tag:blogger.com,1999:blog-8423147466456903072024-03-05T14:35:57.459+05:30FINCOPMy blogs are only subject oriented - Finance, agriculture, MSMEs, Cooperation, Corporate Governance etc. Do not relate to any comments on caste, religion, sex etc.FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.comBlogger278125tag:blogger.com,1999:blog-842314746645690307.post-43076066489757126752024-02-20T07:46:00.005+05:302024-02-20T07:46:53.537+05:30Character & Competence<p> </p><p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><b><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">I am tempted to republish this article in this blogpost as the nation needs to rethink, reinvigorate and move forward to reach its visionary goal of becoming a developed nation. </span></b></p><p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><b><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Character and Competence </span></b><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"> <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><b><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">B Yerram Raju <o:p></o:p></span></b></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><i style="mso-bidi-font-style: normal;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Economist and Founder-Director,
Telangana Industrial Health Clinic Ltd. Co-Author of the book ‘A Saint in the
Board Room’ (2011)<o:p></o:p></span></i></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #212121; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Global Inequality Report 2022 mentioned that top 10 percent earn
as much as the bottom 64 percent. India’s policy reforms during the last two
decades saw high growth and high inequality levels intermittently. Quite often
we also witness confrontation between the legislatures and Courts. We have also
come across persons of acknowledged high competence landing in jail. Why? <span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span></span><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Sustainable and inclusive growth demands both competence and character.
In order to define competence and character, and seeing the paths of their
convergence, some storytelling becomes necessary.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">The McKinsey Global Institute’s latest research on human development in
Mapusa, a small town along a historic trade route in Goa, and in Porto, the
second largest city in Portugal, unfolds “the story of both places that had
virtually the same GDP per capita of $33,000 in 2019. At the country level,
they are worlds apart: India’s GDP per capita was $6,700 (Purchasing Power Parity)
or US$1941.82 in 2019, compared to $34,900 in Portugal—overall more than five
times less.” </span><span style="color: red; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: red; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Nevertheless</span><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">, we are witnessing a few reputed leaders of self-aggrandisement and
self-esteem directing the nation into the debris of material prosperity while a
few others are wedded to the development of society. Hence, there is a strong
need for recalling the basic principles of living that our inherent culture
taught us emphasising competence with character.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">S Radhakrishnan, the philosopher-statesman of India, said: “The ideal
man of India is not the magnanimous man of Greece or the valiant warrior of
medieval Europe but the free man of spirit who has attained insight into the
universal source by rigid discipline and the practice of the disinterested
virtues. He has freed himself from the prejudices of his time and place.”
Indian heritage lies in humanism and universality. This sets the tone for
redefining character and competence as traits of individuals and corporates. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><b><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Wheels within Wheels</span></b><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Meta, Amazon, Google, Wipro, </span><span style="color: red; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Microsoft</span><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"> etc, are in no mood to keep their roasters intact. Jobs are removed in
tens of thousands. NINJA (no income no job, no asset) had set in again. Banks
and housing, and real estate companies are scared of their recoveries. Rising
interest rates, lowering consumption sentiments, volatile markets, and untamed
inflation are at the beginning of a new end. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">India, for the moment, seems to make a difference, raking in higher than
expected revenues in GST and GDP growth </span><span style="color: red; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">forecast
from the CRISIL placing it at 6 percent and Nomura at 5 percent in ‘23-‘24</span><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">. When winter sets in, can spring be far behind? <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Pure economics defies answers to many problems confronting society,
while behavioural economics does offer solutions if character and competence
move like two wheels of the forgotten bullock cart. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">If persons of character are afraid of their shadow and fail to take
decisions keeping in mind the three ‘angel-robed demons – Central Vigilance
Commission, Central Bureau of Investigation and Comptroller-cum-Auditor
General’, competence in them takes a backseat. Autonomy, transparency, and
timeliness in taking decisions never mean ignoring rules and regulations. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Lack of character is different from failure of character. Lack of
character is unpardonable while failures are remediable. People who fail should
be given an opportunity to correct and they should be made clear about the
boundaries and consequences of the failure.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">In Chapter 13 of Bhagavad Gita, (<i>Kshetra, Kshetragjna Vibhaga Yogam</i>),
Lord Krishna defines the character: ‘<i>Amanitvamadambhitvam,
Ahimsaakshantirarjavam, Acharyopasanam, Saucham, Sthyryamatmavinigrahah’</i>.
The substance of the sloka is that a person with character should be devoid of
pride and disrespect; should be humble, patient, and steady; should be able to
have control over his self; be clean and clear in thinking and have restraint.
We are at a point where we know what is right but are hesitant to adopt it. The
Supreme Court had to pull up a plaintiff over the penalty sought on YouTube for
airing what he preferred to see. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><b><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">High Character, Low Competence</span></b><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">How do we handle people on our leadership team who evidence the highest
character, and the best motives, but are incapable of doing effective work? In
a matrix of competence and character, fixing such people would be difficult.
Organisations also skip them while mapping coaching and mentoring persons for
results and sustainable growth. The loss is to the organisation and not to that
person.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">If we can draw a matrix of high character with high competence, high
character with low competence, low character with high competence, low
character with low competence in a Board of Governors, we will be able to
establish the reasons for the failure of many a corporate who got the best
ratings but ended up as disasters. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">The high character – high competence scenario will automatically lead to
a high corporate governance (CG) scenario. But one without the other will not
lead to a good CG scenario. It is said, “Economics without ethics is empty, and
ethics devoid of economics is limp”.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">We did not learn our lessons after the 2008 recession. The proverbial
Vijay Mallyas proliferated and none of the cases of misgovernance and colossal
bank losses got resolution. Over a decade of arguments in the highest courts of
jurisprudence, involving malfeasance, misappropriation, corporate failures, and
bad governance still defy resolution. On top of it, even the Insolvency and
Bankruptcy Code gives the longest rope for resolution and those resolved,
benefitted the errand. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">It is hard to disagree with EV Ramasamy Naicker, a Tamil philosopher of
the 20th century, who said, “When I used to carry heavy bags during my younger
days, my back would bend due to the weight, but not due to shame. Being
straightforward and having less food is far better than diluting our character
and taking lots of rich and quality food.”<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><i style="mso-bidi-font-style: normal;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">The history of today’s wealthiest
nation tells us about what happened between 1923 and 1948:<o:p></o:p></span></i></p>
<p class="MsoListParagraph" style="line-height: normal; margin-bottom: 0cm; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-fareast-language: EN-IN;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">President
of the largest steel company, Charles Schwab, lived on borrowed capital for
five years before he died bankrupt.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="line-height: normal; margin-bottom: 0cm; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-fareast-language: EN-IN;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">President
of the largest gas company, Howard Hudson, went insane.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="line-height: normal; margin-bottom: 0cm; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-fareast-language: EN-IN;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">One
of the greatest commodity traders, Arthur Catton, died insolvent.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="line-height: normal; margin-bottom: 0cm; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-fareast-language: EN-IN;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">President
of the New York Stock Exchange, Richard Whitney, was sent to jail.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="line-height: normal; margin-bottom: 0cm; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-fareast-language: EN-IN;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">A
member of the President’s Cabinet, Albert Fall, was pardoned from jail to go
home and die in peace.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="line-height: normal; margin-bottom: 0cm; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-fareast-language: EN-IN;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">The
greatest ‘bear’ on Wall Street, Jessie Livermore committed suicide.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="line-height: normal; margin-bottom: 0cm; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-fareast-language: EN-IN;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">President
of the world’s greatest monopoly, Ivar Krueger committed suicide.<o:p></o:p></span></p>
<p class="MsoListParagraph" style="line-height: normal; margin-bottom: 0cm; mso-list: l0 level1 lfo1; text-align: justify; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-fareast-language: EN-IN;"><span style="mso-list: Ignore;">-<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-GB" style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">President
of the Bank of International Settlement, Leon Fraser committed suicide.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">It was the pursuit of money to the exclusion of other goals that caused
them their downfall.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Market behaviour largely depends on individual investor behaviour like
buying-high-selling-low or buying-low-selling-high. Behaviour here largely is
related to the character and not pockets. This character is typically borne of
greed and not need. It is more like a honeybee that flits from one flower to
another, sucking honey as it flies. But when it perches on its hive, it stops
humming. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Man is made by his own beliefs. ‘As he believes, so is he.’ (Bhagavat
Gita). Henry David Thoreau may have told in different words, the same thing: ‘What
a man thinks of himself: that is what determines, or rather indicates his
fate.’<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"> <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">We need resilient boards of companies that can build teams of executives
with foresight, virtuous and timely response, and adaptation capabilities. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">India is at the cusp of change and the dream of India 2050 has to be
realised by a generation that is seeing the garbage at the foot of the hill.
They should be directed to reach the top of a mountain and every step counts.
It is competence with character that should enable a crowning future. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><a href="https://epaper.telanganatoday.com/Home/ArticleView?eid=1&edate=20/01/2023&pgid=48693"><span style="font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">https://epaper.telanganatoday.com/Home/ArticleView?eid=1&edate=20/01/2023&pgid=48693</span></a><span lang="EN-US" style="color: #0e101a; font-size: 16.0pt; mso-ansi-language: EN-US; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin: 0cm; text-align: justify;"><span style="color: #0e101a; font-size: 16.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"> <o:p></o:p></span></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-6253476248822396772023-09-05T07:48:00.000+05:302023-09-05T07:48:22.905+05:30Teachers' Day - The Eternal Day<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiudfXY5z68JBNDq4Z4RYKYqfRSNX9M-2QgaOk0fGQ-HKeRViK1FDqPow1Oa5ZQ2TwQEiX0CoEDnnH3ubj656Ep2yev81QEIcIWXVjPv7OUU0WXpJ5JF8CKppqwJSjLVrS1zyT4DjA8_YKmQiiOg5tGlsxRoeTyctDx3fqA8pltQRzECfmZMMOCWnEhZdKM/s529/MA%20Economics%20(2).jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="477" data-original-width="529" height="289" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiudfXY5z68JBNDq4Z4RYKYqfRSNX9M-2QgaOk0fGQ-HKeRViK1FDqPow1Oa5ZQ2TwQEiX0CoEDnnH3ubj656Ep2yev81QEIcIWXVjPv7OUU0WXpJ5JF8CKppqwJSjLVrS1zyT4DjA8_YKmQiiOg5tGlsxRoeTyctDx3fqA8pltQRzECfmZMMOCWnEhZdKM/s320/MA%20Economics%20(2).jpg" width="320" /></a></div>Prof. E.K. Warrier, T.A. Purushotham, S.Subbaramaiah at the S.V. University (1960)<br /><p></p><p class="MsoNormal">THE DAY TO REMEMBER FOR LIFE &<o:p></o:p></p>
<p class="MsoNormal">THE PRAYERS THAT REMAIN LONG.<o:p></o:p></p>
<p class="MsoNormal">‘Acharya Devo Bhava’.<span style="mso-spacerun: yes;">
</span>“Guru Brahma Guru: Vishnu, Guru: Sak Shaath Parabrahma:”. Parents are
the first Gurus and I bow to them day-in and day-out and all life for, these
Gurus took my hand , opened my mind, and remained in my heart. <o:p></o:p></p>
<p class="MsoNormal">During the childhood there were teachers who taught me alphabets
and who did not spare their rod for being late to the school or for correcting
a mistake! No complaints on the Child Rights for my parents told me that I had
only responsibility and not right at that age, for the right to honourable life
had to be earned the hard way. <o:p></o:p></p>
<p class="MsoNormal">K. Keshava Rao, my father’s English Teacher taught me English
Grammar - Wren & Martin was the Bible in front of me in my class IX at the
Mc Lauren High School, Kakinada. Earlier was the most fortunate year when I had
the privilege to learn Telugu language under Indraganti Hanumatsastry in class
VIII. He made me win the District Debating Competition on the subject -- Voting
Right for the Youth, Right or Wrong -- at the inter-school District
Competition. <o:p></o:p></p>
<p class="MsoNormal">At Mrs. A. V. N. College, Visakhapatnam, where I studied Intermediate
(1955-57) K. Swaminathan, Lecturer in English, Prof Diwakarla Rama Murthy,
brother of Diwakarla Venkatavadhani (Osmania University fame), Ramhbhatla Lakshmi
Narayana were my teachers in Telugu and how can I redeem my debt for introducing
me the depth and charm of the language that has no barriers in the globe? <o:p></o:p></p>
<p class="MsoNormal">Moved to Tirupati for my graduation and post-graduation in
Economics. T.A. Purushotham's inaugural address on the opening day of the College defining the words TIME and CHARACTER shaped my life. </p><div class="separator" style="clear: both; text-align: center;"><br /></div><br />Acharya Rayaprolu Subba Rao, <p></p><p class="MsoNormal"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEhZKeMu0kqcp6Y8oBCrHUPjHYxSKxBs4Z-SJiLItMsz862kCdF22dZM4BT5yw6lMVBw0ZQG9DjfrR-MxBcGxbvI8axufLeAUvYOMaUnKeE3iCw94uUcWvQFjaC8J4oa_yem-wjRt7rFm_5jyZczi6eEKkWUf8WZyplDNyrkXBLosLaRD93RpLPbCaQ60HEu" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="136" data-original-width="116" height="240" src="https://blogger.googleusercontent.com/img/a/AVvXsEhZKeMu0kqcp6Y8oBCrHUPjHYxSKxBs4Z-SJiLItMsz862kCdF22dZM4BT5yw6lMVBw0ZQG9DjfrR-MxBcGxbvI8axufLeAUvYOMaUnKeE3iCw94uUcWvQFjaC8J4oa_yem-wjRt7rFm_5jyZczi6eEKkWUf8WZyplDNyrkXBLosLaRD93RpLPbCaQ60HEu" width="205" /></a></div><br /><br /><p></p><p class="MsoNormal">Pingali Lakshmikantam, G.N. Reddy, Jeereddi
Chenna Reddy taught me old poetry,<span style="mso-spacerun: yes;">
</span>modern poetry, prose, and non-detailed text respectively, Prof. M. V.
Rama Sarma, E. Nageswar, Mrs. M. Suryakanta, Lecturers in English, Prof. M.S.
Prakasa Rao, who earned the title ‘Laddu of Public Finance’ in Pachiappa’s
College, Madras, <span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>Prof. E. K. Warrier, Dr. S. Subbaramaiah, and B.N.
Yugandhar (IAS latter),</p><p class="MsoNormal"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEj7Dzsd7-dToX1d5VVS10Rn8ZMmFKcIlGGDS_6v00TNFf-8AIEI969Z_fmp3rIPORYKjlV4IpA1Av8kggi8y7WnqvI5H5KEjnW45534kpclpVfx9TN8wlwYID98BipyrFF5IQLEcUBxCDbGHzKildW1-TsbUcFV5U066e6XejXgv6w6fVyScRkWNsmX8C5b" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="174" data-original-width="290" height="192" src="https://blogger.googleusercontent.com/img/a/AVvXsEj7Dzsd7-dToX1d5VVS10Rn8ZMmFKcIlGGDS_6v00TNFf-8AIEI969Z_fmp3rIPORYKjlV4IpA1Av8kggi8y7WnqvI5H5KEjnW45534kpclpVfx9TN8wlwYID98BipyrFF5IQLEcUBxCDbGHzKildW1-TsbUcFV5U066e6XejXgv6w6fVyScRkWNsmX8C5b=w320-h192" width="320" /></a></div><br /><br /><p></p><p class="MsoNormal"> were all my teachers in my graduation and post-graduation
at the Sri Venkateswara University College, Tirupati (1958-62) who made me what
I am today. <o:p></o:p></p>
<p class="MsoNormal">Dr. C.S. Venkata Ratnam <span style="mso-spacerun: yes;"> </span>and Prof V. Balamohan Das, of the Commerce
Department guided me into PhD at Andhra University, Visakhapatnam, while I was
at work. Prof. B. Sarveswara Rao, Prof. G. Parthasarathy (EPW fame), were my<span style="mso-spacerun: yes;"> </span>mentors. <o:p></o:p></p>
<p class="MsoNormal">The will to write became part of me because of all these
teachers. When I close my eyes, I see their bright eyes, hear their voices, recall
their corrections in my essays of the school and college days, the direction
they gave me not just on the stage when I acted in a few plays - Galsworthy’s
Strife in College Days, and ‘Pedda Manushulu’ in Telugu on Vijayawada and
Hyderabad theatres,</p><p class="MsoNormal"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEjpi_KNLblGjO3IrWALGVzYnKnbS-heHwRMThWpU93UAUaqlC18ptar8Fw7_jH7GpwZ_GPfSj0_x2KDfhKR76QQSQZ9SpQhNUudR-H9zLUEpA4L8o5a7KiAKd1MjlZyQvtCpwq5PlIXzZE3Bas7sbm6vADFMT-91aE7fZ1hCAbJlLMsIPlcwszkv4GbMIe2" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="320" data-original-width="285" height="240" src="https://blogger.googleusercontent.com/img/a/AVvXsEjpi_KNLblGjO3IrWALGVzYnKnbS-heHwRMThWpU93UAUaqlC18ptar8Fw7_jH7GpwZ_GPfSj0_x2KDfhKR76QQSQZ9SpQhNUudR-H9zLUEpA4L8o5a7KiAKd1MjlZyQvtCpwq5PlIXzZE3Bas7sbm6vADFMT-91aE7fZ1hCAbJlLMsIPlcwszkv4GbMIe2=w383-h240" width="383" /></a></div><br /> but to my life. My teacher Prakasa Rao insisted that whenever
I write, I should keep in mind, whether I have a single message to convey
couched in understandable language, a story that stays in the readers’ minds
for long. He always used to say; “Keep your flame burning” but not to burn you.
Watch the word you say and it will save you. I am yet to become a great writer!
Not just today, I pray my teachers everyday to give me the energy and thought
that enriches the society I live in. The warmth, the affection and the
blessings all these teachers who made my life are eternal. <span style="mso-spacerun: yes;"> </span><o:p></o:p><p></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-72387790981331487852023-08-09T06:24:00.000+05:302023-08-09T06:24:03.469+05:30Pressing the interest rate button? Wait for a day.<p> </p><p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><b>Will
the RBI again pause the Rates</b>?<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman", serif; font-size: 12pt;">Subbarao,
the past Governor of the tumultuous times, authored a book on ‘Who moved my
Interest Rates?’ Will the present Governor Shaktikant, acclaimed as the best
central bank governor while the other central banks are still in uncertain
policies, author another book ‘Who paused my interest Rates? Really, a big
question mark. Can inflation be hounded by the RBI or for that matter any
central bank in the world? The day of reckoning is tomorrow.</span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">I
am reminded of my childhood days when my father got my chappals (footwear)
resoled with less cost than a new one and it used to last for one more cycle of
use. Restitch the saree to make frocks for the daughters when the head of the
household gets tired of using the saree for more than four or five occasions.
How can the lady go to functions with the same saree? <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">European
Commission 2008 quoted in a World Bank blog of 19<sup>th</sup> September 2022
mentions: “national authorities must pay attention to measures that can
facilitate the recovery of the so-called secondary raw materials or
end-of-waste materials” arguing for a circular economy. </span><a href="https://blogs.worldbank.org/allaboutfinance/inflation-and-ecological-transition-european-perspective-part-ii?CID=WBW_AL_BlogNotification_EN_EXT"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">https://blogs.worldbank.org/allaboutfinance/inflation-and-ecological-transition-european-perspective-part-ii?CID=WBW_AL_BlogNotification_EN_EXT</span></a><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Is
growth complacency driving this aspirational $5trillion economy? Is inflation
in a growing economy an imperative? Should the RBI Monetary Policy Committee
stick to the boundaries of inflation +/- 2 percent of 4 percent? Next quarter,
are we going to see the soaring prices of tomato ketchup, tomato sauce, tomato
soup and other processed foods using tomato base, touch the roof? Should the
RBI see the warning signals more clearly?<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Five
states are bound for elections in the next few months and are in a mood of
competitive populism. Once the schedule is out of the Election Commission<span style="mso-spacerun: yes;"> </span>pigeon, several incentives directed to engage
the voters have to halt. Make hay while the Sun shines. States within the FRBM
norms hasten to implement their agenda pre-election. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">GoI
is comfortable with its GST earnings month after month. It cares little for
whatever the economists say on federal relations and implementation of the
recommendations of the Fifteenth Finance Commission. Consumption of durable
goods is on the rise. With the festive season ahead, markets are preparing to
stock as much as possible from the rural markets that are buzzing with economic
activity. Farmers are increasingly adopting latest technologies aided by solid
support from a few states like Telangana. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Crorepatis
increased and even a tomato farmer of Karnataka, a press report says, bought a
car worth Rs.45lakhs within a month’s sale of this crop. But the poor who are
still around 240mn and the lower middle class are unable to make both ends
meet. They seem to be toying with the idea of recycling the useable instead of
replacing their old TV or nearly worn out durables with the new ones.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Can
tomatoes and onions be recycled? My wife says: Tomatoes, if bought when cheap,
can be sliced and kept in the deep fridge to last for more than six months.
Pull them off, wash them with water at room temperature, they can be used as
good as fresh tomato slices. But onions, by nature are more durable but storing
them in a fridge stinks. There is no way to recycle. Prices of many vegetables
soaring beyond the common man’s pocket at the moment can neither be stored nor
recycled. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">The
latest buzz word in the US is super core inflation and James Powell argued for
unemployment as a solution, ludicrously. Efficacy of inflation targeting
remained an uneasy solution to the rising prices of all daily consumables. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">An
interesting discussion in OECD Economic Outlook Vol. 22 of 2022 highlights the
current difficulties in targeting inflation post pandemic as both supply and
demand factors pushed the inflation. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">A
S&P Rating Agency’s recent report says that the days for low interest rates
and easy credit in Asia-Pacific markets are ending. India is largely
demand-driven economy and the recent service sector PMI hovering above 65 is a
strong evidence. PMI manufacturing is steady at 57.7 in July 2023. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Politics
of economic growth in India cannot afford the luxury of inflation pushed either
through hiking the interest rates or a dominating fiscal policy. Will these
considerations bat for a pause in the interest rates or reduce by a tad, to
please the tomato buyer by 10 to 20 basis points?<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">*The
author is an economist and risk management specialist. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: 27.0pt; margin: 0cm;"><span style="color: #404040; font-family: "Times New Roman",serif; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"> <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-44151254357111397122023-07-28T11:05:00.001+05:302023-07-28T11:05:35.712+05:30SBI The Old and The New<p> <span style="font-family: Arial, sans-serif; font-size: 12pt;">I
have the pride and honour of serving for 28 years, the State Bank of India,
till February 1994 and as a pensioner for the last 29 years. I see vast
difference in the way the Bank deals with its customers from then to now – both
internal and external. It has one of the biggest balance sheets among its peers
as on 31</span><sup style="font-family: Arial, sans-serif;">st</sup><span style="font-family: Arial, sans-serif; font-size: 12pt;"> March 2023 and with very low NPAs. There is speed of
service for those who help themselves. SBI celebrates 75 years of independence,
Azadi ka Amritotsav with a unique gesture of giving a pension bonus for those
who are above 75years according to the cadre at which they retired. We, the
old-SBI-ites thus had a pleasant surprise in that it still could remember that
generation despite the generational divide and technology disruption.</span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">On
the 8<sup>th</sup> June, 2023 we heard the news that its Chief Financial
Officer, Attar resigned from the Bank. In fact, his appointment raised several
eyebrows couple of years back, because he came from a consulting experience
with Ernst & Young and banking experience with its rival ICICI Bank.
Conflict of interest is not ruled out. This is a governance issue. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">For
those who visit the Personal Banking branch, one stares at long ques.
Technology of which we are all proud of, looks a harrowing experience for the
staff. The staff, despite all good intentions feel helpless many a time because
the system just does not respond. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">The
SBI I worked at was ‘the largest bank for the smallest man’. There were concept
branches dedicated to Agricultural and SSI sectors. It’s primacy in these two
areas and domain expertise whittled away with not many field level managers and
staff having no time to visit the villages and enterprises. They do not have
much time to discuss with them their problems. Most problems are left for the
system to resolve. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">The
SBI today is SBI plus seven Associate Banks merged with it assimilating seven
work cultures. Both are thus entirely different. I am reminded of a Chairman
who said a few years ago: “We are a technology company. Banking also we do.”
Very true. There are more retail loans, personal loans, vehicle loans, more
housing and real estate, and corporate loans. Property and Collateral
verifications take more time than client interactions. There is little time for
the small segment, who need most the banking services. ‘Its old slogan:” the
biggest bank for the smallest man” is consigned to history. Anything small,
except where it is a regulatory responsibility, is not to their taste. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Now
SBI does little of banking as all the staff and managers look to the machines
for instructions. If the machine fails to respond, the employee or manager has
no answer for the banking problem that the customer faces. If one wants to post
a grievance on the system, there is a drop-down menu. If you can’t click one of
them, in ‘others’ you have to post in just 100 letters. The CACHE appears and
you copy it. It disappears directing you to re-input. There is also a cultural
transformation. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">If
a pensioner wants to see the Chief General Manager, he has to seek appointment
through a letter either by mail or email. Earlier, pensioner could telephone
and seek his time and meet him. Both the SBIs are different on several counts.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Earlier,
there used to be Customer Committees meeting on the 15<sup>th</sup> of every
month. They have become things of the past for the last five years. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">I
gave an auto-debit instruction for my Electricity Bills. For fifteen years, it
worked well. During the last three months the compliance is whimsical. It pays
one bill and the other bill of the second meter is not paid. I had to pay a
penalty on that count Rs.150 in the next bill!! If I want to change the auto
debit instruction, branch does not have a mechanism to do it nor does it appear
in the Standing Instruction menu of my internet account. Branch Manager, after
spending lot of time and contacting even the system administrator could not
resolve it.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">SBI
Pensioners’ Monthly Bulletin, Hyderabad has a banner line calling the
pensioners for securing their ID cards both for the family and self, if alone,
through MYHRM portal. The portal is the most unresponsive portal. It rarely
works for loading all the inputs needed. When the ‘forgotten password’ is
clicked either on mobile application or on desktop, it does not respond. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">In
fact, all the data that is required is in the form of KYC with the pension
paying branch. Pensioner’s details should be available with the HR department.
