US-Israel war with Iran will definitely result in heavy price rise of crude oil in International Market. India will also be affected through such a price-rise of crude-oil. Any increase in oil-prices in the country by public-sector oil companies will increase prices of commodities and transportation. On the contrary, if government decides not to burden general public by not increasing oil-price supplied by public-sector oil-companies, then it will lead to budgetary deficit.
Best way is to neutralize effect of price-rise of crude-oil without raising oil-prices distributed by public sector oil companies in the country is to take immediate measures for a drastic cut in overheads of public-sector oil-companies.
Merge Public Sector Oil Companies to Reduce Overheads
All public-sector oil-companies should be immediately merged for a drastic cut in expenses and overheads apart from abolishing useless unhealthy competition. Policy of pricing petrol, diesel and LPG should be totally overhauled by putting all petroleum products under GST network to ensure uniform pricing of these in all parts of the country. This should not pose any problem because GST system has provision of levying cess over highest GST slab. There may be weekly revision in prices rather than daily with prices of petrol and diesel rounded in complete rupee, and that of LPG cylinder rounded in multiples of rupees 50. In practice, delivery-persons never return balance which in suggested manner become gain to exchequer. Oil companies had once decided to replace old iron-cylinders by transparent plastic cylinders to check usual incidents of pilferage. But these plastic-cylinders are not yet seen. Iron-cylinders should not be manufactured in future. However new plastic gas-cylinders should be in 10 or 20 kgs LPG- packing to be in true spirit of metric-packaging and for lasting long.
LPG subsidy may be gradually abolished, and should be provided only on submitting of affidavits by family-heads about total family-income rather than voluntary surrender of LPG subsidy by those having annual family income of rupees ten lakhs. Prices once increased should not be reduced even after reduction in global crude-prices. Such saving should be kept in reserve to avoid future increase in case of further global price-rise of crude. Rise in prices of goods and transportation of goods due to increase in fuel-price is never reduced with any fall of fuel-price.
Merge Public Sector General Insurance Companies
Likewise, it is high time that four public-sector Insurance Companies engaged in General Insurance may be merged to reduce overheads and unnecessary competition amongst these public-sector companies. Such a merged single public-sector company engaged in General Insurance can then ensure vacation of merged nearing branches of the suggested unified public-sector company engaged in General Insurance. Such a step will be in larger interest of general public to save them from malpractices presently prevailing in private sector Insurance Companies engaged in General Insurance.
I recall a case when a private-sector company unethically deducted ten-percent from the settled claim-amount towards a Fire-Accident because of late submission of No-Objection-Certificate (NOC) from the bank! Rather the private-sector company was at gain by utilising the claim-amount for its business due to late lodging the claim-papers. Even Insurance Regulatory & Development Authority (IRDA) did not take any step against the company on lodging the complaint against the said private-sector company.
After the suggested merger of all public-sector Insurance Companies engaged in General Insurance, each unit/branch of such a unified public-sector General Insurance Company, every branch of all public-sector banks may have an alignment with one some unit/branch of suggested unified General Insurance Company. However, till such a merger takes place, every branch of all public-sector banks must be collaborating with any unit/branch of any of the public-sector company engaged in General Insurance for benefit of their customers.
Rationalising LIC Operations for Efficiency
It is observed that even after seven decades of merger of 245 private companies engaged in business of Life Insurance, nearing units could not be merged together for a drastic cut in overheads of LIC of India. There are many such cases where a single building has more than one unit of LIC of India like one such in Daryaganj (Delhi) which has two units of LIC of India. Even there are more units of LIC of India in Daryaganj other than the two in a single building. LIC of India should urgently draw a plan whereby nearing units of LIC of India may be merged in a single unit.
On the contrary, there are areas like big commercial hub in Chandni Chowk area of Old Delhi where the only unit of LIC of India in SBI Building is now closed. LIC of India should go in search of some suitable premises, preferably a government-building, like one lying vacant ever since its completion near Bhai Mati Dass Chowk in Chandni Chowk area which was constructed during re-development plan of Chandni Chowk.
Healthy competition can be developed by giving appreciation-points to branch-managers bringing more insurance-business in public-sector. This will promote public-sector, save people from gimmick and befooling insurance-plans of private-sector companies, and provide a single-window facility for all banking and insurance needs. Profits of public-sector Insurance companies will increase by saving on commission paid to agents which can and should be reduced especially when insurance-agents pay back heavy portion of their commission to their clients. Pay-back is as high as 2.5 percent in single-premium LIC pension-plan Jeevan Akshay.
Strengthening Public Sector Financial Institutions
Public sector Life Insurance Corporation of India (now LIC of India) was constituted on 01.09.1956 by merging 245 private Insurance Companies has done fairly well in last seven decades of its formation. But gradually life-insurance business is being captured by later constituted private insurance-companies many of which are promoted by private banks. These private banks and their promoted insurance-companies always work in alliance to promote their insurance-business in addition to banking-business.
But unfortunately several public-sector banks have started collaborating with private insurance-companies rather than promoting public-sector LIC of India. It is neither in interest of public-sector nor in interest of people where many private insurance-companies offer gimmick schemes to befool people through their agents paid heavy commission for bringing business by hiding hidden facts of apparently good-looking insurance-plans. Banking Department of Department of Financial Services (Government of India) should direct all public-sector banks to collaborate only with public-sector LIC of India for providing bank-customers Life-Insurance services only through a wide range of LIC-policies issued by LIC of India.
Every branch of all public-sector banks should have collaboration with some nearing unit of LIC of India which can provide incentives to concerned bank-branches to motivate for bringing more business to LIC of India.
LIC of India has required all annuitants having Jeevan Akshay policy to submit Life-Certificates after getting these attested from some responsible officer including Bank-Branch Manager, Gazetted Officer, Registered Medical Practitioner, Post-Master, School or College Principal, Class-1 officer of governments or their undertakings, LIC-officer, LIC Development Officer, LIC agent after the annuitant having signed before the attesting authority. LIC of India should better abolish useless formality of Life-Certificate. Abolition of the formality of Life-Certificate will in no way harm LIC of India because Jeevan Akshay is simply a pension-plan, and it does not make LIC of India pay for death of the annuitant except returning the investment-money to the nominee in case of death of the policy-holder. However, such Life-Certificate may be required in cases where cheques or on-line remittance of payable interest of policy-holders are bounced back.
Public sector IDBI Bank where LIC of India has acquired major share-holding should be renamed as LIC Bank of India with all such noble facilities of single-window facility for all banking and insurances needs available at each branch of presently named IDBI Bank.
Next Phase of Public Sector Bank Mergers
News-reports indicate that further mega-merger of public-sector banks is on cards. But till such a merger-plan is implemented, bank-charges and interest-rates (separately for loans and deposits) should be same for all public-sector banks. There should be uniformity in different types of forms which should be simplified with provision to be filled on computer like passport-forms with subsequent provision of such computer-filled forms to be emailed to banks to avoid errors and reduce man-hours.
