Archive for General

admin | April 29, 2024
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SOME SUGGESTIONS IN THE ACTUAL INTEREST OF THE MSME SECTOR

Slogans like “ MSMEs are the backbones of our economy” and many such slogans praising and highlighting the importance of the role that MSMEs  in the economic development are well known to all of us particularly because we have been hearing that almost since several decades.

Though I admit that beside dishing out slogans, a lot of efforts have been placed by the Government and the Banks to encourage and help the MSME sector so as to enable them to successfully survive in the fiercely competitive world and withstand the competition from the larger units despite facing funds and infrastructural challenges.

The government has also enacted MSME Act so as to provide a strong legal entitlements and reliefs. Various amendments and additions have been made in the Income Tax and Companies Act with the intention of easing and ensuring some comforts to the MSME sector.

But still, a lot more needs to be done .There is a huge distance between the cup and the Lips.

Some of the glaring issues that remain unresolved so far are highlighted below;

  1. 1. FINANCIAL SUPPORT :

As far as providing easier finances are concerned, it has been consistently observed that the bankers, who by themselves are in highly competitive environments, find it less attractive to finance an MSME unit as compared to the larger units. They rightly feel that efforts involved in financing and monitoring an MSME unit are much more than the margins that they earn as against financing a larger unit. Despite constant instructions etc from RBI and Government, it has remained a challenge to motivate larger banks to finance MSME sector, particularly the Small and Micro units.

One possible solution is to encourage specialized Banks or Cooperative Banks who cater only to this sector. I saw a good hope in channelizing the Cooperative Banks towards financing the Micro and Small scale sector. Unfortunately, after successfully gaining experience in the banking business even cooperative banks also turn their attention towards the larger units.

The NBFCs too are trying to fill up this gap but it has been noticed that they take advantage of the vulnerability of the borrower and extract higher interest and levy additional fees etc.

In short, as far as financing of significant amount is concerned, the MSME sector remains sidelined in reality. They have to resort to extremely exploitative and costly sources of finance   when it comes to substantial and critical need.

There is ,no doubt that there are numerous schemes offred by Banks and Governments. But each bank and diffrerent Governments have their varied schemes and it is a time consuming and complex situation even to know how many schemes exist and which scheme is good for an MSME unit .

What pains the most is that such is a situation when there is a constant tomtoming about encouraging and supporting the MSME sector.

Somehow one sees a situation where one is reminded of the story of a crow who was thirsty and was offered water in a jug where the water was in the lower half of the jug and his beak could not reach.

  1. LEGAL SUPPORT :

The government with a good intention has constantly been trying to introduce / amend the existing Acts so as to make them “MSME friendly”. But as the proverb goes, “help from an ill informed person is more harmful than the harm from a well informed person.”

Let me tell you how this is true. Section-16 of the MSME Act presents a draconian help and i.e. that if any payment to an MSME unit is delayed beyond 45 days then the MSME unit is empowered and enabled to collect interest at the rate which is three times more than the bank rate with a monthly rest. Converting this into simple equation   it amounts to more than 24% per annum rate of interest ( three times a bankrate ) and since it is on a monthly rest it would amount to nearly effective 27% per annum with annual rest.

At the same time the Income Tax Act,1961 {Section 43B(h)} is now amended to ensure that expenses incurred by paying to, MSME would be allowed as an expense only when they are actually paid.

As if this is not enough the Companies Act is also amended to ensure that any over due to MSME and the purchases from MSME are clearly and separately reported in a company’s annual account.

The above appears to be favorable steps. But the reality is exactly the opposite. The large units are now trying to avoid doing any business with MSME units because of the rigid legal approach and consequences. They feel that they are inviting potential heavy liability and exploitation from the MSME sector. This is likely to effect the business potential of the MSME sector.

  1. 3. General :

If one tries to collect an exhaustive list of the benefits and preferences which are offered to MSME sector by Central Government, State Government, Local Bodies, Banks and Financial Institutions one will find that one is lost in a jungle. This reminds me again of a proverb which says that, “Unscheduled, erratic and excessive rain is more harmful than a drought.”

