Export Sector

Indian export growth has remained low mainly due to low scale of production, low productivity of labour, institutional friction. Any policy from government must encourage greater scale, specifically labour reform that allows easier separation from firms and workers. Textile, mobile and electronic industries can be catalyst for growth and employment if one encourage scale. Micro policy like trade agreement, simpler documentation procedure at port, improved credit access and infrastructure up gradation will help. The ongoing strain between United States of America and People Republic of China may be an opportunity as firms seek an alternative trade relationship. Labour abundantly India could be a good alternative.

Problems In Export Sector.

In the twenty five years since 1992, when India began liberalizing its trade regime, India’s share of world export rose from 0.5% in 1992 to 1.7% in 2017. The export share of India’s much celebrated export increases from 0.5% in 1992 to 3.4% 2017. To put these number in context, over the same period the Chinese share of merchandise export increases from 1.8% to 12.8%. Bangladesh also increases its share of merchandise export from 0.09% to 0.2% over the same period. Moreover, world export are 30% of its GDP while for India share of export to India’s GDP is 20%.

Lethargic pace of India’s export growth has constraint India’s growth potential as it failed to tapped into the global demand and supply. Many exporters especially in textile and other small and medium enterprises which provide huge jobs in the economy lags behind in technology and innovation to compete in global competition. India’s labour force lacked sufficient skills and labour regulation makes it hard for the firms to operate and employ labour. Lastly, our transport system are outdated, insufficient and badly planned and bureaucratic red tape makes it even worse to compete in global competition.

What’s need to be done?

The solution to low export lies in fixing both micro and macro issues. Macro refers to the issue with export while micro refers what need to be done at the lower level to boost the export.

Macro Issue Solution.

Scale – It is successful for a export sector. Hurdle to land acquisition, labour regulation, inadequate power and other infrastructure support must be provided to the firms as it promotes the firms to increase the scale of production which not only leads to the growth of economy, exports but also provides employment.

Fundamental labour reforms – Reforms are needed to encourage large scale, labour incentive production while maintaining the workers right. This will help tradition industries like textiles, footwear, leatherworks and wood products and boost employment in the economy.

Better transportation infrastructure – The government need to work on improving the integration of different mode of transportation with each other, introducing modern warehousing, custom and improving integration with logistics and industrial park.

Micro Issue Solution

Improving credit access – Credit flows to exporters have to be encouraged to grow in order to facilitate export. The majority of India’s exporters are SME’s with limited access to external financing. Bank credit is often their only source of financing. These flows must be stable, so that SMEs can plan their production properly.

Simplify the GST refund – GST refund to the small and medium enterprises must be robust to help the exporter. Refunds are still slow. This means that SMEs are typically under pressure because they may not have enough capital. SMEs are typical labour intensive and constitute percentage of total export have performed very poorly recently.

Tariff – Resists temptation to raise tariff rates in response to economic pressure such as sudden increase in import. As most exporter use imported inputs, tariff reduces the competitiveness of Indian exporter.

Global Integration of Electronic Industry – This industry has one of the fastest growing global supply chains one that India’s has not been able to take advantage unlike China, Indonesia, Taiwan. According to world bank India’s entry to global supply chain faces many hurdles like : (1) poor transportation infrastructure (2) low skill of workforce due to huge investment needs to be done on training of labour (3) complexity of land acquisition (4) lengthy and unpredictable import clearance.

Export is one of the very important components of economy and plays a very important role in economic growth of the country. It also provides immense employment and uplift millions of Indians from poverty. India’s has underperformed in export sector since liberalization in 1992 but all is not lost several needs to be taken so that we can perform to our potential in coming decade.

Ozone hole

Last year, the European Union’s Copernicus Atmosphere Monitoring Service (CAMS) announced that a hole in the Arctic ozone layer, believed to be the biggest reported, has closed.

The ozone hole’s closing was because of a phenomenon called the polar vortex, and not because of reduced pollution levels due to Covid-19 lockdowns around the world, reports said.

