https://www.youtube.com/watch?v=pDs5Q-zTilg&t=2009s
Tuesday, May 9, 2017
The NPA mess in Banks
No one seems to be happy, these days, in banking circles. The recent moves by the Government to give more teeth to the RBI to go after defaulting companies and their boards had caused euphoria initially, but that that is quickly giving way to despair amongst banks.
Reason? Hitherto, the banks were allowed to " sleep over" the Non_Performing Assets (NPA) mess, ie, loans given to big industrial houses that have gone sour,with little prospect of recovering them, under the existing laws, without writing them off in their books. Many Public Sector Banks ( PSBs) saw their CEOs adopt this tactic very smartly, wherein, without writing off the bad apples, they kept on postponing the problem, for their successor to come in and handle. It may be noted that apart from a few "stupid" private banks, the PSBs were manipulated by greedy business magnates, over the years, to oblige them with loans that looked dubious, to say the very least. Some willing bureaucrats heeded the advise of their political masters, enabling swindling of huge swathes of money over the last 7 decades.
Now, firstly, the RBI is empowered to take on the defaulters, and bring them " to the street" if required, in order to recover the loans. That means, the Vijay Mallayas of the world cannot any more hide behind the "limited liability" concept, cajole politicians, bureaucrats and banks to lend them thousands of crores of rupees without proper risk assessment and collateralization being done.
Secondly, and more importantly, the banks will be required to "hand over" the bad apples to RBI, but only after writing them off in their books, after the mandatory waiting period, as laid down in the guidelines of the Indian Bankers' Association (IBA).
What are the potential fallouts of these over the short to medium term?
One, banks because of the write-offs, banks in general can be safely expected to report poor quarterly earnings over the next few quarters. Their stock prices may correct, from the rather lofty valuation currently. Banks are the backbone of the Stock market, and therefore, the ripple effect may be seen in the Stock Indices correcting, too. Any Geo political events that may weigh, over and above this, could only exacerbate matters. Therefore, the risk to reward, in stock markets appears to be diminishing for now. This view of mine is for the short to medium term only.
Two, expect more industrialists to be pulled up legally for default. This is likely to send shivers down the spine of many. Essar, Videocon, Bhushan Steel, GVK, GMR, Suzlon,Lanco etc come to my mind, but there could be many others too. The will throw water in the already poor investment climate, where fresh investments are hard to come by, a fact borne out by the fact that lending to the capital goods sector has actually been going down over the last three years. So, until clarity emerges on who is going to be spared, expect investments to lie low, and therefore, GDP growth to continue to be pale, at around the 7% mark. There is no reason to despair, though, since there is enough excess capacity available for the economy to absorb in case demand picks up. And, in any case, compared to even China, a 7% GDP growth is pretty good, by any yardstick. The unknown entity here is the monsoon. If we end up with a reasonably good monsoon, then things may not have much of an impact on demand. However, if the monsoon fails this year too, as has been happening over the last three years, then Modi will have a tough time coming back to power in 2019, and this likely economic backdrop.
I am disappointed that while the Government has addressed the immediate sick baby - NPAs - they have not yet gone to the root of the problem. While failed enterprises are the foundation of any robust capitalist economy, in India, Risk Assessment and management for Banks, is either very weak, or can be easily manipulated, or both. So, while, the nation may grin it's teeth and clean up the balance sheets of Banks as a "one-time" pain, the problem is likely to resurface, unless lending norms are tightened significantly. To me, Arun Jaitley's acid test lies here. So far, he has failed, but tomorrow could well be different.
So, are there no positives out of this seemingly despondent scenario? Of course there are.
Firstly, expect awareness amongst public and banks to increase. Expect push-back, when it comes to lending. Banks may insist on tighter norms for lending. Politicians may still have their way, but it is going to be more difficult than before. This clean-up exercise sends out a strong message to the sharks out there, that manipulating the system for their personal gains, is getting increasingly difficult, if not impossible.
Secondly, for every Dhoot or Ruia or GVK Reddy who will come under the hammer, expect green shoots to come in. This, to me, presents the more exciting aspect of this clean-up. Tomorrow could well see new business leaders, with fresher ideas, come in and make a difference.
