Crude prices and growth

With reference to your editorial, ‘Making for the world’ (April 3), there are many factors to be reckoned with for lifting exports. The US with its virtual printing of dollars through QE while debilitating its economy, strangely strengthens its currency.

The flood of liquidity from the ECB and Japan has added to the problem. Persistent imperfections in an international monetary system based on the dollar skews exchange rates. Global trade is in descent. India is unable to step up supply due to poor infra growth. China’s economy is deflating, saddled with idle capacity.

The Eurozone keeps wrestling with its unresolved structural issues and South American nations have high inflation levels with huge fiscal deficits.

Now comes a new twist from plunging crude prices. Data of the past four decades shows that elevated oil prices coincided with a surge in the global economy.

R Narayanan

Ghaziabad, Uttar Pradesh

On the financial front

The Prime Minister’s appeal to bankers to lend to small businesses and farmers is the need of the hour, but the initiative is fraught with problems for bankers. First, there is greater risk in small business and agriculture is dependent on the monsoon and marketing of farm produce. Efforts were made to make up for this through insurance for credit and farm insurance. But DICGC, which covered the small business sector was wound up and the crop insurance scheme is not operating as desired. The education loan portfolio also has mounting NPAs, and so on..

To achieve the desired results, the government should seriously pursue the following: 1. Credit guarantee should be hassle-free. The claims invoked by banks after default should be settled without finding reasons for rejection. 2. The crop insurance scheme should cover not only monsoon failure but market failure too. It should be farmer and crop specific with individual policies rather than a master policy and free from government certificates. 3. While granting study loans, there should be a central repository for capturing the details of the borrowers based on their educational certificates. Any employer in India or the emigration officials should crosscheck these details before approval. Employers should route the salaries of their employees only through the bankers from whom the study loan was availed.

S Veeraraghavan

Madurai

Don’t pressure banks

This is with reference to the governor’s remarks in the news item, ‘Rajan asks banks to be cautious in lending to infrastructure sector’ (April 3). It is high time a dedicated infrastructure development bank is set up to lend in this sector exclusively. This entity can source long-term funds to finance huge infrastructure oriented projects with a long gestation period to generate income, and have a very long period of loan servicing.

Asking commercial banks to fund and finance infrastructure projects is not a worthwhile suggestion. With the concept of differentiated gaining momentum, the RBI should set up this bank so that its asset liability management and restructuring as well as provisioning norms could be applied meaningfully, instead of asking commercial banks to bend backwards to fund now and restructure later with or without debt conversion into activity.

Commercial banks should be kept safely away from long-term oriented loans as they need to get back the money in the short term for recycling in trade and commerce instead of getting bogged down in huge project loans.

RS Raghavan

Bengaluru

Absurd appeal

The periodic pleas made by the Prime Minister to the well-off section to forgo LPG subsidy is absurd. If he is serious about providing LPG connections to the poor by saving on subsidy to the rich he should show the political will to stop subsidy to them instead of appealing to their philanthropic impulses.

The state cannot abdicate its responsibility to provide a decent life to the vulnerable sections of society and instead expect charity to solve the country’s problem of inequality.

Manohar Alembath

Kannur, Kerala

Equality above all

The article, ‘Municipal bodies — the bigger, the better’ by Narendar Pani (April 3) offers a solid example for balance of power. States like Uttar Pradesh, Madhya Pradesh, Bihar and now Andhra Pradesh were carved out due to the large expanse of the area they covered and hugeness of population but what progress the carved out States have made is there for everybody to see. All the areas have to be developed equally without prejudice.

HP Murali

Bengaluru

Super achievement

The BJP’s membership drive across the country seems to have paid off with the party managing to enlist a whopping 10 crore new members. The credit should go to the BJP president Amit Shah who has been the driving force behind this incredible effort. The magic number which gives the BJP the distinction of being the largest in the world should come as a shot in the arm for the party after its electoral debacle in the Delhi Assembly polls. However, the saffron party needs to convert the newly added members into workers if it is to make these numbers count.

Narendra Modi’s objective to turn Clean Ganga and yoga into mass movements is a tall order and can be achieved only if each and every member throws his weight firmly behind the party. The move to replace patriarch LK Advani with Modi also shows that the latter is in charge of party affairs, which is what the doctor ordered.

NJ Ravi Chander

Bengaluru

Smoking kills

Despite warnings on cigarette packets and in the media, about the harmful effects of smoking, young people smoke, as they think death is very far. They are unmindful of passive smokers. RJR Nabisco had to withdraw their brand of smokeless cigarettes from the market when they found smokers enjoyed the smoke. The change has to come from within. Also, in the interest of the health of the nation, the problem has to be tackled at the grassroots level of tobacco growing, despite the powerful tobacco lobby. Any delay may result in the nation paying a heavy price.

TS Karthik

Chennai

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