Wednesday, 30 September 2015

Singapore's anti-corruption Strategy

 Since Singapore attained self-government in 1959, corruption control has been top of the government agenda. When we took over from the British, corruption was prevalent. The Prevention of Corruption Ordinance was weak. Corruption was not a seizable offence and the powers of the anti-corruption bureau were inadequate. Public officers were poorly paid and the population was less educated, did not know their rights and often the way to get things done was through bribery

Singapore was named fifth-least corrupt country according to Transparency International's 2012 Corruption Perception Index (CPI).

 The index — which include 176 countries around the world — is ranked based on how corrupt their administrative and political institutions are perceived to be on a scale from 0 (highly corrupt) and a 100 (very clean).

So why has Singapore been so successful in stamping out crooked behavior, despite its history? 

Tough laws

  • Many point to the country's incredibly stringent, almost draconian penal code. Jaywalking, littering, and spitting can get you arrested, failing to flush a public toilet or chewing gum in the open can each lead to a fine, and vandalism is punished by caning.
  • Laws against corruption are tough as well. The Corrupt Practices Investigation Bureau works directly with the Prime Minister's office and wields significant power; the Bureau can arrest individuals without a warrant and execute search and seizure orders carte blanche if there are "reasonable grounds to believe that any delay in obtaining the search warrant is likely to frustrate the object of the search."
  • Those accused of corruption usually face a 5-year jail term and up to S$100,000 ($80,000) fine, and Prime Minister Lee Hsien Loong wants to add even more penalties as a form of deterrence, according to the Associated Press. 
  • Lee made it clear that "it's far better to suffer the embarrassment and keep the system clean for the long-term, than to pretend that nothing has gone wrong and to let the rot spread," after a rare corruption scandal surfaced this year.
  • Some argue that Singapore's tough legal code have created a society that resembles an Orwellian dystopia, in which stringent laws keep the population in line and society sparkly clean.
  • But the results are noticeable, as Singapore has one of the lowest crime and corruption rates in the world. 
  • The Singapore government keeps the salaries of politicians and civil servants high in order prevent talented, honest Singaporeans from leaving and to stifle the economic incentive to engage in corrupt activity.

Punishment, incarceration, and deterrence

There are four 'lessons' that can be learned by other Asian countries from Singapore's example:
  1. Political will is the key ingredient for success
  2. The anti-corruption agency must be independent from the police and political control
  3. The anti-corruption agency must be incorruptible
  4. Minimize corruption by tackling its major sources: low salaries, ample opportunities, and poor policing


With a strong political will as the foundation, the framework of corruption control consists of four pillars, consisting of 4As, as follows: -
 -Effective Anti Corruption Acts (or laws)
 - Effective Anti Corruption Agency
 - Effective Adjudication (or punishment) and 
- Efficient Government Administration.

Narendra Modi's Profitable Foreign Visits

From some angles you can look at Modi's foreign visits as attempting to meet the most important international leaders and establish a reputation with the global community. But his travels have also taken him to a number of countries with largest populations of Indians outside India, including the Nepal, the United States, Sri Lanka, Australia, France and even Fiji.

A lot of money

All of these count as among the top 20 countries with persons of Indian origin living outside India. But it's not just because Modi would like to endear himself to people of Indian origin, many of whom were huge proponents of his candidacy in the run up to last year's election, that he is visiting these countries. They also happen to send a lot of money back home. A lot.

  • A staggering $70 billion came to India in 2014, from remittances according to the World Bank, a figure that has stayed somewhat steady over the last few years.
  • And that's not all that the $70 billion figure is large than. It's also double the amount of Foreign Direct Investment India received in 2014.
  • According to the United Nations Conference on Trade and Development, India saw $35 billion in FDI inflows last year, suggesting that, for all our talk of foreign investment, the importance of reaching out to Indians abroad who send money home is as important.
  • Break that down further into which countries are sending India that much money in remittances, and the choice of Modi's foreign trips become significant in more ways than one.

Narendra Modi vs Man Mohan Singh’s Foreign Visits

 Narendra Modi has been attacked for his foreign travels with opponents branding him as "absentee PM", but government sources insist that the criticism is misplaced, saying the PM was away for just a few days more than his predecessor Manmohan Singh in the inaugural year of UPA's second term and has brought in far greater "diplomatic dividends".