Whether that difference will point towards the positive direction, remains to be seen.
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Picture Courtesy: The Economic Times
http://economictimes.indiatimes.com/news/economy/policy/indian-banking-wont-be-the-same-again-if-rbi-gets-to-clean-the-bad-loan-mess-heres-why/articleshow/58601700.cms
Sunday, May 7, 2017
The God of Honesty
It was less than 3 years ago. Arvind Kejriwal was then busy, organizing one press conference after another. Targeting leaders from the Congress, to Shiv Sena to the BJP , and hurling one corruption charge after another. That was enough to get him the limelight. The presstitutes were only too eager to oblige. After all, who would want to give away freebie TRP ratings?
Cut the chase. Today, Brutus has stabbed Caesar, in front of cameras. The man, whose claim to fame was solely based on hurling unsubstantiated corruption charges, stands alone - getting a taste of his own medicine. The self-styled God of Honesty clearly is God no more.
A few take-aways from today's press conference:
1. Why did Mishra have to wait, and call for a grand conference call, in order to hurl corruption charges against his own leader. If he were that concerned about probity in public life, why did he not blow the whistle then and there? The onus is now on him, to provide prima facie evidence. Without that, to me, this will only be yet another of those political gimmickry.
2. The charges appear to be serious enough to warrant a criminal investigation. I hope the Central Government and the Governor have the spine to pursue this, rather than pussy-footing over the issue.
3. If Kejriwal is indeed clean, as he claims, then it is equally incumbent on him to file a libel or defamation suit on Mishra, in oder to clear his name. Allow the courts to decide, and give him the clean chit. There are too many lawyers in Delhi to help with him in this effort. Including the redoubtable Ram Jethmalani, Abhishek Manu Singhvi, Kapil Sibal, Salman Khurshid, and - yes - Arun Jaitley ;)
Cut the chase. Today, Brutus has stabbed Caesar, in front of cameras. The man, whose claim to fame was solely based on hurling unsubstantiated corruption charges, stands alone - getting a taste of his own medicine. The self-styled God of Honesty clearly is God no more.
A few take-aways from today's press conference:
1. Why did Mishra have to wait, and call for a grand conference call, in order to hurl corruption charges against his own leader. If he were that concerned about probity in public life, why did he not blow the whistle then and there? The onus is now on him, to provide prima facie evidence. Without that, to me, this will only be yet another of those political gimmickry.
2. The charges appear to be serious enough to warrant a criminal investigation. I hope the Central Government and the Governor have the spine to pursue this, rather than pussy-footing over the issue.
3. If Kejriwal is indeed clean, as he claims, then it is equally incumbent on him to file a libel or defamation suit on Mishra, in oder to clear his name. Allow the courts to decide, and give him the clean chit. There are too many lawyers in Delhi to help with him in this effort. Including the redoubtable Ram Jethmalani, Abhishek Manu Singhvi, Kapil Sibal, Salman Khurshid, and - yes - Arun Jaitley ;)
Wednesday, April 26, 2017
The MCD results
Two and half years ago, the Arvind Kerjriwal was nick-named AK67 ( for winning all but 3 Assembly seats in Delhi).
It looks like that AK67 has misfired in all directions. Today's MCD elections are, as I see, not a vote for the BJP or Modi or Amit Shah, but a vote against Kejriwal. Plain and simple. For no voter is THAT stupid to give a 85% mandate in one election, and reverse it to 15% in 2 years flat.
To me, the results point to the following:
1. Rank anger against Kejriwal and his tall promises ( and no action).
2. Disappointment with the AAP for allowing Kerjiwal to hijack the mantle of Anna Hazare, and to get away with it, quite literally.
People are already signing on the epitaph of AAP and Kejriwal. To me, that is an overdo. To me, the following are the take-aways:
Firstly, People have always bounced back from the worst of election defeats, provided they learn their lessons well. Kejriwal should take heart from history, and should honestly strive to be " The New, Improved Kejriwal", rather than sticking to his dirty games and "shoot and scoot" politics.
Secondly, this is a lesson equally for the BJP. They should remain humble, and focus on DELIVERING what they have promised to the people. If not, they would meet the same fate - and they really have much more to lose.
