Warrier's Collage on Sunday May 21, 2023

Welcome To Warrier's COLLAGE On Sunday May 21, 2023 Good Morning. Happy Birthday to all readers having Birthday during the week ending on Saturday May 27, 2023. Ayurarogyasaukhyam 🙏 and Best Wishes to all. Nice Day M G Warrier A Collage Videos of the week Lekshmy Vilas Palace https://youtu.be/uqC4MGTKd4g Kanapram Mana Kannur https://youtu.be/nL7bU9rVRc4 B Messages/Responses 1 E X Joseph See E1 (About my grandson Vihaan's admission to West Bengal School of Jurisprudence in 2023-24) Hearty Congratulations to Vihaan. Well done. It is a good school. He must be brilliant and talented like his mother. All our best wishes to shine in the professional study that he will start very soon, may be July. Thank you for sharing. (Your blessings are precious. Conveyed. Regards 🙏-Warrier) 2 C V Subbaraman The Bias of international rating agencies against India development and growth. This is not new. We can meet them. If someone says, X is not credit worthy, ok. But it is the lender who has to make his own assessment and be guided by the trust he has in the other party. But what is worrysome really is that in the overenthusiasm of some political persons to denigrate the political persons in power, they often rely and quote the foreign inimical forces to degrade our own country and its economy. We do not need enemy rating agencies, we have, despicably, enough in our own country to degrade our economy and interests. Hindenburg report is one of the most recent cases in point. Whom is to blame? subbaraman 3 Sitendra Kumar Dear Shri Warrier, Let the periodicity of the Collage be weekly or more and it should continue and not appear intermittently. It contains interesting information. In the years of yore when the magazines 'The Illustrated Weekly of India' and 'Dharamyug' were closed, I felt very sad and this sadness continues. Day before yesterday I located old copies of Sarika, a monthly Hindi magazine on internet and it gave me boundless joy. This time the theme of Mothers' Day has evoked enthusiastic response and made us all sentimental. Regards, Sitendra Kumar 4 Kerala Story Copied from the website for fun : A question and answer, 5 years ago Is Kerala really a part of India? I understand the pun you intended to convey. Geographically Kerala is still part of India and will continue so in future too, because I don't see any chances of Kerala becoming independent from India and forming a new country/territory, since we immensely depend on our country for almost everything. It's a very known fact that India's literacy rate is at 74.04% and Kerala is the most literate state in India, with 93.91% literacy. So naturally we tend to see everything in a rational way. Obviously that will lead to further criticization of everything we hear or see, including the decisions the country make. Finally to sum up, here is what we learnt from the Indian Constitution preamble, “ WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN, SOCIALIST, SECULAR, DEMOCRATIC REPUBLIC and to secure to all its citizens: JUSTICE, social, economic and political; LIBERTY of thought , expression, belief, faith and worship; EQUALITY of status and of opportunity; and to promote among them all FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation; ..…”.. It's our duty to follow this and we don't mind if others follow that or not, but we Keralites will surely follow this as it is. That's why Kerala is still free from any religious conflicts, unnecessary fights, scams etc. That's why Kerala is still called “GOD's own country”. That's why we usually appear as entirely different from India. We think and act rationally. We sincerely like and wish the whole India should think rational, because the world is watching us. C Collage Update Link shared by Dr T V Gopalakrishnan Indian banks back on track : https://www.opindia.com/2023/05/the-economist-modi-government-indian-banks-making-huge-profits/ D Media Responses 1 Time to recapitalise RBI May 20, 2023 Time to recapitalise RBI This refers the report "RBI to pay Rs87,416 crore as dividend to Centre for FY23" (The Hindu Business Line, May 20). In the recent past RBI has been supportive to the owner's will and the mutual respect for each other's interests has helped in nurturing a comfortable relationship between the two. RBI's share capital remains at a constant Rs5 crore. Time is ripe for GOI to think in terms of raising it to a decent figure, say one billion rupees over a period of time. This will, in addition to giving a more acceptable look to the central bank balance sheet, help mobilization of capital-like funds (in rupees, forex or gold form) from non-government sources. Augmenting the contingency risk buffer (CRB) by 0.5 percent when surplus position is comfortable is also a welcome initiative. M G Warrier Mumbai 2 Protect professionals May 17, 2023 Letters Protect professionals After the tragic incident which resulted in the gruesome murder of Dr Vandana Das, I have been keenly following the responses of government and the media interactions on the genuine demands of doctors for security at workplace. Reports of attacks on medical staff in the past and even after this incident points to the need for immediate corrective measures. It seems security of all hospital staff as a scientific discipline is not in practice. Doctors and nurses particularly, work coping with the huge rush of patients and bystanders. Organising foolproof security in all the