Friends
In my view the Indian economy is passing through a very sensitive phase which needs special focus.
Indian economy -A note from the point of view of businessman/ Industrialists:
UPA was ruling the country since 9 years without any major challenges and the last 3 years were witnessing policy Paralysis. The country could not see any vibration as if every thing was left in the hands of the god. Inflation was continuously increasing and people were simply waiting for this government to go as there was no effect on the deaf ears of the leaders in power. After long wait new government came amidst lot of chaos and confusion. The business fraternity was expecting positive view and support from the new rulers. Though they were taking issues on priority, it was long wait till first boos up came in the form of interest rate reduction of .25 bps. We lost golden opportunity of cheaper crude prices to boos the morale of the business community. In fact in last decade, the businessmen who defaulted or failed were given insulting treatment. There may be some cases of wilful default, fraud or cheating but maximum businesses defaulted due to the circumstances beyond their control. I suggest following measures immediately which can not only revive the economy at grass root level but also save the jobs of millions serving in private sector:
1. Those industries reeling under severe financial crunch but still operating some how shall be immediate helped by extending fresh funding if possible or by restructuring their loans. The terms may stringent enough to stop further financial losses to the lending institutions.
2. Industries operating but NPA , SHALL BE given MINIMUM SIX MONTHS' moratorium towards repayment of interest and principal. This will help them stand on their own.
3. No new account shall be categorised as NPA for next six months. Such borrowers can arrange funds on their own to avoid branded failure under CIBIL and come out of the current tough situation.
4. Role of ARC shall be reviewed as they have caused more loss to the economy then any benefit. These were floated to help business revive but rarely any account has been revived by them. They behave like vultures where they can get 24-30% pa return on their meagre investment. There should be detailed enquiries on the accounts taken up by them ( recently they have acquired abt 50k Crs. account paying hardly 10% to the bankers. In fact the bankers prefer arc instead of helping the borrower as this relieved them from any accountability .
5. Government should think seriously on building up an institution like IIRB, which is scrapped now, who is exclusively helping the business to come out from the stress. A fund should be created separately instead of giving support to the bankers who use such funds to lend further.
6. MSME segments needs immediate relief from interest rates.
Above all there should trust between lenders and borrowers notwithstanding the fact that some of the borrowers have defrauded the lenders but number of such borrowers is not more than 5% , however in value terms it may be 15-20%. Big borrowers have given big hit to the lenders , while small borrowers suffered most.
C P
