Tuesday, August 27, 2013

Household Savings


The sharp fall in household savings to 10.9% of Gross Domestic Product (GDP) in 2011-12 and to    around 8 % in 2012-13 from 17.8% of GDP in 2004-05 is really worrisome phenomenon. Obviously, inflation is the main cause of such a deep fall in domestic household savings. But there other reasons too. There is enormous change the consumption pattern leading to increase in consumerism. In fact, there is a kind of craving among the people for the possession of various modern gadgets and equipments which have been exposed due to globalisation and liberalisation. In fact, there is an insatiable desire to possess them. Many households resort to borrowing indiscriminately in their attempt to possess more and modern items such as television, stereo, video, grinder, fridge, microwave owen, mixie, washing machine, cleaning machine, air conditioner, cell phone, and other such electronic items, besides rise in demand motor cycle, car and so on. Many people in order to meet their cravings resort to borrowings at exorbitantly high rates of interest. More and more households are falling into debt trap. Moreover, in past decade or so after liberalisation millions of people all over the country have lost their savings by investing in fraudulent schemes, which offer exceedingly abnormal return on investment. Therefore, the there is decline in the propensity to save, whereas the propensity to consume has gone up due to rise in consumerism. Moreover, may households seem to have abandoned risky and low return financial instruments in favour of stable instruments with assured returns. Despite low returns the people have turned to bank deposits as the most preferred financial saving instrument in recent years. Nevertheless as consumerism is sweeping in the minds of the people due to globalisation and liberalisation, which may be strong constraint to increase the savings level of the people, i.e. household savings.
One of the  reasons for the fall in the net financial savings of households from 10.9 per cent in years prior to 2011-12 to a mere 8 per cent in 2012-13  is an outcome of the deployment of financial savings into investment in gold. This reduces the domestic financial resources available for supporting capital formation at home, while at the same time increasing the merchandise trade and current account deficits.

Wednesday, August 21, 2013

Slum-free India

Slum-free India
 Available evidences indicate that the number of slums and the slum population in India have been growing. Estimates show that nearly 28 million people lived in the slums in 1981, accounting for 17.5 percent of the urban population. In 1991, the number of slum dwellers rose to 45.7 million, accounting for 21.5 percent of the total population in urban areas. According to the estimate made by the Committee on Slum Statistics/Census the slum population constituted 75.26 million (26.31 percent) out of the 286 million urban population of the country in 2001. As per the estimates, the slum population of India is estimated to have reached 93.06 million in 2011. Slums are found to exist in almost all the cities and towns throughout the country. The goal of making Indian cities slum-free is a stupendous task unparalleled in history. For instance after taking into account various facets of the task of upgrading the life and living conditions of the slum dwellers around the world, the United Nations Millennium Submit (in 2000) decided to take up the task of improving of the living condition and living environment of only 100 million slum dwellers around the world over a period of 20 years from 2000. Therefore, the task of lifting nearly 93 million urban slum dwellers out of poverty and squalor and thereby vanish the slums from Indian cities/towns is really ambitious. Finding resources for the scheme may not be an easy task. Apart from the difficulty in raising the enormous funds required to meet the expenditure for implementing the scheme, there is serious difficulty in implementing such a gigantic scheme due to the weak, inefficient and corrupt administrative machinery. As the plan to make Indian cities slum free entails huge expenditure to the tune of lakhs of crores of rupees, unless suitable measures are undertaken to curb delay in the execution of the projects and to trim down corruption, the success of this scheme seems to be uncertain. The recent revelation of large-scale corruption, embezzlement by bureaucrats, politicians, private contractors and others in the execution of works related to Commonwealth Games and other large projects is an eye opener. The mission to eradicate slums over a short period is a gigantic task. Of course it is a laudable and a daring attempt, but an amazing venture. All-out efforts will have to be put forth, both by the central/state governments, municipal administrations and NGOs to realise the goal. Unless solid steps are taken to prevent the sprouting of new slums, besides resettling and rehabilitating the existing slum dwellers, the praiseworthy goal of slum-free cities might turn out to be a Sisyphus Challenge for India.

Thursday, August 8, 2013

RBI imposes Rs 5.62-lakh penalty on SBI


  • Of late SBI is known for various kinds of deficiencies and lapses . Some of its officers are corrupt and they indulge in harassment of distressed borrowers even by engaging goondas. In 2010 SBI introduced a novel exit scheme for distressed SME borrowers, namely SBI OTS-SME 2010 Scheme. It involved writing off lakhs of rupees in principal and interest . So certain officers connected with the implementation of the scheme conspired to collect huge amount as bribe. So they deliberately misinterpreted the beneficial provisions of the scheme.When the realized that there was wanton misinterpretation of the provisions of SBI OTS-SME 2010 Scheme by SARC/SAMB, Chennai-8 by certain officers, they complained to the higher authorities specifically against three officers of SARC/SAMB, Chennai, The said three officers by misusing authority and abusing power, have harassed many innocent distressed SME borrowers and collected huge amount as commission (bribe). But so far no action has been taken against the said corrupt officers.
    The Hindu Business Line, August 7, 2013