Sunday, March 20, 2016

Nature's Bounty

Sweet Memories
Calgary -2



The lovely morning Sun
Shy of emitting heat
In the dazzling white snow
Breaking into the cool dark homes
Courteously spreads the bright light.




Skylarks flying high
Watching the deer’s merry run
Collect the soft branches of dry trees
Only to make a beautiful nest
For their eggs to grow to safe wings.



Rabbits white and lumpy
Rolling and running
Playing in the snow carpet of my backyard
Enjoying all the smiles of nature
On the waning winter’s Calgary


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Thursday, March 10, 2016

Consolidation of Banks is no cure to the Ills

James Crabtree of the FT reporting on the predicament of the then PM Singh commented in March 2012 that Indian Banking was at the brink and needed heavy capital infusion to catch up with Basel III requirements and clean up to measure up to the requirements of economic growth to revive to beyond 7%.

The position worsened ever since. Gyan Sangam (Intellectual Confluence), the second after the formation of the present government that discussed the revamp of the banks a couple of days back at Gurgaon, Delhi have not offered any better wisdom than loud whispers of consolidation of banks. Is consolidation of banks the right solution?

Wednesday, March 2, 2016

Budget 2016 Transformational Budget

Karl Marx once said speaking of the goals of economic satisfaction: ‘each according to his needs’ (communists achieved it); ‘each according to his ability’ (capitalists achieved it) -- extend this to each according to his greed (modern economies surpassed). Democracy means great expectations and the FM has to meet these expectations in the most unenviable challenging environment.

The stunning defeat in the States’ elections during the year made the FM look at Rural India, agriculture, irrigation and infrastructure in this budget as key to regain its political prominence. Noses ground to the soil made different voices allocating more than 8% of the budget 16-17 to agriculture, rural development and irrigation. The Economic Survey forebode it to a degree.

Economic Survey 2016 read between the lines indicates that the economy would travel in uncertain growth territory due to weak growth of world output (around 3%), declining commodity markets, turbulent financial markets, and volatile exchange rates. The current expectation of 7-7.75% growth during the current year and 8% in the succeeding years is the hopeful. Agriculture sector constituting around 15% of GDP at current prices having 60% of population dependent on it just ended with 1.1%; manufacturing with Make-in-India push surged to 9.5% and services in spite of start-up and digital India efforts slackened to 10.1%.  Unless manufacturing start-ups attract angel funds in a big way it would be difficult to show a double digit growth in the sector as the credit markets are weak.

Friday, February 26, 2016

Pre-Budget 2016 last strokes

Budget Run Up – The Last Strokes
The long wish list of the budget 2016-17 in the double-digit growth pitched economy has GST implementation as the top agenda and implementation of recommendations of Justice Eswar Committee on tax reforms as the second top item.

Farm sector and rural development find a big surge in the budget run up news columns. Declining credit is a cause for worry in these sectors as the banks hit by NPAs and loan write-off are in no mood to oblige the farmers. Agriculture infrastructure targeting market yard digitisation and revamp calls for a big ticket from the challenging budget 2016.  A separate budget for agriculture would have made lot of sense but the government has no such plans. Still hopes ride high in this sector.

Make-in-India requires a big manufacturing push and this is possible mostly with the MSME  sector that has so far drawn little attention.

MSME  Ministry recently redefined the eligibility criteria whereby the aggregate value of the Plant and machinery under the same ownership located anywhere will be reckoned to classifying as MSME, providing for vertical growth. This will correct the distorted subsidy regime engendered by horizontal growth.

Sunday, February 21, 2016

MSMEs Cry for Attention


Start-Ups in MSMEs, particularly in manufacturing can now look for vertical growth instead of horizontal growth with the MSME Ministry revising the definition of plant and machinery to include all such equipment owned by the same owner(s) across the districts and country to be reckoned for classification of MSME under the MSME Development Act 2006. In the long run this redefinition would do lot good to the sector. The sector may witness in the short term more NPAs.

