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.
We welcome emails on this subject which concerns nearly all of us.
narasimhan.crl @thehindu.co.in
