Politics vs Economics

As a person belonging to the business community with Baniya and Marwari tag , I hv always noticed the economics ahead of politics. This is further strengthened with the base in Gujarat. Economics always superseded politics till very recently. However in 5-6 years I have noticed significant lead of politics over economics . Now the politics is more important than the economics or commerce. People at mass level have left aside the importance of economics . Now people are interested only in politics . This  shift in mindset is a significant change in our society which is generally noticed during war or crisis times. Why and how this transformation in mindset could happen is a very interesting issue. Till recently politicians used to blame each other for failure in economy . Public too was bit sensitive about inflation, interest rates, price rises , foreign inflow, rupee/ dollar exchange rate, job etc etc. now people more concerned about CAB, 370, temple, statue, religion, caste, neighbours etc etc. you talk any body anywhere in the country all will discuss about these issue and feel elevated with the knowledge acquired through WhatsApp. WhatsApp and google have taken over all the other knowledge sources irrespective to the authenticity. 

In such situation it seems that people feel threatened from deep inside and only concerned with their survival. Somewhere media has played very important role in this mindset transformation. It is true what ever is seen or heard multiple times we start believing and that is the reason that we all are put into a situation where the survival become threatening forcing the people to leave aside economy . 

I don’t know the long term effect of this but one thing is certain - people will be least interested in development and more into different things resulting in to poor growth . Although the political issues mentioned above are also of importance but superseding economics is something worrisome. We have been ahead of our neighbours due to different mind set but this may not continue in future and may be we will imbibe their mindset. Hope we soone realise this and return back to our growth track. 

C P Jain

GDP, GDP , GDP ......?

In current times, most common matter for discussion after weather is GDP. All media channels, newspapers, magazines etc. are full of this word. Every one in our country has become economist along worth the politician. But do we really know about the GDP? Is it important factor and where do we stand in terms of GDP in world economy . 

Although I am a layman as far as economics is concerned but still would like to share my views with little knowledge acquired from here and there. 

Let's analyse bit deep this GDP. 

What is GDP. : Gross domestic product is a value of all goods and services produced by a country in a specific period commonly annual. This helps In understanding the economic size of a country . Our country’s GDP was 2.935 tn usd in 2019. We are 5th Rank in size of economy after US, China, Japan & Germany. 

Now the question arises is what is the importance of GDP and does it really indicates perfect economic situation.

GDP reflects size of economy and hence the market of that country also. In that sense  GDP indicates overall volume of a country if we talk in laymen language irrespective to the size of population. It is just like a income of a family irrespective to the number of dependants. So we can say that yes to understand the size of a country it is important but this is only partial observation.  In fact it confuses with prosperity. We are always taught that the higher GDP will make us rich. This is not fully correct. The GDP is only one factor in deciding the prosperity of a nation. If we divide GDP by the population of a country we can arrive at the per capita income of its' citizen. 

We are ranking  5th in GDP size but if we look at per capita income then we rank at 127 i.e. far below many nations. Our per capita income is 2172 USD as against 8000 USD average level. If we analyse the economy by per capita we are far below the average of the world. In that sense our situation is too dismal. 

In fact the economic analysis of any country should be based on both the above parameters and not one factor only. Considering the population size we are far below average. Whatever be the growth it will take long time to even touch the average mark. 

Also the economic parameters should be mixed with the other factors like freedom, political situation, happiness level, education, mortality age, health care , infrastructure etc. to understand the real situation of economy in any country. 

Hence in my view defining ourselves at number 5 is of no use rather misguiding considering the per capita income. 

CP

Festivals - Over consumption in life

Friends
Festivals are important part of our lives at every age, caste, creed , society, country and world as a whole. For a child festival means staying away from routine, better family mood, good food, travel, clothing etc. When we grow young , festival leads to chilling out, no commitments, no routine life so on and so forth. When we cross the age further, festivals pushes us to meet our nears and dears, off from the routine along with family time.
In last couple of decades I hv noticed interference of media too in the festivals. Mostly the media in current times affects negatively the celebrations. Over consumption of information, social media pressure , mental obsession of media has taken away the way we used to celebrate the festivals. Now a days social media decides whom to wish and whom not, we have to flow in the direction dictated by the media as number of messages you get , it is compulsory to reply else it may affect the relationship adversely. Now you can not take off mentally during the festival. You have to b always ON socially and respond on same way you do it regularly. There is no OFF from social media these days else's you may be termed as arrogant and rude. Also this social media has multiplied the festivals. Infact every major festival starts on social media and ends with it. The duration of the festival is also stretched and now major festivals are celebrated for 7-10 days.
In our Hindu culture number of festivals are much more than other religions. These festivals costs a lot to us due to their longevity and spendings. May be this is one of the major reasons that we have left behind economically. The per capita income speaks all but no one wants to pin point to this fact that so much holidays are severely damaging our economy. Our leaders speaks total economic size but not per capita. 

