More than rate-cut needed
Apropos of your edit “Limited growth support”, the Reserve bank of India cutting the repo rate by 25 basis points is on anticipated lines. The surprising thing now is that RBI Governor Raghuram Rajan has not surprised the market, as has been the case so far, with the out of cycle rate-cuts. By trimming the rate, RBI is trying hard to recreate an environment to spur growth and investment which is witnessing a near lull for a prolonged period now. The stance of RBI also gives an impression that rate cuts in the recent past have not really translated into contributing the required level of growth momentum and hence banks are required to act on them fast by cutting the lending rates. As a matter of fact, there are also growing concerns about asset quality of banks which is not getting any better with a consequential effect on their profit and margins while capital raising is always an issue engaging top attention. To add to the woes, monsoon outlook for 2015 has now been further revised downward to 88% of the long period average by the IMD and its distribution across the country is also disturbing. Growth and inflation projections appear to be reasonable and meaningful, in the present context. Overall, it is a careful assessment taking into account both the external and internal factors with an eye on taking the country to a higher level of sustained growth.
Rethink one-rank one-pension
Apropos of your edit “Drop the OROP”, even at present levels, the pension drawn by ex-servicemen of different ranks is not chicken-feed. It can go up to about R90,000 per month for the senior-most. Other officers, retiring at even lower ranks, get about R50,000. Besides pension, the retired personnel are entitled to medical, canteen, housing, club facilities, etc, for free or at subsidised rates. Retired personnel who need it get gainful employment which further augments their income. What actually is performed by them in their lifetime during their service is another story! Who will bear the huge recurring and increasing expenditure? It will indirectly or directly go out of pockets of all, tax payers and non-tax-payers. The government needs to be bold and practical and restrict the payment to only the lower ranks, if at all any payment is to be made. This way the government can keep the election promise and reduce the economic burden on itself and, consequently, on the public.
Capt. Sunder Idnani
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