Wednesday, December 31, 2008
: The editorial (‘Price growth high’, Dec 20) warns against RBI being too interfering. It also advocates greater accountability for RBI’s actions. The problem is, more accountability often means more interference which is mostly political, an anomaly in these times when state intervention is considered both pious and blasphemous. Effectiveness is preferable over efficiency, as Drucker put it. RBI can be all but unpopular with the cash-rich few who indulge in labyrinthine financial games. No open economy can be immune to market swings. A central controlling agency which can understand them and act is sine qua non. Conservative wisdom that has staggered meltdown effect is preferable to convoluted activism.
—Subhashree Kishore New Delhi
Friday, December 26, 2008
The wrong parallel
The Financial ExpressPosted: 2008-12-26 23:22:40+05:30 ISTUpdated: Dec 26, 2008 at 2322 hrs
Your editorial (‘By FDI for the poor’, Dec 24, 2008) draws a parallel between the vast volumes in the telecom sector and its promise of prosperity for the poor. With respect to raising living conditions, telecom and insurance are as different as chalk and cheese. Judging by use, telephone is not a necessity in the way medical care or life insurance is. The telecom success story and the mobile phone’s so-called levelling effect or its contribution to GDP may gratify but it doesn’t warrant hiking FDI or rolling the red carpet for reinsurance to the Lloyd’s which has been rocked by losses. Most of the foreign insurance players in Indian market are going through financial nightmares in the countries of their origin. This Bill may be an opportunity for them to cover up problems at home and reap benefits from the more secure Indian market. Shouldn’t we promote domestic Indian insurance firms instead of chasing faulty foreign ones?
—Subhashree Kishore New Delhi
Saturday, December 13, 2008
The Financial ExpressPosted: 2008-12-13 01:00:02+05:30 ISTUpdated: Dec 13, 2008 at 0100 hrs IST
Rama Bijapurkar’s article ‘Problem isn’t consumer demand’ bats for ailing companies. She pleads that the consumer is too small or well-preserved by his/her own prudence and does not need any stimulus. Big companies are cash-strapped and need to be helped. The nice-sounding reason for this is that if companies fail, people lose jobs and current problems will snowball. A few things may have to be put in perspective. Recession implies piling up of stocks owing to dwindling demand. Injecting funds through bailouts or facilitating liquidity through banks to companies will mean that consumers lose from both ends. Price cut is ruled out in seller’s market and private losses are socialised. The fittest survive in a free market. If firms have over-leveraged and made a mess, there is no reason why government should help them to clean up. It’s a win-win for companies who need to give up neither control nor revenues.
Subhashree Kishore New Delhi
Tuesday, October 14, 2008
for a short story penned by subha and uploaded in the site writersblock.com
Wednesday, August 27, 2008
—G Gokul Kishore, New Delhi
Monday, August 11, 2008
The wine industry has grown by nearly 35 per cent last year. This is hardly in the legion of ‘happy statistics of mountains of edible happiness’ as Robert Lynd described the British fondness for chocolates. The varying levels of alcohol content and the health benefits from controlled consumption apart, wine can hardly be hailed as the next best thing to organic foods or sprouts. This is the age of freedom and individual freedom is to be respected, untempered by responsibility or even the best interests. Hence advocating a ban on what is without question a vice would be shouted down as too prudish.
Ill effects of addiction
Addiction is a habit which begins with the most innocuous sip. For all our rocket science and space odysseys, we have very little scientific temper. While judging age-old practices rooted in culture, tradition or religion or changing lifestyles, we are supremely rational and critical. We seek to usher in bold new ideas. Yet when it comes to denouncing alcohol and its milder cousins, we quail.
Alcohol has also made it to the basic necessity list and governments actively participate in its procurement, distribution and control all in the public interest of earning revenue. The wine industry has been nurtured with duty cuts. Hours for serving liquor have been extended in the interest of consumers. The ‘representatives of people’ take cover under such arguments as livelihood, consequences of a sudden closure and public ire and, more specifically, discouraging illicit brewing and prohibition proving fruitless in many countries.