CP

Growing imbalance in Indian society

Since childhood it is being publicised that all the rulers from every political party annihbce that their main focus is to uplift poor, Dalit, farmers and backwards. 

In last almost five decades I could not see any major change in the situation. Whatever growth we are noticing is a normal growth which happened in every other part of the world.  Lot of government subsidies , programmes , freebies and all are publicised and huge money is distributed but nothing improves.

In my view our rulers should review this method of supporting the needy. Sustainable growth is possible only by improving education and social hindrance. Our millennial habits and social restrictions need to be improved which is possibly only through education, health and better environment. Expenditure in education and health is miniscule hence results will also be u the same proportion. 

Gap between poor and rich has widened manifold in last two decades and it is going up day by day. India has 131 billionaires and 3.45 lakhs millionaires which is third largest population after USA and China. Although in a population of 130 crores , millionaires are less than 0.03% it is quite alarming considering the fact that maximum population is poor. The gap between rich and poor is too wide at serious level. Despite this we are yet to invest reasonable amount in education and health. 

Widening gap between the society causes dissatisfaction and anxiety in the society . It is more dangerous when the rich show off their wealth . More on this in next blog. 
CP

When Rome was burning, Niro was piping flute

This is old saying that “ Jab Rome jal raha tha tab Niro bansuri baja raha tha.”

I could not understand the real meaning of this saying till recently. 

In our current period this saying is proving right in toto. Whatever media you watch or read major news is about rapes, lynching, hate, religious fanatism, corruption, Fraud, bank defaults  etc. this is the real situation similar to Rome burning. Despite serious efforts by the PM and slogan of Sabka Vishwas there is no concrete improvement. 

Now coming to Niro. In our current society all rich, famous and politicians are Niro. We blame the Government but the fact is we all are Niro and turning away eyes and ears from the facts and not doing enough to handle this . Rich & Famous are busy in protecting self interests and wealth accumulation by any means. Most of us have become super analysts. Wake up Niro, Rome is burning. 
CP

Stressed Assets: Golden Opportunity for Investors

FriendsWith IBC 2016 , although in operation since last 30 months is still under evolution and may take another 30 months to get settled, has thrown open golden oppprtunity for investors. The Code with protection from hidden liabilities, litigations, past and future claims from government and other stakeholders has insulated the investor as a safety cover. In this new environment, investors can breath easily from the future liabilities and also get the stressed assets at much cheaper price. 

Today the official stressed assets in our country are estimated at around 150 billion US $ which may change hands in near future. Although this may not be a good time for the businesses, it is definitely golden period for the investors who can make killing in a big way. Stressed assets in all sectors are available to change hands either through IBC 2016 or OTS. The process of IBC is well accepted by the industry and lenders which will further expand in near future. 

I foresee huge merger & acquisition in actions in near future in our country where in large number of  existing  businessman will go astray in oblivion and replaced by new entrepreneurs with great enthusiasm. Although changing process is never comfortable but once the change completes it is appreciated. 

Let’s hope the people sitting on hump of money will use this lifetime opportunity. CP

GROWING NPA & IBC

Friends

As is widely known that the NPA in our country are still increasing day by day ( Rs. 8.06 lakh Crs. as on 31.3.2019) and the banks continue to bleed. Recently there have been three different news from different sides erupted which can be inter linked :

a) RBI reduced Repo rate by 0.25%; b) Increase in willful defaulters by 86%; and c) Banking credit growth (non-food) is further down to 11.9% on year on year basis.  