Thirdly, all said and done, this is only the MCD election, and to me, it has no national significance, other than a warning signal for Kejriwal. I had maintained when Kejriwal had won big time, two years ago, that it was after all, the election for the Corporation of Delhi ( jokingly). Today, when he stands defeated and disgraced, I maintain the same - that the MCD results do not matter at the national level.
Fourthly, and more importantly, this means a potentially different political realignment at the national level that could shape, in the coming weeks. Coupled with the defeats in Punjab and Goa, the AAP has now has snatched failure from the jaws of glory. The rapid conquest of the BJP in state and municipal elections, consistently over the last 15 months ( after the Bihar debacle), I am sure, is sending shivers down the spines of the likes of Mamta, Nitish, Naveen Patnaik etc. I expect some of these " cats on the wall" now to officially realign with the Modi wave. I expect the others to huddle together, and concoct another " National Front" against the BJP. That concoction may well contain heady potions, with enemies like TMC and Commies sleeping together- and hey, who knows, the DMK and AIADMK may sleep together too, for Parliamentary and national affairs!! Politics, surely, sees strange bedfellows, more often than not.
It looks like that AK67 has misfired in all directions. Today's MCD elections are, as I see, not a vote for the BJP or Modi or Amit Shah, but a vote against Kejriwal. Plain and simple. For no voter is THAT stupid to give a 85% mandate in one election, and reverse it to 15% in 2 years flat.
To me, the results point to the following:
1. Rank anger against Kejriwal and his tall promises ( and no action).
2. Disappointment with the AAP for allowing Kerjiwal to hijack the mantle of Anna Hazare, and to get away with it, quite literally.
People are already signing on the epitaph of AAP and Kejriwal. To me, that is an overdo. To me, the following are the take-aways:
Firstly, People have always bounced back from the worst of election defeats, provided they learn their lessons well. Kejriwal should take heart from history, and should honestly strive to be " The New, Improved Kejriwal", rather than sticking to his dirty games and "shoot and scoot" politics.
Secondly, this is a lesson equally for the BJP. They should remain humble, and focus on DELIVERING what they have promised to the people. If not, they would meet the same fate - and they really have much more to lose.
Thirdly, all said and done, this is only the MCD election, and to me, it has no national significance, other than a warning signal for Kejriwal. I had maintained when Kejriwal had won big time, two years ago, that it was after all, the election for the Corporation of Delhi ( jokingly). Today, when he stands defeated and disgraced, I maintain the same - that the MCD results do not matter at the national level.
Fourthly, and more importantly, this means a potentially different political realignment at the national level that could shape, in the coming weeks. Coupled with the defeats in Punjab and Goa, the AAP has now has snatched failure from the jaws of glory. The rapid conquest of the BJP in state and municipal elections, consistently over the last 15 months ( after the Bihar debacle), I am sure, is sending shivers down the spines of the likes of Mamta, Nitish, Naveen Patnaik etc. I expect some of these " cats on the wall" now to officially realign with the Modi wave. I expect the others to huddle together, and concoct another " National Front" against the BJP. That concoction may well contain heady potions, with enemies like TMC and Commies sleeping together- and hey, who knows, the DMK and AIADMK may sleep together too, for Parliamentary and national affairs!! Politics, surely, sees strange bedfellows, more often than not.
Saturday, April 22, 2017
The re-emergence of National Parties
Post independence India always witnessed the presence of regional political parties (RPPs) in different states, with differing levels of strength. Some were fringe players, and continue to do so. Will-nilly, the decadence of the one mass-based National Outfit, the Congress(Indira)- which later on usurped the mantle of the Indian National Congress- also saw the emergence of not only the Bharatiya Janata Party, as a credible opposition at the national level, but also some RPPs - notably the SP, BSP, BJP, NCP, Telugu Desam, JDU, RJD etc... wielding power not only in the states, but also influencing, and quite often playing nuisance-maker role at the national level. Parties like the DMK ( and with it, the the breakaway AIADMK), the Shiv Sena etc. have always existed almost since Independence ( or shortly thereafter). Some break-away parties like the NCP, TMC have gained quickie popularity and acceptance, by deftly maneuvering the sentiments of the local populace.
