Health insurance

Whose health are we insuring? thehindubusinessline.com · The new health savings plan appears more advantageous to insurers and agents than consumers My comments as posted in the article:

Insurance industry in this country is just evolving. Neither the operators nor regulators nor the insured know the intricacies in full. Not that I also know something great. All I know is the risks attached to insurance are far different and have varying dimensions across ages and sex. Premium as the insurance companies say is measured by the risk associated. So as one ages, the risks become larger and therefore, the premium is charged higher equivalent to an ageing automobile. Women become more vulnerable to certain health problems far different from after a particular age - say 40-45years. Both men and women while they are earning more could be charged higher premium for insuring risks to cover those that become larger when they age or when they retire and for women after 45 years. The moment one says he is insured in a corporate hospital, the list of tests become longer; charges become hefty to take the maximum in the insurance pie. This exploitation should be stopped by IRDA.

Can Gold Monetisation Scheme succeed?

Gold Monetisation Scheme:

Some Suggestions:

I used to have my batch mate in the SBI, retired as MD of an Associate Bank, who used to buy Rs.100 worth of gold every month during his first ten years of service. Later, he may have increased it to Rs.500 or even Rs.1000 a month. Such is the urge for having gold in domestic vaults in India. South India or people from the South in the North invariably have gold in the shape of jewelery. Every village household, how so ever small it may be, has at least 500-1000gms of gold in the shape of jewelery. There are certain traditionally rich families where every day in a week has certain set of jewelery to wear for the house wife inherited from the mother in law. Such ornaments are at least 20-30kgs. These are invariably kept in the lockers and taken out for the festivals. This is a huge idle gold reserve in jewelry.

Time for Governments to deliver

The year of coronation of the NDA Government is close on the heals of completion. People have seen lots of promises in the air. Corruption continues; delay in delivery of the benefits also continues; expectations of the people on various fronts are unfulfilled. Transparency is yet to be seen. What is the remedy?

Remedy:

Whenever a scheme is introduced by either the State or Central Government, it should also announce the mode of delivery: The department and officer concerned with contact number and email address; any legitimate charges for availing the benefits of the same, the window for payment - on line or physically at the department counter and the time that would be taken for delivering the announced benefit should also figure in the announcement. 

Grievance Redress:

In case of difficulty which authority should be approached, again with the email and telephone/mobile number details should also be announced. This is the only way in which correction could be minimised.

Bank Employees and Social Banking

Bank Employees and Social Banking

  

Bank employees and unions will have to recharge themselves to a new set of objectives that would enhance the business of banks on one side and help the society on the other.

May Day is usually the day to recall the assertion of their rights. For a change, the All India Bank Employees Association (AIBEA) during this 70th year thought of taking the initiative of enjoining social responsibility. Gone are the hard days of militant agitations as means to achieve fair compensation, safety, security and comfort in work places. Workmen and officer representatives are today part of the governance and management of banks. Machines dictate the employees’ ways of working. Discretion has less relevance now than in the past. Technology dictates the employees’ ways of working and management processes. But are the customers, a happier lot? The response is discouraging.

Ever since the introduction of banking reforms following the recommendations of Narasimham Committee 1 and 2 and the alignment with the global regulatory architecture through BASEL I, 2 and 3, technology and capital adequacy have become the prime drivers of growth in banking sector.

Mobile banking and micro finance institutions (MFIs) moved into the space left by the RRBs, weakened cooperatives, and rural branches of commercial banks. Banking correspondents and customer service points, White ATMs surfaced.  Who should we blame for providing this space excepting the lack of commitment and motivation of staff to align with the objectives of the nationalisation of banks?

Farmers Hurt

Farmer Hurt and Farming Needs Innovative Push

Priority Sector Credit Policy to Synchronise

The Scenario:

Agriculture, India’s largest employer is undoubtedly the engine of India’s economic growth. Agriculture is constitutionally a State subject, but, in practice, all policy decisions in its activity chain like Agriculture Credit, Procurement, MSP, fertilizer allocation and subsidy, and relief measures, etc., are in the domain of the Central Government. Indian farmer and the entire value chain in the farming sector, as a consequence, is strangulated by regulations of over twelve ministries of GOI and at least six ministries of the State Government.

While the priorities should be on improving soil health, conserving water and improving markets for assuring reasonable prices for the farmer, the present Government misplaced its priorities to introduce Land Acquisition Bill that now got into the second ordinance faced with stiff opposition on the floor of the house and in the streets of North India.

