The utilities companies should be asked to pay interest to their consumers, who have given a security deposit, whether they are in the public or private sector. Though this does not amount to any substantial benefit individually, this is required to be implemented to ensure equity and justice to the consumer
The common man in our country is reeling under the burden of double-digit inflation for the last couple of years and the steps taken by the government do not appear to be yielding any result so far. To add insult to his injury, every public utility in the country is frequently raising tariffs, putting additional burden on the consumer. This is happening especially in the power sector and telecom companies, too, are reportedly proposing to raise tariffs due to rising cost of their operations. This will be followed by increase in domestic gas prices, as the Govt. is reportedly in the process of finalising the withdrawal or restricting the subsidy element so far enjoyed by domestic gas users. The cumulative effect of all these developments is that the cost of living has been going up on all fronts, with little prospects of seeing any light at the end of the tunnel.
At present all public utility companies insist upon depositing with them a certain amount as deposit at the time of making available their services to the public. Electricity companies ask for a deposit of one month’s estimated use of power, while telecom companies insist upon depositing a fixed amount at the time of connecting basic landline and also for mobile connections obtained on post-paid basis. Water bodies, too, ask for a certain amount of deposit from the users depending upon the consumption of water. Gas supplying companies providing domestic gas take a deposit as a security towards gas cylinders, based on whether you opt for one or two cylinders. Even those companies providing piped gas do take security deposit just like electricity companies. Though these deposits are considered as refundable deposits, they remain permanent so long as you use their services, which are rarely surrendered, as they are a necessity for every household.
These public utilities are perfectly justified in asking for a deposit to protect their own monthly receivables, but what is not justified is that these deposits do not bear any interest so far and the depositing public silently bears this loss of interest for no fault of theirs. As the saying goes, “there is no such thing as a free lunch in this world” and therefore, there is no justification for these utility companies to enjoy these deposits free of interest and there is no reason for depositors to forgo any interest, however small it may be.
The following utilities should, therefore, be immediately asked to pay interest to their consumers, who have given a security deposit, whether they are in the public or private sector.
1. All electricity companies, who supply power to the consumers.
2. All telecom companies who accept deposits from the users of their services as security deposit both for landline and for mobile connections.
3. All corporate or government bodies who provide water to all the users and from whom they accept security deposits, either from individuals or from any other users.
4. All companies who supply gas to the consumers through cylinders and who have taken security deposit towards the cylinders supplied to the consumers.
5. All companies who supply piped gas in several cities and wherever security deposit has been accepted by them from the consumers.
Besides, the rate of interest payable on these deposits should be market-driven based on the long-term deposit rates offered by banks in our country. It is best to benchmark these rates to the long-term deposit rate offered by State Bank of India (SBI) as on 31st March every year and the companies accepting security deposits should automatically calculate interest in the month of April every year and pay it to the consumer as a deduction from the bill amount payable for that month. Though this does not amount to any substantial benefit individually, this is required to be implemented to ensure equity and justice to the consumer.
The regulatory bodies who regulate these utility companies are expected to take care of the interest of the consumers; hence they should direct all the companies coming under their jurisdiction to comply with this requirement of payment of interest, which will, though in a small way, compensate a large number of consumers, who belong to the lower strata of our society. As this does not require any enactment or changes in the laws of the country, and it is within the powers of the regulators, it is all the more necessary to implement this suggestion without any further delay.
Yet another problem faced by the consumers of these utility companies is in respect of payment of their bills through the electronic clearing service (ECS) offered by banks in our country. Some times due to the mistake committed by the staff of the utility companies while claiming the monthly payment like punching wrong account number, etc, or due to any other reasons, the ECS claim gets rejected. But this non-payment is not promptly informed to the consumer either by the bank or by the utility company concerned. The consumer, who does not know about non-payment till he receives his next month’s bill, will have to pay penalty for the delayed payment or face the risk of disconnection of the service, putting him into a lot of inconvenience. It should, therefore, be made mandatory for all utility companies to communicate non-payment of bills in such cases through a written communication to the consumer within reasonable time and provide sufficient time thereafter for payment.