The hole in the North Pole’s ozone layer, which was first detected in February, had since reached a maximum extension of around 1 million sq km, according to scientists at the German Aerospace Center.

The European agency tweeted on April 23, “The unprecedented 2020 northern hemisphere #OzoneHole has come to an end. The #PolarVortex split, allowing #ozone-rich air into the Arctic, closely matching last week’s forecast from the #CopernicusAtmosphere Monitoring Service.”

The importance of the ozone layer

Ozone (chemically, a molecule of three oxygen atoms) is found mainly in the upper atmosphere, an area called the stratosphere, between 10 and 50 km from the earth’s surface. Though it is talked of as a layer, ozone is present in the atmosphere in rather low concentrations. Even at places where this layer is thickest, there are not more than a few molecules of ozone for every million air molecules.

But they perform a very important function. By absorbing the harmful ultraviolet radiations from the sun, the ozone molecules eliminate a big threat to life forms on earth. UV rays can cause skin cancer and other diseases and deformities in plants and animals.

Ozone holes

The ‘ozone hole’ is not really a hole — it refers to a region in the stratosphere where the concentration of ozone becomes extremely low in certain months.

The ‘ozone holes’ most commonly talked about are the depletions over Antarctica, forming each year in the months of September, October and November, due to a set of special meteorological and chemical conditions that arise at the South Pole, and can reach sizes of around 20 to 25 million sq km.

Such holes are also spotted over the North Pole, but owing to warmer temperatures than the South Pole, the depletions here are much smaller in size. Before this year, the last sizable Arctic ozone hole was reported in 2011.

Why this year’s Arctic ozone hole was massive

This year, the ozone depletion over the Arctic was much larger. Scientists believe that unusual atmospheric conditions, including freezing temperatures in the stratosphere, were responsible.

As per a European Space Agency report, cold temperatures (below -80°C), sunlight, wind fields and substances such as chlorofluorocarbons (CFCs) were responsible for the degradation of the Arctic ozone layer.

Although Arctic temperatures do not usually fall as low as in Antarctica, this year, powerful winds flowing around the North Pole trapped cold air within what is known as the polar vortex— a circling whirlpool of stratospheric winds.

“By the end of the polar winter, the first sunlight over the North Pole initiated this unusually strong ozone depletion—causing the hole to form. However, its size is still small compared to what can usually be observed in the southern hemisphere,” the report said.

Scientists believe that the closing of the hole is because of the same polar vortex and not because of the lower pollution levels during the coronavirus lockdown.

Ozone recovery

As per the Scientific Assessment of Ozone Depletion data of 2018, the ozone layer in parts of the stratosphere has recovered at a rate of 1-3 per cent per decade since 2000. “At these projected rates, the Northern Hemisphere and mid-latitude ozone is predicted to recover by around 2030, followed by the Southern Hemisphere around 2050, and polar regions by 2060,” the report said.

Digital Currency and drawbacks.

A virtual currency is a digital representation of value that can be digitally traded and functions as (a) a medium of exchange, and/ or (b) a unit of account, and/or (c) a store of value, but, unlike fiat currency like the rupee, it is not legal tender and does not have the backing of a government. A cryptocurrency is a subset of virtual currencies, and is decentralized, and protected by cryptography.

What are blockchain ?

Imagine a small group of school friends maintaining a list of transactions among themselves, but with a twist: Instead of holding this list in one single computer or in the notebook of one of the group members or authorising some outside authority (say, their class teacher) to maintain (and update) the list, all of them decide to maintain a separate copy of the list in their personal computers. Every time they transact, the rest of the members verify the transaction and once it is verified by all, they update their list. Further, to make sure that none of them changes records of the past transactions in their personal list, they decide to place each transaction as a block, and to stack it one after the other in a sequence. This way, no one can tweak the details of any past transactions because the overall sequence will not match with sequences held by others. Lastly, to make sure that no other child from the school gets to know the details, they devise a code (a cipher) for all their communications related to the list. These blocks are known as Digital ledger technologies (DLT) and bitcoin is special type of DLT.

