Elderly population in India is turning into the new customer segment that is large and distinctive with significant purchasing power
Today there is an urgent need to address the wellness of present day Elders, officially designated Senior Citizens, that encompass their physical, emotional, intellectual, social and spiritual needs by looking at them from an entirely new perspective because of their sheer increasing numbers in absolute terms in the demographic divide that now make them an extremely vital segment of the community that require to be reckoned with. One report puts it – “In India, the senior living sector with strength of over 100 million is poised for a significant growth in the years to come.”
Mr. Harish Bhat, MD&CEO of Tata Global Beverages and author of Tata Log: Eight Modern Stories from a Timeless Institutions writing in the Brand Line column of the Hindu Business Line calls upon the marketers to include the Elderly Population of India as the “new customer segment that is large and distinctive with significant purchasing power”. He writes their population increasing, they are also willing to spend reasonable amounts of money on their essential requirements, in many cases their children, who earn good money are also willing to contribute. They have a distinct set of needs – as they may suffer from weak eyesight or infirm hands that are unable to work with small buttons or phone or remote controls with small keys, slippery bar soaps, wrist watches. He suggests easy to use uncomplicated mobiles with large fonts. Also, banks and reality need to develop products to cater to this segment. Besides there is also a significant proportion of this segment who are naturally either obese and of large build or unusually tall or with large waists, wrists and feet who search for ‘jeans that can make them look slimmer’, bathroom slippers that they can easily slip their feet into, cars and airline seats that they can be comfortable in. They even have specific needs of foods and beverages at variance from others.
The FMCG sector too has now come to recognize the fact that the Elders too have truly arrived as a new class of discerning customers:
A recent Research Survey of 1,900 elders from 12 cities in India reveals:
Many reality operators have now zeroed on the seniors to satisfy the growing demand for Senior Care Communities where the lifestyles, socio-economic and healthcare requirements are well taken care of. The developers have jumped into the bandwagon to take a piece of the burgeoning cake of the Assisted Living Community Projects.
Markets are pushing ever higher on the premise that QE will continue almost indefinitely but there are indications that this program would be replaced by something else. The question is whether the new program will be unambiguously favourable for equities and other risk assets
Janet Yellen is the presumed next chairman of the US central bank, the Federal Reserve (Fed). As part of the confirmation process she defended the bond buying program known as quantitative easing or QE. She said that the program has “made a meaningful contribution to economic growth and to the improving outlook”. The financial press took this as a ‘vigorous defense’ of the QE program. It was taken as further proof of Yellen’s dovish monetary bent and that the long delayed QE tapering would not occur until spring of 2014. It is doubtful that she should have said anything else. To cast aspersions at the Fed’s signature program would hardly have been politic even if she had believed that it had problems. But are the general assumptions about QE correct?
Vice Chairman Yellen at least paid lip service to some of the risks of QE. She said that “there are costs and risks associated with the program. We’re monitoring those very carefully.” Still it is at some level embarrassing if other central banks think your programs are the cause and not the cure for global economic instability. The European Central Bank (ECB) on Wednesday issued a stark warning that the coming taper will most likely cause severe market shocks. The ECB is not alone. In its October minutes the Fed specifically stated that the taper was going to start in “a couple of months”.
The reason for ending QE is simple. It hasn’t worked all that well. The US economy is growing, but not by much. The employment situation is getting better, but slowly. The employment rate is down, but only because people are dropping out of the market. Pushing more money into a market without demand tends forces banks and other investors into riskier assets rather than stimulating businesses. US banks have recently increased their holdings of “sliced and diced” securitised securities to a record amount.
Mortgage real estate investment trusts (mREIT) are a more perilous example. These so-called mREITs make money by borrowing short term at low interest rates and buying mortgage-backed securities offering higher yields. They are leveraged with debt to equity ratios of 8 to 1. Their investors include banks, pension, mutual funds and specifically taxable bond funds, some of which hold as much as a third of their holdings in mREITs. mREITS were specifically mentioned by Fed Governor Jeremy Stein and have been the subject of a recent Fed study.
The longer QE goes on the bigger the risks become and the harder it is to exit. Yellen herself acknowledged this in conversations with QE foe, US Senator Robert Corker (R-TN). According to Senator Corker, she said that QE was a “blunt object” that caused distortions. She also said that the Fed may have become a prisoner of its own policies.
Although the Federal Open Market Committee (FMOC), the main instrument for implementing Fed policy will become noticeably hawkish in 2014, there is still continued support for alternative forms of stimulus. So rather than obsessing on the end of QE it might be a better idea to ask what will replace QE. Right now the Fed is in the process of brainstorming. One option was possibility was a cut in interest paid on bank reserves.