The suggestions mentioned above may look trivial, but if and when implemented, will make life a little bit easier for the common man, who is already burdened with innumerable problems in his daily life. Will the concerned regulatory bodies act swiftly and take steps to improve the lot of our people in the larger interest of our nation?
(The author is a banking & financial consultant. He writes for MoneyLife under the pen-name ‘Gurpur’)
Underground economy and corruption are a further blight on economic forecasting and investing. Both hide the price signals that make markets efficient and predictions accurate. This information is considered too dangerous to be revealed to consumers. The enormous value of the information is also illustrated by the killing of activist trying to enforce the RTI in India
JP Morgan described the panic of 1873 as a "cyclone which came upon us without an hour's warning". But actually there was warning. The boom prior to the panic was like all other booms. It was driven by too much unsecured debt that had driven the stock prices far beyond rational valuation. We want to think that 1873 was the dark ages of finance. But the problems and reason for the panic of 1873 are around today. No one knew then as no one knows now, just how much debt is out there and who owes what to whom. This is why the panic of 1873 occurred. This is why the world went into recession after the collapse of Lehman. This is the danger today.
The lack of information is simple enough. No one wants to give it for the simple reason that it has value. The irony is that much of economics including financial, quantitative and economic analysis assumes that there is sufficient accurate, timely and complete information available to make the theories work. When this rather obvious flaw can no longer be overlooked markets lose it.
The bleeding sore of the Euro crisis is a good example. Despite two sets of stress tests and relentless attention, there is a constant concern for the safety of European banks and the debt of several countries. Greek statistics come in for constant criticism often with good reason. Their unemployment rate is supposed to be 18% but is most likely higher. Still that is nothing compared to Spain's unemployment rate, which is reported to be 21%, but, like Greece, is probably much lower because of a large unreported underground economy.
Underground economy and corruption are a further blight on economic forecasting and investing. Both hide the price signals that make markets efficient and predictions accurate.
Governments certainly contribute and one of the largest contributors is China. Li Keqiang, the man who is likely to be China's next head of government, once described the country's GDP data as "man-made" and "for reference only". Some assume that Beijing is the problem, but according to a recent book by Tom Orlick, it is a "recalcitrant sample set". In other words the locals are lying.
In some ways this is more unsettling than the central government spinning the numbers. If the Chinese government was responsible for the fraud, we could assume that at least someone was aware of the real numbers. If no one really knows, then policies based on bad numbers will be a failure. The prime suspects include the informal lending sector and the vast tumour of China's local government debt, which makes the US muni market look positively healthy. Added to these problems are Chinese corporate debts, which cannot be revealed. The reason given to the US Public Company Accounting Oversight Board, when it requested a review of Chinese auditing firms: state secrets. The issue is that these secrets are probably also withheld from the state.
It is unlikely that China will have a financial panic. A financial panic usually requires a question about the solvency of banks. China's state owned banks may be insolvent, but the state is not. China cannot have a run on itself. This does not mean though that there isn't plenty of room for panic. The China boom has caused bubbles all over the emerging markets. Even a slowdown in China could have some unfortunate effects.
The antidote for bad information is legal disincentives. However, legal disincentives have an issue. They have to be enforced. The Chinese banking regulator the China Banking Regulatory Commission (CBRC) has an enormous conflict of interest. It is a government agency trying to regulate government banks.
What does provide a disincentive are laws like India's Right to Information Act 2005 (RTI). Modelled on the United State's Freedom of Information Act, these laws allow any citizen the right to force a government to divulge information.
The resistance that governments put up to avoid revealing this information is stunning. It took five years for the British government to reveal information required under its act. The reason was simple. The information revealed massive waste by MPs. In India audits and inspections conducted by the central bank on the countries banks to insure solvency and safety is supposed to protect consumer. But the same information is considered too dangerous to be revealed to those consumers. The enormous value of the information is also illustrated by the killing of activist trying to enforce the RTI.
What investors don't know certainly could hurt them. What is worse is that governments who are theoretically responsible for maintaining economic growth and stable markets are systematically either preventing disclosure or allowing information to remain a secret. These are the real enemies of capitalism. If there are further panics, we know whom to blame.
