Fiscal deficit may be more than what was projected: FM

Noting that India has strong fundamentals, like a vast number of technically competent professionals and managers, besides 60% of its population being young, finance minister Mukherjee said he had no doubt that India will come back to a strong growth trajectory by 2020

Chennai: Finance minister Pranab Mukherjee today said the fiscal deficit for 2011-12 could be more than the projected figure, reports PTI.

Observing that India’s fiscal deficit rose to 6.5% in 2008-09 due to the global financial crisis, he said in 2009-10 it was brought to 4.5%.

“But unfortunately, the fiscal deficit may be more in 2011-12 than projected,” he said while delivering his address at a three-day international conference organised by the Institute of Chartered Accountants of India here.

In the Budget, the fiscal deficit was projected at 4.6% of the GDP. Fiscal deficit is the difference between the total expenditure and the total revenue.

“India hoped to register a 9% (plus or minus 0.25%) growth in GDP (gross domestic product) during 2011-12,” he said.

The Eurozone crisis and slow progress in other parts of the world has also affected India, he added.

“I cannot claim that we have been insulated from the crisis in Europe. It does affect both the developed and under developed economies,” Mukherjee said.

Noting that India has strong fundamentals, like a vast number of technically competent professionals and managers, besides 60% of its population being young, Mr Mukherjee said he had no doubt that India will come back to a strong growth trajectory by 2020.

“With these strong fundamentals, I have no doubt that we will overcome the shortcomings and come back to the path of higher growth trajectory,” he said.

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Savings bank account number portability—will it work?

A senior member of a bank employees’ association said, “It is a utopian idea”. On the other hand, the RBI opines that bank account number portability would be easy to implement once a bank customer is in the possession of a number given by the Unique Identification Authority of India

After successfully allowing mobile number portability and health insurance portability, the government is planning to implement saving bank account number portability, giving customers the flexibility to change their bank while retaining the account numbers. The idea has seen mixed reactions from the industry. However experts say that unless there is a proper regulation along with upgraded technology governing the scheme, it is not feasible.

MD Mallya, chairman and managing director, Bank of Baroda, told Moneylife, “The project is doable and is for the benefit of the customers. However, there is a need to improve the technology.”

When asked about the costs and the fact that every bank has its own software, Mr Mallya said, “The systems are in place and software can be customised. From the point view of cost, it is doable.”

Incidentally a similar suggestion was made by the Reserve Bank of India’s (RBI) appointed committee on customer services, headed M Damodaran, former chairman of Securities and Exchange Board of India (SEBI). It recommended that, “the customer should have the facility of number portability within a bank even when s/he moves to another city or shifts his account to another branch in the same city.”

Financial services secretary, DK Mittal had said that banks would have to work on the identification code, know your customer (KYC) norms and CBS for implementing the savings bank account number portability.

Experts say that unlike a mobile number, a bank account number denotes the bank and its branch. So customers on shifting to a new bank could also use a new account number.

TR Bhat, former president of All India Bank Officers’ Confederation (AIBOC) and former officer of Corporation Bank, told Moneylife, “Apart from giving the customer the same number, portability has nothing to offer. Anyways many customers often don’t remember their account number. So if a customer wants his bank details, he’ll directly go and update the passbook or apply for cheques. Having same number or not, hardly matters. So I doubt if portability is required in the first place from the customer point of view.”

“Unlike the mobile number, a savings bank account number denotes the bank, branch and centre. So when the customer is allowed to port to another bank retaining the same number, it will be total chaotic considering the need for technological upgradation. Otherwise it will be not be feasible. In case of inter-banking portability, it is still feasible given the core banking solution (CBS) which banks have,” says an officer with a Mumbai-based public sector bank.

The RBI bank has a different view on the idea. According to a report, the apex bank prefers a one-time KYC over bank account number portability. It is of the view that the idea of portability will be easier to implement once every bank customer is in the possession of a number given by the Unique Identification Authority of India.

Experts point out that there are aspects like costs that have to be taken into consideration. A senior member of a bank employees’ association told Moneylife, “It is a utopian idea. We are not opposing it but whether it will possible or not, itself a big question. A lot of consideration is required. Various factors like KYC and costs need to be taken into account.”