However, the same stories do not appear to hold good while constructing dams across the Narmada, displacing people or closing down vaccine manufacturing units in Kasauli or Coonoor. Ideally, the government should propagate the merits of abstinence, stem the free availability especially near schools and colleges, enforce law regarding location of such shops near temples and residential colonies, but then ideals are unattainable.
The market for wines and the sojourn to harder drinks is set to grow phenomenally in the wake of rising incomes of people under 30s, adoption of a ‘broader’ outlook, global culture and etiquette. Governments may examine rationing of alcohol and all its variants. It has had admirable success in rationing wheat or rice and no one has faced the ill-effects of over-eating. Sweden had reasonable success with the Dr. Bratt rationing system instead of outright prohibition. In Bratt’s words, the fight against excesses was lost to profiteering purveyors of alcohol, and the rise of continental drinking habits when Sweden joined the EU.
We look westward for ideas of progress and to measure up to the various statistics of health or per capita income, legal systems and imbibe without learning from their mistakes. We must learn to separate the chaff from the grain. Equality, fraternity, liberty, punctuality, professionalism are all very well but lack of public censure, shame, flexible morals, money splurging, or problem of underage drinking, ought to be taboo. There is no romance in scarred livers (in cirrhosis), or a riddled esophagus nor any enjoyment in being victim of a drinking bout or brawl as people sleeping on pavements of Mumbai would testify if they could.
We cannot be callous to normal healthy people and in particular generation next wasting away in hangovers and playing with its health and the well-being of a good many others. What we need is an ice-cold resolve and a drop of unadulterated reason.
Saturday, July 12, 2008
The editorial (‘Future in futures’, Jul 8) supports speculation or the euphemism ‘futures’. On paper, anything which could reduce airfares or stem further rise and cut losses for the airline industry is bound to be welcome. Yet, to say that futures is the future and any fear or doubt is an anachronism, is incorrect. For all the cry of business ethics and professionalism, market economy has not given any evidence of self-correction. Experience, as in commodity futures, has shown that financial muscle will dictate the market. Recent stock market oscillations are ample proof that physical supply or real demand would have little say among a host of other intangible factors. Any speculator or market player who can make the extra dime will go for it. It is against the dictates of profit-seeking to act otherwise. Hence, while ‘genuine’ futures with the sole goal of insulation may not increase prices, there are no safeguards to prevent or control artificial escalations.
—Subhashree Kishore, New Delhi
Monday, June 2, 2008
Friday, May 2, 2008
Inevitabilities and allocations
The Financial Express Posted online: Friday , May 02, 2008 at 2236 hrs IST
The editorial (‘Cash crunched’, Apr 30) as well as the writeup (‘RBI’s 79-page misreading’) pointed out flaws in RBI’s policy statement. Since inflation is caused by too much money chasing too few goods, consumption-pushed growth is not sustainable. It can distort the allocation of resources. Luxury expenditure is rising and there is a food crisis. So liquidity reduction was inevitable. The argument that raising cost of credit will penalise only small business is weak. Commercial lending has always eluded smaller businesses. It is laudable that RBI has taken steps to regulate the direction of credit. Increasing the quantum of credit for home loans is also welcome. Rising real estate prices have been acknowledged. It may be a valid assertion that the export lobby has asked for the rupee-dollar peg, but then, every sector from software to commodity trading is guilty of seeking pecuniary gains at the cost of others. Why single out exporters?
—Subhashree Kishore, New Delhi
Monday, April 7, 2008
The Financial Express Tuesday , April 08, 2008 at 2316 hrs IST
The statistics comparing Indian and US banks in your editorial (‘Cart before the horse’, Apr 4) reveal a post-colonial inferiority complex. Also, despite the Bear Stearns or Northern Rock experiences, you advocate deregulation for the banking sector to “be responsive to the needs of the Economy”. The fear that businessmen, left to their own devices, would sell unsafe drugs or shoddy buildings has been proved to be well-founded time and again. In banking, directed lending serves a valid purpose. The primary sector may not be the most profitable, but to feed millions, it deserves priority credit. With demand-supply mismatches in food production looming large, we also need to provide fresh impetus to farm sector. But “consolidation” by “market needs” is a euphemism for closing less profitable rural branches. The mixed Economy model has served India well.
