DEPOSIT AND MISCELLANEOUS SERVICES

Since the last several years there has been a sea change in the services of the Bank. The technological revolution in the Banking industry has ushered in innovative Banking culminating in a host of services available to the public. With the advent of computerisation in Banks the services have become quicker and convenient to the customer. A customer can bank from anywhere at anytime. The facility of online transfer of funds, account information and remittances from abroad have become fast and convenient. With the core banking facilities, Branches of Banks are interconnected for all Banking transactions. In some Banks cheques drawn on one Branch is payable at par at all the branches which are connected. On line facility can also be used for payment of utility bills and taxes. The Banks have introduced online trading in shares and Online booking for Railway / Indian Airlines. ATM (All Time Money) net worth provides round the clock service. The ATM facility provides the customer to withdraw cash from his account through vending machine provided in the ATM centre. The customer is saved of the botheration of going to the Bank and waiting for his payment. Further this facility can be availed on all holidays.
Banks have tied up with Life Insurance Corp of India and General Insurance company for making available their entire Insurance product range. They also offer Mutual Fund product of LIC, Reliance, DSP and other reputed companies. To facilitate their NRI clients and investors they have marketed their Depository services by opening their specialised branch in association with National securities depositors Ltd. Banks not only assist corporate in their business but also help the common man realise his dream. It has made its presence felt in rural India besides reaching out across the globe.
Safety of your hard earned money is the prime concern of the Banks. To this end Banks have various deposit schemes like Term Deposits, Savings Banking, Current Account etc. The nomenclature of deposits classified under Term Deposits vary from Bank to Bank. The deposits classified under Term deposits are Fixed Deposit, quarterly Income Certificate, Monthly Income Certificate, Kamadhenu Deposits . Double Benefit Deposits etc. Term Deposit is a fixed amount deposited by a customer for a fixed period and is payable on maturity of deposit. The interest payable on the term deposit varies from monthly, quarterly, annually and on due date of the deposit. In the case of interest payable on maturity of deposit the depositor gets the benefit of compounded interest The eligibility criteria for. Term Deposits are as follows.
A Term Deposit can be opened by an Individual in his / her name or jointly with his / her spouse or with anybody. The maximum number of persons in a joint account will be four and the deposit is repayable to all of them jointly or to anyone or more of them or survivors or the first named depositor or survivors. In the case of a minor only the guardian can operate the account until the minor is 12 years of age. Thereafter the minor can operate his / her account if the Bank opines that the minor understands the operation of the account. Deposit accounts can also be opened in the name of Hindu undivided family, Trusts, Company clubs, Association, Institutions parternership firm and societies. The deposit account will be opened in the Banks standard form and submitted to the Bank duly completed in all respects. The account should be introduced by an account holder having a satisfactorily conducted account for a minimum period of one year. Two recent passport size photograph of the depositor should be submitted along with the account opening form. The depositor should also submit his Permanent Account Number (PAN) or general Index number (GIR) In the alternate a declaration in form number 60 or 61 as per IT Act (Sec 139 A) will suffice. The following documents have to be submitted as identity and address proof.
a) Passport
b) PAN card
c) Driving License
d) Employee identity card with address
e) Telephone / Electricity bills
f) Consumer gas connection book
The minimum deposit amount should be Rs.1000/- for the original deposit made by the depositor. This criteria however varies from Bank to Bank. The rate of interest is determined on the amount of the deposit and the prevailing rate at the time of opening the deposit account / renewal of the deposit. As the Bank accepts the deposit on a contract basis any change in interest rate in the interviewing period will not be applicable to the deposit. In terms of IT Act Tax (TDS) will be deducted at source if the interest paid on the deposit is more than Rs.10,000/- per annum. In case the depositor does not want the tax to be deducted he has to submit Form 14H/E as per I.T. Act. The maximum period of deposit will be 10 years.
