Sugar production will increase to 26.7 million tonnes next year compared to 16.3 million...
New Delhi: Finance minister Pranab Mukherjee on Sunday said he does not have a magic lamp to bring down inflation automatically and exuded confidence that it will decline from the present level of over 10% after new crops arrive in the market, reports PTI.
"It (inflation) is a matter of concern, no doubt. But...
There is no magic lamp through which you can bring it down or raise it... I do hope it would stabilise after good crop prospects, which is likely to happen during this kharif season," Mr Mukherjee told reporters after meeting with heads of regional rural banks here.
He said new crops would have a moderating impact on prices.
The finance minister said even though food inflation has come down to just 12% from over 20% in December, 2009, fuel and "certain other items" are adding to inflationary pressures.
Mr Mukherjee, however, refused to say anything on the Reserve Bank of India's (RBI) monetary action, scheduled to be taken on Tuesday.
To a query whether RBI's actions would rein in inflation, central bank deputy governor K C Chakrabarty said," Whatever steps we take, hope is always there that they will work."
RBI is scheduled to announce the first quarterly review of monetary policy amid expectations that it will raise short-term borrowing and lending rates to cool down high inflation.
Overall, inflation has been at over 10% for the last five consecutive months till June.
The government had last month raised petrol prices by Rs3.5 a litre while deregulating it, diesel by Rs2, liquefied petroleum gas (LPG) by Rs35 a cylinder and kerosene by Rs3 a litre.
On Saturday, Prime minister Manmohan Singh had expressed confidence that overall inflation will come down to 6% by December on the back of good crops.
There are just three, maybe four, companies that dominate the payment processing industry worldwide. All located geographically within one part of the US, all doing exactly the same business of operating as middlemen in a foolproof business
Look again in your wallet, purse, pocket-book. Try to recall the last monetary transaction you did on the Internet. Check out the signs on the door to the ATM. Think about when you went to any commercial establishment transacting money for goods or services and did not find an option to not use cash. Chances are, the answer to all this is very simple, though they've almost become brilliantly invisible by sheer over-exposure-American Express, MasterCard and Visa. Multiply this by many million users on date, and think of how the telecom industry grew in India, and get an idea of the growth rate in the payment processing industry looking everybody in the face.
Here's another simple fact, the numbers will just divert the importance-India is today the world's fastest-growing country (or market, as foreign investor-speak will position us) for percentile growth in number of ATMs and usage of plastic and other forms of "electronic" and non-paper money. Credit cards, debit cards, mobile phone payment systems, special products for the Internet, wire transfers using coded exchanges, pre-loaded cash cards and more, simple and corporate havala -the list goes on. In a society where havala has got sanctity, where the local money-lender is still an institution, and money without footprints has been the sought-after holy grail, this is one industry which, if properly monitored, could put the business of undocumented cash out of business-the numbers are so high.
So what is the Reserve Bank of India doing about it? Why are large parts of this industry in India still controlled from abroad, by non-Indian entities?
Actually, to give the people at RBI their due, they seem to be trying. PayPal was blocked off for some time till it started adhering to Indian government regulations. Western Union agreed to stricter monitoring-though there are some open issues there, still. MasterCard, Visa and American Express are reluctantly and slowly, but eventually, falling in line with demands being made not just for consumer protection, but also for adherence to Indian laws. And the rules as well as regulations for mobile phone payment systems as well as plastic money are certainly improving. All this, for a business which is essentially a foolproof middle-man service, one without risk. Stand in the middle, and collect commissions from both the merchants and the banks. Then, as though that was not enough, also earn money by a vast variety of other means-customer spend patterns, penalties, fees and charges for everything under the sun, and analysis as well as benefits from date collected are just one small part of the huge pie.
(Personally, this correspondent recalls the panic with client companies after the nuclear bomb explosions by India in May 1998, on how the payment processing industry's analysis could have missed out on such an important event. It is an accepted fact that spending patterns of targeted people as well as groups are regularly analysed by these companies and their, "associates".)
