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Thursday, March 31, 2016

Kejriwal Politics Affect Bankers Too

A large number of gold traders and jewellers are on  strike for almost a month  in protest against the proposed one per cent excise duty on non-silver jewellery. Most jewellery shops and establishments in the country are shut since March 2 after finance minister Arun Jaitley announced one per cent excise duty on non-silver jewellery.

Arvind Kejriwal Chief Minister of Delhi has come in support of jewellers and asked Prime Minister Mr. Narendra Modi to take back 1% excise duty imposed by central government during presentation of budget for the current year. Arvind Kejriwal writes to CMs over rollback of excise hike on jewellery. Delhi Chief Minister Arvind Kejriwal also met President Pranab Mukherjee and asked him to intervene in the matter. He says that as soon as excise duty is imposed , inspector raj will come back, jewellers will be tortured by officials, jewellers will have to maintain proper stock of work done by them and so on. Mr. kejriwal says  that the levy of 1 per cent excise duty on non-silver jewellery will lead to "inspector raj and corruption".

It means Kejriwal is not bothered of illegal money absorbed by these jewellers who sell  their 90% of product in black money. He is not aware that illegal money earned by corrupt officials and Corrupt politicians is also concealed in gold products. 

 If 1% excise duty is imposed, jewellers will have to pay tax for every product they produce and they sell to consumers. Further govrnment has proposed that every buyer of gold should provide PAN if the purchase is more than Rs.2.00 lac. These two important steps taken by central government will help in stopping business men hiding black money in form of gold and also help in exposure of corruption.

These steps in long run will help in boosting economy up when black money will slowly be convertd in white and then invested in real manufacturing work. But Mr. Kejriwal is least concerned about health of economy, he is more concerned about health of his politics, future of his party AAP and that of votes he will get from jewellers and workers associated with this industry if he extend support to their illegal strike.

I do not understnad how workers in jewellary industry will get affected by imposition of excise duty on gold. After all, it will be the consumers of gold who will have to maintain proper account of gold purchased, who will have to show entire transactions in their balance sheet and it is they who will have to pay little bit more than usual market rate while buying gold products. It is traders in gold who will have to maintain proper accounts of their purchases and sales.

It is to be kept in mind that govrnment will earn some revenue which will also ultimatly be spent in social welfare scheme only. It will be a positive step for common men and negative step for rich people who may afford buying gold to save black money. Middle class and poor class families will not face any trouble in buying gold valued less than Rs.2.00 lacs.

People of India who are unbiased towards any political party or any politician  and who understand principles of economy and that of fiscal management  will laugh at logic given by Mr. Kejriwal while supporting withdrawal of 1% excise duty.

Kejriwal's  argument that it will increase the work of jewellers and increase interference of inspectors in activites of jewellers to ensure compliance of excise duty is not at all justified. If this argument is accepted, then government will have to stop charging tax on income  also , because it also leads to frequent raids by income tax authorities and it also gives opportunity to Income tax inspectors to interfere in day to day activities of business men.It also creates scope for corruption.

Practice of income tax also forces every business men and service men to mantain accounts of their income and investmnt to arrive at proper amount of income tax payable to government of India. This is extra burden on business men and service men who work hard to earn money. If they conceal their income and indulge in evasion of tax to create black money , they are subject to scutiny by income tax officials and punishable under IT rules .

Similar is the postion of every type of taxation that a state government or central government introduces for increasing their economic resources and for increasing their capacity to spend on social welfare schemes. If arguments of Mr. Arvind Kejriwal is accepted , then all taxes should be withdrawn and people of India should be made completely free to do what they like to do to earn for their family. Government will have to stop all works related to infrastructure , social welfare and all those works which an individual do not do for the society.

Drug inspectors who carry out inspection before granting a license for a medical shop also create problem for a trader in medicine. Inspectors of Pollution Control Board also appear burden to business men whose industry cause pollution in air and nearby social habitats. Food inspectors are also problem creators for business men who indulge in adultration in food to earn higher profit. Exicse inspectors are burden for all manufacturing industries who fall in the ambit of excise duty. Service Tax inspectors are burden on hotels, cinema halls and all service providers who come in the range of service tax rules. Sales tax and value added tax also lead to inspector Raj and creates scope of corruption.

If arguments of clever Arvind  Kejriwal is accepted , then all these inspectors will have to lose their job. Not only this, rule of law will be taken over by anarchy where free for all will be the law of the land.

 I do not know where Mr. Kejriwal will lead to us if he is handed over charge of this country. I am afraid that such politicians may sacrifice all principles of economics and go to any extent to serve their political interest if they get power to rule.