Further, even the spouse’s data likewise is available with the KYC where the
pensioner and spouse have joint account and nominee details of the spouse,
where the latter is the nominee, on the other deposit accounts held with the
Bank. With so much of advanced technology and the Bank mentioning that they
have AI application also for a decade, where is the need in the first place,
for this harassment of the pensioner on the MYHRM portal? Can’t the Bank pull
the data from the branch account of the pensioner? Photo, Aadhar, PAN,
residential proof are all available with the Bank Branch.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">During
the first year of YONO it was ‘you’ for the bank and ‘no’ for the customer. It
took two years to make it work efficiently and by this time, the UPI system
overtook its strides. I am reasonably tech-savvy but fail to catch up with the
SBI HRM portal.<o:p></o:p></span></p>
<span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">Still, going by the call for a joint ID card
with my spouse, I loaded all the details. The outcome is a disaster. My date of
pension is wrong: Instead of 28.02.1994, it mentions 31.08.1997. Where from the
data is produced, no one knows. Regarding my spouse data that has been
faithfully loaded to MYHRM after great difficulty nearly six months back, her
details are left blank, when the card is issued. </span><div style="border-bottom: solid #4472C4 3.0pt; border-left: none; border-right: none; border-top: solid #4472C4 3.0pt; margin-left: 14.2pt; margin-right: 22.7pt; mso-border-bottom-themecolor: accent1; mso-border-top-themecolor: accent1; mso-element: para-border-div; padding: 8.0pt 0cm 8.0pt 0cm;">
<p class="MsoNormal" style="border: none; margin-bottom: 0cm; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-border-bottom-alt: solid #4472C4 3.0pt; mso-border-bottom-themecolor: accent1; mso-border-top-alt: solid #4472C4 3.0pt; mso-border-top-themecolor: accent1; mso-padding-alt: 8.0pt 0cm 8.0pt 0cm; padding: 0cm;"><span style="font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I had to give up the card
telling the branch manager, that I can do without the pensioner ID with my
spouse details incorporated, as we have other IDs. <o:p></o:p></span></p>
<p class="MsoNormal" style="border: none; margin-bottom: 0cm; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-border-bottom-alt: solid #4472C4 3.0pt; mso-border-bottom-themecolor: accent1; mso-border-top-alt: solid #4472C4 3.0pt; mso-border-top-themecolor: accent1; mso-padding-alt: 8.0pt 0cm 8.0pt 0cm; padding: 0cm;"><span style="font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">The staff who should have
closed their systems at the end of the day at maximum 5pm sit till even 7pm
entering KYC of new accounts or responding to printed requests of service!!
They curse the system they work with day-in and day-out, but in silence. This is more because they continue to focus more on the sale of third party products like Insurance, Mutual Funds, Pension Funds etc.</span></p>
<p class="MsoNormal" style="border: none; margin-bottom: 0cm; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-border-bottom-alt: solid #4472C4 3.0pt; mso-border-bottom-themecolor: accent1; mso-border-top-alt: solid #4472C4 3.0pt; mso-border-top-themecolor: accent1; mso-padding-alt: 8.0pt 0cm 8.0pt 0cm; padding: 0cm;"><span style="font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">I am writing this note with
the hope that the Bank would make better use of technology and help many of my
ilk not facing such risk. <span style="mso-spacerun: yes;"> </span>Instead of
being complacent, the Bank should introspect and it is not correction that is
required but total replacement of its technology to stand in competition with
its peers HDFC Bank and ICICI Bank.<o:p></o:p></span></p>
<p class="MsoNormal" style="border: none; margin-bottom: 0cm; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-border-bottom-alt: solid #4472C4 3.0pt; mso-border-bottom-themecolor: accent1; mso-border-top-alt: solid #4472C4 3.0pt; mso-border-top-themecolor: accent1; mso-padding-alt: 8.0pt 0cm 8.0pt 0cm; padding: 0cm;"><span style="font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Pensioners’ Association left
a helpful note that those who have difficulty in accessing the MyHRM portal can
seek its help in the Association office.<o:p></o:p></span></p>
<p class="MsoNormal" style="border: none; margin-bottom: 0cm; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-border-bottom-alt: solid #4472C4 3.0pt; mso-border-bottom-themecolor: accent1; mso-border-top-alt: solid #4472C4 3.0pt; mso-border-top-themecolor: accent1; mso-padding-alt: 8.0pt 0cm 8.0pt 0cm; padding: 0cm;"><span style="font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">Is this necessary? Doorstep
service to the pensioners announced by the RBI is in circulars. Can’t the
tech-savvy bank think of better way of helping its customers and pensioners? <o:p></o:p></span></p>
<p class="MsoNormal" style="border: none; margin-bottom: 0cm; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-border-bottom-alt: solid #4472C4 3.0pt; mso-border-bottom-themecolor: accent1; mso-border-top-alt: solid #4472C4 3.0pt; mso-border-top-themecolor: accent1; mso-padding-alt: 8.0pt 0cm 8.0pt 0cm; padding: 0cm;"><span style="font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">There are many unsung
heroes. It’s time to have pity on them and find systemic remedies. I wish the
Bank would regain its pride of place in the industry.<o:p></o:p></span></p>
<p class="MsoNormal" style="border: none; margin-bottom: 0cm; margin-left: 0cm; margin-right: 0cm; margin-top: 6.0pt; mso-border-bottom-alt: solid #4472C4 3.0pt; mso-border-bottom-themecolor: accent1; mso-border-top-alt: solid #4472C4 3.0pt; mso-border-top-themecolor: accent1; mso-padding-alt: 8.0pt 0cm 8.0pt 0cm; padding: 0cm;"><span style="font-size: 12.0pt; mso-bidi-font-size: 11.0pt;">*The views are personal.<o:p></o:p></span></p>
</div>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-64193500866677443022023-07-26T14:05:00.001+05:302023-07-26T14:05:12.146+05:30Urban Cooperative Banks - Future Concerns<p> </p><p class="MsoNormal">Urban Cooperative Banks – Future Concerns<o:p></o:p></p>
<p class="MsoNormal">Urban Cooperative Banks (UCBs) occupy nearly 8 percent of
the financial sector space. The topic for discussion at the College of
Supervisors on the 24<sup>th</sup> July
2023 was on “Business Development Plans, Risk Management and Governance.”</p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">UCBs are neighbourhood banks coming under the regulations of
both the State Cooperative Acts and the Banking Regulation Act 1949 and its
amendments. Financial Stability Report June 2023 acknowledges their
contribution to the financial sector. Credit growth of UCBs both scheduled and
non-scheduled UCBs reaching 6.7 percent and 4.9 percent respectively.<o:p></o:p></p>
<p class="MsoNormal">The discussion is timely for more than one reason: After the
Third Five Year Plan, there was no mention of Cooperatives as economic sector
in the subsequent plans until the NDA government formed a separate Ministry of
Cooperation and formulated a National Cooperative Policy. Second, Multi-State
Cooperative Act 2023 was on the anvil. (It was passed in the Parliament on the
25<sup>th</sup> July 2023. Third, these UCBs were in the media and the press
for several reasons: 1. failure of PMC Bank, RBI raising the threshold of
guarantee limit of deposits from Rs. One lakh to Rs.5 lakhs; 2. depositors’
interests occupied the prime interest of the regulator after a series of
failures and irregularities;3. consolidation of banks through merging of weak
banks with strong banks, 4. introduction of 4-tier structure in UCBs based on
their business levels considering their heterogeneity, 5. implementing some of
the Viswanathan Committee recommendations – particularly to help raising
capital beyond the membership through setting up National Urban Cooperative
Finance and Development, an Umbrella Organisation, 6. Board of Management with
functional experts as a support mechanism for the elected Boards has been put
in place; 7.inter-cooperative agency cooperation in strengthening the sector, increasing
number of penalties on good number of banks for several regulatory breaches; 8.new
threshold of lending to priority sector by 2026 depending on the tier to which
they belong, 9. poor governance and 10. risk management standards.<o:p></o:p></p>
<p class="MsoNormal">It has been noticed that majority of the Tier-3&4 UCBs
have been conforming to the regulatory directives, introduced core banking
solutions (CBS), opened ATMs, integrated with the larger payment systems like
the UPI through appropriate technologies, and mostly compliant with the
prudential norms prescribed by the RBI. <o:p></o:p></p>
<p class="MsoNormal">All the UCBs follow the regulation of submitting their
Annual Business Plans to the RBI. This is more ritualistic. Business
Development Plans are not prepared with bottom-up approach. There is no Board
approved strategy for preparation of such plans annually. Even after the constitution
of the Boards of Management as adjuncts to the Board (These BoMs do not have
any discretion and they perform only advisory role). The credit to risk
weighted assets ratio (CRAR) of scheduled UCBs (around 52 banks) remained
stable at 15 percent and the non-scheduled UCBs at 17.8 percent. FSR
acknowledges that ‘tier-wise CRAR of UCBs is well above the minimum regulatory
requirement.’ Net worth of all the <br />
UCBs is stated to be comfortable. Yet there are continuing concerns on their
contribution. Some of the financially sound and well managed banks (FSWM) have
been attempting total transformation akin to commercial banks relating to
technology, like internet banking, mobile banking, one-stop solutions etc.
Capacity building at various levels in this regard and cyber security are the
challenges they are facing. <o:p></o:p></p>
<p class="MsoNormal">Three important aspects that seized my attention while
reviewing their performance are: 1. The role of Board of Management, 2.
Priority Sector lending imperative, and 3. Umbrella Organization. <o:p></o:p></p>
<p class="MsoNormal">Board of Management is supposed to guide and assist the
Board of Governance with no delegation or commitment to them. They are outside
the actual Board of Directors and yet in it. Instead of such ambiguity, there
can be negotiation with the State Governments to adopt certain rules to
facilitate the elected Boards to have nominated Directors from professional
cadres satisfying the fit and proper criteria for such nominations too. This
would settle the issue of enhancing the capability of the Boards. Further, training
of the Board of Directors, measuring the performance of the Board of Directors
on the basis of a written statement of what value addition they would like to
bring to the Board and how they would like to participate in the stability and
sustainable growth of the institution, annual Board retreats etc., should
receive the attention of the regulators. <o:p></o:p></p>
<p class="MsoNormal">Agenda of the Task Force on Cooperative banks (TAFCUB) in
several states is being prepared by the RBI while the concerned Registrar of
Cooperatives of the State and the Associations as the other constituents are
not being consulted mostly, save exceptions. Its functioning has become too
routinised during the last ten years. Since the purpose of the TAFCUB is to
resolve local regulatory issues without escalating them to higher levels, and
improving the functional efficiency of UCBs, it is desirable and necessary that
the agenda becomes more consultative. <o:p></o:p></p>
<p class="MsoNormal">Viswanathan Committee ‘s<span lang="EN-US" style="mso-ansi-language: EN-US;"> view is that “there is ample space for financial institutions that
operate on the principles of co-operation and the inclusivity that they get. As
such, the Vision for the UCB sector should be to emerge as the neighbourhood
bank of choice powered by <b>passion for inclusive finance as the core of the
business model. This can happen only if their operations are founded on
financial strength, strong branding, cutting edge technology driven processes,
and skilled human resources coupled with an enabling regulatory environment.</b>
These internal drivers can be available to a bank either on a stand-alone basis
or acquired through network arrangements. There are now several enabling
factors, both for the UCBs themselves and the RBI as the regulator, to
actualise this vision.”<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Action
still awaits the validated recommendations of the above Committee. Many of
these aspects have been discussed while delivering my talk, the PPt of which is
attached.<span style="mso-spacerun: yes;"> </span></span><o:p></o:p></p>
<p class="MsoNormal">*Text of the address at the College of Supervisors, RBI on
the 24<sup>th</sup> July 2023 at Mumbai. <o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-13791100163920855472023-05-31T12:06:00.002+05:302023-05-31T12:06:31.521+05:30Degenerating Value: A Scar on Democratic Fabric<p> </p><p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Degenerating
‘Values’, a Scar on Democratic Fabric</span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">B.
Yerram Raju*<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">When
R. Durgadoss and I wrote ‘A Saint in the Board Room’ we never thought of being
prophetic. When we see the recent controversies on ‘Mahatma’ getting off the
mark on twitter, and the controversy over the Prime Minister Modi inaugurating
the Parliament on the 28<sup>th of</sup> March 2023, setting aside the chorus
in the country for the Lady President of India from the Dalit Community to
substitute him, the degenerating values and the decline in governance made me
recall the values emphasised in the 2011 Book referred above. Reinforced, as it
looked, there was<span style="mso-spacerun: yes;"> </span>a relentless fight of
the women wrestlers of repute waging a war in the streets of Delhi calling for
punishing the offender who intruded into their privacy. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">“Leaders like Gandhi acquired discipline
to put to operation the knowledge gained into actual learning. He came across a
book titled, ‘Unto the Last’ by John Ruskin, while he was in South Africa. In
this book Ruskin states that the liberation of the individual lay in the
liberation of the community. This ideology transformed Gandhi. He said, “I
arose with the dawn ready to reduce these principles into practice”. These
principles are based on simple living and pursuit of honesty. Today, we have
many who speak of principles and few, who think of practising them. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm;"><span lang="EN-GB" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-GB;">Gandhiji </span><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">felt that one who
cannot wage war over the internal conflicts that require no arms, it is
incredible that non-violence cannot stop war among nations. This recall bears
significance in the conflict between Russia and Ukraine. Except these two
nations at war, every other nation in the world wants them to be at peace and
this is refusing to happen. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm;"><b style="mso-bidi-font-weight: normal;"><span lang="EN-GB" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-GB;">Words of Wisdom from Gandhi</span></b><span lang="EN-GB" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-GB;">ji<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm;"><span lang="EN-GB" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-GB;">“Cleaning
oneself is the first step to realize God. When one cleanses his soul, the
spreading effect will have a telling effect on others. He said it was better to
conquer desire and hatred than winning wars with weapons. Further he believed
that one should have humility as one of the main virtues with the outer
boundary of the humility being “<i style="mso-bidi-font-style: normal;">ahimsa</i>”
or “<i style="mso-bidi-font-style: normal;">non-violence</i>.”<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Gandhiji said unto himself: ‘I myself do
not feel like a saint in any shape or form’ (Young India Jun 20, 1924).<a href="file:///C:/Users/Yerram%20Raju/Desktop/Degenerating.docx#_edn1" name="_ednref1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-size: 12.0pt; mso-ansi-language: EN-IN; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">[i]</span></span><!--[endif]--></span></span></a> It
is important to watch the biological clock in life:<o:p></o:p></span></p>
<table border="1" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; border: none; margin-left: .1pt; mso-border-alt: solid black .5pt; mso-border-insideh: .5pt solid black; mso-border-insidev: .5pt solid black; mso-padding-alt: 0cm 5.4pt 0cm 5.4pt; mso-yfti-tbllook: 160;">
<tbody><tr style="mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td style="border: solid black 1.0pt; mso-border-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 68.4pt;" valign="top" width="91">
<p class="MsoNormal" style="margin-left: 9.0pt;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Age<o:p></o:p></span></b></p>
</td>
<td style="border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 102.6pt;" valign="top" width="137">
<p class="MsoNormal" style="margin-left: 3.6pt;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Designated
as<o:p></o:p></span></b></p>
</td>
<td style="border-left: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 279.0pt;" valign="top" width="372">
<p class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Our role in this
period<o:p></o:p></span></b></p>
</td>
</tr>
<tr style="mso-yfti-irow: 1;">
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 68.4pt;" valign="top" width="91">
<p class="MsoNormal" style="margin-left: 9.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">0 – 20<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 102.6pt;" valign="top" width="137">
<p class="MsoNormal" style="margin-left: 3.6pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Butterfly<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 279.0pt;" valign="top" width="372">
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">We
have colourful dreams; we do not bother for anything<o:p></o:p></span></p>
</td>
</tr>
<tr style="mso-yfti-irow: 2;">
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 68.4pt;" valign="top" width="91">
<p class="MsoNormal" style="margin-left: 9.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">20 – 40<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 102.6pt;" valign="top" width="137">
<p class="MsoNormal" style="margin-left: 3.6pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Migratory bird<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 279.0pt;" valign="top" width="372">
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">We
go in search of career to better environmental destinations<o:p></o:p></span></p>
</td>
</tr>
<tr style="mso-yfti-irow: 3;">
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 68.4pt;" valign="top" width="91">
<p class="MsoNormal" style="margin-left: 9.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">40 – 60<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 102.6pt;" valign="top" width="137">
<p class="MsoNormal" style="margin-left: 3.6pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Donkey<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 279.0pt;" valign="top" width="372">
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">We
bear the burden of the family<o:p></o:p></span></p>
</td>
</tr>
<tr style="mso-yfti-irow: 4;">
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 68.4pt;" valign="top" width="91">
<p class="MsoNormal" style="margin-left: 9.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">60 – 80<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 102.6pt;" valign="top" width="137">
<p class="MsoNormal" style="margin-left: 3.6pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Snail<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 279.0pt;" valign="top" width="372">
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">We
slowly withdraw into a shell, looking more inwards<o:p></o:p></span></p>
</td>
</tr>
<tr style="mso-yfti-irow: 5; mso-yfti-lastrow: yes;">
<td style="border-top: none; border: solid black 1.0pt; mso-border-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 68.4pt;" valign="top" width="91">
<p class="MsoNormal" style="margin-left: 9.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">80 – 100<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 102.6pt;" valign="top" width="137">
<p class="MsoNormal" style="margin-left: 3.6pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Crane<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid black 1.0pt; border-left: none; border-right: solid black 1.0pt; border-top: none; mso-border-alt: solid black .5pt; mso-border-left-alt: solid black .5pt; mso-border-top-alt: solid black .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 279.0pt;" valign="top" width="372">
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">We
wait for our final journey towards the eternal world<o:p></o:p></span></p>
</td>
</tr>
</tbody></table>
<p class="MsoNormal" style="margin-bottom: 0cm;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; margin-left: 0cm; margin-right: 22.7pt; margin-top: 6.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Business
ethics, however, is not driven by such biological clock. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; margin-left: 0cm; margin-right: 22.7pt; margin-top: 6.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Philosophical
outlook these days is inversely proportional to the age. One can find examples
of politicians aged 70 and above are actively pursuing the wrong road to wealth
these days. The child in him has no role model to earn wealth by any other
means. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; margin-left: 0cm; margin-right: 22.7pt; margin-top: 6.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">We
have people loving movies of hatred, street fights, wars, and unnatural
weaponry to show their winning streak. As they age, they learn only to lie and
earn money at any cost by dubious means. We see children getting used to opium
in one form or other. Not a day passes without hearing the news of police
catching hold of such persons. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; margin-left: 0cm; margin-right: 22.7pt; margin-top: 6.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Cultivating
the right values should start from childhood and their practice depends on the
world they witness. Young parents today do not have time to spend with their
children to teach any of those values, for, they are busy in their pursuit of
wealth. They suddenly realise that all this pursuit vanishes on a single day
when they are handed over exit chit. Lakhs of jobs are lost in the guise of
running their organization better. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; margin-left: 0cm; margin-right: 22.7pt; margin-top: 6.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">The
purpose of the educational system is to prepare its students for a lifetime
learning experience that will go better and faster than it would have otherwise
done without formal education. The test of every religious, political, or
educational system is the philosophies that it produces and the spirit that it
preserves. “If the system violates intelligence, it is bad. If it injures
character, it is vicious and if it injures the conscience, it is criminal”.<a href="file:///C:/Users/Yerram%20Raju/Desktop/Degenerating.docx#_edn2" name="_ednref2" style="mso-endnote-id: edn2;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-size: 12.0pt; mso-ansi-language: EN-IN; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">[ii]</span></span><!--[endif]--></span></span></a><o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; margin-left: 0cm; margin-right: 22.7pt; margin-top: 6.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Character
and governance are shadowed. Child of the day is in wilderness seeing those
street fights among politicians, and frightful support to ill-gotten wealth. It
is time for all of us to think – reminisce into the glorious past that produced
Gandhiji, Vijaya Lakshmi Pundit, Gopala Krishna Gokhale, Jawaharlal Nehru,
Vajpayee, Rabindranath Tagore, Swami Vivekananda and not think of the colour of
the cloth one wears – white or saffron.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; margin-left: 0cm; margin-right: 22.7pt; margin-top: 6.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">75
year-old independent India, growing economically as the fastest among nations
in the world, ranking fifth now, should not show cracks in its aspirational
century in 2047. Next few years should be the years of correction in thinking,
federal cooperation, respecting the views of the opposition, allowing debate
over dissent, and a determined pursuit of shaping the next generation based on
values and ethics. The saga of Mallyas, Nirav Modi, Chokshi, and the still
brewing Adani story should be consigned to forgotten history. The nation has
the right to freedom of expression and autonomy of institutions within the
well-defined boundaries, and transparency. The largest democracy of the world,
as it would emerge, should be the beacon light as it was during its epic
history. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; margin-left: 0cm; margin-right: 22.7pt; margin-top: 6.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">New
structures always make the legacy, a forgotten past. But the new Triangular
Parliament Structure built on cultural ethos of the nation could herald a new
dialogue, symbolise cooperative federalism and usher in an era of value-driven
democracy. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; margin-left: 0cm; margin-right: 22.7pt; margin-top: 6.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">*The
writer is co-author of ‘A Saint in the Board Room (2011)’, an economist and
risk management specialist. <span style="mso-tab-count: 1;"> </span><o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm; margin-left: 0cm; margin-right: 22.7pt; margin-top: 6.0pt;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 0cm;"><span lang="EN-GB" style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-GB;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<div style="mso-element: endnote-list;"><!--[if !supportEndnotes]--><br clear="all" />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="edn1" style="mso-element: endnote;">
<p class="MsoListParagraph" style="margin: 0cm; text-align: justify;"><a href="file:///C:/Users/Yerram%20Raju/Desktop/Degenerating.docx#_ednref1" name="_edn1" style="mso-endnote-id: edn1;" title=""><sup><span lang="EN-GB" style="font-size: 10.0pt; line-height: 115%;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><sup><span lang="EN-GB" style="font-family: "Calibri",sans-serif; font-size: 10.0pt; mso-ansi-language: EN-GB; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-font-kerning: 0pt; mso-ligatures: none;">[i]</span></sup><!--[endif]--></span></span></sup></a><span lang="EN-GB" style="font-size: 10.0pt; line-height: 115%;"> Mahatma Gandhi’s
Significance for Today: John Hick, Pg 2 of 11 (</span><span lang="EN-GB"><a href="http://www.johnhick.org.uk/article15.html"><span style="font-size: 10.0pt; line-height: 115%;">http://www.johnhick.org.uk/article15.html</span></a></span><span lang="EN-GB" style="font-size: 10.0pt; line-height: 115%;">)</span><span lang="EN-GB"><o:p></o:p></span></p>
</div>
<div id="edn2" style="mso-element: endnote;">
<p class="MsoListParagraph" style="margin: 0cm; text-align: justify;"><a href="file:///C:/Users/Yerram%20Raju/Desktop/Degenerating.docx#_ednref2" name="_edn2" style="mso-endnote-id: edn2;" title=""><sup><span lang="EN-GB" style="font-size: 10.0pt; line-height: 115%;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><sup><span lang="EN-GB" style="font-family: "Calibri",sans-serif; font-size: 10.0pt; mso-ansi-language: EN-GB; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-font-kerning: 0pt; mso-ligatures: none;">[ii]</span></sup><!--[endif]--></span></span></sup></a><span lang="EN-GB" style="font-size: 10.0pt; line-height: 115%;"> Henry Frederic Amiel,
Journal, 17 June 1852</span><span lang="EN-GB"><o:p></o:p></span></p>
</div>
</div>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-6605351740943433822023-03-29T10:40:00.000+05:302023-03-29T10:40:21.603+05:30Risk Profiling of Manufacturing Micro and Small Enterprises <p> </p><p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-font-width: 120%;">India’s
Micro,<span style="letter-spacing: -.15pt;"> </span>Small<span style="letter-spacing: -.15pt;"> </span>and<span style="letter-spacing: -.15pt;"> </span>Medium<span style="letter-spacing: -.15pt;"> </span>Enterprises<span style="letter-spacing: -.15pt;"> </span>(MSME)<span style="letter-spacing: -.15pt;"> viewed as </span>the<span style="letter-spacing: -.15pt;"> </span>lifeblood<span style="letter-spacing: -.15pt;"> </span>of<span style="letter-spacing: -.15pt;"> </span>the<span style="letter-spacing: -.15pt;"> </span>Indian<span style="letter-spacing: -.15pt;">
</span>economy, contribute 30 percent to GDP and of them micro enterprises
alone are estimated to employ 23 percent of India’s total workforce, according
to the data of the Union Ministry of MSME. Access to credit has been the most
contentious issue discussed on public platforms and IMF estimated that only 23
percent of the total number of enterprises in this segment got formal access to
credit.<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-font-width: 120%;"><span style="mso-spacerun: yes;"> </span></span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEhK2728r0Q5VcTnD01Cmz9l8EHnzDvcCLs_FiJgH8F_bkxzr7Q1ejuw67Iup9GpP3JgKZHNnRD77B7VkVABC59yF6S3-vVul3a50Zi2aa1qT9-BzvVe7qI9lWvSIBA_EQ2Qb43j_tP6s5BCBXEucc07n0ztvnmB0jQEiylPq8OkAzeUSXjWW3-Rb2HQeg" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="525" data-original-width="708" height="237" src="https://blogger.googleusercontent.com/img/a/AVvXsEhK2728r0Q5VcTnD01Cmz9l8EHnzDvcCLs_FiJgH8F_bkxzr7Q1ejuw67Iup9GpP3JgKZHNnRD77B7VkVABC59yF6S3-vVul3a50Zi2aa1qT9-BzvVe7qI9lWvSIBA_EQ2Qb43j_tP6s5BCBXEucc07n0ztvnmB0jQEiylPq8OkAzeUSXjWW3-Rb2HQeg" width="320" /></a></div><br /><o:p></o:p><p></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Post-pandemic,
government of India has been laying lot of emphasis on the growth of micro,
small and medium enterprises and extending incentives and products for easing
the conduct of their business. The Union Finance Minister, in her usual
meetings with the bankers, draws her untiring attention to the need for increase
in credit to these enterprises. Banks, on their part, do not lose the
opportunity to exhibit their fancy to lend to such enterprises. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-font-width: 120%;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-font-width: 120%;">Trust
deficit</span><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt;">
was the major contributory factor from the lenders’ perspective. It is
therefore considered expedient to look at the risk profile of such enterprises
and see the possible mitigating factors.<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><b><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Latest
Profile of the Sector<o:p></o:p></span></b></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Interestingly,
TransUnion CIBIL-SIDBI MSME Pulse Report for July-September presents a very
hopeful perspective presenting a growth of 24 percent year-on-year (Y-o-Y).