The Term deposit receipt will depict the name of the depositor, ID number, the name of the Branch of the Bank, amount and date of deposit, due date, the rate of interest and the interest amount. The receipt will be signed by an authorised official of the Bank with his code number. Repayment instruction will also be indicated in the Deposit Receipt. Overdue interest may be paid by the Bank if the deposit is renewed from the date of maturity. The interest for renewed deposit will be the rate applicable to the renewed period as prevailing on maturity date or date of renewal whichever is minimum. Repayment of matured deposit will be by credit to the depositors savings / current account or by cash. The maximum amount of cash payable is less than Rs.20,000/- as per IT Act 1961. The depositor can avail loan against his term deposit. In such an event the depositor surrenders his deposit receipt to the Bank. The Bank will have a lien on the deposit until the loan is repaid. The maximum amount of loan against the term deposit is 75% of the deposit amount though the Banks have discretion to grant loan upto 90% of the deposit. The interest payable on the loan will be 2% above the deposit rate. The depositor can also avail loan against his deposit from any branch of the Bank. Transfer of deposit is permissible from branch to branch of the Bank in different places. Banks also provide transfer of funds from the customers account to the beneficiaries account with branches of other Banks. The remitted amount gets credited to the beneficiaries account within a maximum of 2 hours from the time the message gets transmitted from the customers bank. Nomination facility is available for all types of deposit Nomination can be effected by the depositor at the time of opening the account or on any subsequent day. It may be noted that if the beneficiary of the depositor's 'WILL' is different from the nominee of his deposit bequeath of deposit made to the beneficiary of the 'WILL' will prevail over the nominee. Some Banks have Auto Renewal Deposit. In this scheme the period of deposit varies from 15 days to 45 days. The deposit is automatically renewed for 12 times. The deposit earns simple interest. The period of Automatic renewal of deposit varies from Bank to Bank.
Recurring Deposit can be opened for a minimum period of 6 months and maximum period of 120 months with a minimum amount of Rs.100/- per month. In a Recurring Deposit account a fixed amount is deposited every month for over a period of time. Interest is compounded quarterly. There is also Tax savings term deposit which is a replica of Recurring deposit. However there is a lock in period of 5 years which means the depositor cannot withdraw his deposits until the completion of the deposit period. Tax will be deducted at source on the amount of interest paid as per I.T. Act from time to time and the deposit is eligible for tax benefits under Section 80 (C) of IT Act. In the case of Recurring deposit loan may be availed against the deposit but in the case of Tax Savings Term Deposit no loan will be granted by the Bank. Banks have special Recurring deposit scheme for Corporate, Government Undertakings and Institutions. The minimum amount to be deposited in the account every month is Rs.10,000/- and the minimum period of deposit is 5 years. The maximum period of deposit is 20 years.
The other types of deposits are Savings Bank, Current Account etc. Besides the regular Savings Bank Account Banks also have "No frills Savings Bank Account" with zero balance facility. It can be opened by an individual including minors above 10 years of age. The account can be opened without any initial deposit. The account is meant for Pensioners, labourers, employees of unorganised sector, students and self employed persons. The rate of interest is the same as applicable to normal Savings account.
Facilities offered for the account are
a) Cheque Book Facility
b) Maximum 10 withdrawals per year.
c) Collection of outstation cheques.
d) Remittance facility.
e) Nomination facility
Photographs, identity proof and age proof is required. The depositor has to declare that the balance in the account with not exceed Rs.50,000/- and the total credit in all the accounts will not exceed Rs.1 lac in a year.
The term deposit maintained with a bank for 5 years is eligible for income Tax exemption for that financial year only. The maximum amount of deposit is Rs. 1 lac. The depositor cannot avail loan against the deposit. Before availing this facility the depositor should specifically inform the bank that the deposit is made to avail tax exemption.

