Citizens' Issues
Common man’s “guzaarish, khwahish, farmaish” to the FM on the ensuing budget!

Here are some suggestions for the kind consideration of the finance minister to ameliorate the sufferings of the common man from the trials and tribulations of daily chores, and to help him/her to live a life of peace, free from the struggles of making both ends meet in these days of growing cost of living and stress and strains of every day life

It is budget time of the year again. The finance minister (FM) is busy meeting the captains of trade, commerce and industry to ascertain their demands from the ensuing budget. As per a PTI report, the FM told the global investors last week that the budget to be presented this month will be a “responsible budget”. Let us hope that he will be responsible and instrumental for making life a bit easy for the common man of this country. But the voice of the common man is never heard nor understood either before or after presenting the budget. Let us at least make our voice heard through the columns of Moneylife, the selfless organisation dedicated to the cause of the common people of our society. So here we present our “guzaarish (a petition), khwahish (a wish) and farmaish (a request)” to the FM on the ensuing budget on behalf of the common men and women of our country.

What can the FM do to improve the life of the common man?

1. First and foremost, there is a need to raise the basic exemption limit from taxes for all class people from the present limit of Rs2,00,000 to at Rs4,00,000, as there is a need to give relief to a large number of people who are really struggling to make a living, because of the runaway inflation present in the economy for the last three years. To keep pace with inflation, this limit should be linked to inflation at least in future years.

2. Similarly the basic exemption limit from taxes for women to be fixed at Rs5,00,000, as they are the ones who have to balance the kitchen budget of every household, but are most hard-pressed to make both ends meet, and they have no recourse to any deficit financing that is available to our finance minister. The additional exemption available to women was suddenly withdrawn in the last budget without any rhyme or reason, and now there is a need to restore this additional exemption from taxes in the context of the need for them to spend on safety measure to protect themselves from the growing atrocities faced in their day-to-day life.

3. The basic exemption limit to senior citizens too deserves to be raised to Rs6,00,000, as they are the people who have given their best during the working years of their life, and with the dwindling purchasing power of the rupee, they find it difficult to maintain their standard of living during the second innings of their life.

4. The super senior citizens are the most deserving of all. The basic exemption limit for them is to be raised to Rs10,00,000 from the present Rs5,00,000 to enable them to live a life of dignity and tranquillity. It is during these years that there is a heavy demand on their purse to maintain their health, which takes away considerable part of their savings. The benefit of health insurance is also not easily available to them at this age of their life, due to which they need a healing touch from the finance minister.

5. For the first time in the history of our country, the Finance Act, 2012, recognized a person who reaches the age of 80 years as “Super Senior Citizen” and a higher exemption limit was conferred on him/her. This was a gift from the finance minister to the elder population of our country, who live beyond 80 years, which is indeed creditable. In order to make such an honour available to a larger number of our people, it is necessary to bring down this age limit to 75 years so that it goes well with the platinum jubilee celebrations of the individual, who certainly deserves recognition at that ripe age. As there are not many super senior citizens in the country, this does not affect the tax collections at all and bringing it down to 75 years, would be a well deserved honour to these septuagenarians.

6. The most deserved gift the FM can give to the banking public before the venerable former governor of RBI and the present PM Manmohan Singh lays down his office next year is to totally abolish TDS (tax deducted at source) on bank interest, as it is the most obnoxious of all regulations of the Income Tax department. Despite all the goading by RBI to banks, even today, majority of banks do not bother to send the TDS certificates to their customers every quarter as required by law, unless one demands for it. At present tax is deducted at source on bank interest paid in excess of Rs10,000 per year. This threshold of a paltry sum of Rs10,000  for deducting tax at source is a pain both to the deductor and the deductee, because, it only increases paper work and a large number of non-assessees have to either file their return of income to get a refund, or file Form No.15 with the bank, which, more often than not, fails to make a note in their records causing avoidable inconvenience to the public. Abolishing TDS on bank interest will only help in financial inclusion and will be a big boost to the banking sector in our country.

7. The Finance Act, 2012, has exempted senior citizens who have no business income from paying advance tax, with a proviso that appropriate tax due, if any, is to be paid before filing the tax return. In view of this exemption available to them, there is no meaning in subjecting them to TDS, which should be totally abolished for all people including senior and super senior citizens, who can be free from the clutches of banks and financial institutions in the evening of their life.