 

One will find varying definitions of M(Micro).S(Small and).M(Medium).E( Enterprise)  not only that the definitions in reality varies from bank to bank, from state to state, from scheme to scheme and they themselves are again subjected to frequent amendments.

 

One of the standard practice of denying an entitlement is to make the preconditions so difficult that the claimant either gives up his claim or is denied the help  and only the lucky few MSME units land up getting the intended help.

The Exit Decision

Besides what is stated above, one thing that strikes while thinking about MSME sector is their reliance and endurance capacity . Somehow, this is noticed in case of many Non MSME units also . An entrepreneur is a good entrepreneur not only when he sets up or runs his enterprise well and successfully . To my mind, he is equally good entrepreneur when he decides to quit at the right time and right way.Many a times emotional and Ego issues prevent many entrepreneurs from quitting at the right time .

At the same time we have to also look at the issue that does our existing legal and banking framework makes the task of quitting easy?

The answer is an emphatic No The current labour laws are so much in favour of labourer s that  the cost of closing a unit and the formalities attached thereto will discourage many entrepreneurs from closing the units which are unviable . This  leads to distressed sales and unfavourable mergers  . The bankers also tend to pressurize regularization of accounts for a long period in order to keep their balance sheets and performance stable

 

The Way Ahead

 

A basic question is, does any sector need a lot of support to be successful , profitable and sustainable ? In an open market economy, a sector will survive against many odds if the basic profitability and strength is present in its business model. All that is required is to allow a peaceful, disturbance and obstacle free atmosphere for them to operate. Whether the unit is MSME or not, it does not matter. All units deserve and need obstacle free , peaceful and disturbance free environment to operate. I feel what we have achieved in case of MSMEs is a “ concentrated bundle of confusion” as far as incentives and supports are concerned. Let’s have a look at our own experience in the past . Look at the rapid development of the Information technology sector which took place during the ninetees and thereon  and carefully note that the unparalled growth of the sector took place during the period when the Government machinery was blissfully in the dark as far as nitty gritty of the sector was concerned . There were no Special Packages offered to them . The market forces and the entrepreneurial attitude of our businessmen drove the momentum .

In other words, encourage all the sectors and please don’t try to give special treatment in a complicated, half hearted manner

All that is needed to foster the growth of MSME sector is a decent , easy and fair atmosphere for all sectors which helps to set up , survive and also provides ease in closing down the operation if it is so required.

In brief, keep the environment of doing business cooperative , predictable,transparent and simple . without any exra special pumping.

 

Category: Finances, General, Taxation |
admin | July 24, 2023
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Stitching Unanimity

Over a long long time, I have been noticing that not only in the corporate world but also in political circles, almost all decisions are taken unanimously. Even a note or reference to dissent expressed by a member is tried to be avoided in the proceedings, if and when they are minuted.

That is fantastic isn’t it ? But we all know that in reality the situations are quite different. I tend to believe that to disagree or to have another point of view is always seen as a dissent. There is therefore a constant effort to avoid conflict within a group as far as it is possible. Unanimity is seen as democratic and not dictatorial, quite surprisingly .

Unanimity is somehow brought about as a face saver after many hidden stitches which are bound to break at the first opportunity.

Why such a psychology or mind set ? This is becoming a typical stand, to avoid conflicts even where they are inevitable. The well known Kalinga ( Ashok’s preachings thereafter ) effect has become a way of life. The preaching of Ashoka to maintain peace and harmony are certainly laudable but it does not mean that healthy differences should be overruled. One of the outcomes of overruling the opposite view is that the differing / overruled party / persons resort to non co-operation which is a fatal tool to be used against enemies and Gandhiji used it effectively against Britishers. But within a society or within an organization, it is detriment to its growth and development.

In short, the art of obtaining genuine unanimity lies in recognizing the beauty of diversity and actively embracing different views and opinions. Somehow, at any cost, the efforts to get unanimity leads to dictatorial regime rather than democratic regime. Stitch unanimity by thinking by open mind, transparent behavior and mutual trust. It is dangerous to resort to double standards and lack of transparency. At the same time, the differing parties also should not pre-plan, backstabbing, non-cooperation and turncoat approach.

