The Financial Scene on the captioned subject appeared on
July 14 elicited very good responses. That is understandable given the
stressful situation in which most middle-class (read common man) are in
and the large expectations that the new government had raised before the
budget. As we pointed out last week, our focus was not on the budget
per se but on the problems confronting the middle-class in everyday life
as they try to cope with a generally unhelpful government policy on the
one hand and a fast changing financial sector environment on the other.
The
larger point is that vulnerable sections of the middle-class such as
the retired, pensioners have not received any particular support from
the budget and that is emblematic of the way officialdom has treated
them over the years.
True, there were increases in the IT exemption limits and an increase in Section 80C provisions.
These
do benefit some sections of the middle-class, who pay income tax. They
are perhaps more fortunate than many others who are below the taxable
limit but it is not a hasty generalisation to say that a vast majority
of the middle-class remains stressed for a variety of reasons.
We
thank reader M. G. Warrier from Mumbai (mgwarrier@gmail.com ) for his
extremely perceptive observations in response to our last week’s
article. He points out that the term ‘middle-class’ refers to “the
majority of people sandwiched between the rich and the poor and facing
extinction in the near future by migrating downwards to the BPL (below
poverty line) category as and when the poverty line is drawn
realistically.’’
That then is a vivid description of
the deep insecurity the middle-class faces. There are several aspects to
this — last week we raised a few issues and in this column we will try
to discuss a few more.
Examples are drawn from banks, but the observations are valid for the whole of financial sector.
The
pros and cons of widespread technology applications were touched upon
last week. Computerisation has no doubt helped the financial sector in a
big way. It is difficult to think of a time when banks operated without
computers but some short-sighted opposition of the unions delayed
technology adaptation in the dominant government-owned banks. This did
affect their competitiveness. Today for the financial sector it not a
question of whether but how much technology.
That
said technology has posed a few problems for customers. There is a
growing tendency among banks as well as other financial institutions,
including government-owned ones, to depend entirely on technology to the
exclusion of the human element. Following the western models, banks
here are envisaging a situation where there will be a minimum number of
customers who actually come to the bank premises whose numbers can be
expected to come down as computerisation takes hold.
The
ATM was one of the first important development — it has transformed the
way people withdraw cash. Its convenience has overshadowed some genuine
concerns. For instance, it has raised security concerns and made banks
take protective measures such as appointing guards, increasing the cost
of such operations.
Moreover, the trend toward fewer
customers at the premises is not necessarily a positive development.
Many customers would still like to visit banks personally, for advice,
for transactions that are not possible through machines. Also, wholesale
technology adoption has lessened the importance of the branch managers.
Decisions such as for issuing cards are made on the basis of ‘scores’
obtained after a computer evaluation. This can go awfully wrong.
The
computer age, as we pointed, has led to alienation as the common man
cannot be expected to be net savvy, a point which Mr. Warrier rightly
says is an understatement. Only in a literate state like Kerala and in a
few metro/urban centres can customers be expected to rely largely on
computers for their day-to-day transactions.
Mr.
Warrier has raised a few other pertinent issues affecting the common
man. They include the NPS, the method of calculating pension and the
capping of the minimum wage. Some of these have been dealt with in The
Hindu, but we will revisit them again.
(The Hindu, received thru RB Kishore)