Credit to ‘micro’, viewed as unmoving window of Banks for five continuous years
since 2017 and even on the negative window, reported a 13 percent growth in
credit outstanding y-o-y as of September 2022 versus 10.6 percent y-o-y for all
the MSMEs y-o-y. Growth in disbursements for micro, small, and medium
enterprises had been at 54 percent, 23 percent, and 9 percent respectively
during the period. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt;">According to RBI’s
Financial Access Survey, 72.83 percent of MSME Credit is concentrated in ten
states: </span><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Maharashtra, Gujarat, Tamil Nadu & Pondicherry,
Uttar Pradesh, Delhi, Karnataka, Rajasthan, West Bengal, Telangana, and
Haryana.</span><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;"> <span lang="EN-US">Maharashtra takes the major slice of 26.19 percent. This obviously
means that government assistance to the sector also reached these states in a
significant measure, at least proportionately viewed. <o:p></o:p></span></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Very
small (with aggregate credit exposure not exceeding ₹ 10 lakh), micro1 (with
aggregate credit exposure between ₹ 10-50 lakh) and micro2 (with aggregate
credit exposure between ₹ 50 lakh-1 crore) experienced growth of 20 per
cent, 15 per cent and 11 per cent y-o-y respectively
showing sudden spurt in micro lending, which is not just a post-pandemic bounce
back, it added.<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Delinquency
rates dropped y-o-y across all the three lender categories (public sector
banks/PSBs, private sector banks(PVBs) and NBFCs); the highest drop was in
PVBs segment (from 2.8 per cent in FY22-Q2 to 1.5 per
cent in FY23-Q2).<a href="file:///C:/Users/Yerram%20Raju/Desktop/Manufacturing%20Micro%20and%20Small%20Enterprises%20-%20Risk%20Profiling.docx#_edn1" name="_ednref1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US;">[i]</span></span><!--[endif]--></span></span></a>
Street Vendors’ financing programme, MUDRA loans (Rs.3.4cr sanctioned during
FY21-22), 59-Minute loan programme for the MSMEs contributed to the steady
uptick that was presented apart from the Union Finance Minister dinning into
the ears of bankers that credit to MSMEs has been sluggish. There was a
pressure on the banks to perform.<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">This
positive vibration whittles down suddenly when we hear the Union Minister of
State for MSME submits to the Parliament, duly reported in the Financial
Express dated 23.02.23: “The number of Udyam-registered MSMEs closed in the
current financial year has nearly doubled from the last financial year’s count,
showed official data. From 6,222 MSMEs shut during FY22, the count has jumped
to 12,307 as of March 9 in FY23 while only 175 units were closed between July 1
(when the Udyam portal was launched) and March 31 in FY21, taking the total
number of MSMEs closed to an all-time high of 18,704. Maharashtra had the
highest number of casualties with 4,871 Udyam-registered MSMEs shut since July
2020 followed by Tamil Nadu (2,326), Uttar Pradesh (1,568), Gujarat (1,558),
Rajasthan (1,297), Bihar (1,075), and more.” <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt;">Gross Non-performing
Assets ratio<span style="mso-spacerun: yes;"> </span>(the ratio of total gross
NPAs to the total advances made during a particular period by the lender) in
MSME loans in FY22 stood at 7.6 per cent, 7.3 per cent in FY21 and 8.9 per cent
in FY20. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Resilience
and sustainability of industrial growth is inextricably linked to the healthy
growth of the manufacturing micro and small enterprises (MMSEs), that happen to
front-end the supply chains of the industry at large. The data and analysis of
the Transunion report does not provide information on how much is the share of
growth of manufacturing MSEs. September 2022 PMI data shows that industrial
growth has not kept pace with the overall growth of the economy. The growth
obviously occurred in the services sector, due to the digitization of the
highest scale, entry of FINTECHs, formalization of the MSMEs, widely dispersed
200-odd incentive schemes from the Union Ministry of MSME, and the unique
success of unified payment interface system (UPI). Despite the U.K. Sinha
Committee Report calling for cash-flow based lending of working capital to the
MSMEs, RBI creating public credit registry, and pushing the banks to move to
data-based lending instead of security-based lending, MMSEs did not catch the
eye of the banks. Hence, risk profiling of the MMSEs would be necessary to
understand the reasons for the trust deficit in the manufacturing sector.<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Definitional
Risk</span></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">:<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Manufacturing
and Services have been combined in the way the MSMEs are defined. The changes
to the definition adopting the twin criteria of investment and turnover to
redefine them have given an escape window for the banks to keep at bay the
MMSEs with investment below Rs.1crore (Rs. Ten million). The turnover threshold
for such enterprises is five times the investment level – Rs.5cr per annum.
While this definition coupled with the insistence of any new enterprise shall
register on Udyog-Aadhar portal of Government of India, has enabled only the
organized to have access <span style="mso-spacerun: yes;"> </span>credit and
incentives, it is yet to bring many unorganized MMSEs into the organized fold.
Lenders still have their own definition – micro enterprises are those that have
outstanding credit of less than Rs.1cr. The law of proportionality demands that
the micro enterprises be brought under a separate statute so that the benefits
meant for them reach without infringement.<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">By
nature, micro manufacturing enterprises are owner-led proprietary or family
partnerships. They do not distinguish their firm expenditure from family
expenditure. Their books of accounts are also not well organised. Their
maintenance of record of stocks of raw materials and finished products is less
systematic than their counterparts in the small and medium enterprises even.
They are mostly sub-contractors as their scale of production does not permit
them to participate in private or public tenders directly. But their working
capital cycle accommodates this unorganised way of running their enterprises.
They lack counselling and guidance from their lenders as the later have little
time for these large numbers in their books of accounts that tend to slip to
non-performance at the turn of the hat. Thus, these enterprises have
origination risk. Information asymmetry and adverse selection, the two factors
that adversely affect the credit risk need mitigation.<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Covenant
Risks</span></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">: These MMSEs in their eagerness to borrow money sign
on the dotted line before their lender. They do not understand the implications
of the covenants they are agreeing for. Earlier they were not knowing even the
rates of interest. At least now, thanks to the widely publicised monetary
policy interventions periodically, they know the interest rates. But they are
ignorant of the insurance clauses and their implications. They do not, in many
a case, know that their machinery and stocks are jointly insured with the
lender and the premium is directly deducted annually from their working capital
account. The extent of insurability is least known to them. Such insurance is
invariably made with the insurance arm of the Bank that lends the enterprise.
But the covenants of the policy are little known to them as the Banks do not
share any copy of the insurance policy. This is a grey area.<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Compliance
Risk</span></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">: MMSEs fail to comply with the regulations relating
to products, processes, and finance more out of ignorance than out of own
volition. Neither the regulatory institutions nor the financial institutions
spare time to explain the implications of non-compliance of the rules and
regulations. Environmental regulations and financial regulations are the most
breached. Labour Code that has four components are least explained to the
MMSEs. It is not uncommon to find that these enterprises fail to maintain even a
muster roll and even where maintained does not agree with the reality. The
number of persons actually engaged and the number in the roll rarely tally.
There is a cost involved in compliance and such cost is felt onerous by the
micro manufacturers. When the cost of compliance is more than the cost of
avoidance, they prefer the latter. Transparency in the cost of compliance is
also found wanting. These are areas of immediate correction to take these
enterprises to the globally competitive levels. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Human
Resource Risks</span></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">: MMSEs employ on average 8-10 workers including the
owners. They invariably depend on migratory labour instead of labour because of
the low wages they demand and reliability. Many studies have indicated that
they spend little resources on skilling, re-skilling, and up-skilling as the
cost of such human resources development is beyond their capacity to absorb. In
fact, these MMSEs act as providers of skilled persons to the Small and Medium
Enterprises as the labour learn their art of working on the machine duly
trained by the proprietors. Some States have insisted on engaging locally
available skills and their experience with such persons on the production front
has become counter productive and costly. They cannot afford to train their
labour in reputed institutions. They require peripatetic trainers who are
rarely available. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Product
Risk</span></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">: According to a number of studies, 60-70 percent of
the MMSEs may conform to the quality of the product requirements but fail in
packing and forwarding requirements. This puts the buyers at risk and
therefore, the related payments. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Pricing
Risks</span></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">: Several manufacturing MSEs adopt neighbourhood
pricing of their products as they would not like to lose out in competition
with the peers. They lack abilities to cost their products. They also do not
much understand the leakages that occur in their supply chains. The product is
not priced cost plus. Since debt is their major source of capital they always
look to loan swaps and interest subsidy as a major source to beat the pricing
competition.<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Technology
Risks</span></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">: While several enterprises are aware that new technologies
have the potential to increase their efficiency, their ability to finance those
new technologies is very limited. Quite many are scared to approach their
lenders as they would have been in arrears already either of the interest or
principal payment. They must have already availed one or two name-sake
restructuring of their loans. Their ability to calculate return on investment
in technology is also extremely limited. Banks hardly find time to spend time
with the entrepreneur and guide him. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Payment
Risk<o:p></o:p></span></b></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Global
Alliance for Mass Entrepreneurship (GAME) estimated that the problem of delayed
payments to MSMEs is in the magnitude of Rs. 10.7 lakh crore, with 80 percent
of this being attributable to delays to micro and small enterprises (MSEs). The
problem of delayed payments is exacerbated by the lack of credit, specifically
working capital facilities, that are available to these businesses. Reports
such as the IFC’s 2018 <i style="mso-bidi-font-style: normal;">Financing India’s
MSMEs </i>estimate that the total addressable debt requirement of micro and small
enterprises was Rs. 24 lakh crores in 2018, with an estimated 70 percent
attributable to the elevated working capital needs of these businesses.<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Sovereign
Risk</span></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">: Industrial policies, Budgetary announcements,
Export-Import policies, Trade Policies and not-so-enriching interface between
various government departments that deal with the MSMEs and the Union Ministry
of Finance, inter-state coordination issues are the various factors that
impinge on sovereign risk. Enterprises have to adjust themselves and
accommodate for the changes in the way they function rather than seeking
instantaneous remedies to their business dealings.<o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Policy
formulation for the MSMEs is at risk because of lack of reliable data. There
has been no census of the units since 2004, the year of last Census. The data
on the Union Ministry of MSME portal is that of 2012. While the data on Udyam
registration is captured in isolation, its integration with the existing data
did not take place. There is no data of mortality in the figure of 6crore-odd
enterprises mentioned on the website. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">While
several state governments and union governments announce a host of incentives,
the reach is suspect due to a variety of constraints: 1. Expediency decides the
allocated budget for release to the sector and the first hit is the MMSEs, the
most vulnerable. 2. There is invariably lack of information relating to the
cost of securing these incentives – in terms of number of visits the
entrepreneur has to make to the concerned department; the cumbersome approach
to the person who actually decides on the sanction and release of the
incentives. 3. Weak negotiating ability of the Industrial Associations over the
incentive releases, etc. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Digitalization
of enterprises, Account Aggregators (yet to mature in its access and use), Open
Credit Enablement Network (OCEN), Co-lending with NBFCs, Factoring, Trade
Related Exchange System (TReDs), have lately entered the Risk Mitigation
instrumentality. Yet, the ability of the MMSEs to take advantage of these
mitigants is way behind both in terms of awareness and the skills. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;"><o:p> </o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">Therefore,
there is a need for developing a separate framework for the MMSEs and a
broad-based ecosystem involving policy makers, institutions that act as policy
instruments, RBI, Indian Banks Association, NBFCs, Ministry of Agriculture and
Cooperation, Ministry of Electronics and Information Technology, Ministry of
Environment, Ministry of Energy of the Union Government and the ten state
governments that have the major share in MMSEs. This framework should be
discussed with the stakeholders in the leading ten states before firming up.
Separate line of budget should be provided to meet the announced incentives and
institutions like the NIMSME, NIRD, Central Universities and those that are
licensed to run technology hubs should monitor the working of the framework. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 0cm; margin-right: 52.85pt; margin-top: 4.95pt; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; mso-ansi-language: EN-IN;">*The
author is an economist, risk management and SME Turnaround Specialist. <o:p></o:p></span></p>
<p class="MsoBodyText" style="margin-top: .3pt;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<div style="mso-element: endnote-list;"><!--[if !supportEndnotes]--><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; mso-ansi-language: EN-IN; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><a href="https://www.moneylife.in/article/risk-profiling-of-manufacturing-micro-and-small-enterprises/70258.html"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt;">https://www.moneylife.in/article/risk-profiling-of-manufacturing-micro-and-small-enterprises/70258.html</span></a></span></div><div style="mso-element: endnote-list;"><span style="font-family: Calibri, sans-serif;"><span style="font-size: 14.6667px;"><br clear="all" /></span></span>
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="edn1" style="mso-element: endnote;">
<p class="MsoBodyText" style="line-height: 163%; margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 23.7pt; margin-right: 52.85pt; margin-top: 4.95pt;"><a href="file:///C:/Users/Yerram%20Raju/Desktop/Manufacturing%20Micro%20and%20Small%20Enterprises%20-%20Risk%20Profiling.docx#_ednref1" name="_edn1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span lang="EN-US"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span lang="EN-US" style="font-family: "Calibri",sans-serif; font-size: 9.0pt; mso-ansi-language: EN-US; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US;">[i]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US"> <a href="https://www.thehindubusinessline.com/money-and-banking/loan-disbursements-to-msme-sector-grew-24-in-q2fy23-transunion-cibil-sidbi-report/article66652635.ece"><span lang="EN-IN" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 163%; mso-ansi-language: EN-IN;">https://www.thehindubusinessline.com/money-and-banking/loan-disbursements-to-msme-sector-grew-24-in-q2fy23-transunion-cibil-sidbi-report/article66652635.ece</span></a></span><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 163%; mso-ansi-language: EN-IN;"><o:p></o:p></span></p>
<p class="MsoEndnoteText"><o:p> </o:p></p>
</div>
</div>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-12348521841958793662022-12-29T11:50:00.002+05:302022-12-29T11:50:42.804+05:30Uncertainties cloud the Future in 2023<p> </p><p class="MsoNormal"><b><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">The
Future is not so much hindsight as foresight: Uncertainties still Cloud Us<o:p></o:p></span></b></p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgy3EKCuWGQQySs0KrwtjMz7DPDbk239L8NSkpY18B7offlq_63p3JDdY7sy-hPCNjO5amzVBjMANF1ldX9qrQRzFhJqpP22x9N55xuwdJ88k0Ry9uPn9sdmx49nau8bgW5JhCNdQ-CmN_6576k9Z7GDPoERmh_IFiEo53REsSLlnl-NlG-51uBdC9y6A/s2589/IMG_20220708_193607.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2243" data-original-width="2589" height="277" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgy3EKCuWGQQySs0KrwtjMz7DPDbk239L8NSkpY18B7offlq_63p3JDdY7sy-hPCNjO5amzVBjMANF1ldX9qrQRzFhJqpP22x9N55xuwdJ88k0Ry9uPn9sdmx49nau8bgW5JhCNdQ-CmN_6576k9Z7GDPoERmh_IFiEo53REsSLlnl-NlG-51uBdC9y6A/s320/IMG_20220708_193607.jpg" width="320" /></a></div>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Rugged
roads need all-weather four-wheel driven vehicles and not the luxury Sedans. We
are in uncertain times still. End of the year has not been that good although
economy-wise, India is far better than many developed countries. We have to
re-discover India as it is the second largest nation in the world next to
China, in terms of population. We have 17% of world’s population and 4% of
world’s water resources. We see more out-migration than in-migration. Loyalty
to the nation and even to the village one is borne, is suspect. This article
explores the future not like a soothsayer but like a typical economist and
philosopher. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">we
see more habitable villages than at the time of independence. We see less land
producing more grain – distancing absolute poverty and hunger. The nimble hands
of women farmers, in particular, were responsible to fight the pandemic with
confidence. There were very few starvation deaths even in the midst of our
intense fight with the pandemic. The nation proved that when a crisis arises,
the nation would rise to the occasion and would not allow it to devour us.
Thanks to the social development schemes of some of the states like Telangana,
Tamil Nadu, Kerala, Jammu & Kashmir, Assam, and Nagaland, we also witness
higher literacy and health levels during the last decade. Numbers are available
in any news daily that I would not like to strain the reader with. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">We
have built good roads, good communication systems, and on the threshold of
reaching the status of a developed nation. In the comity of nations, last eight
years have won us a seat in the UN Security Council, chair of G-20 and a
respect that history of India should be proud of. We see less land producing
more grain – distancing absolute poverty and hunger. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">A
time has come when we should rethink and re-envision the freedom as we see not
just economic and financial risks but risks to the very existence of humanity. We
have laws on Rights – child rights to the right to information and right to
education. Yet, digital education distanced the teacher from the taught and so
is the respect for the teacher. It is ghastly to see the atrocities of teachers
on their wards whom they should love as their children. Not many movies on
celluloid or the small screen can be watched with the entire family. They are
full of violence and sex and all passed by the Censors. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">There
is no state, nay<span style="mso-spacerun: yes;"> </span>a district, that does
not report one type of crime or other. There are areas where people are living
in perpetual fear. Billions of rupees are wiped out with<span style="mso-spacerun: yes;"> </span>a wink of an eye. Cybercrime is at its
heights. A citizen has to fight for enforcing his rights. We see the
strengthening of the vigilance arms: Enforcement Directorate, Central Bureau of
Investigation, Intelligence agencies etc. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">For
75 years, we still think of good governance and good institutional framework
devoid of corruption. We are a witness to collapse of some of the newly built
bridges killing lives. On the other side, we see that villages became more
habitable. We see less land producing more grain – distancing absolute poverty
and hunger. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">I
pleasantly recall that during my young days, we had in the school syllabus,
civics, history, and geography as subjects under the broad heading of social
sciences. We had at least two sessions for drawing, craft and play in the
ground a game of our choice – not just cricket. The National Education Policy
claiming a progressive higher education intervention that ensures opportunities
for those who have the economic muscle to pursue – a four year degree course, a
double degree simultaneously, has not rebuilt the foundation for a student to
blossom under ethics, respect to colleagues, and respect to elders and an
awareness that the student has an ocean to swim the tides of learning. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Therefore,
next twenty five years of this growing nation are really challenging. The
challenge lies in building a generation that loves peace, that embraces ethics
in living, that sees security in building a good society, that witnesses any
young women walking in midnight without fear of assault and in absolute
comfort, that every young lady would like to be a good mother and a good wife
nurturing a good family even within small means. Cooperative federalism should
see the end of riparian water disputes so that we have universal safe drinking
water and not sanitary paper. This should be the new year 2023 pledge for all
of us. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">Future
is going to be more uncertain than the present. There may not be pestilence but
there could be wars over weapons and women. India, known for cohesive families,
should not be a victim of cultural incursions from the west. It cannot afford
to blame the present for what their fathers and forefathers had done to them
and their families. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">It
is a great recall from Pundit Nehru’s Discovery of India (p.61), where he
described the Culture of the Masses. “ ..I saw the moving drama of the Indian
people<span style="mso-spacerun: yes;"> </span>in the present and could often
trace the threads which bound their lives to the past, even while their eyes
were turned towards the future. Everywhere I found a cultural background which
had exerted a powerful influence on their lives. ..The old epics of India, <i>Mahabharat,
Ramayana, </i>and other books, in popular translations and paraphrases, were
widely known among the masses, and every incident and story and moral in them
was engraved on the popular mind and gave richness and content to it.” There is
need for great resurgence in this direction. ‘Let not thy winged days be spent
in vain, where gone, no gold can try them back again.’<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;">*The
views are personal. <span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span><span style="font-family: Times New Roman, serif;"><span style="font-size: 16px;">https://timesofindia.indiatimes.com/blogs/fincop/the-future-is-not-so-much-hindsight-as-foresight-uncertainties-still-cloud-us/</span></span></p><p class="MsoNormal"><span style="font-family: Times New Roman, serif;"><span style="font-size: 16px;"><br /></span></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt;"><o:p> </o:p></span></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-79789005600246178352022-11-16T12:45:00.000+05:302022-11-16T12:45:28.581+05:30Recalli ng the child in you <p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEioW-Azywmbjw6R1Ev_UJbxVlfKPfkBGVH_rUr0X5Q7xQ2MpkF0zGlDW7rK1ugkWdBTqRxKsgh45UsZDwO-vWUHLGh6N5qQyrF-Nb7ZiIiStDq0ndvnYateA1DRtLdewGUar47BKp1JPWFqftsk1JRqh0VGJ3Y7XfmSrT711WtfWBZbjX0fKGK_W0daiQ/s4608/IMG_20181203_165428.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="4608" data-original-width="3456" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEioW-Azywmbjw6R1Ev_UJbxVlfKPfkBGVH_rUr0X5Q7xQ2MpkF0zGlDW7rK1ugkWdBTqRxKsgh45UsZDwO-vWUHLGh6N5qQyrF-Nb7ZiIiStDq0ndvnYateA1DRtLdewGUar47BKp1JPWFqftsk1JRqh0VGJ3Y7XfmSrT711WtfWBZbjX0fKGK_W0daiQ/s320/IMG_20181203_165428.jpg" width="240" /></a></div><br /><p></p><p class="MsoNormal">Recalling the child in you today?<o:p></o:p></p>
<p class="MsoNormal">B. Yerram Raju<o:p></o:p></p>
<p class="MsoNormal">November 14 is remembered as Children’s day. I recall my
younger days when standing among the crowd on the roadside of the Main Road of
Visakhapatnam, I was standing with a rose in one hand and the national flag in
another to greet Pundit Jawaharlal Nehru, the then Prime Minister, who came for
launching Jala Usha. When Nehru picked up the rose from my hand as from a few
of my neighbouring children standing like me, I truly thought, I made the day. There
were no mobile phones to catch it on a camera to show to posterity my joy.<o:p></o:p></p>
<p class="MsoNormal">Nehru had love for children is very well known. He believed
today’s child is a responsible citizen tomorrow. The right of a child to grow
and blossom has permanence. He believed in nurturing the ambitions of a child.<o:p></o:p></p>
<p class="MsoNormal">The smile on an innocent child face unfolds to us the
grandeur of nature. His/her ambition is the future of the world. His innocence
is infectious. Traveling in a train, that too driven by a coal engine creating
a smoke screen on the face, the question that the child puts to the parents is
why are the trees moving backwards when the train is moving forward? Why would
the birds travel along with us? Whenever the train stopped in the night why
would I see the same moon and stars and why they do not move backward? <o:p></o:p></p>
<p class="MsoNormal">Similarly, when I stood on the shores of Vizag beach, why do
the colours of the sea keep changing? Why would my feet soaked in water sink in
sand? <o:p></o:p></p>
<p class="MsoNormal">I hear the small-size carts selling ice creams, fried
groundnuts, a tasty dal mixture made just ready for you but packed in a news
paper cone. They are mouth-watering and irresistible. I make a pressing demand
and when not responded readily cried so loud that the world would be lost
without having them. The parents concede. There was no fear of pollution,
contamination, or threat of food poisoning!! <o:p></o:p></p>
<p class="MsoNormal">As a child, perhaps I never thought that my neighbour
belonged to a different caste. I happily shared whatever I had with him. I sat
by his side in the government school, for there were no private schools. I
played with him and soiled my clothes in the process only to have a beating and
a bath on my return. The days were merry and 14<sup>th</sup> November etched in
my memory. How many children from a poor or lower middle class still enjoy the
same way? May not be many as the schools are no longer the same. <o:p></o:p></p>
<p class="MsoNormal">Teachers in the primary and secondary schools were a great
inspiration not withstanding their unsparing rod to teach a lesson. The parents
never questioned the teacher. But they used to question the teachers if their
children got poor marks in a subject! Those days were different but certainly
worth a ton of lovely remembrance. <o:p></o:p></p>
<p class="MsoNormal"><a href="https://timesofindia.indiatimes.com/blogs/fincop/recalling-the-child-in-you-today/?val=3728">https://timesofindia.indiatimes.com/blogs/fincop/recalling-the-child-in-you-today/?val=3728</a><o:p></o:p></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-86309948009506496702022-09-26T07:25:00.001+05:302022-09-26T07:25:54.127+05:30Mahalaya Amavasya - the Day Leads Many into myriad of lights.<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiF67HmPPT-tDeWfGAg4Hhkhth5bbVT9WhkJrM8DPHaoqr1l-Y2nrUrVXWOBG-rlF4ybRdEjji6UTlVs3nXq6EGMGZjMBbEzz2pY6k_Bi4FxxKT_I65BZmRbKRU2umsS8mUbWqFXa8jjzArertmzPMshQESHUf9h_AgqgFxmKgtWR6_83AEltUAGAcX0Q/s3470/parents.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3470" data-original-width="2864" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiF67HmPPT-tDeWfGAg4Hhkhth5bbVT9WhkJrM8DPHaoqr1l-Y2nrUrVXWOBG-rlF4ybRdEjji6UTlVs3nXq6EGMGZjMBbEzz2pY6k_Bi4FxxKT_I65BZmRbKRU2umsS8mUbWqFXa8jjzArertmzPMshQESHUf9h_AgqgFxmKgtWR6_83AEltUAGAcX0Q/s320/parents.jpg" width="264" /></a></div><br /><p></p><p class="MsoNormal">This Dark Day Leads Many Into Myriad of Lights<o:p></o:p></p>
<p class="MsoNormal">B. Yerram Raju<o:p></o:p></p>
<p class="MsoNormal">‘Mahalaya Amavasya’ is a day we recall our ancestors and pay
homage to them. There lies the culture, compassion, a colossus of learning that
shaped lives for those who recall them. At least for me, scripting my
autobiography at the dawn of eighty years – <i><span style="color: #4472c4; mso-themecolor: accent1;">‘Roots to Fruits: The Journey of a Development Banker’</span></i>,
is a partial justice to the ancestors as it covered only the upbringing by my
beloved parents and shaping my career and life as a banker and beyond.<o:p></o:p></p>
<p class="MsoNormal">My grandfather, bearing the same name as mine, for, all the
eldest sons in the family are so named if the first child was a male, was a
courtier under a zamindar in Madugula in Visakhapatnam district. This is just a
village now. He never gave the feeling of something wanting in his life.<o:p></o:p></p>
<p class="MsoNormal">Families were large in those days. If Varaha Venkata Giri,
our former President had fourteen children in his family, my father gave birth
to twelve. They believed that children well brought up would be true assets to
the family and nation. At least my parents proved right in this thinking. Six
sons and six daughters – family balance sheet is balanced. <o:p></o:p></p>
<p class="MsoNormal">Parents taught through the way they lived and the way they
shared their beliefs. They taught us calling them ‘nanna’ (father) and ‘amma’
(mother) and not dad and mom. The four letters in Telugu – nanna and amma – are
a symphony of nature, a bondage for life. The only earning member, nanna, was a
poor cashier in a leading bank of those British days. Work discipline led him
also to disciplining the family. My mother, daughter of a police sub-inspector
was the third of the fourteen siblings of her family. Amma lost her father
young while my father lost her Amma young similarly. Amma studied up to fifth
standard. That did not deter her from reading Ramayana, Mahabharat,
Bhagavadgita, Devi Bhagavatham etc., to teach her children all they should
learn to lead a life of honesty and simplicity. <o:p></o:p></p>
<p class="MsoNormal">Austerity was the watchword for my dad although ostentation
was the watch word for my grandfather since he was with a zamindar. The reason:
he had no mother to teach and was borne under the munificence of his elder
brother who used him as a servant in the house though educated him up to
intermediate of the British days. Nanna taught us the austerity and some may
say in hindsight, it was borne of necessity. This austerity among the twelve of
us was reinforced by the economics taught by my Amma. <o:p></o:p></p>
<p class="MsoNormal">Atithi Devo Bhava – was scrupulously followed. When Nanna
was posted to Tirupati as Head Cashier of SBI, he felt jubilant. Both Amma and
Nanna felt that they would have the opportunity to visit temples everyday and
visit Lord Venkateswara closely and play host to several friends and relatives
who come to Tirupati on pilgrimage, irrespective of their capacity to entertain
them at home. My father used to walk up Tirumala Hills as buses were few and
far between the day those days, not once but sometimes twice, just to accompany
the guests and help them have good Darshan. <o:p></o:p></p>
<p class="MsoNormal">Amma just asked for a cow and buffalo at home to take care
of the nutritious requirements of her children and feed the guests. Her dairy
economy gave us the freedom from want. My second brother, self-made, became a
professor in Yoga at Chennai, post retirement. My teachers’ kindness and
charity helped the brilliance of my third brother to pursue medical career.