Take this a few logical steps forward. Gambling-problem in paying or receiving funds. Converting funds from the narcotics business-the turnover here exceeds that of the oil and automobile businesses put together. Payouts and receipts for what is discreetly known as the "preventive defence" industry. All these, and more-need middlemen. And these middlemen have a track record as well as history of swallowing up competitors-and whole economies if they don't fall in line.
Think 'EuroPay', swallowed up by MasterCard, which was supposed to provide strength to the euro in Western Europe and the rest of the world. Think JCB, Japan's pride, now relegated to tourist business of the Japanese sort. The list goes on.
But there's a difference now-the dominance of the North American customer is slowly giving way to a new global reality-one who does not spend in dollars or even in a currency not linked to the dollar. And India is on top of the growth stakes. Whichever way you look at it.
Think about how just one government organisation, the Indian Railways, is rapidly trying to move cashless and paperless. My last train trip from Dehradun to New Delhi was transacted completely on mobile phone, paid online, and I boarded the train without a paper ticket, just flashed a PNR received by SMS.
So here's something which has been on the back-burner at the Reserve Bank of India, and now with the National Payments Corporation of India Ltd, for the last three-four years.
""India Card -A domestic card initiative-The concept of a domestic payment card (India Card) and a PoS switch network for issuance and acceptance of payment cards would be looked into. The need for such a system arises from two major considerations (a) the high cost borne by the Indian banks for affiliation with international card associations in the absence of a domestic price-setter (b) the connection with international card associations resulting in the need for routing even domestic transactions, which account for more than 90% of the total, through a switch located outside the country. ""
What's a POS? Typically, that little machine on which your card is swiped, but increasingly now it can mean just about any computer on any network, anywhere. About as low-tech as it gets. And a "switch"? Nothing but a super-computer, for which technology called software is developed for large volumes of transactions and databases. In India. How do I know all this? Because I headed the India operations of one such company till a year ago, before I left them, fed up of the way it was interfering with what I can best define as "national interest".
Note: This statement from RBI's website has one small error-the percentage of purely domestic transactions in India for plastic and other forms of electronic money held and owned by Indians is reportedly over 99%-both in terms of numbers of transactions as well as value of transactions. Despite this overwhelming number, the "middleman" company in this business, continues to run this business from out of India.
Here's one more comment on the payment processing industry from the respected maverick of the US money industry, Motley Fool:
"We came across this company quite by accident several days ago at a blog site. Normally we would pass on companies in the financial industry since we simply don't trust their management, believing them for the most part to be liars, cheats, and thieves. At least that's our opinion of them given the events of the past year or so. Still, we found ourselves more than a bit intrigued once we came to the conclusion that this company was, in the simplest of terms, just a middleman for the electronic transfer of payments between different types of businesses, meaning they get paid first from by the merchant for receiving the transaction, and then again by the financial institution for sending the transaction. This sounded like a pretty sweet deal to us, so we invested a bit of our time in hopes that some small understanding of Total Systems Services, Inc. (NYSE: TSS) might be a pretty sweet deal for us too."
And there are just three, maybe four, companies that dominate this business worldwide. All located geographically within one part of the US, all doing exactly the same business of operating as middlemen in a foolproof business, and all with their beneficial ownerships hidden behind a web of cover companies in the tax-havens of the world. Disclosures being forced on them by the US government over the past few years means that some details are creeping out, but mostly this remains one of the most secretive businesses in the world, and now rapidly trying to dominate in other countries too. Like India.
It is not just about this being an immensely profitable business, too. After all, the business of moving money without reference to its colour or antecedents, has always been profitable, which is why Switzerland and Luxembourg and other havens became famous for physical storage.
But now the money moves electronically worldwide, and in tremendously large volumes, so there is more need for control of the technology and process than of the actual physical money itself.
So why are we, in India, still dependent on Visa, MasterCard and American Express, and their associate entities even for our domestic transactions? Answers are difficult-key people who understood the business were moved out, the power of these companies is enormous and reaches everywhere, and most of all-there seems to be a total lack of initiative in trying to do something which would set us free.
I mean, we have been independent for about 63 years now-and we still need to depend on what are, essentially, foreign banks and their cohorts as well as associations for domestic transactions? Especially when it is Indian companies that supply the technology to them.
(This is the first part of an ongoing series).