Nation
India ninth among crony capitalist nations: Economist
London: A spurt in number of billionaires and increasing wealth creation by any means have made India rank ninth among the crony capitalist countries, said a study in "The Economist" latest issue.
 
According to the weekly crony-capitalism index, crony fortunes had leapt relative to global GDP and as a share of total billionaire wealth.
 
"Encouragingly, India seems to be cleaning up its act. In 2008 crony wealth reached 18 percent of its GDP, putting it on a par with Russia. Today it stands at 3 percent of its GDP, a level similar to Australia," the study revealed.
 
The non-crony sector wealth in India accounts for 8.3 percent of its GDP.
 
The index ranked Russia as the worst crony-capitalist country, followed by Malaysia, Philippines, Singapore, Ukraine, Mexico, Indonesia and Turkey above India. Taiwan and China are ranked 10th and 11th after India.
 
The magazine's index of crony capitalists is based on a study by Ruchir Sharma of Morgan Stanley Investment Management and Aditi Gandhi and Michael Walton of Delhi's Centre for Policy Research.
 
The index was designed in 2014 to test whether the world was experiencing a new era of arobber barons' - a global re-run of Americas's "gilded age" in the late 19th century.
 
"It may seem that this new golden era of crony capitalism is coming to a shabby end. In London, Vijay Mallya, a ponytailed Indian tycoon, is fighting deportation back to India as the authorities there rake over his collapsed empire," the article said, in light of legal battles the liquor baron is facing back home.
 
Using data on billionaires' fortunes from rankings by the US magazine Forbes, the article labelled each billionaire as a crony or not, based on the industry in which he is most active.
 
"The pin-ups of Indian capitalism are no longer the pampered scions of its business dynasties, but the hungry founders of Flipkart, an e-commerce firm," the study said, referring to its co-founders Sachin Bansal and Binny Bansal figuring in the Forbes' 2016 billionaires list, ranked jointly at 1,476 position.
 
Among the 22 countries in the updated index, Germany is the cleanest with least number of crony capitalists, ranking at the bottom of the index, while China has the biggest concentration of crony wealth in the world at $360 billion.
 
The study suggested that since globalisation had taken off in the 1990s, there had been a surge in billionaire wealth in industries that often involve cosy relations with the government, such as casinos, oil and construction.
 
Over two decades, crony fortunes had leapt relative to global GDP and as a share of total billionaire wealth.
 
"The economic climate has been tough on cronies, too. Commodity prices have tanked, cutting the value of mines, steel mills and oilfield concessions. Emerging-market currencies and shares have fallen. Asia's long property boom has sputtered," the study added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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E-Cigs Subject to Pre-Market Approval under FDA Final Rules
The FDA is reigning in some aspects of the marketing of e-cigarettes in its finalized rule issued today, which bans their sale to minors, requires health warnings in ads and on product packages, prohibits the distribution of free-samples and requires manufacturers to show that the products meet applicable public health standards before receiving authorization from the FDA.
 
“The actions being taken today will help the FDA prevent misleading claims by tobacco product manufacturers, evaluate the ingredients of tobacco products and how they are made, as well as communicate their potential risks,” the agency said in a press release.
 
In the absence of regulation, the rapidly expanding $3.5 billion e-cigarette industry has been heavily marketing the products with questionable claims — both online and in the shops themselves — that they are safe, healthier than tobacco cigarettes and can help smokers quit tobacco, TINA.org investigations of the advertising revealed.
 
While a recent British Royal College of Physicians report found that the benefits of e-cigarettes, which are battery powered devices that heat flavored nicotine-laced liquids into vapor — far outweigh the potential harms and urged smokers to switch to vaping, the U.S. Preventive Services Task Force when evaluating e-cigarette studies concluded that “the current evidence is insufficient to recommend electronic nicotine delivery systems for tobacco cessation.” And several other key reports found that e-cigarettes contain harmful chemicals and can compromise immune systems in the lungs. A 2014 report by the World Health Organization, for example, stated that for some brands of e-cigarettes, the level of cancer-causing agents in the aerosol “such as formaldehyde and other toxicants like acrolein have been found to be as high as in the smoke produced by some cigarettes.”
 
“Today’s announcement is an important step in the fight for a tobacco-free generation – it will help us catch up with changes in the marketplace, put into place rules that protect our kids and give adults information they need to make informed decisions,” said U.S. Health and Human Services Secretary Sylvia Burwell.
 