Nanna did not hesitate to borrow a few thousands to send him to write the
qualifying examination that was being held in those days only in Singapore –
ECFMG (Entrance Course for Medical Graduates). He is a gold medallist in
Medicine. He settled as a leading gastroenterologist in Texas, US. The Eleventh
among us, settled as a chartered professional accountant in Austin. <o:p></o:p></p>
<p class="MsoNormal">Integrity, honesty, austerity, simplicity, philanthropy<span style="mso-spacerun: yes;"> </span>and courteousness, the cultural moorings of
this great country are all there in this big family to which I have the honour
to belong. Ancestors have much to teach and this darkest night of Amavasya has
many lights twinkling in the minds of one hundred eight siblings of my parents.
Life may be hard-earned but fully worth every penny and my ancestors are
watching with joy and pride. <span style="mso-spacerun: yes;"> </span><o:p></o:p></p>
<p class="MsoNormal"><a href="https://timesofindia.indiatimes.com/blogs/fincop/this-dark-day-leads-many-into-myriad-of-lights/">https://timesofindia.indiatimes.com/blogs/fincop/this-dark-day-leads-many-into-myriad-of-lights/</a>
- a couple of corrections carried out. <o:p></o:p></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-66911812224347899992022-07-29T16:38:00.000+05:302022-07-29T16:38:00.809+05:30Financial Inclusion on the path of realization<p> </p><div class="tsh-ads ads-head" style="align-items: center; box-sizing: border-box; display: flex; justify-content: center; min-height: 200px; padding: 10px 0px; text-align: center;"><amp-ad aria-label="true" class="i-amphtml-layout-fixed i-amphtml-layout-size-defined i-amphtml-element i-amphtml-built i-amphtml-layout" data-a4a-upgrade-type="amp-ad-network-doubleclick-impl" data-amp-slot-index="0" data-block-on-consent="" data-google-query-id="CMXSusL5nfkCFRCWAAAd0WYDAA" data-multi-size="728x90,980x200" data-slot="/7176/TOI/TOI_Home/TOI_Home_Blogs/TOI_ROS_ATF_HOM_BLG_728" height="200" i-amphtml-layout="fixed" json="{"targeting":{"Tmpl_SCN":["articleshow_Economy"]}}" style="--loader-delay-offset: 84ms !important; 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Yerram Raju" class="amp-wp-enforced-sizes i-amphtml-layout-intrinsic i-amphtml-layout-size-defined i-amphtml-element i-amphtml-built i-amphtml-layout" height="38" i-amphtml-auto-lightbox-visited="" i-amphtml-layout="intrinsic" layout="intrinsic" src="https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/04/yerram-personal-52x38.jpg" style="border-radius: 50%; border: 1px solid rgb(246, 246, 246); box-sizing: border-box; display: inline-block; height: 80px; margin: 0px auto; max-width: 100%; object-fit: cover; overflow: hidden !important; position: relative; vertical-align: middle; width: 80px;" width="52"><i-amphtml-sizer class="i-amphtml-sizer" slot="i-amphtml-svc" style="box-sizing: border-box; display: block !important; max-width: 100%;"><img alt="" aria-hidden="true" class="i-amphtml-intrinsic-sizer" i-amphtml-auto-lightbox-visited="" role="presentation" src="data:image/svg+xml;base64,PHN2ZyBoZWlnaHQ9JzM4JyB3aWR0aD0nNTInIHhtbG5zPSdodHRwOi8vd3d3LnczLm9yZy8yMDAwL3N2ZycgdmVyc2lvbj0nMS4xJy8+" style="box-sizing: border-box; display: block !important; max-width: 100%;" /></i-amphtml-sizer><img alt="B. Yerram Raju" class="i-amphtml-fill-content i-amphtml-replaced-content" decoding="async" i-amphtml-auto-lightbox-visited="" src="https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/04/yerram-personal-52x38.jpg" style="border: none !important; box-sizing: border-box; display: block; height: 0px; inset: 0px; margin: auto; max-height: 100%; max-width: 100%; min-height: 100%; min-width: 100%; object-fit: cover; padding: 0px !important; position: absolute; width: 0px;" /></amp-img></figure></a><a href="https://timesofindia.indiatimes.com/blogs/author/b-yerram-raju/" style="box-sizing: border-box; color: #e21b22; text-decoration-line: none;"><h6 style="box-sizing: border-box; color: #1a1a1a; font-family: Montserrat, Arial, Helvetica, sans-serif; font-size: 12px; line-height: 16px; margin-bottom: 4px; margin-top: 0px; text-align: center; text-rendering: optimizelegibility;">B. Yerram Raju</h6></a><p style="box-sizing: border-box; color: #1a1a1a; font-size: 12px; line-height: 16px; margin-bottom: 0px; margin-top: 0px;">Dr B. Yerram Raju, Ph.D., from Andhra University is a banker turned economist having worked with the SBI for nearly three decades. He was Senior Faculty and Dean of ASCI for n <a class="more csrpoint" id="authorbutton2" role="button" style="box-sizing: border-box; color: #595959; cursor: pointer;" tabindex="0">... MORE</a></p></div></div><div class="main-content single-article-content" style="box-sizing: border-box; flex: 1 1 0%; padding-left: 20px; padding-right: 20px;"><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">In a recent interview to prof. Nicholas Stern in New Delhi, PM Modi emphasised the need to rethink on development beyond the narrow economic and financial sense and more holistically about sustainable, inclusive, and resilient growth that includes human development.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">In this brief article, it is proposed to review the financial inclusion efforts in the light of RBI Annual Report 2022.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;"><amp-img alt="" class="aligncenter size-full wp-image-184914 amp-wp-enforced-sizes i-amphtml-layout-intrinsic i-amphtml-layout-size-defined i-amphtml-element i-amphtml-built i-amphtml-layout" disable-inline-width="" height="188" i-amphtml-auto-lightbox-visited="" i-amphtml-layout="intrinsic" layout="intrinsic" lightbox="i-amphtml-auto-lightbox-0" sizes="(max-width: 641px) 100vw, 641px" src="https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-1.png" srcset="https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-1.png 641w, https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-1-300x88.png 300w, https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-1-52x15.png 52w" style="box-sizing: border-box; clear: both; display: block; height: auto; max-width: 100%; overflow: hidden !important; position: relative; text-align: center; vertical-align: middle;" width="641"><i-amphtml-sizer class="i-amphtml-sizer" slot="i-amphtml-svc" style="box-sizing: border-box; display: block !important; max-width: 100%;"><img alt="" aria-hidden="true" class="i-amphtml-intrinsic-sizer" i-amphtml-auto-lightbox-visited="" role="presentation" src="data:image/svg+xml;base64,PHN2ZyBoZWlnaHQ9JzE4OCcgd2lkdGg9JzY0MScgeG1sbnM9J2h0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnJyB2ZXJzaW9uPScxLjEnLz4=" style="box-sizing: border-box; display: block !important; max-width: 100%;" /></i-amphtml-sizer><img alt="" class="i-amphtml-fill-content i-amphtml-replaced-content" decoding="async" i-amphtml-auto-lightbox-visited="" sizes="(max-width: 641px) 100vw, 641px" src="https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-1.png" srcset="https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-1.png 641w, https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-1-300x88.png 300w, https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-1-52x15.png 52w" style="border: none !important; box-sizing: border-box; display: block; height: 0px; inset: 0px; margin: auto; max-height: 100%; max-width: 100%; min-height: 100%; min-width: 100%; object-fit: contain; padding: 0px !important; position: absolute; width: 0px;" /></amp-img></p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">In a blog put out by the World Bank (worldbank.org/all about finance/blog) inflows and usages illustratively affirms the achievements of financial inclusion, mentioning that 71 percent of adults in developing economies have an account.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">RBI constructed a composite Findex and tracked the milestones of financial inclusion and financial learning. 2021 agenda is a continuation of the effort in financial inclusion from 2005.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">The real instrument for giving a big push came with the opening of Jan Dhan Account, introduction of mobile link to the accounts through Aadhar (JAM), opening no-frills accounts were all the initiatives of the Government in the financial sector, that the RBI cannot take credit for. The single factor responsible for India ranking high in financial inclusion is technology, low cost network availability and easy availability of mobile phones that include smart phones. 2.5lakh villages have been provided broadband connectivity.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">Payment options became easier and convenient, thanks to the National Payment Corporation of India’s Unified Payment Solutions (UPI). Every Bank started mobile instrumentality for payment solution followed by NBFCs and FINTECHs.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">All this was possible because of the aggressive efforts of the government in ensuring digital penetration that saw street vendors taking payments through the PAYTM QR code. Out of 140crore population, 110crore use mobile phones. 6.8crore have bank accounts and 64.67 percent use omnichannel for their online spending. National E-governance Division’s Rapid Assessment System, Public Fund management, Single Nodal Account, and Bharat Bill Payment System (NPCS-owned) ensured that the Direct Benefit Transfers to the farmers, pensioners and others receiving incentives reached in time.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">Government of India and RBI together have saved the cost of delivery of incentives and reduced corruption at the delivery points of the government benefits. It annulled the statement of Rajiv Gandhi once made mentioning in a meeting in Orissa that only 16 percent of the intended benefits under the government schemes reached the intended. Yet, ‘the task of financial inclusion is onerous, but is, by no means, insurmountable’, to quote Deepak Mohanty’s Financial Inclusion Committee Report of Deepak Mohanty.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">Shaktikant Das as Governor took the initiative of putting in place a national strategy for FI that included building a composite index for financial inclusion, FI-INDEX. According to RBI Annual Report, 2022, “The annual FI-Index for the period ending March 2021 stood at 53.9 as against 43.4 for the period ending March 2017, capturing the progress made in this area. The FI-Index will be published annually in July every year.” It also claims a number of initiatives taken towards strengthening financial inclusion.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">According to the Report, the key achievement under NSFI during the year was ensuring the availability of a banking outlet within a 5 km radius of every village/hamlet of 500 households in hilly areas, in 99.94 per cent of the identified villages. Data in the Annual Report shows that village branches came down by 2751 during the calendar year 2021. Business correspondents (BCs) in villages with population below 2000 also came down by 18,429. Banking outlets in villages in other modes also came down by 922. Thus, the reach to the people in general suffered during this pandemic year.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">Its efforts in financial learning through Centers of Financial Learning and workbooks on financial literacy through schools for classes VI-X initiated by Duvvuri Subba Rao as RBI Governor, seem to have laudatory effect going by the increase in the number of Basic Savings Bank Accounts both online and offline.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;"><strong style="box-sizing: border-box;">Disappointing Credit</strong></p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">Credit as medium of financial inclusion leaves several gaps to conclude that the FI-Index increase reflected reality. Priority sector credit, by itself, is no clear indicator of financial inclusion in as much as number of accounts does not reflect the number of either farmers covered, or number of micro and small enterprises covered. There is no data in the report on the number of marginal, small and tenant farmers financed. Priority Sector Lending Certificates (PSLCs) is a shadow achievement in the sector while the window from Small Finance Banks (SFBs) to NBFC-MFIs and MFIs (Trusts and Societies) could reflect true inclusive finance reach expansion as the per capita lending to their clients cannot exceed Rs.25lakhs. Details of E-Negotiable Warehouse Receipts do not give data on the reach of this instrument to the marginal and small farmers. The number of KCCs are part of agricultural credit total given in the priority sector dispensation.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">Deepak Mohanty Committee felt that MSMEs are the best vehicle for inclusive growth, job creation and poverty alleviation. While the poverty has been reduced to 15 percent in 2021 according to the OECD report from 26 percent a decade ago, notwithstanding various policy support measures for MSMEs, access to adequate credit still remains elusive for them as revealed by the following table.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;"><amp-img alt="" class="aligncenter size-full wp-image-184915 amp-wp-enforced-sizes i-amphtml-layout-intrinsic i-amphtml-layout-size-defined i-amphtml-element i-amphtml-built i-amphtml-layout" disable-inline-width="" height="200" i-amphtml-auto-lightbox-visited="" i-amphtml-layout="intrinsic" layout="intrinsic" lightbox="i-amphtml-auto-lightbox-2" sizes="(max-width: 538px) 100vw, 538px" src="https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-2.png" srcset="https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-2.png 538w, https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-2-300x112.png 300w, https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-2-52x19.png 52w" style="box-sizing: border-box; clear: both; display: block; height: auto; max-width: 100%; overflow: hidden !important; position: relative; text-align: center; vertical-align: middle;" width="538"><i-amphtml-sizer class="i-amphtml-sizer" slot="i-amphtml-svc" style="box-sizing: border-box; display: block !important; max-width: 100%;"><img alt="" aria-hidden="true" class="i-amphtml-intrinsic-sizer" i-amphtml-auto-lightbox-visited="" role="presentation" src="data:image/svg+xml;base64,PHN2ZyBoZWlnaHQ9JzIwMCcgd2lkdGg9JzUzOCcgeG1sbnM9J2h0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnJyB2ZXJzaW9uPScxLjEnLz4=" style="box-sizing: border-box; display: block !important; max-width: 100%;" /></i-amphtml-sizer><img alt="" class="i-amphtml-fill-content i-amphtml-replaced-content" decoding="async" sizes="(max-width: 538px) 100vw, 538px" src="https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-2.png" srcset="https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-2.png 538w, https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-2-300x112.png 300w, https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2022/07/Gfx-2-52x19.png 52w" style="border: none !important; box-sizing: border-box; display: block; height: 0px; inset: 0px; margin: auto; max-height: 100%; max-width: 100%; min-height: 100%; min-width: 100%; object-fit: contain; padding: 0px !important; position: absolute; width: 0px;" /></amp-img></p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">RBI reasons out that the decline in number of accounts is due to mandatory registration by Udyam portal of the Ministry of MSME, GoI. Each enterprise can have more than two accounts, both under the category of investment credit and working capital credit. After Atma Nirbhar Bharat Abhiyan, the number of accounts may have gone up for the same enterprises!! The rationale therefore looks peculiar as there is no mention of the number of enterprises financed by the banks but only number of accounts.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">Looking at the increase in lending to micro and small versus medium-sized enterprises, it would be presumptuous to say that banks efforts towards financial inclusion have been exemplary. The other instruments of inclusion are MUDRA loans, loans to street vendors, and the extent of credit guarantee scheme as measures to accelerate credit to the micro enterprises and these accounts are all part of the micro category in the table. It is not, however, clear about the number of manufacturing micro and small enterprises financed.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">The most significant effort of the RBI is expansion of the CFL project by setting up 1,199 Centers for Financial Literacy (CFLs) covering 3,592 blocks across the country and increasing financial education levels across the country. The other significant achievement is in the area of strengthening digital infrastructure by way of institutionalising the Payment Infrastructure Development Fund (PIDF), launch of Digital Payment Index (DPI), implementation and scaling up the pilot project on expanding and deepening of digital payments ecosystem and laying of Optical Fibre Cable (OFC) under the Bharat Net project of the Government of India (GoI) to provide broadband connectivity to all 2.5 lakh Gram Panchayats across the country. The Sachet Portal covering all the regulators as a grievance redress mechanism does not have any data to support the claim in the Report.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">IV.1 Cooperative Banks both in the urban and rural areas have a significant capacity to enhance the financial inclusion effort and they should be supported through counselling, mentoring and follow-up by the regional offices of the RBI.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">IV.2 The outcome is good, but the output requires much more effort at the ground level, both by the commercial banks, Regional Rural Banks, SFBs, and BCs. It is high time that RBI improves the data on financial inclusion efforts more in terms of number of persons than in terms of number of accounts.</p><p style="box-sizing: border-box; color: #1a1a1a; font-size: 16px; line-height: 28px; margin-bottom: 16px; margin-top: 0px;">IV.3 The author is a former senior banker, economist, and risk management specialist. 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border: 1px solid rgb(246, 246, 246); box-sizing: border-box; display: inline-block; height: 60px; max-width: 100%; object-fit: cover; overflow: hidden !important; position: relative; vertical-align: middle; width: 60px;" width="52"><i-amphtml-sizer class="i-amphtml-sizer" slot="i-amphtml-svc" style="box-sizing: border-box; display: block !important; max-width: 100%;"><img alt="" aria-hidden="true" class="i-amphtml-intrinsic-sizer" i-amphtml-auto-lightbox-visited="" role="presentation" src="data:image/svg+xml;base64,PHN2ZyBoZWlnaHQ9JzQ5JyB3aWR0aD0nNTInIHhtbG5zPSdodHRwOi8vd3d3LnczLm9yZy8yMDAwL3N2ZycgdmVyc2lvbj0nMS4xJy8+" style="box-sizing: border-box; display: block !important; max-width: 100%;" /></i-amphtml-sizer><img alt="Twinkle Khanna" class="i-amphtml-fill-content i-amphtml-replaced-content" decoding="async" src="https://static.toiimg.com/imagenext/toiblogs/photo/blogs/wp-content/uploads/2014/11/tkprofile1-52x49.jpg" style="border: none !important; box-sizing: border-box; display: block; height: 0px; inset: 0px; margin: auto; max-height: 100%; max-width: 100%; min-height: 100%; min-width: 100%; object-fit: cover; padding: 0px !important; position: absolute; width: 0px;" /></amp-img></figure><div class="detail" style="box-sizing: border-box;"><h6 style="box-sizing: border-box; color: #1a1a1a; font-family: Montserrat, Arial, Helvetica, sans-serif; font-size: 14px; line-height: 20px; margin-bottom: 4px; margin-top: 0px; text-rendering: optimizelegibility;"><a href="https://timesofindia.indiatimes.com/blogs/author/twinklekhanna/" style="box-sizing: border-box; color: #1a1a1a; text-decoration-line: none;">Twinkle Khanna</a></h6><p style="-webkit-box-orient: vertical; -webkit-line-clamp: 1; box-sizing: border-box; color: #595959; display: -webkit-box; font-size: 12px; line-height: 16px; margin-bottom: 0px; margin-top: 0px; overflow: hidden;">Mrs Funnybones</p></div></li></ul></div></div><div class="widget" style="box-sizing: border-box; margin-bottom: 40px;"><div class="advertisment" style="background: rgba(0, 0, 0, 0.03); 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margin-bottom: 8px;"><br /></div></div></div></div><div><br /></div></div></footer>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-32885272956384341312022-07-02T17:53:00.001+05:302022-07-02T17:53:10.920+05:30Privatisation of Banks - Reversing the history<p> </p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Privatisation of Banks –
Reversing the History<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: Arial, sans-serif; font-size: 12pt;">Good economy and bad banking
can never go together. But will privatisation usher in good banking? Why at all
the banks that were once private, were nationalised in 1969 and later
liberalised in 1991? These are some questions that occur to any customer of a
bank when he sees that the union government would like to privatise the
nationalised banks by amending the Banking Companies (Acquisition and Transfer
of Undertakings) Act, 1970 in the monsoon session of the Parliament.</span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">1970 Banking Act required the
union government to hold at least 51 percent of equity. When Mrs Indira Gandhi
overnight nationalised the banks in two bouts – first in 1969, fourteen and
second in 1980, six banks with different capital thresholds, it was just not a
political move. Banking as a public good, was not within the reach of millions,
more particularly, the neediest, in the rural areas then. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">When the first stage of
reforms started in 1991, nationalised banks were found to have achieved the
expectations, ushering in barefoot banking and phenomenally improving the reach
through the Lead Bank Scheme and Service Area approach, <span style="mso-spacerun: yes;"> </span>al bait at the cost of efficiency. The reforms
helped cleaning up the banks’ balance sheets, introduced asset-liability
management, prudential management, and better and responsible customer service.
Within fourteen years, they became symbols of inefficiency reflected in large
accumulation of non-performing assets (NPAs).<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Inclusive banking approach,
post 2005, led to the creation of banking correspondents (BCs), Small Finance
Banks, Small Payment Banks. While in 1991 there were 76 scheduled commercial
banks, excluding the regional rural banks and urban cooperative banks, the
comparable figure now is 93.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">From 60,220 total bank
branches in 1991 – 35,206 rural, 11,334 semi-urban, 8,046 urban and 5,624
metropolitan branches, the total grew in 2022 to 158,373 (rural branches -52,773,
the least to grow, semi-urban-43,683 branches; urban branches- 30,638, and
31,279 metropolitan branches). On average a branch covers 9,500 persons now
against 14,000 in 1991.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Businesswise, </span></b><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">the
banks had Rs3.8 lakh crore deposits and a Rs1.32 lakh crore credit
portfolio. Three decades later, the deposit portfolio is over Rs155.7 lakh
crore and credit portfolio, Rs108.8 lakh crore. Credit – deposit ratio in terms
of percentage scaled up from 34.2 to 69.88, that is more than twice. The cash
reserve ratio or the portion of deposits that commercial banks keep with the
central bank was 15% in 1991, as against 3%. RBI ensured more liquidity
in the hands of the banks to lend responsibly, while answering the needs of the
society.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Banks have been given freedom
to charge interest rates to different categories of the borrowers based on
their risk perception. The core content changed in the banks. Although
technology took the front seat, cost of banking went up over the years. During
the last eight years, Jan Dhan accounts brought more than 43 crore persons into
the fold of banking.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">The decadal data between 2000 and 2020 indicates
growth in advances in both private and public sector banks and their NPAs too.
