Letters to the editor dated February 5, 2021

| Updated on February 05, 2021

Right move by RBI

The RBI has taken the right step by keeping the repo rate unchanged at 4 per cent. This will definitely help in increasing liquidity in the market. Pumping more funds into the system should be of utmost priority, to combat the huge economic impact of Covid.

For banks, the repo rate has a direct impact on the cost of borrowing. Higher the repo rate, higher will be the cost of borrowing and vice-versa. Since the rate is low now, commercial banks can lend with ease. Also, it is heartening that the RBI has projected a GDP growth of 10.5 per cent in 2021-22.

Ravi Teja Kathuripalli


Tax on savings

This refers to ‘Unfair tax on savings’ (February 5) . Though it may be argued that this proposed tax will only impact those who contribute more than ₹2.5 lakh per year and it will not impact their existing corpus, overall it is not a wise move by the government to tax PF contribution. The government says that there are employees, especially in the higher-income bracket, who tend to use it as tax exemption is available on all three stages. But they are within their right to do so. Moreover, there is no safe asset class or financial instrument that gives more than inflation rate returns.

Bal Govind


Rationalising PF

The Budget notable as much for not imposing any tax as for one clause in its fineprint. And this is the plan to withdraw the tax exemption on the interest income earned by employee’s provident fund contribution exceeding ₹2.5 lakh a year. As the government offers no social security cover to the retired or elderly, those working in the organised sector rely mainly on their own contributions to the EPF to build up a retirement kitty. To withdraw this benefit is quite unfair, even if it impacts only 1 per cent of EPF members. The purpose of high contribution is to secure future security.

The clause’s wordings are also unclear on whether the tax will apply only to contributions made after April 1, 2021, or to interest on legacy investments as well. To help employees plan, the Centre must reveal its long-term roadmap for the three retirement vehicles (EPF, PPF and NPS) without attempting piecemeal changes.

Yash Pal Ralhan


Crusade against Covid

Considering its huge population most experts predicted India would have a large number of fatalities due to Covid. It is heartening to see a downward trend in the coronavirus curve, as infected cases decline dramatically. This may be due to herd immunity or Indians in general having better immunity against deadly viruses. In Manaus, Brazil, a second wave was reported after a dip in corona cases. By taking a leaf out of this, we should be extra vigilant in our crusade against microbes. Meanwhile, people should shed all misconceptions and apprehensions regarding taking Covid vaccination.

V Nagendra Kumar


Hurting the middle class

Apropos ‘Leaving the middle class high and dry’ (February 5), not only the middle class but also the pensioners have been left high and dry, in what is touted as the Budget ‘like none before’. In a climate of falling deposit interest rates and rising prices, the said sections were expecting some relief from Budget 2022, only to be sorely disappointed. Both the IT slabs and the standard deduction threshold have been left untouched.

The middle class has borne the brunt of the pandemic, by suffering job losses, salary cuts, deferment of increments, and so on. Likewise, the pensioners were expecting the ceiling on investment in schemes like the NSS and the LIC PMVVY to be raised, so that they could divert their life-time savings from bank deposits to the former, thus shielding themselves from the falling returns from the latter.

The said sections may not be vocal like the farmers and with general elections still three years away, the government may see no urgent need to placate them. However, it is the bounden duty of any government to keep in mind the interests of all sections, especially the vulnerable ones.

V Jayaraman


Published on February 05, 2021

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