The FDA has been heavily criticized as moving too slowly to regulate the industry at a time when use of e-cigarettes, which are marketed in child-friendly flavors such as bubble gum and fruit loops, has skyrocketed. A survey by the FDA and the Centers for Disease Control and Prevention found that current e-cigarette use among high school students increased by 900 percent from 1.5 percent in 2011 to 16 percent in 2015. Advocates for regulations are concerned that youngsters could become addicted to the nicotine used in e-liquids. Studies have shown nicotine can negatively affect adolescent brains.
 
The finalized rule, however, does not yet restrict the marketing or flavors, nor does it take strict steps to prohibit online sales to minors, said Matthew Myers, president of the Campaign for Tobacco Free Kids, which has scrutinized the industry’s marketing to minors.
 
“The rule announced today falls short in protecting kids from e-cigarettes. It does nothing to restrict the irresponsible marketing of e-cigarettes or the use of sweet e-cigarette flavors such as gummy bear and cotton candy, despite the FDA’s own data showing that flavors play a major role in the skyrocketing youth use of e-cigarettes,” said Myers.
 
Under the rules, manufacturers of e-cigarettes and that were on the market after Feb. 15, 2007 must register with the FDA, provide details of ingredients and health risks, and are subject to inspections. It also prohibits vending machine sales if consumers under 18 have access to them. But e-cigarettes can continue to be on the market for three years while their manufacturers submit and the FDA reviews their new tobacco applications. The ban on sales to consumers 18 and under will take effect in 90 days.
 
The final rule, which also affects cigars and pipe tobacco, comes five years after FDA first announced it would regulate all tobacco products and more than two years after it issued a proposed rule. The rule was issued under the 2009 Family Smoking Prevention and Tobacco Control Act, which gave the FDA immediate regulatory authority over cigarettes, cigarette tobacco, smokeless tobacco and roll-your-own tobacco and also authorized it to extend its jurisdiction to all other new tobacco products.
 
Check back for updates on the FDA’s finalized rule. For more of TINA.org’s coverage of e-cigarette marketing, click here
 
 

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Understanding CIBIL report and keeping the score high with safe and smart saving
It has been around 12 years since Credit Information Bureau (India) Ltd (CIBIL), the country’s first credit bureau started its operations. However, there still are several myths, and apprehensions among people about functioning and the role played by credit bureaus like CIBIL as well the credit score. To demystify such myths and explain easy ways to improve the credit bureaus for becoming responsible borrowers, CIBIL along with Moneylife Foundation and Softcell Technologies held a seminar in Mumbai. 
 
The speakers included Harshala Chandorkar, Chief Operating Officer (COO) of CIBIL, Sucheta Dalal, Managing Editor of Moneylife magazine and Debashis Basu, Editor & Publisher. 
 
The first session began with Ms Dalal speaking on the mistakes that affect your financial life and how to keep money safe from financial mistakes, Ponzi schemes, email fraud etc. Many have lost huge amounts of money in pyramid, Ponzi, multi-level marketing (MLM), chain marketing and chit funds such as Herbalife, Amway, Saradha, Rose Valley, SpeakAsia, Gold Quest or QNet. Many are oblivious of how costs and compounding interest can impact borrowings or investment. Several people want to have a credit card and do not even read the terms and conditions, especially the interest rates and charges that are usually in the range of 40% to 65%. Looking at the increased use of credit reports, credit history of borrowers and credit scores by lenders, Ms Dalal said one needs to be really careful in financial dealings, especially while availing and repaying any loan or credit card. This is because, not paying EMIs or credit card dues on time and, in full, can make the person a defaulter in the credit bureau records and disallow him any kind of credit for seven long years, she added.
 
Lured by high returns, many invest in corporate fixed deposits. Similarly, many opt for fixed deposits of co-operative banks, which pay a higher interest as compared to nationalised banks. Unfortunately, unaware of the risk involved, many have ended up losing their money in such fixed deposits. Mr Basu in his session explained that to save and invest smartly, one needs just a few products. Based on one’s financial goals, investment horizon and tax bracket, they should invest in a mix of equity and fixed income products. Not to forget, make the power of compounding work to your benefit. So, be safe as much as possible, as early as possible, in the right products, he said.
 