hospitals may not be achievable. In this scenario doctors on their own (may be through their Associations like IMA) have to formulate systems for themselves, even creating hospital-specific special funds which could be augmented by government/public contributions, to supply to all doctors on duty, equipments such as panic button alarms with connectivity to police and security officers of hospitals. The sudden alarm itself will bring the attacker to his senses most of the time. While on the subject, personal security of professionals including defence and security staff has to be a national priority. Serious issues get submerged while promoting constituency interests of stakeholders, mostly political leaderships. M G Warrier Mumbai 3 Caregiving as a profession May 16, 2023 Caregiving as a profession This refers to the article "Bridging the care deficit" (The Hindu Business Line, May 16). After the disintegration of the joint family concept and the increase in the number of women joining the workforce, there has been a tacit recognition that several chores traditionally done by ladies have become 'jobs' to be done against remuneration. Thus child care, cooking and other household work including caregiving have become professions accepted by those who are less fortunate to get employed on the strength of educational qualifications. The need of the hour is to recognise these work areas as ones requiring respective skills and build local pools of skilled workers who can be trusted to entrust different types of household work from child care to geriatric care. M G Warrier Mumbai E Collage Books 1 Book on my table : "Songs of Love" By E X Joseph While gifting his book "Songs of Love" E X Joseph wrote these affectionate words in the opening page in 1999 : "To My dearest Govinda Warrier whose friendship, love and affection have always inspired me and who is an embodiment of spirituality and the quest for enlightenment and Mrs Sudha Warrier, the perfect wife and mother and Kiran n Smita and Reshmy the talented young generation With profound love n regards & Best Wishes E X Joseph " We were in touch till last year when he used to respond to Collage from the US. After some gap, owing to the break in bringing out Collage, the message received from Joseph today was a pleasant surprise (See A1) F Collage Psychology : Optional https://www.psychologytoday.com/intl/blog/from-striving-to-thriving/202305/get-space-from-your-busy-mind-and-act-on-what-you-care-about You can opt not to open this link. But, if you open, you will be disappointed that the narrative is too simple, why at all someone should waste time talking about these silly things. Most of your problems are simple and silly. When you leave them unattended, they become obese and start haunting you. The idea of journalising your thoughts as they happen is nothing new. But very few of us have taken it seriously. My monologues are a crude attempt to transcribe my thoughts for the benefit of others. Organising thoughts simultaneously into sentences and writing them down is not easy. By practice, we can make it a habit. Bonus See God in All A temple goer wrote a letter to the editor of a newspaper and complained that it made no sense to go to temple at least once a week. He wrote : "I've gone for 30 years now, and in that time I have heard something like 3,000 satsangs, but for the life of me, I can't remember a single one of them. So, I think I'm wasting my time, the preachers and priests are wasting theirs by preaching to us about the Almighty". This started a real controversy in the "Letters to the Editor" column. Much to the delight of the editor, it went on for weeks until someone wrote this clincher: "I've been married for 30 years now. In that time my wife has cooked some 32,000 meals. But, for the life of me, I cannot recall the entire menu for a single one of those meals." "But I do know this : They all nourished me and gave me the strength I needed to do my work. If my wife had not given me these meals, I would be physically dead today." "Likewise, if I had not gone to temple for nourishment, I would be spiritually dead today! That is what going to temple and praying to GOD does ... it keeps you spiritually alive!!" When you are DOWN to nothing, God is UP to something! Faith sees the invisible, believes the incredible and receives the impossible! Thank God for our physical and our spiritual nourishment! IF YOU CANNOT SEE GOD IN ALL, YOU CANNOT SEE GOD AT ALL! *Shared by Badrinarayanan Chennai G Collage in the Classroom Personal Finance Personal Budget : M G Warrier A Personal Finance Plan for Life Need for a Personal Budget* It is desirable to incorporate goals in life achievable with financial support in a floating plan from the first day one is convinced that planning accelerates chances of achievement. Time was, when life was comparatively slow and need to worry about costs and prices, comparison with neighbors and colleagues as regards lifestyle and anxiety about shrinking income due to circumstances beyond one’s control was relatively less. Now things have changed and the era of competition and comparison, at times irrelevant and irrational, still unavoidable, has arrived. Looking around, one finds that even in villages, the covers earlier available(joint family system, employers who were considerate about their employees and took the responsibility of supporting their workers in times of need without limiting the financial support