What is wrong with indian economy?

[krish44]

Share:

Facebook X (Twitter) LinkedIn WhatsApp Email Share Link

Something is seriously wrong with it.

Poor are feeling more and more hopeless.

Rural economy is is shambles. Farmers in debt and three years of draught leading to suicides in maharashtra,karnataka, parts of UP .

Middle class joining the poor in suffering due to loss of many subsidies and eroding purchase value of rupee.

Oil prices crashing to less than 30 dollars a barrel from highs of 110 -115 $ but consumers not getting benefitted as the reductions are pocketed by the govt and

not passed on.

Rich and higher middle class sitting idly on mounds of cash on sidelines and refusing to invest in the economy for their or anyones good.

Exports at standstill and imports not increasing .

Rupee over valued { some say it ought to be 70rs to dollar]

Stock markets volatile jumping 600 points either way like a yo yo.

People talk vaguely of digital revolution and yet not trusting banks for online transactions.

Caste and religion creating daily conflicts .

Terrorism making all fearful and more safety conscious.

Who has failed us?

Politicians, Religeous leaders, business leaders , representatives of labour all are to be held responsible for this mess that we have to live with.

What can be a meaningful way to transact this scenario?

I wonder.

 

[Iyyarooraan]

Because Indian economy is never people based. Like courts/judgments are based on the mindset of oldest and retired street thugs Indian economy is based on the mindset of entrenched money class and its stooges.

 

[krish44]

Adding to the depressing scenario , climate change.

When in uttarakhand it rains more than it should, glacier melted away, we never bothered

When chennai got flooded and delhi could not breathe due to pollution, we gave a knee jerk reaction.

We returned to take it in our stride becoming feelingless counting though our losses.

We wait every day for new miracles which will deliver us from this bleak scenario.

We are unable to watch TVs as we get to see only disgusting portraying of violence and display of semi naked human form in social channels and depressing business

news. Movies are not worth going to for enjoying as most of them are trash.

We will end up more disoriented , perhaps emulating the IIT girl head for the hills to escape all this.lol

 

[vgane]

Krish Sir,

India is the only bright spot among emerging economies....We should thank our stars for that! It would have been far worse but for the inflation controlling measures taken by RBI!

 

[krish44]

Vgane sir

There are limits what only monetory stance controlling inflation can do.Tight money makes everybody cautious and averse to spending.

When growth crashes , there is no alternative to a stimulus releasing more money .

All central banks like ECB, bank of japan are getting on the stimulus band wagon to grow their own economies.

US would be wary of raising rates further as it would unbalance the world more.

India has no choice except to ease the liquidity and get into spending mode by govt so that private sector and HNI can relax their grip on their money chests.

The blackmoney witch hunts need to stop for some sectors to revive . That is an economy bigger than the economy where govt writ runs.

Even with all controls 85% of transactions in india are cash transactions.

Mindless over regulations of the central kind do not support economic growth.

Govt can perform by dismantling controls and useless licensing and laws to release the people to make a living by doing their own thing.

Most are unable to move a step forward without some law or rule tripping them up.

Govt instead playing caste or religion cards concentrate by delivering on economic front .India requires a decent finance and commerce minister with domain

knowledge.

Govts will be judged on what they can deliver on economy front.

 

[tbs]

hi

now india can save money for foreign oil....oil prices are cheap...even iran's sanction removed....we can get a lot of

crude oil from iran...we need more private corporate players required...we can storage oil now...later we can export

oil also....we need long term financial stability required..

 

[krish44]

Public sector banks are going downhill with mounds of NPAs

The culprits are big corporate house with more than one company deliberately defaulting in one company of the group.

They know nothing can be done to them

They want banks to either write off or take losses.

The courts are so slow, it will take years to recover money from them.

The logic is if corporate make losses let PSU banks pay for it.If it is profit banks get nothing.

This has made PSU banks lend more cautiously with high interest rate to cover risks .Money becomes expensive for small borrowers.

These corporates are sending govt banks downhill.

When debted corporates were having lavish birth days celebrating in style, R.Rajan expressed his displeasure recently.

However finance secretary said that it was OK if corporates have a great personal life style as the companies that defaulted were limited liabilities companies.lol

With this govt mindset , PSU banks cannot be saved.

There is only all around loot with connivance of the govt.

 

[vgane]

RBI Governor recently rebuked Corporates who had huge NPA loans with their companies referred to BIFR but are leading a lavish life style...Are they not supposed to be responsible and display austerity?...When there is a downside they expect Banks to lift them..But when they face an upside in their Business are they willing to share profits with the Banks??