Ms Chandorkar, the COO of CIBIL provided some facts about the credit bureau. She said, founded in 2001, CIBIL has a membership base of over 2,000 comprising credit institutions like banks, financial institutions, non-banking finance companies (NBFCs) and credit card companies. "CIBIL operates in two segments, consumer bureau and commercial bureau. The consumer bureau hold credit information of about 500 million individuals, while commercial bureau has information of businesses and hold about 22 million records," she said.
 
Ms Chandorkar then explained in details, various sections from a CIBIL credit report and how to read and understand it. A CIBIL report contains information in sections, like personal information, accounts (held by the entity), and enquiries performed (for obtaining credit)... "However," she said, "A CIBIL credit information report does not show information like savings account, transactions details on your cards, investments like mutual funds, stocks or insurance and utility payment details."
 
The COO, who is a member of the pioneering team that established credit information infrastructure in India, then informed the audience about the credit score methodology used by CIBIL. She said that if the CIBIL credit score ranges between 300 and 900, it indicates probability of default. "While high score indicated that the individual is very likely to pay all loans on time, low score means there are more chances of defaults," she said. 
 
Explaining the parameters used in a CIBIL credit score, Ms Chandorkar said, "There are four basic components with difference weightage in a CIBIL credit score. Past performance has a weightage of 30%, while, credit type and duration as well as leverage has a weightage of 25% each. Rest 20% weightage is based on other factors."
 
According to the COO of CIBIL, 79% of the loans approved are for individuals with a CIBIL TransUnion score that is greater than 750. Anyone can purchase his/her CIBIL TransUnion score either one time (Rs550 per report) or regular subscription. CIBIL offers two subscription, bi-annual, where the individual can obtain two score reports in a year for Rs800 and quarterly subscription that provides four score reports at Rs1,200 during the 12 months period.
 
Ms Chandorkar then demystified some common myths about the credit bureau, like CIBIL is a defaulters list, CIBIL rejects loan application, CIBIL blacklists an individual and CIBIL should make changes on its own in the database. She said, none of the statements are true. CIBIL is not a defaulters' list, neither does it reject loan applications nor does it blacklist anyone. "Credit applications are accepted or rejected by lenders and not by CIBIL and since it is only a repository, it cannot make any changes in the database. It is the lenders who can make changes in their records that are submitted to credit bureaus," she added.
 
Several borrowers, especially defaulters are under the impression that once their 'account' is deleted from CIBIL, they can obtain fresh loan or credit cards. Ms Chandorkar said, "Accounts cannot be deleted from the CIBIL report. If you have closed the account it can be updated as closed account by the bank. If there are any inaccuracies in the credit report, the consumer can raise a dispute and can then get those corrected."
 
There are many credit 'repairing' firms that promise to remove for a fees the 'settled' remark from a CIBIL report. 'Settled' is a status reported on the loan account when the customer has partly paid the dues on the loan or credit card.
 
"However," the COO of CIBIL said, "this status cannot be changed unless the customer pays back all the dues and the loan or credit card is closed. Once the dues are paid in full the lending institution then report the status on this loan to CIBIL as 'Closed'. Also understand, CIBIL can only make changes to your report, once the lending institutions submit the updated or corrected data.
 
Ms Chandorkar then explained the process to correct inaccuracies in a CIBIL credit report. She said it can be done online by visiting CIBIL's dispute resolution page http://www.cibil.com/consumer-dispute-resolution. Here the person has to provide, name, address, date of birth, report control number (CN-mentioned on the CIBIL report) and the nature of dispute. "CIBIL’s Dispute Resolution Department then analyses and route the dispute to the lending institutions," she added.
 
Many people, who found that they have a low CIBIL score want to improve it overnight and often easily get lured to credit repairing agents. Ms Chandorkar says, "Your credit report and score is a reputational collateral. Cultivate financial discipline in order to enjoy all the benefits associated with it."
 
She then shared the six mantras to improve CIBIL score. Here are the six mantras...
 
1. Pay your loans, credit card bills or any other loans you may have availed in time
2. Do not over leverage yourself on credit- Apply for credit only when you really need it!
3. Maintain a healthy mix of credit
4. Monitor your co-signed, joint accounts monthly. 
5. Monitor the loan accounts for which you have stood as a ‘guarantor’
6. Review your credit score and history frequently
 
The session was followed by a lively, interactive session, where all the three speakers provided answers to several questions raised by attendees.
 

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COMMENTS

Amit Sharma

4 days ago

Hi, very informative article. I am also suffering from bad cibil score and after reading your blog I got clear idea of what impacts it. Thanks

SUNDARESAN

1 year ago

Very useful information

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