—Subhashree Kishore, New Delhi
Wednesday, March 26, 2008
The 6th Central Pay Commission (CPC) has submitted its report and thanks to RTI-age, the report has been made available in the virtual medium also. The positives of the Report are
- It has given its Report in time though the same is due to political events on the horizon
- The Report has been made available immediately as also most of the discussions are hosted by the CPC in its portal marking rare transparency for a govt. committee
- Reduction of holidays to 3 with increase in Restricted Holidays to 8 (in all likelyhood this will not be accepted by the govt.)
- A reasonably good hike in pay for top level officers ( who are relatively least affected by inflation)
As usual a body set up in the era of 'new economic order' can only be anti-worker as the negative points far outweigh the good ones:
- Starting pay or the pay at the lowest level was demanded as Rs.10,000 while the CPC has recommended around Rs.6000
- Introduction of Pay Band concept thus reducing the number of pay scales - effecting bunching of several cadres pay-wise leading to demoralisation
- Increment fixed at 2.5% which is far less than the demand of 5% (even the previous Pay Commn had given around 2.3%)
- To divide the workers, sops recommended for women employees - can come late to office, take 2 or 3 years leave after delivery, etc
- Advances like House Building Advance or HBA being given to banks with govt bearing an interest subsidy of 2% (which will eventually be abolished)
- Suggestion to abolish Group D posts - call for using labour on contract
- Use of technical or fancy jargons like running pay band, Performance Related Incentive Scheme (PRIS), etc thus obfuscating the real issues of stagnation, better facilities and a decent pay.
Wednesday, March 19, 2008
Cross-currents in the gale
The Financial Express Posted online: Wednesday, March 19, 2008 at 2326 hrs IST
Your article (‘Surviving the subprime gale’, Mar 19) provided a specious analysis of the crisis. The statistics are fine, but the prescription of opening more windows is ill-advised. We need to determine how many and how far to open. The suprime mess in the US was the result of poor regulation, refusal to recognise the crisis early and, of course, corporate irresponsibility. The article concedes that public sector banks are awaiting NPAs and there could be more in the crash than meets the eye. We need to learn from others’ mistakes. The 1997 East Asian crisis was triggered by a similar property bubble burst, excessive dependence on short-term foreign capital and hasty financial liberalisation. Common sense dictates that things too good to be true are not. The informed and uninformed alike chase the Sensex or sumptuous financial products without applying conventional wisdom. The government’s or regulators’ action is always corrective, never preventive. Yet, it is these so-called “autonomous” banks that we turn to for interest rate relief to help the economy.
—Subhashree Kishore, New Delhi
Saturday, March 8, 2008
Pl. check the link below for an article on Gandhiadigal Narpanik Kazhagam, a voluntary organisation in Kumbakonam with which we are associated.
By Dr. G. Gokul Kishore
The grand annual event of Budget on the nation’s financial theatre has been staged with a neat performance by the hero our F.M. The pre-budget expectations heavily leaned on populist theory due political factors and events on the horizon. Budget 2008-09 has turned out to be a mixed bag and a preliminary assessment can lead to terming it as fair. It has caused ripples in certain quarters but then economics is hardly a ‘please all’ matter. The upward revision of slabs in case of personal income tax has made the FM darling of the middle class though it has been battered by rising inflation. The backbone of the nation viz., the farming class increasingly dominated by preference to death over life has been taken note of. Leaving direct taxes and other macro issues aside, this article attempts to take stock of Budget 2008-09 changes in the case of Service Tax.
Small Scale Exemption hike – Is it too little?