Sunday, February 7, 2016

Big Data Helps Banks but should help customers too

http://www.moneylife.in/article/big-data-help-banks-but-benefits-should-be-passed-on-to-customers-as-well/45304.html
Banks collect and use client data for better targeting. They should also reduce operational costs by using technology and pass on the benefit to customers
I recall what Greg Baxter, global head of digital strategy at Citigroup mentioned almost a year back (reported in Financial Times on 1 February 2015) that big data is a big opportunity, making a big difference in how the banks serve their customers in future. Financial health barometer can be read by every customer, not just how much balance one has in the account as much as how much the money is likely to be overdrawn every month.

Thursday, January 28, 2016

MSMEs in the eye of the storm



MSMEs are in the eye of the storm with NPAs reaching 5.90 percent as of March 2015 even though the net accretion to the portfolio has gone down from 12.3% in 2014 in terms of number of accounts to 10.1% with a corresponding decline in amount outstanding from 23.9% to 13.6%. The industry NPA level was 5.47 although at the systemic level both industry and MSMEs represent 4.7%.  Only 7.9% constitute MSME advances to the total advances. (Financial Stability Report No.11, July 2015)
Risk appetite for the MSMEs is very low among banks and their adherence to the guidelines of both the RBI and GoI to identify sickness at incipient stage and introduce corrective action plans is highly suspect. There is reluctance among banks for either restructuring or revival of even viable advances. Their credit origination has also no less to blame. Monitoring and supervision are hit hard by lack of adequate field staff leaving most accounts for arm chair surveillance.

Friday, January 1, 2016

A Year 2015 that could be Better looking for the Best 2016

http://indiamicrofinance.com/year-2015-in-retrospect-2016.html


Reminiscing into the past to move fast on the promises for a bright future is the usual year end exercise. Many soothsayers lend their voices. The year 2015 is just about to close. Not many are jubilant. Farmers in a couple of southern States and Punjab and elsewhere committed suicides in penury, groaning under heavy private debt.
Parliament had two wash-out sessions, courtesy, the Congress, save just nine Bills passed by both the Houses. All the major reforms, particularly the GST the game changer, are on back burner.
Nature’ fury brought a major metropolis to ruble. El Nino caused havoc in several States turning the cool weather of the year into hot climate. Discussions on Climate changes, Environment, containing terrorism carried an imprint of Indian view making history. PM Modi with his birthday greetings to his counterpart in Pakistan on the 25th December, created waves in international relations although moving on rocks in India.
Expenditure on Defense and Police modernization has increased. Yet civic protection is on thin edge. More chain snatchings, more ATM thefts, and money-on-call crimes, gold smuggling surfaced. Most of the states have been galvanizing to digitization to tame the corruption. Not a single economic offence barring the decade-odd Satyam scam has put the culprits behind the bars and not a rupee of black money has been brought back from Switzerland to India. Cyber crimes continue to show their ugly face robbing the institutions and individuals’ wallets.
States are competing for ‘ease of doing businesses’ more through policy tweaking. Implementation issues and gearing the grassroots administration remain formidable. Hikes in pay and slides in rights make labour moving to roads.
Micro and small enterprises are still fighting for their space in credit markets and their contribution in manufacturing Make in India sector is full of tears. Although Bankruptcy Act gave hope to the India Inc there is still no exit route for the MSEs. Decade after winding up the unit, it receives a claim for payment of EPF where as Sec.14 of the BIFR Act provides relief for the corporate units.
Laws leave more for interpretation than for a conclusive ruling. Speed of justice is yet to roll out. The silver lining is that the Judiciary has been able to gear up the administration to timely action responding to PILs – food security for the poor in situations of drought, asserting the domain of Right to Information Act in certain restricted areas and the like.
Inflation has been tamed. Indices maneuvered to project higher growth thanks to a statistical model. The alert finance regulator reasserted his commitment to growth – reduced interest rates. But amidst rising NPAs credit markets are tepid. Volatility of capital markets amidst global concerns continued and the initial surge of investments has become timid.
Fed Rate hike as expected made its beginning as if the recession unwound. Yuan became the recognized third largest international currency. Amidst stable exchange reserves RBI is confident of holding the rupee range bound. Banks are at their wits-end to raise capital to meet the demonic Basel III norms by April 2017.
2015 in review