July , 2024
15:53 pm

Dr. H. P. Kanoria

Dear Readers

On 7th July 2024 in Puri, Odisha the yearly holy festival of “Rathayatra” will be celebrated, also known as Chariot Festival. Lord Jagannatha, who is the incarnation of Lord Vishnu, removes all the sufferings of His devotees who pray to Him. In fact, he has the attributes of all the avatars of Lord Vishnu. He is also frequently identified with Lord Krishna who is also an avatar of Lord Vishnu.

On the holy day of Ratha Yatra, Lord Jagannatha, along with His elder brother Balabhadra (Balarama) and sister Shubhadra, are throned on the Chariot and are driven three kilometers to the Sri Gundicha Temple from the Puri’s main temple where the public is able to see the holy view. The Ratha Yatra festival has been observed since the time of the Puranas. The Ratha is usually pulled by the devotees.

Indian Economy: Honourable Shri Narendra Modi had taken the oath as the Prime Minister of India for the 3rd consecutive term and formed a new government with his ministers after winning the Lok Sabha election. Almost all the previous cabinet ministers are given the same portfolio which had been held by them earlier.

Modi ji has already authorised release of Rs. 20,000 crore to 93 million farmers as the 17th installment of direct cash benefit programme under the Pradhan Mantri Kisan Samman Nidhi (PM – Kisan). Modi ji, along with his team, will work to contain inflation, provide employment and improve rural economy, thereby bringing growth and development making Bharat Aatmanirbhar paving the way fora Viksit Bharat. India’s economy continues to grow at a fast pace. Fitch Rating Agency increases India growth for the current fiscal to be 7.2% up from 7% projected in March due to a recovery in spending and increases in investment. It is said that the investment will continue to rise. Growth will be driven mostly by consumer spending and investment.

The World Bank projected growth of 6.7% per year on an average from 2024 and 2026. RBI is quite optimistic of GDP at 7.3% for Q1FY25. The current confluence of various macroeconomic factors is strongly favourable for growth and stability. India’s strong forex reserves and financial stability continues to keep afloat the confidence of foreign investors. The International Monetary Fund (IMF) appears more optimistic and has revised India’s growth forecast to be 6.8% for FY25.

RBI governor Shaktikanta Das has warned the bankers to smell out hidden crisis in business onevery occasion which may result from turbulent global and domestic uncertainties. It is important for the lenders of the financial institutions to form an adaptive and forward looking approach to manage amidst emerging challenges. Mounting healthcare and education cost, inflation, high GST rate on products consumed by common man are affecting their savings and increasing debt affecting the masses.

India Inc’s earnings as a percentage of GDP has reached a 15-year high, driven by improvements in the energy, automotive, and finance sectors’ bottom lines. For Nifty 500 companies, the profit-to-GDP ratio increased from 4% at the end of the previous fiscal year, FY23, to 4.8% in FY24. Despite global concerns, India’s growth narrative remains impressive, and we continue to have high hopes for the country's economy in the years to come.

Cover Story: The government has promised to double the farmers’ income by 2025. It has announced a host of schemes for the development of the farm sector and has also increased the minimum support prices (MSP) of agricultural commodities at regular intervals to address farmers’ immediate problem.

Further, various challenges faced by the government include unemployment, drought, depleted food stock - especially wheat, global uncertainties and unavailability of private capex investment. Global Economy: OECD (Organisation for Economic Co-operation and Development) says the growth trajectory is likely to hold steady in 2024 – that means it will be still weaker than the pre-pandemic level. Growth will be driven by Asian economies like India, Indonesia and China. Among the G20 Nations only Saudi Arabia and Argentina have worse forecasts. Inflation is easing but rising global debt decays the countries’ ability to spend.

IBC: FM Sitharaman said that India’s growth is certain, but it is also subject to global turbulence and uncertainty. A good enterprise is also subject to uncertainty as well and can face many external factors. An industry can be and will be under stress beyond control. Many factors can be responsible for this:

1. External factors ― (a) global competition, (b) dumping of goods, (c) go slow, strikes, low productivity, (d) unions’ militancy, (e) non-payment or delayed payment by debtors, internal and external, (f) fall in demand, (g) rise in cost of production, (h) creation of excess capacity, (i) springing up of new industries with large incentives by the government, and (j) incentive like tax holiday etc. in some region in order to promote the setting up of new industry ignoring the impact on existing industries.

2. Changes in government regulations and administrative delays/no action ― (a) frequent policy changes, (b) cancellation of license like that of coal mines, (c) non-payment or long delays in payment by the government and their agencies, (d) reneging on contracts by the government and their agencies, and changing perceptions/assumptions, (e) multi-level and multi-fold approvals leading to administrative delays, (f) fear psychosis in decision making, and (g) public hearing for green environment.

3. Changes in banking regulations ― (a) inadequate funding, (b) stopping of fund or treating as NPA even for one day default, (c) high rates of front charges compounded every month and penal rules of interest, (d) stringent RBI provisioning norms (proposed) not aligned to market realities, (e) frequent policy changes and compliance norms by regulatory authority, (f) administrative delays leading to heavy cost overrun, (g) errors in judgments by professionals in loan evaluations, and (h) inadequate fund given for modernisation and/or balancing equipment.

4. Global trade threats – Imports are allowed despite the campaign of ‘Make in India’, impacting the capacity utilisation and price realisation of an industrial sector.

Affected by such factors beyond their control, some of the enterprises temporarily default in payment to their lenders. Such enterprises are then subject to IBC proceedings and promoters are not only driven out but their family business and also their reputation gets affected. Precious entrepreneurial talent, so important for creating jobs in a labour-surplus country like India, gets nipped in the bud as a result.

Personal guarantees are being invoked and the enterprises are getting sold at rock bottom prices, sometimes with a haircut of upto 80%. To promote private capex, the lender should restructure the debt of distressed borrowers and allow them adequate time for repayment.

Conclusion: PM Modi ji has reminded us what Swami Vivekananda had said in 1897 that after 50 years Bharat will gain independence from the colonial rule which exactly happened. He also said that after 150 years, i.e. 100 years after gaining independence, India will be one of the major growing Nations in the world. Today, we have the golden opportunity. Let us dedicate our efforts to create a strong foundation for the coming generation and century taking our Mother Land to greater heights.

Add new comment

Filtered HTML

  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.