WEEKEND LIGHTER: Indigenous Ratings
(November 5/6, 2016, No.47*/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
*No 46/2016 was posted on November 3, 2016 with focus on
 “Pension revision in RBI”: Seen by 275 as on November 5
Issue of the week

Indigenous ratings**

Apropos Arup Roychoudhury’s report, “S&P bouncer: No upgrade for 2 yrs” (Business Standard, November 3), this is another instance of the casual approach adopted by international ratings agencies towards the reality in India.
Recent responses from the government and other stakeholders are indicative of a braver stance that sends out a clear message that times are changing and ratings agencies, which take positions to safeguard the business interests and greed of their masters may not be taken seriously even by those who have been giving some respect for their professional skills. 
India is a victim of foreign domination even today with respect to the assessment of the country’s self-esteem. Our creditworthiness, poverty level and comparative ranking on several human development indicators and the ability to protect against environmental hazards are all decided by outside agencies. They have no independent means to judge us other than with the data provided by our own agencies within the country.
It is comforting to see a change in approach in Delhi through various initiatives, including the effort to promote a new ratings agency — though for limited purposes — under the aegis of BRICS.  
Now that the National Institution for Transforming India Aayog has fewer responsibilities, it could be entrusted with the task of making existing organisations responsible for the compilation of statistics and ratings for the country in relation to other countries. The compilation would have to factor in parameters such as purchasing power parity, aggregate resources availability and institutions such as banks using internationally acceptable standards. If existing organisations are irreparably incompetent, new ones should replace them soon.
The time is opportune for India to think about setting up a ratings agency of international standards, which will understand the country and advise stakeholders about the health of domestic financial institutions and provide crucial input to financial institutions and governments abroad with which India has dealings.
Agencies like Standard & Poor’s and Moody’s are working within limitations. They, too, would be benefited if an internationally acceptable ratings agency came into being in India. 
We have, on record, observations such as the one made by the chief of International Monetary Fund (IMF), Christine Lagarde, when she was in India in 2015: “When adjusting for differences in purchasing prices between economies, India’s GDP will exceed that of Japan and Germany combined. Indian output will also exceed the combined output of the three next largest emerging market economies — Russia, Brazil and Indonesia”. The problem is, our own analysts and the media project India in poor light, relying on lobbying by external agencies.
In this context, a stanza from the Bhagvad Gita comes to mind, which translated loosely, means: One should lift oneself by 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.
M G Warrier, Mumbai
**Letter published in Business Standard, November 4, 2016

Recent responses
Inflation targeting
Apropos C Rangarajan’s article “Policy Put the Kettle On”(Economic Times, Inflation Targeting, November 2), it is comforting to see that the former RBI governor has offered a supporting hand to the Monetary Policy Committee to evolve itself into a strong policy arm of the central bank.
The conscious effort on the part of government to broad-base decision making and infuse professionalism in processes, as is evident from the accommodative approach to RBI’s views on MPC and choice of government nominees  from among the best available experts in the field need to be appreciated.
During the Technical Advisory Committee days, though the final call was to be taken by the Governor, the benefit of individual perceptions expressed by the TAC members had helped decision-making to a great extent. We need to give a fair chance to MPC to evolve itself as an expert body which will be able to unburden the RBI Governor from individual responsibility for every policy decision. Under the earlier dispensation, when unpalatable policy decisions had to be taken,  the Governor had to bear the brunt of the attack, as though he had done great injustice for his personal gains.
In a way, MPC formalizes and professionalizes the existing Technical Advisory Committee (TAC) which has been advising RBI Governor on crucial issues concerning monetary policy.

The constitution of MPC strengthens RBI Governor's hands and sends out a clear signal that GOI is serious about retaining RBI’s status as an expert professional body. The MPC met for the first time on the eve of October 4, 2016 Monetary Policy Announcement which saw a base rate cut of 25 basis points. The decision by the MPC, reportedly, was unanimous. We need not read much into the unanimity in the MPC about the first rate cut. Such bodies have different ways of functioning, depending on the leadership provided by the Chairperson.