 

Category: General, Uncategorized |
admin | May 1, 2021
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Tackling COVID in India : An Overview

Everyone is aware about the catastrophically spread of COVID in India in its Second Phase. Much is said, written and shown  by the media and public, to the extent that we are literally made to believe that we are the worst performers as far as combating CORONA is concerned  .  Everyday, such views are floated with improved editing and  stronger flavor.

I do not wish to indulge into that regime of criticism and its debate , which many a times takes political colors.But I would like to state that we should appreciate that India is a huge,highly populated poor country. World over, many advanced countries are also finding the task of tackling COVID to be herculean. India is no exception.

It is time now that we  realise that we can not defeat COVID, but the best we can do is to tackle it in a way that it does least harm to the citizens and the economy as a whole .

 

A     How scary are the numbers, really ?


To my mind, in absolute terms, the numbers are really scary. But speaking in terms of ratios, it is not as scary as the media and experts make it out to be. But the fact remains that the issue is very serious and the recent spread of the virus in the rural sector will make the issue worse and virtually unmanagable with limited resources and skills .

Taking the position as of now, say, at the current level of nearly 3.5 lakh new patients each day , it amounts to 1 patient per 40,000 person per day.

The mortality rate of the patients is at most 2 % ( currently in India it is nearing 1.3 % )

So the mortality will be 1 person per 200,000 persons per day

So, nearly 360 persons p.a. per 200,000 persons will not survive the decease .

This equates to a death rate of 1.8 persons per thousand p.a , as against the average death rate of 7.2 in India .

And, remember, this is at a near peak time situation that prevails today and at very high mortality assumption.

Looking to the population of India the numbers are not as large and the recovery rate and mortality is also not worse than many developed nations .

Than, the question is, why such a huge chaos and fear that prevails in the entire country.

To my mind,the current crisis is quite a man made crisis created due to a sheer mismanagement, improper and ill prepared handling of the pandemic and irresponsible behavior and actions of the so called leaders .

It is this managerial mess up that has accelerated the fear spreading that has picked up at a faster rate. But let us also know that the situation , the world over, is quite similar. Despite the lack of resources , large , illiterate and poverty ridden population, India is giving a commendable fight against COVID.

But this should not absolve us from many lapses and blunders that we have made.

 

B     The situation would have been much better if……


1.. if the election commission had at least bothered to either postpone or at least control the rallies during campaigns

2..  if the high courts and supreme court had activated themselves  a couple of months earlier to give serious warnings while taking stock of the situation that prevailed and likely to prevail if sufficient steps are not taken in time.

3…  if the bureaucrats had realized the seriousness of the likely second phase by taking clues from the European experience, where the second phase had already started. At least enough stocking of oxygen , ventilators, critical medicines, creation of temporary make shift facilities to treat not so serious  patients etc was certainly expected from them . They could have created these facilities during a near slow down period of the pandemic .

4,,, if the vaccines supply had been planned better had the government resisted itself from being penny wise

5..  if the politicians had shown retrain in their campaigns,by not allowing Melas and matches,etc,looking to the infectious nature of the virus and seriousness of the situation

6 ..  if the Disaster Management Authorities had played  their proactive role of establishing disaster mitigation preparedness, as required by their own charters

7.. if media and the all time critics had behaved a bit with restraint in not spreading fear and rumors just to win a race of TRPs. Their role in creating a confusion and fear is not to be taken lightly .

8.. if the traders and fast buck chasers had not rushed to corner essential medicines and oxygen , the situation for the common man would have been much better and even mortality would not have shot us as steeply as it did . Such persons should not be spared either .

9… if we had taken care to establish primary centers for not so serious patients by creating such facilities in Hostels, Halls and open grounds well in advance, more not so critical patients could have been accommodated and hospitals would have faced lesser pressure

and the list will go on and on  ..

Yes,these are bygones and more of after thoughts, but they are certainly quite serious and missing out on taking proper precautions are errors which are unpardonable.

A third wave is also being expected and India should do well to correct the grievous errors once committed  .

 

C… Impact of the Second Phase on the Indian Economy


My attempt here is to understand the  impact of COVID and the measures being taken during the Second Phase of COVID on the average citizen and the economy .

