One Episode, Two Realizations: an Emotional, a Funny

Every year on Rakhsha Bandhan, I remember the early morning gift (a Raakhi and a Coconut) from the priests of Jagannath temple at my hometown. (In this festival, this is also a ritual between temple priests and yajmaans (hosts); the yajamaans in turn gift them due dakshinas.) Being the only child, I used to much look forward to it because to celebrate the occasion, I neither had a brother nor I was/am a brother to someone. Actually, I more desired that someone tied a Raakhi to me ! Moreover, my near cousins were either too young or too old or resided in remote terrains or atheists.

Hence to fill all sorts of emotional gaps on this day, my sister-in-law has now made it a point to include a Raakhi for me too in her annual Raakhi parcels to Bangalore. I was indeed elated with her idea…

Last year, she sent a beautiful gem-studded Raakhi. But while it was in transit, thieves stole it 😦 !

So this year, she sent a ‘Jaga-aakhi’ Raakhi (based on Lord Jagannath’s eyes). As usual, thieves have torn the envelope but it seemed the ‘Jaga-aakhi’ deterred them !! My sister-in-law’s trick worked this time 🙂 .

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The other realization : chor adat se toh majboor hain hii… saath mein, police-ke-dandey aur divya-netron ke ” sirf ahesaas” se bhi majboor hain 🙂 ! (no doubt, thieves have a habitual compulsion… at the same time, they also have another compulsion owing to “mere realization” of police-batons and divine-eyes !)

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Foreign Direct Investment (FDI) – A Necessity in India !!

There are arguments and counter-arguments on FDI or Foreign Direct Investment in India in the Parliament, in election rallies, in TV-debates, in newspaper articles, in general strikes in the country or Bharat Bandhs… There are obvious fears by the farmers, retailers, small-scale manufacturers, and the common man on the effect of FDI in India. Some say that FDI in India will bring major Multi National Companies (MNCs) in India which will abolish small-scale retailers and businessman. There are arguments saying that the MNCs will have a monopoly in the market resulting in a sharp rise in price of items in India. Further, there is also a fear that the country’s security – both internal and external, will be at stake due to the involvement of MNCs in Telecom, Internet, Aviation, Infrastructure, Retail, Healthcare, Insurance, etc.

Not that all the above arguments against FDI are invalid. However, with a positive mindset, we can certainly overcome such apprehensions. This can certainly be done by bringing reforms in our Judicial system, and by resetting a stronger regulator like the Competition Commission in the line of Election Commission of India or Auditor General of India. Moreover, Vigilance Commission has to be more responsive and aggressive in its activities. Along with these, the concept of Lokpal needs to be operational in India and the nature of functioning of the Central Bureau of Investigation (CBI) needs to be completely autonomous in this regard. And of course, the public (consumers) must be aware, prompt and pursuant with regard to issues and their solutions ! With a proper check-and-balance policy implemented, we can  certainly reap benefits from FDI in India. In the current economic scenario – stiff rise in corruption, lack of accountability and transparency – FDI seems to be the right answer and is a dire necessity in India.

Here are some reasons favouring FDI in India…

It is really surprising to know that only 2-3% Indians pay Income tax. Does this figure say that the income of 97-98% Indians are less than the taxable limit (INR 2 Lakh/year) ?? A serious doubt. There are many reasons to it. The first and foremost is the lack of transparency and lack of accountability in our financial transactions – be it in income or expenditure. People prefer cash transaction over card or cheque while buying any item in India. Starting from a kirana shop (local general store) to a jewellery shop, everybody prefers cash transaction and giving and taking a bill /receipt is mostly discouraged. Some feel it is a taboo to ask for a bill, and some think ‘why to pay tax and take a bill’ ? But have you ever wondered that in not asking for a bill /receipt, who is getting benefited – the customers or the aamjunta ?!? ‘No’ – they are the losers only !!!

With direct and organized marketing which will mainly result out of FDI, the financial transactions will be mostly transparent and will be accounted for. Payments will be mostly in online mode. This will not only improve the tax scenario in India but also curtail huge corruption in India. Poor customers will not be cheated… and even if they are cheated, with a valid bill /receipt, necessary complaints can be conveniently filed in the Consumer Court. The investigation process will also become  easy and quick as everything would be duly accounted.

In India, we have the wide concept of “Middle-Man” or “Agent” or “Broker”, who always demands his/her share in every deal; sometimes even more than the actual cost of the product or service, without actually doing any thing or adding any value to it. The concept of direct marketing is hardly available in India, especially in Agriculture, Medicine, Grocery and Household items, etc. Surprisingly, there are many middle-men involved in the process – from the farmer to the consumer, from the factory-worker to the customer, from the laboratory-technician to the patient, and from the poor manufacturer (workmen) to the average consumers. This not only increases the price of the items but also encourages hoarding, corruption, unethical practices in business, unfair trade dealings, and above all the big bug i.e. inflation.