 

[Vaagmi]

I am smart and intelligent.
I come to India and take a look at the banking scenario here. After making a thorough study of the environment, the laws, the market and the Banks' systemic inefficiency, I hit on a plan to make money quickly. I am giving below the modus operandi in detail. If you want to try this I wish you success.

I have taken these factors into account:

1. You can incorporate a joint stock company here easily. You need a Memorandum and the Articles of association. Go to the Registrar of companies and pay the necessary fee and your company is born. In getting the Memo and Articles you can take the help of CA firms who do this for a small fee.

2. Indian banks are notorious for their inefficiency. You give them a balance sheet and they will do a dukrinjkarane with the document and write out pages of analysis. A simple test of comparing the credit and debit items summations in your loan account with the figures you have furnished in the balance Sheet will be revealing but they won't do that. If you have taken your loan from multiple banks ( they call it 'consortium' in India) then you can be sure that the banks will never do this simple test ever. They need the figures from other banks in the 'consortium' and they will never get this.

3. The big banks are all Govt. owned. This means they can not fail. The political consequences are catastrophic for any party in power. So the flip side of this is that the banks will be kept floating and will never sink. This has two advantages. One is that the borrower can factor this info into his relationsw with the banks. Two the sanctioning bank executives get a lot of comfort from this fact. They just do not have to worry about doing an efficient job. They can oblige any number of politicians who make phone calls recommending loans to their friends in Corporate world.

4. Indian bankruptsy laws are primitive. A company whose real net worth has been wiped out long back can still live in books for as long as its owners want.

Now I come to the modus operandi:

I incorporated a company with a share capital of just Rs. 5 lakhs. Major share holder was my close relative. I am the MD or the CEO of the company. A well furnished Registered Office was set up. (Impressions of visitors matter to me a great deal.)
I bought a piece of land at a cheap price in the country side and built a factory with Bank Finance for housing 10000 spindles that can spin cotton yarn. The Bank financed me for the purchase of the machineries too. The loan for construction of plant and for buying and installing machinery is called by the banks as term loan as this loan is to be paid back in quarterly instalments over a period of time (5 years in this case).

I also obtained working capital loans. These are made available as limits upto which I can draw from the account. deposits into this account is allowed and further drawal upto limit is always allowed. Interest is charged on a day to day basis on the balance in the account (money owed by the company to the bank) and recovered once in a month.

Everything was working smoothly. There was a ready market for the good quality yarn that my mill was spinning. And except a few, my buyers were prompt in their payments. Until something strange happened.
(to be continued)

 

[vgane]

I am smart and intelligent.
I come to India and take a look at the banking scenario here. After making a thorough study of the environment, the laws, the market and the Banks' systemic inefficiency, I hit on a plan to make money quickly. I am giving below the modus operandi in detail. If you want to try this I wish you success.

I have taken these factors into account:

1. You can incorporate a joint stock company here easily. You need a Memorandum and the Articles of association. Go to the Registrar of companies and pay the necessary fee and your company is born. In getting the Memo and Articles you can take the help of CA firms who do this for a small fee.

2. Indian banks are notorious for their inefficiency. You give them a balance sheet and they will do a dukrinjkarane with the document and write out pages of analysis. A simple test of comparing the credit and debit items summations in your loan account with the figures you have furnished in the balance Sheet will be revealing but they won't do that. If you have taken your loan from multiple banks ( they call it 'consortium' in India) then you can be sure that the banks will never do this simple test ever. They need the figures from other banks in the 'consortium' and they will never get this.

3. The big banks are all Govt. owned. This means they can not fail. The political consequences are catastrophic for any party in power. So the flip side of this is that the banks will be kept floating and will never sink. This has two advantages. One is that the borrower can factor this info into his relationsw with the banks. Two the sanctioning bank executives get a lot of comfort from this fact. They just do not have to worry about doing an efficient job. They can oblige any number of politicians who make phone calls recommending loans to their friends in Corporate world.

4. Indian bankruptsy laws are primitive. A company whose real net worth has been wiped out long back can still live in books for as long as its owners want.

Now I come to the modus operandi:

I incorporated a company with a share capital of just Rs. 5 lakhs. Major share holder was my close relative. I am the MD or the CEO of the company. A well furnished Registered Office was set up. (Impressions of visitors matter to me a great deal.)
I bought a piece of land at a cheap price in the country side and built a factory with Bank Finance for housing 10000 spindles that can spin cotton yarn. The Bank financed me for the purchase of the machineries too. The loan for construction of plant and for buying and installing machinery is called by the banks as term loan as this loan is to be paid back in quarterly instalments over a period of time (5 years in this case).

