Warrier's blog

Raghuram Rajan on Pump-priming growth - The Hindu My VIEW: I love to read the conclusion once again. I quote: “  That Dr. Rajan has chosen to frontload monetary action and pass the baton to the government, the banks and industry — in order to help ward off inflationary risks, transmit the benefits of interest rate cuts to borrowers, including home buyers, and increase productive investments — could put at stake his best-regarded asset. And that asset is his credibility. ” Sure. The way in which Dr Rajan has purchased peace can boomerang. But it would be puerile to assume that even after 25 months of stay here, Dr Rajan is unaware of the rules of the game politicians and their helpers play in India. The coming months, I expect RBI Governor do what his conscience dictates, not only in regard to monetary policy management, but on several other concerns he has expressed in the chapter “Governor’s Overview” in the RBI Annual Report 2014-15. M G Warrier, Mumbai 

Cut the reviews | Business Line

October 1 is observed as Elders’ Day. Some thoughts… M G Warrier Youth is like the day with its fiery, hot sun Old Age is like the night, cool and the starry sky. WALT WHITMAN Post-Retirement Life* “Necessity is the mother of invention” This is true not only for scientific and technological research, but for any development in the social and even spiritual area also. In India, perhaps till a couple of decades back, care homes for the aged were a government initiative targeting mainly those below poverty line (there is no hope in sight for getting rid of the need for this line!). And if someone who had enough assets to meet his daily needs thought of going and living in a care home, people would refuse to accept it as a normal behaviour. Our social security network through the institution of family and neighbourhood interdependence was strong enough to take care of the aged and the invalid as long as they survived. Times are changing. And fast. These days, yo

Impact of ‘rate cut’ on savers’ interests - Moneylife Excerpt: "The impact of the rate cut on economic growth and the mood of international rating agencies and other stakeholders including foreign institutional investors (FIIs) will be analysed and researched by economists and media in the coming days. This article attempts to caution savers that their interests are at stake and perhaps, time has come when they have to be vigilant about the drain on their resources, which get invested in various financial instruments brought out by government, banks and corporates.    This caution comes from a second reading of the announcement made by finance ministry on the same day RBI held the bi-monthly monetary policy review to the effect that government will review the interest rates on small savings, which ‘banks say, come in the way of lowering interest rates.’ " Please read the full article and respond... M G Warrier

Kamadenu: Udupi Krishna series. #Krishnafortoday  : Udupi Krishna series. #Krishnafortoday

Gautam Sen writes about Empowering CAG - The Hindu My VIEW A well researched, timely article. I quote: "A conference of the chairpersons of Public Accounts Committees (PACs) has just been held under the aegis of the Parliament’s PAC. Nishikant Dubey, Member of Parliament (Lok Sabha), member PAC, and a convener of the conference, stated that the time has come to make our national auditor, the Comptroller and Auditor General of India  (CAG), accountable to Parliament  through a constitutional amendment. This is a strange demand, given that the CAG’s constitutional mandate, under the CAG (Duties, Powers & Condition of Service) Act or Audit Act, is to hold the executive accountable. Such a demand had never been articulated in the past. On the other hand, there have been demands for strengthening the Audit Act to further empower the CAG." Says Gautam Sen Read full article. My response copied below: Letters September 30, 2015 We need strong institution

Loud and clear | Business Line

RBI bows to pressure, cuts repo rate by 50 bps to 6.75% - Moneylife My VIEW: Last week, while commenting(in a financial daily) on speculations about rate cut, I had expected a cut by 25 basis points and observed that "That will satisfy the finance ministry with which Dr Rajan has to at least maintain the present comfort level for several reasons much beyond repo rates. By opting for such a stance, which will not have much impact on any of the economic indicators including inflation till end FY 2016, will also silence the other ‘school’ of economists for the time being. After all the impact of the earlier rate cuts aggregating 75 basis points is yet to percolate to the ground level." The doubling of the cut puts RBI in a better position to make FM come round over certain long pending issues where RBI needs GOI help. Also the present stance of going more than half the way may put the central bank in a position to make banks listen about passing on the benefits of rate cut t