Industry experts say that even if banks are on CBS, there are lot of issues that have remained unresolved. For instance, credit score companies are still unable to get data of customers from public sector banks. This is also the reason why credit default is not a major issue India compared to other nations.

However, some believe that project is possible. Ashok Ravat, secretary, All-India Bank Depositors Association says, “We have technology in place to allow bank account number portability. We have been advocating it as the bank customers must get the choice over the cost and quality of the service. This will be level playing field for the customer and the service providers. The regulator must give their specific requirements.”

An official spokesperson of the RBI said, “We are examining and discussing on the concept.”

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COMMENTS

Nagesh Kini FCA

5 years ago

Sagar & Sanjay Kale,
If you come out with the specifics for your projects possibly we can share our experiences.

sagar

5 years ago

i m intrested to research projcet on Saving account portability so help me...!!

sanjay kale

5 years ago

[email protected],[email protected] plz piz help me in project.........

sanjay kale

5 years ago

i m intrested to research projcet on Saving account portability so help me...!!

S H Subrahmanian

5 years ago

Yes,

Yes, Govind shanbhag... Lot of work may remain to be carried out. But if and when (hopefully soon) it's done it will become a boon for those who have Directt ransfers, pay order and dividends. . I'm particularly happy, after I had some interactions with a RBI officer at one or the meetings at MLF.

govind shanbhag

5 years ago

Boss - No.portability will be possible as different banks have different account digits, SBI and associates it is 11 digits, ABN AMRO(RBS) 6-7 digits, CITI - 10 digits,SCB-11, HSBC- 12 , BBK -16,All PSBs 9 (Indian Bank) to 16 PNB, all private sector banks from 5 (ADCB) to 16 (KVB). However, within the bank i.e. from transfer from one branch to other(like success story of Mr.Subramanian ) the same number can be continued provided account nos. are allotted after migration to CBS.

S H Subrahmanian

5 years ago

Taken. But it's by habit and especially as we know each other well. It's yet fine between two 'Am Admis'

S H Subrahmanian

5 years ago

Fine, Sir Mr Kini,
I haveasuccess story and Ihave transferred my SB account from SBI, Ghatkopar to Mulund with the same.
Let's wait for more comments.

REPLY

nagesh kini

In Reply to S H Subrahmanian 5 years ago

Subrahmanianji,
Please don't knight me by suffixing "Sir".
I'm a aam bharatiya aadmi!

Nagesh Kini FCA

5 years ago

The success rate of Portability in Telecom and Health Insurance are a big question mark.
The Porting of the Bank Accounts will require porting IFSC and MICR.
Will it a case of aborting before take-off of the two elder brothers mentioned by me?

Prakash

5 years ago

Bank number is a crucial part for an investor investing in Mutual Funds and shares (incl. NCDs, Bonds, etc.) where alongwith Bank a/c number one also requires to give IFSC and MICR codes to ensure direct credit of dividends/redemption in a/c. As of today the facility is available for MF investors wherein one can just give one single PAN based request (mentioning a/c no., IFSC/MICR code) to ensure bank a/c number change across Mutual Funds and one single request to their DP to ensure a/c number change for their holding in shares.

So, as it is, it is not much of a hassle when an investor changes the bank because all one has to do is give one application for MF and one to the DP.

If the bank a/c number portability should be brought then the system should also pick up the IFSC and MICR code of the new bank a/c, which would be different from the previous one and if this is not picked up, the investor will still have to inform the companies about the change in IFSC/MICR codes to ensure smooth ECS of dividend/redemption/interests into the new bank a/c.

Otherwise it defeats the purpose.

S H Subrahmanian

5 years ago

We already have the facility of number portability within a bank even when s/he shifts the account to another branch in the same city. A one-time KYC would suffice, in fact. The view that the idea of portability will be easier to implement once every bank customer is in the possession of a number given by the Unique Identification Authority of India. When the fate of UDI Card and its various demerits are still being examined why insist on this 'ghost'!
On the other hand only this could well offer level playing field for the customers and the service providers.

Is Maharashtra giving more power to builders by altering housing regulator bill?