8. The common man today faces a double whammy. On the one hand the premiums on health insurance policies are hitting the roof, and on the other, hospital charges are increasing by the day. In order to have a health insurance policy of a reasonable value for every individual, the rebate for health insurance premium be raised from Rs15,000 to Rs40,000 per person, and from Rs20,000 to Rs50,000 for the senior and super senior citizens.

9. Interest on saving bank (SB) accounts alone up to Rs10,000 is tax free at present. This is sheer mockery of the entire tax system. When dividends paid to all and sundry, whether big share holders or small are totally tax free at the hands of recipients, it does not stand to reason why honest and ordinary middle class who deposit their hard-earned savings with banks are made to pay income tax without any exception. It is only the middle-class population that deposit their savings with banks while all the rich and wealthy play in the stock market and they are rewarded by exempting dividends from taxes completely. It is a long felt need that all interest earned on banks deposits of all kinds, whether savings or fixed deposits, should be totally exempted from income tax and thus remove the most regressive taxation ever from the statute book. This will not only provide considerable relief to the bank depositors, who suffer under the burden of rising inflation, but give a shot in the arm to the banking sector, which is starving for deposits from the public, who feel investing in gold is better than investing in bank deposits. In order to convert investment in gold into bank deposits, thereby helping the government to reduce the trade deficit, the only solution is to make bank deposits attractive by giving complete tax exemption on interest to savers in banks. The finance minister will surely see miracles happening in this field, if the tax burden is totally removed for the common man who invests in bank deposits. When non-resident Indians have been showered with tax free income on all their NRE and FCNR deposits, why resident Indians should be denied of this basic benefit just because they live in India and not abroad?

10. At present under Section 80 DDB of the I-T Act, deduction to the extent of Rs40,000 is permitted in respect of expenditure incurred for self and dependent relatives for medical treatment of specified diseases or terminal ailments. Today, any medical treatment for chronic diseases costs not less than a few lakhs of rupees, and hence this limit ofRs40,000  is chicken-feed. It is therefore, necessary to raise this limit to at least Rs1,00,000 per year, which will be a great relief to the sick and elderly who suffer due to no fault of theirs.

11. Under Section 80DD of the I-T Act, any expenditurefor medical, nursing and rehabilitation incurred on dependent suffering from permanent disability is allowed as a deduction up to Rs50,000 (Rs1 lakh if the disability is severe—exceeding 80%)  per year. With the rising cost of nursing and medical expenses, there is an urgent need to increase this limit to Rs2,00,000 per year, per dependent, irrespective of the level of disability, to help those families who are unfortunate to have such dependents needing special  attention and care.

Concluding prayer:

The above suggestions are for the kind consideration of the FM to ameliorate the sufferings of the common man from the trials and tribulations of daily chores, and to help him/her to live a life of peace, free from the struggles of making both ends meet in these days of growing cost of living and stress and strains of every day life.

This is an appeal to the FM to be generous enough to consider these basic requirements of our citizens, who deserve nothing less than a decent life and a much better deal from the government, as this will be the best opportunity to win over the faceless and voiceless middle-class of this country suffering silently under the burden of stubborn inflation and the rampant corruption pervading our society making life difficult for a large majority of people of this country.  If the FM can touch millions of hearts and spread smiles on a billion faces though a single fiat of a budget, it would be a great day for all Indians.

Other articles from Gurpur.

 (The author is a banking and finance professional writing for Moneylife under the pen-name ‘Gupur’)



Adi Daruwalla

4 years ago

Under 80 DD the benefits should be increased for family members spending money for treatment of mentally challenged dependents also, even if the mentally challenged person is employed. (As he or she may lose their employment anytime.)

nagesh kini

4 years ago

I have serious doubts whether our FM from deep South will grasp the North Indian asli Urdu/Hindustani terms gujraish,kwaish aur fermaish!
Only hope he doesn't take a u-turn in the 2013 Budget.

