Recently there was a news item on the Income Tax Officers Union are unhappy with the Government of India’s plan to bring in faceless tax assessments, which is being planned to reduce direct contact between the officers and the assessee thereby minimizing the scope for corruption. This is following the trend of Government tackling (hopefully) the deep-rooted malice of corruption in the department – Government tells 22 IRS officers to put in their papers over graft charges.

My thoughts on this

There needs to be no doubt now. If the officials (and shortly the union) opposes a move by the government, it has to be a beneficial one to citizens and taxpayers of the country.

In India, most often, we see the interest of the taxpayer and government staff to be running diagonally opposite. It is unfortunate though, in theory, unions provide a voice to the millions of workers, and they have the advantage of bringing to the table a different perspective than the one from the management, consultants and the government.

Government employee unions have ensured their members enjoy the cushy benefits for themselves, without caring for the common men (and women) of this country – and in this age of social media and civic awareness, people are clearly noticing this. Unless unions start sympathising and representing the problems of the common men of this country, the unions will continue to alienate themselves from the populace and not get their support.

Mergers of Public Sector Banks

A recent example is the announcement of the mergers of Public Sector Banks – which seems to the only way out, other than closing the weak banks – the bank unions immediately opposed it. Initially, I was not sure whether the merger was a good idea, but the minute the unions opposed the move, it became clear that this move is sure to benefit the taxpayer. Following are the reasons:

1) If a PSU banks fail, our Government will bail it out with taxpayer money. Instead, merging a poor (bad loans burdened) bank with a good bank puts the burden on the shareholders – yes it is not an ideal situation and penalises the good bank’s shareholders for the benefit of poor bank’s. Government bailouts should strictly be only for the poor and the needy, like individual depositors as urged by HDFC Chairman.

“We have loan waivers & corporate loan write-offs but nothing to protect common man’s savings,” Mr Deepak Parekh said.

2) Already Rs.70,000 Cr is being infused as capital to PSU Banks to cleanse them of their past lending sins (I don’t mean to single out any party here, I agree most parties in power have misused the PSU banks to lend to their kith and kin, during their term in power).

3) In the long term, I am completely against Government running over 25+ banks. A few including SBI and BOB will be more than enough. What’s the logic of having 25+, all with almost the same policies, lending rates, hiring policies, strengths and weakness? It seems to be benefiting only the employees of the bank, as each duplicates a core banking system, office infrastructure, branches, a CEO, a Chairman, numerous directors, staffs at every level and the perks for each of them and so on.

In most cities, we see a row of PSU bank branches. Who is getting benefited with them, especially in today’s day and age, when the physical access and visits to a branch have reduced. Yes, in theory, more banks were supposed to take branches to the unbanked and rural – in practice, it didn’t work out that way. See this article – my intention is not to single out Mr P Chidambaram, most ministers of modern India did that to their towns.

Lastly, the biggest challenge I see for the employee unions is to convince people (especially those like me) the need for them to exist. I wish they reinvent themselves, in a democracy, we need plural viewpoints and the unions are positioned well (in theory) to provide one – maybe they can remodel themselves in the likes of NTUC in Singapore!

The choice was between adapting to the new realities and becoming irrelevant”Prime Minister Mr Lee Hsien Loong , Singapore.

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