Small Scale Service Providers enjoy value-based exemption upto Rs. 8 lakhs. In the last Budget this exemption limit was raised from Rs. 4 lakhs to Rs. 8 lakhs i.e. 100% hike. This year it has been increased to Rs. 10 lakhs, effective from 1st April 2008. Such threshold limits would have made some sense when the number of services taxed was less and sundry services were also brought under the levy. Today, you can hardly have a Works Contract with such meagre amounts. With the proposal to tax cash-rich IT industry by bring new entry in this budget, the nature of taxable services has become diverse with several services involving huge stakes. The limit is not in consonance with industry transactions and it certainly merits far more. But then, the government hurriedly taxes but holds up exemptions on some pretext or the other. Anyhow, a hike in such petty threshold limit shall do a world of good for administration too. It need not waste resources on surveys for netting potential assessees or those outside the net and collection cost should come down further.
No rate change but Works Contract bears the brunt
The fear over rate increase for eventual merger with GST rate in 2010 (GST rate is widely believed to be around 20%) can abate for now. The general rate of Service tax remains unchanged at 12% and with no new Cess proposed/imposed, it remains at 12.36%. But the Works Contract industry has been hit with a 100% hike. Many opted for Composition Scheme as it provided a profitable rate of 2%. With the increase in 4% from 1st March 2008 and with absence of clarification on applicability of new rate to on-going contracts, such optees are certain to experience nightmares now. A sovereign pledge by the FM on the floor of the Parliament to bring WC under the net last year like 2% rate is breached now. Such changes midway do not inspire confidence among the honest tax payers over the designs of the government.
For more pl. see 1st March 2008 Service Tax Review (S.T.R.)
Thursday, February 28, 2008
Second Opinion: Subhashree Kishore
With the flourishing of a plethora of television channels devoted to particular interests, one might be prompted to say that now television viewers in the country are spoilt for choice. They are no more dependent on a single state-owned channel as was the case more than a decade ago. But a closer look at the programmes shown on these channels tells a different story.
Almost all news channels are TRP-driven. They seek to get maximum public attention by whipping up mass hysteria and offer people what is easy and sensational and not what is desirable. This commercialisation has reached a new high as seen in the recent IPL player auction. The electronic media seems totally out of sync with the real India and its problems like food crisis, pollution, malnutrition, diseases, etc, except when forced to fill footage with stories of human grief or natural disasters. Aiming to give the stories a human face, the media makes hapless victims undergo televised trials with pointed, intrusive questions and insensitive language.
Of course, there are a handful of news channels that have debates and discussions. But sandwiched between promos of the latest films and never-ending interviews with celebrities, their kin and sycophants, they dilute the focus.
Despite its other failings, Doordarshan did its bit and still does so with programmes for farmers, coaching for school students, anti-drug addiction drives, content for family audience and children-specific programmes. Today children are made showpieces, conscripted to behave like adults with emotion-fraught mothers and relatives fighting on shows, termed as talent hunt. Quiz programmes have become a rarity. Games of chance, reality shows and film-based song-and-dance shows have become commonplace.
The saas-bahu sagas are retold with killing monotony. The jewellery, the make-up, the vamps and scheming ladies do not change. Programmes of the genre of Great Expectations, Surabhi and the like are always welcome. Sadly, nobody has the courage to ignore formulas.
Classical arts have become an anathema to most channels. Surely, if a director can effectively market a highly regressive image of the Bharatiya naari far removed from reality, he must also be able to popularise art, some real unsung heroes in society or, just for a change, happiness and triumph instead of tears and mean minds.
Monday, February 25, 2008
Pvt Players begging for sops
by Dr.Gokul Kishore on 06-02-2008 - Financial Express
It is not ironical that demand for separate exemption limit for long-term savings like insurance comes not from salaried class but from the private insurance companies. Unable to penetrate or compete PSU behemoths and not able to push FDI ceiling, private insurance players have taken the 'cause of salaried class' now. Service delivery in terms of prompt settlement will be acid test in years to come and given the U.S. experiences, better service will be at an exorbitant premium which the middle-class Indian will hardly be able to cough up. Let there not be a separate exemption for long-term savings but an overall increase without any discrimination as to product as consumer is the king in a market and he can decide which one is better.
