WEEKEND LIGHTER: BYE 2016, WELCOME 2017!

WEEKEND LIGHTER: BYE 2016, WELCOME 2017
(December 24/25, 2016, No.54/2016)*
Weekend Lighter is posted every Saturday @mgwarrier.blogspot.in
Feel free to mail your views on this edition of WL to mgwarrier@gmail.com
HAPPY X’MAS & HAPPY NEW YEAR

*Posted on December 21, 2016. Next issue will be posted during the first week of January 2017

Opening remarks
RBI meddling with public trust

Reserve Bank of India circular* dated December 19, 2016  on deposit of Specified Bank Notes(SBNs) issued to banks can impair the public trust in the banking system in general and in the RBI as the institution statutorily responsible for Currency Management in particular. Consequent to the withdrawal of ‘legal tender’ status of Rs500 and Rs1000 currency notes on November 8, 2016, GOI and RBI have issued and implemented various restrictions on deposits and withdrawals of money, many of them for administrative reasons.
By and large, despite political provocations, citizens accepted the measures conceding the broader objectives of fighting corruption, black money and fake currency in the system. Remember, GOI has not yet withdrawn the RBI promise to pay value, backed by government guarantee which made SBNs currency notes in the first place.
The instructions now issued, restricting deposits to just once, giving discretion to bank officials to accept/reject deposits of SBNs and re-routing such deposits compulsorily to deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016 smacks arbitrariness. If someone alleges that RBI is acting under ‘instructions’ from GOI to ‘promote’ fund raising, the allegation may stick on the central bank.
Such casual approach to Currency Management can impair the public trust not only in the central bank but in the banking system, which can have long term implications for the economy.
M G Warrier, Mumbai   

*Clauses i to v of RBI Circular** dated December 19, 2016 copied below(On December 21, 2016, RBI has through another circular practically withdrawn instructions of December 19, 2016):

i Tenders of  SBNs in excess of 5000 into a bank account  will be received for  credit  only once during the remaining period till December 30, 2016. The credit in  such cases  shall be afforded only after questioning  tenderer,  on record, in the  presence of at least two officials of the bank , as to  why this could not be  deposited earlier and receiving a satisfactory explanation. The  explanation should be kept on  record to facilitate an  audit trail at a later stage. An appropriate flag also should be  raised in CBS to that effect so that no more tenders are allowed.
ii. Tenders of SBNs up to 5000 in  value received across the counter will
allowed to  be  credited to  bank accounts in the normal course  until December 30, 2016.  Even  when  tenders smaller than 5000 are made in an account and such tenders taken  together on cumulative basis exceed 5000  they may be subject to the procedure  to be followed in  case of  tenders above 5000, with no more tenders being allowed thereafter until December 30, 2016.
iii. It may also be ensured that full value of tenders of SBNs in excess of
5000 shall be  credited to only KYC compliant accounts and if the accounts are not  KYC compliant credits may be restricted up  to 50,000 subject to the conditions governing the conduct of such accounts.

iv. The above restrictions shall not apply to tenders of SBNs for the purpose of deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016.
v. The equivalent value of specified bank notes tendered may be credited to an account  maintained by the tenderer at any bank in accordance with standard banking  procedure and on production of valid proof of Identity.

**The disputed instructions contained in the circular were withdrawn by RBI on December 21, 2016.

Confusing between ‘LESS CASH’ and ‘CASHLESS’
M G Warrier

This refers to Amit Varma’s article “Three reasons why a cashless society would be a disaster” (By Invitation, Times of India, December 18, 2016). The writer has done fairly good research to padd up his arguments against what he fears as an emerging cashless India. So much so, he has dug up several quotes from young Mohandas Karamchand Gandhi (pre-1910) to prove that howsoever great the people may become in later life, it is possible that they might have made some absurd observations in their 30’s! Don’t ask me the relevance of this proof to the disaster (Cashless India) he is talking about, in this well-written piece. Unintended damage is, of course to ‘Brand GANDHI’, as the observations by the 21st Century version of that brand-name are becoming ‘viral’ as WhatsApp jokes instantaneously.
Let us be clear about the foundation on which the feared ‘disaster’ is built. It is conversion of India into a ‘CASHLESS SOCIETY’. So far, the talk is only about using ‘LESS CASH’. Even remotely, it will be tough to attribute the motive of making India ‘CASHLESS’, as printing of currency is in full swing even when I am keying in this response.
Privacy angle
Here, the writer is more clear about his intentions. He doesn’t want his financial transactions to leave a digital trail. This is a matter of opinion. And, perhaps, Amit Varma is making a valid point, which needs to be looked into. The problem could be real for those who are handling ‘unaccounted’ resources including money and for those who do their transactions through illegal channels to remain outside financial supervisory system and tax net.
A realistic view may have to be taken on this issue.
Cost angle
Every transaction, cash or cashless, has a cost and costs and benefits will find an equilibrium, in a market economy.
Political donations
This issue needs to be addressed independent of legal tender character of high value currency.
**********************