REVERSE MORTGAGE

Parents spend their prime youth on their children by sacrificing their personal effects, just to see them in clover. With the advent of nuclear family, children settle in distant places to further their prospects leaving their parents to fend for themselves. Some of them land up in old age homes after selling their house as their income from retirement benefits does not cover the cost of living and they find it difficult to meet both ends. To ameliorate their problems the government has decided to bring into effect the scheme of Reverse mortgage which is prevalent in US, Canada and U.K. Though reverse mortgage is a new concept in India its introduction will supplement the pension and other incomes of retired people so as to ensure a reasonable standard of living.
Reverse Mortgage is the opposite of a normal mortgage. In a normal mortgage the borrower is granted loan for construction / purchase of a residential or commercial building free of encumbrances and the said building is mortgaged to the Bank as security for the loan availed by the borrower. In the case of a reverse mortgage the owned residential property of the borrower which is free from all encumbrances is mortgaged to the Bank as security for the loan granted to the borrower.
The loan granted will be based on the value of property.
The salient features of reverse mortgage is as follows :
The borrower must have completed 60 years of age and must have retired from service.
The mortgage pertains to only residential property owned by the borrower.
The residential property should be self acquired and not ancestral.
The prospective borrower should live in the house offered for mortgage and it should be his / her permanent primary residence.
Regarding the mode of disbursal of the mortgage loan, the borrower has the choice of any of the following options.
a) Lump sum loan
b) Fixed monthly installment
c) Line of Credit
d) Combination of all the options
The residential property should be free from all encumbrances and it must be an approved construction.
Dewan Housing Finance Corporation Lt. (DHFL) is the first finance company in India to introduce reverse mortgage scheme for senior citizens. The scheme is so designed to benefit the senior citizens after their retirement from service. The scheme supplements their pension and other income.
Based on the estimated value of the residential property DHFL will grant loan to the borrower at 12% interest. The loan to value ratio will be 50%. The disbursal of the loan will be in fixed monthly installment for a period of 15 years. In other words the tenure of the loan will be 15 years. However if the borrower out lives the tenure of the loan, the mortgage can be renewed six months before the end of the tenure. The mode of construction and the life of the property will be the basis for valuation of the property.
The finance company permits the borrower and his spouse to live in the house as long as they are alive irrespective of the expiry of the tenure period of 15 years. The loan need not be repaid by the borrower during his life time. However after the expiry of 15 years the payment of fixed monthly installment to the borrower will be stopped. If one of the applicants expires the DHFL would sell the house and the sale proceeds will be appropriated towards the outstanding loan and interest. The surplus amount will be paid to the legal heirs of the borrower. The legal heirs have the option to repossess the property after the demise of the borrower, by repaying the loan and interest. The scheme is presently introduced in Bombay and expected to be launched in other cities as well.
Punjab National Bank is the first nationalised Bank to launch reverse mortgage scheme. The reverse mortgage facility is offered to senior citizens.
As per the scheme the borrower is entitled for a maximum loan of Rupees One Crore against his property mortgaged to the Bank. The tenure of the loan is 20 years and carries an interest of 10% per annum. All other conditions of a reverse mortgage are applicable to the loan. Since the reverse mortgage is still in its infancy there appears to be some ambiguity in its operation. At the insistence of the government the National Housing Board (N.H.B.) which is the apex body has drafted guidelines to be followed by all Banks and housing finance companies in respect of reverse mortgage scheme. The guidelines as follows ensures uniformity in the procedures for disbursal of the loan.
The fixed monthly installment payable to the borrower will be subject to upward revision on revaluation of the mortgaged property by the Banks and finance companies once in every five years. This is to ensure that the borrower gets the benefit of appreciated value of his property.
The loans will be given to borrowers who have a clear and marketable title to their property. The rule applies not only to houses but also to flats. If the property offered to the Bank / finance company as security for reverse mortgage is inherited property then all the claimants will give their consent in writing and same will be subject to legal scrutiny so as to ensure that the title to the property is clear and marketable. The borrower should be staying in the house proposed to be mortgaged. Mortgage of house by Power of Attorney holder is not acceptable. The quantum of loan to be disbursed to senior citizens depends on the age of the borrower. Senior citizens between 60 and 70 years of age are eligible for loan upto 45% of the value of the property. It is enhanced to 50% for 71-75 age group and 55% for 76-80 group.
The loan is not required to be repaid by the borrower. The Bank / HFC will recover the loan with interest on the demise of the borrower (owner of property) or on expiry of the mortgaged period by selling the property. The surplus amount will be given to the owner or his legal heirs. The owner has the option to repay the loan before expiry of the loan period. The tenure of the loan will be 15 years. In this scheme spouses will be the joint borrowers. In the event of the demise of borrower the spouse can continue to live in the house and get monthly payment until his / her death. In the event of the borrower surviving beyond the tenure period of 15 years, the Bank / HFC will stop payment of the monthly installment to the borrower and the maintenance of the house would be borrower's responsibility. On the death of the surviving borrower the mortgaged property will be sold by the Bank / finance institution and the outstanding loan amount with interest will be recovered from the sale proceeds. The surplus amount will be paid to the legal heirs. However the legal heirs can reposses the property after settling the Bank's / HFC's dues. The borrower has also the option to repay the loan before the expiry of the mortgaged period. The legal heirs who have been staying in the mortgaged properly will have to vacate within a reasonable period after the demise of the surviving borrower so as to facilitate the sale of the property by the mortgagee.
Corporation Bank has launched the reverse mortgage scheme on 14th April 2008. It is known as "Corp Shelter" for the benefit of senior citizens.
The scheme envisages the following conditions besides other conditions applicable to the scheme.
Married couples will be eligible as joint borrowers provided one of them has completed 60 years of age and the other has completed 55 years of age.
The loan amount will range between Rs.1 lakh and Rs.50 lakhs. The amount can be used for any purpose but the borrower must pay off any existing mortgages with proceeds from reverse mortgage.
The borrower shall not use the proceeds of reverse mortgage loan for speculative trading purposes.
The rate of interest on the loan will be 10% p.a.. The borrower has the option to choose either the fixed rate, rate of interest or floating rate of interest.

