Prime Minister Narendra Modi’s enthusiasm to improve relations with neighbouring and SAARC nations is commendable. The Chinese president’s visit raised hopes that tensions with China would ease, but Chinese troops entered Indian soil and backtracked before the visit was concluded. Now, incursion has been reported in Chumar. It appears that China is more interested in promoting a market for its products in India. The Chinese president downplayed the incursion saying that it was the result of confusion in demarcation of the LAC. Interestingly, the CPM has been maintaining a loud silence even in the face of repeated incursions. The repeated incursions should open the eyes of the Indian administration to increase its troops while at the same time improving the economy.
Rate cut, not now
Never before has the Indian economy witnessed the kind of prolonged slowdown it is seeing now. Banks’ credit growth which is usually around three times the real GDP growth has taken a severe hit. With some political stability, the economy is showing signs of stabilisation and certainly things have started improving.
While industry circles are expecting a cut in the key policy rate, it is also widely believed that the RBI governor may not do so in the next round of the monetary review scheduled for September 30. He would prefer maintaining status quo despite the fact that the level of inflation has eased considerably. Certain issues that are likely to dominate the scene now are geopolitical happenings that have a direct bearing on the economy, delayed arrival of the monsoon and deficient rains in parts of India, supply-side constraints and the not-so-comfortable fiscal situation of the Government. Raghuram Rajan would rather wait for an opportune time before cutting the rate and look for sustained growth in the medium to long term.
The information contained in Sanak Mishra’s “Mine it, use it, don’t export it” (September 20) provides many insights. Though India ranks fourth in world steel production, its output of 81 million tonnes is just 5 per cent of the world’s 1.6 billion asking for accelerated growth. Since per capita steel consumption is a good measure of economic growth and prosperity, our measly consumption of 60 kg against the global average of 215 kg points to the need for quick economic progress. While India’s capacity utilisation has gone up to 77 per cent, it is far below the world figure of 92 per cent. As for the export of iron ore without meeting the domestic requirement, it is an example of “neocolonial trade”. It needs to be checked also because the export of iron ore is mired in alleged malpractices.
Banking on relationships
This refers to the report “Now, SBI’s education loans come with credit cards” (September 22). This is a welcome initiative and all banks should follow suit, not by introducing the same product, but by factoring in the need for monitoring the client’s financial health, irrespective of whether the client is a depositor or a borrower.
One is sadly aware that at a time when banks hate client footprints, even for making deposits, maintaining a relationship between the bank and the customer is not easy. The success of the efforts in this direction will depend on the willingness of the bank to see the customer as the reason for its existence. Maybe, banks may have to revisit the practice of looking at the family as a unit for providing services.
The initiative to provide credit cards to students who avail education loans is similar to NINJA loans (no income, no job or assets) which put American banks into deep trouble some years back. When this credit card is backed by guarantee of parents, it is nothing but an add-on card. If the borrower/guarantor is good, education loans as well as credit card dues will be recoverable. If not, both will become non-performing assets.
Time stands still
One of the best Indian watch manufacturing public sector companies, Hindustan Machine Tools (HMT), is sadly facing closure as it failed in the competitive market. I still have an HMT watch purchased in the 1970s. It hardly required any service, it was so durable. But people prefer international brands these days. Hindustan Motors and the Ambassador have stopped production, now it’s HMT. Let us hope the slogan “Make in India” will not result in the closure of Indian brands and companies if foreign giants come and start their brands in India. If other PSUs are in a similar situation, it would be better to sell to an Indian private sector company or hire a proven management consultant to run the show.
This refers to the editorial, “Life after Xi” (September 22). The Chinese president said he would support India to play a larger role in the UN. We have high ambitions but we never take a stand on international issues. It is time to take a stand, only then will we command respect in international fora. It is also time we act as we speak and face the consequences of the stand we take.
Either you get on board and have a larger role to play globally or be a developing economy forever. With the mandate that this government has got we need to move this country forward by taking assertive steps both economically and politically. Let’s not be non-aligned and stay put.
Prime Minister Narendra Modi has asked the ministry of commerce to work out a plan to reduce India’s dependence on unnecessary imports. Import substitution and export promotion has been one of our main objectives since the First Five-Year Plan (1951). But successive governments have failed to achieve it, thanks to lack of commitment, political will and accountability. It must be remembered that the sole way to reduce imports of commodities (sugar, edible oil) is to produce more and become self-sufficient. S Ramakrishnasayee
Ranipet, Tamil Nadu
Hema Malini's comments about Vrindavan widows once again brought to the fore the problems plaguing the elderly. India once boasted of strong family bonds but it is now going through a phase of “use and throw”. In the globalised era human beings are reduced to commodities. We only talk about human resource and the elderly have no place there. So a change in mindset is required. I wonder why the younger generation who are the harbingers of the new era don’t realise that their plight will be worse than this when they ultimately reach the fag end of their lives.
Gold purchases by the two largest sources of demand, India and China, have fallen sharply, abruptly halting a consumption boom that started six years ago with the onset of the financial crisis. Gold prices, just over $1600 an ounce not too long ago, are now way below their all-time high of $1920. With weakening Indian and Chinese demand, and stagnating price, speculative demand for gold may be poised to collapse, triggering a self-reinforcing downward spiral. That’s what happened after gold peaked at about $900 an ounce in the early 1980s, ushering in a long downward slide in which gold lost almost 75 per cent of its peak value. Bond markets are dominated by low inflation, while gold markets, commodities, futures, by medium-term hyperinflation. With generous doses of quantitative easing in the US, the price of gold could now be highly volatile and tending down. It is very difficult to explain the apparently inconsistent expectations underlying the bond markets and the gold markets and abundant caution may well lie in selling. And that comes with even more unstable gold pricing.
Ghaziabad, Uttar Pradesh