The last five years in Andhra Pradesh politics have shown that Y.S. Rajasekhara Reddy, or YSR, was really a one-man army. He not only brought Congress to power in the state but immensely helped all 33 members of Parliament in winning their seats, eventually making Andhra Pradesh the largest contributor to the Congress’ overall Lok Sabha tally. He was the man of the masses who himself developed a few schemes and ensured its delivery to the needy. Not only that, he ensured that the economy of the state grew rapidly during his tenure to establish it as one of the best states in the country. Now that he is gone, Congress will have a very tough time finding his successor—no one can fill his big shoes.
— Bal Govind
I find your suggestions in “Fixing a financial system” (Mint, 7 September) reflecting an incomplete knowledge of how banking systems and regulators interact, and frankly find it a bit disturbing to read on Mint’s Page 1.
Innovation is part and parcel of life at investment banks and leads to multitudes of exotic financial products being created. In free markets, regulators for the most part are reactive agents who often cannot attract people of the calibre or seniority to understand and unwind the complex securities created by bankers. Even if they can, it is often too late. Having every product regulated and transparent is not the answer, as you curb innovation and most likely will end up throwing the baby out with the bath water.
So regulation is not the answer and, as you mention, capping pay isn’t either. However, linking rewards to long-term returns is certainly closer to the answer. Vested bonus programmes linked to security performance could alleviate some of the short-term problems, and this is where the focus of new regulation should be.
You also mention that excessive pay was not what caused Lehman Brothers to fail. I beg to differ—somewhere along the line, someone saw the bonus potential of peddling sub-prime mortgage-backed securities without fully doing the due diligence on these products that should have been done.
If bonuses had been linked to long-run profitability and performance of these securities, rather than volume or value of securities sold in a fiscal year, we probably would have been looking at a very different economic scenario today.
— Ashish Khanna
I was pained to read the news story “HC nixes legal challenge on airport levies” (Mint, 27 August). I think the entire picture has not been looked at. The user development fee is just the thin end of the wedge.
At Mumbai airport, the developer has now hiked parking charges from Rs30 to Rs60 without providing any extra benefit. In fact, parking is now more chaotic. The price of tea or coffee, which was available for Rs4-5 when the Airports Authority of India (AAI) ran the airport, has now shot up to Rs30—a 600% increase. The private developer is driven by greed and this is apparent at, say, London’s Heathrow where a greedy operator increased operations without adding infrastructure.
Almost all over the world, airport privatization has made the experience for passengers worse, and increased costs. Charles de Gaulle airport in Paris had a stairway collapse a few years ago, and Air India aircraft often do not get a dock at Frankfurt or London. Heathrow’s duty-free shops are so expensive that one concessionaire told me that the goods were duty-free but not profit-free.
I think the best way forward would be to stop all future public-private partnerships in airport development and let AAI do this with an injection of cash from the government. This will make flying cheaper and more comfortable.
— Raj Khalid