Business Economics & Services Team (BEST)
Rate Cut, Black Money and Kisan Vikas Patra
Is RBI governor Rajan becoming more important than the Finance Minister? Going by the financial paper reports in India, one may get that feel. Everyone-from corporate honchos to economists-known and unknown-are clamoring for an early interest rate cut. Even the finance minister has joined the bandwagon of expanding number of people arguing for a rate cut. There is nothing wrong in the finance minster putting pressure on the RBI governor. That has been the practice in India since monetary policy falls in the exclusive realm of the RBI, where RBI's diktat is the last word. Many finance ministers, including the immediate past one, tried to transgress into the exclusive territory of the RBI. Some have succeeded and others have failed, sometimes miserably, depending on astuteness of teh RBI governor.
While the decision of the RBI governor will come out only by the first week of December, the nation is waiting in bated breadth the decision, if one has to believe the newspapers. I have a suggestion in this regard. The present prime minister is known for seeking the views of the people on a continuous basis. He had invitd the views of the citizens on the future of the planning commission and he had enabled even the lowly government servant send their sincere views and suggestions on making the governance apparatus more effective. Why not he seeks the opinion of the people on the interest rate also?
I will not be surprised if a sizable number of people opine against a rate cut. it is not the price alone. Whatever statistics the government wants the public to believe, only the rate of increase of the prices have come down and not the absolute prices, except for some seasonal vegetables. Most ideally, the government should have come out prices ruled last year for each commodity. That will nail the lies, which can be covered through statistical gimmicks.
The oft repeated argument put forward by the protagonists of rate cut is that with lower interest rate, the citizens who availed home loans need to pay only lower EMIs. But does the fiance minister know that such roll back of interest charged by the banks is done when the loanee moves an application to the bank for switch over to the lower rate? For that, the loanee has to pay a one time fee. The banks keep on charging this fee every time the switch over takes place. For a person whose loan is close to Rs 20 lakh, the fee for rate conversion will be upwards of Rs 5000. Sometimes, the switch over takes place several times during the pendency of the loan and aggregates to quite a tidy sum. Not that RBI or finance minister knows about it, but they turn a nelson's eye to such nefarious activities of the reputed banks.
Now about the black money. The G20 has endorsed the global efforts to eliminate the black money. Every participating country has vouched to step up the drive towards the elimination of black money. India was an ardent supporter of the resolution. But what is happening on the ground is different. It is estimated that in India there is a parallel economy as big as the formal economy, if not bigger. That money is not necessarily stashed away abroad. It is floating in our economy in different forms and hues. Construction and building are the best avenues for pumping the black money. There are also agents who indulge in money laundering. Elections are fought on black money. Every one knows about it. There are allegations that successive governments and political parties are using this conduit to the hilt during the election time. Despite the plain talks and threats, the judiciary could do precious little for unearthing such money. The present case of large number of accounts abroad and cricket betting are pointers how very little had done on this count.
The other day, a well known lawyer in one of the news channel opined that the black money holders abroad should be given amnesty and their nontaxable income should be chargeable to the highest rate applicable in the country. Then why a person, who had felled a jack fruit tree from a government compound for personal use in household should be punished with one year imprisonment and that too it had taken place some 40 years back.
The latest from the fiance minister is the launch of Kisan Vikas Patra, a certificate that the public can buy with tax exemption up to a prescribed level. The reason for the fanfare launch of the scheme is to give options to the investors who are crowding the space with investment in gold. That has necessitated a large quantum of gold imports, which will take away the buffer given to external resources on account of the easing of the oil prices.Does the government know that gold is a non merit good and can impose steep tax on it to moderate its use.
For more details: jthac1234@gmail.com,jthac1234@yahoo.com
Rate Cut, Black Money and Kisan Vikas Patra
Is RBI governor Rajan becoming more important than the Finance Minister? Going by the financial paper reports in India, one may get that feel. Everyone-from corporate honchos to economists-known and unknown-are clamoring for an early interest rate cut. Even the finance minister has joined the bandwagon of expanding number of people arguing for a rate cut. There is nothing wrong in the finance minster putting pressure on the RBI governor. That has been the practice in India since monetary policy falls in the exclusive realm of the RBI, where RBI's diktat is the last word. Many finance ministers, including the immediate past one, tried to transgress into the exclusive territory of the RBI. Some have succeeded and others have failed, sometimes miserably, depending on astuteness of teh RBI governor.
While the decision of the RBI governor will come out only by the first week of December, the nation is waiting in bated breadth the decision, if one has to believe the newspapers. I have a suggestion in this regard. The present prime minister is known for seeking the views of the people on a continuous basis. He had invitd the views of the citizens on the future of the planning commission and he had enabled even the lowly government servant send their sincere views and suggestions on making the governance apparatus more effective. Why not he seeks the opinion of the people on the interest rate also?
I will not be surprised if a sizable number of people opine against a rate cut. it is not the price alone. Whatever statistics the government wants the public to believe, only the rate of increase of the prices have come down and not the absolute prices, except for some seasonal vegetables. Most ideally, the government should have come out prices ruled last year for each commodity. That will nail the lies, which can be covered through statistical gimmicks.
The oft repeated argument put forward by the protagonists of rate cut is that with lower interest rate, the citizens who availed home loans need to pay only lower EMIs. But does the fiance minister know that such roll back of interest charged by the banks is done when the loanee moves an application to the bank for switch over to the lower rate? For that, the loanee has to pay a one time fee. The banks keep on charging this fee every time the switch over takes place. For a person whose loan is close to Rs 20 lakh, the fee for rate conversion will be upwards of Rs 5000. Sometimes, the switch over takes place several times during the pendency of the loan and aggregates to quite a tidy sum. Not that RBI or finance minister knows about it, but they turn a nelson's eye to such nefarious activities of the reputed banks.
Now about the black money. The G20 has endorsed the global efforts to eliminate the black money. Every participating country has vouched to step up the drive towards the elimination of black money. India was an ardent supporter of the resolution. But what is happening on the ground is different. It is estimated that in India there is a parallel economy as big as the formal economy, if not bigger. That money is not necessarily stashed away abroad. It is floating in our economy in different forms and hues. Construction and building are the best avenues for pumping the black money. There are also agents who indulge in money laundering. Elections are fought on black money. Every one knows about it. There are allegations that successive governments and political parties are using this conduit to the hilt during the election time. Despite the plain talks and threats, the judiciary could do precious little for unearthing such money. The present case of large number of accounts abroad and cricket betting are pointers how very little had done on this count.
The other day, a well known lawyer in one of the news channel opined that the black money holders abroad should be given amnesty and their nontaxable income should be chargeable to the highest rate applicable in the country. Then why a person, who had felled a jack fruit tree from a government compound for personal use in household should be punished with one year imprisonment and that too it had taken place some 40 years back.
The latest from the fiance minister is the launch of Kisan Vikas Patra, a certificate that the public can buy with tax exemption up to a prescribed level. The reason for the fanfare launch of the scheme is to give options to the investors who are crowding the space with investment in gold. That has necessitated a large quantum of gold imports, which will take away the buffer given to external resources on account of the easing of the oil prices.Does the government know that gold is a non merit good and can impose steep tax on it to moderate its use.
For more details: jthac1234@gmail.com,jthac1234@yahoo.com
0 comments:
Post a Comment