Right now the Fed pays banks interest of 0.25% on their reserves including excess reserves, the so called interest on excess reserves rate (IOER). If this were to be cut to zero or 0.1% it would discourage banks from the risk free strategy of banks parking money with the Fed. According to the most recent minutes ‘most’ officials thought this was an option worth considering.
The potential success of this program seems far less than QE. Ben Bernanke himself criticised this policy three years ago. He said that the benefits would be small and that the program “could disrupt some key financial markets and institutions,” and “could lead short-term money markets . . . to become much less liquid.” The policy was considered both in 2011 and 2012 and rejected each time.
US banks were also not happy with the idea. They said that a cut in the IOER could result in banks charging companies and consumers for deposits. They warned that a cut in the 0.25% rate of interest on the $2.4 trillion in reserves they hold at the Fed would lead them to pass on the cost to depositors. Perhaps the fact that ‘most’ officials even considered a rejected program is a measure of their desperation.
A better idea has been the focus on short term interest rates. The present QE focuses on purchases of mortgage securities and treasuries with maturities between four and 30 years. A recent Fed study showed that short term interest rates had a larger effect than long term interest rates. One of the objectives of QE was to bring down longer term interest rates, flatten the yield curve by lowering the term and risk premiums. But the study showed that a sustained decline in long term interest rates by lowering the premium had half the effect of a similar decline brought about by a decline in short term interest rates.
The preferred method of keeping short term interest rates low is through the policy known as Forward Guidance. Basically the Fed promises to keep short term rates near zero for three years. If the market doesn’t believe the promise, the Fed can simply buy more short term notes. The bond market may already reflect this change of policy. Interest on two year note has fallen steadily from 0.52% in early September to 0.29%. The 10 year note was also high at the beginning of September at 2.93%. It fell to 2.48% at the end of October, but has since risen back to 2.74%. The drop of short term interest rates may also be a crucial signal for a December taper.
This threat has worked well for the ECB. Their promise to buy unlimited quantities of government bonds maturing in one to three years from nations that met certain criteria related to their debts was successful in stabilising interest rates for southern European. The threat was so successful that not one bond was ever bought.
Markets are pushing ever higher on the premise that QE will continue almost indefinitely. The danger here is complacency. The Fed and even Janet Yellen have clearly indicated that the program will end, not necessarily because they are happy with the results, but rather they are afraid of the risks. When the program does end, which will probably be sooner than the market thinks, it will most likely be replaced by something else. The question is whether the new program will be unambiguously favourable for equities and other risk assets. The answer is probably not.
(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first-hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages.)
Readers respond to ProPublica investigation into state laws that criminalize exposing others to HIV
Nick Rhoades was originally sentenced to 25 years in prison for failing to disclose to a sex partner that he was HIV-positive. The fact that he had used a condom during intercourse and was on anti-AIDS drugs, which make transmission unlikely, didn’t matter.
While Rhoades’ sentence was an outlier and was later reduced to five years’ probation, many other states have laws against “criminal transmission of HIV” — regardless of whether the partner actually contracts the virus. Some states also criminalize HIV “exposure,” even in ways that experts say carry little, if any, risk of infection. Among the stories in our recent investigation:
● An inmate in Ohio was accused of “felonious assault with HIV” for performing oral sex on a fellow inmate, though scientists agree there’s nearly zero chance of HIV being passed this way.
● In Nebraska, spitting on a cop is a misdemeanor, unless the offender is HIV-positive. Then it’s a felony, punishable by up to five years in prison and a $10,000 fine. The Centers for Disease Control and Prevention says that spitting cannot transmit HIV.
● Nigalia Gibbs, a former St. Louis sex worker who was born with HIV, was convicted of prostitution while “knowingly infected” with the virus. Gibbs told police she always practiced safe sex, and none of her former customers were found to be infected.
● A South Carolina man spent five months in the Marion County jail awaiting trial for “exposing another to HIV.” He pleaded guilty and was credited with time served, but not before U.S. Immigrations and Customs Enforcement filed to detain him on immigration charges. In February 2011, a federal judge ordered him deported to Mexico.
Proponents say the laws protect people from unknowingly contracting HIV and keep the responsibility on those who can pass on the virus. “Shifting the burden of HIV disclosure from the infected person, who is aware of a known danger, to one who is completely unaware of their partner’s condition smacks of a ‘blame the victim’ sort of mentality,” said one state prosecutor.
But some health and legal experts say using criminal penalties could backfire and fuel the spread of HIV. According to the CDC, 1.1 million Americans are currently living with HIV, but one-fifth of them don’t know it. And studies show that about half of newly infected people got the virus from those who didn’t know they had HIV. So relying on a partner to know, let alone disclose, their HIV status is a risky proposition.
The laws “lull people who are not HIV-positive — or at least think they are not HIV-positive — into believing that they don’t have to do anything,” said Scott Schoettes, a lawyer who supervises HIV litigation for Lambda Legal, the national gay-rights advocacy group.