Bharat/India: The sovereignty and integrity of India is of paramount importance. Bharatwasis are united. Prime Minister Narendra Modi had a meeting with representatives of 20 political parties following the border skirmish with China. With nails wrapped around rods and wires, Chinese soldiers killed 20 Indian soldiers. Our soldiers fought back. There needs to be accountability and transparency about measures to prevent Chinese land-grab in border areas. The long-term motive of the Chinese is to dominate India. That is totally unacceptable to Bharatwasis. However, we must realize that the only way we can manage the rise of China is by rising ourselves. We must grow at 7-8% per year for the next three decades. We must avoid complacency and work together in a Spartan and honest spirit. India should gradually reduce import dependence on Chinese and other foreign goods while also developing our export competitiveness. This will help India to become ‘Atmanirbhar’ and boost ‘Make in India’. There is a saying, “Necessity is the mother of invention.” This is the time for India to ramp up its productivity in all sectors including manufacturing, agriculture and services.
Wealth creators and generators should awake, arise and come out of the cage of fear and uncertainty about their enterprise not taking off, of sinking their capital, and of falling into debt. They need to recall how their predecessors had contributed to the development of Bharat in far more difficult and uncertain times and draw inspiration from that. Many states believe in mixed economy for fast growth. Government need to create confidence among the wealth creators and generators. It should also set up development finance institutions which can provide long-term finance at competitive interest rates. Private sector will have to be the main engine of growth; but it must also show devotion with righteousness in its management of enterprises. Stressed assets and defaults for factors beyond the control of businessmen should be structured and restructured with moderate rate of interest instead of wasting national assets and putting defaulters in the category of fraudsters facing criminal charges. Often businessmen, despite taking all possible precautions, become victims of circumstances and factors beyond their control. Wrongly framing criminal charges on them actually kills the spirit of entrepreneurship.
Even in genuine failures/defaults, wealth creators are exposed to their personal guarantees being invoked. They invest almost 20-25% of their family wealth and 75-80% of their accumulated debts into their ventures, and when a venture fails due to uncertain external factors, they and their families are at risk of becoming beggars and/or being put behind bars. This is like a Damocles’ Sword hanging over their heads for venturing to invest.
Prime Minister Modi said that the time has come for bold reforms, not conservative decisions – time to shift the economy from command and control to plug and play mode. It’s time to be Atmanirbhar in defence, manufacturing, mining, exploration, medical equipment, edible oil, fertilisers, electronics, solar energy, space technology and other sectors.
BJP National Spokesperson on Economic Affairs, Gopal Krishna Agarwal, said, “There are challenges for the manufacturing sector such as lowering the interest rate, labour reforms, reducing logistical costs, ease of compliance, availability of funds – foreign direct investment policy.”
Forex reserve crossed USD500 billion mark for the first time. India has become fifth largest holder of foreign exchange reserves after China, Japan, Switzerland and Russia. Global rating agency Standard & Poor’s (S&P) affirmed India’s sovereign rating at ‘BBB-‘, the lowest investment grade, and retained the ‘stable’ outlook with long term growth potential. S&P predicted India’s GDP to shrink 5% in FY2021 and then grow 8.5% in FY2022 and estimated that India’s fiscal deficit could spike to 11% of GDP this fiscal.
International rating agency Moody’s downgraded India’s sovereign rating by a notch to Baa3 from Baa2 with a negative outlook over a weak reform push contributing to a prolonged period of slow growth that it expects to continue beyond the Covid-19 pandemic. Moody’s expects India’s real GDP to contract by 4% in FY2021, followed by 8.7% growth in FY2022, and closer to 6% growth thereafter. The agency has also said that the longer the period of relatively subdued growth, the more likely India’s debt burden will continue to rise beyond 85% of GDP.
The Organisation for Economic Cooperation and Develop-ment (OECD) said that India’s economy could contract 3.7% in FY2021. The contraction can be 7.3% in case there is a second wave of the pandemic. The government’s fiscal deficit can range between 8.2% -8.9% in FY2021. The World Bank expects India’s economy to shrink 3.2% this fiscal.
The government needs to prioritise GDP for creating employment and revenue instead of taking harsh measures and adopting bad tax measures for increasing tax revenues. There is a sharp decline in imports, which will reduce the trade deficit. The fall in crude oil prices hasalso helped. Exports of goods have fallen too. Foreign Direct Investments (FDI) has increased as assets in India have been attractive in values and on expectation of doing business easier. External Commercial Borrowings (ECB) has been increasing due to relaxation in norms by the Reserve Bank of India and as interest rates are very low. Forex reserves have increased due to these factors despite large FPI outflows.
NBFCs: Banks’ credit to NBFCs has seen a rise of 30% year-on-year but the credit has mostly flowed to large NBFCs. Medium and small NBFCs are struggling for funds despite the RBI’s packages and TLTRO.
Migrant workers: Due to the apathy of government personnel and others, 68% of migrant workers do not still have access to cooked food and four out of five workers are still not getting access to government’s free meagre ration.
Hospitality sector: This sector is the economy’s third largest foreign exchange earner. It contributes 9.2% to the GDP and employs 43 million people. It is badly hit by Covid-19 and crashing economy. Indian hotel industry is expected to witness a decline in their revenues by ` 90,000 crore in 2020. Globally, many countries have already announced various packages for this sector. Canada has offered liquidity to hospitality players. India’s government should release funds and structure/restructure loans with moratorium for two to three yearsfor players in this sector. It is the greenfield projects and units in this sector, which have started operations in last three to four years, who need government help the most now.
Wealth creators and generators: Mukesh Ambani’s enterprise Reliance Industries, the telecom to oil conglomerate, has become net debt-free after it raised Rs. 1.69 lakh crore from global investors and a rights issue in under two months. This milestone of becoming net debt-free has been achieved much before the target date of March 2021 announced earlier by the group. Mukesh Ambani became the world’s 10th richest person as his real-time net worth crossed the USD 60 billion mark for the first time and his company became the first Indian corporation to cross Rs. 11 lakh crore in market valuation. He has diluted his company’s holding with overseas enterprises. Nation wealth, though with debts has been shared with overseas enterprises. To mobilise fund through the Right Issue was good to reduce debts. PSU banks and PSUs may venture this way.
MSMEs: Covid-19 will have an impact on 20-50% of the earnings of this sector based on responses from 14440 MSMEs. Sectors like hospitality, tourism, healthcare, etc. have been badly affected due to Covid-19 and slowing economy. These sectors need to be revived with restructuring of their debts with simple rate of interest, and not compound interest. The Supreme Court has directed that there is no logic to charging interest on interest.
Cover Story: The Internet of Things (IoT) is an inter-related computing system with the ability to transfer data over a network and multiple devices without requiring human to human or human to computer interaction. COVID-19 is having an unprecedented impact globally on the economy and peoples’ lives. IoT can help both. Through the internet, people are having business meetings, conferences, entertainment, health advices, social meetings and all sorts of other things. It is saving millions in terms of travelling, organising of conferences, meetings, and others. IoT revenues are expected to grow by $3 trillion in 2020 in India.
COVID-19 has accelerated technical adoption across India. From telehealth solutions to virtual classrooms, facilitating remote work, and enabling virtual control for decision-making, it is reimagining online business models and stepping up the cyber security needs. IoT will play a major role in reshaping education, public services & MSMEs for growth. Development of the internet will lead to de-congestion in major locations and cities. There will be a shift of jobs and employment to the suburbs and tier-2 cities. There will be a surge in mobile banking.
Bharatwasis may arise to meet the challenges courageously with faith in the Almighty.