Finance minister Pranab Mukherjee said while inflation has implications with respect to sustaining the growth momentum, the drivers of economic expansion remain intact
New Delhi: Admitting that the Reserve Bank of India's (RBI) anti-inflation monetary measures may impact growth, finance minister Pranab Mukherjee today said the major challenge right now is to contain price rise, reports PTI.
“The monetary policy has been gradually tightened...
Monetary measures may end up moderating the growth if they have to be persisted for an extended period of time,” Mr Mukherjee said at an Assocham meet here.
However, he said in the short-term, moderating aggregate demand is critical to check inflation, which is ‘our major challenge’.
The RBI yesterday hiked key policy rates for the tenth time since March 2010, in a bid to tame inflation, which crossed the 9% mark in May.
Inflationary pressures persist both from higher global commodity prices and domestic structural demand-supply imbalances in several commodities.
Mr Mukherjee said while inflation has implications with respect to sustaining the growth momentum, the drivers of economic expansion remain intact.
“... The growth drivers of the economy remain broadly intact,” he said, adding, “I am so far hopeful that we should be able to repeat the growth performance of 2010-11 in 2011-12 as well,” he said.
In 2010-11, the country’s GDP is estimated to have grown at the rate of 8.5%.
Mr Mukherjee said as the government gears itself up for the task of preparing the 12th Five-Year Plan (2012-17), “We need to aim at a GDP growth of 9% to 9.5% for the Plan period.”
For this much expansion in GDP, the country's economy must grow at an average rate at least one percentage point higher than the 8.2% rate likely to be realised in the XII Plan.
On the financial inclusion required to promote the agenda of inclusive growth, Mr Mukherjee said it is a major challenge before the banking sector and financial system at large.
“Newer perspective and strategies toward financial inclusion are needed to reach the un-banked and the under-banked sections of our country,” he said.
While applauding the banking sector on its performance with respect to growth in deposits and net profits, Mr Mukherjee expressed concerns on its ‘asset quality’.
During 2010-11, non-performing assets (both gross and net) increased from the levels witnessed in the previous year.
“It is important for banks to constantly monitor and bring down non-performing assets (NPAs) to the previous level,” he said.
He also asked the banks to go for more innovation and come up with value-added offerings to meet the growing needs of customers.
He further said the government was in the process of deepening policy reforms in the financial sector and addressing gaps in overall economic regulatory architecture.
A Financial Sector Legislative Reforms Commission has been set up to re-write financial sector laws.
He also sought the support of all political parties for passage of the Direct Taxes Code (DTC) and Goods and Services Tax (GST) Act, considered to be the most important tax reforms in the country, in Parliament.
Some Congressmen in the habit of mudslinging are trying to deflect focus from the anti-corruption debate by indulging in accusations against Anna Hazare and his team. Which other country has an unelected prime minister or, criminal cases against nearly a third of its elected representatives, and these same people are talking about democracy in peril from the unelected?
Congress Party spokesperson Manish Tiwari says, "Our democracy faces its peril from the unelected and the unelectable…." (13 June 2011) Finance minister Pranab Mukherjee labels Anna Hazare a tyrant! These Congressmen, who are habituated to mudslinging, have persistently indulged in hurling accusations at Anna Hazare and his team to deflect public focus from the Lokpal debate.
First they tried to fabricate a CD over some registration of a plot against the Bhushans, which attempt fell flat. Now they are trying to get people to believe that Mr Hazare is working for the Rashtriya Swayamsevak Sangh/Bharatiya Janata Party and not for the masses. Only the corrupt, and not democracy, should feel threatened by such a mass movement. Democracy is the people, not the government.
And let it be understood by the arrogant who occupy positions of power, that democracy is not their personal domain or a 'members-only club' where 'unelected' citizens have no role to play. If that were so, should we assume that Mahatma Gandhi, Subhash Chandra Bose and the entire galaxy of our freedom fighters got away with their sins, and that Manish Tiwari would have prosecuted them for being 'unelected tyrants'. Such people must introspect and make a serious attempt to change their outlook.