Make air tickets cheaper, says the PM | Business Line My VIEW: India is not yet a free market. Conceding we are moving towards the concept of free market, is it not essential that once  'regulation' enforced through legislative authority gets diluted, the gap should get filled in through 'self regulation' evolved with the support of policy guidance? M G Warrier, Mumbai

Mr. Modi in Silicon Valley - The Hindu My VIEW* This editorial sums up the content of Modi's California speech of September 27(US). After listening on TV, I wrote to Modi on hard paper asunder: "This morning, I was listening to your impressive speech delivered to an enlightened audience world over (the number of those had the benefit of listening to you directly was 50,000) which has taken the morale of young Indians to a higher level and reaffirmed the faith of all of us in India’s strength to write a glorious growth story for the world’s benefit. The excellent speech, communicating India’s concerns over the neglect of poor by the rich and lopsided priorities of developed nations will definitely help change the attitude of millions of educated world population which is being kept in cages of misinformation." M G Warrier, Mumbai *This Blog enters 8th year with this post(Serial Number 1512).

Alok Sheel: RBI and the crisis of central banking | Business Standard Column My VIEW: The article concludes: " The RBI is one of the few institutions in the country that works well. The rationale of current attempts to reconfigure its policy formulation processes seems baffling, as it is violative of the golden rule that if 'ain't broken, don't fix it'. It anticipated the use of macro-prudential policy tools to target asset bubbles in the run-up to the GGC; it has stuck to monetary rectitude in its wake, despite constant criticism that it was 'behind the curve', even as central banks in advanced economies flogged monetary policy to its limits and fuelled new asset bubbles. After engineering the great escape from a second Great Depression, they seem to hoist with their own petard, unable to engineer an escape from unconventional policies. The RBI stands out as virtuous in comparison, its policy arsenal intact, its gunpowder dry and at the ready." Co

What’s so great about monetary policy? | Business Line My VIEW: If the observation, "A detailed analysis of the relevant data reveals that the RBI’s interest rate policy is the obstacle to India’s economic success" is the finding based on the analysis and research done by the writer, is he suggesting absence of an interest rate policy will improve India's chances for economic success? I couldn't find an answer in the article. May be another economist will help me out! M G Warrier, Mumbai

Signals point to better economic activity: Chief Economic Adviser Arvind Subramanian - The Hindu My VIEW: The observation “In a sense, there are at least two manifestations of the deflation I am talking about. One is agriculture. Prices are down. Apart from onion prices, of course, and one or two commodities, in agriculture we do see depressed incomes because prices are down and the monsoon is what it is. The second thing is that when nominal GDP starts decelerating as it has, it has implications for the fiscal as well. So, that’s another manifestation of deflation.” may need a clarification that agricultural prices are ‘down’ at the farm gate and not at retail outlets. The deflation the CEA is talking about seems to be related to wholesale prices, or put bluntly the prices paid by wholesale dealers at the farm gate. When it comes to interest rates, they are also coming down, but there it is deposit rates which are coming down! M G Warrier

RBI hemmed in by the safety net - The Hindu My VIEW: The percolation of ‘benefits’ to the ground level in respect of the three earlier cuts aggregating 75 basis points has been less than 50 per cent so far. Some banks, of course reduced their cost on resources by reducing deposit rates. Probably, a 25 basis point cut may not have much impact on any of the economic indicators including inflation till end FY 2016 and such an option will help Dr Rajan to bargain with FM on other issues at a better comfort level and also silence the economists who accuse him for going slow on ‘cuts’ for the time being. RBI should consider reverting to quarterly schedule for Monetary Policy Review. There are enough fora for RBI to share its mind on policy issues between such reviews and technically, monetary policy measures including revision of base rates need not always coincide with such reviews. Lesser frequency of reviews may reduce scope for external pressures and lobbying also to that e