What is the IMC’s (Inter ministirial commsion) view on DLT and cryptocurrencies?

The first thing to understand is that the IMC recognises the potential of DLT and Blockchain. The IMC accepts that internationally, the application of DLT is being explored in the areas of trade finance, mortgage loan applications, digital identity management or KYC requirements, cross-border fund transfers and clearing and settlement systems. To that extent, it recommends the Department of Economic Affairs (within the Finance Ministry) to take necessary measures to facilitate the use of DLT in the entire financial field after identifying its uses. The IMC also recommends that regulators — RBI, SEBI, IRDA, PFRDA, and IBBI — explore evolving appropriate regulations for development of DLT in their respective areas.

However, the IMC has recommended a ban on “private” cryptocurrencies. In other words, it is open to a cryptocurrency that the RBI may unveil. The IMC’s view is that it “would be advisable to have an open mind regarding the introduction of an official digital currency in India”. It noted that the RBI Act has the enabling provisions to permit the central government to approve a “Central Bank Digital Currency” (CBDC) as legal tender in India.

It recommended ban on private use of cryptocurrency.

Why have private cryptocurrencies attracted a ban?

While it is true that the technology used in virtual currencies has immense potential, without a central regulating authority, they can have numerous downsides.

The IMC’s first concern is that non-official virtual currencies can be used to defraud consumers, particularly less informed consumers or investors. The IMC gives the example of the Rs 2,000 crore scam involving GainBitcoin in India where investors were duped by a Ponzi scheme.

Second, the IMC is worried that if private cryptocurrencies are allowed to function as legal tender, the RBI would lose control over the monetary policy and financial stability, as it would not be able to keep a tab on the money supply in the economy.

Third, the anonymity of private digital currencies make them vulnerable to money laundering and use in terrorist financing activities while making law enforcement difficult.

Fourth

there is no grievance redressal mechanism in such a system, as all transactions are irreversible.

It is for these broad reasons that the IMC singled out private cryptocurrencies for a ban.

What is the 25th Amendment of the US Constitution that could be used to remove Trump?

In the immediate aftermath of Donald Trump supporters storming the Capitol building, which houses both the US Senate as well as the House of Representatives, there are calls by many to either impeach President Trump or invoke the 25th Amendment.

What is the 25th Amendment of the US Constitution?

This amendment lays out how a US president and vice president may be succeeded or replaced.

According to Cornell Law School, “The Twenty-fifth Amendment was an effort to resolve some of the continuing issues revolving about the office of the President; that is, what happens upon the death, removal, or resignation of the President and what is the course to follow if for some reason the President becomes disabled to such a degree that he cannot fulfill his responsibilities.”

According to Encyclopedia Britannica, while the first section codified the traditionally observed process of succession in the event of the death of the president—that the vice president would succeed to the office—it also introduced a change regarding the ascent of the vice president to president should the latter resign from office.

“In the event of resignation, the vice president would assume the title and position of president—not acting president—effectively prohibiting the departing president from returning to office,” states Britannica.

The second section of the amendment addresses vacancies in the office of the vice president.

The third section of the amendment set forth the formal process for determining the capacity of the president to discharge the powers and duties of office.

If the president is able to declare his/her inability, then the vice president takes over as the acting president.

In case the president is unable to declare his/her incompetence, the fourth section of the amendment requires the vice president and the cabinet to jointly ascertain this and if they do so, then the vice president immediately assumes the position of acting president.

It is this fourth section of the 25th Amendment that many are asking Vice President Pence to invoke against President Trump.

When was it introduced and has it been used in the past?

In the aftermath of the assassination of President John F. Kennedy, the 25th Amendment was proposed by Congress on July 6, 1965, and ratified by the states on February 10, 1967.

According to Cornell Law School, “The Watergate scandal of the 1970s saw the application of these procedures, first when Gerald Ford replaced Spiro Agnew as Vice President, then when he replaced Richard Nixon as President, and then when Nelson Rockefeller filled the resulting vacancy to become the Vice President.”

