From the Desk of the Chairman (August 2023)

There are times when you find it difficult to describe India to a foreign national. The reason is not that you are challenged in our expressions. It is because of the obvious and inherent contradictions that you find all around us.?We have the Taj Mahal, the marvel built by the Mughal Emperor Shah Jahan centuries back. We also have Dharavi, the largest slum in the middle of a bustling city like Mumbai. What is unique about Dharavi is not the size of the slum replete with its poverty, informal housing, and inadequate infrastructure. If you look a bit closely you will also realise that this slum is the hub of bustling economic activities. During the COVID-19 pandemic, Dharavi even gained global attention for effectively managing the outbreak despite its dense population and crammed spaces. Efforts both by the Central and State governments have failed to redevelop this slum in the past. People had resigned to the fact that it likely to remain a slum forever as long us Mumbai itself exists on India’s map. One Indian, who happened to be a billionaire, thought otherwise. Because of his clout and reputation there is a new hope for Dharavi.?Gautam Adani, one of the most enterprising entrepreneurs from India has a plan for this slum. Just before his empire was hit by a scandal unraveled by Hindenburg, the international market short seller, Adani had submitted his plan for development of this slum into a swanky suburb of Mumbai. This is not a small deal. I, for one, is just another idle observer bitterly complaining about this slum every time I pass through it. In case Adani succeeds in developing this slum, he will be saving a lot of Indians who bring visitors from abroad to Mumbai from feeling embarrassed.??This embarrassment is twofold – one that we ourselves live in the city associated with so much filth and the second is that we have no solution to redevelop it. If Adani has his way, five years down the line you will be able to see a different metropolis when you visit Mumbai. Mike Tyson, the boxing legend skipped Dharavi once to the disappointment of the slum dwellers. Next time it could be the turn of Bill Gates to visit this place, for all that you know. The Opposition parties, the Congress in particular, have raised objections to the “favour” offered to Adani for this project. The initial details put out by the Adani Group about the proposed development look quite impressive.?In the process, if Adani acquires the moniker Slumlord Billionaire, no one should nurse a grievance. The new Dada of Dharavi will have earned his laurels.?

When Narendra Modi made his appearance in the national stage as the PM, he brought with him some telltale qualities normally not associated with an Indian politician. His style and felicity of communication were and still are outstanding.?For him nothing is extempore.?He is extremely fond of using short slogans and one-liners.?It is possible that he has his own team in the PMO ‘manufacturing’ these slogans.?Consequently, he may have been disappointed when Rahul Gandhi, of all people, came up with the acronym – INDIA – Indian National Developmental Inclusive Alliance. Modi perhaps did not expect this from his favorite Pappu. ?Any acronym symbolising the motherland should be an uncomfortable one for a self-proclaimed nationalistic Party like the BJP. ?Though the acronym is fine, the string of words connecting to form the word “India” sounds a bit convoluted. But Rahul had his day in the recently concluded convention of the Opposition parties.?Though Modi has tried to attach India to the Mujahideen and the East India company, it has not worked. His spin masters have to come up with something more creative to denounce INDIA without hurting India. Whether you like it or not, Rahul has won this round and Modi is hurting. ?It was quite interesting to see Rahul when he came to the mike to address the Opposition Convention of a motley crowd of leaders, furtively clutching a scrap of paper on which was written the full form of INDIA.?As I am writing this, here is a newsbreak - a much-awaited demand from a Rajya Sabha MP from BJP from Uttarakhand has demanded that the word India be scrapped from the Constitution of the country claiming that it is a colonial imposition that replaced the name of the country ‘Bharat’. Rahul has drawn first blood! So, the next general elections in 2024 is going to be between India and Bharat. Is this what you call an etymological fight to political power?

In his foreword to the Financial Stability Report released last month, RBI Governor Shaktikanta Das talked about how India is on the cusp of a ‘twin balance sheet advantage for growth’. A few days later, the Finance Minister Nirmala Sitharaman also mentioned this while predicting robust economic growth for the country.?The term "twin balance sheet problem" typically refers to a situation where both banks and corporations in an economy are burdened with high levels of non-performing assets (NPAs) on their respective balance sheets.?On one hand, the banking sector faces the issue of mounting bad loans or NPAs. These are loans that borrowers have failed to repay, leading to a decline in the value of the assets on the Bank's balance sheet. This in turn leads to reduction in their lending capacity thereby creating instability in the overall financial system. On the other hand, many corporations struggle with high levels of debt on their Balance Sheets. These companies may have taken loans to fund expansion or other projects, but due to various reasons like economic downturns, policy changes, or adverse market conditions, they find it difficult to service these debts. This impairs their ability to invest and grow, which can have negative consequences for economic growth and employment. The combination of both problems - the troubled banking sector and the heavily indebted corporate sector - is referred to as the "twin balance sheet problem." This situation can create a negative feedback loop where the weak financial position of banks hinders lending to corporations, which, in turn, affects their ability to repay debts and further weakens the banks' asset quality.?However, Finance Minister's recent statement suggests that the worst of the crisis might be behind us as banks and corporates’ performances have improved. The economy’s performance seems to support this optimism.?The data bears this out too – The NPAs of banks have declined and the profit margins of the corporates are also showing an upward trend.?Together, this has led to robust credit growth as per the RBI data. The data shows that Rs 3 trillion?capital was infused by government in public sector banks between FY17 and FY21.?The growth in profit of banks in 2022-23 was 38.4%. 35% The Debt-to-Equity ratio of private firms in FY23 was 38.40% from 55% in FY15. Low private capex pushed down growth in the past decade. No wonder the share prices of public sector banks are going up.?With the general elections around the corner, one hopes that the authorities do not get tempted to let the economic norms to astray.

