let’s talk real. majority of citizens are struggling with their finances. factories, offices, shops are shut. since there is no way for anybody, save those employed with various governments and government bodies, to make money, the onus lies on governments to provide relief. agreed, a few big corporates will pay salaries during the lockdown period from their reserves and some bosses driven by ethics and morality will also do so. but india is a big, big country. nearly 90 percent of total workforce is employed in the informal sector and most of the employers will find it impossible to pay their workers due to nil cash flows and unavailability of reserves earmarked for such situations. amid all this, the governments are charging for electricity and other supplies. they are doing so since the employees of the state and state-owned enterprises will be paid their salaries in full. but is this justified? at a time when companies are laying off workers
at the time of writing this, a few more than 27,000 samples have been tested in india, a country of more than 1.3 billion. of these, more than 800 have returned as positive for coronavirus. but this may not be the only concern. we are short on testing kits and test centres and the government’s and other authorities’ response to the crisis is worrisome. let’s start with the announcement that the prime minister will address the nation at 8pm on 19 March, 2020. this announcement came in advance and gave enough fodder to rumour mills. the pm has a history of causing panic at 8, one can recall the demonetization episode. an advance announcement of pm address triggered panic buying and people stockpiled. in fact, the pm and his team of advisors failed to realise this would happen. then came the declaration of a ‘janta curfew’ on sunday. will this be a curfew, a lockdown or something else, nobody knew.
one can take cue from the agriculture sector of india, where the demand for farm produce is not commensurate with supply, to understand the jobs generation issue. on the supply side, the number of growers is high and this has resulted in glut in the market for such crops as wheat and sugarcane. by contrast, farmers who have wisely shifted towards alternative options, for example floriculture, are prospering in an otherwise distressed sector. this is enough to understand what needs to be done in manufacturing and services sectors to generate jobs for the large number of youths entering the labourforce. be it the conventional textile industry or telecom, the demand for their products has hit the wall. thus, these industries cannot be expected to generate the jobs needed in the economy. the information technology sector is not in similar distress and new engineers (with updated skills) are being recruited. this is owing to demand for new tech, including cloud, artificial
economies across the world have slowed down, those posting good numbers of gdp growth rate aren’t faring well on equitable distribution of national income. then is the issue of rising number of loan defaulters. so what happened suddenly in the economic landscape that well-established companies, barring a few, are increasingly falling in the trap of squeezed profits? first globalisation (that in the indian scene resulted in public sector undertakings sharing their market base with more competitive enterprises, causing gradual decline in performances of psu firms) and now easy access to information (all thanks to the internet revolution) that is not allowing companies to reap unfair profits owing to new ventures in related business coming up rapidly through easily gained knowledge of a profitable market. google is perhaps the best company to work with as per studies, the internet giant has great workplaces, jaw-dropping salary packages for staffers and the perfect work-life balance. but google can afford this, at least for
the bjp is in power in most indian states and its feat in the north-east is an evidence that voters are decisively backing the pro-development and reformist stance of the prime minister. so the perfect time to bring long-pending reforms in banking is now. when indira gandhi brought bank nationalisation in 1969, the move that was although opposed by many in her own party, went down well with the general populace, only because people viewed it as furthering their interests. even at that time, nationalising banks wasn’t the most preferred action to bring a change in how banks functioned; it was thought that banks were operating as agents of few corporates, while the needs of underprivileged classes were not being paid heed to. the then Indira-led government, prior to bringing the nationalisation ordinance, brought the scheme of social control over banks (which couldn’t last long), where a national credit council was established with finance minister as head and representatives of
while everyone is counting the exact figure of non-performing assets, no one has taken time to see how messy, obsolete is the slip that is to be attached when depositing cash in a public sector bank. the modus operandi of government banks has led them to where they stand today; india’s so-called gem of banking sector, state bank of india, has posted a quarterly loss for the first time in 17 years. cut to solution. divestment is the only option to revive indian public sector banks, and yes this can come with challenges hence the need is to think of an appropriate method of divestment. when divestment is considered, we only think of making a public sector unit private by way of selling the stake of the government. this, however, can be a kneejerk decision. what is the alternative then? form a government trust and handover the stake currently held by government in public sector banks to this trust. yes,
what do you expect would trigger organic job creation? increased economic activity? and for this increased economic activity do you want new enterprises to come up or the existing ones to expand? if this is the case, you may be at fault while pursuing the goal of job creation. our country, india, is a typical example of how population rise outpaces creation of new economic activities. you may come up with best measures – liberalisation or incentives to new enterprises – but the impact of these measures wouldn’t be enough to result into creation of as much employment opportunities as the country seeks. a simple and untapped way out to this problem is expanding the existing economic activities in such a manner that already existing enterprises see an increase in their appetite to absorb more unemployed youth. take an example. a public sector bank in india works from 10 am to 5 pm and remains shut on alternate saturdays and
wage restraint as a policy action can be traced back to germany, a european country that has trumped china (the so-called ‘factory of the world’) in terms of positive balance of trade. germany is a net exporter and its economy is one of the most stable and commanding. the edge was attained on the back of curbing any imprudent rise in wages of the working class. on the contrary, asia’s third largest economy, india, never cared about the rising government bill on account of salaries.central government employees or those of state governments or public sector undertakings, including banking companies, are paid salaries that are not proportionate either to their labour or to the financial capability of the employer. why do we have a current account deficit? simple, our exports are less and we import more. let us go in some detail. since our wages are high our exports become expensive than those by other countries where wage restraint is exercised.
country’s banking system is reeling under non-performing assets and a solution is being sought by way of forced bankruptcy, takeover of management and rulings by national company law tribunal. this basically means that the disease is being cured after it has managed to inflict irrevocable damage. a simple tool, in the form of ‘irreversible debit order’, can however bring an end to this by immunizing banking companies against loan defaults. an ‘irreversible debit order’ or ‘ido’ can work as an instrument of repayment of debt facility availed by the borrowing entity from the lender. in the present setup, the borrower, who either pays through cash/ cheque or an instruction in form of automatic monthly debits from bank account toward repayment schedule, has an upper hand. the borrower can either choose not to make the cash/ cheque payment on the pre-decided date or he can instruct his bank to not allow further automatic debits from his/ company’s account toward loan repayment.
question is simple, ‘why do we need a multi-year program for engineering, management or like streams?’. most of the lessons imparted to students in these programs comprise of already established formulas and techniques. consider this – a school pass-out would give most crucial years of her learning and development phase to a program that in the end will certify her knowledge of methods that were invented long ago. the same stint could have been utilized in furthering the child’s ability to formulate novel techniques that can replace the obsolete ones, for we have near-fully exploited them to their usefulness. even when you need someone to possess this knowledge and employ it in the same manner as done over decades and centuries, a few months on-the-job training is enough. the global economy is awaiting innovations that can drive growth for coming centuries. the setback is that people from whom these inventions are awaited are pursuing rather irrelevant goals – learning mathematical,