Government’s Goldberg

It’s surprising how most of my writing happens on Wednesdays; maybe I need to consult an astrologer to find out why. OK so today’s big news in the paper this morning was the Gold Monetization scheme. Gold Monetization is where Gold will be treated like Cash. 

This scheme was announced by the Finance Minister Arun Jaitley in this year’s Budget. The scheme is a two pronged answer to the Indian obsession with Gold.

1.       The scheme shall allow public to deposit gold in scheduled banks and earn interest on their gold.

2.       The scheme allows Banks to use the gold received in this scheme to meet the CRR and SLR requirements.

So what does this mean?

Simply put, you and I can deposit our gold in the bank and earn an interest after a fixed maturity period. How does this happen? Well it works just like cash, the Bank will measure, test and tag your gold, and then lend it to jewelers or other investors who may be willing to buy or borrow at a rate higher than the banks offer to pay you. The interest earned in this scheme is not taxable under income tax or tax from capital gains. Please note that interest will be calculated in terms of gold. That is, if you deposit 50g of gold, 10% would be 5g of gold.   

This brings us to some simple but genuine questions

1.       How will they pay interest? Will they add another gram to my bangle? 

Well, no… Your gold will be treated just like cash. Meaning, you will not get to see the same gold bangle at maturity. If your bangle was 50g, then you will get 50g back + interest, but not in the same bangle. You may get the maturity amount as bullions of gold or you also have an option of redeeming it in cash. However there’s a catch, you need to specify if you want gold or cash while signing up for the scheme.

I’ll say what you’re thinking now… Nope, not gonna happen! My mom would never lose her bangles for 5% or 10% or even 30% if she’s never going to get a chance to see the bangles again. 

So why make this scheme? Politicians and bearcats are probably smarter than us, they would obviously be aware of our attachment to personal jewels, why would they draft such a thing??

Well the answer is simple. The general public is not the target of this scheme. This is for investors who already have gold in their portfolio. Gold itself would grow its worth in time, imagine depositing it in banks and earning interest on it, that’s a double income on a single asset! 

All this is fine and obvious. What are we missing? Well, tipping the rich to invest more is not the only goal here, the second leg,(which is actually the first) is that Banks would be able to allocate this gold to meet CRR and SLR requirements. Banks, need to place certain percentage of their deposits with the RBI, currently the CRR and SLR together constitute 21.5% of the deposits.  Meaning, if a bank has 100B of deposits it needs to deposit 21.5B with the RBI. The remaining 78.5B can be used for their business that is; giving loans. So, now that gold has come into the picture, Banks may keep gold in the RBI and use more cash to give away more loans and hence increasing growth in the country. 

So to summarize, what’s this scheme about? 

1.       Make big investors earn two times on a single asset.

2.       Allow banks to use the gold to meet their duties and save cash to give more loans. 

 

Will this reduce gold imports?

No

Will this make any difference to household gold?

No

Will this mean anything to small investors?

No

Do we need this scheme?

I don’t know.

As it Turnsout

I always have an opinion about votes, but I almost always shy away from debates on voting. It’s frankly because till date I haven’t had an opportunity to vote.  (I’ve seem almost 6 to 8 elections pass by btw) You can simply say I’m lazy, I don’t care about electing, or I still don’t feel empowered enough to actually believe that my vote can make a difference. 

The General Elections of India are probably one of the biggest democratic exercises on the face of earth, and with it comes a lot of drama, games, schemes, garlands, and well... some shoes too. The problem in the Indian electoral system since the earliest times has been the voter turnout. People don’t see it to be worth the effort.   The average voter turnout in the General Elections is around 60% meaning less than two thirds of the people were responsible for deciding whom to elect and assuming two thirds voted for the party(ies) forming the government, only about 40% of the total (voting) population of India chose the ruling party. So about 60% were in no way responsible for the central government! But I’m sure they had their share of complaining on how dysfunctional the government is. (Me included)

Ok here’s little info,

Voter turnout can actually say a lot, they are generally used to send political messages too. The 72% voter turnout in the Assembly election of Arunachal Pradesh in 2009 was hailed by the media and a few voices in India as a message against the Chinese aggressive pursuit of annexing Arunachal Pradesh. Similarly this time around (2014) certain groups... well ok terrorists (I was just trying do a Reuters and not use the word terrorist :D ) put up signs and distributed flyers telling people not to vote, in an attempt to show that Kashmiris don’t feel like voting or participating in the democratic system of India. 

www.mirror.co.uk

Now lemme tell you why I haven’t had a chance to vote yet. When I turned 18 I was sure I could cast my vote in the coming election, I was born in the beginning of the year and by the time the next election came in 2008 I was eager and well, had not yet figured anything in politics but wanted to vote, I was eager and was taken by the ‘right to vote’ thing. But my name was not in the list, disappointment. The next election was in 2009, I tried to register myself, the clerk at the official looking koisk asked me to fill form and took 2 or 3 photos, loksabha election 2009 – ‘sorry your name is absent in the list’, ok. 2010 – Municipal election, the guys came home (supposedly) and we weren’t at home; result – no vote. It’s been so through till now.  In the initial days I wanted a voter ID so that I can have an address proof, (then I got my passport, so lost interest all the more) Oh I forgot, last time I registered online, after everything is done, they want us to take a print of the sheet and goto the election commission office of our district, I got the print, but sadly never found time to do the submitting part. OK enough about me.