The battlelines for the upcoming elections in Rajasthan are getting drawn up quite clearly. The State government has announced the Rajasthan Minimum Guaranteed Income Bill 2023 on 21st July 23. The Bill is more welcoming and emphatic than expected.?Moreover, it is a ‘right based’ scheme to be legislated in the State Assembly shortly.?With this, one talking point for the PM is ready when he comes calling for votes shortly to Rajasthan. It remains to be seen if this Scheme also would fall within the definition “revadi” that the PM is sure to refer to. Whatever that might be, it is a demonstrated fact that come elections, suddenly every politician remembers that there are voters across who are economically distressed. As per the government proposal, every adult person residing in the rural areas of the state shall have a right to get a guaranteed employment for doing permissible work of at least additional 25 days in a financial year on completion of maximum days of work as prescribed by the MGNREGA, and to receive such minimum wages weekly or in any case not later than a fortnight. For the urban areas, every adult person of the state shall have a right to get guaranteed employment for doing permissible work of at least 125 days in a financial year and to receive minimum wages weekly or in any case not later than a fortnight. The first striking feature of the proposal is that it is a ‘right-based’ entitlement.?This State scheme is thus an improvement on the MGNAREGA entitlement.?Second feature is that this scheme has an auto enhancement of wages annually by 15% to take care of inflation.?Thirdly, it also provides for a pension of Rs.1,000/- per month for people who cannot work for certain reasons.?In short, this proposal covers three areas, viz., the right to minimum guaranteed income, right to guaranteed employment, and a right to guaranteed social security pension.?However, it must be remembered that Rajasthan is amongst the states with the highest debt burden in the country. Historically the state allocates less on more productive forms of spending.?The question of how to make ends meet is for another day, that too after the elections. If Ashok Gehlot and his Congress Party do not get elected, the burden of the bill for this initiative would be picked up by the Opposition Party!?Heads I win; Tails you lose.?In the previous issue of Bizsol Update carried an article on Universal Basic Income (UBI).?Here is a quick clarification.?This is not UBI.?Payments here are dependent on measurable and predetermined output. Just a clarification.

Anyone who follows global events has to necessarily reserve a special column exclusively for Donald Trump. In all likelihood Trump would go down in history as a rogue President of the United States. Before his term ended, he had already gone through two Impeachment Trials, a unique distinction.?That is not all.?He has so far been indicted thrice since he left office and he is waiting for more. The previous instance of a sitting President subjected to an impeachment proceeding was Richard Nixon in 1974.?Nixon, by the way, did not cause any embarrassment to his countrymen by resigning from his post. Though his crime was unpardonable, he left his office gracefully. Five decades later when you look back at what Nixon was accused of was akin to a petty crime when compared with Donald Trump. Trump left office in a huff, created a furor all round, instigated riots in Washington before he found that he could not hold on to his office any further. Trump did not show any grace while going but is struggling desperately to get back to the Oval Office in the White House, a place that he has simply debased.?His crimes involve financial frauds, sexual misconduct, breach of Official Secrets Act, blatant obstruction of justice, abuse of power and what have you. You could ask whether that matters to you and me.?Yes, it does. No man with such a background should get anywhere close to a position of power and influence, if only for the one reason that he has the nuclear buttons literally at his fingertips.?Even otherwise as a representative of the most powerful nation he can do things to others that may set in motion an irreversible chain reaction destabilising the world order that at best of times is so tenuous even under normal circumstances.?Moreover, when you think of world leaders, you want them to be of impeccable character, no less. These leaders are the role models for the generations to follow.?That is the reason why in our growing up years we read about such leaders even from foreign lands in our textbooks. They are not all Indians nor are they from India alone. Today one can understand the reasons behind the desperation of Trump.?For him it is not only about his ambition of wanting to be the President again.?It is an existential issue as far as he is concerned. If not elected, it is certain that he will spend most of his time left in his life in jail for which he is already facing trials. ??

Just the other day, two issues back in the Bizsol Update, I had written about the tragedy that we are living through in Manipur. After what had been witnessed there subsequently, I do not know if I should be shocked or ashamed. But today, I am shocked and ashamed like all other citizens of the country. I cannot bring myself to write about Manipur and what is happening there anymore even though that in opinion is most important for the country.?I will write again on Manipur when my PM speaks about Manipur.

Oommen Chandy who served as the 10th Chief Minister of Kerala passed away the other day. He represented Puthuppally in Kottayam District.?Even when he was the CM, he was one who had always been shabbily dressed, with a disheveled look about him. As if that is not enough, he was hardly an exciting orator or an effective speaker, quintessential qualities required for a politician. His bio data otherwise boasts of him as a lawyer who never practiced and a statesman of some standing.?He represented his constituency from 1970 till his death a few days back in 2023. That made him the longest serving MLA of any state legislature in India. Towards the end of his career as a politician he had been accused of serious misdemeanors though it never got proved.?The unprecedented funeral procession for him was witness to his popularity despite these allegations.?State honours were done away with as the former CM himself had conveyed to his family that he did not want them. So typical of him.?May his soul rest in peace, something that eluded him on earth.

Thank you.

Venkat R Venkitachalam