However, the fourth section of the 25th Amendment has never been invoked.

Desalination : Maharashtra new mantra to solve water scarcity.

Desalination is seen as one possible answer to the problem of water scarcity. Recently, Maharashtra government has announced setting up of desalination plant in Mumbai, becoming fourth state to do. So, what is desalination process and what is its feasibility ?

What are desalination plant ?

A desalination plant convert salt water generally seawater into drinking water. The most common  used technology used for the process is reverse osmosis where an external pressure is applied to push solvents from an area of high-solute concentration to an area of low-solute concentration through a membrane. The microscopic pores in the membranes allow water molecules through but leave salt and most other impurities behind, releasing clean water from the other side. These plants are mostly set up in areas that have access to sea water.

How widely is this technology used in India?

Desalination has largely been limited to affluent countries in the Middle East and has recently started making inroads in parts of the United States and Australia. In India, Tamil Nadu has been the pioneer in using this technology, setting up two desalination plants near Chennai in 2010 and then 2013. The two plants supply 100 million liters a day (MLD) each to Chennai. Two more plants are expected to be set up in Chennai. The other states that have proposed these plants are Gujarat, Andhra Pradesh

What is the need to set up a desalination plant in Mumbai?

According to the BMC’s projection, the population of Mumbai is anticipated to touch 1.72 crore by 2041. In 2007, a state government-appointed high-level committee had suggested setting up desalination plants in Mumbai, however, over the years the authorities have avoided building the project claiming that the cost is enormous. However, with the city’s water problems on the rise owing to burgeoning population, Maharashtra Chief Minister Uddhav Thackeray Monday has given the BMC the go ahead for project. It will take about two and a half to three years to complete.

Is it ecologically safe?

The high cost of setting up and running a desalination plant is one reason why the Maharashtra government has over the last decade been hesitant in building such a plant. Desalination is an expensive way of generating drinking water as it requires a high amount of energy. The other problem is the disposal of the byproduct highly concentrated brine ( very high concentration of salt water) of the desalination process. While in most places brine is pumped back into the sea, there have been rising complaints that it ends up severely damaging the local ecology around the plant

Women In Labour Force : Challenges and Reform.

India’s female labour force participation (FLFP) rate is low and reducing consistently. National Sample survey (NSS) shows that between 1983 and 2011, India’s married women participation in labour force is declining even when the economy grew and fertility fell. Surprisingly, these trends are visible in high skill profession like senior officer, legislator and managers. Among engineers the female unemployment is five times more than men.

Reasons for low FLFP rate

High labour market barrier for socially and economically marginalized communities can increase the transmission of disadvantages across generation. Here we look at why participation of women labour force in economy is on a declining trend even when they have access to better education. These main reasons for decline in FLFP rate :

  1. Women are being overlooked among the unemployed people. Majority of them are outside labour force but are willing to work.
  2. Majority of women generally work in low paying or socially accepted jobs many of them are offshoots of domestic helps and childcare.
  3. Women are still entrusted to look after household duties and families across the social status.
  4. Existing skill and employment generation programme ignore the additional needs and constraint of women worker keeping them in disadvantage as compared to others.

Steps needed to be taken

Over the years both sate and central government have taken several steps to increase the participation of women in labour force so that they can contribute to the nation economy. In doing so they must undertake these policy reform

Strengthening existing policy

Both Central and State government use reservation as a policy to increase the representation of marginalized community in their workforce. Almost all states in India provide reservation to female child. Several survey has increased the SC / ST, OBC representation by around some percentage point. Its been observed that there is increase in female employment in education after operation blackboard reserve the post of teacher for women. These steps change the prejudice and bias against women. But these steps should be well monitor and well targeted.

Redesinging policy strategy

Recently, both states and central government has starting using the policy of Direct benefit transfer that is they are started transfering the social security amount direct beneficary bank account. The government should transfer the benefit amount directly to the bank account of women in the household as it leads to proper utilization of that amount.

