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Dear Readers,

Realising the dedication of a wealth creator, generator, protector of the Nation and people, Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman said, “Respect wealth creators”. They played an immense role in the country’s independence and industrialization. Mahatma Gandhi, Bapu, used to have had regular meetings with them. They have been creating and generating wealth and employment. But their services have not been acknowledged. The fact that failures of business enterprises have been happening due to hundreds of external factors global. This has to be viewed with the right perspective. There have been public sector failures too. Many public sector undertakings were given to the private sectors. Government has been planning to give many more undertakings to the private sector. Even Maharaja (Air India) is in line. 

The Finance Minister called on corporate India to awaken its ‘Animal Spirit’ to set up industrial enterprises. As urged by the Finance Minister, wealth creators have to awaken their ‘Indomitable Spirits’ with high risk appetite. She urged the industry to make the best of the disinvestment policy.

The Prime Minister said that the Centre had announced 13 PLI schemes to lure mainly large companies to ramp up the manufacturing base and boost exports covering telecom, electronics, auto parts, pharma, chemical cells and textiles at `1.97 lakh crore over five years.

Wealth creators have the passion and risk appetite to set up, expand and diversify business enterprises. They put 15% to 20% of their own capital and raised 75% to 80% of debt or venture capital. In the event of failures of an enterprise due to external factors, it becomes difficult to feed losses and to pay off debts. There may be cyclical losses. Even in nature good or bad happens. But financial institutions and government view the failure as a case of fraud. In that case, entrepreneurs go through hell and their entire reputations and wealth are put at risk or collapse. What is the guarantee that an enterprise will not fail? If entrepreneurs are not provided some safety net, PLI schemes alone are unlikely to work. There’s a need to revive the sick units and make non-performing assets perform.

The RBI’s moratorium on term loans has helped borrowers to tide over initial stress. It should be longer. Purpose should be to revive an enterprise.

Corporate India: Improvement in turnover and profit of larger companies has been due to various factors like pent-up demand, cost optimisation, rental renegotiation, re-constructing pay structures, letting go off a lot of staff, rationalisation of product portfolios and reduction in debts. All companies are busy reducing their debt.

Private sectors struggle against excessive regulation. The result is loss of investment due increased cost of overheads and compound rate of interest, loss of markets, and change in technology.

Not only ease of doing business but also the ease of continuing and survival of business are essential.

Stock Market: Foreign portfolio investors have pumped in USD 35.37 billion in the domestic equities so far in this fiscal. Stock markets have been pulled on this score.

Cover Story: The real estate sector had faced a severe setback, though sales, which had dropped, is marginally increasing. Due to cut in salaries and sinking of the economy, many home buyers could not make the payment of their loans to the banks and the non-banking financial institutions. As a result, NBFCs have been hit hard. Their situation has worsened due to impractical regulations of the RBI and the government and impractical action by the banks tarnishing their reputation and affecting their business. Lockdown on account of Covid-19 has had a shattering impact on the global economy. Malls have been empty. Tenants have asked for the reduction of rent. The real estate sector has been passing through a credit crunch. Large inventories of unsold built-up areas have increased the woes of the developers. Cost of construction has also gone up due to shortage of labour and the increase in raw material prices like cement, steel, etc. The real estate sector is the second largest employer of educated, skilled, semi-skilled and unskilled workers after agriculture. It is in organised and un-organised sectors. It is being developed by multi-national, multi-domestic, medium, small, and self-employed entrepreneurs.

The Finance Minister’s revised scheme to set up an Alternative Investment Fund (AIF) with a total initial corpus of ` 25,000 crore to help completion of RERA-registered stalled housing projects (with positive net worth) including NPA assets will have limited impact on this sector.

The real estate sector in India is expected to reach USD 1 trillion by 2030. By 2025, it will contribute to 13% of country’s GDP. To achieve this, the real estate sector has to be unshackled from several regulations and approvals. It needs ease in doing business and continuing business with less regulation to ensure that adequate development of the sector actually happens.

Economy: There is a threat to the economy due to the resurgence of fresh infections of Covid-19

and its various mutations across the country. Lockdown may be imposed again, which can further cripple the economy.