Indian Economy: Prime Minister Narendra Modi has ambitious plans of making India a USD 5 trillion economy by 2024-25. Government has pegged GDP growth at 5% for financial year 2020, the slowest in 11 years, though it slumped to a six-year low of 4.5% in Q2 FY20. Majority of businessmen and Chief Executive Officers (CEOs) predict that the economy will worsen in 2020. Even the agriculture growth has fallen. Growth rate of agriculture and allied services in country’s GDP has fallen to 2.7% I 2018-19 from 4.1% in 2016-17. Nobel laureate Abhijit Banerjee has said, “We are extremely close to a tipping point of a major recession.” The Prime Minister is worried about the slowing economy. He cajoled the businessmen/industrialists to invest. He assured them that government will take action only against the corrupt. He urged industrialists not to fear obstacles, be it policies or even officers who are creating road blocks. PM assured that roadblocks would be addressed, and he is open to suggestions from India Inc. Industrialists have to invest their own capital and they need 70%-80% either in bank loan or FDI, FPI. There is no guarantee that investment will deliver high return. It may fail due to various reasons in spite of them following honest practices. There are several external factors beyond the control of businessmen.
The current slowdown is also largely a result of the process of cleaning up of non-performing assets in the banking sector and the criminal actions and prosecution of businessmen/ industrialists and bankers and others. Even some genuine cases of natural business failures are being projected as frauds. Criminal actions for even minor lapses are being taken. All dues resulting from failures for sake of protection of banks officials have been referred to the CBI.
Existing laws are not aligned with market realities and have several shortcomings. Multiple agencies with overlapping powers lead to delays and complexities resulting in high cost of projects. Honest officers are fearful of discharging their duties. They do not want to take the risk. Companies Act/ Income Tax Act/ GST are being made more complex and complicated in the name of simplification. Several announcements have been made to boost the economy. But implementation remains very poor.
Decline of a society or a Nation is not due to few criminals or criminal minded people but due to inaction of good and honest people as said by Swami Vivekananda in 1893. He had said, “Awake, Arise, Work till goal is not reached.” Businessmen who want to create wealth and generate wealth need to work fearlessly, not thinking that crackdown on corrupt persons will also grind them.
SEBI’s rules to make public information any default within 30 days will affect the reputation of a company. Stakeholders will panic, which may lead to the collapse of a company. Who will give credit to a defaulting company? Such companies would be treated like ‘untouchables’. There are several and manifold laws and regulations, which have and have been restricting growth. SEBI’s multiple action and change in the rules and regulations from time to time have dampened the spirit of investment, dividing the post of Chairman and Managing Directors. It will increase the overheads.
Government needs to take these steps: (a) Set the time limit for disposal of proposal both by the government officials and banks. If not done, action needs to be taken. (b) Save the industries from external factors as enumerated above. (c) Credit be made available to manufacturing, NBFCs, service industries, and real estate. (d) Create National Bureau of Financial Restructuring of ailing, sick units. (e) Not more than 10% of interest should be charged to sick and stressed units. (f) GST rates should not be more than 10% except 28% on sin goods like tobacco, alcohol etc.
Prime Minister Modi has told that bankers should not be afraid. They should be honest in their perception, making proper risk analysis. They should extend their credit. The RBI and government have been now realising that NPA is internal part of the financing. Every entrepreneur wants their industry to run. History tells us how a number of textile factories, processing industries, and engineering units have shut down. In the country itself, there is regional imbalance on account of power tariff, taxes, and state policies. Investigating agencies should not move with the mindset of corruption, fraud. Let them put all the papers and the court will decide after trial. Law of jurisprudence says, “Let not any innocent person be punished or tortured.” Many innocent persons have faced mental agony and have lost the vigour of life. Their families are also tarnished.
Prime Minister has said along with Home Minister Amit Shah that the fundamentals of economy are strong. Of course, fundamentals are strong! Positive actions will help to achieve the target of USD 5 trillion economy by 2024-25. Now government has opened the coal mines to the private sector without restriction on the end use.
Infrastructure: Infra projects have cost overrun of over Rs. 4 lakh crore. Due to this many projects have become unviable and many have ended as stressed assets. Overrun of cost have pushed companies like IL&FS and others into major financial trouble. Banks are reluctant to provide additional working capital.
Cover story: Handicrafts are creative products. They create large self-employment. They boost rural economy. They manifest the cultural heritage of centuries. Mahatma Gandhi had given importance to the development of handicrafts – khadi products, spinning on charkha and woven on handlooms. Indian handicrafts were globally recognised. They include jewellery, clothes, home utility products, children’s toys, and recreational and decorative goods. Large numbers of women are also engaged in the sector. They cover cottage industry too. Handicraft exports from India increased by 1.7% year-on-year during April-November 2018 to USD 2.42 billion. During this period, exports of various segments registered positive growth like shawls as art wares (77.5%), wood wares (23.6%) and miscellaneous handicrafts (19.7%). The top 10 destinations where Indian handicrafts are exported to are the USA, the UK, the UAE, Germany, France, Latin America, Italy, the Netherlands, Canada and Australia.
India is facing competition from China in respect of handicrafts. They are producing at a very cheap price and are dumping their products in the Indian market. Their products like deities of Ganesha, Laxmi and almost all the deities are being dumped in the market. So the government has to make the domestic handicrafts industry competitive. Restrictive taxes and other impediments to the sector need to be removed.
Government has increased incentive rates under the Merchandise Exports from India Scheme (MEIS) to 7% from 5% for handicraft items, which will help exporters to recover the input costs which are involved in the production of handicrafts. This will also lead to in competitive pricing and also boost exports.
The handloom and handicraft industry is one of the largest unorganized sectors of economic activity in India providing employment to 43.31 lakh weavers from rural and semi-urban areas. Most of them are women and people from economically disadvantaged groups. Indian handicraft is also witnessing huge demand in domestic as well as international markets, with exports alone amounting to USD 0.35 billion in FY18.
On the ground there are many challenges - weak infrastructure, limited access to raw material, broken supply chains, poor marketing and an absence of consensus on what constitutes ‘handicraft.’ On top of it all, artisans walk a tightrope between preserving traditional skills and innovating for the contemporary marketplace. Weavers, for instance, often replace expensive raw materials with cheaper imitations only to end up devaluing their craft and the customers’ experience of it.
The Holy Vedas advise people to engage in hand work. The assumption is not to engage in populist measures squandering the wealth of the nation. Do not tax the people heavily. Do not create an army of idle people. Protect merchants, waivers, artisans, women, children, senior citizens and all who build the Nation.
Let Bharatwasis discharge their duties honestly and work hard fearlessly.