Dear Readers
Holi: Bharatwasis across the world celebrate the auspicious Holi festival (colour sprinkling festival) symbol of joy, love and harmony. This festival marks the killing of demon, Hiranyakashipu by Lord Narsimha (incarnation of Lord Vishnu) for his cruelty and unethical way of governing.
Economy: Union Budget 2023-24 focus was mainly on increasing the CAPEX by 33% (to ` 10 lakh crore), tax moderation, targeting to lower fiscal deficit at 5.9% of GDP from 6.8% in 2022-23, aiming for an economic growth of 7% while containing the inflation and boosting rural sector (by investing in agriculture, animal husbandry, poultry farming, dairy, fishery, etc.). Agriculture credit target has been increased to ` 20 lakh crore. Capital outlay of government now works out to be almost 3.3 % of GDP.
RBI, in its economic report, states that if most of Union Budget outlay gets utilised, growth could be around 7% in FY24, against estimated growth forecasts for India for 2022-23 and 2023-24 at 6.8% and 6.1%, respectively.
World Bank Chief David Malpass said India can achieve 8% growth through a strong private sector through land and agri reforms ensuring credit for small enterprises. He said the developing countries are facing much higher financial cost along with higher rate of interest on debt.
US Treasury Secretary Janet Yellen pledged to work in coordination with FM Nirmala Sitharaman to address global debt vulnerabilities and issues concerning crypto assets and strengthen multilateral development banks. The US Treasury Secretary also thanked India for taking a leadership role on promoting sovereign debt restructuring, while encouraging faster G20 efforts on existing debt restructuring cases. FM Sitharaman also held bilateral meetings with her counterparts including from Japan, UK, Spain and Indonesia.
RBI Monetary Policy Committee (MPC) member Mr. Jayanth R. Verma said India’s economic growth appears to be very fragile. It may not meet the aspiration of its growing workforce. Monetary tightening is compressing the demand. High interest rates are making everything more costly and difficult.
To achieve growth rate of 7%, India should aim for strong export performance. Our share in world export is low enough. High use of imported inputs on domestic production makes outcome and exports highly uncompetitive. Countries should address weak points concerning industry and global competition. Export policy should be flexible and not bar the export of agricultural produce/commodities.
Defence Production: PM Modi has called the private sectors to invest in defence production. The process of registration and supply should be simplified.
Global Economy: IMF Chief Kristalina Georgieva said that India continues to remain a ‘bright spot’ in the world economy as India and China still account for over half of global economic growth. Both have large consuming population.
MSME: Gross Non Performing Assets (NPAs) in Micro, Small and Medium Enterprises (MSMEs) segment may rise to 10-11%. Between the banks and NBFCs, the latter are becoming increasingly active as sellers, and this is expected to continue in the wake of the revised Income Recognition Asset Classification and Provisioning norms. Helping hand to MSMEs for collaboration is essential.
Inflation: Mr. Jayanth R. Verma, member of RBI’s MPC, warned that it would take longer than anticipated for inflation to slow to 4%, the mid-point of the target range of 2-6%.
IMF reported that inflation risks are likely to be lower for India for FY24. Vigilant of geo-political conflicts and consequent supply disruptions and slowing growth of the economy (growth slowing to 4.4% in Q3 FY23), RBI has to tread carefully on whether to increase the repo rate any further as that will eventually push up cost of production. Inflation is mainly due to the rise in prices of agricultural products. Taxation should not increase the cost of inputs of agriculture.
Debt: G20 is concerned about the debt of several countries. FM Sitharaman discussed jointly with IMF MD Kristalina Georgieva and World Bank Chief David Malpass on world debt restructuring challenges and debt vulnerabilities. They are aiming for faster restructuring process and to work together to help vulnerable countries. There are some disagreements over debt restructuring of distressed economies. Debt crisis is also threatening several economies. Sri Lanka, Bangladesh and Pakistan are seeking urgent IMF fund support.
Indian Debt Scenario: India needs to be concerned as to its growing public debt. The ratio of public debt to GDP is already high. It is expected to increase over the next financial year. The interest cost of serving public money is high. Public debt reduction measures are required. Indian government’s debt has gone up with increasing spending needs.
Despite incorporation of Sec 10A in the IBC Act to mitigate the impact of COVID-19 induced lockdown resulting in slowdown of businesses, lenders had dragged the borrowers into insolvency proceedings.
Global Debt Scenario: There is a need for providing support to the stressed countries for the sake of ensuring global economic stability. Sustainable growth for generating capital is required. Crypto currency and other digital currency assets regulations need consent of all the nations. Even a developed country like US is highly indebted. The U.S. national debt stood at USD 30.93 trillion at the end of 2022, which is 124% of the GDP.
Corporate Debt: Despite having animal spirits and ambition to create and generate wealth and create jobs, wealth and job creators are reluctant to take on debt for making new investments. With authorities and lenders not willing to restructure debt even for temporary defaults (which are due to external factors or slowing down of the economy), enterprises are being pushed into insolvency proceedings which either end up being sold at deep discounts to new managements and resulting in steep haircuts for the lenders or the enterprises getting liquidated. With consultants and auditors suspecting almost every transaction and hinting at frauds, wealth and job creators often have to face criminal action too. It is indeed disheartening to watch global investors are taking over Indian enterprises with decent track-record at throwaway prices, sometimes in collaboration with Indian investors. There has been fishy working.
47% of the cases, which were not closed under the corporate insolvency resolution process, stretched beyond the extended deadline of 270 days, with the rest closed during the stipulated deadline at an average haircut of 80%.
Lenders are overloading so called alleged NPA assets with high rate of interest, swelling the debts even more. Rising interest rates and penal interest are pushing the enterprises to become stressed assets.
Debt relief and restructuring of corporate is essential as of debt relief and restructuring for the nation globally.
IBC: RBI needs to consider external factors before advising drastic actions in case of defaulters.
Union Minister for Commerce and Industry, Textiles and Consumer Affairs, Food and Public Distribution, Mr. Piyush Goyal, while addressing the Asia Economic Dialogue, said that India is likely to attain a size of USD 35-40 trillion by 2047. This resonates with what Swami Vivekananda had said in 1897, that India will be the foremost major economy within 150 years and 2047 will be that 150th year. As said by Swami Vivekananda, “India is a rising Dragon, no power can stop it to rise”. Focusing on the health sector, Union Budget 2023-24 proposed to establish 157 new Nursing Colleges within the same premises of existing Medical Colleges. Government should relax rules for registration of land for establishing Nursing Colleges by the private sector. There is a great shortage of Nursing Colleges in the country. Nursing will open up huge opportunities
for women not only in India, but beyond India as well as there is great demand for nursing staff overseas. In overseas countries male nursing staffs have been employed due to shortage of female nurses.

Dr. H.P. Kanoria

Editor in chief     

 

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