As per a study commissioned by the World Bank, farmers in India hardly get anything more than 12-15% of the price consumers pay at the retail outlet for Agricultural products. The reasons being –  (i) lack of education or awareness (ii) poor infrastructure (machinery) (iii) poor storage system (more than 25% food-grains are wasted in India today due to poor storage system) (iv) poor transport (e.g. non-urbanized roads leading from the agricultural fields to the towns) (v) middle-man (market-domination). With direct marketing as expected because of FDI in agriculture, the involvement of middle-man will be minimized in the process. Both the farmer and the consumer will be benefited largely – quantitatively and qualitatively. Direct sell by the farmers to organized retailers can render them a profit about 60% higher than that via ‘mandi‘ (a big un-organized wholesale /retail market in India) or the middle-man ! This will also check inflation of food items. Moreover, FDI will also ensure adequate storage facilities for food items, improve infrastructure scientifically and transportation facilities.

Like Agriculture, Retailing in India also requires FDI and organized marketing. The quality of the products will be improved and at the same time the price of the retail items will reduce severely. Moreover, it will also generate employment in India. With India’s traditional family system, culture, population and needs, the small retailers will also remain fully functional… but with enhanced accountability – in services and products. It will create a healthy atmosphere for a sustained competitive market.

Other than Agriculture and Retail, FDI will also benefit India to improve its Telecom penetration, Internet affordability, etc. At present, Broadband Services are mainly available in cities only. With better infrastructure and technology, it can be expanded to villages or rural areas at a lesser cost. Growth of Telecom and Internet in India will lead to better Governance, Healthcare, Insurance, Education, etc. This will ensure more and more participation of the common man in day-to-day services or the Public Services of the government. All services can be improved and a better lifestyle can be provided to the common man.

With FDI in Healthcare and Insurance, better care facilities can be provided at a lesser cost in the villages and expert advices can also be effectively delivered through e-health programs. Cost of Medicines will also come down drastically, if the system of generic medicines is adopted in India. In any case, with no middle-man involved, the prices of medicines can be brought down at least by 15-20%. Awareness for insurance schemes – be it life insurance or crop insurance or health insurance – will also greatly benefit the people in general.

What we need is very simple – accountable and transparent services at a better price with growth-oriented policies; create more jobs and provide better services. Political parties – ruling or opposition – must explore maturity levels in understanding the various issues by discussing and debating these in the Parliament, and not on the streets and election rallies ! Nation-wide or state-level strikes must be discouraged outrightly as these activities often spread the wrong message to the unaware folks. Parliament can introduce or change Laws and Institutions such that things can be improved to a larger extent in the interest of the common man.

Many may differ regarding the implementation, policy and the limits of FDI in various sectors. But if FDI brings organized market, with accountability and transparency, then it should be definitely welcomed in India, without any politics.

Recently (May,2013), the Supreme Court of India has aptly remarked that ‘Consumer is King‘ !!!

So, let the consumer decide…

Aamjunta – what do you say ?

Chit Funds or Cheat Funds – the Recent Saga of India’s Investors

The recent Chit Fund fiasco in West Bengal has not only pushed the panic button for the Indian Investors, but also opened the Pandora’s box of our corrupt system and the state of awareness of the aamjunta. This is a case in which all the three parties are to be blamed equally – the Investors, the System or the Government and the investment Agencies. Though the issue of cheating and fraud came to light because of Saradha fiasco in West Bengal, Odisha is not far behind in any sense. More than 85 companies are operating in Odisha with a turnover of roughly Rs. 20,000 crore, and there are more than 100 Chit Fund companies (mostly Ponzi Schemes) operating in West Bengal alone with a turnover of roughly Rs. 75,000 crore.

With CB-CID investigations, the list and the amount of fraud and cheating is bound to increase in both the states. Interestingly, some of the Schemes /Companies are old, operating in multiple states, run by well known politicians or their relatives, with a huge capital investment. Coming to Investors – most of them are poor rural people, unaware of the Ponzi Schemes, and are lured mostly by the young unemployed Agents. On the contrary and surprisingly, a good percentage of the Investors are also well-educated, well-aware about the recent happenings or uncertainties. They too could not resist the temptation of becoming rich or richer over-night… and lost their money in the process. In many places, there are numerous reports of suicides both by the Agents and the Investors.

The Chit Fund empire is so complex and so big that it has forced the Government to consider scrapping the Chit Fund Act of 1962 in entirety. Though the pressure is mounting on the Government to order a CBI inquiry of the entire process, in my opinion, CBI inquiry may not be useful as the CBI’s reputation is also at stake in the wake of recent developments; some of their own Officers have been accused and sent to CBI custody for allegedly taking a bribe from a businessman regarding settlement of a land dispute case. In fact, one of these Officers was heading the Coalgate scam probe !

