Dear Reader,

Agriculture is the backbone of the Nation. It provides sustenance products to all beings. In the Vedas, agriculture is said to be the best profession. Krishi Sarvatam Varinjya Madhyam. India was called- ‘Golden Bird’, ‘Sone ki Chiriya’- a land of milk and honey. Lord Krishna was himself engaged in profession of cattle rearing. All these were accounts of rural agriculture, horticulture, and cattle rearing sectors. However, with growth of manufacturing and services sectors, the share of agriculture in the country’s GDP has slided sharply. Now it is recovering. The Economic Survey has estimated that agriculture sector will grow 4.15% in 2016-17 after a paltry 1.2% growth in 2015-16. Agriculture’s contribution to India’s GDP is about 18% presently. Now some economists are suggesting to tax agriculture income. This will be a great blunder. Rather investments in agriculture, horticulture, pisciculture, poultry, and cattle rearing should be tax-free and the source of funds (except if the source is not suspected to be from terrorists) should not be investigated. Investments are needed to modernize and mechanize agriculture. India has the weather to grow all kinds of pulses and it also has the incentives. A small country like Myanmar is exporting substantial quality of rice and pulses. Its economy is dependent on agriculture. Government should restructure loans of farmers. At times, they are under the threats of drought and floods. Do not waive the principle. Waive off interest portion when that area is affected by either drought or flood. Restructuring time should be the ability to pay loans with sum of 7%. It is unfortunate that even after seven decades of independence, our agriculture remains monsoon dependent. We need to improve our irrigation system. We need to tame our rivers for drought and flood. In the rural areas, the money merchants used to waive or restructure the interest portion in times of drought or flood. Despite the vagaries of nature, fruits' exports rose 18.5 % in 2016-17.

United Nations Global Compact (UNGC) had identified 17 sustainable development goals for India. Research shows that by 2030, the 60 largest opportunities created by achieving the global goals could generate business revenue and saving worth more than USD 1 trillion. Pursuing these opportunities could also create nearly 72 million new jobs by 2030. The global goals can only be delivered with the cooperation of strong private sectors. But to what extent private sector can participate is debatable. Enforcement of business rules and regulations remains a grey area in many countries. Before advising enforcement authorities to penalize companies for non-compliance, it is prudent to look into the causes by independent Tribunals.

From the last three years, NPA has become the buzzword. The total NPA of the banking system is reportedly over Rs.7 lakh crore. A major portion seems to be in PSBs and about 50 borrowers belong to infrastructure, construction, power, iron & steel, cement, textile industries account for the bulk of NPAs in value. Government has to work out feasible resolution plans. Change in management in distressed companies can help a turnaround. Professionals can be employed to run the companies with infusion of capital/loans under strict vigilance. In terms of restructuring exercises, bankers need to be assured impunity from future investigations. Government is exploring the idea of allowing cash rich PSUs to buy stressed assets and turn them around. However, that is feasible only if the PSU is either from the same line of business or matter of diversification having surplus liquidity.

Except a few cases, promoters are not at fault. Most of them have been victims of economic circumstances. Modi’s government has approved an ordinance to tackle with NPAs. Reserve Bank of India has been empowered to advise banks on resolution plans for individual accounts and RBI can now form Oversight Committees to assist and guide banks on resolving NPAs. Will it not be one more bureaucratic structure to resolve the stressed assets issues? It is pushing India’s Central Bank, a regulatory monitory body, into operations. Decentralized powers are being centralized. RBI Act does not give operational control over banks. It is being involved in micro management of the bad loans. By amendment of Banking Regulations Act 1949, government is providing some protection to officers and executives.

Government/RBI can form an independent committee comprising professionals, industry and sector specialists, bankers, academia and judges, and this committee can vet the various resolution plans.

India’s ranking is 130 in a best of 190 Nation in the World Banks (WB) 2017 Doing Business Ranking just a spot higher than 2016. Ease of doing business will certainly make a country rich. A country can progress, if all chains of doing business are unfettered. This will reduce delays in several approvals, local problems,
land acquisition, etc.

A major portion of Rs.7 lakhs seems to be in PSPBS and about 50 borrowers belong to infrastructure, construction, power, iron & steel, cement, and textile industries. The government/RBI should consider re-engineering the finance vis-à-vis the industry's global viability and form an independent committee comprising an expert professional, an industrialist, bankers, and a judge. The government is taking a national steel policy to favour Indian manufacturer to sail through the ocean of excess capacity, high rate of interest (double/triple of global rate of interest specially China), cut through global cooperation. The government’s move is to use the surplus capacity. The waiver is for special type of steel which is not manufactured in India . The current consumption of steel is 61 kg.  National policy project steel production capacity of 360 million tonnes and production of 255 million tonnes with 158 kg of capita consumption in 2030-31. Sickness of stressed assets in steel industry is due to wrong projection of government and consultants ignoring the global features. Even genuine promoters have to face criminal prosecution with no fault of theirs but government. The 300 million tonne capacity (by 2030-31) and consumption of 158kg per capita are ambiguous targets.

Real estate is already having huge unsold stocks. Infrastructure is in the grip of sickness. Who will consume? An additional Rs.10 lakh crore is required for creating such capacity. What about the WTO and China for adopting restrictive trade policy for import? What about coal? What about cheap power and money? The government is planning to give concession to foreign companies to invest in new steel sector which may be peril to existing small medium sector and also.

Stock markets are liquidity driven as reported earlier. Fundamentals have not changed. Valuation of many shares is on a higher side. Global growth outlook has improved, driving the risk appetite for investors. Foreign investors have taken a wait and watch outlook after investing $6 billion (around Rs.38,400 crore) from the beginning of 2017. They may walk out at any moment. It is better to book profit in view of current valuation. It is high time for banking industry to come in stock market with IPO to meet capital adequacy. Market is pressing to bank shares.

The latest world economic report forecast world growth at 3.5% in 2017 and 3.6% in 2018. The IME expects India’s growth to 7.2% in 2017-18 and 7.7% in 2018-19. India’s growth is consumption driven economy. Growth will not fall below a certain level.

From Vedic age, India has been renowned for herbal beauty treatment. Since two decades, both herbal medicines and cosmetics companies are entering the market and doing well. Global market is being captured. Multinational companies have been entering the beauty and wellness sectors. Cosmetic industry has emerged as one of the unique manufacturing and service industries, holding huge economic and employment growth prospects. In 2009, the cosmetic industry registered a sale of Rs. 356.6 billion even after the global economic recession. Growth seems to be 15% to 20% per annum. Indian cosmetic market was growing with a CAGR of 17.6% in the last 5 years. Chemical based cosmetics have side effects. Coconut, neem, henna, bhringraj or brahmi hair oils are becoming favourable choice of consumers globally. The spectacular growth of Patanjali is largely backed by the growth of cosmetic products. It is growing more than 20%. Multinational companies are switching over to the herbal products. These companies are also focusing on herbal cultivation, which will boost the economy of the poor farmers. Pure ghee and herbs are also being used and consumed. Healthy bacteria are secret to healthy and radiating skin. Probiotics
are live bacteria, which are helpful to the overall well-being of a body.

Growth of the cosmetic industry will certainly keep the demand up for herbal cultivation, boosting the financial position of farmers.

May God bless the Nation.


Dr. H.P. Kanoria

Editor in chief     



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