Tight monetary policy may impact growth: Pranab

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.


Anti-corruption crusade: The arrogance of power is killing democracy

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.)



KPadmanabha Reddy

5 years ago

ts and Dogs when cornered pounce ack in fight being frightened.So is the case with UPA dogs now under defenseless onslaught .

Gauri Shankar Das

5 years ago

What is the eqality of political opportunity ? What is the list of the posts of NON PROFIT declared by indian parliyament ?What is the average income of indians ?What is the major scheme for controling population growth ? What is the educational development rate ?What is that "INDIA IS GREAT?


5 years ago

Look who is complaining about unelected people drafting laws. That is exactly what Sonia, Rahul and their slaves in the so-called NAC are. They are like the Viceroy and his council presiding over a tame "parliament". But it all boils down in the end to money. Power is a means to that end. Any serious attempt to curb corruption will therefore be cosmetic only.

padmanabhan iyer

5 years ago

Anna Hazare has a pure heart and right intentions in his head as also a large chunk of non political persons supporting his movement. What Hazare and his suppporters fail to understand that Government controlled by the present set of arrogant Ministers need to be removed first to bring in the needed change. Then the movment will have to be political only. Aand at the end any law can be made only by the parliament. So his leadership be given to bring in all the political parties and lead a movement to cleanse it. One need to understand that in all political parties there is this virus of corruption. But that need not trouble us so long as the movement is led by right people. Realise that Democracy could be brought in only after Jayaprakash took the leadership to bring in all parties from CPM to Jansangh which helped to overthrow the dictatorship,
For Congress its all survival .They first prodded up Ramdev Baba so that the Hazare movement can be contained.Finally they cracked the Baba Ramdev team when they realised that Baba cannot be bought over. Now by engaging Hazare, they want to shift the focus from BJP and other opposition parties.This is exactly what is wanted by Congress.In the end of the day these people under Hazare are not going to be a threat to their government.After some noise it will be forgotten. What is amusing is that, the movement is castrated and made imbecile by the media who one side pretend to expose the Corruption, but make sure that it does not touch PM or Sonia and her children. This is what exactly Congress aim to do , to diffuse the attack and taking the wind out of the sail of BJP and CPM.If Hazare is true to his cause he should name the Corrupte said there is corruption in Modi givt.Will Anna Hazare dare to expose Sonia? Lets wait and see


5 years ago

If 'civil society' leader Anna is a tyrant then PAS another civil society leader Sonia Gandhi also should be called a tyrant as she weilds power without authority.


5 years ago

As described by Nicholas shaxson in treasure islands:- imagine you are in the Market and you see our "leaders" walking out of shops without paying - like many of our royalty used to do and even the British rulers. When your turn comes to pay the bill it shows "extra charges" to subsidise their free loot/shopping. That is what is happening in India.


5 years ago

do u think its just a co indcidence that all this scam thing has gathered steam in 2010 and radia tapes were recorded by some IT fellow for national security reasons? its a corporate war and a god sent opportunity for someone like mms to get rid of people we never wanted but had to. every thing till date is a scam if you reall stick to the definition of scam. as everything moved with a nexus. right from grassroot things to big industrial projects.


5 years ago

if what i hear is correct, very soon we will have a law reform bill, electoral reforms bill and whistleblower act. these are important legislations and should help fix obvious failure of current system. while we should all focus on corruption to weed it out, one should understand that its become a part of every strata of society and cleansing has to begin with us. there was a time when india couldnt have afforded elections on its own. so the process of corporate funding . now if we start digging history , right from tata to birla to gandhis to vajpaye will be found with hand in wrong place. there is no reason why starting today we cannot auction scarce resources, pay for our own elections, set up fast track courts and record court proceedings, curtail discretionary powers , etc. any institution has human interface and all are open to misuse. instead bat for transparency and accountability in existing institutions and we shall be good. the pre condition should be that the govt shouldn fall as there are clear attempts at trying to destabilise the govt. there have been previous SC led investigations with little to show. give this govt a chance. chances are many will go to tihar and stay there this time. that should be the biggest +ve since independece and will have a rub off effect. there are no good choices as all are the same so for those who are pessimists , stick to the known devil. RTI with whistleblower bill and fast track courts , nitish type law on bureaucrats will tame the beast. and india is fighting corrption head on , its a natural consequence of such neck breaking growth in such a unique country. long live india. im against lokpal. constitution should be surpeme and strengthened furthur. keep emotions under control to think sanely without bias.