1.. A good part of the Second Phase is that the governments have not preferred to declare a complete lock down as done during during 2020, The employments, therefore will be hit a bit less. Though the impact on the sectors which are under lock down during 2021 and the sectors which are crumbling due to the fear psychoses that has engulfed us all can not be overlooked , Sectors like restaurants, street vendors, miscellaneous shop keepers, malls, travel and tourism , miscellaneous business service providers etc will be hit at least as severely as during 2020. These  unorganized/semi organised / MSME sectors contribute a large part of our GDP , cover large population and provide huge employment. Their slow down will have substantial dampening effect on the GDP and economy as a whole.

2… The Government does not appear to be in any mood to declare any SOPs / concessions this time . Even timeline for compliance , moratoriums/ relaxations in Interest and repayments are not even under consideration so far.

3… Taking a clue from the above, it appears that the public and the businesses at large, are expected  to handle the crisis by themselves . The government machinery have their hands full in barely managing the pandemic spread and chaos that gets created.The large expenditures involved will not leave much room for hem to announce any further relaxations/ reliefs. On the contrary there will be a pressure towards resource mobilization.

4…   The pressure on resources of the government will be felt due to increasing expenses along with reducing tax collection along with rising expectations from the masses.  Though the uproar will pick up a little later, but with rising prices due to shortages and black marketing many industrial units will find it hard to keep going. The industries where the workers have voluntarily returned to their villages, will find it very tough to continue their operations and  restart after there is a bit of respite from the pandemic. The restart cost and the labour costs are bound to go up, giving a further fuel to inflationary trends.

 

D … So what do we expect ?


1..  There will be a slow down for sure .GDP will not drop as much as 2020( 23%) but will certainly drop to  near 0 to  – 4 % in the second and also third quarter of 2021.The slow down will be all pervasive since the public and the business community has already started feeling  dejected and helpless .

This  GDP estimate presupposes and is based upon an optimism that though late, the desperate measures being taken now will start yielding results soon by end of the second  quarter of 2021 itself. As a result, for the entire year 2021,the downfall will not be as steep as seen in the 2020 .Non declaration of Complete Lock Down, despite strong demand for the same, is a welcome step as far as economic impact is concerned

2..  For the Government, the expenses will skyrocket and the revenues will be taking a dip for sure. This will give rise to deficits which will fuel inflation . Inflation, coupled with crumbling MSME and small services sectors, will be a major issue to tackle for the Government.The citizens, already deprived of income, will be hard hit .

3… The Government will have to address the issue of the disparity of income, which has worsened after COVID . The sporadic rise in the wealth of a few is eye catching . One can easily predict the reinstatement of Wealth Tax and Estate duty with some modifications .

4.. The new concepts of WFH and On Line Education will gain further popularity . The decades to come will clearly belong to those who are Tech Savvy . This will make it difficult to impart a comparable level of education and provide jobs to the under privileged class. The real impact of this will soon start becoming visible.

5… And for the stock market, it will continue to be bullish, not only because India will somehow pass through the tough times but also because a bullish market will make disinvestment task a lot more easier for the Government.

6… As citizens and as a country as a whole, we need to firstly accept that COVID is there to stay and we will have to learn to live with it . Meaning thereby, that the precautions will have to be continued . The Mantra,” Prevention is Better Than cure” will have to be really implemented not only in individual capacity but also for the economy as a whole .

7..Adaption of a new life style will be essential . Certain industries/ sectors like pharma, IT ,On Line education, DTH services will flourish as being seen and sectors like restaurants, travels , tourism, etc will have to evolve a new business model to survive. One sees many closures / amalgamation /mergers /insolvencies /rise in NPAs in near future .

After all this, as we eventually come out, the economy is bound to get back to its track and start moving. But,  the prime thing now is to somehow swim through and survive the crisis.

E… Conclusion

1… The current anxiety and crisis like situation is quite man made crisis . It is a managerial failure which has been over hyped by the media , including international media without considering the population pressure and poverty factors so unique for India . In international comparison also our actual performance is not as bad as it is being projected .