Changing policy approach

Policy to increase FLFP and job creation can’t be viewed differently. This means that FLFP fails to create the level playing field for example job creation and skilling programmes often ignores safety, mobility, and other special needs of women which posses a big labour market barrier for women. Skilling and job creation programme should pay special attention to women needs and should break other entry barrier for women.

Influencing the private sector

Firms do not have incentive to support policy that benefit government and society at large. The great example is India’s recent maternity leave policy, where cost of leave is borne by private firms. This has led to low hiring or in some case no hiring of women in private firm which is just unacceptable.

The government should fund the cost of maternity leave to the firm especially for less education and women who hails from weaker and marginalized sector. Laying off women for just their biology it not unique to India this trends have been observed in all the countries around the world.

The way forward

Women need must be addressed and their participation must be increased not just in labour force but also in all sectors of the sectors. The dream transforming in to developed economy cannot be achieved if without the contribution of women. Not just government but private should come forward and implement gender parity and equal payment for equal work in their firms. Women contribution in society can be better understood by Gandhi quote : “If you educate a man you educate an individual, but if you educate a woman you educate a family (nation)”.

India’s Great Comeback.


Comebacks are always special more so when you’ve back against the wall and no one expects you to fight back. Similar was the situation for Indian cricket team as they were demolished when Australian bowlers ran over them for just 36 runs lowest score for India ever. It infamously known as “Summer of 36” (because its summer season in Australia). To make situation worse Indian captain and superstar batsman Virat Kohli went on parental leave, ace pace bowler Mohammad Shami was ruled out due to fractured arm, another star batsman Rohit Sharma placed in mandatory quarantine for 14 days and Indian bowler Umesh Yadav injured during the second test match. Despite all the odds and challenges India defy the great odds to claim victory in second test match of the series by 8 wicket at MCG and level the series 1-1.

Day 1

The second test began with a lot of questions after all Indian team were demolished for just 36 and lost the first match of 4 match test series. This was evident when Indian team announced 4 changes including 2 debutant on the eve of 2nd test match to be played on Boxing Day at the MCG (Melbourne Cricket Ground). Mohammad Siraj for Mohammad Shami, Ravindra Jadeja for Virat Kohli, Shubman Gill for Prithvi Shaw and Rishabh Pant for Wriddhiman Shaha.

The first day of 2nd test match began with Australia winning the toss and opting to bat. An inspired Indian bowling unit, led by the menacing Jasprit Bumrah (4/56) Ravichandran Ashwin (3/35), steam-rolled Australia for a meagre 195. The debutant for India, Mohammed Siraj (2/40 in 15 overs) also repaid the faith shown in him. While Marnus Labuschagne (48) top-scored for Australia, Travis Head and Matthew Wade made 48 and 30 runs respectively.

India was 36 for one in its first innings in reply to Australia’s 195-10 at stumps on day 1 of the second Test at the MCG, Melbourne on Saturday. Debutant Shubman Gill batting on 28 in the company off Cheteshwar Pujara on 7.

Day 2

Stand-in skipper Ajinkya Rahane scored a fine century as India reached 277 for five against Australia before rain forced an early stumps on the second day of the second Test at Melbourne Cricket Ground (MCG) on Sunday. Rahane showed great determination as he made an unbeaten 200-ball 104, studded with 12 hits to the fence

Rahane (104) and Ravindra Jadeja 40 were at the crease when the stumps were drawn with India leading by 82 runs. In the third session, Rahane and Jadeja added 104 runs without losing a wicket. Australia were all out for 195 in their first innings on the opening day.

Day 3

India is well within distance of levelling the four-match Test series after reducing Australia to 133 for 6 in the second innings at stumps on the third day of the second Test at Melbourne Cricket Ground on Monday. Ajinkya Rahane’s 112 and Ravindra Jadeja’s 57 took India to a decent first innings score of 326 and a handy 131 run lead. India will now look to wrap up the proceedings on the fourth day as Australia has a slender lead of two runs with only four wickets in hand.