Moreover, why do we have the “reactive” mentality to each and every problem ? Can’t we adapt the “proactive” mentality ? Let’s check where exactly the problem is ? Is there any remedy for these in future ?

As pointed out before, there are three broad parties associated in any kind of investment. They are:

1. The Investment Agency

As per the law of the land, the investment Agencies are supposed to be operating under RBI’s guidelines and State /Centre’s special Acts or Amendments. But in most of the cases, the Agencies are not even registered to offer the Schemes, which they simply roll out in the market. Apart from this, most of the Agencies are either owned by a family or a group of relatives or politicians. Sometimes the companies are created to transform the black money into white, without paying any heed to national economy or security. The investment Agencies select their Directors in such a way, that it becomes easy for them to hide the crucial facts to the people; most of the time the Directors of such Agencies are none other than their drivers, cooks, house-maids, and the like, even without their knowledge !

While India is struggling with unemployment, getting Agents at a low salary is not difficult. Hiring Agents is also tricky; first enrol them as Investors and then lure them with perks, AC train-tickets, gifts and sometimes air-tickets for holiday trips to work as Agents set with achieving a certain amount of “target” i.e., number of Investors and Investment.

I remember, some of my friends who were hired by a similar Agency in 2009 were taken to Malaysia and Singapore (with their family) for a free holiday trip. Not just that; some Agents were gifted with Maruti-800 cars by their Chairman !! Tempting ! Seeing them  make good money in a short span of time, other Investors get attracted and deposit their savings with them, without casting any doubt.

In the initial days, the Agents never fail giving back the monthly interest to the Investors; the payments are always in time and sometimes, even in advance. The one in advance is mostly to give an impression (false) to the Investors that their business has been doing extremely well or performing above expectations ! Surprisingly, the interest rates are almost 24 – 36% per annum; whereas the Post Offices, Life Insurance Policies, and other well-known deposit Schemes give interests not more than 8-10% per annum.  The greed of easy money and becoming rich / richer overnight are the prime factors for both the category of Investors.

Other than giving direct interests to the Investors, companies like Hi-tech in Odisha and Rose Valley in West Bengal later started providing lands/plots in the prime localities of Bhubaneshwar, Cuttack, Kolkata, etc., based on small monthly instalments. The Schemes are so attractive and the Agents are so adept in opening heart-to-heart conversations with the Investors, that no one ever has an iota of doubt while investing. And that too, even in obtaining a plot in the capital cities at a cheaper rate. Surprisingly, in the last raid on Hi-tech in December-2012, it was found that in Bhagya Nagar (outskirts in the city of Bhubaneshwar, Odisha) alone, Hi-tech had promised to give plots of 484 hectares while they actually owned only 4 hectares of land. They are not the only ones doing such business in the market !!

Other well-known companies like Rich Mind, Saradha, Artha Tatwa, Seashore, Safex Infra, Ashore, and many others – almost 200+ odd Agencies have been active in the states of West Bengal and Odisha. Their main target is always the border districts of Odisha, West Bengal, Chattisgarh, Assam, Jharkhand and Andhra Pradesh. As it happened in Saradha’s case of quick closure and disappearance, most of the other companies also simply shut down their entire operation over-night and disappear with the entire money, leaving behind many Investors and Agents on the cross-roads to awfully suffer at various personal levels, to bear public wrath, face legal charges, police harassment, etc.

2. The Investors

It is obvious that the high rate of interests in the range of 24-36% per annum offered by the Agencies are tempting to invest in such Schemes. In addition, more than 95% of the Investors deposit their savings on the face value of the Agents working with those Companies, without checking a single document. ‘You know he is like my cousin… he has ensured the amount and promised me by the name of God that his Company is genuine, and they have their local branch here in my town, where my niece is a clerk. Where will they go ? We will get the money without any problem, and everybody is investing… so what is the big thing here to check ?’ – is the usual reaction, if you ask the Investors at the time of making their investments, whether they have checked the credentials of the Company or the Agent !

No one checks the credentials even though all the documents can be apparently verified by a couple of mouse-clicks in this age of Internet. What surprises more is the mode of transaction ! Most of the times, the entire transaction is by cash only, without any proper receipts or deposit certificates. As long as the Investors get their returns, no one bothers (including Media and the Regulator bodies) to check the validity of the Schemes, the mode of incomes, the mode of operations, etc. Rather, Investors bring in more Investors, hoping that the company will flourish and will give more and more returns, gifts, free tours to Singapore or Switzerland, etc.