2… There are certain glaring errors which must be taken seriously and at any cost should not be repeated when the third phase begins soon . Disaster mitigation steps towards such health disasters must be identified and implemented asap . Remember chemical disaster and reputation of such health disasters are quite likely again in years to come

3… By not declaring complete lock down even during such huge sufferings has protected the economy well , but  impact of the wide spread decease and partial lockdoen on MSME, small entrepreneurs, salaried class is bound to be felt.

4… Inflation and unemployment is looming large at least in the short run. A common man will be hit hard in the quarters to come. Black marketing, hoarding and corruption will add fuel to the sufferings unless dealt with stronger arm.

5…  There will be palpable increase in inequality since the pandemic has brought in significant changes in the consumer preference and way of conducting business.

6 … Expecting any direct support from Government appears to be a piped dream. Increase in taxes for the rich class, introduction of Wealth Tax, death duty,  on the contrary are likely.

7…. The stock market will flourish since there are sectors which will gain a lot , e.g. pharma, Infrastructure, banking and IT .

7… But the situation is not too grim and within a short time, it is possible to come back to the growth path .The confidence in India story will be reestablished if we pass through this crisis.


Category: Finances, General, Political, Uncategorized |
admin | July 17, 2020
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Amal Datt Dhru Show

So happy to share my YouTube channel – Amal Datt Dhru Show on the finance fundas with you..It is.my humble attempt to simplify the understanding of the complex world of finance.. The series of 5 lectures will cover various aspects to demystify the complex world of Finance.

Kindly Click below to watch our latest youtube video…..

Please Subscribe, Like, Share and Comment and give your valuable feedback…!!

Part 1 – Introduction to Finance

Amal Datt Dhru Show – Part 1 – Introduction to Finance

Click on the above link

Category: Finances, General |
admin | January 1, 2020
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Suggestions Towards Steps To Revive Indian Economy

SOME SUGGESTIONS TOWARDS GIVING A KICK START and TO BOOST India’s ECONOMIC GROWTH

By……. Mr. Amal Dhru (FCA,MBA(IIMA) , amaldhruv@amaldatt.com (M) 9825015534

1.. The Union BUDGET

a…. It is round the corner. Many suggestions are already made towards reduction in Personal as well as Corporate Income Tax. However it has to be noted that Tax to GDP Ratio in our economy is very low .
So we have to look at corporate rates separately. As far as lowering the Income Tax on Corporate are concerned, lower taxation rate will certainly attract not only Indian but also international investments. A recent clamp down on Tax Heavens by many countries including developed countries have directed the funds towards countries with lower tax rate, since relaxed (nearly nonexistent) compliance based locations will be scarce and very vulnerable .It is an opportunity for India to tab these openings particularly when there is an increasing realization about difficulties in the exit route for investments from China.
On the other hand, the highest income Group needs to be taxed heavily, as it is . They can be given a relief if they invest in Infrastructure Bonds of large ticket size
Similarly one sector of economy vis. Agriculture Income is not taxed at all. It would be worth considering to expand the net of Corporate Farming and bring the corporate farming along with large farmers (by deeming them as corporate farmers) into the Income Tax net. This aspect, though touches the Constitutional provisions narrowly, but is critical enough to be thought of seriously, since the need to mobilize Revenue is alarming

b… The recent thoughts of doing away (reducing, at least) the exemptions is a positive thought. The exemptions lead more towards litigation and mere paper compliances. Though there is a need to give special incentives for employment generation. Most of the exemptions are based upon capital investments in desired sectors etc . India is a country where Labour is ample and capital is scarce. We need to generate more employment. Employment generation should be focused while providing incentives. May be, that an incentive based upon the Employer PF Contribution (say a weighted deduction on employer contribution to PF, like R & D ).

c… Surprisingly, what the economy wants is employment generation, but the labour laws play a huge role in providing disincentive (if not a fear ) towards providing employment . Not only that the Minimum Wage Structure is too high for an average employer, to reduce employee strength is a herculean task. A simple principal of economics is to create more attraction towards the product that a producer wants to sell. But what we see here in India is quite a reverse trend. Why not to create a layer where minimum wages are lower than the unskilled level, call that layer a support level. Please reduce the cost of employing a person, in other words. MSMEs and start ups can benefit immensely and more jobs will be created for otherwise unemployed youth.
Similarly, the employers should be allowed more flexibility to adapt a practice of reducing manpower, in case of genuine difficulties like adverse business conditions. Currently it is a tough task to reduce the manpower strength even in case of genuine necessity to reduce unproductive expenditure. Such an atmosphere creates a disincentive towards generating more employment.

