Alternative Investment
Gold monetisation and sovereign gold bonds schemes have advantages
Gold and jewellery form part of ‘secret reserves’ of institutions and individuals. Until the government is able to establish its own credibility as a guardian of trust, there will be bickering
In my article “How about Re-visiting the idea of Gold Bank?” posted here on February 16, 2015, I had stated that “A change in approach to gold management can rewrite the India Growth Story to the country’s advantage” and listed the advantages of gold deposit accounts with banks asunder:
1) When some banks start opening gold accounts, they will also be able to maintain more liquid assets under Section 24 of the Banking Regulation Act, 1949(the section requires banks to maintain a certain percentage of their liabilities in cash, gold or unencumbered approved securities) in gold.
2) Individuals and institutions will be encouraged to keep their gold stock with banks thereby reducing misuse(Now for the rich, gold is a medium to show off their wealth- Not only in the form of jewellery, but by erecting statues and flag masts in solid gold-less said about the malpractices practiced in such transactions, the better!)
3) Need to import gold will get considerably be reduced resulting in saving precious foreign exchange.
After considering suggestions from many quarters like this and taking a view on the basis of studies by RBI and government, Budget 2015-16 included proposals to introduce a couple of schemes for exploiting the domestic gold stock to the country’s advantage.
The Union Cabinet on September 9, 2015 gave its nod for Gold Monetisation Scheme which envisages deposit of gold with banks by public and Sovereign Gold Bond Scheme which will make it possible to deposit cash in bonds which will have a growth path tracking gold prices. Both deposits will carry interest and will be for fixed tenures, extendable in certain situations. Let us await more details, which will be available as and when banks announce their schemes. This is a welcome beginning.
The response to the schemes from the media is mixed. From fear of taxmen dampening the willingness of investing public to hearty welcome to schemes that meet the twin-objectives of earning income from a ‘dead’ investment and allowing public to invest in ‘paper gold’ without the bother of having to ensure the quality of gold which one owns.
Trust and credibility issues
However, implementation of these schemes or taking forward any initiative to manage domestic stock of gold is not going to be very smooth. Mainly, there are several credibility and trust issues which are tricky. Gold and jewellery formed part of ‘secret reserves’ of institutions and individuals. Until the government is able to establish its own credibility as a guardian of trust, there will be bickering.
Though steps so far are in the right direction and may fetch some positive results, much more need to be done, if at least a substantial portion of the surface domestic stock of gold (latest estimate @22,000 tonnes) is to get into the mainstream. First and foremost would be restoring credibility in the institutional system (includes government) that will handle the yellow metal, if the present holders are willing to ‘sacrifice’ by temporarily parting with their prestigious possessions for the country’s economic growth. Two, there should be clear disincentives for hoarding gold stock, in whatever form and more particularly against misuse of the precious metal for showing off (this include building gold statues, gold-plating etc.). Government should also consider recovering at least a part of costs incurred for providing security for the huge stocks of gold and jewellery maintained by individuals/institutions.
But there are many ifs and buts in the process. The vested interests have their spokespersons everywhere. Without linking to these observations, let me quote a couple of sentences from the editorials that appeared today in two mainstream newspapers commenting on the two gold deposit schemes announced:
“…An amnesty made the gold bond scheme way back in 1998 attractive to investors, but amnesty is not an option today, after a government commitment to Supreme Court against future amnesties in 1997.”
“…If the government really wants the scheme to succeed, it may want to persuade income tax authorities to lay-off from closely scrutinising gold deposits. It must clearly prioritise what objective it wishes to pursue.”
Such warnings will naturally put any government in dilemma of sorts. But, how long law enforcement or legislative reforms, where necessary, can remain at the bottom of the priority list of any government?  But, we hear such views from not only media, but from eminent economists also, when it comes to accumulated assets or assets flow from outside (including gold smuggling).
Without elaborating, let us pray to government to be transparent in its priorities, as institutional and government credibility will decide the success or failure of schemes like this.



