India was fortunate to have several intellectuals holding the coveted position of the India's Central Bank Governor role and any comparison between them is by all means comparing Apples to Oranges. This post is to pick the best amongst those intellectuals. Am sure, all of them would have responded to various Financial situations according to the need of the hour but the Best Man RBI ever had till date is Dr.Raghuram Rajan.
What are some of the factors that set him apart from his class of Elite men?
Internal
Non Performing Assets (NPAs) - India was always proud of its robust Financial system and strong Fundamentals. If with all the robustness and strong fundamentals, Banks espesially Nationalised Banks, accumulate and keep accumulating Thousands of Crores as Bad debt each year, whose fault is it ? It's the System filled with Venal politicians. A particular Bank issuing Mr.M 400 Crores as loan against a flying bird's symbol? Another Bank issues money to buy a Debt laden company, which is in a sector where one in a million makes profit? A third bank issues loans in spite of Mr.M not repaying loans and paying salaries to his company's employees on time? Its many more ugly transactions like these that have led to bad debts and in a way they have turned White money into Black. Even shareholders of these Banks are least bothered about the norms on how Bank issue loans. They have full faith in Government that it will inject money when needed and rescue them. And guess what, they are right 105% of the time! What salaried class need to understand is, how will any Government ultimately get their coffers filled? It is by pegging Petrol and Diesel cost at levels higher than a 'fair' rate. By levying higher taxes. Imagine a day in future, when Government decides not to inject money and allows a bank to file for a closure - can you see scenes of Public (currently they act teeth-less) outcry and back lashes?
Doesn't this call a need for privatizing National Banks so that all of them act more responsibly and sensibly? Why does Government not allow it and just point a finger at one man who is trying all his best to avoid the situation to worsen, as though no one else can see what is happening?
Inflation
At least part of the Inflation in India is because F&O is allowed on Vegetables and essential commodities. Why Should this be allowed? If people of the country have money, let them invest in Stock market. Time and again, we get to read classics like these, which absolutely makes no sense. This shows the kind of vested interests different parties have in Indian market.
http://www.forbes.com/sites/timworstall/2015/10/17/india-should-have-an-onion-futures-market/#cb19869506dd
Where as US realised the danger in 1950s and banned this:
https://en.wikipedia.org/wiki/Onion_Futures_Act
To tame Inflation, to an optimum level in spite of the pressure from Government to ease the rates several times, nonsensical practices and suggestions like above the RBI chief did a very good job in steering the country's monetary policies in the right direction.
External
Thanks to our closed door policy till about 1990s some of RBI governors never had to face External demons to the level what their successors are facing today. Liberalisation, Privatisation and Globalisation also brought with them a can of worms. External markets are even more complex and are so interlinked today than before. While Greece is almost dead; because of the Glutton of Crude Oil production by US, Arab countries - Countries like Venezuela and Several Oil companies are counting their days.
China has huge trade offs, What will it do with all the Paper (Read as US Dollars) it accumulated? Pollution vs. Production? If it stops accepting payments in USD who will purchase their Goods? If China is down who will purchase Raw material from India? If China comes up with alternate currency, should India go with China?
World needs good leaders, especially from US. Depending upon who gets elected as US President will have a significant impact on the world. It is a battle between a bruised Old school Christian male population vs the Entire world.
There is no need for celebrations that India has replaced Japan in terms of Purchasing Power. We should bear in mind, the Population figures of both countries. India still has a long way to go. India is now in such a position, where, when all other countries' economies are travelling by bicycles or going by foot, we have the luxury to travel by car, but hold on, its an Old car!
The top Banker has proved his mettle with his perfect grasp of the situations and understood the car well. Times will not be easy for his successors as all the chief could do is to hand over an old car, they will be under tremendous pressure. When in doubt, they can certainly look at their Senior and learn a thing or two and pick up solutions from his work.
What are some of the factors that set him apart from his class of Elite men?
Internal
Non Performing Assets (NPAs) - India was always proud of its robust Financial system and strong Fundamentals. If with all the robustness and strong fundamentals, Banks espesially Nationalised Banks, accumulate and keep accumulating Thousands of Crores as Bad debt each year, whose fault is it ? It's the System filled with Venal politicians. A particular Bank issuing Mr.M 400 Crores as loan against a flying bird's symbol? Another Bank issues money to buy a Debt laden company, which is in a sector where one in a million makes profit? A third bank issues loans in spite of Mr.M not repaying loans and paying salaries to his company's employees on time? Its many more ugly transactions like these that have led to bad debts and in a way they have turned White money into Black. Even shareholders of these Banks are least bothered about the norms on how Bank issue loans. They have full faith in Government that it will inject money when needed and rescue them. And guess what, they are right 105% of the time! What salaried class need to understand is, how will any Government ultimately get their coffers filled? It is by pegging Petrol and Diesel cost at levels higher than a 'fair' rate. By levying higher taxes. Imagine a day in future, when Government decides not to inject money and allows a bank to file for a closure - can you see scenes of Public (currently they act teeth-less) outcry and back lashes?
Doesn't this call a need for privatizing National Banks so that all of them act more responsibly and sensibly? Why does Government not allow it and just point a finger at one man who is trying all his best to avoid the situation to worsen, as though no one else can see what is happening?
Inflation
 |
Why should Potatoes and Agri commodities be allowed to trade? |
At least part of the Inflation in India is because F&O is allowed on Vegetables and essential commodities. Why Should this be allowed? If people of the country have money, let them invest in Stock market. Time and again, we get to read classics like these, which absolutely makes no sense. This shows the kind of vested interests different parties have in Indian market.
http://www.forbes.com/sites/timworstall/2015/10/17/india-should-have-an-onion-futures-market/#cb19869506dd
Where as US realised the danger in 1950s and banned this:
https://en.wikipedia.org/wiki/Onion_Futures_Act
To tame Inflation, to an optimum level in spite of the pressure from Government to ease the rates several times, nonsensical practices and suggestions like above the RBI chief did a very good job in steering the country's monetary policies in the right direction.
External
Thanks to our closed door policy till about 1990s some of RBI governors never had to face External demons to the level what their successors are facing today. Liberalisation, Privatisation and Globalisation also brought with them a can of worms. External markets are even more complex and are so interlinked today than before. While Greece is almost dead; because of the Glutton of Crude Oil production by US, Arab countries - Countries like Venezuela and Several Oil companies are counting their days.
China has huge trade offs, What will it do with all the Paper (Read as US Dollars) it accumulated? Pollution vs. Production? If it stops accepting payments in USD who will purchase their Goods? If China is down who will purchase Raw material from India? If China comes up with alternate currency, should India go with China?World needs good leaders, especially from US. Depending upon who gets elected as US President will have a significant impact on the world. It is a battle between a bruised Old school Christian male population vs the Entire world.
There is no need for celebrations that India has replaced Japan in terms of Purchasing Power. We should bear in mind, the Population figures of both countries. India still has a long way to go. India is now in such a position, where, when all other countries' economies are travelling by bicycles or going by foot, we have the luxury to travel by car, but hold on, its an Old car!
The top Banker has proved his mettle with his perfect grasp of the situations and understood the car well. Times will not be easy for his successors as all the chief could do is to hand over an old car, they will be under tremendous pressure. When in doubt, they can certainly look at their Senior and learn a thing or two and pick up solutions from his work.
No comments:
Post a Comment