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    Opinions2016 was the year when public lost trust in India's most credible...

    2016 was the year when public lost trust in India’s most credible institutions


    2016 was the year when public lost trust in 's most credible institutions

    MG Arjun

    Just when it seemed that 2016 would pass off as a largely uneventful year for the , barring the election of Donald Trump to power in the US and its impact on the Indian stock markets, and the states' consensus on the Goods and Services Tax, the last few months had something completely unexpected in store.

    It was the year in which the public's trust in three things were shaken – two institutions (one government and the other private) and the life blood of the economy, the currency note.

    Yes, I said shaken, but not lost, since, in all the three, there is ample time for redressal and repair. Hopefully.

    The currency note

    “I promise to pay the bearer the sum of…” so goes the fine print on our currencies, signed by the Reserve Bank of India (RBI) governor.

    When PM Narendra Modi announced on November 8 that high value currencies would not be legal tender from midnight, that promise stood broken. The PM exhorted the nation to stand by him (and, by the end of the 50-days period, many seemed to have stood so) and promised long term gain in lieu of the short-term “inconvenience” that the exercise cost.

    But between the two currencies – Rs 500 and Rs 1,000 – was sucked out 86 per cent of currency in circulation, worth Rs 14 lakh crore. Of this, the even graver issue was that the Rs 500 note comprised almost half of the total currency in circulation (47 per cent, to be precise).

    A note that was at the centre of most transactions, used by the rich and the poor alike, a currency in which over 60 per cent were paid their salaries or daily wages (called the informal sector) became redundant. Snuffing it out not just broke our trust in the note, but in the banking system, which struggled to adjust itself with the cash crunch crisis.

    Only a coordinated effort by the government, the central bank and the commercial banks to ensure a smooth banking experience at the earliest will help the banks win back the public's trust.

    The central bank

    Next is the RBI, the Old Lady of Mint Street, founded in 1935. There had been some instances in which its hefty governors have locked horns with the governments of the day, but that has never been in public or so damaging.

    Early this year, the RBI came under public scrutiny after BJP MP Subramanian Swamy's relentless tirade against the then governor Raghuram Rajan, even going to the extent of saying he was “mentally not fully Indian”, hinting that he was not fully aligned to the country's interest.

    Obviously, what got Swamy's goat was Rajan's tough stance on interest rates, and some off-the-cuff comments on the Indian economy that was perceived to show the Modi government in poor light. While Swamy had his way (Rajan was denied an extension), in a few months, the iconic institution found itself facing a volley of allegations.

    With demonetisation and the ensuing chaos was tested new governor Urjit Patel's mettle – and he surely has been having a tough run so far. Not only had he to issue more than a notification a day as the Indian banking system struggled under a lack of preparedness to handle the withdrawal and exchange of currency, he also had his U-turns as well, exposing undue haste and under-preparedness.

    The most embarrassing moment for Patel was the withdrawal of one of RBI's own December notifications which said those depositing demonetised notes would be needed to answer pointed queries from bankers on why they hadn't deposited the money earlier – that too, with some ten days to go before the December 30 deadline. Coupled with this were reports of how RBI officials connived with unscrupulous elements in exchanging old notes for new, and the public's trust in this institution seemed to be eroding.

    With the New Year dawning, the RBI should take steps to ensure that it communicates clearly and convincingly, and its governor comes across as someone with clear-sighted vision and drive.

    Brand Tata

    Last but not the least is the 150-year-old group. The Tatas are not new to power struggles, but this was the first time when a chairman was shown the door in a boardroom drama that set tongues wagging.

    The manner in which Cyrus Mistry was ousted (all the reasons that were laid out came much later, and may still not be convincing to many), the ugly public spat between Mistry and Ratan Tata (through Tata Sons and Tata Trusts) and the shareholder meetings called to expel Mistry from the directorships of group firms ensured that the $100 billion conglomerate was as vulnerable as any other.

    This is not to say there is any erosion of the public's trust in the products or services of Tatas. That is very much intact. But what is at stake is the Group's reputation as one of India's most trusted companies.

    With serious corporate governance issues being levelled by Mistry against the Tatas – especially those of the Trusts' involvement in the operations of the Tata Group and chasing unproductive investments in auto and aviation driven by sentiments of one person alone, as alleged – one hopes those are steadfastly looked into and resolved.

    (Courtesy of Mail Today.)


    The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.

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