Business Economics wishes its readers a joyous and blissful Vijaya Dashami. May all be blessed by Ma Durga – the embodiment of Universal Supreme Power. Ma is the creator, sustainer and destroyer and is the grantor of power and boon. Ma Durga is worshipped along with Her children Ma Lakshmi, Ma Saraswati, Lord Ganesha and Lord Kartikeya. In this month, we will be celebrating Diwali – the festival of light, praying to Ma Lakshmi and Lord Ganesha to make enterprises successful and to remove all obstacles. Ma Lakshmi – consort of Lord Vishnu resides in the house where people live with simplicity, austerity, works hard with devotion to create and generate wealth for the welfare of humanity.
Bharat Economy: Festival provides earning opportunities to the people. The family stays together to enjoy. Children have a great fun time, in addition to learning more about the rich Indian culture. Festivals are the auspicious occasions of worshipping and creating an atmosphere of faith, trust, love, bonhomie and merriment. Festivals promote values and boost demand. Festivals foster harmonious relations and our quest for material and spiritual wealth.
According to a study, “Hanami” festival in Japan continue to contribute up to 2.25% of wealth to their economy, “Mardi Gras” festivals contribute around 1.5% to the economy of New Orleans in the USA and “Oktoberfest” around 1.35% to Munich’s economy. Durga Puja festival in West Bengal contributes around 2.58% to the state’s GDP.
RBI governor Shaktikanta Das said that interest rate will remain high due to global political headwinds and geopolitical crisis. However, RBI is extra ready to take stern necessary action. US bond yield has gone upto 5%. The Indian economy has developed resilience enabling her to withstand major shocks and navigate increasingly turbulent global situations.
FM Nirmala Sitharaman said that the government is looking to reduce its debt burden further and has already resorted to prudential spending.
JP Morgan reveals the Indian markets have generated positive returns ahead of the general election. As the 2024 election is approaching, the government may like to support rural India and urban poor and national expenses are aimed at boosting public sentiment.
Ashwini Vaishnaw, Union Minister of Communications & IT and Railways, said that India is competing with the world’s best telecom equipment makers.
Forex reserves declined by USD 2.36 bn to USD 583.53 bn during the week ended October 20, the Reserve Bank of India data showed.
NITI Aayog Chief Executive Officer BVR Subrahmanyam said that by radical policy changes and reforms in governance, Bharat will become a developed Nation by 2047 with an economy of USD 30 trillion in her 100th year of independence. The Indian economy is around USD 3.5 trillion in FY23. India’s per capita income was estimated at around USD 2500 in FY23. Countries with per capita income at around USD17,000 are considered to be developed Nations. By 2047, the per capita income of India’s population will be beyond USD 18,000 having a population of around 1.5 billion. India is set to become a developed Nation by 2047, as forecasted by Swami Vivekananda in 1897.
Our honourable PM Modiji distributed more than 51,000 appointment letters to newly inducted recruits. India is equipping its youth with skills and education to harness possible opportunities. Recruitment process is being eased.
Global Economy: US GDP expanded at 4.9%. The Americans step up spending defines expectation of interest rise. To combat high inflation the Federal Reserve had already increased the policy rate. Federal fund rate is between 5.25 – 5.5%. Higher interest makes it more expensive to use credit cards and borrowings.
Higher interest rates make production costly dampening the demand. The living cost increases. In the US, there is a slowdown in consumer spending and it has been affecting the growth of the US economy. IMF seeks urgent support and has increased quota usage to secure funding with vehicles like Poverty Reduction and Growth Trust (PRGT) and Resilience Sustainable Trust (RST) to benefit the poorest members.
The IMF said central banks should continue to focus on restoring price while calibrating data. No country should be left behind in rapid technological transformation.
FM Sitharaman said that the global multilateral institution is becoming less effective. She said India is working on establishing a template to maintain food security. The Indian government is actively working on reducing debt levels.
RBI governor Shaktikanta Das said interest rate will remain high, but RBI is extra vigilant to have price stability and growth as well.
IBC: Insolvency and Bankruptcy Board of India (IBBI), the rule maker and regulator, has been steadily increasing the pace of debt resolution to resolve the cases pending and the government is filling up positions with speed in National Company Law Appellate Tribunal (NCLAT). Due to high legal and professional cost with deferring case dates, borrowers are facing a lot of difficulties and financial crimes.
In resolving cases, natural justice should be imparted by using the conscience without any apprehension. Under the process, lenders are taking haircuts on an average of 80-82% whereas in the process of restructuring borrowers are paying higher rates of interest along with penal interest and other charges. By the process of restructuring an enterprise will remain running with full employment and should not be sold at rock bottom price in the process of insolvency.
Conclusion: Private sector investment needs to be boosted. Fear psychosis of debt needs to be mitigated. Government should take into consideration external factors affecting an enterprise which can adversely impact the borrower’s debt servicing abilities. Lenders should be allowed the freedom to consult such borrowers and arrive at a mutually agreed restructuring or moratorium agreement where the decision is taken purely on commercial terms. The hard-earned funds of promoters, founders and entrepreneurs and also the funds mobilized from their friends and relatives are in jeopardy. Steps need to be taken to ensure that entrepreneurs are not scared away. Our country needs more wealth and job creators at this stage. They should have the animal spirit to take risks and invest for Bharat to be a developed Nation by 2047. Borrowers as directed by honourable Supreme Court should be given a hearing before classification of its accounts as fraudulent in front of a special board having members across society including entrepreneurs. This will boost our Nation to achieve a USD 30 trillion economy by 2047. India is Morgan Stanley’s most preferred market, with the brokerage increasing its overweight stance on the country as they are convinced that the country’s macroeconomic fundamentals remain strong and the earnings growth potential is also good enough to take care of the investments made, even when the cost of capital continues to be high.