Speaking of Democracy itself, I feel it doesn’t work too well with India. I mean, in a country like India, the biggest and most diverse democracy of the world, we need to tailor the idea of democracy. What we currently have is a crude form of democracy that involves participation of everyone at once. How can you actually expect one hundred crore people to actually come out and vote? In fact if the 100 crore came out to vote, I’m not sure we have enough logistics to support that kind of a turn out. What I’m trying to say is this idea of total participative democracy is actually a failure. It doesn’t work. We cant have everyone voting at once... because ‘everyone’ is NOT everyone. Maybe we need stages, maybe increase the levels, cut the power, maybe increase hierarchy... who knows that might have its own problems, but my point is, low voter turnout will remain a problem in this crude form of total participation. Thats it!

Btw facebook pics, all the ‘be responsible’ ads and everything is making voting a glamorous thing, which is good.. might just get the urbans to vote.. but hey.. I still haven’t voted.. not even fashion can me vote.. I wonder how anyone would vote.

Right to Piggy Ride

Amul’s comic snippets are loved by everyone. Marketing teachers are especially fond of them. I’m not sure how the professionals see it and what’s the correlation of those cartoons and sales, but it sure does a hell of a job with the TOMA. 

What Amul does is it releases 1 comic per week and whatever happens that week is generally the theme of the comic. So people read the comic, relate to the news, smile to themselves and remember Amul. It’s ingenious, using news to sell yourself. No one calls them cheap or piggy back riders. Same happens to everyone during cricket season, FIFA world cup season etc etc.

So what caught my attention? The new ad of Hero Hf Deluxe.  The ‘Talent’ theme. Here’s the vid.

Hero piggy back rode the elections. Make the buyer of Hf Deluxe look great, intelligent, rational, responsible and so damn patriotic. Oh btw Hero Honda took a dig at being patriotic a million years ago. Ok 8-10 years ago, Remember ‘desh ki dhadkan’ ??  Back when CBZ was new, I think I was in highschool. Bajaj was already famous for its Hamara Bajaj and came up with a new Hamara Bajaj for the new times, beautiful ad, you gotta watch it. Here,

 So, now we have political parties taking it to the tv, online media and stuff, so why not use the elections as a USP? You know play a little with the Consumer’s head, Idea cellular also did that, the new ‘no ullu banao-ing’ thing, ofcouse, Idea has a history of making videos of showing idea users  to be righteous and awesome but this thing about using elections to sell yourself is awesome! TATA tea started with the ‘Jagore’ program almost 6 to 7 years back. 

It’s as the guy says says in the new Hf Deluxe ad, the elections are India’s biggest talent show. How can anyone refrain from making a buck, right?

Novice Poker Effect

It had been a while since I had been sent out of a classroom… the last time this happened, I think It was in the OOPs lab in 2008, well teachers wouldn’t get offended that easily in UVCE I guess... anyway it was an interesting class of rural marketing and I seemed to be interested, but sadly I was caught fiddling with the phone and making some kinda tattoo on my hand and the teacher took offence at it and pushed me out of the class. But what I was googling about was the Myths involved in Rural Marketing. I’m not gonna bore you with what I found, heres a snap shot. 

Something I remember from class held my attention for a long time. The prof had said ‘One of the biggest myths about rural marketing is that the marketers think we rural buyers don’t ask many questions, they ask more questions than urban buyers, they are smarter than the urban buyer. They sometimes ask questions that seem silly and make you laugh, but we fail to find answers to such questions and that’s what makes rural marketing more challenging.’

Yes, we’ve heard this being said a lot of times. It’s almost a cliché. But something doesn’t fit right, does it? How could rural buyers with less exposure and information about what’s happening be harder to outsmart? Why would they be harder to sell to? Why do they ask harder questions? Why are they tougher to convince? Do they know what we’re trying to do from before? Not really. I like to call it, The Novice Poker Effect.

It happened roughly 2 years ago; out of boredom I decided to teach my cousin how to play poker and tried to play him a little. I couldn’t read him, I couldn’t bluff him, I thought he bluffed when he played simple and I obviously lost. The reason is simple. A novice poker player is not playing you, he is just playing his cards. It’s the same with Rural Marketing, a rural buyer is just playing what’s on his cards, he isn’t bothered about what or why a marketer is trying to sell. 

We could conclude that a rural buyer is not smart; he’s just like a novice poker player. Hard to read, hard to pick up trends and hard to know what he wants. It’s this Novice Poker Effect that makes us think a rural buyer is smart. If we understand that the rural buyer just looks at things from his side and dont try anything fancy against him, we would succeed. 

So to round it up, learn to play poker with a kid, maybe you’ll excel in rural marketing.