Kejriwal is blaming Mr. Narendra Modi in particular  and central government in general for all his fault , for all his failures in Delhi, for all those accidental or normal  incidents taking place in the country which suits politics of Kejriwal. 

Some section of Media and some Modi hater journalists give full coverage to all leaders who can abuse Modi on right or wrong issues.  Kejriwal may get support from such baised media men , but common men will never support irrrational and illogical arguments of Mr. Kejriwal like politicians. This is why , Mr. Kejriwal is hated outside Delhi though he is appreciated by some section of Delhites for his good work for some section of the society.

Even Chandan Taskar Verappan who was  a great looter was worshipped in his village due to his mass charity work by money he accumulated by looting work . And hence getting votes in some constituency or winning some assembly seats or Parliamentary seats in the country is not enough to  certify good character and good qualities of a person or a party.

In short run , Kejriwal may earn some popular votes in country like India where media and caste plays a great role in changing the innocent and illitrate minds of voters . 

But in long run , politics of Kejriwal will prove fatal if he does not change his ways and does not stop his unwarranted interference in the affairs of other state governments and that of central government. Modi haters like Kejriwal will do great harm to country if they do not support government in good policies and in growth oriented works of Central government. People of India had great expectation from Kejriwal when he was leading a movement against corruption but they are now totally disappointed.

Kejriwal thinks it wise to suggest hundreds of advices to management of private schools in Delhi but does not  have idea how to improve teaching standard of government schools. He wants to earn popularity by giving discount on electricity and water bill, but he does not have idea how to ensure power supply and water availability to every common men. He wants reservation for some caste or the other but do not have idea how to create new job opportunities in Delhi.

Kejriwal criticises Modi when Mallya flies out of India and accuses Modi of facilitating Mallya going out of India but he does not have any say for those leaders of Congress Partyy who forced bankers to lend money to sinking Kingfisher airlines of Mr. Mallya. 

It is undeniably true that it is UPA governmnt which wilfully ignored and neglected when volume of stressed assets in banks were rising each quarter during their regime.  And during Modi rule, defaulters are now thinking of repayment due to clear messahe given by Modi, Jaitley and Rajan. 

Kejriwal  suggests bankers to give education loans to each student but he does not suggest how to recover money from defaulting students. If all political leaders start focusing on recovery of bad loans as they suggest for sanction of loan as charity, I think entire culture will change and there will be minimum cases of default in banks.

Kejriwal is perhaps not aware how much of bank loan is in stressed category in banks of Delhi State . And if he is aware of real health of PSU banks in Delhi, he should help banks in recovering money from defaulting persons and companies instead of blaming Modi for all such faults. He should understand role of state government in making banks stronger.

In my view Mr. Kejriwal is pound follish and penny wise in politics as well as in economics and governance. 

Kejriwal thinks that he may win the post of Prime Minister from Mr. Modi just by ridiculing each act of  Mr. Modi and just by putting blame on Modi for fault of each state government. He may think that by doing dirty plitics on dalit issue or on Kanhaiya issue he may win the heart of media men and all India dalit and muslim voters. He may think that by supporting all evil acts of Muslim and by ridiculing all acts of Hindus , he can win the battle of Parliamentary election . But in my view he is totally wondering in dreamland and he will be taught a good lesson in forthcoming election once again as he faced total humiliation in last Parliamentary election.

Banks used to give interest of 3.5 per cent on savings accounts on the basis of the least deposit in an account between the 10th and the last day of each month.

In 2011, the central bank had decided to give freedom to commercial banks to fix savings bank deposit rates, the last bastion of the regulated interest-rate regime. While giving banks this freedom, RBI had said a uniform rate will have to be offered on deposits of up to Rs. 1 lakh.

Now  Reserve Bank has asked banks to pay interest on savings banks account on quarterly basis or shorter duration, a move which will benefit crores of savings account holders.

At present, the interest is credited in savings bank account on half-yearly basis. Interest rate on savings bank account is calculated on daily basis since April 1, 2010.

“Interest on savings deposit shall be credited at quarterly or shorter intervals (on domestic savings deposits),” RBI said in a master circular issued on March 3.

While public sector banks offer 4 per cent interest on savings deposit, private players offer as much as 6 per cent.

Banks are however required to ensure uniform rate of interest on amount upto Rs.1.00 lakh. On higher amounts, banks are allowed to offer differential rates to depositors.

It is roughly estimated that the lower periodicity of interest payment may put a burden of Rs. 500 crore on banks.

