WEEKEND LIGHTER: IMF Recognition, Isaavasya...

WEEKEND LIGHTER: IMF Recognition, Isaavasya…
(March 19/20, 2016, No. 12/2016)
Weekend Lighter is posted every Saturday @mgwarrier.blogspot.in
Feel free to mail your views on this edition of WL to mgwarrier@gmail.com
Opening remarks
IMF recognition

This refers to the report “India’s star shines bright: IMF chief Christine Lagarde” (The Hindu, March 13, 2016). It took 70 long years after IMF came into being (remember, India was a co-founder of IMF) for the world body to come out with an encouraging positive observation on India, bereft of riders. This is not because of any change in the ‘resilience index’ of this country or any windfall gain that has blessed India like oil found in Gulf countries during the last century.

The change is in the attitude of ‘WE THE PEOPLE’ (Refer Preamble of Indian Constitution) brought about by the uprising of Indian youth, ignited by the movement led by Arvind Kejriwal and the leadership provided by two individuals. The political leadership provided by Prime Minister Modi and the role played by RBI Governor Dr Raghuram Rajan in exposing the weaknesses in the management of financial sector and suggesting remedial actions and making them happen are two significant contributors which increased the pace of India’s economic growth during the current  Century.
No lobbying by vested interests can now stall India’s progress as the country has accepted the guidance provided by Mahatma Gandhi who believed in self-reliance. In this context the following stanza from Bhagavadgita is relevant:
Uddharedaatmanaatmaanam Naatmaanamavasaadayet
Aaatmanaiva hyaatmano bandhuraatmaiva ripuraatmanah
(One should lift oneself with one’s own efforts and should not degrade oneself; for one’s own self is one’s friend, and one’s own self is one’s enemy)
(Bhagavadgita, 6.5)
M G Warrier
Recent responses


This is with regard to “Plummeting Confidence in the Government’s Ability To Tackle PSB Bad Loans” by Sucheta Dalal. It is tough for anyone to rescue public sector banks (PSBs) from the shameful situation they have been dragged into by government policies or to defend the high level of bad loans they have accumulated. Since nationalisation, political leadership has been meddling with the working of PSBs, using the ‘assumed’ ownership rights, with immunity. The miraculous survival of PSBs including SBI (State Bank of India) can be attributed to the net interest margins (NIMs) banks in India were privileged to enjoy continuously. During the current ‘Rajan era’, even at times of near ‘cartelisation’, RBI (Reserve Bank of India) has been merciful when it comes to passing on the benefits of lower resource cost by reducing lending rates.
 Judging the performance of banks with reference to the bad loans accumulated or the support they need from the owners, by itself, is not rational. Comparison is always with private sector banks. To get a clear picture, one has to remember that PSBs’ share in banking business is three times that of private sector banks. What prevents the private sector banks from increasing their share in business is a riddle that policy-makers and regulators should solve, at least at this stage, before succumbing to the pressure to again ‘privatise’ PSBs. 

It may be recalled that banks were nationalised because of the refusal of the private sector to plough back deposits mobilised from small savers to sectors that benefited inclusive economic development. The residual and new private sector banks continue to be selective in providing credit; the social responsibility of the banking system was largely met by PSBs. The corporates, which did not want to follow the banking discipline, used their influence to get credit from PSBs. All these, together, resulted in differential treatment for public and private sector banks. Given a level playing field and semblance of functional autonomy, the future of Indian banking is safe in the hands of PSBs.
 MG Warrier
*Online comment @moneylife.in

Unwelcome intruder
This refers to your editorial “An Alternative to Annuities in NPS” (Economic Times, March 18, 2016). Let us face the unpalatable reality. New Pension Scheme (the present National Pension System) is an unwelcome intruder into the family of retirement schemes in India. The purpose of its introduction was to avoid funding of government pension schemes. At the time of introduction of NPS prospectively for new entrants to central government service (excluding defence), effective January 1, 2004, the unfunded pension liability of central government alone was over Rs3.50 lakh crore. This liability will continue to grow for many more years.
Now that government employees have accepted NPS in the absence of any other option, government should at least make it comparable to the provident fund scheme administered by EPFO. As the managers of NPS are struggling to make improvements in that scheme without much success, Centre should, without worrying about the ‘loss of image’ graciously transfer NPS to EPFO for management as that organisation has a reputation and expertise built over a long period of sixty years. EPFO should be, then allowed to manage its resources, including personnel, professionally.
In lighter vein, a mix of current affairs and spirituality!

ISAAVASYA: Asset Liability Mismatch!

Poornamadah Poornamidam Poornaadpoornamudachyate
Poornasya Poornamaadaaya Poornamevaavasishyate
Time is not on my side, you don’t have to tell me
I had half a mind to proceed to HIMAALAYAAS
The media glare made me drop that idea
I have crossed seven seas and reached here
I have (you are right!) seven heavy boxes:
One, which I inherited,
Two, which my good teachers taught me,
Three, what my dad passed on to me (…,in case!),
Four, the blessings of those whom I treated well,
Five, the curses of those who are hungry ’cause of me,
Six, the fear of getting caught,
Seven, the wilderness before!
All along, I have been carrying my own brief (cases),
I always believed in the above-quoted Upanishad stanza,
Like King Lear told his daughter, ‘nothing’ will come out of ‘nothing’!
Take ‘something’ from everyone ‘who has’
Keep everything with you, pack heavily and keep carrying!
The holes you make, will get filled, nature has its ways!
What is with you, WILL BE YOURS FOR EVER
Beliefs change, keep changing, and so has mine!
Drishtwemam swajanam Krishna* yuyutsum samupasthitam
Seedanti mama gathraani mukham cha parisushyati
Vepathushcha sareere me romaharshashcha jaayate
(Gita 1.27/28)
(…as I see these kinsmen arrayed for battle, my limbs give way, and my mouth is getting parched; nay, a shiver runs through my body and hair stands on end)
*pardon me Krishna, I left you there, took another companion with me!



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