The government wants you to send your suggestions on privacy, data protection and security to a free email service
The Indian government has constituted a group of its officers to develop a framework that could address the country’s interests and concerns on privacy, data protection and security. According to a release from the ministry of personnel, public grievances and pensions, put up on the Press Information Bureau's site, one can send suggestions to KG Verma, director, department of personnel and training. However, in case you want to send an email to Mr Verma, then you will have to send it to his personal ID ‘firstname.lastname@example.org’.
This borders on the bizarre. Especially when a senior government official of the rank of a director does not even have an email ID provided by the government and asks for information to be sent to his personal ID. Again, when the whole issue is about privacy, data protection and security, why share it through a free email service? “Does this means the data of the ministry is stored on the Yahoo server somewhere, somehow?” asked an IT expert.
This is not to question the effectiveness of Yahoo’s mail servers, but one should keep in mind that when a high-ranking official like a director is inviting suggestions from the public, then the government should at least provide its own email ID, said other IT expert.
But if you need more bang for your buck, it makes more sense to shell out a little more and go in for a new car
A second-hand Mercedes-Benz, not over six years old, with a six-month manufacturer’s warranty added on. That’s the deal that Mercedes-Benz India is offering, at indicative prices which are typically around half or less than half the price of a new car, with variations for usage and model year, as well as condition. All this, sold through existing Mercedes-Benz dealerships, in addition to the new cars on offer there. Making this announcement, Wilfred Aulbur, the CEO and managing director of Mercedes-Benz India Ltd (MBIL), took a small step up for Indians who already have a vast choice of new and used cars, and a large jump down for Mercedes-Benz—from a perch occupied for decades now on the perceived proposition that buying aMercedes-Benz car in India was an experience unlike buying any other car.
Sounds very good. A star in my drive for half the cost, that too, with a manufacturer-backed warranty. So what if it is old and used, and the technology that was state-of-the-art five years ago is already obsolete in new generation cars costing a fraction of the amount? I am an Indian, and I should consider myself lucky, in being allowed to place the famous 3-pointed star in or outside my home. At least, that’s the attitude, in large doses, which one gets at every interaction with Mercedes-Benz in India.
If nothing else, this gives potential owners of Mercedes-Benz cars in India a very good idea of what the resale value and depreciation will be, going forward. But first, before going forward—a wee bit of history, and why this attitude from a manufacturer of cars, which elsewhere in the world are slowly fitting into a slot often known as “utilitarian”—apart from the top-of-the-line show models, which in any case usually don’t make it to Third World countries—unless destined for the dictator or ruler.
Mercedes-Benz cars have had a favoured run as the ultimate in aspiration for luxury in post-Independence India. One reason for this was the excellent relationship that TELCO, forerunner to Tata Motors, had with the powers that be. This rubbed off on to its international truck partner, Mercedes-Benz, who were the collaborators with TELCO after a deal with the French fell through. The other reason was that it was certainly made difficult for any of the other luxury foreign automobiles to establish a beachhead in India, courtesy a particular well-connected Kashmiri gentleman, who was also in those days very close to the powers that be.
So, along with a restrictive import policy, it was not very uncommon to see that second-hand Mercedes-Benz cars often achieved a price higher than that of a new car—when released into the market through STC, or as and when the original importing owners were permitted to resell the cars—or sold them in ‘benami’ transactions anyway. This happened right up to as recently as the mid-‘90s. And of course, how could these transactions take place without help from the various dealers, authorised as well as otherwise, for such imported cars?
Cut to the future, 15 years later, and take stock of the horizon with about 30,000 Mercedes-Benz cars sold since MBIL started assembling and manufacturing cars and vans in India. Competition is fierce and free-ranging, and from Germany alone both Audi and BMW are offering not just newer and fresher products, but also aggressive pricing as well as that which all seekers search for—more bang. Mercedes-Benz on the other hand ends up carrying this staid reputation, which would have been fine if all the potential buyers and users of luxury cars were above 50 years old, but that’s not true anymore either. Prices of some models of the lower-end luxury cars are now really low—if you search hard enough—and that’s not surprising considering the way the same cars are stacked up against Japanese and South Korean brands in the international market.
