Economy
Industrial activity remains weak with contracting growth in past six months
Industrial activity (IIP) grew by 2.1% YoY (year-on-year) in June 2016 and it was slightly better than 1.1% growth in May 2016. When analysed on trend basis, industrial activity remained weak with contracting growth in the past 5‐6 months. Weakness was concentrated in capital goods, which contracted in double digits for the seventh straight month, according to an Edelweiss research note on the economy.
 
On consumption goods front, non‐durables continued to decline for the 12th straight month. Durables, however, continued to expand at a healthy pace of 8% YoY. Two‐wheelers, air conditioners, tyres and gems & jewellery were some of the goods that recorded good growth. Edelweiss expects industrial activity to pick up owing to improved domestic liquidity conditions, higher government spending, good monsoon, and stabilisation of exports.  
 
The following table and chart capture the position in industrial activity in India:
 
 
 
While industrial activity summarises the supplier’s position in the Indian economy, inflation summarises the consumer’s position. CPI (consumer price index) inflation in July came in at 6.1% YoY. In the past four months, CPI has been inching higher primarily led by food  prices  –  pulses  and  vegetables  –  even  as  core  remained  largely stable.  Excluding these few items, headline CPI remained under 5%. 
 
On the agricultural front, FY16-17 could see a bumper Kharif output. Besides, the international food prices have reversed course in the past few weeks after the sharp rise since March 2016. This augurs well for food inflation in the next few months. Edelweiss feels that in the next 6 months or so, headline CPI inflation could head back towards 5% levels or even below.  
 
With regards to monetary easing, Edelweiss expects the central bank to cut rates by 50bps in FY17. However, easy liquidity accompanied by falling global bond yields (both emerging markets and 
Developed markets) could result in much more cooling of 10‐year G‐Sec and lending rates. 
 
The following table and chart capture the position on inflation in the Indian economy in the current context:
 
 

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Sachet and the PM’s Grievance Redress Agenda: How Far Will It Work for the Financial Consumer?
At prime minister Narendra Modi’s first Town Hall meeting on 6th August, he said, the “most powerful thing in democracy is a grievance redress system. I raise one issue but the whole system is addressed. We are taking a few initiatives for good governance. Grievance redressal is an essential component of democracy; every citizen should have their problems addressed and responded to. We want to develop good governance where processes are less and things get done easy for citizens.”
 
Although the Town Hall was held to celebrate two years of MyGov, which is a government-citizen engagement platform, it would be too much of a coincidence to think that the Reserve Bank of India’s (RBI’s) sudden move to set up Sachet (a Hindi word that means aware), a grievance redress forum with all the financial regulators and the state level coordination committee (SLCC) on board, was not part of the PM’s broad vision outlined above. As the first step in this much-needed area, Sachet is a very positive development; but it is just the beginning and a lot more remains to be done. 
 
The site, sachet.rbi.org.in provides links to entities that are regulated by RBI, SEBI (Securities and Exchange Board of India), the insurance and pension regulators and the National Housing Bank (NHB). At the launch of the website, RBI governor, Raghuram Rajan, said, “Initiating quick follow-up and taking cases to logical conclusion by punishing the guilty is paramount to deter entities in future from carrying out unlawful activity. I hope ‘Sachet’ would help regulators in doing this, as much as it would help members of public in depositing their hard earned money with genuine entities by giving them timely information about these entities.” As always, governor Rajan’s words gladden the hearts of all concerned citizens. But here is what we found on attempting to explore the website. 
 
1. Complaint Registration: This has links to the investor complaint pages of various regulators and even a link for those who are confused about the appropriate regulator. Ironically, RBI has yet to set up a complaint mechanism for non-banking finance companies (NBFCs), since that link opens a blank page. Curiously, there is no link to the banking ombudsman who handles a large swath of complaints against banks, including those on credit cards and bank charges.
 
