De-risking SME stocks

With reference to ‘Signs of froth’ (July 11), SME stocks are in the limelight due to excessive speculation activity. From small investors’ perspective, investment in this segment carries substantial risks due to the limited track record and analytical data on the fundamentals of the companies. Though to a limited extent investor protection has been provided by way of market-making through the merchant bankers handling the IPOs, price sustenance for a longer period is not ensured which can result in investment losses.

There is a need to enlarge the mandatory market-making quantity and period — at least up to five years — post listing of these stocks, and relaxations in investment norms for banks and FIs for enhanced investments. These would help support a safe and sustainable market for SME stocks.

Sitaram Popuri

Bengaluru

Tax breaks needed

This refers to ‘Middle class deserves tax breaks’ (July 11). The expectations of the salaried middle-class and pensioners were belied in the past Budgets. Major revamping of the privileges and concessions extended to the salaried and pensioners is required. Majority of the retirees rely on interest income and very few get job opportunities post retirement. As rightly pointed out by the authors, complete exemption from tax of interest earned on fixed deposits will help pensioners and retirees have more disposable income in their hands. Excluding GST on health insurance premiums of senior citizens and an increase in standard deduction will also be beneficial to them.

GS Santharam

Madurai

Bank deposit mobilisation

While bank deposits are vital for credit expansion and eventual capital formation, it is essential to introduce measures that promote mobilisation of deposits. Since term deposits are not as cost-effective as demand deposits, banks must have a blend of both to achieve optimum profitability and also to ensure there are no asset-liability mismatches.

Also, due to the lower rates of savings deposits, this financial asset is getting converted into other alternatives and affecting the deposit growth of banks.

VSK Pillai

Changanacherry, Kerala

Employment generation

Job creation on a perpetual basis is important for the growth of any economy. But, at the same time, in a country like India which is a mixed economy, the government alone cannot be held responsible for unemployment or underemployment.

Dexterous people can get jobs in the private sector or become entrepreneurs. The government, on its part, should have accurate data on unemployment and regularly enhance its investments to create productive jobs.

S Ramakrishnasayee

Chennai

Economic indicators

Those who make much of India becoming a $5 trillion economy must remember that per capita income is a better indicator than GDP numbers. For instance, Bihar is ranked 15th in term of Sates GDP but ranks last on the per capita income list. Even per capita income has its own drawbacks since it does hide inequality of income. When it comes to comparing the economies of two sovereign nations, purchase power parity is the best indicator. It is time the government addressed other burning issues than obsess with a $5 trillion economy.

Anthony Henriques

Mumbai