Sources emphasized that Modi took 57 days to cover 18 countries in his first year in office, whereas Manmohan Singh travelled to 14 countries over 42 days in the first year of UPA-II, that is after having already served a full five year-term.

They say that the travels of two PMs were significantly different in terms of visibility and impact, both at home and abroad. Unlike Singh's foreign trips which largely went unnoticed at home and in the countries he visited, Modi has made an impact wherever he has gone, they said.

The Financial Impact of PM Modi’s foreign visits
– PM Narendra Modi visited 26 countries from June 2014 to July 2015 with most of his visits having a major economic component
– India received $19.78 billion foreign direct investment (FDI) from 12 countries visited by Prime Minister Narendra Modi in financial year 2014-15
– The total outflow and inflow of foreign investment in general for 2014-15 fiscal was $6.42 billion and $75.71 billion, respectively.
– FDI equity inflows increased from USD 24.3 billion in financial year 2013-14 to USD 30.9 billion in 2014-15, a growth of 27.3%
– Indians living abroad send home more money than other world citizens.  A staggering $70 billion came to India in 2014, from remittances according to the World Bank, a figure that has stayed somewhat steady over the last few years.  This figure is almost double the FDI numbers for India in 2014.

Tuesday, 29 September 2015

Effects of Repo Rate

What is Repo Rate?

When we need money, we take loans from banks, banks charge certain interest rate on these loans. This is called as cost of credit (the rate at which we borrow the money).Similarly, when banks need money they approach RBI. The rate at which banks borrow money from the RBI by selling their surplus government securities to the central bank (RBI) is known as “Repo Rate.” Repo rate is short form of Repurchase Rate.
Example  If repo rate is 7% , and bank takes loan of Rs 1000 from RBI , they will pay interest of Rs 70 to RBI.
RBI surprises, cuts repo rate by 50 bps; keeps CRR at 4%

The Reserve Bank of India (RBI) lowered the benchmark repo rate by 50 basis points to 6.75 percent, while keeping CRR and SLR unchanged at 4 percent and 21.5 percent, respectively. This marks the fourth repo rate cut by the RBI since January 2015. However, it has lowered its FY16 GDP growth target to 7.4 percent from 7.6 percent. It also said the focus should now shift to bringing inflation down to 5 percent by FY17-end.
Impact of RBI Rate cuts

Your EMIs to get lower as RBI cuts interest rates by 50 basis points

The below graphical illustration shows you about the impact of RBI’s rate cuts on Deposit Rates, Lending rates, Money supply in economy, economic growth and purchasing power of consumers.

  • The Reserve Bank of India surprised markets Tuesday by slashing its key interest rate by 0.50 percentage points to 6.75%, taking advantage of easing inflation to boost growth in an economy that hasn't been able to escape global headwinds.
  • A Reuters poll last week showed only one out of 51 economists had expected a 50 basis points cut in the repo rate, while 45 had expected a 25 bps cut.
  • The RBI had previously cut interest rates three times this year, lowering it by 25 basis points each time. 


India after Modi

A much-needed turnaround

After one year of Modi govt, India's economy witnesses higher growth, lower inflation and a relatively stable currency

New private investment
Private-sector announcements of new projects have finally seen a rise, following several years of consistent decline. A good part of that is owing to a single Rs.1.5 trillion order of new aircraft by IndiGo, but there is an increase in new project announcements even adjusting for that.

