The Indian situation

‘Is the middle class getting poorer?’ by Alok Ray (January 4) is an interesting analysis. In the Indian context, a small percentage of the people from this segment has climbed up upon employment with IT, ITES and BPO companies whereas most of them struggle to put up with the rising inflation, depleting value of money, and economic debacles owing to global and inept or abrasive policy shifts, including demonetisation.

Lack of vision and political will, capricious policy shifts unmindful of their devastating effects, inequitable tax structure and curtailment of public expenditure have changed the economic contours. Policy-formulators must show the way to bring economic development on track to raise the real incomes of people across the board.

B Rajasekaran

Bengaluru

Long overdue

The Supreme Court’s ruling that securing votes on the basis of religion, race, caste or language would be treated as corrupt practice should have come long ago. Elections need to be fought on the basis of performance of the candidate/party and strategy, agenda, ideology and promises, not other factors.

The voter is free to make his or her decision based on whatever consideration. If the ruling applies to voter then a great injustice would be done to those who for centuries have been denied dignity and rights on the basis of their caste, religion, language or community.

Unless a strict audit on election expenditure of the candidate is done and a strict punishment for violation is implemented no such ruling can improve the election process. Moreover by this ruling the Supreme Court has invited more and more cases filed by rivals which would add to the crores of pending cases.

TSN Rao

Bhimavaram, Andhra Pradesh

For the country’s economic progress there should be a ban on reservations of all kinds and political parties must include it as an important item in the election manifesto. Economically weaker sections must be given more opportunities but in no case should there be reservation.

Mahesh Kapasi

New Delhi

A challenge for banks

This refers to ‘Credit fantasy’ by Andy Mukherjee (January 4). The risks as listed out facing the Indian industry in terms of capital requirements due to the thrust on new set of borrowers are genuine. There are multiple challenges banking industry will face in the coming days. While the Government’s commitment to the uplift of the weaker sections cannot be doubted, it also needs to take into consideration the fact that the banking industry is passing through a critical phase on account of high NPAs. The renewed thrust on a new set of borrowers would put pressure on lending to productive sectors for want of additional capital. There is going to be a huge requirement of manpower and IT infrastructure. Banks need to stand up to meet this challenge.

Srinivasan Velamur

Chennai

The build up of CASA is a demand liability in the books of the banks. The monies were deposited by the public out of fear that their personal savings would go valueless and face penal action. The anxiety today is to withdraw money. With corporates having myriad issues, confounded by wage payments due to demonetisation, there cannot be immediate credit growth. Banks will be reluctant to finance subprime borrowers and their pricing to risks involved will further dampen spirits.

Capital formation can happen only with internal accruals and government funding in case of PSBs. This will take more time. Once demand deposits get converted into time deposits, banks can have comfort in their asset liability match. Further, it isn’t the interest rate that is going to fuel retail credit growth, but the turn around time (TAT). NBFCs have with ease overtaken banks in retail finance, including jewel loans only with TAT in spite of their higher cost of lending. Retail borrowers have low priority to cost when compared to TAT.

S Veeraraghavan

Coimbatore

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