July , 2023
EDIT- JULY - 2023
22:05 pm

Dr. H. P. Kanoria

Dear Readers
Indian Economy: The Nation seems to be on course to achieve the ‘developed country’ status by
2047 as forecasted by Swami Vivekananda in 1897. The government of India under our honourable
PM has been working in this direction. Current ties of US and India will be a landmark with US
becoming the biggest trading partner of India in FY23 with trading volume touching USD 128.55
billion, while China is in the second position. Major deals are in the areas of defence, semiconductor
and high-tech sectors. India’s Current Account Deficit (CAD) is expected to narrow to below 2% of
GDP in FY 23- 24.
RBI governor said that the fight over inflation is not over yet. The Monetary Policy Committee
meeting of RBI has decided to keep the policy repo rate at 6.5%. RBI will strive to contain inflation at
4%, as targeted. Inflation is expected to be 5.1% in FY24. Moreover, Russia-Ukraine war has led to
surge in inflation.
S&P Global rating agency kept India economic growth at 6% for FY24. Fitch has revised India
growth for this FY to be 6.3% from earlier forecast of 6% in March 2023. Animal spirits of if the
wealth and job creators remain subdued due to fear psychosis of the debt and uncertain external
factors. Government is working to increase the CAPEX investment. The Centre has approved the
grant of interest-free and long-term capital expenditure loans of ` 56,415 crore to 16 states so far in
2023-24. The world is seeing the opportunity by investing in India.
Export and Import: India’s crude imports from Russia jumped 14 times in FY23, rising to USD
31.02 billion from just USD 2.2 billion in FY22 which has helped India to increase petro – product
World Economy: IMF has projected the global growth to bottom out at 2.8% in 2023 before rising
modestly to 3% the next year. For 2023, IMF projects a GDP growth of 1.6% for USA, 0.4% for UK,
1.3% for Japan, –0.1% for Germany and 1.5% for Canada.
Meanwhile despite the marked drop in growth projection, India continues to be the fastest growing
economy, with China’s growth at 5.2% this year and at 4.5% in 2024, as projected by IMF.
PM Modi’s USA visit is expected to be conducive for both the countries. The visit resulted in many
deals to enhance manufacturing in India, like GE–HAL deal which may allow India to co-produce jet
engines for use in Tejas Light Combat Aircraft and Generation 5 Fighter Jets. This will expand the
employment and will add to GDP growth.
Amazon plans to invest USD 15 bn in India over next 7 years in India in different ventures after
having already invested USD 11 bn in the country. Micron planned to put in an investment for
manufacture of semiconductor in India. NASA will be providing advance training to Indian astronauts
with the aim of setting up, in collaboration with ISRO, a joint international space station by 2024.
India and USA will work jointly to make the world a better place.
UK-India free trade talks are being actively pursued for the benefit of both the countries.

IBC: RBI, vide a master circular, has permitted banks to declare any account as fraud account without
hearing, in violation of the principle of natural justice which allows a fair hearing to the borrowers
before classifying the account as fraudulent. Bombay High Court granted interim stay on the fact of
the master circular of RBI. Fear psychosis is dominating the management of lenders and FIs. It is safe
for them to mention an account as fraud and refer to IBC proceedings, not giving any opportunity for
restructuring without considering the external factors.
Central Bank is considering to allow loan restructuring to those affected by natural disasters /
calamities. RBI should also consider external factors like what impact a change in global trade policy
can have on different players.
RBI guidelines will embolden the management of lenders. The proposal issued guidelines for
compromised settlement and technical write-off in case of enterprises affected by natural factors. The
technical write-off refers to cases where the NPAs remain outstanding at borrowers’ loan account
level, but are derecognised by the lenders only for accounting purposes. These new guidelines are
aimed at getting better results than the IBC process which, in most cases, has resulted in transferring
distressed businesses at throwaway prices. More than 75% of the firms undergoing IBC proceedings
have ended in liquidation. Investment by the flagship companies needs to be treated favourably for
job and wealth creation, and not to be termed as ‘diversion of wealth’. Family members of the alleged
/ default promoters / founders should not be barred from fresh borrowings. The alleged account
should not be categorized as a wilful default / fraud without concrete evidence, and the promoters
should be allowed to run the enterprise and all the collections should be used for operations,
overheads and repayment of debts. Putting the enterprise under an administrator who is neither an
expert in technology and nor has domain expertise or the skills for running the business enterprise,
inadvertently decreases the value of the enterprise. The compromise settlement and re-structuring is
expected to enable lenders to make better recovery of the money and with less delays and without
substantial haircuts in the range of 80 – 90% as in the case of a large number of IBC cases.
Healthcare: The Covid-19 pandemic had seriously exposed Indian healthcare sector which needs
urgent capital investment to meet the normal and emergency needs. Healthcare is very poor in the
rural areas
of the country. The sector which is also a social sector needs massive support. Wealth creators’
philanthropy and spirit is down at present. Also, setting up of medical institutions requires passing
through myriad hurdles, approvals and obstructions from local to higher authority levels.
Greenfield project for hospitals needs 10-12 years to start operating while it is burdened by the
increased cost of investment by interest cost and penal cost which mounts the debt.
The growing and ageing population needs increasing healthcare services. The sector can provide great
opportunities for employment. Over 100 mn Indians are now estimated living with diabetes. Around
136 mn are pre-diabetic with sugar levels higher than normal but not high enough to qualify as
diabetes. Over
36% of the population are likely to suffer from depression. Youngsters are committing suicide due to
depression and pressure.
It is a pity that Indian doctors are working globally with high skill and fame. Indian economy can
grow further if the government works out a conducive policy framework for the Indian healthcare
system to prosper. Indian doctors can flourish in India, and with active involvement of our home-
grown entrepreneurs the medical tourism industry can boom.

Indian Pharma companies are selling their products abroad which is a great consolation.
We have 1.3 – 1.5 doctors for every 1000 people. There are 1,01,043 MBBS seats in 660 colleges.
Out of these, 52,778 are in government colleges while the remaining seats are in private MBBS
There is a mushroom growth of engineering colleges, but not medical colleges. Setting up a 150-seat
medical college needs an attached 350 beds hospital. Land is scarce. Setting up a multi-specialty
hospital with all modern facilities in any of the metros will call for investments of more than ` 800
Requirement of Nursing Colleges is also very high. It is essential to:
(a) restructure loans with moratorium of 9% simple interest depending on future cash flows and
values of assets, while keeping the assets classified as ‘standard’
(b) classify loans as priority sector lending
(c) provide additional working capital
(d) an investment or contribution made by corporates to hospitals and healthcare facilities should be
treated as contribution under Corporate Social Responsibility (CSR) under Section 135 of Companies
(e) allow banks, NBFCs and FIs to convert their loans into CSR contribution to hospitals and
(f) GST rate on medical equipment and supplies be reduced from 12% to 5% with immediate effect
Several hospitals under corporate sector and social sector (charity) are today lying closed due to
several reasons. A policy package should be worked out to revive those units in order to quickly add
to the healthcare capacity of the country.

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