strictly within the ‘Cost to Company’ package, magnanimous individuals found in every village and various social groups purveying charity) for tiding over emergencies like illness in the family, children’s basic education and social ceremonies like marriages which were neighborhood responsibilities in the village situations have disappeared without being replaced by comparable arrangements. This has resulted in certain amount of anxiety and even frustration about the future of the next generation in the minds of those belonging to a generation which had enjoyed social security just by being part of the neighborhood they belonged. While reinventing those comforts in the forms they existed, say, till some thirty years back is neither possible nor necessary, it would be unwise to leave the problems remain unresolved or leave them to be solved by passage of time. This takes us to the fundamental question as to who should take the responsibility to identify the problems and find solutions. There is a saying that your decisions would be acceptable most of the time but the reasons you give for arriving at them can make your decisions unacceptable. So, without for the time being worrying about the reasons, let us begin on the presumption that each one of us individually is responsible for our success or failure. This would suffice for our limited purpose of fixing the responsibility of financial planning on each individual who works to earn enough to support himself (and his family).Once the responsibility for making both ends meet is accepted, the question arises how best one can go about fulfilling the responsibility within the available resources. This is where the role of personal budget as a tool to plan, control and monitor one’s income and expenditure becomes significant. Self-regulated Financial Discipline Having accepted that each individual has to take responsibility for planning his own financial inflows and outflows, let us consider whether there are any text book methods to go about to ensure a reasonably secure pattern to follow for financial planning. The honest answer is there are no models within which you can straight-jacket your personal budget, reason being its individual characteristic in regard to sources and uses of funds. Then, the question is, are all Investment Advisors, Portfolio Managers, Financial Advisors and your own bank inefficient in providing you the necessary advice, support and help? No. They are all doing their job within certain territories assigned to them and your personal budget is a function of all of their constituencies and much more. Personal Budget is the financial plan for short term, medium term and for life each one of us will have to formulate to ensure that the life’s goals we set which are dependent on money are realistic and do not go unrealized for want of enough cash at the appropriate time. Sounds something familiar, which even the other day, someone who introduced himself as an Investment Advisor has already told you? Let us look at the same issues, from a different perspective, in a more selfish way, if you may say so, with focus on the gains and losses any movement from the individual’s side would bring to him. This is the era of self-regulation. From a small Non-Governmental Organization(NGO) engaged in organizing self-help groups(SHGs) of small entrepreneurs like vegetable venders or rural artisans in villages to the largest company engaged in manufacturing consumer goods are all told not to depend on Regulatory Authorities for ensuring that they follow the regulatory obligations, but to put in place arrangements for self-regulation. Let us try and find out some norms for formulating individual financial plans which could in due course be converted into personal budgets for various durations. As the basic component of the plan would be money and financial products such as cash, bank balances, investments in various forms and credit (loans), it would be ideal to keep in mind the regulatory framework already in place for banks. The Banking Regulation Act stipulates, among other things, norms for capital adequacy, cash reserves, liquid assets and certain limits for risk-related business a bank undertakes. In the Indian situation, social obligations of banks, as they accept public deposits are also brought into the regulatory framework and hence certain restrictions on lending to certain categories of borrowers and certain requirements relating to credit flow to certain other sectors. All these guidelines/directions could be mutatis mutandis factored into individual personal budgets depending on the base from which such budget evolves. Banks mobilize deposits from public and the regulations are there to ensure the safety of the deposits and to see that banks keep with them adequate cash and liquid assets(assets that can be converted into cash at short notice) to meet depositors’ demands and repayment obligations(in case the banks borrow from other banks or Reserve Bank of India). If we view the money that come to our hands from various sources including the salaries or wages we earn from our own efforts as a part of a trust we are fortunate to manage for a relatively short period, our approach to the management of the corpus of funds with us will undergo a transformation. Depending on individual circumstances, we can work out the size of capital, cash reserves, liquid assets, investments and nature of embargos on deploying our funds in ‘risk