Only when the problem starts and Investors complain, the Media becomes active with their ‘24/7 breaking news‘, demands of CBI investigation starts with public strikes, dharnas, attempts of suicides, etc. With such an ignorance, greed and attitude, do you think any fool-proof solution can at all be provided to the Investors ? I doubt…

3. The Regulators

India of course has many Rules, Articles, legal Sections, Court rulings in place to handle these kind of problems. However, the implementation of such Rules is the key. As per the Government, Chit Funds are a traditional business, strongly regulated by the State Governments and Central Government, Security and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). If that is so, then why have so many issues cropped up, whether out of the blue or not ? There are definitely many disorganised, unregulated Companies operating right under the nose of the Regulator bodies. They mostly operate Ponzi Schemes or Chain Investment Schemes, and take deposits promising unrealistic rates of return- double return in 2.5 years, prime land or flat in a posh locality at a cheap rate.

As per an RBI study, Co-operative banks are more suitable and bankable for the poor. If that is so, tailor made Schemes should be implemented in the rural areas under the supervision of RBI, not the Ponzi Schemes. There should be a blanket ban on Schemes promising unrealistic returns. This can be done by the Regulators, and the Investors should inform the Regulators without any delay or fear, when they are approached with Ponzi Schemes or the like.

The other important point RBI, SEBI and other Institutions of the State and Centre should consider is the amount of moveable and immoveable property of the Companies operating in rural areas. If these Companies are merely collecting money and promising lands/plots or flats on the Investment, then they should have enough assets to honour those promises. Government should ensure that this provision is satisfied at all the times. But that does not happen, and most of the claims made by Saradha, Seashore, Ashore, Hi-tech, Artha Tatwa, and many others are simply a sham without any real assets. They just create an illusion, which the finance watch-dogs should have sensed in time. And now, the poor aamjunta (Investors and Agents) is suffering and repenting to the core !

The most surprising post-reaction came from West Bengal on Saradha fiasco when the CM wanted to levy more tax on Cigarettes and distribute the extra money thus raised, among the Saradha Investors. I do not observe any logic in it at all… Instead of curbing the cheat Chit Funds / Ponzi Schemes and forcing all the associated Companies to return the money to the Investors, if the authority takes a short-cut perhaps for sake of retaining or reinforcing vote-banks, then no doubt aamjunta will again suffer eventually. Vote politics does not work all the time. If Investors money is compensated in this way, then in crude terms it just means- someone (a duped Investor) is going to be paid from his own pockets and other’s also who are not involved in any way !!!!

Aamjunta…what do you say ? Planning to invest ? I strongly suggest- say no to Chit Funds unless they are properly regulated through transparent policies. In general, regarding any Scheme, be very careful and keep your eyes and ears open all the time.

Jai Hind.

Open Letter to Aamjunta

My name is Kurian Varughese. I am an IT professional – working for TCS in Bangalore (Whitefield). I reside at Munekolala ( Green Garden Layout – close to Kundanahalli Gate).

I was on my way to board a BMTC volvo bus on April 2nd-at 7:40am when my cell phone – Samsung Galaxy Note 2 (costing Rs 38,500) was stolen while I was boarding the bus. As soon as I got into the bus I requested the conductor to stop and check if my phone is around. I dialled my number from a passengers phone and it was ringing. Someone picked up the phone and when I told them that I will come to where they are standing and pick up the phone. That person said OK and immediately cut the call – and also switched it off. I tried recalling several times but the phone was switched off.

I feel it is a professional racket operating in this area – as when I went to report this incident at the Whitefield Police Station – they said that it is not the first time that such a thing has been reported. They also did not allow me to register an FIR saying that the side of the road from where i boarded the bus it comes under the purview of HAL Police Station. When I went to the Vodafone Store next to Graphite India junction – they said that on April 2nd – they had received more than 6 such requests for duplicate SIM card.

When I went to HAL police station – they also did not allow me to register an FIR – instead asked me to change the wording of my complaint letter – from stolen – to lost mobile phone. The police officer gave an acknowledgement receipt – but NO FIR. He said that this acknowledgement should be enough.

In the complaint letter – I have stated the IMEI number 354666056537152 and also my SIM number 9886839373 – The police officer made me change the content of the letter – from saying that the phone is stolen – to the phone is lost. I believe this is because he did not want me to file an FIR.

He gave an acknowledgement slip and when I was about to leave – he asked if I was leaving just like that? I knew that he wanted a bribe – I had to pay him Rs 300.

I feel it is not right and that I don’t have to pay any money to get my complaint filed and to request for an FIR.

I seek your help to bring justice and to help track down my phone using the IMEI number that i shared.

It is very disturbing to know that so many such instances are taking place and nothing is being done about it by the Police. Look forward to hearing from you.

Best regards,
Kurian

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