Smaller cities are contributing more to inflation than the main metros
Goldman Sachs said falling food prices notwithstanding, consumer inflation will remain high during the current fiscal because of high cost of housing and services as well as the increasing inflationary pressures from smaller cities, reports PTI.
Goldman's research arm said in a report that inflation, based on consumer price index for industrial workers (CPI-IW) that includes services and housing costs, is already running at double-digits across almost all cities and has picked up rapidly in the smaller ones.
The report further pointed out that since last June housing costs have risen to an estimated 16% now from 4% at the end of 2008.
"We expect inflation to remain high and sticky through the year... even as the winter crops hit the market and ease food prices," Goldman said, adding, "our city-by-city analysis of inflation shows that smaller cities are contributing more to inflation that the main metros."
Goldman said it divided cities into large (with population over five million) and small (one to five million) categories for its analysis, and found higher inflation in small cities because of broad-based recovery from the global economic crisis of the past 18-odd months. Besides, it added, the strong recovery and growth momentum in smaller cities showed their rising importance as "activity hubs" as the country continues to grow at a faster clip.
Goldman said, however, that to tame inflation, the Reserve Bank of India (RBI) is expected to tighten the monetary policy (borrowing and lending rates) further. "We continue to think the RBI will deliver a total of 150 bps (1% equals 100 basis points) of policy rate hikes in 2010, of which 50 bps has already been delivered. We expect a further 100 bps in rate hikes for the rest of the year," Goldman said.
Consumers and activists are upset at CGSI’s decision to severe its connection with London-based Consumers International
The Consumer Guidance Society of India (CGSI), India’s oldest consumer body, continues to be roiled by controversies, this time over its decision on 16th April to terminate its association with Consumers International (CI), a global federation of consumer organisations.
CGSI is the only Indian consumer organisation which has been a council member of CI for 25 years. Unfortunately, this association has now ceased due to issues pertaining to Dr Manohar Kamath, CGSI’s general secretary (who has been in the saddle for four years). CI’s regulations forbid its members from accepting monetary help from private organisations except government bodies for their activities. This is to avoid allegations about bias or influence by sponsors and advertisers.
Things came to a head when Dr Kamath decided to start accepting advertisements in ‘Keemat’, a monthly magazine produced by CGSI for consumers. Some CGSI life members filed a complaint with CI, following which Joost Martens, director general, CI, wrote to CGSI on 3 March 2010 regarding breach of CI membership rules. The formal review of the complaint was done by the Membership Rules Committee of CI.
Members of CGSI have been raising objections since 2006, saying that Dr Kamath violates CGSI’s articles of association and rules and regulations. Dr Kamath has been fighting cases on behalf of insurance companies against consumers, whom he is supposed to protect by virtue of his position. The South Mumbai District Consumer Disputes Redressal Forum in August 2006 had prohibited Dr Kamath from appearing before it after receiving a confirmation that he was using his appearance before the forum as his profession. Vijay Chheda was the complainant and his lawyer brought forward a statement made on oath by Dr Kamath. “I am on the panel of Opposite Party’s Insurance Company. I am being remunerated by (the) insurance company on being on its panel for (the) past three-four years. I have given opinions approximately in five-six matters to the opposite part per month. I am practicing as a family physician and also as a Medico-legal Consultant having completed Master-in-Law. I am remunerated in those matters where I appear on behalf of this opposite party.”
CGSI chairman, professor NM Rajadhyaksha, replied to CI’s complaint on 23 March 2010 denying all charges levied against CGSI and Dr Kamath’s activities. Anticipating ouster from the membership of Consumers International, CGSI’s letter converged ‘withdrawal’ of CGSI from CI’s membership.
Indrani Malkani, a CGSI life member and an activist, told Moneylife, “Since the time Dr Kamath has been associated with CGSI, there have been many controversies. Two years ago, Keemat started accepting advertisements and corporate sponsorships for its seminars and public meetings in contravention of the rules of CI. Hence it was their (CGSI’s) fault.” Dr Kamath explains that CGSI had to accept advertisements for the payment of outstanding rent, “We are sure you will accept that as part of Corporate Social Responsibility and keeping in mind the fact that grants from government organisations are acceptable, this activity should not violate any norms of ethics and/or morality of consumer organisations.”
