A New Dawn in Indo-Japanese Relations
In PM Modi's first foreign visit outside the sub-continent, his reaching out to Japan and his personal relations with Japanese PM Abe may pay rich dividends to the bilateral relationship
Extending a gesture reserved only for very special guests, Prime Minister Shinzo Abe of Japan travelled all the way from Tokyo to meet PM Modi in the old imperial capital of Kyoto. Generally, visiting heads of states are received in the capital. Apart from visiting the ancient Buddhist temples in Kyoto, an agreement was signed to replicate Kyoto in Varanasi, developing it into a "smart city", maintaining its traditional heritage status while making it more modern than it is today.
PM Modi proceeds from Kyoto to Tokyo, to continue discussions with PM Shinzo Abe, with whom he has warm relations from his time as Gujarat Chief Minister. Mr Modi is expected to roll out the red carpet for the Japanese business community, and to set up their manufacturing enterprises in India, where all the essential ingredients are available at competitive prices. He would reiterate his call to make India the manufacturing hub for Japanese products.
Moneylife recently covered the proposed visit by PM Modi and the interest shown by the Japan International Cooperation Agency (JICA) in developing the Indian Railways, by setting up high speed railway corridors. In fact, press reports indicate that JICA, supported by an Indian team, has already identified fifteen possible stations along the proposed high speed train corridor between Ahmedabad and Mumbai. According to the Deputy Director General of the South Asia Department of JICA, Mr Katsuo Matumoto, this corridor will also have to set up some special links so that transfers are possible and made easy, when the system is set up.
It may be recalled that during the Railway Budget presentation, Minister Sadanand Gowda had stated that such a high speed train service wold involve an outlay of Rs60,000 crore (or about $10 billion), but in the long run this would make travelling easier and cheaper. At the moment, this bullet train system, also called Shinkansen, covers an estimated 2,600 KMs of high speed railway networks in Japan and has the best safety record in the world. While India has none, China boasts 12,000 Kms of high speed trains, for which they began construction only in 2007. Chinese high speed trains are cheaper as compared the Japanese Bullet train. PM Modi has a difficult choice to make, but indications are that he may make a final decision only after meeting the Chinese president Xi Jinping, when he visits India later this month. A proper mix of both the systems may be found suitable, also depending on the long term credit facilities, which may well decide the winner!
Both Shinzo Abe and Narendra Modi have a lot of things to discuss, other than the bullet trains. Issues covering mutual defence, civil nuclear agreements and supply of earth minerals and amphibious aircrafts are to be discussed. Currently, Japan obtains rare earth minerals, which are mostly used in the manufacture of high-end electronics, from China. Due to China's controversial territorial claims on some Japanese Islands, it is likely that Japan would like to cultivate India as an alternate source of supply. No doubt, Narendra Modi would do his very best to invite Japanese FDI in many areas and hopefully, he will return successful from Japan.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


Insurance for all?
As regular readers know by now, we argue that the best life insurance product to buy is a term plan. Ever since we launched Moneylife Smart Saver Network (MSSN), our premier service on the financial products best suited for your needs, we have been getting enquiries about whether Indians living abroad, can buy online term plans. When we tried to find out, we discovered that no one is clear about what ought to be the practice.
One MSSN member holding a British passport could buy a policy but Aviva sent him a policy with nationality as Indian. After 45 days of emails and calls, Aviva has returned the premium. LIC does not entertain requests from NRIs/PIOs/OCIs. What is the complete picture? For the very first time, our Cover Story throws light on this tricky issue.
In her Different Strokes section (page 16) Sucheta writes about the peculiar attitude of the Reserve Bank of India (RBI) on consumer protection. One week, it issues a consumer charter to protect the rights of banking consumers; the next week, it acts as a handmaiden of Indian banks and cuts down the number of free usage of ATMs per month. As usual, RBI issued the diktat without sharing any details or justification with the largest stakeholder in the system, namely, bank customers. The RBI governor has been talking frequently about the importance of consumer protection. When it comes to action, it’s another story altogether.
In her Crosshairs column (page14), Sucheta writes about another chain-money scheme that has grown unchecked. PACL has been asked to return a mind-boggling Rs49,000 crore to the depositors. But that fact that it could grow to this size is really a reflection of the breakdown of our financial regulation system.
Our investment columnist, R Balakrishnan, analyses (page 22) whether the REIT (real estate investment trust) would be a good investment product. Bala’s laser sharp analysis identifies five things that are wrong with REITs. Don’t miss it.  


Open a Healthy Debate!
For once, India has asserted that this country has its own position on global issues that will factor in India’s interests which originate in a battery of country-specific and externally-caused situations. For decades, the compulsions of coalition politics and our dependence on external support in various sectors were being exploited by vested interests. The stance taken on the WTO deal sends out a message that India understands the ‘game’ being played by developed countries under the leadership of US.
This is no occasion for celebrating ‘successful stalling of a wrong move’ or lamenting over delay in ‘clinching a deal’ which would have changed the global business environment. So far, developed countries had successfully persuaded the Indian elite to believe that subsidy is a bad word, while they themselves practised ‘subsidy’ by different methods. Daily destruction of unsold stock in Holland’s flower market, destruction of food stock, and issue of food coupons in US, involved element of subsidy.
If one looks at the chronology of events up to prime minister Narendra Modi’s assertion that ‘I am more concerned about the small Indian farmer, even though I believe the trade facilitation agreement is good for India…,” the Indian stance on the issue is a timely warning to India’s own policy think-tank and the advocates of ‘globalisation at any cost’. 
The position taken is consistent with the advice contained in Indian scriptures which say, “One should lift oneself by one’s own efforts and should not degrade oneself; for one’s own self is one’s friend and one’s own self is one’s enemy”(VI 5, Bhagavadgita).
Let us not forget that it was the business interest of a foreign power that kept this country under colonial yoke for centuries. We should not surrender the gains of decades of fighting for our freedom for quick gains. Thanks to the vision of those who took over governance from the British, we have a strong foundation supported by a Constitution which has stood the test of time, a public sector which can shoulder responsibility and institutions, like the judiciary, Election Commission, Reserve Bank of India and CAG, which have withstood external pressures.
One wishes, the new government musters enough strength and moral courage to open a healthy debate within the country on rationalisation and transparency in asset accumulation and cross-subsidisation issues which will help India emerge as a global power without compromising the country’s right to stand on her own feet.  
MG Warrier, by email