If we cosider the impact on a bank by change in policy of payment from half yearly to quarterly, bank will have to pay approximately Rs.20.00 crore per year extra on a corpus of Rs.1.00 lac crore in savings deposit .

So far as depositors are concerned, a person depositing Rs.1.00 lac and keeping it for one yar in the bank, will get additional interest of about Rs.20 in a year by change in periodicity of Payment of Interest on Savings Deposits from Half Yearly Basis to Quarterly Basis.

As such impact of change in periodicity of payment of interest , neither customers will be highly benefitted, nor banks will face significant impact on their balance sheet or profitability.

Change in policy will however enable banks to draw corrct quarterly balance sheet . Earlier, thse banks used to make rough provisions towards payment of interest on Savings Deposit held in their banks. Now they can draw clear picture branch wise too so that they may assess the profitability of each branch . In this way , banks can depict true picture of a branch as well as that of the bank in its entirety.

Impact of Change In Policy

Watch on TV Part 2

18-March-2016 20:58 IST

Interest Rates on various Small Savings Schemes for the 1st Quarter of 2016-17 notified;. Additional Interest Rate spreads which the Government allows on Small Savings Schemes like PPF, Senior Citizen Savings Scheme, Sukanya Samridhi Scheme and NSC etc. are being continued and included in the rates notified today.
From the year 2012-13, the interest rates on various Small Savings Schemes (SSS) are recalculated and notified in the month of March every year
From the year 2012-13, the interest rates on various Small Savings Schemes (SSS) are recalculated and notified in the month of March every year.  These rates are applicable for the next financial year.  This is being done in line with the recommendations of the Shyamala Gopinath Committee to ensure that the interest rates of Small Savings Schemes are market linked.
Accordingly, as done in the previous years, the interest rates for various Small Savings Schemes were due for recalculation in March 2016.  As notified on 16th February, 2016, instead of annual resetting of interest rates for the next financial year, the interest rates from now on will be reset every quarter based on the G-Sec yields of the previous three months. Consequently, the interest rates for various Small Savings Schemes were recalculated with reference to the G-Sec yields of equivalent maturity for the months December 2015 to February 2016.  Based on this calculation, the interest rates on various Small Savings Schemes for the 1st quarter of 2016-17 have been notified today. The rates of interest on various small savings schemes for the First Quarter of Financial Year 2016-17, on the basis of the interest compounding/payment built-in in the schemes, shall be as under:

Rate of interest w.e.f. 01.04.2015 to 31.3.2016
Rate of interest w.e.f. 01.04.2016 to 30.6.2016
Savings Deposit
1 Year Time Deposit
2 Year Time Deposit
3 Year Time Deposit
5 Year Time Deposit
5 Year Recurring Deposit
5 Year Senior Citizens Savings Scheme
5 year Monthly Income Account Scheme
5 Year National Savings Certificate 
Public Provident Fund Scheme 
Kisan Vikas Patra
7.8 (will mature in 110 months)
Sukanya Samriddhi Account Scheme

  This is a formula driven process. 
Further, as notified earlier, the additional interest rate spreads which the Government allows on Small Savings Schemes like PPF, Senior Citizen Savings Scheme, Sukanya Samridhi Scheme, NSC etc. are being continued.  The additional spread for these Schemes are 25 basis points for PPF, 100 basis points for Senior Citizen Savings Scheme, 75 basis points for Sukanya Samridhi Scheme, 25 basis points for five year time deposit, 25 basis points for National Savings Certificate and 25 basis points for Monthly Income Scheme. These additional interest rate spreads are being continued and are included in the rates notified today.
The quarterly revision of interest rates will ensure that the interest rates under Small Savings Schemes are more dynamically related to the current market rates, thereby enabling the Banks to move their interest rates in line with current money market rates. 

1 comment:

  1. every coin has 2 sides. Several permutations and combinations are being worked out / churned out by political parties which are in power. First of all, let the G.O.I. withdraw the trading in GOLD, IN EXCHANGES, so as to bring the artificially created hype and high price of metal GOLD. As per the statistics, a gram GOLD must now be at just 900 INR only. Like that, SILVER too. If G.O.I. controls and regulate the artificial trading in metals such as GOLD, SILVER, COPPER etc., much more turnover is expected. In the name of this and that, several indirect gamblings are being allowed in our country. Then, why not LOTTERIES ? Why only the Government of Kerala is doing LOTTERY business ? Why not Other State Governments ? Let there be a constructive DEBATE / DISCUSSION.