MG Warrier

2 years ago

My online comment with reference to an article captioned “Can anything beat the allure of gold?” by Madan Sabnavis published in The Hindu Business Line on September 11, 2015 and an interesting interaction with a reader reproduced below:
September 12, 2015
Comment by Radhesh:
It is a challenge to make the LADY OF THE HOUSE to part with gold no matter in any form or how attractive a gold deposit scheme. Trusts, temples and HNI's can find this scheme attractive.

My online response:
At least, let people start talking about gold and jewellery. Gold stock, like any other national resource need to be assessed and accounted. Once gold is restored its position as a commodity and the lure and secrecy part are detached, our domestic stock of gold will play its natural role in India Growth Story. We are stretching too farthe fear of 'THE LADY OF THE HOUSE'(taken from one of the comments) and the right of individuals and institutions to be secretive about gold. M G Warrier, Mumbai

Radhesh replies:
Radhesh wrote: "@M Govinda , Women give their jewellery when their is a financial emergency in their home, hoping that they will get it back. Asking THE LADY OF THE HOUSE to give her jewellery for this scheme is a bit too ambitious. As gold needs to be given in the form of coins and bricks. In case you come across any LADY who has willingly parted her jewellery for this scheme do let all us know. Based on facts I shall definitely change my opinion.".

My reply:

Hope this response will be published for the benefit of Radhesh! The schemes are yet to be formulated and launched. What we know is, the broad contours have been approved by Union Cabinet. Send a mail to [email protected] now and I will remember to update Radhesh about the progress of the scheme one year after launch. Things do not change in a day. Even Rome was built over a period of time. And, even Greece can have problems! M G Warrier, Mumbai

FTII deadlock: Students on fast unto death, activists invoke RTI
With the government mum on the report submitted by the three-member committee appointed by the I&B Ministry, and students now taking the extreme step of fast unto death, RTI activist demands transparency
The 90-day old stir of students from the Film and Television Institute of India (FTII) demanding ouster of newly appointed chairman, Gajendra Singh and four other members of the Board, took a new turn today, with five students going on hunger strike unto death. 
In the meanwhile, a three-member Committee appointed by Ministry of Information and Broadcasting (I&B Ministry) and headed by AM Khan, Registrar of Newspaper of India, visited the FTII premises on 21 August 2015. The Committee is said to have submitted its report to the government, but the latter is silent over the same.
Some Pune-based journalists, who demanded access to the findings of the report, under Right to Information (RTI) Act, were denied information. RTI activist Vijay Kumbhar has now invoked Section 4 of the RTI Act and intimated to the Director of FTII, that he would like to inspect files under this section, to make matters more transparent, over this contentious issue.
In a letter to the director of FTII, seeking inspection of files, Kumbhar has demanded the following:
a) All the letters shared and communication between the FTII director and I&B Ministry, Registrar and the Ministry, Dean and the Ministry with respect to the strike.
b)  The minutes and video recordings of all the discussions held between the SM-Khan led three-member delegation and Director, Registrar, Faculty, students and staff on 21 August 2015, which was recorded by the FTII administration on the day. 
c) Details of the report submitted by the SM Khan-led delegation available with the FTII director.
d) All the documents in the file number 29012/2/2015-TS available with the Tutorial Section of the FTII.
Kumbhar says, “The information I have sought comes under Section 4 (1) (c) and 4 (1) (d) of the RTI Act, as the decision concerns and affects the citizens. And also Provision under 4 (1) (b) (v) of the Act incorporates rules, regulation the rules, regulations, instructions, manuals and records, held by it or under its control or used by its employees for discharging its functions.’’
Kumbhar, in the communication to the FTII Director, has pointed out the following, to inform why all the above information should be in the public domain and be made available on request under RTI. Here is what he wrote: 
1. Your kind attention is drawn to Section 4 of the Right to Information Act, 2005 under Chapter II on `Right to Information and Obligation of Public Authorities'.
2. As per the provision, it is obligatory for every public authority to publish certain categories of documents so as to make voluntary disclosure of information so that citizens have ‘minimum resort to the use of this Act to obtain information’.
3. Information covered by Section 4, in fact, should have been published on 12 October 2005 and disseminated widely in such form and manner which is easily accessible to the public and should have been updated at regular intervals later.
4. It is further explained in the provision that "disseminated" means making known or communicated' the information to the public through notice boards, newspapers, public announcements, media broadcasts, the internet or any other means, including inspection of offices of any public authority. I am enclosing here the full text of Section 4 as adopted by the Parliament of India for your reference.
5. Nevertheless, citizens have a right to inspect these documents in the office of the public authority, as explicitly mentioned in the provision under Section 4.
6. It may be noticed that a citizen desiring to inspect the documents containing information covered under Section 4 of the Right to Information Act, 2005, need not make any formal requisition under Section 6 of the Act because these documents should have already been published by the public authority so that citizens have ‘minimum resort to the use of this Act to obtain information’.
7. Provision under 4 (1) (b) (v) of the Act incorporates rules, regulation the rules, regulations, instructions, manuals and records, held by it or under its control or used by its employees for discharging its functions
8. The files come under section 4 (1) (c) and 4 (1) (d) of the RTI Act, as the decision concerns and affects the citizens.
9. Please note that it is not necessary for me under the Act to give such notice before inspection of documents covered under Section 4 of the Act. However, being a responsible citizen, I thought it appropriate to intimate you beforehand.
10. Implementation of this provision of the Act (under Section 4) is the direct responsibility of the head of the public authority. In this specific instance, it is your direct responsibility. Hence this letter is addressed to you and not to any public information officer (PIO) since no formal requisition is needed to be filed.
In the meanwhile, the issue got murkier with the government accusing some students of over-staying and not completing their projects. In 2010, the FTII appointed a Group of Experts (GoE) under former director of National Film Archives of India (NFAI), to prepare a Detailed Project Report (DPR) for the revitalisation of the Institute, in various areas including delay of students’ projects. The DPR proposed measures to help FTII to become a centre of excellence in the field of cinema and television. However, the report lies in neglect, Here is the link: 
(Vinita Deshmukh is consulting editor of Moneylife, and also convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.)