Sunday, February 24, 2008
Some circumspection please
Financial Express February 25th, 2008
Lipstick, lapis lazuli and louki under one roof is perhaps a gem of an idea (‘Open the entry point to foreign players’, Feb 16), though one could set out to buy louki and end up buying all three! Marketing revolves around demand creation and satisfaction. The economic delineation of goods as “necessities”, “comforts” and “luxuries” still persists. People pay for various levels of satisfaction, and business strategies are such that cost advantages do not always accrue to the consumer. Further, in an oligopolistic situation, in a market dominated by big brands, the customer does not have a “none of the above” option. Big retail could mean indigenous products are forced to make way for global merchandise. The soft drinks market is a case in point. Contract farming, likewise, can result in overbearing dominance by a few purchasers. What happens to the free interplay of demand and supply? It recedes. Farmers in Ghana and Thailand only get 5% of the retail realisation, while retailers and distributors garner 40%. The existence and effectiveness of legal measures to check hoarding or predatory pricing will remain doubtful. Land use patterns will certainly begin to change in favour of these biggies. So, before we open the country to such large forces, circumspection is in order.
—Subhashree Kishore New Delhi
Tuesday, February 19, 2008
Why people don't care for Budget
Second Opinion: G Gokul Kishore
(Article published in The Pioneer (Daily) on 19th Feb 2008)
With the date for the announcement of Annual Budget approaching, one wonders if the pre-Budget and post-Budget debates will make any sense to a majority of our countrymen this time.
Average citizens seem to have resigned to fate as budgetary consultations don't accommodate the concerns and needs of the majority. Nor do the farmers, having left with no choice but to end their lives, have any say in the process. The vast majority of labourers in the unorganised sector are not even in the reckoning. Despite myriad schemes, the perennial paradox of intended beneficiaries caught in the vicious circle of lending, usury and sporadic relief persists. Sloppy implementation of NREG does not help them either.
A robust eight per cent growth and soaring Sensex - never mind the occasional dips - try to reinforce an image of all-round prosperity. But cars, colas and creams cannot substitute food, houses and medicine. Education and health still manage just a minuscule percentage of the GDP. Public schools are nakedly commercial today where the net worth of a family determines whether its children will have access to quality education. A hospital with minimum facilities is a mirage in most places.
Income generation is conspicuous by its absence. Unless the per capita income of rural households also registers an increase through substantial employment generation, consumption will stagnate. The sheen of IT/ITES or call-centre jobs cannot combat unemployment; such sectors remain irrelevant to the rural and semi-urban youth.
Equities are touted as 'patriotic' investments today. Government-backed savings schemes give low returns; ironically, the Government, too, is looking up to the market for parking its pension funds. Capital markets are risky and regulatory bodies can hardly protect small investors and senior citizens.
Catchy phrases like millennium goals and four per cent growth in the farm sector sound hollow as they appear more like strokes of fortune rather than result of policy. The overwhelming opinion seems to be to encourage industry, which will take care of all social needs through linkages and trickle-down effect. People forget that the corporate sector can supplement but cannot run a welfare state.
At a time when tax collections are extremely buoyant, Finance Minister P Chidambaram can afford to look beyond mere economic progress. Will he?
Wednesday, February 13, 2008
Tax breaks still lure savingsThe Financial ExpressPosted online: Tuesday , February 12, 2008 at 2354 hrs IST
The article (‘Self-sustained savings’, Feb 11) argues that it’s time to do away with tax breaks or bring pension products in line with tax treatment of small savings. But savings, investments and returns are not synonymous. As a safely regulated stockmarket is a myth, it’s irresponsible to suggest that we leave senior citizens and small investors at the mercy of bulls and bears. We have had enough bad experiences with NBFCs. Every investor would like security and returns, in that order, and not as mutually exclusive benefits. Also, private sector life insurers’ clamour for tax rebates (under Sec 80C) for their products, and the demand to grant a separate exemption upto Rs 1 lakh for insurance policies, defy the contention that tax breaks don’t affect investment decisions. Note how the extention of 80C cover to equity-linked schemes has improved their desirability at the retail level.
