Divergence of Bad Loans and their Provisioning and NPA in Indian Banking System

NPAs have become malaise for the whole banking system in India. For many years, RBI is on drive to clean the banking system but quarter after quarter NPAs are being recognized by banks themselves or detected by RBI. A recent RBI assessment reveals that many lenders including SBI and PNB have been found to be under reporting bad loans as well as their provisioning in last financial year 2018-19. This list democratically includes both the private as well as public sector banks. Those names include UCO Bank, Yes Bank, Union Bank, and Lakshmi Vilas Bank (livemint, 2019). It is quite possible that the final list may many more name names. Similar trend was found in last financial year also. Most importantly the amount of divergence had been very high. For example, in case of SBI, this divergence is tune of ₹ 11,932 crores on account of bad loans and ₹ 12,036 crores towards provisioning. That simply means if these numbers had been adjusted, the bank would have reported a loss of ₹ 6,968 crores than its reported profit of ₹ 862 crores. It had been a quiet practice for long in the Indian banking sector but under wraps and is not just limited to Indian market. However the scary situation is forcing RBI to take serious cognizance of this issue.

Disruption in Telecom Sector in India

It was the second time when Reliance Industries in form of Reliance Jio has made a disruptive entry into telecommunication sector in 2016 to change the whole dynamics of telecom industry forever. The first entry was in form of Reliance Infocomm (now Reliance Communications) in 2002 which resulted into a kind telecommunication revolution in the country. As result of Reliance’s entry into business, telecom services became reachable and affordable to all, even in remotest villages also when telecom services were considered to be a luxury and status symbol for most of the people. Disruption brought by Reliance during that period of time was need of hour as telecom services were limited into a very few hands and benefits were not being utilized to its strength. 

Slowdown in Indian Economy and MGNREGA

Indian economy is under tremendous distress. There is slowdown in every sector from manufacturing to services to agriculture (Upadhyay, 2019a). Core sector is contracting (ET, 2019). The unemployment rate is historically at the highest at 6.1% in last four decades. Indian rupee is getting weaker. Export is falling. Fiscal deficit is expected to expand. There is already trade war going on in international trade. Prices of petroleum products are relatively increasing. Demands for normal goods are falling. There is slowdown all across spectrums but the (Veblen Goods) luxury goods (Mukherjee, 2019). This makes the whole picture really very peculiar for the Indian economy.

Causes and the Nature of the Slowdown in the Indian Economy

Contrary to many, Indian economy is not in the grips of contraction but slowdown. However there are a few optimists who may have luxury to suggest it as cooling or correction in the economy. There are enough and strong indicators clearly indicating that there is slowdown in the economic activities (Upadhyay, 2019). For any economy the cost of slowdown is always very high and the highest for the people at the margins and medium, small and micro enterprises (MSME) and informal sector. The present tide of slowdown is hurting the most to the people at the margin as they have lost their sources of income.

Slowdown Creeps in Indian Economy

The slowdown in Indian economy started knocking on Indian doors by the end of 2015 (Upadhyay, 2015) and it crept into unnoticed. Even the government, RBI, most of the economists and industry leaders are taken by surprise that were optimistic just a few months back (PTI, 2018). Even the global consumer confidence in India was on peak with Consumer Confidence Index score of 133 (Whye, 2019). As per news reports, about 200 manufacturing companies were eager to relocate its production bases from China to India (ET, 2019). However, in 2014 Raghuram Rajan expressed the possibility of financial meltdown in coming years (Schuman, 2014).

Devastating Impact of British Rule on Indian Agriculture

Everyday there are a report about the suicide of farmers in the country. And most of the farmers who attempt suicide are found to be growing cash crop like cotton, sugarcane and jute. This has left so many unanswered questions about the reasons behind these suicides. However there is hardly any doubt about the distress in the Indian farm sector. There is a broad consensus about the same among the economists as well as the Indian administration (Iyer, 2018). 

Are Electric Vehicles Solution to the Problem of Pollution?

The budget presented by the Government of India for fiscal year 2019-20 has presented electric vehicles as the future of transportation in India and provided with policy support to promote these (MoF, 2019). For some time across the world, electric vehicles have been presented as the solution to all the problems relating to pollution emitted by the transportation sector. But at the same time, there are many who don’t have faith in this hypothesis, though, in small numbers relatively. However they present a very different version of this with empirical evidences, data and arguments and try to prove that electric vehicles are dirtier than combustion based fossil fuel vehicles. Although there is consensus among most of the experts that electric vehicles can be helpful in making world greener. Still these two versions of the same electric vehicles force to raise a few questions about the sustainability of electric vehicles before India brace it as alternative mode of transportation. 

Book Review: Desh Deshpande, On Entrepreneurship and Impact

“Every article highlights a value, principle, mind-set or an approach at the foundational level rather than providing a popular tip or a technique. The focus is on the long-term rather than gaining from a fleeting advantage.” 

N R Narayana Murthy, Founder Infosys 

Entrepreneurship is an adventure which attracts perhaps everyone but a very few could actually commit themselves to it and reasons are none but the risk and uncertainty involved. When it comes to writing about entrepreneurship with real life experience and wisdom, it is possible only when you tread the water yourself. This small orange book has been written by a serial entrepreneur who has been successful in establishing big corporations if not the biggest. 

There are a number of books on entrepreneurship by professors and many successful entrepreneurs on this subject that deals with large number of issues that entrepreneurs have to face on the ground. Those books have written either on the basis of observations and theories or experiences. There are really very few books that uses all these three; theories, observations and experiences. This book stands out there by using all these three. 

Jet Airways: Perhaps Insolvency Proceeding at NCLT is not the End

The share prices of troubled Jet Airways on 20th June 2019 increased by more than 120% in one day while the case of airlines was to be admitted by the National Company Law Tribunal (NCLT) for the resolution under Insolvency and Bankruptcy Code (IBC) 2016. Even today, the share prices are sustaining the previous day’s closing price. The tribunal has accepted the case for insolvency proceedings and also approved the appointment of Insolvency Resolution Professional (IRP) to oversee the insolvency proceedings. Declaring this matter to be of national importance, the tribunal has ordered to complete the insolvency resolution process within three months instead of six months that law allows to resolve cases relating to insolvency and bankruptcy. Apart from this every fortnight the insolvency resolution professional is required to submit the progress report to tribunal. 

WTO Questions India’s Plan to Revive Farm Sector

The farm support plans announced by India and the United States have created a lot of noise, mainly among the developed nations with surplus agriculture produces. These are under the scrutiny by the World Trade Organization members in WTO’s quarterly agriculture committee meeting on June 25-26. Specifically the European Union and Australia has asked India to explain the Modi’s proposal to spend Rs 25 lakh crore on agriculture and rural development and doubling farmers’ incomes by 2022 as part of Rs 100 lakh crore, five-year infrastructure development plan. Even the US is out asking questions about India’s 5% export subsidy for non-Basmati rice as well as increasing purchase of wheat at higher minimum support prices by the Indian Government even when India has record wheat stockpile.