I was very impressed to read an article titled “Housing for all: There’s a lot to be built” by Shreya Deb in today’s Business Line . I compliment the writer for an objective presentation of the situation to make the concerned understand the challenges. I am asking my Ministry officials to examine the issues presented in the article and suggest further improvements to PMAY(Urban) at our end.

M Venkaiah Naidu

Union Minister for Urban Development

It is time high-density structures with modern amenities should be considered to replace urban slums. Aiming to provide housing for all by 2022, the Finance Minister has offered a tax sop for home-owners by extending the additional tax incentive on home loans. The housing sector, which witnessed poor sales in the last three years, was hit hard by demonetisation. To beat the slowdown, many developers got into affordable housing projects. Indeed, slums are a degrading way for people to live in.

The slum population in the country has grown 25 per cent between 2001 and 2011, during which total urban population rose 32 per cent. It is clear that unless we have a holistic housing policy which addresses the full spectrum of requirement, ranging from ownership to rental accommodation and shared housing, universal housing will remain a distant dream.

Vinod C Dixit

Ahmedabad

Small savings rates

This refers to “Stop fiddling with small savings rates” (July 10). The argument that small savings rate needs to be aligned to market-determined rates prima facie seems logical. But multiple factors are overlooked in the process. Unlike post office deposits, there is a commercial element involved in bank deposits as they are redeployed for lending purposes with a margin. Commercial banks operate in an environment where interest rates are totally deregulated by RBI and forces of demand and supply of funds come into play while fixing rates to remain competitive. Further banks’ cost of funds is calculated after meeting statutory requirements such as CRR (cash reserve ratio - 4 per cent) which does not yield any return and SLR (Statutory Liquidity Ratio-20 per cent), the yield on which is flexible.

The only drawback of post office deposits is that they are not as liquid as bank deposits are and cannot be encashed freely. Banks and post offices operate under a different environment altogether and as such the interest rates offered by both are not comparable. Finally in a country where there is no social security system for senior citizens, the post office schemes are the only ones which offer better risk-free post-tax returns. As such small savings rates should not be tinkered with frequently.

Srinivasan Velamur

Chennai

The rural population which puts its hard-earned money in post office schemes will obviously feel the heat if small savings rates keep dropping in lower interest rate regime. But people from urban and semi-urban areas with good awareness of mutual funds should not get disheartened as they still have a financial product which can provide them better results and beat inflation. We need to promote indirect investment in markets, apart from safe deposits.

Bal Govind

Noida

Vanishing firms

This refers to your editorial ‘Disappearing act’ (July 10). A joint mechanism of SEBI, RBI and Ministry of Corporate Affairs was developed to form a Coordination and Monitoring Committee to deal with vanishing companies. This committee is supposed to classify a company as a vanishing company when certain conditions exist.

Of what use is it to investors to classify some companies as ‘vanishing companies’ or delist them from the stock exchange? The promoters have swindled money from small investors and walked away. There are provisions under Section 447 of the Companies Act 2013 to take criminal action against such promoters, which should have been done by SEBI. Investors can forego their capital on account of a company’s failure, but but not of fraud.

S Kalyanasundaram

Email

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