(The writer is president of Emerging Market Strategies and can be contacted at [email protected] or [email protected]).
Aishwarya Rai Bachchan gave birth to a baby girl bringing unending joy to her family and fans. However, a recent international research shows that sex selective abortion is conducted in wealthy families across India, not so much in poorer homes. An overview
Notice this: When it’s a baby boy, hardly anyone bothers to add any more description. When it’s a baby girl, an adjective is often added, almost to justify her coming into this world. For example —“she is beautiful”, ``she is really cute’’ and so on.
In fact, internationally acclaimed author Tasleema Nasreen’s Tweets reflect the attitude towards the female child. She had tweeted “I love Aishwarya Rai. But when I said ‘I wish she would give birth to a baby girl’, people asked me, ‘Why do you hate Aishwarya?’” She tweeted once more: “Why do you think if I say it should be a female baby, is not a healthy baby? ...but her having a daughter can encourage millions of couples not to kill their unborn female babies.”
I remember when I delivered my daughter, our first child, my husband was ecstatic. However, when he began calling up his friends, he was consoled…”oh. It’s very lucky to have the first daughter, she is Laxmi …” “doesn’t matter, there is always a next time” “Ohhh, so are you disappointed?”
It’s tragic that thousands of girls have been and are being snuffed out even before they are born and thousands immediately after birth. The result: a lop-sided girl-boy ratio, tilting towards the male fraternity.
What’s even more horrendous is the recent international research report which states that sex selective abortions occur more in affluent families of India than in poorer homes. A fact narrated to me by a leading gynaecologist of Pune who stated, “Poor parents cannot afford the test; middle-class parents normally have just one child and they do not mind whether it’s a girl or boy but it is the rich patients who indulge in sex selective abortions.”
Lancet, the reputed international medical journal which published the research report conducted by Centre for Global Health Research (CGHR), issued a press release recently stating the research shows that “…in Indian families in which the first child has been a girl, more and more parents are aborting their second child if prenatal testing shows it to be a girl, so they can ensure at least one child in their family will be a boy. These declines in girl to boy ratios are larger in better-educated and in richer households than in illiterate and poorer households, and now imply that most people in India live in states where selective abortion of girls is common.”
Lancet’s press release also stated: “...the 2011 Indian census revealed about 7•1 million fewer girls than boys aged 0-6 years, a notable increase in the gap of 6 million fewer girls recorded in the 2001 census and 4•2 million fewer girls recorded in the 1991 census. In this study, the authors analysed census data to determine absolute numbers of selective abortions and examined over 250,000 births from national surveys to estimate differences in the girl-boy ratio for second births in families in which the first-born child had been a girl.”
The study found that “girl-boy ratio fell from 906 girls per 1000 boys in 1990 to 836 in 2005; an annual decline of 0•52%. Declines were much greater in mothers with 10 or more years of education than in mothers with no education, and in wealthier households compared with poorer households. But if the first child had been a boy, there was no fall in the girl-boy ratio for the second child over the study period, strongly suggesting that families, particularly those that are more wealthy and educated, are selectively aborting girls if their firstborn child is also a girl.”
After adjusting for excess mortality rates in girls, the researchers observed that “number of selective abortions of girls rose from 0-2 million in the 1980s, to 1•2-4•1 million in the 1990s, and to 3.1-6 million in the 2000s. Each 1% decline in child sex ratio at ages 0-6 years implied between 1•2 and 3•6 million more selective abortions of girls. Selective abortions of girls are estimated at between 4 and 12 million over the three decades from 1980 to 2010.
The authors point out that the between the 2001 and 2011 censuses, more than twice the number of Indian districts (local administrative areas) showed declines in the child sex ratio compared to districts with no change or increases. They also point out that, the Indian government implemented a Pre-Natal Diagnostic Techniques Act in 1996 to prevent the misuse of techniques for the purpose of prenatal sex determination leading to selective abortion of girls. Yet they add it is unlikely that this Act has been effective nationally.
Isn’t this a national shame?
For the full article in Lancet, see: