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Why do our netas need to brandish guns when they roam with police protection all the time? And when there are several criminal cases pending against MPs, the government itself has sold these guns to them
Vithal Radadiya, a Member of Parliament (MP) belonging to the Congress party, from Porbandar in Gujarat, has been caught on camera pulling out a gun, brandishing it and threatening employees at a toll plaza near Vadorara.
But what is surprising is the Union government itself has sold 756 guns to MPs and VIPs since 1987. Out of the 82 MPs who bought guns (seized by the Customs Department) from the government between 2001 and 2012, around 18 MPs had pending criminal cases, including charges of murder, attempt to murder and kidnapping, when the guns were sold!
EAS Sarma, former secretary of the Government of India (GoI), has asked the authorities to launch a campaign to revoke all gun licenses and withdraw all weapons as a measure to reduce criminality across the country.
Mr Sarma, in a letter to RK Singh, home secretary, GoI, said, “If someone needs to be empowered in India against the mafia and the money power, it is the ordinary citizen that stands totally helpless. He or she cannot approach the authorities for a gun license or a gun. I hope your ministry will act fast on this before another arrogant MP brandishes his weapon against another voiceless citizen!”
“There are more fundamental questions that arise from such unsavoury instances of political arrogance among our legislators and other VIPs and the concessions they claim as a matter of right,” he said.
Quoting information procured by Ambarish Pandey, a Right to Information (RTI) activist, Mr Sarma raised some questions...
1. Why should such guns be sold only to MPs when several of them already have police protection?
2. When several MPs have serious criminal cases against them, including 13 with serious cases, why are guns sold to them?
3. Why should the policy of allotment of guns be discriminatory against ordinary citizens, in favour of the legislators?
4. Does the government track the possession of such guns after some years to check if those who were sold such guns still have them in their possession? It is well known that the black market price for such guns is much higher than what the government sells it for.
5. When a person ceases to be a legislator, should not the government withdraw the gun from him or her and revoke his or her license?
6. In the first instance, why should guns, especially the prohibited type, be given at all to anyone including an MP, unless it is the policy of the government to promote crime and gun-touting as status symbols of a democracy in which we live?
Mr Pandey has filed an RTI on sale of guns to MPs and VIPs. The reply received by him was analysed by Association for Democratic Reforms (ADR) and National Election Watch (NCW). Here are the highlights of the analysis...
• A total of 756 guns were sold to MPs and VIPs between 1987 and 2012.
• A total of 675 guns were sold between 1987 and 2001, 39 between 2001 and 2004, and 42 between 2005 and 2012.
• Between 2001 and 2012, 82 MPs have purchased guns from the government.
• 18 of these 82 MPs who were sold guns have pending criminal cases against them, including charges of murder, attempt to murder, kidnapping etc., at the time of sale.
• Amongst the 82 MPs who have been allotted guns from the government, Atiq Ahmed from Uttar Pradesh has 44 criminal cases including charges of murder, attempt to murder etc, followed by Abu Asim Azmi from Maharashtra and Rakesh Sachan from Uttar Pradesh with seven cases each.
• These are guns seized by the Customs and then sold to MPs and VIPs on a first-come-first-served basis. In earlier years these guns were sold well below market price. Recently the price was hiked to include tariff.
Commenting on the data received through a RTI, Mr Pandey said that “This centralised sale point for VIPs under the finance ministry allows the government to follow an ad hoc, discretionary and opaque policy of allotment. For example, a gun was denied to ex-DG, Central Economic Intelligence Bureau, SPS Pundir despite the fact that his vigilance-related work posed a security risk but allotted to another officer doing a desk job.”
“The evidence shows over 40 exceptional allotments out of a total of 800,” Mr Pandey points out.
Here is the analysis carried out by ADR and NCW...