For India, Jasprit Bumrah bowled brilliantly to end the day with 1/34 while Ravindra Jadeja got 2/25. Ravichandran Ashwin and Mohammed Siraj also got a wicket each. The only worry for India is Umesh Yadav’s (1/5 in 3.3 overs) calf muscle injury after removing opener Joe Burns with a peach of delivery.

Day 4

India restricted Australia for 200 and required another 70 runs to win. Which India achieved with a loss 2 wicket and levelled the series 1-1 in what was incredible comeback story.

As the saying goes “Only darkness can make the stars shine” similarly in the most challenging times the stars of Indian cricket teams shine like brightest stars. Well whole series has not ended there are still two test matches to be played but this victory will be etched as among the most memorable victory of Indian cricket team as they defied great odds to clinched victory.

Infrastructure Crisis

Infrastructure sectors are consider to be bedrock of any economy and Indian economy is no different. Infrastructure is not only vital for growth of Indian economy but also for overall development of an economy. Any growth in an infrastructure sector has a multiplier effect on overall economy growth as it soars manufacturing and industrial growth which in turn increase consumer demand and overall standard of living. The infrastructure sector is often comprises of : Road, Railways, Power, Urban Infrastructure.

Over the years investment deficit has soars as infrastructure investment rate has decline since the highs of 2011-12. This has led to many stalled projects, delays, cost overrun and financially its been a nightmare because infrastructure project requires huge loans and these loans have fixed repayment schedule. If the project get finished on time, revenues from project finance the loans. But if the project gets delayed by months, years it gets bad. Its even worse if the project are unable to operates due to change in land acquisition policy, legal cases, abruptly changes environment regulation.

Its important to get infrastructure on the right track because its a key for an economy as it generation of huge employment which in turn increases income level, which results in increase in consumer demand which shoot up aggragte demand which leads higher level of output hence, higher growth of an economy. So, here are few general decision government should take.

Maintain Macroeconomic stability

Maintaining the macroeconomic stability is key for creating an environment that attract huge investment. There are two imporatnt macroeconomic indicator.

  1. Fiscal consolidation – It means government should take policy decision that reduces its fiscal deficit. It will leads to reduce in inflation rate which in turn leads to low interest rate in an economy. Low interest rate means that loans are cheaper as compared to before therefore it’ll more and more people to invest in economy. At the same government should maintain a healthy stock of savings to channelize into investment.
  1. Stability of inflation rate – It means there is no volatality in inflation rate which helps investor to know how much they are getting return for their investment.

It has often found that unstable macroeconomic indicator discourage investment whereas well articulated policy that maintain macroeconomic indicator invites many investors from all over the world.

Reform Public Finance

The government must scale up investment but in fiscal responsible way. There are few ways of doing it. Firstly, Reducing the government expenditure from current expenditure and increase the investment in capital good without raising national debt doing so will leads increase in capital formation in an economy and leads to higher growth. Raising GST by simplyfing, encouraging people and better targeting. Disinvest the non perform public sector enterprisis and monetize government holding and using process to invest in new infrastructure.

Declutter stalled projects

The number of stalled project sky rocketed in recent years. Majority of these stalled project are due to government policy. Here are few things that government can do.

Land Acquisition – Since the enactment of Land Acquisition, Rehablitation and Resettlement (LARR) in 2013, many states have explored some creative method acquiring land without invoking LARR. For example Andhra Pradesh introduced land pooling method to acquire the land for state capital Amravati. Under which 25000 farmer pooled 33000 acre of land by giving them alternative form of compensation in this case a share of developed land.

Environmental Clearance – The Environmental regulation agency should strengthened to ensure smooth functioning and transparency and enable them to take decision backed by data. This institution should also be headed by someone who has great knowledge about this sector.

Private Public Partnership (PPP) – The government should invite private sector to participate in reviving the stalled project. The government should give incentive to motivate them to invest in stalled projects.

Corporate Bond

While the bank remain an important instrument to finance any long term project or to increase any capital requirement its not the only option . It should promote usage of corporate bond . It refer to bonds issued by corporation to raise money to finance the projects.