I have ten observations that could help analyse the government's perception vis-à-vis the ground reality, in the ongoing turmoil in the country's political field.
1. No other democracy in the world has an unelected prime minister apart from India, which is supposed to be the world's largest democracy. Which is probably also why it is being said that "our democracy faces peril from its people…"
2. No other prime minister or president of a democracy has been as silent or as invisible as is the case in India.
3. No other government in the civilised modern world receives orders from an extra-constitutional authority (10 Janpath) as obsequiously as the Indian government.
4. No other government in the civilised world has been seen staggering so indecisively, and so clownish, as our government has been. First, they tried to make fun of Anna Hazare; then, terrified at the overwhelming response to his call and the support for the anti-corruption campaign, the government caved in and set up the joint drafting committee for the Lokpal Bill. Unable to answer questions raised by the civil society members of Hazare's team, Pranab Mukherjee calls him a tyrant! Next, the top four in the government prostrate before Baba Ramdev, then beat up the yoga guru's supporters two days later. What kind of 'democracy' is this, and who is destroying it?
5. No other democracy in the world has as many as nearly a third of its members of Parliament (mainly the Lok Sabha) (about 162 plus Suresh Kalmadi, A Raja, Kanimozhi and now may be even Dayanidhi Maran and P Chidambaram) facing criminal charges ranging from trespassing to murder. (This is more than a 26% increase over the record of members in the previous Lok Sabha. There are nine ministers in the central cabinet who face criminal charges, one of them for 'theft'. (According to National Election Watch, 76 members of Parliament are involved in serious criminal cases. A total 522 cases are pending against various members of Parliament; 275 of these are under serious sections of the Indian Penal Code.) What more do we need to add, Mr Manish Tewari, that will imperil democracy in India.
6. India ranks at 87 in the survey on the 'International Perception of Corruption' conducted by the World Bank and IBRD, Bertelsman Foundation, World Economic Forum, Global Insight and Transparency International Berlin. India stands on level with countries like Albania, Jamaica and Liberia with an index of 3.3 (out of 10), that has fallen from 3.5 in 2007 and 3.4 in 2008 & 2009.
7. No sane government, other than a heartless, tyrant would unleash brutality against a peaceful bhajan-singing congregation of innocent men, women and children, as happened at Delhi's Ram Lila ground, late night on 4-5 June 2011.
8. According to media reports (The Times of India, Ahmedabad, 8 June 2011), India not only tops the list of nations having tons of black money stashed away in Swiss banks, but its cache of black money ($1,546 billion) is far more than the combined total of the next four countries in the list of black money deposits namely, Russia, the UK, Ukraine and China ($1,056 billion). Contrast this with the poor farmers committing suicides, hapless pregnant women delivering babies at hospital gates, and destitute tribal masses fed up with a callous administration, seeking solace in a Maoist rebellion.
9. No other government can boast of so many scams as the UPA government.
10. Only the DMK appears to be ahead of the Congress (so far, at least) in the corruption race-so what if only a few of them have crash-landed in Tihar Jail!
However, these are merely some facts of the reality, not something that Manish Tiwari and Pranab Mukherjee would like to believe. They, like some of their colleagues in government, are suffering hallucinations and illusions. In Mr Hazare, they see a heavily-armed warrior-'a tyrant'-at the head of an angry army of India's masses, charging ferociously straight into them. This scenario reminds one of Wordsworth's adolescent thief, who was fleeing with a stolen boat, but he felt the hilltop behind was chasing him so menacingly, that the farther he went the bigger the shadow became that loomed over him. For, the more the government tries to shoo away the Lokpal and the uproar over corruption, the more vigorous becomes the public outcry against corruption.
Indian politicians could not have asked for more decent and loving enemies than Anna Hazare and his candle-wielding supporters, or Baba Ramdev, with his devotees practising abstinence and yoga. Arrogant governments in West Asia and North Africa are facing more violent and destructive uprisings. We have a choice to change peacefully.