Both the indices being tracked by the ETFs have delivered reasonable returns in the past. However, much would depend on how well the fund managers are able to track the schemes and ETFs per se are prone to many issues such as poor liquidity
Reliance Mutual Fund plans to launch two open ended index exchange traded funds (ETFs)—R*Shares Consumption Fund and R*Shares Dividend Opportunity Fund— according to offer documents filed with the Securities and Exchange Board of India (SEBI). The index ETFs will track the thematic Indices of NSE— the CNX Consumption Index and CNX Dividend Opportunities Index respectively. The schemes would invest over 95% of their assets in the securities of the respective index. The remaining part of the assets would be invested in debt and money market instruments. The units of the scheme would be listed on the National Stock Exchange (NSE). The trading will be as per the normal settlement cycle.
Though both the indices have delivered decent returns compared to the Sensex in the past, liquidity of the ETFs could be an issue. One of the biggest negatives is precisely that you have to buy them through an exchange—and, therefore, you are at the mercy of the market’s liquidity. Low trading volumes and settlement concerns are major factors leading to low liquidity.
How would the schemes invest?
Since the schemes would be investing in the companies based on their weightage in the index, it is essential to know how the stocks are picked for the respective index. The CNX Consumption Index chooses from the top 500 companies ranked by average free-float market capitalization and aggregate turnover for the last six months and more than 50% of the company’s revenue must come from domestic markets. The final selection of 30 companies shall be done on the basis of free-float market capitalization of the companies. The CNX Dividend Opportunities Index chooses from companies that rank within the top 300 by average free-float market capitalization and aggregate turnover for the last six months. The Top 50 companies ranked by annual dividend yield will form part of the index.
How have the indices performed compared to the Sensex?
We have compared the returns over quarterly periods from June 2008 to September 2012. On taking the mean, the Sensex delivered an annualised return of 7.91% whereas the CNX Consumption Index and the CNX Dividend Opportunities Index delivered 12.01% and 15.77% respectively. The CNX Consumption index has outperformed the Sensex in nine out of the 17 periods whereas the CNX Dividend Opportunities index has beaten in Sensex in 11 periods. When the market rallied, for example, in the quarter ended 30 June 2009, the Sensex returned as much as 51% whereas the other indices returned 36.95% and 48.58% respectively. We do not have a very long track record of the new indices as the base date dates back to just 2006.
Are the constituents any different for the Sensex?
First, Reliance Industries is not present in the top 10 constituents as per the weightage, which is a good thing going by its high volatility. On the Sensex its weightage is more than 9%. ITC and Hindustan Unilever are the only two companies that find themselves in the top ten constituents (according to weightage) of all the three indices. The top five constituents of the CNX Consumption Index are ITC, HUL, Mahindra and Mahindra, Bharti Airtel and Bajaj Auto. For the CNX Dividend Opportunities index— ONGC, ITC, HUL, Bajaj Auto and Hero MotoCorp make up the top five constituents.
How have ETFs from Reliance performed in the past?
Reliance also has two other ETFs—R*Shares Banking ETF and R*Shares Gold ETF – Dividend. Over the quarterly periods from June 2008 to September 2012 the R*Shares Banking ETF delivered an annualised return of 24.61% compared to its benchmark—CNX bank Nifty—which delivered an annualised return of 23.40%. It managed to beat the benchmark on eight of the 17 occasions. The Gold ETF delivered 20.26% compared to prices of gold which delivered a return of 21.86%, beating the benchmark on just six out of the 17 periods. Considering that ETFs are allowed to charge an expense ratio of up to 1.50%, Both the schemes have done relatively well to their benchmarks.
Should you invest in these schemes?
Going by the short-term performance, the two indices have done comparatively better than the Sensex. But a lot would also depend how well the fund managers are able to track the index. As we have seen, the Reliance schemes have done well in the past and a couple of the equity diversified schemes too have performed well. But if you invest in any of these schemes you would be exposed to just one particular sector or category of scheme. Liquidity of ETFs is another issue. The R*Shares Banking ETF has a corpus of just 11.29 crores.
We have written widely about ETFs in the past which you should consider reading before investing. If a particular market is not as efficient as it should be, it may also take time to match an ETF seller with a buyer. The bid-ask spread will be wide. ETFs are structured in such a way that you could end up buying it at a premium to the portfolio’s value and selling it at a discount. Unless these ETFs are widely traded, liquidity will always be an issue.
ETF: Don’t be passive about it
Market volatility exposes perils of Exchange Traded Funds