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Monday,
May 19, 2003, Chandigarh, India  
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Educate people on consumer rights
UTI Bank launches ‘Power Salute’ at IMA
US-64 redemption outgo to be 2,000 cr |
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FIIs net buyers in equities Mumbai, May 18 The foreign institutional investors (FIIs) were net buyers in equities and debt at Rs 27.2 crore ($ 5.7 million) and Rs 180.6 crore ($ 38.1 mn) respectively during the three trading days ended May 14. Inflation falls further to 6.03 pc
L&T likely to appreciate
Exaggerated MRPs misleading consumers
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Educate people on consumer rights CONSUMER rights and consumer protection are relatively new concepts in India, though they are very much needed as the Indian markets are predatory. These concepts are very well developed and also practiced in Western consumer societies, but in India they are hardly known and still less asserted even by the well-informed sections. The poor masses generally are not aware of any such rights; the middle classes do not have the time or inclination to fight for their rights; and the well-to-do do not care much. The scene is definitely changing in recent years as we hear of cases of consumer court judgements holding producers and service providers responsible for deficiencies in the products or services. A television company is required to pay compensation to a client for a defective set; the Telephone Department is called upon to compensate for the loss incurred by subscriber because of delay in shifting his connection; a doctor is made liable for wrong diagnosis and failure to carry out the correct tests and so on. The free market is believed to be the best protector of consumer interests and best controller of quality. The notion that competition will take care of the requirements of quality has never been borne out in practice in India, and has now become outmoded everywhere. Hence, the need for consumer protection even in trade and business-oriented nations like the UK and the USA. A peep into our past history may reveal that crimes against consumers were known in the society in the form of adulteration, cheating in measurements, excessive pricing, clandestine sale of prohibited goods, etc. Historians have recorded that adulteration of food received severe punishment in the reign of the Mauryas; and price control policies were adopted by Mughal kings. But beyond such stray thoughts and practices, there was no consistent philosophy to make consumer interests part of our culture in social-economic activities. The General Assembly of the United Nations unanimously adopted a set of general guidelines for consumer protection in the member-nations in 1985 in response to a series of efforts by the International Organization of Consumer Union. The Government of India passed the Consumer Protection Act in 1986 (C.P. Act) which has created three-tier Courts, called the Consumer Disputes Redressal Agencies (CDRAs) or Consumer Forum at the district, state and national levels for providing speedy, inexpensive and simple redressal of complaints of the consumers. The Act was amended in 1993 to enlarge its coverage and scope and increase its powers. The consumer in India needs special protection for various reasons. First of all, he is not provided with full and correct information about the quality of the product he buys, or its ingredients and its full use or effects. Even a few years ago, even the concept of sharing information about the product by the producer with the consumers was not accepted. Ideas have so changed that many manufactured products these days carry a lebel giving information on ingredients, their properties, manufacturing date, date before which it has to be used in the case of food products, medicines, cosmetics, etc. where it is necessary. Technically, these articles are known as “experience articles” as different from “search goods”, whose quality can be seen and felt as in the case of textiles, furniture, etc. Quality cannot be ascertained while purchasing or even after purchasing certain goods, say products of medicinal value and such goods are called credence goods”. With reference to service, the advice of a doctor, lawyer and such professionals are treated under this category. Complaints to the Consumer Forums should be taken within two years from the date when the need for remedial action arises. The parties to a dispute need not engage a lawyer, and there is no court fee. The proceedings are conducted in an informal manner. The parties, if dissatisfied, may take the case to law courts. Consumer courts are not to be considered as parallel organisation to law courts and their establishment does not imply any lack of confidence in the regular courts. In fact, they have relieved the over burdened courts from a good deal of work load like the Lok Adalats. The Act discourages abuse of this law by a provision that for frivolous petitions, a consumer may be fined up to Rs 10,000. While this is definitely needed, it is also likely to discourage consumers with genuine complaint from approaching the Consumer Court in the context of widespread misuse of money power. In November 1995, the Supreme Court ruled that services offered by nursing homes, hospitals and doctors for consideration fall within the ambit of the Consumer Protection Act except when it is rendered free of charges or under a contract of personal service”. The medical councils are supposed to register medical practitioners and medical colleges and also look into complaints made by or on behalf of patients. It is necessary to prevent damage to consumer rights and provide remedy at the earliest. Market mechanism and law courts take time to act and by the time they start acting, the damage probably would have been done. Food or medicine adulteration may cause even death. But awareness about existing safeguards for the consumers is shockingly low. A strong consumer movement is needed to spread consumer education and to publicise consumer rights. Provision of law and courts is absolutely necessary, but not sufficient. They have to be utilised — whether the subject of dispute is a product or a service — by alert consumers. Quality control, in fact, lies in the hands of the consumers. Unattached non-governmental organisations are best suited to undertake the task of educating people on consumer rights and take this education to rural areas.