Believe it! We are wired for laziness
While you burn calories at the gym or while running in the neighbourhood park, our brain constantly works the opposite, looking for shortest route or choose to sit rather than stand, researchers report.
A team from Simon Fraser University in Canada found that our nervous systems are remarkably adept in changing the way we move so as to expend the least amount of energy possible.
In other words, humans are wired for laziness.
“We found that people readily change the way they walk - including characteristics of their gait that have been established with millions of steps over the course of their lifetime - to save quite small amounts of energy,” explained lead researcher Max Donelan.
This is completely consistent with the sense that most of us have that we prefer to do things in the least effortful way, like when we choose the shortest walking path or choose to sit rather than stand.
“Even within a well-rehearsed movement like walking, the nervous system subconsciously monitors energy use and continuously re-optimises movement patterns in a constant quest to move as cheaply as possible,” Bonelan informed.
To reach this conclusion, the researchers asked people to walk while they wore a robotic exoskeleton.
This contraption allowed the researchers to discourage people from walking in their usual way by making it more costly to walk normally than to walk some other way.
More specifically, the researchers made it more difficult for participants to swing their legs by putting resistance on the knee during normal walking, whereas the researchers eased this resistance for other ways of walking.
This allowed the researchers to test whether people can sense and optimise the cost associated with their movements in real time.
The experiment revealed that people adapt their step frequency to converge on a new energetic optimum very quickly - within minutes.
What's more, people do this even when the energy savings is quite small: less than 5 percent.
There is a bright side to this.
“Sensing and optimising energy use that quickly and accurately is an impressive feat on the part of the nervous system. You have to be smart to be that lazy!” noted lead author Jessica Selinger.
The findings, which were made by studying the energetic costs of walking, apply to most of our movements.
The paper appeared in the Cell Press journal Current Biology.


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