Krishna Basrur, CGSI’s senior-most member and former president, wrote a letter of appeal on 5 May 2010 to all CGSI members to ensure that every member is informed about CGSI’s problems. The letter of appeal from Mrs Basrur informed CGSI members about two modifications in the pipeline. “The Managing Committee is proposing to delete the rule in our constitution which makes businessmen ineligible for election to the Committee. The second amendment proposed is that the Board of Trustees should be dropped.” However, the Charity Commissioner has issued a stay order on the same.
Dr Kamath denies that CGSI’s Managing Committee was considering deleting the rule which makes businessmen ineligible for election to the committee. “The removal of Trustees from the constitution was to correct an anomaly and get rid of the decorative post which played no role in the development or management of the Society.”
In a number of Indian States, it is difficult to find the original title deed of any particular property. For instance, 90% of property transactions in Maharashtra are not even registered
In a number of Indian property transactions, it is difficult to get clarity on the title to the property as most of the documents concerned with the deals are not traceable. In Maharashtra alone, around 90% of property transactions are not registered. In fact, there is an ongoing case being fought out in the Bombay High Court since 1930 for a huge chunk of agricultural land in Pune due to no clarity on property title, according to an industry expert.
“Property is a State subject and documentation—including the titles—falls under the jurisdiction of the State. The dependability of these records in each State is not uniform. We have inherited systems and procedures from the British. In those days, there were no computers so everything was handwritten. These systems which have been in existence for over 70 years have remained unchanged. We need to computerise land title records,” said Pranay Vakil, chairman of Knight Frank (India) Pvt Ltd.
The title to any property can be claimed by persons in diverse legally recognisable means. The most common and legally efficient way of claiming title over a property is by possessing a sale deed in one’s favour. However, even such a legally-executed document is not immune from competing claims made by others to the title.
“There are court cases going on since the 18th century and 19th century over property titles. Around 95% of high-value property titles are defective,” said Vinod Sampat, a Mumbai-based property advocate.
Earlier, according to Section (41) of the Maharashtra Co-operative Societies Act, it was not necessary to register a property transaction. Most documents after the transaction (residential or commercial) do not reach the registration office for registry.
“Earlier, 90% of property transactions in Maharashtra were not registered. Whenever we sanction some title certificate to a person, we always give it with a rider stating that we have verified the title with the registrar and we have found that papers were not traceable. Most of the documents are untraceable with the registrar. The files are not well-maintained and most pages are missing from the files,” said Vimal Punmiya, chartered accountant and proprietor, Vimal Punmiya and Company (an audit firm).
Section (41) of the Maharashtra Co-operative Societies Act was subsequently overruled in 2001 and Section 53(A) of the Transfer of Property Act now stipulates that it is compulsory to register any property transaction. “In 2001, Section (41) of the Maharashtra Co-operative Societies Act was overruled and according to Section 53 (A), the Transfer of Property Act, it is compulsory to register the transfer of properties,” said Mr Sampat.
However, the State government has a mammoth task on its hands—the computerisation of all land records.
Ergo, insurance companies are not being able to offer ‘title insurance’, which offers protection against financial loss from real-estate transactions arising from defects in the ‘title’ or ‘ownership’ of a particular property. Many private players, like ICICI Lombard General Insurance Co Ltd, National Insurance Co Ltd and HDFC Standard Life Insurance Co, had filed details of their property-title insurance products with the Insurance Regulatory and Development Authority (IRDA). But IRDA has still not approved these schemes as the systems are still not in place (the data is not computerised).
“You need to verify the correct title before buying a property. If you do not have the correct title, it is very difficult to sell your property. Title insurance is very important in India because it will help to attract foreign funds,” said Mr Vakil.