India has always been a global showcase of unity in diversity. However, the parochial focus of the Congress in the "cow belt" ( read: Hindi-speaking heartland) had resulted in " more than equal" status to that part of the country, leaving many other "lesser" states far behind, in economic development. The regional players were quick on pounce on this disenchantment. The main national party had failed to put the nation's interest above petty parochial cow-belt and family politics. The regional outfits found it convenient to climb the popularity ladder, by focusing on regional ( read: linguistic, casteist and religious) disparities.
The collateral damage of this growth of the regional parties is that the narrow interests of a focus group have gained predominance over national interests. It does not help that the constitution did not clearly demarcate Central, State and Concurrent lists when it came to managing the resources of the country in a structured way. With due respects to the founding fathers of the nation, they perhaps were not visionary enough to see what was coming down the road. Some natural resources like water, rivers, land etc, which could have perhaps been part of the Central list, were left out. The seemingly insolvable water disputes between various states across the country that we witness today, could have been minimized, had the rivers been part of the National list. It is a shame that almost all national parties, including the current ruling party, play dirty double games, whipping up passions across the state borders.
I strongly feel that barring the odd ones, most regional parties have only served to divide the country further. Nationalism has clearly given way to regionalism. Objectivity has taken the back-seat, while parochialism reigns supreme. To add insult to injury, more often than not, the regional parties have become cases of the tail wagging the dog. It may be recalled that the AIADMK, with less than 10 members in the Lok Sabha, had played nuisance, and had brought down a central government, in 1996.
In an immature democracy like India, coalition politics directly means rampant horse-trading and corruption. The regional satraps end up enjoying their place in the sun, with very little stakes at the national level. Result? No one seems to take the national cause up seriously, any more, playing mere lip service all along. The present government appears to show some signs of change for the better, in that respect, but it is too early to say whether the nation is going to be put back on the path of a strong self-pride and oneness, by just one political party.
Yes, a strong opposition is required, in any democracy, to maintain the necessary checks and balances. It is easy for me to say that we really do not need a strong opposition for the country to grow and stay proud, if I am to take the example of Singapore. But one must remember the sheer complexity and diversity of India is perhaps matched only by the European Union, which is a loose confederation, at best, as opposed to a single country like ours. There, the member countries continue to retain their individual identities, while sleeping with each other, whenever convenient. I am not going to entertain any arguments on whether India should remain one or not. To me, that is a given - India is one, and will continue to exhibit unity in diversity. The question then boils down to what is the best option for India - the emergence of RPPs, or strong national parties with a pan-India presence who avoid playing dirty double-games in different states and maintain a principled stand across the country in almost all issues.
If I am to stick my neck out and take a stand, I would rather see the re-emergence of a set of strong national parties. It is time that the national parties stepped up. The BJP is certainly accelerating the process of substituting the RPPs with itself. Whether that will lead to the extermination of these RPPs remains to be seen. Nevertheless, it augurs well for national interest.
The Chinese had erased all regional identities in their country, including regional dialects, food, language, dress, culture etc., in favour of a unified China. They had even destroyed manuscripts and artifacts, in order to facilitate a unified China. The Ming Dynasty had started it, and the Communist regime had perfected it. India, however, cannot afford to, and should not be foolhardy, to attempt that. India's strength is in tolerance, and unity and diversity, and we should maintain that at all costs. Therefore, it is incumbent on the national parties like the BJP and Congress ( without the Ghandys) to put aside their own hidden agendas. I see the BJP pushing Hindi forcefully down the throat of non-Hindi speaking population, and that is not going to help anyone, including the BJP itself. The Congress's pushing of "cow belt politics", coupled with the hegemony of one family, has pushed it into a position of an also-ran, in national and state politics, and that should serve as a stern warning for the BJP too.
A responsible set of national political parties with the vision and passion for a strong emergent India, will be the best case scenario.
RIP, RPPs.
The re-emergence of National Parties
India has always been a global showcase of unity in diversity. However, the parochial focus of the Congress in the "cow belt" ( read: Hindi-speaking heartland) had resulted in " more than equal" status to that part of the country, leaving many other "lesser" states far behind, in economic development. The regional players were quick on pounce on this disenchantment. The main national party had failed to put the nation's interest above petty parochial cow-belt and family politics. The regional outfits found it convenient to climb the popularity ladder, by focusing on regional ( read: linguistic, casteist and religious) disparities.