THE DIFFERENT FACETS OF EMERGING ECONOMY

The growth of Indian economy has been characterized more by hyperbole than the results for the common man and the poor. The year 2007 may be a watershed moment for the economic growth of our country with the G.D.P. projected at 9%. Keeping pace with the new age developments the past few years have seen rapid economic growth. Rapid economic growth and the existence of millions of poor people in India have exemplified our country as a land of contrasts. India is a land of collisions between the past and the present. Two decades back though the economic growth was slow, it was poor oriented. It ushered in a green revolution which led to agricultural growth and community and rural development which alleviated the problems of the poor. But the benefits of the present rapid economic growth have not percolated to the poor and the common man. The rate of decline in poverty has not kept pace with higher growth. There is no denying the fact that 60 percent of the Indian population depends on agriculture. Agriculture alone accounts for more than 20 percent contribution to G.D.P. However the budgetary allocation is grossly low when compared to the other sectors. Though the government has emphasized on increased credit facilities to the rural population engaged in farming, Banks are fighting shy to provide loans to more than 50 percent of the farmers. Bank's apathy, non remunerative prices and poor rural infrastructure like irrigation, ware housing and transport has added to the woes of the farmers. Farmers were deprived of fair prices for their produce resulting in their indebtness and large number of suicides. Ironically most of the suicides were from agricultural advanced states of Maharashtra, Karnataka, Andhra Pradesh and Punjab.

India is a land of contrasts where there are some who invest lakhs and crores of rupees on an apartment or have the right to splurge in a licentious way while others are content and happy at being able to pay Rs.25/- for a square meal. The satisfaction at the macro economic situation gets camouflaged with the stark fact that nearly 77 percent of our population earns an income of Rs.20/- per day. The inequalities in human development have an adverse impact on the lives and capabilities of the people. The two faces of India should converge for a sustainable growth and bring about a social harmony in the country. The states of Bihar, Madhya Pradesh, Gujarat, Maharashtra and U.P. have accounted for 75 percent of the country's rural poor.
Poverty can be eradicated only by significant investments in health, human resources, education, and infrastructure. Investments in social infrastructure will provide the common man and the poor with access to employment opportunities. I believe that education is the catalyst that generates human resource and it is considered as the most effective weapon to fight poverty. In the eyes of the common man there are two Indias - an India which is focusing on generation and accumulation of wealth and the other on eradicating poverty. With the economic boom and the bullish share market wealth is cornered by only a section of the population. The inequalities in human development have adversely impacted the life and capabilities of our people. The two faces of India should converge for a sustainable economic growth to create decent employment opportunities which will not only eradicate poverty but will build a strong foundation for political and social stability.

It is high time the ground realities are accepted to rectify and address the crisis. India's phenomenal growth rendered in figures in graphs and bulletins appears to be a fairy tale. The government claims that the revenue collection during the present financial year is the highest when compared to the earlier periods.

The direct tax collection during April, December 2007 of the current financial year at Rs.164 crores is a whopping 42 percent higher than what the government collected in the corresponding period last year. Corporate tax contributed Rs.98391 crores. In order to widen the tax net and broaden the tax base the government is roping in new payers besides introducing new taxes like fringe benefit tax, securities transaction tax, banking transaction tax and service tax. It is reported that the securities transaction tax at Rs.5895/- crore was 74 percent higher than last year. The government claims to have brought down Inflation to 3.5 percent which is based on wholesale Index. It is not based on a reality check. The consumer price Index and the retail price of commodities are always on the rise which has deprived the poor and the middle class people from realizing their rightful aspirations. Unfortunately channeling the revenue for development projects and ameliorating the sufferings of the poor is bogged down by political avarice and bureaucratic cupidity. This has culminated in the rise of crime and passion which is finding expression in a stressed urban and rural scenario.

In public perception substantial revenue is wasted on non developmental expenses for running bloated government machinery which has no or little value to the common man. We are a democracy and hence it is imperative that the law of equity is given its due importance to narrow or bridge the gap between the abysmally poor masses and the well to do minority.