INFA |
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A lottery lesson from Thailand ONE must appreciate the efforts of the Chief Minister, Capt Amarinder Singh, and his advisers to retrieve Punjab from the state of near bankruptcy in which the previous extravagant Akali-BJP government had left it. Off and on, they come out with some bright ideas to tone up the state’s precarious finances, but nothing seems to work. Take, for instance, the casino idea. Quite a few of those at the helm of affairs in Punjab must have admired the success of Las Vegas during their state-sponsored visits to the US and, on return home, thought of pulling out the state from the financial quagmire by encouraging people to gamble away to glory. Quite widely known is Punjabis’ fondness for liquor and gambling, and it must have occurred to the powers-that-be that if anything was going to reverse the state’s financial slide, it was this casino
thing. They knew the Badals won’t oppose it. They too would like the state to have such entertainment channels as there were already limited useful distractions from politicking, which anyway was getting boring by the day, and there were hardly any interesting issues left worth fighting for. The far-sighted rulers might have anticipated some religious and moralist voices of protest, but these could be effectively countered and silenced by the broader considerations of development and public welfare. None in the Punjab Congress had, however, expected that of all the people their own Mohsina Kidwai would play the spoilsport. Personally, I welcome the casino idea as the government might, despite the cynics, put at least part of the ill-gotten money of gamblers to some good use like clearing out the urban civic mess or providing free education to girls. Who would usually visit casinos other than bribe-takers, petty criminals and tax-evaders? Moreover, if the state can legalise prostitution, permit the screening of adult films in theatres and vulgar musical goings-on on TV, allow the advertisement and sale of liquor and encourage gambling of another sort called the lottery, why a ban on an equally innocent activity of running a casino? Hasn’t gambling been part of Indian tradition, anyway? But since Mrs Mohsina Kidwai is committed to saving the country from the onslaught of the debased casino culture, she has made it known publicly that Capt Amarinder Singh is “a well-educated person, (and he) would keep the party policy in mind while taking any step in this connection”. But the Captain need not lose his sleep over this minor setback. He still has the lottery idea intact. Since the Haryana-based Jindals, who had been given the contract for running the Punjab online lottery, have backed out of the project and gone to court to demand the refund of their Rs 2 crore bank guarantee, the champions of the lottery business need not lose heart. It is quite common in business that bidders all gang up to corner a lucrative government project on their own terms and officials all too often oblige on the condition of a consideration. Now being in a profession known to proffer unsolicited advice in the public interest, I wish to recommend to the state government to give a serious thought to the Thailand model of the lottery system. Keen to cut its fiscal deficit by raising more taxes, that country kicked off a prize draw last Wednesday by using shop receipts as lottery tickets in the hope that the public would demand taxable receipts from shopkeepers. In Thailand, as in this country, shopkeepers often falsify their taxable income by not issuing receipts to customers. The government in Thailand now offers a handsome prize of $7,000 each week to 11 winners, who scribble their names on the back of the receipts and send them to the Finance Ministry. The idea, according to a Reuters report from Bangkok, is to give the customers carrots to build public pressure on shopkeepers and other businesses to abide by the tax law. However, this is not an original Thai idea. It was borrowed from South Korea, which used to offer income-tax rebates to consumers charging purchases to credit cards in an attempt to crack down on widespread tax evasion among local retailers and restaurants. What is confined to shopkeepers there can be extended to professionals like private doctors, advocates and chartered accountants. Receipts from them may be allowed to attract tax and other state benefits, may be concessional travel for youth. Thank globalisation for the free flow of such ideas. The Chief Minister, meanwhile, may like to replace his juvenile advisers by some grown-ups to avoid any casino-type embarrassment in future.