2. Complaint Tracking: This is an interesting feature that allows a search, based on a mobile number, email or complaint number. Over time, we will know whether complaints filed through Sachet are, indeed, fast-tracked or go into the same spin as those filed directly from the regulators’ websites. RBI needs to ensure that people are able to view all complaints filed on Sachet. This is a standard feature of all crowd-sourced review sites, allows consumers to stay away from entities that have too many complaints and encourages swift grievance redress too. In fact, grievance resolution and the time taken for it should also be accessible publicly. Only then will Sachet catch on in a big way with people and serve the purpose. 
 
3. Forum:  Sachet has a discussion forum which has remained empty five days after the launch. It indicates the absence of any attempt at outreach, barring a hurried launch and media release. Contrast this with the outreach by all forums set up by the PM’s office!
 
4. Registered Entities: The segment on registered entities also has links to multiple regulators. RBI itself lists 10 types of entities, of which only two are updated to 1 August 2016 (companies holding a certificate of registration from RBI to accept deposits and those not accepting deposits); the rest date back to November 2015. These are mere Excel sheets with no guidance or explanation to people on whether or not to stay away for them. At the launch, the governor spoke about phishing, lottery and scam emails about escrow accounts maintained by RBI that go out in the name of the RBI governor. Sachet has no information on these. Wouldn’t it have been nice if RBI itself had started a Sachet discussion on these scams? That would have been a real indicator of intention to engage with people. 
 
5. SEBI: The link to SEBI, under registered entities, carelessly connects to one specific entity (Gift Collective Investment Company).
 
6. NHB: The NHB page has important lists of entities whose registration has been withdrawn or cancelled, or have prohibitory orders against them. This is very useful for Indians who invest a big chunk of their savings in their homes and must be widely publicised through better engagement with civil society and NGOs. So far, NHB does neither. 
 
7. Pension: Clicking on registered entities under the pension regulator only takes you to its home page and the insurance regulator takes you to a list of registered entities with no link to those where action has been taken against dubious insurers or agents. Given the rampant mis-selling in this segment, this must become a key focus of Sachet’s effort. 
 
8. What’s New: The ‘what’s new segment’ has two pointless entries after five days. Does it indicate a lack of seriousness in running the website?
 
9. Help Your Regulator: This is another interesting feature which allows people to post information on illegal and unauthorised fund-collection or deposit-taking. This can be a useful tool if the regulators ensure swift and visible action. However, as someone pointed out, the Sahara India group continues to collect money, despite Subrata Roy spending over a year in jail.  Will some regulator clarify whether it is safe or illegal? 
 
10. Language Version: The Orissa government has already suggested that Sachet must be available in Indian languages. This is an important suggestion that needs to be taken on board. 
 
11. States’ Involvement: There is also nothing to indicate what various states, enforcement agencies and government departments, who are credited for being part of the SLCC which set up Sachet, will contribute to it. In fact, multi-level marketing schemes (MLMs) and money circulation schemes (under the Prize Chits And Money Circulation Schemes Act), which are not under SEBI’s purview, are regulated by states. Many states have separate statutes for illegal deposit collection with draconian powers. None of these is reflected on Sachet and there are no links for filing complaints with state agencies. Thousands of dubious schemes proliferating in each state would have come to the attention of regulators if this had been addressed. There is a closed user group for SLCCs on the website which, we are told, will share market intelligence as well as information on their own meetings. We would think that sharing state-level intelligence on dubious schemes with the public in an open forum is far more important. 
 
12. Where Is FIU?: It is not clear why the finance intelligence unit (FIU), under the finance ministry, is included in Sachet. After all, it claims to be a central repository of cash transactions and an agency that collects, analyses, coordinates and shares information on financial crime with all regulators and investigation agencies. 
 
At first glance, Sachet seems to be a hurriedly cobbled together platform with good intentions and great potential. It will work, if the regulators are true to the PM’s objective of ensuring investor protection and efficient grievance redress. In fact, the PM has gone a step further and said, “Mere good governance is not enough; it has to be pro-people and pro-active. Good governance is putting people at the centre of development process.” There is a lot that Sachet and the SLCCs can do in making processes simpler for consumers and depositors (as the PM wants); but, in order to do it effectively, it has to start engaging with stakeholders. 