The collateral damage of this growth of the regional parties is that the narrow interests of a focus group have gained predominance over national interests. It does not help that the constitution did not clearly demarcate Central, State and Concurrent lists when it came to managing the resources of the country in a structured way. With due respects to the founding fathers of the nation, they perhaps were not visionary enough to see what was coming down the road. Some natural resources like water, rivers, land etc, which could have perhaps been part of the Central list, were left out. The seemingly insolvable water disputes between various states across the country that we witness today, could have been minimized, had the rivers been part of the National list. It is a shame that almost all national parties, including the current ruling party, play dirty double games, whipping up passions across the state borders.
I strongly feel that barring the odd ones, most regional parties have only served to divide the country further. Nationalism has clearly given way to regionalism. Objectivity has taken the back-seat, while parochialism reigns supreme. To add insult to injury, more often than not, the regional parties have become cases of the tail wagging the dog. It may be recalled that the AIADMK, with less than 10 members in the Lok Sabha, had played nuisance, and had brought down a central government, in 1996.
In an immature democracy like India, coalition politics directly means rampant horse-trading and corruption. The regional satraps end up enjoying their place in the sun, with very little stakes at the national level. Result? No one seems to take the national cause up seriously, any more, playing mere lip service all along. The present government appears to show some signs of change for the better, in that respect, but it is too early to say whether the nation is going to be put back on the path of a strong self-pride and oneness, by just one political party.
Yes, a strong opposition is required, in any democracy, to maintain the necessary checks and balances. It is easy for me to say that we really do not need a strong opposition for the country to grow and stay proud, if I am to take the example of Singapore. But one must remember the sheer complexity and diversity of India is perhaps matched only by the European Union, which is a loose confederation, at best, as opposed to a single country like ours. There, the member countries continue to retain their individual identities, while sleeping with each other, whenever convenient. I am not going to entertain any arguments on whether India should remain one or not. To me, that is a given - India is one, and will continue to exhibit unity in diversity. The question then boils down to what is the best option for India - the emergence of RPPs, or strong national parties with a pan-India presence who avoid playing dirty double-games in different states and maintain a principled stand across the country in almost all issues.
If I am to stick my neck out and take a stand, I would rather see the re-emergence of a set of strong national parties. It is time that the national parties stepped up. The BJP is certainly accelerating the process of substituting the RPPs with itself. Whether that will lead to the extermination of these RPPs remains to be seen. Nevertheless, it augurs well for national interest.
The Chinese had erased all regional identities in their country, including regional dialects, food, language, dress, culture etc., in favour of a unified China. They had even destroyed manuscripts and artifacts, in order to facilitate a unified China. The Ming Dynasty had started it, and the Communist regime had perfected it. India, however, cannot afford to, and should not be foolhardy, to attempt that. India's strength is in tolerance, and unity and diversity, and we should maintain that at all costs. Therefore, it is incumbent on the national parties like the BJP and Congress ( without the Ghandys) to put aside their own hidden agendas. I see the BJP pushing Hindi forcefully down the throat of non-Hindi speaking population, and that is not going to help anyone, including the BJP itself. The Congress's pushing of "cow belt politics", coupled with the hegemony of one family, has pushed it into a position of an also-ran, in national and state politics, and that should serve as a stern warning for the BJP too.
A responsible set of national political parties with the vision and passion for a strong emergent India, will be the best case scenario.
RIP, RPPs.