—Subhashree Kishore, New Delhi
Friday, February 1, 2008
Check out the article with this link for Budget suggestions on Personal Income Tax front.
If you have problem in accessing the webpage, please check "Budget Run-up" [Inside "More Articles"] in the website
Sunday, January 13, 2008
Friday, January 11, 2008
In a study published in the Proceedings of the National Academy of Sciences, Sockol and Raichlen compared how much energy humans and chimpanzees use while walking. Five chimpanzees were taught to walk upright on treadmills while wearing oxygen masks. Raichlen said that the training was done over four months, but only when the chimps were cooperating. "These guys are smart enough that they would hit the stop button on the treadmill when they were done. If they didn't want to walk on the treadmill, they'd just hit the stop button or they'd jump off."
Saturday, January 5, 2008
After crossing numerous hurdles and non-cooperation of a few units, the organisation has achieved its goal of statutory recognition. Though recognition per se does not add any extra strength to the organisation, nevertheless, it provides a legal status to the organisation. Such status becomes mandatory in judicial fora. It is also sine qua non to advance certain demands before the Revenue Dept. It can also contain the disparate elements within the organisation and among the cadre.
Now that statutory recognition has been obtained, it is hoped that more members will take active part in the activities and make the organisation more vibrant and help it and other government employees and workers get their just demands accepted. Com Manimohan, Secy. General, AICEIA rightly states "Organisation should be recognised by its members first." The Central Board of Excise & Customs (C.B.E. & C.) known for its anti-staff attitude and policies, should reorient itself and begin a fresh chapter in striking a chord with its own employees.
Friday, January 4, 2008
THOUSANDS of British workers who lost their pensions because of company insolvency received "inadequate" protection from the Government, a European court ruled yesterday.The European Court of Justice (ECJ) said the system in place prior to the establishment of the Pension Protection Fund (PPF) was "incompatible" with European law.But the ruling fell short of demanding that workers receive direct recompense from the state, with the case now being returned to the UK courts to decide.The ECJ also stated that employees whose pension schemes went bust would not necessarily be entitled to full compensation – an implication that the current system does offer sufficient protection to workers.
The court's judgment will come as a relief to firms that had feared their annual contribution to the PPF would soar if the ECJ ruled compensation would have to be 100 per cent. But it will mean staff whose pension schemes went bust before the PPF was born in April 2005 are still in with a chance of some compensation.The ECJ ruling follows a case brought by trade unions Amicus and Community on behalf of pension scheme members at Allied Steel and Wire, which went bust in 2003. It found the Government system at that time was "incompatible with community law". The judgment also comes after more than 550 workers lost their jobs – and many their pensions as well – after the Hibernia Foods factory in Bridlington closed in January 2004.
The unions claimed the ruling as a victory. Derek Simpson, Amicus general secretary, said: "This judgment vindicates our decision to take this case all the way to the ECJ. We want the Government to reconsider its position. We believe that today's ruling demonstrates they have a moral obligation to reimburse the many thousands of people who ... have lost all or substantial parts of their pension savings."The case will now return to the High Court in London, which will decide if workers who lost out prior to the setting up of the PPF are entitled to compensation. But in a move that will allay the worst fears of UK firms the ECJ ruling implied the PPF did serve as a sufficient safety net for staff. Under the present system, members below retirement age only receive 90 per cent of their pension when they retire, with the amount capped at £26,050 every year.This appears to be in line with the ECJ ruling that member states will be given "considerable latitude which excludes an obligation to guarantee in full".
If the ECJ had called for a 100 per cent compensation level, UK firms could have seen their levy to the PPF rise by 500 per cent, analysts felt. In some cases, firms could have seen their levy rise 20-fold, leading to many going bust, experts said.The Department for Work and Pensions said yesterday's ruling was a "common sense" judgment that recognised current EU laws did not require states to ensure pensions were guaranteed in full.