The economic gains can be felt only if the money spent on developing projects translates into a better standard of living for the poor and the common man. The government needs to realize that evolution of democracy should be out of the free will of the people and it cannot be imposed on them. It is for the people and by the people.

THE ECONOMIC GROWTH VIS-A-VIS SAVINGS RATE

The post Independence India saw our nation as frugal despite the fact that India was considered as a country of thrifty individuals. Though by and large the people were thrifty the savings rate remained static. This was so because the house hold savings was mostly invested in land and gold. Investment in land was mostly considered as a source of livelihood. Investment in gold was in consonance with the Indian tradition. As there was no generation of employment opportunities the savings rate among the individuals remained static. The savings rate then was comparatively lower to the rates of developing countries. The savings rate which was about 10 percent during 1950 showed a marginal increase of 5 percent in 1971. The new age development has ushered in economic growth since the past few decades. It has seen the magnificent resurgence of India after decades of poverty even at the middle class level. Encouraging economic growth has thrown up a few magical tricks and turned a bleak situation into a bright one. With the economic growth picking up there was a spurt in the savings rate which stood at 25.5 per cent in 1995. Since then there was no looking back. With a robust economy the savings rate spiraled to 32.4 percent in 2005-06. Consequently the per capita income also rose considerably.

With the advent of I.T. revolution and globalization services led growth has brought about phenomenal increase in the employment of the educated. The Industry which is reported to be employing 1.3 million people has a revenue growth potential of about 25 percent. Globalization has culminated in massive technological growth. The IT Industry and the BPO deluge offering high pay and perquisites have become a blessing and bane to the present youth. In contrast to the old socialistic system we have emerged into a society that is money oriented. Public have become more status conscious and money obsessed. With more money supply there is sharp rise in savings rate. Today the house hold savings is about 70 per cent of the aggregate savings, despite the consumption splurge. With the increase in income of the individuals, the consumption among the Nouveau Riche and the younger generation has catapulted. According to the Max New York Life 81 percent of Indian house holds have savings but only 51 percent deposit in Banks. This is so because there are other avenues for parking their savings with better returns like in Real Estate, Gold and to a certain extent even in Share Market. Substantial amount is invested in real estate which is presently at its pinnacle. However real estate boom depends on demand and supply and also the government policy. Hence such investments are not devoid of risk. It was envisaged that a faster growth in producing capital goods will entail in the savings rate increasing appreciably. With globalization and post liberalization boom the Indian markets were exposed to the foreign consumers abroad. This led to phenomenal increase in exports of garments, leather goods, carpets, rice, shrimp etc. India is today considered as an economic power house with the growth of economy projected at 9 percent. Apart from the house hold savings the corporate sector is reported to account for 60 per cent increase in private corporate savings. The reduction in wasteful expenditure at the Central and State Government level also contributed to the increase in the savings rate which was conspicuous by its absence a few decades back. With the appreciable increase in the savings rate which presently stands at 32 percent despite the spending splurge by the individuals, shopping has turned out to be an established national pastime in India. Retail outlets have given way to shopping malls. The right to splurge in a licentious way has become a way of life. Despite the substantial savings rate individuals in service sectors have gone berserk about material acquisition.

How ever the disturbing trend is the economic slow down in US which are a cause of worry for the global economy. The US economic slow down is expected to hit the software exports to the Banking Financial and Insurance sector in US. If the impending recession in US turns out to the full blown, it will impact the I.T. Industry severely so much so the annual growth in software exports may reduce from 30 per cent to 20 per cent. This in turn will have an adverse effect on corporate savings. The rupee appreciation against the dollar has added to the woes of the exporter. There is also an apprehension that a full blown recession in US will result in US cutting, spending and slashing outsourcing to India. All this means the job opportunities will fall drastically and consequently the savings rate will go for a tail spin. Coming events cast their shadows. This is best exemplified by the downward trend in the share market which has shed 4000 points within a span of few months. It is a known fact that the bulk of the investments in share market comes from foreign Institutional investors who sway the share market. As a result of the slow down of economy in US due to sub prime crises the foreign Institutional Investors have started pulling out their investments from the share market. The subprime crisis in US is as a result of non repayment of mortgage loans by the borrowers. The fall in the share market has resulted in retail and corporate investors loosing crores of rupees.

Fortunately for India the foreign exchange reserve is high at $283 billion. Since India's economy is robust foreign Institutional Investors are expected to reinvest in our share markets sooner or later.