A rate cut will add to the misery - The Hindu An excerpt from the article by C R L Narasimhan: "One rank one pension Only central government employees are lucky to get one rank one pension benefit as their pension is automatically revised. Unfortunately this is not applicable to other public sector undertakings including the RBI. The corporates and even the government are of the view that the Reserve Bank of India should announce a reduction in lending rate. However, the household savings are coming down steeply since independence. This is because successive governments are bothered about the cost of borrowing and not the incentive for saving. With the increase in cost, the savers (mostly senior citizens) are left high and dry. Rightly the interest should be able to cover inflation. But the reality seems to be otherwise. All consumers including senior citizens are required to pay cost of goods plus excise duty and VAT on the consumer goods purchased by them out of the taxed co

K C A B G N I K O O L : M O V I N G F OR W A R D Warrier’s Blog @mgwarrier.blogspot.in Entering eighth year on September 29, 2015 Introductory The purpose of this anniversary edition is not to talk about what has happened @mgwarrier.blogspot.in (Warrier’s Blog) during the past seven years.  Here is an attempt to take myself back memory lane and share some thoughts with my present readers. At this Blog, there are only 12 members and the number of page views at this space also, cannot be considered impressive! Still, I find comfort in finding that one of my articles(the one published in The Hindu Open Page) attracted more than 80 online comments and my articles posted @moneylife.in are viewed by 1000 to 4000 readers. Not convinced? Google search for m g warrier and use the links provided! Pre-journalism days This day in 2008, my daughter Reshmy helped me to open this Blog  post. I loved finding my name in print since my school days. My first published ‘work’ was a tr

Time fast running out for a rate cut | Business Standard Financial X-Ray My VIEW: Letters September 26, 2015 Impact of rate cut This refers to the piece “Time fast running out for a rate cut” by Malini Bhupta (The Compass, September 26). In all probability, RBI will, on September 29, or a little later, cut the base rates by 25 basis points. The finance ministry, which has happily accepted a dividend cheque of over Rs66,000 crore for 2014-15 from RBI(an organisation with a subscribed capital of Rs 5 crore since inception, till date!) and is, according to media reports, expecting a whopping one lakh crore of rupees from the central bank during FY 2017, also has been clamouring for a rate cut, ignoring the fact that rate cuts also bring down RBI’s income. The percolation of ‘benefits’ to the ground level in respect of the three earlier cuts aggregating 75 basis points has been less than 50 per cent so far. Some banks, of course reduced their cost on resources by reducin

Too Utopian | Business Line My letter in Hindu Business Line, September 26, 2015: Rating the ‘cut’ This refers to ‘Economists divided on RBI rate cut demand’ by Vinson Kurian and NS Vageesh (September 25). The common sense perception is that the RBI will cut the base rates by 25 basis points. That will satisfy the finance ministry with which Raghuram Rajan has to at least maintain the present level of comfort for several reasons much beyond repo rates. By opting for such a stance, which will not have much impact on any of the economic indicators including inflation till end FY 2016, it will also silence the other ‘school’ of economists for the time being. After all the impact of the earlier rate cuts aggregating 75 basis points is yet to percolate fully to the ground level. To buy peace for an extra month between reviews, the RBI should consider reverting to a quarterly schedule for monetary policy review. There are enough fora for the RBI to share its mind on policy issues between

The real issues in the NSE-Moneylife case | Business Line My VIEW: Please read Sucheta Dalal's article on the subject in Moneylife @moneylife.in M G Warrier

Black Money, Blue life, Bleak Future-Part 2: Can a thief catch another? - Moneylife My VIEW: I quote a para selected at random from the article: "World renowned psychologist, Dr Dick Millar, called this affliction as 'Affluenza'! According to his research, excess ill-gotten money, either black or white, drives men and women to indulge in immoral behaviour. In this context, it would be interesting to see the famous Hollywood movie, 'The Wolf of Wall Street'. Money, he observes, makes people self-centred. Sometimes it manifests into inhuman actions. They believe and try to even buy happiness with money. When they fail, they lose their sanity and try to get it by force. Criminality sets in. " Do read the full article and the previous part by accessing the link provided at the end of the article(Writer's name in blue) M G Warrier         