100 days of Modi Sarkar: 10 significant developments

1. Bringing back Black Money
The first decision Modi Sarkar took after assuming Office was setting up of a Special Investigative Team (SIT), headed by former Supreme Court Judge MB Shah, to unearth illegal money stashed in tax havens. The SIT has already prepared a comprehensive action plan, including creation of an institutional structure that could enable India to fight the battle against black money.
2. Bringing economy back on track
In a bid to arrest inflation, Modi Government asked States to delist fruits and vegetables from the  Agriculture Produce Marketing Committee (APMC Act). This decision has protected farmers from the middle men and succeeded in preventing hoarding. This in turn has helped in taming inflation.
With inflation on check, economic growth is picking up steadily. It is important to note that Indian economy has thrown up the best growth figures in two-and-a-half years. The GDP growth in April-June quarter is the highest in the last nine quarters. This is a sufficient indication that economy is turning around under the leadership of Narendra Modi.
3. Jan Dhan Yojana
Modi Sarkar has rolled out the Pradhan Mantri Jan Dhan Yojana. The ambitious scheme aims at a comprehensive financial inclusion by opening of bank accounts of people who have been left out in the process so far. On the inauguration day, a record 1.5 crore bank accounts were opened under this scheme.
4. Infrastructural development
The focal point of the Union Budget 2014 was infrastructure, a sector which was neglected in the last 10 years under the Congress-led UPA rule. The Government has attracted large-scale investments in infrastructural sector by reviving the Special Economic Zone (SEZ), streamlining the Public Private Partnership (PPP) models and creating Infrastructural Investment Trusts (InvITs). Work for the ambitious Diamond Quadrilateral rail network — connecting major metros across the country — is in the full swing. The Narendra Modi Government has laid the groundwork for its ambitious ‘100 smart cities’ project. To develop infrastructure in rural areas, the Government has launched Syama Prasad Mookerjee Rurban Mission and Deendayal Upadhyaya Gram Jyoti Yojana. The Government is also working on strengthening and modernising the boarder infrastructure.
5. Abolishing GOMs, EGoMs
Prime Minister Narendra Modi has abolished all Group of Ministers (GoMs) and Empowered Group of Ministers (EGoMs) which were set up during the UPA tenure. The move is expediting the process of decision-making in the Ministries and ushering in a greater accountability in the system.
6. Streamlining bureaucracy
To take administration closer to people and ensure that governance doesn’t get stuck in red tape, the Narendra Modi Government is streamlining the bureaucracy with thrust on transparency.  The Government has amended the All India Service (Conduct) Rules, 1968.  The amended guidelines mandate that the bureaucrats must maintain political neutrality, take decisions and make recommendations on merit alone and take decisions solely in public interest.
7. Disbanding Planning Commission
Narendra Modi Government has disbanded the 64-year-old Planning Commission. In 1950, then Prime Minister Jawaharlal Nehru formed Planning Commission on the line of erstwhile Soviet Union with an aim to formulating India’s five year plans. But during the 60-year-long Congress rule, the Commission was mostly used as a parking lot for cronies of the grand old party. They did nothing apart from sucking up to Congress and its Prime Ministers. Narendra Modi Government is in the process of replacing the Planning Commission with a new institution keeping in view of India’s needs amid changing global economic scenario.
8. Recasting judicial appointment
In a path-breaking initiative, Narendra Government has got the National Judicial Appointments Commission (NJAC) Bill passed in both the Houses of Parliament. The Bill scraps the Collegium System of appointment of Judges of Supreme Court and the High Courts and established a six-member body for the appointment of the Judges. The Chief Justice of the Supreme Court will head the NJAC. Besides, the judiciary would be represented by two senior Judges of the Supreme Court. Law Minister and two eminent personalities will be the other members of the Commission.
9. Weeding out archaic laws
The Narendra Modi Government is working overtime to weed out archaic rules and legislations from the statute books. Most of them are laws introduced during the colonial British rule and still prevalent in the country. These dysfunctional laws have no relevance in the present day. These are obsolete laws which only hamper governance by creating confusions. It only complicates the legislation process and stand as a hindrance within the system.
10. Bilateral diplomacy
Prime Minister Narendra Modi’s SAARC diplomacy was indeed a bold step towards creating an atmosphere for multilateral economic cooperation. The common challenges that these nations face have made Narendra Modi create a common agenda of growth with mutual cooperation. During his visit to Nepal and Bhutan, Narendra Modi used the greater Hindu heritage as an instrument of foreign policy. Modi Government has given a strong message to Pakistan by calling off the Foreign Secretary-level talks after Pakistani High Commissioner to India Abdul Basit met Kashmiri separatists despite clear no from Foreign Ministry. For the first time in India’s history, New Delhi under the leadership of Narendra Modi has asserted that it can’t be bullied by the pressure from the Kashmiri separatists and various lobbyists. Narendra Modi’s ongoing Japan visit underlines the fact that India-Japan Strategic and Global cooperation can shift the balance of power in Asia.
100 days is too short a time to judge a Government. Let’s wait and watch with patience for the India’s real growth story to take shape in the days to come.