I also obtained working capital loans. These are made available as limits upto which I can draw from the account. deposits into this account is allowed and further drawal upto limit is always allowed. Interest is charged on a day to day basis on the balance in the account (money owed by the company to the bank) and recovered once in a month.

Everything was working smoothly. There was a ready market for the good quality yarn that my mill was spinning. And except a few, my buyers were prompt in their payments. Until something strange happened.
(to be continued)

Vaagmi Sir...Great to see you in different faces..Multi talented...Philosopher, a versatile Tamil scholar with a knowledge of Hindu scriptures, Ex Banker & Entrepreneur who is at ease in Malayalam & Sanskrit sprinkling too..Well done!

Look forward to your next instalment!

 

[krish44]

let us see the yarn spun by one tamil scholar.

we are all attention for the climax.

PSU banks should be banned from lending to corporate clients.

They can concentrate on consumer loans for the lower and middle class . they can easily recover these loans.

Our parliament should pass bankruptcy laws at the earliest.

They should stop recapitalising banks and let them slowly die.

Instead they can start new banks with fresh capital and young IT savvy manpower.

Some of the old weak banks can be merged and made to consolidate.

They can offer VRS or lower age of retirement to existing dead wood.

Most of PSU banks have hit rock bottom in share market.

Where to park ones money is becoming a serious concern for all.

We require a decent finance minister to turn the banks around.

 

[asadu]

Sir,
Everything said in all the above posts are true. Enough to give one a good non recoverable heart attack. But it all started with Unionisation, huge pay scale to bank employees, Ignoring merit and encouraging quota.
This can be cured only by shedding some weight and radical reforms. We take it or leave it, it is there at our doorstep. Several countries going bankrupt, somel under deep recession, rest fighting amoungst themselves and with each other. No one dares to say some soothing words. So, now, here, I say, Everything will be alright, nothing to worry, the future is bright for us. God is always great.

 

[Vaagmi]

Continued from post #9.


Now let me quickly finish the story.

I had a problem in the mill with the union. One day when I was discussing this with a fellow industrialist in the club in the evening he gave me a practical advice. I followed his cryptic advice "the union leader has a price. buy him if the cost of settlement is very high". And it worked.

And after five years of profit making when I approached the Bank for expansion, they dragged their feet. They wanted me to bring some additional security which I was reluctant to give and the issue dragged on. again the friend advised and I followed his advice. It went like this:

"divert money to buy the machineries from the working capital" was the cryptic advice. I followed it. There are several methods to divert the money or siphon it off. I followed one and used the money to buy more machineries in the name of another Company functioning within the same premises on lease(again t eh advice of friend). The new company started functioning well and started making profit while the old company started struggling because of lack of finance. the bank was after me. I pointed out that there was loss due to huge bad debts. the production in the old unit slowly grount to a halt and the banks got jitters. There were several meetings and n othing came out. The bank loan became bad because interest was not serviced.

Then again the friend advised to ask for a rehabilitation package from the bank. I asked the bank to consider the unit(old one) as sick and consider rehabilitation. They readily obliged because they had their own problems of poor profitability and heavy provisioning requirements (this is where the need to factor in the Govt bank's need to float above water has to be taken into account) It was a joint endeavor. I needed to make the old unit work and banks needed more to make it work. I needed money for that and they found ways to give me that. They converted the entire current loan facilities into one huge term loan with concessional interest and easy repayment holidays and gave fresh working capital to work with.

I was happy and the banks were happy. I was happy because I realised my goal of having two un its both functioning and making profit. They were happy because the unit was not a bad debt yet and hence needed no proviswion ing in their books. The share holders of the bank were happy because bank's NPAs were within manageable limits.

The fact that they could have looked at my track record and could have given the additional finance straight to the old unit itself was conveniently forgotten. That is the sad part of the story of Indian banks and their clumsy management style.

My friend adopted the same method when his son wanted a new business for himself to manage.

My another friend did this when he diverted funds to build a bunglow in Madurai ( it was a small scale unit).

So friends this is a well tested method of extracting finance from banks.

For those who wonder what would have happened if the bank haad stood firm and took to recalling the loan, the answer is it is a lengthy process in India. They will have to go to court and file a suit and there is no way they can get me declared bank rupt because there are ways to beat that action.

This may appear like a devils prescription but this is the reality.

All I have said above are imaginery. But they are based on real experiences of friends.