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COMMENTS

Aqeel Qureshi

4 months ago

Another relevant point her if I may add. The phishing notification IDs of Income Tax Department was bouncing till a month back. Both [email protected] and [email protected]
No response either from the other notified ID [email protected] as per the dept's website.

Funny, isn't it?

India's sarkari ways need to change with drastic overhaul. I have had multiple such encounters with govt, semi-govt and quasi-govt bodies with email records.
Believe me, these govt employees are pathetic!

REPLY

Sucheta Dalal

In Reply to Aqeel Qureshi 4 months ago

Thank you for your very pertinent comments. Indeed it is shocking that the entire website and the governor's conference made no mention of the Banking Ombudsman (BO), nor is there a link to it. Or the RBI's much self-hyped Consumer Charter, on which it maintains a complete silence.
The BO scheme requires a first level of complaint to each bank. So Sachet should have had links to the nodal officer of each bank. And then to the Banking Ombudsman. But this hurried effort has not bothered to engage with consumer groups before deciding what is good for us, the people.

Aqeel Qureshi

4 months ago

These are very basic and easy research outputs that any trainee journalist can do. Strange that one does not get to see this level of commitment with the so called pink papers or business news TV channels.
Thanks SD for these.
These channels are only interested in taking high glam media bytes. Remember the day sachet was launched by the guv? Flashes and flashes all around. And no follow up at all. Irresponsible fourth estate of India.

REPLY

Sucheta Dalal

In Reply to Aqeel Qureshi 4 months ago

True. No questions asked either, because nobody goes prepared or really cares!

Pradeep Kumar M Sreedharan

4 months ago

We have only 24 hours a day. Within this period, we dress up and work up for work, work overtime, then work down(including commuting) from work. They know we have very limited energy or time left for anything else. So they can do anything and laugh at our face.

REPLY

Sucheta Dalal

In Reply to Pradeep Kumar M Sreedharan 4 months ago

Exactly! It is this realisation that made us set up Moneylife Foundation http://foundation.moneylife.in where our basic philosophy is "less is more" . You need only a FEW safe financial products for ordinary savers -- the rest is noise, unnecessary or downright dangerous. I wish more people would register (FREE) and follow what we put out -- or that readers would make the effort to introduce our work to 10 people each! It would prevent a lot of people from losing money or being duped by unscrupulous insurers and scamsters or ponzi schemes!

Pradeep Kumar M Sreedharan

In Reply to Sucheta Dalal 4 months ago

In reply to Sucheta Dalal, I train Merchant Navy Professionals of all ranks, at an Academy. I brief them about Moneylife, as the sole, sound financial information source, in my 40 years of financial life. My only regret is that I discovered Moneylife at the end of my career at sea.

GLN Prasad

4 months ago

Every one that is acquainted with PGRMS on line portal knows all this redressal system is just a farce. So far I have not come across in any post, in any forum that he has achieved something out of this portal. DOPT expressing regrets that they can not act on violations of Public Authorities unless the bill takes the shape of Act and commission is appointed.

REPLY

Sumer Jain

In Reply to GLN Prasad 4 months ago

I have same experience.Not a single grievance was redressed but disposed with out redressed.

Now India's wholesale inflation shoots up on steep food prices
India's annual rate of inflation based on wholesale prices shot up to 3.55% for July from 1.62% in the previous month, due to an 11.82% jump in prices of food articles, official data showed on Tuesday.
 
The prices of potatoes continued to pinch with an annual rise of 58.78%, pulses were dearer by 35.76%, while fruits were 17.30% costlier over the same month month of the previous year, as per Wholesale Price Index data of the Commerce Ministry.
 
Data released last week showed that the country's annual retail inflation shot up to a 23-month high of 6.07% and beyond the official tolerance level of 6% for July, again due to higher prices for food articles.
 
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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