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Wednesday, September 10, 2014

MAKING A DIFFERENCE THROUGH 'CSR'

                                                                                                      -MILAN K SINHA

Rural IndiaAs per newspaper reports, TCS (Tata Consultancy Services), India’s well-known exporter of software services is going to support the Prime Minister’s ‘Clean India’ initiative by pledging a sum of 1000 million rupees for construction of separate toilets for girl students across thousands of schools in the country.

It is notable that the Indian PM had in his Independence Day speech said, “I want to start one work from today. There should be a toilet in all the schools of our country. A separate toilet for girls...it is only then our girls will not have to quit schools. I appeal to the corporate sector of our country that whatever money you are spending under the Corporate Social Responsibility, give priority to building toilets in schools."

Undoubtedly, by fulfilling its role under CSR, India Inc can make a lot of difference in the quality of life of millions of fellow Indians. The areas can be any and many in a country like India where majority of population is leading an unworthy human life due to lack of proper nutrition, sanitation, education, health care, employment, to name a few.

Millions of young people have acquired degrees by spending lots of money and time but there are serious issues of their employability. On the other side, it is quite unfortunate and equally disgraceful that more than a quarter of country's population is still illiterate and even elementary education is not available to the eligible students despite RTE Act, 2009.

It is a well-known fact that the poor and BPL (Below Poverty line) families which comprises 40% of country’s population i.e., nearly 500 million people, have very little option but to use unclean and unsafe water. As such, various water-borne diseases affect them badly resulting in large number of deaths every year.

So far the basic problems which rural masses are facing day in and day out are concerned, these can be comprehended and appreciated only by first hand observation. India has more than six lakh villages with majority population still living there and earning their livelihood in and around those villages.

Despite billions of rupees being earmarked year after year in the budgets of Central and State Govt. for the welfare of the poor and downtrodden in the country, little change is noticeable as far as improvement in quality of life of these targeted groups is concerned. Unquestionably, the major reason is the lack of proper resource management. To say, it’s an open fact that only a meagre portion of government’s budgetary allocation reaches the targeted beneficiaries whereas major part of it is wasted, misutilised or misappropriated by the vested interest, mostly operating right within the system. It can be hoped that India Inc. is capable of and committed for ensuring proper resource management under CSR to make the difference visible and abundantly defining.

It is heartening to note that Corporations like Wipro, Thermax, Tata Group, Godrej, Bharti, Ambuja etc. have taken up some of these social issues and already made a commendable beginning. Many other corporations need to engage themselves in socio-economic activities hugely in their own way within the CSR provisions to register perceptible change in improving the life of millions of disadvantaged countrymen in near future.

As always, I am keen to know what you think on this subject. Hence, request you to post Comments to share your views and experiences.  

             Will meet again with Open MindAll The Best.

Saturday, August 2, 2014

BANKING ON CONSOLIDATION

                                                        - MILAN K SINHA
banking1The talk of some consolidation in Indian Banking space, particularly among government-run banks has been taking rounds for the last couple of years. The then Union Finance Minister and our present President in his first meeting with the chief executives of Public Sector Banks (PSB) after taking charge (just after the 26/11 Mumbai attacks) as the finance minister had said, "consolidation of Banks might be needed to improve the global competitiveness of Indian banks and to reduce the risk to financial stability. Any consolidation initiative in the banking sector would be viewed positively and government, as a majority shareholder, would continue to play a supportive role in the process”. 

The next incumbent and the preceding finance minister also put forth his opinion on the subject very candidly by saying, "we should not fear consolidation. Yes, it would be a good idea if the initiatives for consolidation among a few PSU banks emanate from the management of such banks themselves (after discussing the issue in-house thoroughly) with Government playing a supportive role as the common stakeholder.'' 

In fact, even proposals were reported to be submitted to the ministry for examining the feasibility and final approval of the government by a few bigger banks for merger of smaller banks having geographical and technological compatibility in a bid to have ten large sized banks in the country instead of twenty six at present. Two associate banks – State Bank of Saurashtra and State Bank of Indore, in State Bank group did merge with SBI in the intervening period. 

Industry watchers were hoping that the new government at the Centre would take the matter forward which actually came true when the present FM said in Lok Sabha during his maiden budget speech that the government agreed in principle on the need for consolidation of state owned banks. This was followed by the statement of Financial Services Secretary G. S. Sandhu wherein he said that several public sector banks had approached the finance ministry with proposals for consolidation.