 

[krish44]

Great . This is what all builders do.

They divert money collected from those buying flat to their next project and delay the completion of existing ones beyond the stipulated ,committed dates.The contracts

are designed to a few months of delay with no repurcussions and further delays with low rates of interest to be paid to the buyers.Working capital is also raised by

collecting cash from the buyers instead of cheque payments .No housing company builds flat on own capital. It is either from banks or from buyers.

Most industrialists always reserve one old unit for booking losses while starting and running a few profitable new units by diverting money and other resources from

existing units in a different area for future growth.

The old units are allowed to sink with borrowings from bank not being serviced.Much of the debts to banks are rescheduled and a deal is made with the bank to return

part and write of the balance.This always works with PSU banks.

This is well known to all industrialists-nothing new.

 

[prasad1]

Does this thread mean that we should get our work done, and that is economy?
Work around and accept corruptions may be a way to get your work done, but that is not the economy.
The visible white economy is what we can discuss. The black economy may be thriving, but is not transparent so we may not know enough about it. Except few people who think they have outsmarted the system.

 

[vgane]

These are never discussed in MSM...Is this transparency & good governance?

 

[krish44]

It is wrong notion that govt should fix the economy.

Its economic writ runs in a limited way in certain fields.

The country runs on its own momentum disregarding the govt.

85 % of business dealings are in cash mode , ignoring the banking system

Percentage of People who pay direct taxes are negligible.
Taxing lower and middle class with fixed income upto about 10 lakhs and using thousands of incometax employees to see they do it is foolish.We are supporting a

huge army of IT employees for enforcing tax complaince from the not so well off in india.

The rich and well off have their tax consultants to evade or avoid taxes.

Most would neither like to pay taxes nor avail any service from govt.They would like to be left alone to do their thing.

Thats why start up with no interference from govt is welcomed by all.

IT succeeded because Govt kept away from it mostly.

Our people have the enterprise and money generating capability on their own

Minimal govt with small cabinet and huge reduction in govt employees would be welcomed by all.

Govt can just keep law and order . We do not need any more laws or regulation.

These can only hamper indias growth.

Govt is just an evil many put up with.

 

[yesmohan]

Continued from post #9.


Now let me quickly finish the story.

I had a problem in the mill with the union. One day when I was discussing this with a fellow industrialist in the club in the evening he gave me a practical advice. I followed his cryptic advice "the union leader has a price. buy him if the cost of settlement is very high". And it worked.

And after five years of profit making when I approached the Bank for expansion, they dragged their feet. They wanted me to bring some additional security which I was reluctant to give and the issue dragged on. again the friend advised and I followed his advice. It went like this:

"divert money to buy the machineries from the working capital" was the cryptic advice. I followed it. There are several methods to divert the money or siphon it off. I followed one and used the money to buy more machineries in the name of another Company functioning within the same premises on lease(again t eh advice of friend). The new company started functioning well and started making profit while the old company started struggling because of lack of finance. the bank was after me. I pointed out that there was loss due to huge bad debts. the production in the old unit slowly grount to a halt and the banks got jitters. There were several meetings and n othing came out. The bank loan became bad because interest was not serviced.

Then again the friend advised to ask for a rehabilitation package from the bank. I asked the bank to consider the unit(old one) as sick and consider rehabilitation. They readily obliged because they had their own problems of poor profitability and heavy provisioning requirements (this is where the need to factor in the Govt bank's need to float above water has to be taken into account) It was a joint endeavor. I needed to make the old unit work and banks needed more to make it work. I needed money for that and they found ways to give me that. They converted the entire current loan facilities into one huge term loan with concessional interest and easy repayment holidays and gave fresh working capital to work with.

I was happy and the banks were happy. I was happy because I realised my goal of having two un its both functioning and making profit. They were happy because the unit was not a bad debt yet and hence needed no proviswion ing in their books. The share holders of the bank were happy because bank's NPAs were within manageable limits.

The fact that they could have looked at my track record and could have given the additional finance straight to the old unit itself was conveniently forgotten. That is the sad part of the story of Indian banks and their clumsy management style.

My friend adopted the same method when his son wanted a new business for himself to manage.

My another friend did this when he diverted funds to build a bunglow in Madurai ( it was a small scale unit).

So friends this is a well tested method of extracting finance from banks.

For those who wonder what would have happened if the bank haad stood firm and took to recalling the loan, the answer is it is a lengthy process in India. They will have to go to court and file a suit and there is no way they can get me declared bank rupt because there are ways to beat that action.

