someone says, when everything is with Elections 2014
in view, why not start with electoral rolls in the first place! What happens to
bank accounts, insurance policies, RDs, accounts with commitments to pay dues
in installments by various agencies including Mutual Funds could be easily
assessed, if the ‘unclaimed’ deposits in such accounts are subjected to
scrutiny.
Rollout of New Pension Scheme in SBI
challenged
Vinson Kurian
Kerala High Court admits petition
filed by staff union; hearing next month
Thiruvananthapuram, Feb. 27:
The High Court of Kerala has
admitted a writ petition filed by State Banks’ Staff Union (Kerala) to quash
implementation of the New Pension Scheme (NPS) in State Bank of India .
The writ also prayed for
directions to revert those recruited on or after August 1, 2010, back to
existing pension scheme.
HEARING POSTED
Justice P. N. Ravindran has
posted the case for further hearing after a month.
The interim order directed that
amounts contributed by employees towards the pension fund be kept in a separate
account and maintained with the trustee bank.
The case was filed by A.
Jayakumar, General Secretary of State Banks’ Staff Union, Kerala Circle .
The petitioner recalled that NPS
was implemented as part of the industry-level 9th bipartite wage settlement.
As per this, Defined Contribution
Pension Scheme (DCPS)/NPS would apply to those joining services on or after
April 1, 2010.
But this settlement between
Indian Banks’ Association and unions of other banks would not apply to SBI, the
petitioner contended. This is because the bank was not party to this settlement
insofar as pension-related matters were concerned.
But central board of SBI on
November 8, 2010, decided that all employees joining in permanent scale on or
after August 1, 2010, shall be offered only the benefit of DCPS.
The SBI Act did not empower the
central board to amend pension fund rules, and that too with retrospective
effect, it was contended.
PARLIAMENT NOD
The SBI Act also makes it clear that any regulation framed
in this manner will have to be laid before Parliament.
It will take effect in the existing or modified form as
decided by both the Houses of Parliament only.
In the present case, the central board has taken a
unilateral decision to modify the pension scheme.
Legal recourse was also being sought on grounds that the pension
scheme once framed cannot be modified without issuing notice.
Comments:
While the Hon’ble court will go
into the merits of the prayer limited to application of NPS to employees
joining SBI on or after August 1, 2010, it would be prudent for GOI and
employees in government (including state governments), public sector
organisations and statutory bodies who have been brought under NPS from various
dates from January1, 2004 to revisit the pros and cons of introduction of NPS
without waiting for the court verdict. Issues like the legality of commitment
taken by IBA from employees’ organisations on introduction of NPS to a category
of employees yet to join service and the enforceability of 9th bipartite wage
settlement on SBI employees joining service long after the settlement should be
gone into by the stakeholders, independent of the present court case.
from: M G WARRIER
Posted on: Feb 28, 2013 at 13:51 IST
Very happy to see that there are
still media people who have their eyes
wide open to the hue and cry of the general public in these dark days of
dirty political-corporate-media-judicial axis! Long Live Vinson Kurian!
wide open to the hue and cry of the general public in these dark days of
dirty political-corporate-media-judicial axis! Long Live Vinson Kurian!
from: Austin G
Posted on: Feb 28, 2013 at 22:30 IST
Congrats Mr VINSON KURIAN and The
Hindu Business Line for such a
fantastic work......
fantastic work......
from: Jayakrishnan B
Posted on: Feb 28, 2013 at 23:55 IST
Budget 2013-14: Only 42,800 rich individuals paying income tax!
Pre-budget speculations and post-budget analysis are both indicative of
the real mood of the people, who, otherwise, take things in their stride and
live a normal life. It would appear, as if, it is the rich who are the only
people contributing to country’s GDP. Let economists bother about this.
FM has revealed that there are ‘only’ 42,800 persons in India
who admitted to a taxable income exceeding Rs1 crore per year. As privacy and
secrecy issues will prevent FM from giving out the names of these 42,800
persons, he should arrange to prepare a district-wise list of these individuals
and provide to each District Magistrate/Collector the number (only the number)
of rich people in the respective districts who have annual income exceeding Rs1
crore. Collectors should be asked to make ‘discreet’ enquiries and report ‘who’
these persons could be and who all are likely ‘omissions’ in the list. Quite
possible, GDP may not grow at the expected growth rate, but, next year (2014),
FM will be able to give a six-digit figure against the 42,800 he included in
the Budget Speech.
FOR YOUNG READERS
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Debashis Basu, Trustee of Moneylife
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author of several business books like 'The Scam', 'Pathbreakers' and the
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