While the anxiety of those in power is understandable, they cannot avoid the problem by looking in the other direction. The tide is unstoppable. The people deserve and they are demanding an effective Lokpal, to rein in rampant corruption and they will get it, with the government's your co-operation, or the tumult will crush authoritarian arrogance and install people's choice.
(The writer is a military veteran who commanded an Infantry battalion with many successes in counter-terrorist operations. He was also actively involved in numerous high-risk operations as second in command of the elite 51 Special Action Group of the National Security Guard (NSG.) He conducts leadership training and is the author of two bestsellers on leadership development that have also been translated into foreign languages.)
A recent survey indicates that 76% of Indians have a financial plan in place, but they were able to save just 150% more than those who had not planned for the future. This just goes to prove that a huge majority need to be better educated on how to plan for a future without a steady income—and start early in this process
In our previous article (Financial Planning: Positive approach but no support), we had mentioned how around 76% of Indian respondents to a recent global survey carried out by HSBC Bank on the 'The Future of Retirement', said that they have a financial plan in place. But there was a glaring contradiction—51% of them were worried about being able to cope with their finances after retirement.
There's another shocker in the survey—this 76% who have a plan were able to save just 150% more than the people who did not have a plan in place!
This shows that Indians have a long way to go as far as financial planning for the future is concerned. Considering the fact that the country does not provide any unemployment dole-or post-retirement benefits, for that matter—investors need to start financial planning early in life, a fact that Moneylife has been consistently pointing out.
And those who do not have a plan in place yet should begin immediately, as the survey results show that those who have planned have accumulated more wealth—albeit by a comparatively small amount, for reasons explained above.
So what is the global scenario, according to the HSBC survey?
On an average, the survey indicates that globally, those who have financial plans in place have accumulated nearly 250% more in savings and investments for their lives after retirement than those who are yet to build their nest egg. For reasons other than post-retirement investments, the ones who have planned have amassed 300% more in savings and other investments than those who do not have any kind of financial plan in place.
Along with the financial benefits, those who have planned their finances have a much more positive outlook toward their later life. But here's another shocker—just 50% of those surveyed globally had a plan in place.
The respondents to the survey were mostly between 30 years and 60 years, living in urban areas and having an above-average income (compared to Indian standards). The three income groups which the survey trifurcated werehigh income with gross annual household income over $100,000 (approximately Rs45,00,000); middle income with gross annual household income of $30,000 (Rs13,50,000) to US$100,000; and low-income, with gross annual household earnings below $30,000. For a country where just 30% of the population are from urban areas, a larger sample size would definitely be more worrying.
According to the report, "Despite India's rising prosperity, unease about the future naturally continues to concern the majority, and the most prominently cited reasons for this centre on fears about healthcare (41%), unforeseen events (45%) and the lack of performance from their investments (39%). Many people in India also worry that they have not saved enough for retirement (34%).
"While they are excited about their increased prosperity and longevity, people in India understand that longer (life after) retirement will be more difficult to fund. One in ten people do not know what their main source of income will be in retirement."
The report also says that "over the next 30 years, a higher proportion of the population will be of working age and when they retire, India will face the challenges of an ageing, non-working population. As life expectancy increases, the number of years spent in retirement is expected to get greater."
All this just goes to show that retirement planning is crucial. And the sooner you start, greater the benefit. The key to surviving uncertainty is preparation. Decisions therefore need to be made based on research and knowledge. The authenticity of the source should also be considered. The source should have unbiased views and opinions about different financial products and the advice should not favour those products which earn advisors a higher commission.
In India, there is a shortage of qualified advisors who thoroughly understand the intricacies of financial planning. This fact is thrown up in the survey too—55% of the respondents take advice from family and friends on financial products compared to the global average of 46%. Just 33% take advice from 'independent' financial advisors and 21% from banks.
One of the main barriers for an individual stopping him from going for financial planning is lack of time, especially for those in the higher-income groups. People appreciate financial advice which is suited to their busy lifestyles. Globally, 41% feel that a financial advice session should not last more than 30 minutes and should focus on their immediate needs, says the survey.