Policy Realism in India

Shamelessly lifted from here but it really struck a chord. I fear I might be turning into a cynic myself. 

A cynic’s perspective on robust policy design

The first law of policy realism
A policy that relies on the Indian citizen to act in selfless public interest will not work. In fact, a policy that expects an Indian citizen to act in anything but self-interest and relative gain will not work.

The second law of policy realism
A policy that expects Indian citizens to adhere to a process—any process—will not work as intended, because people will ignore, work around or actively undermine the process.

Implications of the above:

1. Policies must be designed to appeal to self-interest and maximise relative gains (in other words, the citizen must feel s/he will get more out of it compared to others).

2. Policy design must incorporate processes that are consistent with people’s mindsets and are resistant to being undermined.

We'll never let you go...

You see all these MF ads wherever you turn. Some new scheme launching or something else. Although the ads have come down since their peak in 2008-09 (remember the marketing blitz associated with the Reliance Small Cap fund launch?), their ads are still pretty common.

But the thing is, once you do actually start a SIP, they make it as difficult as humanly possible to stop you from getting out. Actually, what they do is they count on our laziness to postpone tasks and to generally put things off to drag out the thing as long as possible.

I started off with SIPs sometime in 2009-10 and was looking to make a few changes this past year. Here's how I fared.

Reliance SIP: You can download the form, fill it and send it to them. No online stopping business. If they don't get the form 21 days before the next SIP date, they automatically disregard the request and don't bother to inform you. 

HDFC SIP: Just creating an online login involves sending in some form (in triplicate, I think). I haven't been bothered (yet). Couldn't cross pehla padaav only.

Sundaram BNP Paribas: No online forms. You can buy anything you like, and generally transact in any way, except stopping your SIP. No forms, period. Write a letter mentioning all relevant details, then hand-deliver it to one of four offices in Mumbai and that too 30 days before the next SIP. Or else, thank you, come again.

Fidelity: They allow you to invest/redeem/switch/SIP etc. etc. but nothing on their system allows you to stop one. Frankly, I still don't know how. Couldn't find anything on the website. Might have to call up the helpline and ask. Their website doesn't even have a search facility.

Birla Sun Life MF: Nothing to stop a SIP within their customer login. Again, you can purchase, redeem, switch, start an SIP/SWP, but no stopping. One document states that cancellation request has to reach their office 30 days before next SIP, but how to go about doing it I don't know. I couldn't find out how to cancel on the website. Again, will require calling them up I suppose.

ICICI Pru MF - Have a cancel iSIP option when you login to their customer desk, but not one if you've started the old-fashioned way i.e. by filling out a form. Still, something better than nothing, yes? They have a FAQ section, which absolutely does not tell you anything about how to stop your SIP. Le sigh...

Can't SEBI make giving a simple "Stop SIP" button on the website mandatory? Or AMFI? Someone? Anyone?

Things Analysts Say - I

A classic bit of analyst-speak from PL's Amisha Vora:

'Expect choppy mkt with sporadic rallies for next 2-3 qtrs'

Translation: Markets will go up, markets will go down. Translation 2: We really don't have a clue what the markets are going to do.

Wow. This is our industry folks...

Highest & Cheapest Gas Prices by Country

Information as on 15th May, 2012. Directly taking this from The Big Picture blog.

(Click to expand picture)

Most expensive gas ranking:	Price per gallon of premium gasoline:
Norway	$9.69
Denmark	$9.37
Italy	$9.35
Netherland	$9.35
Greece	$9.23
Sweden	$8.97
Hong Kong	$8.89
Portugal	$8.85
United Kingdom	$8.84
Belgium	$8.82
France	$8.72
Finland	$8.59
Germany	$8.56
Ireland	$8.34
Switzerland	$7.95
Slovakia	$7.93
Hungary	$7.69
Czech Republic	$7.59
Japan	$7.58
South Korea	$7.57
Spain	$7.55
Slovenia	$7.54
Austria	$7.45
Malta	$7.32
Latvia	$7.26
Luxembourg	$7.24
Lithuania	$7.24
Estonia	$7.05
Poland	$7.01
Cyprus	$7.00
Bulgaria	$6.94
Australia	$6.75
Singapore	$6.70
Romania	$6.59
Chile	$6.54
Brazil	$6.41
India	$6.06
Canada	$5.75
South Africa	$5.72
Seychelles	$5.53
Argentina	$5.44
China	$5.31
Thailand	$4.96
United States	$4.19
Indonesia	$4.11
Russia	$3.71
Malaysia	$3.30
Mexico	$3.20
Iran	$2.78
Nigeria	$2.33
United Arab Emirates	$1.89
Egypt	$1.73
Kuwait	$0.88
Saudi Arabia	$0.61
Venezuela	$0.09

So India lies at the 19th position out of 56 countries (from lowest to highest), so we're pretty well placed. Few assumptions I made: Gasoline in the US is Petrol in India, so $6.06/gallon works out to roughly Rs. 80 per litre (assuming USD-INR conversion of Rs. 50). That still seems to be a little on the higher side, considering price on the street is around Rs. 71 now. Converting that to dollars we get, $5.37/gallon, which takes us to 15th place. That's not half-bad is it? Are we ready for some more pain in case prices are hiked?

(Note to self: See how every dollar/rupee increase in price cuts down our fiscal deficit)

Here's the 57(!!!) page slide-show by Bloomberg on the same.