However, to expect banks to lend without NPAs will be amounting to calling on
banks to give up risk appetite. Also, creating mega banks and Bad Bank would
extinguish neither their toxic assets nor reduce their losses. The government
ignored the experience of the 2008 recession that warned ‘too big to fail’
banks would demand more resources from the exchequer than earlier, when they
created the monolithic SBI and merged major PSBs to be just ten now from 28 in
1991.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Private banks, foreign banks,
and PSBs are not on par in the eyes of the regulator when it comes to meeting
the priority sector obligations. While agriculture, small industries and small
businesses, housing for the poor, education for the poor and transport
including boats and catamarans were the priority sectors post-nationalisation,
their composition and content changed dramatically during the last thirty
years. Indian Banks Association, the lobbying agent for the banks, negotiated
for redefining the priorities from time to time. The forty percent of total
lending earmarked for this purpose is diluted for the poor and disadvantaged –
the very purpose of prioritisation.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Shaktikant Das, RBI Governor, speaking at Ahmedabad
University in 2019, recalled the status of banking pre-nationalisation:<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">“Five cities in the country, viz, Ahmedabad, Mumbai,
Delhi, Kolkata, and Chennai accounted for around 44% of the bank deposits and
60% of the out-standing bank credit in 1969. This led to the widespread
political perception that, left to themselves, the private sector banks were
not sufficiently aware of their larger responsibilities towards society.”
Quoting RBI’s History of Banking Vol III, he said, “nationalisation of banks
was thought of as a solution for greater penetration of banking that excluded
617 towns out of 2,700 in the country. And, even worse, out of about 6,00,000
villages, hardly 5,000 had banks. The spread, too, was uneven… ”</span><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">The 2008 recession also led to demand for
nationalisation in the UK, Australia, and the US to save the interests of the
depositors and bondholders. The very purpose of nationalisation — namely,
serving the unbanked and under-banked — is yet to reach its frontier. Financial
inclusion cannot afford the luxury of complete privatisation. In fact,
coexistence of private and public sector banks will lead to a healthy
competition if governance issues in PSU banks are adequately addressed.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">It is wise to turn the pages of reforms suggested by
the Narasimham Committee-II and reiterated at Gyan Sangam-1 (Retreat for Banks
and Financial Institutions), that the government would do well to provide full
autonomy to PSU banks, not interfere in transfers and postings, and issue of
loans. Behest lending should stop with setting goals by the RBI. Owner cannot
be regulator. It can at best be a supervisor to ensure their healthy
functioning. Government seems to have realized that its capacity to supervise
is highly limited and therefore, it would be better to give up such
responsibility. It must have also realized that its ability to improve
governance in PSBs has reached its limits.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">However, there is no evidence that all is well with
the private banks, and they can deliver better to the people the banking
requirements than PSBs.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">The present government gives
the impression that growth comes from the rich and the rich do not cry on
inflation. They can pursue non-inclusive growth agenda more effectively if they
change the institutional architecture, so that expenditure on institutions
meant for delivering to the poor can be minimised, if not eliminated. This is
undesirable both politically and economically. While privatisation by itself is
not bad, the timing and motive behind the move at the moment, are suspect,
particularly after the consolidation of PSBs took place. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">The views expressed are
author’s own. The author is an economist and risk management specialist. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"><a href="https://timesofindia.indiatimes.com/blogs/fincop/privatisation-of-banks-reversing-the-history/">https://timesofindia.indiatimes.com/blogs/fincop/privatisation-of-banks-reversing-the-history/</a>
published on 30.06.2022 <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"><o:p> </o:p></span></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-88885004384224306002022-06-27T04:13:00.002+05:302022-06-27T04:13:40.807+05:30Responsibility and Responsiveness<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><b><span style="font-family: "Arial",sans-serif; font-size: 14.0pt; line-height: 107%;">Responsibility and
Responsiveness</span></b><b><span style="font-family: "Arial",sans-serif; font-size: 16.0pt; line-height: 107%;"><o:p></o:p></span></b></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><br /></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Thanks to WhatsApp, if you put two blue ticks
on the message, it can be a mere acknowledgement that the reader has seen your
message. It does not mean that he or she has read the message. Similarly, your
mailers also get responses. Today, most institutions tagged their grievance
redress system to technology. Its implications should be seen to be believed.
This blog addresses a few common occurrences in that direction and the best
that could be done, if the system has to improve. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">My friend went to his bank branch to
enquire about a transaction that he did not originate. At the counter he
approached, he gets a response that he would verify the system and tell him. He
confirms that the transaction reflected was correct and that the system says
so. If he has any further clarification to seek, he may contact the Manager.
The Manager directs him back to the Accounts Manager, who confirms the response
of the first counter clerk. He is directed to lodge a complaint on the bank’s
website. One is dismayed at the responsibility of the officials. Is this unique
to a branch or a bank? This is universal. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">When you lodge a complaint to a bank or a
Company or a mobile operator or a NBFC, you will receive a message on either
your email or mobile phone that ‘Your complaint has been received. It will be
responded to within 24/48 hours as the case may be.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">When you would like to complain on the
website on the contact point, you will be directed to record your complaint on
a series of options that the institution chooses to address that may not
reflect the concern you may want to raise with that institution. When you click
on ‘others’ option, it restricts your message not to cross 100 words in most
cases. You should have learnt precis writing in your school days. You are asked
to enter the <i>captcha. </i>After repeated attempts, you may succeed, if you
are lucky. You wait for the declared time only to receive another message that
the complaint has been referred to the concerned official from whom you will
receive a response shortly.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">In case you are disappointed and try to
reach to the Chairman/Managing Director/CEO, you would not have received even a
simple acknowledgement. Remember, this top executive at least three or four personal secretaries of
sufficient seniority in the organisation and that does not help the response
system. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Government departments are a shade better
if the grievance is addressed in person or manually. If you use technology, the
templated response system gets activated and is no different from the financial
or non-financial institutions.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">We often hear of the remarkable success of
the technology in improving access to the citizen. If you are tech-savvy, you
may do all transactions using network you work with. The digitalized world has
enabled smart phones to do all that anyone does manually. Your smart watch
records your blood pressure, water or coffee intake, number of steps you
walked, and you have any problem with either your mobile phone or the smart
watch, there will be very few lucky who get their complaint redressed. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Technology has enabled many to benefit
immensely that include myriad of fraudsters. The frauds in financial
institutions today are in millions and are mostly unrecoverable. A recent post
in Money Life blog mentioned that during the last ten years bank frauds touched
Rs.5096crore of which only Rs.127cr could be recovered. There is no record of
cyber frauds with the regulator!! <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">I recall Sadguru Jaggy Vasudev’s
definition of responsibility: ‘Ability to respond.’ He adds: “Responsibility is
not compulsive action; it offers you the choice of action.” In several cases, such action is missing
although choices are visible. Responsiveness is the willingness to respond
coupled with ability. Willingness to respond exists sparsely and therefore, one
notices the inaction on the part of institutions against several types of
grievance. Many grievances as a result, reach the courts of justice. Several
complaints may not have cognizable evidence and so, even genuine complaints have
the chance of being treated as frivolous. Where does the remedy lie?<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Entire grievance redress system in all
departments with citizen interface, should be evaluated if the nation were to
really commit to ‘ease of doing business’ and making our democracy work in the
best interest of the welfare of the citizen. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"> </span></p>
<p class="MsoNormal" style="margin-bottom: 8.0pt; margin-left: 1.0cm; margin-right: 1.0cm; margin-top: 0cm; text-align: justify;"><a href="https://timesofindia.indiatimes.com/blogs/fincop/responsibility-and-responsiveness/"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">https://timesofindia.indiatimes.com/blogs/fincop/responsibility-and-responsiveness/</span></a><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"><o:p></o:p></span></p>
<p><span style="font-family: Arial, sans-serif; font-size: 12pt; text-align: justify;"> </span> </p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-59500510831321614132022-06-12T22:53:00.005+05:302022-06-12T22:53:43.871+05:30Pensioners of SBI need redress<p> </p><p class="MsoNormal">Government patronage and Institutional apathy for the Senior
Citizens run parallelly<o:p></o:p></p>
<p class="MsoNormal">B. Yerram Raju*<o:p></o:p></p>
<p class="MsoNormal">I am 80 years old and retired from the country’s biggest
Bank, State Bank of India as a Regional Manager in 1994. I read with great
interest the story put out by the Economic Times today from the horse’s mouth –
the Minister. <o:p></o:p></p>
<p class="MsoNormal">The synopsis of the story in Economic Times of 11<sup>th</sup>
June 2022 attracted me most. India has 8.6 percent of the globally aged and
such population is likely to move to 19 percent by the end of 2050. <o:p></o:p></p>
<p class="MsoNormal">Despite Article 38(1), 39 (e), 41 and 46 making it incumbent
on the states to provide public assistance at the old age, mysteriously, lot
many cases are hibernating in different Courts of justice, with Supreme Court,
no exception.<o:p></o:p></p>
<p class="MsoNormal">Nearly ten thousand senior citizens who retired between 1991
and 1997 from the SBI, that include the Chief General Managers to Assistant
General Managers, draw a measly pension of around Rs.28,000 per month,
including Dearness allowance. With inflation now, their savings are getting
negative returns. A few facts need public attention.<o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 54.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-US" style="mso-ansi-language: EN-US; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span lang="EN-US" style="mso-ansi-language: EN-US;">Government appointed a Committee
with Murmur as Chairman, and its report is still not implemented. Murmur
Committee had recommended that the basic pension of Rs.4250/- has to be
converted to Rs.7120/-. The eighth Bipartite retirees were paid pension on pay
scale of eighth Bipartite from 01.05.2005; that is, those who retired between
01.11.2002 to 30.04.2005 were paid pension on old scale of Rs.4250/- whereas
earlier seventh Bipartite Retirees were already paid pension of Rs.7120/-. This
anomaly arose because of the policy of discrimination followed by the SBI and
IBA while settling the issue of pensioners of earlier era. <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 54.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-US" style="mso-ansi-language: EN-US; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span lang="EN-US" style="mso-ansi-language: EN-US;">D.A. Formula – In the old Scheme
D.A. on Pension was paid on Structured basis. With eighth Bipartite Salary
Structure the System of 100% neutralization was introduced. Only 5th, 6th &
7th Bipartite Retirees are paid Structured D.A. The Federation submitted that
when 100% neutralization has been accepted and introduced why deprive old
Pensioners from this benefit? A small number of such retirees have survived,
and it is not going to cost huge expenditure to the Bank.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 54.0pt; mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-US" style="mso-ansi-language: EN-US; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span lang="EN-US" style="mso-ansi-language: EN-US;">Commutation factor in SBI: The SBI
retirees suffer double loss. The factor which is available in other Banks at
the age of 70 is offered to SBI Retirees at the age of 60. As it is all the
official get 40% pension. They, therefore, suffer double loss. We emphasized
that Ministry should issue directives to provide commutation as per Industry
Level norms to SBI Retirees.<o:p></o:p></span></p>
<p class="MsoNormal">Every effort made by the Federation of SBI Pensioners’
Association and even some individuals could not resolve the issue of the rise
of basic pension from Rs.4,250 per month to the level obtaining in 2005 even
after a wide range of discussions with the Indian Banks’ Association, SBI, and
Department of Financial Services, Government of India. SBI has huge pension
fund balances. Resources are not the issue for resolution.<o:p></o:p></p>
<p class="MsoNormal">Two questions become prominent here: 1. Despite SBI, a
statutory institution set up under the SBI Act, having enough resources to
raise the pension to such group, why should the bank look to the approval of
DFS, GoI? 2. Why the DFS could not take the route of arbitration and
conciliation instead of procrastinating the issue in the name and style of
‘matter is sub-judice’ when they were requested for approval, on the ground
that a few individuals, seeing no easy solution raised the case with the Courts?
<o:p></o:p></p>
<p class="MsoNormal">We not merely look forward to a peaceful and healthy life
but also a life of dignity and honour. Government of India should bring in the
issues of old age and pensions of statutory institutions under the ambit of the
Department of Administrative Reforms, Pensions, and Pensioners’ Welfare to
direct the institutions concerned to settle such matters through its
arbitration not withstanding the cases in the Courts. Courts, to my knowledge
and understanding, will be too happy if the parties come to a compromise and
withdraw the cases. <o:p></o:p></p>
<p class="MsoNormal">National Policy for Older Persons (NP0P) should encompass
all the older persons irrespective of the affiliation to a PSU and Atul Vayo
Abhudaya Yojana that acts as umbrella for all government-aided schemes for the
elderly, and SAGE would be meaningful instruments when their applicability is
universal. <o:p></o:p></p>
<p class="MsoNormal">Department of Financial Services, GoI should confront a
problem head-on and should have timelines for resolving the cases relating to
pensions in PSBs and SBI lest many aspirants of justice get resolution only
when they reach the grave. Let these hapless old age citizens – in the age
group of 75-90 years, get relief sooner than later.<o:p></o:p></p>
<p class="MsoNormal">The views are personal. <o:p></o:p></p>
<p class="MsoNormal"><a href="https://timesofindia.indiatimes.com/blogs/fincop/government-patronage-and-institutional-apathy-for-senior-citizens-run-parallelly/">https://timesofindia.indiatimes.com/blogs/fincop/government-patronage-and-institutional-apathy-for-senior-citizens-run-parallelly/</a><o:p></o:p></p>
<p class="MsoNormal">Published on 11.6.2022<o:p></o:p></p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span><o:p></o:p></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-8305910618074612982022-06-11T16:39:00.001+05:302022-06-11T16:39:20.933+05:30Is risk management cost or revenue function?<p> </p><p class="MsoNormal">Is Risk management a cost function or revenue function?<o:p></o:p></p>
<p class="MsoNormal">B. Yerram Raju*<o:p></o:p></p>
<p class="MsoNormal">Ever since enterprises and firms as well as banks and
financial institutions got a hang on risk management function, two things
happened. One, most viewed it as a regulatory imperative and felt that
compliance is firm’s major responsibility. Two, when the enterprises started
practicing risk management, it became more its risk culture than a regulatory
function. Broadly, all the enterprises, banks and financial institutions realized
that we continue to live in a complex and uncertain world despite improvements
in technology and data collection. However, not many institutions realize that
costs incurred on setting up good risk management practices would enhance their
revenues even in the short term. How? Certainly not through mere data
collection, and modelling.<o:p></o:p></p>
<p class="MsoNormal">The current year and the years ahead seem to pose as many
challenges as opportunities and there will be many more border level
institutions like the non-government organizations (NGOs) coming to interplay
with the rest of the enterprise sector. It is difficult to predict or control
with a degree of certainty the future, climate change, environment and social
governance would bring together private players and NGOs. <o:p></o:p></p>
<p class="MsoNormal">For example, during the pandemic, health of individuals in
organizations, migration of individuals from the enterprises to their
homesteads out of fear of the outbreak of Covid-19, resettlement of people,
work from home and its tracking exposed new risks and there are no models built
for tackling such risks. But the enterprises developed common sense based
approaches initially to combat them. Governments stepped in with fiscal,
financial, and non-fiscal support measures and the whole world evolved coping
mechanisms. <o:p></o:p></p>
<p class="MsoNormal">Many nations came to conclusion that it is better to learn
to live with those risks and cope with them than running away from them.<span lang="EN-US" style="mso-ansi-language: EN-US;"> Supposing that it is a cost
function, can these risks be managed without incurring them? If they are not
incurred, sustainability of firms would be in grave danger. The profit curve
dented but loss is minimized. and many firms could bounce back to normalcy in a
few nations like India. China, continuing its lockdown as a higher risk
mitigation suffered the risks of sustenance and growth. </span><o:p></o:p></p>
<p class="MsoNormal">Pandemic, more than the recession, taught risk managers the
lesson that risk management is a revenue function. Further, it also taught us
that such risks in the short term will also turn out as opportunities. India
became the vaccine producer for the world. Pharmaceuticals, packaging and
packing industry and goods transportation have seized the opportunity for
growth on a sustainable basis. <o:p></o:p></p>
<p class="MsoNormal">E-commerce firms of various hues, that started as small
ventures, became big. Food delivery firms like Zomato and Swiggy showed that it
is yet another business opportunity in the waiting for many. Several cafes
closed only to give space for several households to become food producers to
deliver through e-commerce firms. A sea-change occurred in the firms’ growth
path. <o:p></o:p></p>
<p class="MsoNormal">Cristian deRitis in an optimistic discourse on GARP, says: ‘<span style="font-size: 12.0pt; line-height: 107%;">How much effort we exert to avoid a
negative outcome depends on how highly we discount the future. The higher the
discount rate, the lower the value to us of avoiding a loss in the future.’<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-size: 12.0pt; line-height: 107%;">A unified theory of risk management would enable cohesive and
integrated risk management function. Persons good at credit and operational
risk would realize that they should enhance their knowledge into all other
forms of risk to enhance the value of the firm. Such unified theory of risk
management provides for better risk identification and assessment capabilities
across the geographical spaces and the spaces between the credit, operational,
market, reputational, and sovereign risks.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;">Enterprise Risk Management (ERM)
of firms have to develop, train, and cultivate risk management techniques
easily understandable to each of the staff and other stakeholders to enable
risk culture to thrive and flourish in the organisation not just confining to
the cabins of risk managers and chief risk managers. A realisation has to come
that risk management enables growth of profit. It is an investment and not
cost. The net result would be effective risk culture and governance. <o:p></o:p></p>
<p class="MsoNormal">*The author is an economist and risk management specialist
and the views are personal.<o:p></o:p></p>
<p class="MsoNormal"><a href="https://timesofindia.indiatimes.com/blogs/fincop/is-risk-management-a-cost-function-or-revenue-function/">https://timesofindia.indiatimes.com/blogs/fincop/is-risk-management-a-cost-function-or-revenue-function/</a><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-91226788565949041692022-05-30T17:10:00.003+05:302022-05-30T17:10:21.297+05:30Bright Future for Indian Agriculture But Reforms Imminent<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4AI_TdC4g7f80hk277zG-E1dwE3wKEodCxAxQiGGy7PvQeZqiN_7n1EbtUI6AeJn2F-Bf9Fqk4fAkmCMvP3nfBmRtEvB8pgSx3Rx9Y-FfV-UrAXeVRfChj-zfbe6_bXNxFUDt9ktTfgsLf0gL1Gdh8H8A72kxEzo1XMTTR1ppH6-O3rRVAzYo3lumcQ/s2696/IMG_20191001_095717~2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2524" data-original-width="2696" height="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4AI_TdC4g7f80hk277zG-E1dwE3wKEodCxAxQiGGy7PvQeZqiN_7n1EbtUI6AeJn2F-Bf9Fqk4fAkmCMvP3nfBmRtEvB8pgSx3Rx9Y-FfV-UrAXeVRfChj-zfbe6_bXNxFUDt9ktTfgsLf0gL1Gdh8H8A72kxEzo1XMTTR1ppH6-O3rRVAzYo3lumcQ/s320/IMG_20191001_095717~2.jpg" width="320" /></a></div><br /><p></p><p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Future is bright for Indian Agriculture – But Reforms
Imminent.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">B. Yerram Raju*<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Agriculture is one sector that
takes all the four factors of production – land, labour, capital, and organisation/management
- in full measure, and consumes the scarcest resource water additionally. Several
limitations surround the future of agriculture. Land is limited and there are
several claims from dwellers to industrialists. So is water and capital. Management
depends on the absorption of the latest technologies. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">India has only 4 percent of
world’s wate resources. Its present population of around 1.39bn is likely to
escalate to 1.69bn according to population experts. Improving (a) water
resources’ optimization, (b) productivity of the small holdings that constitute
50 percent of the arable land, (c) technologies unique to the production
systems of India, (d) integrating all types of agricultural activities and (e)
resilience to climate change, is imperative.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">India’s agricultural growth
(1950-2020) can be seen in many areas: the second largest horticultural
production in the world; the highest milk production in the world, witnessing
twelve-fold growth; the second largest fish production in the world. It is now
a net exporter and its agricultural production is 44 percent higher than that
of the US. According to Praveen Rao, Vice Chancellor, PJTS Agricultural
University, Hyderabad, India’s agricultural GDP rose from US$ 15bn in 1960 to
US$101bn in 2000. During the next sixteen years, the growth was 350 percent
more than that registered during the preceding thirty years. <span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">A.K. Singh, Director, Indian
Agricultural Research Institute of ICAR, in his most recent J. Raghotham Reddy
memorial lecture at Hyderabad, highlighted that despite 32.7 percent increase
in the area during 1951-2021, the production increased by almost six times, and
productivity increased by 4.5 times during the same period, maintaining the
food security. The period did not saw pestilence and famines in the country. Market-assisted
Selection (MAS) is now an integral part of the cultivar development programmes
at the ICAR institutions and several agricultural universities, developing 74
crop cultivars in seven different crops -rice, wheat, pearl millet, chickpea,
soybean, groundnut, and maize. This still leaves the challenge of India
producing 333mt of food grains to feed its projected 1.64bn population by 2050.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">As per the NSSO (2014), about
232 million persons are employed still in agriculture (49 per cent of the
workforce), contributing about 17 per cent of the GDP. The number seems to have
come down to about 219 million in 2015, which is still a very significant
number (Kapoor, 2017). A NITI Aayog study estimated the agricultural labour
productivity is one-third of the non-agricultural sectors. There is severe
shortage of farm labour either to cut the sugarcane crop or cotton picking –
the two largest labour-absorbing crops. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Telangana State is the first
state to commence growing single-pick cotton from this year, thanks to the
intense research by the PJTSAU under the specific directive of the farmer-Chief
Minister, K. Chandrasekhar Rao. Farmers are eagerly looking for assured yields
of this variety to save the labour costs. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Farming has been the focus and
not the farmer of all the research that no doubt yielded excellent results.
Doubling of farmers’ income by 2025 is still a dream, because reforms in
agriculture sector were just ignored for the last three decades. Small farmer
and tenant farmers realised that they have to turn as entrepreneurs for
sustainable growth. Several start-ups in farm field have lately come up. Still,
aggregators at the farm gate, marketing reforms and easy access to credit beg
attention of the policy maker, more so, when we look at the technological
innovations that A. K. Singh spoke off:</span><span style="mso-no-proof: yes;"> </span><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"><span style="mso-spacerun: yes;"> </span>1. Molecular breeding, 2. Crop
biofortification, 3. Microbial technologies, 4. Climate change and mitigation
strategies, 5. Satellite remote-sensing technology, 6. Precision agriculture,
and 7. Improving irrigation efficiency.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">In addition to speed breeding,
genome breeding, and use of remote sensing techniques, drone technology for
smart agriculture is making deep inroads. A. Drone Sensing for mapping and
discrimination of crops, monitoring crop stress – biotic and abiotic, yield
damage assessment, soil fertility, and for agri-input applications are some of
the drone-based technologies. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">While it is true that a
century beyond will see the disruptive technologies shaping agriculture growth,
the way forward would be in investing in human resources and infrastructure for
disruptive innovations (at least 1.4 percent of GDP in agriculture), like
Internet of technologies (IoT), AI, ML, Block Chain leading climate, smart,
regenerative and remunerative agriculture, adoption of management practices
integrating small farm holdings, and mainstreaming the biofortified crops and
nutrition literacy.</span><span style="font-family: "Arial",sans-serif;"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif;">Investment
should come either from the farmer’s equity or his ability to raise the debt.
Debt markets in India are deeply suspicious of the farmer and small
entrepreneur. Therefore, there is need for a cultural shift in lending to the
farm sector. Second, all the above technologies still carry the risk of adverse
weather and climate. They are also subject to the cyclones, tsunamis, floods,
and holocausts. While crop related technologies are of short term nature, rest
are all medium to long term capital investments. Agri-entrepreneurs should look
to investments from angel funds, patient capital investors and social capital
entrepreneurs. Green House Gas reduction from the climate-resilient
agricultural practices have the potential to earn carbon credits (CC) up to
5CC/ha and 1 carbon credit is equal to US$37. 15000 hectares have this
potential, according to A. K. Singh.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif;">Further,
integrated farming on small farm holdings – crop, horticulture, household
dairy, backyard poultry, small pond-culture, and home-grown ducks – will
cross-hold risks and pave the way for farmer doubling his income erelong. Sustainability
of agricultural growth is assured thus through heavy capital investments in
climate resistant technologies, cashing in carbon credits sooner than later,
change in the mind-set of lenders and farmers to accelerate lending, and
appropriate insurance mechanisms that are farmer-friendly. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif;">*This
article is based largely on a couple of lectures: 1. V. Praveen Rao, at the
Fifth International Agronomy Congress and A.K. Singh, at the Farm and Rural
Science Foundation’s J. Raghotham Reddy Memorial Lecture. The views expressed
are mine. <o:p></o:p></span></p><p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Future is bright for Indian Agriculture – But Reforms
Imminent.<o:p></o:p></span></p><p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">B. Yerram Raju*<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Agriculture is one sector that
takes all the four factors of production – land, labour, capital, and organisation/management
- in full measure, and consumes the scarcest resource water additionally. Several
limitations surround the future of agriculture. Land is limited and there are
several claims from dwellers to industrialists. So is water and capital. Management
depends on the absorption of the latest technologies. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">India has only 4 percent of
world’s wate resources. Its present population of around 1.39bn is likely to
escalate to 1.69bn according to population experts. Improving (a) water
resources’ optimization, (b) productivity of the small holdings that constitute
50 percent of the arable land, (c) technologies unique to the production
systems of India, (d) integrating all types of agricultural activities and (e)
resilience to climate change, is imperative.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">India’s agricultural growth
(1950-2020) can be seen in many areas: the second largest horticultural
production in the world; the highest milk production in the world, witnessing
twelve-fold growth; the second largest fish production in the world. It is now
a net exporter and its agricultural production is 44 percent higher than that
of the US. According to Praveen Rao, Vice Chancellor, PJTS Agricultural
University, Hyderabad, India’s agricultural GDP rose from US$ 15bn in 1960 to
US$101bn in 2000. During the next sixteen years, the growth was 350 percent
more than that registered during the preceding thirty years. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">A.K. Singh, Director, Indian
Agricultural Research Institute of ICAR, in his most recent J. Raghotham Reddy
memorial lecture at Hyderabad, highlighted that despite 32.7 percent increase
in the area during 1951-2021, the production increased by almost six times, and
productivity increased by 4.5 times during the same period, maintaining the
food security. The period did not saw pestilence and famines in the country. Market-assisted
Selection (MAS) is now an integral part of the cultivar development programmes
at the ICAR institutions and several agricultural universities, developing 74
crop cultivars in seven different crops -rice, wheat, pearl millet, chickpea,
soybean, groundnut, and maize. This still leaves the challenge of India
producing 333mt of food grains to feed its projected 1.64bn population by 2050.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">As per the NSSO (2014), about
232 million persons are employed still in agriculture (49 per cent of the
workforce), contributing about 17 per cent of the GDP. The number seems to have
come down to about 219 million in 2015, which is still a very significant
number (Kapoor, 2017). A NITI Aayog study estimated the agricultural labour
productivity is one-third of the non-agricultural sectors. There is severe
shortage of farm labour either to cut the sugarcane crop or cotton picking –
the two largest labour-absorbing crops. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Telangana State is the first
state to commence growing single-pick cotton from this year, thanks to the
intense research by the PJTSAU under the specific directive of the farmer-Chief
Minister, K. Chandrasekhar Rao. Farmers are eagerly looking for assured yields
of this variety to save the labour costs. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Farming has been the focus and
not the farmer of all the research that no doubt yielded excellent results.