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UTI Bank launches ‘Power Salute’ at IMA Dehra Dun, May 18 The bank also opened an ATM at the IMA. It was inaugurated by Lt Gen T.S. Shergill Commandant, IMA. Speaking at the launch of the Power Salute, Mr Chatterjee said the Power Salute is a unique salary savings account as it offers two international debit-cum-ATM cards absolutely free. The services and facilities that are offered by this account continue even after the retirement of the defence personnel. It offers a host of other benefits and services like no minimum balance requirement, centralised direct credit of the salary through anywhere banking and at par cheque facility that avoids the hassle of changing/opening new accounts for the defence personnel with each transfer. The bank has opened 850 ATMs in the country. Customers can use “iConnect” to view on the Internet all their accounts, transactions and balance details to make bill payments, carry out online shopping and transfer funds to accounts within the UTI Bank. |
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US-64 redemption outgo to be 2,000 cr New Delhi, May 18 Official sources told PTI that the tax-free bonds have had a good response and preliminary estimates put the investments around Rs 10,000 crore with practically all institutional and large investors opting for it. With savings of around Rs 4,500 crore in cash outgo apportioned for US-64 redemption this year, the fiscal deficit is likely to be less to that extent, the sources said. Fiscal deficit is estimated to be 5.6 per cent of GDP for this year. The government announced the five year 6.75 per cent tax free and tradeable bonds effective from June in a bid to reduce the redemption pressure. The annualised returns on the bonds work out to over 9 per cent, factoring the tax component, and this was attractive considering the lower returns from other saving instruments, they said. In order to contain redemption pressure, especially from large investors, the Centre had offered higher interest rate of 0.25 per cent for those opting for bonds instead of cash at the time of redemption of US-64 units, as compared to 6.5 per cent interest tax-free bonds, at present traded in the market.
PTI |
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FIIs net buyers in equities
Mumbai, May 18 Mutual funds were net buyers in equities at Rs 47.68 crore while netting inflows of Rs 333.34 crore in debt market, according to the data available with the SEBI here. FIIs were net buyers in equities at Rs 28.1 crore ($ 5.9 mn) on the first day of the trading week followed by Rs 24.2 crore ($ 5.1 mn) on May 13. They, however, netted sales of Rs 25.1 crore ($ 5.3 mn) on the next day.
PTI |
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Inflation falls further to 6.03 pc
New Delhi, May 18 Continuing its free fall for the third consecutive week, the point-to-point wholesale price index (WPI) inflation fell from the previous week’s level of 6.14 per cent, even as price of vegetables shot up during the latest reported week. WPI fell by 0.2 per cent to 172.4 points from a week-ago figure of 172.8 since the indices of all the major commodities groups — primary articles, fuels and manufactured products — moved southwards and the index was 162.6 in the previous year.
PTI |
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L&T likely to appreciate LAST week was good for the market with general improvement in the market prices of many shares, particularly those belonging to textile, automobile ancillaries and multi-pharma sectors. There was also an inflow of FII investment funds. It has been estimated that between January 1 and May 14, 2003, the inflow of FIIs has gone up by about 40 per cent. In the textile sector the Vardhman group shares as well as Nahar Spinning have registered good appreciation in terms of market prices. Mahavir Spinning which was quoting around Rs 68 last week closed at Rs 80. Vardhman Spinning which had been moving around Rs 54 some 10 days back closed around Rs 72. Vardhman Poly which had been languishing around Rs 42 a fortnight back closed at Rs 49.50. Nahar Spinning which had been recommended in this column around Rs 65-66 closed at Rs 86 on last Friday. GTN which has a normal range around Rs 23-24 per share moved up to Rs 30. Even Eurotex, a share, usually neglected has also moved up from Rs 9.50 to Rs 11.75. Even Arvind Mills gained a couple of rupees at Rs 34.85. There does not appear to be any further scope for appreciation in these textile shares. In the automobile ancillary shares there was a general rise in the market prices. Jay Bharat Maruti which has recommended 28 per cent dividend (previous year 25 per cent) is now around Rs 37. Goetze which generally moves around Rs 25 per share touched Rs 29. Sundram Clayton which normally moves around Rs 195, closed around Rs 271. There appears to be some further scope for rise in prices in this sector. The multi-pharma sector registered gains almost in all scrips. Glaxo scrip moved up from Rs 302 to Rs 351 during the last fortnight. Pfizer also jumped from Rs 311 to Rs 347. Aventis Pharma gained almost Rs 50 during the last fortnight, moving up from Rs 250 to Rs 298. Novartis which appears to have been delisted on National Stock Exchange also closed at Rs 240 on the BSE. There is much further scope for appreciation in Novartis as the Board of Directors is having a meeting on May 26, 2003 to announce buy-back of its shares from the open market. It would also be announcing its dividend and results. According to the market rumours, the buy-back price is likely to be in the range of Rs 280 and Rs 310 per share. It appears that if the bank scrips dominated the calendar year 2002, this year and the next year will be dominated by the multi-pharma scrips. There is ample scope for further appreciation in the market prices of multi-pharma scrips. Larsen & Toubro which is now moving in the range of Rs 204-05 has no risk of any downward movement but it has distinctly positive