Vanishing listed companies 

Many companies coming to the stock market are vanishing quickly. To stop this menace, government should take appropriate steps about name changes, especially of de-listed companies and vanishing companies. Many unscrupulous companies operating in the stock market are playing with public money.
Hence, my suggestion is that through an automatic route, say, SEBI, RoC (registrar of companies), banks/financial institutions, the government should automatically refer the name of companies de-listed, vanished, shell companies and other suspected companies, directly to income-tax department, DRI (directorate of revenue intelligence), finance ministry, RBI, SEBI, various stock exchanges, banks, etc. The list should be prepared on a weekly basis to avoid any financial irregularities. The promoters need close scrutiny and they should be permanently banned from raising funds from the market/ financial institutions/ banks. The main reason is to protect the interest of investors, especially small investors who have invested their lifetime savings in stocks. On the other hand, this will reduce NPA (non-performing assets) of FII/ banks. Promoters/owners should go through proper authentication and identification through various mechanisms like UIDAI, NPR, PAN.
The other measures should be to recover the money from promoters, who are defaulters, by making physical inspection of the various assets of their companies, personal assets of promoters, etc. All departments should start investigating the case separately and quickly and inform finance ministry on their whereabouts, present status, assets and liabilities, etc. For the past 20 years, many companies came all of a sudden and vanished quickly from the market, especially under the UPA regime. The public is losing faith in the stock market because of these companies. It is necessary to investigate the various scams and corruption in financial sector, especially money laundering, etc.
Anirudh, by email

Excellent Analysis

This is with regard to “Rot at the Top” by Sucheta Dalal. What an excellent analysis and insight expressed in the above piece wherein the columnist has clearly brought out the deep corruption at the top level in our banking and corporate sector! It is, indeed, shocking and scary to say the least.
What is the remedy? Can the Narendra Modi government clean up the rot? What future do you foresee?
Cdr KP Jani IN (Retd), by email

Dare to be a Pessimist

This is with regard to “Right moves by the RBI to help savers” by Sucheta Dalal. I am afraid, I’m a pessimist and feel that these measures will not get translated to actual assistance to the consumers. Especially, the fifth step—said to be substantially improved in effective redress of grievances to the consumer; I am afraid the RBI, or its redress agency, the Banking Ombudsman, are not yet ready to interpret the provisions of ‘Ombudsman Scheme’ rightly. It simply goes by the words used in the scheme and not the intent, namely, to protect the rights of the consumer. I have the order passed by the dy. governor RBI (in late July). It is simply sticking to the anti-consumer approach on mere technical grounds.
There is no need for enacting fresh rules. The crying need is to amend the existing banking ombudsman scheme to be more consumer-centric. It is important to keep a hawk’s eye on any violation of consumer rights or RBI’s regulations by the banks.
Mohan Siroya, online comment

Modi’s silence?

This is with regard to “Modi Supporters All Confused?” by Sucheta Dalal. Wonderfully written. The two articles quoted by you were outstanding. The young generation went with Narendra Modi because they thought he had answers to all their problems. They were, of course, aided by the non-performance of UPA. They did not realise that problems faced by UPA may haunt Mr Modi too.
However, the entire campaign had raised expectations too high. I believe if Mr Modi can deliver even 25%-30% of what he talked about, he will win a second term. His silence is baffling. BJP slammed Manmohan Singh for silence and now they are paying homage to the old doctor sahib with their silence.
Mr Modi tweets about a municipal win in Gujarat but not about more relevant issues is unlikely to be accepted. Prakash Jawadekar was pulled up for wearing jeans and T-shirts on his way to Kenya within 2km from his house by the PMO and told to change into a dress befitting his position.  How did the PMO know this? This is scary in the long run. Are ministers under surveillance from PM? 
BJP criticised every Congress policy for the past five years and did not let the parliament function. They had enough time to think about alternates which they don’t seem to have done and the actions are not coming quickly. Or were they not confident that they will win?
They still have time on their side; but they must show they are different by actions—which is missing. Making a great speech and practising what one preaches are different things. Secondly, it is hard to believe that babus are working harder now. I think, the top babus always wok hard and keep long hours. It is the babus with whom common people come in contact who are the real problem; whether Mr Modi can make them work is the real issue!
Anil Agashe

Popularise the idea!

This is with regard to “Do you know the benefits of a One Person Company?” by SD Israni. I did not expect that ‘ONE IS A COMPANY’ will ever come true. It may take some time for the idea to become popular. Maybe some ‘subsidy’—like the one offered for those joining NPS (New Pension Scheme)—should be considered to popularise it!
MG Warrier



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