assets’. Let us consider these items individually. i) Cash and bank balances Cash and bank balances should be adequate to meet one’s requirement of routine expenses for two months, expected travel expenses for one month, provision for medical and other emergencies and other routine expenses which could be estimated on the basis of experience for the previous one year. The norm fixed for maintenance of cash reserves for certain types of banks at some stage was three to six per cent(three percent on a day-to-day basis with an optimum six per cent level which would ensure adequate balances for meeting daily demands) of their liabilities. In the case of individuals, once the amount is worked out based on the needs as above, it could be converted as a multiple of one’s monthly income and the norm could be followed till another review after, say, three years. ii) Liquid Assets/Investments The components of liquid assets would be long term deposits, gold, insurance, investments in mutual funds, equity and Public Provident Fund and similar deposits in Post Office, banks etc which would be available for encashment depending on their maturities or facilities for withdrawal/loans available. In this case each instrument for investment has to be selected depending on availability of surplus funds for investment, pattern of maturity (which has to be aligned to the time when one would need the funds) and it would be desirable to go for investments which are safe and those allowing enough flexibility in the matter of deposits and withdrawals. For example Public Provident Fund account allows deposit as little as rupees five hundred in a year (maximum rupees seventy thousand) during its fifteen year tenure (further extendable for five years at a time thereafter. Depending on surpluses available for investment, it would be desirable to look at insurance as life cover and avoid this as an investment instrument, which approach may release money for direct deployment in equity/debt/mutual fund. Like cash and bank balances, the quantum of which are dependent on current income and current needs, the quantum of investments also will depend on the future needs and current surpluses. This writer, while working on his own personal budget at the age of thirty-five, found that a person dependent only on salary income will have to save about forty per cent of his monthly income for at least twenty years to maintain a reasonably good lifestyle(comparable to the one during active service ) post-retirement. After twenty-five years, in the year 2004, he found that whatever changes happened in the components of his family expenditure, inflation rates, interest rates or income tax structure the saving rate estimated in early 1980’s is still valid, although it may not be quite easy to prove its accuracy with a convincing model acceptable for all. If the employer provides a decent pension scheme and medical facilities for life, there could be appropriate adjustments in this requirement. At this stage, a mention has to be made about the windfall incomes/gains some youngsters these days are getting for different reasons like having started the career in a booming sector of the economy or in a country where remunerations are high for the time being or parents having left a fortune and so on. In their cases it is all the more necessary to protect the windfall component of income and assets insulated from the likely impacts of inflation and tax laws, failing which the damage that may happen at a totally unexpected time owing to a change in tax laws or criteria for assessment of wealth could result in huge cash outflows. One would find it extremely difficult to absorb the shock in such situations and everyone knows banks and close associates would also vanish in the thin air the moment there is a smell of financial trouble. It is always better to remain prepared to meet any eventuality, especially when this is possible with a little bit planning when one is well off. iii) Risk Assets While considering investments, one would always find that more the risk involved in a particular category of investment, the return offered is higher. This does not mean that investment in risk-prone assets should be totally avoided. The safe way is to arrive at the level up to which one can take risk in the matter of leaving one’s hard earned savings in instruments that are perceived to be unpredictable in terms of return and liquidity. Here there are mainly two categories of investments. One, like equity and real estate where the fortunes may fluctuate, but in the long run, gains may set off losses, provided one had taken normal precautions while investing. If one is not very sure about the volatility and intricacies of equity market and still would like to reap some benefits of the growth potential in equity investment, to begin with mutual fund route would be better, as good mutual funds engage professionals to manage their funds and they would have the backing of expert research groups. In any case, it is better to limit investments in equity and equity-based instruments to not more than 30 to 50 per cent of surplus funds available for investment (higher levels at lower ages) at one’s disposal. Funds that would be needed in the medium term should ideally be deployed in more liquid areas than equity and equity-linked mutual funds. The second type is where the institutions or groups which are not normally in a position to raise funds through legal