scope for handsome appreciation. The company has an equity capital of Rs 248.66 crore and a book value of Rs 133, and is likely to have an EPS of Rs 14 for the year ending March 2003. It declared a dividend of Rs 70 per share last year. Its scope for further appreciation lies in Aditya Birla group’s intention to acquire management control of L&T. It has already made an offer for buy-back at Rs 190 per share, which is sure to fail. But Birla groups is likely to raise the quantum of the offer later. This group is anxious to for a vertical demerger of the cement division of the L&T from the other business. Grasim, a Birla group company, has valued cement business of L&T at Rs 130 per share and the remaining business of the L&T at Rs 162.50 per share. This would make for Rs 292.50 per share for L&T as one combined unit. L&T has the largest capacity for cement production in India. The company is also a top engineering and construction outfit and has now received large orders from defence department as well as from the Middle East. This share can be recommended for investment. |
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by Pushpa Girimaji Exaggerated MRPs misleading consumers IN recent months, two cellphone manufacturers have put out advertisements offering their products at prices much below the maximum retail price
(MRP) stamped on the product . For example, one company is offering a particular model of a cellphone at a “best buy price” of Rs 3,995 against its MRP of Rs 4,695. In other words, the manufacturer is offering a discount of Rs 700 on the
MRP. This is an indicator of the mark-up that exists in the MRP of products. As per the Standards of Weights and Measures (Packaged Commodities ) Rules, manufacturers have to specify on all pre-packed goods meant for retail sale, the maximum retail price inclusive of all taxes. This is a requirement meant to ensure that consumers are not misled on price by retailers. However, two factors have diluted the very concept of marking the
MRP. While one is the highly exaggerated MRPs marked by manufacturers in certain sectors, the other is the misconception among consumers — prompted of course by retailers — that the MRP is the actual selling price. As a result, the MRP has become a tool in the hands of unscrupulous retailers to overcharge. Let me come back to the cellphone market — an alert consumer here can buy a cellphone at a price that is 10-15 per cent lower than the MRP marked on cartons. Similarly a survey of 147 shops selling colour television sets in Kolkata, Mumbai, Delhi and Bangalore, conducted by consumer group VOICE, found that the actual selling price of CTV was about 10-15 per cent less than the MRP . But there are some products on which the difference between the selling price and the MRP marked is as much as 30-50 per cent and such goods range from salted savouries and pressure cookers to electrical goods, including plugs and switches. But the maximum mark-up could be found in the paint industry where the MRP marked on certain products is as much as 100-120 per cent more than a reasonable selling price. And there is no law that prevents a retailer from charging the
MRP. The Packaged Commodities Rules only prohibit the sale of packed goods at prices above the
MRP. It’s for this reason that consumer groups have, for several years, been demanding that the manufacturer’s price or the price quoted by the manufacturer to the first wholesaler in the invoice or the First Point Price in addition to the MRP so that there is transparency in pricing and a consumer gets an idea of the percentage of cut he or she can expect on the
MRP. The industry, however, is unwilling to accept this suggestion. Their argument is that it is not practical and in a competitive regime, the manufacturers cannot survive with exaggerated MRP and are bound to bring it down. The Ministry of Consumer Affairs has been trying unsuccessfully for several years now to find a via-media or get the industry to agree to marking the First Point Price. In February this year, the ministry made yet another attempt to discuss the problem threadbare and come up with a solution that would protect the interests of consumers. The recent meeting was prompted by two factors: one was the suggestion from the Supreme Court, while examining a Civil Appeal in the case of Whirlpool India Vs Union of India, that to protect unwary consumers, the government provided for the stamping of the wholesale price along with the
MRP, through a suitable rule or regulation. The idea was that such dual pricing would enable the consumer to know the exact profit margin or the mark-up given to the retailer and other intermediaries and also enhance the bargaining power of the consumer. This was followed by a question by a Rajya Sabha MP, Mr Kailash Joshi, during the Winter Session , on the action taken by the government in response to the suggestion of the Supreme Court. However this time too, there was a vertical split in the opinion of members of the committee called to discuss the issue. While the consumer representatives wanted the marking of FPP in addition to the
MRP, industry representatives said that would not be possible. Meanwhile, consumers would do well to remember that it would be well within their rights to demand that products be sold at prices below the MRP indicated on the cartons. However, consumers will encounter one problem here — it is not always easy to guess the actual retail price from the maximum price printed on a package. One wayout is for residents associations and local consumer groups to compare the actual selling prices of different retailers in their area and circulate such information to residents. This will not only give consumers an idea of what is a reasonable price for a product, but also force retailers to quote lower prices in order to attract customers. And whenever you come across goods that carry an exaggerated
MRP, write to the manufacturer and register your protest. |
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