Doubling of farmers’ income by 2025 is still a dream, because reforms in
agriculture sector were just ignored for the last three decades. Small farmer
and tenant farmers realised that they have to turn as entrepreneurs for
sustainable growth. Several start-ups in farm field have lately come up. Still,
aggregators at the farm gate, marketing reforms and easy access to credit beg
attention of the policy maker, more so, when we look at the technological
innovations that A. K. Singh spoke off:</span> <span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"> 1. Molecular breeding, 2. Crop
biofortification, 3. Microbial technologies, 4. Climate change and mitigation
strategies, 5. Satellite remote-sensing technology, 6. Precision agriculture,
and 7. Improving irrigation efficiency.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">In addition to speed breeding,
genome breeding, and use of remote sensing techniques, drone technology for
smart agriculture is making deep inroads. A. Drone Sensing for mapping and
discrimination of crops, monitoring crop stress – biotic and abiotic, yield
damage assessment, soil fertility, and for agri-input applications are some of
the drone-based technologies. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">While it is true that a
century beyond will see the disruptive technologies shaping agriculture growth,
the way forward would be in investing in human resources and infrastructure for
disruptive innovations (at least 1.4 percent of GDP in agriculture), like
Internet of technologies (IoT), AI, ML, Block Chain leading climate, smart,
regenerative and remunerative agriculture, adoption of management practices
integrating small farm holdings, and mainstreaming the biofortified crops and
nutrition literacy.</span><span style="font-family: "Arial",sans-serif;"><o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif;">Investment
should come either from the farmer’s equity or his ability to raise the debt.
Debt markets in India are deeply suspicious of the farmer and small
entrepreneur. Therefore, there is need for a cultural shift in lending to the
farm sector. Second, all the above technologies still carry the risk of adverse
weather and climate. They are also subject to the cyclones, tsunamis, floods,
and holocausts. While crop related technologies are of short term nature, rest
are all medium to long term capital investments. Agri-entrepreneurs should look
to investments from angel funds, patient capital investors and social capital
entrepreneurs. Green House Gas reduction from the climate-resilient
agricultural practices have the potential to earn carbon credits (CC) up to
5CC/ha and 1 carbon credit is equal to US$37. 15000 hectares have this
potential, according to A. K. Singh.<o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif;">Further,
integrated farming on small farm holdings – crop, horticulture, household
dairy, backyard poultry, small pond-culture, and home-grown ducks – will
cross-hold risks and pave the way for farmer doubling his income erelong. Sustainability
of agricultural growth is assured thus through heavy capital investments in
climate resistant technologies, cashing in carbon credits sooner than later,
change in the mind-set of lenders and farmers to accelerate lending, and
appropriate insurance mechanisms that are farmer-friendly. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif;">*This
article is based largely on a couple of lectures: 1. V. Praveen Rao, at the
Fifth International Agronomy Congress and A.K. Singh, at the Farm and Rural
Science Foundation’s J. Raghotham Reddy Memorial Lecture. The views expressed
are mine. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"> </span></p><p class="MsoNormal" style="text-align: justify;">
</p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"> </span><span style="font-family: Arial, sans-serif; font-size: 12pt; text-align: left;">Future is bright for Indian Agriculture – But Reforms
Imminent.</span></p>
<p class="MsoNormal"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">B. Yerram Raju*<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Agriculture is one sector that
takes all the four factors of production – land, labour, capital, and organisation/management
- in full measure, and consumes the scarcest resource water additionally. Several
limitations surround the future of agriculture. Land is limited and there are
several claims from dwellers to industrialists. So is water and capital. Management
depends on the absorption of the latest technologies. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">India has only 4 percent of
world’s wate resources. Its present population of around 1.39bn is likely to
escalate to 1.69bn according to population experts. Improving (a) water
resources’ optimization, (b) productivity of the small holdings that constitute
50 percent of the arable land, (c) technologies unique to the production
systems of India, (d) integrating all types of agricultural activities and (e)
resilience to climate change, is imperative.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">India’s agricultural growth
(1950-2020) can be seen in many areas: the second largest horticultural
production in the world; the highest milk production in the world, witnessing
twelve-fold growth; the second largest fish production in the world. It is now
a net exporter and its agricultural production is 44 percent higher than that
of the US. According to Praveen Rao, Vice Chancellor, PJTS Agricultural
University, Hyderabad, India’s agricultural GDP rose from US$ 15bn in 1960 to
US$101bn in 2000. During the next sixteen years, the growth was 350 percent
more than that registered during the preceding thirty years. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">A.K. Singh, Director, Indian
Agricultural Research Institute of ICAR, in his most recent J. Raghotham Reddy
memorial lecture at Hyderabad, highlighted that despite 32.7 percent increase
in the area during 1951-2021, the production increased by almost six times, and
productivity increased by 4.5 times during the same period, maintaining the
food security. The period did not saw pestilence and famines in the country. Market-assisted
Selection (MAS) is now an integral part of the cultivar development programmes
at the ICAR institutions and several agricultural universities, developing 74
crop cultivars in seven different crops -rice, wheat, pearl millet, chickpea,
soybean, groundnut, and maize. This still leaves the challenge of India
producing 333mt of food grains to feed its projected 1.64bn population by 2050.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">As per the NSSO (2014), about
232 million persons are employed still in agriculture (49 per cent of the
workforce), contributing about 17 per cent of the GDP. The number seems to have
come down to about 219 million in 2015, which is still a very significant
number (Kapoor, 2017). A NITI Aayog study estimated the agricultural labour
productivity is one-third of the non-agricultural sectors. There is severe
shortage of farm labour either to cut the sugarcane crop or cotton picking –
the two largest labour-absorbing crops. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Telangana State is the first
state to commence growing single-pick cotton from this year, thanks to the
intense research by the PJTSAU under the specific directive of the farmer-Chief
Minister, K. Chandrasekhar Rao. Farmers are eagerly looking for assured yields
of this variety to save the labour costs. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">Farming has been the focus and
not the farmer of all the research that no doubt yielded excellent results.
Doubling of farmers’ income by 2025 is still a dream, because reforms in
agriculture sector were just ignored for the last three decades. Small farmer
and tenant farmers realised that they have to turn as entrepreneurs for
sustainable growth. Several start-ups in farm field have lately come up. Still,
aggregators at the farm gate, marketing reforms and easy access to credit beg
attention of the policy maker, more so, when we look at the technological
innovations that A. K. Singh spoke off:</span> <span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"> 1. Molecular breeding, 2. Crop
biofortification, 3. Microbial technologies, 4. Climate change and mitigation
strategies, 5. Satellite remote-sensing technology, 6. Precision agriculture,
and 7. Improving irrigation efficiency.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">In addition to speed breeding,
genome breeding, and use of remote sensing techniques, drone technology for
smart agriculture is making deep inroads. A. Drone Sensing for mapping and
discrimination of crops, monitoring crop stress – biotic and abiotic, yield
damage assessment, soil fertility, and for agri-input applications are some of
the drone-based technologies. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;">While it is true that a
century beyond will see the disruptive technologies shaping agriculture growth,
the way forward would be in investing in human resources and infrastructure for
disruptive innovations (at least 1.4 percent of GDP in agriculture), like
Internet of technologies (IoT), AI, ML, Block Chain leading climate, smart,
regenerative and remunerative agriculture, adoption of management practices
integrating small farm holdings, and mainstreaming the biofortified crops and
nutrition literacy.</span><span style="font-family: "Arial",sans-serif;"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif;">Investment
should come either from the farmer’s equity or his ability to raise the debt.
Debt markets in India are deeply suspicious of the farmer and small
entrepreneur. Therefore, there is need for a cultural shift in lending to the
farm sector. Second, all the above technologies still carry the risk of adverse
weather and climate. They are also subject to the cyclones, tsunamis, floods,
and holocausts. While crop related technologies are of short term nature, rest
are all medium to long term capital investments. Agri-entrepreneurs should look
to investments from angel funds, patient capital investors and social capital
entrepreneurs. Green House Gas reduction from the climate-resilient
agricultural practices have the potential to earn carbon credits (CC) up to
5CC/ha and 1 carbon credit is equal to US$37. 15000 hectares have this
potential, according to A. K. Singh.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif;">Further,
integrated farming on small farm holdings – crop, horticulture, household
dairy, backyard poultry, small pond-culture, and home-grown ducks – will
cross-hold risks and pave the way for farmer doubling his income erelong. Sustainability
of agricultural growth is assured thus through heavy capital investments in
climate resistant technologies, cashing in carbon credits sooner than later,
change in the mind-set of lenders and farmers to accelerate lending, and
appropriate insurance mechanisms that are farmer-friendly. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif;">*This
article is based largely on a couple of lectures: 1. V. Praveen Rao, at the
Fifth International Agronomy Congress and A.K. Singh, at the Farm and Rural
Science Foundation’s J. Raghotham Reddy Memorial Lecture. The views expressed
are mine. <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: Arial, sans-serif;">https://timesofindia.indiatimes.com/blogs/fincorp/future-is-bright-for-indian-agriculture-but-reforms-imminent/</span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"> </span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"> </span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%;"><o:p> </o:p></span></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-26031707908017736852022-05-09T06:25:00.001+05:302022-05-09T06:25:37.126+05:30Farm Loan Waiver - No longer, the need.<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjEcqVZ8Mq3rvIm5Hgc5b-TDT-53mx1dxhzpdm2ZFt9vafrAbIdN8Lj0rEWRxidxpi0Y4jf7gu0eTHow_fmAnMC_qgwxB5Yn8phEbJrNsMba03E7S5xGeKC9JzRqX9OCQC0nauSimy3Uyc92jyUSaOGzWkCgNTnB472Y2DKJp-64UILUvb4m2LlmaMWXw/s800/yourstory-agriculture.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="400" data-original-width="800" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjEcqVZ8Mq3rvIm5Hgc5b-TDT-53mx1dxhzpdm2ZFt9vafrAbIdN8Lj0rEWRxidxpi0Y4jf7gu0eTHow_fmAnMC_qgwxB5Yn8phEbJrNsMba03E7S5xGeKC9JzRqX9OCQC0nauSimy3Uyc92jyUSaOGzWkCgNTnB472Y2DKJp-64UILUvb4m2LlmaMWXw/s320/yourstory-agriculture.jpg" width="320" /></a></div> Courtesy: The Hindu<p></p><p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">Farm Loan Waivers – No
longer the need <o:p></o:p></span></p>
<p class="MsoNormal" style="tab-stops: 329.4pt; text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">B.
Yerram Raju<span style="mso-tab-count: 1;"> </span><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">From corporates to the individuals, irrespective of
activity, want their loans to be waived. Who wants to live in debt? But can the
economy giving such waivers live without debt? Simply put, a firm ‘No’. The
rising public debt of the sovereign puts not just the present but the future
citizen in debt for it is the next generation that has the responsibility to
repay. Farm sector is not just exception, but the future is not just generation
away but only a crop season away. This should clear the way for the argument
against the loan waivers of any kind save very serious exceptions. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Politicians and farmers are good friends close to the
elections and bad enemies to farm economics. Rahul Gandhi stirred the hornet’s
nest at Warangal on the 6<sup>th</sup> May while announcing that if Congress is
elected to power in Telangana, it would waive off Rs.2lakhs for each farmer
from his debt portfolio. Such slogans pre-elections are not new to the farmers,
ever since V.P. Singh/Charan Singh duo indulged in crop loan write-off in 1990s.
The scheme received the ire of Comptroller and Auditor General for its bad
implementation. RBI repeatedly advised the political parties not to indulge in
this luxury as the states do not have that much resource apart from encouraging
bad borrower behaviour. But do all farmers look for such write-off? What
exactly they need? <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Doubling farm income remained a far-cry leading scores
of farmers to double-up to Delhi to fight against what they considered as bad
farm laws. The much-needed farm reforms that were bypassed during the first
phase of reforms in the 1990s could have been triggered had there been
political sagacity and cooperative federalism. Be that as it may, it has become
difficult for governments to do what the farmers want, save the exception of
government of Telangana, that I would explain latter. There are good number of
farmers who took to mixed farming, organic farming, natural farming, and use of
technologies intensely. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Farmer is generally short of cash at the beginning of
the crop season. This leads him/her to go to the money lender who is wont to
give credit on his own terms. The revenue from his previous crop would not be
to hand at that moment as it would have been up for sale but not sold. If he
had no dairy or poultry or allied activity to come to his rescue, even family
would be on the brink of starvation despite his four or five acres of land!<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Government of Telangana is the first government to
think of giving Rs.10000 at the beginning of the season in cash. It also
arranged for insurance against untoward calamity in the family while working on
the farm -<span style="mso-spacerun: yes;"> </span>may be a snakebite or an
accident or loss in family up to Rs.5lakhs. Both these schemes are monitored by
the Chief Minister to ensure that there is no slip up in the releases. The
result is that farmer does not have to wait at the banker’s gate for a loan! On
top, all the 789 <span style="mso-spacerun: yes;"> </span>Primary Agricultural
Cooperative Societies in Telangana have been digitized and linked to core
banking solutions of <span style="mso-spacerun: yes;"> </span>around 298 DCCB
-branches and State Cooperative Bank. This opened a reliable credit window for
the farmers when credit is needed. Marketing paddy, the principal crop of the
state is engaged in a street fight between the union and state. The result,
however, is good as the farmers realized that they should go more for alternate
crops that have better markets and yield better price. When asuras and devas
churned the ocean, both milk and poison emerged and the churning is still on. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Illustratively, Saritha, a commerce postgraduate from Rapakapalle
village in Hanumakonda district took to zero budget natural farming on her
four-acre land. She collected rainwater to farm a fishpond; honeybee-keeping,
polyhouse for vegetable cultivation and an acre of paddy cultivation. She
established two retail outlets for her farm produce and multiplied her farm
income. She is proud to say that she could hedge the risks of farming through
mixed farming as one or the other agricultural activity gets her sustainable
income year-long. She also influenced two thousand farmers in and around her
village. There are many more of her ilk in Telangana. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Credit for farming is a necessary but not sufficient
condition for sustainability because farmer’s liquidity is always locked up
either in soil or silo. As long as farmer’s credit requirement is viewed in
exclusion for production purposes alone, the empty valet of farmer stares at
the banker. In spite of nearly five decades of engagement of banks with
farmers, bankers have no trust in them. Similarly, farmers also lack confidence
in banks that they would meet their genuine requirements in time. It will be
interesting to see from the RBI data that the banks lent to farming mostly in
irrigated tracts – nearly 83% of lending took place in just twelve states. National
Bank for Agriculture and Rural Development (NABARD) took up watershed programme
on a mission mode that helped many water-starved tracts could get crop-relevant
water using latest technologies. Kisan Credit Card has become a fancy
instrument that did not give credit comfort to the farmer. Revisiting this
instrument and modifying its delivery mechanism is more imminent now than ever.
<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">The banks’ concerns are equity and discipline while
the farmers’ concerns are adequacy, timeliness, and multipurpose credit –
production, consumption, and marketing. Farming unlike any other activity is
prone to risks arising from natural calamities and each calamity is different
in nature and dimension. </span><span lang="EN-GB" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-GB;"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-GB" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-GB;">Chanakya in his magnum opus Artha Sastra clearly
mentions that if a natural calamity like cyclone, holocaust, continuous drought
for over two years, repeated floods, tsunami etc., it is the responsibility of
the state to bail out the farmers by relieving him from all the debt and give
cash to him for sustenance. He never advocated loan write-off as it would
debilitate the farmer of his own capacities and creates trust-deficit with his
lender. Strengthen the insurance mechanism for farming sector. Make available
lending to farmer at no more than four percent per annum. Announce the produce
price well ahead of the season. Interest reimbursement is a budget game and put
an end to it. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-GB" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-GB;">It has become a fashion for all the political parties
to announce loan write-off from the state exchequer. It is difficult to imagine
that they are ignorant of the consequences. But they indulge in this political
ploy. A responsible democracy like ours shall refrain from such sloganeering
and Election Commission should impose a ban on such announcements. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-GB" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-GB;">The views are author’s own. </span><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;"><a href="https://timesofindia.indiatimes.com/blogs/fincorp/farm-loan-waivers-no-longer-the-need/">https://timesofindia.indiatimes.com/blogs/fincorp/farm-loan-waivers-no-longer-the-need/</a><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-GB" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-GB;"><o:p> </o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-86025282046989165332022-05-06T12:01:00.001+05:302022-05-06T12:01:18.023+05:30Recession - Far and yet Near.<p> Opinion: On edge with recession fears https://telanganatoday.com/opinion-on-edge-with-recession-fears</p><p></p><p class="MsoNormal">Recession? Near and yet Far.<o:p></o:p></p>
<p class="MsoNormal">B. Yerram Raju<o:p></o:p></p>
<p class="MsoNormal">Several economists, in the wake of Russia-Ukraine war and
the rise of global inflation index, have been talking of recession. It is
important to understand the meaning of recession. It occurs when there is
contraction of demand for goods and services consecutively for two quarters;
employment falls precipitously; consumption declines; both exports and imports
fall; credit markets shrink and finally, the GDP declines. This means that all
the macro-economic indicators show an alarming trend. <o:p></o:p></p>
<p class="MsoNormal">In layman’s language, when your neighbour loses his job, it
is recession, while depression is, when you lose your job. Before going into
the macro-economic indicators that prompted such prediction, the discussion is
timely because price stability is viewed as necessary precondition for growth
by the authors of the Currency and Finance Report (RBI), 2021-22. This is the
wake up call to the Monetary Policy Committee meeting on May 2 and 4 calling
for a rate hike close to the rate hike in Fed-US. <o:p></o:p></p>
<p class="MsoNormal">Impact of global recession is seen in the backdrop of
Covid-19 variants making aggressive re-entry unnerving many economies.
Externalities like Russia-Ukraine war, collapse of Sri Lanka in our immediate
neighbourhood, strained global value chains added fuel to fire. Fuel prices are
not likely to relent in the short term and edible oil prices are touching the
roof. <o:p></o:p></p>
<p class="MsoNormal">A bit of History<o:p></o:p></p>
<p class="MsoNormal">Unprecedented banking crises in the past triggered recession
both in advanced economies and emerging economies. Advanced economies: Herstatt
crisis in Germany, Japan in 90s, Norway in 1988-92, Spain in 1985, Sweden in
1985, UK in 1995, USA in 1980s to early 90s, and emerging economies: Brazil
1994, East Asian Crisis in 1997 hitting Korea, Thailand, Malaysia, Vietnam, and
the subprime crisis of 2006 hitting the whole world are examples of recession
if we leave 1930 recession way behind. The Economist, London in its special
report of May 16,2009 said: ‘the dirty secret of the golden age of finance was
that it was obscenely easy to make money.” Interest rates rose and housing
prices fell. <o:p></o:p></p>
<p class="MsoNormal">Rate Hike:<o:p></o:p></p>
<p class="MsoNormal">Latest hike in the basic rates announced by Governor
Shaktikant in a huddle on May 5,2022 shocked the stock markets. Lenders, rating
agencies, and investors commented that this hike is just the beginning in the
wake of unrelenting inflation for the past three quarters in a row. <o:p></o:p></p>
<p class="MsoNormal">Gross Domestic Product:<o:p></o:p></p>
<p class="MsoNormal">The most important macroeconomic factor is decline in GDP {[<i>C+I+G+(x-m)],
where C= consumption; I=investment; G=Government spending; x= exports and
m=imports} </i>. Total goods and services produced in the economy declines. Currency
and Finance Report (CFR 21-22), mentioned that economic growth slowed down
since the second half of 2016, taking the average of GDP growth between 2017-20
fiscal to 5.7 percent. There is understandable decline post 2020 due to
Covid-19 that saw irrecoverable loans in all segments, rents prohibited for
more than a year in several states in 2020-21, unoccupied hotels and unmoved
airbuses hitting tourism and aviation industry, several drivers losing their
jobs and cabs parked in sheds with a steep fall in fuel consumption.<o:p></o:p></p>
<p class="MsoNormal">Inflation:<o:p></o:p></p>
<p class="MsoNormal">One must begin with inflation. Data released four days after
the MPC's April 8 decision showed Consumer Price Index (CPI) inflation saw a
seventeen-month high of 6.95 percent in March. Wholesale inflation index rose
to a four-month high of 14.55 percent the same month. <span style="mso-spacerun: yes;"> </span>This data was in the RBI’s pages even three
weeks before. Should it be behind the curve in announcing the rate hike for so
long? A question that would have few answers from the powers that be. Money
Control, a financial blog, vents its disappointment over the RBI Governor’s
statement:”<span style="background: white; color: black; font-family: Lora; font-size: 15.0pt; line-height: 107%;"> </span>CPI inflation has been above the
medium-term target of 4 percent for exactly two-and-half years. In these
30 months, CPI inflation has been above 5 percent 27 times and above the 6
percent upper bound of the RBI's flexible inflation target 16 times. So, to
state now — after not saying anything in the last two years — that inflation
expectations could get unanchored is a tad disconcerting.”<o:p></o:p></p>
<p class="MsoNormal">Unemployment: <o:p></o:p></p>
<p class="MsoNormal">CMIE data released almost simultaneously reveals that urban
unemployment rate was 9.22 percent, and rural unemployment rate was at 7.18
percent. <o:p></o:p></p>
<p class="MsoNormal">International Trade<o:p></o:p></p>
<p class="MsoNormal">Trade balances were hit badly all over the world. Thanks to
seizing the right opportunities, India’s trade balances moved to $400bn in
April 2022. Several measures taken under Atma Nirbhar Bharat Abhiyan
(self-reliant India) started yielding results. Startups swelled to encouraging
levels. Thanks to agriculture and pharmaceutical sectors, the economy looked up
during the covid time. There were no deaths due to hunger. More than 4.58crore
population had been vaccinated – first, second, and precautionary and child
vaccines together. To keep the export markets diversified, PM Modi is on Europe
tour. This may also signal export markets that India is keen to see that the
war between Russia and Ukraine ends sooner than later. <o:p></o:p></p>
<p class="MsoNormal">India’s consumption, growing at 12 percent pre-pandemic,
nose-dived during the pandemic. But it recovered fast and is at 17 percent with
a likely 10 percent annual growth in the next decade, according to Managing
Partner, Boston Consulting Group. E-commerce is on the rise. It is likely to
reach US $130bn by 2026.<o:p></o:p></p>
<p class="MsoNormal">For recession to set in there are certain conditions:
Foreign capital should flee; people’s confidence should evaporate; stock
markets should take a deep dive continuously; melt-down of global markets;
tumbling currencies; flight of assets to safety; financial institutions blowing
cold on credit; increasing government interventions in every sphere; federal
politics on hostile note; and trust deficit in the governments. Banks will be
on the nervous hook. Banks have always been on a weak wicket because of their
inherent mismatch between the assets and liabilities. After digitalization, the
risks went beyond their normal reach and added to that are the crypto
currencies and cybercrimes. <o:p></o:p></p>
<p class="MsoNormal">Government asserts that and the RBI reinforces its argument
in that growth is here to stay as banks, corporate enterprises and agriculture
are all looking up. Credit from institutions for the second month in a row saw
a rising trend. But unlike in 2006 crisis, Indian financial system is not a
closeted financial system but exposed to global value chains. <o:p></o:p></p>
<p class="MsoNormal">Globally, forex markets nose-dived. Commodity markets are on
continuous decline. Industrial production everywhere wears a disappointing look
due to the war and continuing Covid-19 variants making economies nervous.
