Pakistan President Parvez Musharraf always manages to teach us a thing or two about handling tricky situations. At the Agra Summit, he had the editors eating out of his hands and the Indian government wiping the egg off its face. He has outsmarted us again in dealing with the United States. Both India and Pakistan are hugely in debt and face US-imposed sanctions imposed after the nuclear tests. However, while India was jumping up to offer unsolicited logistic support to the US, Pakistan left us looking foolish by demanding $30 billion debt write-off, lifting of sanctions and asking India to ‘lay-off’ in return for his help. Many Indians are taking comfort at the fact that the Pak President looked extremely tense on television and is battling violent public protests; but the US seems ready to meet his demands. We, on the other hand cannot even seem to tell the US government to at least ‘lay off’ Enron. Until recently, Enron’s chief was issuing veiled threats about further US sanctions (later denied by Enron) against India, if the imbroglio was not ‘resolved’. Various senior government officials and US ambassadors openly lobby for Enron; and without their meddling, we would resolve the issue much faster—but not necessarily to Enron’s billion dollar satisfaction.
Taken for granted?
Is Citibank making a serious mistake by taking its customers for granted? Readers may recall that Citibank’s credit card holders are furious at its decision to levy a premium charge for an insurance cover branded Suraksha, without their prior permission. Citibank stuck to its guns saying that the number of cardholders rejecting the insurance was not significant. Citibank probably failed to realise that cardholders have to trust their issuer and not have to pore over their bills looking for unauthorised charges and levies. Angry reactions to Citibank’s move continue to pour in. R Balasubramaniam from Chennai says Citibank’s action is ‘nothing short of a Criminal act and I do not want any personal Accident Insurance sold to me using artifice and on the sly’. A couple from Pune—Sheela and Shankaranarayan have stopped using their cards and appealed to other cardholders to close their bank accounts and ‘hit Citibank where it hurts’. I also have angry mail from Gujarat where cardholders complain that it is not as easy to call up Citibank and reject its Suraksha. Clearly, there are thousands of others who feel the same. It will be interesting to see if Citibank’s insensitivity turns out to be a costly mistake.
Triumph International Finance, the investment banking firm, which used to be proud of its association with Ketan Parekh is now desperate to dissociate itself from him. In fact, Triumph International used to be considered Ketan’s investment banking flagship. The firm has now written to a couple of newspapers that it is not a Ketan company. They argue that Ketan personally does not hold shares in the company but his wife along with the wife of his cousin Kartik together hold 15.84 per cent. They claim that Ketan and Kartik were directors only for a short time and that it has 8000 shareholders. It is all very well for Triumph to try and disown the Ketan Parekh’s association, but let us not forget that the capital market regulator Sebi has listed it among the 23 Ketan Parekh entities which are under investigation. It is also among those chosen Ketan Parekh companies against whom action has been taken under Section 11 B of the Sebi Act. In the circumstances, Triumph should surely be first making its case to the regulator that it is not a KP company.
Pradip Shah, the former chief of Crisil has, in an open letter to the Prime Minister, made a strong case for government to kick start consumption growth by cutting excise duties. The move he argues will benefit consumers and improve corporate performance. Interestingly, the IFCI chairman echoes Shah’s arguments. PV Narasimham argues that when companies start to default on their financial commitments, only the financial institutions are expected to make sacrifices by slashing interest rates and waiving arrears. The government continues to collect at least 16 per cent excise duty so long as the company remains alive. High excise duties are also affecting the competitiveness of Indian companies, especially when cheap Chinese imports are flooding the markets; high duties also encourage corruption. However, the huge government debt probably inhibits any such experimentation for fear of reduced revenues. Often government ends up paying a price by bailing out the lending institutions when their net worth is wiped out. Wouldn’t it be far better, if the government turned pragmatic and cut excise duties to stimulate consumption instead tinkering with ridiculous measures to prop up the capital market?