Warrier's blog

February 1, 2016 Monetary Policy: Role for Private Sector Banks Apropos “Interpretation of Maladies” (Economic Times, February 1), the brilliant analysis gives a realistic picture of the scenario in which RBI Governor will be presenting the last bimonthly monetary policy for FY06 on Tuesday. The plea to RBI to go slow on its policy initiatives to infuse professionalism in handling stressed assets by PSBs, though an ideal short-cut to ensure that economy does not suffer on account of sudden drying up of credit, will generate expectations that the GOI and RBI will remain soft with inefficiency in all situations for one reason or another. Now is the time to put pressure on private sector banks to move out to risky areas and expand their share in total banking business. If this is not done, more than the existing players in the private sector, new banks of various denominations too will become risk-averse  and avoid sectors and geographical areas which are not considered ‘profitabl

ASSOCHAM advocates setting up Gold Bank : The Chamber President Mr. Rana Kapoor said, the Gold Bank would procure and retain gold abroad through offshore foreign currency borrowing. Using this gold backing from the Gold Bank, scheduled commercial banks can offer Gold Deposit Account to This report was published in Business Standard in 2014. Government has taken initiatives and progress is fairly good in regard to gold deposit accounts. Now the second suggestion contained in the report on setting up a Gold Bank should be taken up for feasibility study. Copied below is the relevant excerpt from the report: " The Chamber President Mr. Rana Kapoor said, the Gold Bank would procure and retain gold abroad through offshore foreign currency borrowing. Using this gold backing from the Gold Bank, scheduled commercial banks can offer Gold Deposit Account to its retail customers and the Finance Minister could consider announcing it with the Budget." M G Warrier

'Bad' subsidies should go, says PM : The PM noted that subsidies are also given to industries and businesses, but named differently My VIEW: *Subsidy or incentive? Prime Minister Narendra Modi's observations on subsidy at the ET Global Business Meet on January 29, 2016 should be taken seriously by economists and policy makers. PM said, “if a benefit is given to farmers or the poor, experts and government officers normally call it a subsidy. However, I find that if a benefit is given to industry or commerce, it is usually called an ‘incentive’ or ‘subvention’. We must ask ourselves whether this difference in language also reflects difference in our attitude?...” PM has focussed on a real attitudinal issue prevailing world over, since the developed countries started dominating policy formulation for the rest of the world. US considered purchase and destruction of agricultural produce by government as ‘subvention’ to hold prices, while subsidising interest rates or

What Gandhi means to me : He stopped at the thresholds of the huts of the thousands of dispossessed, dressed like one of their own. He spoke to them in their own language. Here was living truth at last, and not only My VIEW: This tribute by Octogenarian poet Jayanta Mahapatra is special. Find out why. Excerpts: " Years after independence, one questions the society we live in. Where is the equitable distribution of wealth Gandhi dreamt of? What progress can we be proud of when most of our tribal population is in rebellion against the government and farmers commit suicide because of debts they are unable to repay? And when will we learn to rule ourselves? In moments when I am alone, and poetry pushes me against my will into a wide, wide expanse of loneliness, I think of him and his courage — the mature convictions of a frail old man who could once walk into Number Ten of a famous London street wearing merely a short dhoti. I might not agree with all that he said, but he could

Corruption in civil services: The stained steel frame : The sensational arrest, by the Central Bureau of Investigation (CBI) on January 18, of the Regional Provident Fund (PF) Commissioner, Chennai, and some of his staff, as also a few private individuals My VIEW: Revisit Arthashastra Going by dictionary meaning, the word corruption is associated with words like bribe, cheating, evil, badness, decayed, stinking, decayed, false, defilement, wickedness, violation, defective, spoilt, faulty, wrong, malignant, offensive, immoral, unchaste, vile and fallen (the list can go on). Suffice to say, anyone or any institution/organization having something attributable to any formations out of any of these words can be alleged to be corrupt. Luckily corruption remains undefined and it is generally accepted that what is ‘legal’ is not corrupt. Then, like morality, the perception of corruption varies from individual to individual, society to society and country to country. That explains

January 30, 2016 Subsidy and incentive The Prime Minister’s observations on subsidy at the ET Global Business Meet on January 29, 2016 (Report in The Economic Times, January 30) should be taken seriously by economists and policy makers. PM said, “if a benefit is given to farmers or the poor, experts and government officers normally call it a subsidy. However, I find that if a benefit is given to industry or commerce, it is usually called an ‘incentive’ or ‘subvention’. We must ask ourselves whether this difference in language also reflects difference in our attitude?...” PM has focussed on a real attitudinal issue prevailing world over, since the developed countries started dominating policy formulation for the rest of the world. US considered purchase and destruction of agricultural produce by government as ‘subvention’ to hold prices, while subsidising interest rates or cost of inputs to make farming a viable economic activity in poor or developing countries was discouraged