N Krishnan

5 years ago

Karan saab,
You put rightly. It seems Hon. Min. Chidambaran did not know that Mahatmaji had driven out British by satyagrahah and question Anna for it. Our so called political champions order their followers to do hartal or bandh to protest against anything and everything which create unbearable inconveniences and problems to so called janatha or unelected normal men. Anna intents to sit at a place at least without causing any problem to public or government, still these higher ups show their merciless mind to criticise a ghandian ex soldier. I feel shame on them by being a non-member congressman who follows the ghandhian thought.
The corruption has grown to a level these elected champions think that it is their rights to do anything without looking at the public feelings just because they were elected by the public. An end to this or a change is imminent. Instead of reviewing the pertinent possibilities the govt seems trying to dilute the issue by simply transforming as street fighters. Let us hope the Prime Minister himself will wake up to resolve the issue or else?


padmanabhan iyer

In Reply to N Krishnan 5 years ago

The repetitve call saying that Mahatma Gandhi won the freedom by satygraha is historically incorrect.there are tens of commonwealth nations which were under British. These nations also were given freedom because British could nt hold it together.Days have changed and italian mafia is different from alien british The italin mafia in action is a saree clad self styled bahu, who is Antonio Maino, supported tacitly by the Roman Catholic church ,controlling the Congress and their ministers who all are indians playing fiddle.In Egypt it was the Muslim Brotherhood which added muscle to removed Mubarak,In India too it was RSS which removed Indira Gandhis govt and brought in democracy, though RSS is a nationalist humanist organisation and never preached or committed terror as Muslim Brother hood did. There is no other solution other than a political solution and it can be done only with the support of Non Congress political entities ofcourse with a leader who is above politics,such as JP

Deepak Khemani

5 years ago

Nothing will actually change, these politicians dare the UNELECTED people from civil society to stand for elections and then talk, now everyone knows how our MP's get elected, some on the pseudo secular platform some on the religion platform,some get elected because they are dalits or OBC/ST/SC and some get elected because they are from the left(Communism died years ago in USSR) and most of them get elected with money power or because they are the sons, daughters or relatives or close friends of powerful politicians.Tell them about the cases pending against them and they will say that the cases are politically motivated or they say that the law will take its own course, now we know what that means(10-15-20 years). Has anyone ever wondered why the spokespersons of major political parties are lawyers, Manish and previously Kapil Sibal for the Congress, Ravi Sankar Prasad and Arun Jaitley for the BJP. The Baba Ramdev fiasco and the treatment given to Anna Hazare and his team has I hope given something to the people of India to think about where this country is headed with the present setup. I wont be surprised if things change in the next Elections-hopefully


5 years ago

The arrogance of Kapil "The consequences" Sibal and the antics of Digvijay Singh and the supercilious attitude of P.C Chidambaran, while talking to the press makes one wonder whether these ministers actually believe what they say. They come through to us viewers and readers as people who have lost complete touch with the concerns and feeling of the electorate and live in a self created world. I am sure the time will come when we will have a clear law on corruption - whether through a lokpal or a different set of people governing the country. This surely is another freedom struggle for us - who are denied proper benefits for the honest work we put in and the taxes that we are pay. All we get in return is nothing but poor and incompetent governance and corruption. Go team ANNA .Go..



In Reply to sunil 5 years ago

You are right. Arrogance is the reason why still Dayanidhi Maran is not arrested inspite of the proof that he had misused his position of authority to threaten the BSNL GM to enable him run his borther's business through his home exchange. Will you or me be allowed to remain not paying the outsanding dues. Maran owes 400 crores to the nation.


5 years ago

The statement from Government that civil society can't threaten & negotiate is very revealing of the kind of Government we have. Agreed. But can civil society pray & beg (of course to be heard)? What options civil society has if prayers begging and hunger strikes are unable to evoke a response. I do not doubt the resolve of ministers like Sibbal and PC to draft a strong Lokpal bill but will they explain why at all they needed prompting by Hazare. I understand & I believe all sane people know that as corruption lies in the mind of people it is very hard to fight it. An honest resolve by the ministers concerned could have assured Hazare and the whole of civil society, which unfortunately did not come up. Had the ministers too declared all their assets and the assets of their kin’s immediately after or had there been a candid admission on their part, Sibbal & PC could have capitalised upon the opportunity. Remember Kennedy, who after Martin Luther Kings great address had said that he too had a dream. ‘The same dream’. It is really sad that in the country of Mahatma Gandhi corruption in high places has become an issue. Does any on remember that Gandhi once wrote " when ever in doubt or when self becomes too much with you ....remember the face of poorest .. you ever met and think the decision you contemplate will really be of any good to him... your doubts shall melt away." Secondly, Government can not allow another parallel Government. They allow a parallel economy instead! Now let's forget about Khaps and Naxals and Kashmir, just to name a few. These do not really indicate the inefficiency of Government but the resolve on their part. I still hope, at some point of time better sense shall prevail on all in the Government and the opportunity shall not be allowed to fritter away latter to be lamented as shokpal bill.

Financial planning: Indians need to start early and save smartly, indicates survey

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.


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