d… Giving direct cash or free bees to poor people is a charitable, noble act, but I feel that the same should be given against some work. Providing free money to people will form a very dangerous trend and will keep increasing expectation and will encourage laziness. Greece etc economies tumbled due to excessive freebees!!
Why not to create more jobs, say towards internal security (in semi police force ) , or swachchata mission, or construction etc like MANREGA scheme) , instead ? Why not to include Agricultural employment under a special scheme which is similar to NAREGA?

e… Dwelling further on employment generating proposal, I am surprised that under the GST Act, Supply of Manpower attracts full 18% GST. That too is on the entire amount of billing, without any abatement of gross salary, which includes PF and ESI . In other words if Mr X pays Rs 100 as Salary ( including PF, ESI etc ) and adds Rs 10 towards his services, he will be called upon to pay GST of Rs 19.80 ! This certainly increases to ultimate cost of his services. This is a clear disincentive towards generating employment. I sincerely plead that an abatement of salary component has to be provided while taxing the Manpower Supply Services.

f… While on the GST, it is to be painfully noted that the instances of claiming wrong input credits are not only rampant but are also huge. This has to be curbed. The recent amendment by the council of restricting the input credit is a welcome step but not sufficient and effective. I would suggest that the input credit claimed has to be populated within 180 days from claiming. If not populated, it should not only be reversed, with interest but should also attract huge penalty in case it is established that the same was recklessly or fraudulently claimed.

g.. Coming to the Macro aspect of budgeting, I think the economists are overly obsessed with control over deficits . So long as the deficits are generating more output, employment and spending power in the hands of the masses and idle, uneconomic expenditures are curtailed to minimum; there is no need to panic if the deficit number is high. In any case, in economy like ours, where there are huge uncovered services (domestic services of housewives etc) , the GDP number is always likely to be understated, an additional reason not to panic with deficit .

h… What is stated above raises an important point towards controlling and managing the Expenditure side. Most of the thoughts from the economists and public particularly, in a budget are guided towards the revenue side . But the need to have control over expenditure by strictly following the OUTMOME BUDGETING (a lot is talked about it, without much headway) and setting and ensuring physical Targets should Not be lost sight of .

2… BANKING, MSME AND NPAs

a… A lot is also talked about the huge quantum and frankly a continuing inflows of NPAs in the banking sector . The economy is not doing so badly. The cause of such rise in NPAs should be investigated . I would also see a big role of improper sanctioning, lax documentation and careless monitoring the Bankers. The promoters are not the only culprits. I doubt whether adequate actions to book such instances except in a few cases where the quantum was embarrassingly large. In other words, smaller NPAs do add up to large numbers and they can be addressed quickly and effectively. More attention on this line may yield good results.

b… The recent Insolvency Code has really been a promising step in a right direction. It has opened up the vistas for a quick resolution of NPAs and ailing assets. What is now needed is a strong framework of TURN AROUND SPECIALISTS, who can quickly and effectively help in restarting productive activities. A separate, illustrative organization for the same can be initially set up in public sector

c… The sanctioning authority, the documentation machinery, the monitoring authority and the recovery authorities are concentrated , I believe within a bank itself .This is against the basics of Control Mechanism. A plan has to be implemented where more than one set of people/ agencies are involved in carrying out different functions of the total activity load of a loan or advance .

d… MSMEs and Start Ups play a crucial role in the economy like ours . They need timely and adequate financial support for their progress which can generate huge employment. Realizing this, there are various schemes that are already being implemented by State Governments, banks, Union Governments etc. This has created a flood of schemes, making it more and more difficult for the entrepreneurs to even get to know about existence of various programs, schemes, exemptions and support. I think a time has come to properly codify these schemes and make adequate awareness about the same.

