Dear Reader,

Bandhan Bank, which started about two years back, came up with an IPO to mobilise Rs 4,473 crore with an issue price of Rs 375. Shares of Bandhan Bank are presently trading at more than Rs 500 per share, 33% higher than the issue price. With a market capitalization of over Rs 600 billion now, Bandhan has become the eighth largest bank in India in terms of market capitalization in short time. Interestingly, its market capitalization is now more than all the public sector banks barring State Bank of India.

Had the NPA issue not received such wide publicity, the market capitalisation of PSU Banks would not have fallen by 50 to 70%. Had interest rates ranged between 9.50% to 11%, without so many charges like panel rate, front charges, defaulter charges, and high rate of interest, the actual NPA figure would be more likely to be around Rs 5 lakh crore instead of the Rs 8.41 lakh crore as claimed. Banks would have realised their dues/advances in course of boom time of businesses. Advances are made on the basis of prudence, perception and business analysis and reports given by consultants and the projection target of the government, the capacity expansion would not have been at least in steel sector. PSU banks' privatisation is not feasible and should not be done.

The Reserve Bank of India, the central bank of the Nation, in its bi-monthly monetary review summed up the state of the affairs as “Bullish on Growth”, “Dovish on Inflation” and that “the GDP growth could rise to 7.4% in FY19 from the estimated 6.6% in FY18”. RBI has maintained the status quo in its policy. It has lowered its inflation projection to 4.5% from its previous projection of 5%. The IMF, which had projected the combined fiscal deficit of the central and state governments at 6.4% of GDP in 2017-18, now intends to revise the figure upward to 6.7%. Oil prices and a growing tendency of protectionism around the world have posed threats to the Indian economy.

An impending trade war between the USA and China is brewing and has created a sense of uncertainty. US President Donald Trump claimed that USA ran a trade deficit of USD 500 billion vis-à-vis China in 2017 (although the actual figure was USD 375.2 billion). After imposing higher tariffs on imported solar panels and washing machines in January 2018, Washington followed up with higher duties on steel imports in March 2018. China retaliated by imposing higher tariffs on 128 items of import from US in April 2018. Within 24 hours, US reacted by proposing a 25% tax on 1300 goods of import from China ranging from aerospace, machinery and medical industries. The very next day China announced another set of retaliatory tariffs on 106 items of import from US accounting for USD 50 billion (including automobiles, aircraft, chemicals, soybean, etc.). A day after, US called for targeting another USD 100 billion worth items of import from China. China responded by saying that it is ready with further counter-measures. Now USA and China have started talks.

The main sufferers of such a trade war will be the low income consumers in US for whom low cost Chinese goods will become more expensive. The US’s manufacturers will now have to produce low cost goods, by lowering the cost of production. The savings rate in US is low. Nobel laureate economist, Joseph Stiglitz, has said that “Trump’s action will disrupt normal trade”. India has to think on the issue of mass scale dumping of Chinese products, imperiling many small and medium scale industries including some large companies whose products are similar.

Foreign investors had invested USD 2.06 billion in the India equity market in March 2018. Above 40% of the funds had gone to IPOs. They expect a minimum return of 10% to 12%. India is still a favourite among the emerging markets. The fundamental of the economy is robust. The economic outlook is fine. Profitability and earnings of many companies are good. In the market, ups and downs are bound to happen. After a steep rise, corrections are due. The extent of correction is to be understood. Geo-politics also plays a role here. If the tensions between China and the US, escalates into a full-blown trade war, it can adversely impact stock markets around the world. For capital protection and risk distribution, the inflow of money to India will get affected then. Some feel that the Sensex may decline to 30,000. The Indian market has already corrected by 10% from its peak. Higher interest rates in the US can increase pressure on equities. Inflow will be affected.

An entrepreneur is a person who takes all the risks to transform an idea into a business enterprise. He puts his money and whatever money he raises from friends and relatives, at great risks. In other words, he also put his life and his family at risk. He borrows the money from banks and other financial institutions. An enterprise can fail mainly due to external and internal factors. Failure can be due to lack of business acumen, delayed due to manifold approvals. Delay in any enterprise causes losses as interests keep piling up as do overheads. New competition, even domestic or global recession, change in policy of the government, labour problems, etc. – occurrence of any or many of these factors can lead to losses and/or closure. Availability of finance is most difficult. Remember, an enterprise is ruled by VUCA word  – Volatile, Uncertain, Complex, Ambiguious.

The central and state governments have recognised the role of entrepreneurs for economic growth and employment. Educational institutions have launched entrepreneurship courses. They are facilitating incubation of ideas. The central government has earmarked a fund of Rs10,000 crore for start-ups. A recent study- ‘Entrepreneurial India’- by the IBM Institute for Business Values and Oxford economists found that 90% of the Indian start-ups fail within the first five years. Reasons are lack of new technologies, unique business models, skilled workforce, funding, business acumen; delay in approvals, and so on. Since 2015, as many as 1503 start-ups have closed down in India. The highest numbers of failures were in logistics, e-commerce, and food technology.

Entrepreneurship is service to self, family, society, nation, and the world. Sacrifice is involved in entrepreneurship. An entrepreneur’s core objective should be creation and generation of wealth righteously for the welfare of all. The life of an entrepreneur is not a bed of roses. To be an entrepreneur, one needs to be a man/woman of steel. One must be hardworking and courageous, fearless, humble; and one must have forbearance and be righteous, and have faith in oneself, in all and in God. One must have good habits. After the failure of an enterprise, one has to rise again with a new spirit, a new energy. The government is working hard on facilitating ‘doing business with ease’. Reforms are getting implemented. But still, things have become more complicated and complex. Approvals are manifold. Funds are not available. Still, be an entrepreneur to serve the Nation.

Let us march with the flag of entrepreneurship to create and generate wealth and employment for the welfare of humanity.




Dr. H.P. Kanoria

Editor in chief     



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