Finding Gandhi : On Mahatma Gandhi's death anniversary, the author finds out how the institutions in his name are struggling to remain relevant Let's find out what the author says... M G Warrier

The new arithmetic of inequality: 1%=99% : Well, a new report from Oxfam, an international NGO, shows — hold your breath — 1 per cent of the world’s population will soon own more wealth than the other 99 per cent combined, if governments don’t act on rising JUST FOR RECORD'S SAKE! M G Warrier

WEEKEND LIGHTER: LISTEN TO THE PRESIDENT (January 30/31, 2016, No. 5/2016) Feel free to mail your views on this edition of WL to mgwarrier@gmail.com I Listen to the President Excerpts from President’s speech on the eve of Republic Day, 2016 **  ** There will be, amongst us, occasional doubters and baiters. Let us continue to complain; to demand; to rebel. This too is a virtue of democracy. But let us also applaud what our democracy has achieved. With investments in infrastructure, manufacturing, health, education, science and technology, we are positioning ourselves well for achieving a higher growth rate which will in the next ten to fifteen years help us eliminate poverty. **  ** For revitalizing the forces of growth, we need reforms and progressive legislation. It is the bounden duty of the law makers to ensure that such legislation is enacted after due discussion and debate. A spirit of accommodation, cooperation and consensus-building should be the preferre

Government policies must result in job creation: Rajan : ‘Ingenuity of society must meld with technology to push employment’ Excerpts: Pranab Bardhan's analysis: " He also pointed to data that showed that nearly 30 per cent of Indians in 1the 5-24 age group are neither in employment nor in education or training. “India is the worst-performing in this metric among the top 10-15 major economies. China’s equivalent figure is at 10 per cent,” Bardhan said. He said it would be wise if the government changed the current system of offering capital subsidies to giving wage subsidies — that is, incentives for businesses for hiring more workers. Currently, he said, the sum total of corporate subsidies far exceed the government’s spending on social welfare, agriculture and fertilizer subsidies and job guarantee schchemes" Read full report. My VIEW: January 29, 2016 Job creation This refers to “Govt policies must result in job creation: Rajan” (The Hindu Busine

His inscrutable ways : None can fathom the Supreme Brahman’s greatness or Sankalpa. Scriptures point out this truth when trying to describe Him and say that he is beyond thought and speech. The myriad names in the Vishnu Sa Excerpts: "But the powdered pieces are washed ashore and these grow into a kind of grass that turns deadly to the Yadavas who use it to kill themselves in a fight. One bit of the rod is swallowed by a fish and this reaches the hands of a hunter who fixes it to his arrow. The end of Krishna avatar is entwined with this episode when Krishna becomes a prey to this arrow." Read the short article using the link. M G Warrier

If you flaunt while owing a lot, it suggests you don't care: Raghuram Rajan : Excerpts of NDTV's Walk the Talk interview with Raghuram Rajan January 28, 2016 Mind reading Apropos excerpts from Shekhar Gupta’s walk the talk at Davos with RBI Governor (Business Standard, January 28), hats off to Gupta for the brilliant questions which could make Dr Rajan speak out his mind. Last question, first. ‘If India wants you to stay on…’, the answer is positive when Rajan said ‘…we are in a good position; we need to keep working on it’. India cannot afford to allow Rajan to leave Team RBI which is playing the game well, to fend for itself by briefing another incumbent at the top for another six months half-way through FY2016-17. Rajan’s optimism expressed clearly when he said ‘…but if the guys who are not behaving behave, with them, and all the young entrepreneurs coming on stream, we have a world class system’ should be supported by GOI with appropriate policy and legislati

Takeaway from R-Day : At 85, I have seen the dawn of Independence in 1947, the birth of our great Republic in 1950 and the gradual transformation of this nation from an economically weak country, which once faced a shorta Takeaway from R-Day At 85, I have seen the dawn of Independence in 1947, the birth of our great Republic in 1950 and the gradual transformation of this nation from an economically weak country, which once faced a shortage of food grain, clothing, communication facilities and other essentials, into an economic powerhouse with an abundance of all these. The grandeur of the 67th Republic Day parade made me realise that all of us need to get over our narrow religion- and caste-driven politics and instead salute our great workers, farmers and soldiers who have made this achievement possible. We have the strength and the resources to progress even further. V.R. Sastry, Bengaluru

