The Department of Posts is in talks with various consultants to formulate a roadmap for its life insurance business with an aim to grow the customer base to about 100 million subscribers in next few years
The Department of Posts (DoP) is in talks with various consultants to formulate a roadmap for its life insurance business with an aim to grow the customer base to about 100 million subscribers in next few years, sources said. "But, the talks are still in the initial stages and nothing concrete has been done till yet," a source in the DoP said.
The department has about five million policies under postal life insurance (PLI) with an amount of Rs58,132 crore, while under rural postal life insurance (RPLI), it has about 13 million policies with an assured amount of Rs67,162 crore. The growth rate of RPLI was 60% in terms of premium income in 2009-10 over 2008-09. The Department is committed to expanding insurance cover to reach a target of about 100 million customers in next few years, the source said.
The department has already invited expressions of interest (EoIs) to receive responses from eligible interested firms for providing project consultancy on "Long Term Strategy for Life Insurance Business of Department of Posts".
Given the recent regulatory changes, government policies and the need for greater participation in the evolving but still growing life insurance market, DoP wants a thorough diagnostic re-look at its entire operating strategy including a structural framework in the insurance division and to develop a road map for the future.
In that regard, the consultants chosen shall focus on the following areas as a part of the assignment, including analysis of insurance market, future outlook for growth and profitability, scope for expansion of products and clientele and key success factors for an organisation to succeed.
Despite the festival season—cutting across communities, various freebies being offered and substantial discounts, buyers are staying away from property purchases. However, a few analysts feel that it would be better to cash in on the current discounts, as rates are likely to go up in the near future
Amid dismal sales figures, city developers and builders were looking forward to Gudi Padwa for some improvement. Unfortunately, despite the freebies and other attractive offers, buyers have shied away from purchasing properties.
"Last year, it was comparatively better," said a Borivali-based broker. "This year, it brings us no joy. We have not seen a single registration this year, and I know of other brokers in other parts of Mumbai who are suffering in the same way," he said.
'Gudi Padwa', 'Akshay Tritiya' and 'Dussera' are traditionally considered to be auspicious occasions for making purchases, and usually see a lot of activity in the realty sector. Many people register for buying properties, and builders and brokers too, offer attractive deals to woo them. Gudi Padwa, which comes around the time of Punjab's 'Baisakhi', the Tamil 'Puthandu', Andhra's 'Ugadi' and Kerala's 'Vishu', is a profitable time for developers.
Many developers have offered discounts up to 20% on property prices and other offers to attract buyers. Even those developers, who had been otherwise reluctant to restructure property prices, have offered some sort of incentive. For example, the Sanghvi Group declared the launch of 'Sanghvi Paradise' at Rs1,854/ per square foot (psf) for the first 50 bookings along with offering discounts of up to Rs3 lakh for Sanghvi Exotica and up to Rs100/psf for 'Sanghvi Valley', 'Sanghvi Ecocity'. 'Sanghvi Nakshatra' and 'Sanghvi Nisarg' and 'Shankheswar Nagar'.
However, the magic has not worked. Neither has this year seen many project launches. Ramesh Nair, managing director-west India, Jones Lang LaSalle, said in a report, "The number of launches is lower when compared to last year, as not many projects have been approved in the last four months. There is a noticeable trend towards smaller-sized units, obviously meant to catch the tail-end of demand."
It appears as if the festive spirit cannot outbalance decreasing affordability. As Mr Kalpesh Shah, treasurer, National Association of Realtors (India), pointed out, projects which offer affordable rates are the only ones likely to sell. In many cases, people have stayed away from developers who have not reduced their prices.
"But what do we do?", remarked a developer in Navi Mumbai. "The last year has been bad, and some people are under pressure to settle bank dues with the financial year ending. So, we couldn't offer much discounts."
However, some experts feel that it is better to register for property now. "Post festival, some developers may hike prices citing increased input costs", an analyst said. Mr Nair said that people who are willing to take advantage of the festive offers and pay 30%-40% down payment will make a profit.