Keeping in view the BASEL III requirements of capital Adequacy, the fast pace of soaring NPA, the unnecessary competition among the banks involving avoidable expenditure, the urgent need for greater and better financial inclusion, the expected growth in credit needs of corporate and infrastructure sector to sustain average 7-8% growth in GDP and such other reasons, the consolidation in Indian banking space looks imminent. 

However, two major factors namely requirement of substantial capital by almost all PSBs and ever increasing level of stressed assets commonly known as Bad Loans or Non- Performing Assets (NPA) necessitated early consolidation of banks which naturally demand certain elaboration. 

As spelt out in 2014-15 budget, the public sector banks which account for 70% of the assets that Indian Banks show in their books, will need huge capital infusion of Rs.2.4 trillion (two lakh forty thousand crore) by 2018 to comply with  BASEL III international regulatory norms. But the government doesn’t have this large sum to salvage the situation in view of the weak fiscal position. Hence, by embarking on a different approach to tackle this problem, the finance minister proposed that the government would reduce its stake in PSBs to 51% and allow PSBs to raise capital through sale of shares to retail investors by approaching the capital market. In nutshell, the government will continue to hold majority stake in PSBs without arranging capital through budgetary mechanism. 

NPA of country’s forty odd listed banks touched the alarming level at Rs.2.42 trillion in the quarter ended March, 2014 - about 36% higher than what it was a year ago. If the mammoth figure of Rs.6 trillion of restructured assets in the system is added for fair assessment of the bad loan position, the total amount of stressed asset would touch an astounding figure of Rs.8.42 trillion or to say, 14% of total bank loans. This has great impact on earnings, NIM and provisions besides bad image and reputation in international financial market.

Now, in order to mobilise and meet its own capital requirement from the open market, these PSBs will be forced to keep them sound and healthy by improving their overall functioning which includes far better management of the quality of their huge assets.

The Trade and Industry Associations have been in favour of such initiatives for consolidation to have at least few banks far bigger than SBI to qualify to be globally competitive. Understandably, the trade unions of the banks would be making hue and cry against such proposals, but they also know the basic ground reality and hence would be finally ready to accept the writing on the wall.

It is hoped that the actual process is started at the earliest by asking SBI, the big brother in the banking sector of the country, to effect merger of remaining five associate banks. Similarly, to start with one or two big and healthy PSB can be asked to take the lead in this direction so as to have at least two-three far bigger and healthier state run banks including SBI by the end of this fiscal.

As always, I am keen to know what you think on this subject. Hence, request you to post Comments to share your views and experiences.  

             Will meet again with Open MindAll The Best.

# Published in Patna Daily 

Tuesday, July 15, 2014

BETTER RESOURCE MANAGEMENT FOR BETTER DAYS

                                                                      -Milan K Sinha
Tree And Rainbow Stock PhotoGeneral Budget 2014-15 was presented by the Finance Minister of NDA government at the Centre about five months after the Interim Budget for this fiscal was presented in parliament by Finance Minister of UPA-II government. It’s now an open fact that the Indian economy has been in poor shape for last two-three years due to plethora of known and unknown reasons. The GDP was lower, the inflation was high and so was the rate of unemployment. The fiscal deficit and current account deficit, though looking to be within the targeted level in 2013-14, was actually managed by resorting to accounting tactics for covering up ballooning subsidy bill by rolling over fuel subsidy worth thousands of crore from last fiscal to the current  fiscal, while remaining silent on the roll-over figures for food and fertilizer subsidies on the one hand  and  by containing  the quantum of gold import through imposition of additional customs duty on the other hand.

Notwithstanding the bad economic legacy that the new union  government inherited, the maiden budget presented by Arun Jaitley is undoubtedly an attempt, may not be seen as very bold,  to correct, improve and balance the position - by announcing several measures to control inflation, spur growth in all sectors to boost GDP indices and to create reasonable number of  job opportunities, offer certain tax exemption, effect fiscal consolidation and finally to create investor friendly business climate in the country.