This may appear like a devils prescription but this is the reality.

All I have said above are imaginery. But they are based on real experiences of friends.

Story proves that Law breakers are always more intelligent than the law enforcers!!

 

[yesmohan]

let us see the yarn spun by one tamil scholar.

we are all attention for the climax.

PSU banks should be banned from lending to corporate clients.

They can concentrate on consumer loans for the lower and middle class . they can easily recover these loans.

Our parliament should pass bankruptcy laws at the earliest.

They should stop recapitalising banks and let them slowly die.

Instead they can start new banks with fresh capital and young IT savvy manpower.

Some of the old weak banks can be merged and made to consolidate.

They can offer VRS or lower age of retirement to existing dead wood.

Most of PSU banks have hit rock bottom in share market.

Where to park ones money is becoming a serious concern for all.

We require a decent finance minister to turn the banks around.

This much of negative points are there against Banks.

But still many fools are trading in PSU banks' shares and cry after burning the fingers!!

 

[yesmohan]

Adding to the depressing scenario , climate change.

When in uttarakhand it rains more than it should, glacier melted away, we never bothered

When chennai got flooded and delhi could not breathe due to pollution, we gave a knee jerk reaction.

We returned to take it in our stride becoming feelingless counting though our losses.

We wait every day for new miracles which will deliver us from this bleak scenario.

We are unable to watch TVs as we get to see only disgusting portraying of violence and display of semi naked human form in social channels and depressing business

news. Movies are not worth going to for enjoying as most of them are trash.

We will end up more disoriented , perhaps emulating the IIT girl head for the hills to escape all this.lol

A good perception of the environment !

But if these perceptions are predominant, it indicate one is getting older than old!

 

[yesmohan]

RBI Governor recently rebuked Corporates who had huge NPA loans with their companies referred to BIFR but are leading a lavish life style...Are they not supposed to be responsible and display austerity?...When there is a downside they expect Banks to lift them..But when they face an upside in their Business are they willing to share profits with the Banks??

These people are having strong political back up.Their paid servants includes ministers / opposition leaders ! Raghuram Rajan is trying to do his duty but in vain.

 

[yesmohan]

Sir,
Everything said in all the above posts are true. Enough to give one a good non recoverable heart attack. But it all started with Unionisation, huge pay scale to bank employees, Ignoring merit and encouraging quota.
This can be cured only by shedding some weight and radical reforms. We take it or leave it, it is there at our doorstep. Several countries going bankrupt, somel under deep recession, rest fighting amoungst themselves and with each other. No one dares to say some soothing words. So, now, here, I say, Everything will be alright, nothing to worry, the future is bright for us. God is always great.

Compared to software and other sectors, salary in Banks, is not that much lucrative.

A lot of well qualified boys……….MCAs, BEs ,MBAs are there in Banks.

Still a career in Banking is a good avenue for TBs to enter by getting through the BSRB competitive exams, by merit.

We can recommend to our TB boys to target banking for their career prospects.

 

[krish44]

Compared to software and other sectors, salary in Banks, is not that much lucrative.

A lot of well qualified boys……….MCAs, BEs ,MBAs are there in Banks.

Still a career in Banking is a good avenue for TBs to enter by getting through the BSRB competitive exams, by merit.

We can recommend to our TB boys to target banking for their career prospects.

I beg to disagree that banking is good for TBs.

They are better off as delivery boys and Uber drivers as many in bengaluru are doing.

Money is in new economy in areas like logistics and ecommerce.

Employment in PSU banks is best for reserved categories and women who want to have some income in addition to be a housewife. If you look around in PSU banks

this is what you will find in most PSU banks.

 

[krish44]

These people are having strong political back up.Their paid servants includes ministers / opposition leaders ! Raghuram Rajan is trying to do his duty but in vain.

Longevity of corporates and possibility of bigger defaults are more than longevity of tenure of RBI governor.

I do not expect the governor to last long in the present set up.

Corporates will ride it out as they are doing with the present govt.

When in despair, Governors start sermonising , it shows they are on their way out.

Our corporate and political culture cannot be changed by anyone.

 

[asadu]

If TBs are to be given a piece of suggestion i.e.to the younger generation, then I would suggest our TB fraternity to only focus on two key areas of future growth potential. One is Maths and the other is Science i.e. Biology and its relative fields like genetics, bio engineering, bio genetics, bio medical, bio informatics etc etc and in Computer science the new and upcoming area of Artificial Intelligence. Either enter into these fields and excell in your life or rot like a peon, liftman, courier boy or even lesser meanial jobs.