What does the carnage in Public Sector Bank stocks mean? - Moneylife

No more slogans : With reference to the editorial, ‘Renewed friendship’ (Janaury 26), a deep, democratic ethos binds the Indo-French relations. That said, modern economic compulsions spawn trade blocs much more than political or defence Heed the expert This refers to Aarati Krishnan’s brilliant analysis in the book review, ‘Reforming financial reforms’ (Business Line, January 25). It brings together what Tarapore has been saying about the half-baked report of the FSLRC; the aggressive, single-handed efforts of Justice Srikrishna, brushing aside dissent expressed by his own colleagues; and the need to tread cautiously while dismantling the institutional structure which is presently handling the mandated responsibilities relating to regulation and supervision of the financial sector fairly well. Whether inside the RBI, handling sensitive areas such as monetary policy or management of forex reserves, or as a regular columnist SS Tarapore drew one hundred per cent on his resources which c

January 27, 2016 Suitable system This refers to Shashi Tharoor’s observation that “Parliamentary System is ill-suited for India” (Economic Times, January 26). Sure, coming from the historian-cum-administrator turned parliamentarian on the eve of Republic Day, the idea will have many takers in the media and debates will follow to come to a consensus on a suitable system. Perhaps, Tharoor could have initiated the debate inside his own party which cannot disown responsibility for evolving the prevailing system of governance for the country during the first half of last century. Without worrying about the timing or motives, India need to dispassionately ponder over what made the scholar politician make the observation. The events during the current decade call for a relook at the efficacy of the present federal system. From the Non-Congress-non-BJP and Non-BJP-non-Communist approaches of political parties in a scenario where there is no escape from coalition politics to the latest

Google celebrates Republic Day with BSF’s camel contingent doodle : Google on Tuesday celebrated India’s Republic Day with a doodle of a tableau of camels carrying band members. Each of the six camels carries a letter of the word ’Google’ on its golden caparison. The

Kamadenu: Experiments with Krishna series. #Krishnafortoday ... : Experiments with Krishna series. #Krishnafortoday Great imagination... Go to kamadenu and enjoy Keshav's works. M G Warrier

President flags 'intolerance', 'unreason' : Reminds legislators of their duty as lawmakers; says education must be open-minded January 26, 2016 Republic Day This refers to the report “President flags ‘intolerance’, ‘unreason’” (BS, January 26). It is an irony that the mainstream media (both print and electronic) willing to debate intolerance and unreason endlessly, gives much less attention to the President’s speech which briefly, but eloquently expresses the common man’s concerns, from terrorism to poverty. President’s observation, “For revitalizing the forces of growth, we need reforms and progressive legislation. It is the bounden duty of the law makers to ensure that such legislation is enacted after due discussion and debate. A spirit of accommodation, cooperation and consensus-building should be the preferred mode of decision-making. Delays in decision-making and implementation can only harm the process of development.” Is loaded with directions bot

Taking a sabbatical from the present : It was an unlikely group on an implausible journey. Bound by blood and a common past, we liked to call ourselves ‘the originals’. By definition, we are not a legal family — a social unit of adults and Excerpts: " As my brother pushed mum’s wheelchair through familiar terrain I was reminded of the times almost half a century ago when mum would push him in his pram. Back then, my brother would insist he could walk just like mum did now. In both cases the wheels were just a convenience to avoid the crankiness of an over-exhausted child... Life had indeed come full circle!" Read full article using the link above. You will remember something you had almost forgotten! M G Warrier

Gold bank - Moneylife My VIEW: This article was published in February 2015. The media report about government having mobilised 900 kg of gold under gold monetisation scheme, by mid-January 2016 is encouraging. The quick response from GOI and RBI to stakeholders’ sentiments make the chances of survival and success of the three gold schemes under implementation (Sovereign Gold Deposit Scheme, Gold Monetisation Scheme and Gold Coin Scheme) brighter. After decades of hesitant approach to gold management, India is now exhibiting the country’s determination to exploit the past savings idling in the lockers of families, institutions and religious centres, and bring them to the mainstream economy, to which gesture, people are responding positively. The initiative taken by GOI to exploit the potential of domestic gold stock to country’s advantage, if pursued with will and determination, will have a great impact on the growth story of India. When credibility in the government’s

Indian economy growth: Public investment crucial for a new normal : The Indian economy is not exactly “in a bright spot”. That is what most observers, barring those like the International Monetary Fund (IMF), appear to think. One can, of course, see where the IMF is