The reaction by political parties for or against the budget proposals is going to be on expected lines based on their political ideology and compulsions for cogent reasons. Broadly speaking without any political bias from the point of view of a common man which includes millions of people from lower middle class, there are certain relief in terms of tax exemptions and also making provisions of funds for agriculture and rural development in general. There are many new initiatives to address the grey areas which have been  greatly impacting the lives of poor and disadvantaged section of society. In fact, next few months will be interesting to watch the real ground level impact of different budget proposals.

All said and done, the bigger question still remains unanswered, at least for now. And that is the perennial 15 paise versus 85 paise syndrome. Ironically, government after government accepts this to be the greatest malady as far as governance is concerned; the widening gap between rich and poor is concerned; the white and black economy in this welfare state named India is concerned, to list a few. 

But then, who will reverse the trend and how long it will take to make this happen against the backdrop of all big talks by all those who have been claiming to be the champion of espousing the cause and concern of common Indians for decades together? 

Believe me, if only this can be ensured and 85 paise of every rupee that government allocates in the budget starts reaching the targeted beneficiaries instead of meager 15 paise out of a rupee presently, there would be great qualitative as well as quantitative improvement not only in all sectors of economy but also in the lives of every Indian. After all, it is tax payers’ hard earned money, which nobody is entitled to waste, misutilise or misappropriate. 

To say in few words, instead of making much hue and cry for more and more resources by every government, be it in Centre or in States, if resource management is taken care of on highest priority with utmost sincerity in a truly professional manner, far better inclusive growth model can be sustained year after year. And then better days will not be really far off for none of us.

As always, I am keen to know what you think on this subject. Hence, request you to post Comments to share your views and experiences.  

              Will meet again with Open MindAll The Best.
# Published in Weekly Magazine,'Indian Currents' on 14.07.2014 

Monday, May 26, 2014

COMMON MAN'S AGENDA FOR THE NEW GOVERNMENT

                               -MILAN K SINHA

modi-victoryFew hours from now, the new government at the centre led by Narendra Modi of Bharatiya Janata Party (BJP) is going to take oath of office with an unprecedented initiative on the external front- inviting the head of states of SAARC countries. Undoubtedly, this will have far reaching impact on internal policy formulation in days ahead by this non-congress government.

The massive mandate, cutting across all sections of society which BJP alone received in 2014 general election has raised the hope and aspirations of every common man to a new high - not without reason as even Narendra Modi made them believe all through his election campaign that  good days are coming ( Achche Din Aanewaale Hain).

We know and appreciate the gigantic task of nation building ahead for the new government for well-known reasons - inflation, corruption, low GDP growth etc. and hence there is bound to be intense pressure to perform within shortest possible time, but certain core issues need to be addressed on highest priority by the new government to instil the trust and confidence among millions of poor and disadvantaged section of our society throughout the length and breadth of this vast country.

Naturally, the following points of serious concern must find place in top agenda:
1. The Malady of Starvation Deaths
Every day more than 7000 people die of hunger in India.
India is topping the list of countries in World Hunger Chart.
More than 30% of the world's hungry population lives in India.
Over 200 million people sleep hungry every night.

2. Problem of Drinking Water
Out of the 6.38 lakh revenue villages in India, more than 30% have water problems.
21% of communicable diseases in India are related to unsafe water.
73% of respondents of a question as to what truly make them proud of being an Indian said, "It is availability of safe drinking water to every Indian."

3. Literacy/Education Problem
Our literacy percentage is only 74%; Kerala being the highest with 94% and Bihar being the lowest with 63%. 
School dropout percentage is still more than 40%. 
The drop out percentage is even worse than that of Bangladesh and Vietnam - countries that got independence more than two decades later. 
We spend less than 2% of our national budget on education for the children who constitute 25% of our total population. 
The dropout percentage is higher among tribal, economically weaker sections of society etc.

4. Sanitation/Open Defecation Problem 
53% Indian population lack sanitation facilities, where as it is only 7% in case of Bangladesh and Brazil. 
India is termed as the world's capital of open defecation.
More than 60% of households in Uttarakhand, Orissa, Bihar, Chhattisgarh, Madhya Pradesh, Jharkhand and Rajasthan are without toilets. 
Only 28,000 Gram Panchayats (GPs) are declared as "Nirmal Gram" under TSC program out of 2.4 lakh GPs in the country.