But most of all, nobody has any idea any more of how much of any car, luxury or otherwise, is now made from parts and components coming largely out of China—but could also be from anywhere else. Which does not in any way reflect on the quality of the end product, but certainly makes one think—if a brand new car from any of the other countries is available at the same price as a five-year old Mercedes in the same bracket, then which would be a better choice?
In addition, please be aware, rapidly-changing regulations for new generation fuels—BS Stage IV is now a fact in the larger cities and soon going to spread—is going to create problems which were not even envisaged when these cars were designed. And this is not going to be easy to fix, either—there are multiple complex issues involved, especially with complex car engines, which no amount of local tinkering will resolve.
So, while the price may sound attractive, the fact remains—it may make more sense to go the extra yard, spend double the money, and buy something new, and here the choice is much wider now. Or it may make sense to spend the same amount of money, and look at different brands. After all, ‘new’ also means that you can be sure that your luxury car today was not somebody’s private taxi yesterday.
And if you must have a star in the drive, then something which was new about 10-15 years ago is often available for a price which even your scrap merchant may match—and that’s the truth too.
The changes may have been cosmetic and won’t rock the boat of insurance companies
The Insurance Regulatory and Development Authority (IRDA) introduced sweeping changes in Unit-linked Insurance Plans (ULIPs) yesterday. Among the measures are-a five year lock-in, even-out commission over the first five years and graded charges for the subsequent years.
How will these changes affect ULIPs? Are they competitive now with mutual funds (MFs) as long-term products? Nothing has really changed for the investors.
All IRDA has insisted is that the fat commissions, which insurance companies were paying, would have to be spread over five years. Insurance companies were doling out upfront commission as high as 30%-35% to distributors in the first year.
They will now have to spread this commission over the five-year lock-in period. But this will put off distributors used to making a fat upfront income. "It's not attractive for distributors anymore," said a top official from a fund house. He points out that for mutual fund investors, there is no entry load. If you invest Rs1,000, you will get units equivalent to Rs1,000. Considering a commission of 6% in ULIPs for the first year, if you invest Rs1,000 in a ULIP, your investment will be worth Rs940 after deducting the 6% expenses.
The insurance regulator has attempted to cap the charges at 4% annually for 5 years, and 3% for 5-10 years and 2.25% for products of above 10 year terms.
These are more expensive than mutual funds. The total maximum permissible expense for a mutual fund stands at 2.5% on the first Rs100 crore of the average weekly net assets collected by the fund. This is then reduced to 2.25% for the next Rs300 crore, 2% on the subsequent Rs300 crore corpus, which finally comes down to 1.75% for the balance assets. The expenses consist of Investment Management & Advisory fee (1.25%); Custodial fees (0.05%); Registrar & Transfer Agent (RTA) fee (0.25%); marketing expenses including commission paid to distributors (0.65%); Audit fees (0.10%); Costs of fund transfer from location to location (0.10%) and other expenses (0.10%).
Moneylife contributor R Balakrishnan says, "The ULIP changes are cosmetic in nature. Maybe the product becomes a little more efficient than it used to be, but in no way has it become comparable to a mutual fund. In a mutual fund, the total damage is limited by law to 2.50% per annum. In ULIPs, the selling commission has not been reduced. The only thing that has happened is that instead of front ending, it is now supposed to be spread evenly. In effect, a marginal improvement."
Some industry experts believe that ULIP charges will still be opaque and can differ from company to company. Insurance companies can still charge a lot of money to investors under the garb of administration and management expenses.
Mr Balakrishnan pointed out that in all investment products of the insurance industry, "There is a management charge, administration charge and some other charges. Typically, these aggregate over 3% per year, assuming a typical monthly investment of say Rs20,000 per month. These charges are separately deducted from the contribution paid by the customer."
He added, "ULIPs are the sole survival mechanism for the insurance industry. And they are perhaps the biggest prop for the stock markets. The government just does not want to rock the boat. Hence they have legitimised what they have been doing."