channels like borrowing from banks offer high returns and cash on the greed of people who are not very well versed in investment matters. When anyone considers handing over money to the second category of people, whatever their vocation (charities, agriculture, business, marketing and a host of other attractive group-forming and networking are highlighted as their main activity by this category of resource mobilizers), some of the questions for which answer should be sought are: (a) Prima facie, will the investment (principal) be safe? (b) What is the activity that will generate the assured return? (c) Does the venture in which your money will be invested have enough scope in the area where undertaken and whether the institution or group has the necessary infrastructure and linkages to successfully carry it on? Who are their competitors? (d) Are the people behind the proposition of proven integrity? What is their track record? An effort to find answers to these questions will give an intuitive suggestion as to whether one can go ahead with the investment. In brief, where the return offered is more than one and a half times the highest interest rate offered by a public sector bank on fixed deposit, one should be doubly sure about the bona fides of the hands that will be playing with one’s hard-earned savings. Asset-Liability Management and preparing draft financial plan A budget seeks to match income and expenditure. Personal Budget cannot be different. As it would be difficult to prepare a long term budget for life at one go let us consider splitting the plan into three timeframes namely (a) One Year (b) Medium Term (say five years) and (c) Long Term (next twenty years). Each plan would seek to identify the income expected and the likely expenditure/savings out of the income during the plan period. The effort would be to match aggregate resources with the estimate expenditure and savings/investments during the same period. This is similar to the Asset-Liability Management being attempted by banks. Naturally the One Year Plan will become an integral part of the Medium Term Plan which will ultimately be incorporated into the Long Term Plan. For preparing any financial plan, it is essential to identify the sources and uses of funds. It would be ideal to create check-lists of items that would form part of the income side and expenditure side of the plan. These check-lists will take into account all the components of the resources at one’s command and estimates of all expenses/investments/savings. Resources side Check-list Under this income from salaries, rents, regular remittances expected from any source, interests and dividends, agricultural income, income from business/profession and any other regular income should be included. Augmentation of resources through borrowing should be included under this. However, borrowings should be matched by source for meeting repayment obligations on the expenditure side. One-time income/Windfalls should be kept aside and treated separately as suggested elsewhere. Expenditure/Investment side Check-list This check-list includes household expenditure, children’s education, travel, entertainment/leisure, books and magazines, remittances to dependents/children staying away from home, medical expenses and all other recurring expenses, lump sum commitments on loans which may be due during the plan period, loan repayment obligations, regular savings commitments and any other anticipated outgo from one’s income. Draft Financial Plans Once the income and expenditure/investment side check-lists are finalized, one can move ahead to formulate draft financial plans for various time durations discussed earlier. Utmost care should be taken while selecting instruments for investment/savings and deciding their maturities to ensure that these are in alignment with the tax planning and future major events in one’s life like children’s education, marriage/s in the family, acquisition of movable(car etc) and immovable assets(house etc) and retirement. The Draft Financial Plans will have the following major heads on income and expenditure sides. A Income Side 1. Salaries 2. Interests/Dividends 3. Rents receivable 4. Bonus/Commission 5. Windfall Gains 6. Other Income(Specify) B Expenditure Side 1. Household Expenditure 2. Education Expenses 3. Travel 4. Medical Expenses 5. Loan Repayments 6. Savings/Investments 7. Other Expenditure(Specify) It is desirable to prepare all the three draft financial plans simultaneously and go on revising it considering the need to match sources and uses of funds. This exercise will be an ongoing process and need not reach any finality in the short-term. The effort will put one on the right track as regards financial planning as each item in the financial plan will trigger thoughts in one’s mind as to the relationship of that item to the corresponding items on the opposite side of the plan(income or expenditure, as the case may be). The exercise will eventually help in finalizing one’s own Personal Budget for Life which will remain as a guide in times of doubt as to whether or not to incur a fresh expenditure. This will also improve one’s ability to advise anyone seeking one’s views on expenditure/investment. **** **** **** *An edited version of this article was published in Dignity Dialogue, some 20 years ago. My handbook "Savings For Survival" is based on the contents of this article-Warrier


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