If we analyse the above clippings, it would be very clear that the actual level of NPA is yet to be reported by the Bankers. Still huge amount is not come out as NPA. Current level of NPA is marginally lower than the actual net worth of all the banks taken together. This situation is after so many good things happen in banks which went silently unreported. Banks could have performed better but they lost the opportunity. Some of the major benefits to banks occur in following manner:

a) RBI has reduced the lending rate by 2.75% sofar in last 4 ½ years out of which not more than 1% is passed on to the borrowers  whereas the deposit rates are reduced to the fiull extent. It means 1.75% rate benefit is sucked by the Banks which is equal to Rs. 5-6 lakh crores ;

b) Rupee dollar is in range bound area and there is no risk to the bankers ;

c) Crude Oil prices are still below USD 60 / barrel and had touched $40 also. This should have fuelled credit growth substantially; and 

d) Insolvency & Bankruptcy Code 2016 has become very effective tool to recover the Bank dues. Infact , under waterfall arrangement, payment to financial creditors has been on top even much ahead of the statutory dues. 

Long back I had mentioned in one of my post that the NPA can be controlled only by change in loan appraisal & monitoring methods but there has been no major improvement in this segment. 

IBC has been blamed off late for delay and hair cuts. This is absolutely incorrect considering the legal set up of our country. IBC has been able to resolve the issue with 342 days as against 2000 days in previous laws. As far as the hair cut is concerned, it is subjective matter because if lending is faulty every thing else will be cascading only. 

This blog and earlier posts can be read at cpjain63.blogpost.com

CP

Love your Enterprise

In recent times we are witnessing lot of enterprises sucking down due to losses and heading towards liquidation. I get opportunity to meet large number of entrepreneurs and try to understand real reason for such failure . The situation aftermath of the failure is very painful, emberassing, frustrating and to a great extent insulting too. It is not just the failure which causes problem but the side effects of failure of an enterprise is more dangerous. 

Imaging an entrepreneur visualising a large industrial enterprises at a barren and isolated land with no facility. He gives everything to realise his vision including security of own properties and guarantees and so on.. he never gets anything out of this till the enterprise starts operation and churns profit. During this phase he gives employment to many people , pays their salary, buys material and sale in the market. He faces the risk of not getting any money but to pay the suppliers and employees. After long wait if he is lucky , there may be some profit generation to take back home. This is the moment when he is branded as decoit, scamster, thief and all. No one thinks about the efforts and risk the promoter puts in building this dream and sacrificing every thing he possesses. No one appreciates when promoter takes away profit at home . Later if there is any loss or default due to genuine or non genuine reasons the onus falls on the promoter who is totally cornered and trapped in his own making. There is no one at this stage to support him which pushes him further to the dock. N

So far the picture I painted above is quite normal but the real challenge begins now when every thing is finished and the promoter starts losing business , social reputations and family disputes crop in. Debt cloud overtakes him from all sides. Here the promoters divides into two i. An entrepreneur who does not leave the enterprise and gives everything to survive and save it. He will come every day to the business place , respond positively to all the calls and never escapes from responding . He will keep patience, try to keep the unit in operation and beg to save the unit; and ii. An entrepreneur who feels it is not possible to save it now , stops coming to the business place , tries to avoid the calls and takes every step to save the assets under his possession. He may abscond even and manipulate every thing to safeguard his interests. 

In both the cases the motive of the entrepreneur is to safeguard his interest but with and without the enterprise. I have noticed that those who treat the enterprise as a child or family member, the revival is almost certain but if the enterprise is deserted at its own fate, it is rare to revive the enterprise as well as the entrepreneur. Wherever the entrepreneur is ready to sacrificethe for the survival of the enterprise and does not leave at the mercy of others , the revival is guaranteed. 

Hence my suggestion to all the entrepreneurs currently passing through the challenging phase is to never leave the enterprise at its fate, give your 100% to save it and treat like own child, till it is back to normal. It is bread earner and like we humans some time pass through turbulent time. It is test for you also. 

Above suggestion and observations apply only in cases of genuine reasons of defaults and may not hold true when the entrepreneur has intentionally manipulated the matter. 

C P

Growing Challenges in CA Profession: Good opportunity too?

Chartered accountancy profession in our country was a very respectable profession . The profession in last 70 years has grown to great heights having current strength of 300000 approx. CAs. Out of these 40% are in practice and rest in job. The ratio towards job is increasing every year due to various challenges in the profession. CA profession has changed drastically in last 15 years due to technological and economical changes. The profession first saw major revolution in nineties when the Indian economy was opening up and the interaction with the outside world had just started. Later the technological advancement pushed it towards system based tools and methods. 

