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
Feel free to mail your views on this edition of WL to mgwarrier@gmail.com
MONEY MATTERS: Demonetisation, 2016
Reserve Bank of India’s Priorities
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.

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.
M G Warrier, Mumbai

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


Popular posts from this blog



The King of Ragas: Sankarabharanam