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Dear Readers,

Holi: Bharatwasis across the world have celebrated Holi festival (colour sprinkling festival), an occasion of love, harmony and joy. This festival marks the killing of demon Hiranyakashipu who had cruelly become monarch of the three worlds. He started living in Devaloka. He declared himself Bhagwan-God. His one son Prahlada was devotee of Lord Vishnu. Lord Vishnu had incarnated as Narasimha to save Prahlada. It is a joyous occasion to rescue from the fire when he was sitting on his aunt Holika’s lap who was burnt when the protective boom could not protect her as her intent was not good. Lord Krishna, the incarnation of Lord Vishnu, had played colour with all especially Gopis – ladies and Gopa-boys of Vrindavan and Barsana.

Bharat: Prime Minister Narendra Modi is aiming for attaining an economy size of USD 5 trillion by 2024-25. Presently, the economy is going through a on slowdown. The Q3 FY20 GDP stood at 4.7%. To boost investment and economy, the government has been taking several steps. The PM and the Finance Minister have had several meetings with industrialists to regain their lost confidence. The Cabinet has cleared bills, which will be presented to the Parliament for approval to decriminalise 72 provisions of the Companies Act. 23 out of 66 compoundable offences will be dealt with via internal mechanism.

Growth, trade (exports and imports), investments, savings and employment – all show negative trends. Strong and practical actions are required. The government’s Chief Economic Advisor (CEA) Krishnamurthy V. Subramanian has said the slump is part of business cycles, and is bottoming out. Changes in sentiment happen over time. He is hopeful.

Bankers hesitate to give loans while industrialists/entrepreneurs fear taking loans. In fact the latter are doing their best to reduce loans/debts by deleveraging. As a result, loan growth rate has plunged to 6.3%. Surplus of fund in banking system is Rs 2.5 lakh crore. Banks have also parked large funds with the RBI. Deposits have continued to mount despite low rate of interest, as equity market is very volatile and gold price have hiked. Real estate is in a bad shape.

Demand for credit from industries is low. Each loan has inherent aspect of risk of default. How to manage defaults is a matter of wisdom and not populist measures.

Growth of the mining sector is of importance to the nation. It contributed 3% to GDP in the 90s, however its share of India’s GDP stood at 1.53% in FY18. It has the potential to contribute up to 7 to 8% of GDP. Anil Agarwal of Vedanta is advocating the harnessing of the hidden wealth of India to boost economy and to create employment. It has been seized by populist actions of all three wings of the nation, namely, legislation, bureaucracy and judiciary. Large quantities of essential minerals have been imported even at high prices draining the scarce funds of the nation.

SMEs: This sector’s growth is limping. It can contribute greatly to GDP and push economy on the path of USD 5 trillion economy as envisaged by PM. It needs reforms in the Goods and Services Act. Some of the major problems that MSMEs are facing today include non-availability of credit, linking of credit with collateral, delayed payments by PSUs and governments, high rates of interest, delayed refund of GST payments.

Infrastructure: Due to risk factors, banks are not doing infrastructure’s finance. Bankers say that it is the job of the government. Hikes in costs are blocking the growth. As on Q2FY20, 1676 infrastructure projects are under implementation. Over Rs. 10 trillion has been spent on these projects. Amitabh Choudhury, MD and CEO of Axis Bank, has said that commercial banks are not suited for infrastructure financing.

To achieve the USD 5 trillion GDP goal, India would need to spend USD 1.4 trillion over the next five years for creating world class infrastructure vis-à-vis USD 1.1 trillion spent between 2008 and 2017. The secondary loan market which has participants like insurance, pension and mutual fund companies are governed by strict regulations. Government has to sort out the challenges. Time and cost overruns have become routine features. These problems are more acute in sectors like road transport, power, railways, oil, real estate. There are whole lot of central and states regulatory clearances which are needed. Land acquisition, rehabilitation, resettlements also take a lot of time. On top of these, funding now is a major constraint.

Government has taken various steps to enhance infrastructure investment by launching innovative financial vehicles such as Infrastructure Debt Funds (IDFs), Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs) and laying down a framework for municipal bonds. The Asset Recycling model to modernize existing infrastructure, like highways, is also being tried out.

CSR: Provisions were incorporated in Companies Act for mandatory Corporate Social Responsibility for firms fulfilling certain conditions regarding their size and profit history. Such firms are to spend at least 2% of the average net profits made during the three immediately preceding financial years.

The expenditures under CSR are not being allowed as business/professional expenditure under Income Tax. No specific exemption for CSR expenditure is allowed under the IT Act. Even expenditure under 80Gis not allowed. Expenditure on this score has to be made from net profit after tax. This is great fallacy. If not spent, firm stands to get penalised. The criminal provision is also incorporated.

Around 20,000 companies have to meet CSR obligations every year and the annual CSR spend is estimated at Rs 15,000 crore. The top 5,000 firms account for almost 80% of the total CSR spend. Around 15,000 companies have a spending obligation of less than Rs 50 lakh under CSR. They would no longer need to constitute CSR committees.

Service to humanity and all creations of God is inherent and eternal. We are endowed with compassion. Businesspersons and industrialists, inspired by holy texts and enlightened saints, have been serving humanity and protecting the environment, since centuries. We find inns (Dharamshala), schools, colleges, universities, hospitals, gosala (cow shelter homes), old age care homes, water serving booths, ponds etc. built by these people. Such acts of benevolence have been more spontaneous. Government has made it compulsory, complex and complicated by institutionalising CSR. There is wastage of scarce funds too.

International Women’s Day: The world is celebrating International Women’s Day with an intent to inspire and motivate women to achieve their full potential. Rather than such act of one-day tokenism, it is more important to give them their due respect, acknowledge their contribution to the society, treat them well as they are reflection of God’s love in the role of loving
mother, caring sister, lovable daughter and under-standing and caring wife. Swami Vivekananda had said women have infinite ‘Shakti’ (Strength). In Hinduism (Sanatana Dharma), women have been endowed as Goddess of wealth, Goddess of wisdom, Intelligence, Knowledge, learning, Goddess of Power-Destroyer
of Evils and Demons. Swami Vivekananda said, “Educate women, allow them to architect/build/chisel their own future. The best thermometer to the progress of a nation is its treatment of its women. There is no chance for the welfare of the world unless the
condition of women is improved. It is not possible for a bird to fly on only one wing.”

Global economy: The coronavirus outbreak may cause huge losses across the globe. Loss estimates for global GDP have varied between USD 77 - 347 billion, as reported by various international agencies like the Asian Development Bank. As per S&P, more than USD 200 billon will be wiped out of the Asia-Pacific economy.