e… As we understand the bankers are in tremendous pressure to reduce the NPAs and improve their profitability. The MSME and Start Up financing, for them is time consuming and does not show quick results. In fact same, if not more time is taken in financing an MSME than the larger advances .As a result, there are many paper schemes for these sectors, without pushing the schemes, they remain in dormant mode .I would suggest a separate Bank ( can be a subsidiary of a bank) can be set up for large advances alone, so that due focus is available on each separate entity .

f.. Monitoring of an advance or a loan is a crucial part of banking activity . This requires a pool of officers, who have an expertise in different industries, who can understand the nuances of the business of the borrower. The current system of placing Nominee Directors has not yielded the desired results. The Banking and Corporate Governance efforts of the Government badly needs a pool of qualified, experienced and reliable professionals who can act as effective Nominee or Independent Directors .

g. Our economy and our products have to remain competitive in the world market. But if we see the cost structure of our products, one finds that the indirect taxes and interest costs are nearly half of the total costs. Special care has to be taken to provide more waivers /exemptions for reducing the costs of export products for increasing exports and also for reducing the costs of essential items for the ultimate domestic consumers.

3… Other Areas :
a. Agriculture Sector offers a huge scope towards employment generation as well as in pushing the GDP. Corporate Farming needs to be encouraged by allotting at least the UN Cultivated Land blocks. Similarly Agriculture Co operatives and Producer Companies need very special encouragement and monitoring.
Distribution channels with inbuilt competition and margin controls are badly required to ensure that a reasonable portion of the market price is available to the farmers. Waiving of loans is a temporary, one time solution. It Can Not and should not be a Norm.
Agro Industries, with modern facilities should be improved along with better storage and transportation network .

b.. Corporate Sector no doubt is a backbone of our economy . The tightening compliance requirements and computerization has added to the cost of compliance, not only to the corporate sector but also on the entire business sector. Lapses, of course should be punished, but providing a power of taking criminal action to the law enforcing authorities to come down heavily on non compliance should be used only sparingly. There are numerous instances where Non Operating and Independent Directors are dragged into Criminal Proceedings, even when they had No role to play in the wrong doings of the promoters or Non Payments of the dues or in bouncing of cheques . Such avoidable actions taken out of zealous and high handed bankers and Officers have created a fear psychology amongst the business community. There needs to be some screening mechanism, when criminal actions are initiated particularly against Non Operating or nominee or independent Directors. Criminal cases should be initiated only against the persons directly involved in the wrong doings. They should be initiated more as an exception under extreme violations rather than as a routine. In addition to creating a fear, it has made it more difficult to attract good talents to act as Independent or nominee or non operating directors, which goes against the very purpose of creating the cadre of Nominee and Independent Directors.

c.. Education Sector has, if said plainly, has let us down, barring of course the IIMs, IITs and some few more shining examples . The Research initiative has nearly vanished and some sparks of students have to cross the shore to seek opportunities.
What we need is a quality School Education and purposeful Education .The British rule has successfully implemented a system of education and curriculum which produces clerks and obedient mass, by restricting imagination and creativity. A sea change in moral based atmosphere needs to be built up through revamping the curriculum and method of teaching.

d.. On Health Care side AYUSH initiative needs greater push along with creating a cadre of skilled manpower who can work at village levels also to at least provide first aid type of Basic Healthcare and spread awareness about good public health . The initiative to popularize Generic Drugs has been showing a very slow progress. A sincere push is really required particularly since the Generic Drugs have to compete with large corporate when it comes to reaching the ultimate consumers

e.. At Judiciary Level , a relook at the procedural aspect of Law and Litigation needs a relook . This is a Must, if we want to reduce the pendency of litigation and transparent justice delivery system.
At the Administrative Level also a relook at the procedural aspect is necessary for efficient and effective implementation of various schemes and programs initiated by the Government.
A robust and Strong MIS system needs to be introduced along with Administrative reforms both in Judiciary and Administrative network, which has remained untouched, perhaps since the British Raj.

Prepared by … Mr Amal Dhru .
amaldhruv@gmail.com (m) 9825015534

Category: Finances, General, Taxation | Tags: , , ,
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