The need for credit bureaus

If all of the creditors got together and shared information on their debtors, they should easily be able to determine which debtors defaulted and which debtors paid on time. To ensure that the information is not misused requires transparency and accountability. In countries without adequate enforcement or protection of rights, these issues are unlikely to be resolved

According to the game theory a debtor’s best move is not to pay back a loan. Creditors know this. So their best move is not to make the loan. Obviously this is not what happens. In developed countries creditors rely on the state to keep debtors honest. A failure to pay back a debt brings with it legal sanctions. In many emerging markets these sanctions are either not available or incredibly slow. So for many emerging markets creditors and debtors rely on trust built from relationships often within families, political parties, religions and even castes. Regardless of the sophistication the main element of the loan is trust. Trust built on information, which is why the development of credit bureaus and credit reporting agencies is so important to growing economies.


The idea of a credit bureau is to solve the problem of asymmetry of information between the debtor and the creditor. In smaller relationship-based systems this is usually not a problem. Everyone knows everyone else’s reputation, but as the population grows, the process become more difficult. How do you separate the worthy, the diligent and honest from the dishonourable, indolent and corrupt? What would stop a debtor with a bad history with one creditor from trying to defraud another? When do you know when a usually reliable debtor gets in too deep? How does a large creditor like a bank control its risk portfolio? What methods can a creditor use to screen or automate the process to bring the cost of credit down?


The best way would be to share information. If all of the creditors got together and shared information on their debtors, they should easily be able to determine which debtors defaulted and which debtors paid on time. But there are problems with such an arrangement and it has to do with information. Information has value and power. To share information requires losing both. Information can also be abused. To ensure that it is not misused requires transparency and accountability. Consumers must have access to ensure that the information is accurate. In countries without adequate enforcement or protection of rights, these issues are unlikely to be resolved.


Click here to read about how our credit-tracking system is in a mess whether RBI is playing its role. An analysis by Sucheta Dalal.


In more authoritarian countries like China and Vietnam, state control of information is paramount. Both these countries maintain credit bureaus controlled by the government. Public ownership has problems beyond the serious potential for abuse. The main problem is the size of the sample. The credit bureaus were owned and managed by the country’s central bank. The banks are more concerned with debts that might impact the economy. So the average minimum threshold for credit information in public bureaus was $30,000.  In countries with private bureaus the motivation is profit, so the average threshold is only $450.


Since creditors have an incentive not to share information, it is often better to provide a legal mandate, but sometimes the regulation itself is the problem. According Moneylife, the Mumbai financial newsletter, The Indian Credit Information Act requires only that lenders share information with at least one bureau. This has had the effect of creating a monopoly for the oldest private credit bureau, CIBIL (Credit Information Bureau India). Newer entries like Experian and High Mark are effectively shut out.


Brazil has one of the highest levels of consumer debt in the world. The average Brazilian household pays 25.8% of their incomes servicing their debts. This could be a serious problem in a country where the average interest rate on consumer loans is 34.6%. But the government only passed legislation allowing for credit bureaus to get information regarding the total debt rather than just defaults in 2011. The American company, Experian, has just bought out other minority interests in the local credit bureau, Serasa. The change in the law will allow Serasa to supply its credit partners, Brazilian banks, with other products including detailed credit histories, but given Brazil’s slowdown and the rise of consumer defaults, it may be too late.


Read here: Credit scores are a big zero, by Sucheta Dalal.


The need for sophisticated credit information was illustrated in the relatively urbane economies of Hong Kong, South Korea and Taiwan. Each of these countries experienced booms and busts in consumer credit between 1998 and 2005. Delinquencies rose to over 10% during the falls. The busts convinced most of the countries of South East Asia to establish bureaus in the last ten years.


Still consumer bureaus do not necessarily eliminate the problem of extensive consumer debt. Korea established a third credit bureau in 2006. The bureaus now cover 100% of borrowers. But as the economy grew, so did less regulated non-bank sources of credit. Korean consumers now have accumulated debt equal to 160% of their disposable income. This is higher than both the US figure and the Korean number before the credit crises. Like Brazil, Korea’s economy has been slowing, and with easy money even the best information cannot necessarily prevent a collapse.


Other stories by William Gamble


(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages.)


