On slippery ground Speak in one voice A false show of bravery
This refers to your article “Crude oil tops 65$, first time since 2015” (December 13). The global impact of the increase in crude oil prices and decrease in inventories is not to be viewed from the commercial angle alone. It equally impacts internal economic activity within a country. This is especially so as oil is a key component for production, infrastructure marketing and sales in all countries. The absence of a controlling benchmark to monitor the cost of oil, coupled with a fall in oil supply will create global market confusion apart from increasing their internal cost of economic functioning. It will also create economic uncertainty, increase the cost of production, decrease in investment.
In view of the inadequate market returns, there is also the likelihood of retrenchment of labour. Despite the economic turmoil within countries, it cannot automatically be construed that the Organisation of the Petroleum Exporting Countries and other oil exporting nations will stand to benefit from this situation. Their cost of imports will offset any pecuniary gain from their exports. Their internal economic functioning will also be equally impacted in their inability to import finished products at higher costs caused by limited product supply.
Therefore, the implications of this increase in oil price impacts more on the quantum and speed in trade globally. An early restoration of the Forties oil pipeline is therefore important for all countries not only to restore the earlier volumes but also ensure speedy market movement to correct their economic imbalances.
C Gopinath Nair Kochi At times, the different mouths of the state speak in different languages. While the government wants a Digital India to the point of forcing people away from cash/cheques, the Reserve Bank of India (RBI) is not making it any easier (RBI stays firm on MDR revision, 14th December).
Without getting into the debate as to who gains more — the customer freed from carrying exact cash or the bank which can reduce its staff cost, cashless transactions should be encouraged though on a voluntary basis. It is true that the banks have to incur some cost in frontend ATM or IT facilities, but once that cost is incurred, the marginal cost of one additional transaction is close to zero. It is fair that banks are allowed to recover part of this investment and maintenance cost, which is fixed in nature and does not fluctuate directly in proportion with the value of the transaction.
This is especially true for debit card and e-wallet type operations where there is no extension of credit. These transactions therefore should have a fixed charge, with a maximum of ~200 (for beyond ~100,000) and a floor of ~10, within which the fee can be set at 20 bp. After all the variable cost is mostly the internet connection cost. Comparison with other countries can be done, keeping in mind the earning power of the middle 60 per cent of the population. This charge should be free of GST, as no GST gets involved when a customer withdraws cash from a branch teller and pays it to another person. Artificial limits like maximum number of free ATM withdrawals need a review if one seeks to reduce the cash holding by the public. P DattaKolkata With reference to the editorial ‘Just the beginning' (December 13), it is quite clear that Britain has made a big mistake in deciding to quit the European Union (EU) and now Theresa May is backing up the blunder with a cavalier all-or-nothing approach. Her bravado would perhaps cost her the prime ministership.
Britain has perhaps forgotten that its economy was all but shattered and the country was out on a limb but for the North Sea oil find and the consequent windfall inflow of ‘petro pounds’. Britain should’ve actually celebrated its membership to the much stronger EU. Its economy has only gained from the association; there is really nothing that it has contributed to the body. Britain’s only strength now is it’s arguable status as the financial capital of the world, which itself the country may lose after its divorce with the EU is final.
Krishna Kalra Gurugram