Some food for thought
"Be polite; write diplomatically; even in a declaration of
war one observes the rules of politeness."
—Otto Van Bismarck (German Leader, 1815-1898)
Word for the day
Multiverse (n)
A hypothetical collection of identical or diverse universes,
including our own.
First thought this morning
The eligibility criteria for Lok Sabha membership has been a
matter of seasonal debate ever since we adopted our constitution in 1950 and
became a full-fledged electoral democracy. Four issues are debated in particular—
(1) Whether minimum age for contesting Lok Sabha elections should be same as
minimum age for voting, presently 18yrs; (2) Should there be a minimum
educational qualification criteria for members of parliament; (3) Should there
be a limit on maximum number of children a Lok Sabha candidate can have; and
lastly (4) Should the people with serious criminal charges be allowed to
contest elections.
"Minimum educational qualification for MPs" and
"criminal charges" issues are however debated more intensively around
every election.
Given the state of criminal justice system in our country, the
issue of "criminal charges" is difficult to decide. It appears that
the best has already been achieved in this regard by prohibiting convicts of
offences entailing a jail term of 2yr or more, from contesting elections for
six year. The proposal to impose a life ban is also under consideration.
Insofar as minimum educational qualification is concerned, I
have strong views that may not necessarily be in agreement with any side of the
debate.
In my view, while it is an advantage to have knowledge of a wide
variety of technical subjects to participate in the parliamentary debates and
make constructive contribution, it is not at all necessary.
The primary function of a member of parliament is to represent
the people in his constituency. He should know the problems, aspirations and
needs of his constituents and should be able to present these to the concerned
departments and insist on expeditious solutions.
The knowledge of the "system", "standard
operating procedures (SoP)", and "the Constitution" is therefore
must. It is therefore important that before taking oath of office, all first
time elected members of parliament are required to complete a 3month intensive
certification course in Constitution of India and parliamentary procedures.
I assume the people who've won elections would possess strong
communication skills and fully understand the problems, aspirations and needs
to their constituents. Nonetheless, it should be made mandatory for all elected
representatives (not just the first timers) that before taking oath of office
they attend a two day workshop in their constituency, where the district
officers (administrative and police), local representatives (MLA and Local Body
members), recognized trade association representatives, and active civil
society members would make presentations to them about the important local
issues, requirements, growth potentials and aspirations etc. The Member must be
given specific goals to be achieved in his/her term as such member.
It must be made a practice that every year after the conclusion
of budget session, they report back to this assembly of people, what efforts
the Member made to achieve the desired goals.
I strongly believe that implementation of these suggestions
would strengthen our democracy; and restore the trust and confidence of people
in the "System".
A colossal Ponzi scheme
In past four years, small savings of Indian households have seen
a threefold jump. From ~INR50bn in FY15, the contribution of Indian households
to National Small Savings Fund (NSSF) has increased to INR157bn in FY18.
Small savings include (a) All deposits with post office; (b)
Saving certificates (KVP, NSC etc); (c) Social security deposits (PPF, Senior
Citizen Saving, Sukanya Smrudhi etc.)
In this context two things are important to note:
(a) The interest
rates on small savings are mostly pegged to the government security of
equivalent maturity. These are announced every year and are generally fixed
25bps to 100bps higher than the yield on comparable government security. In
some cases, like Sukanya Smrudhi, these rates are fixed at much higher level.
(b) The net
collection in small savings is used to buy the securities of the state
government, where these savings are collected. The receipts of NSSF from
redemption of state government securities are used to buy central government
securities.
Thus, small savings are very important source of financing
fiscal deficit. Though these funds are shown as a liability of the central
government, no provision in budget is made for repayment of these funds. In
that sense it is like a colossal Ponzi scheme in which all redemptions are met
only through fresh deposits.
A related interesting trend is the changes in the ownership
pattern of government securities (Gilt) in past few years.
- Since FY12, the share of commercial banks in ownership of Gilt has declined from 54% to 40% in September 2018.
- RBI has also reduced its holding of Gilt materially. At the end of FY15 RBI owned 14% of outstanding Gilt. The holding had fallen to 7% by September 2018.
- Since FY15, foreign institutions have also cut their holding by 50%, from 4% in FY15 to 2% in September 2018.
- The contribution of small savings (MFs, Insurance, NSSF, PPF etc.) has grown materially since FY12.
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