World No Tobacco Day – May 31

Everyone knows what the end effect of tobacco consumption is. Tobacco is one of the proven carcinogenic material, consumed by millions of people in various forms such as cigarettes, beedies, gutka, etc. It is a dangerous addiction. Street kids as young as four are smoking tobacco in some form or other! We only hope the tobacco industry realizes what it is doing to millions of people.

The World No Tobacco Day is to spread “Shun-Tobacco” message all around the world. The cancer-affected people say “I wish I hadn’t smoked my first cigarette”. They are also now pressing for introduction of pictorial health warnings on all tobacco packs. In India, pictorial warning of –a skull and bones sign with a message “tobacco and smoking kills” - will be introduced on cigarette and bidi packets from May 31, 2009 onwards. Better late than never.

Everyone of us should support and demand a smoke-free environment. If tobacco is so much harmful why grow it at all? Ban tobacco cultivation.

Hookah bars-ban them

In India, smoking is banned in public places, including in restaurants, bars and pubs. Public opinion is definitely for the ban. The cigarette smoke contains particulates and hundreds of organic chemicals which are known to cause cancer. The common types of cancers associated with the cigarette smoke are lung cancer and throat cancer. The smoke is harmful even if it is inhaled in a passive way – like non-smokers sitting in a room inhaling the cigarette (tobacco) smoke exhaled by the smokers.

In-spite of the ban, a report in the news paper reveals that only 64% of the restaurants, bars and pubs in Mumbai are complying with the ban and the rest are not able to. The particulate (2.5 micron size) concentration in the air varied from 55 (in bars/restaurants) to 707 (in Hookah bars) microgram per cubic meter of air. The Deonar Dumping ground area records the particulate concentration of 169 microgram per cubic meter of air.

Why the Mumbai Municipal Authorities are not able to crack down on the non-complying hoteliers and enforce the ban, and save the non-smoking customers from inhaling the air contaminated with these deadly pollutants?

Radioactive Cargo in aircrafts

Millions of radioactive packages are transported regularly by air between different destinations around the world. I believe, India also imports and exports these radioactive sources for different applications, mainly for the diagnosis and treatment of patients in hospitals.

There are very stringent international regulations applicable for transportation of radioactive materials. The rules and regulations apply with respect to type of the radioactive source, nature of the package and the total radioactive material permitted inside the package. The purpose of this is to make sure that even in case of any accident no radioactivity comes out of the package and harm anybody.

Under such situations, there is no reason for any alarm and no need for the media to give undue importance for the presence of radioactive cargo in the aircrafts. Let us not make patients suffer because of our ignorance.

Organised “frauds” in mutual funds’ management?

Who controls and regulates management of thousands of Crore rupees in Indian financial sector. All along, people suspected some sort of a “Jole” in the mutual funds. For one, the final decision to buy types of equities may be a “one-man show” and purchases and sales may be person-biased. This paves way for a lot of loop holes and opportunities to favour selected companies, which may not be in the interest of gullible Indian investors. Often, there is pressure from politicians and other influential company CEOs to buy or sell equities of particular company at a particular time. For example, the Indian mutual fund managers completely missed April rally. Instead, they pumped in Rs.26,000 Cr into debt, their highest ever investment in a month.

Finally, the investor is the loser. More than 40% of the mutual fund NAVs languish below Rs.10/- and may remain so for a year more. The advertisements are fooling the public and for a heft commission, the agents/sales executives somehow convince the people to buy these funds. Some economist’s suspect organized frauds in the management of mutual funds.

Why the investors are taken for ride, again and again? No regulations? Why PSU banks should support these funds? Any answers?

Restructuring of loans – Sub prime crisis brewing in India?

Keeping in view of the bank’s margins which are under pressure due to the global economic slowdown, the Reserve Bank of India has provided the banks a breather by revising the method of calculating the current value of restructured loans. The RBI has been decided to modify the formula for computing diminution in the fair value of restructured loan. Diminution means the reduction in the value of loans that have come for restructuring, due to reduction in interest rate or rescheduling of repayment of principal.

At present, while restructuring the loans, banks take into account the benchmark lending rate, Prime Lending Rate, which have been on a rise during the last few years, the RBI said. It is adding to the financial difficulties being faced by banks due to the current downturn. The RBI further said that in the annual balance sheets for the year ending March 2009, the banks will also have to disclose the amount and number of accounts in respect of which applications for restructuring are under way.

Indian banks have restructured Rs.40,304 Cr loans in year to March 31, 2009. This figure is going to rise since State Bank of India (SBI), a biggest lender is yet to come out with its figures. As of now, Axis bank is topping the list with the restrucutured loan of Rs.9961.7 Cr. Under restructural scheme, the banks, depending on the genuineness of the borrower may either give the borrower additional time for repayment or EMI holiday for a while instead of declaring the borrower as defaulter.

More and more applications are coming for restructuring the loans. But, if the economic situation doesn’t improve, and with more and more job loses, the borrowers may not be in a position to pay-back even under restrucutured loan scheme. In housing sector, with the real estate rates falling by 40-50% in urban areas, inventory valuations also will also dip drastically and a sub prime crisis may soon develop in India.

Global Investors started investing in India

Indian stock markets have partially recovered over the last few sessions of trading. The Sensex has gained over 3200 points since the beginning of the rally. Economists with leading financial institutions also say that the slump period is over and “green shoots” of recovery are sighted. The turning point in the industrial production cycle is expected by mid 2009.

Sensing the change in the economic scenario in India as compared to dismal performance in other countries, global investors have started investing again in a big way. Over Rs.500 Cr was the inflow in the week ended April 22. Since March 9, FIIs have invested Rs.8000 Cr in the Indian markets. Without any significant growth in industrial/agricultural sector, any upward movement of the Sensex is purely speculative and un-sustainable.

Now, the point to be seen is whether the markets can sustain these during and after the elections? What sort of reactions the markets will show for the new coalition (kichdi) government at the centre? What will be extent of long-term effects of the recession in USA in India?

Good move by the market regulator

Indian stock market regulator, SEBI has amended listing agreement to bring-in greater transparency in reporting by ensuring uniformity in declaring dividends. Dividends will now be on per-share basis and not on percentage basis. This will remove the confusion of the investors regarding the actual return on their investments since the face value of the shares are not uniform. It may one or two rupee, 10 rupee or a hundred rupee.

Per-share dividend declaration will make more sense in Indian markets.