5. Health & Nutrition Problem
Can we think of a strong India without healthy and strong citizens, present and future? 
Healthy Indians = Healthy & Strong India.
Child nutrition and their overall health need extra care in India as one in every three malnourished children in the world live in India; 8.8 lakh children die every year, more than 100 deaths per hour in India; the IMR (Infant Mortality Rate) in many states is still more than 50 per thousand for children up to the age of 5 years where as it should be at least below 30 per thousand; about 50% of all childhood deaths are attributed to malnutrition; 26% of the world's childhood vaccine preventable deaths take place in the country; Anaemia affects 74% of children under the age of three; as high as 44% children under five years are underweight; malnutrition in early childhood has serious long term consequences because it impedes development of vital life organs.

There are, no doubt many more pressing problems before the country which demand serious attention of power that be at all levels, but to start with the issues enumerated above would definitely give the right signal to common people at large that this government is really doing well rather than talking well. And we all know, well begun is half done. 

Finally, lots of best wishes to the new central government of the largest democratic country of the world from a common Indian.

               Will meet again with Open MindAll The Best. 

Wednesday, May 14, 2014

NO POLITICS IN NATION BUILDING, PLEASE!

                                                         - MILA K  SINHA

rahul modi kejriwalNext few days would be extremely important and defining for the country. As such, it is pertinent to remember the former prime minister of India and the leader of Jai Jawan, Jai Kisan fame, Lal Bahadur Shastri at this crucial juncture to know his perception on major issues – Governance, Development, National Integration - concerning country's wellbeing. This will help the architects of next Govt. at the Centre in finalising the right agenda and formulating the effective action plan for next sixty months.

Governance :
"...The basic idea of governance, as I see it, is to hold the society together so that it can develop and march towards certain goals. The task of the Government is to facilitate this evolution, this progress. It must provide proper conditions and a proper climate for this purpose. While governing, the administrator must, therefore, keep certain trends in view. He should be aware of the policies which he has to implement and of the methods which are open to him for their implementation. He should know what the Government wants and at the same time be attuned to the needs of the people..."

Development:

tree meadow nature"...The economic issues are most vital for us and it is of the highest importance that we should fight our biggest enemies – Poverty, unemployment... Whether it is agriculture or industrial development, or for that matter, development in other fields, the basic fact remains – that it would serve the largest number of our people...."

National Integration:
"...In this vast country of ours, people profess different religions, speak different languages, dress differently and observe different customs; but we are one nation; the history of our struggle for independence and our faith in our future development are our common bonds....Among the major tasks before us none is of greater importance for our strength and stability than the task of building up the unity and solidarity of our people. Our country has often stood as a solid rock in the face of common danger and there is a deep underlying unity which runs like a golden thread through all our seeming diversity...."

The election results are only few hours away but the fact remains that whichever party or coalition forms the next Government at the center, it must take all possible steps to enlist the support and cooperation of all political parties and every citizen  towards fulfilling its bounden duty to make this largest democracy of the world a place where everybody must have Food, Clothing, Shelter, Education, Health, Employment to name only the basic necessities of life. 

Lastly, a small word of caution: No Politics in Nation Building, Please! We have had enough of it in last 66 years since 1947.

                Will meet again with Open Mind. All The Best. 

Sunday, April 6, 2014

NO FAME IN BLAME GAME

                                                             -MILAN K SINHA

blameDay in and day out we find ourselves, whether we agree or disagree, engaged in one of the finest and funniest games of the world- The Blame Game. Golda Meir says, ‘There can be no doubt that the average man blames much more than he praises. His instinct is to blame. If he is satisfied he says nothing; if he is not, he most illogically kicks up a row.'

In today’s politics, it is the major game being played by all political parties in varying degrees more by design than by default. Ironically, such political gossip stories are found to capture a sizeable portion of media space at the cost of serious discussion on matters concerning common man’s welfare and well-being.  

While on the subject, I am tempted to share with you one short story from 'Akbar- Birbal' stock. The story goes like this: Akbar, the Great Moghul Emperor once asked Birbal, his most favorite and wisest courtier who was immensely loved by the commoners too because of his ready wit and wisdom, to paint his portrait. Accordingly, Birbal commenced the job and completed it within a week and then presented the portrait to the Emperor. Akbar was extremely delighted to see the portrait. In order to have comments from his other courtiers (Navratnas), Akbar asked them to offer their views on Birbal's art work. So, everyone came up to the portrait one by one, had a deep glance, detected few mistakes and put dots on such points where improvement was required as per their perception. Interestingly, some of the courtiers made corrections on the portrait itself. Consequently, the portrait was smeared with dots and dashes. Akbar was very upset and asked Birbal to offer his comment and reaction. Birbal gave it a thought for a moment and called for blank canvases, paints and brushes for each of his fellow courtiers. He then requested them to paint the portrait of the emperor with all the improvements and corrections suggested by them. Interestingly, none came forward to perform the job. Akbar was obviously annoyed and angry to assert, “What a difference between 'Doers and Doters'?”