Review of India's Growth Resurgence

Today's Free Press Journal carried a review of the jointly authored book: India's Growth Resurgence: Sectoral Issues and Governance Risks. The book is now available at Amazon.com and Flipkart. 

http://epaper.freepressjournal.in/487506/The-Free-Press-Journal-Mumbai-Edition/26-Apr-2015#page/17/1

Mudra Bank for the poor - Confusions Galore

http://www.moneylife.in/article/mudra-bank-confusions-galore/41221/62915.html

Will MUDRA Bank put its stamp on the Indian Financial System as the institution to resolve the Financial Inclusion dilemmas in the rural areas?

Piper calls the tunes. Inauguration of Micro Units Development and Refinance Agency (MUDRA) Bank by the Prime Minister before he left for Canada, Germany and France on a nine-day tour is being seen as a landmark akin to ‘Garibi Hatau’ and IRDP of the forgotten decades. People say that name has a lot to do with institutions. The name and style of MUDRA has built into it an agency and a bank. It has in it, development and refinance as functions.

Growth has to pare with human development

Business Advisor, Vol.X, Part 1, 10th April 2015 carried this article of mine.

ile:///C:/Users/dell/Documents/Business%20Advisor%20-%20April%2010,%202015%20-%20Contributor%20copy.pdf

February 2015, towards the close was crowded with the vision-led railway budget, the release of Economic Survey and the Union Budget. The next twenty days in Parliament did not have so much to discuss on the approach to the budget as on amendments to the land bill, the rape incident of West Bengal and some unholy acts in Haryana. The most significant budget discussion related to the allocations to AP and Telangana states and the devolutions under the 14^th Finance commission. The strategic intent and the road map for growth laid out in the FM Budget speech, would seem to have got full endorsement.

Growth by itself even if in double digit, would be inconsequential if it escapes the human development. The 300mn poor are not so much worried about how the dollar is moving against the rupee or how the rupee is globally pared although its consequences will have definitive impact on them. In an event crowded out during the last few days of February 15 was the release of a book: ‘India’s Growth Resurgence.’

In spite of the change in the base year from 2005 to 2012, the CSO credibility of the growth figure is still in question in the context of lowest/negative manufacturing growth and not too impressive growth of services sector. The statistical jumble did not in any case put the human development in a better frame than what was on hold till 2014 with 134^th rank out of 183 nations surveyed by the UN.

The near two and half decades of reform process were literally in waves with turfs and peaks between 1991. Never ever in the past has the Indian economy been so keenly watched by global community with hope, expectation and anticipation. The sheer size of the economy and the potential it holds has global investors, multi-national corporations, and players in different sectors, queuing to take part in the country’s economic progress and the growth agenda, what with, Make-in-India, Swatch Bharat and Jan Dhan, the new instrument of inclusive growth.

Indian Agriculture - Transforming a Natiion

Can Modi’s eloquence respond to farm credit vows?

Mobile Banking can show the way.

Poverty in riches and riches of the poor - both are now with the banks. The Prime Minister has also asked the bankers to see the red herring in farmers' suicides with compassion and advised passion for extending credit to the farmers. Banks should now see how their machines can be taught this human touch beyond the click of the mouse!!

http://www.mlmsoftwarezindia.com/images/mlm-mobile-banking.jpg

 “India accounts for only about 2.4 % of the world’s geographical area and 4 % of its water resources, but has to support about 17 % of the world’s human population and 15 % of the livestock. Agriculture is an important sector of the Indian economy, accounting for 14% of the nation’s GDP, about 11% of its exports, about half of the population still relies on agriculture as its principal source of income and it is a source of raw material for a large number of industries.” (State of Indian Agriculture 2013-14, Ministry of Agriculture, GoI, New Delhi)

 

Policy Brief

‘Agriculture credit is one of the main drivers of agricultural production.’^[1] Farming and credit have been highly interdependent for ages because the farmer would have his cash stashed either in soil or in silo and never in liquid form for him to spend for both production and consumption requirements. So is the case for credit at any cost and anywhere for the farmer. This is where the roots of money lender lie. He sits in the village close to the farmer.

Efforts at institutionalizing money lender started with the starting of primary cooperative agricultural credit societies. Post nationalization, nationalized banks, regional rural banks took to agriculture lending in a big way. NABARD was established in 1982 to accelerate productive agricultural credit flow with focus on improving the lot of the small and marginal farmers.

Post liberalization, with India becoming an important constituent of the WTO, Agreement on Agriculture and Market Access has also witnessed diversification of agriculture and rural economy. The wide ranging definition of farming encompassing dairy, poultry, piggery, fisheries, and all animal husbandry and horticulture activities led to inadequacies and delays in extension of credit from institutions. Public sector banks are mandated to extend credit for agriculture that now includes agro-industry and agri-businesses up to 18 % of the total credit.