With several civic elections approaching, earning support from the powerful builders’ is any party’s topmost priority. The Maharashtra Housing Regulator Bill gives blanket powers to builders to get away from lot of irregularities

Recently, the Maharashtra government overhauled the Development Control Rules (DCR), re-defining the concept of floor space index (FSI). Just prior to that, the ready reckoner rates have been hiked, and the state Cabinet has given a nod to the Maharashtra Housing (Regulation and Promotion of Construction, Sale, Management and Transfer) Bill—all with the intention to curb black money flowing in into the sector, and seemingly empowering the customer. But will it really help? By all indications, No.
 
According to the changed DCR, facilities like balconies and terraces cannot be counted as ‘developable’ area—now they are part of the FSI. The developers can pay a premium and utilise 35% above the available FSI for residential structures. For residential property, the premium will amount to 60% of the ready reckoner (RR) rates.

According to reports, the Brihanmumbai Municipal Corporation (BMC) aims to earn some Rs1,000 crore each year from the premiums. The government claims to have done it to stop blatant misuse of FSI norms—but in the process, it has burdened the customer.

On the positive side, customers will not have to pay for these amenities illegally, like they used too. But apart from that, there is little to look up to. “Obviously, it entails that the cost of construction will go up. And it will be passed on to the customer,” said a spokesperson for a realty company in Mumbai. A Prabhudas Lilladher report says, “As per our initial calculations, without accounting for any changes in pricing strategies, margins could get hit by 9% on a standard project.”

In December, registrations stood at a 31-month low. With the change in DCR, the government hopes that approvals will speed up, and supply will increase. But the added cost, along with the recent hike in RR rates is likely to put off buyers. The government has revised RR rates ranging between 5% and 30% in 716 zones of Mumbai—which again points towards increasing costs.

“This is like bleeding the customer,” said Vinod Sampat, veteran property lawyer and president of the Stamp Duty and Registration Payers Association. “We are hoping that the government changes its approach by the end of the month. Otherwise, we will file public interest litigation,” he added.

The customer appears to be at the end of a raw deal on all counts. The state regulator bill has diluted the provisions given in the Central version, which was due to be tabled in the Winter Session of parliament and is probably the most important legislation on real estate sector this year. The Maharashtra Housing (Regulation and Promotion of Construction, Sale, Management and Transfer) Bill gives blanket powers to the builder in many respects—he can alter the open and recreation spaces of the project at will, sell parking space and garage and can get away with a lot of irregularities. The Bill also enables builders to go ahead with utilising additional FSI/TDR without asking consent from the customers.

On top of that, allegedly under the influence of the powerful builder lobby, the government has done away with the option of depositing 70% of payment received from the customer during booking, which is included in the Central version. The builders then, are free to use that money for further buying land, and keeping speculative prices high.  

According to the Maharashtra Bill, the builder doesn’t need to get consent for construction of less than five flats or less that 250 sq ft of area; and so, can execute projects in small phases without paying any fees. The Act doesn’t mention how subsequent payments have to be made after the initial one, and the builder may demand ‘more than 20%’ of the money—which he may demand at one go. In case the customer fails to pay, the builder can cut off necessary amenities like water or electricity after serving the customer a notice.

“Is this fair?” asks Mr Sampat, “On one hand, the penalty for delay in delivery for the builder is peanuts and the customer, if he defaults, will suffer heavily.”

With several civic elections approaching, earning support from the powerful builders’ group is any party’s topmost priority. But if the year continues with this trend, it will be the customer’s loss.

User

COMMENTS

sash

5 years ago

It is sad that flat owners interest is ofno importance money power is important

govind shanbhag

5 years ago

MDT - In 1980, it was his excellency A R ANTULAY saab with whose patronage the rates of residential property shot up and rates never came down. He was responsible in doing away carpet area concent and brought built up, super built up and poor consumer had no choice to pay taking loan for space and carpet to built at times exceeded 40%. Now this regulation which again is helping powerful builder lobby is against common man especially middle class. If such patronoage goes up, you will also find middle class people living in hutments.

Ravishankar

5 years ago

First incisive analysis in the media on the subject from consumer point of view...things for the consumer are same, perhaps worse than before.

Ravishankar

Piyush Chamedia

5 years ago

This is a murder of consumer rights, and surely the consumer in Maharashtra will be at loss. The Congress party knows that this time, the time is up, and garnering money from builders will not help them. Our CM talked of killing the builder politician nexus, he is now nurturing it. Congress !

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