The real problem with bribery is paradoxically a problem with law. So, the best and most economically efficient method of eliminating corruption would be simply to eliminate the laws themselves
Kaushik Basu is a professor of economics at Cornell University. Cornell is located in the quaint, neat and beautiful town of Ithaca, which is about 320 km, or a four-hour drive north of New York City, in the US. He has recently returned to India, the country of his birth, to advise the government.
Like all emerging markets, India has a problem-too much corruption, too many bribes. Professor Basu has a solution. He has suggested that paying bribes should be legal.
His ideas come from one of my favorite disciplines, game theory. The logic goes like this. Right now, both the government official, who receives the bribe (in good legal speak the bribee), and the person making the bribe (the bribor?) are punished if the crime is discovered. Since both are equally guilty under the law, the bribor has no incentive to expose the activity.
Professor Basu's idea is that for so-called "facilitation payments", small payments made to expedite routine business needs, like clearing customs or obtaining permits, the bribor's actions should be legal. In theory, once the bribe has been made, the bribor can expose the bribee to prosecution. This threat would act as a legal disincentive to deter the bribee or government official from soliciting the bribe in the first place. Right now, the interests converge. Since both bribor and the bribee face punishment, it is in both their interests to keep quiet.
But will it work? To answer that you have to ask why do people pay bribes anyway? Bribes by definition involve government activities. There has to be a government official. The bribor wants the government official to act, refrain from acting or act in a manner that favors the person making the bribe.
In the case where bribes are paid for purely ministerial functions, making bribe-paying legal might help, if we assume that the government official once exposed would actually be subject to punishment. No doubt this would occur in Ithaca, New York, but would it occur in India or another emerging market? Probably not.
Recently, according to the Indian newspaper, The Hindu, via WikiLeaks, an American diplomat was shown two chests full of cash that the ruling Congress Party was going to use to bribe opposition Members of Parliament at $2.2 million apiece. Although, no doubt well aware of the bribes, the squeaky clean Congress party leader, prime minister Manmohan Singh, denied the allegation.
Again, by definition, the government official taking the bribe is part of a government. The government, or the party in power, most likely appointed the official for political reasons. As the former American president, Ronald Reagan, said "the 11th commandment was that thou shall not criticize a member of your own party."
So the government, in order to protect itself, will not have an incentive to prosecute the official receiving the bribe. Instead it will be more likely to persecute the person who exposed the malfeasance, the whistle-blower. Which points to the problem neglected by professor Basu, other economists and financial analysts, who assume that their theories will work anywhere regardless of the legal framework.
The real problem with bribes for ministerial functions is that the government has monopoly. For example in many countries for many years the state controlled telephone service. Getting a landline often took many years and many bribes. With the advent of mobile phones, multiple companies offered service and the monopoly disappeared along with the potential for corruption.
The other aspect of bribing government officials has to do with having the government official use his discretionary power in a manner that benefits the person paying the bribe. In this case, if paying the bribe was legal, it would make the situation worse.
The person making the bribe is doing so to obtain a competitive advantage, like a cheap mobile licence. If he exposes the official, then he loses the advantage. So his best move in game theory would not be to expose government official, but rather use the evidence of the bribe to extort further advantages.
One of the main problems with bribery is transparency. Businessmen are not sure who to bribe, how much to bribe and how to ensure that the bribed official actually performs the contracted action, so the market is always inefficient. Decriminalizing the paying of bribes will simply help the bribors enforce the contract through extortion.
The real problem with bribery is paradoxically a problem with law. Many laws have a tendency to distort the economic environment and markets. So, the best and most economically efficient method of eliminating corruption is usually simply to eliminate the laws themselves. Reducing the size of government, reducing its monopoly, outsourcing its services, limiting discretion, reducing regulatory interference, diversifying enforcement and above all, increasing transparency, are far better methods to eliminate corruption than decriminalising an obvious theft.
(The writer is president of Emerging Market Strategies and can be contacted at [email protected] or [email protected])