Sucheta Dalal :Post office vs automation
Sucheta Dalal

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Post office vs automation  

Sep 20, 2004


When the Finance Minister flagged off Unit Trust of India’s (UTI) plan to sell its units through post offices, he probably killed an effort to push mutual fund units into the paperless mode. The mutual fund business is divided between large Funds such as UTI, LIC Mutual Fund and SBI Mutual Fund, whose distribution is facilitated by the massive network of branches/agents of their parent organisations; and smaller private and foreign funds that are struggling to find inexpensive ways of extending their market reach. The latter have mooted a proposal to use the 1,700 centre depository network and mandatory dematerialisation of mutual fund units to bridge the distribution divide. At the same time, retail investors are beginning to balk at the high cost of automation and dematerialisation (especially custody charges), which have turned into an entry barrier. There is no demand from retail investors to extend dematerialisation to mutual fund units. Instead, they worry that hefty demat costs will be deducted from the Net Asset Value (NAVs) of units. Private and foreign mutual funds believe that demat costs can be reduced considerably to make it attractive, but wouldn’t the same low costs have to apply to equity as well? There are no clear answers today. Instead, UTI has categorically opposed mandatory dematerialisation of units and its stand may find support from investors. The demat plan may probably be shelved.


Tax payers’ money


This year, some Income Tax officials came up with the bright idea of reminding people to pay their taxes and gather payment details. Many of us received a personalised letter (in duplicate), hand-delivered by an Income Tax official (not through a courier agency or by post) seeking proper acknowledgement, merely reminding us to pay our advance tax before September 15 and report the payment to tax officials. Is this personalised reminder a part of the new and friendly face of the tax department? We called the Chief Commissioner of Income Tax to find out and realised that she hadn’t a clue about this solicitous reminder service. Now consider this. Not paying advance tax attracts hefty penalty, yet the Income tax department has enough of surplus staff, on permanent, pensionable government employment to type out reminder letters and hand deliver them to individuals who are not even in the super income bracket. Maybe if the government wasn’t splurging our hard-earned tax rupees on keeping surplus employees occupied in typing and delivering letters, the Finance Minister may actually be able to cut taxes. At the least, these employees ought to be busy catching tax-avoiders and increasing collections.


Contact TRAI


Even as service standards of private telephone operators deteriorate rapidly, the Telecom Regulatory Authority of India (TRAI) has started addressing basic issues such as the need for telephone directories and telephonic inquiry services for private networks. As a part of its consultation process, TRAI has asked whether ‘‘the publication of the Telephone Directory of both the mobile and fixed customers be mandated or not’’? And whether pre-paid mobile users must be included in the directory. Clearly, directories for private fixed line services are a necessity, but there cannot and should not be published mobile phone directories. Mobile phone directory will only be a treasure trove for telemarketers and will escalate the already high level of harassment of users. Telemarketing irritates most people, but landline calls can sometimes be filtered and do not cost the recipient. Unsolicited mobile calls disturb users during work and play and are often get charged to recipients as roaming charges while travelling. Let’s not assume that mobile phone companies will protest against the publication of directories. They can always charge a fat fee for ‘unlisted numbers’. It is up to the consumers to quickly write to the TRAI ( and make their preferences clear. The TRAI is also seeking opinion on whether directories for different service providers should be consolidated, whether they should be priced, and if so, who should decide the pricing. It has also asked whether Telephone Directory Enquiry Services must be mandated, whether they must be paid services and unified for all operators and accessible from all phones? All these are important questions, with no easy answers. Ideally, each company must provide its own telephone directory and directory inquiry service on a chargeable basis — but it must be accessible from all phones. This will leave room for companies to compete with each other in providing cheaper and better services to consumers.


Martha’s gamble


The heavy five-month jail sentence for homemaking icon Martha Stewart for lying to American regulators has only ensured a huge wave of sympathy for the gutsy entrepreneur. Martha’s latest move to serve out her prison term instead of waiting for the appeal (so that she can get it over with and return to business) seems set to boost her image even further. It will also turn the pressure on judges and regulators to ensure that the big corporate scamsters are punished more severely.


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-- Sucheta Dalal