Wealth brings value only when given away

~DEVDUTT PATTANAIK


Lakshmi, goddess of wealth, has three fathers. There is Varuna, god of the sea, who gives the world salt, fish and all the water it needs. This is why Lakshmi is called Sagara-putri. 

Then there is Puloman, the Asura-king, who rules from the subterranean realm of Patala, where the primary form of all wealth is located. This is why Lakshmi is called Paulomi and Patala-nivasini, or resident of Patala. Finally there is Bhrigu, the sage who can see the future and so bring fortune. This is why Lakshmi is called Bhargavi. 

Varuna gives Lakshmi away freely without resentment; and so is blessed with abundance. Puloman resists giving away Lakshmi and keeps fighting with the Devas, who want to make Lakshmi their queen, Sachi. Bhrigu rarely shares his secret and very selectively parts with his daughter. That is why, for most humans, Varuna is a generous god, worthy of worship, while Puloman is a demon and Bhrigu, the guru of demons. 

Wealth was visualised as a daughter that we create. She sits in our wallets. But she brings value only when she is given away. This is kanya-daan, giving away of the bride. To not part with wealth; to hoard; was considered the gravest of crimes. Yakshas, who hoard wealth, are therefore visualised as demons who are often attacked and tortured by their half-brothers, Rakshasas, just as Devas are perennially at war with the Asuras. 

Through these stories, value was placed on wealth distribution, allowing wealth to flow so that it brought in more value. It also revealed the mindset that was considered beneficial to society at large, and ultimately, to the individual involved in wealth generation. 

Jamshed owns six bakeries across the city. Each bakery has a turnover of over two lakh rupees each day. But Jamshed does not care much about the turnover, "The more bakeries I build, the more boys and girls get jobs, more people get to taste my bread and my cake. There is so much joy in that," he feels. 

Firoz is also in the baking business. He has two bakeries. But he does not want to build more. He says, "It is a headache. The vendors do not give enough credit and the employees threaten to form unions. And the taxes are so high. Customers prefer Jamshed's breads to mine. He is too strong a competitor. I barely make any profit." 

Samsher also has a bakery that makes the most exquisite scones in the city. There is always a crowd in front of his store. He does not share his recipe and makes the batter for the scones himself. He cannot expand the business, as he might have to share his trade secret. He is happy being exclusive and highly profitable.


Jamshed is like Varuna, who uses his money to take care of his employees and lavish his customers, who return the favour. Firoz is like Puloman; so careful about his money that both employees and customers feel the pinch. Samsher is like Bhrigu whose customer-friendly secrets ensure his success. 

While all generate wealth, Jamshed's wealth is shared amongst many people and it gives livelihood to many, reducing unemployment and helping society at large. The wealth of Firoz and Samsher helps only them. They become rich. But when one is rich in a world where there is poverty and unemployment, one lives perpetually in fear, facing the resentment of the rest. This is unhealthy in the long run. We then become 'demons' for other members of society. 

(The author is the Chief Belief Officer of the Future Group.)

NEW Pension Schemes (NPS) are in news..

by - BAKUL CHUGAN

With India gearing up for its own government-regulated pension plan, in line of the 401Kretirement plan in the US, investors need to know the intricacies of the same.

NEW Pension Schemes (NPS) are in news for quite some time now. With India finally gearing up to have its own government-regulated pension plan, on the lines of the ‘401K-retirement plan’ in the US, the excitement hovering around NPS is obvious. While the scheme is already operational for central govt employees, its opening for general public on May 1, 2009. Unlike the traditional retirement solutions, such as PPF and EPF; NPS is not a defined benefit, but rather a defined contribution plan. Thus, while investment in PPF and EPF attract a fixed rate of interest, returns from NPS will be market determined. The market here, however, is not confined to equity alone, but includes corporate bonds and government securities. Investment in these papers is to be actively managed by fund managers. Pension Fund Regulatory and Development Authority (PFRDA) has designated six asset management companies (AMCs) for the purpose. So, does it imply that NPS is just another mutual fund scheme? Though the NPS will be managed by fund houses, the autonomy lies with the PFRDA. While AMCs take investment decisions for NPS, their operational freedom shall be confined to the guidelines issued by PFRDA from time to time. Again, while an MF investor can enter and exit an scheme at free will, NPS will bind them till the retirement age of 58 years. The current guidelines do not permit a pre-mature withdrawal or any loan against the investment in NPS. The onus of deciding the structure of investments and selecting the fund house has, however, been left to the investor. The investor is free to choose the right mix of equity (E), corporate bonds (C) and government securities (G) in his/her portfolio. Alternatively, investor can choose auto option, wherein his investment in NPS will divided in pre-determined proportion of 15% (E), 45% (C) and 40% (G). In the case of automatic allocation, the entire investment will be equally distributed among all six fund managers in the first year. From second year onwards, however, the allocation will be pro-rated on the basis of the first year’s performance. NPS can also be distinguished from an MF scheme in terms of its cost structure. While an MF scheme charges an entry-load of about 2.25% and an average management charge of 1.5%, NPS carries a bare minimum fee of 0.0009%. Virtually free; as one might put it! But hold on. For, while NPS may prima facie appear an art of charity, investors would do well to note that there is never a free lunch. NPS requires maintenance of all records and the same will be done by NSDL, which will act as the central record keeping agency (CAR). Each investor will thus be required to pay NSDL an account opening charge of Rs 50. Besides, there will be a maintenance charge of Rs 350 per year and an additional charge of Rs 10 per transaction. PFRDA has also appointed selected banks as point of presence (POPs) to facilitate quick and hassle-free transactions. However, these services are not free either. According to an industry source, POPs will also charge an investor an account opening fee of Rs 20 and an additional charge of Rs 20 per transaction. This implies that an investor seeking to invest Rs 500 per month will actually end up paying around Rs 560 per month. That’s nearly 11% transaction cost, considerably higher than 8% return offered by PPF. So does this render NPS more costly visà-vis an MF scheme? The current cost structure of NPS is as good as fixed in nature, while that of an MF is a percentage of investment. Thus, the higher the investment, the higher would be the charges in case of an MF scheme. Given the current cost structure, NPS appears to be more beneficial to those with a higher amount of periodic investment. Another factor that needs major consideration is the tax treatment. NPS does not enjoy any tax benefits, either at the investment stage or at the time of maturity. This makes it less attractive vis-à-vis other retirement plans available in the market. While PFRDA is understood to have approached the government to grant NPS the tax status of (exempt-exempt-exempt) EEE, the fact that PFRDA bill is yet to be approved by Parliament may procrastinate the process. Thus, while the step in the right direction has been taken, a lot needs to be done to make NPS as competitive as 401K.