WEEKEND LIGHTER: Reserve Bank of India's Priorities
WEEKEND LIGHTER: Reserve Bank’s Priorities
(November 12/13, 2016, No.48/2016)
Weekend Lighter is posted every Saturday @mgwarrier.blogspot.in
MONEY MATTERS:
Demonetisation, 2016
I
Reserve Bank of India’s Priorities
M G WARRIER
One feels that
at Reserve bank of India, some issues are kept in the back burner, probably because
they have a different set of priorities which is not easy for common man to
decipher. Examples galore. Let me restrict to three.
(i)The RBI’s
Balance Sheet included in the Annual Report 2015-16 carries an observation:
“An amount of `10 million each has been transferred to
the National Industrial Credit (Long Term Operations) Fund, the National Rural
Credit (Long Term Operations) Fund, the National Rural Credit (Stabilisation)
Fund and the National Housing Credit (Long Term Operations) Fund during each of
the five years. An amount of `10 million each has been transferred to the
National Industrial Credit (Long Term Operations) Fund, the National Rural
Credit (Long Term Operations) Fund, the National Rural Credit (Stabilisation)
Fund and the National Housing Credit (Long Term Operations) Fund during each of
the five years.”
The transfer is in compliance of a statutory provision
in the Reserve bank of India Act, 1934. High time, the position is reviewed and
contributions made with reference to felt needs.
(ii) The retirees from RBI covered by RBI Pension
Regulations, 1990 are drawing pension with reference to 4 reference dates
(November 1, 1997, 2002, 2007 and 2012) while pension introduced effective
January 1, 1986 was revised every time wage was revised for serving employees
till November 1, 1997. Last two Annual Reports carry an observation that RBI is
engaged with GOI regarding pension revision. Pension Scheme in RBI is a fully
funded one unlike in GOI where the practice is “Pay As You Go”.
(iii) DICGC which is a fully owned subsidiary of RBI
is a neglected baby. While RBI has a history of being professionally managed
since inception, DICGC, having no worry about sources and uses of funds,
survives like a small ‘government department’ within RBI. The whole approach to
deposit insurance in India is due for a review and overhaul, considering
factors like:
(a) Should
Government owned banks should continue to be covered under Deposit Insurance
Scheme,
(b) Adequacy of deposit insurance cover,
(c) Whether deposit insurance premium should be worked out
keeping in view the risk-weights of individual banks,
(d) Whether Deposit Insurance cover should be for
aggregate deposits held in banks by an individual or should continue as at
present, and
(e) What will be the impact on the image of individual
banks, if a differential system for premia and threshold for coverage is
introduced.
II
Recent responses
Money matters
Pulapre
Balakrishnan’s article “The new colour of money”(The Hindu, November 11) puts
together cogently in one place several aspects and dimensions of the somewhat
drastic measure of demonetizing more than 80 per cent(in terms of value) of
notes in circulation in the county announced by Government of India and RBI on
November 8, 2016. Some of the implications lucidly explained in the article
were not known to the common man, and, one is not sure, whether even policy
makers had taken serious note of these, while taking the decision. These are
issues which, hopefully, will be deliberated during the weeks ahead.
Let us accept
that the concerns and anxieties expressed by the Prime Minister on November 8,
while announcing demonetization of Rs 500 and Rs 1000 notes, which included
misuse and abuse of high denomination currency notes for purposes other than
those for which ‘currency’ was issued, by themselves prepared a genuine ground
for the tough option that was exercised.
The follow up
measures suggested in the article, namely those relating to regulating
transactions in gold and property by making mandatory provisions to route them
through banks are significant and sooner the political leadership (as different
from the government) comes to a consensus on these measures, the better for the
country. A couple of issues, which even scholars like Prof: Balakrishnan avoid
mentioning but will have long term beneficial impact for the country’s economic
growth and India’s image among developing/developed nations, remain still in
the backburner. They are handling the taxation of agricultural income and
mapping the assets including gold and jewelry lying unaccounted in various
pockets. Government could start with making it mandatory to report periodically
the value of assets above a pre-decided threshold level, held by individuals
and registered institutions.
M G Warrier, Mumbai
Mystery gift
This refers to
Tiny Nair’s interesting story “Mystery of the wrapped gift solved”(The Hindu, Open
Page, November 8). These days, gifts come in different shapes and packings and
many a time from ‘unknown’ sources! When a gift is a ‘quid pro quo’ or a
gesture of love and affection or even a mark of appreciation as in this case,
things are under control. Sometimes,
gifts herald possible future demands, as in the case of gifts the politicians
fighting elections receive.
And there are occasions when you get
‘return gifts’ just for your attendance. Some of the invitees and intruders who attend certain
celebrations will be ‘picked and chosen’ for award of such gifts. I received
one such gift while in Nagpur, during late 1990’s. We (myself and wife) were invited for the wedding of a
colleague’s relative. As we did not know the family directly, there was a little
embarrassment, still we attended the wedding as we were in the good company of
several others from our office. In the light of the ‘no presents, only presence’
advice on the invitation and after enquiring about the general practice, none
of us carried any gift for the new couple. It was a grand function, with music,
dances and buffet dinner capable of satisfying the taste buds of all. We
returned happy.
After a few days, my colleague who had invited us for the wedding came and delivered a ‘packet’ to me, explaining that the packet contained a ‘gift’ for me. After a detailed interrogation, it turned out that it was the ‘return gift’ given to close friends and relatives who attended the wedding. He persuaded me to accept it. The packet contained a wall clock on which a photograph of the newly married couple had been embossed. Sometimes, gifts leave sweet memories of love and affection. This was one such occasion.
After a few days, my colleague who had invited us for the wedding came and delivered a ‘packet’ to me, explaining that the packet contained a ‘gift’ for me. After a detailed interrogation, it turned out that it was the ‘return gift’ given to close friends and relatives who attended the wedding. He persuaded me to accept it. The packet contained a wall clock on which a photograph of the newly married couple had been embossed. Sometimes, gifts leave sweet memories of love and affection. This was one such occasion.
M G Warrier, Mumbai
III
Leisure
Salad for the soul
The piece “Like
salad for the soul” by Uma Mahadevan Dasgupta (The Hindu, November 6) itself
flowed into one’s soul like a poetry. By the time one finished the quote in the
penultimate paragraph which read: “…Bare
ruin’d choirs, where late the sweet birds sang…” thoughts had wandered
elsewhere making tough to separate one’s own memories and those in the
narrative. Reading the article was a profound experience.
The illustration
brought back to mind a scaring personal experience of 1950’s. During my Class
VII vacation, I was in my sister’s house in a remote village in Kannur
(Kerala). The house had a big compound and my sister had some goats being
reared for milk. By around 11 a m suddenly we heard the barking of a canine of
dogs and when we came out of the house and saw, a young lamb was being bitten by
several dogs. After driving away the dogs, we started giving ‘first aid’ to the
bleeding lamb. I still remember its pathetic look piercing into my eyes. It was
one of the pet lambs for my sister.
I was asked to
accompany a helper from the neighborhood to carry the lamb to a Veterinary
Hospital, some five kilometers away(In Mahe which was part of Pondicherry then
where medical facilities were much better than those available in Malabar). The
helper was another boy and we carried the lamb by turn. The Vet there, after
dressing the wounds, suggested injections for rabies as an abundant precaution.
The helper and I commuted the 5 km route on alternate days, carrying the lamb,
and once the wounds subsided, making it walk. The lamb survived.
M G Warrier, Mumbai
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