Volatility exists in all the stock markets. Several FIIs are keen to pull back
their investments. <o:p></o:p></p>
<p class="MsoNormal">It is this backdrop that still makes economists nervous to
feel that recession is very likely. <span style="mso-spacerun: yes;"> </span>India
is far and yet near. It’s export thrust in the wake of volatile forex markets
is enough cause for worry. Further, the freebies, rising public debt,
indiscrete valuations of public assets put to sale, large official haircuts in
official IBC resolutions need rethinking if India would escape recession. Next
two months in a row, we may witness rate hikes to contain the galloping
inflation. <o:p></o:p></p>
<p class="MsoNormal">The views expressed are author’s own. <o:p></o:p></p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span><o:p></o:p></p><br /><p></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-89451024093971074722022-04-30T06:28:00.002+05:302022-04-30T06:28:51.067+05:30Inflation - the hydra<p> </p><p class="MsoNormal">Inflation – the hydra<o:p></o:p></p>
<p class="MsoNormal">B. Yerram Raju<o:p></o:p></p>
<p class="MsoNormal">Times of India Blogpost dated 29.04.2022.<o:p></o:p></p>
<p class="MsoNormal">Sweltering heat makes us look to June’s first monsoon
showers as much as the monetary policy of the RBI looking at taming the
inflation as its uppermost task. When Bloomberg mentions that the world is experiencing
a synchronised inflation outbreak that previously seemed related to the US and
Europe, and that producer prices are rising in Japan, South Korea, India, and
all economies are feeling the heat of fuel and food prices, it has to be viewed
seriously. <o:p></o:p></p>
<p class="MsoNormal">I tried to look at it from what is happening in the working
class both in urban and rural areas in our country. Several state governments
are indulging in competitive populism, notwithstanding the ever-rising fuel
prices. <o:p></o:p></p>
<p class="MsoNormal">My house cleaner has a couple of acres of land in
Mahbubnagar district of Telangana. She gets her minimum wages when she abstains
from the work in our house, at least four days a month and seven days at least
once in a quarter. Her logic: Every office has one Sunday and two second Saturdays
as holidays. Why should I not get the same? She works as house cleaner for ten
houses with an average income of Rs.2000 per month per household. She gets free
ration; free medical treatment in the government hospital if she or her family
members have illness or accident. Her husband is a fruit-seller on bicycle. His
net income is Rs.15000 a month and recently he got a loan of Rs.10000 under the
street vendors’ scheme that helped him buy a cooler to the house. She has put
both her sons in a social welfare residential school. She is also not bothered
about income tax though her family income exceeds the taxable income. She has
Aadhar card and felt needless to have PAN card! She is least bothered about
inflation.<o:p></o:p></p>
<p class="MsoNormal">In a chat with her, I and my wife realized that most house
cleaners are in the same boat as her and they only have to pay rent. Some of
them are also expecting to move to their own two-bedroom flat promised by the
government. I went to a village on the way to a temple in Sangareddy district.
That was a shandy day. Hence most villagers are in shandy either as buyers or
sellers. I got down from the car, a little uncared for the anger of my wife.
She knows that when I get down on such errand, I would take at least thirty to
forty-five minutes to be back. <o:p></o:p></p>
<p class="MsoNormal">I enquired from around twenty persons regarding the price-rise.
They mentioned only two things: one, Fuel price and two, Oil price. No others
mattered to them. At least one person in every house has a motorcycle. Every
family has a piece of land either owned or leased. They are bothered about the
wages for the farm labour. They sky-rocketed. They are planning to go for farm
machinery either in groups or go for hiring it to reduce farming costs. They
are bothered more about increasing unrest in villages due to family feuds. <o:p></o:p></p>
<p class="MsoNormal">Inflation therefore has not figured much in the
conversation. Rise in wages is an issue but related to inflation. Not that the
rising inflation indices – consumer price indices crossing the RBI headline
boundaries – is not a worry. The fact is that there are several factors that do
not get into inflation accounting. The rents in urban areas are on the rise
despite a boom in real estate and housing and cheap housing loans. <o:p></o:p></p>
<p class="MsoNormal">If interest rates rise, the cause will not be so much the inflation
as the non-performing loans in the retail sector, protracted corporate loan
recoveries after severe haircuts, under the most permissive route of Indian
Bankruptcy Code proceedings. <o:p></o:p></p>
<p class="MsoNormal">Union government has a responsibility to look at the fuel
prices beyond the revenues that are earned out of them. Most of the states have
genuine concerns over the cess and it is time to be transparent and remove all
the cess as the purpose for which cess is levied and spent are never
coordinated. For example, look at the similar rise in fuel prices globally in
2014 and 2015 and the domestic prices. Can we get back to the comparable barrel
prices and retail prices of fuel and gas?<o:p></o:p></p>
<p class="MsoNormal">Once the interest rates rise, the scope for real interest
rates to pare up and comfort the savers exists and the hapless senior citizens
will have a sigh of relief. Real interest rates are currently negative and
hopefully the June monetary policy of the RBI will bend the hydra. <o:p></o:p></p>
<p class="MsoNormal">*Author is an economist and risk management specialist and
the views are his own. <o:p></o:p></p>
<p class="MsoNormal"><a href="https://timesofindia.indiatimes.com/blogs/fincorp/inflation-the-hydra/">https://timesofindia.indiatimes.com/blogs/fincorp/inflation-the-hydra/</a><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-44777139055437020222022-04-21T12:01:00.000+05:302022-04-21T12:01:04.950+05:30<p> <span style="font-family: "Times New Roman", serif; font-size: 12pt;">Cumbersome Guarantees
and Insurances for MSEs Need Redress</span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">This Blog was published in the Times of India ( see the link below)<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Micro, Small, and Medium Enterprises (MSMEs) are extolled
as the engines of employment, growth, and key to the supply chain management of
medium and large corporate enterprises, leading exporters, manufacture over
6000 products. They have been redefined during the first Covid-19 disruptions
to the economy in terms of investment and turnover, replacing the earlier
definition restricted to investment in plants and machinery. This sector is next
to agriculture which employs the largest number of persons. 98% of enterprises are
micro, mostly owned by proprietors or partners. Even partnerships are to a
large extent family partners.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Access to credit for the sector is the Achilles Heel.
To provide easy and better access the GoI and SIDBI have set up Credit
Guarantee Trust for Micro and Small Enterprises in 2000 (CGTMSE). Even during
the pandemic, GoI introduced Emergency Credit Linked Guarantee Scheme under
Atma Nirbhar Bharat Abhiyan with CGTMSE holding the baby. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">But did the sector gain much from the insurances and
guarantees in their existing shape? This needs a probe.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Insurance:<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">When the small-scale industries of Yester decades used
to take out insurance cover for the plant and machinery against fire, riot, and
risks, through the liability jointly owned by both the credit institution and
the borrowing enterprise. After universal banking was ushered in, several banks
took to Bank Assurance. A transparent joint insurance policy gave place to a
policy that just lists the names of the borrowing MSME firms with the amount insured.
The firms are ignorant of their liability under such policy and its renewal
terms annually. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">There is no evidence of any insurance claim of such
bank insurance of enterprise machinery as a primary asset response. On the other
hand, as several MSMEs noted that banks have over-booked insurance premium
amount upfront with every loan sanction – whether term loan or working capital.
Never did such insurance pay off for the MSE in trouble.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Both the MSMEs and the Banks have debated their mutual
deficiencies in several media discussions, and they are plagued by mutual
distrust. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">While the redefinition helped many scale up their
enterprises and move to exports quickly, there were lakhs that shut their doors
during the pandemic. The impact of redefining has been such that a negative 1.8% MSE
outstanding loan in FY20 has moved to 4.8% year-on-year by the third quarter as
the existing. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Guarantees:<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">The 'strength' of a
guarantee that allows credit to the enterprises without collateral or third
party, is context-dependent: it depends on its nature, the legal environments
that are relevant, current practices, and the context when the lender exercises
his right. Yet, for twenty years, institutional credit to the sector leaves a
gaping hole of Rs.279 trillion according to the International Financial
Corporation (2015) study.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">RBI mandated Banks to extend
credit to micro-enterprises under CGTMSE up to Rs.10lakhs per enterprise. While
the CGTMSE can extend guarantees to MSEs up to Rs.2crore, the covers range from
75 to 85 percent of the loans. During the last three years (2018-21), even
retail loans and the service sector are being covered with guarantees while the
extent of such guarantees is limited to 50% of retail loans. One hundred
Member-Lending institutions (MLIs) that include 23 NBFCs are availing of the
facility and yet several of them express serious reservations over such
ailment. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">Annual Report of CGTMSE
for Fy2021 reveals that 47 percent of guarantees pertained to loan amounts of
less than Rs.10lakhs (mandated by the RBI to extend without any collateral);
18% are in the range of loan amount of Rs.10lakhs-25lakhs; 14% are in the range
of Rs.25lakhs-50lakhs; 12% are in the range of Rs.50lakhs-100lakhs, and 9% are
in the range of Rs.100lakhs-200lakhs. Rs.45,851crore have been provided
guarantee cover during the year 2020-21.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">MLI concerns</span></b><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">:<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">The guarantee portfolio
increased after the retail, hybrid-collateral, and NBFCs joined, as these three
constituted 49% of the guarantees extended during FY 21. It is the 1.18crore of
the 6.3crore MSMEs that need a guarantee more than the rest. MLIs opine that the
guarantee premium of 1-1.25 percent involved a lot of paperwork, follow-up for
receiving the claim amount that too, after declaring the asset as NPA.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">Banks have to prove that
they have taken all the measures that include issuing legal notices, follow-up
on recovery, provisioning for the loans, and proceeding against the borrowers under
SARFAESI Act where the assets are partially guaranteed. These factors lead to a lack of trust by the CGTMSE both the MSEs and Banks.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">The Way Forward<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">MSEs in manufacturing
that forms an important component of sustainable supply chain management of
Industry 4.0 need different forms of credit acceleration and insurance
mechanism. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">While the Banks should
evaluate the credit risks of such enterprises on transparent parameters and
extend credit to MSEs along with counseling, mentoring, and follow-up, the
enterprises should digitize their operations and derive benefits from a large
number of schemes recently floated by the Ministry of MSME, GoI. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">Since fourteen states
take 88 percent of MSE outstanding credit, and these MSEs reported less NPAs
than their elder brothers in the corporate sector, each enterprise can be
insured for various risks that include, fire, riot risks, natural calamities,
the pandemic-like situations, plant and machinery, storage, other supply-chain
disruptions, and cash flows on a graded scale. Once the enterprise pays the
premium based on the risk it chooses to cover, and such risks are
well-measured, insurance will ensure that the enterprise will be a going
concern, and banks can extend the needed help duly assessing their risk cover as
well. It is time for a change the guarantee is looked at and replaced it with Insurance,
for which purpose, the GoI may appoint a High-powered Committee. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">The policy should be
transparent and discussed with the stakeholders in at least ten of the fourteen MSME-dominant states before
introduction. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><br /></p>
<p class="MsoNormal" style="text-align: justify;"><a href="https://timesofindia.indiatimes.com/blogs/fincorp/cumbersome-guarantees-and-insurances-for-mses-need-redress/"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;">https://timesofindia.indiatimes.com/blogs/fincorp/cumbersome-guarantees-and-insurances-for-mses-need-redress/</span></a><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;"> </span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;"> </span></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-83674333397885085282022-04-21T10:19:00.001+05:302022-04-21T10:19:06.545+05:30Future Agenda for Cooperatives <p class="Pa3" style="margin-right: -2.35pt; mso-prop-change: "Yerram Raju" 20220412T1039; text-align: justify;"><b><span lang="EN-US" style="font-family: "Times New Roman", serif;">FUTURE CO-OPERATIVE
AGENDA<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 115%;">B.
Yerram Raju*<o:p></o:p></span></p>
<p class="Pa3" style="margin-right: -2.35pt; text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman", serif;"> </span></p>
<p class="Pa3" style="margin-right: -2.35pt; mso-prop-change: "Yerram Raju" 20220412T1053; text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">The Home Minister and Union Minister for Cooperation, Amit Shah held
a meeting of state ministers to reformulate and revise the National Co-operative
Policy, 2022 in the aftermath of the resistance of the states to the 97<sup>th</sup> Constitutional Amendment 2012
and the consequential changed milieu in the Co-operative movement of the
Country.</span><span lang="EN-US" style="font-family: "Times New Roman",serif;"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 115%;"> </span></p>
<p class="MsoNormal" style="mso-prop-change: "Yerram Raju" 20220412T1043; text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 115%;">The
widely spread Co-operatives from brooms
to looms; from fertilizer to food; from production to consumption; from milk to
silk and from labour to power have their roots lie in the setting up of Primary
Agricultural Co-operative Credit Societies (PACS) in 1904. Entire cooperative
legislation has been catering more to the credit cooperative structure al bait
several imbalances and irregularities and faulty accounting practices. Urban
Cooperative Banks (UCBs), like the community banks in the US, has been serving
the limited requirements of the interested cooperators and have become symbols
of mismanagement and poor governance, requiring continual intervention and
regulatory architecture from the RBI to protect the interests of the depositors
who invested in those banks. <o:p></o:p></span></p>
<p class="MsoNormal" style="mso-prop-change: "Yerram Raju" 20220412T1043; text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 115%;">‘Cooperatives
are operatives in misappropriation’, bemoaned some famous cooperators like L.C.
Jain and eminent bankers like Burra Venkatappapaiah, in the yesteryears. After
the Third Five-Year Plan, the Five-Year Plan (FYP) documents removed the chapter
on Cooperation. After NABARD assumed charge of supervision of the rural
cooperative credit structure, their size and contribution to agriculture and rural
development significantly declined giving more space to the less-interested
commercial banks. There has been a strategy retreat from ‘Farmers’ Service
Societies’ (multi-purpose cooperatives) financed earlier by the commercial
banks<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 115%;">Context,
Rationale, and the problems</span></b><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 115%;"><o:p></o:p></span></p>
<p class="MsoNormal" style="mso-prop-change: "Yerram Raju" 20220412T1043; text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 115%;">The
lofty ideal of Gram Swaraj embedded in Panchayats and Cooperatives came to occupy
secondary status despite the 73rd and 74th Amendments to the Constitution of
India, mired in confusing objectives and corrupt practices. Cooperatives originally started with the laudable socio-economic goal of helping the unreached and
as effective instruments of financial inclusion, are today under the seizure of the political elite and became in fact the seedbeds of political power. The elected
representatives like the Presidents, Vice Presidents, and Board of Directors
appointed secretaries would do the things they want and not what the members
legitimately expected of them. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 115%;">Cooperative
Federalism demands that the states have to be taken on board over any new
policy changes as the subject of cooperation falls in the domain of the states
and not the union government. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 115%;">Martin
Luther King Jr, once stated, “Almost always, it is the creative dedicated minority
that has made the world better.” The largest food brand in India – AMUL proved
that cooperatives are the best bet for survival. “If you want to be incrementally
better, be competitive. If you want to be exponentially better, be cooperative,”
a Canadian Lesson Book on Cooperatives quoted. <b><o:p></o:p></b></span></p>
<p class="Pa3" style="margin-right: -2.35pt; text-align: justify;"><b><span lang="EN-US" style="font-family: "Times New Roman", serif;">Recommendation:<o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 115%;"> The Government should reformulate
its Future Co-operative Agenda to professionalize and democratize the Co-operatives
and also to facilitate the development of the Co-operatives as Self-reliant and
economically sustainable organizations in order to provide an environment for the
members to have improved access, economies of scale, insuring them against
unforeseen risks, safeguarding them against market imperfections and bestowing
the advantages of Co-operative Collective Action, based on <b>International Co-operative </b>Principles. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><b><span style="font-family: "Times New Roman", serif; font-size: 12pt;">Policy on Future Co-operative
Agenda:<o:p></o:p></span></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><b><span style="font-family: "Times New Roman", serif; font-size: 12pt;"> </span></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><b><span style="font-family: "Times New Roman", serif; font-size: 12pt;">Definition of cooperatives
should avoid their classification that gives a long arm to the regulator. <o:p></o:p></span></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman", serif; font-size: 12pt;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman", serif; font-size: 12pt;">* While upholding the values and principles of
Cooperation, the Policy recognizes the Cooperatives as an autonomous association of persons, united voluntarily to meet their common economic, social, and
cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman", serif; font-size: 12pt;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman", serif; font-size: 12pt;">This Policy addresses the hitherto unaddressed or
neglected issues of management, governance, audit, and member-run democratic
structure of the cooperatives in the country through legal, accounting, technological
and structural changes and therefore would prove its supremacy over other economic
instruments in the interest of inclusive growth, a goal not to be missed by any
democratic government.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman", serif; font-size: 12pt;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman", serif; font-size: 12pt;">Registrar of Cooperatives – role shall not be so
much of intervention as registration, maintaining membership data and
arbitration over the issues that arise among the co-operators and cooperatives.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman", serif; font-size: 12pt;"> </span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><b><span style="font-family: "Times New Roman", serif; font-size: 12pt;">Key Risk Areas:<o:p></o:p></span></b></p>
<ol start="1" style="margin-top: 0cm;" type="1">
<li class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-IN; mso-fareast-language: EN-IN;">The political will to
implement such policy throughout the length and breadth of the country.<o:p></o:p></span></li>
<li class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-IN; mso-fareast-language: EN-IN;">Speed of action<o:p></o:p></span></li>
<li class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-IN; mso-fareast-language: EN-IN;">Resources for
implementing change – Budgetary provisions; Endorsement of Niti Aayog –
the think tank of the present government and<o:p></o:p></span></li>
<li class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: justify;"><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; mso-ansi-language: EN-IN; mso-fareast-language: EN-IN;">Approvals from RBI and
SEBI, where required.<o:p></o:p></span></li>
</ol>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman", serif; font-size: 12pt;"> </span></p>
<p class="MsoNormal" style="tab-stops: 311.25pt; text-align: justify;"><b><span lang="EN-US" style="font-family: "Times New Roman", serif; font-size: 12pt; line-height: 115%;">Strategies To Achieve The Objectives:<o:p></o:p></span></b></p>
<p class="MsoNormal" style="tab-stops: 311.25pt; text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman", serif; font-size: 12pt; line-height: 115%;">
Technology
offers a level playing field and therefore, there must be a plan for technology
infusion. Co-operatives being financially weak enterprises owing to their
excessive obligations enjoined upon by the state governments, funds for
technology management should come from the State Government as a one-time
grant/support with conformance to certain discipline by the leadership in Co-operatives
from the primary to the apex levels in all the spheres. <o:p></o:p></span></p>
<p class="MsoNormal" style="tab-stops: 311.25pt; text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman", serif; font-size: 12pt; line-height: 115%;">
The Investment in technology can come as a grant or soft loan
assistance from either the government or an international organization. Co-operatives
that have adequate collaterals to offer can be enabled to do so with the
approval of their respective General Body. The tenor of assistance can be mutually
agreed upon between the giver and taker. <o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><b><span style="font-family: "Times New Roman", serif; font-size: 12pt;">Monitoring and
Implementation<o:p></o:p></span></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman", serif; font-size: 12pt;">There shall be a Policy Review Committee, meeting
at half-yearly intervals, at the State and Union Government levels with the
concerned Secretary-in-charge to chair the deliberations at quarterly
intervals. The concerned Minister shall present to the Parliament’s first session
of the year, a review of the efficacy of the delivery instruments under the Cooperative
Act.<o:p></o:p></span></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><b><span style="font-family: "Times New Roman", serif; font-size: 12pt;"> </span></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><b><span style="font-family: "Times New Roman", serif; font-size: 12pt;">Conclusion<o:p></o:p></span></b></p>
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; mso-layout-grid-align: none; text-align: justify; text-autospace: none;"><span style="font-family: "Times New Roman", serif; font-size: 12pt;">The vision for the twenty-first century should
withstand the challenges of a competitive business environment where excellence, efficiency, and high productivity parameters will be the priority. Emphasis will continue to
be laid on an improvement with co-operative governance through the process of
restructuring and rejuvenation.<o:p></o:p></span></p>
<p><span style="font-family: "Times New Roman", serif; font-size: 12pt; text-align: justify;"> </span> </p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-70038078620550894932022-02-22T11:58:00.000+05:302022-02-22T11:58:37.629+05:30Draft MSME Policy falls short of reality<p> <b style="text-align: justify;"><span style="font-size: 14.0pt; line-height: 107%;">MSME vision falls short of reality</span></b><span style="text-align: justify;"> </span></p><p class="MsoNormal" style="text-align: justify;"><o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">BY <a href="https://telanganatoday.com/author/TelanganaToday"><b>TELANGANA TODAY</b></a><o:p></o:p></p>
<p class="MsoNormal" style="text-align: justify;">21 FEBRUARY 22<o:p></o:p></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 0cm; text-align: justify;"><b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">By B Yerram Raju</span></b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 11.25pt; text-align: justify;"><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">The Draft National MSME Policy,
targeting V-shaped recovery after the Covid pandemic and the $5-trillion
economy by 2025 (since extended by two years to 2027), seems to have seen the
world more than India. There is a virtue in looking at the policies of other
countries during the pandemic. However, the policy nowhere mentions the reasons
for not adopting some of the policies, particularly employment as one of the
criteria for defining the sector, when we say from rooftops that MSMEs are
employment-intensive.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 11.25pt; text-align: justify;"><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">The virtue of the document is the
Vision: “Stimulate efficiency and productivity of MSME sector to generate
income, employment and become part of domestic and global value chains taking
into account structural transformation, competitive edge, demographic dividend,
and regional balance.” The objectives highlight building an eco-system for the
growth of the sector, sensitising stakeholders, creating physical
infrastructure and linkages amenable to MSMEs, developing a framework for
accessible and affordable technology upgradation, and an appropriate institutional
mechanism<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 0cm; text-align: justify;"><b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Historical Data!</span></b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><br />
It wants to develop a platform to create an integrated database under a uniform
format. It nowhere mentions that a census of the sector will be taken. Its data
for the present is historical – a mess-up of manufacturing and services. 63.9
million enterprises and 111 million employment are figures of 2015. Where could
one find the six crore units while one finds only 70 lakh on the Udyam portal?
According to the NSSO data (73rd round), 14 States account for 88% of the MSMEs.
While 98% are micro-enterprises, only 11-12% are in the reckoning for
manufacturing.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 11.25pt; text-align: justify;"><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">We must have a periodical census of
the MSMEs that spread across several sectors – agriculture, KVIC, artisans,
rural development, technology, food processing — as none is aware of the
mortality of enterprises. A study of 1,079 units of Sidbi in the wake of the
pandemic revealed that 63% of units are closed and 67% lost 50% revenues. ISID
(Bengaluru) found out only 16% of micro manufacturing units (as defined in July
2020) are functional. The mortality of units is not captured in any reliable
data frame. This will be possible only when a census is taken periodically.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 11.25pt; text-align: justify;"><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">It has extensively given the
facilitation to the SMEs in several countries but mentioned only 6 States’
policy innovations in Annexure-IV that represent 28% of MSMEs in India (NSSO).
It is good to see the extensive reference to the Prabhat Kumar Committee (2017)
to which no reference has been made during the last five years and very useful
inputs have found a place in the draft. Widening the Tool Room set-up is a
welcome policy intervention.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 0cm; text-align: justify;"><b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Legal Reform</span></b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><br />
As the MSME Development Act (2006) has dealt with the MSEs, an important
subject of the Act, disproportionately, a separate law should be enacted and
while so doing, redefine the sector in terms of the twin criteria of employment
and turnover as investment by them will not cross Rs 5 crore. This would
facilitate scaling up as well.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 11.25pt; text-align: justify;"><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Existing EPF is hardly adequate to
take care of eventualities as we noticed in the pandemic. Like in the farm
sector, all such enterprises should be covered with specific insurance for
employees. This would also enable data on employment more dependable for
synchronisation of other benefits to the sector.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 0cm; text-align: justify;"><b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Definition</span></b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><br />
The consequence of the revised definition on the twin criteria of investment
and turnover has been dealt with but failed to emphasise its effect on the
manufacturing sector. Till date, many do not know whether it is retrospective,
if so from which date and if not, from which prospective date it is applicable.