While these some ways in which government can revitalize the infrastructure sector. Recently, government took great interest as well measure for resurgence of infrastructure sector. From road and highways construction to development of inland waterways as a new mode of transportation. The new policy is being formed for railways, aviation, coal, urban sector. Recently, government has National infrastructure Pipeline. National Infrastructure Pipeline Project will  play a crucial role in pulling the country out of impact of Covid 19.  NIP is a project that will revolutionize India’s infra creation efforts. Many new jobs will be created , our farmers , youngsters , entrepreneurs will benefit. If India has to transform it should invest hugely in its infrastructure.

The Great Indian Banking Crisis.

For a few years now we have witness number of banks and other financial institution crumbled to dust. Apart from PMC (Punjab and Maharashtra Co-Operative) Bank and Yes Bank crisis there are several small banks crisis that have barely been reported and recently RBI have red flagged as many as 11 bank. So how come most important financial institution of our country are falling apart one by one?

Well the failure of several financial institutions and more importantly banking are mainly due to these reasons. Firstly, Indian banks mainly public sector banks(PSB) are loaded with non performing assets (NPA). This implies that they find it difficult to lend more money to industries and other business out of fear which leads to fall in capital formation which in turn leads to reduction in growth of an economy. Secondly, Public Sector Banks are not professional enough that is government still controls the appointment to their boards and their management are short of talents. Thirdly, Banks are made to do too much and take too much risk. They are made to bear the burden of loan waiver and direct lending. All banks suffer miserably due to lack of well develop financial system that could take some risk.

The banking system in India is overwhelmed by bad loans ( loans which bank fails to recover along with interest). Much of the blame is put on the poor performance of public sector bank but recent crisis in YES BANK shows that problem of poor governance, lack of transparency, government interference is same across all banks in both public and private through direct or indirect channel. And how small solution like privatisation is not a solution to any problems.

Any banking reform should address 2 important areas:

  1. Cleaning up banks
  2. Improve governance and management in Public sector banks

Cleaning up Banks

Under IBFC law, National Company Law Tribunal (NCLT) helps to restructure the loans for the largest firms but it’ll be overwhelmed if every stressed firms files before it. So, we need to find a way for out of court restructuring process so the many cases are restructure out of bankruptcy and NCLT acting as a last resort. Out of case settlement process should be transparent, speedy and it should protect the interest of bankers and harass them using central agency of CBI, CVC, ED on the other hand NCLT should be more transparent and speedy.

Improving Governance

Public sector has still not adequately professionalized since government rather than a independent body appoint boards member which inevitably leads to government interference. Every public sectors bank should independent body which have a power and authority to appoint CEO and hold him responsible for performance. Productivity of employees should also increased through imparting new skills and knowledge as PSBs has a huge talent deficit. Lateral entry should also be promoted at the top most. Banking system should not made to bear risk of the government electoral promises of loan waiver and direct benefit transfer targets because these are often achieved by abandoning appropriate procedure and create environment for future NPA and these measure constraint state and central government budget spending.

Over the there have been many debate and discussion over solution to fix the flaws of about the great Indian Banking crisis. All these debate and discussion often leads two common answers: Privatization of PSBs and Merger of Small and non performing PSBs to good performing and well managed PSBs.

Privatization of Banks

Privatization of Public Sector Banks (PSB) means to process in which government transfer the ownership and control to private entity by selling of its shares. Much of the discussion and debate over privatization are based on the ideology one believes in. Definitely, if the PSBs are given more independence in decision making, policy making and especially in recruitment of high skilled workers it’ll lead to some better result. However believing privatization is the solution to all the problems are short sightedness and foolish. The crisis of YES BANK only brought the biggest vulnerability in Indian banking system, the interference of government across all the bank both private and public is a big reality and lack of proper management and governance across all sector is also a reality which cannot be ignored.