Exploitative enslavement*
A B Sivakumar’s piece “Folly of hiring technical contract staff” (Business Line, November 2)  brings into focus a really grey area in Human Resources Management in government, public and private sectors in India. There is real confusion at the highest level about regular employment, ‘outsourcing of work’ and contract work assignments. To understand the implications, one may have to travel a little back in time.
While contract labour may be the continuation of ‘bonded labour’ practiced in farms, factories and mines in not so distant past, large scale outsourcing of work was an antidote against militant trade unionism which fought mechanization and introduction of Information Technology(IT), circa 1970’s and 1980’s. Policy makers, instead of taking the long and tough route of counseling trade union leadership and taking the workforce into confidence by assuring that IT is not about job elimination, but about improving efficiency by skill development, took the short-cut by encouraging ‘outsourcing’ of IT-enabled work to new generation companies which had a modern outlook to luring, hiring and firing.
Just a count of heads working in financial sector and its IT-support system will give an idea of the number of men-at-work in that sector and the huge waste of resources attributable to the reluctance of organizations to develop in-house skills. The social cost of sagging morale of workers in the organized sector and creation of an inefficient and socially insecure workforce in the unorganized sector is a subject for further study.
M G Warrier, Mumbai
*Letter published in The Hindu Business Line, November 3, 2016
Misuse of currency notes/coins
Currency notes and coins are issued through Reserve Bank of India to facilitate financial transactions. Personally, I would love to continue the pre-currency barter system, with some sophistication. Actually I have written an article explaining how a world without money will be a much more comfortable place to live. But the realization of that dream being a distant possibility, let us consider how to make use of the currency and coins available, to our best advantage.
First let us consider how currency notes are misused.
Currency should keep moving from hand to hand. Once it is stored beyond a reasonable period anywhere, it stinks.
Currency notes should not be used for taking notes or jotting down addresses and phone numbers. It's illegal to use notes for spreading one's ideas or thoughts.
Currency notes should be given the respect they deserve. Fold them, but with care. Have pockets and divisions in wallets sufficiently big to hold currency and coins you usually carry.
If soiled or forged note  come to you in the normal course, do not try to get rid of them by mixing with good notes or slipping to the fish vendor. Normally, banks exchange soiled notes.
Though one of the characteristics of money is ‘store of value’, better not to keep huge quantities of hard cash (currency notes or coins) at home or carry while traveling. My experience is, keeping cash needed for a week’s household expenditure at home in addition to a ‘reserve’ for medical emergencies will suffice. Let us make it a habit to keep some coins in our pockets while going for shopping, unless you are a collector.
Discourage ugly exhibition of currency
GOI and RBI should discourage the use of currency notes for purposes other than for financial transactions. Political leadership need to enforce some self-discipline in avoiding the temptation of the followers to show their loyalty to leaders by garlanding with note-haars.
Misuse and hoarding of coins
Use of coins for deposit in Hundis result in seasonal and regional shortage of coins for normal transactions. Faster recycling of such deposited coins should be considered by religious organisations. Shops and establishments as also public transport systems should be encouraged to re-use their coin receipts.
Leisure, faith, spirituality
Social scientists, economists, political parties of various denominations, social workers, recipients of compensations and remunerations, donors and those who receive donations, billionaires like Bill Gates and poor men on the street (including beggars) have different perceptions about accumulation of wealth and its subsequent deployment, allocation and disposal, depending on the constituency they belong to.

In personal life, as a school-going child, dependent on people outside family for monetary help to pursue studies, I have experienced the uneasiness one is subjected to, when one approaches someone else for financial support. The first lesson I learnt was, when one asks money from another, one must be prepared for rudeness, insults and rejections.
*Source: The Hindu, Faith
Here, I am reminded of one stanza by Rahim:
Sai itnaa deejiye, ja mei kudumb samai
Rahiman bhookhaa naa rahoom, sadhu na bhookhaa jai
(God, give me that much, just sufficient to manage my family, Rahim cannot remain hungry, those who come for food also should not return hungry)


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