CA profession these days has been in severe criticism due to unethical and manipulative practice of some Chartered accountants. Such people may not be more than 5% but this is sufficient to spoil the image of all. This has also affected the social reputation of CAs. Another factor affecting the profession is self interest of some of the elected body  members who are representing the profession. It is being noticed since quite some time that few elected members try to grab more business or develop the connection with politics s and government authorities to serve the personal interests by using the platform of the profession and spoiling the image. Also the disciplinary actions against the erring members is too slow and mostly they get Scot free. These days most of the financial scams are having one common factor i.e CA along with the accused. GOI has taken various measures to control these but so far improvement is not yet been noticed. In fact, CA profession is witnessing very serious challenges due to govt actions including setting up of NFRA (National Financial Reporting Authority) , a supreme body over the CA Institute.

Despite all these above challenge the profession has expanded to various new verticals which are quite lucrative too comparing the traditional verticals. In last five years, role of CA has expanded to new areas like GST, Forensic, Insolvency, Financial Restructuring, System Audits . Although all these carry lot of accountability too on the part of the Professional. The future of this profession is quite good considering the economic growth of our country. But the current situation is scaring the professionals to plunge into practice and they prefer jobs which may change once the callenges settles down or the professionals get accustomed too. Wish we will not only recover the lost ground but also scale new heights.

CP

Tearing Social Fabric

Friends

Technological advancement of last 3 decades have changed the life economically, socially and personally. We people of sixties have experienced the thick social fabric when family was full of Chachas, Taus, Dada, Dadi, Bua, mama, mausi and so on…it was the time when every elder had authority to scold or fire or abuse. And we would just bow our head as a respect. The joint families with large number of members were common with strong binding . Any marriage or function in a family was on priority and well attended. Things were quite simple and easy. Every responsibility was family responsibility . The situation stared deteriorating in eighties and escalated in nineties. Post 2000, technology took over the emotions , life styles, way of doing business , education, family structure and social responsibilities. In last 10-15 years, the families have shrunk almost every where, every responsibility is yours only , relations are shrinking- now bua or mausi have become rare and optional. Now social functions have become big challenges. We have become so possessive about the kids that no one can dare to scold them. Now getting annoyed means the end of relations for ever. Neither we care for others nor do others. Education and income have taken top priority slot than anything else including our nears and dears. Technology has virtually tore the social fabric in our society. Now we don’t cry if some one leaves us but we cry if some one comes to us. We have gone far away from our own culture and values. We feel happy to criticise others, their ancestors, down others to any extent. We are happier to see others in trouble. Now if we dont agree with others’ views, he is our enemy . We can not live with people of rival views. . No doubt technology has changed life for good, it has come with equal destruction too .

Technological development has damaged the social fabric badly. We have lot emotions, brotherhood, joint living and so on. Yeh kaha aa gaye hum log.

CP

Changing Parameters of Success

It has been more than five decades of journey which have taught me lot of lessons in the sphere of Social, Professional and Personal fields.

In childhood we were told that the success means good education and Job. It modified later to good education, Job & Money. Time changed with further modification in success parameters to good job, money and happy married life. Following the parameters We tried to improvise all these but that was not end. Those who have son but no money or good life were considered more successful than those who have daughters , money and happy life. Finally these days I am experiencing that the success parameters have changed drastically if you are father. The successful is the one and only one who has married his daughters/ Son whether they like or not. All Other parameters are lost. If you could not then you are most pitiable person who did not achieve any thing in life irrespective of success in all others areas. People will start advising you to do anything possible in this world but get kids married. It does not matter how low you bring down yourself or whether the families gel or not. In our Marwari culture lot is suspected about the budget of marriage.

These kind of changing parameters put lot of pressure which may lead to wrong decisions also causing heavy damage to the life of our own kids. But society is not going to consider this. Despite education and modernisation the mind set is still unchanged.

I wish the parameters change for the better .

CP

Father’s Day

Today’s day is dedicated to all the fathers of the planet. Father is 6 word letter which combines into a role of a person who is your shield, source of dreams coming true, unspoken love & affection. The value of father can be understood only when you become father or father is no more in this world. 

The human world is so cruel that God created FATHER to allow the people survive. Can any one imagine life without father? I think we can not imagine life without father.  My heartiest wishes to all the Fathers.

I became father almost 28 years back in 1991 when god gifted me one of my two angels. Although a boy becomes MAN after marriage , his real manship starts the day he becomes Father. Fathership creates the world around you filled with love, sacrifice, dedication and commitment to each other. 

Wish Happy Fathers’ Day.

CP