The re-emergence of National Parties
Saturday, April 15, 2017
नामुमक़िन है
दिल-ए-नादान को रोखना नामुमक़िन है
ज़क्मी सीने को और ठोकना नामुमकिन है।
दिल के आईने से तुम्हारी तस्वीर ग़ाइब है
टूटे इस शीशे को अब जोड़ना नामुमकिन है।
दर्द-ए-दिल को समझाना नामुमकिन है
टूटकर फिर मुस्कुराना नामुमकिन है।
जब तुम चले जाओ किसीके हाथ थामकर
जहां से लौट आना बिलकुल नामुमकिन है।
ज़क्मी सीने को और ठोकना नामुमकिन है।
दिल के आईने से तुम्हारी तस्वीर ग़ाइब है
टूटे इस शीशे को अब जोड़ना नामुमकिन है।
दर्द-ए-दिल को समझाना नामुमकिन है
टूटकर फिर मुस्कुराना नामुमकिन है।
जब तुम चले जाओ किसीके हाथ थामकर
जहां से लौट आना बिलकुल नामुमकिन है।
Pakistan's Machinations
Of late, Pakistan has been busy "catching Indian agents" in "the act". First, it was Kulbhushan Yadav. India alleges that he guy was in Iran, when he was dragged into Pakistani border, and foisted with spying charges, tried and convicted. Whether Pakistan is right, or that they trying to frame, no one will really know. These are spy and war games and anything is indeed possible Today's news below adds more spice. So, is it the Silk Route turing into Spicy route?
To me, these do not appear to be isolated incidents. I see the the breathing of fire of the dragon in all this.
Take a step back and look at the big picture. Pakistan is increasingly cozying up to China, and it just suits China, at a time, when the US is consciously moving away from using Pakistan as the toilet paper to wipe terrorists away. With Trump now in charge, there is immense pressure to declare Pak a rogue state along the lines of Syria, Cuba, North Korea etc. It is in Pakistan's interests, therefore, to take refuge under the shadow of the dragon. And it that plays right into China's hands.
China is being increasingly being marginalized at the UN, in admitting India into the Security Council. So far, they have dodged with their veto power. However, they know that they cannot hold off for too long, and would naturally look for new ammunition against a strong India's case.
Pakistan, to me, is attempting to bracket India with itself. " You call me a rogue state! Now , what will you call India, who are fomenting trouble inside my territory? Call them a rogue state too! Stop all Nuclear shipments with them! Cancel all free trade with them!!"
That could, with one stone, kill two birds. One, the blooming bonhomie between India and the West, could be checkmated, much to Pakistan's glee, if they succeed in this attempt. Two, it gives China the perfect to ammo to stop any of India's dreams of making it to the Council. Plus, China could also easily say " See! We told you so! India is creating trouble in OUR territories like Ladakh, Tibet and Arunachal Pradesh, and Sikkim, and ( when India is sleeping a bit), TAMIL NADU too!!"
What would be India's response? Let us wait and watch.
http://www.hindustantimes.com/india-news/three-raw-recruits-arrested-in-pok-for-anti-state-activities-claims-pakistan/story-OorSGnUqw3A0H0et9SxYsI.html
To me, these do not appear to be isolated incidents. I see the the breathing of fire of the dragon in all this.
Take a step back and look at the big picture. Pakistan is increasingly cozying up to China, and it just suits China, at a time, when the US is consciously moving away from using Pakistan as the toilet paper to wipe terrorists away. With Trump now in charge, there is immense pressure to declare Pak a rogue state along the lines of Syria, Cuba, North Korea etc. It is in Pakistan's interests, therefore, to take refuge under the shadow of the dragon. And it that plays right into China's hands.
China is being increasingly being marginalized at the UN, in admitting India into the Security Council. So far, they have dodged with their veto power. However, they know that they cannot hold off for too long, and would naturally look for new ammunition against a strong India's case.
Pakistan, to me, is attempting to bracket India with itself. " You call me a rogue state! Now , what will you call India, who are fomenting trouble inside my territory? Call them a rogue state too! Stop all Nuclear shipments with them! Cancel all free trade with them!!"
That could, with one stone, kill two birds. One, the blooming bonhomie between India and the West, could be checkmated, much to Pakistan's glee, if they succeed in this attempt. Two, it gives China the perfect to ammo to stop any of India's dreams of making it to the Council. Plus, China could also easily say " See! We told you so! India is creating trouble in OUR territories like Ladakh, Tibet and Arunachal Pradesh, and Sikkim, and ( when India is sleeping a bit), TAMIL NADU too!!"
What would be India's response? Let us wait and watch.
http://www.hindustantimes.com/india-news/three-raw-recruits-arrested-in-pok-for-anti-state-activities-claims-pakistan/story-OorSGnUqw3A0H0et9SxYsI.html
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