Stop buying gold, says FM; unapologetic that savers have so few options

Chidambaram is asking people not to buy gold. This sermon looks ironical, because over the past 10 years, it’s the ministry of finance and various financial regulators that have ensured that savers lose money by investing in various financial products

The government has been grappling with the problem of massive gold imports as it pushes up current account deficit and makes the rupee weaker. On Thursday P Chidambaram, the Finance Minister, in an open appeal to the public in a televised press conference, said, “Please resist the temptation to buy gold.” As the Prime Minister will be reviewing the economic situation today, the Finance Minister spoke to the press just before the Cabinet Meeting in the morning for about 45 minutes.


India does not produce gold. It imports gold by paying in US dollars for retail purchases in rupees by Indians. The public has been buying gold in massive quantities because of widely held belief that gold is a safe investment whose value goes up. That apart the real reason why people buy gold is because of poor options to put their money. However, the FM sought to debunk both the notions. He argued that gold is not the best of investments whereas those who are well-informed of financial products do not buy gold.


The trouble is that the FM is brushing major problems that savers have with other financial products. Bank savings accounts and fixed deposits are the commonest options for intelligent savers, but there are hindrances in Know-Your-Customer rules’ implementation by the banks at entry level. By the time the saver learns a little more, the quality of customer service leaves much to be desired. In the case of longer-term savers, insurance and mutual funds are options but the problem is that there has been rampant mis-selling, especially in Unit-linked Insurance Plans. For the knowledgeable savers, mutual funds may appear to be a good option. But a large number of funds have failed their investors by giving poor returns. That apart, mutual funds offer a large number of irrelevant products and have not been able to communicate that stocks, and therefore equity funds, work only over the really long term. And now, as Moneylife has repeatedly highlighted, banks have been mis-selling financial products blatantly, abusing the trust of its customers.


In all almost all the product categories, the regulators have made a complete mess by not creating regulations centred on savers’ interests. With such major hurdles in investing in various financial products and disincentives in the regular savings options, savers in the poor or lower middle class category have been pushed to chain-money schemes, chit funds, pyramid schemes and the like, leading to capital erosion, when these scheme inevitably go bankrupt. What the FM either does not know or does not want to know is people are buying gold not just as a matter of choice but because they are unable to trust anyone.




3 years ago

Unless the Govt. comes out with a Fixed Deposit which should be 5% plus the CPI and available without hassles from any Nationalized Bank, people would continue to hold on to Gold !

Mis-selling Is Inherent to Life Insurance

Insurance companies try and avoid selling a pure term policy as the commissions are very low...

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RTI Judgement Series: No record of important note sent by MCD commissioner

The CIC expressed shock after learning that there was no record of an important note sent by the municipal commissioner of MCD to the chief secretary. This is the 112th in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application

The Central Information Commission (CIC), while allowing an appeal, directed the Public Information Officer (PIO) and additional deputy commissioner (HQ) at the Municipal Corporation of Delhi (MCD) to provide copy of the particular note, asked by the appellant or obtain a certificate from the municipal commissioner stating no copies of notes and letters are kept.


While giving this judgement on 27 August 2009, Shailesh Gandhi, the then Central Information Commissioner, said, “It is a shocking matter if no record is being kept of the note and other letters sent by the municipal commissioner of Delhi on important matters. If this was true, then the MCD should state this on its website.”


Delhi resident HB Sharma, on 31 December 2008, sought information about appointment of Chief Vigilance Officer and other Vigilance staff in MCD from the Public Information Officer (PIO). Here is the information he sought under the RTI Act...


Request a copy of Commissioner/ MCD' Note bearing No.PSC/289/2007 dated 25 May 2007, on the subject of appointment of Chief Vigilance Officer and other Vigilance staff in the Municipal Corporation of Delhi.


In his reply, the PIO stated, ""As per the Dak register the copy of the note, as aforesaid (in RTI application), is not available on record."


PIO also stated that the information had also been sought vide appellant's RTI application dated 29 September 2008 and reply was given to him vide letter date 27 October 2008 by that office.


Not satisfied with this reply, Sharma filed his first appeal. In the appeal, he stated that reply of PIO was refusal of the Information. He also mentioned that CED had already supplied to appellant the copy of chief secretary's DO letter under reference.


In his order, the First Appellate Authority (FAA) directed the PIO to make afresh attempt to trace the record and make available required information to the appellant within fifteen days.


Since Sharma did not receive any information from the PIO, he approached the CIC. In his second appeal he stated the record which was only about one year old at the time of initial application for information and by now which had not completed two years' period had not been given to him.


During the hearing before Mr Gandhi, the then CIC, the PIO stated that a fairly important letter sent by the municipal commissioner to the Chief Secretary (no. PSC/289/2007 dated 25 May 2007) on the subject of appointment of chief vigilance officer and other vigilance staff in MCD was not anywhere on record.


Mr Gandhi noted that the chief secretary also replied to this and it appeared to be the basis of certain important actions in the MCD.


The PIO also showed the order passed by SC Kohli, the FAA and secretary to the commissioner. The FAA, in his order had stated, "The PIO, i.e. additional deputy commissioner (HQ) informed that the commissioner vide aforesaid diary no. had sent a note to the chief secretary and as per normal practice the copy of the note is not kept in record. However, the ADC (HQ)/ PIO is hereby asked to make fresh attempt to trace the record and make available required information to the appellant within fifteen days."


The CIC noted that a letter had been sent to the appellant by an unnamed ADC(HQ) on 24 April 2009 which stated "as per dak register the copy of the note is not available in the Commissioner's office record."


While allowing the appeal, the Commission directed Rajesh Prakash, the PIO, to give a copy of this note to Sharma or obtain a certificate from the MCD commissioner stating that no copies of letters and notes sent by the commissioner are kept.




Decision No. CIC/SG/A/2009/001650/4586

Appeal No. CIC/SG/A/2009/001650


Appellant                                            : HB Sharma,



Respondent                                       : UV Tripathi

                                                            Public Information Officer,                                                                                                         Municipal Corporation of India,

                                                            Office of the Addl. Deputy                                                                                                          Commissioner(HQ), Town Hall,                                                                                                             Delhi


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