Letters to the editor dated May 6, 2021

Apropos ‘Should India pile its reserves with gold?’ (May 6), leading economies are neutral to gold avarice and poorer ones do not possess the luxury. It is the middling economies that gravitate to gold in painful memory of earlier economic inadequacies.

Gold is at its best when interest rates fall below the rate of inflation as monetary largesse and stimulus programmes threaten inflation spikes and thus investors stick to gold. Stagflation of the 1970s pushed up gold prices and the financial crisis of 2008 saw the prices peak, only to subside with the global recovery thereafter.

Crude oil, on the other hand, enjoys a symbiotic relation with the economy. Though like gold it too has finite reserves, it moves in step with the state of economy. Gold is at the pre-eminent position to be the perfect money by which all other currencies are judged. It will still be so when digital currencies do dare some day to usurp the kingdom of the dollar.

Navi Mumbai

The slew of measures unveiled by the RBI with an intent to boost the flow of funds to small businesses and the health sector at a time when the second wave of Covid is wrecking havoc are welcome. Banks are allowed to borrow ₹50,000 crore at the repo rate for lending to the health sector — which encompasses manufacturers of vaccines, suppliers of medical devices, oxygen and ventilators, and hospitals among others — and the RBI has decided to conduct ₹10,000 crore special long-term repo operations for small finance banks to ensure credit flow to small businesses and categorised credit to MFIs as priority sector lending.

By these steps the RBI had signalled its commitment to provide needed policy support to the most critical sectors of the economy which now face severe strain due to the pandemic. However, the concerns over negative repercussions from its decision to restructure loans of small businesses, MSMEs and individuals on the asset quality of banks cannot be ignored.

While the RBI has now embarked upon steps to ensure copious flow of liquidity, what cannot be overlooked is the dismal credit offtake. With Covid-19 infections showing no signs of abating, economic recovery to pre-Covid levels will only remain a distant dream.

Sholavandan, TN

This refers to ‘Are States’ GST collections on track’ (May 6). Indeed, on its introduction, GST was seen as a game changer in increasing the tax revenue of the States with improved compliance and ease of filing. But the tax collections of States have not been impressive and GST frauds involving humongous amounts are rampant.

The loopholes in the system must be plugged and States must adopt a roadmap for proper scrutiny of returns, audit and enforcement. The e-invoice system makes tax evasion hard and States should implement it properly. The Centre must execute revenue share with States in a timely manner and this will encourage States to boost GST collections.

Sivakasi, TN

The Supreme Court has done right in striking down the law passed by Maharashtra, providing for 16 per cent reservation to the said community. Else, it would have opened the Pandora’s box, prompting other States too to breach the 50 per cent reservation laid down by the court in the Indira Sawhney case, in 1992. Already in Tamil Nadu, despite the existing 69 per cent reservations, there is a clamour for further increase by various caste groups.

For the politicians, quotas have been more a vote catching device, than the intended purpose of the uplift of the truly disadvantaged sections.

Despite decades of reservations, not one group has been excluded from the privilege, with most benefits cornered by the elite. Now, there is a growing demand for reservations in private sector jobs, little realising that even if implemented, it would not ensure ‘lifelong employment irrespective of performance’, as in the government sector.

Chennai

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