The need for prudence and austerity in spending by the individuals and corporate sector will go a long way in sustaining the present growth in savings rate.

Monetary Policy - Inflation

The August 2007 issue of Reserve Bank of India Bulletin makes a interesting reading in as much as a robust economy is projected with commendable achievements in almost all sectors be it Agriculture, Industry, Manufacturing, Communication, Service, Banking etc. As per the Reserve Bank of India Bulletin Indian Economy continued robust growth in 2006-2007 for the fourth successive year buoyed by the sustained momentum in the services, manufacturing and other sectors. The Agricultural sector has also shown a sustained growth. The growth in Agricultural sector is mainly due to South West Monsoon which has been satisfactory despite hiatus due to initial delays in its onset over western, north western and central regions. The cumulative rainfall during 2007 season (upto July 07) was 4 percent above normal as compared with 14 percent below normal during the corresponding period of the previous year - Source India Metrological Department. As of July 07 total area of Kharif sown was 1.7 percent higher than that in the corresponding period of 2006. According to the fourth Advances estimate the food grain production during 2006-2007 was 216.1 million tones an increase of 3.6 percent over previous year source - Ministry of Agriculture, Government of India. Industrial output has increased more than the expected level in April / May 2007. The Industrial production remained robust during April / May 07. It has clocked a record expansion of 11.7 percent. The manufacturing of sector has shown an impressive growth of 12.7 percent - Source - Central statistical organization. The service sector growth during 2006-2007 has shown a commendable growth in as much as it has contributed 71.5 percent to the overall GDP growth of 9.4 percent - source Ministry of Tourism, Ministry of Commerce and Industry, Ministry of Statistics, Programmed Implementation RBI and CMIE. The other sectors which have shown significant growth are Communication, Corporate and Banking. The perceptible growth in other sectors also contributed to a robust economy.

Though our economy is growth oriented it is not a bonanza to the average consumer. The benefits of the growth in economy have not percolated to the common man. There are grey areas which needs the Government's attention. A large portion of the population especially in the rural areas and in towns is well below the poverty line. Unless the Government takes immediate corrective steps to ameliorate their standard of living the average consumer will find it arduous to make both ends meet.

As per the statement of Reserve Bank of India Governor on the First Quarter Review, Review of Annual Monetary Policy for the year 2007-08 and published in the August 2007 issue of Reserve Bank of India Bulletin, Inflation measured by variations in the wholesale price (WPI) on a year-on-basis declined from 5.9 percent at the end of March 07 to 4.4 percent as on 14th July 07. The inflation during August / Sept 07 is reported to have declined further. Though the figures are in consonance with the Finance Ministers expectations it does not augur well with the purchasing power of the average consumer. The average consumer is more concerned with retail prices of commodities rather than whole sale price.

After all he is not going to make purchases in bulk in the whole sale market as many of the commodities like vegetables, eggs, milk, fish, fruits etc. are perishable by nature. Further when the general inflation is reported to be hovering around 3.5 percent the food prices Index is about 8.5 percent. The prices of onions, potato, pulses and even rice and wheat are spiraling upwards. The common man is concerned only with consumer price Index as it gives due weight age for food, fuel, transport, clothing, housing, medical care, education etc. which has a direct impact on him. The Real Estate market is over heated and dreams of owning a house is shattered as the prices have sky rocketed in all cities and even in towns. It is only the affluent class of people and professionals from I.T. Industry purchase flats / house at exorbitant price as their purchasing capacity can withstand the buyers offer. It is not known whether the government has considered the housing cost when computing whole sale price Index. Another aspect which the average consumer is concerned is the medical care. There is no denying the fact that the cost of medicines and hospitalization has spiraled since the last couple of years and the Government has not made any attempt to curb the prices. The premium on Mediclaim policy issued by the Insurance Companies has shot up by 200 percent.

With the increase in prices of all commodities having a direct impact on the average consumer, there is no reason for the Government to gloss over the general inflation which they claim to have pegged. The inflation figures projected by the government are not based on reality check. The significant growth in the economy should have translated into a bonanza for the average consumer by making available the basic necessities at affordable prices.

It is imperative that the government takes appropriate steps at the earliest to evolve a fool proof system for computing the whole sale price Index which should not be in contrast to the Consumer price Index at least with respect to the basic necessities of the average consumer. This in reality will act as the yard stick for measuring the general inflation which otherwise gets camouflaged, by whole sale price Index.