The media reported that the Lok Sabha was stunned on 13 March, when members of the CPI(M) and DMK rushed to the well of the House and almost came to blows when surface transport minister T.R. Baalu got up to introduce the controversial Indian Maritime University Bill. It is a matter of shock and deep regret that elected members in the Lok Sabha behave in such an indecent manner. Such misbehaviour cannot be accepted or condoned. There is an urgent need to have a code of conduct for our elected representatives that will force them to follow certain norms of behaviour. Violation of these norms must have strict penalties. Let a standing committee be formed to watch the behaviour of our elected members and take punitive action.
The concerns raised because of the recent ripple in the call money market are likely to be shortlived. They will not, as you suggest in the editorial published on 22 March, lead to a credit squeeze.
The monetary steps taken by the Reserve Bank of India (RBI) have helped dampen the demand for home loans. Also, the price level for real estate is still below its peak; so investors are less willing to buy real estate at a higher price and at a high cost of capital.
So, it is clear that even though the supply of credit has decreased, it is being balanced by lower demand for credit.
The stock market has been through a roller-coaster ride. It has seen historic lows day after day. So, investors have decreased their exposure to the equity market and have stepped up their investments in the bond market and other fixed-income securities. The deposit rates of AA-rated banks have become more attractive (thanks to RBI’s strict monetary measures). Small-time investors who have become wary of volatility have been lured by these banks.
Last, but not least, the corporate world is no longer dependent on the domestic capital market and banks to quench its need for money.
India, with its robust growth story, has instilled confidence in foreign investors. Indian companies can easily raise debt in the foreign market (the amazing response for the junk bonds issue by the special purpose vehicles created to support the Tata-Corus deal is one example). Even private-equity players have shown keen interest in India in recent times.
The situation has changed in India because credit liquidity is no longer a monopoly of domestic banks. We should also not forget our very own Indian investors who have been eager to invest in the capital market through mutual funds.
Thus, we can safely predict that liquidity of money has finally come of age and small hiccups cannot completely solidify it.
This refers to the story on impact of organized retail on neighbourhood stores, Mint, 23 March. The writers have tried to highlight only one side of the issue.
There are many more benefits as compared to the concerns mentioned.
Pramod Gupta may lose his business but his son or daughter could have got a job with Reliance Fresh. The mall culture has generated employment for a lot of people.
Vegetables and fruit sold at stores such as Reliance or Subhiksha are hygienic in presentation and packaging, and are properly weighed. One can get the exact quantity. The small shopkeeper always tries to round off the amount or items to be sold. If it is 953gm, they convert it into 1 kg. The organized retail format is convenient for government agencies to check weight, compliance of taxes and health standards. The situation is definitely a win-win one, though it is always difficult to implement a change.