The moral of the story is: whenever you point an accusing finger at someone, you have the other three fingers pointing at you.


In fact, the real boldness lies in admitting our own mistakes and laughing at ourselves. Acceptance of our own weakness is a greatness which paves the path for our improvement and progress. Ralph Marston puts it in another way, 'Concern yourself more with accepting responsibility than with assigning blame. Let the possibilities inspire you more than the obstacles discourage you.’

As always, I am keen to know what you think on this subject. Hence, request you to post Comments to share your views and experiences.

                  Will meet again with Open MindAll the Best.
Published in Patna Daily.com
# Do visit my site : milanksinha.com  

Sunday, March 30, 2014

THE MENACE OF BAD LOANS

                                                         - MILAN K SINHA
Just after reviewing the quarterly performance of state-run banks, the union finance minister informed the media, 'Bad loans of PSU banks are expected to be slightly higher by March-end from a year earlier and banks have been asked to focus on recovery of bad loans, particularly large NPA accounts.'

There is no denying the fact that the biggest challenge facing the public sector banks is their ever growing NPA portfolio. In fact, bad loans of PSU banks rose by 28.5 per cent from Rs.1.83 lakh cr in March, 2013 to Rs. 2.36 lakh cr in September’13- within just two quarters. By all indications, it is going to be far worse by the end of this fiscal.

The matter assumes greater concern as it is reported that one of the Kolkata based PSU banks- United Bank of India has recorded huge surge in its NPA portfolio. In the September quarter, it had to make provision for NPA to the extent of Rs.987.35 cr which rose to Rs.1857.83 cr in the December’13 quarter. The bank’s gross NPA rose from 5.39%  to 10.82% during the same period. As a natural outcome, United Bank recorded a net loss of 1238 cr. in December'13 quarter. Its net worth has also registered substantial erosion and its capital adequacy ratio dropped to the floor level of 9%. 

But, how did it happen in the first place despite so much internal checks and balances; strict control and regular supervision by the RBI and also by other statutory authorities as per the law of the land? What is the efficacy of quarterly review mechanism being undertaken religiously by the ministry? 

Interestingly, yet very unfortunately, this is not the first case of its kind for any state-run bank. It does happen in almost all banks - both public and private in differing magnitude depending upon various factors contrary to the laid down norms of classifying an asset. To put it straight, all banks allow its top brass to influence, if not manipulate the asset recognition exercise to boost profit and show better bottom line performance. If we take a ten year span to see and analyze the balance sheet of any bank after taking over of the new CMD or CEO and the previous one of his or her predecessor, we can very well see large variation in both the figures of NPA as well as profit for obvious reasons.  

Industry watchers say that there is nothing unusual about this and it is also not without the know of regulator and the ministry  as almost every new incumbent to the top post faces this music of hidden NPAs and under reporting of bad loans  by the previous top management. 

Yes, a far more severe than what happened in United Bank's instant case did happen with Chennai based Indian Bank in early nineties. The entire banking industry was under attack from all corners during that period- ironically a period when the economic liberalization had started taking shape in this country. But, that was the period of manual banking, unlike today’s technology based CBS banking where everything is computerized and IT enabled. Moreover, United Bank of India too uses the same computer software named Finacle for accounting purposes as many other banks in India.

To put it in plain words, the prudential norms of asset classification and income recognition is not strictly complied by the banks in the country as per the laid down principles by maintaining a fair and transparent system. And most importantly, the follow up, monitoring and control mechanism of RBI and ministry have not been full proof and up to the mark to ensure early detection of irregularities for initiating timely and effective action to keep the banking sector always in good health.   

As always, I am keen to know what you think on this subject. Hence, request you to post Comments to share your views and experiences.

                  Will meet again with Open MindAll the Best.
Published in Indian Currents.org
# Do visit my site : milanksinha.com