Economists divided on RBI rate cut demand | Business Line My VIEW: In all probability, the common sense perception is that RBI will, on September 29, or a little later, cut the base rates by 25 basis points. That will satisfy the finance ministry with which Dr Rajan has to at least maintain the present comfort level for several reasons much beyond repo rates. By opting for such a stance, which will not have much impact on any of the economic indicators including inflation till end FY 2016, will also silence the other ‘school’ of economists for the time being. After all the impact of the earlier rate cuts aggregating 75 basis points is yet to percolate, fully, to the ground level. To buy peace for an extra month between reviews, RBI should consider reverting to quarterly schedule for Monetary Policy Review. There are enough fora for RBI to share its mind on policy issues between such reviews and technically, monetary policy measures including revision of base rates need not always coi

News 2.0: Sriram Srinivasan column on Rise of the robot journalist - The Hindu My VIEW: September 25, 2015 Welcome Robot Era This refers to the article “Rise of the Robot Journalist” (September 25). We have already entered the era of ‘Robot Journalism’ long back. Not just in journalism, in all fields where application of mind and use of human intelligence would make life on this planet better, the entry of money which can be stored as an asset which created a class called rich who became powerful have started dominating. They ‘buy’ the best talent available, convert them to ‘robots’ by offering money and make them think and act the way they want. Now, when some of the robots have started revolting, the rich and the powerful want to remove the ‘human factor’ from their ‘robots’ and make the entire work completely machine-based. Great idea. May be, this will herald an era in which a new world with machines on one side and humans on the other will emerge. M G Warrier, Mum

Letters: Let Rajan do his job | Business Standard Letters

Transmission loss | Business Standard Editorials My VIEW: September 24, 2015 Regulated interest rates This refers to the editorial “Transmission loss” (September 24). The clamour for rate cut by RBI has become an addiction for economists, analysts and media to the extent that this year’s RBI Annual Report also missed the attention of many among them. Most unfortunate thing that can happen to interest rate regime in India is a forced return to regulated rates. One is not able to buy the argument that administered rates on provident funds and small savings are stumbling blocks in percolation of rate-cut benefits. At present, such long term investments and even government securities also fetch returns below 9 per cent per annum only, which, net of inflation (and taxes where applicable) cannot be considered high by any standards. Pro-equity investment advisors say that equity investments can give average annual return of 15 per cent or above. Reverting to quarterly schedule

Meet Babar Ali, the world’s youngest headmaster - The Hindu My VIEW: There are thousands of individuals like this dedicating their lives for making the lives of their fellow beings and future generation a shade better. Media (both electronic and print) does not devote much space for them. Thanks to The Hindu. Allow me to copy the concluding sentences of the article: "Various people, a majority of who are from Karnataka, have supported him morally and financially. “The Karnataka government has a chapter on me in the first pre-university textbook, which is why 90 per cent of the mails I receive are from Karnataka.” Despite all the attention and the recognition he has received, he is still not content. “There are people in my village who do not go to school and there is a long way to go as so many children still need to avail education,” he says." Let more people come to know of such efforts. M G Warrier, Mumbai

Letters: Bank licences on tap | Business Standard Letters Submitted version* Letters September 20, 2015 Bank licenses on tap This refers to the article “More transparent bank licenses” (September 20). This is a well-argued article which calls for having more transparency in issue of new bank licenses by RBI. The central bank, burdened with the dual roles of regulation and supervision of the financial sector, somewhere on the way, neglected a responsibility which it was performing excellently well till late 1980’s. That is the one relating to institution-building and ensuring geographical spread of bank branch network in rural and semi-urban areas and controlling the concentration of commercial bank business in urban and metropolitan areas. The sudden awakening and expression of intention to issue new bank licences early during the current decade did not reveal what approach RBI would be following  in  allowing new banks. Some method in madness was factored in, once the ne