Business Today 26-Aug-2018

THE BAD LOAN problem for Indian banks has defied solutions despite multiple efforts by the government and the Reserve Bank of India (RBI) over the years. Way back in 2002, the Securities and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (Sarfaesi Act) was passed in the hope that it would lead to an orderly solution. Unfortunately, when banks and asset reconstruction companies tried to use it, defaulters went to court. Pretty soon the Act became non-functional in practice. Even while the government was enacting the Sarfaesi Act, RBI had issued guidelines (in 2001) for the Corporate Debt Restructuring (CDR) scheme. The scheme was to allow restructuring of debt to firms, on a case-by-case basis, to allow them to turn around companies. However, the overwhelming majority of firms,…

STAY CONNECTED WITH US ON www.facebook.com/BusinessToday@BT_India PERSPECTIVES Tata Motors’ Downward Spiral in the Stock Market Continues on Worries About Europe As part of the new strategy, the company has shut down manufacturing operations in Thailand; nearly closed Nano production; and increased prices of passenger cars in India businesstoday.in/tatamotors-strategy GST, IBC May Help India Scale Higher in World Bank’s Ease of Doing Business Ranking The introduction of the GST and enactment of IBC are considered to be the two key parameters where India made significant progress during 2017/18 businesstoday.in/wb.ranking-india How to Merge Public Sector Banks Merger of banks based on geography will result in lesser disruption in terms of rationalisation of branches and people. The merger of weak banks can be done once the bad assets are out of the system…

IS INDIA ALREADY consuming food items that include Genetically Modified crop ingredients? A recent study by public advocacy organisation Centre for Science and Environment (CSE) suggests that GM crop ingredients are already part of India’s food chain. Of 65 imported and domestically produced or processed food samples that CSE tested, 46 per cent of imported food products that were made of, or used soya, corn, or rapeseed, tested positive for the presence of GM DNA. About 17 per cent of samples that were produced in India tested positive for GM cottonseed oil. The imported products - oils, packaged food, infant foods, and protein supplements - came from the US, Canada, the Netherlands, Thailand, and UAE. In India, GM Bt cotton is the only crop approved for commercial cultivation. Though unregulated…

HOW MUCH DOES the monetary policy affect demand, especially at the state level? And how effective is increased government spending on economic output? An RBI Working Paper by Garima Wahi and Muneesh Kapur, focused specifically on state level data, seeks to give the answers. The author’s empirical analysis concludes that higher interest rates reduce demand and lower interest rates support economic activity, not only at the national level but also at state levels. More interesting is the effect of fiscal policy. Higher public investment boosts non-agricultural output while higher revenue and fiscal deficits crowd out private investment – and its effects are particularly felt in low-income states. Unlike other studies, the authors say their study could not find any benefits of higher fiscal deficit even in the short term.…

STRUGGLING TO FIND new buyers, Harley Davidson, the quintessential American motorcycling brand is changing. It announced a comprehensive four-year roadmap to doubling revenue. Harley’s plans include tying up with an Indian motorcycle company to produce a smaller 250-500cc mobike targeting Indian riders. It is likely to take Harley towards India's biggest two-wheeler company Hero MotoCorp that hasn't tied up with any rival global firm. Others like Bajaj (with Triumph) and TVS (with BMW Motorrad) are already taken. The need for this is simple. In the West, riding a mobike is no longer cool; there are few takers; and Harley is struggling financially and in terms of outright sales. Like its peers, it is now looking at emerging markets like India, China, and South East Asia. The market here is big…

6,000 MEDICINE brands worth about ₹2,500-odd crore are likely to be banned soon. These are 343 Fixed Dose Combinations (drugs with two or more active ingredients), which the Drugs Technical Advisory Board will be asking the Health Ministry to ban. India’s ₹1.10 lakh crore, drug market is saturated with over 25,000 brands and 349 FDCs were banned two years back as they were deemed “unsafe” and “irrational”. Pharma companies and the government battled it out in various courts and eventually the Supreme Court directed the government to set up another committee to take a fresh look. The second committee has asked the government to ban all but six FDCs from the list it was given. FDCs are a mechanism to evade price control measures and the same drug can be…