Recent Blog Posts



Bridging the learning deficit
Excerpts

“The problem of poor learning outcomes is of particular concern, for it is a structural issue pertaining to the design of curricula and ingrained rote learning methods. These have been the backbone of India’s teaching tradition for over half a century. But will this help create the kind of workforce that India wishes to develop: nimble, highly-skilled and ready for the digital age, the global economy and new pathways of occupational mobility? Or will the sheer weight of an outdated, colonial-era education system make Indians too sluggish and skill-deprived to cope in a highly competitive global arena? While efforts of the present and previous government to boost the quality of learning in higher and vocational education must be appreciated, policymakers ought not to ignore early childhood education and primary schooling, the phases during which the most important cognitive development milestones are attained. The tenth Annual Status of Education Report found that in 2014 the proportion of Class 3 and Class 5 students in rural areas who could read a Class 2 textbook was 23.6 and 48.1 per cent, respectively. Until Activity-Based Learning and “teaching at the right level”, tools for real learning and skill-absorption, become the norm, hopes of the country becoming a great power may well remain a dream.”


The Hindu, December 19, 2016
Interview: Ramachandran Venkataramanan, the managing trustee of Tata Trusts in conversation with Piyush Pandey:

Excerpts:

“We operate businesses and life on trust and confidence, not necessarily on a legal contract. That doesn’t mean we are doing anything illegal. If you have to finalise the books of accounts of a particular company, you could say ‘Financial systems and processes do not exist’. It could be reworded to ‘There is a need to strengthen the financial systems and processes’. It means the same but the way you interpret it or deal with it makes a huge difference. If you have trust, you will say the latter. If you don’t have trust, you will say the former.

***   ***

Salt fortification
We worked with the Ministry of Women and Child Development, Health and the Food Safety Standards Authority of India (FSSAI) to formally adopt and notify standards for fortification. These were announced on November 16, 2016 in the presence of Hon’ble Minister Ram Vilas Paswan. Several states are formally launching Double Fortified Salt using such protocols.
Fortification has been a practice globally. For example, many years ago, China found a way to embed micro-nutrients in soya sauce because soya sauce is a staple food in China. India has always been privy to this sort of fortification, earlier. In the 80s, iodised salt came into being that way. Then it became a standard, over the years. Now, we hope that in the coming years, Double Fortified Salt (DFS) or fortified milk will be a mandatory standard. It is available in the market but the key difference is that today, Tata Salt sells DFS at a price of about Rs.28, beyond the reach of many people. What we are attempting to do from the Trusts is, we are agnostic to any company or any state. The price points in public programmes will be around Rs.10 or less.
It is on initiatives like this that Mr. Tata has been personally involved. Conceiving it, providing strategic direction and also, reviewing it, very periodically – some times more than a programme manager.
We worked with the Ministry of Women and Child Development, Health and the Food Safety Standards Authority of India (FSSAI) to formally adopt and notify standards for fortification. These were announced on November 16, 2016 in the presence of Hon’ble Minister Ram Vilas Paswan. Several states are formally launching Double Fortified Salt using such protocols.
Fortification has been a practice globally. For example, many years ago, China found a way to embed micro-nutrients in soya sauce because soya sauce is a staple food in China. India has always been privy to this sort of fortification, earlier. In the 80s, iodised salt came into being that way. Then it became a standard, over the years. Now, we hope that in the coming years, Double Fortified Salt (DFS) or fortified milk will be a mandatory standard. It is available in the market but the key difference is that today, Tata Salt sells DFS at a price of about Rs.28, beyond the reach of many people. What we are attempting to do from the Trusts is, we are agnostic to any company or any state. The price points in public programmes will be around Rs.10 or less.
It is on initiatives like this that Mr. Tata has been personally involved. Conceiving it, providing strategic direction and also, reviewing it, very periodically – some times more than a programme manager.”

LEISURE


When life as you know it ends*

Excerpts:

How many of us while giving an account of a day that turned on us without a warning have begun its telling with the following lines: “It was a perfectly normal day. The sun was bright and the sky blue and clear”? Whether it was 9/11 or 26/11, or deeply personal narratives, normalcy is the default position at the time of their retelling. Joan Didion’s bestseller, The Year of Magical Thinking, reveals itself in different ways with each rereading. “Life changes fast. Life changes in the instant. You sit down to dinner and life as you know it ends.”

*The Hindu, December 18, 2016: SHELF HELP
Review of the book “The Year of Magical Thinking” by Joan Didion




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