Merger of Banks

Merger of banks often prescribed as solution to address the problem of poor goverance. In this process the poor manage banks are merged with good managed and governed banks. It is uncertain whether this process will result in a good result for collective performance of both banks but it’ll depends on ability of good bank management to impose its policy and will without alienating the employees of poor managed banks. Recently India government merge 10 PSBs and India is left with 12 Public sector banks. Whether this move is a success or not only time will tell.

Bank and other financial institution plays an important role in growth of any economy. It accepts deposit from an individual and lends that any people or business. It gives interest to people who deposit their savings and charges interest on loans, the difference between the two is its profit. Through process of accepting deposit and lending money (loans) leads to capital formation which is very important component of growth of an economy. So the government and all the stakeholder should pay a serious attention on the fragility of Indian banking system.

Agriculture : The Lone Survivor

Apart from the enormous consequence of coronavirus on the human life which claimed more than 1.75 million lives worldwide and infected more than 75 million people, COVID 19 also demolished economies around the globe. Amongst the most badly affected nation was India, which recorded more than 1 crore case and a lakhs deaths and counting. While this sounds bad, visuals of lakh and lakh of migrant workers waking back thousands and thousand of kilometers on foot made the situation worse. If this was not the end of misery Indian economy shrinks by 23.9 percentage point in the first quarter of FY 2020-21 lowest since independence. Every sector of economy from manufacturing to industries and even services tanked except one : Agriculture and allied services which recorded growth 3.4 percentage point at constant prices. Agriculture and allied services contributes nearly 16 % to country GDP while providing employment to 42 % of the workforces.

Several economical and agriculture expert had the views that had there been slummed in agriculture and allied services, things would have been much worse. Agriculture provided employment to the migrated worker who returned to there home and provided them with some earning in these apocalyptic times. Such was its importance and necessity that it was the first sectors to get relaxation from nationwide lockdown for manufacturing and transportation of agriculture input, seeds, machine, etc. Supply chains related to agriculture goods and services were allowed to function with protective measures in place. Efforts paid the dividend a sharp increase of 5.7% in area coverage of Kharif crops was registered as on September 2020. Amid good monsoon and adequate water storage in the winter reservoir for Rabi crops the Government of India set an all time high record for food production target of 301 million tons for 2020-21.

When the prime minister Modi announced nationwide lockdown, the immediate consequence was the mass exodus of migrant labourer from virtually every part of country to there rural household and faces an immediate risk of hunger and livelihood. So government announced a number of schemes for them. Government released an advance installment of Rs. 2000 from PM- KISAN scheme, wage rate of worker were increased and number of days of guarantee work was increased to 150 days under NAREGA. Under the economic stimulus package, credit support for small farmer were announce through various institution like NABARD was extending additional support of Rs. 30,000 crore for crop loan through RRB(Region Rural Bank) and other institutions. Nearly 25 lakhs new Kisan credit cards were sanctioned with a loan limit of Rs. 25000 at a minimal rate of interest were provided to not just farmer but also to one belonging fisheries, animal husbandries and agriculture allied services. The timely credit stimulus helped thousand of farmers and laborer to sustain themselves during such a tough times. A new scheme under the name of Pradhan Mantri Garib Kalyan Yojana was launched to take care poor and vulnerable section of society. In order to boost the rural economy, Indian Railways launched Krishi Rail scheme for transportation and building a seamless supply chain of perishable product like milk, fruits, fish etc. It is benefitting farmer from all around the country as they will be able to sell there product all around the country.

In addition to the schemes and relaxation, good monsoon season and tremendous efforts of our farmers and workers help agriculture to stay afloat at a most delicate point in our economic history. These schemes and announcement might seems be rewarding but not a solution for a sector which is on a downward trend for quiet a few years and the news of suicides of farmer reported daily. There is a need for a comprehensive long term vision and policy with huge investment not just on agriculture and its subsidiaries but also on the farmer. When agriculture and its allied sector will grow at a great pace so will rural economies of our countries and in process increasing the income of farmers and laborer which in turn will increase the growth of our overall GDP.