Sensex, Nifty on a slippery slope: Weekly Market Report

The Nifty is likely to hit 5,950 and maybe head even lower

The market ended lower this week, mainly on macro-economic concerns and a clutch on lower-than-expected third quarter results from corporates. Although the Reserve Bank of India (RBI) announced a 25 basis point cut in repo and CRR rates on 29th January, the central bank cautioned on inflation and the fiscal deficit front. A dip in the January manufacturing output also weighed on investors. Stock specific movement is expected to drive the market in the week ahead as companies continue with the third quarter earnings reports.


The Sensex declined 322 points (1.60%) to 19,781 and the Nifty fell 76 points (1.25%) to close the week at 5,999. The market is on a slippery slope. The Nifty is likely to touch 5,950 and maybe head even lower.


The market ended flat on Monday ahead of the RBI’s quarterly monetary policy review. The central bank’s rate cut did not enthuse investors as concerns about the economy led the benchmarks lower on Tuesday. The volatile market settled higher on Wednesday on late buying in rate-sensitive sectors.


The market edged lower on Thursday as the government revised the economic growth for fiscal 2011-12 to 6.2% from the earlier estimate of 6.5% and weak global cues. The market closed lower on Friday on a fall in India’s manufacturing output in January and weak corporate results of Bharti Airtel and BHEL, among others.


BSE Consumer Durables and BSE Fast Moving Consumer Goods (up 2% each) were the top sectoral gainers while BSE Capital Goods (down 3%) and BSE Oil & Gas (down 2%) were the chief losers.


Coal India, Cipla (up 4% each), ITC, Hero MotoCorp (up 3% each) and TCS (up 1%) were the top performers on the Sensex in the week. The losers were led by Bharti Airtel (down 8%), Tata Motors, Larsen & Toubro (down 5% each), State Bank of India and Jindal Steel & Power (down 4% each).


The major gainers on the Nifty were Axis Bank (up 9%), Coal India (up 5%), Cipla (up 4%), ITC and DLF (up 3% each). The main laggards on the index were Bharti Airtel (down 9%), Tata Motors (down 6%), L&T (down 5%), Reliance Infrastructure and UltraTech Cement (down 4% each).


Shedding its nine-month long hawkish monetary policy stance, the Reserve Bank of India (RBI) on Tuesday cut the short-term lending (repo) by 0.25% to 7.75% and cash reserve ratio (CRR) by similar margin to 4%, releasing Rs18,000 crore primary liquidity into the system. The RBI, however, reduced the growth projections for the current fiscal to 5.5% from its earlier estimate of 5.8% and moderated the inflation rate to 6.8% for March-end from earlier projection of 7.5%.


The HSBC manufacturing PMI, an indicator of the country’s manufacturing output growth, eased to 53.2 in January 2013, from 54.7 in December 2012. While the overall rate of growth remained firm, the growth slipped to a three-month low.


Among corporates, Bharti Airtel, India’s leading telecom services operator, posted a lower than expected third quarter net profit of Rs284 crore. The profit which fell for the twelfth quarter in a row is down a whopping 72% compared Rs1,011 crore same period last year.


BHEL’s net profit declined 17.5% to Rs 1181.85 crore on 3.17% decline in total income to Rs10,552.09 crore in Q3 December 2012 over the corresponding previous quarter. The company’s total order book position fell to Rs113,700 crore at the end of the December quarter from Rs122,300 crore in the previous quarter.


A series of freak trades in Tata Motors and UltraTech Cement towards the end of the trading session on Friday saw the two scrips tumbling around 10% before making a recovery. Tata Motors’ shares tumbled 9.98% to Rs 268.25 per shares before recovering to close at Rs 281.65, down 5.4%. The UltraTech scrip dropped 10% to Rs 1,712.35 apiece. The share pared its losses to close at Rs 1,837.75, down 3.4%.


An NSE (National Stock Exchange) official said the orders were within the exchange’s limits and came from a single broker. The official clarified these were not freak trades, but added the exchange would look into the matter.


On the international front, US gross domestic product (GDP) unexpectedly fell at a 0.1% annual rate in the December quarter, its first decline since the 2007-09 recession. Meanwhile, payrolls in the world’s largest economy increased by 157,000 workers in January following a revised 196,000 gain in the previous month and a 247,000 jump in November.


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