The group will submit its report to the ministry within six months on the roadmap to roll out five projects—tax information network, the new pension system, the National Treasury Management Agency, the expenditure information network and goods and services tax
The government on Monday set up a committee headed by the Unique Identification Authority of India (UIDAI) chairman Nandan Nilekani to advise it on various information technology (IT) initiatives taken in the areas of income tax (I-T), new pension system (NPS) and the proposed goods and services tax (GST), reports PTI.
The finance ministry yesterday announced the constitution of the Technology Advisory Group for Unique Projects (TAGUP) which will have six other members, including Securities and Exchange Board of India (SEBI) chairman CB Bhave.
The group will submit its report to the ministry within six months on the roadmap to roll out five projects-tax information network (TIN), the new pension system, the National Treasury Management Agency (NTMA), the expenditure information network (EIN) and goods and service tax.
"These five projects alone have immense transformative power and change the country's growth trajectory. The challenge is to find ways to rapidly roll out these complex systems, to achieve and sustain high levels of reliable performance," the finance ministry said in a statement, adding the constitution of the TAGUP is an effort in this direction.
The group will suggest roadmap to roll out these systems and any changes in legal and regulatory requirements for this purpose. Besides, the group has also been asked to suggest technology architecture, including the possibility of introducing open protocols, for implementing these projects.
The seven-member body will also advise the ministry on security challenges of malicious attacks on the system.
Mr Nilekani, one of the founders of IT giant Infosys, had left his job last year to join the government in its ambitious plan of rolling out a 16-digit unique identification number to all citizens.
While TIN was set up to improve tax administration and check tax evasion, NTMA is an autonomous body set up to carry out debt and cash management, besides management of contingent and other liabilities of the Centre and the states.
The probability of a real-estate meltdown fuelled by toxic assets does not exist in China. The real problem lies in the absurdities prevalent in the Chinese financial system, which are bound to slow down growth
It finally has happened. A high-level Chinese academic has admitted that there is a problem with the real-estate market. Li Daokui, a professor at Tsinghua University and a member of the Chinese central bank's monetary policy committee was quoted by the Financial Times as saying, "The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis." Well, it's a start.
But recognition of the problem does not mean a solution. It also brings with it a whole set of assumptions about the future that are simply not true.
In the US, the UK and even presently in the eurozone these crises have specific causes and run a predictable course. A financial panic starts because too much money was loaned carelessly during an expansion. When the cycle turns, what looked like a safe credit risk turns into a toxic asset. As fear spreads through the markets, all lending stops because of asymmetry of information. No one knows who is overextended or who made the bad investments. In the simplest terms you start with a solvency problem which eventually is exacerbated by a liquidity problem.
If you look at the Chinese real-estate market using these criteria, there does not seem to be anything to worry about. It is true that prices have risen dramatically.
Depending on whose numbers you believe, real estate in 70 Chinese cities has risen between 12.8% to 18% over the past year and 95% in Beijing. To buy an apartment in Beijing would cost the average wage earner 17 years' income.
To pay for these skyrocketing prices the amount of mortgages as a percentage of GDP has exploded from an average of 10% from 2005 to 2008 to 16%, while the amounts have tripled from 500 billion yuan to 1.75 trillion yuan. But is this a problem?
Economists argue that it isn't. Most mortgages are for only 50% of the value of the property. So prices would have to plummet by 50% before the property is 'underwater'. Besides, mortgage loans make up only 23% of bank loans. What worries Professor Li is not a financial issue, but social stability. "When prices go up, many people, especially young people, become very anxious," he said. "It is a social problem." This perspective gives a hint that things in China may be different.
The toxic assets are not in residential mortgages. The toxic assets are from local governments through the 8,000 or so local investment companies, now banned.
According to Victor Shih, a professor at Northwestern University, these debts could be as large as 11 trillion yuan, or about $1.6 trillion. S&P, the people who messed up on the US toxic assets, feel that the problem is manageable and that the bad debts will stay below 10%. But does that include the bad debts left over from the last recession? Or the bad debts we don't even know about?
Solvency is a legal term. It depends on how you count a debt. If a State-owned bank doesn't think that its loan to a local government or a State-owned company is a bad loan, then it isn't. Who is going to say something else? If the local government isn't insolvent then neither is the bank. Solvency problem solved.
The same is true of the liquidity problem. It isn't a problem in China because the government can simply order the banks it owns to lend to each other. Last year the Chinese government solved its liquidity problem by telling the banks to lend $1.4 trillion and they did so.So the probability of a real-estate toxic asset-fuelled meltdown does not exist. Does that mean that there isn't a problem? No, because there is. A big problem. The Chinese financial system has failed in its principal economic task. As an intermediary designed to channel assets to the most efficient enterprises, it is a major flop. Not collecting a dud loan means that the money for that loan has been wasted. Evidence of the waste exists throughout China in empty buildings and unrented apartments.
But if there is not going to be a meltdown, what consequences will follow? Simple, slower growth. The burden of this absurd system will be borne by depositors and consumers. By keeping borrowing rates low, deposit rates low and increasing the spread, you can in effect transfer wealth from households to banks, businesses and government, which is exactly what happened before and what will happen again.
Of course, shifting the cost to consumers means that domestic consumption remains low and requires the present imbalance in the Chinese economy to continue, which of course will exacerbate the international trade imbalances and slow growth. So Professor Li is right to worry, but until he worries about the right thing the problems will not go away.
The new ad is hackneyed and no longer captures the imagination
So, Fevicol is back. A relatively small brand, but one that is best known for its shining, award-winning creative work. Actually, Pidilite Industries (makers of Fevicol) is a dream account for any ad agency. They give their ad agency (Ogilvy & Mather) creative directors total freedom. Not something you can say for 99% of Indian clients. No wonder Piyush Pandey will never let go of the client…. he's gleefully stuck to them with Fevicol!
This time the brand is back with an extension called 'Fevicol Marine', with a promise that the bond doesn't break even under water. The TV commercial is a hark back to its age-old 'tug-of-war' ad for the mother brand. Except that this time, the action has shifted to the backwaters of Kerala. So it's once again 'Dum lagake, zor lagake, haishaaaaaa!'. The occasion is the State's famous snake boat race. Two snake boats are tied to an ancient chair that's placed under water.
With each boat and its crew pulling from the opposite directions. Egged on by an excitable chap, who I assume must be the brand manager of Fevicol. The idea quite obviously is to demonstrate that the kursi bonded by Fevicol Marine will stay in one piece in these testing conditions.
So no bets for guessing the boatmen lose this competition. Cool. Once again Fevicol does what it does best: make a wild claim using wild exaggeration as the creative route. Don't know how much of it helps in the market place, but award juries are stuck with Fevicol.
My own take: Very disappointing ad. It's an ordinary ad, not even a patch on Fevicol's own sensational past body of work. An obvious idea for a marine adhesive: go under water. And the snake boat trick has been so done to death in Indian commercials, it no longer captures the imagination. In fact, it's totally hackneyed. Some would argue that product performance is nicely demonstrated, so then why crib? Yes, that's true. And for any other brand one wouldn't have dissed this creative. But not for Fevicol. You don't come up with such banal work for any ad agency's dream brand. It's unforgivable, it's criminal.
Methinks creative 'god' and O&M honcho Shri Piyush Pandey is on his annual leave, and is holidaying in some exotic location faraway (no, not the Kerala backwaters!). And so he didn't get a chance to whet this dull storyboard. Come back soon, Sirji! Else your own bond with Pidilite might just come undone. Haishaaaaa!