Business Today 10-Feb-2019

PRETTY MUCH everyone agrees that the problems of farmers are going to play an enormous role in the coming general elections. They have played a role in the change of governments in recent state elections and that is why all parties are trying their best to woo farmers. The NDA government, in its first two years, had been fairly indifferent to the farm sector if you examine the Budget allocations, or even the announcements made. Unfortunately, those were also the years when the country faced two successive bad monsoons, and that brought farmer distress sharply into focus for every politician. After all, despite the fact that it only accounts for 17 per cent of India’s GDP, agriculture provides jobs, directly and indirectly, to over 40 per cent of the country’s…

INDIA’S MUCH PUBLICISED Mudra loans are becoming a new breeding ground for NPAs. Launched four years back to boost entrepreneurship, these small loans (less than ₹10 lakh), without collateral, don’t appear to be such a great idea in hindsight. The RBI reportedly cautioned the government over this recently, even as Secretary, Financial Services, Rajiv Kumar, spent the week playing down asset quality concerns. The truth is, ‘such schemes’ need to be examined more closely for potential credit risk, says former RBI Governor Raghuram Rajan. In 2017/18, over 5 per cent of these loans of three-five years tenure turned NPAs. The disbursement figure is ₹7.16 lakh crore. As redemption approaches, there are likely to be more defaulters. Banks, under pressure to meet targets, are doing their best to squeeze all kinds…

Arvind Subramanian, when he was the Chief Economic Adviser, first mooted the idea of a universal basic income system ending all existing subsidies. The government would transfer some funds to each citizen’s bank account regularly, and unconditionally, to cover basic needs. Now, Sikkim’s ruling party, the Sikkim Democratic Front, seems to be interested in this idea. The Pawan Kumar Chamling government – in power continuously since 1994 – has promised to implement Universal Basic Income if voted to power for another term. Experimenting with such ideas would be great if India could afford it, and if citizens were more or less equal – socially and financially. But, India is not rich, and its citizens need the benefits of its welfare programmes. Sikkim is no different. The nation’s welfare schemes can…

SALIL PAREKH has a lot more to celebrate than just the first work anniversary at Infosys. The 3rd quarter’s financial results saw the company overtake TCS’ revenue growth rate. The company recorded 2.7 per cent revenue growth as against TCS’ 1.8 per cent. It also upped the full-year revenue guidance to 8.9-9 per cent from the earlier 6-8 per cent. Markets have cheered the early indications of growth coming back to Infosys, even as the company is in the middle of its three-year transformational journey. With the Q3 Total Contact Value standing close to $1.57 billion and a significant increase in large deals, analysts have already given the stock a thumbs-up. Will Infosys overtake TCS in near future? The answer would have to be No. But will it be spoken…

THE ONGOING uncertainty in the Amtek Auto insolvency case after the ‘successful’ bidder Liberty House failed to pay creditors is a ‘learning’ experience for the entire insolvency regime. After Liberty House failed to pay banks as promised, the creditors’ committee has now begun looking for fresh bidders for Amtek. While this means start of the insolvency process from scratch, the case should force stakeholders to revamp the entire process and select a resolution plan more robustly to ensure that future bidders are fully committed. This is equally true for bidders – Liberty House, for instance, has been saying it was misled into buying Amtek Auto – who need a way to check the assets of companies they are trying to buy. Though the insolvency law does include penalties for those…

TEHRAN HAS FINALLY formally handed over the Shahid Beheshti port at Chabahar to state-owned India Ports Global Ltd. The US did waiver sanctions for Chahbahar ostensibly for crucial Afghan humanitarian relief. Trade restrictions on Iran and limited initial opportunities in Afghanistan mean India has really nothing to do after being handed over control. Chabahar, however, is full of possibilities. It is connected with the multimodal International North-South Transport Corridor and will serve as a gateway to Central Asia, Russia and Eastern Europe. Land route access through this port would greatly reduce Pakistan’s influence (with Kabul) and that of Beijing in the general region. India hopes that with land access, trade via Chabahar can jump from $2 billion now to $70 billion in just a few years. But Tehran will claim…