Cyber Risks

http://www.moneylife.in/article/the-threat-of-increasing-cyber-risks/40639.html?utm_source=PoweRelayEDM&utm_medium=Email&utm_content=Subscriber%2320149&utm_campaign=Daily%20newsletter%2027%20Feb%202015

Hyderabad City Police commissioner in a press conference recently revealed that the city police registered 21,035 cyber crime cases in 2014 as against 19,011 in 2013 and 18,744 in 2012. A near ten per cent rise in just two years is a cause for alarm. The rise is attributed to the large scale use of technology and mobile phones.

Social media contributed significantly with the uploading of fake woman profiles, online payment frauds, blackmailing, hacking, skimming, identity theft and data theft etc. The police are trying to use technology again to track and trace the criminals. Global trends are no different although it cannot be a solace.

Budget Discussion - 1

: http://www.livemint.com/Politics/wpg7fODtc18aM2xVgANViP/Why-India-needs-a-new-fiscal-policy-framework.html?ref=newsletter&utm

My response to the above article is as follows and can also be seen in the Livemint discussions: 

GDP in itself is a poor indicator. It escapes several areas of income in the aggregation that has become the springboard for black money. For instance, all the waste and scrap dealers till date in all the cities deal only in cash. Several jewelry merchants take only self cheques from their clients and not account payee cheques. Several doctors doing private practice do not ever, ever give any receipt for the consultancy. Several leading advocates are no exception. Like this many areas still escape our GDP. All the ratios depend upon such aggregation as GDP suffer credibility.

Second, India's prism of planned economic development rested on the tripod of politics, poverty and patronage. We have traveled a long way from the erstwhile socialistic pattern of society. But inequities still persist. 

Areas which are the essential domain of public expenditure - universal education, health, safe drinking water and good sanitation moved to private or public-private domain. It is time that the government looks at what are its key responsible areas and provide resources adequately with periodical monitoring mechanisms as part of the Budget.

All the laws impacting on state finances should be subject to Regulatory Impact Assessment annually and the relative Report should be presented to the first session of the Parliament for discussion and modification.

Once these are done, the fiscal responsibility budgetary management exercise becomes simpler. The country is currently in transformation phase and this is the right time to plug all the loopholes in the existing system of monetary and fiscal management. 

It is good to recall John Stuart Mill: "It must always have been seen more or less distinctly, by political economists that the increase in wealth is not boundless: that at the end of what they term the progressive state lies the stationary state.."

Governance Reforms Imminent

Budget Hopes and Hypes

Fiscal balance

Union Budget 2014-15 was more on aspirations. It had to address the legacy issues. But 2015-16 Budget in the wake of series of policy announcements by the NDA government during the last nine months has promised to be progressive and inspirational. The recent statements of FM leave more expectations on this count.

Notwithstanding the hope of the World Bank President the dragging growth in farm and manufacturing sectors is still a matter of great concern and this led to pragmatic low pitch by the RBI at 5.5-5.7 percent growth at the end of this fiscal.

Inflation has come down but the fundamentals are still weak; gross domestic savings has not improved markedly; credit has not picked up. The domestic food and vegetable prices are yet to record the type of decline that would give confidence to the RBI to tame further the lending rates.

The 14^th Finance Commission handed over its Report to the President. Once it is tabled in the Budget session, the new formula of dispensation of resources among the States and Union and between the States and the sub-states would lead the budget formulations.

Expectations on the Finance Minister:

Ten Point Agenda for MSMEs in Brand India way

New Year leaves many in hope with the MSMEs no exception. Their share in GDP at around 8% currently has prospects of moving to 15% by 2020 according to a KPMG-CII Study in October 2014. Hopes are built on the double digit growth of a few manufacturing sectors by that time and the FDI interventions in defense, pharma and infrastructure sectors. Not so encouraging, however, is the decline in credit growth in the manufacturing sector from 13.7%  a year ago to 7.3% in December 2014.

The Government has no doubt infused some confidence building measures, like a few start-up Funds for SC entrepreneurs, revisiting the definition of the MSMEs and credit policies. Action seems to be far slower than announcements. Even earlier there were 32 Funds announced for the sector at different points of time that did not create the impact one would expect.

At least ten things need to be done by the Government if the MSMEs should move to building brand image for India and they will be all in any case, Make-in-India only.

New Year Bites 2015

For the New Year:

Year 2014 can be termed as year in waiting. People waited with bated breath for the policy paralysis to end and for the economy to start growing to its potential. Post elections, the wait did not however end. There have been announcements more than achievements and promises more than performance. 2015 would therefore be a demanding year for the rulers.

The crude shocks elsewhere brought some cheer to India in containing its current account deficit and inflation that touched unsustaining levels in March 2014. Stock markets reacted favourably with the indices taking the highest ever jump of 6000 since the last General Elections. They shocked the investors with a peak in the crash on the 7^th January 2015 led by yet another decline in global oil prices and other commodity prices.