While we welcomed the change in July 2020, six months after the first Covid
attack, micro enterprises in the pre-July 2020 period were virtually the most
hit.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 0cm; text-align: justify;"><b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Relief Measures</span></b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><br />
Banks did not extend the Atma Nirbhar Bharat Abhiyan scheme -1 covering
moratorium and 20% increase in working capital to the micro manufacturing
enterprises. Among the small, those who had collateral securities and the
medium enterprises or mid-corporate enterprises were extended the benefits,
according to a few sample surveys conducted by RBI (they did not reach out to
the micro), Sidbi, ILO, Skoch, IMT, etc.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 11.25pt; text-align: justify;"><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">A sample study of 1,079 units in the
country over the effect of Covid-19 that Sidbi presented should unnerve the
economy: 67% of the MSMEs are half-shut, and 63% closed. Where did the money
spent under Atma Nirbhar Bharat to the extent of more than Rs 3 lakh crore go?<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 0cm; text-align: justify;"><b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Facilitation, Promotion Councils</span></b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><br />
The objective of the facilitation council – resolving delayed payments of MSEs
– has been side-tracked and the policy contours expected from the States has
been expanded to converting them into promotion/development councils in
coordination with the National MSME Promotion Council. They should have first
targeted strengthening the MSEFCs, as they are quasi-judicial, and then
considered establishment of MSME Promotion Councils with specific institutional
framework and objectives of functioning.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 0cm; text-align: justify;"><b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Funds and their utilisation</span></b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><br />
No evaluation of various funds and Fund of Funds released during 2020-22
through Sidbi and SBI has found a place, either for continuance, modification
or enhancement. Which sector has benefited the most? And what further steps are
needed to get effective returns on such investments and incentives? Answers are
needed to these questions.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 0cm; text-align: justify;"><b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Budget Utilisation</span></b><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;"><br />
Of the Rs 7,572.20 crore earmarked for the MSME Ministry in the Budget 2020-21,
Rs 5,647.50 crore was spent across various schemes while the remaining 25% or
around Rs 1,924.7 crore was left unspent. In comparison, 99.39% of the
allocated Rs 6,552.61 crore during 2018-19 and 95.81% of the Rs 7,011.29 crore
allocated during 2019-20 were spent with only less than 1% and 4% of
underspending respectively, said the MSME Minister in the Lok Sabha.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 11.25pt; text-align: justify;"><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">Equity should flow to the sector from
the Fund of Funds at the lowest cost to the MSEs. Following suggestions of the
Prabhat Kumar Committee, meeting a part of listing expenses for small
enterprises scaling up to medium or for raising equity in the stock exchanges,
establishment of SME Equity Fund, modifications to the rating scheme specific
to manufacturing MSEs, and creating a separate fund for Revival and
Restructuring through a separate Industrial Health Clinic like in Telangana
need incorporation in the policy.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 0cm; text-align: justify;"><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">State-specific Brand Equity Fund from
Fund of Funds should be set up by Sidbi on the following norms:<br />
•All SMEs can co-brand with this if they have ISO certification or any other
globally accepted certification standard.<br />
•Share in the equity would be dispensed by the State government through a specially
constituted committee in proportion to the size of the business.<br />
•Misuse or abuse of the Brand would entail heavy penalties including criminal
prosecution where warranted.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 11.25pt; text-align: justify;"><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">The Market Development Fund currently
in operation has not reached many units in the small-scale sector. This fund
should be accessed by the State government and dispensed through the same
expert committee constituted for the Brand Equity Fund. Like the Trade
Development Board of Singapore, this MDF should be made available for those SSI
units co-branding and joining for large tenders of other State governments or
any global contracts as a loan for matured tenders and as subsidy for unmatured
tenders.<o:p></o:p></span></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 0cm; text-align: justify;"><br /></p>
<p class="MsoNormal" style="background: white; line-height: normal; margin-bottom: 11.25pt; text-align: justify;"><span style="color: #282828; font-family: "PT Serif",serif; font-size: 15.0pt; mso-bidi-font-family: "Times New Roman"; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN;">The author is an economist and risk
management specialist. Views are personal.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><o:p> </o:p></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-17228467190655490272022-02-06T10:40:00.001+05:302022-02-06T10:40:07.961+05:30Disappointing Union Budget 2023<p> </p><p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;"><b>Bluster Budget</b><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">BY<a href="https://telanganatoday.com/author/telanganatoday">TELANGANA
TODAY</a><o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;">B. Yerram Raju</p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">PUBLISHED: 6TH FEB 2022 12:02 AM | UPDATED: 5TH FEB 2022 10:27 PM<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt; mso-no-proof: yes;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEiPQeftKBhdAxT16vpNnnZOxUx808DW2hXEAKQ-eedQbZ164A_rWdHUCZxi6oZpQvY9nBN-csaJV0ON4xASshO6RqN3e0KrG1EYIz6IdF8tcjAg8Y4EB4iOn8GYleLinAIuVIQ8Jzj_dc13jBuEo-BJ9lE8mFzzrP7z89ZHAKzrQob_PITOWizqsMBjKQ=s3456" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="3456" data-original-width="3456" height="320" src="https://blogger.googleusercontent.com/img/a/AVvXsEiPQeftKBhdAxT16vpNnnZOxUx808DW2hXEAKQ-eedQbZ164A_rWdHUCZxi6oZpQvY9nBN-csaJV0ON4xASshO6RqN3e0KrG1EYIz6IdF8tcjAg8Y4EB4iOn8GYleLinAIuVIQ8Jzj_dc13jBuEo-BJ9lE8mFzzrP7z89ZHAKzrQob_PITOWizqsMBjKQ=s320" width="320" /></a><br /></span><b>Budget leaves these ladies in search of viable options</b></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Usually, the Economic Survey presented a day before the Union Budget is
expected to lay the foundation for a policy direction. It acknowledges the
challenging times for policymaking – this time against the backdrop of the
pandemic impact, especially on the vulnerable sections, fall in consumption in
the medium term and serious supply-side disruptions. There are some half-truths
as well when it said that government expenditure has pushed consumption by 7%
in 2021-22. Even credit flow was tepid till the end of the second quarter of
this fiscal.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The Union government’s debt crossed 59.3% of GDP from 49.1% a year ago.
Recovery of the economy is unlikely to contain fiscal deficit as the major item
of investment is through public debt and less through tax revenue. The Finance
Minister’s Budget speech has little substance to combat either inflation or
inclusivity. It also seemed to ignore several suggestions from the pre-Budget
meetings.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Roads, highways, and railways are dependent on States for making available
the land but the States have not been taken into confidence and several
State-led projects were not supported by the Union government<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The Budget has laid, of course, a foundation for large investments in
infrastructure to flow under public-private partnership. But roads, highways
and railways are dependent on States for making available the land, and the
States have not been taken into confidence. Several State-led projects were not
supported by the Union government during the year. The same is the case with
the integration of rivers —Godavari, Krishna and Cauvery.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;"><b>Missing Mention</b>s<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The Budget disappoints on inclusive development and climate change.
Waste management has no incentive and de-carbonisation too was little talked
about. Infrastructure development leads only to temporary employment and in the
context of migratory unemployment that saw people dying on railway platforms
and highways, literally starving during the first Covid-19 lockdown, and their
returning to work, there are no clues. Inflation is least talked about.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The increase in GST (Goods and Services Tax) on which there was wide
applause is more on account of inflation than due to the increase in
productivity going by the drop in IIP. There was no mention of the revival of
manufacturing NPAs in Atma Nirbhar Bharat Abhiyan though the extension of the
guarantee mechanism under CGTMSE (Credit Guarantee Fund Trust for Micro and
Small Enterprises) modification and Sovereign Bond replacing the guarantee for
tender participation in public sector markets are most welcome for MSMEs. It is
the medium enterprises that got the best of the bargain. The agriculture sector
received an apologetic approach — a rise in MSP for wheat and rice accompanied
by a fall in subsidy for fertilizers by Rs 35,000 crore.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;"><b>Gujarat is Nation</b>!<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">No wonder the Chief Minister of Telangana in a deservedly hard-hitting
address, highlighted the thinking and approach of the Union government on
several issues, and particularly, those relating to Telangana. For eight years,
ie, since the inception of the State, Rs 42,000 crore is all that was given
under Central schemes. This is far below the disbursements made by the State
under the Rythu Bandhu scheme alone. Jal Shakti, the much-touted scheme of the
Union government, had an allocation of just Rs 60,000 crore while Telangana
spent Rs 40,000 crore on Mission Kakatiya and Mission Bhagiratha. The country
holds 65,000 TMC of water with just around 35,000 TMC utilised. The water
policy of the nation is in a shambles.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">When the International Arbitration Centre was officially launched at
Hyderabad and the State government has allotted enough space for it, it is
strange that the Budget announced it as a gift to the GIFT city of Gujarat!<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Uniform GST rate for toys, a policy framework for the toy industry and
targeting at least 1% of the market share from China would mean a Rs
10,000-crore opportunity for the MSEs. The Budget has done little<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Bihar Special Package, Gujarat Bullet Train, Karnataka Metro,
Bundelkhand Defence Corridor had space but nothing for Telangana. Gujarat is
the only State that received a mention in the allocations to the States as if
Gujarat alone represents the nation!!<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Further, the Budget should usually consider a few recommendations of
statutory bodies like the Finance Commissions and the NITI Aayog. This Budget
quietly slipped the recommended allocations to Telangana both under the 14th
and 15th Finance Commissions depriving the legitimate share of the State in the
Union Budget.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Even under the AP State Reorganization Act, 2013, allocations for important
projects like IIM, IIT, IT corridor, Warangal-Hyderabad industrial corridor are
forgotten despite repeated representations from the State. This squint-eyed
approach of the Union government makes one wonder whether we are under a
federal democracy or a unitary rule. This is the reason for K Chandrashekhar
Rao calling for rewriting the Indian Constitution, which has seen more than 120
amendments.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The International Arbitration Centre was officially launched at
Hyderabad but it is strange that the Budget announced it as a gift to the GIFT
city of Gujarat!<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Devils that lie in details<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;"><b>Legitimising Crypto</b><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The Budget legitimised the illegal cryptocurrency that has the potential
for killing the monetary stability of the large population by taxing 30% of
those assets. Finance Minister Nirmala Sitharaman said a “digital rupee using
blockchain and other technologies” will be issued by the Reserve Bank of India
in 2022-23. “It will also lead to a more efficient and cheaper currency
management system.”<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The RBI coming up with digital currency would add fuel to the fire, as
it may help only the fintechs. This could lead to financial instability in the
days to come. Digital literacy is at a 32% level and general literacy at more
than 45%. There is a cyber-fraud every day draining the hard-earned savings of
lakhs of persons hurting their livelihoods as well.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;"><b>NEP Neglected</b><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">There has been no increase in the allocation for the education sector.
The National Education Policy demands at least 4-5% of allocation for the
education sector but it ended up with less than 2%. The pandemic led to several
uncertainties in education — a mix of institutional and digital education — and
the complicity of some digital institutions awarding MBA degree that has been
rightly discredited by the AICTE.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;"><b>Poor Health</b><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The health sector, despite all encomiums in her speech for the
remarkable speed and efficiency in delivery of vaccines and improvements in
health infrastructure during the year, did not receive even 6% allocation.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;"><b>Uncertain Jobs</b><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Employment had a serious setback due to the pandemic. Employment
expectations on account of infrastructure projects under the PPP model will be
project-driven and not stability and security for the persons employed. Fifty
lakh persons to be employed in such projects and services sector would be a
mythical figure. The Budget is hollow here.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;"><b>Takers for Tourism</b><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Tourism and hospitality sectors received a big-ticket. But all of it
would depend on the people’s confidence in safe travel and safe food. Supply
chains for this sector are in serious problems. The allocations would give a
psychological boost for the sectors and would not materially alter their
fortunes at least for six months after the Omicron settles down without any
further variants hitting the economies around the globe.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Globally, commodity markets indicate a slump and have all portends of
inflation.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Budget quietly slips the recommended allocations to Telangana both under
the 14th and 15th Finance Commissions depriving the legitimate share of the
State in the Union Budget<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;"><b>MSME Sector</b><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The MSME Sector has some things to cheer about but much to mourn.
Extension of ECLGS (Emergency Credit Line Guarantee Scheme) till March 2023 is
welcome but they expect that the banks should extend the facilities to the most
beleaguered micro and small manufacturing enterprises. Rs 6,000 crore over the
next five years for a rating tool for the sector creates more fears as 98% of
enterprises are proprietary and partnerships (family concerns).<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The organic databases of G to C, B to B, and B to C would perform as
portals with interlinkage of Udhyam, e-Shram, National Career Service (NCS) and
Aatamanirbhar Skilled Employee Employer Mapping (ASEEM) portals, giving data a
big push. There is no indication whether data itself would provide security
instead of collaterals or guarantees sought by banks. The proposal to initiate
a completely paperless, end-to-end online e-Bill System in all central
ministries will greatly help MSME suppliers as it is to reduce delays in
payments and make the process transparent. It is, however, doubtful whether
this step would boost skilling, re-skilling, up-skilling and promote new
enterprises because of the present levels of digitisation of the MSEs.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Micro and small manufacturers or service providers are sub-contractors
and the FM’s announcement of substituting guarantees demanded by the
governments and PSUs by a surety bond at the hands of insurance companies could
be saving the working capital gap. It is important to see the fine print here
and that the subcontractors get their due share.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">A fund with blended capital raised under co-investment model facilitated
through Nabard to finance startups in agriculture and rural enterprises for
farm produce value chain is proposed. Startups will be promoted for Drone
Shakti. It will be the large among the SMEs that may take advantage of this
scheme. It also depends upon the way the co-investment model is structured by
Nabard.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">We have not seen much traction of PE/VC investments in manufacturing
MSEs and hope that the Expert Committee proposed would provide sufficient
comfort for the sector’s access to these funds. Extension of tax redemption by
one more year for startups beyond the existing three years would help many
service sector enterprises.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Micro and small manufacturing enterprises were the worst hit during the
pandemic and many have not been able to revive. While speaking about Atma
Nirbhar Bharat Abhiyan, the FM chose to ignore the failure of the subordinate
debt scheme meant to revive the NPAs as all banks have woven a wet cloth around
it. The manufacturing sector, due to severe supply chain disruptions, has grown
only by a modest 1.3% (IIP).<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">MSEs have sought the lowest cost of capital of which, there was no
mention in the Budget. Uniform GST rate for toys, a policy framework for the
toy industry and targeting at least one per cent of the market share from China
would mean a Rs 10,000 crore opportunity for the MSEs. The sector has been
demanding cash-flow-based working capital assessment from the banks as
recommended by UK Sinha Committee on which there was no word.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The Budget has done little for pushing consumer demand, particularly in
the context of McKinsey estimate of a fall in the retail grocery market by 20%
in the next five years.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">If GST has peaked to Rs 1.40 lakh crore, it is because of inflation and
not because of high buoyancy in production and productivity of the industry.
Industry is struggling to stay afloat<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;"><b>Doing Business will be Difficult</b><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">To establish a globally competitive business environment for certain
domestic companies, a concessional tax regime of 15% was introduced by the
government for newly incorporated domestic manufacturing companies. The FM
extended the last date for commencement of manufacturing or production under
section 115BAB by one year, ie, from March 31, 2023, to March 31, 2024.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The ‘One Station One Product’ concept is laudable as a souvenir shop
will help generate business and spread awareness about local art and craft.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Although the Budget 2022-23 proposes several initiatives for ‘Ease of
Doing Business’, including modernisation of building byelaws, Unique Land
Parcel Identification Number for IT-based management of land records,
Accelerated Corporate Exit and introduction of new ‘Updated return’ — a
provision to file an Updated Return on payment of additional tax, the cost of
doing business is bound to go up and this will dampen the initiative.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">The country needs judicial reforms and several regulatory reforms to
make us highly competitive. The Budget was silent on these. The issue of high
Customs duties and non-tariff barriers on basic raw material, other than steel,
such as copper, aluminum, and polymers also remain largely unaddressed.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">Poor, earning less than $1.90 a day as per purchasing power parity of
2011, have nothing to cheer. The Union government seems to be for the rich, of
the rich, and by the rich. While rich by itself is no evil as everyone would
like to be one, the road to such reach should be laid by governments. Some old
tools, like more investment through PPP and disinvestment, to ensure a level
playing field have been dusted off to provide the companies some cheer. The
Budget is deceptive in approach and has less prospects of success.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><i><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;">(The author is an Economist and Risk Management Specialist)</span></i><span style="color: #111111; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-IN; mso-font-kerning: 18.0pt;"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><a href="https://telanganatoday.com/bluster-budget">Bluster Budget
(telanganatoday.com)</a><span style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%;"><o:p></o:p></span></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-84138455594764109492022-02-03T15:15:00.005+05:302022-02-03T15:15:57.637+05:30Prof. R. Radhakrishna, Eminent Economist<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEifqmoutgQhDS2AIgBTNPMPk5MJWEWPB4meoev4eEOL7PtvDo_ErdVJKWY80EFoWiD1lgQis7dWEAanISNXq_iOwt6EACslE-ufX08rMUtTM6lDFILY_r11Kww2fd1mgFNtFCb-BLePwChE1tKUiZArmlYLof0n9FiG1KDreec7Yl9sOx10J-3QUMPeNQ=s318" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="240" data-original-width="318" height="240" src="https://blogger.googleusercontent.com/img/a/AVvXsEifqmoutgQhDS2AIgBTNPMPk5MJWEWPB4meoev4eEOL7PtvDo_ErdVJKWY80EFoWiD1lgQis7dWEAanISNXq_iOwt6EACslE-ufX08rMUtTM6lDFILY_r11Kww2fd1mgFNtFCb-BLePwChE1tKUiZArmlYLof0n9FiG1KDreec7Yl9sOx10J-3QUMPeNQ" width="318" /></a></div><br /><p></p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="mso-ansi-language: EN-US;">A Tribute to Prof. R. Radhakrishna, Chairman,
Centre for Economic And Social Studies<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="mso-ansi-language: EN-US;">A treasure trove in economics and econometrics
– he has left a big void with his sudden demise on 28th January 2022. It is difficult to imagine he is no more. I had three interactions after his movement to Visakhapatnam
following his illness. Pandemic did upset him greatly. Even in our brief
interaction, he expressed his deep distress over the impact on the poor and
migrant labour that the pandemic has been causing.<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="mso-ansi-language: EN-US;">My first association with him was when he
worked with the Agro-Economic Research Centre, Andhra University in the company
of Prof. G. Parthasarathy, a great economist of the times. “Professor
Radhakrishna’s life-long work on Growth, Inequality, Food Security, Poverty,
and wellbeing is widely recognized as illuminating, authentic and credible.”
(Ch. Hanumantha Rao, in a blurb on his book – The Essays on Indian
Economy).<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="mso-ansi-language: EN-US;">During my association with Farm and Rural
Science Foundation, I invited him to deliver the first J. Raghotham Reddy
Memorial Lecture. He readily agreed and laid a firm foundation for further work
of the FRSF. After my joining Administrative Staff College of India, my
interaction with him became closer. He invited me on a few occasions to talk to
the researchers of CESS on the research ideas and methodologies on credit to
the poor. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="mso-ansi-language: EN-US;">When he moved to IGIDR, he associated me for a
meeting to discuss the syllabus of Law And Economics Course. He involved me in
a couple of Committees he chaired: Agricultural Indebtedness and AP
Agriculture. He is a great leader and effective coordinator. His commitment to
research and a concern for the common man, and belief in institutions that could
contribute to the development of the poor, like the cooperatives, FPOs leave an
imprint on the Indian economy. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="mso-ansi-language: EN-US;">When I requested him to write a Foreword to my
book on India’s Economic Resurgence, he readily agreed and released it in the
CESS Auditorium. <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="mso-ansi-language: EN-US;">His erudition on Poverty Studies and Agriculture
gave me immense benefit. My interaction with him at the Andhra University,
University of Hyderabad as Vice Chancellor, as Director, CESS and IGIDR, Chairman,
ICSSR, and Chairman of Indian Society of Agricultural Marketing gave the new
angle in him. He is a great administrator, researcher, <span style="mso-spacerun: yes;"> </span>a good teacher, affable person, a good
conversationalist, and a great human being. I am sure the galaxy of researchers
built by him would carry on his legacy. I bow to him in all humility. May his
soul rest in peace.<o:p></o:p></span></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0tag:blogger.com,1999:blog-842314746645690307.post-34851566779000176642022-01-28T08:06:00.002+05:302022-01-28T08:06:36.337+05:30Union Budget 2022-23<p> </p><p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Union Budget 22-23<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><b><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman", serif; font-size: 12pt; line-height: 107%;">Backdrop:</span></b></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">The expected growth rate of 11 percent in the Economic Survey 20-21 is
now pegged at 9.5 percent by RBI and several global rating institutions in the
backdrop of negative 7.7% growth rate of 20-21 whereas the World Bank upgraded
India’s outlook for the year to grow by 8.3 percent in FY 2022. The V-curve
expectation of the Chief Economist of India, in an online seminar in August
2021 would prima facie appear real, with health infrastructure measuring up to
withstand the second wave of Covid-19 and the inescapable third wave of Omicron
variant of the pandemic rescue in full swing. It is inflation that led the GDP
growth instead of production and productivity increase. HBL headline of the 16<sup>th</sup>
instant shows decline of IIP to 1.3 percent. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Retail inflation index scaled to 5.9 percent; a five-month high during
December 2021. OECD has leagued India among the four nations that would cross
6.4 percent inflation this fiscal. The share of private consumption has been
steadily falling since the pandemic struck according to the latest RBI Survey. SBI
Report says that per capita income dented due to covid-19 effect by as much as
5.4 percent.<o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">The ratio of private consumption to GDP fell to 54.7 percent in ‘21-22
from 55.6 percent in ‘19-20. Demand for MNREG from all the states confirm that
rural wages for agricultural and non-agricultural workers have been flat.
Pandemic has also inflated both debt and deficit levels. IMF estimates that
India’s debt is around 90 percent of GDP, the highest among the peer group of
nations similarly placed, even by the end of the third quarter of FY21-22, an
unsustainable level. </span></span><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;"><o:p></o:p></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Financial Stability Report of the RBI and Morgan Stanley economist leave
the hope in financial sector. Last Budget has seen the mergers of PSBs, setting
up of Development Finance Institution to finance infrastructure and National
Asset Reconstruction Company (euphemism for Bad Bank) to reduce the
non-performing assets of banks. The quality of assets of banks improved and the
NPA accretion during the year saw a decline. However, micro, and small
manufacturing enterprises got a raw deal at the hands of banks and NPA levels
of NBFCs and Fintech companies are on the rise. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">While India could save the lives of many, it is efforts to save the livelihoods
has only marginally impacted going by the CMIE Working Paper from A. Gupta
et.al quoted by the Economist, 14<sup>th</sup> January 2022. First wave 20-21
saw stagnation in poverty (measured by $1.9 per day in 2011 purchasing power
parity) and oscillated in rural poverty whereas both urban and rural poverty
declined with urban poverty nearing zero and rural poverty reaching 18-19
percent, during the second wave. It is a moot point whether increase in gross
fixed capital formation post 2019-20, a proxy for private and public investment
in absolute terms and as percentage of GDP, has led to the reduction in the
number of the poor in the country. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><b><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Budget Hopes<o:p></o:p></span></b></span></p>
<p class="MsoNormal" style="text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">“.It was the spring of hope and the winter of despair,”
to recall Charles Dickens’ description in the Tale of Two Cities. Markets
responded very positively with several startups and IPOs in the green. <span class="MsoHyperlink"><span style="color: windowtext; text-decoration: none; text-underline: none;">Then, what could be the expectation from Sitharaman, the
FM? Everyone expects that taxes could be lowered and incentives to pep up
consumption should be increased! What is the balancing trick that the FM would
do?<b><o:p></o:p></b></span></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><b><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Revenues</span></b></span><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">:<o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">GST revenues have been buoyant, but the states want the compensation for
loss of revenue that could end by this fiscal to continue for two more years!
With elections in five states announced, and general elections that would
follow two years hence, the FM has little scope to cut revenues on this front.
She can expect dividends from all the PSBs and profit-making PSUs to make up
the revenue deficit to an extent of at least 1.5 -2 percent of GDP. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">The FM should increase non-tax revenues very discreetly. She is hamstrung
on fiscal deficit. This is likely to surge to 6 percent from the stated level
of 3.5 percent as the State Survey of RBI also mentioned that all the states
crossed the benchmark level of 4 -4.5 percent of public debt. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Investor sentiment will not be hit badly even if she increases the share
transaction tax to 2 percent. This measure does not involve tax administration expense
but earns revenue every day instantaneously into government account. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">As part of <b>agricultural reforms</b>, she should announce separate
budget for the sector: 1. Assurance on MSP for a few commodities with a sunset
clause; 2. Digital agricultural market incentive as part of Agricultural Market
reform; 3. Agricultural Income Tax for income above Rs.25lakh per annum at 5
percent; 4. Incentive for farm mechanization and formalized lending to tenant
farmers; and 6. Strengthening Rural Cooperatives and 7. Restructuring NABARD. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><b><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Allocations:<o:p></o:p></span></b></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">The FM should strengthen implementation of the budget proposals towards
reforms in the areas of judiciary, police, and administration through even
symbolic allocation. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Health sector should get at least 6 percent allocation both for
infrastructure and functional efficiency. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Education sector, consistent with the National Education Policy 2021,
should receive 3 percent allocation and mandatory schooling of the wards of the
parliamentarians, legislators, and government servants in government schools.
Mid-day meals programme should be strengthened.<o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">The FM should be bold enough to introduce abolition of surcharge of all
types to demonstrate the cooperative federalism.<i><o:p></o:p></i></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><b><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Micro and Small enterprise sector<o:p></o:p></span></b></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Micro Finance Association has already demanded Rs.15000 crores to make up
their capital erosion, due to the pandemic. While conceding to this demand, she
should also announce a new law to deal with the micro and small enterprises.
While 98 percent of MSMEs are proprietary or partnerships (family-owned
mostly), the benefits of the existing MSME Development Act 2006 have reached
the medium and large among the small, to an extent of over 55 percent. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">The threshold level of TReDs should be also reduced at the entry level to
Rs.50cr turnover per annum to activate factoring and bill finance as
independent finance channel. Cluster of manufacturing MSEs should be enabled to
pool their limits and collaterals under a separate agreement with the banks and
FIs so that they can access inputs at lower costs and sell on TReDs platform as
a pool. All the government departments also should be mandated to purchase on
this platform by registering on TReDs. <o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Indiscriminate application of SARFAESI Act by the Banks should be
contained by announcing a state approved third party scrutiny of NPAs in the
manufacturing MSE segment. SIDBI should be restructured as it hardly met the
expectation of the sector during the last thirty-one years of its existence.
Banks should be mandated to furnish data on the number of enterprises financed
in manufacturing and services MSEs and not in terms of number of accounts.<o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">While most queries on finance should be dealt with by the Department of
Financial Services, Union Ministry of Finance, they are directed for response
to the Ministry of MSMEs that does not have a voice with the banks to resolve
the issues. The solution lies in resolving across the table all such issues
through a monthly meeting between the DFS and DC-MSME on a pre-determined date.
<span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">Priority sector targeting is a soaring point for the banks while they do
not admit to this openly as it carries interest rate risk and loan origination
risk. Lending MSEs has no charm for the PSBs and large traditional private
sector banks. SFBs and NBFCs could be the best windows. FM may announce
suitable measures for better regulation of the sector. FM should resist the
temptation of state interventionism to bring big business to heels.<o:p></o:p></span></span></p>
<p class="MsoNormal" style="text-align: justify;"><span class="MsoHyperlink"><span lang="EN-US" style="color: windowtext; font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">*The Author is an economist and risk management specialist. The views are
personal. </span></span><span lang="EN-US" style="font-family: "Times New Roman",serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;"><o:p></o:p></span></p>FINCOPhttp://www.blogger.com/profile/17582600946723759375noreply@blogger.com0