Reforming financial reforms : SS Tarapore hits a raw nerve on the Big Bang changes in India’s finance sector My VIEW: January 25, 2016 Decoding UF Code This refers to Aarati Krishnan’s brilliant analysis “Reforming financial reforms” (The Hindu Business Line, Book Review, January 25). For the discerning reader, the review brings in one place, the background of Tarapore to say what he has been saying about the half-baked report of the Financial Sector Legislative Reforms Commission’s(FSLRC) report, the aggressive efforts single-handedly made by Justice Srikrishna, brushing aside several dissents expressed by his own colleagues on FSLRC and the need for treading cautiously while dismantling the institutional structure which is presently handling the mandated responsibilities relating to regulation and supervision of the financial sector fairly well. Whether inside RBI, handling sensitive work areas like monetary policy or management of forex reserves or as a regular columnist

Letters: Better insurance plans : With reference to the editorial, 'Improved crop insurance' (January 20), earlier initiatives by some states to introduce crop insurance either did not take off or their success was limited due to a half-hearted approach and lack of linkages. This Business Standard, January 25, 2016 Letters Better insurance plans With reference to the editorial, "Improved crop insurance" (January 20), earlier initiatives by some states to introduce crop insurance either did not take off or their success was limited due to a half-hearted approach and lack of linkages. This time around, Centre-state participation and overall awareness about the need to make farming bankable should make a difference. The Centre and the states should revisit the subsidies provided to the farm sector in terms of interest, inputs and cost of electricity, pool these and provide need-based subsidy to make individual farming economically viable. Although goi

Arun Jaitley: Towards a friendly taxation regime : We have already worked upon an entrepreneur-friendly taxation regime; there are some steps that can be taken by notifications, which would be taken forthwith

Govt. mobilises 900 kg of gold under monetisation scheme : The government on Saturday said it had netted a hefty 900 kg of idle household and temple gold under the monetisation scheme and is hopeful that the number would rise further in future. “Gold Mone Also read my article on Gold Monetisation Schemes  @ www.moneylife.in/author/ mg - warrier .html My VIEW: Welcome news. The quick response from GOI and RBI to stakeholders’ sentiments  make the chances of survival and success of the three gold schemes under implementation (Sovereign Gold Deposit Scheme, Gold Monetisation Scheme and Gold Coin Scheme) brighter. After decades of hesitant approach to gold management, India is now exhibiting the country’s determination to exploit the past savings idling in the lockers of families, institutions and religious centres, and bring them to the mainstream economy. The initiative taken by GOI to exploit the potential of domestic gold stock to country’s advantage, if p

Tale of two regulators : The RBI has largely been a paternalistic regulator, while the Sebi wears its 'investor protection' mandate on its sleeve My VIEW: This article oversimplifies the roles of both RBI and SEBI. Sure, both are mandated with regulatory functions. But, as much as RBI’s role in the management of financial sector includes supervision, regulatory control, institutional development and mandated duties relating to several other areas including monetary policy and public debt management, SEBI has a hitherto neglected role of product development and maintaining the health of the equity market in addition to the supervisory role it performs now. A word about the concluding observation. Institution’s philosophy does not change with the change of leadership at the top. Even Dr Rajan’s leadership acted as a catalyst in pursuing the institutional vision of RBI. Also, frequent changes at the top are not in the interest of smooth functioning of institutions l

January 22, 2016 Silver line on gold horizon This refers to the report “RBI simplifies gold monetisation scheme” (Business Standard, January 22). The quick response from GOI and RBI to stakeholders’ sentiments  make the chances of survival and success of the three gold schemes under implementation (Sovereign Gold Deposit Scheme, Gold Monetisation Scheme and Gold Coin Scheme) brighter. After decades of hesitant approach to gold management, India is now exhibiting the country’s determination to exploit the past savings idling in the lockers of families, institutions and religious centres, and bring them to the mainstream economy. This approach is consistent with Finance Minister Arun Jaitley’s observation in Davos that accumulated savings idling as ‘reserves’ with PSUs should be ploughed back and utilised for public benefit. Once this principle is accepted at the highest level, policy formulation is just a ‘matter of details’. Read this with Thomas Piketty’s call to the rich to

China’s fallout : This refers to your editorial ‘Bad news from Beijing’ (January 22). When the US Fed raised interest rates, there was this fear in the markets that the world is without any tools to fight a China-led recession in 2016. The Hindu Business Line, January 23, 2016 Letters Income and tax This refers to SS Tarapore’s article “The ‘golden mean’ for this Budget” (January 22). The general exemption limit for individual income tax is one of the most discussed subjects among the salaried class and senior citizens before every Budget. The revelation that an upward revision of the threshold from ₹2.5 lakh to ₹5.0 lakh will have an impact of just ₹15,000 crore on the income side of the budget, by itself should be the guiding factor for the FM to be magnanimous and allow the doubling of the limit. The present practice of keeping the exemption limit low and extending several deductions for savings and ‘perks’ forces the salaried class to save money in instruments which they woul